3.14.2 Notice Review - Business Master File (BMF) Notice Review

Manual Transmittal

November 09, 2017

Purpose

(1) This transmits revised IRM 3.14.2, Notice Review - Business Master File (BMF).

Material Changes

(1) Minor editorial changes have been made throughout this Internal Revenue Manual (IRM) (e.g. line number updates, spelling, punctuation, links, etc.) and editorial changes to tables to ensure 508 compliance. Other significant changes to the IRM are shown below.

(2) Deleted the information in 3.14.2.1, Notice Review Overview, and added new internal controls subsection 3.14.2.1, Program Scope and Objectives. 3.14.2.1 now includes the following subsections:

  1. 3.14.2.1.1, Background

  2. 3.14.2.1.2, Authority

  3. 3.14.2.1.3, Responsibilities

  4. 3.14.2.1.4, Program Objectives and Review

  5. 3.14.2.1.5, Acronyms/Abbreviations/Definitions

  6. 3.14.2.1.6, Related Resources

(3) IRM 3.14.2.5.4(10) - Removed instructions to select 100% CP 161 MFT 17 via LCF. IPU 17U0741

(4) IRM 3.14.2.6.1(6) - Corrected NOREF cut-off date chart for cycle 201705. IPU 17U0236

(5) IRM 3.14.2.6.2.2 - Updated manual refund threshold.

(6) IRM 3.14.2.7.1 - Clarified when a return is required to review notices. IPU 17U1063

(7) IRM 3.14.2.7.1.2 - Updated manual refund threshold.

(8) IRM 3.14.2.7.1.2.3(10) - Added instructions for % and C/O in name and address lines. IPU 17U0680

(9) IRM 3.14.2.7.1.2.3 - Minor changes to Name and Address instructions. IPU 17U0193

(10) IRM 3.14.2.7.1.3.2(1) - Added instruction to send a manual refund for large dollar amounts.

(11) IRM 3.14.2.7.1.4.1 - Added instructions for determining date for tax decrease. IPU 17U0680

(12) IRM 3.14.2.7.1.4.1(6) - Removed instruction to monitor the case until the TC 841 posts.

(13) IRM 3.14.2.7.1.4.1(11) - Corrected the due date for Form 1120.

(14) IRM 3.14.2.7.1.5 - Updated manual refund threshold.

(15) IRM 3.14.2.7.2(4) - Added Form 1042 to FTD penalty computation.

(16) IRM 3.14.2.7.4.3(3) - Updated disaster relief procedures and the link to IRM 20.1.2.1.2.2.

(17) IRM 3.14.2.7.4.4(1) - Added instruction print the notice if the TC 846 has posted.

(18) IRM 3.14.2.7.4.5(3) - Updated the Form 1120 due date information.

(19) IRM 3.14.2.7.5.26(3) - Added instruction to check if TC 912 is present.

(20) IRM 3.14.2.7.7.1 - Corrected Credit Reference Exhibit number to 3.14.2-23. IPU 17U0323I

(21) IRM 3.14.2.7.7.2(11) and (12) - Added instructions to set -K freeze when unable to determine where payment should be applied.

(22) IRM 3.14.2.7.7.2(12) - Removed requirement to monitor for TC 841 posting when setting -K freeze on excess credits. IPU 17U1313

(23) IRM 3.14.2.7.8(4) - Added instruction to release the Q- freeze and apply Label 22 if the -A freeze is being released with TC 290.00 with no change to the tax.

(24) IRM 3.14.2.7.9(8) and (9)- Added instructions to print the notice if the balance due is fully paid and offsets TC 706 or if the offset partially pays the module.

(25) IRM 3.14.2.7.10.3 - Updated Form 1065 penalties for failure to file electronically. IPU 17U0680

(26) IRM 3.14.2.7.10.3 - Corrected Form 1065 penalties. IPU 17U0690

(27) IRM 3.14.2.7.10.6 - Rewrite of General Review Procedures for CP 162. IPU 17U0680

(28) IRM 3.14.2.7.10.6(3) - Corrected the due date of the Form 1065 short period return.

(29) IRM 3.14.2.7.10.7 - Rewrite of review procedures for CP 162, Key 53. IPU 17U0680

(30) IRM 3.14.2.7.10.7(1) - Corrected the due date of the Form 1065 short period return.

(31) IRM 3.14.2.7.10.8 - Rewrite of review procedures for CP 162, Key 14. IPU 17U0680

(32) IRM 3.14.2.7.10.9 - Rewrite of review procedures for CP 162, Key 32. IPU 17U0680

(33) IRM 3.14.2.7.11(8) - Deleted the Note explaining how to release a R- freeze.

(34) IRM 3.14.2.7.12(11) - Added instruction to release refund when TC 670 payments are present and the module has been satisfied.

(35) IRM 3.14.2.7.12(12) - Added correction procedures to resolve erroneous refunds in relation to payments being credited to the incorrect taxpayer and/or tax period or due to error conditions and erroneous credits.

(36) IRM 3.14.2.7.14.1(8) - Added instructions to use CC RECON before using CC INTST.

(37) IRM 3.14.2.7.15 - Added instructions and link to new TPNC 90 Literals-Copy and Paste Job Aid. IPU 17U1136

(38) IRM 3.14.2.7.15(4) - Clarified instructions for figuring TC 160. IPU 17U0680

(39) IRM 3.14.2.7.15(4) - Updated Key 54 instructions to include exceptions to assessing penalties and ordering returns. IPU 17U1063

(40) IRM 3.14.2.7.15(4) - Restricted grace period making it Official Use Only.

(41) IRM 3.14.2.7.15.1 - Removed the Do not reprocess instructions and added routing information if reprocessing of the return is required. IPU 17U1393

(42) IRM 3.14.2.7.17(1) and Exhibit 3.14.2-22 - Removed reference to Penalty Code 09. IPU 17U0506

(43) IRM 3.14.2.7.19.4.6 - Corrected Credit Reference Exhibit number to 3.14.2-23. IPU 17U0323

(44) IRM 3.14.2.9.23(2) - Added note in reference to TC 620 and FTD penalties on Form 1042. Added link to IRM 20.1.4.11.6.

(45) IRM 3.14.2.9.28(2) - Corrected the due date for Form 1120-F.

(46) IRM 3.14.2.10 - Re-write of Replies to Computer Paragraph Notices Overview Section. IPU 1740506

(47) IRM 3.14.2.10.1 - Re-write of Replies to Computer Paragraph Notices Overview Section. IPU 1740506

(48) IRM 3.14.2.10.2 - Re-write of Replies to Computer Paragraph Notices Overview Section. IPU 1740506

(49) IRM 3.14.2.10.2 - Added third party instructions. IPU 17U0680

(50) IRM 3.14.2.10.3 - Re-write of Replies to Computer Paragraph Notices Overview Section. IPU 1740506

(51) IRM 3.14.2.10.3 - Clarified instructions for excess credits. IPU 17U0680

(52) IRM 3.14.2.10.3(6) - Deleted Form 941C reference.

(53) IRM 3.14.2.11 - Added New Subsection - Replies to CP 108-Error on FTD EFTPS Payment. IPU 17U0506

(54) IRM 3.14.2.11 - Added CP 108 replies should be routed to lead for distribution. IPU 17U0680

(55) IRM 3.14.2.11 - Removed instructions for 1120 workaround. IPU 17U0193

(56) Exhibit 3.14.2-2 - Corrected the Form 1065 and Form 1120 due dates.

(57) Exhibit 3.14.2-4 - Corrected the Form 1065 and Form 1120 due dates.

(58) Exhibit 3.14.2-19 - Corrected 1120S Installment and Due Date Chart. IPU 17U0323

(59) Exhibit 3.14.2-20 - Added 1120 Family Installment and Due Date Chart. IPU 17U0323

(60) Exhibit 3.14.2-21 - Added Exception for Non-Restricting Transaction Code (TC) 340. IPU 17U0109

(61) Exhibit 3.14.2-23 - Corrected Flow Chart Description. IPU 17U0109

(62) Exhibit 3.14.2-24 - Corrected Flow Chart Description. IPU 17U0109

Effect on Other Documents

IRM 3.14.2 dated October 19, 2016 (effective January 1, 2017) is superseded. The following IRM Procedural Updates (IPUs), issued from January 17, 2017 through October 4, 2017, have been incorporated into this IRM: IPU 17U0109, 17U0193, 17U0236, 17U0323, 17U0506, 17U0680, 17U0690, 17U0741, 17U1063, 17U1136, 17U1313, 17U1393.

Audience

Business Master File (BMF) Notice Review Tax Examiners primarily in Cincinnati and Ogden, Submission Processing Campuses.

Effective Date

(01-01-2018)

Linda J. Brown
Director, Submission Processing
Wage and Investment Division

Program Scope and Objectives

  1. This section provides instructions to the Submission Processing Notice Review function for reviewing Business Master File (BMF) Computer Paragraph (CP) notices. These notices are selected for review by the Notice Review Processing System (NRPS).

    Note:

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

  2. Purpose: This section provides BMF Notice Review personnel with instructions for reviewing CP notices that have been selected by the Notice Review Processing System (NRPS). Reviews are conducted with the goal of improving both the accuracy and quality of information the IRS sends to the taxpayers. The Notice Review process helps to ensure the information received by taxpayers is complete and correct.

  3. Audience: These procedures apply to Wage and Investment (W&I) Submission Processing Business Master File (BMF) Notice Review personnel, located primarily in Cincinnati and Ogden:

    • Supervisory Tax Examining Technician

    • Lead Tax Examining Technician

    • Tax Examining Technician

    • Supervisory Clerk

    • Lead Clerk

    • Clerk

  4. Policy Owner: Director, Submission Processing

  5. Program Owner: Speciality Programs Branch, Post Processing Section

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

    • Accounts Management (AM)

    • 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 BMF Computer Paragraph (CP) notices to verify the accuracy of notices selected for review before mailing. This will ensure the information received by taxpayers is complete and correct. Notice Review employees use the Notice Review Processing System (NRPS) Package, Control D, and/or Integrated Data Retrieval System (IDRS) 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 2016

    • Hiring Incentives to Restore Employment (HIRE) Act

    • Foreign Account Tax Compliance Act (FATCA)

    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 Management and Review

  1. Program Goals: Review Computer Paragraph (CP) notices to verify the accuracy of the information to ensure notices received by the taxpayer are complete and correct.

  2. Program Reports: The NRPS system produces several types of reports, which can be accessed on Web Control-D. See IRM 3.14.2.4.3 for a complete listing.

  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
    AC Action Code
    AM Accounts Management
    BFS Bureau of Fiscal Services
    BMF Business Master File
    CADE Customer Accounts Data Engine
    CAF Centralized Authorization File
    CC Command Code
    CNM Contact Not Made
    COB Close of Business
    CP Computer Paragraph
    CRD Correspondence Received Date
    CSPC Cincinnati Submission Processing Center
    DA Disclosure Authorization
    DC Document Code
    DLN Document Locator Number
    DP Data Processing
    EFT Electronic Fund Transfer
    EFTPS Electronic Federal Tax Payment System
    EIN Employer Identification Number
    ELF Electronic Return Filing
    ERS Error Resolution System
    ES Estimated Tax
    FTD Federal Tax Deposit
    FTF Failure to File
    HCTC Health Coverage Tax Credit
    IAT Integrated Automation Technologies
    IDRS Integrated Data Retrieval System
    IRC Internal Revenue Code
    IRM Internal Revenue Manual
    LB&I Large Business and International
    LCF Local Control File
    MeF Modernized Electronic Filing
    MFT Master File Tax Code
    MMDDYY Month Month Day Day Year Year
    NR Notice Review
    NRPS Notice Review Processing System
    OLNR On Line Notice Review
    OSPC Ogden Submission Processing Center
    POA Power of Attorney
    RA Reporting Agent
    RAF Reporting Agent’s File
    RDD Return Due Date
    RPD Return Processable Date
    RPS Remittance Processing System
    RTF Return Transaction File
    SERP Servicewide Electronic Research Program
    SSN Social Security Number
    TAS Taxpayer Advocate Service
    TBOR Taxpayer Bill of Rights
    TC Transaction Code
    TE Tax Examiner
    TEGE Tax Exempt & Government Entities
    TIGTA Treasury Inspector General for Tax Administration
    TIN Taxpayer Identification Number
    TOP Treasury Offset Program
    TPNC Taxpayer Notice Code
    TRS Transcript Request System
    UPC Unpostable Code
    W&I Wage and Investment
    XREF Cross Reference

Related Resources

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

    • Servicewide Electronic Research Program (SERP)

    • Notice Review Processing System (NRPS)

    • On Line Notice Review (OLNR)

    • Integrated Data Retrieval System (IDRS)

    • Control D

IRM Deviations

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

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

Prioritization of Work for BMF Service Centers

  1. The goal of the Notice Review Departments is to complete their BMF selected notices by the established cutoff times.

  2. Starting in 2012 the cycle load and close out times have changed due to Customer Account Data Engine 2 (CADE). For BMF - the cycle will load Saturday at 10:00 PM following Master File cycle processing beginning on Thursday evening and close out the second Monday at 2:00 AM.

  3. If there is a possibility that the entire cycle will not be reviewed, the centers cannot extend the cycle and must prioritize the work in the following order:

    • Large Dollar key codes regardless of the accuracy rate.

    • Key 90

    • Refund Key Codes with lowest accuracy rates first, keeping in mind Command Code (CC) NOREF cutoff times. Bypass reviewing any key code with an accuracy rate of 94% or higher.

    • Balance Due Key Codes with lowest accuracy rates. Bypass reviewing any key code with an accuracy rate of 94% or higher.

    • CP 267 Key 12

    • Skipped key codes.

What Is Notice Review?

  1. Notice Review is the process where tax accounts with specific, pre-decided account activity occurring after notice generation, are selected for manual review. This process allows tax examiners (TEs) to analyze the account and the notice to decide if the information on the notice to be mailed is complete and represents the most current and up to date account information. Tax modules are also selected to intercept and correct possible processing errors and potential erroneous refunds.

  2. The ultimate goal of this process is to allow the Service the opportunity to change inaccurate information on the notice before mailing to reduce taxpayer inquiries, both written and by phone. The end result will give the taxpayer the most accurate and current tax account information available at the time of mailing. The review of refund transcripts can decrease taxpayer burden and reduce the cost to the Service for recovery efforts.

  3. Notice Review employs the following to achieve its goal:

    • Quality

    • Timeliness

    • Interest Reduction

    • Effectiveness

    • Completeness

Quality

  1. Notice accuracy is increased when appropriate feedback is provided to all areas that contribute to the generation of erroneous notices or refunds.

  2. An effective method must be developed to provide feedback to the responsible processing functions at a local level.

    Reminder:

    This feedback must be provided weekly during the current filing season.

  3. In order for the process to work, Notice Review TEs must be allowed time to assemble and provide feedback information to the team lead, who will contact the appropriate functional area.

  4. The Notice Review Processing System (NRPS) Notice Disposition Reports are used as a feedback tool. There are two basic formats for these reports:

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

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

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

  6. The historical records are used to assist in feedback sessions with functional areas that cause the generation of notices. Provide your Headquarters Analyst a monthly list of error trends so that it can be shared with the appropriate Headquarters processing analyst.

  7. If the IRM contains inconsistencies and/or conflicting information, immediately submit this information to the Headquarters Analyst for resolution.

    Caution:

    Do not establish local procedures without first contacting the Headquarters Analyst.

  8. The Servicewide Electronic Research Program (SERP) is the vehicle that IRM changes and IRM alerts are distributed to the service centers. IRM changes are sent to the SERP Area who then posts the updated version on SERP the next business day. IRM alerts are issued for a variety of reasons and generally will not update the IRM. These include changes that affect only the current cycle. Examples can be Command Code NOREF day or time change due to Holiday processing.

Quality Assurance Research
  1. Information common to all returns must be verified and compared to the CP notice as well as the information contained in the NRPS package. Research is required to ensure that the information contained on the tax return is processed as the taxpayer intended.

  2. Some of the most common IDRS research command codes used by Notice Review can be found in IRM 3.14.2.7.2, Common Command Codes Used in Notice Review.

Timeliness

  1. ALL selected notices must be reviewed, corrected and timely mailed to minimize any negative impact to the taxpayer. For Notice Review, timely means ALL of the following:

    • Marking the disposition of ALL selected notices on the OLNR Retype Application on or before the closeout .

    • Completing ALL adjustments affecting refunds within one week of the transaction code (TC) 841 posting

    • Inputting adjustment actions on ALL other cases by the notice 23C Date

Interest Reduction

  1. To help reduce the amount of interest IRS pays on refunds:

    1. IRS has a 45 day interest-free period (from the later of the return due date, return received date, or the date the return was received in processable form) in which to process taxpayer refunds. By law, refunds not issued within the 45 day period (180 days for tax deducted and withheld under Chapter 3 and Chapter 4) must include credit interest.

    2. Revisions to the process are made when necessary to review AND correct overpaid accounts without paying unnecessary interest.

  2. Reviewing, correcting, and mailing ALL notices timely allows the taxpayer the full allotted time to pay any outstanding balances. Generally a taxpayer has 21 calendar days from the date of the notice (10 business days for notice amounts of $100,000 or more) to pay the outstanding balance without incurring additional interest charges. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  3. For proper guidance when reducing, computing or discussing interest, refer to IRM 20.2, Interest.

Effectiveness

  1. The review of Math Error notices helps to identify those notices that historically have high error rates. It also provides valuable feedback that is used to refine selection criteria.

Completeness

  1. Generally, you must review the entire tax return, and ALL tax modules related to a notice or transcript selected for review by utilizing the NRPS Package and IDRS. The review can include, but is not limited to the review of items below:

    • Entity Module(s)

    • Outstanding Credit Balance Modules

    • Cross-reference Taxpayer Identification Numbers (TINs)

    • Related Names

    • Freeze Conditions

  2. See IRM 3.14.2.7.1 (General Review Procedures), for additional guidance.

  3. The ultimate goal of Notice Review is to verify the accuracy of the information contained in all notices selected for review before mailing. All changes made to the taxpayer's account must be correct and completed before cycle close out. (There are some exceptions.)

Computer Paragraph (CP) Notices

  1. A CP notice is a computer generated message resulting from:

    • A tax examiner entering taxpayer notice codes (TPNCs) on a return

    • A Master File analysis of a taxpayer’s account

    • Certain transactions posting to an account

  2. Notices can generate to:

    • Request information or payment from a taxpayer

    • Educate a taxpayer

    • Clarify an issue (i.e., explain a Math Error identified on their tax return)

  3. Most notices contain the following information:

    • Taxpayer’s name

    • Address

    • Employer Identification Number (EIN) or Social Security Number (SSN) for Form 706 and Form 709

    • Tax period

    • Tax form

    • A computer generated message

  4. Settlement Notices-Tell the taxpayer of payments due, interest and/or penalties due, math errors, or adjustments the Campus has made to the taxpayer’s account. The three types of settlement notices reviewed by Notice Review are:

    1. Math Error Notices-Generate when a tax return, containing a math error, posts to the Master File. Error Resolution normally identifies the math errors. The tax module may include math, clerical, or credit errors.

    2. Non-Math Error Balance Due 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. The CP 161 is the balance due notice for all BMF forms except for Form 1065.

    3. Adjustment Notices-Generate when certain types of Data Processing (DP) or Examination adjustments post to an account. All adjustments made in Notice Review are Data Processing adjustments.

      Reminder:

      All Settlement Notices are subject to review.

  5. Information Notices-Generate when information needs to be sent to a taxpayer. Notice Review selects Informational type notices that explain credit elect and the offsetting of money to other balance due tax modules within the account. These notices are referred to as Associated Notices.

  6. Campus Notices-Generate to notify the Campus, Territory Office, or Area Office of a condition that needs further action to bring the taxpayer’s Master File account into current status. This category includes Refund Transcripts, which are the only Campus notices reviewed in Notice Review.

    Note:

    For a description of all notices, see Document 6209. To view an exhibit of a notice, refer to The Office of Taxpayer Correspondence at http://gatekeeper.web.irs.gov/new_default.aspx.

Notice Review Processing System (NRPS)

  1. The Notice Review Processing System (NRPS) selects settlement notices, adjustment notices, associated notices and refund transcripts for review by analyzing data from the following sources:

    1. CP Notice Records-NRPS also uses this information to print a copy of selected notices for the review.

    2. Entity and Tax Modules-NRPS uses the Transcript Request System (TRS) to obtain data. This information is sent to each campus exclusively for NRPS processing. NRPS prints this information in transcript format as part of the NRPS package.

    3. Return Transaction File (RTF) -NRPS extracts RTF data records for each selectable settlement notice. NRPS packages also contain printouts of this information.

    4. Pending Transactions-NRPS uses data from transactions that have not yet posted at the campus as part of the selection criteria for certain keys. See table below for Pending Transaction Sources and Possible Pending Transactions.

      Pending Transaction Sources Possible Pending Transactions
      Enterprise Computing Center at Martinsburg (ECC-MTB) Resequence File Adjustments (TC 29X/30X)
      Unidentified Remittance Files (URF) Extensions (TC 460)
      Tape Edit Program (TEP) (pipeline and corrected unpostable files) Merge Transactions (TCs 001, 011, and 04X)
      Generalized Unpostable Framework (GUF) and Current Cycle ECC-MTB Unpostable Files Credit Transfers [Document Codes (DC) 24, 34, 48, or 58 transactions]
      Excess Collection (XSC) File Credit Transfers [Document Codes (DC) 24, 34, 48, or 58 transactions]
      Generalized Mainline Framework (GMF) Error File All other significant (non-zero) transactions
      Reject File -

Notice Selection Process

  1. Notices are selected based on established selection criteria. These criteria are divided into categories. Each category contains a list of Keys that have been assigned specific selection criteria. The categories were established to separate notice types and help establish a priority of review. Notices are selected in category order as follows:

    • Category A - Special Handling Required

    • Category B - High Priority Selection-Local Selection

    • Category C - Federal Tax Deposit (FTD) Rollover

    • Category D - Balance Due and Even Balance Notices

    • Category E - Overpaid Notices

    • Category F - Adjustment Notices

    • Category G - Refund Transcripts

    • Category H - Low Priority Local Selection

    • Category I - Balance Due Low Priority

  2. Within each category the notice is analyzed in sequence by selection priority. Once a notice meets the criteria for a key within a category, the remaining selection keys in that category are bypassed and the analysis continues through the remaining categories. If the notice meets selection criteria in another category, it is assigned a secondary selection key; all remaining categories are bypassed, and analysis stops. (Analysis is limited to one primary and one secondary selection key.)

  3. The selection process continues from category to category in alphabetical order. When completed, the process will result in one of the following conditions:

    1. All selection criteria was applied to the notice, but the notice was not selected for review.

    2. The notice was selected for review meeting only one selection criteria.

    3. The notice was selected for review meeting two selection criteria.

  4. During the selection process:

    1. The first selection criteria causing a notice to be selected for review is named the Primary Selection Key.

    2. The second (if applicable) selection reason is named the Secondary Selection key.

    3. Once a Secondary Selection key is assigned to the notice, the selection process is terminated.

    4. Any remaining selection criteria both within the category or in remaining categories is bypassed.

  5. Selection Criteria-The NRPS selection criteria is only applied to selectable notices and transcripts.

    1. The selection criteria is divided into categories containing similar conditions or notice types.

    2. Each category is assigned a priority based on the importance of the selection criteria within the category.

    3. Each selection criteria is assigned a two-digit numerical selection key and a numerical priority.

    4. The selection criteria is applied against the notice in ascending priority order until either the notice is selected for review or the selection criteria for the category is exhausted.

    5. If the notice is selected for review, the remaining selection criteria for the category is not applied against the notice.

      Note:

      A numerical group number is assigned during the selection analysis, and is used to sort and batch the NRPS packages. The group number is decided by the priority of the review and is used to associate similar selections together.

  6. The selection process requires the following:

    1. Entity and Tax Modules-The Transcript Request System provides Master File data for use in the analysis process. This data is separated from other Master File data, then shipped to each Campus for use by NRPS processing and displayed in transcript format as part of the NRPS package.

    2. Transcribed Tax Return Data-an RTF data record is extracted for each settlement notice subject to NRPS selection. This data is used in the selection process and included in the NRPS package for selected notices.

  7. The selection process requires in-house transactions-certain transactions which have not posted to the Master File by the notice cycle are required by NRPS processing, they include:

    • Adjustments (TC 29X) (TC 30X)

    • Credit Transfers (Document Codes 24, 34, 48, and 58)

    • Merge Transactions (TCs 001, 011, 04X)

    • Extensions of Time to File (TC 460)

    • Any transactions with non-zero transaction amounts

  8. The transactions listed above are extracted from the following files:

    • ECC-MTB Resequence

    • Unpostables (current cycle at ECC-MTB and GUF)

    • TEP (all pipeline transactions)

    • Unidentified Remittance File

    • Excess Collections (XSC)

    • GUF Error

    • Rejects-Transaction failed Campus validity check

    • FTD File

  9. Notice Data-All selected notices are displayed in the NRPS package.

  10. The NRPS package will include all current cycle notices, selected/associated notices and/or refund transcripts.

  11. A contents sheet will be included with each package, and will provide the following information:

    • Selected notice

    • Selection Key and literal key description

    • Pending transactions

    • Documents requested

    • Other (non-selected) notices

  12. A NRPS batch consists of the following:

    • NRPS Batching Sheet-Identifies the beginning of each batch

    • NRPS Packages-1 to 20 notices per batch

    • NRPS Selection List-A list of the notices contained within the batch

  13. Manual Intervention List-This list will show, in notice sequence number order, all notices that were not selected for review but require manual intervention for any of the following conditions:

    1. Central Authorization File (CAF) Mismatch-Central Authorization File name/address information to be added.

    2. Reporting Agent File (RAF) Mismatch-Reporting Agent File name/address information to be added for Form 940, Form 941, Form 944, and Form 945.

  14. NRPS Batch Control Sheet-Contains a line for each batch (Notice Review copy) or a line for each batch with a document request (Files copy). It is also used as an assignment control document.

Selection Keys

  1. For specific information on NRPS Selection Keys, see Exhibit 3.14.2-5

    Note:

    For detailed information on the Local Control File, see IRM2.4.45, Command Code NRP97. For detailed information on the Notice Review Processing system, See Program Requirement Package (PRP) 160 Section 54. Valid percentages for Local Control File: 1%, 10%, 25%, 33%, 50%, 75%, and 100%.

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 Batching Sheet

    • NRPS Packages

    • NRPS Selection List

  2. NRPS are viewed using Web Control-D . Refer to the On-line Notice Review (OLNR) User Guide and Job Aid for additional information.

  3. NRPS produces several additional types of output:

    • NRPS Batch Control Sheet

    • NRPS Document Charge-Out

    • NRPS Batch Return Request List

    • Manual Intervention List

    • NRPS Selection Report

    • NRPS Non-package Selection List

    • NRPS Duplicate Selection List

    • NRPS Associated Notice Listing

      Note:

      A description of each of these is in IRM 3.14.2.4.7 (Other Output).

  4. All of the above print-outs generate from the following Listing of Output Files:

    File Name Description
    NOT 1320/P Notice [Quick (Q) Print] Listing
    NOT 1330 NRPS Selection
    NOT 3431 Back-end Notices
    NOT 3440 Back-end Notices
    NOT 3445 Back-end Assistant Commissioner International (ACI) Notices - Ogden Service Center (OSC)
    NOT 3446 Back-end ACI CP 220 (OSC)
    NOT 3480 Back-end Routing and Stuffer
    NOT 394/AG Redesign Notices (CPs 101, 102, 103, 104, 105, 106, 107, 110, 111, 112, 113, 114, 115, 116, 117, 118, 123, 124, 125, 128, 134 R/B, 138, 145, 161,162, 169, 173, 210, 215, 220, 225, 260, 267, 268)
    NOT 3135 CP 297 and CP 297A Selected Certified Mail Listing
    NRP 1410/20 NRPS Selected and Associated Report
    NRP97 Command Code used to update, add, delete or change requested NRPS Packages
    NRP 9841 Local Control File records
    NORI - B NOREF Tape
    NOR0 142 Refund Intercept
    1603D12 NRP CP Totals

NRPS Batch Sheet

  1. The Batch Sheet is the first sheet of each batch. It contains the following information:

    • Page Number

    • Batch Number

    • Sort Group- Special, BALANCE DUE NOTICE or OVERPAID NOTICE

    • Current Cycle

  2. See exhibit below for what is contained in the NRPS Batch Sheet.

    Figure 3.14.2-1

    This is an Image: 32201001.gif
     

    Please click here for the text description of the image.

NRPS Packages

  1. NRPS packages contain various types of information needed to review each selected CP Notice or Refund Transcript. Each batch may contain up to 20 selected notices.

    Note:

    Packages for overpayment notices must be viewed on-line first. Most packages contain only one notice. However, the NRPS Package will contain all Selectable or Associated CP Notices that generate in the current cycle for a taxpayer if one or more is selected for review. Each NRPS package contains the following:

    1. Package Contents Page-View online as the first page of each NRPS Package. This page contains the following information:

      NRPS Package Contents:
      A list of all Selected or Associated CP Notices or Refund Transcripts in the package with CP number and Document Locator Number (DLN)
      The Selection Key Number along with a brief description of the Key
      A list of pending transactions
      A list of requested vouchers and documents
      Manual Intervention Indicators
    2. Online Notice Information-Depending on the CP number of the selected notice, this may either be a duplicate of the live notice, or a shortened version. The shortened version, displays only the notice record information, such as dollar amounts and TPNC numbers, as opposed to Taxpayer Bill of Rights language and TPNC explanations.

    3. Entity Transcript-This displays the entity information for the notice Taxpayer Identification Number (TIN).

    4. Tax Module Transcript (optional) -This displays the tax module transactions for the notice TIN.

    5. Transcribed Posted Return Data-This displays transcribed return fields for selected Settlement Notices

    6. 813 List-This list displays only for Remittance Processing System (RPS) Discrepancy cases.

NRPS Selection List

  1. This list is the last page of each batch. It shows the following information for each Selected CP Notice in the batch:

    • Count (item number on the list)

    • Sequence #

    • DLN

    • CP Number

    • Primary Selection Key

    • Secondary Selection Key

Other Output

  1. NRPS produces two different (but related) Batch Control Sheets.

    1. The Notice Review copy has one line for each batch, showing the number of Selected and Associated CPs and Document Requests in each batch.

    2. The Files Function copy has a line for each batch, showing the number of Document Charge-outs in each batch.

  2. The NRPS Document Charge-out provides information that the Files Function needs to pull documents for Notice Review to 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 contains a line for each charge-out.

  4. The Manual Intervention List provides a list (in notice sequence number order) of all notices that were not selected for review but may require manual intervention.

    1. See IRM 3.14.2.5.3 (Manual Intervention List) for additional information and procedures.

  5. The NRPS Selection Report contains various statistical data including the number of CPs selected. This report is sorted by CP # and Selection Key. See Exhibit 3.14.2-8 (BMF NRPS Selection Report).

Clerical Procedures

  1. This section describes the clerical procedures performed during the Notice Review process.

Clerical Function

  1. The clerical function provides a wide variety of services critical to the NRPS system. These services, outlined in Sections 3.14.2.4.1 and 3.14.2.4.2, assist Notice Review TEs (and other customers) in providing accurate information to the taxpayer. The clerical support staff:

    • Orders and sorts tax returns

    • Distributes NRPS packages and related documents to the TEs

    • Corrects erroneous, and undeliverable notices

    • Stops refunds

    • Resolves CAF and RAF mismatches on notices that generate on the Manual Intervention List

Clerical Function Priorities

  1. This subsection contains instructions dealing with clerical function priorities. It includes instructions for associating tax returns and payment vouchers, reviewing priority, intercepting requests from other areas, notice corrections, and releasing notices to Receipt and Control.

Associating Documents from Files
  1. Document Request Forms (Return Charge-outs) and a Batch Return Request List generates weekly.

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

    2. The Notice Review Clerical Function associates the Batch Return Request List and the attached returns with the corresponding NRPS batch sheets.

  2. All necessary documents (adjustment documents and tax returns) are associated with each batch before releasing to TEs. All NRPS batch sheets that do not need documents are routed directly to Notice Review.

Additional LCF Selection
  1. Error Resolution System (ERS) may request that Notice Review select and correct a specific notice:

    1. ERS Tax Examiner must prepare Form 3465 and send it with the return to Notice Review.

    2. Local Control File (LCF) Key 091 is used to select the notice for review by DLN.

    3. Notice Review Clerical Support will associate the return and Form 3465 with the NRPS batch and release the case to the Tax Examiner Unit.

Priority of Review
  1. The Clerical Support Unit will distribute the work in the following order of priority: Refer to IRM 3.14.2.1.8 for additional information.

    1. Selected Overpayment Notices and Refund Transcripts-Tax examiner must complete this review before the pre-determined cut-off of CC NOREF (4:00 PM Thursday). Local management must decide the disposition of overpayment notices not reviewed by the cut-off. In doing so, consider prior cycle error rates of the individual CP Notices and selection keys.

      Caution:

      Treat notices selected by BMF Key 52 as overpayment notices because the current cycle refund is the reason for the review.

    2. Selected Balance Due Notices.

Intercept Requests from Other Areas
  1. 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 that they should contact their own area to have the refund stopped. If the requestor indicates that they do not have access to IDRS or do not have CC NOREF in their profile, they should contact their area to address this issue.

  2. Other functions may request that an incorrect notice be corrected or stopped. However, it has to be a selectable notice, and the request has to be received in Notice Review within established deadline cut off times.

    1. See below for the deadlines for requesting a notice:

      If the request is for Then the Request Must Be Received By
      A current cycle notice Close of Business (COB) Thursday before the 23C Date of the notice.
      A subsequent cycle notice The request must be received by 12:00 PM Thursday (local time) before the notice cycle.
    2. Notice Review Clerical Team uses Command Code NRP97 (Local Control File) to select the notice.

      Note:

      Tell other functions that the notice request deadline is Thursday 12:00 PM local time per LCF local procedures.

Manual Intervention CAF/RAF

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

  2. The notices generated on the manual intervention List do not meet NRPS selection criteria. However, it has been decided that they do require some sort of manual review and correction. Manual intervention conditions are as follows:

    1. Central Authorization File (CAF) mismatch.

    2. Reporting Agent’s File (RAF) mismatch.

  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 25 to a batch.

  4. 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.

  5. The Centralized Authorization File (CAF) is a computerized system of records which houses authorization information from both powers of attorney and tax information authorizations. The CAF system contains several types of records, among them taxpayer and representatives records, tax modules and authorizations. For more information see IRM 21.3.7, Processing Third Party Authorizations onto the Centralized Authorization File (CAF).

  6. Authorizations recorded on the CAF are generally submitted on:

    1. Form 2848, Power of Attorney and Declaration of Representative

    2. Form 706, U.S. Estate Tax Return

    3. Form 8821, Tax Information Authorization

    4. Oral Tax Information Authorization (OTIA), paperless Form 8821

    5. Via e-services, using Disclosure Authorization (DA)

  7. Form 8655, Reporting Agent Authorization, is used to authorize a designated agent to assist an employer in making required tax deposits and tax information filings to federal, state, and local governments. For more information refer to IRM 21.3.9, Processing Reporting Agents File Authorizations. The Form 8655 allows a reporting agent the authorities listed below:

    1. File and sign certain tax returns filed electronically.

    2. Make FTDs and submit FTD information electronically.

    3. Receive duplicate copies of official notices, correspondence, transcripts or other information with respect to the electronic returns filed by the agent.

    4. Receive duplicate copies of official notices, correspondence, transcripts, filing frequency information or other information with respect to the FTDs submitted electronically by the agent.

    5. Provide information, as an “other third party”, to assist the IRS in deciding whether or not reasonable cause exists for penalty abatement when related to a filing or payment made electronically by the agent. Under these circumstances, the agent can be advised as to whether or not the penalty will be abated at the time the determination is made.

  8. When the notice with manual intervention criteria is selected based on NRPS key criteria, the tax examiner is responsible for resolving the potential notice issue and the manual intervention conditions. Clerical is only responsible for resolving notices that generate on the manual intervention Listing.

