3.17.80 Working and Monitoring Category D, Erroneous Refund Cases in Accounting Operations

Manual Transmittal

November 23, 2016

Note:DO NOT REMOVE AND INSERT PAGES OF PRIOR IRM TRANSMITTALS PRIOR TO JANUARY 1, 2017.

Purpose

(1) This transmits the revised IRM 3.17.80, Accounting and Data Control, Working and Monitoring Category D, Erroneous Refund Cases in Accounting Operations.

Material Changes

(1) Updated IRM 3.17.80.1.3.1 with editorial changes to correct typographical errors.

(2) Updated IRM 3.17.80.1.3.2 with 2017 report due dates.

(3) Updated IRM 3.17.80 Exhibit-18 with newer points of contact.

(4) Updated IRM 3.17.80 Related Resources with IRM 3.0.167, Losses and Shortages.

(5) IPU 16U1535 issued 10-14-2016 IRM 3.17.80.1.3(2) clarification to IPU16U1480.

(6) IPU 16U1480 issued 10-05-2016 IRM 3.17.80.1.3(2) new item added to the descriptions of errors that are to be included when submitting the monthly reports to Headquarters (HQ).

(7) IPU 16U1480 issued 10-05-2016 IRM 3.17.80.1.3.1(14) revised instructions for completion of the monthly DMER review by the Erroneous Refund Work Leaders (a.k.a. Leads).

(8) IPU 16U1480 issued 10-05-2016 IRM 3.17.80.1.6.2(1) editorial change revising the note.

(9) IPU 16U1480 issued 10-05-2016 IRM 3.17.80.1.7(1) (a) revised instructions removing instructions not needed

(10) IPU 16U1480 issued 10-05-2016 IRM 3.17.80.1.8(3) revised instructions and deleted ASED/CSED information.

(11) IPU 16U1480 issued 10-05-2016 IRM 3.17.80.1.8(5) revised instructions and deleted ASED/CSED information.

(12) IPU 16U1480 issued 10-05-2016 IRM 3.17.80.1.9.1(4) note revised instructions making it optional to access the Integrated Collection System (ICS) if available instead of issuing Forms 2209.

(13) IPU 16U1480 issued 10-05-2016 IRM 3.17.80.1.9.2(1) (e) revised instructions for inputting TC 270.

(14) IPU 16U1480 issued 10-05-2016 IRM 3.17.80.1.9.3 revised instructions for inputting TC 270.

(15) IPU 16U1480 issued 10-05-2016 IRM 3.17.80.1.11 added instructions about legibility and having no abbreviations within the history file documentation.

(16) IPU 16U1480 issued 10-05-2016 IRM 3.17.80.1.11 IRM 3.17.80.1.12 revised instructions making it optional to access the Integrated Collection System (ICS) if available instead of issuing Forms 2209.

(17) IPU 16U1480 issued 10-05-2016 IRM 3.17.80.1.13 revised instructions making it option to access the Integrated Collection System (ICS) if available instead of issuing Forms 2209.

(18) IPU 16U1480 issued 10-05-2016 IRM 3.17.80.1.19(10) revised instructions for entering various information into the 1099-C.

(19) IPU 16U1240 issued 07-29-2016 IRM 3.17.80.1.2.1 additional instructions added for 1530 General Ledger.

(20) IPU 16U1240 issued 07-29-2016 IRM 3.17.80.1.3.1 additional instructions added for completion of DMER Report.

(21) IPU 16U1240 issued 07-29-2016 IRM 3.17.80.1.3.2 new/additional instructions for reporting the two Manual Refund Reports that are part of the HQ Duplicate Refund report.

(22) IPU 16U1240 issued 07-29-2016 IRM 3.17.80.1.9.2(1) revised TC 270 instructions.

(23) IPU 16U1240 issued 07-29-2016 IRM 3.17.80.1.9.3(4) revised TC 270 instructions.

(24) IPU 16U1240 issued 07-29-2016 IRM 3.17.80.1.11.1 revised instructions to assist with interest and demand letters.

(25) IPU 16U1077 issued 06-15-2016 IRM 3.17.80.1.2 (1) IF/Then chart has been updated.

(26) IPU 16U1077 issued 06-15-2016 IRM 3.17.80.1.3.1 has additional clarification to instructions.

(27) IPU 16U1077 issued 06-15-2016 IRM 3.17.80.1.5 has additional guidance regarding interest calculations on erroneous refunds over $100,000.00.

(28) IPU 16U1077 issued 06-15-2016 IRM 3.17.80.1.9.2 has additional guidance regarding interest calculations on erroneous refunds over $100,000.00.

(29) IPU 16U1077 issued 06-15-2016 IRM 3.17.80.1.11(8) has new instructions about closing an erroneous refund case when there are more credits than the amount of the erroneous refund.

(30) IPU 16U1077 issued 06-15-2016 IRM 3.17.80.1.12 has additional clarification to instructions.

(31) IPU 16U1077 issued 06-15-2016 IRM 3.17.80.2.4.3 (2) has and editorial change due to a typographic mistake.

(32) IPU 16U1077 issued 06-15-2016 minor editorial change throughout IRM regarding reviewing and inputting TC 470 CC 93.

(33) IPU 16U0813 issued 04-27-2016 IRM 3.17.80.1.3.1 revised all reporting procedures for Duplicate Manual Erroneous Refund (DMER) cases.

(34) IPU 16U0813 issued 04-27-2016 IRM 3.17.80.1.12 providing clarification to instructions.

(35) IPU 16U0621 issued 03-29-2016 Updated IRM 3.17.80.1.3 added erroneous refund causes.

(36) IPU 16U0621 issued 03-29-2016 Revised IRM 3.17.80.1.5 Interest Considerations to conform more with IRM 20.2, Interest, and Policy Statement 2-10.

(37) IPU 16U0621 issued 03-29-2016 Revised IRM 3.17.80.1.9(4) Note for the correct 510-C letter paragraph.

(38) IPU 16U0303 issued 02-10-2016 Additional information and guidance in IRM 3.17.80.1.3 with editorial changes and added erroneous refund causes.

(39) IPU 16U0303 issued 02-10-2016 Additional information and guidance in IRM 3.17.80.1.6.1(4) editorial change

(40) IPU 16U0303 issued 02-10-2016 Additional information and guidance in IRM 3.17.80.1.9.2(5) editorial change

(41) IPU 16U0303 issued 02-10-2016 Additional information and guidance in IRM 3.17.80.1.9.4(9) instruction change

(42) IPU 16U0303 issued 02-10-2016 Additional information and guidance in IRM 3.17.80.1.11(3) editorial change

Effect on Other Documents

IRM 3.17.80 dated November 19, 2015 (effective January 1, 2016) is superseded. The following IPUs, issued from January through October 5, 2016 have been incorporated into this IRM: 16U0303, 16U0621, 16U0813, 16U1077, 16U1240, 16U1480.

Audience

All Submission Processing Accounting Operations Campuses (Wage & Investment and Small Business/Self Employed)

Effective Date

(01-01-2017)

Related Resources

These procedures should be used in conjunction with IRM 3.17.63 Redesign Revenue Accounting Control System, IRM 3.17.64, Accounting Control General Ledger Policies and Procedures, IRM 3.17.243, Miscellaneous Accounting, IRM 21.3.3, Incoming and Outgoing Correspondence/Letters, IRM 21.4.5, Erroneous Refunds, IRM 3.0.167, Losses and Shortages, IRM 2.3, IDRS Terminal Responses, IRM 1.11.5, Publishing the Internal Revenue Manual (IRM), 1.11.8, Servicewide Electronic Research Program (SERP). IRM deviations must be submitted in writing following instructions from IRM 1.11.2.2, Internal Management Documents System - Internal Revenue Manual (IRM) Process, IRM Standards, and elevated through appropriate channels for executive approval.

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

Recovering Category D, Erroneous Refunds

  1. Incorrect refunds are occasionally issued to taxpayers due to processing errors, misapplied payments, incorrect tax adjustments, taxpayers filing fraudulent returns or using an incorrect taxpayer identification number (TIN), etc.

  2. Erroneous Refunds are processed according to categories (A1, B, etc.) based upon certain characteristics on the tax module. The categories are defined in IRM 21.4.5, Erroneous Refunds, and must be used for processing all erroneous refunds.

  3. For Un-assessable (Category D) erroneous refund cases processed in Accounting Control/Services, Erroneous Refund Unit, it is imperative that technicians use and be familiar with the instructions outlined in IRM 21.4.5, Erroneous Refunds, when processing cases.

  4. Section 3705 (a) of the IRS Restructuring and Reform Act of 1998 (RRA 98) requires employees to include their name, telephone number and Integrated Data Retrieval System (IDRS) number on manually generated and handwritten correspondence.

  5. Refunds issued to an identity thief are Category D erroneous refunds; however, the provisions of this IRM do not apply. BMF Identity Theft (IDT) Erroneous Refunds, Forms 3809, and in IRM 3.17.243.6.6, Identity Theft Erroneous Refund Write-Off Procedures.

  6. See Enterprise Learning Management System (ELMS) Course 10824, Researching and Resolving Erroneous Refunds.

Taxpayer Advocate Service

  1. Refer taxpayers to the Taxpayer Advocate Service (TAS) (see IRM Part 13, Taxpayer Advocate Service ) when the contact meets TAS criteria (see IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria) and you can’t resolve the taxpayer’s issue the same day. The definition of “same day” is within 24-hours. These “Same day” cases include cases you can completely resolve in 24-hours, as well as cases in which you have taken steps within 24-hours to begin resolving the taxpayer’s issue(s). Do not refer these cases to TAS unless they meet TAS criteria and the taxpayer asks to be transferred to TAS. Refer to IRM 13.1.7.4, Same Day Resolution by Operations. When referring cases to TAS, use Form 911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance order).

  2. The National Taxpayer Advocate has reached agreements with the commissioners of the Wage and Investment (W&I) Division, Small Business and Self-Employed (SB/SE) Division, Tax Exempt and Government Entities (TE/GE), Criminal Investigation (CI), Appeals and Large Business and International (LB&I), that outline the procedures and responsibilities for the processing of TAS casework when either the statutory or delegated authority to complete case transactions rests outside of TAS. These agreements are known as service level agreements (SLAs).

  3. The SLAs contain basic requirements for handling TAS-referred cases, and includes specific actions to take on TAS referrals and specific time frames for completing those actions. Employees in the business operating divisions will acknowledge receipt and provide the name and phone number of the IRS employee assigned to work the case via Form 3210, Document Transmittal, secure messaging E-mail, facsimile, or by telephone within three (3) workday of receipt of the Form 12412, Operations Assistance Request (OAR). If necessary, the assigned employee/manager will contact the TAS employee and negotiate the completion date in resolving the OAR actions.

