3.14.1 IMF Notice Review

Manual Transmittal

November 07, 2022

Purpose

(1) This transmits revised IRM 3.14.1, Notice Review - IMF

Material Changes

(1) IRM 3.14.1.1.2(1) - Added to the bullet list, Inflation Reduction Act of 2022.

(2) IRM 3.14.1.1.6 - Moved Related Resources from IRM 1.11.2.2.5 to this section.

(3) IRM 3.14.1.2.2.1(4) - Updated link.

(4) IRM 3.14.1.2.3(2) - Updated Exhibit 3.14.1-1 to current year and cycle.

(5) IRM 3.14.1.3.1(1) - Updated Selection Keys 105,106,109,168,181, 216, 220, 260, 296, 356, 570, 575, 601, 649, 669, 732, and 734.

(6) IRM 3.14.1.3.2(1) - Due to LEP changes, updated all Spanish notices with CP and (SP).

(7) IRM 3.14.1.4.2.3(1) - Note added contact Headquarters for approval.

(8) IRM 3.14.1.5.1.2- Added new note, for TPNC 100 return requests and updated info on requesting returns.

(9) IRM 3.14.1.6.6.2(5) - Deleted row. IPU 22U0257 issued 02-09-2022

(10) IRM 3.14.1.6.1.1(1) - Added to bullet list, AGI, TXI, and Tax.

(11) IRM 3.14.1.6.1.1.6(3) - Updated name change example from Mary Smith to Mary Beagle.

(12) IRM 3.14.1.6.9.1(4) - Added contact headquarters for guidance and deleted bullet list.

(13) IRM 3.14.1.6.9.4(2) - Added at the end of the sentence and the entire account is frozen and new sentence, adjustments should not be made to accounts showing an F- freeze.

(14) IRM 3.14.1.6.9.13(3) - Added TY 2021 information for repayment limitation.

(15) IRM 3.14.1.6.9.16(2) - Added new, An IRC 965 inclusion will most often be reported on returns for tax years 2017 and 2018 (returns for tax years that start in 2017 and 2018), although it is possible to see an inclusion in tax year 2019 for fiscal filers, new alpha list, and note. IPU 22U0257 issued 02-09-2022

(16) IRM 3.14.1.6.9.16(3) - Updated first sentence taxpayer’s inclusion year return unless certain the taxpayer may have elected to defer payment and pay in installments over 8 years (965 (h) election), or defer the assessment and payment of the IRC 965 liability until a triggering event occurs (965 (i) election). Second sentence added new triggering events are outlined in the Internal Revenue Code, but the taxpayer is not required to explain the event, only report it on Form 965-A. Updated exception. IPU 22U0257 issued 02-09-2022

(17) IRM 3.14.1.6.9.16(4) - Revised content and added new table for, Taxpayers that made an IRC 965(i) election to defer the assessment and payment of tax until a triggering event occurs during the inclusion period (201712-201911). IPU 22U0257 issued 02-09-2022

(18) IRM 3.14.1.6.9.16(5) - Revised content and added new table for, Taxpayers that made an IRC 965(i) election during the inclusion period (201712-201911) that subsequently experience a triggering event and pay the triggered liability in full, should report the triggering event. IPU 22U0257 issued 02-09-2022

(19) IRM 3.14.1.6.9.16(6) - Revised content and added new table for, Taxpayers make made an IRC 965(h) election to pay the transition tax in 8 annual installments during the inclusion period (201712-201911). IPU 22U0257 issued 02-09-2022

(20) IRM 3.14.1.6.9.16(7) - Revised content and added new table for, Taxpayers that made an IRC 965(i) election during the inclusion period that subsequently experience a triggering event and make a 965(h) election to pay the triggered liability in installments, should report the triggering event. IPU 22U0257 issued 02-09-2022

(21) IRM 3.14.1.6.9.16(8) - Revised content, IRC 965(h) annual installments are due on the due date of the return (not the extended due date) and should be paid and/or posted in accordance with the 965(h) Payment Schedule. Added new exception and alpha list. Revised table for IRC 965(h) deferred payment method payment schedule. Updated examples. IPU 22U0257 issued 02-09-2022

(22) IRM 3.14.1.6.9.16(9)(10)(11) - Deleted. IPU 22U0257 issued 02-09-2022

(23) IRM 3.14.1.6.9.16.1 - Revised the subsection with new content and tables for IRC 965. IPU 22U0257 issued 02-09-2022

(24) IRM 3.14.1.6.9.16.1 (10)(11) - Corrected e-mail address for SBSE Memphis 965.

(25) IRM 3.14.1.6.9.16.2 - Added recorded the taxpayer election and deleted that they elected. IPU 22U0257 issued 02-09-2022

(26) IRM 3.14.1.6.9.16.3 - Added 56sp to title. IPU 22U0257 issued 02-09-2022

(27) IRM 3.14.1.6.9.16.3 - Updated title and deleted Section.

(28) IRM 3.14.1.6.9.16.3(2)(a) - Due to updated changes, deleted (a). IPU 22U0257 issued 02-09-2022

(29) IRM 3.14.1.6.9.16.3(3) - Added new IRM reference link. IPU 22U0257 issued 02-09-2022

(30) IRM 3.14.1.6.9.16.3(4) - Added new sentence for inclusion year and subsequent modules using IMFOL and TXMOD to locate missing payments and deleted next sentence. IPU 22U0257 issued 02-09-2022

(31) IRM 3.14.1.6.9.16.3(5) - Replaced with, If an IRC 965 designated payment was misapplied, transfer the credit to the appropriate module and retype the notice to include the correct "Total Unpaid IRC Section 965 Amount" and/or "Installment Amount Due." IPU 22U0257 issued 02-09-2022

(32) IRM 3.14.1.6.9.16.3(6) - Replaced with, If there was no IRC 965 inclusion and/or IRC 965(h) election made and the TC 971, AC 114 and/or the TC 766 CRN 263 were input in error, input the appropriate reversals in accordance with the IRM and void the notice and added new note. IPU 22U0257 issued 02-09-2022

(33) IRM 3.14.1.6.9.16.3(7) - Replaced with, Once an installment becomes past due, the amount is no longer "properly deferred" and should be referred to SB/SE per paragraph 12 above for acceleration and note. IPU 22U0257 issued 02-09-2022

(34) IRM 3.14.1.6.9.16.3(7) - Deleted per paragraph 12.

(35) IRM 3.14.1.6.9.16.3(8)(9)(10) - Due to updated changes, deleted sentences. IPU 22U0257 issued 02-09-2022

(36) IRM 3.14.1.6.9.16.4 - Added new subsection for Command Code IMFOL IRC 965. IPU 22U0257 issued 02-09-2022

(37) IRM 3.14.1.6.9.17- Added new subsection for Qualified Business Income Deduction Income (QBID).

(38) IRM 3.14.1.6.10.2(1)(c) - Added Status 48 and 53.

(39) IRM 3.14.1.6.12.3.1(1) - Updated dollar amounts for tax year 2022.

(40) IRM 3.14.1.6.12.4(4) - Corrected IRM link to 3.14.1.6.12.6.14.

(41) IRM 3.14.1.6.12.6.2(1) - Added is only for tax year 2021.

(42) IRM 3.14.1.6.12.6.4 - Added new subsection for reconciling Advance Child Tax payments. IPU 22U0299 issued 02-24-2022

(43) IRM 3.14.1.6.12.6.15(4) - Updated EIP 2 amounts and content. IPU 22U0257 issued 02-09-2022

(44) IRM 3.14.1.6.12.6.15(5) - Added new EIP 3 content with new bullet list including dollar amounts. IPU 22U0257 issued 02-09-2022

(45) IRM 3.14.1.6.12.6.15(6) - Added the credits and refunds of Economic Impact Payments (EIP) and bullet list. IPU 22U0257 issued 02-09-2022

(46) IRM 3.14.1.6.12.6.15(7) - Added new when determining the taxpayer’s eligibility for EIP 3. IPU 22U0257 issued 02-09-2022

(47) IRM 3.14.1.6.12.6.15(8)(9) - Renumbered due to new content. IPU 22U0257 issued 02-09-2022

(48) IRM 3.14.1.6.12.6.15(10) - Added new qualifying children are those that have a proper SSN or ATIN and meet all criteria to qualify for the Child Tax Credit and bullet list. IPU 22U0257 issued 02-09-2022

(49) IRM 3.14.1.6.12.6.15(11) - Renumbered due to new content. IPU 22U0257 issued 02-09-2022

(50) IRM 3.14.1.6.12.6.15(12) - Added new taxpayers will report the tax year 2021 recovery rebate credit on their tax year 2021 return. The credit will be calculated based on the 2021 tax return information using the EIP 3 criteria for phase out and will be reduced by the total amount of the advanced payment(s) received. Any remaining credit will be allowed on the tax year 2021 return. IPU 22U0257 issued 02-09-2022

(51) IRM 3.14.1.6.12.6.15(13) (a) - Added new reason code 214. IPU 22U0257 issued 02-09-2022

(52) IRM 3.14.1.6.12.6.15(13) (b) - Updated reason codes 215, 216, and descriptions, added new 217, 218, and 219 and descriptions. IPU 22U0257 issued 02-09-2022

(53) IRM 3.14.1.6.12.6.15(14) - Renumbered due to new content. IPU 22U0257 issued 02-09-2022

(54) IRM 3.14.1.6.12.6.16 - Added to title and 2021. IPU 22U0257 issued 02-09-2022

(55) IRM 3.14.1.6.12.6.16(5) - Added new taxpayers will report the tax year 2021 recovery rebate credit on their tax year 2021 return. The credit will be calculated based on the 2021 tax return information using the EIP 3 criteria for phase out and will be reduced by the total amount of the advanced payment(s) received. Any remaining credit will be allowed on the tax year 2021 return. IPU 22U0257 issued 02-09-2022

(56) IRM 3.14.1.6.15(4) - Added IRM link 3.14.1.6.1.1, Verifying Return Information.

(57) IRM 3.14.1.6.21.2(8) - Updated last row in table changed date from 12/31/2021 to 12/31/2022.

(58) IRM 3.14.1.6.23(2) - Updated tax years from 2022-2019

(59) IRM 3.14.1.6.23(5) - Updated table for current year to $14,000.

(60) IRM 3.14.1.6.23(6)(b) - Updated table for current year.

(61) IRM 3.14.1.6.23(7) - Added income limits.

(62) IRM 3.14.1.6.23(8) - Updated table for current year to $61,000.

(63) IRM 3.14.1.7.7(4) (b) - Added IRC 965 payments require a DPC 64 and IRM reference. IPU 22U0257 issued 02-09-2022

(64) IRM 3.14.1.7.7(17) - Added to hold a credit (prevent a refund or offset), use a Credit Freeze Code "1" on Doc Code 34 or a TC 570 on Doc Code 24 or 48 as the secondary transaction code on the credit side of the transfer to set an -R freeze on the module. IPU 22U0257 issued 02-09-2022

(65) IRM 3.14.1.7.7(18) - Added if a payment needs to be corrected (date, DPC, transaction code, etc.), but not moved, this is called an in-module or single tax module credit transfer and new bullet list. IPU 22U0257 issued 02-09-2022

(66) IRM 3.14.1.7.8(3) - Add label number 13 to sentence.

(67) IRM 3.14.1.7.8.5(5)(6)(7) - Deleted sentences.

(68) IRM 3.14.1.8- Exhibit 3.14.1-2- Added CPs 10SP, 11SP, 12SP,13SP,14SP,16SP,21A(SP), 21B(SP), 21C(SP), 21E(SP), 21I(SP), 22A(SP),22E(SP), 22I(SP), 49SP, 53SP, and 71SP.

(69) IRM 3.14.1.8- Exhibit 3.14.1-5- Removed an additional an on the 06 Negligence penalty.

(70) IRM 3.14.1.8- Exhibit 3.14.1-6- Updated tax years through out and dollar amount on first bullet.

(71) IRM 3.14.1.8- Exhibit 3.14.1-7- Updated tax year, description information, and dollar amounts.

(72) IRM 3.14.1.8- Exhibit 3.14.1-8- Updated tax year information and line numbers.

(73) IRM 3.14.1.8- Exhibit 3.14.1-9- thru Exhibit 1-17- Updated dates for current tax year.

(74) IRM 3.14.1.8- Exhibit 3.14.1-18 and Exhibit 3.14.1-19- Updated dates for current tax year and payment DLNs.

(75) IRM 3.14.1.8- Exhibit 3.14.1-20 thru Exhibit 3.14.1-23- Updated dates for current tax year.

(76) IRM 3.14.1.8- Exhibit 3.14.1-24- Updated dates for current tax year and dollar amounts for Adjusted Gross Income on CP51C.

(77) IRM 3.14.1.8- Exhibit 3.14.1-25 and Exhibit 3.14.1-26- Updated dates for current tax year.

(78) IRM 3.14.1.8- Exhibit 3.14.1-27 and Exhibit 3.14.1-28- Updated cycle dates and current tax year information throughout the notices.

(79) IRM 3.14.1.8- Exhibit 3.14.1-29- Updated DLN for the current year.

(80) IRM 3.14.1.8- Exhibit 3.14.1-30- Updated title and updated from 14 items to 13.

(81) IRM 3.14.1.8- Exhibit 3.14.1-31 and IRM 3.14.1.8- Exhibit 3.14.1-32- Updated cycle dates for current tax year

(82) IRM 3.14.1.8- Exhibit 3.14.1-34- Updated cycle dates and current tax year information throughout the files.

(83) IRM 3.14.1.8- Exhibit 3.14.1-35- Updated example of Form 3809 with current tax year information.

(84) IRM 3.14.1.8- Exhibit 3.14.1-36- Corrected misaligned box for the REQ 54 Close Action box.

(85) IRM 3.14.1.8- Exhibit 3.14.1-37- Updated years at the bottom of the list.

(86) Editorial changes and IRM titles updated from Italics to regular font have been made throughout this IRM.

Effect on Other Documents

IRM 3.14.1, dated November 05, 2021 (effective January 1, 2022), is superseded. The following IRM Procedural Updates (IPUs), issued from February 9, 2022 through February 24, 2022, have been incorporated into this IRM: IPU 22U0257 and IPU 22U0299.

Audience

Individual Master File (IMF) Submission Processing Campuses and Notice Review Tax Examiners

Effective Date

(01-01-2023)

James L. Fish
Director, Submission Processing
Wage and Investment Division

Program Scope and Objectives

  1. This section provides instructions to the Notice Review Function for reviewing Individual Master File (IMF), Individual Retirement Account (IRA), Shared Responsibility Payment (SRP) and Integrated Data Retrieval System (IDRS) Computer Paragraph (CP) notices. These notices may be selected for review by either the Notice Review Processing System (NRPS) or by the IDRS Review Notice Register.

    Note:

    Notices may also be mandated for review by Treasury Inspector General for Tax Administration (TIGTA), management, policy statements, etc.

  2. Priority Refund Transcripts are worked using the Account Management Services (AMS) system and are delivered daily. This section also provides instructions to the Notice Review Function for reviewing Priority Refund Transcripts meeting criteria identified by IMF using AMS. Type of Priority Refund Transcripts are:

    • Million $100

    • Million $10

    • Million $

    • Refund-S

    • Refund-E

    • Refund (Other)

    Note:

    The CP Notice inventory is found in the OLNR system.

  3. Purpose: This section provides IMF Notice Review personnel with instructions for reviewing CP notices that have been selected by NRPS. Reviews are conducted with the goal of improving both the accuracy and quality of information the IRS sends to taxpayers. The Notice Review process helps to ensure the information received by taxpayers is complete and correct and taxpayers do not receive an erroneous refund or an erroneous balance due notice.

    Note:

    Notices are subject to change for various reasons, including notice clarity studies and legislative changes.

  4. Audience: These procedures apply to Wage and Investment (W&I) Submission Processing Individual Master File (IMF) Notice Review personnel, located primarily in Austin, Ogden, and Kansas City:

    • Supervisory Tax Examining Technician

    • Lead Tax Examining Technician

    • Tax Examining Technician

    • Supervisory Clerk

    • Lead Clerk

    • Clerk

  5. Policy Owner: Director, Submission Processing

  6. Primary Stakeholders: Other areas that may be affected by these procedures include (but are not limited to):

    • Accounts Management

    • Chief Counsel

    • Compliance

    • Information Technology (IT) Programmers

    • Large Business and International (LB&I)

    • Submission Processing (SP)

    • Tax Exempt and Government Entities (TEGE)

Background

  1. The purpose of Notice Review is to review IMF Computer Paragraph (CP) notices to verify the accuracy of notices selected for review before mailing. This will ensure the information received by taxpayers are complete and accurate. Notice Review employees use the Notice Review Processing System (NRPS) package, Control D, and /or Integrated Data Retrieval System (IDRS), Integrated Automation Technologies (IAT) Tool, and Account Management Services (AMS) to ensure the information for each notice is processed correctly. Any changes to the notices are made using the On Line Notice Review (OLNR) system.

Authority

  1. Title 26 of the United States Code (USC) or more commonly known as the Internal Revenue Code (IRC). The IRC has been amended by acts, public laws, rules and regulations, such as the following:

    • Omnibus Budget Reconciliation Act (OBRA) of 1993

    • Revenue Reconciliation Act of 1998 (RRA 98)

    • American Taxpayer Relief Act (ATRA) of 2012

    • Surface Transportation and Veterans Heal Care Choice Improvement Act of 2015.

    • Consolidated Appropriations Act of 2016

    • Hiring Incentives to Restore Employment (HIRE) Act

    • Foreign Account Tax Compliance Act (FATCA)

    • The Protecting Americans from Tax Hikes Act of 2015 (PATH)

    • Tax Reform Act of 2017

    • Tax Cuts and Jobs Act 2018

    • Coronavirus Aid, Relief, and Economic Security Act of 2020 (CARES Act)

    • Families First Coronavirus Response Act

    • The American Rescue Plan Act of 2021

    • Inflation Reduction Act of 2022

      Note:

      The above list may not be all inclusive of the various updates to the IRC.

Responsibilities

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

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

  3. The Team Manager/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 Objectives and Review

  1. Program Goals: To review Computer Paragraph (CP) notices generate to notify the taxpayer of any change to a specific module from the taxpayer’s original return and to verify the accuracy of the information and ensure the notice received by the taxpayer is complete and correct.

  2. Program Reports: After NRPS completes the selection process, it combines all the selection information into NRPS batches. NRPS produces various reports from the output files:

    1. NRPS Document Charge-out (NRPS 6120)- provides information needed by the Files Function to pull documents for use in reviewing notices.

    2. NRPS Selection Report (NRPS 6130)- contains notice/transcript input and selected for review counts, sorted by selection key and by Taxpayer Notice Code (TPNC), with year- to-date totals for notices selected in the current cycle.

    3. Notice Retype Error Report (NRPS 8240)- contains information on notices that were unable to be processed after cycle release. The notices on this report must be recreated.

    4. NRPS Automated Local Control Selection Report- shows the previous four weeks’ selection percentages and the current cycle’s selection percentage, based on the automated selection process.

  3. Program Effectiveness: The program goals are measured by using the following tools:

    • Embedded Quality Submission Processing (EQSP)

    • Balanced Measures

    • Managerial Reviews

  4. Annual Review: The processes outlined in this IRM should be reviewed annually to ensure accuracy and promote consistent tax administration.

Acronyms/Abbreviations/Definitions

  1. This table lists Acronyms, Abbreviations, and Definitions.

    Acronyms and Abbreviations Definition
    ABI Age Blind Indicator
    AC Action Code
    ACA Affordable Care Act
    ACTC Additional Child Tax Credit
    AEIC Advanced Earned Income Credit
    AGI Adjusted Gross Income
    AMS Account Management System
    AMTAP Accounts Management Taxpayer Assurance Program
    AOTC American Opportunity Credit
    APTC Advance Premium Tax Credit
    BMF Business Master File
    BOB Block out of Balance
    CADE Customer Account Data Engine
    CAF Centralized Authorization File
    CARE Computer Assisted Review of ERS
    CCC Computer Condition Code
    CFOL Corporate File On-Line
    CIS Correspondence Imaging System
    CP Computer Paragraph
    CRD Correspondence Received Date
    CRN Credit Reference Number
    CTC Child Tax Credit
    CU Corrected Unpostable
    DLN Document Locator Number
    DP Data Processing
    DU Deleted Unpostable
    EFDS Electronic Fraud Detection System
    EIC Earned Income Credit
    EIP Economic Impact Payment
    ELF Electronic Filing System
    ERP Economic Recovery Payment
    ERRF Erroneous Refund
    ERS Error Resolution System
    ESP Economic Stimulus Payment
    FTHBC First Time Home Buyer Credit
    FTF Failure to File
    FTP Failure to Pay
    GMF Generalized Mainline Framework
    GUF Generalized Unpostable Framework
    HCTC Health Coverage Tax Credit
    ICT Image Control Team
    IDRS Integrated Retrieval System
    IDT Identity Theft
    IGR IDRS Generated Refund
    IMF Individual Master File
    IRA Individual Retirement Account
    IRC Internal Revenue Code
    IRM Internal Revenue Manual
    IRN Item Reference Number
    IRSN Internal Revenue Service Number
    ITIN Individual Taxpayer Identification Number
    RIVO Return Integrity and Verification Operation
    LCF Local Control File
    LSE Lump Sum Election
    MAGI Modified Adjusted Gross Income
    MEC Minimum Essential Coverage
    NPA Non-Passive Activity
    NR Not Reviewed
    NRPS Notice Review Processing System
    NU Nullified Unpostable
    OLNR On-Line Notice Review
    PTC Premium Tax Credit
    RAL Refund Anticipation Loan
    RDD Return Due Date
    RPD Return Processable Date
    RRB Railroad Retirement Benefits
    RRC Recovery Rebate Credit
    RTF Return Transaction File
    RTR Remittance Transaction Research
    SSA Social Security Administration
    SSB Social Security Benefits
    SSI Supplemental Social Security Benefits
    SSN Social Security Number
    SRP Shared Responsibility Payment
    TANF Temporary Assistance for Needy Families
    TAS Taxpayer Advocate Services
    TC Transaction Code
    TDA Tax Delinquent Account
    TDI Tax Delinquent Investigation
    TEP Tape Edit Processing
    TIGTA Treasury Inspector General for Tax Administration
    TOP Treasury Offset Program
    TPNC Taxpayer Notice Code
    TPP Taxpayer Protection Program
    TXI Taxable Income
    UP Unpostable Transaction
    URC Unpostable Reason Code
    URF Unidentified Remittance File
    XSF Excess Collection File

Related Resources

  1. The following resources may assist in performing the work as outlined in this IRM:

    • Document 6209, IRS Processing Codes and Information

    • IRM 3.11.3, Individual Income Tax Returns, for instructions related to Code and Edit

    • IRM 3.12.3, Individual Income Tax Returns, for instructions related to Error Resolution System

    • IRM 21.4.4, Manual Refunds

    • IRM 21.4.5, Erroneous Refunds

    • IRM 21.4.6, Refund Offset

    • IRM 20.1, Penalty Handbook

    • IRM 20.2, Interest

    • Servicewide Electronic Research Program (SERP)

    • Notice Review Processing System (NRPS)

    • On Line Notice Review (OLNR)

    • Integrated Data Retrieval System (IDRS)

    • Account Management System (AMS)

    • Integrated Automation Technologies (IAT)

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) Internal Management Documents System. 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.

Customer Account Data Engine 2 (CADE 2)

  1. The Customer Account Data Engine 2 (CADE) 2 solution modernizes the IRS to a daily processing environment.

  2. The components of CADE 2 Transition State 1 in January 2012 include:

    New Cycles Refund Issuance Notice Issuance
    1. Campus Cycle –Thursday – Wednesday

    2. Master File Processing – Friday - Thursday

    3. Notice Review – Saturday - Monday (8 days later, 2 A.M. Eastern Time)

    4. Unpostables – Tuesday to Tuesday

    Refunds for IMF accounts will be accelerated to provide refunds to taxpayers more quickly.
    1. Direct deposit refunds will be issued in 4 business days from posting.

    2. Paper check refunds will be issued in 6 business days from posting.

    IMF notices under a $1000 tolerance (change in taxpayer requested refund amount) will bypass Notice Review Processing System (NRPS) and will be sent directly to Correspondence Processing System (CPS), to be mailed to the taxpayer.

    Note:

    If the remaining refund amount is less than ≡ ≡, the refund hold will not be applied.

    1. Daily Processing – IMF processing with the new cycle definition outlined in (3) a), but processing daily (daily transactions to daily accounts) with weekly processing occurring on Thursday.

      Note:

      Business Master File (BMF) and Employee Plans Master File (EPMF) will continue to process all transactions on a weekly basis. Master File processing will occur on Thursdays.

    2. IMF will identify unpostable criteria daily, but the files will not be processed by Generalized Unpostable Framework (GUF) until the weekly cycle. This may result in subsequent transactions posting in the same cycle as the unpostable transaction, resolving the earlier unpostable.

    3. CADE 2 database – Establishment of a taxpayer account database that will house all individual taxpayer accounts. IMF will process all transactions, settle accounts, and will provide data to the CADE 2 database. IMF will remain the system of record for Transition State 1. Key programs IDRS and Integrated Production Model (IPM) will receive data from the CADE 2 database.

  3. IMF transactions posting time frames are outlined as follows:

    1. Daily transactions directed to a daily account are expected to post daily with daily processing. Transactions will be displayed using Corporate File On-line (CFOL) command codes (IMFOL) the second day after campus input. Transactions will be displayed on IDRS command codes (i.e., TXMOD, ENMOD) the third day after campus input.

    2. Weekly transactions directed to a daily account are expected to post with the master file during weekly processing on Thursday and may result in the account type changing to weekly.

    3. Daily and weekly transactions directed to a weekly account are expected to post with the weekly processing on Thursday.

      Note:

      For items b) and c) above, transactions will be displayed using command codes (IMFOL/BMFOL) on Saturday after the Thursday master file processing. Transactions will be displayed on IDRS command codes (i.e., TXMOD, ENMOD) on Monday after the Thursday master file processing.

    4. Use of the posting delay code on transactions will result in the transaction being held until the weekly processing on Thursday. When the transaction is processed on Thursday and the posting delay code contains a value other than zero, the transaction will continue to resequence for the number of cycles equal to the value.

    Example:

    A transaction input with a posting delay code of 1 will be processed on Thursday and will not re-sequence until the following weekly processing day (the following Thursday).

    Caution:

    Use of the posting delay code on a daily account may result in delaying the posting of the transactions that would resolve the account.

  4. When an action is taken to:

    1. Increase or decrease an overpayment, and the action is being taken before 6 P.M. local time on Monday:
      1. Input adjustment
      2. Retype or void the notice

    2. Decrease the overpayment, and the action is being taken after 6 P.M. local time on Monday and before 6 P.M. local time on Wednesday:
      1. Input transaction code (TC) 570 to stop the refund.
      2. Input the adjustment with the appropriate blocking series, hold code, and posting delay code
      3. Retype or void the notice

    3. Decrease the overpayment, and the action is being taken after 6 P.M. local time on Wednesday and before 10 P.M. Eastern time on Thursday:
      1. Input NOREFP
      2. Input the adjustment with the appropriate blocking series, hold code, and posting delay code
      3. Retype or void the notice

    4. Increase an overpayment, and the action is being taken after 6 P.M. local time on Monday:
      1. Input adjustment
      2. Label the notice

  5. CFOL Command Code IMFOL will contain an indicator on the screen to identify whether the account is a Daily account or a Weekly account.

  6. When CC NOREFP is initiated, the following chart explains when the TC 846 and systemic TC 841 will be displayed:

    Transaction Code Daily Account TC 846/841 Posting Chart for CFOL Command Codes IDRS Command Codes
    846 Next business day Second business day
    841 Two business days Third business day
    Transaction Code Weekly Account TC 846/841 Posting Chart for CFOL Command Codes IDRS Command Codes
    846 Saturday after freeze releases Monday after freeze releases
    841 Second Saturday after freeze releases Second Monday after freeze releases

  7. Beginning May 1, 2015, it is no longer the responsibility of Notice Review to stop refunds at the request of another area. If a request is received via phone or fax, inform the requestor they should contact their own area to have the refund stopped. If the requestor indicates they do not have access to IDRS or CC NOREF in their profile, they should contact their area to address the issue.

Quality

  1. Notice Accuracy is a part of Balanced Measures; therefore it is critical and necessary to provide appropriate feedback to all functions generating erroneous notices or refunds.

  2. Notice Review will develop a local method for providing feedback to the responsible function.

    Reminder:

    Provide this feedback weekly during the filing season.

  3. Management must ensure that adequate reviews are performed during the employee's on-duty status. AMS will provide the ability for on-line quality review of the Priority Refund Transcripts. Management must input the sample size or percentage in each employee's profile in AMS to ensure a sample of transcripts are included in the Quality rating.

  4. Management must allow time for Tax Examiners to provide feedback information.

  5. The Tax Examiner must identify to the lead those situations where an error trend can be established (e.g., same/similar error being committed repeatedly by the same function and/or Tax Examiner).

  6. The lead will provide this information weekly to the Planning and Analysis analyst responsible for Notice Review.

  7. Use the NRPS Notice Disposition Reports and AMS reports as a feedback tool. There are two basic formats for these reports:

    1. The CP Format provides a breakdown of each notice by selection key for a given cycle.

    2. The Key Total Format provides a breakdown of each selection key by CP number for a given cycle.

  8. Cumulative history reports show year-to-date totals for the above reports. Although the weekly reports show data only for those keys with current cycle activity, the history reports show data for keys that have had activity at any time during the year.

  9. Use historical records to assist in feedback sessions for functions that frequently generate bad notices.

Notice Timeliness

  1. Notice Review should correct and disposition notices timely to minimize negative impact to the taxpayer, Timely means all of the following:

    1. Close out the notice cycle on or before the end of the Notice Review cycle.

      Note:

      Notice Review cycle is available beginning on Saturday evenings and closes at 2 am Eastern time on the second Monday following the Saturday availability (eight days).

    2. Complete all refunding notices which include CP 10, 12, 16, 24, and 30 before 10 p.m. Eastern time Thursday.

    3. Input adjustment actions on all other cases by the 23C date of the notice.

  2. Notice Review should schedule and staff personnel to work 100 percent of the notices selected for review.

  3. Whenever a site determines that 100 percent of the sample cannot be completed timely, they will contact the Headquarters Notice Review analyst.

Interest Reduction

  1. Make every reasonable attempt to reduce the amount of interest IRS pays on refunds.

    1. IRS has a 45-day interest-free period in which to process taxpayer refunds. By law, refunds not issued within 45 days from the later of the following dates must include credit interest. (180 days on any overpayment resulting from tax deducted and withheld under Chapter 3 or 4 of the Internal Revenue Code).
      The return date (determined without regard to any extension of time for filing the return).
      The return received date (used when the return is filed after the return due date, determined without regard to any extension of time for filing the return).
      The date the return was received in processable form (Correspondence Received Date (CRD) may be present).

    2. Review and, if needed, correct the account without paying unnecessary interest.

  2. Review, correct, and select disposition (OLNR) all notices in a timely manner to allow the taxpayer the full amount of time to pay. A taxpayer has only 21 calendar days from the date of the notice (ten business days for notice amounts of $100,000 or more) to pay without incurring interest for periods after the date of the notice.

  3. Refer to IRM 20.2, Interest, for proper guidance when reducing, computing, or discussing interest.

Effectiveness

  1. Reviewing Math Error notices that have historically high error rates is a top priority.

  2. For assistance in adjusting the percentage of Math Error notices selected by NRPS, review IRM 3.14.1.3.8, NRPS Local Control File.

Completeness

  1. Review ALL modules and the tax return, if available, as required per Selection Key criteria related to a notice or transcript selected for review. Modules to review include:

    • Entity Module

    • Outstanding Credit Balance Modules

    • Cross-reference Taxpayer Identification Numbers (TIN)s

    • Related Names

    • Freeze Conditions/Codes

    Note:

    This list is by no means all-inclusive. See IRM 3.14.1.6.1,General Review Procedures.

  2. It is the function of Notice Review to review and verify the accuracy of all selected CP Notices in a timely manner. The notice must state accurately and clearly the changes made and the status of the taxpayer's account.

Notice Review Research

  1. There is certain information, generic to all returns, that must be verified. Compare the return to the Computer Paragraph (CP) notice and the information contained in the Notice Review Processing System (NRPS) Package/Control D and/or IDRS to ensure that the information for each tax period is processed correctly.

  2. Use the IDRS Command Codes Job Aid for assistance (Command Codes (CC) such as ENMOD, IMFOL, INOLE, INTST, IRPTR, RTVUE, NAMES, TRDBV, and TXMOD), which is available on Servicewide Electronic Research Program (SERP).

IRM References

  1. This section lists the IRM references that relate to the Notice Review Function. Functional handbooks contain specific instructions for processing and resolving issues that appear on a given notice.

  2. To ensure a comprehensive review, Tax Examiners must be aware of these procedures. They are not to be used to reflect errors against the individual employees, but as a means of providing feedback to the functions causing errors or not following procedures. The references are:

    Procedures for See IRM Reference This IRM's Reference (if any)
    Accounting Refund Transactions IRM 3.17.79 No specific reference
    General Adjustments IRM 21.5.2 IRM 3.14.1.7.5, Entity Adjustments, or IRM 3.14.1.7.6, Tax Adjustments
    Automated Non-Master File Accounting IRM 3.17.46 No specific reference
    Business Tax Returns and Non-Master File Accounts IRM 21.7 No specific reference
    Credit Transfers IRM 21.5.8 IRM 3.14.1.7.7, Credit Transfers
    Erroneous Refunds IRM 21.4.5 IRM 3.14.1.6.7, Erroneous Refunds
    Excess Collections File IRM 3.17.220 IRM 3.14.1.6.8, Excess Collections (XSF) and Unidentified Remittance (URF) Files
    Files Management/Service IRM 3.5.61 No specific reference
    General Adjustments and Guidelines IRM 21.5.1 IRM 3.14.1.7.5 for Entity Adjustments, or IRM 3.14.1.7.6 for Tax Adjustments
    IDRS Command Codes IRM 2.3 and IRM 2.4 No specific reference
    IMF Account Numbers IRM 3.13.5 IRM 3.14.1.6.1.1, Verifying Return Information
    Incoming and Outgoing Correspondence/Letters IRM 21.3.3 IRM 3.14.1.6.9.1, Taxpayer Correspondence
    Individual Tax Returns IRM 21.6 No specific reference
    Individual Income Tax Returns (Code & Edit) IRM 3.11.3 No specific reference
    Individual Income Tax Returns (Error Resolution System - ERS) IRM 3.12.3 No specific reference
    IRS e-file of Individual Income Tax Returns IRM 3.42.5 IRM 3.14.1.6.22, Reprocessing Returns
    Manual Refunds IRM 21.4.4 IRM 3.14.1.6.6, Manual Refunds
    Media Transport and Control IRM 3.13.62 No specific reference
    Operational Guidelines Overview IRM 21.1.3 IRM 3.14.1.1, Program Scope and Objectives
    Processing Timeliness: Cycles, Criteria, and Critical Dates IRM 3.30.123 IRM 3.14.1.1.8, Customer Account Data Engine 2 (CADE 2)
    Undeliverables (Mail Receiving and Sorting Operations) IRM 3.13.62-54 IRM 3.14.1.6.10,Undeliverable CP Notice and C-Letter Distribution and Mailing Guides
    Unpostables (General) and Unpostables Resolution IRM 3.12.32 and IRM 3.12.179 IRM 3.14.1.6.3, General Unpostables and IMF Unpostable Resolution

  3. Submission Processing Campus officials and managers must communicate security standards to their employees and establish methods for enforcement. Refer to IRM 1.4.6, Managers Security Handbook for more information.

  4. Employees are responsible for taking the required precautions to provide security for documents, information, and property handled while performing official duties.

Computer Paragraph Notices

  1. This section contains information relating to Individual Master File (IMF) and Individual Retirement Account (IRA) and Shared Responsibility Payment (SRP) notices. It includes a description of the notices and information on the data elements.

  2. Computer Paragraph (CP) Notices are the most common form of communication with the taxpayer regarding their account. A CP Notice generates to notify the taxpayer of any change to a specific tax module from the taxpayer’s original return, or in response to taxpayer correspondence. A notice must have accurate and timely information.

  3. A CP Notice is a computer-generated message resulting from:

    • An entry of Taxpayer Notice Codes (TPNCs) for a return

    • A Master File analysis of a taxpayer's account

    • Certain transactions posting to an account

  4. Notices generate to:

    • Request information or a payment from a taxpayer

    • Inform or educate a taxpayer

    • Clarify an issue for the taxpayer

  5. The taxpayer must receive a notice (unless otherwise specified in IRM 3.14.1, IMF Notice Review) when there is:

    • A debit balance on the module

    • A math error on the return

    • An Estimated Tax (ES) payment discrepancy

    • Penalty and interest assessed on the module

    • A subsequent change to the taxpayer’s original figures for tax, credits, penalties or net operating loss

    • A Taxpayer Offset Program (TOP) offset or an overpayment offset to another module (issued by Financial Management Service [FMS])

    • A reduced credit elect

  6. Each CP Notice contains the following basic information:

    • Taxpayer’s name

    • Address

    • Taxpayer Identification Number (TIN)

      Note:

      The TIN may be in full form or shortened on the notice.

    • A computer generated message

  7. The Notice Elements describe the conditions which characterize a notice. The principal elements are:

    • Overpayment

    • Balance due

    • Even balance

    • Estimated Tax discrepancy

    • Non-Compute

    • Math Error

    • Adjustment of tax, credits, Failure to File (FTF TC 166 or TC 160) penalty, or Estimated Tax (ES TC 176 or TC 170) penalty

    • A reduced credit elect

    • Offset to other modules or accounts

  8. Overpayment CP Notices 12 and 24 will have a systemically imposed refund hold to allow time for Notice Review to correct erroneous notices before the refund transaction generates. This results in the ability to input an adjustment, credit transfer, or required transaction to correct the notice and associated refund amount prior to the refund being issued to the taxpayer.

    1. The taxpayer account reflects a TC 570 with blocking series "55555" .

    2. The systemic hold expires Thursday of the Notice Review cycle. Master File generates the refund transaction (TC 846) during the IMF weekly processing on Thursday evening.

    3. TC 570 can be input to prevent the refund transaction from generating up through 6 P.M. local time on Wednesday.

    4. NOREFP can be input from 6 P.M. local time Wednesday through 10 P.M. eastern time Thursday to request IMF to reverse the systemically generated refund transaction (TC 846) before the refund information is transmitted to Financial Management Services (FMS).

    5. IMF generates the TC 841 reflecting the reversal of the TC 846 when the NOREFP is processed with the IMF weekly processing on Thursday.

  9. Other overpaid notices in OLNR inventory include, CP 10, CP 12, CP 16, CP 21, CP 24, CP 30A, and CP 51B do not have a refund hold applied for refunds less than $100,000. A TC 846 is present on these accounts and cannot be intercepted. If these notices are identified as erroneous, follow erroneous refund procedures. See IRM 3.14.1.6.7, Erroneous Refunds.

Notice Types and Definitions
  1. Settlement Notices inform the taxpayer of payments due, interest and/or penalties due, math errors, or adjustments made to the taxpayer’s account. There are three types of settlement notices:

    1. Math Error Notices generate when a tax return containing a math error posts to the Master File. The Error Resolution System (ERS) normally identifies and assigns the math errors during pipeline processing. The tax module may include math, clerical, or credit related errors.

    2. Non-Math Error Notices generate when a return with no math error posts to the Master File. The tax module may include tax, credits, penalties, interest, or a combination of all four.

    3. Adjustment Notices generate when certain types of Data Processing (DP) or Examination adjustments post to an account.

  2. Information (Associated) Notices generate when information needs to be sent to the taxpayer. The information can cover many areas such as: Earned Income Credit (EIC), credit elects, offsets of money to other balance due tax modules, or information about the taxpayer’s TIN.

  3. IDRS Notices typically generate five cycles after a settlement notice if the account remains in balance due status. These notices are sometimes referred to as Collection or Tax Delinquent Account (TDA) Notices.

  4. Submission Processing Campus Notices generate to notify the Submission Processing Campus or Area Office of a condition that needs further action to bring the taxpayer’s Master File account into current status. This category includes Refunds, Refund E, and Refund S Transcripts, CP 36, etc.

    Note:

    See Exhibits 3.14.1-8 through Exhibit 3.14.1-6 to 3.14.1-26 on CP Notices which include images of most of the settlement, information, and IDRS notices. For description of all notices, see Document 6209, IRS Processing Codes and Information, Section 9. Additional notice images can be viewed from the Office of Taxpayer Correspondence: https://irsgov.sharepoint.com/sites/SNIP. The web site can also be accessed through Servicewide Electronic Research Program (SERP).

Data Elements — IMF and IRA Notice List

  1. Each posting cycle, the Notice Review Processing System (NRPS) generates the IMF and IRA Notice Lists. These lists contain information on all notices (except CP 36A and CP 38A) generated from that Submission Processing Campus. These lists are tools for reviewing notice output, requesting tax returns, and controlling notices.

  2. The IMF Notice List shows CP information grouped by inquiry campus, then by CP number in Social Security Number (SSN) order. Refer to the figure below for a description of the Notice List Data Elements. Figure 3.14.1-1.

    Figure 3.14.1-1

    This is an Image: 31974001.gif

    Please click here for the text description of the image.

    Item Number Title Description
    Item 1 File Page Number File Page Number
    Item 2 Current Date Current Date
    Item 3 File Title IMF NOTICE/AUDIT LIST
    Item 4 Submission Processing Campus Name Submission Processing Campus Name
    Item 5 Page Number Page Number
    Item 6 Output File Number
    • NRP 4510 for Pass A and D notices

    • NRP 6610 for Pass B and C notices

    Item 7 CP Notice Number CP number of notice
    Item 8 Notice Count Total count
    Item 9 Current Cycle Cycle of the notice list
    Item Number Title These Elements Print for Each CP Notice
    Item 10 Social Security Number (SSN) Invalid SSNs have a preceding "1" (e.g., 1-234-56-7890)
    Item 11 Tax Period Field is blank for CP 37
    Item 12 Document Locator Number (DLN)
    • Adjustment DLN for CP 21, CP 22, CP 721, and CP 722

    • Control DLN for all other CPs

    Item 13 Notice Amount or First Notice Document Location Number (DLN) CP Number and What Prints for it
    • CP 17 — Net Refund Amount

    • CP 36, CP 36A, CP 36D, CP 36S — First notice DLN

    • CP 39 — Balance after offset

    • CP 42, CP 44, CP 49, CP 749 — Total overpayment amount

    • CP 45 — Amount credited to the account

    • CP 52 — Self-Employment (SE) earnings

    • CP 60 — Corrected balance due

    • All other CPs — Total balance due

    Note:

    All credit amounts in this field print with a trailing "-" . Zero amounts do not print

    Item 14 NRPS Primary Selection Key, Manual Intervention Codes, Sub-Agency Codes, or blank
    • M = Math Error (TPNC) 100

    • C = Centralized Authorization File (CAF) Mismatch

    • B = Blind Trust

    • S = Submission Processing Campus Address

    • Sub-Agency Codes print as "SAG: nn" where "nn" is a two-digit Sub-Agency Number (See Document 6209 IRS Processing Codes and Information)

    Item 15 Notice Sequence Number This is a six-digit number preceded by a letter that indicates the Run (or Pass) number (A, B, C, or D).
  3. IRA Notices also appear on the IMF Notice List.