  9. Processing Notices with Power of Attorney (POA) and Central Authorization File (CAF) Mismatch indicators. Research a CAF mismatch on CC CFINK with Taxpayer's TIN, and the specific MFT and tax period of the notice module.

    1. If CFINK response screen indicates, RECORD NOT FOUND, there is no authorized representative.

    2. If a representative is found, check the RECEIPTS line to decide if the representative is authorized to receive notices. See table below for Receipts Line Decision Table:

      If Then
      YES is present in the NOTICE field. The representative is authorized to receive notices. Place the representative's name on the Sort Name Line and include the representative's address, city, and state on the appropriate lines under the CAF Mismatch Tab.

      Note:

      More than one representative may be authorized to receive notices.

      NO is present in the NOTICE field. The representative is not authorized to receive notices.
    3. See below for Rep-Action Decision Table:

      If Then
      Undeliverable, Disbarred, Suspended , or Deceased is present The representative can no longer represent the taxpayer or the mail is undeliverable.
      None is present The representative is an authorized POA.
    4. Use CC CFINK with the REP-number to view display of each representative's address.

    1. The CAF copy of the notices will generate with the representative’s name and address on the notice. If the notice has the representative's name with no address, it is considered a CAF mismatch condition and will be notated on the Notice List. NRPS will compile all CAF mismatch notices and include them on the manual intervention List. A literal will print out on the list indicating the CAF mismatch by notice sequence number and CP number.

    2. Research the CAF mismatches on IDRS. Use CC CFINK to identify the representative name and address.

    3. Using CFINK, request the specific year-ending period.

    4. Check for Y on the receipts line. The Y indicates the representative is authorized to receive notices.

    5. Check for N on the receipts line. The N indicates there is no authorized representative to receive notices. See table below for the CC CFINK Notice Indicators and the action to be taken.

      If Then
      N is present Void the CAF notice.
      Y is present for one or more representative Type the name and address of each representative(s) on the notice(s) and mail.

      Note:

      If the name of the second representative is the same or similar to the first representative, and the address is identical, do not use the second representative. Void the second CAF copy if applicable. If the representative for the CAF is the same representative for the RAF, void the RAF copy.

    6. Check the Rep-Action line for any of the following words; Undeliverable, Suspended, Deceased, Disbarred, Retired or None. If present, follow the instructions in the Rep-Action Decision table below:

      If Then
      The word Undeliverable is present on the Rep-Action line; Void the CAF notice.
      The words Disbarred, Suspended, Retired or Deceased is present on the Rep-Action line; Void the CAF notice.
      The word None is present on the Rep-Action line; Type the name and address of the representative on the notice and mail it.
  10. If RECORD NOT FOUND for the taxpayer on the CAF file, void the duplicate notice.

  11. Processing Notices with Reporting Agents File (RAF) Mismatch.

    1. Reporting Agents File notices (RAF) are similar to CAF notices, in that a copy of the notice will generate to the taxpayer, and a copy will generate to the Reporting Agent. Reporting Agents (RA) can file the Form 941, Form 941-PR, Form 941-SS, Form 941-NMI, Form 940, Form 940-PR, Form 943, Form 943-PR, Form 944, Form 945 and Form CT-1 for their clients. An RA can also submit electronic payments for their clients on the previously mentioned forms, as well as Form 720, Form 1042, Form 1041, Form 1120, Form 990-PF, and Form 1120-C.

      Note:

      Form 1120-C replaced Form 990-C. Form 1120-C is valid for all tax periods ending after 200611.

    2. Most notices will have the RA's name and address printed on the notice. A mismatch (MISM) occurs when the RA's name and address do not generate on the RAF copy of the notice. A manual intervention List is produced to identify CAF and RAF mismatches. RAF mismatches are identified with the literal RAF MIS.

    3. The RA information can be obtained on IDRS using CC RFINK. CC RFINK with the definer L requires the taxpayer's EIN on the first line and the RA's EIN on the second line. This will display whether they should receive copies of notices and the beginning and ending tax period and RA has authorization. When the ending period shows all 9s the authorization has not ended.

    4. CC RFINKL will display a notice indicator of N (not authorized to receive notices), or Y (authorized to receive notices). See CC RFINK Notice Indicator table below for further instructions.

      If Then
      CC RFINKL shows a notice indicator Y and the tax period on the notice is within the range of beginning and ending tax periods. Type the name and address of each representative(s) on the notice(s) and mail. (CC RFINKR with the RA's TIN will display the agents mailing address.)
      CC RFINKL shows a notice indicator N or the tax period is not within date range. Void Notice

      Note:

      If the representative for the CAF is the same representative for the RAF, void the RAF copy.

    5. The tax period shown on CC RFINK is the Beginning Period the reporting agent has authorization.

      Note:

      Electronic Federal Tax Payment System (EFTPS) modules will have a payment indicator of P.

    6. For paper filed returns, if the CC RFINK screen shows the representative’s address is undeliverable, associate the duplicate notice to the return with a print of the undeliverable address. For electronically filed returns, do not use the attachment or association form. A TC 290 .00, Blocking Series 15 or 17 (non-refile DLN) will be input. Attach the print of the undeliverable address to the adjustment tag.

NRPS Local Control File

  1. The NRPS Local Control File processing is designed to allow each Campus the option to obtain additional notices for review. BMF has a priority option that when exercised, moves the analysis for the selection from Category H to the second highest Category B. The Local Control File priority option does not override the Category A selection criteria.

  2. There are three programs used by Clerical to update and maintain the NRPS Local Control Database.

    1. Program NRP97 is used by Notice Review to add, change and delete records on the Local Control Database. Program NRP97 is an IDRS Command Code accessed from any IDRS terminal. The request must be done by 12:00 PM (local time) Thursday before the new cycle is loaded.

    2. Program NRP98 is a batch processing program executed by operations each Friday. This program creates Local Control File tapes for input into the weekly NRPS processing. Local control reports are produced detailing the contents of the Local Control File. These reports are intended to be reviewed by Notice Review before the input of the Local Control tape files into the weekly National Account System (NAS) program. NRP98 is run on Saturday AM before running NRP11.

    3. Program NRP99 is a batch processing program executed by Operations after the completion of the weekly NRPS processing. This program deletes records from the Local Control Data Base as a result of the NRPS processing, or when a TIN or DLN record has remained on the Data Base for six weeks. Local Control reports are produced by this processing. These reports show which records were deleted and why they were deleted and detail the records remaining on the Data Base.

      Note:

      Refer to IRM 2.4.45, IDRS terminal input of CC NRP97.

  3. NRPS Local Control Data Base consist of ten NRPS record types:

    • NRPS-TIN-REC

    • NRPS-DLN-REC

    • NRPS-TPNC-REC

    • NRPS-MFT-TAXPRD-REC

    • NRPS-CPNUM-REC

    • NRPS-BAL-DUE-REC

    • NRPS-LG-CORP-REC

    • NRPS-ADJ-REC

    • NRPS-Employment-CD-REC

    • NRPS-MISC-REC

  4. Each record type may be updated by command code NRP97 with a unique command code definer. The NRP97 CC Definer table below is a list of both the definer codes and the record types:

    Definer Record Type
    T EIN option
    D DLN
    N TPNC
    M MFT/TAXPRD
    C CP NUMBER/ZIP CODE
    B Balance due amount
    L Large Corporation
    A Adj reason code
    E Employment code
    I Miscellaneous BMF
    1. These command code literals appear on the BASIC OPTIONS menu screen generated by command code NRP97.

    2. Besides the updating options (display, change, add, delete), there are two options provided on the command code screens. The OPTION-MENU is used to display the Basic Options menu screen on which the user may select another option to continue updating another NRPS record type. The EXIT TAP option is used to clear the entire screen and continue to input another command code if desired, or to sign off the IDRS terminal.

  5. Do not run NRPS command code to update records in between the weekly runs NRP98 and NRP99. However, you can use them for research during this period. If any records have been updated in between these two runs, these updated records will not appear on the NRPS Data Base after NRP99 run. This restriction will ensure continuity in the data base throughout the weekend NRPS runs.

  6. Data Retention- Records will only be deleted from the NRPS Local Control Data Base under the following circumstances:

    1. EIN (except Large Corporation), ERS DLN and Full DLN records are automatically deleted when selected for review or after six weeks if not selected.

    2. Any record may be manually deleted by selecting the appropriate Option from the Option Menu, keying in enough information to identify the record. Then use the X to select the Delete action and hit XMIT key.

  7. Data change- Any existing local control record may be altered as desired. To use this capability:

    1. Select the appropriate Option from the Option Menu.

    2. Enter enough information to identify the record.

    3. Alter the record as desired and use X to select the change action.

    4. Hit the XMIT key to save the changes.

  8. Selection Keys- The following is a list of the Selection Keys assigned when a notice is selected for review by Local Control:

    1. 06 -Large Corporation selection

    2. 90 -EIN Selection

    3. 91 -ERS DLN selection

    4. 92 -CP number Selection

    5. 93 -Balance Due Amount Selection

    6. 94 -Full or Partial DLN Selection

    7. 95 -Penalty Code Selection

  9. Substitute Keys- Selection Keys 85, 86, 87, 88, 89, and 99 are reserved for use as Substitute Selection Keys. Substitute Keys can only be used to replace Selection Keys 90 through 96. Large corporation, TPNC, Exception Override and normal criteria selections do not have substitute keys. Terminology:

    1. Batch processing is simply a computer term for any computer program that executes without human intervention except for duties normally performed by a computer operator.

    2. Interactive Processing is the opposite of Batch processing. This is a computer program designed to interact with a person, normally using a remote terminal as the interactive device.

    Note:

    Percentages valid on Command Code NRP97 (Local Control File) -1%, 10%, 25%, 33%, 50%, 75%, and 100%.

Refunds

  1. This section describes procedures for:

    1. Refund Intercepts

    2. Erroneous Refunds

    3. Manual Refunds

Refund Intercepts using Command Code (CC) NOREF

  1. Use CC NOREF to input all refund intercept requests.

    Note:

    To intercept an International refund, input the DLN of the TC 846 as the LOC code on the NOREF screen.

  2. The cutoff for BMF Refunds utilizing CC NOREF is Thursday 4:00 PM (Eastern Time). Refer to chart in IRM 3.14.2.6.1 (6) for exact day and times.

    Note:

    Due to the 2013 cutoff day change of CC NOREF, the HAL program will no longer be used in Notice Review.

  3. CC NOREF cannot be used to intercept refunds for MFT 02 (Form 1120) and MFT 05 (Form 1041) during accelerated refund cycles. During these cycles, the refund checks are mailed one week early to reduce credit interest paid on the refund. Follow normal review procedures in conjunction with Erroneous Refund procedures (see IRM 3.14.2.6.2.1).

    Exception:

    Notice Review may contact the Financial Center directly for unusual intercept requests. Contact the team lead to decide if the case meets the criteria for this exception.

  4. The following CC NOREF definers are used in Notice Review:

    • CC NOREF intercepts refunds and updates the Refund Information File.

    • CC NOREFD deletes an intercept request in the same cycle the request was input.

    • CC NOREFC updates the Refund Information File when an intercept is requested by phone.

    • CC NOREFM updates the Refund Information File if a check was not intercepted by the Regional Disbursing Office.

    CC NOREF Format Example:
    1. NOREF

    2. C#,Cycle#N,B,RFDL

    3. 10 Digit TE#, * (Use*,* When TE does own NOREF)

    4. Leave Blank

    5. TC 846 Amount

    6. LOC Code

    7. XX (Refund Deletion Code)

    Figure 3.14.2-2

    This is an Image: 32201999.gif
     

    Please click here for the text description of the image.

  5. This chart contains a list of Refund Deletion Codes.

    Code Reason For Delete
    00 No Signature
    13 Schedule D
    21 Other Income
    22 Total Income
    31 Total Adjustments to Income
    32 Adjusted Gross Income
    34 Tax Computation
    38 Investment Credit
    39 Foreign Tax Credit
    43 Total Credits
    45 Minimum Tax on Alternative Tax
    51 Withholding
    52 Estimated Tax Payments
    56 Tax on Special Fuels and Oils (Form 4136)
    58 Total Payments
    75 Taxable Income
    77 Credit Elect
    78 Payment with Return
    79 Incorrect Tax
    80 Manual Refund
    81 Phone request to stop Refund
    82 Bad Check
    83 FTD Payment
    84 Misapplied Credit
    85 Correspondence with Taxpayer
    86 Assessment to Post
    87 Duplicate Filing
    88 670 Verification
    89 Transfer Payment to Another Period
    90 No Document
    99 All Other Reasons
  6. Use the chart below for the 2018 CC NOREF CUT OFF day and time.

    CYCLE CUT OFF DAY AND TIME 4:00 PM ET
    201803 02/01/2018
    201804 02/08/2018
    201805 02/15/2018
    201806 02/22/2018
    201807 03/01/2018
    201808 03/08/2018
    201809 03/15/2018
    201810 03/22/2018
    201811 03/29/2018
    201812 04/05/2018
    201813 04/12/2018
    201814 04/19/2018
    201815 04/26/2018
    201816 05/03/2018
    201817 05/10/2018
    201818 05/17/2018
    201819 05/24/2018
    201820 05/31/2018
    201821 06/07/2018
    201822 06/14/2018
    201823 06/21/2018
    201824 06/28/2018
    201825 07/05/2018
    201826 07/12/2018
    201827 07/19/2018
    201828 07/26/2018
    201829 08/02/2018
    201830 08/09/2018
    201831 08/16/2018
    201832 08/23/2018
    201833 08/30/2018
    201834 09/06/2018
    201835 09/13/2018
    201836 09/20/2018
    201837 09/27/2018
    201838 10/04/2018
    201839 10/11/2018
    201840 10/18/2018
    201841 10/25/2018
    201842 11/01/2018
    201843 11/08/2018
    201844 11/15/2018
    201845 11/21/2018
    201846 11/29/2018
    201847 12/06/2018
    201848 12/13/2018
    201849 12/20/2018
    201850 12/27/2018
    201851 01/03/2019
  7. CC NOREF will establish a case control base on TXMOD. See IRM Figure 3.14.2-2 (CC NOREF) for input format.

CC NOREFD
  1. CC NOREFD will cancel a NOREF intercept request if input before the Thursday cutoff. See CC NOREFD Example for NOREFD input.

    NOREFD
    Cancels a NOREF but it must be input before Thursday's deadline
    • NOREFD

    • Cxx, Cycle#c,c

    • 10 digit TE#,* (or *,*)

    Note:

    If the control base has been closed and a CC NOREF was erroneously input, You must re-establish a new control base using CC ACTON to input the CC NOREFD . This must be done within the same cycle the CC NOREF was input. If there is any doubt on how to perform this procedure, contact the team lead for assistance.

    To Establish an Open Control
    • ACTON

    • C#,ASSIGN,A,OURV

    • *,*

CC NOREF Activity Code
  1. CC NOREF creates an activity code in the format, ppxxxxxxyy. See CC NOREF Activity Code chart below:

    PP Activity Code
    RR RR-Initial Refund Intercept Request
    RD RD-Intercept Request Deleted
    RC RC-Intercept Request Correct
    RM RM-Intercept Request Missed
    xxxxxx TC 846 (refund) posting cycle
    yy Refund Deletion Code refer to IRM 3.14.2.6.1(5), Processing Refund Deletion Codes.

Reconciling Refund Deletion Requests

  1. A Control D report will be generated weekly showing a detailed record of all NOREF actions. Conduct research on the following applicable report(s) to determine if any refunds initiated by the campus Notice Review area were not held. These will appear in the "Status" column as "Not Held" See Campus Refund Deletion Report chart below.

    Campus Report Name
    Austin 160-3R-18
    Brookhaven 160-3R-19
    Cincinnati 160-3R-17
    Fresno 160-3R-89
    Kansas City 160-3R-09
    Memphis 160-3R-49
    Ogden 160-3R-29
    Philadelphia 160-3R-28
    Campus Totals Summary 160-3R-15
  2. Use CC NOREFM to update the IDRS account information for the refunds that were not held.

  3. Follow the Erroneous Refund procedures in IRM 3.14.2.6.2.1 on any refunds that are determined to be erroneous.

Erroneous Refunds
  1. This section provides information on processing erroneous refunds. The IRS sometimes issues a refund to a taxpayer who is not entitled to the money. When this occurs, the refund is known as an Erroneous Refund. See IRM 21.4.5, Erroneous Refunds, for more detailed instructions on classifying and processing Erroneous Refunds and for procedures not listed below.

  2. An Erroneous Refund is defined as any receipt of money from the Service to which the recipient is not entitled. This definition includes all erroneous payments to taxpayers, even if the non-entitlement could not have been known at the time of the refund. The taxpayer may or may not have made an intentional misstatement of income or credits to the IRS.

  3. There are two types of Erroneous Refunds:

    1. Rebate Erroneous Refunds: are Categories A1, A2, and C requiring a recalculation of the tax liability. Generally these occur when the taxpayer incorrectly computes the tax calculation. Refer to IRC § 6211(b)(2) .

    2. Non-Rebate Erroneous Refunds: are Categories B, and D and sometimes C, from clerical or administrative mistakes that do not involve a redetermination of the tax liability. Generally, these occur when there is a payment or a processing error NOT affecting the tax calculation.

  4. The following situations may cause or create an erroneous refund. This list is not all encompassing and other causes and effects do exist.

    1. Misapplied payments - A payment applied to the wrong TIN. The misapplied payment overpays the account, causing an erroneous refund.

    2. A taxpayer's designated payment posts to the correct TIN but the wrong type of tax or tax year.

    3. A credit refund, of any type, if the taxpayer is not entitled.

    4. Return of court ordered restitution.

    5. An incorrect tax assessment, such as an incorrect use of Hold Codes or Priority Codes causing an incorrect refund.

    6. An incorrect tax adjustment causing an erroneous refund.

    7. Two taxpayers file refund returns , using the same TIN, and the refund goes to the wrong taxpayer.

    8. A taxpayer fraudulently or by mistake, receives refunds from more than one TIN for the same tax period.

    9. A taxpayer receives a manual refund (TC 840) and a computer- generated refund (TC 846) for the same overpayment.

    10. A taxpayer files a claim on a lost check, receives a replacement check, finds the original check and cashes both.

    11. A taxpayer makes an advance payment against a pending tax increase, and the money refunds before tax assessment posts.

    12. Incorrectly computed interest.

    13. A Direct Deposit is applied to the wrong taxpayer's account due to IRS error. (Owner of account may or may not be known.)

    14. Improper release of the TC 700 (false credit) -U Freeze. See Document 6209 for a complete description of TC 700.

      Note:

      On Category D Erroneous Refunds, the Submission Processing Accounting/Erroneous Refund Unit (A/ER), inputs a TC 700 to remove the erroneous refund amount on Master File and the account is reestablished in Accounting. This action is taken to prevent administrative collection action (liens or levies) from occurring on the erroneous refund liability. Do NOT release the TC 700 credit.

    15. Statute Barred Refunds.

    16. Taxpayer receives erroneous Health Care Tax Credit (HCTC) .

  5. Erroneous refund procedures are not necessary in the following situations:

    1. A signature is missing.

    2. Credit elect requested by the taxpayer has refunded.

    3. In a situation, where an error found in Notice Review increases the original tax (TC 150) and there was not a previous tax decrease, treat the tax increase as a regular turnaround case instead of an erroneous refund. Make the adjustment using Blocking Series 00 (non-income tax returns) or 77 (income tax returns) with Hold Code 0. Apply Label #16 and mail the original notice.

  6. Route returns that need to be reprocessed that also have an erroneous refund to Accounts Management and follow the procedures listed below:

    1. Order the return if it is not already with the case.

    2. Complete Form 3465, explaining the erroneous refund and the reason for the adjustment.

    3. Void the notice.

    4. Recharge and route the case to Accounts Management.

  7. Once an Erroneous Refund has been identified, it must be categorized to decide what further actions will be taken. The most common categories worked in Notice Review are A1 , A2 , B, C, and D.

    Note:

    Input TC 971 action code (AC) 663 on the erroneous refund module, regardless of the category. AC 663 is used for reporting purposes. Refer to IRM 21.4.5-1 for input instructions.

  8. See Erroneous Refund Categories chart below.

    If Example Then the Category is
    The Erroneous Refund relates to TCs 150, 29X, and/or 30X and the MFT's are not01, 09, 10, 11, 12, 16, or 88. 1. The IRS lowered the tax when originally processing the Form 1120.
    2. Incorrect tax assessment or incorrect adjustments (TC 29X or TC 30X), on a Form 1120X.
    A1
    Rebate Erroneous Refund 1 and 2 Refer to Exam for deficiency processing. (Only refer cases if ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , do not pursue. See, IRC §6211 (b) (2) and IRM 21.4.5.4.2(7).
    The erroneous refund relates to disallowed EITC, TCs 764, 766 OR 768 or disallowed refundable or nonrefundable tax credits. The taxpayer income tax return not claiming any Rate Reduction Credit (RRC). An error was made during processing and IRS allowed $300 in RRC causing a refund of $300 RRC. TP contacts IRS explaining that he or she has already received the maximum amount of credit the previous year and is not entitled to the credit. A2 Rebate Erroneous Refund. This was an IRS error. Refer to Exam for deficiency processing. (Only refer cases if ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ do not pursue, See IRC 6211 (b) (2) and IRM 21.4.5.4.2.
    The Erroneous Refund relates to taxpayer overstatement of withholding (TC 80X) or ES payments (TC 66X). The taxpayer claimed withholding of $1,000 on Form 1041 and the supporting documentation only states $500.00, B
    Non-rebate Erroneous Refunds
    The Erroneous Refund relates to TCs 150, 29X, and/or 30X and the MFTs are 01, 09, 10, 11, 12, 16 or 88. 1. The IRS makes an incorrect tax assessment (TC 150) on Form 940 or Form 941.
    2. The IRS makes an incorrect adjustment to tax (TC 29X or TC 30X) on Form 940 or Form 941.
    C
    Rebate Erroneous Refunds 1 and 2 Refer to Exam for deficiency processing.
    The Erroneous Refund relates to any error not included in the above categories. 1. A misapplied payment (TCs 6XX).
    2. Incorrect refundable credits (HCTC) or other credits not included in Category "B " .
    3. TC 840 and TC 846 posted for the same overpayment, or
    4. Refunds issued after expiration of the Statute of Limitations, or
    5. Entity errors.
    D
    Non-rebate Erroneous Refunds
  9. Category A1 -- Rebate Erroneous Refunds

    1. Do not input the adjustment.

    2. Mail the notice with no changes or labels.

    3. Input history item CATA1/XXXM or IDRS. (XXX=CP#)

    4. Recharge the return to Exam using CC ESTABDT.

    5. Prepare Form 3465 showing the adjustment action to be taken. Staple the Form 3465 to the front of the return (or to the back of a print of CC BRTVU for Electronic File (Electronic File (ELF)) returns) below the Entity. ( Figure 3.14.2-3 Form 3465 A1).

    6. Staple a copy of TXMOD to the front of the return (or to the back of the BRTVU print for Electronic File (ELF) returns).

    7. Route the Erroneous Refund package to Exam.

      Figure 3.14.2-3

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      Please click here for the text description of the image.

  10. Category B- Non-rebate Erroneous Refunds for income tax returns.

    Caution:

    If the IRS caused the overstated amount (key input error or misapplied payments), this case is considered a Category "D" (Non-rebate) case. Follow procedures for Category D cases.

    1. Add erroneous refund label to the notice. Mark the disposition online L. If the notice has already been mailed, skip this step. See Erroneous Refund Labels chart below. See Figure 3.14.2-4 (Labels 15 and 16).

      If Then
      The entire refund is erroneous Use Label #15.
      A part of the refund is erroneous Use Label #16.

      Figure 3.14.2-4

      This is an Image: 32201996.gif
       

      Please click here for the text description of the image.

    2. Input the adjustment on IDRS with Hold Code 0. Use the return (or a print of BTRVU for Electronic File (ELF) returns) as a source document. Attach adjustment tag to return/BRTVU and refile as usual.

    3. If any offsets have occurred due to the erroneous credits, reverse the offsets.

  11. Category C - Rebate Erroneous Refunds limited to MFTs 01, 09, 10, 11, 12,16 or 88:

    Caution:

    If the IRS caused the overstated amount (key input error or misapplied payments), this case is considered a Category D (Non-rebate) case. Follow procedures for Category D cases.

    1. Add erroneous refund label to the notice. Mark the disposition online L. If the notice has already been mailed, skip this step. Refer to Figure 3.14.2–3. See When to Use Erroneous Refund Labels chart below.

      If Then
      The entire refund is erroneous Use Label #15.
      A part of the refund is erroneous Use Label #16.
    2. Input the adjustment on IDRS with Hold Code 0. Use the return (or a print of BTRVU for Electronic File (ELF) returns) as a source document. Attach adjustment tag to return/BRTVU and refile as usual.

  12. Category D -- Non-rebate Erroneous refunds

    1. Add erroneous refund label to the notice. Mark the disposition online L. If the notice has already been mailed, skip this step. Refer to Figure 3.14.2– 3. See When to Use Erroneous Refund Labels chart below.

      If Then
      The entire refund is erroneous Use Label #15.
      A part of the refund is erroneous Use Label #16.
    2. If the erroneous refund involves misapplied payments, reverse the payment(s) on IDRS using ADC/ADD24. Input a TC 570 on the debit side of the credit transfer to suppress a CP 260. Transfer the credit only if it belongs to another taxpayer.

    3. If the erroneous refund is due to an incorrect tax or credit, input the adjustment with a Hold Code 3. Use a copy of the return or a print of BRTVU for Electronic File (ELF) returns as a source document. Attach the adjustment tag to the source document.

    4. If any offsets have occurred due to the erroneous credits, reverse the offsets.

    5. Input TC 470 on REQ77 with closing code 93, Posting Delay Code 1. This holds notices for 26 cycles.

    6. Send 510C Letter to tell the taxpayer of the erroneous refund.

    7. Input TC 844 on REQ77. Do not input until after the TC 846 date.

    8. See TC 844 Decision Table below.

      If Then Input
      The taxpayer is not at fault and the amount of the refund is $50,000.00 or less
      1. TC 844

      2. Extension Date: Use the date of input of 510C Letter plus 5 working days

      3. Transaction Date: Use the date of TC 846

      4. Freeze Release Amount: Erroneous part of the refund (including any erroneous credit interest)

      5. Remark: Erroneous Refund

      The taxpayer is at fault or the amount of the refund is more than $50,000.00
      1. TC 844

      2. Transaction Date: The date of TC 846

      3. Remarks: Erroneous Refund

    9. Complete Form 3465. See IRM Figure 3.14.2–3, Form 3465 D.

    10. Attach a print of TXMOD, a copy of the 510-C Letter, a copy of the payment voucher or check (if caused by a misapplied payment), and any other pertinent documentation to Form 3465. If the adjustment involves withholding, attach a copy of the return (or BRTVU for Electronic File (ELF) returns).

    11. Route the Erroneous Refund package to Accounting. If sending the original return, recharge the document.

      Figure 3.14.2-5

      This is an Image: 32201841.gif
       

      Please click here for the text description of the image.

Manual Refunds
  1. A manual refund is an IDRS generated refund request (TC 840). Thorough analysis of the case is required before requesting a manual refund as it can greatly increase the possibility of a duplicate refund situation and can increase the processing cost of issuing a refund to the taxpayer.

    • When the front line manager reviews the timeliness of the monitoring process he or she will initial and date the manual refund transmittal sheet. The manager will monitor the account with the use of IDRS weekly (Monday - Wednesday) until the TC 840 posts. This is a necessary action that must be carried out to prevent duplicate refunds from occurring. Refer to IRM 21.4.4.5, Other Manual Refund Requirements, for further guidelines on this mandate.

    Note:

    If your center's Notice Review inputs manual refunds, the use of the IAT Tool for both input and monitoring is mandatory.

    Note:

    All Manual Refunds require management approval.

  2. Refer to the Manual Refund Decision Table chart below for more information.

    If Then
    A refund must be issued before or instead of computer generated refunds (TC 846) Issue a manual refund.
    A refund was intercepted to verify unclaimed payments; the documents were unavailable and the taxpayer did not respond to requests for clarification Issue a manual refund for the substantiated payments.

    Example:

    A taxpayer claims three verified payments of $2,000 and an additional payment of $2,260 that cannot be verified. Because the total of the verifiable payments exceed $5,000, issue a manual refund for $6,000. Do not refund the $2,260 payment that cannot be verified. See IRM 3.12.38.5.4 for additional information

    A refund is for $100,000,000 or more 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. Assign these cases to a work leader the same day they are received in the unit. See IRM 3.14.2.7.1.5 ($100,000,000 Refunds) for more information.
    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.

    Caution:

    Do not take any action on a case controlled by the Technical or Taxpayer Advocate Service (TAS) Functions. Contact the controlling area and take action only if instructed by the area to do so.

  3. Before requesting an IDRS refund:

    1. Make sure that a computer generated refund will not generate.

    2. Intercept the refund (TC 846).

      Note:

      Monitor the account if a pending transaction may cause another refund to generate before the TC 840 posts.

  4. Be sure the case is complete and correct before issuing a manual refund. To avoid the generation of an 846:

    1. Use a Hold Code 1 (if original notice was mailed) or 4 (as appropriate) on a CC ADJ54 adjustment.

    2. Use a TC 570 on a credit transfer.

Manual Refund Research
  1. Obtain all necessary documents.

  2. Use the IDRS research Command Codes to review the taxpayer's account for a debit balance on another module.

    1. Do not transfer credit to satisfy a balance due if the assessed liability on TXMOD is less than ≡ ≡ ≡ ≡ ≡ and the accrued liability on INTST is less than ≡ ≡ ≡ .

    2. All Freeze Codes must be addressed before a manual refund is issued. Refer to IRM 3.14.2.7.5 , Reviewing Notices With Freeze Codes, for additional Freeze Code information.

    3. Do not transfer payments/credits to a module containing a freeze code that would prevent the computer from offsetting credits unless it is certain the payments belong on the debit module.

      Note:

      For Z- Freeze, refer to IRM 3.14.2.7.5.26 for complete instructions.

    4. For parent-subsidiary cases, only research the parent EIN for open liabilities.

    5. Large Corp cases are identified on TXMOD as LARG-CORP> , These notices should be routed to the Large Corp/Technical Function in the center.

    6. Do not transfer money to accounts in Installment Status 14.

  3. Decide whether to allow credit interest. See IRM 3.14.2.6.2.2.3 (Computing Credit Interest On Manual Refunds).

Resolving a Manual Refund
  1. Complete Form 5792, Request for IDRS Generated Refunds (IGR). ( Refer to Exhibit IRM 3.14.2-7, Form 5792 Request for IDRS Generated Refund).

    1. Take all necessary action to prevent an erroneous refund or erroneous notices from generating.

    2. In the remarks area of the Form 5792, write the taxpayer's TIN, the tax period, and the transaction code where the supporting document will be filed.

    3. If a manual refund will be issued to an address other than the Master File address, explain the different address in the remarks area and indicate where the supporting documentation will be filed.

    4. Monitor the case until the TC 840 posts. Input CC NOREF if necessary to prevent a duplicate TC 846 from generating.

      Caution:

      Treasury Inspector General for Tax Administration (TIGTA) and Headquarters program reviews have discovered an unacceptably high number of erroneous refunds issued due to inadequate monitoring and control of manual refunds.

  2. Input the Return Processable Date (RPD) on IDRS if the correspondence was received after the Return Due Date. See the Changing the Correspondence Date chart below for more information.

    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 .00, Blocking Series 15, NSD, and a Hold Code 4.
  3. Use CC RFUNDR to input the information from Form 5792 on IDRS. The CC RFUNDR entity must exactly match the entity on Form 5792.

    1. If the manual refund will be issued to someone other than the taxpayer, (i.e., Executor or Executrix) the title must be indicated on the Form 5792 and CC RFUNDR.

      Note:

      CC RFUNDR will close the case unless the status is changed from C.

  4. Attach a copy of the IDRS screen prints for the following Command Codes: COMPA, ENMOD, TXMODA, RFUNDR, REQ54/ADJ54, credit transfers (if input), and any additional supporting documents, as required by your local Accounting Branch.

  5. Submit the completed Form 5792 to your team lead for signature.

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. Compute credit interest using CC COMPA, CC COMPAC and/or CC COMPAG. The Service currently approves and supports the use of IDRS (e.g., CC COMPA) and a commercial off-the-shelf (COTS) software program, Interest Net by Decision Modeling, Inc., which is commonly referred to as ACT/DMI, to perform manual interest computations. See IRM 20.2.4, Overpayment Interest, for more details.

  2. An overpayment is defined as an amount paid in excess of the tax liability. Tax liability includes tax, penalties and interest. Interest is paid on the available net overpayment.

  3. No interest is allowed for overpayments on an original return if the overpayment is refunded within 45 days of the later of the return due date, return received date, or the date the return was received in processable form.

  4. If the return is not in processable form, suspend the 45 day interest-free period. The return or case is not considered to be 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). See IRM 20.2.4.5, Unprocessable Returns, for more information.

  5. If the date of the manual refund check (certification/scheduled date) is not on or before 45 days from the later of the return due date, return received date, or the date the return was received in processable form, interest must be allowed on the refund. To determine the “From” date, see the Determining the “From” Date chart below.

    If the Taxpayer Then Allow Interest From the Later of
    Timely filed (i.e., return received by the original or extended due date) The original due date, the payment date, or the CRD/RPD (if after the extension date).
    Late filed (i.e., return not received by the original or extended due date) The late return received date, the payment date, or the CRD/RPD (if present).


    To determine the payment date, see the Determining the Payment Date chart below.

    If the Payment is a Then the Payment Date is the
    Prepaid or timely credit, e.g., estimated tax payment, withholding (Form 1041), 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 made after the due date (determined without regard to any extension of time for filing) Payment received date.
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡


    To determine the “To” date, see the Determining the “To” Date chart below.

    If the Return Then
    Indicates an overpayment The interest To date is the date certified by the Accounting Function for allowing the refund.

    Note:

    The Manual Refund scheduled Date cannot be a Saturday, Sunday, or Holiday.

    Reminder:

    Night shifts must use local procedures.

  6. Use the appropriate CC COMPA definer to compute credit interest for the period decided in (5) above. See the COMPA Definer Decision Chart below..

    IF THEN
    Credit interest before 1/1/99 for a "Non-Corporate" taxpayer Compute using COMPAC
    Credit interest on or after 1/1/99 for a "Non-Corporate" taxpayer Compute using COMPA or COMPAD.
    Credit interest before 1/1/95 for a "Corporate" taxpayer, regardless of the overpayment amount (See IRM 20.2.4.9 , Special Credit Interest Rules for Corporations, for the definition of a "Corporate" taxpayer.) Compute using COMPAC
    Credit interest on or after 1/1/95 for a "Corporate" taxpayer and the overpayment amount is less than or equal to $10,000

    Caution:

    If the General Agreement on Tariffs and Trade (GATT) threshold has been met, the overpayment will be computed at the GATT interest rate (COMPAG), regardless of the overpayment amount. See IRM 20.2.4.9.2, Determining the GATT Threshold.

    Compute using COMPAC
    Credit interest after 12/31/94 for a "Corporate" taxpayer and the overpayment amount is greater than $10,000, or the GATT threshold has previously been met (See IRM 20.2.4.9.2, Determining the GATT Threshold.) Compute using COMPAG (GATT).

    Note:

    Add the COMPAC (first $10,000) with the GATT interest (over $10,000) for the total interest allowed

Tax Examiner Review Procedures

  1. The following section contains procedures Notice Review TEs should follow when reviewing notices and transcripts.

General Review Procedures

  1. TEs must verify the tax return information, if available, contained on the notice by utilizing the information in the NRPS Package and IDRS research Command Codes to ensure the notice contains correct information.

  2. At the beginning of each cycle, NRPS provides a charge out sheet (based on the assigned selection key) to Files for returns that may be needed for review. However, the selections key is not always an indication that a return should be ordered from Files. The return is not always necessary when reviewing certain keys and notices.

    • Appropriate IDRS research using CC’s TXMODA, BRTVU, TRDBV, etc. should be completed. If the research is not conclusive, the return should be ordered from Files.

