3.17.20  Refund Intercept Program

Manual Transmittal

November 19, 2015


(1) This transmits revised IRM 3.17.20 Accounting and Data Control, Refund Intercept Program.

Material Changes

(1) Editorial changes and procedural clarifications throughout the IRM.

(2) IRM Procedural Update (IPU) issued on May 29, 2015 is referenced in the "Effect on Other Documents" section below.

(3) Provided link to the SP ATP SharePoint site throughout.

(4) Updated all IRM references to provide links throughout.

(5) Updated examples with dates using more current dates throughout.

(6) Spelled out acronyms where needed throughout.

Effect on Other Documents

IRM 3.17.20 Refund Intercept Program published December 05, 2014 (effective January 1, 2015) is superseded. The following IRM Procedure Update IPU 15U0931 (issued 05/29/2015) was incorporated into this revised IRM.


Submission Processing - Accounting Operations Tax Examining Technicians

Effective Date


Paul J. Mamo
Director, Submission Processing
Wage and Investment Division  (11-19-2015)
Introduction and Purpose

  1. This IRM provides guidance for the Refund Intercept Program to reduce refund interest paid on current year and prior year tax returns during original settlement processing, and on refunds issued with credit interest as a result of data processing tentative carryback (TCB) adjustments.


    IRM deviations must be submitted in writing following instructions from IRM Internal Management Documents System - Internal Revenue Manual (IRM) Process, IRM Standards and elevated through appropriate channels for executive approval.  (01-01-2015)
Scope and Background

  1. The Refund Intercept Program was created to review scheduled generated refunds (Transaction Code (TC) 846) and make a determination if issuing a manual refund within the 45 day interest-free period results in a reduced or eliminated credit interest amount.

  2. The program requires a designated tax examining technician to have the capability to recognize the criteria and take immediate action on Business Master File (BMF) accounts, due to the limited amount of time available for working these cases. The tax examining technician with primary responsibility for working the program, must notify management when additional assistance is required to work the listing. Management must then determine if additional staff is available and/or a tolerance modification is needed.

  3. The program requires very close control of all steps in the process to ensure manual refunds are properly prepared and issued in a timely manner. As a result, it is necessary for the employees performing the review to take on a number of duties that would normally be considered clerical in nature. Nevertheless, each step in the process should be used as an opportunity to evaluate the accuracy and timeliness of the refund action, and as such, requires knowledge and account analysis skills not expected of clerical employees.

  4. The employee with primary responsibility for the program must be highly self-motivated and must be able to work independently, without managerial assistance. The ability to properly identify, set priorities and effectively control the review process is an extreme requirement.

  5. Employees are required to elevate information, related to interest savings and issues, through their local management. Management will work with Process & Analysis (PA) staff and Headquarters (HQ)s to address processing impact.  (01-01-2015)
Required Skills

  1. The employees working the program must have extensive knowledge of pre-posted and posted account transactions, including the ability to perform the analysis required to accurately issue manual refunds.

  2. The program involves conducting extensive Integrated Data Retrieval System (IDRS)/Corporate Files On-line (CFOL) research. The employees should also have extensive IDRS input experience related to refund processing, account maintenance, and the ability to perform restricted interest computations. Use of the Control D (Ctrl-D) reporting system and Microsoft Excel is also a requirement.

  3. The following IDRS Command Codes (CCs) are required to work the program: ACTON, ADC24, ADC48, ADD24, ADD48, ADJ54, BMFOL, BRTVU, COMPA, DRT24, DRT48, ENMOD, FRM77, INOLE, LETER, LPAGD, LPAGE, MFREQ, NOREF, RECON, REQ54, REQ77, RFUND, RTVUE, SUMRY, TERUP$, TRDBV, TXMOD, UPTIN.

  4. It is mandatory for all Wage & Investment (W&I) employees to utilize Integrated Automation Technologies (IAT) Manual Refund tool when initiating a manual refund request Form 5792, IDRS Generated Refund (IGR) and/or Form 3753, Manual Refund Posting Voucher. See IRM Preparation of Manual Refund Forms regarding the mandatory use of the IAT, Erroneous Refund Monitoring Tool (EMT) is also required when a manual refund is initiated. See IRM, Other Manual Refund Requirements.  (11-19-2015)
Business Master File (BMF) - Listing Information

  1. The BMF-IR Refund Intercept Listings are available on Ctrl-D under job name: OBMFIRxx (xx = campus filing location code (FLC)). The data in these files is extracted from Enterprise Computing Center (ECC) Non-Tape Distribution to Submission Processing Centers under Report Name: BMF REFUND INTERCEPT Reports. These files are transmitted to Submission Processing Centers, each week on Friday, after Master File processing.


    If the current BMF-IR Listings are not available on Ctrl-D, on Friday of each week, the employee(s) should contact the Enterprise Help Desk at ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ for assistance.

    The Refund Intercept Report must be worked no later than (NLT) the second Thursday following the report date, including the input of CC NOREF and initiating manual refund requests.

  2. The Refund BMF-IR Refund Intercept Files are a weekly extract of all refunds with ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ credit interest posted to a campus controlling Document Locator Number (DLN). These refunds are grouped by Net Tax Refund Report Line numbers starting with line number 01. The account information is listed for each line number starting with the largest interest amount and ending with the smallest. Each line of the listing contains one account record:

    1. Access Ctrl-D.

    2. Search for report using the filter option.

    3. Locate the BMFIRXX (variable) - BMF Refund Intercept file, highlight and select one. These files will display the BMF Refund Intercept/45 Day Interest-Free Period listing for the current posting cycle.