  4. The Notice List prints in the same sequence as the corresponding notices. A notice sequence number prints for each Notice List line item and provides an easily referenced number for each notice. The Notice List provides a total count of notices issued.

The Notice Review Processing System (NRPS)

  1. NRPS selects Settlement Notices and Adjustment Notices for review by analyzing data from the following sources:

    1. CP Notice Records — NRPS uses this information to print a one-page overview "Quick Print" of the selected notice for the review.

    2. Entity and Tax Modules — NRPS uses the Transcript Request System (TRS) to obtain data. Enterprise Computing Center - Martinsburg (ECC-MTB) and Enterprise Computing Center - Memphis (ECC-MEM) send this information to each Submission Processing Campus exclusively for NRPS processing. NRPS prints this information in transcript format as part of the NRPS Package/Control D. Refer to the On-Line NRPS Tax Module Transcript exhibit. See Exhibit 3.14.1-27

    3. Return Transaction File (RTF) — NRPS extracts RTF data records for each selectable settlement notice. NRPS Package/Control D also contain printouts of this information. Refer to the On-line NRPS Return Transaction File (RTF) exhibit. See Exhibit 3.14.1-28

    4. Pending Transactions — NRPS uses data from transactions that have not yet posted at the Submission Processing Campus as part of the selection criteria for certain keys. With CADE 2 daily processing, there is a decrease in pending transactions. Certain transactions post daily and the IDRS/Taxpayer Information File (TIF) update accelerates one week.

      Pending Transaction Sources Possible Pending Transactions
      ECC Resequence File Adjustments (TC 29x/30x)
      Unidentified Remittance Files (URF) Extensions (TC 460)
      Tape Edit Processing (TEP) (Pipeline and Corrected Unpostable files) Merge Transactions (TCs 001, 011, and 04x)
      Generalized Unpostable Framework (GUF) and Current Cycle ECC Unpostable Files Credit Transfers (Doc Code 24, 34, 48, or 58 transactions)
      Excess Collection File (XSF) Credit Transfers (Doc Code 24, 34, 48, or 58 transactions)
      Generalized Mainline Framework (GMF) Error File All other significant (non-zero) transactions
      Block Out of Balance (BOB) File All other significant (non-zero) transactions
      Reject File Payments (TC 610 or TC 670)

Notice Selection Process

  1. NRPS uses sets of criteria called Selection Keys in the selection process. The Selection Keys with similar criteria are grouped within a category that NRPS uses for prioritizing the selection order. Refer to the NRPS Selection Keys table below. The following is a list of categories in selection priority:

    • CATEGORY A — Special Priority

    • CATEGORY B — High Priority Local Selection

    • CATEGORY C — Special Handling Required

    • CATEGORY D — ES Discrepancy

    • CATEGORY E — Pending/Posted Analysis

    • CATEGORY F — Taxpayer Notice Code (Math Error) Notices

    • CATEGORY G — Adjustment Notices

    • CATEGORY H — Condition Analysis

    • CATEGORY J — Low Priority Local Selection

    • CATEGORY K — Miscellaneous

      Group Definitions

      Group Definition
      A Multiple TPNCs
      B Prior Year TPNCs
      C Filing Status TPNCs
      D Standard Deduction TPNCs
      E Schedule A TPNCs
      F Schedule D TPNCs
      G Alternative Minimum Tax TPNCs
      H Dependents with unearned income TPNCs
      I Schedules C, E, F, and J TPNCs
      J Earned Income Credit TPNCs
      K Income TPNCs
      L International TPNCs
      M Form W-2 TPNCs
      N Child Tax Credit TPNCs
      O Adjustments to Income TPNCs
      P Payments and Credits TPNCs
      Q Rejects TPNCs
      R Schedule SE TPNCs
      S Schedule H TPNCs
      T Educator Expense/Tuition and Fees Deduction TPNCs
      U Exemptions TPNCs
      V Taxes TPNCs
      W Other Credits TPNCs
      X Elderly/Disabled Credit TPNCs
      Y Child and Dependent Care TPNCs
      Z Exemptions/Standard Deduction TPNCs

    NRPS Selection Key Description

    Key NRPS Selection Key Description Category
    001 Overpaid notice for $100,000 or more. See IRM 3.14.1.6.17.1, Overpayment Notices of $100,000 or More, C
    002 Balance due notice issued and a current cycle refund in another tax period C
    003 Overpaid adjustment notice for $100,000 or more. See IRM 3.14.1.6.17.2, Overpayment Adjustment Notices of $100,000 or More C
    004 ES payments displayed on taxpayer copy incomplete or out of balance with tax data. See IRM 3.14.1.6.17.3, Key 004 ES Discrepancy Notice with Incomplete or Out of Balance Payment Data C
    008 Balance due notice for $100,000 or more. See IRM 3.14.1.6.17.4, Balance Due Notices of $100,000 or More C
    009 Balance due adjustment notice for $100,000 or more. See IRM 3.14.1.6.17.5 , Balance Due Adjustment Notices of $100,000 or More C
    010 Pre-199612 tax year with EIC TPNC. See IRM 3.14.1.6.17.6, Dependent TIN TPNC Assigned to Pre-199612 Return  
    012 Notice is CP 14I, 21I, or CP 22I A
    013 Notices in which the return has a Form 8962.  
    014 Notices in which the return has a Form 8941 with significant amounts in ACA fields.  
    015 Select CPs which have significant amounts in the self-assess 5000A penalty or offset to MFT 35.  
    020 Select if CP 23, 24, or 25 is either Estimated Tax Credit or Form 4868 payment is equal to Form 8885 Health Coverage Credit amount. D
    021 Withholding claimed on return equals posted ES payments D
    023 One ES payment in the notice was not claimed on the return D
    025 ES credit claimed on the return, but no ES payments are posted in the notice module D
    026 Verify payments received more than two months after period end are not for the subsequent year D
    027 Verify inconsistent payment in the notice module D
    028 ES credit posted, but no ES credit was claimed on the return D
    029 ES payment posted differs by 10 percent or more of ES credits claimed by taxpayer D
    030 ES credit claimed less than ES credits posted equals credit balance in another tax period D
    031 ES credit claimed less than ES credits posted equals one to four pending/posted payments D
    032 ES credit claimed equals one to four pending/posted payments including notice period D
    033 Refund over $1,000 with a $200 or more difference between overpay claimed and allowed D
    034 Pending spouse offset — Check spouse's account, prevent refund from generating refund/spouse notice, transfer credit D
    035 Tax per taxpayer and tax per computer differ by $2,000 or more — Overpayment notice H
    036 Tax per taxpayer and tax per computer differ by $2,000 or more — Balance due notice H
    037 Select if TPNC 101 or 108 is present and filing status is not 1 H
    038 Prior year credit elect/current year refund. Verify taxpayer intentions in current year H
    039 Select if TPNCs 121 and 158 are both present H
    040 ES Penalty posted differs from Form 2210 ES Penalty amount, no computer condition code (CCC) "P" — Check Form 2210 H
    050 Section 965 - RPC F Indicator detected A
    051 Section 965 - DPC 64 Payment Detected A
    054 Form 1040 or Form 1040A with TPNC 141 and total income per computer minus total income per taxpayer equals either Gross IRA Distribution or Gross Pension Annuity. H
    055 TPNC 190 is only TPNC present. H
    057 Overpaid $100,000 or more — current cycle adjustment C
    059 TPNC 209 is present and either Qualified Taxable Dividends or Schedule D Profit/Loss is significant amount. H
    060 Math error notice for tax period 3 or more years prior to current year See IRM 3.14.1.6.17.7, F
    061 Multiple math error explanations See IRM 3.14.1.6.17.8, F
    062 TPNC 211 is present and Qualified Taxable Dividends is greater than Taxable Dividends. H
    063 TPNC is 217 Tentative Tax per Taxpayer is zero or Taxable Income per Computer is greater than zero. H
    064 TPNC 284, 285, 286, 287, 288, 289, 290, 291, 292, or 293 and the control DLN has an ELF FLC. H
    065 Schedule H filed without a return (loose Schedule H) See IRM 3.14.1.6.17.9, K
    066 TPNC is 285 or 287 and Control DLN does not have ELF FLC and Combined Schedule C, E, or F is not zero. H
    067 TPNC is 291 and Schedule D Profit/Loss or Schedule E Profit/Loss is significant. H
    068 TPNC is 547 and tax period is not 200312. H
    069 TPNC is 530,531, 532, 533, 534, or 535 and tax period is not 200112. H
    070 Balance due notice issued and a refund was intercepted for another tax period E
    071 TPNC is 604 and a Dependent TIN is invalid. H
    072 Balance due notice issued and a matching credit transaction is pending E
    073 Notice issued and a money transaction is pending E
    074 Notice issued and an account merge transaction is pending. See IRM 3.14.1.6.17.10 E
    075 Notice issued and a matching credit transfer transaction is pending. E
    076 Balance due notice issued and credit is available for possible offset E
    077 CP 14 or CP 60 (FS = 3) issued and credit is available in another tax period E
    078 Delinquency penalty assessed, but extension of time to file (TC 460) pending E
    079 TPNC is 218 and Tentative Tax per Taxpayer is zero. H
    080 CP 21 or CP 22 for 1993 and Reason Code 23 H
    081 CP 21 or CP 22 for Tax Year 93 and Reason Code 023 G
    083 Adjustment notice issued and the credit is refunding G
    085 Requested by another area outside Notice Review B
    086 Requested by Notice Review B
    087 Requested by Notice Review B
    088 Requested by Notice Review B
    089 Requested by Notice Review B
    090 SSN — Requested by Notice Review B
    091 ERS DLN — Requested by Notice Review. See IRM 3.14.1.6.17.11 , Key 091 — Selection Requested by Error Resolution (ERS) B
    092 Local Selection — CP Requested by Notice Review J
    093 Money amount range — Requested by Notice Review B
    094 Notice matches the requested Partial or Full DLN (match on the significant digits only) B
    095 CP number/Penalty code — Requested by Notice Review B
    096 Adjustment reason code — Requested by Notice Review B
    097 ZIP Code — Requested by Notice Review B
    098 SSN/tax period — Requested by Notice Review B
    099 Requested by Notice Review B
    100 TPNC explanations not computer-generated. See IRM 3.14.1.6.17.12, Key 100 — Non-Standard TPNC Explanations Not Computer Generated A
    101 Tax computed based on a single taxpayer rate F
    102 Tax computed based on married filing joint rate F
    103 Tax computed based on married filing separate rate F
    104 Tax computed based on head of household F
    105 Tax computed based on qualifying surviving spouse rate F
    106 Tax computed using married joint rate - year of Qualifying surviving spouse death F
    108 Tax computed based on single rate, dependent name missing F
    109 We changed your filing status. We refigured your tax using the Married Filing Separately filing status because you can’t claim your spouse as a dependent when using single or head of household filing status. F
    110 We changed your filing status to single - claimed as dependent on other return F
    111 Converted to Form 1040 F
    113 Welfare payments, workers compensation, etc., shown as income F
    114 Income from Form W-2 and/or Form 1099 not included in income section F
    115 Total adjusted to include tips from Form 4137 F
    116 Total interest income transferred incorrectly to page 1 F
    117 Excludable Savings Bond interest disallowed — Married Filing Separately (FS3) F
    118 We adjusted your return by removing the amount of alimony received on Schedule 1. Alimony received should not be included as additional income when the date of divorce or separation agreement is after December 31, 2018. F
    119 Schedule B- Schedule 1 ordinary dividends — computation and/or transfer error F
    120 Error made on state income tax payments F
    121 Schedule C/C-EZ computation and/or transfer error F
    122 Schedule D — computation and/or transfer error limited to $3,000/$1,500 Married Filing Separately [FS3] F
    123 Capital loss carryover from Form 4797 transferred incorrectly to income section F
    125 Unemployment compensation repaid must be on Schedule A subject to 2 percent limitation F
    126 Schedule E computation and/or transfer error F
    127 Schedule F computation and/or transfer error F
    128 Schedules C, E, or F adjusted based on Form 6198 or Form 8582 limitation F
    129 We disallowed the negative amount for unemployment compensation F
    130 Social Security Benefits repaid must be on Schedule A subject to 2 percent limitation F
    131 Error computing taxable amount of Social Security benefits F
    132 We adjusted your Social Security benefits — negative amount claimed F
    133 Gambling losses disallowed, deduction must be reported on Schedule A F
    134 Disallowed child's income from Form 8814, because income greater than maximum allowed for tax year F
    135 United States Department of Agriculture (USDA) Settlement Income moved from Form 1040, line 21 to Schedule F, line 10 F
    136 Total income adjusted to include business property loss from Form 4684 F
    138 Total income adjusted to include employer-provided dependent care benefits F
    141 Error adding income amounts on page 1 F
    142 Educator expenses adjusted — claimed more than the amount allowed for filing status F
    143 Disallowed Tuition and Fees Deduction — already claimed Education Credit F
    144 Tuition and Fees Form 8917 computation error F
    145 We didn’t allow the tuition and fees deduction on your return. This deduction is not allowed for the tax year. F
    147 Disallowed IRA deduction — exceeded maximum amount F
    148 Modified AGI exceeds limitation for figuring IRA deduction F
    149 We disallowed your deduction for an IRA contribution F
    151 Disallowed student loan interest deduction — Married Filing Separately or AGI exceeds maximum amount F
    152 Changed student loan interest deduction — computation error F
    153 Health Savings Account — Error computing deduction and/or transferring to page 1 F
    154 Tuition and fees deduction disallowed — Married Filing Separately, AGI exceeds limitation, or dependent on another return F
    157 Changed Archer MSA deduction Form 8853 — exceeded allowable amount F
    158 Error was made in figuring your deduction for SE Tax F
    159 SE Tax deduction disallowed — use Form 4137 F
    160 SE Tax deduction disallowed — no SE Tax reported F
    161 Adjustment for tax deferred savings plan disallowed — wages on Form W-2 already reflect any adjustments F
    162 Amount of tax on page 2 changes — error figuring or transferring part III, Form 8889 F
    163 We didn’t allow the adjustment to income for alimony paid on Schedule 1. You can’t take a deduction for alimony paid because the date of divorce or separation agreement is after December 31, 2018. F
    164 Disallowed alimony paid to spouse claimed as exemption F
    165 Disallowed combat pay excluded from taxable income F
    166 Employee business expenses must be claimed as an itemized deduction F
    167 Disallowed Qualified Performing Artist (QPA) expenses F
    168 We changed the amount claimed for Charitable Contribution Deduction as an Adjustments to Income on your tax return. You must itemize deductions to claim more than the allowable amount in charitable contributions. If itemized deductions have been claimed Charitable Contribution Deductions have been moved to Schedule A and return adjusted accordingly. F
    169 Disallowed jury pay deduction — not included in income F
    170 Changed amount of ordinary dividends on page 1 — cannot be less than amount of qualified dividends F
    171 Disallowed health savings account deduction — missing or incomplete Form 8889 F
    172 Disallowed Archer MSA amount on page 1 — missing or incomplete Form 8853 F
    174 Error in computing adjustments to income on page 1 F
    175 Error computing adjusted gross income page 1 F
    176 AGI transferred from page 1 to page 2 incorrectly F
    177 Error computing medical/dental expenses on Schedule A F
    178 Error computing taxes paid on Schedule A F
    179 Error computing interest expenses on Schedule A F
    180 Error computing contributions on Schedule A or exceeds 1/2 AGI F
    181 Changed total gifts to charity on Schedule A — missing Form 8283 because one or more of following was incomplete or not attached to the return: F
    182 Changed casualties and theft losses on Schedule A — Form 4684 computation or transfer error to Schedule A F
    183 Error computing total miscellaneous expenses on Schedule A F
    184 Gambling losses exceeding winnings were disallowed F
    185 Schedule A — Other miscellaneous deductions adjusted due to two percent limitation F
    186 Limitation on itemized deductions due to AGI F
    187 Schedule A — Error computing total itemized deductions and/or transferring to page 2 F
    188 We made adjustments to taxable income based on your filing status F
    189 We used your itemized deduction instead of standard deduction F
    190 Standard deduction used in lieu of itemized due to other changes F
    191 Error computing the allowable deduction for dependent on another return F
    192 Error computing additional standard deduction for blindness or over 65 F
    193 Zero not entered on Form 1040 when deductions not itemized — Married Filing Separately F
    194 Error entering standard deduction — amount not entered or amount not correct for Filing Status F
    195 Changed total exemption amount — taxpayer claimed as dependent on other return F
    196 Claim for both standard and itemized deductions disallowed F
    197 Tax recomputed — Taxpayer claimed as dependent on another person's return F
    199 Error made subtracting deductions from adjusted gross income F
    200 Error computing exemptions amount F
    201 Incorrect limitations on exemptions due to AGI F
    202 Taxpayer claimed as a dependent on another return F
    203 We applied your exemption — Married Filing Jointly (FS2) with tax liability F
    204 Filing status code not compatible with claimed spouse F
    205 We did not allow your personal exemption — Invalid or missing TIN F
    206 Spouse's exemption disallowed — Invalid or missing TIN F
    207 Gambling loss greater than standard deduction - subject to Schedule A, two percent limitation F
    208 Error computing taxable income amount F
    209 Tax entered incorrectly from tax table or tax rate schedules F
    211 Tax recomputed using worksheet or maximum capital gains rates F
    212 Schedule J computation and/or transfer error F
    214 Form 8615 transfer error F
    215 Investment income less than minimum amount, Form 8615 not required F
    216 We changed the amount of income and/or tax on your return because there was an error on your Form 8814 — Error figuring Part I and/or transferring that amount to page 1 F
    217 Error figuring tax — Tax adjusted to zero F
    218 IRS figured the tax F
    219 Error computing tax plus additional tax on Form 1040 F
    220 It appears you owe tax based on the filing of Form 8615 We have determined your tax by using the Tax Rate Schedules, which reflects the minimum amount of tax assessed to you. F
    221 We recomputed tax liability by deleting taxes paid on Form 8615 F
    222 Error figuring or transferring tax on lump sum distribution on Form 4972 F
    225 Schedule J not used in Form 6251 computation F
    226 Error on Form 6251 computing alternative minimum taxable income F
    227 Form 6251— Error figuring tentative minimum tax F
    229 Form 6251— Computation error due to presence of Form 8844 F
    230 Error adding Alternative Minimum Tax to Form 1040 tentative tax F
    231 Foreign tax credit limited due to Form 6251 F
    232 Form 2441 computation and/or transfer error F
    233 Child Care Credit disallowed — No earned income shown for taxpayer or spouse F
    234 Child Care Credit disallowed — No provider TIN F
    235 Child Care Credit disallowed — Child on Form 2441 has missing SSN F
    236 Form 2441— Prior year expenses disallowed F
    237 Form 2441 — Part III computation and/or transfer error F
    238 Child Care Credit disallowed — Spouse or dependent cannot be provider F
    239 Child Care Credit disallowed — married filing separately F
    240 Schedule R computation and/or transfer error F
    241 IRS figured credit for elderly/disabled using Schedule R F
    242 Disallowed education credits — Student TIN missing/invalid, Filing Status is Married Filing Separately (FS3), AGI exceeded maximum for Filing Status, or student not claimed as exemption F
    243 Form 8863 computation and/or transfer error F
    246 Retirement savings contribution credit disallowed — Age disqualification F
    247 Form 8880 computation and/or transfer error F
    249 Changed Child Credit-Page 1 missing total Dependents F
    250 Disallow Child Tax Credit-Age Exceeded or Missing SSN F
    251 Child Tax Credit and/or Additional Child Tax Credit reduced/removed — Age requirement not met F
    252 Child Tax Credit and/or Additional Child Tax Credit reduced/removed — No amount entered or amount incorrect based on boxes checked F
    253 Error computing Mortgage Interest/Adoption/DC Home Credit F
    254 Error computing Credit for Qualified Adoption Expenses on Form 8839 or transfer to return page 2 error F
    255 Disallowed Adoption Credit – Form 8839 incomplete or missing F
    257 Disallowed Mortgage Interest Credit – Mortgage interest paid should be on Schedule A F
    260 We changed the amount claimed as other credits on your tax return because there was an error on Form 3800Form 8826 and/or Form 8881 computation and/or transfer error F
    264 Recomputed total credits – addition in error F
    265 Recomputed tax minus total credits – subtraction error F
    266 Changed total credits (return page 2) – credit not limited to tax minus Alternative Minimum Tax Form 6251 F
    267 Credit limited by Alternative Minimum Tax per Form 6251 F
    268 Schedule SE computation and/or transfer error F
    269 Schedule SE adjusted to reflect true net earnings before multiplying by .9235 F
    270 Error transferring net farm profit from Schedule F to Schedule SE F
    271 Error transferring net profit/loss from Schedule C to Schedule SE F
    272 Optional method on Schedule SE disallowed — Not qualified F
    273 No Self-Employment Tax if SE Income is less than $434.00 F
    274 Changed SS/MED tax on unreported tip income – computation Form 4137 or transfer to return page 2 error F
    275 Error transferring IRA tax from Form 5329 to Form 1040 F
    276 We changed the amount claimed as Additional Tax from Schedule 8812 on your tax return because there was an error on Schedule 8812, Credits for Qualifying Children and Other Dependents. F
    277 Error computing federal unemployment tax part of Schedule H F
    278 Schedule H — Error figuring or totaling taxes F
    279 Deleted household employment taxes – cash wages (Schedule H) not enough to owe SS/MED taxes F
    280 Schedule H computation and/or transfer error F
    281 Total tax adjusted to exclude Form 8697 refundable interest – form should be filed separately F
    282 Error computing total tax on Page 2 F
    283 Total tax withheld does not agree with Form W-2 or other documents F
    284 Earned Income Credit computed by IRS F
    285 Error computing earned income credit on Form 1040 F
    286 Disallowed EIC – FS is married separate F
    287 EIC disallowed due to maximum AGI F
    288 EIC disallowed due to lack of earned income F
    290 EIC not allowed — Taxpayer claimed as dependent on another return F
    291 Disallowed EIC – investment income exceeds amt allowed for credit F
    292 IRS figured EIC — Taxpayer may be eligible for larger EIC F
    293 EIC disallowed — Taxpayer younger than 25 or 65 older F
    294 Excess Social Security or RRTA tax entered incorrectly F
    296 We changed the amount claimed as credit for federal tax on fuels Form 4136 computation and/or transfer error F
    297 Error computing total payments F
    298 Deleted state income taxes from federal taxes – IRS does not collect state taxes F
    299 Error computing balance due or overpayment amount F
    501 Changed AGI-Missing Schedule 1 F
    502 Changed Non Refund Credits- Missing Schedule 3 F
    503 Credits-No Reply Schedule 3 F
    504 Payments-No Reply Schedule 3 F
    505 Changed total payments-Missing Schedule 5 F
    507 Disallow other payments claimed on page 2 – missing form F
    513 We didn’t allow the amount claimed as Foreign Tax Credit on page 2 F
    521 Disallowed Residential Energy Credit – missing or incomplete Form 5695 F
    522 We changed the amount claimed as alternative motor vehicle credit on page 2 of your tax return because there was an error on Form 8910, Alternative Motor Vehicle Credit. F
    523 We changed the amount claimed as qualified plug-in electric drive motor vehicle credit on page 2- error on Form 8936 F
    524 We changed the amount claimed as qualified plug-in electric drive motor vehicle credit on page 2- error on Form 8834 F
    528 We changed the amount claimed as qualified electric vehicle credit on Form 3800. You figured Form 8834 incorrectly. F
    531 Rate Reduction Credit not allowed — Maximum allowed in 2001 F
    539 Changed EIC or Additional Child Tax Credit – prior year earned income not used in both computations F
    540 Earned income credit disallowed, Form 1040 indicates not qualified F
    541 No Reply Qualified Business Income Deduction F
    550 Disallowed Loss on Schedule C, E or F —Form 6198 not filed F
    551 Moving expenses disallowed —Form 3903 missing or incomplete F
    552 Casualty/theft disallowed, Form 4684 missing or incomplete F
    553 Disallow employee business expense — Form 2106 incomplete or missing F
    554 Standard deduction used since Schedule A was missing/incomplete F
    555 Substituted additional standard deduction for itemized deduction—lowers tax F
    556 The Residential Energy Credit in Part II of Form 5695 is limited to $500 for an eligible property. F
    557 Disallow the deduction amount for domestic production activities on page 1 of your tax return. F
    558 Tax adjusted based on information received F
    559 Recomputed tax at maximum rate -parents taxable income not provided on Form 8615 F
    560 Changed computations for long term gains to short term —Schedule D not attached F
    561 Exceeded limit for residential energy credit on Form 5695 F
    562 Child Care Credit disallowed — Number of months for students, disabled, or looking for work missing F
    563 Child Care Credit disallowed, Form 2441 or Schedule 1 missing or incomplete F
    564 We changed the amount claimed as Refundable Child and Dependent Care Benefits because Form 2441, Child and Dependent Care Expenses, was required but incomplete or not attached to your tax return. F
    565 Elderly/Disabled Credit disallowed — Schedule R or Schedule 3 missing or incomplete F
    567 Disallowed Residential Energy Credit — missing or incomplete Form 5695 F
    568 We cannot allow your Hope and/or Lifetime Learning Credit — Form 8863 incomplete or not attached F
    569 Retirement Savings Contribution Credit disallowed — Form 8880 missing or incomplete F
    570 We didn’t allow the amount claimed as credit for prior year minimum tax — missing or incomplete Form 8801 Form 8801 F
    572 Disallowed/Limited residential energy credit — limited to amount of tentative tax liability F
    573 DC Home buyer credit disallowed — Form 8859 Form 8859 incomplete or not attached F
    575 We didn’t allow the amount claimed as other credits Disallowed other (general business) credit — Form 3800 ,Form 3468 ,Form 8910 missing/incomplete F
    580 SE Tax not computed by taxpayer — IRS computed (EIC related) F
    582 Form W-2(s) missing, cannot verify tax withheld amount F
    584 Denied claim for refund American Opportunity Credit — missing or incomplete Form 8863 F
    585 EIC disallowed — Schedule EIC incomplete or missing F
    586 Changed EIC —Form W-2 and wages claimed don't match F
    588 Adjusted tax on unemployment compensation F
    589 Disallowed new motor vehicle taxes Schedule A — cannot claim with sales tax F
    590 Excess Social Security or RRTA tax withheld disallowed, Form W-2 missing F
    591 We didn’t allow the amount claimed as Refundable Child Tax Credit on your tax return because Schedule 8812, Credits for Qualifying Children and Other Dependents, was required but incomplete or not attached to your tax return. F
    592 We cannot allow your Additional Child Tax Credit — Schedule 8812 incomplete or not attached F
    593 Disallowed Additional standard deduction for Real Estate Taxes — Schedule A present F
    594 Health Coverage Tax Credit disallowed — Not eligible per IRS records F
    595 Regulated Investment Company Credit disallowed, Form 2439 missing/incomplete F
    596 Changed Credit for Federal Tax paid on oils/fuels — Form 4136 missing/incomplete F
    597 Disallowed tuition and fees credit — Form 8917 missing F
    598 Change exemption —Form 8332 - Divorce decree missing/incomplete F
    601 We changed the amount claimed on Schedule 3 as Deferral of taxes from Schedule H or Schedule SE because the amount cannot exceed maximum amounts of deferred taxes reported on Schedule H and/or Schedule SE. We made this change because of one of the following: F
    605 Invalid dependent SSN/ITIN F
    606 Exemption disallowed for dependent born after end of tax year F
    607 Primary Exemption disallowed — Taxpayer deceased prior to tax period F
    608 Secondary Exemption disallowed — Taxpayer deceased prior to tax period F
    609 Changed return — SS records show dependent(s) deceased F
    610 Disallowed Dependent Exemption — born and died with no proof F
    614 Changed amount of SSN and Medicare Tax on Wages — error on Form 8919 F
    615 Qualified Business Income Deduction- We changed the amount claimed because there was an error in the computation. F
    617 We didn’t allow the amount claimed as Earned Income Credit on your tax return. You or your spouse must be at least age 19 on December 31st of the tax year for which the return is being filed or at least 18 and checked the box on line 27, Form 1040. F
    618 We didn’t allow the amount claimed as Earned Income Credit (EIC) on your tax return. You’re not eligible to claim EIC because your filing status is Married Filing Separately and you did not check the box to indicate you meet the requirements to claim Earned Income Credit when your filing status is married filing separate. F
    621 We changed the amount claimed as Refundable Child Tax Credit on your tax return because there was an error on Schedule 8812, Credits for Qualifying Children and Other Dependents. F
    623 We can’t allow your Refundable Child Tax Credit. According to information on Schedule 8812, Credits for Qualifying Children and Other Dependents, you did not maintain a home in the United States for 6 months or more or were not a bona fide resident of Puerto Rico. We have changed your return accordingly. F
    624 We didn’t allow all or part of the Refundable Child Tax Credit claimed on your return. One or more of the dependents listed on your return exceeds the age limit to be a qualifying child, or the child’s Social Security number (SSN) was missing. If you claimed the Additional Child Tax Credit, it may also be affected. The age and SSN requirements don’t apply when claiming the credit for other dependents. We changed the credit amount to include this credit. F
    628 We changed the amount claimed as Child Tax Credit and/or Additional Child Tax Credit on your Form 1040 F
    630 We can’t allow your Refundable Child Dependent Care Benefits. According to information on Form 2441, Child and Dependent Care Expenses, you did not maintain a home in the United States for 6 months or more. We have changed your return accordingly. F
    631 We changed the amount claimed as Refundable Child Dependent Care Benefits on your tax return because there was an error on Form 2441, Child and Dependent Care Expenses. F
    642 We didn’t allow your personal exemption on your tax return because your individual taxpayer identification number (ITIN) is inactive. Each exemption on your tax return must have an active ITIN or other valid taxpayer identification number (TIN). F
    643 We didn’t allow your spouse’s personal exemption on your tax return because your spouse’s individual taxpayer identification number (ITIN) is inactive. Each exemption on your tax return must have an active ITIN or other valid taxpayer identification number (TIN). F
    644 Each exemption on your tax return must have an active individual taxpayer identification number (ITIN) or other valid taxpayer identification number (TIN). The ITIN for one or more of your dependents is inactive. As a result, we didn’t allow those exemptions on page 2 of your tax return. F
    645 We didn’t allow some or all of the education credits you reported on Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits), and claimed on lines 50 and 68 of your Form 1040 because one or more students listed on the form has an inactive individual taxpayer identification number (ITIN). F
    646 We didn’t allow some or all of the amount you claimed as credit for child and dependent care expenses on page 2 of your tax return because the individual taxpayer identification number (ITIN) for one or more qualifying persons is inactive. F
    647 Disallowed qualified mortgage insurance premiums on SCH A — AGI limit exceeded F
    648 According to our records an installment payment is due for the First-Time Homebuyer Credit received with your 2008 tax return. F
    649 Changed amount of First Time Home buyer Credit repayment — error on Form 5405 or transferred payment incorrectly. F
    650 Deceased taxpayer not eligible for income exclusion F
    653 EIC not allowed — No Form 8862 F
    669 Form 8885 credit reduced or removed — Not eligible and/or line 2 support not attached to return or the amount shown on line 2, Form 8885 is from Form W-2 box 12. F
    672 Disallow Education Credit-Error on Form 8863  
    677 Disallow Refundable Education Credit — TP does not meet AGI requirements F
    678 Changed refundable Education Credit — Error on Form 8863 F
    681 We changed the amount claimed as Recovery Rebate credit on your tax return. Information on your return indicates that either you or your spouse is claimed as a dependent on another person’s tax return. F
    682 We changed the amount claimed as Recovery Rebate credit on your tax return. You or your spouse’s Social Security number was either missing or incomplete. F
    683 We changed the amount claimed as Recovery Rebate credit on your tax return. One or more qualifying dependents Social Security number was missing or incomplete. F
    693 Disallow credit on Line 71, Form 1040 F
    701 We did not allow your EIC or your spouse's exemption — Invalid/missing secondary SSN F
    702 We did not allow your EIC — Primary or secondary TIN issued by IRS F
    704 Missing SSN or ITIN -Disallowed certain credits F
    705 Dependent SSN required-Disallowed certain credits F
    706 SSN does not match SSA F
    707 Missing deceased dependent SSN F
    708 Disallow dependent born after tax year- May change certain credits F
    709 ITIN has expired-Disallowed certain credits F
    710 ITIN for one or more dependents expired-Disallowed certain credits F
    711 Missing ITIN-Disallowed certain credits F
    730 Changed Itemized Deductions-State/Local taxes exceeds filing status F
    731 Changed TXI amount-Math error from AGI F
    732 Changed other Taxes-Math error on Schedule 4, transferring the total amount to Form 1040 F
    733 Changed Refundable Credits-Math error Line 17 F
    734 Tax Computation-We changed the amount reported as other taxes on your tax return because you made an error in totaling the taxes on Schedule 2, Additional taxes, or transferring the amount to your tax return. F
    741 Changed EIC — SSA's birth dates(s) of qualified child(ren) show age requirement not met F
    743 EIC adjusted because of missing or invalid dependent SSN F
    745 We reduced or removed your EIC — Child has ITIN F
    748 Personal exemption and EIC disallowed — Invalid SSN F
    750 Part or all of your EIC not allowed – child(ren) did not meet age requirement F
    751 Part or all of your EIC not allowed – child(ren) did not meet relationship requirement F
    752 Part or all of your EIC not allowed – child(ren) did not live with you required time F
    753 Credit amount changed on Form 3800 – incorrect total from Form 8941 F
    754 Credit not allowed for Small Employer Health Insurance Premium on Form 3800 and Form 8941 missing or incomplete F
    759 Tax return adjusted-Income or Withholding from multiple tax years F
    760 Some or all of Earned Income Credit not allowed-Statutory wages not supported F
    761 Form 2106 EmployeeBusiness Expense was incomplete or missing F
    762 ITIN issue changed family size on Form 8962  
    763 Medical and Dental Amount changed on Schedule A- Wrong percentage used. F
    764 Additional Medicare Tax changed Form 8959, Error computing Part I F
    765 Additional Medicare Tax changed Form 8959 , Error computing Part II F
    766 Additional Medicare Tax changed Form 8959 , Error computing Part III F
    767 Changed the amount reported as Additional Medicare Tax Form 8859 F
    768 Net Investment Tax changed-Error computing total investment income Form 8960 F
    769 Net Investment Tax changed- Error computing total deductions and modifications Form 8960 F
    770 Net Investment Tax changed - Error computing Part III Line 16 Form 8960 Net Investment Tax F
    771 Net Investment Tax changed - Error computing Part III Line 17 Form 8960 Net Investment Tax F
    776 Changed the amount of Form 8960 Net Investment Income. There was an error transferring the amount on Page 2 incorrectly. F
    777 Changed the amount of Form 8859 Additional Medicare Tax. There was an error transferring the amount on Page 2 incorrectly. F
    781 Return was adjusted/error in the amount of statutory credits return was adjusted. F
    784 Monthly contribution amount changed on Form 8962, Incorrectly calculated in Part I. F
    785 Monthly contribution amount changed on Form 8962, Incorrectly calculated in Part 5. F
    786 Total Premium Tax Credit amount changed on Form 8962. Incorrectly calculated F
    787 Advance Premium Tax Credit amount changed on Form 8962. Incorrectly calculated F
    788 Changed the amount you claimed as Net Premium Tax credit on Page 2 because there was an error on Form 8962. F
    789 Changed the amount of Advance Premium Tax Credit Repayment on Page 2 because there was an error on Form 8962. F
    790 We did not allow the Net Premium Tax Credit claimed because of your Married Filing Separate status. F
    791 We did not allow the Net Premium Tax Credit claimed because your income is greater than 400% poverty line. F
    792 We didn’t allow the amount claimed as net premium tax credit on line 24 of Form 8962, Premium Tax Credit. You're not eligible to claim the credit because you indicated on your return that someone can claim you as a dependent. F
    793 We did not allow the Alternative Calculation for Marriage from Part 5, Form 8962. F
    794 We did not allow the Net Premium Tax Credit claimed on Line 68 of your Form 1040. Form 8962 was not attached to the return. F
    795 We changed the amounts on your Form 8962, Part II, to match the Form 1095-A record we received from the Health Insurance Marketplace. We have adjusted your return accordingly. F
    800 We did not allow the credit claimed for Small Employer Health Insurance Premiums because you did not participate in the SHOP exchange. F
    801 We did not allow the amount claimed as a write in on the front of your tax return. The write in is not an allowable adjustment to income. F
    804 Negative deductions may not be claimed on Schedule A. F
    805 We didn’t allow all or part of the amount claimed for child tax credit or additional child tax credit. F
    806 We did not allow the amount claimed on page 2 of your tax return for any dependent who did not meet substantial presence test. F
    807 We did not allow the credit(s) you claimed on page 2 of your tax return. The amount you entered is not an allowable credit. F
    810 We didn’t allow the amount you claimed for the child tax credit or additional child tax credit on page 2 of your tax return. You, your spouse, or one or more of your dependents claimed for the credit did not have taxpayer identification number assigned by the due date of the tax return. F
    811 We estimated a shared responsibility payment (SRP) on your tax return because you didn’t respond to our request. The law allows us to assess the (SRP) for not having minimum essential health coverage for you and, if applicable, your spouse and all dependents listed on your tax return, per Internal Revenue Code Section 5000A. We adjusted your tax return accordingly. F
    812 We changed the refund amount, or the amount you owe on your tax return, based on the shared responsibility payment information you provided in response to our correspondence. F
    813 We changed the amount of the shared responsibility payment (SRP) you reported on your tax return. The maximum amount of the (SRP) reported on your tax return is limited to $2,484 per year for an individual and $12,420 per year for a family with five or more members. F
    814 We didn’t allow the amount claimed as Earned Income Credit on your tax return. Our records indicate that you are banned from claiming Earned Income Credit for two tax years. F
    815 We didn’t allow the amount claimed as Earned Income Credit on your tax return. Our records indicate that you are banned from claiming Earned Income Credit for this tax year. F
    816 We didn’t allow the amount claimed as Earned Income Credit on your tax return. Our records indicate that you are banned from claiming Earned Income Credit for ten tax years. F
    817 The Individual Taxpayer Identification Number (ITIN) for you and/or your spouse has expired. As a result, we didn’t allow certain credits on your return claimed for one or more of your dependents. This change may affect your taxable income, tax, or any of the following credits: ACTC, CTC, and/or Education Credits. F
    818 You and/or your spouse’s Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN) was missing or the last name provided doesn’t match our records or the records provided by the Social Security Administration. As a result, we didn’t allow certain credits on your return claimed for one or more of your dependents. This change may affect your taxable income, tax, or any of the following credits: ACTC, CTC, and/or Education Credits. F
    819 Disallowed amount claimed as Child Tax Credit and/or Additional Child Tax Credit on your tax return. Banned the credit for this year. F
    820 Disallowed amount claimed as Child Tax Credit and/or Additional Child Tax Credit on your tax return. Banned the credit for two tax years. F
    822 Disallowed amount claimed as Education Credit (AOTC) on your tax return. Banned the credit for this year. F
    823 Disallowed amount claimed as Education Credit (AOTC) on your tax return. Banned the credit for two tax years. F

    Note:

    Refer to IRM 3.38.147.3.8.1 , Notice Review Processing System (NRPS) International Selection Keys

  2. Within a category, NRPS assigns a priority to each Selection Key.

  3. NRPS performs the following steps for each Selectable Notice Record in the notice stream until the selection limit is reached, or until all notice records are processed:

    1. Begin with Category A.

    2. Use the highest priority Selection Key in the Category.

    3. If the Notice Record meets the Selection Key Criteria, go to step 8.

    4. If the current Selection Key is the last in the Category, go to step 6.

    5. Use the next highest priority Selection Key in the Category, go to step 3.

    6. If there are no more NRPS Categories remaining, go to step 16.

    7. Move to the next Category, go to step 2.

    8. Assign the current Selection Key as the Primary Selection Key.

    9. If there are no more NRPS Categories remaining, go to step 15.

    10. Move to the next Category.

    11. Use the highest priority Selection Key in the Category.

    12. If the Notice Record meets the Selection Key Criteria, go to step 14.

    13. If the current Selection Key is the last in the Category, go to step 9.

    14. Assign the current Selection Key as the Secondary Selection Key, go to step 17.

    15. Do not assign a Secondary Selection Key, go to step 17.

    16. Do not select the notice.

    17. End NRPS Processing.

  4. The NRPS selection limit for each weekly cycle is 14,000 notices. As the number of selections increases at each Submission Processing Campus, the following changes occur in the selection process:

    If the number of notices selected... Then NRPS will...
    Comes within 1,000 of the selection limit (14,000 by default) Bypass the following keys:
    • All Category A Keys except 011, 012, 013, 014, and 100

    • All Category B Keys

    • All Category F Key except 060

    • All Category J Keys

    Reaches the selection limit (14,000 by default) Process the following keys only
    • Category A Keys 011, 012, 013, 014, and 100.

    • Category G Keys 081.

  5. New Taxpayer Notice Codes (TPNCs)are reviewed at 100 percent at the beginning of each filing season to ensure that all TPNCs are reviewed at least once. To ensure that the NRPS automated selection process selects at 100 percent, all TPNC percentages that have been manually adjusted using the Local Control File must be cleared prior to the first cycle.

    1. Use the Notice Disposition Reports to monitor the error rates of all TPNCs.

    2. Refer to the table in IRM 3.14.1.3.8, NRPS Local Control File, which is used to determine the correct Local Control File (LCF) selection rate for each TPNC.

CP Notice Types

  1. Selectable Notices — These notices are subject to selection under NRPS and may also be subject to Manual Intervention:

    • CP 10/ CP 10 (SP) — Math Error/Reduced Credit Elect/Overpaid

    • CP 10A — EIC Math Error/Reduced Credit Elect/Overpaid

    • CP 11/ CP 11 (SP) — Math Error/Balance Due

    • CP 11A — EIC Math Error/Balance Due

    • CP 12/ CP 12 (SP) — Math Error/Overpaid

    • CP 12A — EIC Math Error/Overpaid

    • CP 13/ CP 13 (SP) — Math Error/Even Balance

    • CP 13A — EIC Math Error/Even Balance

    • CP 14/ CP 14 (SP) — Non-Math Error Balance Due

    • CP 14H — Non-Math Error Balance Due (ACA)

    • CP 14I — IRA Non-Math Error Balance Due

    • CP 16/ CP 16 (SP) — Math Error/Overpayment Offset

    • CP 21/ CP 21 (SP) — DP Adjustment

    • CP 21H — DP Adjustment (ACA)

    • CP 22/ CP 22 (SP) — DP Adjustment

    • CP 22H — DP Adjustment (ACA)

    • CP 23/ CP 23 (SP) — ES Discrepancy/Balance Due

    • CP 24/ CP 24 (SP) — ES Discrepancy/Overpaid

    • CP 25/ CP 25 (SP) — ES Discrepancy/Even Balance

    • CP 30 — ES Penalty/Overpaid/Balance Due

    • CP 30A — ES Penalty Reduced/Overpaid/Balance Due

      Note:

      CP 30 and CP 30A notices are only selected for review if requested on the Local Control File or if there is a Refund-E transcript for the same SSN/Tax Period as the notice. These notices are not included in the review package if not selected.

    • CP 47A- Defer payment of your IRC Section 965 tax liability.

    • CP 47B- Defer payment of your IRC Section 965 tax liability.