    • A TE must order the return from Files if they determine it necessary for review to ensure the taxpayer will receive a correct notice. Failure to do so will result in incorrect notices being sent to the taxpayer.

    • Returns should be requested using CC ESTAB. Mark notice disposition H.

    • If you are reviewing a math error notice with a balance due of $250,000 or more or an overpayment of $100,000 or more, you are required to have the return. Request the return using CC ESTAB. Input CC NOREF and use an H disposition. Correct the notice disposition when case is completed.

    • The return is generally needed when reviewing Key 54. See IRM 3.14.2.7.15 for complete instructions.

    • If the return is not provided, the entity portion must be reviewed to ensure that the taxpayer will receive the notice and it is correct.

  3. All related tax modules and associated notices must be reviewed and resolved, as applicable, when a notice is resolved. Only one count is allowed when associated notices and/or modules are resolved with the notice module.

  4. The notice module may contain multiple issues. All issues must be resolved before marking notice disposition. Refer to all appropriate sections of IRM 3.14.2 to ensure proper analysis and resolution of notice issue(s).

  5. Use the appropriate CC (TERUP, NOREFD, etc.,) to reverse actions that may have been performed in error. Be mindful of specific time frames associated with your reversing actions. Contact your team lead for clarification if unsure. Some of the more common Command Codes used by Notice Review can be found in IRM 3.14.2.7.2, Common Command Codes used in Notice Review.

  6. History Items are required when taking action on your notice module. If notice module is not available on CC TXMOD, A history item is not necessary. Do not create a module just to leave a history item.

  7. Take the following actions with regards to contacting another functional employee that has an open control over the module your are reviewing:

    • Always contact employees in A status.

      Exception:

      No contact is necessary if the open control is a clerical number.

      Note:

      Certain Freeze Codes require contact regardless of status code on the module. For exceptions, refer to IRM 3.14.2.7.5 Freeze Codes.

    • After two attempts at contact, if no response is received within two days after contact is initiated, note contact information on quick print

    • If none made, indicate CNM (contact not made) on the quick print

    • If contact was made, indicate notice disposition and the contacted employee's name and phone number must be written on the quick print.

    • Take the necessary action to resolve the notice.

    • If no response is received on the last day of cycle, take appropriate action.

  8. If the IRM contains inconsistencies and/or conflicting information, immediately submit this information to the Headquarters Analyst for resolution.

    Caution:

    Do not establish local procedures without first contacting the Headquarters Analyst.

  9. The following information and instructions attempt to address situations that are encountered most often when reviewing notices. These instructions cannot address every possible situation and/or issue encountered . They are to be used in conjunction with all the information contained in IRM 3.14.2 and classroom training. When in doubt, contact your team lead or manager.

Manual Intervention Centralized Authorization File (CAF) and Reporting Agents File (RAF)
  1. If Manual Intervention conditions on the notice module are identified on the NRPS contents page, use the following to aid in notice resolution and disposition:

    1. The Centralized Authorization File (CAF) is a listing of all Power of Attorneys (POA) information.

    2. The Reporting Agents File (RAF) is a listing of all agents that are authorized to receive notices. It is limited to filers of Form 940, Form 941, Form 943, Form 944, Form 945, Form 720, Form 1041, Form 1120, Form 2290 and Form CT-1, for both paper and electronically submitted returns.

    3. If the notice generates with the representative's name and address in the entity, manual intervention will indicate match.

    4. If the notice generates with the representative's name and address blank, manual intervention will indicate mismatch

    5. manual intervention may indicate any combination of CAF Match, CAF Mismatch, RAF Match, or RAF Mismatch.

    6. Use CCs CFINK and RFINK on IDRS to decide notice disposition for CAF/RAF mismatch and locate an authorized representative's name and address.

    Note:

    For more complete instructions for reviewing CAF/RAF notices please refer to IRM 3.14.2.5.3.

  2. Research a CAF mismatch on CC CFINK with Taxpayer's TIN, and the specific MFT and tax period of the notice module.

    1. If CFINK response screen indicates, RECORD NOT FOUND, there is no authorized representative.

    2. If a representative is found, check the RECEIPTS line to decide if the representative is authorized to receive notices. Refer to the Receipts Line Decision Table for CC CFINK below.

      If Then
      YES is present in the NOTICE field. The representative is authorized to receive notices. Place the representative's name on the Sort Name Line and include the representative's address, city, and state on the appropriate lines under the CAF Mismatch Tab.

      Note:

      More than one representative may be authorized to receive notices.

      NO is present in the NOTICE field. The representative is not authorized to receive notices.
      Undeliverable, Disbarred, Suspended , or Deceased is present The representative can no longer represent the taxpayer or the mail is undeliverable.
      None is present The representative is not authorized to receive notices.
    3. Use CC CFINK with the REP-number to view display of each representative's address.

  3. Research a RAF mismatch on CC RFINK with taxpayer's TIN

    1. If CC RFINK response screen indicates, NO DATA AVAILABLE , there is no authorized representative.

    2. If a representative is found, CC RFINK will display the Reporting Agent's name and EIN as well as the MFTs and tax periods they are authorized to receive notices for. .

    3. If RFINK shows a notice indicator of “N”, then the representative is not authorized to receive notices.

    4. If RFINK shows a notice indicator of “Y”, then the representative is authorized to receive notices.

    5. Check the tax period to determine if the RAF is valid for the notice module. Refer to the RAF Tax Period Validity chart below.

      If the tax period of the notice Then
      Is the period of or later than the tax period on RFINK This Reporting Agent is authorized to receive the notice. Place the representative's name on the Sort Name Line and include the representative's address, city and state on the appropriate lines under the CAF Mismatch Tab.
      Is the period before the tax period on RFINK A new agent has been authorized. This agent is not authorized to receive the notice.

      Note:

      The tax period shown on CC RFINK is the beginning period the Reporting Agent has authorization.

    6. Use CC RFINK with definer R and the representative's EIN to view display of the representative's name and address.

  4. Notice disposition when a valid Authorized Representative is not located. Refer to the Invalid Representative DispositionTable below.

    If And disposition of original CP is Then
    NO is present on CFINK or NO is present on RFINK Print Select OLNR disposition E (Entity) and void the CAF or RAF Entity copy.
    NO is present on CFINK or NO is present on RFINK Label Select OLNR disposition R (Retype) and void the CAF or RAF Entity copy. Then select the appropriate label from the Label Drop Down Menu.
    NO is present on CFINK or NO is present on RFINK Retype Select OLNR disposition R and void the CAF or RAF Entity copy.
    NO is present on CFINK or NO is present on RFINK Void No action required.
    Disbarred, Suspended or Deceased is indicated Print Select OLNR disposition E and void the CAF or RAF Entity copy.
    Disbarred, Suspended or Deceased is indicated Label Select OLNR disposition R and void the CAF or RAF Entity copy. Then select the appropriate label from the Label Drop Down Menu.
    Disbarred, Suspended or Deceased is indicated Retype Select OLNR disposition R and void the CAF or RAF Entity copy.
    Disbarred, Suspended or Deceased is indicated Void No action required.
    If the representative address is undeliverable Print Select OLNR disposition E and void the CAF or RAF Entity copy by checking the box located on the Entity Tab Screen.
    If the representative address is undeliverable Label Mark OLNR disposition R and void the CAF or RAF Entity copy by checking the box located on the Entity Tab Screen. Then select the appropriate label from the Label Drop Down Menu.
    If the representative address is undeliverable Retype Mark OLNR disposition R and void the CAF or RAF Entity copy by checking the box located on the Entity Tab Screen.
    If the representative address is undeliverable Void No action is required.
  5. Notice disposition when an authorized representative's address is located. Refer to the CAF/RAF Notice Disposition table below.

    Disposition of Original CP CAF/RAF Match Additional Action Required CAF/RAF Mismatch Additional Action Required
    PRINT None
    1. Select the OLNR disposition E.

    2. Add the CFINK or the RFINK address information to the CAF or RAF Entity Copy on the OLNR server.

    VOID None None
    RETYPE None
    1. Select OLNR disposition R.

    2. Add the CFINK or the RFINK address information to the CAF or RAF Entity copy on the OLNR server.

    LABEL None
    1. Select OLNR disposition R.

    2. Add the CFINK or the RFINK address information to the CAF or RAF Entity copy on the OLNR server.

    3. Select the appropriate label.

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

    • Employer Identification Number

    • Document Locator Number

    • Name

    • Address

    • Return Received Date

    • Tax period

    • Signature(s) for refund returns only

    • Taxpayer correspondence (if applicable)

    • Payments and credits

    • Discovered remittance (if applicable)

    • Dishonored payments and bad check penalties

    • Offsets

    • $100,000,000 refunds

    • Pending transactions

    • Slipped blocks and mixed data blocks

Employer Identification Number (EIN)
  1. Compare the EIN on the return to the notice quick print. EIN discrepancies must be routed to Entity Control. The majority of business returns require an EIN, but an SSN followed by a one letter code is used for Form 8288, Form 709 and Form 706 (V for valid SSN and W for an invalid SSN on BMF). Use CC NAME with the proper definer if you have reason to believe the EIN may have been changed. It may be necessary to use CC BMFOL if the account is for an EIN that is not available on CC TXMOD.

Document Locator Numbers (DLN)
  1. Always verify the DLN on your return with the DLN on the notice or NRPS package to ensure that you are reviewing the proper document. If the DLNs do not match, follow local procedures to request the correct document.

Name and Address
  1. Refer to the instructions below to determine if changes should be made to the Primary Name Line.

    • If there is a misspelling, typographical error, or extra characters (e.g. extraneous %) in the first name line or Continuation of first name line (CONT-OF-PRIM-NM), correct the misspelling, typo or extra characters using CC ENREQ.

    • If a Trustee name on the notice is different from the Trustee name on the return, send to Entity. Exception: If et al (and others) following a name, do not forward to Entity.

  2. If the return is available, compare the name on the tax return to the name on the notice or entity part of the Transcript.

    • If the name on the return is illegible, check the signature, return envelope or other attachments to determine the taxpayer’s name.

    • If the name on the notice is different, check CC INOLE under the EIN for the correct Master File name.

  3. If the taxpayer is requesting a Trustee name change, send to Entity.

  4. Because of the nature of the BMF tax account, ALL OTHER FIRST NAME LINE CHANGES MUST BE SENT TO ENTITY FOR CONSIDERATION. An error will be charged if name changes other than those listed above are initiated by a Notice Review employee.

    Note:

    Follow your local procedures when routing your document to Entity.

  5. Before deleting a refund for a Primary name correction, decide if the taxpayer will be able to cash the check.

    If the taxpayer will be able to cash the check:

    • Allow the refund.

    • Correct the address on IDRS using IAT and OLNR.

    If the taxpayer will not be able to cash the check:

    • Stop the refund.

    • Correct the name on IDRS and OLNR if the difference is a misspelling or typographical error.

    • Release the refund (PD 1).

  6. Address-Compare the address on the tax return if available with the notice or refund transcript address. The notice must match the return. If the address is illegible, check the return and all attachments for clarification. If the notice and return do not agree, use the zip code directory, USPS, to verify street, city, state and zip code.

    Note:

    The Integrated Automation Technologies (IAT) tool MUST be used by the centers to make address changes.

  7. The FINALIST program is standardization software used by the United States Postal Service (USPS) to ensure addresses are valid and correct. FINALIST knows if building numbers are valid and is used to ensure the IRS’s outgoing mail, notices, tax packages, etc. comply with the USPS address standards.

    1. An address that is entered into IDRS and does not meet the USPS standards WILL NOT update and/or post with the input address.

    2. The USPS allows thirteen characters (including spaces) for city names. FINALIST will abbreviate city names if needed to reduce the number of characters to thirteen.

    3. FINALIST will also abbreviate street names if over 13 characters. However, a list of abbreviations used by FINALIST is not available.

      Note:

      Abbreviated street or city names are acceptable regardless of the FINALIST program or Pipeline processing. Do not change allow the abbreviation.

      Example:

      PENNSYLVANIA AVE posts as PENN AVE; WASHINGTON DR is posting as WA DR

  8. The general guidelines to follow when making address changes are below:

    1. Never change an address to an in care of unless the request is signed by the taxpayer or authorized representative. If a return, extension, etc., is received with an in care of address and is signed by the taxpayer, process the change.

    2. Change the address if signed correspondence is received from the taxpayer with the old street address lined through and a new address is written in.

    3. If the return has a response written on it, accept the information as coming from the taxpayer. Process the change even if the return is not signed.

    4. If a photocopy is received without an original signature, do not change.

    5. Requests for changes of address from Certified Public Accountants (CPAs), attorneys, etc., will be honored only if we have a valid Power of Attorney on file. Use CC CFINK to check for Power of Attorney.

  9. The entity must be changed in the following instances:

    1. The notice contains an incorrect or misspelled street suffix. Even though the Post Office can deliver by street name alone in most cases, all street suffixes (e.g. Avenue, Boulevard, Circle, Drive, Road, Street etc., or their acceptable abbreviations) must be correct on the notice, regardless of where the error originates

    2. If the notice has incorrect or missing bldg./trailer/apartment number/Suite/Room you must make the correction.

    3. If the notice has an “in care of” symbol (%) with no name or representative, remove the “%” from the notice and IDRS. It is not necessary to send to Entity.

    4. If the return or notice contains both a PO Box number and a numbered street address, put the PO Box in the street address field and the street address in the location address on ENMOD. Correct the address on OLNR to the PO Box.

    5. If a number is shown as part of the city, it must be spelled out. See example in the “Guide to Changing City” table below.

      Address on Notice Corrected to Notice
      29 PALMS TWENTY NINE PALMS
      1000 OAKS THOUSAND OAKS
    6. If North, South, East or West, (or N, S, E or W) is shown at the beginning of the city name, no change is necessary.

    7. A city or town name (that is too long) will only be abbreviated for lack of space in the IDRS field

    8. Correct obviously misspelled cities and incorrect abbreviations. If you have any questions about valid abbreviations refer to IRM 3.24.38.4.4.14.8, Street Address. Use the USPS web site or other internet search engines to determine the correct spelling or abbreviation of an address.

    9. FT and ST are allowable abbreviations and do not need to be spelled out.

      Note:

      Use of the USPS web site is not required on every notice. Refer to the team leader if in doubt about any part of an address.

  10. When notices are printed with LOCAL as the address. The following instructions must be followed:

    1. Use CC ENMOD to find the latest entity information on a taxpayer.

    2. Input a CC FINDS/FINDE to obtain the taxpayer's current address information.

    3. Follow local procedures to find the location address if available.

    4. If none of the procedures shown above give a current address to use, then change the address to GENERAL DELIVERY after using the United States Postal Service (USPS) web-site to verify the zip code.

      Note:

      Do not mail a notice with LOCAL as the address.

    5. If the notice contains % or C/O name on the address line, add to the "In Care Of" line and delete from the address line.

    6. If the notice contains an address in the "In Care Of" name line that is identical to the address line, delete the "In Care Of" line.

Return Received Date
  1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Any return received ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ after the RDD must 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). See IRS Received Date Decision Table below.

    Exception:

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

    If the postmark date is Then the return received date is
    On or before the RDD and the postmark was made by the United States Postal Service, or a designated private delivery service under IRC Section 7502(f) The RDD regardless of when the return was received.
    After the RDD The IRS Received Date.
  2. The TC 610 date on the tax module is the return received date. The DUE/RCVD DATE field in the NRPS package also shows the received date.

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

    Note:

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

    1. Earliest postmark date on envelope, if there is no postmark on or before the RRD.

    2. Taxpayer signature date; and

    3. Julian control date minus 10 days in the DLN, or

    4. Current date minus 10 days.

  4. IRC 7503 provides that, in the case where the due date for filing or paying falls on a Saturday, Sunday, or legal holiday, the return or payment is considered to have been filed or made on the due date if it is mailed on the next succeeding day which is not a Saturday, Sunday, or legal holiday. “Legal holiday” means any legal holiday in the District of Columbia, or any Statewide legal holiday of the State where the taxpayer files his returns.

  5. The Failure to File (FTF) penalty is the only penalty that should be adjusted manually for Return Received Date recomputation issues. Interest should not be adjusted manually. When the FTF is adjusted manually the computer will adjust the interest. (See IRM 3.14.2.7.17.1, Recomputation of Interest and Penalties-General.)

Tax Period
  1. For Business Returns, the type of return filed can have varied period/year endings. They are:

    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 CCYYMM. The acronym CCYYMM stands for the Century (CC), the Year (YY). the Month (MM). Each acronym is represented in 2 digit format, so it would appear on Business Returns as 201612.

    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, 2016, would indicate a tax period of 201601.

    3. Short Year-These are for a consecutive period of fewer than 12 months. (See IRM 3.14.2.7.4.5 Short Period Returns.)

    4. Quarterly-These returns are filed 4 times a year (within a consecutive 12 month period beginning January 1, and ending December 31)

      Example:

      A first quarter return (January - March 31) would indicate a tax period of 201703 in format CCYYMM; second quarter, (April -- June 30) would indicate a tax period of 201706 in format CCYYMM, etc.

  2. Compare the year on the tax return to the tax period on the notice or on the NRPS Package Contents Page.

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

      Note:

      Taxpayers often file their returns using the incorrect year tax forms.

    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. (See IRM 3.14.2.7.18 Reprocessing Returns.)

Signatures
  1. Tax returns are legal documents and must have a signature.

    Exception:

    The following are processed without signatures:

    • Returns prepared by IRS under IRC 6020(b), referred to a Substitute for Returns or SFRs.

      Note:

      If the taxpayer signs the SFR it becomes the return of such person under IRC 6020(a).

    • Returns prepared by Examination, for example SFR (Substitute for Return).

    • Dummy returns filed by IRS.

    • Correspondence is attached to the return showing that the taxpayer is responding to an IRS letter.

  2. Constructive Signatures (signature on an attached check, letter, etc.) are not acceptable unless there is a perjury statement JURAT on the document which contains the signature. Otherwise the signature must be on the return.

  3. Tax return preparers may use a signature stamp to facilitate signing large numbers of returns; see facsimile signature, below. Taxpayers, however, must continue to sign returns with original signature.

  4. Facsimile signatures -Internal Revenue Procedure 2005–39 outlines the use of facsimile signatures by corporate officers or duly authorized agents when filing certain employer information returns. The Revenue Procedure includes the following tax forms:

    • Form 94X series, including but not limited to Form 940, Employer's Annual Unemployment (FUTA) Tax Return; Form 941, Employer's QUARTERLY Federal Tax Return; Form 943, Employer's Annual Federal Tax Return for Agricultural Employees; Form 944, Employer's ANNUAL Federal Tax Return; Form 945, Annual return of Withheld Federal Income Tax, and Form 941X, Form 943X, Form 944X, Form 945X and Form CT-1X.

    • Form 1042, Annual Withholding Information Return for U.S. Source of Foreign Persons.

    • Form 8027, Employer's Annual Information Return of Tip Income Allocated Tips.

    • Form CT-1, Employer's Annual Railroad Retirement Tax Return.

    • Form 941SS, Employer's QUARTERLY Federal Tax Return.

      The facsimile signature may be in the form of a rubber stamp, mechanical device or computer software program. The corporate officer or authorized agent is responsible for ensuring their facsimile signature is affixed to return. For more detailed information, please refer to Revenue Procedure 2005–39.

  5. If the signature is missing on a tax return requesting a refund or indicating a balance due and the tax module does contain a Computer Condition Code (CCC) 3 or E, process the notice module as if the tax return was signed. If CCC 3 or E are NOT present, consider those conditions when resolving the notice issue(s).

Taxpayer Correspondence
  1. If taxpayer correspondence is discovered attached to the return, review it and follow through as necessary. Follow Policy Statement P-21-3 (formerly Action 61) requirements if more than 25 days have elapsed from the date the return was received.

  2. If the correspondence is requesting action to be taken on the notice module, see Correspondence Decision Table below.

    If Then
    The action can be taken Take the necessary action.
    Retype the notice as appropriate.
    Update History on IDRS, indicting CORRW/RTN as first History Item; indicate notice disposition with second History Item.
    Mailing of the notice within cycle will satisfy Policy Statement P-21-3 (formerly Action 61) requirement.
    The action cannot be taken Photocopy the tax return and the original letter.
    Attach the photocopy of the letter to the original tax return.
    Route the original letter with a copy of the tax return to Accounts Management. (Write photocopy on the copy of the tax return.)
    An Interim letter is required if more than 25 days have elapsed from the return received date.
    Update the account History to indicate action(s) taken.
  3. If the taxpayer is requesting an Installment Agreement or indicates an inability to pay and there is no indiction the letter was forwarded to Collections:

    1. Copy the letter and attach the copy to the return.

    2. Notate the original letter was sent to collections.

    3. Route the original letter to Collections.

    4. Make sure the taxpayer's name, address, and EIN is indicated on the correspondence.

    5. Input a CC STAUP for 9 cycles.

    6. An Interim letter is required if more than 25 days have elapsed from the return received date.

    7. Update the account History to indicate action(s) taken.

  4. Route Reasonable Cause requests to Accounts Management.

    1. If the account is in balance due status, input CC STAUP for 9 cycles.

    2. An Interim letter is required if more than 25 days have elapsed from the return received date.

    3. Update the account History to indicate action(s) taken.

    4. The table below can be used as a guide to determining reasonable cause.

    Examples of Reasonable Cause
    Death, serious illness, or injury of the taxpayer or his/her immediate family
    Unavoidable absence of the taxpayer
    Destruction by fire or other casualty of the taxpayer's place of business or records
    Delay due to erroneous information from an Internal Revenue Service employee
    Delays caused by, or related to, civil disturbances outside of the taxpayer's control
    Timely requested forms not received timely
    Advice or aid sought in preparing returns from Internal Revenue Service representative on or before the due date, but through no fault of the taxpayer, she/he was unable to see a representative
    Taxpayer is unable to determine the amount of deposits or tax due for reasons beyond the taxpayer's control
    Taxpayer does not have access to his/her records
    Events beyond the control of the taxpayer. For example, the Post Office shredded the taxpayer's return, a bank substantiates the taxpayer's claim that the delay was caused by the bank, etc.
    Taxpayer relies upon his/her accountant, and reasonable cause for the accountants' failure can be established
    While inability to pay is not reasonable cause forlate filing, lack of funds is reasonable cause for failure to pay ONLY when it is shown that the taxpayer was unable to pay despite his/her exercise of ordinary business care and prudence. (Make this determination using the information available in the taxpayer's statement.)
  5. If correspondence indicates missing information that was not added when the tax return was processed, or requests assistance in computing tax or credits that is beyond the scope of Notice Review:

    1. Void the notice.

    2. Route to Accounts Management.

    3. Make sure the taxpayer's name, address, and EIN is indicated on the correspondence.

    4. Input CC STAUP for 9 cycles if the account is in balance due status.

    5. An Interim letter is required if more than 25 days have elapsed from the return received date.

    6. Update the account History to indicate action(s) taken.

  6. If the correspondence is referencing a tax module(s) other than the notice module:

    1. Check IDRS for an open control base. See IDRS Open Control Base Decision Table below.

      If Then
      There is an open control base Route the original letter to the tax examiner who has the case controlled.
      Indicate correspondence attached to original return on routing document.
      There is no open control base and the requested action has not been taken Input CC STAUP for 9 cycles.
      Route case to Accounts Management.
      Indicate correspondence attached to original return on routing document.
  7. The guidelines for Policy Statement P-21-3 (formerly Action 61) are established to ensure the taxpayer receives an accurate, professional and timely response to correspondence submitted to the Service. In Notice Review, we will be responsible for sending interim responses to correspondence attached to original tax returns when it is decided the action requested has not been taken. If it can be decided the action requested has been taken, the mailing of the notice will satisfy our responsibility for the requirement.

Payments and Credits
  1. This subsection contains instructions dealing with payments and credits. It includes information on discovered remittance, dishonored payments, Bad Check Penalties and Bank Adjustments.

Discovered Remittance
  1. When reviewing tax returns, especially Non-Math Error Balance Due notices, thoroughly search all attachments (including envelopes) for payments.

  2. Use the following procedures to process a discovered remittance:

    1. Prepare Form 3244 (Payment Voucher) in duplicate.

    2. Attach the carbon copy to the front of the tax return under the Entity section.

    3. Use CC ACTON to input a history item of DISCREMIT on IDRS.

    4. Input CC STAUP for 8 cycles on all balance due modules.

    5. Void, retype, or label the original notice as required.

    6. Prepare Form 4287 - Record of Discovered Remittance.

    7. Give remittance and the original copy of Form 3244 to team lead.

Dishonored Payments and Bad Check Penalties
  1. If a Dishonored Payment transaction (TCs 611, 641, 651, 661, 671, 681, or 691) and penalty (TC 280 or 286) are pending on the notice module:

    1. Delete any refund.

    2. If the refund was deleted, wait for the TC 841 to post.

    3. Input CC STAUP for 6 cycles if a balance due remains.

    4. Retype the notice to include the Dishonored Payment Penalty (Notice Penalty Code 04). Update the balance due, refund amount, or credits on the notice using CC COMPA and CC INTST.

      Note:

      Use CC COMPA to update the module since CC INTST will not be accurate until the TC 280 or 286 posts.

    5. Issue a manual refund for large dollar refunds if it can be done within the 45 day period.

Bank Adjustments
  1. There may be instances where payments are encoded incorrectly on a taxpayers account. If an obvious encoding error is discovered, refer to the Bank Adjustments Decision Table below.

    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 1. Allow the refund.
    2. Mail the notice.
    3. Contact the Payment Correction Team (at the SP site that processed the payment) for resolution.
    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 $5,000.00 or more, issue a manual refund for the corrected refund amount. Void the notice, leave a history and follow Item 4 in next box.

    1. Intercept the refund using CC NOREF.
    2. Use Refund Deletion code 99.
    3. Close your control base.
    4. Contact the Payment Correction Team (at the SP site that processed the payment) for resolution.
    The notice is a non-math error notice Notice is balance due Void notice.
    Leave History Item
    Input CC STAUP for 9 cycles.
    Contact the Payment Correction Team at the SP site that processed the payment) for resolution.
    Notice is a non-math error notice Notice is credit or even balance Void notice.
    leave History Item.
    Intercept Refund and/or freeze credit on module.

    Note:

    When working CP 267 or CP 210, if there is a bank adjustment, the credit must be frozen or refund intercepted so the bank adjustment can be done prior to the credit being erroneously refunded.


    Contact the Payment Correction Team at the SP site that processed the payment) for resolution.
    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.
Offsets
  1. Internal Revenue Code IRC §6402 (a), (c), (d) and (e) require a taxpayer’s overpayment to be applied to any outstanding Federal tax, non-tax child support, Federal agency non-tax debt, State income tax obligation or certain unemployment compensation debts prior to crediting the overpayment to a future tax or making a refund. This application of a tax overpayment is called a refund offset. Refund offsets to child support, Federal agency non-tax debts, State income tax obligations and unemployment compensation debt are handled by the Bureau of the Fiscal Service (BFS) through the Treasury Offset Program (TOP). This occurs after a refund is certified by Internal Revenue Service (IRS) for payment by BFS, but before the refund check is issued or direct deposit is transferred to the taxpayer’s bank account. For additional information see IRM 21.4.6.

  2. There are three types of refund offsets:

    • Tax offset,

    • Treasury Offset Program (TOP) offset, effective 01/11/1999

    • Debtor Master File (DMF) offset, prior to 01/11/1999

  3. A tax overpayment must offset to an outstanding tax debt before it offsets to non-tax debts or is applied to a credit elect.

  4. The priority of offsets within TOP are:

    • Office of Child Support Enforcement Temporary Assistance to Needy Families (TANF) (payments to the state).

    • Federal Agencies.

    • Office of Child Support Enforcement Non-TANF (payments to the custodial parent through the state).

    • State tax debts

  5. Command Code (CC) INOLE contains debt liability indicators based on information received from BFS. BFS debt records are updated daily; however, IRS CC INOLE is only updated weekly. Therefore, CC INOLE may not have the most current debt information. The indicators are used to identify an IRS freeze or tax debt, TOP non-tax debt, or both. These indicators are shared with Electronic Return Originators (EROs) on the Electronic Filing (ELF) acknowledgement file, and used by the EROs to determine whether to approve a Refund Anticipation Loan (RAL) The indicators are the letters: “N”,“ I”,“ F”,“ B”. For a complete explanation of each code refer to IRM 21.4.6.4 (6).

  6. CC TXMOD also contains debt liability indicator, found directly below the TC 846 and is displayed in the form of the number “0” or “1”. The indicator is set at the time the TC 846 is generated on the module and is shown as: DMFLIAB-> 1 or DMF-LIAB-IND>0.

  7. Offsets occur when credit is moved between different tax modules and/or taxpayer accounts. Credits can be moved manually, or are computer generated.

    Note:

    "Money should not be moved manually with offset or lump sum transaction code if the Refund Statute Expiration Date (RSED) has expired, unless the payment was made less than 2 years before the claim was filed."

    Caution:

    All existing modules with a balance due≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ must be satisfied before inputting a manual refund or manually transferring a credit elect.

Credit Elect-TC 830/TC 710 and 836/TC 716
  1. Review the return to decide if the taxpayer requested that all or part of their overpayment be applied to the subsequent tax period.

    Caution:

    If any balance due module contains an -E Freeze, do not manually offset credit to satisfy the module. Transfer the credit elect as requested by the taxpayer.

  2. When the request is transcribed properly from a current period return, the computer will automatically offset the credit (TC 836/716) if it is available.

    Caution:

    If credit elect is $ .99 or less the amount will not be automatically offset by the computer. In this instance the tax examiners do not have to manually transfer the credit.

  3. If the full amount of the credit is not available when the return posted:

    1. For Form 1041, Form 1120, Form 1120-C, Form 990-T, and Form 990-PF, the computer continues to offset as more credit becomes available until the full credit elect amount is satisfied. This capability only exists up to one year after the original tax period ending date.

      Example:

      Up to December 31, 2017 for a 201612 tax return.

    2. For Form 940, Form 941, Form 943, Form 944, Form 945, Form 720, Form CT–1, and Form 1042 the computer will not offset additional credit elect after the return posting cycle. A manual credit elect transfer must be input for subsequent offsets on these forms. (Input CC ADD48 on IDRS using TC 830/TC 710.)

  4. The following notices pertain specifically to Credit Elect situations:

    1. CP 147 – will only generate on an income tax return. It is issued when additional credit(s) become available and are computer offset.

    2. CP 145 – must be pulled and associated with the case when adjusting an account if the credit elect will be affected.

  5. Forms 940, 941, 943, 944, and 945 - When the refund box is checked, Integrated Submission and Remittance Processing (ISRP) System or Data Input System (DIS) will input a Refund Indicator, which generates the Computer Condition Code S at posting. When neither box is checked or the Applied to Next Return box is checked, the refund indicator is not input, Computer Condition Code E generates at posting, and the overpayment is applied to the next return (credit elect). Follow the instructions below:

    1. Verify that the entries match the Computer Condition Code posted to the notice module.

    2. If there is an overpayment on the account that will refund, and any of the following occur, apply the credit elect using (6) below:

      • Neither of the boxes are checked.
      • The return is not available.
      • The Computer Condition Code E is present on the notice module.

  6. If the Data Transcriber did not properly transcribe the Credit Elect request and the credit is refunding:

    1. Delete the refund.

    2. Use CC ADD48 to manually transfer the Credit Elect amount as a TC 830/TC 710. Be sure to use posting delay codes to allow time for the TC 841 to post to the module before the TC 830 posting.

  7. For Form 941 and Form 944, if the taxpayer entered the credit elect or total FTD credits on the Advanced Earned Income Credit line in error and an erroneous TC 766 credit is present, delete the refund. Adjust the TC 766, using CC REQ54 on IDRS. Manually transfer the claimed credit elect if not already offset by the computer.

  8. Master File will not automatically offset requests for Credit Elect on prior year income tax returns and/or subsequent requests on all non-income tax returns.

    1. Use CC BMFOL to review the subsequent period.

    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 claimed Credit Elect directly to a module separated by more than one tax period (e.g., 201603 to 201609), if all of the 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 Code "2" on the Doc Code 48 transfer.

    4. All other offsets (TC 826 or 896) have priority over a Credit Elect offset. Only reverse one of these offsets in favor of a credit elect when a TC 826 offsets to the subsequent period, and penalties and interest will decrease if a timely credit elect posts.

    5. Refer to the Credit Elect and Credit Offset Decision Table below.

    If Then
    The subsequent tax period has a balance due Delete the refund.
    The credit elect will cause penalties and interest assessed on the subsequent period to partially or fully abate Retype the settlement notice or void the CP 145.
    Taxpayer claimed the credit on the subsequent tax period and the Credit Elect field on the subsequent module has a significant amount Manually offset the Credit Elect.
    Otherwise Allow the refund.
  9. When increasing tax or reversing credits on the notice module, reverse all or part of a notice cycle credit elect to cover the debit. Input CC ADC48 using TC 832/712 on IDRS.

    1. Delete any current cycle refund on the subsequent module. Reverse the offset using a posting delay code to allow time for the TC 841 to post before the TC 712.

    2. Do not reverse a credit elect that was offset in a different cycle from the notice cycle.

      Example:

      If the notice generated in cycle 201715 and the TC 836 posted in cycle 201708, do not reverse the TC 836.

    3. Retype the original notice to include the CP 145. If a notice can not be mailed take no action.

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

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

    2. Use the date the credit was originally available as the TC 710 date.

    3. Reverse a TC 826 offset if there is a pending manual credit transfer

  11. When manually transferring Credit Elect, input TC 830/TC 710:

    1. If all payments or credits are timely ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , use the due date of the return as the 830/TC 710 date. Otherwise, use the date of the credit creating the overpayment as the TC 830/TC 710 date. In the case of a tax decrease (TC 291/295), use the due date of the return or latest payment date.

      Exception:

      For Form 1120, the TC 830/836 date is the RDD plus one month. For example: on a 201512 return the due date is 04152016 and the TC 830/836 date is 05152016.

      Note:

      Multiple TC 830's may need to be input 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, time the offset (TC 830) to post after the adjustment or credit transfer, by inputting a Posting Delay Code (See Use of Posting Delay Codes Table).

      Note:

      Timing the actions will allow all of the transactions to post and will prevent unintentional refunds and unpostables. If the required overpayment amount is not available, the computer will resequence the TC 830 for one cycle. The exact amount of credit must be available or the TC 830 will unpost.

      Reminder:

      An adjustment notice will generate the same cycle as a penalty reversal if a Failure to Deposit (FTD), Failure to File (FTF), Failure to Pay (FTP) (decrease only) or Estimated Tax (ES) Penalty recomputes.

    3. Refer to the Use of Posting Delay Codes chart below.

      If Then
      The penalty or interest will recompute because of an adjustment action.

      Note:

      If penalties and interest will not recompute, the Posting Delay Code on the TC 830 is not required.

      Use appropriate Posting Delay Codes to time the transactions to post in the following order:
      1. Adjustment or credit transfers and TC 290 .00 adjustments, if preventing an adjustment notice.

        Note:

        When inputting a credit transfer follow instruction in IRM 3.14.2.7.20

      2. The TC 830.

      3. The TC 571, if required.

        Caution:

        Check prior periods for debit modules before inputting the TC 830/TC 710. If no E Freezes are present, manually offset applicable credit to the debit module(s) with the earliest CSED(s) before applying forward. Use TC 820/700 with CC ADD24. Time the transaction to post in the same cycle as the TC 830/TC 710.

      A Doc Code 34 credit transfer will create the overpayment, use a Freeze Code 1 on the transfer.
      1. Input TC 290 .00, Hold Code 4, appropriate Posting Delay Code, if the adjustment notice must be suppressed. See Note below.

      2. Input TC 830/TC 710, Doc Code 48, appropriate Posting Delay Code on the debit side of the transfer.

      3. Release module freeze, appropriate Posting Delay Code to post after the TC 830 if there is remaining credit that must refund.

      A Doc Code 24 or 48 credit transfer will create the overpayment, use a TC 570 on the credit side of the transfer.
      1. Input TC 290 .00, Hold Code 4 if the adjustment notice must be suppressed. See Note below.

      2. Input TC 830/TC 710 with Doc Code 48.

      3. Release module freeze. Use appropriate Posting Delay Code to post after the TC 830 if there is remaining credit that should refund.