  4. The SLAs are located at "http://tas.web.irs.gov/" under the heading of "Policy/Procedures/Guidance" .

General Overview

  1. Accounting Operation's role, to attempt recovery or request voluntary repayment of erroneous refunds, does not change. Report feedback to your respective site servicing areas if the causes are attributable to the actions of a particular functional area whether the Erroneous Refund was initiated locally or at another site (transferred). This not only alerts the area of processing errors to initiate corrective actions, but documents that we have informed management to prevent future erroneous refunds. (see table below)

    If: Then:
    The erroneous refund was issued and identified in Kansas City's servicing area
    1. Feedback will be sent by Kansas City's erroneous refund team to their local (servicing area) business or functional area.

    2. Kansas City's erroneous refund team will report the feedback information on their Monthly Erroneous Refund Report to Headquarters.

    The erroneous refund was issued by Fresno's servicing area and subsequently identified by Ogden’s servicing area
    1. The case should be sent to Fresno’s Erroneous Refund team

    2. Fresno's erroneous refund team will report the feedback information on their Monthly Erroneous Refund Report to Headquarters

    3. Error feedback will be sent by Fresno’s Erroneous Refund team to Fresno's (servicing area) business or functional area

    Note:

    For duplicate, manual, erroneous refund feedback, follow IRM 3.17.80.1.3.1.

  2. IRS must report disbursement losses per IRM 3.0.167, Losses and Shortages. Areas causing erroneous refunds must participate and provide documentation to support write-off actions if deemed un-collectible.

    1. Documentation consists of the circumstances surrounding the reason actions resulted in an Erroneous Refund.

    2. Management must take corrective actions to prevent processing errors in the future.

    3. In addition to working notices, transcripts and quality reviews, establishing a mechanism to provide feedback to the areas causing erroneous refunds to occur demonstrates the IRS proactive approach to reduce errors and suffer fewer disbursement losses.

  3. Feedback must have but not be limited to:

    • Feedback sheet explaining fin! dings and corrective actions taken.

    • Full IDRS TXMOD print of account where ERRF occurred.

    • Entity portion of ENMOD print for accounts affected.

    • Copy of Form 12356 (if provided in the erroneous refund package sent to the Erroneous Refund team)

    • Any information to identify the employee or area causing the erroneous refund such as a copy of the manual refund document, Discovery Directory prints, IUUD prints, etc.

  4. Erroneous Refund cases must be forwarded to the respective Submission Processing site Erroneous Refund function documented and accurately prepared, as outlined in IRM 21.4.5, Erroneous Refunds

    Note:

    If the erroneous refund was issued outside a campus servicing area, they would not be working the case or sending, or reporting feedback. The campus where the refund generated from would work the case, initiate feedback and include on their report.

    .

    1. The category type of erroneous refund must be identified.

    2. Determine the correct Accountable Officer for recovery actions. If the Accounting Erroneous Refund team incorrectly receives a case belonging to another site accountable officer, reject the case back to the originator.

    3. If an Erroneous Refund team is maintaining a case that belongs to another site Accountable Officer, close the IDRS control base and follow IRM 3.17.80.1.23 to transfer the erroneous refund case to the site of the Accountable Officer.

    4. Where incomplete case files are received, they may be returned to the originator after attempts of contacting the originator by telephone and/or E-mail communication has been made to correct information/documentation on the account.

    5. Ensure the erroneous refund statute expiration date (ERSED) is open prior to returning the case to the originators for completion (always use TCIS to determine the actual refund date).

    6. If the ERSED is open, and the newly-received case is incomplete, return the case to the originators after 5 work-days of attempting to obtain the missing documentation.

    7. Ensure Transaction Code (TC) 971 with Action Code (AC) 663 is input.

  5. History Sheets must be prepared from the point of discovery. Form 12356 must be used by the area discovering the erroneous refund per IRM 21.4.5.5, Account Actions for Category D Erroneous Refunds. Accounting Operations must also include documentation of actions taken, pending actions, telephone calls, copies all letters, etc., must be annotated on the History Sheet and be retained in the case file. This assists in substantiating future write-off actions if not recovered in the manual billing process.

  6. The ERSED is 2 years after making the erroneous refund unless the refund was induced by fraud or misrepresentation of a material fact, in which case the ERSED expires 5 years from the date the taxpayer receives the erroneous refund. . If there are causes that do not appear to be covered in this IRM, seek assistance to pursue cases through coordination at the Planning and Analysis staff level or other management support functions to obtain local Counsel's approval to pursue recovery using the 5-year duration. Refer to IRM 3.17.80.1.6.1, Erroneous Refund Statute Considerations.

    Note:

    All payment over cancellation (POC) cases have a 5-year ERSED.

  7. Classification depends on the type of error which caused the Erroneous Refund. For additional information, see Exhibit 3.17.80-2, Erroneous Refund Flow Chart. All erroneous refunds will be classified into categories as described in IRM 21.4.5, Erroneous Refunds.

  8. The entire amount of the unpaid erroneous refund must be reversed into the 1530/1535/1540/1543/1545/1547 General Ledger and recovered, within the ERSED, through voluntary repayment, right of offset, or civil suit pursuant to IRC Section 7405. This process forms the basis for the instructions in this IRM to monitor, recover or write-off as unrecoverable Erroneous Refund cases.

    1. References to the erroneous refunds accounts (1530, 1535, 1540, 1543, 1545, 1547) are shown in text as "15XX" .

    2. See IRM 3.17.80.1.18, Write-Off Procedures for Unrecoverable Erroneous Refunds.

    3. Accounts 1530, Employee Fraud-Court Case Erroneous Refunds, 1535, Court Case Erroneous Refunds (Kansas City-Only), 1540, Non-Court Case Erroneous Refunds, 1543, Payment Over Cancellation Erroneous Refunds, and 1545, ID-Theft Erroneous Refunds, 1547, Return Preparer Misconduct Erroneous Refunds were established with Redesigned Revenue Accounting Control System (RRACS). These accounts impact the Director's accountability.

    4. If it is determined that an erroneous refund is recoverable, one of the 15XX Accounts are debited and used to substantiate use of credit TC 700 posted to the taxpayer's account. This action prevents erroneous Master File (MF) notices from generating while corresponding with the taxpayer requesting repayment for the Erroneous Refund.

    5. A credit (false) TC 700 posts to the taxpayer's account, identified by Document Code 58 blocking series 950-999 in the document locator number (DLN). "Erroneous Refund (-U Freeze)" ERR-REF-BAL-DUE is displayed on TXMOD for these cases. This informs other employees that the account is being worked and monitored in Accounting.

    6. See Figure 3.17.80-1, for a view of the TXMOD screen and Exhibit 3.17.80-3, Erroneous Refund Accounts 1530 and 1540.

    Figure 3.17.80-1

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    Please click here for the text description of the image.

  9. The Customer Account Data Engine (CADE) 2 solution is comprised of several components, to modernize the IRS to a daily processing environment with several transition states.

  10. The components of CADE 2 Transition State 1 in January 2015 include:

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

    2. Master File Processing – Friday - Thursday

    3. Notice Review – Saturday - Monday (8 days later, 2 am eastern)

    4. Unpostables – Tuesday to Tuesday

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

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

    IMF notices under a $1000 tolerance (change in refund amount) will bypass Notice Review Processing System (NRPS) and will be sent directly to Correspondence Processing System (CPS), to be mailed to the taxpayer.
    1. Daily Processing – IMF processing with the new cycle definition outlined in (2) a), but processing daily (daily transactions to daily accounts) with weekly processing occurring on Thursday.

      Note:

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

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

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

  11. IMF transactions posting time frames are outlined as follows

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

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

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

      Note:

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

    4. Use of the posting delay code on transactions will result in the transaction being held until the weekly processing on Thursday. When the transaction is processed on Thursday and the posting delay code contains a value other than zero, the transaction will continue to resequence for the number of cycles equal to the value.
      EXAMPLE: A transaction input with a posting delay code of 1 will be processed on Thursday, and will resequence until the following weekly processing day (the following Thursday).
      CAUTION: Be aware that the use of the posting delay code by IRS personnel, on a daily account with daily transactions, may result in delaying the posting of the transactions that would resolve the account.

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

    Note:

    Some new IMFOL definer codes have been added to be able to view a “historical” look at accounts for a previous date or cycle. The new IMFOL definers are:

    • “J” – IMF Tax Module Balance History

    • “K” – IMF Entity Freeze History

    • “L” – IMF Tax Module Freeze History

  13. For Notice Review and or Erroneous Refund units, when CC NOREFP is initiated, the following chart explains when the TC 846 and systemic TC 841 will be displayed:

    Daily Account TC 846/841 Posting Chart
    Transaction Code CFOL Command Codes IDRS Command Codes
    TC 846 Next business day Second business day
    TC 841 Two business days Third business day
    Weekly Account TC 846/841 Posting Chart
    Transaction Code CFOL Command Codes IDRS Command Codes
    TC 846 Saturday after freeze releases Monday after freeze releases
    TC 841 Second Saturday after freeze releases Second Monday after freeze releases
Accounts 1530, Employee Fraud and/or Civil Suit Erroneous Refund Court Cases, Account 1540, Non-Court Case Erroneous Refunds, Account 1543, Payment Over Cancellation Erroneous Refunds.
  1. This receivable account is used to record an employee fraud case and/or civil suit erroneous refund court case. Account 1530 will be supported by:

    • Court documents

    • Treasury Inspector General for Tax Administration (TIGTA) and/or Criminal Investigation (CI) Reports

    • Debit vouchers or other documents showing the name of each debtor, amount receivable and details of the transaction creating the indebtedness.

  2. Employee fraud cases are controlled in the 1530 Account. Access should be limited.

  3. Transfer case to the 4910 Disbursement Loss Account, when the case is determined un-collectible.

    Note:

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    . Documentation will explain why the case is uncollected.

  4. The external subsidiary for the 1530 account is the file of paper documents described in (1) above.

  5. Account 1530, Civil Suit Erroneous Refund cases:

    1. This account records erroneous refunds that result in a court case. Account 1530 is supported by copies of all correspondence, court documents, TIGTA and/or CI or other agency reports, debit vouchers or documents showing the name of each debtor, amount receivable and details of the transaction creating the indebtedness.

    2. Since this is considered a Category-D erroneous refund case and the case has been through court where we expect restitution, proceed to send quarterly letters.