  3. The column header descriptions for the BMF Refund Intercept/45 Day Interest-Free Period Listings are as follows:

    • SC/LC - SC-Service Center, e.g., 29 Ogden C-Line Code, e.g., 61 = Form 1120Corporate Income Tax series Corporate Income-Prior Year Controlling DLN, Literal

    • DLN - Controlling DLN, Literal

    • TIN - Tax Identification Number

    • N/C - Name Control, Literal

    • MFT - Master File Tax Code, Literal

    • TXPD - Tax Period, Literal

    • Tot Ref Amt - Total Refund Amount, Literal, no decimal for cents

    • Principal Amt - Principal Amount (overpayment), Literal, no decimal for cents

    • Int Amt - Interest Amount, Literal, no decimal for cents

    • CY - Posting Cycle

  4. The pre-screened BMF listing File is available on Ctrl-D under job name PRTA60X on the immediate Friday after BMF processes. For example, BMF processes cycle 201505 on February05, 2015; the BMF listing file will be on Ctrl-D on February 06, 2015. The files can be located under Report Name 160-44-XX (BMF) Reports. The listing contains records for BMF refunds with open 45 day periods and no limiting freeze or refund type conditions.


    The listing contains both original settlement and other types of BMF refunds. The 45 day interest-free period rules are different for other than original settlement and TCBs. The 160–44–XX Listing is the first of several stages designed to streamline the Refund Interception Review program. The review process in this procedure will be followed on the refund transactions identified on pre-screened listings just as it is done on the BMF-IR Listings.

  5. The column header descriptions for the BMF Edited Refund Report listings are as follows:

    • TINTYPE/TIN - Tax Identification Number, the first position is the File Segment Indicator, e.g., 0 - Valid Segment, 1 - Invalid Segment

    • MFT - Master File Tax Code

    • YYYYMM or TAXPER - Tax Period

    • NAME - Name Control

    • LC - SC-Service Center, e.g., 61 - Form 1120 series Corporate Income-Prior Year Controlling DLN

    • PRINCIPAL - Principal Amount (overpayment)

    • INTEREST - Interest Amount

    • TOTAL - Total Refund Amount  (11-19-2015)
Cycle Folder and Listing Preparation

  1. The listings must be reviewed immediately to ensure the 45 day interest-free period is met. Immediate review is critical to eliminate and/or reduce allowable credit interest.


    For both listings, if refunds need to be stopped, CC NOREF must be input NLT close of business (COB) the second Thursday following the report date and prior to initiating a manual refund request.

  2. Access the refund data on Control D and print the listing pages containing the line numbers subject to the 45 day period for BMF: 11, 12, 15, 16, 17, 21, 22, 25, 26, 27, 31, 32, 36, 37, 41, 42, 46, 47, 56, 57, 60, 61, 62, 65, 66, 87, 89, 90, 91 and 99. See IRM 2.4.20 Command Codes RFUND and REFAP, Exhibit 12 Description of Line Item Numbers. Documentation of all actions taken must be retained within each cycle folder and include the following:

    • Refund Cycle

    • Date and time the listings were printed. Notate any circumstance pertinent when working the listings, such as BMF Accelerated Cycle, holiday or equipment failure, etc. See SP ATP SharePoint site for Refund Cycle Chart information :
      https://organization.ds.irsnet.gov/sites/SPATPBranch/default.aspx . The chart is located within the Manual Refund Misc. Documents folder..

  3. Underline the first record within each line number (61, 62, etc.). Underline the last record for each line number starting at the left of the taxpayer identification number (TIN) column. This will provide a visual break between the line numbers to facilitate the use of the listings.

  4. After identifying the volume of accounts for the cycle that are subject to review, evaluate workload conditions. If the volume is high, notify the manager that assistance is needed to work the program. Management will make a determination if additional staffing or a tolerance adjustment is necessary.


    Prepare a cycle folder for the listings by annotating the refund posting cycle on the tab. The folders will be maintained in cycle order for the fiscal year and stored in the work area for a minimum of one year following the close of the fiscal year. The folders can then be archived following the published guidelines for original refund documents.  (11-19-2015)
Listing Review and Annotation

  1. The listing will be used as a control document throughout the review process, so it is recommended that annotations do not overwrite the listings original data.

  2. During peak volume periods, review the refunds with the highest interest amounts first, e.g., all records with ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ refund interest for each line number and continue to work in descending order, ≡ ≡ ≡ ≡ . If the volume of refunds with high interest is large, concentrate on completing the high interest refunds first before moving on to the lower amounts.


    During peak, BMF Current Year line numbers must be worked expeditiously.

  3. The first step in the account review is to determine the return and TCB adjustment received dates. On original settlement line numbers, use CC BMFOL to determine the return received dates. See IRM 2.4.20 Exhibit 12 Description of Line Item Numbers. On TCB related refunds, use CC TXMOD to determine the credit-interest-date (CR-INT-DT) of the TCB adjustment. This date is shown one line down from the TC 295 or TC 299 transaction DLN on the right side of the page. The refunds cannot be stopped if the date is not present. Compare the received dates for each account to the last day for input. This should be done at the same time as the received dates are reviewed.