      A Doc Code 54 adjustment will create the overpayment, use Hold Code 4 on the adjustment. Input the TC 830/TC 710 on a Doc Code 48.

      Reminder:

      The TC 830 will release any remaining credit on the module when Hold Code 4 is used.

      Note:

      A Hold Code 2 or 4 can also be used to suppress the notice and used in place of the Hold Code 3 when preventing an adjustment notice resulting from a Doc Code 34 or 24 or 48 credit transfer input with TC 570. (The Hold Code 4 will not create a -K Freeze when input in the same cycle as the Doc Code 24, 34, or 48 credit transfer. TC 570 input on the credit side of the transfer is required to hold the credit) .

    4. See the Credit Elect Notice Disposition chart below to determine the correct notice disposition.

      If And Then
      The CP 145 or settlement notice with the Credit Elect pop-in paragraph will be mailed to the taxpayer. Master File cannot systemically offset the additional Credit Elect.
      1. Manually transfer the Credit Elect (see above).

      2. Use label #7 to reflect the credit elect.

      The CP 145 or settlement notice with the Credit Elect pop-in paragraph will be mailed to the taxpayer. Master File can systematically offset the additional Credit Elect.
      1. Let Master File offset the credit. Do not input a TC 830/TC 710.

      2. Use Label #2. Allow the CP 147 to generate.

      All of the requested Credit Elect amount has now been applied. A CP 145 generated. Void the CP 145.
      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 exclude the pop-in paragraph or void if returning to taxpayers original figures.
      The total Credit Elect applied is still less than the taxpayer’s figures. A CP 145 generated. Retype the CP 145.
      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 correct the dollar amounts in the pop-in paragraph.
  12. Keep the following in mind when manually transferring Credit Elect:

    1. Use an Override-Date Indicator 2 on both sides of a Doc Code 48 if the debit and credit transaction dates are different.

    2. Use the date of the credit being reversed as the reversal transaction date.

    3. Do not transfer Credit Elect for an amount exceeding the available credit on the module.

    4. Do not transfer Credit Elect with a transaction date earlier than the due date of the return.

    5. Do not transfer Credit Elect with a transaction date earlier than the credit or payment that created the overpayment.

      Note:

      In the case of a tax decrease (TC 291/295), use the due date of the return or latest payment date.

Lump Sum Credit Offset-TC 826/706 and 820/700
  1. Master File offsets available credit (with a TC 826/706) to an account on which a taxpayer has a balance due. A notice will generate to tell the taxpayer of the offset:

    Note:

    This offset to a debit account has priority over a requested Credit Elect except when an -A Freeze is present.

  2. CP 138 generates when an overpayment offsets to another tax liability.

  3. Use a Doc Code 24 credit transfer with a TC 701/821 to reverse an offset to a tax liability. Include a TC 570 on the credit side (TC 821) if the credit must be held. A Bypass Indicator is unnecessary.

    1. Make sure the reversal date matches the original offset date. Use CC BMFOLT to review a module that is not in the NRPS package or on IDRS.

      Caution:

      The TC 826 date may differ from the corresponding TC 706 date.

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

    3. Reverse a TC 826 offset if there is a pending manual credit transfer

  4. If an adjustment will leave a balance due on a module:

    1. Reverse the offset. Refer to the Offset Reversal Decision Table below.

      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 timely credits are located to satisfy the account.
      The module that received the offset has a current cycle refund Delete the refund. Reverse the TC 826 using a Posting Delay Code to allow time for the TC 841 to post before the TC 821.
  5. Use CC ADD24 with a TC 731/851 to reverse offset interest (TC 736/ 856).

    Note:

    Use CC REQ54 with a TC 772 to reverse the TC 776. Use Hold Code 3 if needed.

  6. Void or retype the CP 138.

  7. When manually transferring offsets, input TC 820/700 on CC ADD24.

    1. Use the later of the Return Due Date (RDD) or the date of the credit creating the overpayment as the TC 820/700 date.

      Caution:

      Never transfer lump sum credit from a module with an expired RSED.

    2. Multiple TC 820s may need to be input depending on the date credit is available. Always transfer the earliest available credits first.

TOP OFFSET
  1. Bureau of the Fiscal Service (BFS) initiates refund offsets to outstanding federal tax debts, child support, state income tax obligations and unemployment compensation debts via the Treasury Offset Program (TOP). These offsets are referred to as TOP offsets. A TOP offset appears on the module as:

    • TC 898 with an Offset Trace Number (OTN), an offset amount, and a debtor-TIN field, if the offset is for a secondary spouse.

    • OTN - Starting with 1 indicates primary taxpayer debt.

    • OTN - Starting with 2 indicates secondary taxpayer debt.

  2. TOP offsets occur after the IRS has certified a refund to BFS for payment (TC 840/846 on account), but before BFS direct-deposits the refund overpayment or mails the refund check.

  3. A TOP offset reduces the amount of the IRS refund by the amount of the TC 898 offset.

  4. A TOP offset does not affect IRS’ ability to stop a refund through (CC) NOREF, or the time frame involved to do so.

  5. A TOP offset Bypass Indicator (BPI) is assigned to all manual and systemic refunds issued to BFS by IRS. The BPI is a one-digit indicator that identifies for BFS whether the refund is eligible for offset by TOP.

  6. The BPI is posted/displayed along with the TC 840/846 on all output screens such as TXMOD, IMFOL, BMFOL, and on MFTRA transcripts.

  7. There are ten BPIs, 0 through 9. For a complete definition of BPI codes refer to IRM 21.4.6.4.2.1

  8. TOP offsets are made against any refund issued from MFT 02, 07, 10, 13, 29, 34, 44, 46, 52, 55, 60, 63, 64, 77, and 78, unless a BPI is systemically generated on the refund or input on a manual refund. See IRM 21.4.6.4.2.1, TOP Offset Bypass Indicator (BPI).

    Note:

    For specific questions concerning offsets refer to IRM 21.4.6 .

$100,000,000 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. Assign these cases to a work leader the same day they are received in the unit.

    Note:

    Refer to Document 6209 for release of the -X Freeze.

  2. Use current procedures for resolving deletes to work 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 satisfied or in debit status before closing the control. If another area has an open control on the case, contact that area, and route all available documents to that area (remember to document this action on IDRS).

    Exception:

    The control base may be closed if there is an -L Freeze (see IRM 3.14.2.7.5.13) on the module and a Revenue Agent (RA) has advised that the credit not be refunded due to legal implications. Remember to document this action on IDRS.

  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. Input manual refund using CC RFUNDR.

    4. 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.

    2. Send a copy of the original return, transcript, Form 3753, all prints essential to manual refunds, and any other documents about the case to the Accounting function.

    3. Monitor the case until the refund (TC 840) posts (6 to 10 weeks).

  6. For additional information refer to IRM 3.12.38.5.4.2 BMF Review Process for all Manual Refunds $100 Million or more.

  7. Close the control base after all account transactions post.

  8. Keep photocopies of the return and the transcript on file for future reference.

Analyzing NRPS Data Sheet Appended
  1. NRPS extracts this data from the following sources:

    • Generalized Unpostable Framework (GUF) and Unpostable Files

    • Taped Edited Program (TEP) File

    • Error Resolution System (ERS) File Revenue Receipts

    • Unidentified Remittance and Excess Collection File

    • Resequencing File (RS)

    • Generalized Mainline Framework (GMF) Error, Block Out Of Balance (BOB), and Reject Files (RF)

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 Contents Page. (See Document 6209, Section 14.)

  3. Due to CADE 2 accelerating IDRS updates the amount of pending transactions should be reduced.

Unpostable Transactions
  1. Unpostable transactions are transactions that require corrective action before posting to the Master File.

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

    Note:

    http://serp.enterprise.irs.gov/databases/irm.dr/current/6209.dr/6209ch08B.htmDocument 6209, Section 8, contains descriptions of UPCs and RCs. This information will help decide the corrective action to take.

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

    • Transaction Code

    • Date

    • Dollar Amount

    • TIN

    • MFT

    • Tax Period

    • Cross Reference (XREF) Account

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

    1. Unnn or UP-An open unpostable transaction nnn is a numeric unpostable codes (e.g., 198 or 175).

    2. CU-A corrected unpostable. The transaction should post in the cycle displayed on IDRS

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

    4. NU-A nullified unpostable to be resolved by the Rejects Function or by the originating tax examiner.

      Reminder:

      If the account is not on your local database, research through universal access to research controls or actions being taken on the remote database.

  2. Use CC UPTIN on cases open on the Unpostable File to provide useful information to the Unpostables Function. Only the Unpostables Function can correct and close a case on the Unpostable File.

    Note:

    The originating tax examiner may need to resolve closed cases.

    1. Use the unpostable code to decide what caused the unpostable.

    2. If Unpostables has closed the case, an Unpostable Resolution Code (URC) will describe the resolution (See Document 6209, Section 8b and reference IRM 3.12.179). Use this information to decide how the transaction will affect the notice and the notice module. Correct the notice (See IRM 3.14.2.7.23, Notice Disposition and IRM 3.14.2.7.14, Adjustment Notices) and resolve the case (See IRM 3.14.2.7.19, Case Resolution). No further action is required on the unpostable.

    3. If the case is still open, check the transaction information to decide the cause of the unpostable. Overlay the CC UPDIS response screen with CC UPCASZ and input any history item information that will be useful in resolving the unpostable case.

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

      Example:

      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.

  3. When a Notice Review Tax Examiner receives notification of an unpostable, the transaction has usually been deleted on IDRS. Use the Unpostable Code information to correct the transaction. Refer to the Unpostable Decision Table below.

    Note:

    Unpostables 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 Reinput the transaction with the corrected information.
    Error condition cannot be corrected Close the base. Input any necessary history items, TC 570's or CC STAUPs. Delete any incorrect refunds.
    Adjustment or credit transfer was already input by someone else Do not enter a duplicate transaction. Close the control base.
  4. Refer to the chart below for Common Unpostable Codes and Resolutions.

    UNPOSTABLE CODE ERROR CONDITION RESOLUTION
    UPC 305 A credit transfer input without a Bypass Indicator or a TC 570, attempts to post to a settled module.
    • When transferring a payment to a settled module, use CC UPTIN to tell the Unpostable (UP) Unit to allow the credit to post.

    • If the module balance changes to a credit balance and the credit is not to be released, input a TC 570 using REQ77, FRM77.

    UPC 313 Incorrect TC was used to reverse original TC in module. (no matching TC found) Determine what the correct TC should have been. Use CC UPTIN to alert the Unpostables unit to post with the correct TC. ( Input correct TC in remarks)
    UPC 316 Transaction date of credit transfer does not match date of the related TC. Use UPTIN to tell UP unit to post with the correct date. (Input correct date in remarks)
    UPC 316 Money amount not matching Input credit transfer with correct amount.
    UPC 316 Doc Code 24 credit transfer input for EFT payment without inputting the EFT indicator Re-input credit transfer using ADD/ADC24 with EFTPS indicator 1 or using ADD/ADC 34. (EFTPS indicator is not required)
    UPC 325 TC 820 or 830 amount exceeds the credit balance in the module Re-input the transaction by either waiting until the credit will be available or reducing the amount of the TC 820/830.
    UPC 328 A tax adjustment without Priority Code 8, is within $10.00 of a previous tax adjustment Decide if the adjustment is not a duplication. Re-input the adjustment with Priority Code 8.
  5. See IRM 3.12.279, titled BMF, Combined Annual Wage Reconciliation (CAWR), PMF Unpostable Resolution, for further information concerning resolving any of the UPC’s listed above.

    Note:

    UPTIN can only be used if the case is open on the UPTIN file.

    Note:

    The Unpostables Unit cannot correct money amounts.

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 adjustment actions. When inputting a credit transfer follow instructions in IRM 3.14.2.7.20 and mandatory use the IAT tool. The following are actions to take to prevent unpostables:

    • Decide the correct TC.

    • Use Doc Code 24 to transfer credits between Master Files when a secondary TC is needed, or when changing the date on a posted transaction.

    • The debit and credit parts post separately on ADC 34 (3 cycle) and ADD 34 (2 cycle).

    • The debit and credit parts post together on ADC 24 and ADD 24.

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

    Note:

    The use of Integrated Automation Technologies (IAT) when inputting credit transfers has been designated as being mandatory. The IAT tool was designed to help reduce unpostable transactions and to prevent erroneous transactions from posting.

  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 tax examiner with an open control base in A status only to coordinate actions on modules and prevent erroneous and duplicate adjustments. See IRM for additional instructions for contacting IRM 3.14.2.7.1 (11).

  5. To prevent Unpostable Tax Adjustments (Doc Code 54):

    1. Be sure 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.

    3. Look for manual adjustment of penalties and interest (TCs 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 and Credit Reference codes. Consider posted amounts and limitations for each code being input. Do not reduce Reference Number 886 below zero.

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

    1. Follow instructions in IRM 3.14.2.7.20

    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, make sure the credit to be transferred is available on the module. The TC 830/820 amounts cannot exceed the credit balance on the module.

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

      Exception:

      TC 826 and TC 706 can have different transaction dates. Use the correct dates for the debit and credit transactions when reversing these transactions. See IRM 3.14.2.7.1.4.2 (Offsets) for credit elect and offset procedures.

    6. Use a Bypass Indicator 1 to allow the credit to refund, or use a TC 570 or Credit Freeze Code 1 to freeze the credit when transferring TCs 650, 660, or 670 to a full paid tax module (status 10 or 12) and the posting of the credit will create an overpayment of $1.00 or more.

    7. Use a Bypass Indicator 1 to allow the credit to refund, or use a TC 570 or Credit Freeze Code 1 to freeze the credit when transferring TCs 650 or 670 to a balance due tax module when the payment is dated later than the period ending and the posting of the credit will create a credit balance of $10.00 or more.

    8. Use a Credit Freeze Code 1 or input a TC 570 on the credit side of the transfer if the credit will be held. This will generate a –R Freeze.

      Note:

      Two TC 570's will not post simultaneously on a module, you should use only one TC 570 for multiple credit transfers.

    9. An EFT indicator is required on a 24 Doc Code for EFT deposits.

    10. Use a Posting Delay Code to delay the posting of a transaction so that it matches the posting cycle of another transaction. Enter 1 through 6 to delay the posting of a transaction for one to six cycles, respectively.

      Example:

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

Common Command Codes Used In Notice Review

  1. Command Codes are used to perform taxpayer account research to aid in case resolution and to initiate changes to taxpayers accounts on IDRS (Integrated Data Retrieval System).

  2. The BMF Notice Review employees are required to use the Integrated Automation Technologies (IAT) tools. The IAT tools simplify taxpayer account processing by assisting the user with IDRS research and input. They are desktop productivity enhancing tools.

  3. If an IAT tool is not available, or an employee has a problem with the IAT TASK Manager (ITM), the account action should be processed manually on IDRS. If you have any questions or concerns contact your lead for help. Refer to IAT Job Aid for additional information at Document http://iat.web.irs.gov/JobAids/iat.asp.

  4. Below are the most commonly used IDRS Command Codes in Notice Review with a brief description of its use:

    • ACTON - Used to open or close control base and input history items. See IRM 2.3.12, Command Code Acton for more information

    • ADD/ADC24 – Used to transfer payments or reverse offsets.

    • ADD/ADC34 - Used to transfer one to four payments.

      Note:

      The credit side of the transaction will post one cycle after the debit side. For more information about doing credit transfers go to IRM 2.4.17, Command Codes ADD24/34/48, ADC24/34/48, FRM34 and DRT24/48.

    • ADD/ADC48 - Used to input credit elect transactions.

    • AMDIS - Provides a display of any action or potential action initiated by the Examination Function. For more information refer to IRM 2.8.3, AIMS Command Code AMDIS

      Note:

      The definer A (AMDIS A) limits access to a particular module.

    • BMFOL - The use of CC BMFOL provides on-line research of nationwide entity and tax data information posted to the Business Master File (BMF). For more information please go to IRM 2.3.59, Command Codes BMFOL and BMFOR. Refer to the BMFOL Definers chart below to search for the information that you need:

      Definer Display File Source MFT and Tax Period Result
      A Y Y Adjustment transactions including trans code, posted date, among, cycle, DLN, codes and other dates
      B Y Y CFOL038 Screen message or error screen.
      C N N Tax Module screen associated with input check symbol/check number, CFOL041, or CFOL042
      D Y N Deposit Schedules for 941, CT-1, 943, and 945.
      E Y N Entity information including cross-ref TIN, freeze codes, indicators, codes, and posted transactions
      F Y N FTD coupon ordering information
      H N N Help screen
      I Y N On/off-line status of entity and tax modules, merge information, sign of module balance, posted return indicator, and IDRS service centers
      K Y Y F941 Lookback information
      L Y N Last tax module satisfied
      N Y N Index of Retention Register Tax Modules that do not have an associated Vestigial Entry
      O Y N Exempt organization information
      P Y N Payment Summary
      R Y Y Return DLN, cycle posted, transaction date, some schedules, codes, exemptions, amounts
      S Y Y Status histories
      T Y Y Control DLN, exemption total, settlement information, amounts, freezes, indicators
      U Y Y CAWR information
      V Y N Vestigial data (retention register)
      W Y Y Quarterly F941 information.
      Z Y N Audit history information
      # N Y Refund Checks (up to 5) associated with a particular TIN/MFT/Tax Period.
    • BRTVU - Used to display the transcribed and posted data on various BMF returns. For more information refer to IRM 2.3.57.

    • CFINK - Accesses the Centralized Authorization File (CAF), which contains information on the type of authorization that a taxpayer has granted a representative. For more information refer to IRM 2.3.31.

    • COMPA - This Command Code is used to manually compute penalties and interest. You must use the correct definer when calculating the penalty. Refer to the CC COMPA Definers chart below. For more information refer to IRM 2.3.29.

      Definer Description
      C
      1. Before 01/01/1999 for a Non-Corporate Taxpayer

      2. Before 01/01/1995 for a Corporate taxpayer, regardless of the overpayment amount.

      3. On or after 1/1/95 for a Corporate taxpayer and the overpayment amount is less than or equal to $10,000

        Caution:

        If the GATT threshold has been met, the overpayment will be computed at the GATT interest rate (COMPAG), regardless of the overpayment amount. See IRM 20.2.4.9.2 , Determining the GATT Threshold.

      A On or after 01/01/1999 for a Non-Corporate taxpayer
      D Used to compute debit interest. Provides percentages, factors, and dates for the computation. Limited to one computation per request.
      E Used to compute Estimated (ES) Penalty, accumulates and displays page totals, and provides estimated tax from and to dates in a formatted screen display for MFTs 02, 05, 33, and 44.
      F Used to compute Failure to Pay Penalty (FTP) (TC 276).
      G Credit interest after 12/31/94 for a Corporate taxpayer and the overpayment amount is greater than $10,000, or the GATT threshold has previously been met (See IRM 20.2.4.9.2, Determining the GATT Threshold.)
      M Used to compute multiple independent credit interest computations on the same page.
      R Used whenever several independent interest calculations are desired on the same page.
      S Used for the manual computation of the Estimated Tax Penalty.
      4 Used with certain estate tax modules. Computes interest at 4%.
      5 Used to compute interest at 45% of the current normal interest rate, and displays details of the interest computation on the response screen.
    • ENMOD - Used to request a display of a particular taxpayer's name, address, Fiscal Year Month (FYM) and filing requirements. For more information refer to IRM 2.3.15.

      Note:

      This CC is a prerequisite for CC ENREQ.

    • ENREQ - Used to make name, address, and miscellaneous changes to the data recorded on a taxpayers entity module (ENMOD). For more information refer to IRM 2.4.9.

    • ESTAB - To request or recharge documents. For more information refer to IRM 2.3.62.

    • FINDS/FINDE-Uses the TIN to search for matching name(s) and address(es). For more information refer to IRM 2.3.60.

    • FRM49 - Used when reprocessing a return to a prior year (quarter) module with a TC 140 present. For more information refer to IRM 2.4.26.

    • FTDPN - Used to manually compute FTD penalty on Form 940, Form 941, Form 943, Form 944, Form 945 and Form 1042. For more information refer to IRM 2.3.28.

    • INOLE - The National Account Profile (NAP) file, contains Master File entity information on all taxpayers by TIN. For more information, see IRM 2.3.47. Refer to the CC INOLE Definers chart below.

      Definer Description
      G Used when TIN type is unknown.
      T Displays name line and street address for all accounts with the same EIN.
      S Displays name line information available for any account associated with the TIN.
    • INTST - CC INTST computes the correct outstanding balance, including interest and failure to pay accruals, to the date specified in the input of the command code. For more information refer to IRM 2.3.29. A list of Definers is listed below:
      CC INTSTA has the same capabilities as INTST. In addition, accruals will be computed to the input date plus 10 days, 15 days and 21 days or any dates input, as long as they are less than 30 days.
      CC INTSTB has the same capabilities as CC INTST. In addition, it computes a separate total for other assessed penalties.
      CC INTSTD is used to display FTP and Interest calculations.
      CC INTSTN has the same capabilities as INTST. In addition accruals will be computed to the input date plus 30 days, input date plus 45 days, and input date plus 60 days.

    • LETER - Used to input IDRS letters. For more information refer to IRM 2.4.6.

    • LPAGD - Used to delete IDRS letters.

    • MFREQ - Used when a module is not on TXMOD, but is on BMFOL. For more information refer to IRM 2.3.10

      Note:

      MFREQ with definer C transfers the data from BMFOL to TXMOD. .

    • NAMEE/NAMEB - Allows IRS employees access to the national file name and address data located at ECC-MTB. For more information refer to IRM 2.3.60.

    • NOREF - Used to delete refunds and automatically opens a control base.

      Note:

      Refer to IRM 3.14.2.6.1(4) (Refund Intercept) for valid definers for CC NOREF and IRM 2.4.37.

    • PIEST - Displays an explanation of an estimated tax penalty (TC 176) computation. For more information refer to IRM 2.3.41.

    • PIFTD - Displays an explanation of an FTD penalty (TC 186) computation.

    • PIFTF - Displays the computation of the Failure to File Penalty (TC 166).

      Note:

      CC PIFTF must be used to decide if the FTF penalty will recompute after payments are moved into and out of a module.

    • REQ54 - Used to make tax, penalty, interest and other adjustments to a tax module. For more information please go to IRM 2.4.16.

    • REQ77 - Used mainly to input TCs 460, 470, 570, 571, and 971. For more information refer to IRM 2.4.19.

    • RFINK - Used to research the Reporting Agent File. For more information refer to IRM 2.3.16.

    • RFUNDR - Used to input a manual refund on IDRS. For more information refer to IRM 2.4.20.

    • SCTFR - Used to access the Campus Control File.

    • SFDISP - Used to display all authorized CC in an employees security profile.

    • STAUP - Used to delay, accelerate, or skip the issuance of notices to taxpayers. For more information refer to IRM 2.4.28.

    • SUMRY - Used to request a chronological listing of all available tax modules on IDRS for a particular TIN. For more information refer to IRM 2.3.11.

      Note:

      If CC SUMRY is accessed and only one module is available, IDRS will display that module.

    • TERUP - Used to void/remove an adjustment transaction, including credit transfers, name and address changes, etc., made to a taxpayer's account. For more information refer to IRM 2.4.13.

      Note:

      The originator of the adjustment must input CC TERUP by 6:00 p.m. of the same day of input to ensure the transaction will be voided. For swing shift cutoffs, see your work lead.

    • TRDBV - Provides access to tax return and related schedule data on Electronically filed returns. For more information refer to IRM 2.3.73.

    • TXMOD - Command Code TXMOD is used to request for display all tax module information for a specific tax period on the Tax Information File (TIF). The display consists of Entity data, posted returns, posted transactions, pending transactions, and reject data if available on IDRS TIF. The display shows the latest control DLN of the return. Use the following definers to access a specific module of a particular TIN. Refer to the CC TXMOD Definers chart below. For more information go to IRM 2.3.11

      Definer Description
      A Displays tax module information.
      C Displays control base and history data.
      L Displays pending transactions.
      N Displays notice data.
      P Displays posted and pending transaction data.
      S Displays Campus and Master File status history data.
      X Displays status history and notice data.
    • UPDIS - Input with the unpostable sequence number to bring up the response screen CC UPRES on IDRS. For more information refer to IRM 2.3.48.

    • UPRES - Response screen to CC UPDIS.

      Note:

      When CC UPRES is overlaid (replaced) with CC UPCASZ, history items can be added.

    • UPCASZ - Used to add history items to the CC UPRES screen.

    • UPTIN - Displays unpostable case data, including the unpostable sequence number used to input CC UPDIS. For more information refer to IRM 2.3.37.

    • URINQ - Used to view payment information in the Unidentified Remittance File (URF). For more information refer to IRM 2.3.20.

    • XSINQ - Used to view payment information in the Excess Collection File (XSF). For more information refer to IRM 2.3.45.

Unidentified Remittance and Excess Collections Files

  1. When there is insufficient 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 - 4260 Account) or the Excess Collections File (XSF - 6800 Account). If a return is later filed claiming those payments, it may be necessary to request a transfer to move the payments from URF or XSF to the Master File. Please refer to IRM 3.17.220, Accounting and Data Control - Excess Collections File, for further guidance. If the credit is an FTD/EFTPS payment, the last five digits will reflect the FTD/EFTPS number into 9 through 13 digits of the original DLN. This will create a unique control number which reflects the credit’s origin.

  2. When a credit or payment is moved to the Excess Collection File (XSF) or the Unidentified Remittance File (URF), a Transaction Code (TC) 971, Action Code (AC) 296 must be input on the module, please refer to IRM 21.2.4.3.10.1(1)b . This is the final audit trail that indicates that all available research sources have been used. This requirement was part of the Excess Collection Task Group and was started in 1/2007. This applies to Excess Collection only.

    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. Matches with these files are displayed on the NRPS Appended Data page.

    1. Research CC XSINQ/URINQ for credits claimed by taxpayers.

    2. 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.

    3. Generated Refundable Credit (TC 766) will be accepted by Excess Collections.

  3. Excess Collections File (6800 Account)

    1. When credits and payments are over one year old and have not been applied back to a taxpayer's account on Master File, they are moved into the 6800 Account.

  4. If necessary to transfer credits or payments to the Unidentified Remittance File or Excess Collections File, see work lead.

Requesting Payments From Unidentified Remittance File (Form 8765)
  1. Use CC URINQ to verify the availability of the credit.

    1. Complete the Form 8765. (See Figure 3.14.2–6, Form 8765 and Instructions.) Attach current prints of CC's URINQ, BMFOL, or TXMOD to Part 1 of the form.

      Note:

      Current, for the purpose described throughout this section (3.14.2.7.3), denotes less than 7 days old before routing cases for payment application.

      Note:

      Remember Form 8765 must be forwarded to the correct Campus based on the DLN of where the money was applied.

    2. Input a CC STAUP for 9 cycles on balance due modules. This will prevent the generation of a notice while the transfer is being processed.

  2. After requesting application of payment, treat the notice as if payment(s) will be applied to the module.

  3. If the refund statute has expired, the application to move credits from Excess Collections File (XSF) must not exceed the tax liability, interest, and penalties. There can be no refund or credit elect. Timely payments will abate all but self assessed penalties. Timely payments can also result in the abatement of self-assessed estimated tax penalties. If the module contains a TC 170 with a DLN that matches the return DLN, use CC ADJ54 to post TC 170 .00 to prevent abatement of the self-assessed estimated tax penalty.

  4. Follow local procedures if the notice module is a statute year, before routing it to the Excess Collection unit.

    Figure 3.14.2-6

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    Please click here for the text description of the image.

Requesting Payments From Excess Collections (Form 8765)
  1. To request a payment from Excess Collections File (XSF):

    1. Use CC XSINQ to verify the credit(s) is available.

      Note:

      The credit is not available if the remarks section of the XSINQ record indicates CLOS. Do not request transfer of the credit.

      Reminder:

      Remember Form 8765 must be forwarded to the correct Campus based on the DLN of where the money was applied.

    2. Complete Form 8765 to request the Excess Collection Function transfer payment/credit from XSF to the taxpayer's account. (See Figure 3.14.2-6, Form 8765 and Instructions.)

    3. Include a complete explanation of the reason for the request in the remarks section of Form 8765.

    4. Attach a current print (less than 7 days old) of CC TXMOD or BMFOLT and CC XSINQ to Form 8765.

    5. Route Form 8765 with attached research to the Excess Collection Team.

      Caution:

      If the refund statute has expired, the credit application must not exceed the tax liability, interest and penalties. Follow local procedures if the notice module is a statute year.

  2. After requesting application of the credit, complete notice disposition as if payment(s) will post to the module. Refer to the Notice Disposition Decision Table below.

    If Then
    Payment(s) is timely and all penalties will abate. Void notice and request subsequent notice utilizing LCF.
    Payment(s) is late or unsure of TC 186 penalty recomputation. Apply Label #2 and allow subsequent notice to generate.
  3. Input CC STAUP for 9 cycles on balance due accounts to prevent erroneous notices.

Special Notice Review Issues

  1. This subsection contains instructions related to miscellaneous issues such as:

    • Taxpayers meeting Taxpayer Advocate Service (TAS) Criteria

    • Slipped or Mixed Blocks

    • Natural Disaster

    • Large Dollar Review

    • Short Period

    • Undeliverable

    • Conversion of Form 944 to Form 941

    • American Recovery Reinvestment Act of 2009

    • PII fraudulent returns

Taxpayers Meeting Taxpayer Advocate Service (TAS) Criteria
  1. Taxpayers meeting TAS criteria will get priority handling. See IRM 13.1.7, Taxpayer Advocate Case Criteria, for additional information.

  2. If you are able to resolve and close the issue meeting TAS case criteria on the same day as the taxpayer contact, input history item (one day/CL). The definition of same day is within 24 hours. There will be times you can completely resolve the issue within 24 hours. There will also be times that you cannot completely resolve the issue within 24 hours. If you have taken steps within 24 hours to resolve the taxpayer's issue, these cases also meet the definition of same day. Do not refer these cases to TAS unless the taxpayer asks to be transferred to TAS. Refer to IRM 13.1.7.4, Same-Day Resolution by Operations.

    1. A case that meets the criteria above may be kept in the general area when the problem has been corrected.

    2. The taxpayer is advised of the name, phone number, and Identification (ID) number of the employee who resolved the problem.

    3. The taxpayer is provided the National Taxpayer Advocate toll-free number (1-877-777-4778) or TTY/TDD 1-800-829-4059, and is advised that TAS is available if further assistance is needed.

  3. When referring cases to TAS, use Form 911, Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance order) and forward to TAS in accordance with your local procedures.

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. The erroneous data on the notice module usually belongs to the taxpayer whose document or payment is immediately before or after the notice document or payment in the DLN block sequence.

  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.

  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 and inspect the block:

    1. Review the Remittance Transaction Research (RTR) system to match checks with name/EIN. Refer to the RTR Decision Table below.

      If the Situation Involves And the Case is a Then
      Two or fewer taxpayers Slipped or mixed data block Resolve the case in Notice Review. (See IRM 3.14.2.7.19 , Case Resolution.)
      More than two taxpayers Slipped block Recharge and route the BMFOL prints and RTR check prints to the Accounts Management Function's Adjustments/Payment Tracer Unit.
      More than two taxpayers Mixed-data block Recharge and route the BMFOL prints and RTR check prints to the Accounts Management Function (Adjustments).
  6. When routing the case:

    1. Input CC STAUP for 9 cycles on any balance due account.

    2. Input a TC 570 on any credit balance account.

    3. Close the Notice Review control base.

    4. Enter appropriate history items.

    5. Indicate in the remarks section of Form 3465 that a. through d. above have been completed.

  7. Make every effort to resolve or route slipped and mixed data situations in cycle.

Natural Disaster Procedures
  1. Use CC BMFOLT and/or CC ENMOD to check for FEMA disaster areas and use the date shown to calculate interest and penalties.

    Note:

    CC ENMOD can have several FEMAs listed, so verify you are using the dates for the correct filing period.

  2. Notice Suppression – The Disaster Relief Memorandum identifies the covered disaster area (zip codes) and the beginning and ending dates for notice suppression and/or stuffer requirements. If systemic notice suppression is established by an - O Freeze, no further action is required to suppress notices.

    Note:

    If an -O freeze is not reflected on the taxpayer’s account, whose address of record is in the covered disaster area, then input a TC 971 with an AC 688 via the IDRS tool to ensure that the account will not have any penalties and/or interest being assessed on it.

  3. Penalty Adjustments – If the -O Freeze is not on the module, notices with zip codes in the impacted disaster areas may require penalty adjustments for the period designated in the Disaster Relief Memorandum. Use Local Control to select those notices with zip codes in the impacted disaster areas.
    Notice Review will review notices generated for taxpayers who have filed late tax returns, or submitted late payments during the disaster period. Notice Review will only address the Failure to File and Failure to Pay penalties if the following apply:

    1. If only the Failure to File penalty (TC 166) is assessed, the original or extended due date is within the disaster period, and the return received date is timely based on the disaster extended due date, abate the TC 166 for each month, or part of a month the penalty was assessed. (See IRM 20.1.2.1.2.2, Federal Disaster Area - IRC 7508A.) ,

    2. If only the Failure to Pay penalty (TC 276) was assessed and the original due date is within the disaster period, abate the penalty for each month and/or part of the month from the original due date to the extended due date that the tax remained unpaid.

    3. If both TC 166 and TC 276 penalties were assessed and the original or extended due date is within the disaster period, abate the part of the FTF penalty from the original or extended due date (if the original due date is within the disaster period). (See IRM 20.1.1 , Introduction to Penalty Relief and IRM 20.1.2. Failure to File/Failure To Pay Penalties for abatement procedures.)

  4. If the taxpayer notates on the front of the return the designated disaster phrase, abate the TC 166 and TC 276 per instructions in (2) above.

  5. If the taxpayer correspondence attached to the return is requesting relief of any penalty because of disaster damage or disruption, take the following actions:

    1. Decide if the taxpayer qualifies for TC 166 and/or TC 276 relief based on the disaster criteria. If the taxpayer qualifies, abate the penalty(s).

    2. If taxpayer does not qualify for relief based on the disaster criteria but may qualify based on the Reasonable Cause criteria, route the case to Accounts Management. This includes taxpayer requests for FTD Penalty abatement.

  6. FTD and Reasonable Cause – All requests for abatement for FTD penalties received in Notice Review must be routed to Accounts Management for determination and resolution.

  7. Estimated Tax Penalty – If an Estimated Tax Penalty (TC 176) has been assessed, decide if the taxpayer was required to make an estimated tax payment during the disaster period. If the payment was received by the date required by the Disaster Relief Memorandum, abate the part of the estimated tax penalty assessed for the underpayment. Notate on the adjustment document, "Adjustment Due to Disaster" . If in doubt, send case to Accounts Management for determination and resolution.

Large Dollar Review
  1. Upon identification, all Balance Due Notices of $100,000.00 or more must be reviewed for accuracy.

    1. An in-depth review of the entire account must be performed, since problems with other modules or TINs not directly related to the notice often surface at this time and must be expeditiously resolved to prevent future taxpayer and/or Accounts Receivable impact.

    2. If a questionable situation is identified, but you cannot positively decide how the account must be adjusted, give the case to the work lead. The work lead will telephone the taxpayer for additional information. If the taxpayer verifies the balance due is correct, mail the notice. If the taxpayer indicates that incorrect data was submitted on the return, request that corrected information be sent. If unable to contact the taxpayer before the mailing deadline, mail the notice.

    3. When reviewing Form 1065 with partnership penalties review the prior year to see if the number of partners appear to be in error. Erroneous penalties may have been assessed because various other fields were picked up for the number of partners. If the penalty is in error, recompute and make the necessary adjustment, and retype the notice. For CP 162 instruction refer to IRM 3.14.2.7.10.

    4. Form 706 is filed under the decedents Social Security Number (SSN). When researching IDRS, input a "V" behind the decedents SSN (i.e., 000-00-0000V). The MFT is 52 and the tax period consists of six zeros (000000). Although the return is filed under the decedents SSN, research via BMF CC such as BMFOL and BRTVU. Also, input a "W" behind the decedents SSN to research accounts on the invalid segment.