    3. Transfer cases from the 1540 Account to this account when it is determined that the case is going to court.

    4. Transfer cases to the 4910 Disbursement Loss Account once the case is determined to be uncollectible. See IRM 3.0.167.8.4, Account 4910, Disbursement Loss, for additional instructions.

    5. Indicators that the case is uncollectible include: 1) Taxpayer has fled the country; 2) Taxpayer is incarcerated and won’t be released until after the ERSED; 3) Taxpayer is deceased; 4) There are indicators that the taxpayer cannot be found (e.g. returned letter indicating taxpayer does not live at the address IRS has on file and no better address can be found.

  6. Account 1540, Non-Court Case Erroneous Refund:

    1. This account records erroneous refunds that are NOT court cases. This account represents erroneous refunds that have NOT been collected, resulted in court cases, assessed or determined uncollectible. Account 1540 is supported by copies of all correspondence, debit vouchers (Form 2209, Form 3809, etc.) or other documents showing the name of the debtor, amount receivable and details of the transaction creating the indebtedness.

    2. Transfer cases to the 1530 Account when it is determined that the case is going to court.

    3. Transfer cases to the 4910 Disbursement Loss Account when the ERSED (either 2 or 5 years) expires.

    4. A case determined to be uncollectible before the statute expiration is transferred to the 4910 Disbursement Loss Account. Documentation explains why the account is uncollectible. See IRM 3.17.64.3.5, Account 4910, Disbursement Loss (Real Account, DR Normal Balance), and IRM 3.0.167.8.4, Account 4910, Disbursement Loss, for additional instructions.

  7. Account 1543, Payment Over Cancellation (POC) Erroneous Refund:

    1. A "Payment Over Cancellation (POC)" case occurs when a taxpayer files a claim for non-receipt of a refund check, a replacement (Recertified) check is issued, and it is determined that both checks were cashed.

    2. This account records erroneous refunds that are NOT court cases (1530 Account) and NOT cases that belong in the 1540 account, "regular" erroneous refunds. Account 1543 is supported by copies of all correspondence, debit vouchers (e.g. various Bureau Financial Services (BFS) documents, Forms 2209, Forms 3809, etc.) or other documents showing the name of the debtor, amount receivable and details of the transaction creating the indebtedness.

    3. Although extremely rare, transfer cases to the 1530 Account when it is determined that the case is going to court. Transfer cases to the 4910 Disbursement Loss Account when the ERSED (always 5-years for POC cases) expires.

    4. A case determined to be uncollectible before the statute expiration is transferred to the 4910 Disbursement Loss Account. Documentation explains why the account is uncollectible. SeeIRM 3.17.64.17.3.5 , Account 4910, Disbursement Loss (Real Account, DR Normal Balance), and IRM 3.0.167.8.4 , Account 4910, Disbursement Loss, for additional instructions.

Monthly Reporting Category D Erroneous Refunds

  1. Management must report feedback to business or functional areas when employee actions cause the occurrence of erroneous refunds. This may be the result of lack of actions such as failure to monitor accounts or the originators of manual refunds (TC 840) who inadequately research accounts and fail to stop a system-generated refund (TC 846).

    1. Management's interest in the causes of erroneous refunds became elevated as a result of the 1998 TIGTA erroneous refunds audit report.

    2. It is suggested reports be centralized at the Operation level or Director's level.

    3. Reports at the sites will support documentation that we have provided notification to the areas causing the errors for corrective actions. Similar reviews have been performed by the Government Accountability Office (GAO), TIGTA, the Annual Assurance process, and related other internal control review requirements described in IRM 3.0.257, Systems Accountability Review.

    4. The calendar-year, monthly Erroneous Refund report is due to Headquarters (E-mail or fax) 10 business days after the last business day of the month (i.e., January 2016 report due on February 12, February 2016 report due on March 14, June 2016 report due on July 15th, etc.).

  2. Only the following descriptions of errors will be included when submitting the monthly reports to Headquarters (HQ):

    • Bankruptcy

    • Credit Card Charge-back

    • Dishonored Check/Stopped Payment/Insufficient Funds

    • Duplicate Filed Return

    • Duplicate Refund (TC 840 and TC 846-TC 840 in error)

    • Duplicate Refund (TC 840 and TC 846-TC 846 in error)

    • Duplicate Refund (Two TC 840s)

    • Duplicate Refund Systemic

    • Encoding Error

    • Fraudulent Return (TC 840/841)

    • Health Coverage Tax Credit (HCTC)

    • Failure to code or input Computer Condition Code (CCC)"O"

      Note:

      If a Submission Processing Site has failed to code or input the CCC, always send error feedback to the Site’s SP P&A Chief in addition to the appropriate area causing the error. Refer to this instruction when doing so.

    • Fraudulent Returns (TC 840/841)

    • Health Coverage Tax Credit (HCTC)

    • Identity Theft- Thief Benefitted

    • Identity Theft - Taxpayer Benefitted (include a specific reason (i.e. Child Support or Offset to an Agency that needs to be included within the description)

    • Incorrect Adjustment

    • Incorrect Hold Code

    • Incorrect Credit Interest

    • Incorrect Credit Transfer

    • Incorrect Manual Refund (TC 840)

    • Incorrect Withholding

    • Internet Tax Scheme

    • Misapplied Payment — Account #

    • Misapplied Payment — Master File Tax (MFT)

    • Misapplied Payment — Routing #

    • Misapplied Payment — Tax Year

    • Misapplied Payment — TIN

    • Misapplied Payment Lockbox — Account #

    • Misapplied Payment Lockbox — MFT

    • Misapplied Payment Lockbox — Routing #

    • Misapplied Payment Lockbox — Tax Year

    • Misapplied Payment Lockbox — TIN

    • Mixed Entity

    • Omitted/Improper Monitoring

    • Other-Field Error (describe in detail)

    • Other-Service Center Error (describe in detail with above or below causes)

    • Payment Over Cancellation (POC)

    • Return Preparer Misconduct (RPM) - Taxpayer Benefitted)

    • Refund Before Assessment

    • Refund Intercept Processing Error

    • Re-sequencing - not systemic

    • Statute Expired Credit Release

      Note:

      Always use TCIS to research the actual refund date

    • Systemic causes (describe in detail)


    Functional area or other cause of the error Description of the error Corrective actions taken Volume of cases Dollar amounts
    Taxpayer Advocate Service (Fresno Submissions Processing Campus) Omitted/Improper Monitoring Discussed importance of monitoring and stopping a generated (TC 846) when expediting a Manual Refund (TC 840) due to a hardship in team meeting 3 $25,750.28
    Accounts Management (Ogden Submission Processing Campus) Misapplied Payment — TIN Lead went over transferring procedures in a team meeting; also discussed importance of applying payments to correct taxpayer account 56 $325,756.47
    Data Conversion (Integrated Submission and Remittance Processing) Misapplied Payment — Tax Year Provided feedback on importance of transcribing information correctly in a group meeting. 24 $36,500.00

    Note:

    The monthly reports should mirror the above table. When describing the business or functional Area, descriptions, and corrective actions taken, be sure to provide clear and concise descriptions in the appropriate report fields. (see table above and descriptions found in IRM 3.17.80.1.2(2)

  3. When feedback is received and there is disagreement on who caused the erroneous refund, and if it is discovered the error feedback should have been sent elsewhere (i.e., a previous month lockbox error was really a taxpayer error), prepare an updated monthly report and send it to the HQ Erroneous Refund Analyst the same time the regularly scheduled monthly report is due.

  4. For lockbox cases that are being written-off, the above described report and copies of the cases should be sent to both the HQ Erroneous Refund Analyst and the HQ Losses and Shortages Analyst.

  5. Uploading Multiple Reports to the ATP SharePoint site: Go to the ATP SharePoint site home page: https://organization.ds.irsnet.gov/sites/SPATPBranch/default.aspx

    1. From the ATP SharePoint Site home page click on the Category-D Erroneous Refund Reports link on the left hand side of the screen under Document Libraries.

    2. Select (click on) the appropriate year of your report

    3. Select (click on) the appropriate Site for loading your report.

    4. Select (click on) the appropriate month of your report.

    5. On the top of the screen under Library Tools select Documents, select Upload Document and from the drop‐down list select Upload Document.

    6. Select the monthly erroneous refund report/file that you want to upload and select OK.

    7. Select Yes on the pop-up box and your file will be uploaded and be viewable within the ATP SharePoint Site.

  6. Deleting Reports from the ATP SharePoint Site: Go to the ATP SharePoint site home page: https://organization.ds.irsnet.gov/sites/SPATPBranch/default.aspx

    1. From the ATP SharePoint Site home page click on the Category-D Erroneous Refund Reports link or the Duplicate Refund link on the left hand side of the screen under Documents.

    2. A screen showing all sites will appear.

    3. Select the site and then select the folder of the report that is to be deleted.

    4. Move your pointer over the item you want to delete and a box will appear around the item.

    5. To the right of the item there will be a small triangle, click on the triangle and a drop-down menu

    6. Select Delete from the list, and then click on OK.

Monthly Reporting and Error Feedback for Duplicate, Manual, Erroneous Refunds (DMER)
  1. TIGTA, GAO, and other management internal control reviews cited a high incidence of duplicate refunds. Because of this, the Wage and Investment Commissioner has asked for additional focus on duplicate, manual, erroneous refunds.

  2. Refer to IRM 21.4.5.4.6, Duplicate, Manual, Erroneous Refund (DMER), for identifying and initial actions that anyone must take if/when a DMER is identified.

    1. Accounting Erroneous Refund team employees must be able to identify DMER cases!

    2. A Duplicate Manual Erroneous Refund (DMER) is created anytime a manual refund (TC 840) and a computer generated refund (TC 846) or two manual refunds are issued for the same overpayment, one of which the taxpayer is not entitled to receive. This definition applies regardless of taxpayer intent or whether the error that caused the DMER was made by the IRS, the taxpayer, or a third party.

    3. Because of the seriousness of this kind of erroneous refund it is imperative for you to know the IRM 21.4.5.4.6 information.

  3. Form 14165, Erroneous TC 840/TC 846 Report, will be included with all duplicate, manual, erroneous refund (DMER) cases forwarded to the Erroneous Refund Teams. (see IRM 21.4.5.4.6.1 and Figure 3.17.80–2) Lines 1 through 10 of the Form 14165 must be completed by the organization that forwards the case to the Erroneous Refund Teams.