  4. The last day for input chart shows the last day for input of refund transactions. Also, note that other factors must be taken into consideration to determine if it should be followed or not. Every effort must be made to input the refund at least 1 work day prior to the last day for input date.

  5. It takes three work days, counting the date manual refunds are input for checks to be issued to taxpayers. If the refund input day is followed by two consecutive work days, it can be input on the 43rd date. This does not allow re-input of the refund if the CC RFUND/REFAP inputs do not match and should be avoided, if possible.

  6. The refund input day must be adjusted to an earlier date if there is a holiday or intervening weekend following the input date that would cause the interest-free period to expire before the check is issued.

  7. Do not take the time to do a complete analysis of each account while checking the Received Date for the last day for input dates. It is very important to identify the accounts that may generate refund interceptions and the last day for input dates as early as possible in the review.

  8. If the 45 day period and last day for input date are open and there is no other reason the generated refund cannot be stopped, underline the record starting at the left of the TIN column. Write the last day for input (LDI = month and day) to the right of the Cycle column after you underline the record. If the refund is being issued due to a bad received date write the month and day of the posted received date first, then the last day for input date to the right of the received date.

  9. If the 45 day period or last day for input date is not open, write an X (expired) to the right of the Cycle column for the record. Also, annotate any other conditions that prevent the manual refund from being issued. Do not underline the record if the 45 day interest-free period is expired or there is another reason to not intercept the refund.

  10. When the refund can be intercepted on original settlement returns, bring the account onto the local IDRS file (CC MFREQ) during the received date review. This step is done to update the local file for subsequent input and to check for math errors. If a math error is indicated on the first page of the tax module, annotate ME to the left of the principal column on the listing. You will be able to identify the module to be included on the Notice Retype Fax List after all receive dates have been verified.


    NOREF must be initiated NLT COB the second Thursday following the report date and prior to initiating a manual refund request.

  11. As the accounts are brought onto the local file, print the TXMOD and ENMOD displays for any accounts that require immediate action following the MFREQ or RECON input. If the volume of refunds is high, it is best to print the accounts as needed by date rather than all at once.

  12. If it is determined that the generated refund should be stopped and no manual refund should be issued, print the ENMOD and TXMOD displays and use the prints to document the CC NOREF refund reversal input. Annotate Stop Only on the listings for these accounts.

  13. If the Fax List cannot be prepared due to time constraints, annotate that it was not sent on the cover sheet of the listing. Continue with the review.

  14. After screening the accounts to assess the volume that are within the last day for input, notify management to allow a final determination of any adjustments to the selection tolerance and staffing needed.

  15. Use the dates on the listings to establish which refunds have to be worked first and to control the review process. Be sure to pay close attention to completing the highest interest amount refunds first.

  16. After each Form 5792Request for IDRS Generated Refund (IGR) is prepared, annotate R on the listings to the right of the last day for input dates. Use red ink or pencil to make the notations highly visible.

  17. After each refund transaction is input on IDRS, write the input date on the listings to the right of the R. This serves as a visual confirmation that the refund transaction has been completed and can be quickly scanned to verify all actions have been taken on the listings.

  18. After all of the refund and refund stop transactions are input and verified, total the number of accounts reviewed, the number of refunds stopped and the total amount of interest saved for the BMF Refund Intercept Savings listings and annotate the totals on the cover sheets of the listings.  (01-01-2014)
Records Control

  1. All BMF processed listing files will be maintained in the unit for the period of one (1) year.

  2. At the end of the one year period, all BMF processed listing files should be sent to the Files area to be retained for an additional two (2) years.  (11-19-2015)
Limitations on Refund Interceptions

  1. There are a number of conditions that may prevent refunds from being worked even when the interest-free period is open or the last day for input has not passed. These conditions can be checked at the same time as the received date review. Other limitations may not be found until further research is performed.

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

  3. The Questionable Refund Program (QRP) is now under the program responsibility of the Return Integrity and Compliance Services (RICS) . RICS identifies individuals filing false returns claiming refundable credits, income and withholding as part of schemes. These programs are implemented at the beginning of every filing season. Research transactions codes to determine if credits should be released. Contact with RICS may be required. The following examples of QRP account identifiers:

    Account Identifier Description
    TC 971 Action Code (AC) 052 Generated by QRP and causes returns to re-sequence 1–2 cycles
    TC 971 AC 053 Generated by QRP and causes direct deposit to flip to paper

    Taxpayer modules that contain a TC 971 AC 052 should not be worked. This is a definer for modules selected under the IVO QRP. Displayed on CC TXMOD may be a control showing ACTIVITY (IN_VERIFY) and CATEGORY (NVFY).

    1. If a TC 971 AC 052 is present on the account prior to performing any account action, DO NOT WORK THIS TIN for the Refund Intercept Program.

    2. If you see this specific activity control prior to performing NOREF, continue normal processing to avoid the issuance of two refunds. RICS will not pursue this case any further once they have identified the manual refund (TC 840). If contacted by RICS, inform them the only way to get the money back is to contact the taxpayer.

  4. If there is an open control base on a module, employees are required to contact the area with the active control base prior to initiating a manual refund.. . Annotate that contact was made with the work area with the active control base in the remarks section of the Form 5792. Do not issue a refund if there is a pending assessment or TC 971 AC 665 on the module indicating a Form 2859 Request for Quick or Prompt Assessment assessment is in process. The other work area may request that you stop the generated refund and not issue a manual refund. If this occurs, count the interest as savings.