    5. For Forms 706/709, use CC IMFOL to research the IMF SSN for possible misapplied payments.

      Note:

      An SSN beginning with 909–17 or any temporary TIN will not have any Master File information.

    6. For Form 709, the missing credit may be posted to the Form 1040 account (for returns check both SSNs). If the Form 1040 is overpaid, research CC RTVUE for the amount of credit the taxpayer claimed on the Form 1040 return. If credit is available for the Form 709, refer to the Form 709 Decision Table below.

      Form 709 Decision Table
      Delete the refund on the 1040 account. If the TC 846 has already posted, then print the notice. Do not debit the IMF account if the TC 846 has posted.
      Transfer the credit
      Input a CC STAUP for 9 Cycles on the Form 709 account
      \\\Transfer the extension if no extension is posted on the 709

    Note:

    Form 1040 extensions Form 4868 include the extension for the Form 709 account.

Short Period Returns
  1. A short period return must be filed by a subsidiary corporation when it becomes affiliated with a consolidated group (parent corporation). This step allows the subsidiary corporation to file an initial consolidated return with the parent corporation. Income not included in the consolidated return by a corporation, because it was not in the group for the complete taxable year, must be reported on a separate return. The due date of the return is decided by using the earlier of the due date of the original tax period of the parent corporation, or the due date of the original tax period of the subsidiary corporation. Do not confuse the original tax period with the short period.

    1. Research of the parent corporation accounts may be required to decide the due date.

  2. Review any short period Form 1120 to decide if the taxpayer has filed using this regulation. If so, recompute interest and penalties and correct the taxpayer’s account.

  3. Change in Accounting Period.

    1. For tax years beginning after 2015, the Form 1120 due date is the 15th day of the 4th calendar month after the tax period. For tax periods ending prior to January 1, 2016, the Form 1120 is due by the 15th day of the 3rd calendar month.

    2. An approved Form 1120 can be identified on the Entity module by a TC 053 or a TC 054.

  4. Tax entities not in existence the entire year may file a short period return. Requirements for filing the return and figuring the tax are generally the same as if the return was for a full tax year that ended on the last day of the short tax year.

  5. Watch for any reprocessable returns.

Short Period Partnership Returns-Administrative Waiver
  1. Short period partnership returns with certain criteria (see below) have been granted an administrative waiver for 2016.

  2. Refer to the Short Period Partnership Returns-Administrative Waiver processing instructions below.

    IF AND THEN
    The tax period began on 12/31/2015 or prior Then Process the notice as usual
    The tax period began on 01/01/2016 or subsequent Meets the criteria in the table below Abate the penalty and void the notice
    The tax period began on 01/01/2016 or subsequent DOES NOT meet the criteria in the table below Process the notice as usual
  3. Refer to the Administrative Waiver Criteria Table below to determine if a return qualifies for the Administrative Waiver.

    Tax Period Ended Return is Received After AND Received On or Before OR Postmarked On or Before
    201601 04/22/2016 05/22/2016 05/16/2016
    201602 05/22/2016 06/22/2016 06/15/2016
    201603 06/22/2016 07/22/2016 07/15/2016
    201604 07/22/2016 08/22/2016 08/15/2016
    201605 08/22/2016 09/22/2016 09/15/2016
    201606 09/22/2016 10/22/2016 10/17/2016
    201607 10/22/2016 11/22/2016 11/15/2016
    201608 11/22/2016 12/22/2016 12/15/2016
    201609 12/22/2016 01/22/2017 01/16/2017
    201610 01/22/2017 02/22/2017 02/15/2017
    201611 02/22/2017 03/22/2017 03/15/2017
Researching Undeliverable Notices
  1. Research ENMOD, NAMEE or FINDED for PN and AP address changes. Use the new address, if present.

  2. Use the address on the yellow Post Office Forwarding Label if it is different from the notice address.

  3. Use the address on the 3 x 5 card from the Files Function if a more current address was not found and the notice has an original DLN.

  4. Use the following procedures if a more current address is NOT FOUND:

    1. Use local procedures to send the notice to the Files function to be attached to the return.

    2. Input CC STAUP 51 for no cycles to issue a Taxpayer Delinquent Account (TDA) to the Collection function and suspend all Collection procedures.

Resolving Undeliverable Notices
  1. Do not change the entity based on the address on the 3 x 5 from Files, the Post Office label, or research:

    1. Follow local procedures to change only the address on the notice.

    2. Include Form 8822 (Change of Address) with the notice.

      Note:

      The taxpayer will use this form to authorize an address change.

    3. Label the notice with the appropriate label.

    4. Use CC ACTON to enter a history item if CC TXMOD is up on IDRS.

    5. Input a CC STAUP for six cycles on balance due accounts.

  2. Refer to the Label Decision Table for Refund and Overpaid Notices below to determine the appropriate label for Refund and Overpaid notices.

    If Then Mail the Notice With
    A TC 846 posted to the module in the notice cycle Labels #11 and #12.
    A TC 740 posted to the module with 99999 in the DLN, setting an S- Freeze Labels #11 and #12 if a new address is found. Note: The S- Freeze means that a refund check was returned as undeliverable
    A TC 740 posted to the module between two TC 846s for the same amount Labels #11 and #12 to the address shown on CC ENMOD. Note: The original refund check was returned as undeliverable and subsequently reissued.
    No TC 846 is present on the module Label #11.
  3. Refer to the Label Decision Table for Undeliverable Balance Due Notices below To determine the appropriate label for Undeliverable Balance Due Notices:

    If a Payment Then Mail the Notice With:
    Posted since the notice cycle or is pending on the module, Labels #3 and #9. Use CC INTST to decide the new account balance.
    Has not posted since the notice cycle, Label #9. Use CC INTST to decide the new account balance.
  4. Resolve Even Balance and Information notices by mailing the notice with Label #11.

    Note:

    Use CC BMFOL if the account is not available on IDRS.

  5. Resolve Adjustment notices by mailing the notice with Label # 9 or any other applicable label from IRM 3.14.2.7.23.5, Labeling Notices.

  6. Assume that any subsequent notice that was mailed is also undeliverable. Update the original notice using the above instructions.

    Exception:

    If module conditions indicate that the entity was corrected before the subsequent notice generated, assume that the notice was deliverable and take no action other than to correct the undelivered notice.

    1. If the subsequent notice is going out in the current cycle, void the notice if possible.

    2. Input a history item on IDRS.

  7. Paper clip all stuffers and attachments to the notice. Do not discard anything. Return the completed Undeliverables to the Clerical Unit to be mailed within the same cycle as received.

Form 944 Issues
  1. Taxpayers who file Form 944 should have total taxes of $1,000 or less. If over that amount, then a taxpayer can receive 3 notices for this condition depending on when the return is processed. All three notices give the taxpayer instructions on what form to file. The notices are

    1. CP 250A - You Are No Longer Eligible to File Form 944

    2. CP 250B - You Are No Longer Eligible to File Form 944

    3. CP 250C - You Are No Longer Eligible to File Form 944

  2. CP 250A is issued to taxpayers who file Form 944 and have a total tax liability on line 7 of Form 944 of more than $1,000, but the returns met the PCD (Program Completion Date), posting in or before cycle 09. This notice instructs the taxpayer that he is no longer eligible to file Form 944 and he must file quarterly using Form 941 for the current year.

  3. CP 250B is issued to taxpayers who file Form 944 and have a total tax liability on line 7 of Form 944 of more than $1000, but the return did not meet the PCD of cycle 09. This notice is for the returns processed between cycles 10 - 49. This notice instructs the taxpayer they will remain a Form 944 filer for the current year and to make the appropriate FTD's as required by the lookback analysis. These taxpayers will be allowed to remain Form 944 filers for the year because there is not a sufficient amount of time to notify them to file quarterly. Taxpayers that receive CP 250 B will also receive CP 250C later in the year informing them that they will be changed to a Form 941 filer beginning in January the subsequent year.

  4. CP 250C is issued to Form 944 filers who received CP 250B earlier in the year, or File Form 944 after cycle 49 of the current calendar year. These taxpayers will not receive CP 250B, only CP 250C. This notice informs the taxpayer that because they exceeded the threshold for the Form 944 participation, they must file Form 941 for the upcoming year. This notice is generated in cycle 52.

Instruction for Form 944
  1. If the Taxpayer receives a CP 250A and a selected notice, generally a CP 145 Notice Review should:

    1. Transfer any credit elect amount(s) from Form 944 to the Form 941 first quarter return of the following year.

    2. Retype CP 145 to reflect Form 941 for tax period ending 03312017.

      Exception:

      For notices reviewed in 2017, use Label 7 to alert the taxpayer where the credit elect has been applied to.

      Exception:

      If credit elect amount is zero mail CP 145.

  2. Notice Review will not be required to take any action for CP 250B and CP 250C.

Credit Payments to Issuers of Qualified Bonds
  1. The following are General Review Procedures for the Issuers of Qualified Bonds related to Form 8038-CP (MFT 46) procedures:

    a) The following disposition codes are the only ones allowed to be used for CP 116s, CP 138s, CP 210s, CP 220s for Form 8038-CP (MFT 46) when utilizing the On-Line Notice Review (OLNR) application:

    • E (Entity) - Use this disposition to make entity information changes or updates.

    • V (Void) - Use this disposition to void the notice completely because of inaccurate information.

    • VI (Void/Intercept) - Use this disposition to void the notice and to intercept any refund on the module. It will only be applicable to CP 210s or CP 220s.

    • P (Print) - Use this disposition to mail the notice to the taxpayer.

    • PI (Print/Intercept) - Use this disposition to mail the notice and intercept the refund on the module. It will only be applicable to CP 210s or CP 220s.

    Note:

    These notices will not carry any penalties and no penalties shall be added to any of these notices. Exception: CP 210 and CP 220 may include Failure to Pay penalty if a previously claimed credit was previously disallowed after a refund was issued.

    b) The following disposition codes are the only ones allowed to be used for CP 380s , CP 384s and CP 388s generating for Form 8038-CP (MFT 46) when utilizing the OLNR application:

    • T (Transcript) - Use this disposition to mark the account as a transcript and no other updates are needed.

    • TI (Transcript/Intercept) - Use this disposition to just mark the account as a transcript and intercept the refund

    Note:

    A CP 386s will never generate for a Form 8038-CP (MFT 46).

Reviewing Notices With Freeze Codes

  1. Consider all existing freeze codes before taking any action on a tax module.

  2. Refer to Document 6209 Section 8 for a complete listing of Master File Freeze Codes with explanations of the codes, conditions on the account, and freeze release instructions. Consult your work lead for instructions for resolving cases with freeze codes not mentioned in the following sections.

Duplicate Return Freeze (-A)
  1. The -A Freeze is set when a duplicate or amended return (TC 976 or TC 971 (AC 010)) posts to a tax module that contains a posted original return.

  2. The freeze generates a CP 193 transcript that is routed to Accounts Management (Adjustments) for resolution.

  3. If the notice is selected for review, follow the procedures in the -A Freeze Decision Table below.

    If Then
    The Category Code is DUPF or 941X
    • Do not transfer credit into or out of the notice module.

    • Do not assess the TC 160 penalty .

    • Mail notice

    • The return posted to an incorrect tax period and has to be reprocessed, and

    • Either the receiving or losing module contains an -A Freeze

    Void the notice.
    • If box 1 above applies, and

    • The notice module contains excess credit, and

    • The TC 976 tax liability on CC BMFOL or CC BRTVU matches the excess credit amount

    Void the notice.
    The notice module has an -A freeze with no current open control and there is a pending payment (TC 6XX) Label the notice.
    The notice module is in balance due status with no current open control and a payment is located. Transfer payment into notice module and determine the correct notice disposition.
    If payment found on Losing module that contains A Freeze and no open control base. Transfer payment into notice module and determine the correct notice disposition. See IRM 3.14.2.7.23 Notice Disposition.
    The notice module has an -A freeze with no current open control. Mail the notice. Do not assess TC 160.
    Controlled to a tax examiner outside Accounts Management Contact the tax examiner for case resolution (notice disposition, etc.) for all other instances see IRM 3.14.2.7.1 and IRM 3.14.2.7.19.1 .
    There is a pending adjustment with no Hold Code or Hold Code 1 on the notice module. Label the notice.
    CP 267 Refer to IRM 3.14.2.7.8.
STEX Freeze (-B)
  1. This freeze prevents credits from refunding or offsetting (including Credit Elect) from the module.

  2. It is set when the Statute of Limitations for refunds expires.

  3. You must contact the Statute Unit for all notices with a tax increase selected with a -B Freeze to determine notice disposition. Use chart below for disposition.

  4. Follow any special instructions given by the Statute Unit when making an adjustment to the tax module.

  5. If increasing the tax, input a HC 4 to hold any remaining credit.

  6. If transferring credit with a TC 820, input a secondary TC 570 on the debit side of the transfer to create a -R Freeze and hold any remaining credit on the module.

  7. Any of the following actions will release the freeze:

    • TC 820

    • The module balance becomes zero or debit, or less than $5.00 credit.

  8. Follow procedures in -B Freeze Decision Chart below.

    IF THEN
    Notice with refund selected with -B Freeze Void the notice.
    Notice with tax increase selected with -B Freeze Contact the local Statute Unit. Your contact should state that if you do not receive any instructions from the Statute Unit before cycle closeout, the notice will be voided.
Offset Overflow Freeze (C-)
  1. This freeze delays a TC 846 for one or two cycles.

  2. Master File generates this freeze when an offset overflow (computer capacity exceeded) exists.

  3. Follow normal review procedures.

  4. If the delayed refund needs to be reduced:

    1. Hold the notice.

    2. Monitor the case for posting of the TC 846.

    3. Delete the refund.

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 47 or 54) posts and creates a credit balance that is comprised of pre-paid credits (credits posted by the due date of the return) and the RSED has expired.

  3. The following conditions will release the freeze:

    • A TC 29X with a Priority Code 4 posts to the module

    • The module balance becomes zero or debit

      Caution:

      Contact the Statute Function before making any adjustment.

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:

    • No original return (TC 150) has posted, but a duplicate (TC 976) return posts to a tax module

    • TC 971 Action Codes 010, 012, 013, 014, or 015 is input

  3. Any of the following actions will release the freeze:

    • TC 150

    • TC 971 with Action Code (AC) 002

    Note:

    If the case is controlled to a Tax Examiner (TE), contact the tax examiner for case resolution.

Rollback Freeze (-E)
  1. This freeze prevents credits from offsetting into a debit module the computer has performed a rollback analysis on or to a debit module that has no modules in status 22, 23, 24, or 26 for the previous 12 months.

  2. Any of the following actions will release the freeze:

    • Computer released after 10 cycles

    • The credit discrepancy is resolved

    • The module balance becomes zero or credit

    • The module reaches status 22, 23, 24, or 26

      Caution:

      Overpayments must be transferred into modules with -E Freezes only if the credit is claimed on the module, intended to be applied, or the taxpayer requested the credit transfer.

Math Error Freeze (G)
  1. This freeze grants Appeal Rights to the taxpayer and prevents the tax module from updating to TDA status.

  2. One of the following conditions usually sets this freeze:

    • An original return with a Math Error Notice Code (TPNC) posts to the module

    • An adjustment in Blocking Series 770–789 posts to the module

  3. The freeze will automatically release in twelve 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 restricts the Failure to Pay penalty.

  2. Any of the following conditions will set the freeze:

    • TC 270/271 (except with Reason Code 62)

    • TC 320 (Return due date is before 1–1–87)

    • TC 534 (for significant amount)

    • TC 780 with a TC 480

  3. Any of the following actions will release the freeze:

    • TC 272 (zero amount)

    • TC 321

    • TC 535 (if the TC 534 amount is completely reversed)

    • TC 781 or TC 782

  4. Manually compute the penalty and retype the notice if necessary.

    Note:

    Any transaction with Doc Code 52 will restrict FTP penalty and interest (credit and debit) in the module with that transaction. This restriction is permanent and cannot be released. This condition does not set the G- freeze. Nevertheless, manual penalty and interest computation is required. Exception: A transaction with Doc Code 52 with Julian Date 999 will not restrict the Failure to Pay penalty and interest.

Restricted Credit Interest Freeze (I-)
  1. This freeze restricts credit interest.

  2. One of the following conditions will set the freeze:

    • TC 770

    • TC 780

    • TC 534 (for significant amount)

  3. Any of the following actions will release the freeze:

    • TC 771

    • TC 772

    • TC 535 (must completely reverse TC 534 amount)

    • TC 781 or TC 782

    • Net module balance becomes zero or debit

    Note:

    Any transaction with Doc Code 52 will restrict FTP penalty and interest (credit and debit) in the module with that transaction. This restriction is permanent and cannot be released. This condition does not set any I freeze. Nevertheless, manual penalty and interest computation is required. Exception: A transaction with Doc Code 52 with Julian Date 999 will not restrict the Failure to Pay penalty and interest.

  4. Follow normal review procedures.

Restricted Debit Interest Freeze (-I)
  1. The –I (Debit Interest) Freeze sets when a manual abatement or assessment requirement is placed on an account. The –I Freeze is generated when a TC 340/ TC 341 posts or when CCC “Z” is placed on an account identifying combat zone taxpayers entitled to an automatic postponement of a deadline. You must manually compute interest on adjustments input on an account with the –I Freeze. It also prevents credits from refunding or offsetting into or out of the module for eight weeks.

  2. A TC 340/341 sets this freeze.

  3. TC 342 will release this freeze.

  4. Manually compute the interest and retype the notice if necessary.

    Reminder:

    Electronically document reason for action taken when available to function inputting adjustment.

    Example:

    If case is located on Accounts Management Services (AMS) system and/or the CIS (Correspondence Imaging System) - effective February 17, 2009 renamed as AMS (Accounts Management Services) - notate the following in case history:
    • reason interest has been restricted
    • relevant interest computation dates/amounts for that adjustment
    • any specific information helpful in reconstructing the posted restricted interest adjustment.

    Reminder:

    Any transaction with Doc Code 52 will restrict FTP penalty and interest (credit and debit) in the module with that transaction. This restriction is permanent and cannot be released. This condition does not set any I freeze. Nevertheless, manual penalty and interest computation is required. Exception: A transaction with Doc Code 52 with Julian Date 999 will not restrict the Failure to Pay penalty and interest.

  5. For a complete list of conditions for -I Freeze refer tohttp://serp.enterprise.irs.gov/databases/irm.dr/current/6209.dr/6209ch08A.4.htm Doc. 6209 Section 8.

Credit Balance Freeze (-K)
  1. This freeze prevents the credit balance from refunding or offsetting from the module.

  2. Any of the following conditions will set the freeze:

    • TC 29X with Hold Code 1, 2, or 4

    • TC 30X with Hold Code 1, 2, or 4

    • Form 1120 with CCC "N" (Joint Committee Case) is posted

      Note:

      A TC 290 .00 with Hold Code 4 sets this freeze on a refund delete case.

    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. Any of the following actions will release the freeze:

    • TC 150 posts to the module

    • 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 debit

Form 2290 (L-)
  1. This freeze is set when MFT 60 (Form 2290) module has a credit balance of $10.00 or more.

    1. The freeze was created to prevent erroneous refunds.

    2. The credits are recorded on the Form 2290 Credit Report which is worked by the Excise Group at Cincinnati Campus.

    3. The module is frozen from refunding and offsets.

  2. The Excise team in Cincinnati can be reached by calling 859-669-5728 or 859-669-5732.

AIMS Indicator Freeze (-L)
  1. A TC 420 or TC 424 sets this freeze.

    Note:

    This freeze will not prevent a refund.

  2. Follow normal review procedures.

    Note:

    If a CC REQ54 adjustment is needed, use Priority Code 1.

  3. Freeze is released by certain TC 30X or TC 42X transactions.

Disaster Freeze (-O)
  1. This freeze is set by TC 971 (Action Code 086 or 087).

  2. Please refer to IRM 3.14.2.7.4.3, Natural Disaster Procedures, for more information.

Refund Deletion Freeze (P-)
  1. This freeze prevents overpaid balances from refunding or offsetting from the module.

  2. Any of the following conditions will set the freeze:

    • TC 720

    • TC 841

    • TC 842 with a posted TC 150

  3. Any of the following actions will release the freeze:

    • TC 29X posts to the module

    • TC 30X posts to the module

    • TC 721 posts to the module

    • TC 722 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

    Caution:

    If an open control base is on the module regardless of status, do not release the freeze without contacting the originator.

Rollover Freeze (Q-)
  1. The Q-Freeze is set when a return posts with unclaimed excess credits.

  2. The account is frozen from refunding or offsetting for 15 cycles for MFTs 01, 02, 03, 10, 11, 12 and 33.

  3. Any of the following actions will release the freeze:

    • Automatically at the end of 15 cycles

    • A TC 652 or TC 662 posts and remaining credits are within $10.00 of the claimed amount (including penalties and interest)

    • A TC 290 .00 with Hold Code 3 and Priority Code 4 posts

    • The module balance becomes zero or debit

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 X posts

    • A TC 291 with Priority Code 7 posts

  3. Any of the following actions will release the freeze:

    • TC 571

    • TC 572

    • TC 29X

    • TC 180 posts for zero to a module with an unreversed TC 186

    • The module balance becomes zero

RPS Multiple 610 Freeze (R-)
  1. Any of the following actions will set this freeze:

    • Multiple TC 610s on module when the TC 150 posts

    • Multiple TC 610s posted with no TC 150 posted on module

  2. Any of the following actions will release the freeze:

    • TC 29X

    • TC 30X

    • TC 612 (to reverse the TC 610)

    • The module becomes zero or debit

Undelivered Refund Check Freeze (S-)
  1. This freeze prevents any overpayment from refunding. It also causes a CP 231 to be issued to the taxpayer.

  2. A TC 740 sets the freeze

  3. Any of the following actions will release the freeze:

    • TC 018

    • TC 742 (net of all TC 74X is zero and debit)

    • TC 014

    • The module balance becomes zero or debit

Outstanding Liability Freeze (V-)
  1. This freeze indicates an outstanding liability on another tax account.

  2. A TC 130 sets this freeze.

  3. Any of the following actions will release the freeze:

    • TC 131

    • TC 132

    • TC 824

  4. Follow normal review procedures.

Bankruptcy Freeze (-V)
  1. This freeze causes the Campus Status to become 72.

  2. A TC 520 with Closing Codes 60-67, 83, 85-89 sets the freeze.

  3. A TC 521/522 with Closing Codes 60-67, 85-89 releases the freeze.

  4. Follow normal review procedures.

  5. Closing Code 81 usually indicates that the Department of Justice (DOJ) is litigating a bankruptcy matter relating to the account. Follow procedures below. Caution: Taking actions on these cases before seeking DOJ concurrence/approval may have a negative and serious impact on the ongoing litigation or secured judgment.

  6. If during review, it is decided that the Territory Office Special Procedures function needs to be contacted:

    1. Give the case to the work lead.

    2. The work lead will contact the Territory Office Special Procedures function for case resolution.

    3. The work lead will return the case to the tax examiner with instructions for case resolution.

    4. The tax examiner will resolve the case.

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.

  4. If during review it is decided that the Territory Office Special Procedures function or the Appeals Office needs to be contacted:

    1. Give the case to the work lead.

    2. The work lead will contact the Special Procedures function and/or Appeals Office for case resolution. (To inquire about the status of a case in Appeals Office, call the Appeals Customer Service Line at (559) 233-1267.)

    3. The work lead will return the case to the tax examiner with instructions to resolve the case.

    4. The tax examiner will resolve the case.

Litigation Pending Freeze (-W)
  1. A TC 520 with various closing codes sets this freeze.

  2. Follow normal review procedures.

  3. If during review it is decided that the Territory Office Special Procedures function or the Appeals Office needs to be contacted:

    1. Give the case to the work lead.

    2. The work lead will contact the Special Procedures function and/or Appeals Office for case resolution. (To inquire about the status of a case in Appeals Office, call the Appeals Customer Service Line at (559) 233-1267.)

    3. The work lead will return the case to the tax examiner with instructions to resolve the case.

    4. The tax examiner will resolve the case.

    5. The following defines a Department of Justice (DOJ) case:

    • Any module in Status 72 and/or an unreversed TC 520 with closing codes 70, 75, 80 and 82.

    • Any module with a TC 550 and definer code 04.


    Caution: Taking actions on these cases before seeking DOJ concurrence/approval may have a negative and serious impact on the ongoing litigation or secured judgment.

Accounting Manual Refund Freeze (-X)
  1. A manual refund worked by Accounting sets this freeze. Follow normal procedures.

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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    Exception:

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

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Additional Review Requirements

  1. After completing the General Review procedures located in IRM 3.14.2.7.1, continue with the following instructions found in IRM 3.14.2 as appropriate:

    • Math Error Condition - IRM 3.14.2.7.7

    • CP 267 and CP 268 - Q- Freeze - IRM 3.14.2.7.8

    • CP 161 Balance Due Notices - Non-Math Error IRM 3.14.2.7.9

    • Reviewing Notices with Remittance Processing System "RPS" indicators - IRM 3.14.2.7.11

    • Refund Transcripts - IRM 3.14.2.7.12

    • Required Payment or Refund under Section 7519 - Form 8752 - IRM 3.14.2.7.13

    • Adjustment Notices - IRM 3.14.2.7.14

    • Selection Keys - Additional Review Required for Notices Generated Under Keys 09, 33,52, 54, 55, and 91 - IRM 3.14.2.7.15

    • CP 173 - ES Penalty - IRM 3.14.2.7.16

Math Error Condition

  1. A math error notice generates whenever a mathematical error is made by the taxpayer on the return or the posted payment information does not agree with the amount claimed on the return.

    1. The taxpayer notice code (TPNC), also called the math error code, is a two-digit numerical code assigned by ERS or ECC-MTB for the specific error condition.

    2. The computer translates this code into a literal message that prints on the math error notice.

    3. This message notifies the taxpayer of the error on the return or account.

  2. Complete all general review procedures in IRM 3.14.2.7.1before reviewing the math error condition. The return may or may not be included with the NRPS package, depending on the error condition.

  3. The Main Math Error Notices:

    1. Overpayment Notices

      Return Computer Paragraph Notice
      940, 940-EZ 111
      941, 943, 944, 945 112
      CT-1, CT-1X 113
      720 114
      11-C, 2290, 706, 709, 730 115
      5227, 990PF, 4720 116
      1042 117
      1120, 1120X, 1041, 1120-C, 990-T 133
      720, 940, 940-EZ, 941, 943, 944, 945, 1120, 1120-C, 1120X, 1041 268
    2. Even/Balance Due Notices

      Return Computer Paragraph Notice
      940, 940-EZ 101
      941, 943, 944, 945, 941X, 943X, 944X, 945X 102
      CT-1, CT-1X 103, 123
      720 104, 124
      11-C, 2290, 706, 709, 730 105, 125
      5227, 990PF, 4720 106, 126
      1042 107, 127
      1120-C, 1120X, 990-T, 1041, 1120 131, 131A and 132
  4. The balance due non-math error notices are the CP 161 (all returns except Form 1065) and CP 162 (Form 1065 and 1120-S).

  5. The overpaid non-math error notices generated at return settlement (TC 150) are the CP 267 (Q- Freeze), the CP 173 (ES Penalty notice) and the CP 210 (adjustment notice):

  6. To view an exhibit of a notice, refer to The Office of Taxpayer Correspondence website at http://gatekeeper.web.irs.gov/new_default.aspx.

Reviewing Return Math Errors
  1. Verify the validity of the taxpayer notice codes.

    Note:

    For unusual situations or patterns in Code and Edit or for Error Correction changes, research the applicable IRMs per local procedures.

    1. Refer to the Taxpayer Notice Codes (TPNC), Exhibit IRM 3.14.2–6.

    2. The TPNCs on the notice must clearly state the taxpayer's error on the return.

    3. If the assigned TPNC is incorrect, retype the notice to reflect the correct TPNC.

    4. If the return is a 6020(b), remove the TPNC(s), correct the return and retype the notice to a CP161.

  2. Review, from the point of error, all lines and schedules affected by the error.

    1. The required review is limited to those items directly related to the point of error (ripple errors)

    2. Correct any other obvious errors found during the review

  3. If you are reviewing a math error notice with a balance due of $250,000 or more or an overpayment of $100,000 or more, then you are required to have the return. If it is not provided , then you should request the document by using CC ESTAB. If the review can not be completed before close out, you must input CC NOREF and use an H Disposition.

  4. Analyze for the taxpayers intent. If the taxpayer entered a line incorrectly it could affect the whole return. This can sometimes be discovered by working a line calculation backwards.

    Example:

    On a Form 941 with TPNC 07, the taxpayer's figure for Total Social Security and Medicare Taxes (line 5d), divided by the correct percentage equals the Taxable Social Security Wages (line 5a). If this amount does not match the taxpayer's figure for line 5a, it could equal the entry for Wages, Tips and Other Compensation for (line 2). Verify taxpayer intent before adjusting the account.

    Note:

    Line 5c will be greater than or equal to the total of lines 5a and 5b.

    Example:

    A CP may generate when the taxpayer is claiming total payments as estimated payments. Void the notice if the refund matches the amount the taxpayer is expecting and there are no other error conditions present.

  5. Check for incorrect input of the tax data, such as:

    • Transcription errors

    • A misplaced decimal point

      Example:

      A CP 111 generated with tax of $5.60. NRPS shows taxable income of $700.00. The taxpayer made deposits of $56.00. The remaining $50.40 is refunding. Your review indicates a transcription error was made. Taxable wages will be $7,000.00 with a tax of $56.00. Delete the refund and adjust back to the taxpayer figures.

  6. If the tax is incorrect, input CC REQ54 on IDRS:

    1. Change other items, such as taxable income, as needed.

    2. Do not adjust other items unless also changing the tax.

    3. See Document 6209 for specific item reference numbers or see Exhibit 3.14.2-23 .

      Reminder:

      If adjusting tax on Employment Tax Returns, the FTD Penalty (TC 186) must be addressed. (Refer to IRM 3.14.2.7.17.8, Failure to Deposit Penalty.)

    4. Refer to IRM 3.14.2.7.19.4 when inputting tax adjustments.

    5. If an adjustment is needed on Form 706/709 accounts, take the following actions:

    • Route the return to Estate and Gift at the Cincinnati Campus, mail stop 824G. Attach a note explaining the adjustment needed.

    • Recharge the return to 0283000000.

    • Leave a history item on IDRS.

    • Stop the refund on overpaid notices.

    • Input STAUP on balance due notices.

    • Void the notice on reprocessables.

    • Mail the notice with Label #1

  7. Delete a refund:

    1. If increasing the tax

    2. If decreasing the refundable credits

    3. For a pending debit transaction.

    4. Refer to IRM 3.14.2.6.1 for instructions on inputting Command Code NOREF

  8. Special condition on CP 102 and CP 112. For returns where Line 5 d Taxable wages and tips subject to Additional Medicare Tax withholding contains a significant entry, NR tax examiners should:

    • Retype notice on OLNR to the figures on Q-Print

    • Make tax adjustments as necessary to correct tax.

    • If CP 112, enter Label 5 on OLNR.

    • Refer to IRM 3.14.2.7.19.4 when inputting tax adjustments.

Credit Discrepancy -- Excess Credits
  1. Excess credits occur when more credits are posted to the module than claimed by the taxpayer. The credit may belong on another module or the taxpayer may have forgotten a payment was made. To decide the excess credit amount:

    1. Subtract the total credits claimed by the taxpayer from the actual amount posted.

    2. Consider that any credit elect (TC 716/TC 710) or credit applied (TC 700) posted to the module may not be claimed by the taxpayer.

    3. Consider that the taxpayer may not have received the full credit elect amount requested on the previous return.

      Note:

      Since the taxpayer may be requesting a refund or credit elect, use the credit amount the taxpayer claimed on the return to decide the discrepancy. Do not use the tax amount.

  2. Examples of notices reviewed are CP 111, CP 112, CP 117, CP 134R and CP 834R. List is not all inclusive.

  3. Use the selection keys to serve as a guideline to assist in the review of the notice.

  4. Use the NRPS notice module data to decide which credit(s) or part of a credit is creating the discrepancy.

    Exception:

    If discrepancy is $ .99 or less void notice.

  5. Review all other NRPS modules to decide if the excess credit is claimed or belongs on another module. If the excess credit is in line, transfer the credit. Use the following to analyze the account for the taxpayer's intent.

    1. Look at the payment pattern.

    2. Check payments claimed by the taxpayer and underpaid tax amounts.

    3. Check liability schedules on balance due modules (IDRS research may be required).

    4. Review the NRPS package for evidence of a previous transfer to or from another TIN (Research any other TIN on IDRS).

  6. Several payments may be misapplied between two or more modules.

    1. Analyze the entire account (IDRS research may be required).

    2. Multiple transfers may be required.

  7. If the date of the overpayment is timely for a prior year or quarter return, decide if the payment belongs on the prior account (IDRS research may be required).

  8. Transfer a payment into a full paid module only if the transfer(s) will reduce penalty and/or interest, or if the transfer into the account will overpay the module and a misapplied payment will then be transferred to a different module. Otherwise, allow the refund to generate from the notice module. When inputting a credit transfer follow instructions in IRM 3.14.2.7.20 and IRM 2.4.17, Command Codes ADD24/34/48, ADC24/34/48, FRM34 and DRT24/48.

  9. Research unclaimed out of line credits.

    1. Research the voucher, FTD payment, or copy of check as needed.

    2. If a payment is made on the Electronic Federal Tax Payment System, (EFTPS) do not research unless significantly out of line (Follow local procedures).

    3. Verify that all unclaimed, refunding TC 670 payments belong to the taxpayer.

      Note:

      Payment with return (TC 610) will not create a credit discrepancy notice. However, if the TC 610 amount is not the balance due per taxpayer, and NRPS/IDRS research does not explain the payment, verify the payment through research on the RTR system.

  10. Check for misplaced line entries creating erroneous credits.

    Example:

    Deposits or extension payments may be entered on withholding or refundable credits lines on income tax returns. Credit Elect or total deposits may be entered on advanced earned income credit line on Form 941. Compare the tax and liability data on the notice module with credits posted on other modules.

    Note:

    Do not void a CP 161 if fully paid by credits that offset (TC 706) into the notice cycle. A CP 138 will generate from the losing module. Print Notice.

    Note:

    Do not label if the offset partially pays the module. A CP 138 will generate from the losing module. Print Notice.

     

    If And Then
    Tax liability or claimed credits match timely credits posted on another tax module. TC 150 has not posted to the other module. Request the return using CC ESTAB (if not included in the NRPS package). The return may need to be reprocessed. Use Disposition Code H to hold the notice until a determination can be made regardless of selection key.
    Tax liability or claimed credits match timely credits posted on another tax module. TC 150 has posted to the other module and the tax liability matches the credit on the notice module. Request returns for both modules. If the returns posted incorrectly, do not reprocess the returns. Adjust the tax on each module to agree with the information on the correct tax period. Use Disposition Code H to hold the notice until a determination can be made regardless of selection key.
  11. After completing the review, refer to the “Refund Decision” tables below to allow or intercept the refund as appropriate:

    Allow the Refund for Excess Credits When:
    The excess credit is timely and in line with other posted credits in the module and does not belong on any other module.
    The excess credit is an unclaimed Credit Elect (TC 716 or TC 710).
    The excess credit is an extension payment that does not belong on another module.
    Information on the return explains the excess credit or indicates the taxpayer is requesting a refund for the amount of the excess credit.
    CCC F- Final Return and payments or credits are not posted on subsequent module.
    Intercept the Refund for Excess Credits When:
    There is a pending (AP, PN, UP, CU, TP, or RS) debit transaction listed in the NRPS package and on IDRS.

    Reminder:

    Delete the refund and use the LCF to request CP 260 or Adjustment notice.

    The taxpayer requested credit elect and TC 836 has not posted

    Reminder:

    The credit must be available before credit elect can be moved forward.

    A credit is claimed on or intended for another module.
    An unclaimed credit is timely and in-line for the next tax period or another MFT

    Reminder:

    If credits are transferred to another module, use posting delay codes to ensure TC 841 posts before the credit transfer.

    The taxpayer entered the credit elect, total deposit amount, or extension amount on the Refundable Credits line or withholding line on the return

    Reminder:

    A TC 766 generates, giving the taxpayer a double credit or erroneous withholding credit. Reverse the TC 766 or TC 806 on CC REQ54.