    • CP 47C- Defer payment of your IRC Section 965 tax liability.

    • CP 47T- IMF Notice for Assessment of IRC 965 transferee liability

    • CP 51A — Non-Compute/Balance Due

    • CP 51B — Non-Compute/Overpaid

    • CP 51C — Non-Compute/Even Balance

    • CP 56- The annual installment payment is due for your IRC 965 tax liability.

    • CP 56A- Your annual Internal Revenue Code (IRC) Section 965(h) installment amount is overdue.

    • CP 60 — Adjustment/Credit Reversal/Balance Due

    • CP 62 — Credit Transfer

    • CP 71/ CP 71(SP)— Balance Due Reminder Notice

    • CP 77 — Alaska Permanent Fund Dividend Levy Program (AKPFD)/Final Notice

    • CP 78 — AKPFD/Reminder Notice

    • CP 90 — Federal Payment Levy Program (FPLP)/Final Notice

    • CP 91 — FPLP/Final Notice Before Levy on Social Security Benefits

  2. Associated Notices — These notices are not subject to selection, but are included in the review package if NRPS selects another notice for the same taxpayer/spouse and are also subject to Manual Intervention:

    • CP 08 — Taxpayer May Qualify for Additional Child Tax Credit

    • CP 09 — Taxpayer May Qualify for EIC (with children)

    • CP 17 — Refund of Excess ES Credits

    • CP 27 — Potential EIC for Low Income Taxpayer (without children)

    • CP 45 — Reduction in Credit Elect Amount

    • CP 49/ CP 49 (SP) — Adjustment/Overpayment Offset

    • CP 54 — SSN and Name Inquiry

    • CP 54B — SSN and Name Inquiry - Refund

    • CP 54E — SSN and Name Inquiry on Estimated Tax Payments

    • CP 54G — SSN and Name Inquiry - Even/Balance Due

    • CP 54Q — SSN and Name Inquiry - Second Request

  3. Manual Intervention Notices — NRPS will neither select these nor associate them with a selected notice. However, they may appear on the NRPS Manual Intervention List.

    • CP 15A — Civil Penalty Notice

    • CP 15B — Trust Fund Recovery Penalty

    • CP 18 — Refund Withheld Unallowable Item

    • CP 31 — Undelivered Refund Check

    • CP 32 — Refund Inquiry

    • CP 32A — Refund Inquiry

    • CP 39 — Offset from Secondary SSN

    • CP 42 — Offset to Secondary SSN

    • CP 44 — IMF Overpayment to Non-IMF Liability

    • CP 52 — Reduced SE Earnings

    • CP 53/ CP 53 (SP) — Electronic Deposit not Honored

    • CP 74 — EIC Examination Intent

    • CP 75 — EIC Recertification

    • CP 75C — EIC Resolution

    • CP 79 — EIC Recertification/Form 8862

    • CP 79A — EIC Ban (2 Years)

    • CP 79B — EIC Ban (Indefinite)

    • CP 80 — Non-receipt of Tax Return/Credit Balance

    • CP 81 — Refund Statute within six months of Expiration/Credit Balance

    • CP 84 — EIC Certification Soft Notice

    • CP 85 — EIC Disqualification Soft Notice

    • CP 92 — State Income Tax Levy Program (SITLP)/Final Notice

  4. If there is a CP Notice selected by NRPS for OLNR inventory and a Priority Refund Transcript is in AMS within the same cycle, NRPS will provide a statement on the NRPS Package/Control D Package Contents Page indicating the TIN that is also a Priority Refund Transcript in AMS.

NRPS Output Files

  1. After NRPS completes the selection process, it combines all of the selection information into NRPS batches. A NRPS batch consists of the following:

    • NRPS Batch Separator Page

    • NRPS Package/Control D

    • NRPS Selection List

  2. Use Control D/Web Access to view NRPS batches. For additional information, refer to the Notice Review Job Aid 2534-002 and IRM 3.14.1.4, On-Line Notice Review (OLNR).

  3. NRPS produces the following additional types of output:

    • NRPS Batch Control Sheet

    • NRPS Document Charge-Out

    • NRPS Batch Return Request List

    • NRPS Association List

    • NRPS Manual Intervention List

    • NRPS Selection Report

    • NRPS TPNC Trend List Report

    • NRPS Non-package Selection List

    • NRPS Duplicate Selection List

    • Notice Retype Error Report

    • NRPS Automated Local Control File Selection Report

      Note:

      Refer to IRM 3.14.1.3.7 , Other NRPS Batch Output for a description of each of these.

  4. All of the above print outs generate from the following NRPS output files:

    NRPS File... Generates the following...
    NRP 6110 NRPS Package/Control D for notices (associated notice information) selected in the notice selection processing
    NRP 6110P Hard Copies. These include copies of the notices, commonly referred to as the "Quick Print."

    Note:

    The Quick Print is built from data contained in a separate file (called RTY68), and though it is designed to resemble the live notice data, it does not have any impact on how the notice truly looks when printed

    NRP 6120 Document Charge-outs and Files Batch Control Sheets for the NRPS Package/Control D
    NRP 6130 Duplicate copy of Selection List and IMF NRPS Batch Control Sheets for the NRPS Package/Control D
    NRP 6630
    • Large Dollar List

    • NRPS Non-Package Selection List

    • NRPS Manual Intervention List

    • NRPS Selection List

    NRP 4510 Notice Listing
    NOR 0141 Intercept NOREF List

    Note:

    Listing will generate for BMF.

    NRP 8240 Notice Retype Error Report
    NRP 6096 Notice Retype Error Report
    NRP 6610 IMF Notice Listing of Selected CPs

NRPS Batch Separator Pages

  1. The Batch Separator Page identifies the beginning of each batch and contains the following information:

    • Page Number

    • Batch Number

    • Batch Type — Either "OVERPAID" or "NOT OVERPAID"

    • Batch Sort — Either CP, KEY, or MULTIPLE

    • Current Cycle

NRPS Package/Control D

  1. NRPS Package/Control D contains various types of information needed to review each selected CP Notice. Each batch may contain up to 20 selected notices.

    Note:

    Most packages contain only one notice. However, the NRPS Package/Control D will contain all selectable or associated CP Notices that generate in the current cycle for a taxpayer or spouse, if one or more is selected for review.

  2. Each NRPS Package/Control D contains a Contents Page, On-Line notice information, transcribed posted return data, an Entity transcript, and a tax module transcript. These items are explained in greater detail in the subsections that follow.

NRPS Package/Control D — Package Contents Page
  1. Viewed on-line as the first page of each NRPS Package/Control D, this page contains the following information:

    1. Selection Key Number, along with a brief description of the key

    2. List of requested documents

    3. Manual Intervention Reason Codes

    4. List of all selected or associated CP Notices in the package, with CP number and DLN

    5. List of pending transactions

    6. Statement indicating there may be a Priority Refund Transcript in the same cycle on AMS, if applicable

    Exhibit 3.14.1-29

NRPS Package/Control D — On-Line Notice Information
  1. Depending on the CP selected, it may either be a duplicate of the "live" notice, or a shortened version of it. The shortened version displays only the notice record information, such as dollar amounts and TPNC numbers, as opposed to the Taxpayer Bill of Rights language and TPNC explanations.

  2. For CP Notices, the visual representation (or "Quick Print" ) of the notice is created from its own separate file, rather than from the Notice Edit File, as in the past. This change in source data means that occasional abnormalities appearing on the "Quick Print" (which is in the old Legacy notice format), are NOT part of the Notice Edit File. Therefore, those abnormalities will not be on the printed notice.

NRPS Package/Control D — Transcribed Posted Return Data
  1. Displays transcribed return fields for selected settlement notices. This is also referred to as the Return Transaction File (RTF). Exhibit 3.14.1-28

NRPS Package/Control D — Entity Transcript
  1. Displays the entity information for the notice TIN, as well as for the secondary TIN, if applicable (optional).

NRPS Package/Control D — Tax Module Transcript
  1. Displays the tax module transactions for the notice taxpayer identification number (TIN), as well as for the secondary TIN, if applicable (optional).

NRPS Selection List

  1. The last page of each batch shows the following information for each CP Notice:

    • Count (item number on the list)

    • TIN

    • Document Locator Number (DLN)

    • Notice Sequence Number

    • CP Number

    • Primary Selection Key

    • Secondary Selection Key

    • Notice Disposition Choices

Other NRPS Batch Output

  1. NRPS produces two different (but related) Batch Control Sheets. Refer to the NRPS 6130 — Batch Control Sheet exhibit. Exhibit 3.14.1-30

    Note:

    The Files Function copy has a line for each batch, showing the number of document charge-outs in each batch. (Refer to IRM 3.14.1.5.1.2, Associating Documents from Files).

  2. The NRPS Document Charge-out provides information needed by the Files Function to pull documents for use in reviewing CP Notices.

  3. The NRPS Batch Return Request List is a cover sheet that separates the document charge-outs by batch and to accompany the requested documents sent by the Files Function. It contains a line for each charge-out in the batch.

  4. The Manual Intervention List includes notices that may or may not have been selected for review, but manual intervention is required before allowing them to be mailed (if appropriate).

    1. This list is divided into three parts based on the Manual Intervention (MI) Code. If any one of the MI Codes for a Manual Intervention notice is a "1" , then it is printed on the MI Code 1 List. If any one of the MI Codes is a "4" , it is printed on the MI Code 4 List.

    2. Notices on this list may have also been selected by a NRPS selection key.

    3. Refer to IRM 3.14.1.4.3.1.1 , Manual Intervention List for additional information.

  5. The NRPS Selection Report contains notice/transcript input and selected-for-review counts, sorted by selection key and by Taxpayer Notice Code (TPNC), with year-to-date totals, for notices selected in the current cycle. Refer to the NRPS 6130 — NRPS Selection Report exhibit. Exhibit 3.14.1-31

  6. The Notice Retype Error Report (NRPS 8240) contains information on notices that were unable to be processed after cycle release. The notices on this report must be recreated by one of the following methods:

    • All Individual Master File (IMF) notices, with the exception of TDA notices, should be recreated using the transaction code (TC) 971 action code (AC) 264 process.

    • Input a TC 971/AC264 (using CC REQ77 in IDRS) to create a Notice Recreate Transcript CP 67 that will fall out to OLNR. These transcripts will be received in batch "00000" . Once the transcript is received, the notice can be recreated by converting the CP 67 transcript into a retyped CP limited to:
      CP 08
      CP 09
      CP 10
      CP 11
      CP 12
      CP 13
      CP 14
      CP 16
      CP 23
      CP 24
      CP 25
      CP 27
      CP 30
      CP 30A
      CP 45
      CP 49
      CP 51
      CP 711
      CP 712
      CP 713

  7. The NRPS Automated Local Control Selection Report shows the previous four weeks' selection percentages and the current cycle's selection percentage, based on the automated selection process.

NRPS Local Control File (LCF)

  1. Submission Processing Campuses can adjust the number of notices selected weekly by NRPS through the use of the Local Control File (LCF) produced by CC NRP97 on IDRS.

  2. The LCF can increase or decrease the number of notices selected for review. Additionally, the non-print indicator can be input on the LCF to suppress printing of NRPS Package/Control D when only a list is needed. Returns may be requested for the selected notices, if necessary.

    Note:

    Only the Math Error notice selection volumes can be decreased.

    1. NRPS will automatically delete a specific SSN or DLN request when selected or if it is not selected within six weeks of its LCF request. This prevents the file from getting unnecessarily large.

    2. Other types of requests remain on the LCF until action is taken to change or delete the request.

    3. Purge all TPNC requests, in Category F, from the LCF at the beginning of each year to ensure that the NRPS automated selection process is initiated.

  3. Use input screen information for instructions on how to use Substitute Keys 085-089 and 099 to identify local selections.

    Note:

    Use Substitute Key 085 to identify selection requests from other Submission Processing Campuses only.

  4. TPNC defect rates and selection percentages are computed by the NRPS system using data from OLNR NRPS 0030 Report. It is no longer necessary to manually set the percentages for TPNC selection. While the systemic selection can be overridden by manual input, this occurrence should be kept to a minimum and only under special circumstances (programming problem, etc.).

    Note:

    Manual input to the LCF will override the systemic calculation. The percentages in the LCF must be cleared to resume systemic calculation.

  5. See the chart below for defect rates and selection percentages. NRPS will select 100 percent for a particular TPNC until the year-to-date volume reviewed for that TPNC exceeds 50 notices.

    If the defect rate is... Then input... For a Selection Rate of...
    =0 or <6 percent 001 1 percent
    >6 and <7 percent 010 10 percent
    >7 and <8 percent 025 25 percent
    >8 and <10 percent 033 33 percent
    >10 and <12 percent 050 50 percent
    >12 and <14 percent 075 75 percent
    >14 percent% 100 100 percent

    Reminder:

    NRPS will stop selection based on TPNC when the threshold of 14,000 notices is reached, so that the remaining categories (Category G, Adjustment Notices and Category H, Condition Analysis) can be selected with the remaining 1,000. The remaining TPNC, partial DLN, and CP percentages requested via the LCF will not be selected. Selection limits should not be raised above the 14,000 mark, unless requested or approved by Headquarters. Refer to the chart in Item (4) of IRM 3.14.1.3.1, Notice Selection Process.

  6. A priority option causes 100 percent of the notices containing a specific TPNC to be selected without regard to normal exception processing, i.e., previous CARE review ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. This is limited to 40 TPNCs. Other options control the Exception Override of Selection Keys 028/029 and TPNC 100 Document Charge-outs.

  7. The computer processing used to access this capability resides in IDRS. Three programs are used to update and maintain the NRPS Local Control File database.

  8. Adjust the LCF using CC NRP97. This IDRS command code allows sites to add, change, and delete requests on the LCF. The weekly deadline for making changes is determined by the running of NRP98. NRP98 is run on Friday afternoon. After the records are processed on International Business Machine (IBM), NRP99 is run to create a new LCF. NRP99 is run on Friday 12:00 noon. Any data input on the LCF after NRP98 is run and before NRP99 is run is overwritten by NRP99. To ensure requests are processed, you can start input Monday and stop input at 12:00 noon before the running of NRP98.

Local Control File (LCF) Overview
  1. Monitor the TPNC Trend List to assist in estimating notice fallout, and to provide feedback to ERS.

  2. Review the NRPS Notice Disposition Reports to determine TPNC error rates.

    Note:

    Notices with an "E" disposition are not included when determining the defect/selection rate by NRPS.

  3. Review the latest NRP98/NRP99 Reports for:

    • Possible changes to selection criteria already on the LCF.

    • Possible re-entry of TINs and DLNs which are about to expire.

  4. Requests for notices by TIN will also include an optional entry of tax period. These requests will remain until the specific request is met or the user removes the request from the LCF.

  5. List the changes to be made to the LCF.

  6. Use CC NRP97 to input the changes to the LCF. See IRM 2.4.45, Command Code NRP97, for terminal input requirements of CC NRP97.

  7. When inputting LCF request to select notices by CP, sites can now indicate if the selection should bypass notices generated from MeF returns.

  8. Review the NRP98 report to check input data for accuracy. Correct any errors.

  9. The NRP 6130 report generates each week. This report lists every notice and transcript selected for review.

    Title Action Result
    Data Retention Requests are deleted from the LCF only under the following circumstances: Not Applicable
    Data Retention ERS DLN and Full DLN Automatically deleted when selected by NRPS or after six weeks if not selected
    Data Retention SSN with or without Tax Period Automatically deleted when selected by NRPS
    Data Retention All others Must be manually deleted
    Local Control File (LCF) Specifications The LCF uses the following Selection Keys: Must be manually changed through NRP 97.
    Selection Keys 090 — SSN Selection 094 — Full/Partial DLN Selection
    Selection Keys 091 — ERS DLN Selection 095 — Penalty Code Selection
    Selection Keys 092 — CP Number Selection 096 — Adjustment Reason Code Selection
    Selection Keys 093 — Balance Due Amount Selection nnn — TPNC Selection
    Substitute Keys The LCF uses keys 085, 086, 087, 088, 089, and 099 as Substitute Selection Keys that may only be used to replace Selection Keys 090 through 096. TPNC, Exception Override, and normal criteria selections cannot be selected under a Substitute Selection Key Not Applicable
    Substitute Keys

    Example:

    NRPS normally selects Penalty code 01 and 02 requests under Key 095. If Substitute Key 085 is input on the request screen for Penalty Code 02, these selections will be made under Key 085 instead

    Not Applicable

On-Line Notice Review (OLNR)

  1. The On-Line Notice Review (OLNR) System allows Tax Examiners to review notices, determine notice disposition, and retype notices on-line.

    1. Notices are reviewed "on-line" using a personal computer. However, OLNR does not change the procedures for reviewing notices established by the Notice Review Processing System (NRPS).

    2. Selected taxpayer notices are not printed until after the NRPS batches have been reviewed, and OLNR goes through its weekly "closeout" process (term used for end-of-cycle processing that controls notice printing). This allows the system to avoid printing notices that should be voided, and also allows full editing capabilities in case a notice needs correction prior to mailing.

    3. Notices that are not reviewed before cycle closeout will automatically default to the "NR" (Not Reviewed) disposition and are then converted to the "P" (Print) disposition. This default provides a more correct notice accuracy rate, since only notices that are reviewed in a given cycle are compiled into notice accuracy numbers for reporting.

  2. The OLNR System also eliminates much of the manual work involved in the clerical support and Tax Examiner processes.

    1. Each computer with the OLNR program can also support IDRS access, so tax accounts can be corrected, if necessary, at the time of review of the notice.

    2. IDRS access helps by reducing the inventory of monitored cases.

    3. IDRS access helps provide quicker assistance to the taxpayer.

    4. The Notice Disposition Report generates automatically, rather than requiring manual preparation by Clerical Support Staff.

  3. The OLNR System creates the weekly Notice Disposition Report.

    1. Entering the applicable disposition code tells the system how to process the notice.

    2. At the end of each cycle, the disposition codes are applied to the notice files on the mainframe computer. The notice data is updated prior to printing.

    3. After the cycle is "closed out" , the system uses the disposition code data to create the Notice Disposition Report.

OLNR Retype Enhancements

  1. The OLNR Retype Enhancement for IMF operates at all Campuses. The following are features/capabilities of the OLNR Retype Enhancement:

    1. Ability to correct entity on selected and associated notices excluding Spanish notices.

    2. Ability to correct data fields on most selected notices including Penalties and Interest.

    3. Ability to select and insert TPNCs using a drop-down list. Delete TPNCs. This list includes a free form TPNC 100 screen and several dozen OLNR specific TPNC 100s.

    4. Ability to add a label to selected, associated, and manual intervention notices.

    5. Ability to correct entity fields on manual intervention notices, or void them.

    6. Ability to correct entity on CAF copies of notices or void them (even if the primary notice is mailed).

    7. Ability to convert from one CP to another CP.

    Note:

    For information on how to utilize the OLNR System, refer to the OLNR User Guide and Notice Review Job Aid 2534-002.

OLNR Notice Conversions
  1. The OLNR system allows the user to convert from one CP Notice type to another, when adjustments to the account require a different type of notice.

  2. Almost all appropriate field values from the original notice will be transferred into the conversion notice, where they can then be adjusted by the examiner, if necessary.

  3. If any adjustment actions will be reflected in the converted notice, take appropriate action to prevent unnecessary adjustment notices.

  4. When converting to or from a Non-Compute notice CP 51, special instructions apply with respect to the Pay-By Date field of OLNR. Follow instructions in IRM 3.14.1.6.16, Reviewing Non-Compute Notices-CP 51A, CP 51B, and CP 51C.

Notice Disposition Program and Notice Disposition Report

  1. Once inside a cycle of work in OLNR, and a batch is selected, the Notice Disposition screen is loaded and appears on the screen. It contains all of the sequence numbers for the selected batch. As each case in the batch is reviewed, the user selects the disposition code for the desired notice action.

  2. The Notice Disposition Program sends the selected disposition codes to the mainframe, and the data is used to compile the Notice Disposition Report. The disposition code entered for each notice will determine how the notice will be handled by the back-end printing programs.

Notice Disposition Codes
  1. Description of the Notice Disposition Codes:

    1. Entity-Only Change ("E" or "EI" Disposition): These notices require an Entity only change.

    2. Hold Notices ("H" Disposition): These notices are held (awaiting additional information or a response from the taxpayer) for processing in a subsequent cycle.

    3. Label Notices ("L" or "LI" Disposition): Labels are added to the notice on-line.

    4. Print Notices ("P" or "PI" Disposition): This disposition results in the printing of the notice without any changes.

    5. Retype Notices ("R" or "RI" Disposition): Any needed changes/corrections are made directly on-line by the Tax Examiner.

      Note:

      For CP 67 Notice Recreate Transcripts, the "R" disposition is used solely for the purpose of converting the transcript into another notice.

    6. Voided Notices ("V" or "VI" Disposition): These notices are never printed.

Notice Disposition Code Table
  1. The table explains the result of selecting each disposition code. The Notice Disposition program includes the "I" for refunds that have been prevented by Notice Review from generating so that this data can be reflected in the Notice Disposition report.

    Disposition Code Action
    "E" This disposition is entered when only an entity change is required
    "EI" This disposition is entered when the situations in "E" above exist, and the refund is prevented from generating
    "H" This disposition will cause the notice to be held for processing in a subsequent cycle. It is only entered when the review of the notice cannot be completed in the current cycle
    "L" This disposition allows the notice to be printed with the insertion of the user-selected label(s)

    Note:

    Use

    Code "L" when the notice needs only a label added. If a notice requires additional changes other than a label, the "R" disposition should be used
    "LI" This disposition should be entered when the situations in "L" above exist, and the refund is prevented from generating
    "P" This disposition will cause the notice to be printed in its original condition. Code "P" is only used when the notice is correct
    "PI" This disposition is only entered when the notice is correct. It is printed, but the refund is prevented from generating
    "R" This disposition is used when the notice will be retyped. Code "R" should also be used when both an Entity change and a Label are needed
    "RI" This disposition is used when the notice will be retyped, and the refund is prevented from generating
    "V" This disposition will prevent the notice from being printed. It should be used when the notice is voided
    "VI" This disposition is used when the notice is voided, and the refund is prevented from generating

Notices Held Beyond Current Cycle
  1. Every effort must be made to review, correct, and select disposition of notices in the current cycle to minimize negative impact to the taxpayer.

    Note:

    Do not hold notices past cycle, contact headquarters for approval.

  2. In situations where a review of a specific notice cannot be completed before the end of the cycle, the notice should be held, and then released when the review can be completed.

  3. Input disposition code "H" to hold the notice for processing in a subsequent cycle. Examples that may cause the review of the notice to be delayed include:

    • Request for a voucher to validate a payment not found on Remittance Transaction Research (RTR) System

    • Request for documents from the taxpayer

    • Referring of a case to RIVO

  4. Notices should be worked as soon as the requested information or document(s) are received to minimize any further delay to the taxpayer and possible additional accrual of penalties and/or interest.

  5. Balance Due notices should not be held past the current cycle unless approved by headquarters. If a Balance Due notice is held beyond cycle, change the pay-by date to be consistent with the pay-by date of balance due notices generating in the cycle of the held notice's release. Recalculate the interest, penalties, and any other applicable fields. When inputting a disposition of “H” you must put a control status of “B” on the module and enter a STAUP for 8 weeks. When releasing the hold please keep in mind to reduce the STAUP to the appropriate number of weeks so that a 50X notice is mailed to the taxpayer in the appropriate timeframe.

  6. When an error is identified by quality review, they must have the notice corrected in the cycle it generated. The Tax Examiner is responsible to correct the OLNR application and issue a corrected notice in the cycle it generated in.

Notice Error File
  1. If a notice fails a validity check (OLNR Retypes), the notice is dropped from the back-end mainframe notice print processing and placed in the Notice Error File.

  2. The Notice Error File will contain information needed by Notice Review to manually retype the notice.

  3. The information will include:

    • A copy of the disposition record for the notice sequence number.

    • Retype data for the notice.

    • An additional record containing a brief description of the reason for rejection.

  4. The reports are sent via File Transfer Protocol (FTP) to the server and can be viewed and/or printed using Electronic Online Network System (EONS).

  5. The first line of the report contains the batch number, which should be used to locate the “quick print” of the original notice.

  6. Recreate the notice, by using the “quick print” and the retype data from the reports. Use the TC 971/AC264 method described in IRM 3.14.1.4.3.4, Notice Recreate Transcripts CP 67.

  7. Use normal procedures for reviewing the notice. Begin the review as soon as possible to minimize any further delay to the taxpayer and possible additional accrual of penalties and/or interest.

Special Reviews

  1. Special reviews include:

    • Manual Intervention — Non-Selected Notices

    • Manual Intervention — Selected Notices

    • Requests to Stop Notices from Other Areas

    • Cases Controlled for Researching the Taxpayer's Account

    • Notice Recreate Transcripts (CP 67)

Manual Intervention
  1. Perform manual intervention on selected and non-selected notices.

  2. Selected notices
    When reviewing each notice, determine whether the notice has a Manual Intervention Indicator. If it does, enter a disposition code that will account for the manual intervention.

  3. Non-selected notices

    Manual Intervention Notices will appear in batches in the 9000 (9xxx) series. For notices that are not selectable, a disposition code of "E" should be applied to the notice, if changes are made to any of the entity screens. Entity fields will be updated during the print process.

Manual Intervention List
  1. When certain conditions are present on a notice, it may require Manual Intervention before being printed. The Manual Intervention List is divided into four parts based on the MI Code. The following table describes the MI Codes:

    MI Code MI Code Description MI Code Explanation
    3 Blind Trust Taxpayer has a Blind Trust
    4 Service Center (Campus) Address Service Center ZIP Codes
    5 No Doc Code 47 or 54 Adjustment notice with a DLN document code other than 47 or 54
    6 ES Tax Payment Discrepancy Summary of payments listed at bottom of notice does not agree with Total ES Tax Payment(s) amount on the notice

  2. If the notice is also selected by NRPS, the Manual Intervention information will be on the Package Contents page of the NRPS Package/Control D. If a Manual Intervention condition is present, the Tax Examiner must resolve it during the review.

  3. If the notice is not selected by NRPS, the notice (and the Manual Intervention condition) appears on the Manual Intervention List, and in Batches on OLNR beginning in the 9000 series (9xxx).

    1. The list shows one line for each notice, sorted by notice sequence number.

    2. Maximum of 24 to a batch.

Blind Trust — Code 03
  1. Do not mail notices with a Blind Trust code to the taxpayer. Send them only to the taxpayer’s representative.

  2. Review notices to ensure representative’s address. If necessary, correct the address.

Submission Processing Campus as Addressee — Code 04
  1. This code indicates that the ZIP code (73301, 93888, 64999, 45999, 84201, and 19255) on the notice matches that of a Submission Processing Campus. Correct these notices.

    If a valid address is... And the SP Campus status is... Then...
    Available Any
    1. Select Disposition "E"

    2. Edit the correct address

    Note:

    The notice should be voided if ENMOD includes an Identity Theft (IDT) indicator (TC 971/AC501 AC504, AC505, and/or AC506)

    Not available 20, 56, or 58
    1. Use CC STAUPS to update the status to 51

    2. Void the notice

    Not available other than 20, 56, or 58 Void the notice

Adjustment Notices with a Doc Code Other Than 47 or 54 — Code 05
  1. In most cases, Adjustment Notices will have a DLN Doc Code of "54" or "47" . If the DLN has a different Doc Code, then the notice will appear on the Manual Intervention List with Code "05" .

  2. When working Code "05" cases, check for an existing MFT 31 account using CC IMFOLI. MFT 31 primarily involves Innocent Spouse accounts.

Estimated Tax Discrepancy (ES) Payment Balance Discrepancy — Code 06
  1. If the sum of the payments shown on an Estimated Tax (ES) Discrepancy notice does not match the Total ES Payment amount on the notice, the notice will appear on the Manual Intervention List with Code "06" .

  2. Retype the notice to show the correct payments and Total ES Payment amount. Add any missing original payments that correspond to the dishonored check.

    Caution:

    Do not remove Dishonored Check(s) from the notice, even if it is the only reason the ES discrepancy exists. The taxpayer needs to know why the ES discrepancy exists, and to which dishonored check any Bad Check Penalty (TC 280/286) is being applied.

Researching the Taxpayer's Account
  1. When researching a taxpayer's account that cannot be resolved during the review process, prepare adequate case documentation to allow resolution as quickly as possible upon completion of research.

  2. Since the NRPS Package/Control D only stays available for 30 days, documentation should include any data from NRPS that will not be available on IDRS. Establish a control base on IDRS immediately and if necessary, input CC STAUPS.

  3. Input disposition code "P" if the notice can be printed while the research is being completed.

  4. Input disposition code "H" if the notice cannot be printed until the research is completed.

Notice Recreate Transcripts CP 67
  1. There are some situations which require a notice to be built or recreated:

    • A notice record contains bad data which prevents it from properly passing through the OLNR system.

    • A notice was voided in error, when it should have been released in cycle.

    • An incorrect notice was released, and a corrected notice must be sent in its place, with the apology label inserted. See IRM 3.14.1.7.8.5.15, Label 13

    • A notice may be needed when there is no other notice or transcript generating in the system.

  2. When a notice record contains bad data as described in Item (1) above, the notice record gets "dumped" , and the Headquarters Analyst contacts the affected site to have the notice recreated.

  3. Use the following instructions to generate the CP 67 Notice Recreate Transcript.

    Note:

    If creating a balance due notice from the CP 67, input CC STAUPS for six cycles.

    1. Input CC REQ77

    2. Input 971 in the "TC-FIELD" of the FRM77 response screen.

    3. Enter the Return Received Date from the "RET-REVD-DT" field of TXMOD in the "TRANS-DT>" field.

    4. In the "TC 971–CD>" field, enter Action Code (AC) 264.

    5. In the "Remarks" field, enter "CP 67 to CP xx" .

      Reminder:

      Retain the taxpayer information for use in locating the correct transcript in the "000000" batch.

      Caution:

      Be sure to set a calendar reminder as to when the CP 67 will post. If the CP 67 cycle closes out without the transcript being converted to a notice, the transcript data will be lost and another TC 971 must be input to start the process over.

  4. When the TC 971/AC264 posts, a CP 67 Notice Recreate Transcript will generate.

  5. All CP 67 transcripts appear in the batch numbered with all zeroes (000000) for any given cycle and are considered Manual Intervention cases.

  6. The CP 67 must be converted to another notice prior to cycle closeout. If the transcript is not converted to a notice prior to cycle closeout, the opportunity is lost and another TC 971/AC264 must be input to create another CP 67.

  7. Create the new notice by selecting the "R" disposition in OLNR, and when the entity data appears use the "Change" button feature for Notice Type to change the CP 67 to the desired CP.

  8. Be careful to include all necessary items, such as TPNC(s), Label(s), Pay-by date, etc. Double check the Entity tab information for accuracy. Be careful to include Name, DLN, and Filing Status information.

  9. AMS will systemically generate a TC 971/AC264 upon selection of the Suspense Action "Convert Transcript to Notice" . The notice will be in the OLNR inventory in the next cycle.

Clerical Support Procedures

  1. This section provides procedures for the Clerical Support staff within the Notice Review Function.

  2. The Clerical Support staff provides a variety of services critical to the NRPS and AMS processes. These services assist Notice Review Tax Examiners (and other customers) in providing accurate information to the taxpayer. The Clerical Support staff:

    1. Associates tax returns needed to review selected notices.

    2. Distributes NRPS Package/Control D and related documents.

    3. Corrects erroneous, misprinted, and undeliverable notices.

    4. Maintains records on taxpayer notices.

    5. Enters Priority Refund Transcript closing or suspense actions when AMS has been down for 4 hours or more and Tax Examiners have been instructed to work Priority Refund Transcript inventory manually.

Clerical Priorities

  1. This subsection provides instructions on prioritizing duties performed by the Clerical Support staff. These include:

    1. Inputting Priority Refund Transcript closing or suspense actions into the AMS system (when AMS has been down for 4 hours or more). See IRM 3.14.1.5.1.1, Inputting Priority Refund Transcript Closing or Suspense Actions .

    2. Associating tax returns and other documents from Files. See IRM 3.14.1.5.1.2., Associating Documents from Files

    3. Establishing priority of review. See IRM 3.14.1.5.1.3, Establishing Priority of Review

Inputting Priority Refund Transcript Closing or Suspense Actions
  1. In the event AMS is down for 4 hours or more, Tax Examiners will manually work the Priority Refund Transcripts using a listing available on Control D. TEs will indicate the manual action they performed on IDRS for each case on the NR Manual Action Sheet.

  2. Clerks will use the NR Manual Action Sheet to search for the correct refund transcript. Searches can be executed on the TIN, Transcript Type, Dollar Amount Range, or date to locate the correct case.

  3. Clerks should ensure each case is assigned to the correct Tax Examiner and the closing or suspense actions are input accurately in order to remove each case from the AMS unassigned queue.

Associating Documents from Files
  1. Document Charge-outs and a Batch Return Request List generate weekly. Note the following:

    1. The Files Function uses these forms to pull returns needed to review notices. Returns are routed in batch order (per the Batch Return Request List) to the Notice Review Function.

      Note:

      TPNC 100 returns should be received from your local ERS operation and not requested through Files.

      Caution:

      Only request returns through Files when necessary.

    2. The Clerical Support staff associates the Batch Return Request List and the attached returns with the corresponding NRPS batch sheets.

  2. Route the NRPS batch sheets that do not need documents directly to the Tax Examiners.

  3. Associate all necessary documents (adjustment documents and tax returns) with each batch before releasing to the Tax Examiners.

Establishing Priority of Review
  1. Error Resolution System (ERS) may request the Notice Review Function to select and correct a specific notice:

    1. ERS Tax Examiners must prepare Form 3465, Adjustment Request, and send it with the return to the Notice Review Function.

    2. Use LCF Key 091 to select the notice for review by DLN. Use full DLN for high priority review, and partial DLN for low priority review.

    3. The Clerical Support staff must associate the return and Form 3465 with the NRPS batch and release the case to the Tax Examiner.

  2. The Clerical Support staff must distribute the work in this order or directed by headquarters.

    1. Selected Overpayment Notices — Tax Examiners must complete review prior to the predetermined cutoff for TC 570 (CP Notice hold TC 570 with blocking series "55555" and a credit balance), which is 6:00 P.M. (local time) each Wednesday. If the cut-off time for TC 570 is missed, use NOREFP until 10 P.M. (eastern time) on Thursday. Consider prior cycle error rates of individual CP Notices and selection keys to ensure that the greatest number of incorrect refunds are prevented from generating.

Notice Corrections
  1. Work 100 percent of the Manual Intervention notices (some may be assigned to the Clerical Support Staff), using OLNR, prior to the cycle closeout.

  2. Manual Intervention (MI) notices will be contained in OLNR mainly under batch numbers in the 9000-series (9xxx).

    Exception:

    The CP 67 Notice Recreate Transcript will be contained in Batch "000000" .

  3. Notices received after the notice date should be corrected as they are received. These include:

    • Undeliverable Notices

    • Torn/Mutilated Notices

    • Reporting Agents Files (RAF) Notices received back from the print sites as incomplete/unaddressed.

Printing of Notices — Correspondence Production Services (CPS East and CPS West)
  1. With the delivery of the OLNR Retype Enhancement, the need to route notices back to the Notice Review Function is eliminated. Notices that require printing and mailing will generate and be mailed from one of the Correspondence Production Services (CPS) sites.

Primary Notice Review Procedures

  1. This section provides procedures for Tax Examiners within the Notice Review Function.

General Review Procedures

  1. Notice Review must verify certain types of information common to all returns to ensure the accuracy of each notice. Compare IDRS, CP Notice data, along with the information contained in the NRPS Package/Control D, against the information on the return, being mindful of any transcription errors or misplaced entries. If the return is unavailable use IDRS, Control D, and other available tools to verify the accuracy of the notice data.

  2. The following instructions attempt to address the situations that are most frequently encountered when reviewing notices. These instructions cannot address every possible issue; use in conjunction with all of the information contained in this IRM.

  3. In addition to completing the following General Review Procedures, continue with the necessary subsections as appropriate:

    • Reviewing Math Error Notices — CP 10, CP 11, CP 12, CP 13, and CP 16 — See IRM 3.14.1.6.12.

    • Earned Income Credit (EIC) — See IRM 3.14.1.6.12.4.

    • Reviewing Estimated Tax (ES) Discrepancy Notices — CP 23, CP 24, and CP 25 — See IRM 3.14.1.6.13.

    • Reviewing Priority Refund Transcripts in Account Management Services (AMS) — See IRM 3.14.1.6.14.

    • Reviewing Non-Math Error Balance Due Notices – CP 14IRM 3.14.1.6.15.

    • Reviewing Non-Compute Notices — CP 51A, CP 51B, and CP 51C — See IRM 3.14.1.6.16.

    • Reviewing Notice and Demand IRC Section 965 notices - CP 47A, CP 47B, and CP 47C Notices - See IRM 3.14.1.6.9.16.2

    • Reviewing IRC Section 965 Notice- CP 56 Annual Installment Notice- See IRM 3.14.1.6.9.16.3

    • Reviewing Notices with Specific Selection Keys — See IRM 3.14.1.6.17.

  4. To prevent a refund from generating, see IRM 3.14.1.7.1.1, Refund Intercepts

  5. For Taxpayer Notice Code (TPNC) lists and descriptions, refer to IRM 3.14.1.8, Taxpayer Notice Codes Document 6209, IRS Processing Codes and Information, Section 9, and IRM 3.12.3, Individual Income Tax Returns – Error Resolution System (ERS) to 3.12.3-2 Taxpayer Notice Codes .

  6. All related tax modules associated with the notice module as well as any associated notices must be reviewed and resolved, as applicable, with the resolution of the notice issue. Only one count will be allowed when associated notices and or modules have to be resolved in conjunction with the notice module.

Verifying Return Information
  1. Verify the following items for each selected notice:

    • Social Security Number (SSN)

    • Individual Taxpayer Identification Number (ITIN)

      Note:

      The SSN or ITIN may be in full form or shortened on the notice

    • Document Locator Number (DLN)

    • Name and address

      Note:

      If a name control has been edited in red, use as the name control for the ITIN or Internal Revenue Service Number (IRSN).

    • Return received date

    • Check for Statute Stamp if applicable

    • Tax Period

    • Signature(s)

    • Adjusted Gross Income (compare original and corrected amounts)

    • Taxable Income (compare original and corrected amounts)

    • Tax (compare original and corrected amounts )

    • Offsets (including TOPS, Credit Elect, and Lump Sum)

    • Dishonored payments and bad check penalties

    • Discovered remittance

    • Contributions to reduce the public debt

    • $10,000,000 (ten million) refunds

    • Pending transactions

    • Taxpayer correspondence

    • Frivolous Claims

    • Slipped blocks and mixed data blocks

    • Community property split

    • Injured spouse claim

    • Decedent accounts

    • Return Processable Date (RPD) if required

    • Protecting Americans from Tax Hikes

Protecting Americans from Tax Hikes
  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 TIN assigned by return due date or due date as extended. The PATH Act applies to:

    • Child Tax Credit

    • Additional Child Tax Credit

    • American Opportunity Credit (AOTC) -both refundable and non-refundable

    • Earned Income Credit

  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.

    Note:

    See IRM 3.14.1.6.12.6.11, Expired ITIN Math Errors

Social Security Numbers (SSNs)
  1. The Social Security Administration (SSA) assigns all SSNs. ECC-MTB verifies taxpayer SSNs against SSA records to identify invalid situations. Master File identifies an invalid SSN with a trailing asterisk (*). If the asterisk appears after the SSN on a notice, it indicates that the SSN has already been identified as invalid.

    Example:

    123–32–1321* is an invalid SSN.

  2. For tax years, 1996 thru 2018 the secondary taxpayer must have a valid TIN in order to qualify for a personal exemption. By law, taxpayers are not required to update their name with SSA; therefore, some exceptions exist when an invalid TIN is allowed for purposes of claiming a personal exemption, etc. If the taxpayer is using the SSN issued to them by SSA (or ITIN issued by the IRS), but their last name now differs because of marriage, allow the personal exemption. In these cases, ERS will input Return Processing Code (RPC) E and a new name control will be established as a valid IRS name control on the account.

  3. Master File takes the following actions on accounts having invalid SSNs unless the SSN is an ITIN:

    • Master File issues a CP 54. If review of the account determines that the invalid condition can be corrected, void the CP 54.

    • Master File freezes overpaid accounts when the TC 150 posts. See IRM 3.14.1.6.11.11, Restricted Credit Interest Freeze (I–).

  4. Compare the SSN on the notice to the SSN on the return. When a taxpayer has data for both a valid and an invalid SSN and the only difference is the name control, determine if the difference was caused by a processing error, such as a transposed first and last name or a misspelled last name. If so, do the following:

    If a tax return... Then...
    Has posted to either the valid or the invalid SSN, but not to both
    1. Use CC ENMOD/ENREQ to input a name change on the invalid SSN

    2. Input CC STAUPS for eight cycles if the account has a balance due

      Note:

      The accounts will resequence and merge. It is not necessary to move payments on the account

    3. Void or retype notice as appropriate

    Caution:

    Take action to prevent subsequent notices as appropriate

    Has posted on both the valid and the invalid SSNs Do not merge the accounts or make a name change
    1. Recharge (ESTABDT) and route the case to Accounts Management for resolution

    2. Input CC STAUPS for eight cycles if the account has a balance due

    3. Input TC 570 or CC NOREFP per guidelines in IRM 3.14.1.7.1.1, Refund Intercepts, if account is refunding

    4. Void the notice

  5. When reviewing a balance due notice generated by a joint return, check for payments on the invalid portion of the secondary taxpayer’s SSN. If payments are on the invalid secondary SSN, transfer them to the primary SSN where the joint return posted.

    Exception:

    If both the valid and invalid accounts show duplicate posted returns, send the case to Accounts Management for resolution.

  6. In all other situations involving invalid SSNs, review all attachments to the return, looking for evidence of a correct SSN. Use CC INOLE and CC NAMES to check for other SSNs, or a pending name change.

    If... And... Then...
    The correct SSN can be verified and the account resolved A new SSA name control is present on CC INOLE(T)
    (See Note following this table)
    1. Void all notices to the taxpayer

    2. Prevent the refund from generating

    3. Input CC STAUPS for eight cycles if the account has a balance due

    4. See IRM 3.14.1.6.22 , Reprocessing Returns

    If there is an invalid SSN condition A new SSA name control is present on CC INOLE(T)
    (See Note following this table)
    1. Void the CP 54

    2. Do not transfer credits from the valid to the invalid account. Input CC STAUPS for eight cycles to allow the quarterly SSA update to merge the accounts. Quarterly updates will occur in cycles 5, 16, 31, and 44

    3. If a credit transfer from or an adjustment to the account is necessary and the transaction will post during a quarterly SSA update cycle, use a posting delay code so the transaction will post after the update to avoid an Unpostable

    If the invalid SSN condition cannot be resolved, but an adjustment or credit transfer is required. A new SSA name control is not present on CC INOLE(T)
    (See Note following this table)
    1. Use Hold Code "4" on an adjustment to prevent any credit from refunding

    2. Input a TC 570 (Doc Code 24 or 48) or a Credit Freeze Code "1" (Doc 34) on the credit side of any transfer into the account. Make sure that any refund remains frozen until the taxpayer responds to the CP 54

    3. Input a TC 570 on the debit side of any Doc Code 24 or 48 when transferring credits out of the account

    Note:

    Do not use Doc Code 34 to transfer a payment out. There is no way to freeze the debit side of the transfer

    Note:

    On a weekly basis, tapes containing name control updates are received from the SSA. On a quarterly basis, the updated accounts are merged.