  5. If there is a TC 130 present on ENMOD (with service center indicator), there may be a Non-Master File balance due. Contact Cincinnati Non Master File (NMF) Function ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ to find out if the refund should be issued or stopped. If you are unable to take action on the account, annotate the listing as NMF. The Cincinnati NMF function may request that you stop the generated refund (TC 846) but not reissue a manual refund (TC 840). If they do, count the interest as savings.

  6. There may be more than one tax adjustment transaction posting at the same time as TCB refund account. If a TC 291 is posting in the same cycle as the TCB adjustment, annotate the listing as Mixed Cr. Credits against taxable income or credits against tax are allowable in the same cycle as the refund. These credits must be included in the overpayment amount.

  7. Some TCB adjustment refunds have manually computed credit interest (TC 770) posting the same cycle as the refund. The employee that input the adjustment is required to enter an abbreviated reason, such as RSCH/CR (Research Credit) in the ACTON activity field. If there is no history item and the TC 770 appears questionable, call the employee to verify the correct action. If there is a TC 770 with money present, annotate the listing as TC 770.

  8. Check for any pending assessment transactions, credit transfers or credit reversals that may affect the availability of the credit that is being refunded. Stop the generated refund and claim the interest saved if all of the available credit is being reversed. If only part of the credit is being reversed, claim the savings on the portion that is being reversed and issue a refund for the remainder credit. These reversals will require restricted interest computations.

  9. Check the return display data against the posted data using IDRS CC BRTVU to identify possible fraudulent filers and misapplied payment errors.

  10. Some refunds may include interest on offset credits or abated penalties and interest (i.e., TC 826, TC 197, TC 277, etc.). This interest must be paid and may reduce the amount that can be saved below the ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ for the program.

  11. Research may indicate a manual refund was issued. Manual refunds are identified by TC 840 (Manual Refund, Form 5792 and Form 3753) or TC 971 AC 664 (Manual Refund processed by Accounting, Form 3753 only). If you identify either of these codes, do not issue a manual refund, unless certain it is NOT A DUPLICATE. Coordinate with the initiating function to determine if the potential refund is due to the taxpayer.

  12. Cases identified with TC 846 as direct deposits (DD). Do not attempt to issue manual refunds on these cases.


    Manual refunds (TC 840) may also be issued via direct deposit in certain situations, i.e., hardships. TC 840 will show a DD indicator "9" on TXMOD only. It will not appear on BMFOLT.  (11-19-2015)
Integrated Data Retrieval System (IDRS) Command Code BRTVU

  1. Use CC BRTVU (BMF) to review the return line entry information prior to issuing manual refunds. Enter the TIN, Master File Tax (MFT) and tax period in the following format:

  2. The response will be a summary screen, which can be used to retrieve each page of the return information. Enter a 1, 2, etc., immediately to the right of the R on the first line of the response page to see a display of the data for the selected page.

  3. Look for inconsistencies in the submitted return information compared to the posted information. Evaluate the amounts claimed in relationship to other entries. Question entries, such as the reported income being low compared to the amount claimed as withholding or the amount entered on the refund line being less than the generated amount.

  4. If the amount being refunded exceeds the amount claimed on the BRTVU display, compare the estimated payments or other credit amounts claimed, to the posted amounts. Periodically a payment intended for the next tax year will be applied to the current year account. If this is the case, transfer the excess credit to the next tax year using CC ADD24.

  5. If the refund is based on a payment that is not claimed by the taxpayer and there is no indication it was intended for a future period, research the credit using the Remittance Transaction Research (RTR) database. If this application is not available to the employee(s) performing the review, contact one of the following Accounting functions for assistance: Payment Tracer or Erroneous Refund.  (11-19-2015)
Integrated Data Retrieval System (IDRS) Command Codes MFREQ and RECON

  1. If the tax account is not already present on the Local IDRS file (TXMOD) or does not reflect all current information on CFOL, the current account information for the original settlement refunds must to be updated to the Local IDRS file at the time the last day for input is determined to be open. This step is completed by using CC MFREQ and RECON. This step is also required to allow identification of any math errors reflected at the start of the review process for inclusion on the Notice Retype Fax List. Math errors can then be reviewed on the local file (TXMOD). Command Code RECON will be input for review of TCB refunds and is not required to be performed before the Notice Retype Fax List is prepared for Notice Review. The cut-off for faxing the Notice Retype List to Notice Review is 11:00 a.m. local time Wednesday, the first week of review. These times vary depending on local requirements. The cut-off time frame must be verified with the local Notice Review staff.

  2. Use CC MFREQ with definer C to update the module on the local IDRS file when a No Data message is displayed when CC TXMOD is input. See below:

    02 200406 AAAA
  3. Use CC RECON if the latest transactions shown on BMFOL are not present on the CC TXMOD module display on the local IDRS file. See below:

    02 200406 AAAA  (01-01-2014)
Notice Retype Procedure

  1. A notice will be issued to the taxpayer when TCB or math error adjustments appear on the account. Any notice generated must be corrected by Notice Review (NR) to reflect the correct refund and interest amount..

  2. NR must be alerted to request the applicable notices on the local control file before the BMF Refund Intercept Program report is available. Selections can be made by MFT or notice type. Coordinate with Notice Review by providing a list to request selection of the notices each week before 12:00 noon EST on Thursday.