    The return posted to the incorrect tax module and requires reprocessing.
    Verification of out of line credits, or TC 670s or TC 610 is required and the research has not been received before the refund intercept cutoff

    Reminder:

    If the taxpayer does not send the payment voucher with the return to the Lockbox bank, a photocopy of the top part of the return is used as the voucher. The photocopy does not verify the payment. The check is required in this instance.

    Unable to determine where payment should be applied, intercept refund and set -K freeze.
    TC 976 , TC 971 (AC 010) or TC 150 is pending on the notice module.
    TC 976 is posted on BMFOLT.

    Note:

    Check BMFOLT to decide if TC 976 posted with tax liability information. If the tax liability matches the refund amount, void the notice.

    There is a TC 840 on the module for a manual refund and the TC 846 has not been intercepted.
  12. Excess Credits with Zero Liabilities (TC 150 for .00)

    1. Check for other TINs. Research CC NAME with appropriate definer for another TIN. Check the return if provided for any other TINs.

    2. Check for name changes. Use CCs INOLE and ENMOD for possible name changes. Check the return if provided for any other names.

      Note:

      Sole proprietors may incorporate and file incorrect preprinted forms. If a Doing Business As (DBA) is entered on the return if it is provided, check CC NAME with the appropriate definer B for a corporation TIN. If an indication of previous sole proprietor is found on the return if provided, check CC NAMEB/NAMEI for a sole proprietor's TIN.

    3. If another TIN is found, use IDRS to decide if credit belongs on the other TIN.

    4. Decide if the taxpayer is liable for other types of tax. The credit may belong on a different MFT.

    5. Research TC 670 to verify credits belong to the taxpayer and have posted correctly.

    6. Request the return if not included in the NRPS package, but is required to complete the review of the notice.

    7. Refer to “Refund Criteria” tables below.

      Allow the refund if any of the following apply:
      The payments are not claimed or do not belong on another module
      Research, including taxpayer history, indicates the payment(s) belong to the taxpayer
      Similar payments are not posted to other TIN's or MFT's
      There is no indication an amended return will post to the notice module
      Intercept the refund if any of the following apply:
      The payment(s) belong on other TIN's or MFT's
      Prior history indicates the taxpayer has filed returns with tax liability and payment patterns are in line with the payments posted to the notice module (see h. below) If CCC F, allow refund if final return and payments or credits are not posted on subsequent module.

      Note:

      Your prior history research is limited to 2 years.

      A posted payment is out of line (amount and/or date)
      TC 670 verification has not been completed before end of cycle
      TC 570 is pending on the notice module
      TC 976, TC 971 (AC 010) or TC 150 is pending on the notice module
      TC 976 is posted on BMFOLT

      Note:

      Check BMFOLT to decide if TC 976 posted with tax liability information. If the tax liability matches the refund amount, void the notice.

      Unable to determine where payment should be applied, intercept refund and set -K freeze.
    8. If prior history indicates the taxpayer is liable for tax on the notice module and payments are refunding, refer to the “Case Processing” chart below.

      Case Processing
      Intercept the refund as appropriate. If CCC F, allow refund if final return and payments or credits are not posted on subsequent module.
      Mail the notice in cycle
      Input TC 290, Hold Code 4 and if intercepting a refund input Posting Delay Code 2
      Close case control
    9. Electronically Filed Employment Returns -- When a taxpayer changes Reporting Agent (RAF) within a given quarter and does not terminate the contract with the old agent, the old agent is still required to file tax returns until the contract is terminated. Any credits posted to the module must be held until the new agent files the correct return. Refer to the “ELF TC 150 $.00 Returns” table below.

      If And Then
      Prior history indicates taxpayer did not file returns for prior quarters

      Note:

      Your prior history research is limited to 2 years.

      Then Follow instructions above in 3.14.2.7.7.2 (11)
      Prior history indicates taxpayer is liable for tax and payments are posted to the module There is no posted or pending TC 976 on the module and TC 846 IS NOT present.
      1. Void the notice.

      2. Input a TC 290 for .00, Hold Code 4, to set the -K Freeze.

      3. Add ELF150ZERO as an additional History Item.

      Prior history indicates taxpayer is liable for tax and payments are posted to the module There is no posted or pending TC 976 on the module and a TC 846 IS present.
      1. Void the notice.

      2. Intercept the refund.

      3. Input a TC 290 for .00, Hold Code 4, to set the -K Freeze.

      4. Close base and input ELF150ZERO as Case Activity (history).

      Prior history indicates taxpayer is liable for tax and payments are posted to the module If a pending or posted TC 976 IS on the module and no TC 846 is present.
      1. Void the notice.

      2. Add ELF150ZERO as an additional History Item.

      Research indicates there is a partial offset of the refund and a CP 138 has generated in the same cycle as the notice cycle. There is no posted or pending TC 976 on the module and a TC 846 IS present. Mail the notice and the CP 138. Do not reverse the offset.
  13. Form 1120/1120-S -- Specific Review-

    1. If an MFT 02 return has been filed with a TC 150 .00 and a TC 610 payment is refunding, it may be a Form 1120-S. In some instances, a Form 1120-S may not have tax liability and the income reported is taxed to the shareholders on their individual tax returns (Schedule K-1).

      Caution:

      Please be aware that the tax can be for $ .00 if the Taxpayers income is less than their deductions. In these instances allow the refund, do not set 'K' Freeze on these accounts.

    2. To decide if a return is a Form 1120 or a Form 1120-S, check CC ENMOD and refer the Form 1120/1120-S Decision Table below.

      If Then Action
      TC 091 or TC 096 has posted with Blocking Series 950 - 999 The return was originally a Form 1120-S and the filing requirements have been changed to Form 1120. The taxpayer will be liable for tax. If the return is available:
      • Delete the refund.

      • Assess the tax with Hold Code 3.

      • Void the notice

      If the return is not available:
      • Request return using your procedures.

      • Delete refund if applicable.

      • Input a H disposition if return is not received before cycle closeout.

      • Once obtained, follow instructions in box above.

      No TC 091 or TC 096 has posted Tax must not be assessed. Allow the refund.
  14. Form 1041T, Transmittal of Estimated Taxes Credited to Beneficiaries- Specific Review -

    Note:

    Form 1041T is used by an estate or trust to make an election to transfer the estimated tax payment from the 1041 account to the individual accounts of the beneficiaries.

    1. Review the account to decide if estimated credits have already been transferred to the beneficiaries. Refer to the Decision Table below.

      If Then
      The credits have already been transferred No action is required.
      The credits have not been transferred and are frozen with a -P Freeze No action is required.
      The credits have not been transferred and are refunding Contact Accounts Management Function for correct resolution.

      Note:

      If Form 1041T is attached to the Form 1041, detach it and route it to Accounts Management.

Credit Discrepancy -- Missing Credit
  1. Missing credits occur when the total credits posted to the module are less than the amount claimed by the taxpayer. The credit may have posted to another module or the taxpayer may not have made the payment. To decide the missing credit amount:

    1. Subtract the posted credits from the amount claimed on the return.

    2. Consider that any credit elect (TC 716/TC 710) or credit applied (TC 700) posted to the module may not be claimed on the return.

    3. Consider that the taxpayer may have claimed credit elect, but not received any or not received the full amount.

      Reminder:

      If there has been activity on account by Accounts Management or some other area, involving the transferring of credits or payments, (i.e., AP, PN, CU, RS, TP credits). Reflect payment and use appropriate label.

  2. Examples of notices reviewed are CP 101, CP 102, CP 107, CP 134B and CP 834B. List is not all inclusive.

  3. Check the selection key for an indication of how to find the missing credit. See Exhibit 3.14.2-5 for a complete listing of selection keys.

    Note:

    If the selection key is Key 31, OR The taxpayer is claiming a credit or payment(s) that refunded in a prior year, prior quarter, or from a different MFT, then use Label # 8.

  4. Look for pending (AP, PN, CU, RS, TP) credits on the contents page of the NRPS package and IDRS.

    Note:

    If a TC 650/660 (Doc Code 97) payment dated later than the last day of the tax period is unclaimed and overpays the module, the payment may roll to the subsequent tax period or into the FTD module. (A rolled payment will post on BMFOLT as TC 650/660 for .00). Refer to Payment Decision Table below.

    If Then
    The payment is not claimed and does not appear to belong on the notice module Do not include the payment amount on the notice.
    The payment belongs on the module but has or will roll (i.e., is posted on BMFOLT as TC 650/660 for .00) it may require monitoring for correct determination Transfer the payment back into the notice module. (Use correct bypass indicator.)
    The payment has posted but does not belong on the notice Decide where the payment belongs and transfer to the correct module.
    The taxpayer is claiming a credit or payment(s) that refunded in a prior year, prior quarter, or from a different MFT Mark your disposition and add Label # 8 to the notice.
  5. Using the NRPS package and IDRS, look for credits that match the missing credit amount, the underpaid tax amount, or the liability schedule.

  6. Look for credits that match taxpayer's payment pattern. Compare the number of payments made on the notice module to the prior and subsequent tax modules. Also compare the dates and money amounts of the payments.

  7. Like payments on employment tax returns - are payments for the same amount, made weekly, biweekly or monthly based on the taxpayer's deposit requirements. Most employers with like liabilities and like payments are monthly depositors with deposits due by the 15th day of the month following the month the liability is incurred.

    1. Transfer a like payment only if timely for the module based on the liability due date or payment pattern.

    2. Do not transfer a like payment if the payment is dated earlier than the beginning of the tax period for the notice module. Multiple transactions may be required to transfer payments into correct modules. IDRS is required to research prior tax periods not included in the NRPS package.

      Example:

      The notice module's missing credit is a like payment. Payment found in the FTD module is dated early for the notice module but timely for the prior module. A payment dated timely for the notice module has posted to the prior module. Multiple transfers are required.

  8. If the missing credit(s) is found on an open module (no TC 150), before transferring the credit determine if it is "in-line" with the other payments in the notice module. In-line refers to similar payment amounts that have posted to your module.

    Note:

    When inputting a credit transfer follow instructions in IRM 3.14.2.7.20 and IRM 2.4.17

    1. Transfer a late payment if there is a clear indication based on payment amount, liability schedule, total deposits or balance due amounts (does not apply to like payments).

      Example:

      A payment is a dollar and cents payment that matches a liability or is the amount of the missing credit.

    2. Do not transfer credits posted earlier than the beginning day of the tax period.

    3. If credits posted earlier than the tax period are claimed on the return, this may indicate the return has posted to the wrong tax period.

    4. Decide the correct Filing Requirements if Form 941 is filed and the credit(s) have posted to a Form 943 open module, or if Form 943 is filed and the credit(s) have posted to a Form 941 open module. The taxpayer may have filed the incorrect form. Check for tax liability on prior tax modules using CC BMFOLT to decide which form the taxpayer is liable to file. If the taxpayer has filed the incorrect form, do not transfer the credit(s). Mail the notice instead.

      Note:

      The taxpayer's entity (first name line and/or DBA) may serve as a guideline to decide if the taxpayer is an agricultural Form 943 filer.

    5. If the return is available for review, verify the tax period and refer to the Tax Period Verification Decision Table below.

      If Then
      The tax period matches Mail the notice.
      The tax period is incorrect and belongs on the tax period where the credits have posted Reprocess the return to the correct tax period.
    6. When the return is not available for review, refer to the decision table below:

      If And Then
      An incorrectly posted return regardless of selection key is suspected (not certain the return is a reprocess)


      or


      The return posted incorrectly based on 2 or more claimed credit(s) or one payment for the full amount of tax, that posted timely to an open module (no TC 150) regardless of selection key
      The notice is reviewed before Friday of current cycle 1. ESTAB for the return.
      2. Open Control Base.
      3. Use notice disposition H (Hold).
      4. Input STAUP for 9 weeks.
      5. After the return is received, reprocess if posted incorrectly. See IRM 3.14.2.7.18 Reprocessing Returns. Input Hold Code 4 on CC REQ54.
      6. If the return is not a reprocess, reduce STAUP to 5 cycles.
      7. Close the control base.
  9. Missing credit is found on a module with TC 150 posted :

    If Then
    The liability schedules or payment dates indicate misapplied payments between multiple modules. Transfer multiple credits. Use proper bypass indicators to prevent unpostables and ensure all credits post in the same cycle to prevent an erroneous notice. Transfer the credit in before transferring credit out to prevent a settled module from going into a balance due status.

    Caution:

    Do not put a full paid (settled) module into balance due.

    Credits located on another module match the missing credits or tax of the notice module, and the credits posted on the notice module match the tax or credits claimed on the other module. Do not transfer the credits or reprocess the returns. Order the other return(s) and adjust the tax for both modules.
    Missing credit has previously refunded from another module Do not transfer the credit.
    Missing credit is located on a full paid module (balance .00) Do not transfer the credit. (Do not put a full paid module into balance due.)
    Missing credit is located on a balance due module and the taxpayer has received a previous notice that included the credit Do not transfer the credit.
    The missing credit is located on a module with a Q- Freeze and credit is available for transfer. Transfer the credit. Taxpayers often claim the Q- Freeze credit on a subsequent module.
    The missing credit is on a module with a Q- Freeze and is the amount of overpayment before any penalty and/or interest Transfer the credit and allow CP 260 to generate for penalty and interest.
    The missing credit is on a Q- Freeze but is not the total amount of overpayment (partial credit is needed to full pay tax on Q- Freeze module) Transfer the available credit as a lump sum module balance (TC 820/700). EXCEPTION to IRM 3.14.2.7.1.4.2 (Lump Sum Credit Offset TC 826/706, 820/700): For this situation, use the date of the payment claimed as the credit availability date.

    Note:

    Refer to IRM 3.14.2.7.8 CP 267 and CP 268 review for additional information.

    Reminder:

    At least three cycles must remain when transferring credits from a Q- Freeze to allow sufficient time for the transfer to post. When less than three cycles remain on the Q- Freeze, refer to the Q- Freeze Decision Table below.

    If Then
    All debit modules have -E Freeze 1. Transfer credit with applicable posting delay codes to allow transfer to post after TC 841.
    2. Complete notice disposition in cycle.
    3. Monitor for TC 846 and intercept the refund.
    All debit modules do not have -E Freeze Credit will offset to the earliest debit module.
    1. Complete notice disposition in cycle (Label the notice if FTD penalty is on the account and unable to decide recomputation).
    2. Request subsequent notices on LCF (CP 138, and CP 210/220 or CP 128 as applicable).
    3. Monitor for any TC 846 posting and intercept the refund.
    4. Reverse offsets as required and transfer credit to notice module.
  10. Review NRPS package and return (if included in the NRPS package) for evidence of another EIN.

    1. Research IDRS for missing credit(s) for any other EIN found.

    2. Verify the return has posted to the correct EIN.

    3. Transfer available missing credit(s) or reprocess return based on review.

      Caution:

      Do not transfer credit(s) or reprocess a return with a merge in process. CC BMFOLI will not display an index of tax modules when accounts are merging. Instead, MRG-PRO will be indicated. TC 011 is located on CC ENMOD on the losing module's TIN. The XREF TIN listed under TC 011 is the receiving module. (The account with TC 011 will merge to the XREF TIN listed) If credits will be merged into a balance due notice module, consider the credits as pending to the notice module and input CC STAUP to prevent the generation of an erroneous CP 504.

    4. If credit will fully pay module void notice. Use Local Control File to select any adjustment notice.

    5. If the credit will not full pay module use appropriate label .

CP 267 and CP 268 Review - Notice of Excess Credit Q- Freeze

  1. A Q– Freeze (Rollover Freeze) is set and CP 267 or 268 generates when the module contains more credits than claimed on the return. The credit is frozen from refunding or offsetting for 15 cycles from the posting of the TC 150. See IRM 3.14.2.7.5.16 for more information.

    • CP 267 is a non-math error notice with unclaimed excess credit(s) that were rolled into the notice module because it met roll-over criteria. This notice informs the taxpayer of possible misapplied payments and allows him/her to advise the IRS of their correct application. This notice requires a response from the taxpayer.

    • The CP 268 is a math error notice with unclaimed excess credit that was rolled into the notice module because it met roll-over criteria. This notice informs the taxpayer of a math error on the return and possible misapplied payments, resulting in an overpayment. It allows the taxpayer the opportunity to advise IRS of the validity of the math error and of proper application of the credits. This notice requires a response from the taxpayer.

  2. To view an exhibit of a CP 267 or CP 268 refer to The Office of Taxpayer Correspondence at http://gatekeeper.web.irs.gov/new_default.aspx.

  3. The Q- Freeze will release when any of the following occurs:

    1. The module balance becomes zero or debit balance.

    2. A TC 652/662 posts and the credit discrepancy is resolved - any remaining credit is within ≡ ≡ ≡ ≡ ≡ of the credit amount claimed on the return or the remaining credit is ≡ ≡ or less.

    3. A CC REQ54 is input with Hold Code 3 and Priority Code 4.

    4. 15 cycles have elapsed and no corrective action was taken on the account.

  4. CPs 267 and 268 Review

    1. Complete all General Review Procedures. See IRM 3.14.2.7.1.

      Exception:

      If the return is not signed, do not correspond for a signature unless releasing the refund. Reference IRM 3.14.2.7.1.2.6 as a guide on requesting signatures on a refund.

    2. CP 268 only - Verify the math error condition.

    3. Use the selection key as a guideline to assist in the review of the notice.

    4. Review the account for -A Freeze conditions that may affect notice disposition. Refer to the -A Freeze Condition chart below.

      If Then
      The module contains a -A freeze with no case control or open control base to Accounts Management. Do not input CC REQ54 TC 290 .00. Void the notice.
      The control base indicates the case is assigned to another employee Contact employee to decide case resolution and notice disposition.
      TC 976, TC 971 (AC 010) or TC 150 is pending on the notice module, or TC 976 is posted on BMFOLT

      Note:

      A pending TC 971 (AC 010) or TC 150 on the notice module will post as a TC 976 and create an -A Freeze.

      Void the notice.
      The overpayment is caused by a rolled payment and the module that the credit rolled from now has a -A freeze or pending TC 976 Print the CP 267. DO NOT release the credit (Q freeze).

      Exception:

      If the -A freeze is being released with a pending TC 290.00 with no change to tax, release the Q- freeze and apply Label 22.

    5. Compare the tax amount on the notice module with the tax amount on the return.

      If Then
      The tax return is not included in the NRPS package and you suspect a decimal point, transposition or transcription error Request the return, use disposition H if the return is not received in time for cycle close-out
      The tax amount differs from the tax amount on the return and is not an obvious transposition or decimal point error Request the entire block to determine if a slipped block condition exists. Reference Section IRM 3.14.2.7.4.2 Slipped Blocks and Mixed Data Blocks. Mark Notice disposition H until the block is received.

      Note:

      Review the return for taxpayer request for credit elect. If credit elect is requested but not transcribed, manually transfer the amount requested on the return.

    6. When inputting a credit transfer follow instructions in IRM 3.14.2.7.20 and IRM 2.4.17.

    7. Review the NRPS contents page and IDRS for pending transactions (AP, PN, UP, CU, RS or TP) that may affect notice disposition.

      Note:

      If a TC 650 or 660 is pending and the payment is dated later than the last day of the notice module, the payment may roll to the subsequent period or into the FTD module. Check CC BMFOLT; a TC with a dollar amount .00 indicates the credit rolled while attempting to post. If the rolled payment belongs on the notice module, then transfer the payment back into the notice module. Decide if other payments will be transferred out and excess credit released.

      IF THEN
      The taxpayer indicates on his return to apply credit to the next quarter (year) Manually transfer the amount requested and void/retype the notice as appropriate.
      There is no indication because the return does not show either a refund or credit elect box is checked. Mail the notice.
      If the CCC is set to E but there is no credit available or the balance on the return is zero. Mail the notice.
    8. If a TC 670 and TC 570 with the same DLN created the overpayment, look for an incoming correction to the original return (i.e., pending TC 976, TC 971 (AC 010) or pending TC 150). If present, void the notice. If not present, mail the notice.

  5. Researching CP 267 / CP 268

    1. Use the NRPS notice module data (including liability schedule, if available) to decide which credit(s) or part of a credit created the excess credit discrepancy. Subtract the total credits claimed on the return from the actual total credits posted.

    2. If your notice module contains a TC 150 for $.00 and is not a $ .00 tax return, you must follow procedures to set -K Freeze on account. If prior history indicates the taxpayer is liable for tax on the notice module :

      Case Processing
      1. If CCC F, do not set the -K Freeze
      2. Mail the notice in cycle
      3. Input TC 290 Hold Code 4
    3. Review other NRPS modules to decide if the unclaimed credit on the notice module is claimed or belongs on another module.

    4. Review the return (if included in the NRPS package) for any explanation of the unclaimed credit.

    5. Research the NRPS package and the return (if included in the NRPS package) for any indication of another TIN. If another TIN is found, research IDRS to decide if the unclaimed credit belongs on the other TIN.

    6. If a payment(s) rolled or was transferred in from another module or TIN creating the overpayment, verify there is no balance due or pending assessment on that module or TIN. If a -A Freeze is on the losing module, do not release the Q- Freeze. Mail the notice. (Requires IDRS research.)

    7. If the date of the overpayment is timely for an earlier tax period, or is timely and the payment amount is in-line for another MFT, research to decide if the payment belongs on the earlier tax period or other MFT. (Requires IDRS research if the prior tax module or other MFT is not on NRPS.)

    8. Compare the tax liability data on the notice module with credits posted on other modules. If the tax matches credits posted timely on another module, decide if the return posted to an incorrect tax period and should be reprocessed. (Refer to IRM 3.14.2.7.18 Reprocessing Returns.)

    9. It is not necessary to order vouchers or checks to verify payments. If a payment does not appear to belong to the taxpayer, (dated 10-28-03 and subsequent) use RTR to verify that the payment belongs to the taxpayer. Review the check and voucher (if applicable) for an indication of another TIN or for correct posting of the payment. Follow instructions below for Q- Freeze resolution and notice disposition.

  6. Resolving CP 267 / CP 268 Q- Freeze -- Releasing Q- Freeze

    1. If the overpayment is caused by a rolled payment and the module that the credit rolled from now has a -A freeze or pending TC 976, print the CP 267. DO NOT release the credit (Q freeze).

    2. Input TC 290 .00, BS 05/15/17, HC 3, PC 4, NSD, on CC REQ54 to release the Q- Freeze if the Over Payment amount is $10 or more in following situations:

      IF AN UNCLAIMED OVERPAYMENT IS CAUSED BY THEN RELEASE THE CREDIT AND
      • Credit Elect TC 716/710

      • TC 700 credit from another module

      • Rolled payment (99 in DLN)

      • Payment transferred in (Doc 24/34)

      • COBRA Premium Assistance Credit TC 766

      • HIRE Credit TC 766

      Apply Label # 22. The TE must look for the actual, specific, unclaimed overpayments that are exact or within $10.00 of the overpayment.

      Caution:

      If the overpayment is not exact, but is equal to any combination of these credits within $10.00 BEFORE penalty and interest, release the credit and apply Label 22.

      Reminder:

      If overpayment amount is $ 9.99 or less, a REQ54 290.00 is not necessary. The payment will release automatically.

    3. Do not input CC REQ54 TC 290 .00 if a -A Freeze is on the module. Posting of the TC 290 .00 would release the -A Freeze. Void the notice if Accounts Management does not have an open control base otherwise reference section on the -A Condition If and Then table in IRM 3.14.2.7.8(4) d.

  7. Resolving CP 267 / CP 268/ Q- Freeze - Transferring credit(s) to balance due module(s)

    1. To decide if a payment will be transferred to a balance due module: review the account for balance due modules, liability amounts, previous notice amounts, credits claimed by the taxpayer minus credits posted to the module and other payments posted.

    2. Transfer only those credits that belong on the balance due module. Do not transfer credits based only on the availability of the Q- Freeze credit.

    3. Transfer the entire payment if claimed on another module. Do not split a payment unless taxpayer intent can be determined.

    4. Research TC 670 payments on the RTR system - may be intended for a balance due module or for another MFT or TIN. Check for balance due amounts, previous notice amounts, and taxpayer intent. If check or voucher indicates the payment belongs on another TIN, transfer the payment. If the payment belongs to the taxpayer, but a determination to transfer the payment cannot be made, mail the notice.

      Reminder:

      If TC 670 and 570 with the same DLN is creating the overpayment, and a TC 976, TC 971 (AC 010), or TC 150 (correction to the module) is pending, void the notice.

  8. Resolving CP 267 / CP 268/ Q- Freeze -- Transfer credit(s) to a subsequent open module(s) (No TC 150) when all the following conditions are met:

    1. The payment(s) have valid dates for the subsequent period

    2. The payment amounts are in-line with prior history payment patterns

    3. A payment is missing on the subsequent module (based on posted data and history of payment patterns)

  9. Use the Decision Table below when the credit transfer resolves the Q- Freeze as follows:

    If the credit transfer Then

    Results in a partial excess credit remaining on the module and the taxpayer is not in a balance due status.

    Retype the notice,
    or
    Void the notice is the remaining credit is $9.99 or less of the overpayment the taxpayer expected.

    Note:

    The Q- Freeze does not need to be resolved.

    Resolves any remaining excess credit on the module and the account is in zero balance. Void CP.
    Does not resolve the Q- Freeze but the unclaimed excess credit remaining on the module meets the criteria for releasing the Q- Freeze. Retype the notice to remove the transferred credit, add label 22 to the CP 267 and release credit with TC 290 .00, HC 3 and PC 4 and PD 1.
    Results in a balance due on the notice module for penalty and/or interest only. Transfer the credit and retype CP 267 to a CP 161 balance due notice.
    Results in a balance due for underpaid tax on the notice module when the underpayment can be decided by comparing the liability schedule with the tax deposits. Transfer the credit and retype to a CP 161 balance due notice.
    Results in a balance due for underpaid tax but the missing liability payment cannot be decided by comparing the liability schedule with the deposits. Do not transfer the credit. Mail the notice.
  10. Q- Freeze Retype Condition Flowchart.

    1. Use the flowchart below to determine the actions that should be taken on notices with Q-Freeze on the module.

      Figure 3.14.2-7

      This is an Image: 32201055.gif
       

      Please click here for the text description of the image.

    2. This chart can be used in conjunction with Reference Chart for Retyping most BMF Notices. The conditions listed are those that remain after all corrective actions have been input on IDRS. The notice disposition for CP 267 and CP 268 is decided from a combination of conditions:

    • Math Error means an error with the figures on the tax return.

    • Overpaid Math Error are notices that include credit discrepancies and return math errors.

    Note:

    Effective 2013 the OLNR application will allow a CP 267 or a CP 268 to be retyped to the following CP Notice Types: Follow instructions in IRM 3.14.2.7.8 (16) when retyping a CP 267 to a one of the notices listed below:

    CP 267 CPs 101, 102, 104, 111, 112, 114, 132, 133, 145,161, 268
    CP 268 CPs 101, 102, 104, 111, 112, 114, 132, 133, 267
  11. Resolving CP 267 / CP 268/ Q- Freeze --Transfer a payment to another MFT when the payment fits the pattern per date and amount. Examples are:

    If a Then
    Small payment posted to a Form 941, 944, 945, or 1120 module Decide if the payment belongs on Form 940 account.
    Large payment posted to a Form 940 module Decide if the payment belongs on Form 941, 944, 1120, or 1041.
    Large even payment posted to the notice module Decide if the payment belongs on Form 1120 or 1041. (See specific review -- Form 1120, 1041, 990 T (9) a and (9) b below).
    Form 944 filer does not meet the qualification (whose annual liability for social security, medicare, and withheld federal income taxes is not $1000 or less). TE will move the credits to a Form 941.
  12. Specific Review Form 1120, Form 1041 and Form 990 series

    1. Check the notice module for posted estimated tax payment(s). Transfer payment(s) from the notice module to the correct module if the payment amount matches other posted payments and the date is in line with required estimated tax payments.

    2. Transfer the payment if it is one-fourth or a multiple of one-fourth of the total tax liability on the notice module and the payment date is in line for the subsequent tax year module.

      Example:

      The subsequent module is missing the first two Estimated Tax deposits. The overpayment on the Q- Freeze is one-half of the notice module's tax liability. Transfer the payment per taxpayer intent to combine both payments.

    3. If a misapplied payment is transferred from a notice module with an estimated tax penalty, and the overpayment per the taxpayer is reduced by the penalty, retype the notice to a CP 173 (if no other discrepancy exists).

    4. Review module for the incorrect posting of TC 806 (Credit for Withheld Taxes) or TC 766 (Refundable Credits). Check for payment(s) posting to the module that match the TC 806 or TC 766 amount. If the credit is incorrect, reverse the TC 806 with CR REF CD 807 and TC 766 with CR REF CD 767.

  13. Specific Review -- FTD Penalty- If an FTD penalty is assessed for a bad breakdown (any of the ROFT FTD Penalty Reason Codes), then the FTD penalty will be suppressed and a CP 207 or 207L will generate alerting the taxpayer of a potential FTD penalty assessment.

    1. The CP 207 will generate on proposed FTD averaged penalties under $100,000.00.

    2. The CP 207L will generate on proposed FTD averaged penalties $100,000.00 and above.

    3. If the proposed penalty is not resolved within 15 weeks, an averaged FTD penalty will be assessed on the notice module.

    4. The CP 207 will not be selected by NRPS.

    5. The CP 207L will be selected by NRPS and worked in the Large Corp/Technical function.

    6. If a CP 161 is scheduled to generate and the only reason for generation is to indicate an averaged FTD penalty, the CP 161 will be suppressed and the CP 207 or 207L will generate.

    7. If a CP 267 generates and there is a proposed averaged FTD penalty, the penalty will be suppressed and not included in the CP 267. The taxpayer will receive a CP 267 and a CP 207 or 207L in the same cycle.

  14. If transferring a timely misapplied payment from a notice module for Form 940, 941, 943, 944, or 945, check CC FTDPN or PIFTD for FTD penalty computation:

    IF THEN
    An FTD penalty (TC 186) has not posted on the notice module, but CC FTDPN indicates a penalty amount over tolerance The FTD penalty will assess when the credit transfer posts. Refer to Q- Freeze Retype Condition Chart to decide if notice must be retyped to the applicable notice or voided and allow CP 210 to generate.
    AN FTD penalty (TC 186) has posted on notice module and CC FTDPN or PIFTD indicates the penalty will recompute The penalty will recompute when the credit transfer posts. Use LCF to void adjustment notice or suppress adjustment notice on CC REQ54, 290 .00, Hold Code 3. (See Q- Freeze Retype Condition Chart for notice disposition.)

    Note:

    Specific Review Credit Elect -- If a Credit Elect (TC 836) has offset from the notice module to the subsequent module (TC 716), and a debit balance results when a misapplied payment is transferred, reverse the amount of offset needed on the notice module. Reverse offset with TC 832/712.

    Notify the taxpayer of any reduced Credit Elect amount on the retype if retyping to a settlement with the pop-in paragraph. Type CP 145 if the Credit Elect pop-in paragraph is not included on the retyped notice (such as CP 173 or CP 210).

  15. Specific Selection Key Review -- Follow applicable procedures above to review research and resolve CPs 267/268:

    1. Selection Keys 01 or 03 -- CP 267 overpaid for $250,000.00 or more. If the taxpayer claimed at least a $1,000,000.00 but less than $10,000,000.00 refund issue a manual refund to avoid additional credit interest. If additional unclaimed credits remain on the module, do not release the Q- Freeze. Retype the notice to reflect the unclaimed payments. (Do not address the $1,000,000.00 manual refund since the taxpayer is expecting it.) However , if the refund is questionable in nature and taxpayer intent cannot be decided, mail the notice.

    2. Selection Key 11 -- The overpayment amount is equal to or greater than 100 times the tax liability -- verify tax amount for decimal error, transposition error, or transcription error. If the tax is incorrect, adjust on CC REQ 54. For Forms 941, 943, 944, and 945, compute FTD penalty on CC FTDPN and assess if penalty amount is ≡ ≡ ≡ ≡ ≡ ≡ or more.

    3. Selection Key 18 -- TC 186 and Schedule Indicator Code (SIC) 1 with Schedule B attached to return -- Ensure the criteria for SIC Code 1 is met. If the liability schedule has been disregarded incorrectly or transcription errors are found, verify addition on the Schedule B. If the schedule is valid, compute the FTD penalty on CC FTDPN and adjust penalty according to the computation.

    4. Selection Key 34 -- Select if the overpayment amount is equal to the TC 716/TC 710 +/- $10.00 before penalty and interest. If so, release credit and apply Label #22.

    5. Selection Key 12 -- The overpayment amount is between $500.00 and $24,999.99 and no other CP 267 / CP 268 selection criteria are met.

    6. Selection Key 36 -- When the CP 267 / CP 268 notice amount is $500.00 or more and a TC 766 or TC 806 is present.

  16. Notice Disposition

    1. Void if returning to taxpayer's figures.

    2. Void if TC 976 or TC 971 (AC 010) is posted or pending.

    3. Mail if no changes are made or no action is taken on the account -- determination to transfer or release the overpayment cannot be made.

    4. Retype CP 267 / CP 268 or retype to the appropriate notice based on corrective actions taken on the module.
      * You must add the TPNC(s) on the retyped notice and they must clearly state the taxpayer’s error on the return.
      * OLNR will populate the fields depending on what notice you are attempting to retype the notice to.
      * Use a Hold Code when retyping the original notice to prevent the subsequent notice or use the Local Control File to intercept the subsequent notice
      * Use CC ACTON to enter a history item on IDRS when retyping a notice. If retyping to a different notice, include both CP numbers in the history item, such as RYT267-102 as an example.
      * If a Balance Due Notice is held past the notice cycle, update the Pay by date to the current cycle Pay by date. Update the balance due, penalties, and interest to the 23C date.
      * For additional instructions refer to IRM 3.14.2.7.23.4 .

    5. Apply Label 22 only when releasing a credit elect TC 716/710, TC 700 credit from another module, rolled payments(s) or transferred in payments(s), COBRA, or HIRE credit TC 766. (See IRM 3.14.2.7.8 (10) , Q- Freeze Retype Condition Chart.)

      Note:

      The Q- Freeze will remain on the notice module if an unclaimed credit balance of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ remains. Retype the CP 267/268 to reflect the correct credit balance.

      Reminder:

      A CP 260 credit reversal notice generates when the credit reversal transaction results in a debit balance ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . Suppress CP 260 with input of TC 570 on debit side of Doc Code 24 . A secondary TC 570 will not suppress an adjustment notice. To suppress an adjustment notice, input CC REQ54, TC 290 .00, Hold Code 3.

      Note:

      Doc Code 34 input with a credit freeze will not suppress the CP 260.

  17. Multiple IDRS transactions:

    IF THEN
    Releasing a Q- Freeze and completing a credit transfer (DOC Code 24, 34 and 48) Retype notice to remove the transferred credit and add Label 22. Release the Q-Freeze with HC 3, PC 4. Use PD 1 to cycle CC REQ54 one cycle past the credit transfer to avoid creating an unpostable condition.
    The remaining credit after completing a credit transfer is ≡ ≡ ≡ or less of the credit claimed by the taxpayer or the remaining credit is ≡ ≡ ≡ ≡ ≡ or less CC REQ54, Priority Code 4 is not required. The remaining credit will release automatically.

    Note:

    The Q- Freeze will remain in effect if the difference between the credit claimed and the remaining credit on the module is ≡ ≡ ≡ or more.

    Adjusting the tax or credits and releasing the Q- Freeze CC REQ54 must be input. Input the second CC REQ54 with Hold Code 3, Priority Code 4 to release the refund. (Posting Delay is not required.)

    Note:

    A CC REQ54 does not apply to a tolerance of ≡ ≡ ≡ ≡ ≡ ≡ ≡ . Credit of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and over must be manually released with a second CC REQ54, Hold Code 3, Priority Code 4.

    Caution:

    Do not input CC REQ54 if a -A Freeze or a pending TC 976, TC 971 (AC 010) or TC 150 is on the notice module. Void the notice.

CP 161 Balance Due Notice - Non Math Error

  1. CP 161 (All BMF Forms except 1065). The CP 161 is a non-math error notice informing the taxpayer of a balance due of $5.00 or more. The balance due may be the result of any combination of tax, penalties, and interest.