    Note:

    If the Form 14165 (boxes 1-9) are not fully completed, complete the entries for the area if possible. If completion of the entries is not possible, contact the generating area for the information and complete the Form 14165. If the information is not supplied to the erroneous refund team/employee within 5 business days of contacting the area, do not reject the forms. Instead, proceed to report the cases to the HQ Submission Processing Erroneous Refund Analyst. Generally, the forms will be completed properly as outlined in IRM 21.4.5.4.6.1 , Form 14165, Erroneous TC 840/TC 846.

  4. The Erroneous Refund Teams will complete lines 11 through 13 of the Form 14165 that should be included with each DMER case.

    1. Box 11 should be entered and include the manual refund Approver's SEID.

    2. Box 12 should be entered and include the manual refund preparer's name and phone number.

    3. Box 13 should be entered and include the Manual Refund request date of approval.

  5. Any complete DMER case received during the month will be reported to SP Headquarters in the same month when the case was received by the site (e.g. a case received on May 15th will be reported within the May report, a case received on June 29th will be reported on the June report, etc.)

  6. By the 1st of each month, the Business Operating Division (BOD) Points of Contact (see Exhibit 3.17.80-16) will receive a copy of newly-identified DMER cases from HQ AM who researches Masterfile for erroneous refunds.

  7. The BOD Points of Contact (POCs) have 15-days to:

    1. Review and provide feedback to the DMER HQ AM Analyst, if the BOD POC does not agree with the DMER list. If no feedback is received from the BOD POC, all DMER cases shown on the list will be loaded to the DMER SharePoint site for inclusion in the Duplicate Refund Report (DRR) that is completed by Submission Processing HQ Erroneous Refund Analyst.

    2. Forward all cases to the DMER originator(s)/preparer with instructions for them to: 1)Take the necessary corrective actions – including the instructions from the DMER AM HQ Analyst (basically, follow IRM 21.4.5 instructions). 2) Scan complete case(s) to the BOD POC (send the BOD POCs a complete copy of the DMER case with appropriate Forms).

    3. Create the each DMER case file name using the following naming convention: The Refund Schedule Number (RSN) and the last four digits of TIN are provided in the DMER log from AM HQ Analyst (See below example where the file name is 2014094175W_6081 ).

      RSN provided by HQ AM Analyst Last 4-digits of TIN provided by AM HQ Analyst
      2014094175W 6081
  8. After the DMER originator/preparer e-mails the completed, scanned file(s) back to the BOD POCs, the POCs will save the file onto the New Shared Drive in the appropriate Fiscal Year and monthly folder (i.e., February, if the due date is February 15th )

    Note:

    Access is very limited to BOD POCs, SP Erroneous Refund Work Leaders, and HQ Analysts involved with DMER reports. The Shared Drive is located here: \\VP0SENTSHRCMN15\Common\CAS\AM\PPM\IMFAdjstmnt

  9. AM HQ Analyst will send a reminder to the BOD POCs 5-days before the due date to ensure timely submission of cases to the Shared Drive.

  10. Daily, using the 8th and 9th digits of the Refund Schedule Number (RSN), all SP Erroneous Refund Work Leaders will identify their site’s DMER cases in the Shared Drive. Below is the listing of Submission Processing Center aligning with 8th and 9th digit of the RSN:

    8th and 9th digits of RSN: Site:
    18 Austin
    17, 19, 49 Cincinnati
    08, 89 Fresno
    07, 09 Kansas City
    28, 29 Ogden
  11. Erroneous Refund Work Leaders or designated individuals need to follow Step 10 daily until the 17th day of each month (from the 1st through 16th, excluding weekends). After the 17th of each month, review the Shared Drive weekly to determine if there are additional cases that must be added to the SharePoint site for your Site.

  12. Begin the process of reviewing every DMER case for completeness. Then, rename the uploaded files:

    1. Right-click your mouse on the appropriate file you’ve uploaded with the original name and add “- completed” or -incomplete to the end of the name (see example below).

    Original Name File Re-Named File
    2014093081_6081 2014093081_6081_Completed
    2014093081_6081 2014093081_6081_Incomplete
  13. If the case is complete, upload the DMER case file(s) from the Shared Drive to the Duplicate Refund SharePoint site.

    1. Select the appropriate month (e.g. If you’ve just completed the March report then next month you’ll be working on the April report, you’d select the month of April).

    2. Select “Document” in the menu bar (on the top left of the screen)

    3. Select “Upload Document” in the menu bar, then select from the drop-down list “Upload Document”.

      Note:

      The overwrite box will be checked. Do not remove the Check Mark. This will overwrite any previous e-mail that already exists in the folder with the same file name (example: Refund Schedule Number last four digits of TIN); this will ensure duplicate files are not present.

    4. Select “Browse”

    5. Locate the file on the “Shared Drive” you want to upload and select “Open”.

    6. Select “OK” to upload.

  14. Repeat step 13 for all complete cases.

    Note:

    This process including the below instructions needs to begin, daily, by the 7th day of each new month (or the Friday before the 7th day if the 7th day falls on a weekend) and continue through the 18th day of each month (or the Friday before the 18th (or the Friday before the 18th if the 18th falls on a weekend). Be sure to check if there are new cases every 3-days after the 18th day (or the following Monday if the 18th falls on a weekend day.

  15. Click on the DMER Log folder located in the DMER SharePoint site (https://organization.ds.irsnet.gov/sites/WICASSpDupRefProj?DMER%20Checklist/Forms/AllItems.asp) on the quick link bar on the left side.

    Note:

    Please note the DMER SharePoint site is not the same as the SharePoint site mentioned in 3.17.80.1.3.2 below. Make sure you note the differences between the sites and identify what reports belong in the different sites.

  16. Select the tab for the current month (e.g. If you’ve just completed the March report then the next month you’ll be working with is the April report, select “April”).

  17. Update DMER log notating the critical documents received for AM HQ-Identified DMERs

  18. Add/upload Self-Identified DMERs (an example of a self-identified DMER would be a case where Accounting has identified they are the cause of the DMER and they have to follow IRM 21.4.5.4.6 to start the erroneous refund process for DMERS) and critical documents received to DMER log (these are true DMER cases that belong to your site but were not identified by the AM HQ Analyst and communicated out to the BOD POCs).

  19. For cases with "Incomplete" documentation, right-click your mouse on the appropriate file and add -incomplete to the end of the name (see example below).

    2014093081_6081 2014093081_6081_Incomplete
  20. Click on the DMER Log folder located in the SharePoint site(https://organization.ds.irsnet.gov/sites/WICASSpDupRefProj/DMER%20Checklist/Forms/AllItems.aspx) on the quick link bar on the left side.

  21. Select the tab for the current month (e.g. If you’ve just completed the March report then the next month you’ll be working with is the April report, select “April”).

  22. Update DMER log notating the missing critical documents (e.g. F. 14165, F. 12356, IDRS transcript, etc.).

  23. Contact (e-mail) the appropriate Business Operating Division (BOD) Point of Contact (see Exhibit 3.17.80-16) for any DMER cases where it is believed their Division employees did not follow IRM 21.4.5.46 in determining whether the case is/is not a a true DMER case. When contacting the BOD Point of Contact, be sure to send a copy of the case in question. Carbon Copy the Submission Processing HQ Erroneous Refund Analyst with all questionable cases.

    1. Unless instructed by the Submission Processing HQ Erroneous Refund Analyst, always report it as a DMER erroneous refund following the below instructions.

  24. For any “Self-identified” DMER, the Erroneous Refund Teams will notate on every case's Form 14165 whether the taxpayer repaid the erroneous refund within the 21–day (plus grace-period) demand date time frame.

  25. Use ONLY Form 14165-A, Duplicate Manual Erroneous Refund Feedback, when preparing error feedback for this type of erroneous refund. Do not issue any additional error feedback (locally-developed) other than Form 14165-A which is found in Publishing's web site at this location: Product Catalogue Information for Form 14165-A.

    1. Complete boxes 1–9 on Form 14165-A

    2. Using the Point of Contact information in Exhibit 3.17.80-16, send the Form 14165-A (with boxes 1-9 completed) and a copy of the completed Form 14165 to the appropriate Business Operating Division (BOD) point of contact via secure encrypted E-mail correspondence.

    3. The Form 14165-A must be completed and submitted no later that 10 business-days after receipt of the DMER case within the Erroneous Refund team.

    Figure 3.17.80-2

    This is an Image: 47865046.gif

    Please click here for the text description of the image.

Monthly Manual Refund Reporting Process
  1. The following reports will usually be completed by site Accounting, Manual Refund teams per IRM 3.17.79.3.4.1 and IRM 3.17.79.3.4.2:

  2. The reports will be completed and sent to HQ by the 10th business-day of each month.

  3. The "No IDRS Control Report" The No IDRS Control Report will be saved into the SPHQ-ATP SharePoint site in Excel format.

  4. The "Random Sample Report" The Random Sample Report will be saved into the SPHQ-ATP Folder in Excel format.

  5. The due date chart for these reports is below:

    2017 Month of Report Due Date of Report
    January February 14th
    February March 14th
    March April 14th
    April May 12th
    May June 14th
    June July 17th
    July August 14th
    August September 18th
    September October 16th
    October November 15th
    November December 14th
    December January 15th, 2018

    Note:

    Due dates exclude weekends and holidays.

  6. The SPHQ-ATP SharePoint site home page is found here: https://organization.ds.irsnet.gov/sites/SPATPBranch/default.aspx

    1. From the SPHQ SharePoint Site home page click on the Duplicate Refund Reporting link on the left hand side of the screen under Documents. Do not change any report information unless the SPHQ Erroneous Refund Analysts provides instructions to make changes.

    2. Select your Campus from the list, select the reporting month, and then select the report Type:
      -No IDRS Control
      -Random Sample

    3. On the top of the screen under Library Tools select Documents, select Upload Document and from the drop‐down list select Upload Document.

    4. Select Browse, identify the location wherever the reports have been saved on a computer or network (need computer file location) and then select the "No IDRS Control" or "Random Sample" report for uploading.

    5. Select the file that you want to upload, select Open and then select OK and your files should have uploaded and be viewable on the SPHQ SharePoint Site.

    6. Contact SPHQ Erroneous Refund Analyst if/whenever you are not able to upload a file.

    7. Even if you have zero cases for any given month, create an Excel report and type out, "No Cases In Error" or "No Cases to Report" within the report.

Account 1535 Court Case Erroneous Refund (Kansas City Only)

  1. This receivable account is used to record erroneous refund receivables that result in a court case.

  2. 1535 Account will be supported by:

    • Form 3809 documents

    • Backup documentation such as IDRS print reflecting erroneous refund

    Note:

    The case file for this account is maintained by the Ogden Scheme Development Office.