  3. If a restricted interest computation is required, annotate the listing with an NR next to the ME math error entry. Annotating the listing will provide a quick visual confirmation of the notices that need to be corrected.

  4. Contact Notice Review to coordinate the notice correction.  (01-01-2015)
Restricted Interest Computations

  1. It will be necessary to manually compute credit interest on accounts that include abatements of interest and or penalty (TC 197 or TC 277), or have TC 826 credit offsets with TC 776 credit interest that are posted in the same cycle as the generated refunds. The IRS is required to pay credit interest on penalty and interest abatements only when the taxpayer has paid the assessed penalty or interest and it is subsequently abated.

  2. There may be occasions when part of the overpayment being refunded on an account needs to be held for a pending adjustment or dishonored check or credit reversal. This can occur when a locally input action comes onto an account right after the Master File analysis has been completed. This happens very infrequently so no description of the interest computation is included in this procedure. See IRM 20.2Interest for additional information.

  3. When the abated amount is more than the most recent assessment, there will be more than one computation line on the COMPA. The total of the abated amount (or amounts, if combined) will be shown on the last line of the COMPA screen with each preceding line showing the balance after subtracting the last assessment. Continue this sequence by always subtracting the assessment prior to the last.

  4. These computations are based on the assessment dates and the manual refund input date without consideration of payments on the account following the assessment dates. See IRM 20.2, Interest for guidance.  (11-19-2015)
Display of Computation of Interest on Abated Interest and Penalty

  1. The following table is an example of this type of manual credit interest computation. The table below displays posted transactions. The original return was filed and full paid before the audit assessment posted.

    Display of posted transactions. The original return was filed and full paid before the Audit assessment posted.
    TC Date Amount Cycle Description
    TC 300 05082000 3,885.00 200017 Tax Assessment (Audit)
    TC 336 05082000 862.01 200017 Interest Assessment
    TC 670 07172000 4,785.24- 200030 Payment (ignored)
    TC 276 08072000 19.27 200030 Penalty Assessment
    TC 196 08072000 48.96 200030 Interest Assessment
    TC 299 05122003 76,754.00– 200318 Tax Abatement (TCB)
    TC 277 05122003 19.27- 200318 Penalty Abatement
    TC 197 05122003 262.33- 200318 Interest Abatement
    TC 776 05122003 14,412.19– 200318 Credit Interest Paid
    TC 846 05122003 91,417.79 200318 Generated Refund
    TC 770 04302003 64.73- 200319 Credit Interest Man/Ref
    TC 840 04302003 77,005.60 200319 Manual Refund
    TC 777 05122003 14,412.19 200321 Credit Interest Reversal
    TC 841 05122003 91,447.79- 200321 Refund Reversal


    All of the abatement transactions considered in this type of computation must be posted in the same cycle as the TC 776 and TC 846.

  2. Setting up the interest computation.

    1. First, start with establishing the date the manual refund will be input, then add one workday to get the final TO date for the last line of the COMPA. Review the posted assessment transaction dates, recording each date, subtracting each assessed amount from the abated amount and repeating this step until the total abated amount is eliminated.

    2. In this example, the abated interest and penalty can be combined on the COMPA because they share the same assessment date (08-07-2000). All of the penalty amount will be reversed as of this date.

    3. If the assessment dates are not the same on the abated interest and penalty, the computations will have to be done separately using the same procedure on both types.

  3. Description of interest on abated amounts

    1. Refund input date 04-30-2015, plus one work day: 05-01-2015. Most recent assessment date: 08-07-2015.

    2. The TC 197 for $262.33- and the TC 277 for $19.27- (abatements) added together totals $281.60. Both are assessed on the same date and the penalty amount will be eliminated as of that day so they can be combined. This can be performed if the penalty was not completely eliminated. Input start date of 08-07-2000 with a To date 05-01-2003 on $281.60.

    3. Subtract the combined amount assessed on 08-07-2000 from the total abated amount. TC 196 for $48.96 plus TC 276 for $19.27 = $68.23. Total abatement $281.60 minus $68.23 = $213.37. This is the amount to compute interest, in the next step.

    4. Use the start date of the last COMPA line (08-07-2015) as the to date for the next preceding line, and the next most recent assessment date (05-08-2015) as the start date. Input start date of 05-08-2015 with a To date 08-07-2015 on $213.37.

    5. The amount assessed on 05-08-2015 eliminates the remaining abated amount, and the IDRS interest computation will be captured on two lines.  (01-01-2014)
Example of IDRS COMPA Print to be Attached to Form 5792

  1. See example of the IDRS interest computation on the abated amount below.

    05082015 08072015 213.37 $4.83
    08072015 05012018 281.60 $59.90
    Total Interest $64.73 $64.73 (TC 770)
    1. Add the TC 299, TC 197 and TC 277 amounts to arrive at the overpayment amount.

    2. The $76,754.00 abated tax, plus the $262.33 abated interest, plus the $19.27 abated penalty totals the $77,035.60 overpayment.

    3. The overpayment plus the $64.73 credit interest (TC 770) on the abated amounts totals $77,100.33, which is the TC 840 refund amount.

    4. Note that the TC 777 interest reversal paired with the TC 841 refund cancellation totals the full amount shown on the TC 776 paired with the TC 846 refund.  (01-01-2014)
Interest on Credit Offset Interest

  1. The interest on the credit offset interest is combined into the TC 776 amount that is paired with the TC 846 refund transaction. This interest will be reversed when the generated refund reversal posts (TC 841), following input of the refund stop (NOREF). As a result, any interest due on the credit offset interest will have to be manually computed and entered in the TC 770 interest field on the Form 5792. Attach COMPA prints to the Form 5792.