Individual Taxpayer Identification Number (ITIN)
  1. The IRS requires that all foreign and domestic taxpayers provide a valid identification number. This number can be either a valid social security number (SSN) or an Individual Taxpayer Identification number (ITIN).

  2. ITINs are issued to individuals who are required to have a U.S. Taxpayer Identification Number, but neither have nor are eligible to obtain a SSN.

  3. ITINs are valid only for tax purposes and are obtained by completing Form W-7, Application for IRS Individual Taxpayer Identification Number.

    Note:

    If Form W-7 is attached to the return see IRM 3.14.1.6.9.1, Taxpayer Correspondence.

  4. ITINs can be identified by a "9" as the first number and a range of "50 - 99" for the 4th and 5th numbers.

    Exception:

    4th and 5th numbers 66-69,89, and 93 are not ITINs.

    Note:

    ATINs also begin with "9" as the first number; however, the 4th and 5th digits will be "93" .

  5. Compare the ITIN on the notice to the ITIN on the return. When a taxpayer has data for both a valid and an invalid ITIN and the only difference is the name control, determine if the difference was caused by a processing error, such as a transposed first and last name or a misspelled last name. If so, do the following:

    If a tax return... Then...
    Has posted to either the valid or the invalid ITIN, but not to both
    1. Use CC ENMOD/ENREQ to input a name change on the invalid ITIN

    2. Input CC STAUPS for eight cycles if the account has a balance due

      Note:

      The accounts will resequence and merge. It is not necessary to move payments on the account

    3. Void or retype notice as appropriate

    Caution:

    Take action to prevent subsequent notices as appropriate

    Has posted on both the valid and the invalid ITINs Do not merge the accounts or make a name change
    1. Recharge (ESTABDT if a paper return) and route the case to Accounts Management for resolution

    2. Input CC STAUPS for eight cycles if the account has a balance due

    3. Input TC 570 or CC NOREFP per guidelines in IRM 3.14.1.7.1.1, Refund Intercepts, if account is refunding

    4. Void the notice

  6. When reviewing a balance due notice generated by a joint return, check for payments on the invalid portion of the secondary taxpayer’s ITIN. If payments are on the invalid secondary ITIN, transfer them to the primary ITIN where the joint return posted.

    If... And... Then...
    The correct ITIN can be verified and the account resolved Not Applicable
    1. Void all notices to the taxpayer

    2. Prevent the refund from generating

    3. Input CC STAUPS for eight cycles if the account has a balance due

    4. See IRM 3.14.1.6.22 , Reprocessing Returns

    The invalid ITIN condition cannot be resolved, but an adjustment or credit transfer is required A new ITIN name control is present on CC INOLE(T)
    1. Void the CP 54

    2. Do not transfer credits from the valid to the invalid account. Input CC STAUPS for eight cycles.

    The invalid ITIN condition cannot be resolved, but an adjustment or credit transfer is required A new ITIN name control is not present on CC INOLE(T)
    1. Use Hold Code "4" on an adjustment to prevent any credit from refunding

    2. Input a TC 570 (Doc Code 24 or 48) or a Credit Freeze Code "1" (Doc 34) on the credit side of any transfer into the account. Make sure that any refund remains frozen until the taxpayer responds to the CP 54

    3. Input a TC 570 on the debit side of any Doc Code 24 or 48 when transferring credits out of the account

    Note:

    Do not use Doc Code 34 to transfer a payment out. There is no way to freeze the debit side of the transfer

    Exception:

    If both the valid and invalid accounts show duplicate posted returns, send the case to Accounts Management for resolution.

Internal Revenue Service Number (IRSN)
  1. An IRSN (Internal Revenue Service Number) is a number assigned by the IRS and is used in place of a required TIN during processing.

  2. An IRSN is used only as an internal identifying number or until the taxpayer is assigned a SSN or ITIN, or until their SSN or ITIN is located.

  3. All IRSNs begin with the number “9”. The fourth and fifth digits of the IRSN typically signify what campus assigns the IRSN.
    Example: 9nn-18-nnnn, assigned by the Austin Campus.

  4. Taxpayers with an ATIN/ITIN or IRSN are ineligible for EIC. If a taxpayer is not valid on Master File (first time filing, changes in marital status) but has a valid SSN with the Social Security Administration, he/she may claim EIC.

  5. If the taxpayer is claiming EIC with an ITIN, invalid SSN, or IRSN, thoroughly research the taxpayer’s account using CC IRPTR with Definer L and CCs INOLE, NAMES, and NAMEI.

  6. If the taxpayer is claiming EIC and personal exemptions and you cannot determine a valid number on an:

    • Erroneous SSN - Remove EIC and Personal Exemption

    • IRSN- Remove EIC and /or Personal Exemption

    • ITIN - Remove EIC

Document Locator Number (DLN)
  1. Always verify the DLN on the Quick Print copy of the notice or NRPS Package/Control D against the DLN on the return, to ensure the correct document is being reviewed.

  2. Use the posted return data, selected vouchers, and pending transactions available in the NRPS Package/Control D to determine whether the refund is questionable. If the return is unavailable, then determine whether the refund should be prevented from generating.

  3. Only prevent the refund from generating when needed.

  4. When you need the return to complete the research and after a second request has been made, inform the lead, who will investigate the reason for unavailability, and possibly locate the return.

  5. Management should identify and coordinate with problem area(s) so that corrective action can be taken as quickly as possible.

Verifying and Correcting Name Information
  1. Verify the name on the notice against the entity information on the return or CC INOLE and CC IMFOLE.

    Note:

    Before preventing a refund from generating for a name correction, determine if the taxpayer will be able to cash the check (non-critical entity adjustment). If the check can be cashed, allow the refund and input the entity change on OLNR. See IRM 3.14.1.6.1.1.8 , NRPS Automated Entity Updating

    Caution:

    If the taxpayer will not be able to cash the refund (critical entity adjustment), prevent the refund from generating. See IRM 3.14.1.7.5, Entity Adjustments.

    If... Then...
    The name on the return is illegible Determine the correct name by checking the signature, the Form W-2 documents, the return envelope, and any other attachments
    The name on the notice is different (this also applies to the secondary name of a joint entity)
    1. If the name is different, misspelled or contains a typographical error, but is obviously the same taxpayer, correct the name in OLNR

    2. If the spouse's last name changed due to marriage, and the spouse signs the return with their married name, correct the name in OLNR

      Exception:

      Do not change the last name of the spouse unless they sign the return with their married name (or if the signature is illegible)

      Note:

      Although this may create an invalid spouse SSN condition for the subsequent year (if the spouse has not yet updated their name with Social Security Administration [SSA]), ERS can force the SSN through the system by assigning Return Processing Code (RPC) "E" to the next return

    3. If the name is obviously not the same taxpayer, check the SSN with CC INOLE and CC NAMES to determine the correct Master File name (a reprocess may be necessary if a taxpayer has used an incorrect SSN)

    4. Update the second name line as needed. Do not change or add second name lines unless you have the original signed return

    The name on the return contains a name suffix (e.g., Jr., II, III, etc.)
    • Correct name suffixes on the notice entity if they are incorrect or missing

    • Do not prevent refund from generating for a missing name suffix

    The name on either the return or the notice contains a middle initial
    • Correct the middle initial if it is incorrect on the notice.

    • Add the middle initial if already changing or correcting the entity for another purpose

    The return entity shows a deceased taxpayer, an "in-care-of" person, or a guardian Add a second name line, if possible
    The return is for a minor and a parent or legal guardian signs the return
    1. Add "minor" to the taxpayer’s name
      For example: John]Doe]Minor

    2. Add the parent’s or legal guardian's name as a second name line

    3. It is acceptable to remove the word "minor" from a child's entity if they are at least 18 years of age

    Note:

    A parent’s or legal guardian's signature is valid on a minor taxpayer’s return

    Two signatures appear on the return Verify that the entity reflects both names, unless the filing status is Married Filing Separately (FS3)

    Note:

    When the Joint Name Line is present in OLNR, it may appear that a notice on a joint account is being mailed to a single taxpayer. However, this is a Dual Notice condition, and each spouse will receive their own copy with identical information. An entity change is not necessary

  2. Reducing the length of taxpayer name
    Name and Address fields are limited to 35 characters each. If the name line is more than 35 characters, modify it in the order shown in the list below, proceeding to the next item (if necessary) until the taxpayer’s name(s) can fit on the name line:

    How to reduce length of taxpayer(s) name
    1. Use initials only for middle or second name

    2. Delete middle initial of secondary taxpayer

    3. Delete middle initial of primary taxpayer

    4. Use initials only for secondary taxpayer's first name

    5. Use initials only for primary taxpayer's first name

    6. Use initials only for primary and secondary taxpayers' first name(s), if their last name(s) exceed the 35 character/space limit

    Note:

    Do not intentionally shorten taxpayer name(s) if they fit within the 35 character space constraint

  3. Inputting Name Changes

    Tax Return Input format for joint filers
    John Doe Mary Doe John & Mary]Doe
    John Doe Mary Beagle John]Doe]& Mary Beagle
    John Doe Mary Beagle-Doe John]Doe]& Mary Beagle-Doe
    John D Doe Mary Ann Beagle-Doe John D]Doe]& Mary Ann Beagle-Doe
    John D Doe III MaryAnn L Beagle John D]Doe]III & MaryAnn L Beagle
    John A Doe DECD John A]Doe]DECD
    John A DECD & Jane B Doe John A DECD & Jane B]Doe
    John D Doe III & Mary Doe John D III & Mary]Doe
    John A Doe Jr DECD Mary Beagle John A]Doe]Jr DECD & Mary Beagle
    John DECD & Mary DECD Doe John DECD & Mary DECD]Doe
    John DECD Doe & Mary Beagle DECD John DECD]Doe]& Mary Beagle DECD

    Note:

    The bracket "]" indicates the information after or between the brackets is the controlling surname. Additional spaces must not be input immediately before or after the bracket.

  4. Entity Changes and OLNR disposition

    1. If only a name and/or an address needs to be corrected on the notice, update the entity by using the "E" or "EI" disposition.

    2. If other changes in addition to entity are also required on the notice (such as amounts, labels or TPNCs), use the "R" or "RI" disposition.

Verifying and Correcting Address Information
  1. Verify the address on the notice against the address on the tax return. Always correct the address on the notice. Use the return information provided by the taxpayer, but do not apply any information that is obviously incorrect. Refer to the lead if in doubt about any part of an address.

    Note:

    When making any change to the address in CC ENMOD/ENREQ, all elements of the address must be input (e.g., street address, city, state, and ZIP Code), even if the change is minor.

    If the address... Then...
    On the return is illegible Check the return and all attachments for a legible address
    On the return is from an IRS label, and is different than the address on the notice The taxpayer essentially agrees that the label information is accurate by signing the return. Check CC ENMOD for any pending or recent address changes. Change the address to match the label, but bypass any obvious errors that may appear on it
    On the notice is different, Use the USPS ZIP code directory to verify the ZIP code, the spelling of the street, city, post office box, and state. Correct the address on the notice to reflect the ZIP Code directory information. Prevent refund from generating, if needed. If internet access is available, use the post office website Zip Code Lookup http://zip4.usps.com/zip4/welcome.jsp
    On the notice is printed with LOCAL Check CC ENMOD for any pending or recent address changes. Check CC FINDS/FINDE for current taxpayer address information. If no current information can be found, then verify the zip code using the United States Postal Service (USPS) web-site and change the address to GENERAL DELIVERY and print the notice.
    On the notice contains an inconsistent, misspelled address or missing street suffix Use the USPS ZIP code directory to verify the street suffix, then correct the entity in OLNR.
    Contains an Apartment, Building, Floor, Room, or Suite, etc. Correct or add these "secondary street indicators" if they are missing or incorrect.

    Reminder:

    If needed, prevent the refund from generating, if the check may be returned undeliverable as a result of a missing secondary street indicator.

    Contains a directional indicator in the street or city Make sure these "directional indicators" (e.g., N, NE, NW, E, S, SE, SW, W, etc.) are in the proper location. Typically, if a street name is a direction, it will be spelled out (e.g., West St., Northwest Blvd.). The directional indicators are almost always abbreviations (e.g., West St S, or S West St, E Chicago)
    Contains a street and a post office box address Verify the address on the tax return. You may use either a street or post office box address, but not both on the same line,

  2. In addition to following the chart above, change the address if:

    1. Signed correspondence from the taxpayer has the old address lined through and a new address written in its place.

    2. A CPA, attorney, or another authorized individual requests an address change, provided CC CFINK indicates that IRS has a Power of Attorney on file for that individual.

    3. Form 3870, Request for Adjustment, is attached to the document and shows a new address. This form is used by Area Offices to request account adjustments and indicates that there has been personal contact with the taxpayer.

    4. The return has a notation written on it, or has a response to previous correspondence attached, and we are accepting the information as coming from the taxpayer, even if it is not signed.

    5. The taxpayer has filed a Form 8822, Change of Address.

  3. Never change an address to an "in care of" unless the taxpayer or an authorized representative signed the request.

  4. Never change an address if a photocopy of an address change request does not contain an original signature.

  5. The return envelope should not be used to correct an address unless it is the same as the return and is used only to verify an illegible address from the return.

  6. Entity Changes and OLNR disposition:

    1. If only a name and/or an address needs to be corrected on the notice, update the entity by using the "E" or "EI" disposition.

    2. If other changes in addition to entity are also required on the notice (such as amounts, labels or TPNCs), use the "R" or "RI" disposition.

NRPS Automated Entity Updating
  1. NRPS creates an Entity Update File (NRP 8250) for most IMF entity changes. Changes made to the notice entity will automatically update CC ENMOD with a TC013 or TC014.

  2. NRPS cannot create entity update records under all conditions. In the following situations, the Tax Examiner must always use IDRS to update CC ENMOD, in addition to changing the entity data in OLNR:

    1. All overpaid notices requiring a critical entity change must be corrected on both CC ENMOD/ENREQ and OLNR. See IRM 3.14.1.7.5, Entity Adjustments

    2. When a notice carries a SPACK/Spouse copy (identified by the presence of the "Joint Name Line" field on OLNR). This applies to any change to the name line and/or address lines.

    3. When no notice is going to the taxpayer, but an entity change is still necessary the OLNR entity does not need to be updated.

      Example:

      When an entity correction is necessary for a voided notice.

Return Received Date
  1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Any return received ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ after the RDD should have the envelope attached and will carry the stamped "IRS Received Date" as the return received date unless the postmark date is on or before the RDD (as extended).

    Exception:

    A late filed return that was overlooked in processing may not be stamped. An incorrect received date will affect penalty and interest computations. See (3) below.

    If the postmark date is... Then the return received date is...
    On or before the RDD and a postmark was made by the USPS or a designated private delivery service under Internal Revenue Code (IRC) Section 7502(f) The RDD regardless of when the return was received
    After the RDD The IRS Received Date

  2. The return received date can be found on TXMOD in the RET-RCVD-DT field or in the NRPS Package/Control D DUE/RCVD DATE field.

  3. If there is a question about the received date, determine the correct received date in the following priority:

    1. Latest postmark date on envelope (United States Postal Service or designated private delivery service).

    2. Date the taxpayer signed the return (only if current year date).

    3. Julian date of the return DLN minus ten days.

      Exception:

      If the taxpayer has attached a note or explanation that the return is late because of rejection of a timely filed electronic return, the RDD will be used.

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

  4. Adjust all interest and penalties as appropriate. Refer to IRM 3.14.1.6.21.1, Recomputations of Penalties and Interest — General.

  5. Verify the correct received date is used. If it is incorrect, prevent the systemic refund from generating> Issue a Manual Refund with recomputed credit interest, (TC 770 for .00 if the refund date is within the 45/180-day interest free period), and put the Return Processable Date (RPD) on the account with the correct received date. See IRM 3.14.1.6.6 Manual Refunds

Tax Period
  1. There are three types of returns:

    1. Calendar Year — These are for a consecutive 12- month period ending on December 31. The tax period for this type of return is in the format CCYY12.

    2. Fiscal Year — These are for a consecutive 12 month period ending on the last day of a month other than December.

      Example:

      A return with a tax period ending January 31, 2013, has a tax period of 201301.

    3. Short Year — These are for a consecutive period of fewer than 12 months.

  2. Compare the year on the tax return against the tax period on the notice or the NRPS Package/Control D Contents Page.

    1. Look for cross-outs and changes to the tax period portion of the return.

      Note:

      Taxpayers often use current year tax forms to file prior year returns.

    2. Fiscal year returns are indicated at the top of the tax return.

    3. If the return is posted to the wrong tax period, reprocess the return to the correct tax period. Refer to IRM 3.14.1.6.22, Reprocessing Returns.

Signatures
  1. Tax returns are legal documents. All returns must have a signature(s). Accept any original signatures that are signed according to the return’s filing status.

    Example:

    A joint return (FS2) requires two signatures.

    1. Returns signed with an "X" require the signatures of two witnesses. Correspond if the witness signatures are missing. Send Letter 12C and include selective paragraphs i and Declaration paragraph "q" , to provide signature lines for the witnesses.

    2. Never accept photocopied signatures as valid original signatures for the tax return.

      Exception:

      Do not correspond if return states Correspondence Imaging System (CIS).

    3. If a person other than the taxpayer has signed the return, check CC CFINK to ensure that the taxpayer has a power of attorney on file for the signer. If no information is available and documentation is not included with the return, prevent the refund from generating and correspond for the necessary information.

  2. Electronic Filing (ELF) documents are signed either via Form 8453, or electronically. It is not necessary to correspond for signatures on an MeF processed return.

  3. If one or more signatures are missing on an overpaid account, analyze the return to determine if the taxpayer replied to previous correspondence from Code and Edit or ERS.

    Exception:

    If the entire refund is offsetting or refund cannot be prevented from generating, do not correspond for signature, and do not hold the case in inventory.

    If... Then...
    The signed reply is attached to the return Review the case as if the original return was signed
    There was no previous correspondence
    1. Prevent the refund from generating and correspond for the missing signature(s)

    2. Print or Retype the notice. Verify and edit, if necessary, the Refund Release indicator (RRI) on the notice (RRI 1= No Refund, and RRI 3= Statute Expired)

    3. Follow IRM 3.14.1.7.4, Taxpayer Correspondence/Reply Procedures

    4. Open a control base under the activity WAIT4SIGN,

    There was previous correspondence, but no reply
    1. Computer Condition Code (CCC) 3 should have been edited on the return to generate a –R freeze (TC 570) to hold the overpayment. These cases will be worked as transcripts in Accounts Management (AM)

    2. If a –R freeze (TC 570) is not on the module then prevent the refund from generating using guidelines in IRM 3.14.1.7.1.1, Refund Intercepts and input a 290 for .00 Hold Code 4 to set a –K freeze

    3. Print the notice

    A taxpayer response is received after 45 days, and the control base is closed
    1. Complete Form 3465, Adjustment Request, indicating that the Return Processable Date needs to be updated

    2. Route Form 3465 and the response to Accounts Management

    3. Follow IRM 3.14.1.7.4, Taxpayer Correspondence/Reply Procedures

  4. If the return is a balance due, it is not necessary to secure the signature, unless a subsequent adjustment is necessary, which will result in the account becoming overpaid. If this occurs:

    1. Use Hold Code "4" on the adjustment to set a –K freeze.

    2. Retype the notice as appropriate and allow the notice to be released in cycle.

    3. Send Letter 143C for the signature and handle the response appropriately when received.

    4. Open a control base under the activity "WAIT4SIGN" , and monitor the case for up to 45 days, or until a signature is received.

    5. Follow the reply or no reply instructions in IRM 3.14.1.7.4, Taxpayer Correspondence/Reply.

    If ... And the result will be... Then ...
    No other action is necessary a balance due
    1. Print the notice in cycle

    2. Do not suspend the case

    An adjustment is needed a balance due
    1. Retype the notice

    2. Do not suspend the case

    An adjustment is needed an overpayment
    1. Use Hold Code "4" on the adjustment

    2. Retype the notice in the current cycle

    3. Monitor the case for 45 days from the date the letter was input, keeping the control base open under activity code "WAIT4SIGN "

  5. Faxed signatures are now acceptable for returns in very limited situations if the taxpayer has not previously signed the return. Before acceptance, do the following:

    1. Verify that a faxed signature is not attached to the return based on a prior correspondence from the IRS.

    2. Validate that you are speaking to the taxpayer or authorized representative.

    3. Advise taxpayer that the signature will become a permanent part of the tax return.

    4. Fax the signature perjury statement (jurat) to the taxpayer or authorized representative.

Analyzing NRPS Data Sheet Appended

  1. NRPS extracts this data from the following sources:

    • Generalized Unpostable Framework (GUF) and Unpostable Files

    • Tape Edit Processing (TEP) File

    • ERS File Revenue Receipts

    • Unidentified Remittance and Excess Collection File

    • Resequencing File

    • Generalized Mainline Framework (GMF) Error, Computer Assisted Review of ERS (CARE), Block Out of Balance (BOB), and Reject Files

Pending Transactions
  1. Pending Transactions are account actions that have not posted to the taxpayer’s account by the notice cycle.

  2. Pending Transaction data consist of transaction codes, dates, and amounts, account identifying information, and other pertinent data. This data appears with the name of its source file (GUF, TEP, etc.) under the Pending Transaction heading on the NRPS Package/Control D Contents Page and on TXMOD under the Pending Transactions section. Refer to the Pending Transaction Files exhibit. Exhibit 3.14.1-34

Unpostable Transactions

  1. Unpostable transactions require corrective action before they can post to the Master File.

  2. Unpostable Codes (UPCs) identify the set of conditions that caused the unpostable transaction. Unpostable Reason Codes (RCs) specify the various conditions that can be present for each UPC.

    Note:

    Document 6209, IRS Processing Codes and Information, Section 8B, contains descriptions of UPCs and RCs. This information will help determine the appropriate corrective action.

  3. Unpostable Resolution Codes (URC) identify whether the corrective action can be done systemically, manually by the Unpostables function, or must be rejected back to the originator for correction.

  4. The GUF and the Unpostable Files show pertinent information about unpostable transactions on IDRS, including:

    • Transaction Code

    • Date

    • Dollar Amount

    • ITIN

    • MFT

    • Tax Period

    • XREF Account

    • UPC

Reviewing Unpostable Transactions
  1. A pending Unpostable will display one of the following identification codes next to the Transaction Code:

    • Unnn or UP — An open unpostable transaction "nnn" is a numeric unpostable code, e.g., 198 or 175.

    • CU — A corrected unpostable. The transaction should post in the cycle displayed on IDRS.

    • DU — A deleted unpostable. This transaction will not post and has been deleted from the module.

    • NU — A nullified unpostable. This transaction should be resolved by the Rejects Function or by the originating Tax Examiner.

Resolving Unpostable Transactions
  1. Utilize the following steps for resolving an unpostable condition:

    1. Use the Unpostable Code to determine the reason for the unpostable condition.

    2. Use CC UPTIN to view the unpostable record(s). If the unpostable transaction is out of region use the @ with the campus location code.

      Note:

      For listing of the campus locations codes see Doc 6209, Section 4.

      Example:

      UPTIN XXX-XX-XXXX@07 or CMODEXX (XX)-denotes the service center location

    3. If the case is open, use CC UPDIS with the Unpostable Sequence Number to access the response screen.

    4. Overlay the CC UPRES screen with CC UPCASZ and input any information useful to the Unpostables Function for resolving the unpostable condition.

    5. If the case is closed, the Unpostable Resolution Code (URC) will indicate the resolution to the unpostable condition. Use this information to determine how the transaction will affect the notice and the notice module. No further action is required on the unpostable. Correct the notice as instructed in the IRM 3.14.1.7.8, Notice Disposition.

    6. If the transaction can be posted as it is, leave a history item indicating that the Unpostables Function should post the transaction without a change. The transaction may have been unpostable when it first reached the Master File.

      Example:

      When a TC 670 transaction has failed to post to an account having a credit balance (UPC 198)but will now post because a debit transaction has posted, leave a history item. See Notice Review Job Aid 2534-002.

    7. If you cannot determine whether an unpostable transaction will post, take no action.

  2. When notified of an unpostable, the transaction has usually been deleted on IDRS. Use the Unpostable Code information to correct the transaction.

    Note:

    The Unpostables Function will open a control base for the originating Tax Examiner and include the transaction on the Nullified Distribution Listing.

    If the... Then...
    Error condition can be corrected Re-enter the transaction with the corrected information
    Error condition cannot be corrected Close the control base. Input any necessary history items, TC 570s, or CC STAUPS. Prevent any incorrect refunds from generating, if applicable, per guidelines in IRM 3.14.1.7.1.1, Refund Intercepts
    Adjustment or transfer was already input by someone else Do not enter a duplicate transaction. Close the control base

    Note:

    See Notice Review Job Aid 2534-002 for common Unpostable Codes and how to resolve them.

Preventing Unpostable Transactions
  1. Avoiding unpostables requires that the proper priority codes, hold codes, bypass indicators, freeze codes (or TC 570), and posting delay codes be input with an adjustment or credit transfer.

  2. Review each account carefully before entering an adjustment or credit transfer.

  3. Consider the effects of pending transactions, previous actions, freeze codes, module balances, and posted manual penalty and interest adjustments. Also consider the effects of the transaction being input.

  4. Contact any controlling Tax Examiner to coordinate actions on modules and to prevent erroneous and duplicate adjustments.

  5. To prevent unpostable tax adjustments (Doc Code 54):

    1. Verify that the adjustment is not a duplicate of a previous adjustment.

    2. Consider previous tax adjustments before inputting a subsequent adjustment, especially those within $10 of a previous adjustment. If it is still necessary, use Priority Code 8 on the adjustment.

    3. Look for any manual adjustments of penalties and interest (TC 160, 161, 170, 171, 340, and 341) that need correction or recognition when inputting an adjustment.

    4. Use the correct MFT, tax period, and name control.

    5. Input the correct Item Reference Codes and Credit Reference Numbers. Consider posted amounts, and limitations for each code being input.

    6. Do not attempt to reduce tax, any refundable credit, or any of the following Credit Reference Numbers below zero:
      873 — Adjust Primary Form 8919 Soc Security Wages Computer
      874 — Adjust Secondary Form 8919 Soc Security Wages Computer
      878 — Primary Self Employment Income
      879 — Secondary Self Employment Income
      885 — Advanced EIC
      886 — Taxable Income
      887 — Number of Exemptions
      889 — Self Employment Tax amount
      891 — Primary Tip Income
      892 — Secondary Tip Income
      893 — Adjust the Primary (Form 8919) Total Medicare Wages
      894 — Adjust the Secondary (Form 8919) Total Medicare Wages
      895 — Primary Medicare Income
      896 — Secondary Medicare Income
      898 — Primary Medicare Tip Income
      899 — Secondary Medicare Tip Income

  6. To prevent Unpostable Credit Transfers (Doc Code 24, 34, or 48):

    1. Whenever possible, begin the credit transfer from within the notice module.

    2. Use the correct reversal transaction code for the posted transaction code.

      Example:

      Use TC 672 to reverse TC 670.

    3. Use the correct MFT, name control, and tax period.

    4. When transferring overpayments, verify that the credit is available to be transferred. TC 830 and TC 820 amounts cannot exceed the credit balance on the module.

    5. When transferring payments from an account, verify that the dates on both sides of the credit transfer match. The money amounts must not exceed the amounts of the transactions being reversed.

      Caution:

      TC 826 and TC 706 can have different transaction dates. Use the correct dates for the debit and credit transactions when reversing these transactions. Follow credit elect and offset procedures, IRM 3.14.1.6.4, Offsets.

    6. When transferring credits to a fully paid module or to a balance due module and the transfer will create an overpayment, use a Bypass Indicator "1" .

    7. Use a Credit Freeze Code "1" (Doc Code 34) or input a TC 570 (Doc Code 24) on the credit side of the transfer if the credit should be held. This will generate a –R freeze.

      Note:

      Two TC 570s will not post simultaneously on a module, unless the first unreversed TC 570 is the systemic hold placed by IMF (55555 in the blocking series).

    8. Use a posting delay code (one to six cycles) to delay the posting of a transaction so that it matches the posting cycle of another transaction.

      Example:

      Use it to delay the posting of a Doc Code 48 debit transaction until a Doc Code 34 credit transaction posts.

Offsets

  1. The computer will automatically offset an overpayment if a credit elect request to a subsequent year is present, but will first attempt to satisfy balances due for other federal taxes, or liabilities owed to other federal or state agencies. Therefore, when manually transferring credits, Lump Sum Credit Offsets to other federal taxes, and Treasury Offset Program (TOP) offsets to other agencies take priority over credit elect and refund requests. TOP offsets can be identified by the DEBT indicator on the module. See IRM 3.14.1.6.4.3, TOP Offsets-TC 898/899

  2. Master File can perform systemic offsets correctly within the same account (same taxpayer) and will also transfer credit interest.

  3. Exceptions to systemic processing of offsets:

    When an overpayment is available earlier than a liability and a manual offset is required, credit interest on the offset must be manually computed on the module that generated the overpayment. Master File will only generate the correct amount of overpayment interest if it originates the offset.

    When Master File is allowed to offset manually computed overpayment interest, it will use the 23C date of the TC 770 for both the TC 856 and TC 736, which can cause erroneous underpayment interest accruals on the module where the TC 736 posts. When a TC 770 must be offset, a manual transfer using TC 850 and TC 730 should always be used. Debit with TC 850 using the 23C date of the TC 770, and credit with TC 730 using the date interest on the TC 770 was computed to (i.e.,”CR-INT-TO_DT” of TC 770).

  4. Satisfy all existing modules with a balance due ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ before inputting a manual refund or manually transferring a credit elect.

Credit Elect — TC 836/716 or TC 830/710
  1. Check INOLES for a debt indicator before moving credit elect. See IRM 3.14.1.6.4.3, Treasury Offset Program (TOP) Offsets- TC 898/899.

  2. The following notices pertain to Credit Elect situations:

    • CP 10 — Generates when a math error reduces the overpayment and the requested Credit Elect.

    • CP 10A — Generates when an EIC math error reduces the overpayment and the requested Credit Elect.

    • CP 45 — Generates when there is no settlement notice to inform the taxpayer that only a portion (or none) of the requested amount was credited.

      Note:

      If a settlement notice generates, the notice will contain a pop-in paragraph that informs the taxpayer of the unapplied credit elect amount.

  3. Review the return to determine if the taxpayer requested all or part of their overpayment be applied to the subsequent tax year as an estimated tax payment.

  4. When a credit elect request is transcribed properly on a current year return, the computer will automatically offset the credit (TC 836/716) if it is available, even if the overpayment is caused by a subsequent adjustment or credit transfer.

  5. If the full amount of credit elect requested is not available when the return posts, the computer will offset what is available, and continues to offset (as more credit becomes available), until the full credit elect amount is satisfied.

    Note:

    Credit Elect on a current year return may not automatically transfer to the next year after November 1st of the current calendar year.

  6. If the credit elect request was transcribed incorrectly, and the credit has refunded, take no action. CP 10 and 45 instructs the taxpayer to review the subsequent tax year estimated tax payments to avoid any possible underpayment.

  7. Master File will not automatically process credit elect requests on prior year or future year returns, if a TC 150 has already posted to the receiving tax period.

    1. Use CC TXMOD/RTVUE to review the subsequent period if it is not in the NRPS Package/Control D.

    2. Manually input all subsequent credit elects on all prior year returns.

      Caution:

      Never transfer credit elect from a module with an expired RSED.

    3. Transfer a claimed credit elect directly to a module separated by more than one tax period, if all modules in between claim the same Credit Elect, are settled modules, and no penalties or interest will abate. Use the correct dates and an Override-Dt Code "2" on the Doc Code 48 transfer.

      Example:

      Transfer from 201212 directly to 201412, if 201312 also claims a credit elect request, and has no penalty or interest that would abate if the credit elect was passed through it.

    4. All other offsets (TC 820/826, TC 898) have priority over a Credit Elect. Only reverse a TC 820/826 offset in favor of a credit elect, when a TC 826 has offset to the credit elect receiving module, and penalties and interest in that receiving module will decrease if a timely credit elect posts. However, do not reverse a TC 898 for a credit elect.

    If any of the following apply... Then...
    • The subsequent tax period has a balance due;

    • The credit elect will cause penalties and interest assessed on the subsequent period to partially or fully abate; or

    • The taxpayer claimed the credit on the subsequent tax period and the Credit Elect field on the subsequent module has a significant amount,

    • There is no TC 150 on the subsequent year's account

    1. Prevent the refund from generating

    2. Retype the settlement notice, editing the Credit Elect and unapplied credit elect fields accordingly, or void the CP 45

    3. Manually offset the Credit Elect

    Otherwise Allow the refund

  8. When increasing tax or reversing credits on the notice module, reverse all or part of a notice cycle Credit Elect to cover the debit. Use CC ADC48 and TC 832/712 on IDRS.

    1. If necessary, prevent the refund from generating on the subsequent module. If the refund was intercepted then reverse the offset using a posting delay code to allow time for the TC 841 to post before the TC 712. Also, input Bypass Indicator "0."

    2. Do not reverse a Credit Elect that was offset in a different cycle than the notice cycle.

      Example:

      If the notice generated in cycle 201615 and the TC 836 posted in cycle 201618, do not reverse the TC 836.

    3. Retype the original notice and edit the Credit Elect/unapplied credit elect fields or retype to a CP 10 and edit the "Credit Elect per Taxpayer" and "Credit Elect to Next Year" fields.

  9. If the Credit Elect from the prior year module (TC 716) was intended for another account, use the IAT tool or CC ADD48 to transfer the payment with a TC 712/710:

    1. Use the TC 716 date as the TC 712 date.

    2. Use the correct date for the tax period as the TC 710 date.

  10. When manually transferring Credit Elect(s), input TC 830/710 using CC ADD48 or the IAT tool:

    1. Use the later of the Return Due Date (RDD) or the date of the credit creating the overpayment (except on timely credits) such as the TC 830/710 date.

      Note:

      Multiple TC 830s may be needed depending on the date the credit is available. Always transfer the most recent credits first.

    2. If a tax adjustment or credit transfer creates (or is a part of) the overpayment, input the offset (TC 830) to post after the adjustment or credit transfer by inputting a posting delay code, if needed.

    3. If a subsequent notice must be stopped, take the appropriate action. See IRM 3.14.1.7.8, Notice Disposition.

      Note:

      Coordinating the timing of posting actions allows all transactions to post in a manner that prevents unintentional refunds and unpostables. If the required overpayment amount is not available, the computer will resequence the TC 830 for one cycle. The full amount of credit must be available or the TC 830 will unpost.

      Reminder:

      If FTF or ES Penalty will recompute, input a TC 290 for .00 with a Hold Code "4" , and a posting delay code timed to post in the same cycle as the penalty reversal. This will prevent an adjustment notice.

      If... Then...
      The penalty or interest will recompute because of an adjustment action To avoid erroneous refunds and unpostables, use posting delay codes and a TC 570 or credit freeze code to time the transactions to post in the following order:
      1. Adjustments or credit transfers

      2. TC 830

      3. TC 571 (if needed)

      Caution:

      Check for prior year debit modules before inputting a TC 830/710. Use CC ADD24 and a TC 820/700 if an offset to a debit module is needed. Time it to post in the same cycle as the TC 830/710

      Note:

      If penalties and interest will not recompute, the input of a posting delay code on the TC 830 is unnecessary.

      A Doc Code 34 credit transfer will create the overpayment
      1. Input a Credit Freeze Code "1" on the transfer. Input the TC 830/710 on a Doc Code 48 with a Posting Delay Code "2"

      2. If a credit will remain on the module to be refunded, use CC REQ77 to input a TC 571

      3. Use a Posting Delay Code "3" to time it to post after the TC 830

      A Doc Code 24 or 48 credit transfer or a Doc Code 54 adjustment will create the overpayment
      1. Use a TC 570 on the credit side of the transfer

      2. Use Hold Code "4" on any CC ADJ54 adjustment

      3. Input the TC 830/710 on a Doc Code 48 with Posting Delay Code "1"

      4. If a credit will remain on the module to be refunded and Hold Code "4" was not used, use CC REQ77 to input a TC 571. Use a Posting Delay Code "2" to time it to post after the TC 830

    4. Determine the correct notice disposition:

      If... And... Then...
      The CP 45 or settlement notice with the Credit Elect pop-in paragraph was generated for the taxpayer Master File cannot systemically offset the additional Credit Elect
      1. Manually transfer the Credit Elect (see above)

      2. Retype the notice to reflect the credit elect

      The CP 45 or settlement notice with the Credit Elect pop-in paragraph was generated for the taxpayer Master File can systemically offset the additional Credit Elect Print the notice
      All of the requested Credit Elect amount has now been applied A CP 45 generated Void the CP 45
      All of the requested Credit Elect amount has now been applied A settlement notice generated with the Credit Elect pop-in paragraph Retype the notice to include the corrected Credit Elect amount, and also to exclude the pop-in paragraph (or void if no notice is necessary at all)
      The total Credit Elect applied is still less than the taxpayer’s figures A CP 45 generated Retype the CP 45
      The total Credit Elect applied is still less than the taxpayer’s figures A settlement notice generated with the Credit Elect pop-in paragraph Retype the notice to reflect the current status of the taxpayer's account

  11. When manually transferring a credit elect, do the following:

    1. Use an Override-Date Indicator "2" on both sides of a CC DRT48 screen if the debit and credit transaction dates are different.

      Example:

      When moving a credit elect forward two or more years.

    2. Typically, for the TC 830 date, use the Return Due Date (RDD) or the earliest date of credit availability, whichever is later. The same date applies to the TC 710 date.

    3. Multiple CC ADD48 transactions are necessary if credit availability dates (after RDD) are staggered.

      Example:

      On a 201312 return, with a $1,500 credit elect requested: If only $500 is available at RDD (04152014), and the remaining $1,000 isn't available until 06/15/2014, then input two separate TC 830s with corresponding dates.

    4. Do not input a Credit Elect for an amount exceeding the available credit on the losing module. The transaction will go unpostable.

Lump Sum Credit Offset — TC 826/706 and TC 820/700
  1. Master File offsets available overpayments (with a TC 826/706) to an account in which a taxpayer has a balance due. The overpayment offset will post as a TC 826 (with a corresponding TC 706 in the receiving module).

  2. If credit interest is available on that overpayment, and offsets at the same time as the TC 826, the credit interest offset will post as a TC 856 (with a corresponding TC 736 in the receiving module).

  3. A notice will generate to inform the taxpayer of the offset:

    Note:

    This offset to a debit account has priority over a requested credit elect.

    • CP 16 generates when an overpayment with a math error offsets to another tax liability. Refer to IRM 3.14.1.6.12.7, Math Error Notice Disposition.

    • CP 49 generates for any other offset to another tax liability.

  4. Use a Doc Code 24 credit transfer with a TC 701 (debit) and TC 821 (credit) to reverse an offset to a tax liability.

  5. Include a TC 570 with the TC 821 (and any associated TC 851) on the credit side of the transfer screen, if the credit should be held.

    Note:

    A TC 701 input to a settled module will not generate a CP 60 on the module.

    1. Verify that the reversal date matches the original offset date. Use CC IMFOLT to review a module that is not in the NRPS Package/Control D or on IDRS.

      Caution:

      The TC 826 date may differ from the corresponding TC 706 date. Similarly, the TC 856 date may differ from that of the corresponding TC 736.

    2. Reverse multiple transactions in the order that the TC 826s appear on the module. Do not combine transactions.

  6. If an adjustment will leave a balance due on a module, reverse the offset:

    If... Then...
    There is a current cycle TC 826/706 offset Reverse it, in whole or in part, to satisfy the balance due. Do not reverse a prior cycle TC 826 unless the TC 826 amount is refunding in the current cycle
    The module that received the offset has a current cycle refund Prevent the refund from generating. Reverse the TC 826, using a posting delay code to allow time for the TC 841 to post prior to the TC 821

  7. Use CC ADD24 with TC 731 (debit) and TC 851 (credit) to reverse credit interest that has been offset (TC 736/TC 856). Use a TC 570 on the credit side of the transfer if the credit needs to be held.

    Note:

    When credit interest is allowed on an offset overpayment, input TC 772 to remove or reduce the interest when the offset of overpayment principal and or credit interest is through manual action(s), either fully or partially reversed. Master File will not systemically adjust the credit interest.
    Example: Overpayment principal (offset the TC 826), and its accompanying interest (posted with TC 776 and offset with TC 856) are fully reversed with TC 821 and TC 851. When TC 821 and TC 851 post back to the module, Master File will not generate TC 777 to systemically remove the interest previously allowed by TC 776 and offset with TC 856; the interest must be manually removed with TC 772.

  8. Void or retype the CP 16 or the CP 49 as appropriate. Refer to IRM 3.14.1.6.12.7.5, CP 16 Notice Disposition.

Treasury Offset Program (TOP) Offsets — TC 898/899
  1. For current year Form 1040, an amount other than zero in the unapplied credit elect field indicates a TOP Offset.

    Note:

    Do not prevent the refund from generating to transfer unapplied credit elect; the TOP offset has priority over the credit elect. Be aware of situations requiring special handling. Refer to IRM 3.14.1.6.9.9 , Injured Spouse Claims , if necessary.

  2. A TOP Offset debt indicator is displayed on the following screens:

    • CC TXMOD (DMF-LIAB-IND>) — below the TC 846 line, to the right

    • CC TXMOD (OTN-CD) — TC 898 with OTN-CD below the refund

    • CC REINF (FMS-DEBT-IND)

    • CC INOLE with definer S or X (Debt Indicator). The debt indicators for a TOP Offset are "F,” “I," or "B"

    Note:

    On a joint return (FS2) be sure to check both the primary and secondary taxpayers for any debt indicators.

  3. For more information about reversing TOP offsets, refer to the Notice Review Job Aid 2534-002.

Payments and Credits
  1. This section contains information related to payments and credits. It includes information on Lockbox Payments, the Remittance Transaction Research (RTR) System, Dishonored Payments, Discovered Remittance, and Contributions to Reduce the Public Debt.

Lockbox Payments
  1. Payments for balance due returns (Form 1040–V) and Estimated Tax payments Form 1040–ES are sent to Lockbox locations.

  2. Estimated Tax payment DLNs contain "220" as the third, fourth, and fifth digits.

    1. If a Lockbox payment causes an ES discrepancy, follow the procedures in IRM 3.14.1.6.13 , Reviewing Estimated Tax Discrepancy Notices.

    2. Follow procedures in IRM 21.5.7.4.7.4(8) for Out-of-Area Lockbox payments.

  3. Form 1040–V payment DLNs contain "270" as the third, fourth, and fifth digits.

    1. If the tax return indicates that a payment was made and an ES discrepancy exists, verify any excess credits against the balance due on the return.

    2. If the excess ES credit matches the balance due on the return, void or retype the ES discrepancy notice as appropriate.

Remittance Transaction Research (RTR) System
  1. The Remittance Transaction Research (RTR) system is a researchable database that provides all payment information and images on-line immediately after receipt from ISRP and Lockbox. RTR supports ten days of data on-line and three years of data near-line, allowing for an immediate query response time. Exhibit 3.14.1-33

  2. Notice Review's use of RTR provides greater efficiency in resolving payment tracer cases and misapplied payment or excess credit issues.