  3. For court-ordered restitution (or IRS employee fraud) cases identified by CI, process as follows.

  4. Cases received from CI are identified with a "CRIMINAL INVESTIGATION RESTITUTION CASE" cover sheet.

  5. CI will:

    1. Reverse all erroneous credits

    2. Input TC 130

    3. Prepare Form 3809, Miscellaneous Adjustment Voucher, Form 3753, Manual Refund Posting Voucher or Form 12857, Refund Transfer Posting Voucher as appropriate. (see Figure 3.17.80-20 and 3.17.80-24 for examples of completed Forms 3809)

    4. Prepare any necessary manual refunds to the injured taxpayer, following IRM 21.4.4 manual refund procedures.

    5. Send a letter to the taxpayer requesting repayment (this letter is in lieu of the 510-C letter). A copy of the correspondence becomes part of the case file documentation

  6. Update the IDRS Category Code to "ERRF" , reassign the IDRS control base to the CI-SDC unit in Ogden, change the status to "A" with activity code "ERRORREF(CI-RestitutionCase)."

  7. If 45 days after the date of the initial letter, review each case file.

    Note:

    The initial letter which is initiated by the Ogden Scheme Development Center (CI-SDC) is an internal letter and is a request for notification to defendant for repayment.

  8. CI will follow-up with taxpayer.

  9. Monitor the account for payments/credits to post to the account as they become available using generated TC 844 transcripts (see IRM 3.17.80.1.14, Processing 844 Transcripts (TRANS-844) -U Freeze).

Maintaining Account 1535 Court Ordered Restitution (QRP/RPP) Case Files (Ogden Scheme Development Only)
  1. Ogden CI-SDC will maintain the case files in alphabetical (last name first) order.

  2. Organize the case file as follows (each letter on the list below will have a corresponding tab in the case file):

    1. Court judgement in criminal case should be attached to the left of the case file.

    2. Completed case History Sheet should be on top right of case folder. (see Exhibit 3.17.80-12)

      Note:

      Important: All actions taken while working the case should be dated and recorded in detail on the History Sheet.

    3. A current TXMOD print showing any new activity on the account should be maintained in the case folder (print TXMOD pages showing NEW activity ONLY) directly under the History Sheet. If there is no activity (do not print the TXMOD) annotate History Sheet: "No activity on TXMOD" . The TXMOD should be updated when a review is conducted when an action is taken on the account (discard old TXMOD prints except for the original - see Note below).

      Note:

      The "ORIGINAL " TXMOD should always be kept in the case file under the History Sheet. This print will reflect the original account activity.

    4. A balance sheet showing the original erroneous refund balance and all subsequent payments should precede the Case History sheet and tax modules.

    5. CI-SDC will forward completed Form 3809s to the Kansas City Erroneous Refund team. All corresponding Form 3809s should follow the balance sheet with the most current on top. The Form 3809 must be stapled to the balance sheet to prevent it from being lost.

    6. Criminal Investigation Management Information System (CIMIS) summary and Criminal Investigation Closing report.

  3. Pull the case every three (3) months for review.

    Note:

    Annotate case history sheet that a review was performed and the findings of the review.

  4. CI-SDC will provide a cumulative balance sheet of all open cases to Accounting every six months with the following information: Name (Alpha order, last name first), TIN, Master File Tax (MFT), tax period, and money amount. This list will be used by accounting to ensure the case file balance (IDRS) matches the RRACS account balance.

    Note:

    Any inconsistencies will be expeditiously worked/corrected between Accounting and CI-SDC to avoid imbalances.

  5. If a Scheme Development case meets "write-off" criteria, CI-SDC will issue a memo requesting "write-off" processing. The “memo” with backup documentation will be sent to Kansas City's Submission Processing Accounting Operation (see Exhibit 3.17.80-4) and include the following:

    1. Write-off criteria and reference documented (Example: 20 year collection statute, or deceased taxpayer, IRM or IRC reference to the Statute expiration of Collection).

    2. Taxpayer Name.

    3. TIN.

    4. MFT/Tax Year.

    5. Case Number.

    6. Total amount to be written off

    7. Erroneous refund date(s) and amount(s) of the original refund(s).

  6. Follow IRM 3.17.80.1.18, Write-Off Procedures for Unrecoverable Erroneous Refunds, when transferring the loss from the 1535 Account to the 4910 and 6920 Accounts.

    1. A copy of the Field Director memo to the Submission Processing Director requesting relief/ write-off will be included with the copy of the Form 3809 that is sent to CI-SCD.

  7. Remove case to the "closed" file when TC 845 is input to release the Erroneous Refund Freeze, if appropriate.

    Note:

    CI-SDC will complete a Form 3465, Adjustment Request, and forward to the Kansas City Erroneous Refund team requesting a TC 845 input. This form is used when the account is full-paid or written off, and the reversal of the TC 844, —U freeze, needs to be released.

Interest Considerations

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

    Note:

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

  2. Interest assessments are abated when the interest is not legally due, excessive, or barred under IRC 6404(a). See IRM 20.2.7.2 , Excessive or Not Legally Due - IRC 6404(a).

  3. In cases involving requests for abatement of interest on erroneous refunds, the facts must be sufficiently researched (e.g., information provided by a taxpayer, post mark dates on documents, TXMOD, etc.) and the documentation for acceptance or denial attached to the case.

  4. See IRM 20.2.7, Abatement and Suspension of Debit Interest, , for further instructions or clarification on abatement of interest.

  5. Interest on the Erroneous Refund is recovered in the same manner as the Erroneous Refund to which the interest relates. Interest (at the applicable rate) is charged on the amount of the Erroneous Refund from the date of issuance until the date of recovery unless waived under IRM 1.2.12.1.4, Policy Statement 2-10, Abatement of Interest on Erroneous Refunds.

    Exception:

    In instances where a prepaid credit was overstated causing an Erroneous Refund, interest will be charged on the amount of the Erroneous Refund from the date of the issuance or the due date of the return, which ever is later.

  6. Policy Statement 2-10, Abatement of Interest on Erroneous Refunds, requires that:

    1. Taxpayers not be held liable for interest on erroneous refunds until the taxpayer is asked to repay the refund.

    2. The Service must clearly be at fault in issuing the refund, and the refund must not exceed $50,000.00. Questions on cases of erroneous refunds in excess of $50,000.00 should be referred to your Team Leader, Work Leader, or local Counsel.

  7. IRM 1.2.51.2, Delegation Order 20-1 (Rev.2), paragraphs 14 through 16, , states that Service officials have the authority to abate interest on Erroneous Refunds under IRC Section 6404(e)(2) interest can be abated when the following conditions apply:

    1. Documentation is present which leaves no doubt a Service error caused the Erroneous Refund to be issued.

    2. Documentation is present which substantiates repayment of the refund has been received in full.

    3. The official is satisfied after considering the relative size of the Erroneous Refund, the amount of interest involved, the circumstances surrounding any delay in the repayment of the Erroneous Refund and the handling and correction costs which would be entailed, a waiver would be fair and equitable to the Government and the taxpayer.

    4. The authority delegated herein may not be re-delegated.

    Note:

    Interest will be abated under IRC Section 6404(e)(2) from the date of refund to the date of demand of repayment.

  8. Interest considerations are covered in IRM 20.2.7.6, Erroneous Refunds IRC Section 6404(e)(2).

    1. IRM 20.2, Interest is available on Servicewide Electronic Research Program (SERP). The Office of Servicewide Interest Administration and IRM 20.2 provides oversight on computing interest.

    2. IRM 20.2 recommends that interest specialists work the complicated restricted interest cases.

Methods Used to Recover Erroneous Refunds

  1. Assessable erroneous refunds are refunds which the IRS may assess (credit reversals are not assessments) under the IRC. The assessment may be either a TC 290 Reason Code (RC) 51, as in the case of Category B erroneous refunds, or deficiency, as in Category A-1 or A-2 erroneous refunds or other assessable taxes, as in Category C.

    1. These refunds are referred to as assessable erroneous refunds.

    2. The IRS' authority to assess assessable erroneous refunds is not limited to the amount of "total tax. "

    3. Provided that the applicable period for the assessment of the tax to which the refund relates is still open, the Service may assess the full amount refunded.

    4. Once the refund is assessed, it can be collected in the same manner as a tax within the collection statute expiration date (CSED).

    5. See IRM 21.4.5 , Erroneous Refunds, for variety of the types, categories and processing procedures.

  2. Category D erroneous refunds, referred to as "unassessable" erroneous refunds, are refunds not resulting from a tax determination and are not assessable under the IRC.

    1. Erroneous Refunds carry a 2 or 5-year ERSED date and can only be recovered by following proper erroneous refunds procedures.

    2. See IRM 21.4.5 , for types, categories and processing procedures on identified erroneous refunds and what is supposed to have been completed prior to the receipt of the case in the Erroneous Refund Team.

  3. If the case does not qualify for assessment as described in IRM 21.4.5 , the Erroneous Refund can be recovered only by the following:

    1. Civil suit under IRC Section 7405 is within 2 or 5 years from the time the refund is received by the taxpayer (when the check clears the bank). (see IRC Section 6532(b))

    2. The Erroneous Refund may be offset against any refund otherwise due the taxpayer for the same year and with respect to the same type of tax to which the refund is related. There is no time limitation on this right of offset until the ERSED.

    3. To the extent the refund is an unassessable erroneous refund, the refund may be offset against any refund otherwise due to the taxpayer with respect to any year or any type of tax. This right to offset is limited to the ERSED.

    4. The taxpayer may voluntary repay the erroneous refund.

Erroneous Refund Statute Considerations
  1. The collection methods and statutes of limitation for recovering erroneous refunds are different than those used to collect tax liabilities. Three different statutes may apply to Erroneous Refund account modules:

    • Assessment Statute Expiration Date (ASED)

    • CSED

    • ERSED

  2. The ASED expires 3 years from the due date or the date the return was filed; whichever is later.

  3. The CSED expires 10 years from the date of the assessment.

  4. The ERSED expires 2 or 5 years from the date the refund check was cashed (refer to IRC Section 6532(b).

    Note:

    As a general rule, the TC 840 or TC 846 date can be used to determine the ERSED. Always research TCIS to research the actual refund cashed date. TCIS indicates a paid date. The paid date is the date the check was cashed.