  2. The TC 776 interest transactions, paired with the TC 826 offsets, will not be reversed when the refund reversal posts. As a result, it should be included in the overpayment amount shown on the Form 5792. Note in the remarks section that the total TC 776 amount on the offsets is included in the overpayment amount.

  3. In the abatement example, all of the transactions will be posted in the same cycle as the TC 846.

  4. Occasionally, more than one offset amount may be paired with a single TC 776 amount. This occurs when the offsets are split to pay separate accruals on the gaining account and post with the same transaction date on the gaining account.

  5. Any generated TC 776 interest amounts paired with offsets require no additional verification.

  6. The posting dates on the TC 776 paired with the offsets will match the posting dates of the offsets on the gaining module. The TC 826 will post with the credit availability date of the TCB loss year module.

  7. If generated interest is paid on a TC 826 transaction, the TC 826 will be immediately followed by an INT-TO-DT>MMDDYYYY. If no interest is paid on the offset amount, it will be followed by an INT-TO-DT>00000000. The INT-TO-DT dates are used as the start dates for the interest on the corresponding TC 776 amounts when the manual interest computation is completed.

  8. The interest savings claimed for the refund must be reduced by the TC 776 amounts paired with the offsets and any additional interest paid on this interest. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  9. Listed below is an example of the manual credit interest computation on accounts with TC 776 interest paired with TC 826 offsets.

    1. See the display of posted transactions. The original return was filed and full paid before the TCB adjustment posted.

    2. Note that the transactions included in this computation must be posted in the same cycle as the TC 776 and TC 846.

    3. The offset, interest and refund transactions that are paired together are separated by a space from the others to emphasize their relationship to each other.

    4. The IDRS displays will not show this separation.  (01-01-2014)
Setting Up the Interest Computation

  1. Start with establishing the date the manual refund will be input then add one work day to get the To date. Use this date as the To date for each of the individual computations.

  2. The start dates for COMPA will be the INT TO DT> shown for each TC 826. If the TC 826 offset has INT TO DT>MMDDYYYY paired with it, there was no interest paid on the offset.  (01-01-2014)
Display of Computation Interest on Credit Offset Interest

  1. See example display below.

    Display of posted transactions. The original return was filed and full paid before the TCB adjustment posted.
    TC Date Amount Cycle Description
    TC 299 09082003 175,049.00- 200335 INT-TO-DT>03152002 Tax Abatement
    TC 826 03152002 16,440.28 200335 INT-TO-DT>04292002 Credit Offset Out
    TC 776 04292002 89.26- 200335 Credit Interest on Offset
    TC 826 03152002 10,242.19 200335 INT-TO-DT>00000000 Credit Offset Out
    TC 826 03152002 67,848.33 200335 INT-TO-DT>04302002 Credit Offset Out
    TC 776 04302002 299.92- 200335 Credit Interest on Offset
    TC 826 03152002 3,392.42 200335 INT-TO-DT>07152002 Credit Offset Out
    TC 776 07152002 39.91- 200335 Credit Interest on Offset
    TC 826 03152002 9,757.62 200335 INT-TO-DT>06102002 Credit Offset Out
    TC 776 06102002 81.74- 200335 Credit Interest on Offset
    TC 776 09082003 3,322.53– 200335 Credit Interest Overpayment
    TC 846 09082003 71,201.52 200335 Generated Refund
    TC 770 09032003 20.45- 200337 Manual Credit Interest
    TC 840 09032003 67,899.44 200337 Manual Refund
    TC 777 09082003 3,322.53 200338 Credit Interest Reversal
    TC 841 09082003 71,201.52- 200338 Refund Reversal  (11-19-2015)
Setting Up the Interest Computation

  1. Start with establishing the date the manual refund will be input then add one work day to get the To date. Use this date as the To date for each of the individual computations.

  2. The start dates for the COMPA will be the INT-TO-DT> shown for each TC 826. If the TC 826 offset has INT-TO-DT>MMDDYYYY paired with it, there was no interest paid on the offset.

  3. Unlike the computations set up for the interest on the abated interest and penalty, each of the offset transactions are independent of the others. Do a separate COMPA for each offset, starting with the first one following the TC 295 or TC 299. Total the interest amounts together to determine the interest that must to be paid on the posted offset interest. This amount is entered on the Form 5792 in the TC 770 field.  (01-01-2014)
Description of Interest on Credit Offset Interest

  1. See description below.

    Description of Interest on Credit Offset Interest
    Refund Input Date 09-03-2015 plus 1 day 09-04-2015
    1st TC 826 INT-TO-DT> 04-29-2014
    TC 776 Interest Amount $89.26
    Start date 04-29-2014, to date 09-04-2015 on $89.26
    2nd TC 826 INT-TO-DT> No TC 776 interest amount 00-00-0000
    3rd TC 826 INT-TO-DT> 04-30-2014
    TC 776 interest amount $299.92
    Start date 04-30-2002, to date 09-04-2003 on $299.92
    4th TC 826 INT-TO-DT> 07-15-2014
    TC 776 interest amount $39.91
    Start date 07-15-2014, to date 09-04-2015 on $39.91
    5th TC 826 INT-TO-DT> 06-10-2014
    TC 776 interest amount $81.74
    Start date 06-10-2014, to date 09-04-2015 on $81.74
  2. Use IDRS to compute the interest on the interest paired with the offset amounts as shown below.