Dishonored Payments and Bad Check Penalties
  1. If a Dishonored Payment transaction (TC 611, 671, 641, 681, or 661) and a penalty (TC 280 or TC 286) are pending on the notice module:

    1. Prevent the refund from generating, if applicable.

    2. Input CC STAUPS for eight cycles if a balance due remains. See STAUPS Chart in the Notice Review Job Aid 2534-002.

    3. Retype the original notice to include the Dishonored Check and Dishonored Check Penalty (Notice Penalty Code 04). Update the balance due and pay-by-date, refund amount, or credits on the notice using CC RECON and/or CC INTST.

      Note:

      CC INTST is not accurate until the TC 280 or TC 286 posts or CC RECON updates the module.

Bank Adjustments
  1. There may be instances where payments are encoded incorrectly on a taxpayer’s account. If an obvious encoding error is discovered, refer to the Bank Adjustments Decision table below.

    Bank Adjustments Decision Table

    If And Then
    The payment can be located on Remittance Transaction Research (RTR) system The amount of the check matches the amount posted to the account No further research is needed. Resolve the notice issue.
    The payment can be located on RTR The amount of the check does not match the amount posted to the account This may be an encoding error. Print a copy of the check from RTR and follow the directions in the boxes below.
    Math error notice and the notice module is overpaid and a refund is scheduled to be released The payment is less than what the taxpayer is claiming
    • Allow the refund

    • Mail the notice

    • Contact the Payment Correction Team (as the SP site that processed the payment) for resolution. See Hardcore Payment Tracer Addresses for contact information

    Math error notice and the notice module is overpaid and a refund is scheduled to be released The payment is more than what the taxpayer is claiming

    Note:

    If the verified payments total is $5,000.00 or more, issue a manual refund to the corrected refund amount. Void the notice, leave a history item and contact the Payment Correction Team (as the SP site that processed the payment) for resolution.

    • Intercept the refund

    • Close your control base

    • Contact the Payment Correction Team (as the SP site that processed the payment) for resolution. See Hardcore Payment Tracer Addresses for contact information

    The notice is a non-math error Notice is a balance due
    • Void the notice

    • Leave a history item

    • Input CC STAUP for 9 cycles

    • Contact the Payment Correction Team (as the SP site that processed the payment) for resolution. See Hardcore Payment Tracer Addresses for contact information

    The notice is a non-math error Notice is credit or even balance due
    • Void the notice

    • Leave a history item

    • Intercept the refund/and or freeze credit on the module

    • Contact the Payment Correction Team (as the SP site that processed the payment) for resolution. See Hardcore Payment Tracer Addresses for contact information

    The notice is a math error notice with a balance due The notice has EFTPS payment(s)
    • Mail the notice

    • Contact the Ogden Payment Correction Team at (801) 620-7801 for resolution.

     

Discovered Remittance
  1. When reviewing tax returns, especially Non-Math Error Balance Due notices (Key 092), thoroughly search all attachments (including envelopes) for payments.

  2. Use the following procedures to process a discovered remittance:

    1. Prepare Form 3244, Payment Posting Voucher, in duplicate.

    2. Attach the copy to the front of the tax return under the entity section.

    3. Use CC ACTON to input a history item of "DISC–REMIT" on IDRS.

    4. Input CC STAUPS for eight cycles on all balance due modules.

    5. Void, retype, or label the original notice as required.

    6. Provide the remittance, the original copy of Form 3244, the NRPS Package/Control D, a print of CC TXMOD, and the tax return to the lead.

    7. Complete Form 4287, Record of Discovered Remittance, as appropriate.

      Note:

      Check to see if the taxpayer indicates the money is intended for the Public Debt. Refer to IRM 3.14.1.6.4.4.5, Contributions to Reduce the Public Debt, if necessary.

Contributions to Reduce the Public Debt
  1. Occasionally, taxpayers request that all or part of their overpayment (or remittance) be applied to reduce the Public Debt. These payments generally post as a TC 610 or TC 670.

    If the credit... Then...
    Is refunding
    • Prevent the refund from generating if the refund has been held (no TC 846 and a TC 570 with blocking series "55555" ) and prepare Form 3809, Miscellaneous Adjustment Voucher, in duplicate, to transfer the specified amount to the 6400 account. Refer to the Transferring Credits to the Public Debt Fund exhibit. Exhibit 3.14.1-35

    • If TC 846 is on the module, take no action

    Posted to a prior year module Prepare Form 3809, Miscellaneous Adjustment Voucher, in duplicate, to transfer the specified amount to the 6400 account. Refer to the Transferring Credits to the Public Debt Fund exhibit. See Exhibit 3.14.1-35 for step-by-step instructions
    Posted to a current year module Prepare Form 2424, Account Adjustment Voucher, to transfer the specified amount to the 6400 account. See IRM 3.14.1.6.8, Figure 3.14.1-5 for step-by-step instructions

Decedent Accounts

  1. When a taxpayer is a decedent, all Functions must follow certain procedures to ensure that a correct refund is issued. In order for a computer generated refund to be issued to the correct person, the account must have all of the following present:

    1. A current year entity reflecting first and second name lines.

    2. Computer Condition Code (CCC) "L" or "W" .

    3. All required supporting documents. If both taxpayers on a joint return (FS2), or a lone taxpayer (FS 1, 3, 4, or 5) is deceased, Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer, or court appointment documentation must be attached to the return if the account is overpaid.

    4. Make sure the term "DECD" appears after the first name of the decedent on a joint (FS 2) account, or after the surname of the primary taxpayer for any other filing status. Only surviving spouses and representatives should appear on the second name line.

    5. Do NOT change the name line to replace the term "DECD" with "Estate of" under any circumstances. Code & Edit or ERS may use that for correspondence purposes, but do not remove the term "DECD" from the entity.

      Note:

      Supporting documentation is unnecessary on even balance or balance due accounts or if only one taxpayer on a joint account (FS2) is deceased, or if the overpayment is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

  2. Decedent refund claims must have supporting documents (Form 1310 or Court Appointment Documentation and Payment Verification) unless there is a surviving spouse. The surviving spouse need only provide the date of death for the deceased spouse. The following (CCC)s apply to decedent accounts. Review the NRPS Package/Control D or posted return information on TXMOD to determine if the necessary codes were transcribed:

    CCC DESCRIPTION
    A
    • Both taxpayers died during the tax period

    • Deletes both the primary and secondary taxpayers from the module

    • Form 1310 or court appointment documentation is required to allow any overpayment to be refunded to the personal representative or court appointed official

    Reminder:

    If the account is overpaid, the return should also contain CCC "L"

    F
    • The primary taxpayer died during the tax year

    • Deletes the primary taxpayer from the module and establishes an updated entity for the surviving spouse on the secondary SSN, one cycle after the return (TC 150) posts

    • Form 1310 or court appointment documentation is not required since there is a surviving spouse

    Reminder:

    If the account is overpaid, the return should also contain CCC "W"

    Note:

    Both CCC "A" and "F" generate a TC 540 on the module for the year of death, updating the Mail Filing Requirement (MFR) to "08" on the entity, which deletes the filing requirement

    9
    • The secondary taxpayer died during the tax year

    • Deletes the secondary taxpayer from the module and establishes an updated entity for the primary taxpayer one cycle after the return (TC 150) posts

    • Form 1310 or court appointment documentation is not required since there is a surviving spouse

    Reminder:

    If the account is overpaid, the return should also contain CCC "W"

    L
    • Reverses the first and second name lines so that the refund check generates to the person on the second name line

    • Form 1310 or court appointment documentation is required, since there is no surviving spouse

    W
    • This is used when there is a surviving spouse on a joint account

    • Suppresses the first name line so the refund check will generate to the second name line only

      Note:

      A CCC "L" or "W" prevents the refund check from being issued to the deceased taxpayer. An account with a surviving spouse with a CCC "L" or "W" does not require a manual refund

  3. Review the account:

    If... Then...
    Additional information (signature, Form 1310 or court appointment documentation) is required before a refund can be issued
    1. Correspond with the taxpayer in the current cycle to request the missing information. Remove DECD from the name line when corresponding by letter, but do not remove DECD from the entity portion of the notice on OLNR or on ENMOD. Also, do not replace DECD with Estate of on the Notice or on ENMOD

      Note:

      A math error or a discovered credit might have caused the overpaid condition

    2. If an adjustment is not needed, print the original notice in cycle. The taxpayer may not realize that a refund is due.

      Note:

      A prompt reply is likely if the surviving spouse or Executor realizes a refund is due

    3. Follow Reply/No Reply instructions in IRM 3.14.1.7.4 , Taxpayer Correspondence/Reply Procedures

    The account contains a CCC "9" An adjustment resulting in an additional refund will require a manual refund since a second refund will not be computer generated
    1. The original TC 846 computer generated refund will be issued correctly if there is a first and second name line on the current entity and the account contains a CCC "L" or "W"

      Note:

      CCC "9" indicates a deceased secondary taxpayer. After the computer releases the original refund, a second systemic refund can be issued as long as the current processing year entity reflects the first and second name lines. The second name line will be retained until later in the year to allow more systemic refunds.

    2. Input the adjustment with the appropriate Hold Code

    TC 540 is not present and the primary taxpayer is the decedent, and the date of death is in the same year as the notice module Use CC REQ77 to input a TC 540. Use the Date of Death in the TRANS-DT> field of FRM77 response screen. TC 540 is not necessary if the secondary taxpayer is the only decedent.

    Note:

    Refer to the IRM 3.14.1.6.6, Manual Refunds section for instructions on issuing a manual refund.

  4. Form 1310 or court appointment documentation is required when an overpayment on a decedent account ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ will refund to someone other than a surviving spouse. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    If... And there was... Then...
    Form 1310 or court appointment documentation is attached to the return No previous correspondence
    1. Verify that the notice has the same second name line and address as the attached Form 1310 or court appointment documentation

    2. If different, correct notice

    Form 1310 or court appointment documentation is not attached to the return No previous correspondence Prevent the refund from generating and correspond for the missing Form 1310 or court appointment documentation

    Note:

    Remove DECD from the name line when corresponding by letter, but do not remove DECD from the entity portion of the notice on OLNR or on ENMOD. Also, do not replace DECD with Estate Of on the Notice or on ENMOD

    Form 1310 or court appointment documentation is not attached to the return No reply to Code and Edit or ERS correspondence CCC "3" should have been edited on the return to generate a –R freeze (TC 570) to hold the overpayment
    If no CCC “3” intercept refund and correspond with the taxpayer. Select PI for notice disposition on OLNR. Refer to IRM 3.14.1.7.4, Taxpayer Correspondence/Reply Procedures

  5. Form 1310 or court appointment documentation is not required on a balance due account, unless an adjustment is made that will result in an overpayment.

Manual Refunds

  1. A Manual Refund (also known as an IDRS-generated refund) is a refund which is not generated by normal computer processing. Manual Refunds post to the tax module as a TC 840. Manual Refunds are completed by leads.

  2. The general processes to follow for manual refunds are:

    1. Determine if a Manual Refund is required.

    2. Compute credit interest, if necessary, on the credit to be manually refunded.

  3. Before inputting a Manual Refund:

    1. Ensure that a computer-generated refund will not generate.

    2. Prevent any computer-generated refund. Wait until TC 841 is present on TXMOD before inputting a Manual Refund.

    3. Monitor any account where a pending transaction may cause a refund to generate before the TC 840 posts.

    4. When issuing a manual refund based on a "Hardship" claim, verify that no bankruptcy action (V– freeze) is pending.

  4. Verify that the case is correct and no other actions are needed before issuing a manual refund.

    1. Do not generate a TC 846 from any IDRS actions.

    2. Use a Hold Code "1" , or "4" (as appropriate) on a CC ADJ54 adjustment and a TC 570 or credit freeze code on a credit transfer.

  5. Obtain all necessary documents to support the refund claim. Correspondence or telephone contact with the taxpayer may be needed.

    1. Preparing and inputting the Manual Refund, via Form 5792 (Request for IDRS Generated Refund) and CC RFUNDR.

  6. Use CC IMFOLI to research the taxpayer’s account for debit balances on other modules. Transfer credit using a TC820/TC700 on CC ADD24 to satisfy a balance due ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  7. Refer to IRM 21.4.4.4.5, Manual Refunds, Approval from other functions, for freeze codes that must be addressed before a manual refund is issued.

  8. Take all necessary action to prevent an erroneous refund or erroneous notices from generating.

  9. Use a CC REQ54 to input a new Return Processable Date on IDRS if required correspondence was received after the Return Due Date (including extensions):

    If... Then...
    A CC REQ54 adjustment is needed Include the Return Processable Date with that adjustment. Use Hold Code "1" , or "4" , if necessary
    A CC REQ54 adjustment is not needed Use CC REQ54 to input the Return Processable Date. Input a TC 290 for .00, Blocking Series "05" , NSD, and Hold Code "4" .

Determining When a Manual Refund is Required
  1. Issue Manual Refunds under the conditions listed below. For additional information, see IRM 21.4.4, Manual Refunds.
    Caution: A manual refund should not be initiated if an IDRS generated refund will be issued within two cycles (10 business days).

    Note:

    It is mandatory to issue and monitor Manual Refunds using the IAT tool.

    If... Then...
    The taxpayer requests an immediate refund on a deleted refund case due to financial or other hardship Issue a manual refund
    A refund was prevented from generating to verify unclaimed payments, the substantiated total is $5,000 or more, and the 45-day interest free period is in jeopardy (180 days on any overpayment resulting from tax deducted and withheld under Chapter 3 or 4 of the Internal Revenue Code).

    Example:

    A taxpayer claims three payments of $2,000 each. The account shows these plus another payment of $2,260

    Issue a manual refund for the substantiated payments
    A refund is for $100,000,000 or more Refer to $100,000,000 Refunds, IRM 3.14.1.6.9.3
    Technical or Taxpayer Advocate Service criteria determine that there has been agross disservice to the taxpayer, a refund was prevented from generating to verify unclaimed payments, the documents are unavailable, and the taxpayer has not replied to correspondence Issue a manual refund or a TAS OAR may request authority to process a manual refund for a hardship case related to a return.
    1. Issue a manual refund for the claimed payments

    2. Transfer the unclaimed payments to the Unidentified Remittance File or to the Excess Collection File. See IRM 3.14.1.6.8, Excess Collections (XSF) and Unidentified Remittance (URF) Files

    The taxpayer requests that a refund check be issued to an address other than that shown on IDRS, and indicates that the address is temporary Issue a manual refund to the temporary address.

    Caution:

    Do not input an address change. Use CC REQ77 to input TC 971/AC037

    The refund is for a prior year return with an original name line that has changed Issue a manual refund in the taxpayer’s current name

    Note:

    If the refund is for a decedent overpaid return without a CCC "L" code on the module, a manual refund is not necessary.

Computing Credit Interest on Manual Refunds
  1. Credit interest is mandatory on an overpayment or refund, if certain conditions specified in the Internal Revenue Code (IRC 6611) are met. Refer to IRM 20.2.4, Overpayment Interest.

  2. An overpayment is defined as beginning with the first amount paid in excess of the tax liability. Tax liability includes tax, additions to tax, penalties and interest. Generally, credit interest is paid on the available net overpayment.

  3. Under IRC 6611(e)(1), no interest is payable on an overpayment refunded within a 45-day period (180 days on any overpayment resulting from tax deducted and withheld under Chapter 3 or 4 of the Internal Revenue Code).

  4. Use the later of the following dates to determine whether the 45-day interest-free period has lapsed:

    • Return Due Date (RDD) (determined without regard to any extension of time for filing the return)

    • Return Received Date (used when the return is filed after the return due date, determined without regard to any extension of time for filing the return).

    • Return Processable Date/Correspondence Received Date date the return was received in processable form (Correspondence Received Date (CRD) may be present).

      Note:

      The IRS should make every effort to request all of the information necessary to a make a return processable at one time. However, if the IRS inadvertently fails to request all of the necessary information at one time and a second request becomes necessary, the return is not processable until all of the information needed to process the return is submitted.

      Note:

      If the return is not in processable form, suspend the 45-day interest-free period. The return is not considered in processable form until all the required information, correspondence, or supporting documentation is received. On these cases, the start date for the 45-day interest-free period is the Correspondence Received Date (CRD).

  5. When the 45-day period is missed, interest is generally allowed from the availability of the overpayment. See the table below for determining the availability date of the overpayment.

    If the Payment/Credit is a... Then the availability date of the overpayment is the ...
    Prepaid or timely credit (e.g., estimated tax payment, withholding, or a payment before the due date (determined without regard to any extension of time for filing). Due date of return (determined without regard to any extension of time for filing).
    Subsequent payment/credit made/dated on or after the due date (determined without regard to any extension of time for filing). Payment received date/credit date.
    Reminder: Any payment mailed or electronically transmitted to the service that is received with seven days of the prescribed date for making payment (generally, the un-extended return due date) is deemed paid, for credit interest purposes, as of the date of the payment. See IRM 20.2.4.3, Overpayment Interest.

    CAUTION: Since an overpayment can be made up of multiple payments and/or credits, it may have more than one availability date. Refund payments or credits comprising the overpayment in the order of last-in, first out.

    Interest may be computed from other than the availability date of the overpayment when the original tax return was filed late or in unprocessible form. See the table below for determining which date to calculate interest from.
    If the return is... Then allow interest from the later of the...
    Timely filed (i.e. return received by the original or extended due date).
    1. return due date (determined without regard to any extension of time for filing), or

    2. date of the overpayment (as determined in the preceding table), or

    3. Return Processible Date (RPD) (if the RPD is after the due date, including any extension of time for filing).

    Late filed (i.e. return not received by the original or extended due date).
    1. late return received date, or

    2. date of the overpayment (as determined in the preceding table), or

    3. Return Processible Date.

    Interest paid on an overpayment issued as a manual refund is computed to the refund issue date (i.e., date of the refund check).
    Determining the "To" Date applies to refunds issued from Form 5792If the overpayment is... Determining the "To" Date Then...
    Initiated by the taxpayer The interest "To" date is one business day past the date of the CC RFUNDR date (two days for night shift)
    Initiated by the IRS. (Examples include: EIC eligibility, math error decrease in tax, and math error increase in refundable credits) The portion of the overpayment initiated by the Service is subject to the provisions of IRC 6611(e)(3). (See IRM 20.2.4.7.5.5, 45- Day Rule) Go to one business day past the date of the CC RFUNDR date (two days for night shift), and subtract 45 days to derive the interest "To" date.

    Note:

    The Refund Date cannot be a Saturday, Sunday, or legal holiday

  6. Use CC COMPA with Definer "D" to compute credit interest for the period determined in (6) above. The tables below show an example of the CC COMPAD computation.

    Example:

    The 201312 return was filed in processable form by the due date April 15, 2014. The return was filed by the due date and did not show an overpayment. There was an estimated tax discrepancy of $386.

    Transaction Code Date Dollar Amount
    TC 150 06302014 $12,562
    TC 716 04152013 -$2,414
    TC 660 01272014 -$386
    TC 610 04152014 -$10,148

  7. The table below describes the CC COMPAD format for Credit Interest. (CC RFUNDR date is 07282014)

    From Date To Date Dollar Amount Result
    04152014 06142014 386.00 (no $ sign)

    Note:

    Subtract 45 days from 07292014 to arrive at the to date of 06142014

    $1.91

    Note:

    CC COMPAD displays details of the computation, such as the number of days at each interest rate, that an ordinary COMPA display does not show. This detailed information is used to verify the accuracy of the interest calculation.

Preparing and Monitoring Manual Refunds — Form 5792 and CC RFUNDR
  1. Complete Form 5792, Request for IDRS Generated Refund (IGR). Refer to the IRS intranet for a visual example of Form 5792.

    1. Write the taxpayer’s SSN, tax period, and transaction code where the supporting document will be filed, in the remarks area of Form 5792.

    2. If a manual refund will be issued to an address other than the Master File address, explain in the remarks area and indicate where the supporting documentation will be filed. Also input a TC 971/AC037 on the module using CC REQ77.

      Example:

      REMARKS: Temporary Address Change per Taxpayer Request.

    3. Monitor the case until the TC 840 posts. Input CC NOREFP, if necessary, to prevent a duplicate TC 846 from generating.

      Note:

      For additional directions on monitoring manual refunds see IRM 21.4.4.6.1, Monitoring Manual Refunds.

    Figure 3.14.1-2

    Item Field Name Form 5792 Field Descriptions, Section I
    1 TIN and File Source Enter the taxpayer's SSN
    2 MFT Code Enter MFT code from the refunding module
    3 Tax Period Enter Tax Period of the refunding module in YYYYMM format
    4 Plan number Leave Blank
    5 Name Control Enter Name Control from refunding module
    6 TC 840 Amount Enter the total overpayment plus any credit interest
    7 TC 770 Amount Enter the credit interest portion of the refund
    8 Overpayment Amount Enter the overpayment on the tax module, without interest.

    Note:

    Consider previously assessed failure to file and failure to pay penalties, and underpayment interest that will be affected by an adjustment action. Any decrease in penalties and/or interest already paid must be included in the overpayment amount. In addition, unassessed accruals of penalty and/or interest may reduce the overpayment amount.

    9 Line No. Enter "01" for prior year, or "02" for current year. See IRM 2.4.20, CC RFUND Input
    10 (Interest) Indicator Enter "N" for normal, "R" for restricted, or "0" if no interest
    11 ULC Code Enter the Primary Location Code from TXMOD
    12 Sequence Number Enter the IDRS sequence number
    13 Block Series No. Blank unless refund is for an Injured Spouse claim
    14 1st Name Line Enter the name of the payee. Include Executor/Executrix, Administrator, etc., if Form 1310 is attached
    15 2nd Name Line Optional unless refund is for a decedent return with or without surviving spouse
    18 Street Address or PO Box Enter address where the check is to be mailed
    19 City, State, and ZIP Code Enter City, State, and ZIP code where the check is to be mailed
    20 Remarks Enter all appropriate remarks
    21 Initiating BOD Check box - W&I-SP
    22 DLN of Return Enter DLN of the return
    23 Bankruptcy code case None applicable
    24 TC 130 (check-box) Check if a TC 130 is present
    Section II Manual Refund Authority checklist Contains 13 check-boxes to address if appropriate
    Section III Interest Computation Contains Interest to Date and Total Interest Fields. Attach COMPAD print if interest is included in refund
    Section IV Manual Refund Approval Complete Items 1, 2, and 3 prior to submitting for approval
  2. Attach a copy of the IDRS screens for the following Command Codes: COMPAD, IMFOLI, ENMOD, TXMODA, RFUNDR, REQ54 and credit transfers (if input) to the Form 5792, as required by the Accounting Function. Also attach a copy of Form 1310 or court appointment documentation and any supporting documents to the case itself. Print and attach IMFOLI screen(s) for both the primary and secondary taxpayer, when applicable.

  3. Submit the case for review and approval.

  4. Secure Manager's signature on all three copies of Form 5792.

  5. Using the IAT tool, input CC RFUNDR on IDRS:

    1. Use the information from Form 5792.

    2. The CC RFUNDR entity section must match the entity exactly on Form 5792 (which may be different than the information on CC ENMOD). This includes hyphens, spaces, suffixes, all abbreviations, etc.

    3. If the manual refund is being sent to someone other than the taxpayer, such as an executor or executrix, include that representative's title on both Form 5792 and CC RFUNDR.

    4. CC RFUNDR will close the case unless the status is changed from C.

  6. Form 5792 must be sent forward the same day the RFUND command is input.

  7. Effective November 1, 2018 all manual refund forms will be sent to Accounting via e-mail or saved to an established shared drive file.

  8. When sending the manual refunds to the Accounting Function, the e-mail will consist of two attachments:

    1. One attachment will be the Form 5792 or Form 3753

    2. The second attachment will be the back-up documentation.

    3. There can be no other documents attached to the Form 5792 attachment.

      Note:

      Each document must be saved by a specific naming convention.


      Example: The Form 5792 or Form 3753 attachment will use: Name Control, Last 4 digits of the TIN, Tax Period 5792/3753 (depending on the form attached). The back-up documentation will use: Name Control, Last 4 digits of TIN, Tax Period Doc (this would be all the back-up documentation attachment).

    Type of Attachment Naming Convention
    Form 5792 MOUS 1234 201712 5792.pdf
    Form 3753 MOUS 1234 201712 3753.pdf
    Back-up Documentation MOUS 1234 201712 Doc.pdf

Erroneous Refunds

  1. An erroneous refund (ERRF) is defined as "any receipt of money from IRS to which the recipient is not entitled" .

  2. In the Notice Review Function, erroneous refunds can result from:

    • Errors found on cases where the taxpayer has received a refund as a Split Refund

    • Errors found on cases reviewed after the deadline for preventing a refund from generating for the cycle; or

    • Errors on notices not subject to the systemic refund hold (55555 in the blocking series) such as CP 16 and CP 51B

  3. If a duplicate refund is present, i.e., TC 840 and TC 846, treat the TC 840 as the erroneous refund.

  4. When an erroneous refund is identified, determine the correct erroneous refund Category. There are three categories of erroneous refunds:

    Erroneous Refund Category Description
    "A" Tax increased or tax/refundable credits decreased
    and
    IRS has erroneously decreased tax below taxpayer's figures or increased credits to more than the taxpayer's figures during processing

    Note:

    Withholding and estimated tax payments are not included in this category

    "B" Federal Income Tax Withheld was overstated by the taxpayer on a return or claim for refund, and as a result, a refund, offset, or credit elect generated, and the withholding should be reversed

    Note:

    This does not apply to Excess Social Security Tax Withheld (Excess Federal Insurance Contributions Act (FICA))

    Reminder:

    This Category is only for cases in which the taxpayer is at fault

    "D"
    • Misapplied payments

    • Entity errors that caused refund to be paid to wrong taxpayer

    • Duplicate refunds issued (i.e., TC 840 and TC 846 for same overpayment)

    • Refunds issued after refund statute expiration date (RSED)

    • Any other issues that do not fall into the Cat-A or Cat-B descriptions

  5. For detailed procedures on classifying and processing Erroneous Refunds, see IRM 21.4.5, Erroneous Refunds. It is mandatory to use the IAT tool for all ERRF.

  6. Erroneous Refund procedures are not necessary in the following situations:

    1. Erroneous refund in Category A that is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. Missing signature(s)

      Note:

      It is still necessary to attempt to obtain the missing signature(s).

    3. A Credit Elect request to the next year was not processed, and instead the credit refunded.

    4. No CCC "L" or "W" code was present on a decedent return.

    5. No Form 1310 or court appointment documentation is present.

    6. An error found in Notice Review (including errors made during initial processing) results in a tax increase with no prior tax decrease.

    7. An error found in Notice Review (including errors made during initial processing) results in a refundable credit (except withholding) decrease with no prior refundable credit increase.

    8. Scenario (f) and (g) are identified as "turnaround" cases and should be adjusted by using Blocking Series "77” or “78" as appropriate, Source Code "6" , and Hold Code "0" . Insert Label 1 on the notice in the current cycle.

      Note:

      If a taxpayer requests abatement of the adjustment, route to Exam for a deficiency assessment on Form 3465, Adjustment Request. Attach all documentation available and a print of RTVUE and TXMOD.

  7. Route returns requiring reprocessing with an erroneous refund to Accounts Management.

    1. Order the return if the return is not included with the case.

    2. Complete Form 3465, Adjustment Request and explain the erroneous refund and the reason for the adjustment.

    3. Void the notice.

    4. Recharge the return using CC ESTABDT and route the case to Accounts Management.

      Note:

      Also refer cases involving two taxpayers using the same SSN or one taxpayer using two SSNs to Accounts Management. If a refund scheme or fraud is suspected, route the case to the Criminal Investigation Function.

Category A ERRF Resolution
  1. Complete Forms 4442, Inquiry Referral, Form 5101, Examination Referral Slip, or Form 12356, Erroneous Refund Worksheet, include a detailed explanation of why it is an erroneous refund, and attach all information/documentation to the erroneous refund (otherwise the case will be rejected by Exam)

  2. Recharge paper returns to Exam using CC ESTABDT.

  3. Insert Label 15 or 16.

    Note:

    Do not input a TC 470 or TC 844 on these accounts. Do not take any actions or refer a Category A erroneous refund case to Examination when the erroneous refund amount is under ≡ ≡ ≡ ≡ ≡

Category B ERRF Resolution
  1. Per the Office of Chief Counsel, input an assessment to reverse federal withholding overstated on a return or a claim for refund by the taxpayer.

    Reminder:

    These instructions do not apply to overstatements of Excess Social Security Tax Withheld (Excess FICA), which should be resolved using Category D procedures.

  2. Standard TC 807 withholding reversals from CC REQ54 do not post to the Summary Record of Assessment. To correct accounts that have either refunded, offset, or credit elected as a result of overstated withholding, an IRC 6201(a)(3) assessment must be input to "reverse" the withholding.

    Note:

    Even if the overpayment was offset or credit elected (rather than actually refunding), the taxpayer still claimed a refund due to the withholding overstatement, and therefore, an IRC 6201(a)(3) assessment is needed to recover it.

  3. An IRC 6201(a)(3) assessment protects the IRS' ability to collect, satisfies the requirement of denying a refund claim, and places burden of proof upon the taxpayer, should a case develop in tax court.

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

  5. Use CC REQ54 to input an IRC 6201(a)(3) assessment to recover the overstated portion of federal income tax withheld:

    • Input TC 290 for the amount of overstated withholding being recovered.

    • Use Category Code ERRF.

    • In the Activity field of CC ADJ54, input: "W/H–6201A3"

    • Blocking Series 00, if return is available and Blocking Series 05, if no return or if MeF return

    • Source Code 2

    • Reason Code 051 (and any others that apply)

    • Hold Code 0 (See Caution below).

    • Do not use Item Reference Code 807

    • In the Remarks field of CC ADJ54, input: "IRC 6201a3 assessment to reverse overstated withholding" .

    • Do not input a TC 470 or a TC 844 or send a Letter 510C. on these accounts.

    • Source Document (Y) (if MeF return or return not available, attach a print of TRDBV or MeF, the return information only). See Caution below.

    • Insert erroneous refund Label 15 or 16 on the notice, as appropriate.

      Caution:

      Counsel has advised if a refund claim is pending (the taxpayer has included the overstated amount as a refund), an assessment using a TC 290 must be used to recover the overstated credit. This is true even if the IRS was able to prevent refund from generating, i.e., the error is identified and the refund is prevented from being issued. In this situation, follow the above procedures; however, use Hold Code "3" and retype the notice to include the appropriate withholding TPNC. Use Category Code OURV or RFDL when adjusting or stopping the refund.

Category D ERRF Resolution
  1. Complete Form 12356 or applicable local form.

  2. Input all applicable credit transfers, adjustments and Entity changes prior to routing the case.

  3. Use TC 570 on the debit side of the credit transfers.

    Note:

    If removing a timely credit will create FTF or ES Tax penalty assessments, input a TC 290 for .00 with Hold Code "3" .

  4. Send Letter 510C to the taxpayer.

  5. Input a TC 470 with a closing code (CC) 93 using REQ77, with a Posting Delay code "1" to prevent issuance of Balance Due notice.

  6. Input TC 844, using CC REQ77 with demand date.

  7. Route the case to the appropriate Erroneous Refund Coordinator.

  8. Insert Label 15 or 16 on the Notice as appropriate.

    Exception:

    When the erroneous refund is issued on an Adjustment notice, void the notice.

Excess Collections (XSF) and Unidentified Remittance (URF) Files

  1. When there is not enough information to properly apply credits to a taxpayer’s account (e.g., when a taxpayer does not claim a payment and the correct taxpayer cannot be located), funds may be transferred to the Unidentified Remittance File (URF) or the Excess Collections File (XSF).

    Note:

    TC 820 may indicate that a payment has been moved from the taxpayer’s account to URF or XSF. If the cross-reference TIN and tax period (next to the transfer DLN) are all zeros or nines, the credit was transferred to either the URF or the XSF. If a taxpayer files a return claiming credits that were applied to the URF or XSF, it may be necessary to transfer the credit from the URF or the XSF to the Master File. Use Form 8765, IDRS Control File Credit Application . Figure 3.14.1-3a

    Caution:

    If the DLN of the payment is for another Submission Processing Campus, send the request to that campus.

    1. Credits less than 12 months old are applied to the Unidentified Remittance File. Credits over 12 months old are applied to Excess Collections. An application to move credits to Unidentified Remittances can be made in the 11th month.

      Exception:

      Credits with Document Codes 48, 58, or 65 may be added to the XSF regardless of age.

    2. Earned Income Credit (TC 764 or TC 768) and Generated Refundable Credit (TC 766) will be accepted by Excess Collections.

  2. For assistance in matters related to XSF and URF, an Excess Collections/Unidentified Remittance Files contacts list is provided in the Who/Where tab of SERP.

Excess Collections File (XSF) — 6800 Account
  1. The XSF consists of two accounts:

    • 6800 Account — Credits over one year old that cannot be applied to a taxpayer's account are transferred to the 6800 Account.

    • 9999 Account — Credits in the 6800 Account are automatically transferred to the 9999 Account after one year.

  2. Before requesting a payment from the XSF determine whether the statute of limitations for refunds has expired. The general rule is that a claim for refund must be filed within three years from the date the original return was filed, even if the return was delinquent, or two years from the date the tax was paid, whichever is later.

    If the claim was filed... Then the amount paid within...
    Within the three-year period, The prior three years, plus any return filing extension period, may be refunded
    Within the two-year period, The prior two years may be refunded

    Note:

    Prepaid credits are treated as being paid on the Return Due Date (RDD). These includewithholding (TC 806), Estimated Tax payments (TC 660, TC 716, and TC 710), Earned Income Credit (TC 764 and TC 768), and Generated Refundable Credit Allowances (TC 766).

    1. Check the Monthly Statute Alert Bulletin.

    2. The remarks section of the CC XSINQ record should indicate "STATUTE" or "FROZ" if the credit is barred from refunding.

    3. If the refund statute (RSED) has expired, the application to move credits from XSF must not exceed the tax liability, interest, and penalties. There can be no refund or credit elect.

Requesting Payments from the XSF
  1. Use CC XSINQ to verify that the credit is available.

    Note:

    Do not request a transfer of the credit if the remarks section of the CC XSINQ record indicates "CLOS" . These credits are not available for transfer.

  2. Prepare Form 8765, IDRS Control File Credit Application, per instructions. Figure 3.14.1-3a

  3. Attach a current print (less than seven days old) of CC TXMOD or CC IMFOL and CC XSINQ to Part 1 of Form 8765.

  4. Enter CC STAUPS for eight cycles on balance due accounts to prevent erroneous or unnecessary notices.

  5. Determine which campus transferred the original credit to the XSF.

  6. If the original transfer to XSF was local, route Part 1 of Form 8765, with research, to the local Statutes function. After Statutes completes their clearing process, they will forward the case to the Excess Collections Function, per the Statute of Limitations, refer to IRM 25.6.1.7.3.3, Transferring Credits from the XSF.

  7. If the original transfer was done in another campus, route the case to the other campus' Accounting function, per the Statute of Limitations, refer to IRM 25.6.1.7.3.3, Transferring Credits from the XSF.

  8. Attach Part 2 of Form 8765 to the case.

  9. Include a complete explanation for the request.

    Note:

    An IRM reference alone is not a sufficient explanation.

  10. Give the completed form and all necessary attachments to your lead to hand-carry to the Statute Classifier, who will stamp "STATUTE CLEARED" on the form before routing it to the Excess Collections Unit.

    Figure 3.14.1-3a

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    Please click here for the text description of the image.

    Figure 3.14.1-3b

    This is an Image: 31974924.gif

    Please click here for the text description of the image.

Transferring Payments to the XSF
  1. Correspond for the missing payment information using Letter 1687C.

  2. If the taxpayer does not reply, or replies with insufficient information, use Form 8758, Excess Collection Files Addition, to apply a credit to the XSF. Form 8758 is a two-part form. Attach the research to part one (the original). Figure 3.14.1-4a

  3. Use the received date of the credit. Do not use the available date of the credit or the return due date.

  4. Use the original DLN of the credit, not a transfer DLN.

  5. Issue a manual refund when money is transferred out of an account using a Form 8758 paper document and there is still an overpayment to be refunded. Refer to IRM 3.14.1.6.6, Manual Refunds.

  6. Move each payment individually. Do not transfer a lump sum.

  7. The date on Form 8758 and the date of the CC IMFOLT or CC TXMOD print must be no more than seven days prior to receipt of the case in the Excess Collections Function.

  8. Both copies of Form 8758 must be complete and identical. Route both to the Excess Collections Function.

  9. Attach the following to the original copy: a current CC IMFOLT or CC TXMOD print, a copy of any taxpayer correspondence, tax returns, vouchers, or other research relevant to the transfer to the XSF, and a research history sheet showing the research performed on the case.

    Note:

    Send only copies of original (DLN) documents. Do not send original "live" documents.

  10. Use activity code "CLTO6800" to close the IDRS control base.

  11. A TC 971/AC296 must be input using CC REQ77 to indicate taxpayer contact has been attempted. Input "971" in Field TC>, input "296" in Field TC 971/151-CD>, and input "Credit to Excess Collections" for remarks. Refer to IRM 3.17.220.2.1.1

    Figure 3.14.1-4b

    This is an Image: 31974926.gif

    Please click here for the text description of the image.

Unidentified Remittance File (URF) — the 4620 Account
  1. Follow procedures in the subsections that follow when transferring credits to, or from, the 4620 URF account.

Requesting Payments from the URF
  1. Use CC URINQ to verify that the credit is available.

  2. Follow the instructions on Form 8765, IDRS Control File Credit Application. Figure 3.14.1-3a

  3. Attach Form 8765 to a print of CC URINQ.

  4. Include research as required.

  5. Enter CC STAUPS for eight cycles on balance due accounts to prevent erroneous or unnecessary notices.

  6. Route Form 8765, with research, to the Unidentified Remittance Function.

Transferring Payments to the URF
  1. Correspond for the missing payment information using Letter 1687C.

  2. Issue a manual refund for the substantiated payment(s) when there is still an overpayment amount to be refunded. Refer to IRM 3.14.1.6.6, Manual Refunds.

  3. If the taxpayer does not reply, or replies with insufficient information, use Form 2424, Account Adjustment Voucher to apply a payment to the URF. Form 2424 is a two-part form: the pink copy is the original, and the blue copy is the duplicate. Attach the research to the pink copy. See Figure 3.14.1-5.

  4. Use the received date of the credit. Do not use the available date of the credit or the Return Due Date.

  5. Use the original DLN of the credit, not a transfer DLN.

  6. Include the payment DLN, the tracer ID, and the reason for the transfer to the URF in the “Remarks” section.

    Note:

    An IRM reference alone is not a sufficient explanation.

  7. The date on Form 2424 and the date of the CC IMFOLT or TXMOD print must be no more than seven days prior to receipt of the case in the Unidentified Remittance Function.

  8. Both the pink and blue copies of the Form 2424 must be completed and sent to the Unidentified Remittance Unit . The carbon (blue) copy must be legible and match the original (pink) copy.

  9. Attach the following to the original (pink) copy: a current CC IMFOLT or TXMOD print, a copy of any taxpayer correspondence, tax returns, vouchers, or other research relevant to the transfer to the URF, a research history sheet (except on Statute credits) showing the research performed on the case and the results, and a copy of the check.

    Note:

    Send only copies of original (DLN) documents. Do not send original ("live" ) documents.

Special Notice Review Issues

  1. This subsection contains instructions related to miscellaneous issues. These issues include:

    • Taxpayer Correspondence

    • Taxpayers Meeting Taxpayer Advocate Service (TAS) Criteria

    • $100,000,000 (One Hundred Million) Refunds

    • Frivolous Claims

    • RIVO (Return Integrity and Verification Operation)

    • Initial Allegation or Suspicion of Tax-Related Identity Theft Indicators

    • Slipped Blocks and Mixed Data Blocks

    • Community Property Split

    • Injured Spouse Claim

    • Natural Disaster Procedures

    • Combat Zone or -C Freeze Returns

    • Large Dollar Review

    • Undeliverable Notices

    • Premium Tax Credit (PTC)

    • 8962 PTC Calculator Tool

    • ACA Shared Responsibility Payment

    • Tax Reform Act of 2017

    • IRC Section 965- Transition Tax on Untaxed Foreign Earnings

    Million Dollar Notice Review Processing System (NRPS)
    1. Generates if the module balance plus computed interest is a credit of 1 million dollars or more.

    2. The key 020 selects the Million Dollar NRPS Transcript.

    3. Review of these transcripts are the responsibility of the Team leads in NR.

    4. The NR Team lead will contact the employee identified as having control over the account.

    5. This contact should be done as an E-mail notification that this account has an X– freeze posted that is 15 cycles old.

    6. Once the contact has been made, then the Team lead will leave a case history using IDRS that the employee identified as having control over the account was notified.

      Note:

      A refund for 100 million dollars or more will not generate a TC 846. A manual refund is required if the refund must be allowed. A $100 million refund transcript will generate. See IRM 3.14.1.6.14.2, Million $100 Refund Transcripts. Systemic refunds can now be generated on IDRS (TC 846) for refunds under $100 million, unless a manual refund is required.

    If... Then...
    No established control over the account can be found The Team lead will review the account
    No other issues are found during the review The Team lead will prepare a manual refund for the credit balance, including any interest if applicable, and release the X– freeze

Taxpayer Correspondence
  1. If taxpayer correspondence attached to the return is discovered attached to the return, review, analyze, and determine disposition as necessary. Follow Policy Statement -21-3 requirements (noted below) to initiate a response.

    If the taxpayer... And there is... Then...
    Requests installment payments or indicates an inability to pay No indication that Code and Edit has forwarded the letter to the Collection Function
    1. Verify that the taxpayer’s SSN and address are on the letter

    2. Send the letter to the Collection Function

    3. Input CC STAUPS for eight cycles on balance due notices

    4. Input CC REQ77 with TC 971/AC043

      Note:

      For Electronic Filed Returns

      MeF sends all Form 9465 data to Compliance in a separate file. Form 9465 attached to a electronic returns are routed to MeF. Do not print and send to Collections.

    Inquires about an account An open control base Route the original letter to the Tax Examiner who has the case controlled on IDRS
    Inquires about an account No open control base Route the original letter to Accounts Management.

    Reminder:

    Input CC STAUPS for eight cycles on a balance due module

    Requests abatement of a penalty due to Reasonable Cause The request was denied (identifiable by CCC "7" ) Route the request to Accounts Management for correspondence with the taxpayer.