  2. Use the selection key as a guide for reviewing the notice. See Exhibit 3.14.2-5.

  3. Look for pending (AP, PN, TP, RS, UP or CU) credits in the NRPS package and IDRS. If the payment overpays the module and is not pending on TXMOD or posted on BMFOLT, decide if the payment belongs on the notice module before including the payment on the notice.

  4. If the payment is UP, check UPTIN for the Unpostable Resolution Code to decide if the payment will post to the module. If the unpostable case is open, use CC UPCASZ to enter information to facilitate posting of the payment.

    Reminder:

    Input CC STAUPS for 9 cycles.

  5. Look for misapplied payments in the NRPS package. Look for credits that match the underpaid tax amount on the tax return and the liability schedule. Payments may be late since the taxpayer knew about the balance due. When inputting a credit transfer follow instructions in IRM 3.14.2.7.20 and IRM 2.4.17

    Reminder:

    Do not transfer credits dated earlier than the tax period.

  6. Check for credits on others MFTs and Fiscal year ending returns. Decide correct Filing Requirements before transferring credit.

  7. If timely credits have posted to a module with no TC 150, and they match the tax liability of the notice module, the return may have posted to the wrong tax period. Verify the tax period. Follow instructions in IRM 3.14.2.7.18 ; Reprocessing Returns.

  8. Do not void a CP 161 if fully paid by credits that offset (TC 706) into the notice cycle. A CP 138 will generate from the Losing module. Print the notice.

  9. Do not label if the offset partially pays the module. A CP 138 will generate from the losing module. Print the notice.

  10. Form 8288 MFT 17 (OSPC Only)-Specific Review-Research using IDRS and BMFOLI for possible misapplied payment(s). The missing payment may have posted to the incorrect tax period. In this case, BMFOLI will show the account you are working and the account the payment posted to.

    Note:

    Tax Period is always the “Date of Transfer” from Form 8288.
    Example: If “DT-OF-TRFR>” on TXMODA is 20150403, the Tax Period will be 201504. The Date of Transfer on TXMODA is always in YYYYMMDD format. If the Tax Period on CP 161 is 201410 and the payment is on Tax Period 201411, look at the “DT-OF-TRFR>” on TXMODA to determine if the payment belongs to your module.

    If And Then
    The payment will satisfy the debit balance Penalties will recompute (TCs 166, 186, 176 or decrease TC 276)
    1. Transfer the payment in

    2. TC 290.00, HC 3, DT-OF-TRFR>

      Note:

      On this screen (REQ54), input the DT-OF-TRFR as MMDDYYYY.

    3. Input a CC STAUP for 9 cycles

    4. Void the notice

  11. Forms 941/943/944/945 - Specific Review - If a tax liability schedule is attached but not transcribed, and a FTD Penalty (TC 186) is assessed on the notice module, refer to IRM 3.14.2.7.17.8 , Failure to Deposit Penalty.

  12. Forms 1041/1120/990 series - Specific Review - ES Penalty (TC 170): If the module contains an Estimated Tax Penalty (TC 170), the missing payments may include the balance of tax, plus the taxpayer's computed ES Penalty. Add TC 170 to the balance due to decide the missing payment amount.

    Note:

    When timely credits are applied to a module containing a TC 170, a CP 234 transcript will generate. Accounts Management will review and recompute the ES Penalty if necessary.

  13. Forms 1041/1120/990 series - Specific Review - Penalty (TC 276, 166) and Interest (TC 196): The taxpayer may have included any combination of FTP penalty, FTF penalty, and interest in the balance due amount on the return. If the return is included in the NRPS package, review thoroughly for any notation. Also, consider the taxpayer's addition of penalty and interest when looking for a missing payment.

    Note:

    Return not included in the NRPS package : If a payment is dated close to the received date of the return, but overpays the tax due, check CC INTST to the date of the payment. If the balance due on INTST is the amount of the payment, the taxpayer computed penalty and interest, transfer the payment.

  14. Forms 1041/1120/990 series - Specific Review - Extensions : Search for timely credits and an extension of time to file. A timely filed extension with or without credits can post to an incorrect tax period or EIN. If you decide the extension was intended for the notice module, transfer the extension. See IRM 3.14.2.7.22 , Extensions.

  15. Form 990 Series - Specific Review - CP 161 generates as a settlement notice for missing credits. Decide missing credit amount by subtracting claimed credits from credits posted. Check for tax due, tax due plus penalty and/or interest, and missing claimed credits. If payments posted to other modules appear to be timely for the notice module, use CC BRTVU to decide total claimed credits. (Extension payments may not appear on NRPS as claimed credits.

  16. Form 2290 - Specific Review CP 161 is issued when there is an L- Freeze is present on the account. The NRPS package, IDRS and BMFOL indicates multiple TC 610 payments have posted to a prior module. If the module has a credit balance, then decide if the taxpayer claimed the payment on the notice module, follow the chart below:

    If And Then
    1. The taxpayer is claiming the payment on the notice module Moving the payment will not place the "from" module in debit status Transfer the payment.
    2. The taxpayer is claiming the payment on the notice module Additional credit will remain after the claimed payment is transferred out Use a TC 570 on the debit side of the credit transfer to hold any remaining credit.
    3. If the payment is timely Full pays the notice module (penalty and/or interest will abate) Void the notice.
    4. If the payment is applied It is not timely, or there is still a remaining balance Use the appropriate label.
  17. Forms 706/709 - Specific Review - Use CC IMFOL to research the IMF SSN (for joint returns check both SSNs) for possible misapplied payments. For Form 709, a missing extension payment may be posted to the Form 1040 account:

    If And Then
    There is excess credit on Form 1040 that is refunding The overpayment equals the amount claimed on the Form 709
    1. Delete the refund on the Form 1040 account.
    2. Transfer the credit.
    3. Input a CC STAUP for 9 cycles on the Form 709 account.
    4. Add the extension to Form 709 account if no extension has posted.

CP 162 Balance Due Notice - Non Math Error

  1. CP 162 is a Balance Due Notice used for Form 1065 (MFT 06) and Form 1120-S (MFT 02) penalties.

  2. This notice is issued when Form 1065 or Form 1120-S is assessed a penalty for failure to timely file by the return due date (including extensions), for failure to include required information on a return, or (for Form 1065) for failure to file electronically when required to do so.

  3. For more information refer to IRM 21.7.4.4.2.7, IRM 21.7.4.4.4.11.2.8, IRM 20.1.2.3, IRM 20.1.2.4 or IRM 20.1.2.5.

CP 162 Form 1065 Failure to File Penalty/Missing Information Penalty
  1. This notice is issued when Partnerships are assessed a penalty for failure to timely file a return, including extensions (TC 160 /TC 166) or a failure to provide information penalty (TC 240/246), when Form 1065 is lacking the required information such as Schedules K-1 or balance sheet.

  2. A partnership must file Form 7004 to request an extension. Form 7004 is due by the Return Due Date (RDD). The extension request must be timely filed for the tax period.

  3. If a partnership return is both late and incomplete, the penalty will be assessed for filing an incomplete return, because that will result in the correct, larger, penalty.

  4. See below to figure out the FTF penalty assessed for Form 1065 when the return is filed late or the taxpayer filed an incomplete return.

    For tax periods ending And the tax year began in The penalty amount assessed per partner per month is For a maximum of
    201001 and Subsequent 2010 and subsequent $195 12 Months
CP 162 Form 1120-S Failure To File Penalty/Missing Information Penalty
  1. A 1120-S Corporation may be assessed a penalty under IRC 6699 for failure to file a timely and complete return as required under IRC 6037. The return is considered incomplete when Form 1120-S is lacking the required information required by section 6037, such as Schedule(s) K-1, or a Schedule L, Balance Sheet. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The penalty is assessed with TC 240 or TC 246 when the return is incomplete. It is assessed with TC 160 or TC 166 when the return is complete, but late. The penalty is assessed for each month or part of a month that the return was late and/or incomplete. Refer to IRM 21.7.4.4.4.11.2.8 more information.

  2. If an S corporation return is both late and incomplete, the penalty will be assessed for filing an incomplete return, because that will result in the correct, larger, penalty.

  3. Refer to IRM 20.1.2.5.4 to compute the penalty using the Penalty Computation Tool. Follow the instructions found there to add a shortcut to this tool to your desktop.

Electronic Filing of Partnership Returns
  1. Partnerships with 100 partners or less can file on paper or can voluntarily file their returns electronically. Partnerships with more than 100 partners are required to file electronically if they are able to do so. See IRM 21.7.4.4.2.8.1 and IRM 20.1.2.4 for more information on partnerships with more than 100 partners.

  2. For years ending December 31, 2000 and later, IRC 6011(e)(2) requires partnerships with more than 100 partners to file electronically, unless an exception applies. Treas. Reg. 301.6011-3(c) provides for a penalty for partnerships that fail to file electronically when required to do so. (See information concerning waivers for this requirement in IRM 21.7.4.4.2.8.1.2 and IRM 20.1.2.4.1.)

  3. If a partnership has more than 100 partners and is required to file their return electronically and they fail to do so, a penalty will be assessed for each schedule K-1 over 100.

    • Returns due before January 1, 2011, the penalty is $50 per partner over 100, with a maximum penalty of $250,000 [$100,000].

    • Returns due between January 1, 2011 and December 31, 2015, the penalty is $100 per partner over 100, with a maximum penalty of $1,500,000 [$500,000].

    • Returns due between January 1, 2016 and December 31, 2016, the penalty is $260 per partner over 100, with a maximum penalty of $3,178,500 [$1,059,500].

    • Returns due between January 1, 2017 and December 31, 2017, the penalty is $260 per partner over 100, with a maximum penalty of $3,193,000 [$1,064,000].

    For example, if a partnership return with 120 partners is due between January 1, 2011 and December 31, 2015, the penalty would be $2,000. If the return was due between January 1, 2016 and December 31, 2016, the penalty would be $5,200.

    Note:

    For partnerships with average gross receipts below $5,000,000 for the previous three years, the maximum penalty is the lower amounts shown in brackets above.

  4. The penalty is assessed as TC 246 with reference number 688.

    Note:

    A return with over 100 partners may have both the TC 166 and the TC 246 penalties assessed if the return is filed late and is not filed electronically.

Return and Extended Due Dates
  1. Form 1065 is an information return and therefore has no tax. Each partner's distributive share of each partnership item is reported on the partner's return of income.

  2. See table below for the Form 1065 Return and Extended Due Dates for tax periods beginning 12/31/2015 and prior.

    Period Ending Return Due Date Extended Due Date
    Jan. 31 5-15 10-15
    Feb. 28 6-15 11-15
    Mar. 31 7-15 12-15
    Apr. 30 8-15 1-15
    May 31 9-15 2-15
    June 30 10-15 3-15
    July 30 11-15 4-15
    Aug. 31 12-15 5-15
    Sept. 30 1-15 6-15
    Oct. 31 2-15 7-15
    Nov. 30 3-15 8-15
    Dec. 31 4-15 9-15
  3. See table below for Form 1065 Return and Extended Due Dates for tax periods beginning 1/1/2016 and subsequent.

    Period Ending Return Due Date Extended Due Date
    Jan. 31 4-15 10-15
    Feb. 28 5-15 11-15
    Mar. 31 6-15 12-15
    Apr. 30 7-15 1-15
    May 31 8-15 2-15
    June 30 9-15 3-15
    July 30 10-15 4-15
    Aug. 31 11-15 5-15
    Sept. 30 12-15 6-15
    Oct. 31 1-15 7-15
    Nov. 30 2-15 8-15
    Dec. 31 3-15 9-15
  4. For Tax Periods ending 201611 or earlier (and due on or before 02/15/2017), if the taxpayer files the extension request by the 15th day of the 4th month (the previous return due date), a 5 month extension will be granted from the “old” due date. See Form 1065 Return and Extended Due Date Table below.

    Tax Period Ending Due Date Extension Filed By Extended Due Date
    201601 4/15/2016 5/15/2016 10/15/2016
    201602 5/15/2016 6/15/2016 11/15/2016
    201603 6/15/2016 7/15/2016 12/15/2016
    201604 7/15/2016 8/15/2016 1/15/2017
    201605 8/15/2016 9/15/2016 2/15/2017
    201606 9/15/2016 10/15/2016 3/15/2017
    201607 10/15/2016 11/15/2016 4/15/2017
    201608 11/15/2016 12/15/2016 5/15/2017
    201609 12/15/2016 1/15/2017 6/15/2017
    201610 1/15/2017 2/15/2017 7/15/2017
    201611 2/15/2017 3/15/2017 8/15/2017
  5. See Form 1120-S Return and Extended Due Date Table below. Form 1120-S is due the 15th day of the third month after the period ending date (March 15 for a calendar year return).

    Period Ending Return Due Date Extended Due Date
    Jan. 31 4-15 10-15
    Feb. 28 5-15 11-15
    Mar. 31 6-15 12-15
    Apr. 30 7-15 1-15
    May 31 8-15 2-15
    June 30 9-15 3-15
    July 30 10-15 4-15
    Aug. 31 11-15 5-15
    Sept. 30 12-15 6-15
    Oct. 31 1-15 7-15
    Nov. 30 2-15 8-15
    Dec. 31 3-15 09-15
Selection Keys for CP 162
  1. The selection keys for CP 162 are 14, 53 and 32. See the chart below for an explanation of each key.

    CP 162 Selection Keys Explanation
    Key 14 The return is filed late and an Extension of Time to File Return (TC 460) is pending.
    Key 53 The return is filed late and an extension has posted to a different, open module (no TC 150) or a posted TC 610 has a Julian date that indicates the return may be filed timely by extended due dates.
    Key 32 The return indicates the partnership has over 100 partners, but failed to file electronically and does not have a waiver on file for tax years December 31, 2000 and subsequent.
General Review Procedures for CP 162
  1. Follow general review procedures in IRM 3.14.2.7.1 to determine the timeliness of the return. If the return was filed late follow the procedures below to determine the number of months for which the penalty needs to be assessed.

    • IRS date stamp

      Note:

      Earliest date stamp by Campus, Area Office, US Consulate, or Revenue Officer.

    • The earliest legible postmark date (U. S. Postal Service, Foreign Postmark, or Private Delivery Service) on the return.

      IF THEN
      An envelope is not attached Use the postmark date stamped on the face of the document
      An envelope has both a USPS or Foreign postmark and private metered postmark, Always use the USPS or Foreign postmark
      An envelope has two private metered postmarks, Always use the latest private metered postmark
      An envelope has only one private metered postmark, Use the private metered postmark.
    • Taxpayer signature date

    • Julian date minus 10 days

    • Current date minus 10 days

    Note:

    All other issues should be referred to your lead or manager so that a determination can be made.

  2. If received date as figured above is different than the date on CC TXMOD you must manually adjust the FTF Penalty.

    Reminder:

    When Adjusting these accounts you must input the correct received date in the REQ54 adjustment screen by entering the correct date in the Ret Proc Date field.

  3. If a partnership terminates before the end of the tax year, Form 1065 must be filed for the short period. The short period consists of the period from the beginning of the tax year through the date of termination. Therefore, the return is due the 15th day of the third month following the termination. If more time is needed to file, the Form 7004 must be filed by the short period return due date (the 15th day of the third month following the date of termination).

  4. If an Form 1120–S is filing a short period return, it must filed by the 15th day of the 3rd month following the end of the short tax year. A dissolving corporation is required to file a return for the short period from the first day of its normal accounting period to the date of dissolution. The return is due the 15th day of the 3rd month following the close of the short tax year.

Specific Review Procedures for Key 53
  1. Refer to the Key 53 Decision Table below.:

    IF THEN
    The EIN and/or tax period are incorrect and the tax return is not available, check BRTVU for the number of partners Decide if the return needs to be reprocessed. If so, follow the reprocessing returns procedures. IRM 3.14.2.7.18 (Penalty must be abated on CC REQ54).
    The number of partners transcribed is incorrect (compare the number of partners on the notice with the number on the return)

    Note:

    If the return is not available for partner verification, check BRTVU for number of partners on previous tax years.

    Abate or adjust the penalty (CC REQ54, Blocking Series 00, TC 161 or TC 160, Hold Code 3) based on the penalty computation using the correct number of partners. Void or retype the notice, as applicable.
    The postmark is timely for the Return Due Date or for a posted extension Abate the TC 166 penalty and void the notice for Key 53.
    A payment(s) or refundable credit is on the module or in the payment tab area of OLNR for notice generating from Form 1120-S
    1. Retype CP162 and add the total payment amount to the LESS Penalty Paid Field. Change MIC Code to 00.

    2. Void any additional current cycle notices that are selected for the same EIN, MFT and Tax period. (They will be in the same batch.)

    The return was filed by an extended due date and the extension has posted on an open tax module (no TC 150) Transfer the extension to the notice module using CC REQ77. Void CP 162. Input TC 290 .00, appropriate Blocking Series, Hold Code 3 to suppress the adjustment notice.
    Form 1065 is received by the short period extended due date, (the 15th day of the third month following the date of termination) Abate the penalty and void CP 162.
    Form 1120–S is received by the short period extended due date (third month following the date of termination) Abate the penalty and void CP 162.
    The extension was processed to an incorrect tax period (prior year end)
    • To determine timeliness of the extension, use Julian date of TC 460 and/or TC 620.

    • If the Julian date makes the extension timely filed, input TC 460 using REQ77

    • Void CP 162

    • If the Julian date doesn’t exist, compare TC 620 and TC 460 to determine timeliness.

    Note:

    If Form 1065 or Form 1120-S is filing a short period return, it must be filed by the Return Due Date of short tax year.

    Reminder:

    Indicate on CC REQ54 in Remarks field that the penalty is being abated based on a timely filed extension for a short period return.

Specific Review Procedures for Key 14
  1. Refer to the Key 14 Decision Table below. If the pending extension is timely, compare the Return Received Date with the extended RDD:

    IF THEN
    The return was timely filed for the extended Return Due Date The TC 166 will automatically abate when the extension posts.
    • Void CP 162 and use Local Control File to stop the adjustment notice.

    • If after LCF cutoff, apply Label 19 CP 162.

Specific Review Procedures for Key 32
  1. Ensure the number of partners is entered correctly.

  2. Anytime the number of partners appears to be large, but the return is not available for partner verification, check CC BRTVU for the previous year's number of partners. If the number of partners differs greatly, or if a previous year return is not on CC BRTVU, input CC STAUP and order the return.

    Caution:

    The Date business started may be entered incorrectly as the number of partners. Watch for this situation.

  3. Refer to the Key 32 Decision Table below.

    If Then
    The correct number of partners is less than 100 and a TC 166 has not posted Abate TC 246 and void CP 162.
    The correct number of partners is less than 100 and a TC 166 has posted Abate TC 246 with Reason Code 688. Decide the correct amount of late filing penalty (TC 166) and adjust or abate. Retype CP 162 if adjusting, void if abating.

    Note:

    To avoid an unpostable condition, abate the TC 246 with Reason Code 688 on a REQ54. Input a second REQ54 to adjust the TC 166, using a Posting Delay Code of 1.

    The EIN and/or tax period are incorrect and the tax return is not available, check BRTVU for the number of partners Decide if the return needs to be reprocessed. If so, follow the reprocessing returns procedures. IRM 3.14.2.7.18 (Penalty must be abated on CC REQ54).
    The number of partners transcribed is incorrect (compare the number of partners on the notice with the number on the return)

    Note:

    If the return is not available for partner verification, check BRTVU for number of partners on previous tax years.

    Abate or adjust the penalty (CC REQ54, Blocking Series 00, TC 161 or TC 160, Hold Code 3) based on the penalty computation using the correct number of partners. Void or retype the notice, as applicable.
    The postmark is timely for the Return Due Date or for a posted extension Abate the TC 166 penalty and void the notice.
  4. If the partnership is erroneously assessed a penalty for failure to file electronically due to a service center error, (i.e., incorrect number of partners), abate TC 246 on CC REQ54 using:

    Key 32 (Form 1065 Failure to File ELF Penalty)
    TC 290 .00
    Blocking Series (BS) - 17
    Hold Code 3
    Reference Code 688 (for the amount of the penalty being abated with a minus sign)
    RC 045 in the fourth position
Reasonable Cause Requests for Form 1065
  1. All Reasonable Cause (RC) requests for penalty abatement on partnership returns with over 100 partners are processed at the Ogden Campus.

    1. If there is a "1382C letter" action trail in the left margin of the return or CCC "R" is present on the return, Code & Edit has already addressed the Reasonable Cause statement and no further action is required.

    2. If there is no indication that Code & Edit has addressed the Reasonable Cause statement, it must be either faxed or routed to Accounts Management. Either method is acceptable. See below.

    To fax to Accounts Management
    • Fax a copy of the request and a copy of the first page of the tax return to the Ogden Campus at 801-620-7622

    • Input CC STAUP for 9 cycles and mail the notice

    • An Interim letter is required if more than 25 days have elapsed from the return received date

    To route to Accounts Management
    • Photocopy the first page of the return and the original Reasonable Cause Statement letter (Notate "photocopy" )

    • Attach the photocopy of the letter to the original return

    • Route original letter and photocopy of the first page of the return to Ogden Accounts Management at:
      Ogden Service Center
      1973 N. Rulon White Blvd
      Ogden, UT 84404
      M/S 6552

    • Input CC STAUP for 9 cycles and mail the notice

    • An Interim letter is required if more than 25 days have elapsed from the return received date

Reviewing Notices With Remittance Processing System (RPS) Indicators (Key 02)

  1. An RPS coded return (TC 150) posts to the Master File and the corresponding RPS TC 610 or TC 670 payment transaction is not present on the module.

  2. An RPS timely coded return (TC 150) posts and there is a corresponding RPS TC 610 or TC 670 payment transaction with a delinquent service center received date.

  3. RPS notices are designated as selection Key 02 or by the literal RPS-Discrepancy or the Appended Data page. Review all notices with the RPS indicator.

  4. Follow General Review Procedures. See General Review Procedures at IRM 3.14.2.7.1.

  5. To locate the missing TC 610 or TC 670 payment:

    1. Check the NRPS Appended Data for a pending, unpostable, or reject transaction.

    2. Check the NRPS tax modules and the tax modules on IDRS.

      IF THEN
      The payment posted to an incorrect tax period Transfer the payment. Use appropriate notice disposition. Refer to IRM 3.14.2.7.23
      The payment is found on another EIN (look for any cross-referenced data on the NRPS package tax modules) and research CC NAMEE ON IDRS Transfer the payment. Use appropriate notice disposition. Refer to IRM 3.14.2.7.23
    3. When researching IDRS:

      Research CC SUMRY, TXMOD, or BMFOL
      Input CC UPTIN to check the Generalized Unpostable Framework (GUF)
      If an open case is found, use UPCASZ to notify Unpostables of the correct information
      Check CC ENMOD for a campus Reject transaction
      If found, research CC ERINV to decide if the case is still open
      If the case is not open, the response will not be in ERS
      For open cases, contact the Rejects Function for payment Disposition
      Decide the notice disposition on this information
  6. The TC 610 payment can be posted to the notice module but may have an incorrect date. The payment may have been delayed in processing or batched incorrectly. The payment date may need to be changed.

    1. Verify the return is timely.

    2. To correct the payment date, input CC ADD24 and use the same tax period on the debit and credit sides.

      Input the corrected transaction date on the credit side:
      Use an Override Date Indicator 2 on both sides
      Input a TC 570 on the credit side
  7. If the payment cannot be located or transferred, mail the notice.

    Note:

    In cases where the TC 610 cannot be found, the returns could have been blocked incorrectly, causing the RPS indicator to generate in error.

  8. Overpaid RPS Notices-Three different conditions are possible with overpaid RPS notices:

    1. Multiple TC 610s posted on the notice module (R– Freeze). Research the excess payment through local ISRP procedures.

    2. The posted TC 610 does not match the DLN of the TC 150 (R– Freeze). Research any TC 610 payment with a DLN different from the TC 150. The payment may belong to another taxpayer.

    3. The TC 610 payment is missing on the module. Other payments posting to the module may have created the overpayment. Look for the missing TC 610 payment and research any extra payments on the module.

      IF THEN
      The TC 610 document is available, Follow instructions in IRM 3.14.2.7.4.2. (Slipped Blocks and Mixed Data Blocks) or perform additional research.
      The payment belongs to another taxpayer, Transfer the payment to the correct account.
      The payment belongs on the EIN where posted, Follow the taxpayer's intent. The payment may be intended for a subsequent period.
  9. For pending payments, credit transfers, or changing the payment date, follow the notice disposition instructions. See IRM 3.14.2.7.23

Refund Transcripts

  1. Refund Transcripts are reviewed to decide if the overpayment must be allowed to refund. The transcripts are selected for NRPS and reviewed by key. Disposition TI is only to be used if Notice Review intercepts the refund. There are four types of Refund Transcripts:

    • Million Dollar

    • Highly Questionable

    • Back-Up Withholding

    • Interest Refund

  2. Allowable dispositions for refund transcripts are:

    • T (Transcript) - Use this disposition to mark the account as a transcript and no other updates are needed.

    • TI (Transcript/Intercept) - Use this disposition to mark the account as a transcript and you were required to intercept the refund

      Note:

      Use the T disposition if another area input the Refund Delete.

  3. CPREF shown on CC TXMOD indicates Refund Transcript. Refund Transcripts generate from the same file as CP notices.

  4. The transcript is issued when:

    1. The refund amount includes interest of more than $50.00 on a module that contains a TC 766

    2. The refund amount is $500.00 or more for Form 941 (MFT 01), or $1000 or more on all other forms

    3. The amount of the overpayment by the taxpayer differs by more than $100.

  5. Refund transcripts are numerically identified on NRPS as CPs. However, a CP is not issued. The selection key criteria decides the numerical CP as follows:

    • CP 380 - Refund of 1 Million dollars or more

    • CP 384 - Refund Transcript

    • CP 386 - Highly Questionable Refund

    • CP 388 - Refund Interest Transcript

  6. TC 570 blocking series 55555 is input by Frivolous Return Program (FRP) on BMF accounts to stop frivolous BMF refunds. Do not release these refunds.

  7. Million Dollar NRPS Transcript (CP 380)

    1. Generates if the module balance plus computed interest is a credit of 1 million dollars or more.

    2. The select key for Million Dollar NRPS Transcripts is 020.

    3. These transcripts are the responsibility of the Team Leads of NR to review.

    4. The NR Team Lead will contact the employee identified as having control over the account.
      This contact should be done as an E-mail notification that this account has an X- Freeze posted that is 15 cycles old.
      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 $10 million dollars or more will not generate a TC 846. A manual refund is required if the refund must be allowed. See IRM 3.14.2.7.1.5 for more information. Refunds over $10 million must be reviewed by the leads.

      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.
  8. HQ (Highly Questionable) Refund NRPS Transcript (CP 386)

    1. Generates for MFT 01 when the refund is more than $10,000.00 and the total tax settlement is less than 10% of the refund amount.

    2. The select key for HQ NRPS Transcript is 021.

    3. If criteria exists to generate a CP 112, the HQ Transcript will be suppressed and a CP 112 will generate with select key 021.

  9. Refund Interest Transcript (CP 388)

    1. Generates for Form 1120 if TC 846 includes credit interest of $50.00 or more in the cycle the return posts and no other refund transcript is being issued in the same cycle.

    2. The select key for Refund Interest Transcripts is 022.

    3. Credit interest is allowed on overpayments if a refund is not issued on or before 45 days (180 days on any overpayment resulting from tax deducted and withheld under Chapter 3 or Chapter 4) from the later of :

      Credit Interest Allowed:
      The Return Due 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 Return Processable Date (date required information is received if the return is received in an unprocessable form)

      Note:

      For BMF, the date of the refund check is the 23C Date of the TC 846 plus 1 calendar date. The date of the direct deposit is the 23C Date of the TC 846 minus 6 calendar days. The date of the refund check for a manual refund is the date certified by Accounting for allowing the refund.

    4. No interest is allowed on refunds if the refund is issued within 45/180 days of the dates outlined in the table above.

    5. These transcripts must be reviewed to decide if a manual refund will be issued to meet the interest free period . (See IRM 3.14.2.6.2.2.3, Computing Credit Interest on Manual Refunds.)

    6. If it is possible to meet the interest free period, use the following steps:

      Decision Table for 45-Day and 180-Day Interest Free Period:
      Count two work days past the current date on the calender
      Subtract 45 days (180 days for Chapter 3 or Chapter 4 withholding) from the Julian date (located on the bottom left hand side of the calendar)

      Note:

      For returns received or due on that day and later, it is still possible to prepare an interest free manual refund

    7. Prepare Form 5792 for the manual refund. See Exhibit 3.14.2-7

    8. Input CC NOREF to delete the TC 846 on the module and complete the Manual Refund procedures in IRM 3.14.2.6.2.2.

  10. NRPS Refund Transcripts (CP 384) selection keys are:

    • Key 024 - selected if there is a pending credit transaction

    • Key 025 - selected if a TC 670 is causing the refund

    • Key 026 - selected if there is refundable Credit (TC 766) posted of $10.00 or more

    • Key 027 - selected when no other select key criteria is met

  11. Allow the Refund under any of the following circumstances:

    1. The taxpayer requested the credit to be refunded.

    2. The refund is caused by an action not requiring verification, such as an abatement of interest or penalty, or a valid Doc Code 24 or 34 credit transfer.

    3. TC 700 or TC 706 posted to the module and a subsequent TC 670 is causing the refund.

    4. Notice history indicates a bill was issued on the account for the refunding amount, but the module has since been satisfied.

      Note:

      Ensure the refunding amount is not a TC 650 or TC 660 that posted to the incorrect tax period.

    5. The module has two 670 payments for the total tax amount and one is Doc Code 18. The taxpayer has paid the balance due twice.

    6. The module has multiple TC 670 payments for the same amount as part of an installment agreement and the module has been satisfied.

    7. Over-estimated tentative tax was paid with a request for an Extension of Time to File (TCs 620 or 670 obviously submitted as an extension payment) for Forms 1120, 1041, or 990 Series.

      Note:

      The amount must be reasonable and the extension payment date applicable for the module. The TC 620 may belong on the subsequent year tax module.

    8. TC 29X adjustment or TC 30X Examination Tax Adjustment created the refund.

    9. TC 571 or TC 290 .00 has released the credit freeze.

    10. Claimed TC 650 or TC 660 payments are posted and a subsequent TC 610 for the amount of tax due posts to the module.

  12. Delete the refund under the following circumstances:

    1. Payment(s) that appear to be misapplied. Determine taxpayer intent by evaluating payment patterns, amount claimed on return, missing payments on other modules, and liability schedule(s). Use research tools such as RTR, if available, to verify payment(s) .

    2. Unclaimed payments are refunding on another tax period. The following situations apply:

      Unclaimed Payment Requirements
      TC 620 (payment with extension) posted to the incorrect tax year -- transfer to correct year ending
      TC 660 or TC 650 posts to the incorrect tax period or year (per date and amount of payment) -- move to the appropriate tax period or year or MFT
      The overpayment is either claimed, or the tax due per taxpayer, or the amount on a balance due notice -- payment should be transferred
      The overpayment is refunding from MFT 67 (Form 990) and is not a result of a payment made for a penalty that was subsequently abated -- transfer the credit to MFT 34 or 44 if filing requirements, previous filing history, or payment history indicates payment will be transferred
    3. A TC 610 payment substantially overpays the module and does not match the taxpayer's figures. Complete the following:

      TC 610 Over Pays Module
      Check other modules on the taxpayer's account for debit balances (with or without penalty and interest) that match the overpayment

      Note:

      Taxpayer may submit one payment intended for tax on two or more modules. If this is the case, then move the payment(s) to the correct module(s).

      Check account for a pending debit transaction as the payment may belong there. If so, move the payment.
      Check for any indication that the refunding TC 610 is actually a subsequent year ES payment (i.e., one-fourth of the tax liability). If so, move the payment.
      Research the TC 610 payment to ensure the payment was credited to the correct taxpayer and/or tax period. If research determines the payment was credited to the incorrect taxpayer and/or tax period then move the payment to the correct taxpayer and/or tax period.
    4. If unclaimed payments are refunding and the reason for the payment cannot be determined.

      Exception:

      TC 670 with Designated Payment Codes 05, 07, or 15 do not require verification. These refunds should not be deleted. These payments are in response to levies/liens. Transcripts are generated and resolved by the Collection Function for these payments.

    5. The overpayment is the amount of TC 670 payment(s) and the following apply:
      The taxpayer did not previously receive a balance due notice for the amount;
      RTR research and/or balance(s) due on other module(s) indicate the payment is misapplied.

      Unclaimed Refunding Payments
      Research the payment, and delete the refund if the required research has not been received before the CC NOREF delete deadline.
      Check the notice history for a CP 207, and CC FTDPN for an indication of a potential FTD penalty

      Note:

      TC 670 may be in response of the CP 207. (The FTD penalty will assess fifteen weeks after the CP 207 generates unless a TC 180 is input by the Accounts Management (Adjustments) Function).

      Note:

      If possible research an Electronic Federal Tax Payments System (EFTPS) payment only if it is extremely out-of-line or if the taxpayer has not previously made EFTPS payments. Transfer to a subsequent module or correct MFT if possible. If a determination cannot be made contact with the taxpayer may be necessary to verify the payment.

    6. The refund is due to erroneous IRS math error condition, duplicate posting of payment (same date and amount), or decimal point error (such as a TC 150 for $20.00 instead of $2,000.00). Make the necessary correction to resolve the error condition(s). Input adjustment using REQ54.

    7. The wrong line entry created erroneous credits (such as ES payments entered as withholding or as refundable credits). Watch for double credit situations. Make the necessary correction to resolve the erroneous credit(s). Input adjustment using REQ54.

    8. The credit elect intended for the next period is refunding.

    9. TC 976 or TC 971 (AC 010) is pending to the module.

    10. A pending or unpostable Transaction Code would reduce the refunding credit or leave the module in debit status.

    11. A TC 570 is pending.

      Note:

      If CP 260 or CP 210/220 will generate before the TC 841 posts use Local Control File to intercept the notice.

  13. If deleting a refund to transfer a credit from the refunding module will create a balance due, and:

    IF THEN
    The taxpayer was not issued a previous settlement notice Type the appropriate settlement notice. Input TC 570 on debit side of credit transfer to suppress the CP 260 or input CC REQ54, TC 290 .00, Hold Code 3, to suppress an Adjustment notice. (See note below)
    The taxpayer was issued a previous notice for the same balance due amount Input TC 570 on debit side of credit transfer to suppress the CP 260 or input CC REQ54, TC 290 .00, Hold Code 3, to suppress an Adjustment notice.
    The taxpayer was issued previous notices for amounts other than the resulting balance due or previous refunds Allow the CP 260 or Adjustment notice to generate. Use the appropriate posting delay code on the credit transfer.

    Note:

    Since penalties may be assessed when timely credit is transferred out of the module, Local Control File may be used to obtain the CP 260 or Adjustment notice. This will ensure the correct penalty amounts are included on a typed settlement notice.

Required Payment or Refund Under Section 7519 - Form 8752

  1. Partnerships and S-Corporations file Form 8752 when they make the Section 444 election to file their income tax return on a fiscal year basis instead of the required calendar year. The Form 8752 is used to remit the required payment intended to represent the value of the tax deferral using a taxable year other than the required calendar year.

  2. Taxpayers electing Section 444 are not required to remit a payment until they incur a liability in excess of $500.00. Later, the taxpayer must make their required payment even when the amount is below the $500.00 threshold.

  3. The return will post to the Business Master File (BMF) as MFT 15, Document Code 23 and Tax Class 2. See the Form 8752 instructions for specific line by line computation instruction. All Form 8752s are selected by NRPS using Select Key 75.