    1. Print these IDRS screens and attach them to the Form 5792.

    2. Note that the definer G is used on these COMPA inputs. This example is of a Form 1120 BMF account that received credit interest under the normal corporate (COMPA C) rate on the first $10,000 of the overpayment. The remaining overpayment and the interest on the credit offset interest are subject to the GATT (COMPA G) interest rate limitation.

  3. The TC 776 following the interest on the fifth offset amount is paired with the TC 846 generated refund and is comprised of the interest on the remaining overpayment (TC 299 amount less all of the TC 826 offset amounts) and the interest on the posted TC 776 interest paired with the offsets.

  4. Note that the TC 777 interest reversal paired with the TC 841 refund cancellation only reverses the TC 776 paired with the TC 846. The TC 776 paired with the TC 826 offsets have not been reversed.  (11-19-2015)
Example of IDRS Input Used to Compute the Interest Paired with the Offset Amounts

  1. See example below.

    04292014 09042015 89.26 $3.69
    No INT-TO-DT> None
    04302014 09042015 299.92 $12.37
    07152014 09042015 39.91 $1.35
    06122014 09042015 81.74 $3.04
    Total Interest $20.45 (TC 770)  (11-19-2015)
Monitoring Requirements

  1. Mandatory use of the IAT, Erroneous Refund Monitoring Tool (EMT) is required when a manual refund is initiated. See IRM Monitoring Manual Refunds.

    1. Employees will monitor IMF accounts daily and BMF accounts weekly until the manual refund (TC 840) and NOREF (TC 841) posts to Master File and the account is in zero balance. Employees must document monitoring actions. Documentation should be reflected on the EMT listing along with locally developed history sheet.


      Managers must immediately notify the Process & Analysis (PA) Analyst assigned to Accounting and the Accounting HQ Analysts, if the TC 841 does not post within 2 - 3 weeks.


      The Refund Intercept Program (RIP) employees work from cycle folders containing all related case work, including monitoring activity.

    2. Documentation must include the TIN, MFT, TXPD (tax period), date of review (annotate each date you research TXMOD or BMFOL and employee name or initials and the TC 840 post date.

    3. When TC 840 posts to the tax module, attach an IDRS print showing the posted TC 840 or notate the date and IDRS posting cycle of the TC 840 on the monitoring documentation.

    4. Managers are required to confirm employees are leaving the IDRS control base open after refunds are input and are properly monitoring accounts until refund transactions post. Also, managers are required to document the review of the monitoring on a weekly basis. Managers will review monitoring documents and annotate with initials and date of review. Management will maintain this documentation in the cycle folder along with the required managerial monitoring of the monitoring on IAT, EMT. See IRM Monitoring Manual Refunds.

  2. Monitoring activity is intended to prevent erroneous refunds from being issued as a result of Master File processing, or other local actions, pending posting of the manual refunds.

  3. After the TC 840 posts, the accounts should be monitored to verify the posting of the refund reversals (TC 777 and TC 841). Use the IDRS Case Control listing to identify when the TC 841 transactions post along with the IAT, EMT. See IRM Other Manual Refund Requirements.


    Managers must immediately notify the Process & Analysis (P&A) Analyst assigned to Accounting and the Accounting Headquarters (HQ) Analysts, if the TC 841 does not post within 2 - 3 weeks.

    The Business Operating Division (BOD) Category on the IDRS Case Control listing (third column from the left) will update from RFDL to 841P when the TC 777(s) and TC 841(s) are processed.

  4. If a CC NOREF did not work and was not deleted by Kansas City Bureau of Fiscal Services (BFS), the activity information on the control base will change from RR200X2480 to RIM200X24. RIM means the refund interception was missed. If this occurs, there has been a duplicate refund issued and the account should be worked as an erroneous refund. See IRM 21.4.5 Erroneous Refunds.

  5. The inventory report should be used to check for credit or outstanding balances (other than the refund amount) during the monitoring period.

  6. Monitoring documentation must be maintained for a period of 90 days. A complete documentation file will include weekly monitoring actions completed by the employee, as well as the manager's completed review. The IAT, EMT Archive file will also reflect 90 days worth of data.  (01-01-2014)
IDRS Control Base Information

  1. The IDRS control base is established when initiating a manual refund on CC RFUND. The control base information reflected on IDRS should be used to track the status of account until all transactions are posted.

  2. The tables below reflect the IDRS control base display information and Field Description.

    Field Description
    C# Numeric sequence of the control base.
    STATUS Will reflect as one of the following alpha codes:
        A (Assigned)
        B (Background)
        S (Suspense)
        C (Closed)
        M (Monitor)
    ACT-DT Date of the most recent update to the control base
    ACTION-EMP Employee IDRS number of the person who did the input
    ACTIVITY Ten character field for abbreviated remarks. Following input of CC NOREF, it will be RR20XX4480 (current year variable cycle). This may be updated to RIM20XX480 if AFC misses the interception of the generated refund
    RCVD-DT Date of RFUND input, can be revised
    ASSIGN-TO Employee who input RFUND, can be revised
    CAT Control Base Category will be:
        840- when the refund is input
        RFDL after the NOREF is input
        841P when the TC 777 and TC 841 posts
  3. The IDRS CC input screen requires the input of a Status Code and Category Code. It automatically generates an Activity description.