    Note:

    Code and Edit Tax Examiners assign CCC "7" and send the Appeals letters

    Requests abatement of a penalty due to Reasonable Cause NRPS data does not show CCC "7" or CCC "M" Route the request to Accounts Management for correspondence with the taxpayer. See IRM 20.1, Penalty Handbook

    Note:

    Before routing see IRM 3.14.1.6.21.1(5)

    Requests acknowledgment of payments and/or documents attached to the return NRPS data does not show CCC 7 or CCC M Route the request to the Receipt and Control Function
    Attached original or certified documents (such as, birth certificates, SSN card, marriage license etc.) NRPS data does not show CCC 7 or CCC M Return them to the taxpayer upon completion of the case, unless the taxpayer indicates that returning them is unnecessary. If the document is needed as a source document, attach a copy to the return. Do not detach death certificates on decedent returns even if original document.
    Attached documents labeled as copy or the taxpayer has indicated returning them is unnecessary NRPS data does not show CCC 7 or CCC M Staple documents to the back of the return or attach completed Form 9856 and return to files
    Has replied to IRS initiated Processing correspondence (Letter 12C, Form 3531, Form 6001, etc.) No evidence of a Return Processable Date (RPD) on the account
    1. Prevent the refund from generating if it reflects interest

    2. Input RPD with TC 290 with appropriate Hold Code

    3. Issue Manual Refund if necessary to avoid paying interest

    Has not replied to IRS Processing correspondence (no reply stamp on Form 3531, Form 6001 , etc.) No I– freeze on account (freeze is set by Computer Condition Code U)
    1. Prevent the refund from generating if it reflects erroneous interest

    2. Verify correct no-reply procedures were followed by ERS/Rejects

    3. Issue manual refund for overpayment without interest

    Was not required to reply (Correspondence was issued in error) An I – freeze on the account Issue manual refund for the appropriate amount of credit interest (TC 770), calculating interest on the initial systemic refund of overpayment principal (TC 846), less the back-off period of IRC 6611 (b)(2). See IRM 20.2.4.7.1.1, Systemic Refund Dates for IMF and BMF Then, calculating interest on that interest amount to one business day past the CC RFUNDR date (two days for swing shift)
    Attaches Form W-7, or Form W-7A An I – freeze on the account
    1. Make a copy of the return, front and back pages only, and indicate across the copied return that it is a “COPY ONLY”. Line thru the DLN of the copied return. DO NOT SEND ORIGINAL RETURNS

    2. Detach the Form W-7 from the original return, make a copy of it and staple the copy to the back of the original return. Notate on the Form W-7 copy that the original was sent to Stop 6091, ITIN and the date it was sent. Staple the original Form W-7 to the front of the copied return that you are sending

    3. Route the original Form W-7 and the copied return . DO NOT ALLOW THE EXEMPTION, ETC., BECAUSE THE Form W-7 HAS NOT BEEN PROCESSED

  2. Policy Statement -21-3 Requirements — A Quality Response is an accurate and professional communication which:

    • Is based on information provided,

    • Requests additional information from the taxpayer, or

    • Notifies the taxpayer that we have requested information from outside the IRS.

  3. A Quality Response is timely when initiated within 30 days (calendar days) of the IRS Received Date.

  4. When a Quality Response cannot be issued timely, contact headquarters for guidance.

  5. Exceptions to Policy Statement -21-3 Requirements:

    • Substitute returns

    • Amended returns

    • Tentative Carrybacks

    • CAF/POA

    • Address Changes

    • Responses to IRS solicitation for information necessary to secure or complete processing of the tax return.

Taxpayers Meeting Taxpayer Advocate Service (TAS) Criteria
  1. The Taxpayer Advocate Service (TAS) is an independent organization within the IRS whose employees assist taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working as it should. Per the Taxpayer Bill of Rights, taxpayers have the right to expect a fair and just tax system which provides taxpayers with the opportunity to have their facts and circumstances considered when it might affect their underlying liabilities, ability to pay, or ability to provide information timely. Taxpayers have the right to receive assistance from the Taxpayer Advocate Service (TAS) if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through normal channels. TAS criteria include economic burden, systemic burden, best interest of the taxpayer, and public policy (as determined solely by the National Taxpayer Advocate (NTA)). TAS is responsible for assisting taxpayers who have unresolved problems with the IRS. See IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria if additional information is required.

  2. While the Internal Revenue Service (IRS) is continually working to serve customers in a quality manner, some taxpayers still have difficulty getting solutions to their problems or getting timely and appropriate responses to their inquiries. Per IRC 7803(c), Congress established the office of the National Taxpayer Advocate (NTA) and its functions within the IRS to assist these taxpayers. TAS has identified criteria that qualify taxpayers for TAS assistance. The Case Advocate will conduct an independent review of actions that have been taken or need to be taken to resolve the problems taxpayers are experiencing.

  3. Employees should not view TAS case criteria as a means of excluding taxpayers from TAS, but rather, as a guide to TAS case acceptance. The criteria under which TAS accepts a case should not govern whether a taxpayer is entitled to relief.

  4. If the IRS employee can resolve a taxpayer’s inquiry or provide the relief requested, as outlined in IRM 13.1.7.4, Same Day Resolution by Operations, a referral to a TAS office is not necessary even if TAS case criteria are met. The definition of "same day resolution" is "within 24 hours." However, cases where the employee cannot completely resolve the issue within 24 hours, but has taken steps within 24 hours to resolve the taxpayer’s issue, also meet the definition of “same day.” Do not refer these cases to TAS unless the taxpayer asks to be transferred to TAS.

    Note:

    It is important that all IRS employees handle potential TAS cases with the taxpayer's best interest in mind. Refer also to IRM 21.1.3.18, Taxpayer Advocate Service (TAS) Guidelines, for more information. Provide the taxpayer with the number for the NTA toll-free case intake line, 1-877-777-4778 or TTY/TDD 1-800-829-4059. The taxpayer should be advised that TAS is available if the taxpayer is not satisfied with the service he or she received.

  5. An IRS employee should make a referral to a TAS office if the employee receives a taxpayer contact, and cannot initiate action to resolve the inquiry or provide the relief requested. A taxpayer does not have to specifically request TAS assistance to be referred to TAS. IRS employees will advise taxpayers of the option to seek TAS assistance when appropriate. TAS will request documentation from the taxpayer if it is needed to support the requested relief, or required by their IRM.

  6. The following types of cases should NOT be referred to TAS:

    1. Cases where the taxpayer’s complaint or inquiry only questions the constitutionality of the tax system, or

    2. Cases where the focus of the taxpayer's inquiry is solely to employ frivolous tax strategies to avoid or delay filing or paying federal taxes.

$100,000,000 (One Hundred Million) Refunds
  1. An account with an overpayment of $100,000,000 or more requires that a manual refund be issued since a TC 846 will not generate. These cases are assigned to the lead the same day they are received in the Notice Review Function. See IRM 3.14.1.6.14.2, $100 Million or more Refund Transcripts.

    Note:

    Refer to Document 6209, IRS Processing Codes and Information for release of the X– freeze.

  2. Use current procedures for resolving the case:

    1. Verify all unclaimed credits.

    2. Offset the overpayment as needed to cover any debit balances.

    3. Abate any interest caused by an overpayment not due the taxpayer.

    4. Monitor the case until all actions post to the Master File.

  3. The account must be fully paid or in debit status before closing the control. If another area has an open control on the case, contact that area, close the control, and route all available documents to that area.

    Exception:

    The control base may be closed if there is an L freeze on the module and a Revenue Agent has advised that the credit not be refunded due to legal implications.

  4. If, after any adjustments, the account has a credit balance less than $100,000,000:

    1. Offset credit to any debit balance modules.

    2. Prepare a manual refund for the excess credit.

    3. Monitor the case until the TC 840 posts.

  5. If, after any adjustments, the account has a credit balance of $100,000,000 or more, the Accounting Function must issue the manual refund:

    1. Prepare Form 3753, Manual Refund Posting Voucher.

    2. Send the original return, transcript, Form 3753, all prints essential to manual refunds, and any other documents pertaining to the case to the Accounting Function.

    3. Monitor the case until the refund (TC 840) posts.

  6. Close the control base after all account transactions post.

  7. Keep photocopies of the return and the transcript on file for future reference.

Frivolous Claims
  1. A frivolous argument is used for expressing dissatisfaction with the substance, form, or administration of the tax laws by attempting to illegally avoid or reduce tax liabilities.

  2. If it can be determined that a return is a frivolous claim, accounts with a transaction code TC) 971 AC089 and indicates that a frivolous return has been received and the entire account is frozen. An F- freeze is generated on all tax periods. Adjustments should not be made to accounts showing an F- freeze.

  3. Currently, one of the most common frivolous claims is the Reparations Tax (also known as the Black Investment Tax). The claim is based on the premise that African-Americans should receive repayment for historical slavery. There is no existing law that allows payment of reparations. Any claim(s) for reparations should be disallowed.

  4. Another example of a frivolous claim is when taxpayers attempt to eliminate their tax liability by removing their income by citing "Less Native American Indian Treaty" or simply "Native American Indian Treaty" . Usually, these filings include Form 1099–MISC income and tax withheld (generally higher than 18 percent of earnings) that results in a refund.

  5. Use the following procedures IRM 21.5.3.4.16.7, Identifying Frivolous Returns/Correspondence and Responding to Frivolous Arguments when referring frivolous claims and/or correspondence to the Ogden Campus Frivolous Return Program:
    Ogden Compliance
    1973 N Rulon White Blvd, Mail Stop 4450 OSC
    Ogden, UT 84404
    Attention: Frivolous Return Program.

  6. For additional information and examples, see the figure in IRM 3.11.3–11, Frivolous Filer/Non-Filer Definitions, and IRM 4.19.15, Discretionary Programs.

RIVO (Return Integrity and Verification Operation)
  1. If Notice Review is reviewing a Return Integrity & Verification Operations (RIVO) [formerly Accounts Management Taxpayer Assurance Program (AMTAP)] case and any one of the following is on the tax module:

    • Notice Review identifies a return with a P– freeze

    • Has an open 148XX control base

    • A Letter 4464C has been issued to the taxpayer

    • A TC 971/AC134 on the account

      Note:

      If the account contains a math error that needs to be corrected, adjust the account using HC "4" to prevent a notice from generating and to prevent the refund from issuing.

  2. If a Notice Review Tax Examiner identifies a case, submit the case to the lead or manager via e-mail for further review before taking any action. If the case is not returned to the Tax Examiner timely (by Thursday 10:00 A.M.), prevent any refund from generating. Follow normal procedures for Notice Disposition.

  3. Criminal Investigation (CI) investigates potential violations of the Internal Revenue Code (IRC) and related financial crimes. Criminal violations of the IRC are willful and deliberate attempts to evade or defeat the income tax. Flagrant criminal activities include, but are not limited, to the failure to pay taxes due and/or taxes collected or withheld and claims of false returns based on bogus return information.

  4. RIVO performs a revenue protection program review. RIVO utilizes the Electronic Fraud Detection System (EFDS) to screen and verify the accuracy of wages and withholding reported on paper and electronically filed tax returns.

  5. Submit the following case to the lead and/or manager via e-mail:

    1. Multiple returns with matching characteristics such as: duplicate filing addresses, same writing instruments (matching ink, pencil, color), same/similar handwriting, matching attached envelopes, same paper stock, same amounts entered on similar Form 1040 line entries (including Schedules/Forms), multiple entries ending in zeros, same occupations, large number of returns submitted in a single envelope/box and duplicate bank routing number and account numbers.

    2. Returns with any of the criteria listed in paragraph (5)(a) above when the taxpayer claims any of the following income and/or credits: Adoption Credit, First Time Home buyer Credit, Credits from Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains and/or Form 4136, Unsubstantiated withholding (no wages reported and no supporting documents attached).

    3. RIVO Involvement: When RIVO has already determined a case to be IDT related. If RIVO has released the refund, the case should not be referred to IVO again.

  6. Submit cases that meet potential RIVO Criteria below by e-mail to the lead. The Tax Examiner needs to include TIN/Tax period/and name on the return and submit by secure e-mail. Lead must review and send to the main point of contact to Caleb Davishines.

    • Refund Schemes, Form W-2 is altered, handwritten or a substitute/similar statement

    • Form(s) 4852 attached and no other withholding documentation is present

    • Similarities between Form(s) W-2 on different returns such as: Typing or printing, Wage amounts, Withholding amounts, Employer, Earned Income Credit (EIC) is being claimed and only the attached Form W-2 is altered, handwritten or a substitute/similar statement.

    • IDT/Operation Mass Mailing (OMM) – refund scheme involving bulk filings. Returns are often identical or vary only slightly. See IRM 3.11.3 and Exhibits 3.11.3-12 and 3.11.3-13 for more information on RIVO criteria. RIVO Involvement: When RIVO has already determined a case to be IDT related fraud.

    Note:

    Do Not Send to RIVO: Returns that already have been stamped by (RIVO/AMTAP/QRDT) and Returns that have a zero balance or a balance due.

  7. If you suspect identity theft on an e-filed return or refund transcript case, use the following criteria to determine whether the case should be sent to RIVO for consideration.

    Caution:

    It is not inclusive of all possible criteria. Not all cases will meet all criteria, but a case should have at least 3 to be considered suspect (See Exception).

    1. A drastic change of address from prior year (e.g., a different state)

    2. Children claimed that are not claimed in prior years

    3. The employer changes from prior years (use CC IRPTR)

    4. The filing status changed from prior years

    5. If direct deposit was elected, research the routing/account number using CC TRDBV to determine if the number has changed from prior years. Refund Anticipation Loan (RAL) commonly displays the taxpayer’s SSN as the last nine digits, or displays the SSN in reverse order. Refer to IRM 21.4.1.5.7.1(7), Direct Deposit of Refunds

    6. Occupation/Type of work changed from prior year (e.g., wage earner vs. Schedule C filer, etc.)

    7. A drastic change in the amount of refund claimed from previous years

    8. Methods of tax payments changed, or information on the tax module doesn’t match the payment history. Examples of this might include: The taxpayer has made substantial ES payments but claims refundable credits or reports low AGI. The taxpayer has made a payment with extension (TC 670/460) that posts after the return, or is inconsistent with the posted TC 150.

      Exception:

      Per RIVO, cases may be routed on this criteria alone

      If the taxpayer is requesting a refund AND there are estimated tax payments on the module that are not claimed on the return.

    9. Income type changed (e.g., Investment to employment) – Returns that have employment income but the account history indicates the taxpayer has not been employed and only filed investment returns (i.e. retired status)

      Exception:

      Per RIVO, cases may be routed on this criteria alone.

    10. Method of preparing the return has changed (Paid preparer versus online or Turbo Tax, etc.).

  8. Indications of previous identity theft. Use CC ENMOD to research for TC 971 with AC 501 or AC 506.

Initial Allegation or Suspicion of Tax-Related Identity Theft Indicators
  1. If Form 14039 is attached, or another similar statement indicating identity theft, route the case to Image Control Team (ICT), stop the refund and mail the notice.

  2. CC FTBOL with definer (P) is used for verifying if a taxpayer is incarcerated and release date if appropriate. See IRM 3.11.6.4.21, Prisoner Returns for additional guidelines.

  3. Use CC ENMOD, CC TXMOD, and AMS to search for a TC 971 with the Action Codes identified below:

    CC ENMOD Identity Theft Indicators

    Action Code Description
    501 Tax administration related identity theft - taxpayer provided the required ID theft documentation and case resolution is complete.
    504 Taxpayer-Identified Identity Theft not Affecting Tax Administration. Note: In FY 2014, the TC 971/AC 504 was expanded for use on both tax and non-tax-related identity theft allegations.
    505 IRS loss of PII-IRS identified, taxpayer not required to provide required ID theft documentation.
    506 IRS identified identity theft - IRS identified, taxpayer not required to provide required ID theft documentation, unless requested and Identity Theft issue is resolved.
    522 Identity theft claim has been made. Reminder: TC 971/AC 522 does not provide taxpayer protections or prevent future occurrences of identity theft. This code is used to identify potential identity theft cases.
    523 IRS identifies a potential repeat identity theft
    524 Locking SSNs with No Filing Requirements.
     

    CC TXMOD Identity Theft Indicators

    Action Code Description
    111 Indicates the return with the matching DLN has been identified as ID Theft and moved to MFT 32.
    121 Potential ID Theft Case selected by Taxpayer Protection Program (TPP) for review prior to posting.
    129 Potential ID Theft Case selected by Taxpayer Protection Program (TPP) for review after the return posted.
     

Slipped Blocks and Mixed Data Blocks
  1. Slipped blocks and mixed data blocks occur when data from a document or payment posts to a module related to a different document or payment in the same block of DLNs.

  2. Slipped Blocks have the following characteristics:

    1. A block (or part of a block) of documents or payments posted to the Master File incorrectly.

    2. The incorrect transactions have DLNs from other documents or payments in the same block.

    3. The DLN is usually from the document or payment immediately before or after the notice document or payment in the block sequence.

    4. A slipped block may result in erroneous refunds, incorrect notices, and/or lost or missing documents, returns, or payments.

      Note:

      Per Chief Counsel: If money is found in the wrong account(s) due to a Slipped Block and the money has refunded, Erroneous Refund Procedures (CAT- D) must be used to recover the money even if the money is not in your original assigned case.

  3. Mixed Data Blocks have the following characteristics:

    1. A block (or part of a block) of documents or payments posted to the Master File incorrectly.

    2. The data is incorrect due to a transcription error.

    3. A mixed-data block may result in erroneous refunds and/or incorrect notices.

  4. Suspect a slipped block or a mixed data block if any of the following conditions are present:

    1. The data on the notice module does not match the data on the document.

    2. A posted payment amount does not match the amount listed on the payment voucher.

    3. A payment is missing or is misapplied.

  5. Research the five accounts posted immediately prior to and the five accounts immediately subsequent to the notice document.

    1. If the situation involves... Then...
      Two or less taxpayers Resolve the case in Notice Review. See IRM 3.14.1.7, Case Resolution
      Three or more taxpayers
      1. Resolve your account on IDRS if possible. See (6) below

      2. Recharge any live documents to Payment Tracer

      3. Complete Form 3465 Adjustment Request, and indicate in the remarks section what action was taken to resolve your account

      4. Print all incorrect vouchers and include them in the package

      5. Route entire package to Payment Tracer and complete the following:

      1. Input CCSTAUPS for eight cycles on any balance due account

      2. Enter all appropriate history items

  6. To resolve your account:

    1. Prevent the refund from generating (when present and if possible See IRM 3.14.1.7.1.1 ) if it is needed to resolve the credit discrepancy.

      Note:

      If the refund cannot be prevented from generating and is needed to resolve the credit discrepancy, work any math error adjustment and the credit discrepancy as a Category D erroneous refund. See IRM 3.14.1.6.7.3, Category D ERRF Resolution.

    2. Transfer all payments not belonging to your taxpayer to the appropriate account(s). Input a TC 570 on the credit side if needed.

    3. If any payments belonging to your taxpayer are found, transfer them into your taxpayer's account.

    4. Reverse any current cycle offsets if needed.

      Note:

      Use a TC 570 on the credit side of the offset reversal.

    5. Work any math error.

    6. Determine the notice disposition.

      Note:

      Make every effort to resolve these situations in cycle.

Community Property Split
  1. A Community Property Split is when divorced or separated taxpayers divide their joint property. If information on the tax return, such as income, withholding, ES credits, etc., differs from the Form W-2 and tax module information, suspect a community property split.

    1. Determine if an attachment to the return indicates allocation of income and credits between the two taxpayers. If necessary, adjust to taxpayer intent.

    2. Request all relevant documents.

      Caution:

      Review for a possible erroneous refund issued from the spouse’s tax module.

Injured Spouse Claim
  1. If the front of a tax return has "Injured Spouse" written on it (with or without Form 8379, Injured Spouse Allocation, attached), the document Blocking Series should be 920–929.

  2. Review the notice.

  3. If the return is an Injured Spouse Claim and the blocking series is 920–929 take the following actions:

    If... And... Then...
    No adjustment is required There is no TC 840 on the tax module
    1. Mark the notice disposition

    2. Route the return to Accounts Management. See (5) below

    No adjustment is required TC 840 is present on the module Mark the notice disposition
    An adjustment must be made to the account TC 840 is present on the module
    1. Mark the notice disposition

    2. Use CC REQ54 to input the adjustment using Blocking Series 05 with a Hold Code "4"

    3. Route return to Accounts Management. See (5) below

  4. If the return is an Injured Spouse Claim and the blocking series is not 920–929, take the following actions:

    If... And... Then...
    No adjustment is required There is no TC 840 on the tax module
    1. Mark the notice disposition

    2. Route return to Accounts Management. See (5) below

    No adjustment is required TC 840 is present on the module Mark the notice disposition
    An adjustment must be made to the account Adjustment is a net increase
    1. Prevent any refund from generating if possible, per IRM 3.14.1.7.1.1, Refund Intercept . See first note below

    2. Input adjustment using CC REQ54 using Blocking Series 05 with Hold Code "4" . See second note below

    3. Use CC REQ77 to input a TC 470 with no Closing Code

    4. Mark the notice disposition

    5. Route return to Accounts Management. See (5) below

    Note:

    Use the Accounts Management control number on line 3 of the CC NOREFP format instead of, *,

    Note:

    If the prevented refund will not satisfy the debit created by the adjustment, check for offsets. If offsets of any type are present, See IRM 3.14.1.6.4.2 , Lump Sum Credit Offsets — TC 826/706, TC 820/700 and IRM 3.14.1.6.4.3 , Treasury Offset Program (TOP) Offsets — TC 898/899 for reversal instructions. See IRM 21.4.6.4 , if there are multiple TC 898 or TC 826.

    An adjustment must be made to the account Adjustment is a net decrease
    1. Input adjustment using Blocking Series 05 with Hold Code "4"

    2. Use CC REQ77 to input a TC 570

    3. Mark the notice disposition

    4. Route return to Accounts Management. See (5) below

  5. When routing an injured spouse claim to Accounts Management take the following steps:

    1. If a paper return, use CC ESTABDT to recharge the return to Accounts Management.

    2. Prepare Form 3465 and/or Form 12305.

    3. Indicate "–K freeze" , "29X mandatory" and "Injured Spouse Claim" on the Form 3465 or Form 12305.

    4. Route the case to Accounts Management in the current cycle.

Natural Disaster Procedures
  1. Accounts impacted by a designated disaster should have a "–O" freeze present. A TC971/AC086 appearing on the taxpayer's CC ENMOD screen indicates disaster processing is in place. A list of regions (such as counties, parishes or other political subdivisions) impacted by a designated disaster is compiled and provided by the Federal Emergency Management Agency (FEMA). The IRS then identifies the corresponding ZIP codes for disaster processing purposes.

  2. For processing years after 12/31/2006, a "–S" freeze may be present on the account. A TC971/AC688 would appear on CC ENMOD to indicate disaster processing.

  3. The Local Control File (input on designated ZIP codes) can be used to select notices for the area(s) designated on the Disaster Relief Memorandum, if penalty adjustments are required.

  4. If the "–O" (or "–S" if processed after 12/31/2006) freeze is not present on an account with an address that is either in the FEMA Zip Code list, or is outside the FEMA Zip Code list and the taxpayer has "self-identified" as being impacted by the disaster, take the following action:

    1. Access CC ENMOD for the taxpayer.

    2. While in the CC ENMOD screen, execute CC REQ77.

    3. Input TC 971 as the transaction code, using the disaster end date in the "TRANS-DT>" field. Input Action Code 086 (or 688 if processed after 12/31/2006) in the "TC 971-CD>" field.

      Example:

      For Hurricane Katrina, use a "TRANS-DT>" of 08292005, and an "EXTENSION-DT>" of 02282006 for all states except Florida. For Florida, use a "TRANS-DT>" of 08242005.

    4. In the "FEMA-NUM>" field, enter the 4-digit code of the disaster identified on the return, as shown in the FEMA lists. The lists can be found on the Technical Reference Information System (TRIS) web site at http://www.icce.irs.gov/fema/ .

    5. If there are multiple FEMA codes for the same disaster (as in the case of Hurricane Katrina), and the taxpayer identifies a particular state or region, use the FEMA code for that state or region. If it cannot be determined which FEMA code should be used, enter whichever FEMA code for that disaster will provide the longest period of extension relief/penalty suspension for the taxpayer.

    6. On the Remarks line of the FRM77 response screen, enter "Disaster relief per self-identification" or "Disaster relief per FEMA Zip Code" as appropriate.

    7. Label the notice using Custom Label 98, since a label has not yet been added to OLNR programming, with the following language:
      "We are giving your return penalty relief consideration, because your return indicates that you were affected by certain disasters. If any penalties or interest on your account will be reduced by this consideration, you will receive another notice in 2–3 weeks."

      Exception:

      Do NOT apply this Label, if after inputting TC 971/AC086 or AC688, no penalties or interest will abate. The TC 971 itself, however, should still be input as described above.

      Note:

      Master File has special processing in place that will allow an adjustment notice to generate for recomputations of interest (TC 196) and Failure to Pay Penalty (TC 276) when a TC 971 AC 086 or AC 688 is input. This is an exception to normal adjustment notice generation.

  5. If the taxpayer notates on the front of the return the designated disaster phrase, and the return has not been edited with the appropriate Computer Condition Codes (CCC), input the TC 971 and label the notice as described in Item (4) above.

    Note:

    After 12/31/2006, Code and Edit will disregard all disaster notations on the return. All disaster relief will be done systemically. If the affected taxpayer is located outside the disaster area, they will be instructed to call the disaster hot line to "self-identify" for disaster relief.

  6. If correspondence, either attached to the return or subsequently received from the taxpayer, requests relief from any penalty due to disaster damage or disruption, take the following actions:

    1. Determine whether the taxpayer qualifies for relief based on disaster criteria as noted in item (1) above. If the taxpayer qualifies, input the TC 971 as described in Item (4) above.

    2. If the taxpayer does not qualify for relief based on disaster criteria, but may qualify based on "Reasonable Cause" , route the case to Accounts Management Function.

  7. If the estimated tax penalty has been imposed, determine if the taxpayer was required to make an estimated tax payment during the disaster period and if so, whether the payment was received by the date required by the Disaster Relief Memorandum. If the payment was received within this period, input the TC 971 as described in Item (4) above, which will systemically abate the portion of the estimated tax penalty assessed for the underpayment.

  8. If the payment was not received within the allowable period, and it concerns the estimated tax payment obligation of an individual, estate or trust (not a corporation's obligation), then evaluate the taxpayer's statement to determine if it meets IRC 6654(e)(3)(A) relating to waivers due to casualty, disaster, or other unusual circumstances. See IRM 20.1, Penalty Handbook.

  9. All affected notices, which receive this TC 971 AC 086 or AC 688 resolution should be labeled as described in Item (4) above, to inform the taxpayer that their return is being given disaster relief consideration.

  10. For additional information on disasters, see Pub 4492, Information for Taxpayers Affected by Hurricanes Katrina, Rita, and Wilma.

Combat Zone or -C Freeze Returns
  1. Special handling may be required for those accounts where the taxpayer has served in a combat zone or contingency operation. The location or operation name should be noted at the top of the tax return (e.g., Operation Iraqi Freedom, Enduring Freedom, etc.).

  2. Combat Zone (CZ) accounts, identified by a –C freeze, indicate a taxpayer who is or was serving in a designated combat zone area. When working an account that contains a –C freeze, additional research is required to determine the taxpayer's CZ status. Research CC IMFOLE for the Combat indicator on Line 11. If the Combat indicator is "1", then the taxpayer is still serving in a combat zone. Any compliance activity such as assessing or collecting tax is prohibited. However, if the taxpayer has other issues or requests information, you may work these other issues and contact the taxpayer if needed. If Combat indicator is "2", then the taxpayer is no longer a combat zone participant. Follow normal IRM procedures to work the case.

    Note:

    NOTE: The –C freeze stays on the account even after the taxpayer is no longer in the CZ.

  3. During processing, Computer Condition Codes (CCC) and Return Processing Codes (RPC) are assigned. These identify the type of tax relief to which the taxpayer is entitled. For CCC and RPC descriptions, refer to Document 6209, IRS Processing Codes and Information.

  4. If the appropriate relief is not provided during processing, correct the taxpayer's account to provide the relief to which the taxpayer is entitled. For example, you may be required to input:

    • TC 460

    • TC 500

      Note:

      Per Document 6209 , IRS Processing Codes and Information. TC 340 will generate with the input of a TC 500.

    • TC 270

  5. For additional information on Combat Zone and other Military Returns, see IRM 3.12.2.3.10, Combat Zone Returns and IRM 5.19.10.6.3, Combat Zone Freeze Code in evaluating –C Freeze accounts.

Large Dollar Review
  1. Upon identification, all Balance Due Notices of $100,000 or more must be reviewed for accuracy.

    1. An in-depth review of the entire account should be performed. Problems with other modules or TINs not directly related to the notice often surface at this time and should be expeditiously resolved to prevent future taxpayer and/or Accounts Receivable impact.

    2. If a questionable situation is identified, but you cannot positively determine how the account should be adjusted, see a work leader if telephone contact is necessary. If the taxpayer verifies the information, print the notice. If the taxpayer indicates that an error was made, request the corrected information. If unable to contact the taxpayer before the mailing deadline, print the notice.

      Note:

      To prevent unauthorized disclosures of tax information when initiating telephone contacts, ensure that you are speaking with the taxpayer or someone authorized by the taxpayer.

    3. Payments intended for Form 1040 may have been misapplied to tax modules for BMF Form 706 or Form 709. Refer to IRM 3.14.1.6.17.4, Key 008 – Balance Due Notices of $100,000 or More.

Premium Tax Credit (PTC)
  1. The PTC is a tax credit for certain taxpayers who enroll, or whose family member enrolls, in a qualified health plan offered through a Marketplace. The credit provides financial assistance to pay the premiums by reducing the amount of taxes owed, giving the taxpayer a refund, or increasing their refund amount. The taxpayer must file Form 8962 to compute and take the PTC on their tax return.

  2. The American Rescue Plan Act (ARPA) waived the repayment requirement for tax year 2020. Taxpayers, who after completing Form 8962, find they have a repayment requirement, should not file Form 8962 or report the repayment amount as a tax liability.

  3. The repayment limitation for advance payments are as follows:
    2021 and 2022

    • $325 for single ($650 for all other filing statuses) with household income under 200 percent of the Federal Poverty Level (FPL)

    • $800 for single ($1600 for all other filing statuses) with household income at least 200 percent but less than 300 percent of FPL

    • $1,350 for single ($2,700) for all other filing statuses) with household income of at least 300 percent but less than 400 percent of the FPL


    2020- Not applicable
    2019
    • $ 300 for single ($600 for all other filing statuses) with household income under 200 percent of the FPL

    • $800 for single ($1,600 for all other filing statuses) with household income at least 200 percent but less than 300 percent of the FPL

    • $1,325 for single ($2650 for all other filing statuses) with household income at least 300 percent but less than 400 percent of the FPL

    • There is no limitation if the taxpayer’s household income is 400 percent or more of the FPL
      2018

    • $ 300 for single ($600 for all other filing statuses) with household income under 200 percent of the FPL

    • $775 for single ($1,550 for all other filing statuses) with household income at least 200 percent but less than 300 percent of the FPL

    • $1,300 for single ($2600 for all other filing statuses) with household income at least 300 percent but less than 400 percent of the FPL

    • There is no limitation if the taxpayer’s household income is 400 percent or more of the FPL
      2017 and 2016

    • $ 300 for single ($600 for all other filing statuses) with household income under 200 percent of the FPL

    • $750 for single ($1,500 for all other filing statuses) with household income at least 200 percent but less than 300 percent of the FPL

    • $1,275 for single ($2550 for all other filing statuses) with household income at least 300 percent but less than 400 percent of the FPL

    • There is no limitation if the taxpayer’s household income is 400 percent or more of the FPL


    The taxpayer’s liability is the smaller of the excess advance payment or repayment limitation.

  4. Taxpayers who received the benefit of advance payments for health insurance coverage must file a tax return for that year (for tax years 2019 and prior) and attach Form 8962.

    Note:

    The American Rescue Plan Act (ARPA) waived the repayment requirement for tax year 2020. Taxpayers, who after completing Form 8962, find they have a repayment requirement, should not file Form 8962 or report the repayment amount as a tax liability.

  5. Advance payment of the premium tax credit (APTC) is a payment made for coverage during the year to the taxpayer’s insurance provider that pays for part or all of the premiums for the coverage of the taxpayer or an individual in the taxpayer family. The APTC eligibility is determined by the Marketplace. If APTC was paid for an individual in the taxpayer family, they must file Form 8962 to reconcile (compare) this APTC with their PTC.

  6. PTC math errors can be reviewed by using Command Code (CC) RTVUE/ TRDBV/IRPOLA and the math error notice table exhibit found in IRM 3.12.3-2, Taxpayer Notice Codes. The math error notices can be found on any CP (10,11,12,13,16, 23, 24, and 25).

    Note:

    There is a tool in AMS (8962 PTC Calculator) to recalculate Form 8962 .

  7. TPNCs 784-794 may be assigned when there is an error on Form 8962.

  8. When reviewing a notice containing one of the Form 8962 TPNCs, use worksheets available in AMS for Modified AGI and Form 8962 (8962 PTC Calculator) to verify Form 8962.

    Caution:

    TPNCs that change the Modified Adjusted Gross Income (MAGI) or disallow an exemption will impact the Form 8962 computations for PTC/APTC. Use the ERS “computed” figures when verifying Form 8962, specifically AGI and exemptions (family size) when they have been disallowed.

    Note:

    When an exemption has been disallowed for a Dependent, review the tax return and attached forms and schedules (i.e. Schedule EIC, Form 2441, or Form 8863) to determine if the correct TIN can be found. If a correct TIN cannot be found on the tax return or attached forms/schedules, the exemption cannot be allowed.

  9. Posted PTC associated data can be viewed in the posted return section of CC TXMOD and CC IMFOLR. Below are the data elements and the applicable credit reference number (CRN) and item reference number (IRN):

    Data Element CRN/IRN Form 8962, Line # IMFOLR Term TXMOD Term
    Premium Tax Credit 262 26 TC 766 TC 766
    Advance Premium Tax Credit 865 25 TOTAL APTC ADV PTC AMT
    Total Premium Tax Credit 866 24 TOTAL PTC PTC AMT
    Excess APTC Repayment 867 29 APTC REPMT PTC LIAB AMT
    Excess Advance Payment Above Limitation 868 * LIMIT AMT PTC LIMITATION AMT
    ** PTC Exposure Amount N/A N/A *** PTC EXPSR PTC EXP AMT
    * The difference between line 27 and line 28 if line 27 is greater than line 28. ** *** Computed by AVS and displayed at the top of the PTC calculator screen.

    Note:

    When performing a calculation using the PTC calculator, AVS takes the taxpayer’s figures and computes. The figures provided in the AVS column are the end result. Adjust the posted data on IDRS to match the AVS figures using the appropriate reference numbers as shown on the PTC calculator screen.

  10. In the event PTC or APTC has been erroneously changed or omitted and needs to be corrected, input adjustment (TC 29X) with appropriate reference numbers:

    1. Ref number 865 to adjust the Total APTC, Form 8962 line 25

    2. Ref number 866 to adjust the Total PTC, Form 8962 line 24

    3. Credit ref number 262, reason code 151 to adjust the Net PTC refund, Form 8962 line 26 and Form 1040 line 69

    4. Ref number 867, reason code 152 to adjust the APTC Repayment, Form 8962 line 29 and Form 1040 line 46

    5. Ref number 868 to adjust the PTC Excess advance payment above the limitation, computed as the difference between APTC repayment and Excess APTC, Form 8962 line 27 when APTC repayment is the lesser of the two amounts. This amount should be 0 or adjusted to 0 when return result is a Net PTC refund or the APTC repayment is equal to the Excess APTC, line 27.

      Note:

      Taxpayers who have excess advance credit payments must treat the excess amount as an additional tax, subject to limitations based on the taxpayer’s household income. If the PTC allowed exceeds the advance credit payments, the excess will reduce tax liabilities or result in a refund.

      Note:

      When inputting an adjustment to correct PTC or APTC, the adjustment must contain all PTC reference numbers and amounts that require correction from the posted data. If the correction to PTC or APTC impacts the posted amount of tax, the adjustment should also include correction to the posted amount of tax.

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

    1. 151 – PTC (refundable credit issue)

    2. 152 – Excess Advance PTC Repayment (tax liability issue)

8962 PTC Calculator Tool
  1. AMS provides tools to verify taxpayer health care related information, input health care exemptions, and for computing Form 8962. The tool pulls information from posted return data, FPL tables and insurance data from CDR, including any APTC paid on behalf of an individual.

  2. All data and reference material, except for posted return information, is maintained outside of IDRS. Integrated Automation Technologies (IAT) tool cannot be used to research or calculate, but IAT can still be used to adjust accounts.

  3. To access taxpayer data, pull up the taxpayer’s account on AMS following normal procedures. Select the ACA tools menu option.

  4. The “8962 PTC Calc” tool will:

    • Provide the user the ability to select ACA data by year (the default is the current processing year ending in 12. Fiscal year filers must be set to active prior to accessing the tool)

    • Retrieve and display Form 8962 data reported on the original return

    • Allow the user to invoke AVS PTC calculation and verification

    • Retrieve and display AVS PTC calculation and 3rd party verification discrepancies

    • Provide the ability to recalculate PTC

    • Calculate and display the posted data and AVS calculated amounts which require adjustment action

  5. The “8962 PTC Calc” screen will be pre-populated with posted return and Form 8962 data if available. The user will then input or update the data prior to recalculating. After clicking the calculate button, the “AVS figures” column will be returned and displayed to the right of the taxpayer’s figures.

  6. The “8962 PTC Calc” provides an option to calculate with or without CDR validation. Using the calculator without the CDR validation only performs math verification. Using the calculation with CDR validation performs math verification and conducts a 3rd party data check. CDR validation is required when Form 8962 data is not on file (not filed with original return), when premiums, SLCP or APTC amounts are changing, or when adding an exemption (dependent or spouse).

  7. The CDR Data tool provides the ability to search by SSN, name, address, date of birth, policy number, and ECN. AMS also provides the ability to search reference tables such as the FPL, payback limitation and applicable percentage tables.

    Note:

    Since the SSN of covered individuals doesn’t have to be provided on data sent to the Service, searching by an individual’s name may provide better results.

  8. AMS does not have the ability to store the AVS response to the calculation/verification requests.

  9. AMS is the primary method of accessing health insurance data.

ACA Shared Responsibility Payment (SRP)
  1. Beginning in 2014, certain individuals must have Minimum Essential Health Coverage (MEC), a coverage exemption, or make a Shared Responsibility Payment (SRP). This is indicated on the return by:

    1. Checking the full-year coverage check box

    2. Attaching Form 8965, Health Coverage Exemptions

    3. Making a Shared Responsibility Payment (SRP)

  2. Generally, 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 taxpayer figures the SRP using a worksheet found in the taxpayer instructions for Form 8965. However; the worksheet DOES NOT have to be submitted. The SRP amount is entered on Form 1040, Schedule 4, line 61; Form 1040A, line 38; or Form 1040EZ, line 11. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  3. The SRP is assessed and collected under the MFT 35.

    1. When the tax return posts, IMF generates the transactions to post the MFT 35 module one cycle later. The resequencing transactions can be viewed using IMFOLQ.

  4. If the SRP was present on the tax return and erroneously removed by ERS:

    1. If the overpayment is under the refund hold, input NOREF or TC 570 on MFT 30 to prevent the refund from generating.

    2. Input adjustment on the MFT 35 using a TC 290 for .00 with PRN 692 for the amount of the SRP on the return and RC 153. Input Source Document “N”. If there is an overpayment on the MFT 30 that is going to be credit transferred to MFT 35, input hold code 3 to prevent a notice from generating.

    3. If the overpayment on MFT 30 is under the refund hold, input a credit transfer 820/700 up to the amount of SRP to transfer the money from the MFT 30 to MFT 35.

      Note:

      If the MFT 30 account has a R- freeze with a TC 610 Doc 19, 70, or 76 posted subsequent to the TC 150 DLN’s do not match and the module balance is a credit as a result. Input TC 290.00 on the MFT 30 side. The money will automatically offset to the MFT 35.

    4. If a TC 570 was input to further hold the refund in 4a, and there will still be an overpayment after the credit transfer posts, input a TC 290 .00 with post delay code of 2 to release the refund.

IRC 965 Transition Tax
  1. Internal Revenue Code (IRC) section 965 requires certain taxpayers to pay a transition tax on the untaxed foreign earnings of certain specified foreign corporations as if those earnings had been repatriated to the United States.

  2. The IRC 965 inclusion period was 201712-201911. An IRC 965 inclusion will most often be reported on returns for tax years 2017 and 2018 (returns for tax years that start in 2017 and 2018), although it is possible to see an inclusion in tax year 2019 for fiscal filers.
    During the inclusion period, taxpayers making an IRC 965 inclusion could elect one or more of the following:

    1. Pay the IRC 965 liability in full when filing their return.

    2. Make an IRC 965(h) election to pay the 965 tax liability in installments

    3. Make an IRC 965 (i) election to defer the 965 tax liability until a triggering event.

      Note:

      Taxpayers must have made an IRC 965 election by the timely due date of their return, including extensions.

  3. Full payment of an IRC 965 net tax liability was generally due with the taxpayer’s inclusion year return unless the taxpayer may have elected to defer payment and pay in installments over 8 years (965 (h) election), or defer the assessment and payment of the IRC 965 liability until a triggering event occurs (965 (i) election). Triggering events are outlined in the Internal Revenue Code, but the taxpayer is not required to explain the event, only report it on Form 965-A.

    Exception: Although no new IRC 965 inclusions can be made after November 30, 2019, if a taxpayer originally made an IRC 965(i) election during the inclusion period specified above, a triggering event requiring the repayment of the inclusion tax can happen in any subsequent period. If the taxpayer subsequently experiences a triggering event requiring the repayment of the inclusion tax, the IRC 965(i) liability will be assessed and deemed payable in the year the taxpayer indicates the triggering event. The taxpayer may choose at that time to make a 965(h) election and pay the triggered liability in deferred installments.

  4. Taxpayers that made an IRC 965(i) election to defer the assessment and payment of tax until a triggering event occurs during the inclusion period (201712-201911), did so as follows:

    Inclusion Made 2017 2018 2019
    IRC 965(i) The 965 income was reported on line 21, Line 44, was reduced by the amount of net tax liability deferred under section 965(i) & thereby NOT included in the “Total Tax” calculation reported on Line 63.

    In addition to the IRC 965 Transition Tax Statement and IRC 965(i) Election Statement being attached to the return.
    The 965 income was reported on Schedule 1, Line 21, Line 11a, was reduced by the amount of net tax liability deferred under section 965(i) & thereby NOT included in the “Total Tax” calculation reported on Line 15.

    In addition to the Form 965 (& applicable schedules) and Form 965-A being attached to the return in lieu of an IRC 965 Transition Tax Statement.
    The 965 income was reported on Schedule 1, Line 8, Line 12a, was reduced by the amount of net tax liability deferred under section 965(i) & thereby NOT included in the “Total Tax” calculation reported on Line 16.

    In addition to the Forms 965(& applicable schedules) and Form 965-A being attached to the return in lieu of an IRC 965 Transition Tax Statement.

    IRC 965 inclusion year modules wherein a 965(i) election was made to defer the entire 965 liability should have a TC 971 AC 114 with zero in the MISC field. The Miscellaneous Field of the TC 971, AC 114 in this instance should reflect “0” (without commas or decimal points) because 965(i) defers both the assessment and payment of the 965 tax.
    In addition to the TC 971 AC 114 for zero, there should also be a TC 971 AC 165 with the amount of the 965(i) deferral in the MISC field present on the inclusion year module. The Miscellaneous Field of the TC 971, AC 165 will show the amount of the IRC 965(i) deferral as shown on the original return without commas or decimal points.

    Note:

    Both a TC 971 AC 114 & A TC 971 AC 165 should be input on the 965(i) inclusion year tax module, however, a TC 971 AC 165 (without a TC 971 AC 114) should continue to be input on every Form 1040 tax year module thereafter until the IRC 965(i) liability is triggered, assessed and deemed payable. On the triggering event year module, there should be a TC 971 AC 114 in the amount of the triggered liability without a TC 971 AC 165.