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

    2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

      Exception:

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

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

    Note:

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

  5. Each site will direct employees to coordinate with the local Counsel to determine case types for applying the 5-year ERSED. Before referring to Counsel fill out a "Non-Rebate 5-year ERSED Check Sheet" to determine if the 5-year ERSED is applicable. (see Exhibit 3.17.80-13)

Statutes Determined by Erroneous Refund Category Type
  1. Always review cases to apply statute considerations. The statutes listed by categories below apply to erroneous refunds:

    1. Category A-1: ASED and CSED

    2. Category A-2: ASED and CSED

    3. Category B: ASED and CSED

    4. Category C: ASED and CSED

    5. Category D: CSED and ERSED

    Note:

    The CSED may be applicable on unassessable erroneous refund accounts when the taxpayer received an Erroneous Refund before satisfying their tax obligation.

Category A1 or A2 Erroneous Refunds

  1. When Category A-1 or A-2 (Assessable) erroneous refunds are identified, review the case to determine if it meets Examination's criteria. See IRM 21.4.5 , Erroneous Refunds. Tax decreases made in error must be forwarded to the Examination function.

    1. If assessment or abatement actions were previously input, the case does not meet Examination's criteria.

  2. For the Service to make an assessment, the taxpayer has to either agree to the assessment or a Notice of Deficiency has to be issued. The Notice of Deficiency gives the taxpayer 90 days to petition the tax court (150 days if the Notice of Deficiency is addressed to a taxpayer outside the United States). If the taxpayer does not petition, then IRS can assess after the 90-day period has expired. Notices of Deficiency must be issued before the ASED expires.

    1. Research the Centralized Authorization File (CAF) using command code (CC) CFINK (see Figure 3.17.80-3). A CAF representative may be entitled to the same information you are providing to the taxpayer.

      Figure 3.17.80-3

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    2. Cases received in Accounting should be returned to originators for resolution unless an adjustment was made in error. This would be worked in Accounting as a Category D Unassessable Erroneous Refund. If the case is not a Unassessable Category D type, then return cases to the originator for resolution.

      Note:

      Letter 510-C without appeal rights is inappropriate here. The only cases worked in Accounting are those where the ASED has expired and the ERSED is open. There would be no assessments made on these cases and voluntary repayment would be applied to Excess Collections (or Unidentified Remittance File, URF).

  3. When a taxpayer repays the Erroneous Refund voluntarily:

    1. If ASED has expired but the ERSED is open, apply repayment to Excess Collections (or Unidentified Remittance File, URF).

    2. If the ASED is open and the ERSED is open, adjust the account.

  4. If the taxpayer repays, prepare Form 3245, Posting Voucher - Refund Cancellation or Repayment and update IDRS to post the credit transactions. (see IRM 3.17.80.1.12, Refund Cancellation, Repayments and Replies to Correspondence)

    1. Transfer to Excess Collections (or Unidentified Remittance File, URF) not to be refunded or reapplied if ASED is expired, but ERSED is open.

    2. If ASED is open ERSED is open, adjust account.

  5. If no response from the taxpayer:

    1. If ERSED is still open (see IRM 3.17.80.1.10, Maintaining Case Files).

    2. If the ERSED is closed:
      close the case on IDRS: C#,NOPAYMENT,C,ERRF
      notate actions taken on the case History Sheet
      file in the closed case file

  6. When the case meets Examination's criteria, process per local Examination Notice of Deficiency procedures. Before routing erroneous refunds to Examination, be sure the case meets Examination's criteria and that the 3-year ASED has not expired.

  7. To determine whether interest is due from the taxpayer, see Exhibit 3.17.80-1, Erroneous Refund Interest Considerations, and IRM 3.17.80.1.4, Interest Considerations, 20.2.1, General and Legal Authorizations or IRM 21.4.5.7 , Erroneous Refunds on Designated and Non-Designated Payments.

Processing Categories A, B or C Erroneous Refunds
  1. Category A, B or C erroneous refunds received in Accounting are not considered unassessable type erroneous refund, upon receipt.

    Note:

    Do not follow these procedures if the adjustment did not result from a tax determination. Instead, process as a Category D unassessable erroneous refund.

    1. Immediately contact the Submission Processing site Planning and Analysis staff analyst to contact the area causing adjustments in error.

    2. Errors impact the Submission Processing Director's accountability over disbursement losses.

  2. Return cases to the originator for resolution (see IRM 21.4.5 , Erroneous Refunds).

  3. Direct deposit refunds made in error or refunds determined to be sent to "unknown" or "unable to locate" recipients will eventually be written off. Case files citing these circumstances must provide sufficient explanation to support write-off actions. (see Figure 3.17.80–5).

    Note:

    For more information on direct deposits refer to IRM 21.4.5.10.1 , IRS Error Direct Deposit).

    Figure 3.17.80-4

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    Figure 3.17.80-5

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General Overview - Category D, Unassessable Erroneous Refunds

  1. Cases forwarded to Accounting/Erroneous Refunds Units must meet Category D criteria as defined in IRM 21.4.5 , Erroneous Refunds. The related training material can be found in ELMS Course 10824, Researching and Resolving Erroneous Refunds. In general, within the first 10 days of receipt employees should:

    1. See IRM 21.4.5.6 , Adjustments and Credit Transfers on Category D Accounts, for necessary actions and how to assemble and submit packages for processing by Accounting/Erroneous Refund Units.

    2. Review the case to ensure that the 510-C letter (see Figure 3.17.80-4) was issued and that TC 844, TC 470 with Closing Code (CC) 93, and TC 971 AC 663 were input. Form 12356, Erroneous Refund Worksheet must also be included. Ensure that all applicable Statutes are open. Follow site direction and IRM 3.17.80.1.5.1 to refer case types deemed meeting the 5-year ERSED to local Counsel, as appropriate.

      Note:

      Ogden Only - For 8038-CP cases, release any -U freeze that may be on the account. No contact is necessary.

    3. If IDRS actions were not input and/or documentation is not attached or incomplete, contact the originator by E-mail or telephone for resolution. If there is no response within (5 work days reject the case back to the originator informing them IRM 21.4.5 was not followed for preliminary preparation of the Category D erroneous refund case.

      Note:

      Do Not reject if the erroneous refund date is a future date and the TC 844 is not input, Form 12356 will state that a TC 844 be input by the Accounting Function upon receipt of the case.

      Note:

      Occasionally Field Offices without IDRS access will forward a case to Accounting Operations without completing the necessary requirements - Do Not reject these cases. Send a 510-C, input Transaction Codes (TCs) 844, 470 with Closing Code 93, and 971 with Action Code 663. (see IRM 21.4.5.12, Field Offices Without IDRS)

    4. If the case is complete and the taxpayer has not responded to the first notification within 45 days, follow-up within 10-days, with a 2nd letter, including interest due, and prepare Form 3809 to credit the taxpayer's account and debit the appropriate 15XX General Ledger account. Number Form 3809 and post the TC 700 with Document Code 58 in blocking Series 950 through 999 to display the literal Refund Balance Due notification on IMFOL and TXMOD. If reversing, post the TC 702 with Document Code 58 in Blocking Series 900 through 949.

    5. Credit the taxpayer's account (TC 700) for the amount of the Erroneous Refund only.

    6. Annotate actions taken on the History Sheet.

    7. If the case is complete, and the 45 day response time has not yet passed, monitor the account for recent transactions posting, for statute expiration dates, and to determine the date for the interest letter (2nd or later 510-C or 3414-C letter).

    8. Maintain case file and documentation.

    9. Suspense case file and monitor for subsequent follow-up actions (see IRM 3.17.80.1.11, Maintaining Case Files).

  2. If necessary documentation is not received with the case file, update the History Sheet stating the reasons the case is being returned to the originator.

    Note:

    Form 12356, Erroneous Refund Worksheet must be included as documentation for all Category D erroneous refunds. If this documentation is not received with the case, refer the sender to IRM 21.4.5.5.2 for completion of the Form 12356. Request this form be completed and sent to the erroneous refund team. If the request is ignored after sufficient time has been given (5 work days), reject the case.

    Note:

    Form 14165, Erroneous TC 840/846 Report, must be included as documentation for al Category D Duplicate, Manual, Erroneous Refund (DMER) cases. If this documentation is not received with the case, refer the sender to IRM 21.4.5.4.6.1 for completion of the Form 14165. Request this form be completed and sent to the Erroneous Refund team. If the request is ignored, after sufficient time (5 workdays) has been given, reject the case.

  3. If the applicable ERSED, CSED or ASED has not expired, but is imminent, expedite the processing of the case (see IRM 3.17.80.1.9.1, Working Statute-Imminent Cases). Prepare appropriate Erroneous Refund correspondence and Form 2209, Courtesy Investigation (or use Integrated Collection System (ICS) if it is available) if:

    1. The amount of the Erroneous Refund exceeds≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    2. The 2 or 5-year ERSED is open, but imminent.

  4. Review the case file for interest which may be due from the taxpayer (see IRM 3.17.80.1.5, Interest Considerations and Exhibit 3.17.80-1, Erroneous Refund Interest Considerations).

  5. If the ERSED 2 or 5-year will expire in approximately 3 months, the Erroneous Refund amount is over ≡ ≡ ≡ ≡ ≡ ≡ , issue the appropriate Erroneous Refund letter and issue Form 2209 (or access ICS if available). See IRM 3.17.80.1.9.1, Working Statute-Imminent Cases)

  6. Erroneous Refund Unit employees are reminded to input the correct blocking series when posting unassessable erroneous refund accounts with TC 700 (58 Document Code, 950-999 blocking series). This unique blocking code produces the displayed literal Erroneous Refund Balance ("-U" Freeze) on the account.

  7. Submission Processing site Erroneous Refund Coordinators are listed in Exhibit 3.17.80-4.

Recovering Erroneous Refunds with Additional Balance Due

  1. Ensure that applicable statutes are still open. (see IRM 21.4.5 , Erroneous Refunds)

  2. History Sheets and supporting documentation are necessary to substantiate the Erroneous Refund and any future write-off actions. This applies to cases received from other areas. If pertinent documentation is not received with the case, including Form 12356, Erroneous Refund Worksheet, update the local History Sheet stating the reasons. Return the case to the originator for correction or request complete documentation.

  3. Combination cases may have both a CSED and ERSED applicable. (see IRM 21.4.5.14.1 , Collection Statute Expiration Date for Category D Erroneous Refunds)

  4. When an assessable tax liability plus a unassessable erroneous refund amount exists:

    1. See IRM 21.4.5.14.1 , Collection Statute Expiration Date for Category D Erroneous Refunds, for further instructions.

    2. Research the CAF CC CFINK for power of attorney (POA) indicators. The indicator requires the Service to issue notices or correspondence to the taxpayer's representative or POA.

    3. If the taxpayer does not respond to the first letter within 45 days, take the following steps:

      1. Within 10-days issue letters IDRS 510-C or 3414-C to notify the taxpayer of the erroneous refund amount and interest due.