    1. The Status Code is included on the refund input screen as part of the Line 4 entries. The literal C on Line 4 should be overlaid with B to establish the control base in background status.

    2. The Category Code is also included on Line 4. It will be established as 840- when the refund is input.

    3. Input of the CC RFUNDR will cause IDRS to establish the Activity field with the description IDRSREFUND.

  4. The IDRS CC NOREF input screen requires the input of a Status Code and a Category Code and a revision to the Activity description.

    1. The Status Code is included on the refund stop screen as part of the Line 2 entries. Status Code B should be entered in the designated field to leave the control base in Background status.

    2. Also, the Category Code is included on Line 2. It will be entered as RFDL on the input screen.

    3. The Activity description is computer generated as RR200X44T (current year variable cycle) when the NOREF is input. The resulting update on the control base activity display will be RR20XX580.

  5. When the reversal of the TC 776 and TC 846 is processed, the Category Code will be changed to 841P. This will provide an easy visual reference to check for on the weekly IDRS Inventory listing.

  6. When all actions are completed, the IDRS control base should be closed using CC ACTON.  (01-13-2014)
TC 470/TC 570 Module Freeze Input

  1. A manual refund input will cause the taxpayer account to reflect a balance due status, pending the posting of the refund reversal (TC 841). Input a TC 470 with posting delay code "1" and the following statement in the "Remarks" : "NSD PN TC 841 of TC 846." The TC 470 initiates a module freeze code "T" , which prevents balance due notices and systemic credit transfers from occurring.

  2. If an account has a proposed assessment, offset or credit reversal identified at the completion of the Refund Intercept Review, input CC NOREF and a TC 570 to prevent an erroneous refund from generating. This must be completed prior to the posting of the proposed assessment, offset or credit reversal. When TC 570 is input the following statement should be used in the "Remarks" : "Pending Assessment" . Do not issue a manual refund if this occurs.

  3. In the event the refund reversal (TC 841) posts prior to the proposed assessment, offset or credit reversal, an erroneous refund may generate. The TC 570 initiates a module freeze code "R" , preventing the issuance of an erroneous refund. This situation is most likely to occur on Examination and Underreporter cases.  (11-19-2015)
Refund Interception Savings Log

  1. The Refund Interception Savings Log is used for tracking the review statistics for the Refund Intercept Program. It is a spreadsheet maintained by fiscal year ending, with weekly results and broken down by posting cycle for BMF Accounts. It also provides combined totals. The BMF sites E-mail completed Logs weekly to Refund Interest Analyst Garry.S.Sewell@irs.gov and Submission Processing Headquarters Analysts Debra.J.Scott@irs.gov and Crystal.Noble@irs.gov. .A copy of the current Refund Intercept Savings Log can be found on the Submission Processing Web Site.

  2. The Refund Interception Savings log is designed to automatically provide weekly and monthly receipt totals,, the number of refund stops input and the total interest saved. Also, the Log generates quarterly, half-year and full year totals. The log is designed to automatically modify all of the totals when corrections to previously entered data are made.

  3. The transaction dates (23C) of the TC 846 is used to designate the month the results are reported to.

  4. The data collected from the sites is used to compile Headquarters reports.  (01-01-2015)
Production Report on Work Planning & Control (WP&C)

  1. On the Production Report for the WP&C, the sites should count the number of accounts reviewed and the number of refund stops for the Refund Intercept Program. All work and volumes will be charged to (organization, function and program (OFP) 420–38740.

  2. Clerical hours used for the Refund Intercept Program will be charged to OFP 420-38740.  (01-01-2014)
Correcting Accounts Identified with Incorrect Received Dates

  1. During receive date review of the Refund Intercept listings it may become apparent returns have posted with incorrect received dates. Research for inconsistencies such as the received date is earlier than a previously posted TC 460 or a TC 140 posted later than the IRS received date. Other examples may be a number of returns posted with an odd received date such as 05-11-09 present on the cycle listing with a current Julian date and current year 2010 is shown in the DLN.

  2. Order the questionable returns from Files within two weeks following the receipt of the cycle listing. If the posted received date is identified as correct/incorrect, issuance of an additional refund of the interest may be necessary. Subtract the savings and volume from the Refund Intercept Report.

  3. If you determine the posted received date is in error, issue the manual refund without interest and stop the generated refund.

  4. If the received dates are incorrect, the assessment statute expiration date (ASED) and correspondence received dates (CRD) will need to be updated and/or added to the modules. The collection statute expiration date (CSED) does not need to be corrected. They are established by the 23C posting date of the TC 150 and are correct as shown in the table below.

    If ... Then ...
    Incorrect IRS received dates detected
    1. Determine if the following dates are correct/incorrect.

      1. ASED

      2. CRD

    2. Calculate correct dates

      1. ASED is 3 years after the return was filed (received date)

      2. CRD is the same as the date the return was filed (received date).

    ASED is correct Take no action
    ASED is incorrect Input REQ77
    1. Overlay TXMOD with REQ77 (transmit)

    2. Input TC = 560, Extension date = 3 years + received date (date filed/Julian date)


    CRD is correct Take no action
    CRD is incorrect Input CC REQ77
    1. Overlay TXMOD with REQ54 (transmit)


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