  5. Taxpayers that made an IRC 965(i) election during the inclusion period (201712-201911) that subsequently experience a triggering event and pay the triggered liability in full, should report the triggering event as follows:

    Form IRC 965 Amounts Reported in the Year of the Triggering Event on Form 1040 when Paying the Triggered Liability in Full
    1040 (MFT 30/31) When a 965(i) deferred liability is triggered, it must be transferred from Form 965-A, Part IV, where it is annually reported, to Part I, on one of lines 5 through 8 as follows: In column (a) the tax year in which the triggering event occurred is reported. Columns (b) through (e) are skipped and the triggered liability is reported in column (f) as a positive number. “No” is then entered in column (g) to indicate a 965 (h) election is NOT being made to pay the triggered liability in installments. The amount in column (f) should be carried to column (h) and the corresponding line in Part II, column (b), Paid for Year 1, should reflect a payment in the amount of the full triggered liability.

    In addition to reporting the triggered liability on the Form-965-A, the taxpayer should report the triggered net 965 tax liability on the Tentative “Tax” line (2018 = Line 11, 2019 = Line 12, 2020/2021 = Line 16) and check box 3 and enter “965INC” on the line next to box 3. Doing this ensures the 965 liability is included in the Total Tax calculation.

    The triggered 965 liability amount should be included in the total tax and thereby included in the posted TC 150 amount.

    Additionally, there should be a TC 971 AC 114 with the amount of the triggered liability in the MISC field, posted on the triggering event year module without a TC 971 AC 165.

  6. Taxpayers made an IRC 965(h) election to pay the transition tax in 8 annual installments during the inclusion period (201712-201911), did so as follows:

    Inclusion Made 2017 2018 2019
    IRC 965(h) The 965 income is reported on line 21, 965-Tax is included in Line 44 and thereby included in the “Total Tax” calculation reported on Line 63 and a portion of this tax is deferred on line 73d of Form 1040.

    In addition to the IRC 965 Transition Tax Statement and IRC 965(h) Election Statement being attached to the return.
    The 965 income is reported on Schedule 1, line 21, the 965-Tax is included in Line 11a and thereby included in the “Total Tax” calculation reported on Line 15 and a portion of this tax is deferred on Schedule 5, line 74d.

    In addition to the Forms 965(& applicable schedules) and Form 965-A being attached to the return in lieu of an IRC 965 Transition Tax Statement.
    The 965 income is reported on Schedule 1, Line 8, the 965-Tax is included in Line 12a, and thereby included in the “Total Tax” calculation reported on Line 16 and a portion of this tax is deferred on Schedule 3, line 13d.

    In addition to the Forms 965(& applicable schedules) and Form 965-A being attached to the return in lieu of an IRC 965 Transition Tax Statement.

    For returns where an IRC 965(h) election was made during the inclusion period (201712-201911): there will should be a TC 971, AC 114 posted with the original return on the inclusion year module. The Miscellaneous Field of the TC 971, AC 114 will show the amount of the total IRC 965 transition tax as shown on the original return without commas or decimal points. This amount will be included in the TC 150 tax amount.

    Note:

    The only time that a TC 971 AC 114 should be input on a module after November 2019, is if the taxpayer had an already established 965(i) election and experienced a triggering event (which they should report on Form 965-A).


    In addition to the TC 971 AC 114, a TC 766 with Credit Reference Number (CRN) 263 is posted to the module indicating the remaining unpaid IRC 965 liability amount (deferred amount) to be paid in installments. The TC 766 CRN 263 creates a faux credit, so the deferred tax does not accrue interest and penalties. The first installment payment should be paid when the return is filed.
    Example: A taxpayer’s regular tax is $5,000. The transition tax is $25,000. The TC 150 is $30,000. Since 8 percent of the transition tax is due in year one ($25,000 x .08 = $2,000), a TC 766 is posted for $23,000 which is the amount of the remaining unpaid deferred tax.

  7. Taxpayers that made an IRC 965(i) election during the inclusion period that subsequently experience a triggering event and make a 965(h) election to pay the triggered liability in installments, should report the triggering event as follows:

    Form 965 Amounts Reported in the Year of the Triggering Event on Form 1040 when Making a 965(h) Election
    1040 (MFT 30/31) When a 965(i) deferred liability is triggered, it must be transferred from Form 965-A , Part IV, where it is annually reported, to Part I, on one of lines 5 through 8 as follows: In column (a) the tax year in which the triggering event occurred is reported. Columns (b) through (e) are skipped and the triggered liability is reported in column (f) as a positive number. “Yes” is then entered in column (g) to indicate a 965 (h) election is being made to pay the triggered liability in installments. The amount in column (f) should be carried to column (i) and the corresponding line in Part II, column (b), Paid for Year 1, should report an 8% payment of the amount elected to be paid in installments.

    Form 965-E should also be attached when making a 965(h) election.
    In addition to reporting the triggered liability and subsequent 965(h) election on the Form 965-A and
    Form 965-E, the taxpayer should report the triggered net 965 tax liability on the Tentative “Tax” line (2018 = Line 11, 2019 = Line 12, 2020/2021 = Line 16) and check box 3 and enter “965INC” on the line next to box 3. Doing this ensures the 965 liability is included in the Total Tax calculation.

    The taxpayer will then report the amount being deferred under 965(h) on the “Other Payments or Refundable Credits” line (2018= Schedule 5 Line 74d, 2019 = Schedule 3 Line 13d, 2020 = Schedule 3 Line 12d, 2021 = Schedule 3 Line 13f).

    There should be a TC 971 AC 114 with the amount of the triggered liability in the MISC field, input on the triggering event year module without a TC 971 AC 165.

    In addition to the TC 971 AC 114 in the amount of the triggered liability, there should also be a TC 766 CRN 263 input for 92% of triggered liability on the triggering event year module.

    If the non 965 tax and the 1st installment were overpaid (i.e. if there is a credit on the triggering event year module after the initial TC 766 CRN 263 is posted), then the overpayment should be applied to the 965 liability by inputting a TC 767 CRN 263 in the amount of the overpayment up to the 965 tax amount. Any overpayment remaining after the non-965 tax amount and full 965 tax amount have been paid in full may be refunded/offset as normal.

  8. IRC 965(h) annual installments are due on the due date of the return (not the extended due date )and should be paid and/or posted in accordance with the 965(h) Payment Schedule . Failure to timely pay a required installment could result in the assessment of an addition to tax, which could accelerate the deferred IRC 965 tax balance and cause it to become immediately due.
    Exception: Relief was available for IMF taxpayers who missed the first of the 8 annual installments if the individual’s total 965 transition tax liability is less than $1 million and the first installment is paid in full by April 15, 2019. Interest must be paid on the first installment from the original installment due date until the date paid. A penalty will not be imposed on an individual taxpayer:

    • If they owe less than $1,000 in tax, after subtracting tax withheld on wages,

    • If the individual did not have any tax liability for the previous year, the preceding taxable year was 12 months, and individual was a citizen or resident of the United States throughout the preceding tax year, and

    • If casualty, disaster, or other unusual circumstances.

    1. For the convenience of the Service, taxpayers are instructed to make two separate payments each year: one for the any non-IRC 965 tax and another for the IRC 965 installment. NOTE: IRC 965 payments can be identified by: a Designated Payment Code (DPC) of 64 (i.e. TC 670 DPC 64), a CP 56 voucher, or an indication on the memo line of the check such as “transition”, “965” and “inclusion”.

    2. If the IRC 965(h) deferred payment method is elected, then the annual IRC 965 payment schedule is as follows:

    The IRC 965(h) payment schedule is below: The “Maximum Unpaid Percentage per Year” column represents the max deferral allowed under the law for the given year, meaning no more that the amount listed in the “Maximum Unpaid Percentage per Year” column can be left unpaid by the due date of the return for the applicable year.

    Note:

    If the due date below falls on a Saturday or legal holiday, the due date will be the next business day.

    Year Annual Payment Schedule Max Unpaid % Per Year Due Date if Election was made TY 2017 Due Date if Election was made TY 2018 Due Date if Election was made TY 2019
    1 8% 92% 4/15/2018 04/15/2019 7/15/2020
    2 8% 84% 04/15/2019 7/15/2020 05/15/2021
    3 8% 76% 7/15/2020 5/15/2021 04/15/2022
    4 8% 68% 5/15/2021 4/15/2022 04/15/2023
    5 8% 60% 4/15/2022 04/15/2023 04/15/2024
    6 15% 45% 04/15/2023 04/15/2024 04/15/2025
    7 20% 25% 04/15/2024 04/15/2025 04/15/2026
    8 25% 0% 04/15/2025 04/15/2026 04/15/2027

    To determine the installment due, multiply the IRC 965 Total Tax amount by the percentage due.

    For Example: To determine the 1st through 5th installment amounts, you multiply the IRC 965 Total Tax amount by .08 because 8% is due in years 1-5. In year 6, you would multiply the IRC 965 Total Tax amount by .15, in year 7 multiply it by .20 and in year 8 multiply it by .25.

    To determine the Maximum Deferral Amount, multiply the IRC 965 Total Tax amount by the Max Unpaid percentage due per year.
    For Example: To identify the Maximum Deferral Amount in year 1, you multiply the IRC 965 Total Tax amount by .92, in year 2 multiply it by .84, in year 3 multiply it by .76, in year 4 multiply it by .68, in year 5 multiply it by .60, in year 6 multiply it by .45, in year 7 multiply it by .25. The remaining 25% is due in year 8 so that maximum deferral in year 8 is zero.

    Generally, the IRS will issue an installment notice (CP 56 or CP 56SP) and payment voucher for the next installment approximately six to eight weeks before the unextended return due date without extension. The installment notice will provide the total amount of unpaid IRC 965(h) net tax liability and the amount of the liability to be paid by the installment to be paid by the notice due date. Annual installments are due on the due date of the return (not the extended due date). Failure to timely pay a required installment could result in the assessment of an addition to tax, which could accelerate the entire IRC 965 tax balance and cause it to become immediately due.

Identifying and Correcting IRC 965 Accounts
  1. During the IRC 965 inclusion period (201712-201911), Section 965 inclusion and election amounts can be identified on Form 1040 as follows:

    Inclusion Made 2017 2018 2019
    Full paid The 965 Income was reported on line 21, the 965 tax was included in the “Total Tax” calculation reported on Line 63 and fully paid by the due date of the return. The 965 Income was reported on Schedule 1, Line 21, the 965-tax was included in Line 11a and thereby included in the “Total Tax” calculation reported on Line 15 and fully paid by the due date of the return The 965 Income was reported on Schedule 1, Line 8, the 965-tax was reported in Line 12a and thereby included in the “Total Tax” calculation reported on Line 16 and fully paid by the due date of the return
    IRC 965(i) The 965 Income was reported on Line 21, Line 44 was reduced by the amount of net tax liability deferred under section 965(i) and thereby NOT included in the “Total Tax” calculation reported on Line 63. The 965 Income was reported on Schedule 1, Line 21, Line 11a, was reduced by the amount of net tax liability deferred under section 965(i) and thereby NOT included in the “Total Tax” calculation reported on Line 15. The 965 Income was reported on Schedule 1, Line 8, Line 12a, was reduced by the amount of net tax liability deferred under section 965(i) and thereby NOT included in the “Total Tax” calculation reported on Line 16.
    IRC 965(h) Election-the 965 Income is reported on line 21,965- Tax is included in Line 44 and thereby included in the “Total Tax” calculation reported on Line 63 and a portion of this tax is deferred on Line 73d of Form 1040. The 965 Income is reported on Schedule 1, Line 21, the 965- tax is included in Line 11a and thereby included in the “Total Tax” calculation reported on Line 15 and a portion of this tax is deferred on Schedule 5, line 74d. The 965 Income is reported on Schedule 1, Line 8, the 965-Tax is included in Line 12a and thereby included in the “Total Tax” calculation reported on Line 16 and a portion of this tax is deferred on Schedule 3, line 13d.

    In addition to reporting the 965 amounts on the return as indicated in the above table, 2017 Form 1040 returns with IRC 965 inclusions were required to have an IRC 965 Transition Tax Statement attached. If a 965(i) election was made then an IRC 965(i) Election Statement was required in addition to the Transition Tax Statement. If a 965(h) election was made then an IRC 965(h) Election Statement was required in addition to the Transition Tax Statement. If BOTH a 965(i) and a 965(h) election were made then both an IRC 965(i) Election Statement and an IRC 965(h) Election Statement were required in addition to the Transition Tax Statement.

    In addition to reporting the 965 amounts on the return as indicated in the above table, 2018 and 2019 Form 1040 returns with IRC 965 inclusions were required to have a Form 965 with applicable schedules and a Form 965-A attached in lieu of the Transition Tax Statement and applicable election statements.

    No new IRC 965 inclusions can be made after November 30, 2019, however, if a taxpayer has an already established 965(i) election that was made during the inclusion period, and subsequently experiences a triggering event, the taxpayer may make a subsequent IRC 965(h) election, at that time, to pay the triggered S corporation-related net 965 tax liability in 8 installments, beginning in the year of the triggering event.

  2. The following Return Processing Codes (RPC) and Computer Condition Codes (CCC) are used to identify IMF IRC 965 tax returns and initiate specific processing:

    IMF Computer Condition Codes and Return Processing Codes Description Explanation (These Codes can be viewed using CC RTVUE or TRDBV)
    RPC 7 Tax returns reporting an IRC 965(i) election (IMF). RPC 7 is specific to IMF modules where a 965(i) election was made during the inclusion period.
    RPC F Tax returns reporting an IRC 965 inclusion/election (IMF). All IMF modules where the taxpayer made an IRC 965 inclusion or election during the inclusion year or year of a triggering event should contain an RPC F.
    CCC 3 Tax returns reporting an overpayment, this CCC sets Transaction Code 570 which freezes release of overpayment of account at Master file (IMF). CCC 3 isn’t specific to IRC 965, however CCC 3 with an RPC F indicates an IRC 965 filer with a TC 570 on the module.
    CCC P Tax returns identified with a 2017 Penalty Waiver (IMF). CCC P was used to identify 2017 modules that were granted the 2017 Penalty Waiver. These modules should include a TC 971 AC 116 and a TC 971 AC 117.

  3. The following transaction codes are used to identify IMF IRC 965 modules:

    IMF Transaction Codes Description Input Using CC Posted on
    TC 971 AC 114 Indicates the IRC 965 Total Tax Liability. This amount should be included in the TC 150 amount.

    Note:

    If an IRC 965(i) election was made during the inclusion period, a TC 971 AC 114 for zero should be displayed on the inclusion year module because IRC 965(i) defers both the assessment and the payment of the IRC 965 tax liability


    If both a 965(h) & 965(i) election were made on the same inclusion year module, the TC 971 AC 114 should be for the 965 total tax amount minus the 965(i) deferred liability amount. There should be a TC 971 AC 165 reflecting the 965(i) deferred tax amount on the module along with the TC 971 AC 114 if a 965(i) election was made.
    TC 972 AC 114 is used to reverse a TC 971 AC 114 input in error. Do NOT input an amount in the MISC field when inputting a TC 972/114
    If the amount in the TC 971/114 MISC field is incorrect, do NOT input a TC 972 AC 114 to reverse it. Simply, input another TC 971 AC 114. IMF programming will systemically mark the original posting with a reversal indicator “1” once the new TC 971 AC 114 is input.
    REQ77/FRM77
    When inputting a TC 971 AC 114 follow these steps:
    1. Input 971 in TC>
    2. Input the current date in TRANS-DT>
    3. Input the tax period ending date in SECONDARY-DT>
    4. Input 114 in TC971/151-CD>
    5. Input the 965 Total Tax amount (dollars only, no cents, no special characters) in MISC>
    6 .Input NSD, 965 TAX in Remarks
    7. Transmit
    Inclusion Year Module and/or Triggering Event Year Module ONLY
    TC 971 AC 165 Indicates an intact IRC 965(i) election with the amount of the outstanding IRC 965(i) Deferred Tax Liability reported in the MISC field.

    Note:

    This amount should NOT be included in the TC 150 amount until the year of the triggering event when the liability has been triggered and assessed.


    TC 972 AC 165 is used to reverse a TC 971 AC 165 input in error. Do NOT input an amount in the MISC field when inputting a TC 972/165.
    If the amount in the TC 971/165 MISC field is incorrect, do NOT input a TC 972 AC 165 to reverse it. Simply, input another TC 971 AC 165. IMF programming will systemically mark the original posting with a reversal indicator “1” once the new TC 971 AC 165 is input.
    REQ77/FRM77
    When inputting a TC 971 AC 165 follow these steps:

    1. Input 971 in TC>
    2. Input the current date in TRANS-DT>
    3. Input the tax period ending date in SECONDARY-DT>
    4. Input 165 in TC971/151-CD>
    5. Input the 965(i) Deferred Liability amount (dollars only, no cents, no special characters) in MISC>
    6. Input NSD, 965i Deferral in Remarks
    7. Transmit
    Inclusion Year Module & each subsequent year module the 965(i) election remains intact and untriggered. Do NOT enter a TC 971 AC 165 on the Triggering Event Year module.
    TC 971 AC 116 Represents the underpayment of the first 965(h) installment for TY 2017 ONLY.
    The amount of the underpayment was input in the MISC field (dollars only-no cents, no special characters)
    REQ77/FRM77 2017 Inclusion Year Module with a qualifying late 1st installment payment ONLY
    TC 971 AC 117 Represents the interest charged on the underpayment of the first 965(h) installment for TY 2017 ONLY. The amount of the interest charged on the underpayment was input in the MISC field (dollars only-no cents, no special characters) REQ77/FRM77 2017 Inclusion Year Module with a qualifying late 1st installment payment ONLY
    TC 766 CRN 263 A faux credit that masks the IRC 965 liability on the inclusion year module. The initial TC 766 CRN 263 input in the inclusion year should equal 92% of the 965 Total Tax Liability (i.e. 965 Total Tax minus the 1st installment). It represents the unpaid IRC 965(h) liability (deferred amount) to be paid in installments. The net sum of the TC 76X CRN 263 transactions represent the remaining unpaid IRC 965 liability. REQ77/FRM77
    When inputting a TC 776 AC 263 follow these steps:

    1. TIN- should be auto-filled, if not input the TIN.
    2. MFT>- should be auto-filled, if not input the MFT.
    3. TX-PRD>- should be auto-filled, if not input the tax period.
    4. NM-CTRL>- should be auto-filled, if not input the name control.
    5. SEQ-NUM>-Input sequence number. Start with “1” and continue to number your adjustments in order each day.
    6. BLK>- Use “05” for IMF.
    7. INTCOMP-DT>-Use when inputting a TC 298.00 adjustment. The TC 298.00 CRN 263 adjustment should carry an interest computation date of the installment due date or the date of the payment (whichever is earlier) unless there is interest on the module in which case the installment due date should be used.
    8. CASE-STS-CD>-Keep an open control base until all adjustments post at which time the control base can be closed.
    9. IRC-RCVD-DT>-Input *.
    10. CTRL-CAT>-Input “OURV”.
    11. TC>-Input “290” if the transaction should carry the return due date otherwise input “298” if the transaction date is a date other than the return due date.
    12. AMT>-Input “.00”.
    13. RSN-CDS>-Input “190” for IMF. Input “050” & “190” when inputting TC 298.00.
    14. HOLD-CD>-Use HC 4 when inputting adjustments to TC76X CRN 263 transactions unless the account is full paid (i.e. all non-965 & 965 tax is paid in full) in which case you would use a HC 0-4 as appropriate.
    15. PSTING-DLAY-CD>-A posting delay code (PDC) is not needed when inputting multiple TC 290.00 CRN 263 and/or TC 298.00 CRN 263 adjustments. A PDC is only needed when inputting non TC 290/298 CRN 263 adjustments in addition to TC 290/298 CRN 263 adjustments.

    Note:

    For IMF adjustments, although the TC 290/298 CRN 263 adjustments can be input without a PDC, they all will not post in the same cycle, the earliest will post and the request will resequence allowing only one adjustment to post per cycle.


    16. CD>-Input “263”
    17. AMT>-input the amount of the 965 deferred tax if inputting the initial TC 766/263, otherwise input the amount needed to adjust the initial TC 766/263
    18. SOURCE-DOC-ATTACHED?> Enter “Y” if yes. Enter “N” if no. If you do not have the original/amended return/correspondence physically in hand, input ”N”.
    19. REMARKS>-Input “965 DEF ADJ”
    Inclusion Year Module and/or Triggering Event Year Module ONLY
    TC 767 CRN 263 Reverses the TC 766 CRN 263 by the amount of a payment(s) made against or credits applied to the IRC 965(h) liability.
    The net sum of the TC 76X CRN 263 transactions represent the remaining unpaid IRC 965 liability.
    REQ54/ADJ54
    When inputting a TC 766 CRN 263, follow these steps:
    1. TIN- should be auto-filled, if not input the TIN.
    2. MFT>- should be auto-filled, if not input the MFT.
    3. TX-PRD>should be auto-filled, if not input the tax period.
    4. NM-CTRL>- should be auto-filled, if not input the name control.
    5. SEQ-NUM>-Input sequence number. Start with “1” and continue to number your adjustments in order each day.
    6. BLK>- Use “05” for IMF
    7 .INTCOMP-DT>-Use when inputting a TC 298.00 adjustment. The TC 298.00 CRN 263 adjustment should carry an interest computation date of the installment due date or the date of the payment (whichever is earlier) unless there is interest on the module in which case the installment due date should be used.
    8. CASE-STS-CD>-Keep an open control base until all adjustments post at which time the control base can be closed.
    9. IRC-RCVD-DT>-Input *.
    10. CTRL-CAT>-Input “OURV”.
    11. TC>-Input “290” if the transaction should carry the return due date otherwise input “298” if the transaction date is a date other than the return due date.
    12. AMT>-Input “.00”.
    13. RSN-CDS>-Input “190” for IMF. Input “050” & “190” when inputting TC 298.00.
    14. HOLD-CD>-Use HC 4 when inputting adjustments to TC76X CRN 263 transactions unless the account is full paid (i.e. all non-965 & 965 tax is paid in full) in which case you would use a HC 0-4 as appropriate.
    15. PSTING-DLAY-CD>-A posting delay code (PDC) is not needed when inputting multiple TC 290.00 CRN 263 and/or TC 298.00 CRN 263 adjustments. A PDC is only needed when inputting non TC 290/298 CRN 263 adjustments in addition to TC 290/298 CRN 263 adjustments.

    Note:

    For IMF adjustments, although the TC 290/298 CRN 263 adjustments can be input without a PDC, they all will not post in the same cycle, the earliest will post and the request will resequence allowing only one adjustment to post per cycle.
    16. CD>-Input “263”
    17. AMT>-input the amount of the payment/credit being applied to the 965 liability. ALWAYSinput a minus sign after the amount when attempting to post a TC 767 CRN 263.
    18. SOURCE-DOC-ATTACHED?> Enter “Y” if yes. Enter “N” if no. If you do not have the original/amended return/correspondence physically in hand, input ”N”.
    19. REMARKS>-Input “965 DEF ADJ”

    Inclusion Year Module and/or Triggering Event Year Module ONLY
    DPC 64 Indicates the payment is an IRC 965 designated payment.
    Payments that have been designated as IRC 965 payments should post to the module with a DPC 64 (i.e. TC 670 DPC 64)
    Beginning 2019, IMF programming systemically generates a TC 767 CRN 263 when a TC 670 DPC 64 posts to the Inclusion Year and/or Triggering Event Year module.
    Payments designated as 965 payments by the taxpayer should post as a TC 670 DPC 64.

    Beginning 2019, IMF , IMF programming systemically generates a TC 767 CRN 263 when a TC 670 DPC 64 posts to the inclusion year and/or triggering event year module.
    Inclusion Year Module and/or Triggering Event Year Module ONLY. If posted to a module other than an Inclusion Year or Triggering Event Year module, the payment is misapplied or mis-coded or both.

    Caution: Do not make any adjustments to IRC 965 transaction codes (CRN 263, 971/114 ) without consulting a lead. In addition, if the return is a paper document, obtain the return before making changes to a tax module.

  4. Refer to the table below when researching and inputting adjustments to the TC 971, AC 114 and TC 766 CRN 263 amounts:

    If and Then
    TC 971, AC 114 and TC 766 CRN 263 amounts are the same The transition tax statement/return/payment information reflect that the deferred tax amount should be an amount less than the amount posted
    1. Use CC REQ54 to input a TC 290.00 CRN 263 to reduce the deferred tax amount.

    Note:

    To figure the amount, subtract the correct deferred tax amount per the return from the posted TC 766 CRN 263 amount reflected on the module and input a TC 290.00 CRN 263 for the difference. Once this adjustment is made a TC 767 will post to the account.

    Note:

    RC 190 must be used when inputting a CRN 263. RC 099 for all other IRC 965 adjustments. RC 050 when inputting a TC 298.


    Caution: If decreasing a posted TC 766 CRN 263, input the CRN amount with a minus sign. For example, a CRN 263 for $2,500.00- will generate a TC 767 CRN 263 for $2,500.00.
    The TC 971 AC 114 was input incorrectly (i.e. input using dollars and cents instead of just dollars)   Use CC REQ77 to input the correct TC 971 AC 114 amount.

    Note:

    Input the total IRC 965 tax liability or the IRC 965 triggered liability amount in the Miscellaneous Field. The amount should be input as dollars only (no cents), with no special characters. For example, an amount of $12,500.00 should be entered as 12500 in the Miscellaneous Field. Enter the tax period ending date (MMDDYYYY) in the SECONDARYDT Field. For example, if the tax period is 201712, input 12312017 in the SECONDARYDT Field.


    Caution: Do NOT input a TC 972 reversal when adjusting the TC 971 AC 114 amount. IMF programming will systemically mark the original posting with a reversal indicator “1” once the new TC 971 AC 114 is input.
    No TC 971 AC 114 was entered The inclusion year return indicates an IRC 965 election was made timely during the inclusion period and reflects the IRC 965 Total Tax Liability and/or the return indicates an IRC 965(i) liability was triggered Use REQ77 to input the TC 971, AC 114 to reflect the IRC 965 total tax amount on the inclusion year module or the 965 triggered liability amount on the triggering event year module.

    Note:

    Input the total IRC 965 tax liability amount or the IRC 965 triggered liability amount in the Miscellaneous Field. The amount should be input as dollars only (no cents), with no special characters. For example, an amount of $12,500.00 should be entered as 12500 in the Miscellaneous Field. Enter the tax period ending Date (MMDDYYYY) in the SECONDARYDT Field. For example, if the tax period is 201712, input 12312017 in the SECONDARYDT Field.

    A TC 971, AC 114 has posted, but no TC 766 CRN 263 posted The return indicates an IRC 965(h) election was made Ensure the TC971 AC 114 amount was entered correctly and use CC REQ54 to input a TC 290.00 CRN 263 to correct the deferred tax amount.
    Reminder: No minus sign is needed when inputting the CRN amount when increasing the posted TC 766 CRN 263 amount.
    Caution: If inputting a TC 29X CRN 263 adjustment and inputting a TC 971 AC 114, a Posting Delay Code (PDC) 1 is required on the TC 29X adjustment.
    A TC 971 AC 114 was input in error There is no indication on the return and/or return attachments of an IRC 965 inclusion being made by the taxpayer and/or there is no indication on the return/attachments that a 965(i) election made during the inclusion period triggered Use REQ77 to reverse the TC 971, AC 114 using TC 972 AC 114.

    Note:

    When inputting a TC 972 AC114 do not input an amount in the Miscellaneous Field. Enter the tax period ending Date (MMDDYYYY) in the SECONDARYDT Field.

  5. The TC 766 CRN 263 amount should NEVER be greater than the TC 971 AC 114 amount.

    If Then
    The TC 766 CRN 263 amount exceeds the TC 971 AC 114 Review the Transition Tax Statement or Form 965-A for the correct section 965 total tax and deferred tax amounts
    The TC 971 AC 114 amount was entered incorrectly Use CC REQ77 to input a new TC 971 AC 114 with the correct amount entered in the Miscellaneous Field.

    Note:

    This is a dollars only input. Do NOT include cents or special characters in the amount.

    The initial TC 766 CRN 263 amount was entered incorrectly Use CC REQ54 to input a TC 290.00 CRN 263 to correct the deferred tax amount.

    Note:

    RC 190 must be used when inputting a CRN 263. RC 099 for all other IRC 965 adjustments. RC 050 when inputting a TC 298.

  6. Payments should be applied towards the IRC 965 liability in accordance with the IRC 965 Payment Schedule reflecting the appropriate installment due date or payment due date. To ensure the proper recordation of payments made towards or credits applied to the IRC 965 liability it is important to use the transaction date and/or interest computation date. If the date of the transaction should be the due date of the inclusion year/triggering event year return then input TC 290.00 CRN 263 when adjusting the 965 deferred liability amount. If the adjustment should carry a date other than the due date of the inclusion year/triggering event year return (i.e. the installment due date or the payment date) then input a TC 298.00 CRN 263 when adjusting the 965 deferred liability amount.

    Refer to the table below for guidance on how to adjust the IRC 965 deferred liability:

    If and Then
    The initial TC 766 CRN 263 is for more than 92% of IRC 965 total tax liability (i.e. TC 971 AC 114 amount). For example if the IRC 965 total tax is $10,000.00 and the initial TC 766 CRN 263 is for $9,800 The return/payment history indicates timely installment payments have been made and/or credits have been timely applied to installments due Use CC REQ 54 to input a TC 290.00 CRN 263 with a minus sign behind the 263 amount to reduce the deferred tax amount.

    Note:

    To figure the amount, subtract the correct deferred tax amount per the return from the posted TC 766 CRN 263 amount reflected on the module and input a TC 290.00 CRN 263 for the difference. Once this adjustment is made a TC 767 will post to the account.


    Caution: Review all of the posted TC 767 CRN 263 adjusts prior to performing the adjustment to ensure the needed adjustment hasn’t already been made.
    Manually input TC 767 CRN 263 adjustments for installment payments 2-8 received after the due date of the inclusion year return post with a transaction date matching the due date of the inclusion year return Penalty and/or interest is assessed on the module Input a TC 290.00 CRN 263 for the amount of incorrect TC 767 CRN 263 to credit the amount back to the 965 deferral before inputting a TC 298.00 CRN 263 with the due date of the installment payment in the INTCOMP-DT> Field.
    Manually input TC 767 CRN 263 adjustments for installment payments 2-8 received after the due date of the inclusion year return post with a transaction date matching the due date of the inclusion year return No penalty and/or interest is assessed on the module Input a TC 290.00 CRN 263 for the amount of incorrect TC 767 CRN 263 to credit the amount back to the 965 deferral before inputting a TC 298.00 CRN 263 with the due date of the installment payment or the payment date whichever is earlier in the INTCOMP-DT> Field.

  7. Taxpayers that made an IRC 965(i) election are required to file Form 965-A with their return each year until the IRC 965 liability is assessed and paid in full. When reviewing a notice on an account where an IRC 965(i) election was made, review the return and all attachments.
    Refer to the table below for guidance on when to input a TC 971 AC 165:

    If Then
    Form 965-A is attached indicating that a timely IRC 965(i) election was made during the inclusion period and remains intact at the time of the filing Input a TC 971 AC 165 on the current year module using a CC REQ77 If one is not already on the module.

    Note:

    Input the total IRC 965(i) deferred liability amount in the Miscellaneous Field. The amount should be input as dollars only (no cents), with no special characters. For example, an amount of $12,500 should be entered as 12500 in the Miscellaneous Field. Enter the current date (MMDDYYYY) in both the TRANS-DT field and SECONDARY-DT field.
    The 965(i) deferred liability amount entered in the MISC Field should equal the sum of Form 965-A, Part IV, Column (i) for the reporting year.
    Caution: The taxpayer may have made an IRC 965(i) election in more than one inclusion year. If the Form 965-A indicates more than one 965(i) election was made, combine the 965(i) liability amounts and enter that amount in the Miscellaneous Field.

  8. Taxpayers are instructed to make IRC 965 payments separate from their regular tax payment. The CP 56, Annual Section 965(h) Installment Notice has an IRC 965 payment voucher attached for this purpose. IRC 965 designated payments are identified with a Designated Payment Code (DPC) of 64.
    Refer to the table below when transferring IRC 965 designated payments:

    If Then
    The IRC 965 designated payment (i.e TC 670 DPC 64) was misapplied to the incorrect module Transfer the credit to the appropriate module using CC ADD24. The DPC 64 must be input on both the credit and debit side of the transfer.
    Caution: If using the IAT credit Transfer Tool to complete the transfer, you must select “Override all ADD34 with ADD24” and manually add the “64” to the “Reverse DPC” field on the debit side of the transfer. The DPC 64 must be input on both the credit and debit side of the transfer or it will unpost. Verify before transmitting that the DPC is present on the transfer screen.

  9. Refer to the table below when reviewing balance due notices for Keys 050 and/or 051:

    If and Then
    The balance due was generated because an IRC 965(i) election was not processed correctly The 965(i) liability was erroneously included in the TC 150 amount
    1) Review the tax module and determine the underpayment amount (balance due minus the penalty and interest).
    2) Research the tax return for the total net transition tax liability and the transition tax being deferred per the (i) election.
    3) The total tax liability (TC 150) must be reduced by the amount of the net tax liability deferred - input a TC 291 to reduce the tax liability per the transition tax statement or Form 965-A .
    4) A TC 971 AC 114 must be present on the module. Input a TC 971 AC 114 with a miscellaneous field of zero, if applicable.

    Note:

    If both an IRC 965(i) and 965(h) election were made in the same inclusion year, a TC 971 AC 114 for the amount of the IRC 965 Total Tax liability minus the 965(i) deferred tax amount, should be displayed on the inclusion year module along with a TC 971 AC 165 for the full amount of the 965(i) deferred tax liability.


    5) Input a TC 971 AC 165 on the current year module using a CC REQ77 if one is not on the module.
    The balance due was generated because an IRC 965(h) election was not processed correctly  
    1) Review the tax module and determine the underpayment amount (balance due minus the penalty and interest).
    2) Research the tax return to determine the 965 total tax amount and the 965 deferred tax amount .
    3) A TC 971 AC 114 must be present on the module. Input a TC 971 AC 114 with a miscellaneous field for the 965 total tax amount if not present..
    4) Input a TC 290 for zero with CRN 263 for the amount of the deferred tax liability to be paid in installments if not present .If inputting a TC 290 CRN 263 and TC 971 AC 114, use a Posting Delay Code 1 on the CRN 263 adjustment.

    Note:

    RC 190 must be used when inputting a CRN 263. RC 099 for all other IRC 965 adjustments. RC 050 when inputting a TC 298.

  10. Follow general notice procedures for disposition. If the balance due is a result of incorrect manual TC 76X CRN 263 adjustments, use the applicable If and Then table above to correct the module.

    If any of the installment payments were received late or if after all the necessary adjustments have posted to the inclusion year module, the module is in a debit balance, refer the case to SB/SE for possible acceleration by e-mailing all relevant information pertaining to the case to the *SBSE Memphis 965 e-mail box.

  11. If there is any indication of a transfer agreement or accelerated liability on the module refer the case to the *SBSE Memphis 965 for further processing.

    If Then
    MFT 82 is present on the module.

    Note:

    MFT 82 is an IMF transferee module which indicates an IRC 965 liability was transferred. IRC 965 payments/credits on the transferee’s module should mirror the IRC 965 payments/credits on the transferor’s 965 inclusion year module until the 965 tax liability is paid in full.

    Refer the case to the *SBSE Memphis 965 e-mail box for further processing
    Unreversed TC 971 AC 507 is present on the module.

    An unreversed TC 971 AC 507 indicates an approved IRC 965 Transfer Agreement. This transaction creates an MFT 82 Transferee module which mirrors the Transferor’s module. TC 971 AC 507 links the transferor and transferee accounts. Once established any payment made towards the transferred 965 liability will be recorded on both modules until it is paid in full.
    Refer the case to the *SBSE Memphis 965 e-mail box for further processing.
    TC 767 CRN 337 is present on the module.

    A TC 767 CRN 337 indicates a payment made to a mirrored account. This transaction code is used to cross reference (mirror) payments made towards 965(h) installments to the joint and severally liable, transferee and transferor accounts.
    Refer the case to the *SBSE Memphis 965 e-mail box for further processing.
    History Item of “F965/TRSFR” is present on TXMOD Refer the case to the *SBSE Memphis 965 e-mail box for further processing.
    An open Control Base present on TXMOD with any of the following history items: L6154, 965/L6154, 6154SNT, 965ACCEL, FTPACCEL. Refer the case to the *SBSE Memphis 965 e-mail box for further processing.

Reviewing CP 47A, CP 47B, and CP 47C Notices (Notice and Demand IRC Section 965 notices)
  1. The CP 47A, CP 47B, and CP 47C informs the taxpayer that the IRS has received and processed their income tax return and recorded the taxpayer election to pay their IRC Section 965 net liability in installments.

  2. For CP 47A, CP 47B, and CP 47C, verify the “Notice and Demand for IRC Section 965 Total Amount” on the notice against the TC 150 on IDRS.

  3. Verify the amount on NRPS/OLNR and the TC 150 on IDRS matches.

  4. If the notice matches, select print “P” on OLNR for notice disposition, If the amount does not match, select hold “H” on OLNR for notice disposition and forward to the lead or manager.

Reviewing CP 56/56SP Annual Installment Notice (IRC 965 Notice)
  1. The CP 56, Annual Section 965(h) Installment Notice is issued annually to notify taxpayers who made a 965(h) election of their IRC Section 965 installment payment amount and due date.

  2. When reviewing CP 56, research the account to ensure the TC 971, AC 114 amount and TC 766 CRN 263 were input correctly.

  3. If the TC 971 AC 114 and/or the TC 766 CRN 263 were input incorrectly, input the appropriate adjustment in accordance with IRM 3.14.1.9.16.1. If there is a remaining IRC 965 tax liability after the adjustments are made, and the installment is still owed, retype the notice to include the correct “Total Unpaid IRC Section 965 Amount” and/or “Installment Amount Due.

    Note:

    The Total Unpaid IRC Section 965 Amount is the net of all TC 766 CRN 263 and TC 767 CRN 263 transactions on the module.


    Caution: Be aware of pending transactions that could impact the accuracy of this amount on the notice and update the notice accordingly. If the pending transaction(s) will reduce the Total IRC 965 deferred tax to zero, void the notice.

    Note:

    The Installment Amount Due will be equal to or less than the applicable percentage (8 percent in years 1-5, 15 percent in year 6, 20 percent in year 7 and 25 percent in year 8) of the most recently posted TC 971 AC 114 amount. The amount will be less than the designated percentage if the taxpayer overpaid a previous installment.

  4. If there is a remaining IRC 965 tax liability, research to ensure all designated IRC 965 payments were properly applied to the appropriate module and accounted for. Review inclusion year and subsequent modules using IMFOL and/or TXMOD to locate missing IRC 965 installment payments. Always use RTR or EFTPS (electronic payments) to verify taxpayer intent for payments.

    Note:

    When transferring a TC 670 DPC 64 from one module to another, make sure to use ADD24 and include the DPC 64 on both the credit and debit side of the transfer. The IAT Credit transfer tool does not include the DPC 64 on the debit side of the transfer, so if using the IAT Tool, you will need to manually add the DPC 64 on the debit side or the transaction will unpost.

  5. If an IRC 965 designated payment was misapplied, transfer the credit to the appropriate module and retype the notice to include the correct “Total Unpaid IRC Section 965 Amount” and/or “Installment Amount Due.”

    Note:

    When transferring a TC 670 DPC 64 from one module to another, make sure to use ADD24 and include the DPC 64 on both the credit and debit side of the transfer. The IAT Credit transfer tool does not include the DPC 64 on the debit side of the transfer, so if using the IAT Tool, you will need to manually add the DPC 64 on the debit side or the transaction will unpost

  6. If there was no IRC 965 inclusion and/or IRC 965(h) election made and the TC 971, AC 114 and/or the TC 766 CRN 263 were input in error, input the appropriate reversals in accordance with the IRM and void the notice.

    Note:

    Do not move an overpayment from 2018 or subsequent module to 2017 to reduce a TC 766 CRN 263 on 2017 or move an overpayment from 2017 to 2018 to reduce a TC 766 CRN 263 on 2018 unless the overpayment is a result of a designated IRC 965 installment payment that was misapplied in which case the payment should be applied/transferred to the specified inclusion module.

  7. Once an installment becomes past due, the amount is no longer “properly deferred” and should be referred to SB/SE above for acceleration.

    Note:

    The waiver granted to certain IMF filers was only applicable to the 1st installment, however, the “Underpayment of 1st Installment” and “Interest on Underpayment” fields still display on the CP 56 or CP 56SP notice and in OLNR. If there are amounts in these fields and the notice doesn’t meet the criteria above to be voided, then notice should be retyped to zero these amounts out. If an installment other than that 1st installment is underpaid it is subject to acceleration/penalties and interest and should be referred to SB/SE above.

Command Code IMFOL IRC 965
  1. Command Code IMFOL with Definer M was created to assist in identifying the IRC 965(h) deferral payments on the account.

  2. The amount listed under the title, “Tax Liabilities and Installments” reflects the latest TC 971, AC 114 (Total Net Tax Liability under Section 965) reported by the taxpayer.

  3. The amount listed under the title, Deferred amount, reflects the latest TC 766 CRN 263 remaining deferred amount.

  4. The remainder of the screen display reflects the yearly percentage of the 8 installments based on the latest TC 971, AC 114 and the remaining installment amounts due based on the latest TC 766 CRN 263, along with the yearly due dates of the installments.

  5. This display screen will assist in determining the amount of the IRC 965 deferral amount paid, and the remaining deferral amount still owed. It will allow you to determine if an installment amount was paid, overpaid, with the overpayment being credited to the next installment or if the installment was underpaid.
    Caution: The IMFOLM display screen will recalculate with the input of a new TC 971, AC 114 and/or a new TC 766/767 CRN 263 amount. If there is an incorrect TC 971 AC 114 and/or an incorrect TC 766/767 CRN 263, the installment information shown on IMFOLM will also be incorrect.

    Note:

    See IRM 2.3.51-31, Command Code IMFOL IRC 965 Output Display.

Qualified Business Income Deduction (QBID)
  1. Many owners of sole proprietorships, partnerships, S corporations and some trusts and estates may be eligible for a qualified business income (QBI) deduction – also called Section 199A – for tax years beginning after December 31, 2017. The deduction allows eligible taxpayers to deduct up to 20 percent of their qualified business income (QBI), plus 20 percent of qualified real estate investment trust (REIT) dividends and qualified publicly traded partnership (PTP) income. Income earned through a C corporation or by providing services as an employee is not eligible for the deduction. For more information on what qualifies as a trade or business, see Determining your qualified trades or businesses in Pub 535.

  2. The deduction is available, regardless of whether taxpayers itemize deductions on Schedule A or take the standard deduction. Eligible taxpayers can claim it for the first time on the 2018 federal income tax return they file in 2019.
    The deduction has two components.

    1. QBI Component. This component of the deduction equals 20 percent of QBI from a domestic business operated as a sole proprietorship or through a partnership, S corporation, trust or estate. The QBI Component is subject to limitations, depending on the taxpayer’s taxable income, that may include the type of trade or business, the amount of W-2 wages paid by the qualified trade or business and the unadjusted basis immediately after acquisition (UBIA) of qualified property held by the trade or business. It may also be reduced by the patron reduction if the taxpayer is a patron of an agricultural or horticultural cooperative.