        Note:

        Add to the correspondence text, "erroneous refund amounts are billed separately, you may receive a separate notice for any other unpaid portions of this tax period" . For the 510-C letter use paragraph 9.

      2. Prepare Form 3809 to post a TC 700, blocking series 950-999, Document Code 58, for the amount of the erroneous refund.

        Note:

        Input a TC 470 CC 93 (Input TC 470 CC 93 only if prior TC470 CC 93 has expired or was not previously input. See above IRM 3.17.80.1.7(1)) prior to preparing the false credit (TC 700) to prevent balance due notices from generating to the taxpayer for the erroneous refund amount.

    4. Cycle the input of all transactions, as appropriate.

    5. If applicable, reverse interest and penalty.

    6. Research modules for TC 470, STAUPs and TC 844. If a TC 470, Closing Code (CC) 93, is not present on the Erroneous Refund tax module, input TC 470 using IDRS CC REQ77. This prevents erroneous MF notices from generating.

    7. Monitor the account for the above transactions to post to Master File. This posting action could take up to six (6) weeks.

    8. Once the TC 700 posts to the account, input reversal TC 472. This reverses the TC 470, CC 93, and allows normal notices to generate for tax liability balances due to IRS.

    9. See IRM 3.17.80.1.9.4, Taxpayer Repays in Full through IRM 3.17.80.1.9.5, Processing Partial Repayments for case monitoring and recovery actions.

    10. Update History Sheet case file when taking follow-up and monitoring actions and update IDRS history as appropriate.

  5. See IRM 3.17.80.1.6.1(4) for cases deemed valid as a 5-year ERSED. See IRM 20.2, Interest, and 3.17.80.1.5, Interest Considerations, for instructions when interest may be applicable.

Working Statute Imminent Cases
  1. At times, areas may forward cases shortly before the related statutes may expire. These cases are known as Statute Imminent cases. Review credit transfer documents for both the ERSED and/or ASED. Route to appropriate area for expedite processing per site direction for case processing.

  2. If a 510-C letter was not sent, issue 510-C letter within 10-days of receipt. Include a self-addressed, return envelope.

  3. Photocopy documentation for case file. Record actions on History Sheet.

  4. If necessary seek recovery of the Erroneous Refund amount, follow procedures in IRM 3.17.80.1.11(9) and mail Form 2209, Courtesy Investigation to the appropriate Field Collection Group. Include copy of all correspondence (e.g., 510-C letter(s)).

    Note:

    Find the correct Collection Field Function group by going to http://irweb.irs.gov/ then click on the, "SERP," link. Next, click on the, "Who/Where," tab. Next, click on the, "RO by TSIGN/ZIP/STATE," link and select the drop-down, "Search By:" button and enter the zip code to select Zip Code and enter the taxpayer's zip code. Send the completed Form 2209 to the point of contact listed. If Integrated Collection System (ICS) is available, it may be used instead of submitting Form 2209.

  5. Annotate the date and case control number on Form 2209 and specify Statute expiration date under the remarks as appropriate. In remarks notate: "Take No Enforcement Actions" "ERSED Expires (date)."

  6. Update History Sheet "Form 2209 requested" . Enter in remarks, "Notice sent to taxpayer on (date). Form 2209 initiated (date) to the Field Collection Group" .

  7. Update IDRS control base to "2209TOCOLL,M."

  8. Suspense File and monitor for necessary follow-up with Technical/Collections. (see Form 2209-A follow-up procedures in IRM 3.17.80.1.11(10)

IDRS and Case Controls - ERRF
  1. If taxpayer fully repays or returns the original refund check:

    1. Assess additional interest, if appropriate.

    2. Prepare Form 3245 upon receipt of the Erroneous Refund payment. (see Figure 3.17.80-6)

    3. Update IDRS to post credit transactions.

    4. Monitor account for actions to post. Release TC 844 and TC 470 CC 93, as necessary.

    5. Check for penalty accruals. Input CC INTST. Check for penalty accruals. If accruals are incorrect input TC 270 (.00) using REQ54 to restrict the module and remove any accruals.

      Note:

      Always wait for the TC 700 credit to post before inputting the TC270.

    Figure 3.17.80-6

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  2. See subsection IRM 3.17.80.1.12, Refund Cancellation, Repayments and Replies to Correspondence.

  3. If the ERSED has expired, process as outlined in IRM 3.17.80.1.9.6, Statute Barred Refunds.

  4. Establish control on IDRS in category "ERRF" and status "A." Enter the ERRF control number on Form 3809 to transfer amounts to the 15XX Account, and in the history section on IDRS. Record the Statute expiration date for write-off.

  5. Verify that the TC 844, TC 470 CC 93, and TC 971 AC 663 were input correctly to the taxpayer's account that received the Erroneous Refund. Make other account adjustments where needed. The ERSED and TC 844 Date of Demand must be recorded on the History Sheet. When appropriate, TC 844 must be input as follows:

    1. If the taxpayer (or a related party) has in no way caused the erroneous refund to occur and the Erroneous Refund amount is $50,000.00 or less, the Service may: input TC 844, CC REQ77. (see Figure 3.17.80-7) The date on 510-C letter is the date by which repayment is demanded (EXTENSIONDT) which is 7 work days NOT including the day of input, weekends and holidays. If using CC ENMOND to determine the date of demand, it is 6 working-days from the posting date NOT including the day of input, weekends and holidays.

      Note:

      If the refund is greater than $50,000.00 and an interest abatement is requested, see IRM 20.2.7.6 Erroneous Refunds IRC Section 6404(e)(2). If the refund amount is $100,000.00 or more interest is assessed from the date of the refund to the date of the demand letter, then taxpayers have 10 business days plus 7 days grace to repay the amount in order to avoid additional interest.

    2. Use the date of the related TC 846 or TC 840 as the TC 844 transaction date (TRANSDT).

    3. Input the amount of the erroneous portion of the refund in the (Freeze RELEASEAMT) field.

      Figure 3.17.80-7

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    4. If the taxpayer (or related party) has in any way contributed to the cause of the refund, deliberate or not, and the refund is greater than $50,000.00 (regardless of fault): input TC 844, CC REQ77 (see Figure 3.17.80-8) using the date of the related TC 846/840 as the (TRANSDT).

    5. Do not input a date of demand or a freeze release amount.

      Figure 3.17.80-8

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  6. Review for and reverse erroneous portion of credit interest refunded.

    1. Reverse only the erroneous portion of the credit interest if computer generated (TC 777) interest has not occurred.

    2. Input a TC 772 using CC REQ54 to reverse all or part of the allowable interest given. (see figure 3.17.80-9)

      Figure 3.17.80-9

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  7. Prepare Form 3809 to debit the 15XX Account for the amount of the Erroneous Refund. Maintain the debit portion of Form 3809 in alpha sequence to debit the appropriate 15XX Account. Assign a case control number to the case and on the Form 3809, using the following guidelines:

    Note:

    If the ASED is still open and the refund is Category A-1, A-2, B, or C, forward to the appropriate function for assessment and do not debit 15XX Account.

    1. Calendar year, current Enterprise Computing Center (ECC) processing cycle and consecutive serial number (e.g., 2004-29-299).

    2. Each new year, start with serial number series beginning with 1.

    Example:

    Cases from October 12, 2012 through October 18, 2012, (EMartinsburg (ECC-MTB), posting cycle 43) have the control number prefixed by 201243.

  8. Prepare 2nd 510-C or 3414-C letter.

    1. Input TC 700 within the first 45 days (plus 10-days for internal review of case and letter) after sending the first letter, use Document Code 58, 950-999 blocking series .

    2. Input a TC 270 (.00) to restrict Failure to Pay (FTP) if the erroneous refund is the only amount due on tax module.

  9. Determine whether the taxpayer owes interest when issuing IDRS 510-C letter. Interest on any unpaid amount is charged from the date of the refund to the date of repayment if either:

    1. The erroneous refund is more than $50,000, (see IRM 20.2.7.6, Erroneous Refunds-IRC 6404(e)(2)) or

    2. The taxpayer caused the erroneous refund

    If Then
    The taxpayer caused the error, deliberate or not, regardless of the amount of the erroneous refund Interest is assessed from the refund date (TC 846/TC 840). The Letter 510C will provide a balance due which includes interest calculated to the notice date. Taxpayers have 21 days ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ to pay the balance due or interest will continue to accrue.

    Note:

    If the erroneous refund amount is $100,000 or more, taxpayers have 10 business days ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ to pay the balance due or interest will continue to accrue.

    The IRS caused the error and the amount of the refund is $50,000 or less Interest is assessed from the notice of demand date (date of the Letter 510C). The taxpayer has 21 days ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ to pay the balance due stated in the notice of demand or interest will accrue starting on the notice and demand date.
    The IRS caused the error and the amount of the erroneous refund is more than $50,000 but less than $100,000 Interest is assessed from the refund date (TC 846/TC 840). The taxpayers have 21 days ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ to repay the amount in order to avoid additional interest.
    The IRS caused the error and the amount of erroneous refund is $100,000 or more Interest is assessed from the refund date (TC 846/TC 840). Taxpayers have 10 business days ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ to repay the amount in order to avoid additional interest.

    Note:

    Interest is not charged when a treasury check is returned (the check was not cashed).

    Note:

    Refer to IRM 20.2.7.6, Erroneous Refunds IRS 6404(e)(2), for case by case discretionary authority to abate interest on erroneous refunds that exceed $50,000.

  10. If debit interest is restricted (e.g., TC 34X on module) Master File will be unable to calculate interest as described in the previous If/Then table. Interest must be manually computed and input. Likewise, if the repayment did not post with a TC 720, interest must be manually computed and input. (A payment received within 21 calendar (or 10 business) days from the erroneous refund demand date must post with a TC 720 in order for Master File to correctly suspend interest from the date of demand to the repayment date.)

  11. If credit interest did not reverse or is incorrect, enter TC 772 to correct the amount. If debit interest is not correct, assess or abate as directed in IRM 20.2.7, Abatement and Suspension of Debit Interest.

  12. Interest abatement is not required if the refund is greater than $50,000, but may be allowed on a case by case basis, see IRM 20.2.7.6, Erroneous Refunds IRC Section 6404(e)(2). Refer questions on interest abatement for erroneous refunds in excess of $50,000 to local interest specialists, or through managerial channels to local counsel. Also, make contact with the SP HQ Erroneous Refund Analyst about the interest abatement issue to determine if the case should go directly to Chief Counsel..