    • Form 8752 is an annual return due on or before May 15th of each year for which the election is in effect

    • The last reporting period for the required payment on Form 720 was tax period March 1990

    • The first reporting period on Form 8752 is for period ending December 31, 1990

    • Personal Service Corporations do not file Form 8752

  4. IRC section 6651 penalties (failure to file and pay) will not be applied to Form 8752 MFT 15 underpayments.

  5. The required payment (line 9b) will post as the TC 150 amount. The system will credit the payment and automatically roll that amount forward to the following year’s account and post the credit with a TC 766; there will not be a corresponding debit for that amount. When the return posts, one of three things can occur:

    1. TC 150 $5,000, TC 766 $8,000 (excess credit) the system will roll over $5,000 and issue a refund of $3,000.

    2. TC 150 $8,000, TC 766 $5,000 (Balance due) if paid with the return, TC 610 for $3,000 and the system will roll over a credit of $8,000. If not paid with the return, a Balance Due Notice for $3,000 plus penalty and interest will be issued to the taxpayer. The system will roll over the credit of $5,000 and when paid, the system will roll over an additional $3,000.

    3. TC 150 $5,000, TC 766 $5,000 (account in balance); The system will roll over a credit of $5,000.

  6. Review Instructions:

    1. Follow general review procedures. Verify the correct tax period. The tax period is the election year on the Form 8752. If it is incorrect, then route the case to Accounts Management (Adjustments) with a Form 3465 and void the notice.

    2. Search for a missing TC 610 or TC 670 payment on a balance due case. If found on another module, transfer the payment to the notice module. Void or retype the notice. An adjustment notice will not generate from the 10% penalty (TC 246) recomputation. In addition:
      • Void the notice if the tax will be full paid after transferring the payment
      • Retype the notice if the tax will be only partially paid
      • Refigure the 10% penalty on the new underpaid tax amount

    3. If the missing payment posted on another MFT 15 module that has a return, route the case to the Accounts Management (Adjustments) Function. Void the notice.

    4. If the TC 766 amount does not match Line 10 of Form 8752, the fault lies with the prior year return. Mail the notice .

    5. The TC 150 can be adjusted. If line 9b was transcribed in error, input a TC 290 or TC 291 to adjust the TC 150. Void or retype the notice.

  7. The IRS will issue a refund after April 15 and not later than the 90th day after the claim is filed. The taxpayer must file a final Form 8752 when terminating the Section 444 Election.

    1. The taxpayer should check box c on Form 8752, or write at the top of the form Termination of Section 444 Election.

    2. Credit interest will not be added to any refund made under this Section.

  8. Do not manually adjust the TC 76X credit.

    • Programming will prohibit the manual input of a TC 76X

    • The system will automatically adjust the TC 766 credit when the required payment (TC 150) is adjusted

    • The computer will accept a TC 290 or TC 291.

  9. Section 7519 required payments will be treated as deposits rather than tax for the purpose of the statute of limitations on credits or refunds.

Adjustment Notices

  1. Adjustment Notices are CP 210, CP 220, CP 225 and CP 260.

  2. Adjustment Notices generate to tell the taxpayer of adjustments or credit transfers made on the account. For example:

    • Examination (Doc Code 47)

    • Data Processing (DP) (Doc Code 54)

    • Changes to penalties, Failure to File (FTF - TC 166/167), Failure to Pay - decrease only (FTP - TC 277), Failure to Deposit (FTD - TC 186/187), Estimated Tax Penalty (ES - TC 176/177)

    • Penalty assessed on an overpaid, non-math error return (CP 210 as first notice)

    • Credit transfer on Doc Code 34 with Correspondence Received Date entered on the credit side of FRM 34 (CP 225)

    • Credit reversal on an overpaid or even balance module resulting in a debit balance of ≡ ≡ ≡ ≡ or more (CP 260)

  3. To view an exhibit of the above CPs, refer to The Office of Taxpayer Correspondence web site at http://gatekeeper.web.irs.gov/new_default.aspx.

  4. An adjustment notice will not generate with posting of TC 290 .00 without a Credit Transaction Code.

  5. Notice Review TEs are responsible for determining the effects any adjustments or credit transfers will have on the module. Proper use of Hold Codes, Local Control File, TC 570, and unpostable bypass indicators is essential for preventing incorrect adjustment notices. When inputting a credit transfer follow instructions in IRM 3.14.2.7.20.

CP 210 and CP 220
  1. Notice Elements of CP 210 -- Account adjustment notice.

    1. The adjustment results in an overpayment, an even balance, or a balance due of less than ≡ ≡ ≡ (≡ ≡ ≡ for MFT 61), or the adjustment results in a balance due of ≡ ≡ ≡ or more (≡ ≡ for MFT 61), and the module was in TDA Status (22, 24, or 26) before the adjustment for the conditions listed in b.

    2. The adjustment is a change to tax (DP or Exam) or credits (TCs 637, 766, or TC 767), penalties (FTF, FTP (decrease only), FTD or ES), or Civil Penalty (TC 240 with Reference Numbers 680-682, 686 for MFTs 05, 51, and 52).

    Reminder:

    When an account has more than one pending payment (such as TCs 610, 620, 640, 650, 660, 670, 700 or 710) that are resequencing (RS) or teping (TEP) or adjustment pending (AP) or corrected unpostable (CU) or pending transaction (PN), then label the notice with the appropriate label and mail out the notice.

  2. Notice Elements of CP 220 -- Account adjustment notice.

    1. The adjustment results in a balance due of ≡ ≡ ≡ or more (≡ ≡ for MFT 61) and the module was not in TDA Status (22, 24, or 26) before the adjustment for the conditions listed in (b).

    2. The adjustment is a change to tax (DP or Exam) or credits (TCs 637, 766, or 767), penalties (FTF, FTP (decrease only), FTD or ES), or Civil Penalty (TC 240 with Reference Numbers 680-682 for MFTs 05, 51, and 52).

      Note:

      There is no minimum money amount tolerance for the notices. If the balance due is less than ≡ ≡ ≡ ≡ , the balance due amount will print as none.

  3. An adjustment notice will have the DLN of the TC 150 if it generated for the recomputation of FTF (TC 166), FTP (TC 276 decrease only), ES (TC 176), or FTD (TC 186) penalties to a timely credit or extension posting after the notice module has settled or at settlement if the notice module is overpaid with no math error.

  4. The notice will have an adjustment DLN only if generated by a Doc Code 54 or 47 adjustment action. The 4th and 5th digits of the DLN will carry the Doc Code of the adjustment document. Doc Code 54 indicates an adjustment input on CC REQ54. Doc Code 47 indicates an adjustment input on CC REQ47 by Examination.

  5. CP 210 and CP 220 Review Procedures

    1. Review Adjustment Notices on IDRS to accurately decide notice disposition. Ensure the action creating the adjustment notice:
      • Is not a duplicate of a previously posted credit or adjustment
      • Is a valid credit and has not unposted on the debit side of the credit transfer

    2. Reviewing a notice generated by a Doc Code 47 or 54.

      If Then
      The validity of the assessment or abatement is an unreasonable amount (ie, ≡ ≡ ≡ ≡ ≡ ≡ ) or a duplicate Compare the adjustment item with the source document. Verify the adjustment was input correctly.
      The adjustment appears to be incorrect Contact the originator (lead or manager if originator cannot be contacted) for advice in taking corrective action such as notice disposition or deleting refund.
      The originator or lead or manager cannot be contacted Take case to Notice Review lead to decide possible corrective action.

      Note:

      Verification of the adjustment action is required only if the source document is provided with the NRPS package.

    3. If the notice module has a TC 300 .00 adjustment, look for a refunding TC 640 (advance payment of decided deficiency) on the module. If the TC 640 is refunding, check the Disposal Code on CC AMDISA.

      If Then
      Disposal Code is 01 or 02 Allow the refund and mail the notice.
      Disposal Code is other than 01 or 02 Delete the refund and contact Exam for notice disposition.
  6. CP 210 and CP 220 Notice Disposition for Doc Code 47 or 54 Transactions .

    1. Notice disposition for pending Doc Code 47 or 54 tax decrease or credit increase transaction:

      IF THE PENDING IS A TAX DECREASE OR CREDIT INCREASE Then
      Input with Hold Code 0 or Hold Code 1 A subsequent notice will generate. Apply Label #1.
      Input with Hold Code 2 and Doc Code 24 or 34 will post in the same cycle A subsequent notice will generate. Apply Label #1.
      Input with Hold Code 2 (no Doc Code 24 or 34 transfer) or Hold Code 4 A subsequent notice is suppressed and credit is held. Retype the notice.
      Input with Hold Code 3 A subsequent notice is suppressed. Retype Notice.
    2. Notice disposition for pending Doc Code 47 or 54 tax increase or credit decrease transaction: (See below)

      If the pending transaction was input with Hold Code 0, 1, or 2 and Doc Code 24 or 34 will post in the same cycle, a subsequent notice WILL generate.

      If Account IS Refunding (pending will reduce the refund)
      1. Delete refund.
      2. Retype notice to remove credit interest (if on notice).
      3. Apply Label #1 to selected notice
      If Account is NOT Refunding
      1. Apply Label #1 to selected notice.

      If the pending Transaction was input with Hold Code 2 and Doc Code 24 or 34 and will not post in the same cycle, or input with Hold code 3 or 4, a subsequent notice WILL NOT generate.

      If Account IS Refunding
      1. Delete refund.
      2. If the correct amounts can be determined prior to the posting of a TC 841, retype the notice.
      3. If the correct amounts cannot be determined prior to the posting of a TC 841, hold the notice.
      1. After TC 841 posts back, retype notice to reflect correct module information.

      If Account is NOT Refunding (regardless of module balance)
      1. Retype the notice to reflect correct module balance.
    3. Notice disposition for Resequencing (RS) and Unpostable (UP) Doc Code 47 or 54 transaction.

      If Then
      The transaction is resequencing (RS) The transaction will post unless conditions on the module or the transaction data will cause it to unpost. Decide notice disposition based on Hold Code per previous chart.
      The transaction is unpostable (UP) Decide if transaction will post. If determination cannot be made, print the notice. If determination is made that transaction will post, decide notice disposition based on the Hold Code input per b above.

      Example:

      A Doc Code 47 or 54 pending transaction with an L Freeze on the module will unpost without priority code 1.

  7. Reviewing CP 210 and CP 220 with a Pending Credit or Debit Transaction.

    1. If review of the module indicates pending credits or debits will post to the module, the transaction may result in systemic recomputation of penalty and/or interest. Recomputation of interest (TC 196) does not generate an adjustment notice. Recomputation of penalties will result in the issuance of a CP 210 or 220:

      If Then
      TC 166 (FTF Penalty) CC PIFTF recomputes
      TC 176 (ES Penalty) CC PIEST recomputes
      TC 186 (FTD Penalty) CC PIFTD recomputes
      TC 276 (Paying Late) CC INTST decrease only

      Note:

      CC INTST does not provide correct computation of FTP or Interest if pending payment on IDRS is Unpostable (UP), Resequencing (RS), or Tepping (TP).

    2. The penalty period for FTP (TC 276) is calculated from the date the penalty period begins (the Return Due Date) to the same date in each following month. TC 276 will not recompute if the payment is late and dated within the same monthly period as the 23C Date of the notice. If the return is due the 15th of the month, the penalty will not recompute until the 15th of the month after the 23C Date of the notice.

      Note:

      If the payment is timely (≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ), the FTP will recompute and generate an adjustment notice even if the payment is dated within the same monthly period as the 23C Date of the notice.

    3. If timely credit is removed from a module, an FTF or FTD penalty may assess on the module. See below.

      If Then
      CC FTDPN indicates penalty TC 186 will assess and an adjustment notice will generate.
      CC PIFTF indicates penalty TC 166 will assess and an adjustment notice will generate.
  8. CP 210 and CP 220 Notice Disposition for Pending Credit Transactions.

    1. Notice disposition for pending (PN, RS, TP or UP) credit transactions such as TCs 610, 640, 650, 660, 670, 700 or 710:

      If Then
      The notice module is overpaid, a refund will issue, and no subsequent notice will generate Apply Label #6.
      The notice module is balance due, the balance due will be reduced, and no subsequent notice will generate Apply Label #3. See caution below.
      The notice module is balance due or even balance, changes to overpaid, and no subsequent notice will generate Apply Label #4. See caution below.
      A subsequent notice will generate due to recomputation of penalty (FTF - TC 166, ES - TC 176, FTD - TC 186, or FTD - TC 276 (decrease only) Apply Label #2.

      Caution:

      INTST does not reflect recomputation of CCs PIFTD, PIFTF, or PIEST. If FTD penalty (TC 186), FTF (TC 166), or ES Penalty (TC 176) is on the module and timely credits are applied, CC INTST will not reflect any changes to the penalties in the balance due amount.

    2. Multiple pending credit transactions on the notice module may post in different cycles. Decide the cycle the credit will post and complete notice disposition:

      If Then
      A subsequent notice will generate Apply Label #2; Address only the pending credits that will be reflected in the adjustment on the subsequent notice.
      A subsequent notice will not generate Apply applicable label per instructions in (8) a above. Address all pending credits.

      Note:

      Check CC BMFOLT for posting of credits in the subsequent cycle. The cycle indicated on the pending transaction on CC TXMOD is not always the cycle the credit posts in. The credit often posts in an earlier cycle.

    3. If credit is unpostable, decide if the credit will post. If determination cannot be made, do not reflect the credit on the notice.

    4. If the PN (pending), RS (resequencing) or TP (tepping) credit is listed on the NRPS contents page but not on BMFOLT or TXMOD, decide if the credit will post to the module. If determination cannot be made, do not reflect the credit on the notice.

      Note:

      DLN of payment will indicate campus location of payment.

    5. CC INTST does not compute correct module information if the pending transaction is a RS, TP or UP. If the payment belongs on the module and a correct balance is required on the label:

      If Then
      Payment is RS or TP and reflected on CC BMFOLT Use CC RECON to bring the information to TXMOD and overlay with CC INTST to view the updated balance, then enter CC COMPA.
      Payment is RS or TP but not reflected on CC BMFOLT Compute correct balance using CCs COMPA and COMPAF.
      Payment is UP and belongs on the module Compute correct balance using CCs COMPA and COMPAF.
    6. Ensure the transaction creating the adjustment notice is correct and valid. The credit transfer may be a duplicate transaction. If TC 700 or TC 710, ensure the debit side of the transfer is not unpostable and the credit is available for transfer.

    7. If the transaction has unposted on the debit side do not reverse the transaction. Unpostables will reverse the credit side of the transaction in a future cycle. Void the adjustment notice and request and void any subsequent notice utilizing LCF.

      Example:

      TC 710 posts to the notice module but has unposted on the debit side. Unpostables will reverse the TC 710 in a future cycle. Any previous penalty decrease will reverse and generate a subsequent notice.

  9. CP 210 and CP 220 Notice Disposition for Pending Debit Transactions

    1. Notice disposition for pending (PN, RS, TP or UP) debit transactions such as TCs 612, 642, 652, 662, 672, 701 or 702):

      If Then
      The notice module is overpaid and a subsequent notice will generate and the module balance changes to balance due. 1. Delete the refund if applicable.
      2. Request the subsequent notice using LCF.
      3. Retype the subsequent notice to combine the information on one notice after all transactions have posted (including TC 841).
      4.) Remove any incorrect credit interest
      5. Void the other adjustment notice.
      The notice module is overpaid and a subsequent notice will not generate and the balance will change to balance due. 1. Delete the refund if applicable.
      2. Retype the notice after all transactions have posted. You may have to remove credit interest
      The notice module is overpaid and the module balance will remain in credit or even balance. 1. Delete the refund if applicable.
      2. Apply Label #7.
      3. Retype to remove credit interest included on the notice if applicable.

      Note:

      Void the notice (rather than label) if the pending transactions is a reversal of the transaction that generated the adjustment notice. Pull and void the subsequent notice.

      The notice module is balance due and a subsequent notice will generate. 1. Request subsequent notice utilizing LCF.
      2. Retype the subsequent notice to combine the information on one notice.
      3. Void the other notice.
      The notice module is balance due and a subsequent notice will not generate. Retype the notice.
      A subsequent notice will generate and the notice is reviewed after LCF cutoff and the notice requires retyping (per above procedures). 1. Delete the refund if applicable.
      2. Retype the notice after all transactions have posted.
      3. Apply label #13.
      The pending transaction will transfer the credit to another EIN. Follow applicable instructions above, except in all instances, retype (do not label) the notice.
      You are reviewing a CP 210 and, your module contains two different credits that are PN on an overpaid module and they are being transferred to two different modules with the same EIN Apply label # 21
    2. Notice Disposition for Pending Debit Transactions -- (PN, RS, or UP) TC 820 or 830. If the pending transaction is a TC 820 or TC 830, the transaction will unpost if the overpayment is refunding or the module balance is less than the transaction amount (since the credit is not available to be transferred). See below.

      If Then
      TC 820 or TC 830 is correct and is pending on an overpaid, non-refunding module and the full credit is available. 1. Retype to remove credit interest included on the notice if applicable.
      2. Apply Label #7.
      3. If credit will remain on the account after the TC 820/830 posts, release the -R Freeze with TC 571 or TC 290 .00 Hold Code 3, Posting Delay Code 1.

      Note:

      If the full amount of credit is not available, the transaction will unpost.

      TC 820 or TC 830 transaction must be reinput if credit transfer has not been corrected and the module is refunding.

      Note:

      If unpostable record is open on CC UPCASZ leave history item if you are inputting the credit transfer.

      1. Delete the refund.
      2. Apply Label #7.
      3. Retype to remove credit interest included on the notice if applicable.

      Reminder:

      Notice Review Tax Examiner is responsible for notices generating on the credit side of the transactions.


      4. Close case control.

      Note:

      Do not input 290 .00 on account. Doc Code 24/48 will release the P- Freeze when the transaction posts.

      The TC 820 or TC 830 transaction has been reinput already and the module is refunding. 1. Delete the refund.
      2. Apply Label #7.
      3. Retype to remove credit interest included on the notice if applicable.
      4. Close case control.

      Note:

      Do not input 290 .00 on account. Doc Code 24/48 will release the P- Freeze when the transaction posts.

      TC 820 or TC 830 is incorrect due to insufficient credit available Follow above instructions as applicable and reinput transaction with correct amount.

      Note:

      It may be necessary to contact the originating tax examiner to determine if the transaction is valid.

  10. Review all aspects of the CP 210 and CP 220 notice module before voiding. CP 210 or CP 220 can only be voided if:

    1. The original notice was voided (returning to taxpayer's figures)

    2. The original notice was retyped to reflect the information on the adjustment notice or the information on the adjustment notice was previously communicated to the taxpayer

    3. An adjustment notice reflecting the correct module information will be retyped in a subsequent cycle

    4. The Doc Code 47 or 54 is incorrect and subsequent pending transaction will correct the module

    5. The credit transaction that created the notice is invalid and will unpost in a subsequent cycle

    6. A pending transaction on the notice module is a reversal of the adjustment action that created the adjustment notice

      Note:

      If subsequent notice generates, request the notice on LCF and void or retype to exclude incorrect transaction as applicable.

  11. CP 210 and CP 220 cannot be voided if:

    1. The taxpayer has not previously received the information and will not receive the information on a subsequent notice.

    2. If the original Balance Due Notice was voided in error and the subsequent CP 210/220 is selected, release the CP 210/220 with the current notice module information. If the taxpayer contacts Customer Service to inquire why a previous notice was not sent, the Customer Service Representative will be able to read the account history and explain the account activity to the taxpayer.

  12. For Ogden Notice Review only.

    1. In January 2011, the IRS started to use the information submitted on Form 8947 to calculate the annual fee for branded prescription drug (BPD) sales ("the fee"). The fee was imposed by section 9008 of Public Law 111-148 (Patient Protection and Affordable Care Act), as amended by Public Law 111-152 (Health Care and Education Reconciliation Act of 2010) (the “Act”).

    2. Branded prescription drug sales are sales of branded prescription drugs made to specified government programs (or sales due to coverage under the programs). A branded prescription drug is any prescription drug for which an application was submitted under section 505(b) of the Federal Food, Drug, and Cosmetic Act (21 US C 355(b)), or any biological product the license for which was submitted under section 351(a) of the Public Health Service Act (42 US C 262(a)).

    3. Section 9008(b)(4) sets an applicable fee amount for each year, beginning in 2011, that will be allocated among covered entities with aggregate branded prescription drug sales of over $5 million to specified government programs or pursuant to coverage under such programs.

    4. Branded Prescription Drug Fees will always have a tax period ending in August and MFT of 03. Example 03 201108.

    5. They will generally kick out under Key 018, but may be selected by other key selection criteria.

    6. CP 210 or CP 220 will be the only notice generating for these accounts.

      Caution:

      These notices are not to be worked in Notice Review or Large Corp/Technical. Clerical should not batch with the regular cycle work. Do not input dispositions.

CP 225 - Notice of Credit Transfer
  1. CP 225 is issued to tell the taxpayer that a missing payment(s) inquired about either through correspondence or telephone, has been located and applied. It generates if the CORRESP-DT field on FRM 34 is overlaid with a correspondence received date and will not be voided.

    1. There are four versions of CP 225. See below:

      Complete CP 225: 1. Balance Due Generates if no other notice of demand is generated in the same cycle (a CP 210/220).
      • Informs taxpayer of payment(s) located and applied to the requested tax module.

      • Fully explains the balance due (including tax data and penalty information).

      Partial CP 225: 2) No Return Filed - Informs taxpayer that payment(s) was located and applied.
      3) Overpayment - Informs taxpayer that payment(s) was located, applied and the resulting overpayment amount.
      4) Even Balance - Informs the taxpayer that payment(s) was located, applied and account is full paid.
    2. The partial CP 225 and the CPs 210/220 generate in the same cycle.

    3. Use the NRPS package and IDRS to review a partial or a complete CP 225. Ensure the credit transfer creating the CP 225 is valid.

      Note:

      If both CP 225 and CP 210 are selected for review, both notices are to be reviewed. Verify tax period, all credits, tax assessed, prepayments, penalty and interest amounts. Verify balance due, even and overpayment amounts.

    4. Review the CP 225 for accuracy :

      If the CP 225 is Then
      Even balance Verify the validity of the action that settled the account.
      Overpaid Verify that the action is valid and the refund must not be intercepted.
      Balance Due Verify that the action is valid; search for remaining claimed credit(s) that match the balance due. If found, transfer in.

      Note:

      If the credit transfer that settled the account is being removed from the account with a pending TC 652, or the validity of the transfer is questioned, mail the notice. Another CP 225 will generate after the pending transactions posts.

    5. Review the NRPS package and IDRS for any AP, PN, or RS transaction that affect the notice module. For complete balance due CP 225 notices:

      IF AND THEN
      Credit(s) are pending (AP, PN, or RS) Penalties will recompute Mail the CP 225 with Label #2.
      Credit(s) are pending (AP, PN, or RS) Penalties will not recompute Mail the CP 225 with Label #3 or #4.
      A TC 29X or 30X is pending A subsequent notice will generate Mail the CP 225 with Label #1.
      A credit balance is refunding A debit transaction is pending that will decrease the refund Delete the refund. Mail CP 225 with Label #7 or #14.
      A credit balance is refunding The overpayment is the result of a duplicate credit transfer Delete the refund and retype the notice.

      Note:

      Follow procedures in IRM 3.14.2.7.14.1 - Notice Disposition of Adjustment Notices for any other condition.

    6. Review a partial CP 225 to ensure the credit transfer is valid. If valid, mail the notice.

    7. Since the partial CP 225 is verification to the taxpayer of the payment transfer, do not label to reflect other transactions pending on the module. An additional CP 225 will generate in subsequent cycles for pending Doc Code 34 credit transfers, if correspondence received dates were input. The CP 210/220 generating in the same cycle as the CP 225 will be labeled or retyped with any changes affecting the notice module. The partial CP 225 must be mailed. When inputting a credit transfer follow instructions in IRM 3.14.2.7.20

CP 260 - Credit Reversal Adjustment Notice
  1. CP 260 is generated to tell the taxpayer of a credit reversal on the tax module. The notice generates under the following conditions:

    1. The resulting module balance is a debit of ≡ ≡ ≡ ≡ ≡ or more.

    2. The credit reversal does not cause a recomputation or assessment of penalties resulting in the generation of CP 210 or 220 adjustment notice (FTF, FTD, ES or decreased FTP penalties).

      Note:

      TC 570 on the debit side of a credit transfer suppresses the CP 260 but does not suppress a CP 210 or CP 220. Hold Code 3 input on CC REQ54 does not suppress CP 260.

  2. Use the NRPS package and IDRS to review CP 260 for possible resolution of the debit balance.

    1. Check all other tax modules for a credit claimed on the notice module. If located and available for transfer, process the credit transfer. Check NRPS and the tax module on IDRS for pending (AP, PN, RS, UP, and TP ) transactions.

      IF THEN
      The credit will satisfy the debit balance (overpay, even balance, or balance due less than ≡ ≡ ≡ ) Void the notice.
      The credit will not satisfy the entire debit balance, and penalties will not recompute Label the notice with Label #3. Input CC STAUP if necessary.
      The credit will not satisfy the entire debit balance but penalties will recompute (TCs 166, 186, 176 or decrease TC 276) Void the CP 260 and allow the adjustment notice to mail to the taxpayer. Input CC STAUP if necessary.
      If the credit is unpostable on the notice module or another module Input CC STAUP for 9 cycles. Notify Unpostables by utilizing CCs UPTIN, UPDIS, and UPCASZ. Follow the above for correct notice disposition.
    2. Check the tax module on NRPS and IDRS to decide if the credit needed has offset (TC 826/706).

      IF THEN
      TC 826 generated from another module in the notice cycle 1. Reverse enough of the offset to cover the debit balance (if available).
      2. Transfer the credit to the notice module.
      3. Void, retype or label the CP 260, as applicable.
      4. Void CP 138. (Retype if only part of the offset was reversed.) Pull and void or retype CP 128 if it generates.
      TC 826 offset in a prior cycle from the notice module or from another module Do not reverse the offset unless the credit is refunding or available for reversal, since the taxpayer has previously received the CP 138 (notification of the offset).
      TC 856 (offset of generated interest) and TC 776 (generated interest) are present and the offset is reversed. Use CC ADD24 to reverse TC 856 with TCs 731/851. Then use CC REQ54 to reverse TC 776 with TC 772 (Hold Code 3).
    3. Check the tax module for a prior cycle refund.

      IF AND THEN
      The refund was deleted and the TC 841 will satisfy the debit balance - Void the CP 260 and input CC STAUP for 9 cycles. (STAUP is not required if TC 841 has posted on CC BMFOL.)
      The refund was deleted but the TC 841 will not completely satisfy the debit balance A notice or a refund previously generated Retype the CP 260 with the current account information.
      The refund was deleted but the TC 841 will not completely satisfy the debit balance A notice or a refund did not previously generate Retype the CP 260 to the appropriate settlement notice.
      The case control history shows a category 3913 - Void or retype the CP 260 using the above criteria. Input CC STAUP for 9 cycles.
      The refund (TC 846 was not deleted and a category 3913 is not present). - Mail the CP 260.

      Note:

      Use CC COMPA to compute penalties and interest when CP 260 retype is required. Input CC STAUP for 9 cycles.

    4. Check the module for a pending tax adjustment:

      If And Then
      The adjustment contains:
      1. No Hold Code
      2. Hold Code 1 or
      3. Hold Code 2, with a pending Doc Code 24/34 credit transfer
      - Void CP 260.
      The adjustment contains:
      1. A Hold Code 2, with no pending Doc Code 24/34 credit transfer
      2. Hold Code 3
      3. Hold Code 4
      The module balance will be full paid or credit Void CP 260.
      The adjustment contains:
      1. A Hold Code 2, with no pending Doc Code 24/34 credit transfer
      2. Hold Code 3
      3. Hold Code 4
      The module will remain in balance due Retype CP 260 with the correct balance due.
  3. If the payment was transferred to a module for another taxpayer, (different TIN), mail CP 260.

  4. It is important to know that the penalties and interest shown on CP 260 are accrued, and not yet assessed on the module and the taxpayer has not been previously notified of these accruals.

  5. Always input history items when voiding, labeling or retyping CP 260.

    Reminder:

    When deleting a refund for a pending credit reversal, use Local Control File to pull the CP 260. Retype or void CP 260 based on the TC 841 amount.

Selection Keys - Additional Review Required for Notices Generated Under Keys 09, 33, 52, 54, 55, 90 and 91

  1. Key 09 – TPNC 90 -When none of the standard TPNCs adequately describe an error condition on the return, the Error Resolution System (ERS) Tax Examiner selects an approved 90 Math Error Code or writes a specific, math error explanation on a 3 X 5 slip of paper and attaches it to the return.

    IF THEN
    The return is not included in the NRPS Package Check with Notice Review Clerical Team to ensure return was not received from ERS.
    Return is not located in Clerical Use CC BRTVU to decide Math Error.

    Reminder:

    Coordination with ERS may be necessary in order to ensure the TPNC 90 returns are sent to Notice Review timely. Follow local procedures for providing feedback to ERS.

    1. Follow normal review procedures.

    2. Review the validity of the 90 Error Code written on or attached to the front of the return. Refer to the 90 Error Code Decision Table below.

      IF THEN
      The taxpayer is correct with no math error on the return Void the notice.
      A standard TPNC is indicated and is correct Select the correct TPNC.
      The standard TPNC is incorrect Delete incorrect TPNC and select correct TPNC.
      If an error message written on the 3 X 5 is correct Select the TPNC 90 code and type in the error message in the pop up window.
      The error message is incorrect Select correct TPNC or type in the appropriate action to provide accurate explanation (TPNC, 90 Error Code, or appropriate error message).
      The 90 Error Code is correct Select the appropriate TPNC 90.
      The 90 Error Code is incorrect Delete TPNC 90 code and select the correct TPNC.
      The 90 Error Code is incorrect and a different 90 Error Code will be used Select the correct TPNC 90.
      The 90 Error Code is incorrect and a standard TPNC will be used Indicate the standard TPNC on the notice.

      Note:

      ERS may indicate a standard TPNC for the math error rather than a 90 Error Code.

    3. Beginning in 2014, some of the TPNC 90 literals have been numbered and are programmed for use in OLNR. They can be selected in the same manner as any other TPNC. A list of these programmed TPNC 90s can be found on the BMF Notice Review SERP Portal under “Job Aids”, titled TPNC 90 Math Error Code Job Aid. http://serp.enterprise.irs.gov/databases/portals.dr/sp-portal/bmf.dr/bmf_notice_review/bmf_notice_review_jobaids_toc.htm

    4. TPNC 90 literals that are not programmed into OLNR can be copied and pasted from the TPNC 90 Literals-Copy and Paste Job Aid. This job aid can be found on the BMF Notice Review SERP Portal under “Job Aids”, titled TPNC 90 Literals-Copy and Paste. http://serp.enterprise.irs.gov/databases/portals.dr/sp-portal/bmf.dr/bmf_notice_review/bmf_notice_review_jobaids_toc.htm

    5. TPNC 90 is still available to be used as a fill-in notice.

  2. Key 33 - CP 161, MFT 51 -- Form 709 -- The selection for Key 33 changed for 2004. The TC 460 will no longer be placed on the Form 709 tax module. Therefore, the criteria was changed to select any CP 161 with an MFT 51. To decide if the taxpayer filed an extension on their Form 1040 and the payment intended for the Form 709 is available on the Form 1040 module, do the following:

    1. Use CC IMFOL to research the IMF SSN for a TC 460 on the tax module applicable to the Form 709 filing. If a joint return, research both SSN's.

    2. If timely extension is found, input the TC 460 on the Form 709 notice module.

    3. If the 1040 module is overpaid, check CC RTVUE to decide the amount of credit claimed by the taxpayer.

    4. If the credit is available and can be transferred to the Form 709 notice module without placing the IMF module into a balance due status, transfer the credit using the appropriate transaction code. Do not consider penalty and/or interest charges not claimed on the tax return if they create the balance due left on the account.

    5. If the above actions will systemically abate any penalty and/or interest charges in full, void the notice.

    6. If a balance due remains after completing (a) and/or (b) above, make the necessary corrections to the notice and release the notice for mailing.

  3. Key 52 -- Select if the notice amount is less than or equal to the amount being refunded (TC 846) this cycle from another tax period within the account. Intercept the refund where the credit is posted (must be a claimed credit or exact amount needed). Move the credit with a posting delay code 2 on the debit side. Apply appropriate notice disposition.

  4. Key 54 -Delinquency Penalty (TC 166) was not assessed on a potentially delinquent return. The Balance Due Notices are selected if returns that appear to be late are processed with timely received dates.

    1. You must have the return to review this key. If the return is not available, you must request it using CC ESTAB. Mark notice disposition H. When the return is received, follow the remaining instructions.

      Exception:

      Do not order the return or assess the penalty in the following situations:

      Do Not Order Return or Assess the Penalty If:
      There is a -A freeze on the account.
      It is a 6020b return (not liable for penalties). A 6020b return is a substitute for a return using Forms 4549, 886-A, and 13496 in place of a return under IRC Section 6020b. These forms are completed during an Examination case.
      It is a Dummy Return.
    2. Check CC BMFOLT and/or CC ENMOD for FEMA disaster areas and use the date shown to calculate interest and penalties.

      Note:

      CC ENMOD can have several FEMAs listed, so verify you are using the dates for the correct filing period.

    3. Refer to IRM 3.14.2.7.17.3 for more information concerning FTF penalty.

    4. Use the following guidelines to decide the correct received date of the return and conclude if Failure to File penalty (TC 160) will be assessed:

      Note:

      7 days after the due date the return is considered on time. 8 days past the due date the return is considered 1 month late.

      Received Date Decision Table
      IRS stamped Received Date or edited Received Date, unless a timely postmark date is present.
      Earliest postmark date, if the envelope is attached,

      Note:

      The return is not late if the postmark is on or before the Return Due Date (RDD), regardless of the IRS Received Date stamp.

      Use the taxpayer signature date if there is no IRS Received Date or postmarked envelope, (Do not use the preparer's signature date).
      Julian control date of DLN (i.e., if more than one DLN is present, then use the earliest DLN Julian Date posted) minus 10 days.

      Caution:

      Do not use correspondence issued from Code and Edit to decide the received date. That correspondence is often sent on timely filed returns after the due date.

    5. If the return is delinquent, compute and assess the FTF penalty using the following steps:

      FTF Penalty Assessment
      1. Identify the penalty period -- From the Return Due Date to the return received date (the number of months or any part of a month the return is late, up to a maximum of 5 months).
      2. Identify the penalty rate -- 4 1/2 percent per month (maximum 22 1/2 percent) or 5 percent per month (maximum 25 percent) if FTP is not assessed for the same time period.

      Note:

      41/1% does not apply if there are payments during the penalty period.

      3. Identify the amount subject to penalty -- the TC 150 tax amount minus timely credits received on or before the RDD.

      Note:

      Payments received after the RDD will not be used in the penalty computation.

      4. Multiply: amount subject to penalty X penalty rate X penalty period = the penalty amount. Example 10000 x 5 % x 3 = $ 1,500.00.

      Caution:

      Please keep in mind the minimum penalty amounts.

      5. Assess TC 160 on CC REQ54, Blocking Series 00, Hold Code 3.
      6. Use CC COMPA to compute the interest, but do not assess the additional interest.

      Reminder:

      Interest is charged on FTF penalty. Include the penalty amount when computing the interest due.

      7. Retype the notice to reflect the assessed FTF penalty and the correct interest amount due.

      Reminder:

      If a notice has been held, then update other penalties on the notice as required.

    6. Figure the TC 160 amount using the following chart.

      # of Months TC 160 (no TC 276) TC 160 (TC 276 on module)
      1 month Underpayment x 5% Underpayment x 4.5% (.045)
      2 months Underpayment x 10% Underpayment x 9% (.09)
      3 months Underpayment x 15% Underpayment x 13.5% (.135)
      4 months Underpayment x 20% Underpayment x 18% (.18)
      5 months Underpayment x 25% Underpayment x 22.5% (.225)
      1. Attach adjustment tag to the return, being careful that you do not cover any portion of the entity, and put return in gusset folder. You may still use the pink adjustment tag if preferred.

      2. Attach completed Form 10550 to gusset folder.

    7. To figure the interest on the Retype, use CC COMPA and input as follows:

      Figure 3.14.2-8

      This is an Image: 32201046.gif
       

      Please click here for the text description of the image.

      COMPA - - - -
      XXXXXXXX sp XXXXXXXX sp $$$$.$$
      Due date of return sp 23C date sp Underpayment plus 160 penalty amount
    8. If there are late payments, figure interest as follows:

      COMPA