    2. REIT/PTP Component. This component of the deduction equals 20 percent of qualified REIT dividends and qualified PTP income. This component is not limited by W-2 wages or the UBIA of qualified property. Depending on the taxpayer’s taxable income, the amount of PTP income that qualifies may be limited depending on the PTP’s trade or business


    The deduction is limited to the lesser of the QBI component plus the REIT/PTP component or 20 percent of the taxable income minus net capital gain.
    QBI is the net amount of qualified items of income, gain, deduction and loss from any qualified trade or business, including income from partnerships, S corporations, sole proprietorships, and certain trusts. Generally this includes, but is not limited to, the deductible part of self-employment tax, self-employed health insurance, and deductions for contributions to qualified retirement plans (e.g. SEP, SIMPLE and qualified plan deductions).
    QBI does not include items such as:
    • Items that are not properly includable in taxable income

    • Investment items such as capital gains or losses or dividends

    • Interest income not properly allocable to a trade or business

    • Wage income

    • Income that is not effectively connected with the conduct of business within the United States

    • Commodities transactions or foreign currency gains or losses

    • Certain dividends and payments in lieu of dividends

    • Income, loss, or deductions from notional principal contracts

    • Annuities, unless received in connection with the trade or business

    • Amounts received as reasonable compensation from an S corporation

    • Amounts received as guaranteed payments from a partnership

    • Payments received by a partner for services other than in a capacity as a partner

    • Qualified REIT dividends

    • PTP income


    Solely for the purposes of IRC 199A, a safe harbor is available to individuals and owners of pass through entities who seek to claim the deduction under section 199A with respect to a rental real estate enterprise. Under the safe harbor a rental real estate enterprise will be treated as a trade or business for purposes of the QBI deduction if certain criteria are met.

    Note:

    Rental real estate that does not meet the requirements of the safe harbor may still be treated as a trade or business for purposes of the QBI deduction if it is a section 162 trade or business.

  3. Adjusting the Qualified Business Income Deduction, see IRM 21.6.7.4.18.1

Reviewing Undeliverable Notices

  1. Notices that cannot be delivered to taxpayers are generally returned to the Submission Processing Campus. They are routed to Files, where a preliminary search for a more current address is conducted. If a better address is found, Files attaches a 3x5 note with that address. These, and notices for which no better address is found, are then routed to Notice Review for resolution.

  2. Void the undeliverable notice if the account is in Service Center Status 60-64 or 71-72. Input history items on IDRS/AMS.

    Note:

    Do not create a dummy module to input a history item on IDRS.

  3. Void the notice if the account shows it was previously worked as an undeliverable notice in Notice Review. Input history items on IDRS/AMS and input CC STAUPS 51

    Note:

    Do not create a dummy module to input a history item on IDRS.

    Note:

    CC STAUPS- Do not input if the account status (See SC Status on TXMOD) is 22, 23, 24, 26,60, 61, 62, 63, 64, 71, or 72. CC STAUPS must be input before using CC RECON.

  4. Undeliverables that aren't Service Center Status 60-64 or 71-72 or have not been previously worked in Notice Review must be reviewed for a more current address, as well as for any payment, penalty and interest changes.

  5. The Centralized Authorization File contains information regarding the type of authorization that taxpayers have given third party representatives for various modules within their accounts. This information is used to direct refunds and/or copies of notices and correspondence to authorized representatives. It can also be used to determine whether an individual claiming to be a representative of a taxpayer is, in fact, authorized to represent or act in the taxpayer’s behalf, or to receive information requested. The command code available for research is CC CFINK IRM 2.3.31.

    • If the undelivered notice is going to a representative address, research the CAF mismatches on IDRS. Use CC CFINK to identify the representative’s name and address. Use CC CFINK with MFT and tax period (Example: 000-00-1234, 30 201612).

    • The “Yes” on the notice line indicates the representative is authorized to receive notices.

    • The “No” on the notice line indicates there is no authorized representative to receive notices

      Note:

      A history item is not required for CAF notices.

      If Then
      If “No” is present Void the Undeliverable
      If “Yes” is present If a representative address is found update name and address of each representative(s) on the notice(s) and use CC INTST to determine the new account balance. Use CC CFINK with the CAF number to obtain the representative name and address.
      If “Yes” is present If a better address is not found, void the notice. Form 9856 is not required.

  6. Decedent undeliverable notices with a second name line other than a spouse: the administrator, executor, or trustee of an estate may receive the returns and return information of a deceased individual. Often, an estate is already settled at the time a request for returns and return information is made, and thus an administrator, executor or trustee of the estate will no longer exist. In these circumstances, a person seeking disclosure will often need to consult state law to determine how appointment of an administrator, executor or trustee of the estate may be accomplished.

    • Research for a better address only if the second name line is the spouse, otherwise void the notice and input CC STAUPS 51.

    • In Care of or %, should be voided or sent to better address of taxpayer with no %. If notice is voided, input CC STAUPS 51.

Researching Undeliverables
  1. Research Undeliverables using IAT address tool, CC ENMOD, and CC IMFOLE, as the Primary command codes. As needed for verification, use CC NAMES, CC NAMEI, CC IRPTR, CC TPIIP, AMS History notes, and RTR (submitted checks often contain a more current address) for additional research. Check ENMOD or IMFOLE for recently-posted or pending address changes. Some are made by the National Change of Address (NCOA) Program and are indicated by the presence of TC 014 and the unique DLN of xx26399599999Y, with “xx” representing each campus. Update the notice using the more current address or the pending change-of-address on IDRS/AMS.

    Note:

    Any change created by National Change of Address (NCOA) will update the taxpayer's entity information.

    Note:

    CC TPIIP researches for taxpayer account information using components/fields other than the full SSN.

  2. If a yellow USPS forwarding label is attached, verify the address on the label using CC ENMOD and CC NAMES, if available on IDRS. Use the address on the yellow label to update the notice if it differs from the notice address, and nothing more current was found.

    Exception: If the USPS label states that the forward time is expired AND the cycle date on ENMOD is one year or more PRIOR to the date on the USPS yellow label date, update the address.

    1. If the taxpayer’s name printed in the letter and what is shown on the "yellow label" are exactly the same, update the taxpayer address to the "yellow label" address.

    2. If the taxpayer’s mailing address differs from the "yellow label" and the name printed on the "yellow label" is an exact match to the correspondence, update the taxpayer’s mailing address to the "yellow label" address. Reissue the correspondence to the taxpayer’s updated mailing address.

    3. If the taxpayer’s first name is like that on the "yellow label", but the last name is an exact match, confirm whether IRS records show any other taxpayers with similar first names and the exact same last name at the same address. If not, update the taxpayer address. Otherwise, do not update the taxpayer address.

    4. In all other cases do not update the taxpayer address.

  3. If neither of the above are good choices, consider using the address on the attached 3x5 card from Files.

    Caution:

    This information is often outdated, especially on prior year returns. Do not use an address from a previous year unless it is clear that any difference (for example, “1224 Main Street” vs. “124 Main Street”) may resolve the problem.

  4. If a better address is found, update the notice, but do not change the taxpayer's entity information on CC ENMOD based on information provided by the Files function 3X5 card or any other research.

  5. Attempt to perfect any new address by entering into USPS.COM - Zip Code Finder. http://zip4.usps.com/zip4/welcome.jsp

Resolving Undeliverables
  1. If no better address is found:

    1. E-filed notices: void (“X” through with pencil) the notice.

    2. Paper returns: attach Form 9856, Attachment Alert, to send the notice (along with envelope and any stuffers) back to Files to be associated with the return.

    3. Input CC STAUPS 51, with no cycle entry, to suspend Collection procedures and notices (series 500 on CC TXMOD).

      Note:

      CC STAUPS do not input if the account status (see SC STATUS on TXMOD) is 22, 23, 24, 26, 48, 53, 60, 61, 62, 63, 64, 71, or 72. CC STAUPS must be input before using CC RECON.

    4. Use CC ACTON to input a history item on CC TXMOD, if present on IDRS.

    5. Input history item on AMS (UD-Undelivered Mail) to include the following information:

      CP#

      Undeliverable notice

      Address of Undelivered notice

      Document no better address found

  2. If a better address is found:

    1. Update the address on the notice. Do not change the address on CC ENMOD.

    2. Include Form 8822, Change of Address, with the notice. Completion of this form by the taxpayer authorizes an address change.

    3. If the total accrual change is less than $5.00 (after using CC INTSTD), send the notice as is and use Label #10 and #19.

    4. Input CC STAUPS for eight cycles in the appropriate status.

      Note:

      CC STAUPS do not input if the account status (see SC STATUS on TXMOD) is 22, 23, 24, 26, 60, 61, 62, 63, 64, 71, or 72. CC STAUPS must be input before using CC RECON.

    5. Assume any Collection notice (series 500) issued after an undeliverable notice was also undeliverable. However, if CC TXMOD indicates a payment was received because of a Collection notice, add Label 13 and any others that apply.

    6. Mark or insert the appropriate label. See IRM 3.14.1.7.8.5, Labeling Notices.

      If a payment or credit... Then...
      Posted since the notice cycle or is pending on the module Add Labels 3, 19, and 10. Use CC INTSTD to determine the new account balance
      Has not posted since the notice cycle Add Label 9 to the notice. Use CC INTSTD to determine the new account balance, which will be computed using the current 23C date, plus:
      • 21 calendar days, on balances less than $100,000 (21 calendar days from the current 23C date)

      • 10 work days (10 work days from the current 23C date) for a balance of $100,000 or more

      Note:

      If using CC INTSTD, it may be necessary to change the date on the initial response screen to the current 23C date and re-transmit to get the exact pay by dates on page 2 of CC INTSTD

    7. Use CC ACTON to input a history item on CC TXMOD, if present on IDRS.

    8. Input history item on AMS (UD-Undelivered Mail) to include the following information:

      CP#

      Undeliverable notice

      Address of Undelivered notice

      New address of resent notice

  3. For refund, overpaid, fully paid, even balance, and adjustment notices.

    Resolve undeliverable refund and overpaid notices by correcting the address (if possible) and inserting the appropriate label using the chart below. Input a history item on IDRS and AMS.

    If... Then...
    A TC 846 posted in the notice cycle and the refund was direct deposit Add Label 19 to the notice
    A TC 846 posted in the notice cycle and the refund was issued on paper Add Labels 19 and 12 to the notice
    A TC 740 posted to the module with 99999 in the DLN, setting an S– freeze (Refund Check Returned Undeliverable) Add Labels 19 and 12 to the notice
    A TC 740 posted to the module between two TC 846s for the same amount

    Example:

    The original refund check was returned as undeliverable, then subsequently reissued

    Add Labels 19 and 12 to the notice, and mail to the address shown on CC ENMOD
    No TC 846 is present on the module Add Label 19 to the notice
  4. Resolve fully-paid CP 14I, 14H, 23, and 60:

    1. Void the notice if a CP 14I, 14H, 23, or 60 is fully-paid or falls below ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ as a result of a subsequent payment.

    2. If the module balance was satisfied by an offset and is not in Status 60-64, 71-72 update address and insert Label 3 and 19. It is likely that any offset notice also went undeliverable, and the taxpayer must be apprised of changes to the account.

    3. Use CC ACTON to input a history item on CC TXMOD, if present on IDRS

    4. Input the history item on AMS (UD-Undelivered Mail) to include the following information:

      CP#

      Undeliverable notice

      Address of Undelivered notice

      New address of resent notice

  5. Resolve Even Balance and Information notices:

    1. Insert Label 19

    2. Use CC ACTON to input a history item on CC TXMOD, if present on IDRS

    3. Input the history item on AMS (UD-Undelivered Mail) to include the following information:

    CP#

    Undeliverable notice

    Address of Undelivered notice

    New address of resent notice

    Note:

    Use CC IMFOL if the account is not available on IDRS.

  6. Resolve Adjustment notices:

    1. Insert Label 9/9H or any other applicable label into the notice. See IRM 3.14.1.7.8.5 , Labeling Notices

    2. Use CC ACTON to input a history item on CC TXMOD, if present on IDRS

    3. Input the history item on AMS (UD-Undelivered Mail) to include the following information:

      CP#

      Undeliverable notice

      Address of Undelivered notice

      New address of resent notice

  7. Assume that any subsequent notice that was mailed is also undeliverable. Update the original notice using the above instructions.

    Note:

    On a CP 14H notice only insert labels 9H and/or 10H, update interest only on the account. No additional penalties can be assessed on a CP14H notice.

    Exception:

    If module conditions indicate that the entity was corrected before the subsequent notice generated, assume the notice was deliverable. Take no action other than to correct the address on the original undelivered notice.

    1. If the subsequent notice is going out in the current cycle, See IRM 3.14.1.7.8.5, Labeling Notices and input CC STAUP for eight cycles.

    2. Use CC ACTON to input a history item on CC TXMOD, if present on IDRS.

    3. Input the history item on AMS (UD-Undelivered Mail) to include the following information:

    CP#

    Undeliverable notice

    Address of Undelivered notice

    New address of resent notice

Reviewing Notices with Freeze Codes

  1. Consider all existing freeze codes before taking any action on a tax module. Before routing, referring, or closing the case, notate any action that may be required to correct the account.

  2. Document 6209, IRS Processing Codes and Information, contains a complete listing of Master File Freeze Codes with explanations of the codes, conditions on the account, and freeze release instructions.

Duplicate Return Freeze (–A)
  1. This freeze causes a Submission Processing Campus Notice CP 36 to generate to Accounts Management.

  2. It is set by the posting of:

    • A duplicate return (TC 976).

    • An amended return (TC 977).

  3. Accounts Management must resolve this freeze:

    If the –A Freeze case Then
    Is not controlled (Category Code DUPF) to an individual Tax Examiner Recharge the return using (CC ESTABDT for a paper return) and route to Accounts Management. Print the notice
    Is controlled to a Tax Examiner Contact the Tax Examiner on instructions for notice disposition, return routing, and case resolution
  4. Do not insert a label unless there is an adjustment without a Hold Code "2" , "3" , or "4" pending on the account. The case will normally be closed in this situation.

STEX Freeze (–B)
  1. This freeze prevents credits from refunding or offsetting (including credit elect) from the module.

  2. It is set when the refund statute expiration date (RSED date on TXMOD) expires.

  3. Contact the Statute Function before making any adjustments to the account when the ASED is within 90 days AND:

    • The adjustment is a tax increase, or

    • There is Recapture of Advanced Earned Income Credit, Earned Income Credit, First-time Homebuyer Credit, Make Work Pay Credit, American Opportunity Tax Credit, Additional Child Tax Credit, or any other prepaid credits, or

    • There is Recapture of Withholding

      Caution:

      Do not abate tax on statute period accounts with the intent of reprocessing a return without first contacting the Statute Function. You may create a barred assessment by abating the tax.

  4. Follow any special instructions given by the Statute Function when making an adjustment to the tax module. Assessments of the above items must be made by the Statute Team.

  5. You DO NOT NEED to contact the Statute Function if the adjustment:

    • Is a timely claim for a tax decrease or a TC 290 for .00, or

    • If the return has been statute cleared within 90 days

      Note:

      If adjusting the tax, input a Hold Code “4” to hold any remaining credit.

  6. If transferring a credit, input a TC 570 on the notice module to hold any remaining credit.

Offset Overflow Freeze (C–)
  1. Master File generates the C– freeze:

    • When an offset overflow (computer capacity exceeded) exists

  2. This freeze delays a TC 846 for one or two cycles.

  3. Follow normal review procedures for the Offset Overflow Freeze.

Refund Statute Expiration Date (RSED) Freeze (–D)
  1. This freeze prevents credits from refunding or offsetting (including credit elect) from the module.

  2. It is set when a TC 29X or TC 30X (Doc Code 54 or 47) creates a credit balance comprised of timely credits on the account after the RSED expires.

  3. The following conditions will release the freeze:

    • A TC 29X with a Priority Code posts to the module.

    • The module balance becomes zero or a debit.

      Caution:

      Contact the Statutes Function before making any adjustment.

ES Spousal Validation Freeze (D–)
  1. Either of the following conditions will set this freeze:

    • A TC 150 claiming more ES credits than are available on the tax module results in a TC 667 resequencing to a spouse’s account.

      Note:

      A computer-generated TC 666 will release the freeze in this circumstance.

    • An overpayment offsets to a joint balance due account.

      Note:

      A TC 826 posting to the spouse’s account (usually in three cycles) releases this type of D– freeze.

LB&I Freeze of 1042-S credits (-E)
  1. Beginning January 1, 2015, all Form 1040-NR claiming a Form 1042-S (CRN 330) credit will be reviewed for validity. All credit balances will have that portion of the refund systemically frozen and the initial Freeze is set for 168 days and may be extended by LB&I.

    • The refund is frozen systemically by TC 810.

    • DO NOT release the amount frozen.

    • DO NOT perform any adjustments on the TC 766 CRN 330 credit (i.e. Credit Transfer)

Amended Return Freeze (E–)
  1. This freeze prevents overpayments from refunding or offsetting into or out of the frozen module.

  2. The following conditions will set this freeze:

    • A TC 977 posts to a module without a posted TC 150

      Note:

      This condition generates a CP 29.

    • A TC 976 posts as the result of a TC 971 with an Action Code 10, 12, 13, 14, or 15

  3. Any of the following actions will release the freeze:

    • TC 150

    • TC 971 with Action Code "AC 002"

  4. Route the case to Accounts Management.

    Note:

    If the case is controlled to a Tax Examiner, route it directly to that Tax Examiner.

Math Error Freeze (–G)
  1. One of the most common freeze codes seen in Notice Review, this freeze grants Appeal Rights to the taxpayer, and prevents the tax module from updating to Tax Delinquent Account (TDA) status. One of the following conditions usually sets this freeze:

    • An original return with a Taxpayer Notice Code (TPNC) Math Error Notice Code posts to the module.

    • An adjustment in Blocking Series 770–789 posts to the module.

  2. The freeze automatically releases in 12 weeks. Any of the following actions will release it earlier:

    • TC 472 with closing code 94

    • TC 290 with priority code 6

Restricted Failure to Pay Penalty Freeze (G–)
  1. This freeze is most commonly encountered when reviewing TDA (CP 500 series) notices.

  2. A TC 150 with CCC "Z" sets this freeze and generates a TC 270, TC 271, TC 320 (RDD is prior to 01/08/87), TC 534 and TC 780.

  3. A TC 272, TC 321, TC 535 (if TC 534 amount is completely released, TC 781 and TC 782) will release the freeze.

  4. Manually compute the penalty and retype the notice, if necessary.

Business Master File (BMF) Offset Freeze (H–)
  1. A resequencing module TC 796 sets this freeze. This indicates that Master File is searching Business Master File (BMF) for a possible offset from the IMF account.

  2. The freeze automatically releases in two cycles.

  3. If the credit offsets to a BMF account:

    1. A corresponding TC 896 debit posts to the Individual Master File (IMF) module for each credit offset.

    2. A CP 138 generates from the BMF module one cycle after the CP 12 or CP 24 generates from the IMF module.

    3. If it is necessary to input a TC 570 or CC NOREFP as outlined in IRM 3.14.1.7.1.1, Refund Intercepts, hold the CP 12 or CP 24 for one cycle and disposition in the next cycle when the CP 138 generates.

Restricted Credit Interest Freeze (I–)
  1. This freeze restricts credit interest.

  2. One of the following conditions will set the freeze:

    • A TC 150 posts with CCC "U" .

    • A TC 150 posts to an invalid SSN or temporary SSN (first digit is a 9).

      Note:

      A TC 29X with a Return Processable Date will release the freeze in either of the above situations.

    • A TC 150 posts with CCC "Z" . A TC 770 for .00 will also generate. This freeze is released when the net module balance becomes zero or a debit.

  3. Follow normal review procedures.

Restricted Debit Interest Freeze (–I)
  1. This freeze is most commonly encountered when reviewing TDA (CP 500 series) notices.

  2. This freeze prevents the computer from generating debit interest. It also prevents credits from refunding or offsetting into or out of the module for eight weeks.

  3. A TC 340/341, a TC 780 posting or a module containing a TC 150 with CCC "Z" sets this freeze.

  4. TC 342 or TC 781/782 will release this freeze.

  5. Manually compute the interest and retype the notice, if necessary.

Excess Estimated Tax Credit Freeze (J–)
  1. The presence of both of the following conditions will set this freeze:

    • Available ES credits exceed those claimed on the return.

    • The Filing Status Code is other than Married Filing Jointly (FS2).

  2. Any of the following actions will release the freeze:

    • TC 29X with Priority Code 8

    • TC 662 (even for a zero amount)

    • TC 667

    • TC 712

  3. Follow normal review procedures.

Credit Balance Freeze (–K)
  1. This freeze prevents the credit balance from refunding or offsetting from the module.

  2. Any of the following transactions will set the freeze:

    • TC 30X with Hold Code "1" , "2" , "4" or posting of Form 1120 (MFT 02) with CCC "N" .

    • TC 29X with Hold Code "1" , "2" , or "4" .

      Note:

      A TC 290 for .00 with Hold Code "4" sets this freeze and prevents the refund from generating. A transcript generates to Accounts Management sixteen (16) cycles later. If a TC 29X or TC 30X posts with a Hold Code "2" or "4" , an adjustment notice will not generate.

    Caution:

    Do not set a –K freeze unless it is necessary for case resolution. Be aware of the conditions for the release of the freeze. Do not release a refund erroneously.

  3. If a case is returned to Notice Review requesting to work the -K freeze and the credit should not be released, reject it back to the originator explaining the reason.

  4. Any of the following actions will release the freeze:

    • TC 150 posts to the module

    • TC 29X (without Priority Code "6" or "7" ) posts to the module

    • TC 30X posts to the module

    • TC 820 posts to the module

    • TC 830 posts to the module.

    • A Doc Code 24 or 34 credit transfer.

    • The module balance becomes zero or debit.

Innocent Spouse Claim Freeze (L–)
  1. A TC 971/AC065 sets this freeze.

  2. This freeze prohibits offsets and prevents notices from being issued.

    Note:

    CP 521 (Monthly Installment Agreement Reminder) and CP 71C, issued semi-annually for all TDAs in the queue in Status 24 for at least one year, are not held by the L– freeze.

  3. TC 972/AC065 releases the freeze. Before releasing this freeze, contact the originator.

Audit Information Management System (AIMS)- Exam Indicator Freeze (–L)
  1. A TC 420 or TC 424 sets this freeze.

    Caution:

    This freeze will not prevent a refund from generating. Follow normal review procedures.

    Note:

    If a CC REQ54 adjustment is needed, use Priority Code "1" .

Disaster Processing Freeze (–O)
  1. This freeze represents an account, in which disaster processing has taken place.

  2. For returns processed 12/31/2006 and prior, this freeze is identified by a TC 971 AC 086 or AC 087 appearing on CC ENMOD.

  3. For information on how to handle these cases, refer to IRM 3.14.1.6.9.10, Natural Disaster Procedures.

Refund Deletion Freeze (P–)
  1. This freeze prevents overpaid balances from refunding or offsetting from the module.

  2. A TC 841 or TC 720 sets the freeze.

  3. Any of the following actions will release the freeze:

    • TC 29X posts to the module

    • TC 30X posts to the module

    • TC 820 posts to the module

    • TC 830 posts to the module

    • A Doc Code 24 or 34 credit transfer

    • The module balance becomes zero or a debit

    Caution:

    If an open control base is on the module, do not release the freeze without contacting the controlling employee.

Additional Liability Freeze (–R)
  1. A manual or systemic TC 570 sets this freeze.

  2. Any of the following conditions will generate a TC 570:

    • A TC 150 with CCC "3" posting to the module (unless the return has an Audit Code "L" or there is an unreversed TC 424 or TC 940 on the module).

    • A TC 150 posting in Blocking Series 920–929.

    • A TC 680 posting and creating a credit balance of $5 or more after interest accruals are assessed.

    • A 29X posting in Blocking Series 740–769.

    • A Taxpayer Delinquency Investigation (TDI) refund hold with Julian date 999.

  3. This freeze is usually released by a TC 571, 572, or 29X.

    Exception:

    If the freeze was set by the TDI refund hold, the refund may only be released by a TC 290 with Priority Code "8" .

Remittance Processing System (RPS) Multiple 610 Freeze (R–)
  1. This freeze prevents any overpayment from refunding.

  2. RPS multiple 610 freeze sets when multiple TC 610s are present on the module when the TC 150 posted, or if RPS TC 610 does not match the DLN of a posted TC 150.

    Note:

    The mismatched DLN condition described above is becoming increasingly common, because electronically filed balance due returns, if paid by paper check with a Form 1040–V Voucher, will never carry the same DLN as the return.

  3. Common reasons why the TC 610 creates a credit balance are because the taxpayer anticipates penalty and/or interest, and attempts to satisfy it along with the unpaid tax, or a balance due is paid, and a math error causes the account to become overpaid.

  4. Research the payment and take all necessary corrective actions.

  5. Input a TC 290 for .00 to release the freeze and allow the module to refund, as appropriate. A credit transfer will also release the freeze.

Undelivered Refund Check Freeze (S–)
  1. This freeze prevents any overpayment from refunding. It also causes a CP 31 to be issued to the taxpayer.

  2. Either of the following actions sets this freeze:

    • A TC 740.

    • A refund attempting to generate from an account having a Submission Processing Campus Zip Code.

  3. A TC 018 releases this freeze.

  4. Refer to IRM 3.14.1.6.10.1, Researching Undeliverables.

Disaster Processing Freeze (–S)
  1. This freeze represents an account in which disaster processing has taken place.

  2. For returns processed 01/01/2007 and later, this freeze is identified by a TC 971/AC 688 appearing on CC ENMOD.

  3. For information on how to handle these cases, refer to IRM 3.14.1.6.9.10 , Natural Disaster Procedures.

Outstanding Liability Freeze (V–)
  1. This freeze indicates an outstanding liability on another tax account.

  2. A TC 130 sets this freeze.

  3. A TC 131, TC 132, or TC 824 releases the freeze.

  4. If the account has a credit balance and the TC 130 DLN indicates a DMF liability, research the account to determine if there is a DMF liability. If there is no indication of a DMF liability, contact Collections before taking any action.

  5. Follow normal review procedures.

Bankruptcy Freeze (–V)
  1. This freeze causes the Submission Processing Campus status to become SC 72.

  2. A TC 520 with Closing Code 83, 85–89 sets the freeze.

  3. A TC 521/522 with Closing Code 83, 85-89 releases the freeze.

  4. Follow normal review procedures.

    Caution:

    Contact the appropriate Insolvency Function before taking any action on the account that is not specified here. Refer to Servicewide Electronic Research Project (SERP) for Insolvency contacts.

Claim Pending Freeze (W–)
  1. This freeze indicates that a claim is pending.

  2. A TC 470 or TC 976 posting to a balance due module sets the freeze.

    Note:

    A TC 470 without a Closing Code or with a Closing Code "90" will prevent offsets into the account.

  3. Follow normal review procedures.

Litigation Pending Freeze (–W)
  1. A TC 520 with various closing codes sets this freeze.

  2. Follow normal review procedures.

    Caution:

    Contact the Insolvency Function or the Appeals Function indicated before taking action on the account that is not specified here. Refer to SERP for Insolvency contacts.

Accounting Manual Refund Freeze ( X–)
  1. A refund amount of $10,000,000 (Ten Million) or greater sets this freeze. These cases require a manual refund and are worked by the Accounting Function.

  2. If working a case with a refund of less than $10,000,000 without an X– freeze, and the case requires an action that will create a refund over $100,000,000 Million, the case must be routed to the Accounting Function. Refer to IRM 3.14.1.6.9.3, $100,000,000 Million Refunds for more information.

Offer In Compromise Freeze (–Y)
  1. A -Y Freeze indicates an Offer in Compromise is pending.

  2. A TC 480 or TC 780 sets this freeze.

  3. Void the notice.

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Reviewing Math Error Notices – CP 10, CP 11, CP 12, CP 13, CP 16, CP 23, CP 24, and CP 25

  1. Tax returns with math errors must receive the appropriate notice and math error explanations (TPNCs), even if the refund or balance due is what the taxpayer expected.

  2. Notices that contain Math Error information are:

    • CP 10 —Math error on an overpaid module, which causes a reduction of credit elect. Exhibit 3.14.1-6

    • CP 11 — Math error on a module with a balance due of $5 or more. Exhibit 3.14.1-7

    • CP 12 — Math error on a module with an overpayment of $1 or more. Exhibit 3.14.1-8

    • CP 13 — Math error on a module with an even balance, a balance due of less than $5 or an overpayment of less than $1. Exhibit 3.14.1-9

    • CP 16 — Math error on an overpaid module, and part or all of the overpayment is offsetting to satisfy another tax module liability. Exhibit 3.14.1-13

  3. Estimated Tax (ES) Discrepancy notices are not considered true Math Error notices, but they may also contain math errors.

    • CP 23 — ES discrepancy with a possible math error on a balance due module of $5 or more. Exhibit 3.14.1-17

    • CP 24 — ES discrepancy with a possible math error on an overpaid module of $1 or more. Exhibit 3.14.1-18

    • CP 25 — ES discrepancy with a possible math error on a module with an even balance, a balance due of less than $5, or an overpayment of less than $1. Exhibit 3.14.1-19

  4. Review each TPNC assigned by ERS starting with the point of error through the remainder of the return. Although a complete review of the entire return is not required, a review of all lines, forms, and schedules affected by the error is necessary.

  5. Ensure that each TPNC matches the math error involved. The TPNC must clearly state the taxpayer’s error.

  6. When assigning TPNCs, only one TPNC should be assigned to cover the point of error. Assigning two TPNCs that cover the same situation is not appropriate.

  7. A CP 12 will have a systemic refund hold applied (TC 570 with blocking series "55555" ) and there will not be a TC 846 on the account. These notices must be worked by Thursday 10 P.M. Eastern time to prevent the refund from going out to the taxpayer. When a refund needs to be prevented from generating, follow guidelines in IRM 3.14.1.7.1.1, Refund Intercepts.

Social Security Number (SSN), Adoption Taxpayer Identification Number (ATIN), and Taxpayer Identification Number (TIN) Assignment Date
  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 the return 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)

  2. The PATH Act prohibits current year refunds of EIC or ACTC before February 15, all amended returns, without a C freeze, EIC or ACTC must be held until then.

  3. The PATH act does not allow the removal of PATH credits previously allowed due to a filing status change to Married Filing Joint unless initiated by the taxpayer.

  4. Research is required on all TINS on the return to determine whether the retroactive PATH Act credits are allowable on an original tax return filing use CC-INOLES-TIN ASGMT to research:

    1. SSN- if the field is populated with all zeros, the assignment date is prior to January 1, 2012. If the credit(s) is associated to an SSN, the SSN must have been assigned earlier than the due date or approved due date as extended of the return being processed.

    2. ITIN-/ if the field is populated with all zeros, the ITIN assignment date is prior to January 1, 2012. If the credit(s) is associated to an ITIN, the ITIN application must have been received earlier than the due date or approved due date as extended of the return being processed.

      Note:

      For prior year returns, if the ITIN assignment date is 90 days or less after the return due date, the Real Time System (RTS) in EUP can be used to verify the received date of the application. If received prior to the due date, allow the credit.

    3. ATIN- if the credit(s) is associated to an ATIN, the ATIN application must have been received earlier than the due date or approved due date as extended of the return processed.

  5. After researching the TIN Assignment Date for all TINs, use the table below to determine necessary actions.

  6. If Then
    The TIN the credit is associated to and the primary and secondary (if joint return) have a TIN ASGMT DATE prior to the due date of the original return or approved due date as extended of the original return. Allow the credits. If the notice has TPNCs 495/711/810, Retype the notice. Input adjustment to allow the credits that were disallowed.
    The TIN the credit is associated to and the primary or secondary (if joint return) have a TIN ASGMT DATE after the due date of the return or the approved due date as extended of the original return. The credits are not allowable.
    • If TPNCs 495/711/810 are on the notice, verify the correct TPNC has been selected and print the notice.

    • If TPNCs 495/711/810 are on the notice, and the correct TPNC has not been selected, retype the notice.

    • If TPNCs 495/808/809/810 are not on the notice, retype the notice to include the correct TPNC and input adjustment to disallow the credit(s).

    The TIN-ASGMT field on INOLES shows all zeros and your return is tax year 2012 or prior The credits are not allowable.
    • If TPNCs 495/711/810 are on the notice, verify the correct TPNC has been selected and print the notice.

    • If TPNCs 495/711/810 are on the notice, and the correct TPNC has not been selected, retype the notice.

    • If TPNCs 495/711/810 are not on the notice, retype the notice to include the correct TPNC and input adjustment to disallow the credit(s).

Items to Review on All Math Error Notices
  1. The following items need to be reviewed on every math error notice when impacted by the point of error:

    • Adjusted Gross Income (AGI)

    • Taxable Income (TXI)

    • Tax

    • Self-Employment (SE) Tax, if present

    • For TY 2017 and prior, if the TPNC involves an invalid SSN or ITIN the standard deduction/exemption

    • TY 2009, if Form 1099-G attached $2,400 deduction of Unemployment Compensation (Line 19 Form 1040, Line 13 Form 1040A, Line 3 Form 1040EZ, and Line 20 Form 1040NR)

    • Accuracy of TPNCs assigned to the notice

    Note:

    TPNC verbiage shown on OLNR will always be that of the default (general) TPNC. The literal TPNC has line specifics which vary by tax form and tax year. These will appear on the actual notice.

  2. Also review the tax period, entity and signature(s) on math error notices. These items are covered in IRM 3.14.1.6.1.1 , Verifying Return Information.

Verifying Adjusted Gross Income (AGI), Taxable Income (TXI), and Tax Changes
  1. Compare Adjusted Gross Income (AGI), Taxable Income (TXI), and tax including Self-Employment (SE) Tax to the notice as described below:

    1. Verify any change made by ERS to the AGI, TXI, and tax amounts on the tax return filed by the taxpayer.

    2. If filing status is the point of error, compare the filing status on the return to the tax account. If ERS changed the filing status, verify that the filing status was changed correctly.

    3. Perfect the AGI and TXI if adjusting the tax on the tax module. However, do not adjust AGI and TXI if no changes to the tax are needed.

      Reminder:

      AGI can be adjusted below zero, but TXI cannot. The adjustment will unpost.

    4. When claimed, the Qualified dividends are more than the claimed Ordinary dividends, research IRP data to verify dividend amounts on Form 1040/SR, Form 1040A for (TY 2017 and prior), the Tax Examiner needs to add both amounts and enter the total as Ordinary dividends while still using the originally reported qualified dividends to figure tax.

      Note:

      See Miscellaneous Quick Reference Chart in Job Aid 2534-002.

    5. If Lump Sum Election (LSE) is notated on the return, follow taxpayer intent.

    6. Compare overpayment, balance due, and credit elect amounts to the notice.

    7. If the ERS (computer) figures are incorrect, adjust the module using CC REQ54.

      Note:

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

    8. Prevent the refund from generating when increasing the tax (including SE Tax) or when decreasing refundable credits.

      Note:

      Do not prevent the refund from generating unless decreasing the overpayment.

  2. Take appropriate action to correct the taxpayer’s account, when needed. Also change incorrect or incomplete TPNCs to adequately explain math errors.

  3. See the following for additional instructions for specific Math Error Keys:

    • Key 060 — Tax Period More Than Two Years Prior To Current Tax Year. See IRM 3.14.1.6.17.7

    • Key 061 – Multiple Math Error Explanations. See IRM 3.14.1.6.17.8 .

    • Key 100 – Non-Standard TPNC Explanations Not Computer Generated IRM 3.14.1.6.17.12

  4. Correct all associated notices in the NRPS package if their accuracy is affected by a change to the primary notice or to the notice module.

  5. TPNC 111 will be assigned by ERS whenever a return is converted, during processing, from a Form 1040EZ or Form 1040A to a Form 1040. TPNC 111 notifies the taxpayer that their return was converted, and also causes the default TPNC literals to generate during printing. If TPNC 111 is not present on a notice for a converted return, retype the notice and add TPNC 111 as the first TPNC.

Verifying Self-Employment Tax Changes
  1. If the math error is related to self-employment income (Schedule C, E, or F), and/or the line marked "Other Income" on Form 1040, then verify:

    • Schedule SE

    • Deductible part of self-employment tax

    • Self-employment tax

  2. Use the following table as a guide for determining how to handle various SE Tax scenarios:

    Reminder:

    Adjust the Social Security and Medicare incomes and taxes when adjusting total SE Tax.

    Caution:

    For tax year 2013 and subsequent, the SE Social Security tax rate is to 12.4 percent , For tax years 2011 and 2012, the SE Social Security tax rate is 10.4 percent.

    If... Then...
    The Schedule C, Schedule F, or Schedule E Self-Employed income amount has changed Verify that the tax on Schedule SE was also changed
    The taxpayer has Social Security wages greater than the current year limitation The entire self-employment amount may not be subject to Social Security tax since self-employment (SE) tax is now divided between Social Security and Medicare taxes.

    Reminder:

    There is no longer a maximum Medicare income limit for 199412 and subsequent returns

    The taxpayer has self-employment income of less than $434 (Exception: For church employee income, less than $108.28). Do not assess SE tax.

    Note:

    If the taxpayer enters SE income of $433.00 to $433.99, round up the entry to $434 and assess the tax.

    The taxpayer used either of the optional SE Tax methods Verify that the SE Tax method was not changed by ERS to the normal method. Adjust the SE Tax if necessary.
    The taxpayer computed SE Tax, but did not attach Schedule SE to the return Check for Schedules C, E, or F. Follow the taxpayer’s intent to assess SE Tax. If taxpayer is Married Filing Jointly (FS2) and there is no indication which taxpayer is liable for SE Tax:
    If... Then...
    If primary taxpayer’s Social Security wages were... Then assign the SE Tax to...
    At least the current year limitation The secondary taxpayer
    Less than the current year limitation The primary taxpayer
    Self-Employment income is shown on the line marked "Other Income" on the front of the Form 1040 and no SE Tax is computed The return should have an RPC "N" (coded at the bottom front of Form 1040). If it was not transcribed, recharge the return and route the case to the Examination Function.
    No SE Tax is self-assessed and Schedules C, E, or F is attached Do not assess the SE Tax unless EIC is claimed.

    Exception:

    If the taxpayer qualifies for EIC, additional instructions may apply. Refer to IRM 3.14.1.6.12.5.3, SE Tax Computation — TPNC 580

    Note:

    For tax period 201012, taxpayers are instructed to reduce line 3 of Schedule SE by the amount claimed on Form 1040, line 29. If an amount is present on Form 1040, line 29 research Form(s) W-2 (boxes 1, 3, 5, and 14), Schedule E (S Corporation Income), and Schedule SE (line 3) to determine if SE Income should be reduced.

Verifying Accuracy of Assigned Taxpayer Notice Codes
  1. When reviewing notices containing TPNCs, it is important to allow only TPNCs that reflect actual errors made by the taxpayer. A ripple is a TPNC assigned in error by ERS to a computer calculation resulting from a previous math error. Each TPNC must be reviewed on its own to be considered a valid math error.

  2. If a subsequent taxpayer error is found after the point of error, add the correct TPNC.

  3. Remove incorrect TPNCs.

Verifying Information from Form W-2, Form W-2G, and Form 1099
  1. Verify Form W-2, Form W-2G, and/or Form 1099 and other types of income using IRP data and attached documents when the point of error is one of the following:

    • Additional Child Tax Credit (Schedule 8812)

    • Adjusted Gross Income (AGI)

    • Advance Earned Income Credit (AEIC) (prior to 2011)

    • Child and Dependent Care (Schedule 2 or Form 2441)

    • Credit for Elderly or Disabled (Schedule 3 or Schedule R)

    • Earned Income Credit (EIC)

    • Estimated Tax Payment Discrepancy (CP 23, CP 24, or CP 25)

    • Excess Federal Insurance Contribution Act (FICA)

    • Gambling Winnings

    • Individual Retirement Account (IRA)

    • Lump Sum Distribution

    • Non-Compute Returns (CP 51A, CP 51B, or 51C)

    • Pensions

    • Self-Employment Income (Schedule C, Schedule E, or Schedule F)

    • Self-Employment Tax (Schedule SE)

    • Social Security Benefits

    • Total Income

    • TPNC 297 or 299

    • Wages

    • Withholding

    Note:

    If the taxpayer places a line entry for Additional Child Tax Credit, Schedule 8812 must be attached to the return to receive the credit for 3 or more children. For dependents with an ITIN, Schedule 8812 must be attached to the return to verify substantial presence test.

  2. Tax Period — The individual income tax period usually runs from January 1 through December 31 of a given year. Compare the year of Form W-2 with the tax form year. Wages may only be claimed for the tax period in which the wages were paid. If Form W-2 indicates the tax return was processed to the incorrect year, reprocess the return as appropriate. See IRM 3.14.1.6.22, Reprocessing Returns. If the module is overpaid, and the refund transaction has not generated, prevent the refund from generating using procedures in IRM 3.14.1.7.1.1 and void any notices associated with a return needing to be reprocessed to a different tax period. If the refund transaction has already generated, follow Erroneous Refund procedures.

  3. Name Mismatch — If the name shown on Form W-2 does not match the return and:

    If the taxpayer... Then...
    Did not use the money amount on Form W-2 for computing Wages or Withholding Remove and process as loose Form W-2
    Did use the Form W-2 wages or withholding Accept all attached W-2 wages and withholding per taxpayer intent
    Claimed children's income with no Form 8814 Remove child/children's income and send TPNC 100: You cannot claim your child/children's income from interest and/or dividends on your return. We have removed the interest and/or dividends and adjusted your return accordingly
    Claimed child/children's income with Form 8814 Allow child/children's income from interest and/or dividends

    Note:

    A parent can only claim interest and/or dividend income from a child when there is no federal income tax withheld from the child's income until the age of 19 or age 24 if the child is a full-time student.

  4. Wages, Allocated Tips, and Other Compensation — The sum of all entries for wages and other compensation shown on Form W-2, box 1, should equal the amount claimed on Form 1040, or Form 1040SR, TY 2017 and prior, Form 1040, line 7 or on Form 1040EZ, line 1.

    If the amount on the return... And the taxpayer... Then...
    Includes compensation from other than Form W-2 wages Included this compensation to compute EIC Accept the income as earned unless it can be identified as unearned income (unemployment compensation or pension income, for example)

    Caution:

    If unearned income is from Temporary Assistance for Needy Family (TANF), FS4 or FS5 may need to be changed to FS1

    Is greater than the total wages on Form W-2 Included this compensation to compute EIC Do not decrease the entry. Accept the larger wage amount unless you determine that the taxpayer made a double entry, a transposition error, or used Social Security wages from Form W-2, Exception: Form W-2, box 12 or 14 includes deferred compensation such as Thrift Savings Plan (TSP) or 401(k) contributions
    Is less than the total wages on Form W-2 Included this compensation to compute EIC Change the amount entered as wages on the return to match the total Form W-2 wages.
    Is less than the total wages on Form W-2 Included a statement indicating that the Form W-2(s) are incorrect Do not process as a math error
    Is less than the total wages on Form W-2 Has Schedule C income Review the Schedule C to determine if the taxpayer included Form W-2 income on Schedule C. If so, do not increase wages on (Statutory Employees) or Form 1040-SR
    Is less than the total wages on Form W-2 Reported a gross income amount on line 7, Form 1040 or Form 1040-SR, and also on Schedule C Deduct the amount reported from Form 1040, Line