  13. Recovering multiple unassessable Category D erroneous refunds issued to the same taxpayer by different Submission Processing sites on the same tax year should be combined as one case and worked by the site who issued the erroneous refund to prevent multiple bills from being sent to the same taxpayer.

    Note:

    Erroneous refunds issued to the same taxpayer by different sites on different tax years should be worked as separate cases but transferred to the site who issued the erroneous refund.

    1. Combining these amounts will prevent the appearance of harassment, taxpayer burden and multiple billings and will ensure consistency nationwide.

    2. Combining these amounts will ensure the taxpayer's account is handled efficiently.

    3. Multiple refunds may be discovered during a variety of case and account management actions or reviews.

    4. Use the earliest IDRS assigned date to determine which site jurisdiction should manage the recovery. If dates are identical, then look for the largest dollar amount. If unable to make this determination, forward the issue to the respective Planning and Analysis staff analyst for a decision.

    5. Combine the liability amount, correspond with the taxpayer, freeze the account as appropriate and indicate the attributes of the refunds on the combined History Sheets as separate checks for maintaining the issuing site's identity. Use Bureau Fiscal Service's (BFS) Check Symbol and Serial Number information if possible to differentiate the checks.

    6. For example, annotate the documentation or History Sheet as follows:

    1. Check A: in the amount of $, issued (XX/XX/XXXX) by SPCampus (XX);

    2. Check B: in the amount of $, issued (XX/XX/XXXX) by SPCampus (XX);

    3. Total Dollar Liability Check A + B = $.

  14. Maintaining multiple Erroneous Refund check issue cases by one site will benefit the Service by offering equitable treatment of taxpayers and improved customer service.

  15. If Erroneous Refund amounts are not recovered at the expiration of the ERSED, return the appropriate portion of the amount and case to the issuing site Agency Location Code (ALC).

    1. Describe the attempts by the Service to recover the Erroneous Refund amount. Provide a copy of the History Sheet when returning the portion of the case to the originating site.

    2. Both sites require supporting documentation that attempts were made to recover the funds for an eventual report. Follow instructions in IRM 3.0.167.8.4, Relief Request Procedures, for write-off to Accounts 4910/6920.

    3. Retain a copy of the case in the closed case file.

Tax Refund Issued In Error
  1. These procedures are applicable when 510-C letters were not previously sent, incomplete, or issued incorrectly.

    1. The 510-C letter should explain the refund they received was incorrect and reason for being erroneously issued. If the refund was not caused by the taxpayer and $50,000.00 or less, advise them that if the Erroneous Refund is repaid within 21 calendar days from the date of the letter, interest will not be charged. Request the refund check be returned, if not cashed. (see Figure 3.17.80–10)

    Figure 3.17.80-10

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    • The first 510-C letter may be considered a first notice or first bill.

    • Accounts Management may have communicated with the taxpayer to return or repay the erroneous refund. Verify CC ENMOD and/or the case history information Accounts Management (AM) sends with the case to determine whether AM did tell the taxpayer to repay the erroneous refund. If AM did tell the taxpayer, that communication will be considered a first notice and the issuance of a first 510-C letter will not be necessary.

    • If a replacement 510-C letter is issued due to a correction, acknowledge the letter is a change from the original letter.

    Note:

    A Form 12356, Erroneous Refund Worksheet should have some indication that there was a communication of first notice.

  2. If there is no response from the taxpayer, no later than 10-days after the 45th day of the initial 510-C letter or correspondence, issue a second 510-C (or 3414-C or 285-C) letter and include interest that should be assessed. (see IRM 21.4.5.5, Account Actions for Category D Erroneous Refunds)

    Note:

    Issue the 2nd letter no later than 10 days after the 45 days (by the 55th day).

  3. Prepare related case file, Form 3809 and assign case controls.

  4. Check for penalty accruals. Input CC INTST. Check for penalty accruals. If accruals are incorrect input TC 270 (.00) using REQ54 to restrict the module and remove any accruals.

    Note:

    Always wait for the TC 700 credit to post before inputting the TC270. Input only if no other TC 270 for zero amount is on the tax module

  5. See IRM 3.17.80.1.5, Interest Considerations, IRM 20.2 , Interest, and Exhibit 3.17.80-1, Erroneous Refund Interest Considerations.

    Note:

    When using 510-C letters (or 3414-C, or 285-C), include debit interest. The debit interest is figured using COMPAD. (see Figure 3.17.80-11 and Figure 3.17.80-12)

    Figure 3.17.80-11

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    Figure 3.17.80-12

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    Note:

    The 510-C, 3414-C, or 285-C letter should be reviewed by the lead/manager before being mailed to the taxpayer.

  6. Annotate on the case History Sheet and Case Label, the date the ERSED expires. (The Statute expires 2 or 5 years from the date of the refund check (IRC Section 6532(b)).

    Note:

    For Service-wide consistency, use TCIS for the date of the cashed refund.

  7. Photocopy correspondence or 510-C letter for the case file and send a 510-C letter to the taxpayer (allow 45 days for a reply or repayment).

    1. Update the IDRS control base.

    2. Update case History Sheet with the actions taken.

    3. Annotate the first 510-C letter date as the date of demand (if applicable).

  8. For those cases not meeting collections referral criteria, under IRM 3.17.80.1.11(9)a, suspense and review each case every 3 months and re-issue a 510-C, 3414-C, or 285-C, letter including updated Interest, until the ERSED expires. (see IRM 3.17.80.1.11, Maintaining Case Files)

Taxpayer Repays in Full
  1. If the taxpayer responds with full repayment of the Erroneous Refund amount, follow procedures below. Repayments must be processed through Receipt and Control.

  2. Determine if the taxpayer responded, with payment and within the specified time frame on 510-C letter.

  3. If repayment ($50,000 or less) is within the specified time frame ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , and if the 15XX account was used to credit the erroneous refund in the taxpayer's account, prepare Form 3809 (TC 702, Document Code 58, blocking series 900-949) to reverse the debit in the appropriate 15XX Account (Use the date of the TC 700).

    Note:

    If the erroneous refund is $100,000.00 or more, the taxpayer has 10 business days (plus 7) to repay, per IRC 6601(e)(3). If repayment in full is made within this period, no interest will accrue from the date of demand (TC 844) up to repayment date (TC 720). If the erroneous refund is less than $100,000.00, taxpayer has 21 days (plus 7) to repay. If repayment in full is made within this period, no interest will accrue from the date of demand (TC 844) up to repayment date (TC 720). If taxpayer error, interest is charged from the date of the refund to repayment date.

  4. If repayment is not within the specified time frame, compute interest due before case is closed. (see IRM 3.17.80.1.9.2.9)

  5. In both situations above, also:

    1. Update IDRS control base to reflect current actions.

    2. Update case History Sheet.

    3. Place case in file and monitor for actions to post.

  6. Once TC 720 and TC 702 post:

    Note:

    Full repayment on Category D unassessable erroneous refunds should "NEVER" post as a TC 670 to avoid erroneous interest and penalty accruals.

    1. Compute interest manually, using the correct "to" and "from" dates. Interest is assessed up to the amount of the payment. If interest owed is ≡ ≡ ≡ or less, input a TC 340 (.00) and close control base. Before closing the Erroneous Refund case, verify interest.

    2. Input CC INTST. Check for interest/penalty accruals. (see Figure 3.17.80-13) If accruals are incorrect and the taxpayer(s) were timely with full repayment of the Erroneous Refund, input a TC 340 and or TC 270 (.00) using CC REQ54 to restrict the module and remove any accruals (see Figure 3.17.80-14).

    Figure 3.17.80-13

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    Figure 3.17.80-14

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  7. After the Erroneous Refund is paid in full, interest should be computed and assessed "ONLY" if the credit is available to cover the amount of the interest. Any payments or credits received before the ERSED expires can be applied to the interest owed.

    Note:

    If remaining interest owed exceeds ≡ ≡ ≡ ≡ , you must keep case open, continue to send quarterly letters, and monitor for additional credit until ERSED expires.

  8. To input a TC 340 for interest use date of last payment as your DB-INT-TO-DT. (see Figure 3.17.80-15)

    Figure 3.17.80-15

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  9. Interest should be assessed ONLY on the Erroneous Refund amount if the taxpayer(s) made payments or credit is available to cover the interest due. However, after the 15XX Account has been reimbursed, any payment received before the ERSED expires can be offset against interest.

    Note:

    If the TP repays an erroneous refund and additional tax is due, do not input a TC340. The TC340 is restricting the manual calculations of interest. If a TC340 was input a TC342 is needed to unrestrict the account and allow the accruals on the tax to continue.

  10. Accounting will input TC 845 using CC REQ77 to release the ("-U" Freeze). Close the IDRS control base and record information on the case History Sheet. File case in the "Closed File" . (see Figure 3.17.80-16)

    Figure 3.17.80-16

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  11. For cases where additional interest is due and the 2 or 5-year ERSED has not expired, DO NOT release the TC 844 (-U Freeze). File case in the "Suspense," file, pending additional payments or potential offsets.

    Note:

    Research modules before closing an Erroneous Refund case where accruals are in error.

  12. Notate on the case History Sheet, the amount used to compute interest and the date to when interest was computed.

  13. If/when interest applies on an IRS-caused erroneous refund, the "from" date is the date of demand; the "to" date, the date of the second (or subsequent) 510-C letter (or other letters previously mentioned).

Processing Partial Repayments
  1. If the taxpayer responds with a partial repayment, process as outlined below. All remittances are now processed by Receipt and Control.

  2. When partial repayment is received and the ERSED is open:

    1. Prepare Form 3809 (TC 702, Document Code 58, blocking series 900-949) to reverse the debit portion in 15XX Account repaid by the taxpayer.

    2. If partial payment is received without indication as to when final payment will be received, correspond with the taxpayer. Use a 510-C letter or 3414-C letter, unless it meets the criteria outlined in (3) below. The letter to the taxpayer should include interest due.

    3. Update the IDRS control base to: PARTIALPMT,M,ERRF

    4. Update the case History Sheet to show the partial repayment and indicate when final payment will be made, if indicated by the taxpayer.

    5. Place the case file in suspense and monitor the account.

  3. When partial repayment(s) is (or are) received and the remaining erroneous refund exceeds ≡ ≡ ≡ ≡ ≡ and ERSED is open:

    1. Process as above in IRM 3.17.80.1.8.5(2).

    2. Complete Form 2209, Courtesy Investigation. Send Form 2209 to the appropriate Collection Field Function group. Note on Form 2209 that partial payment was received from the taxpayer.

      Note:

      Find the correct Collection Field Function group by going to http://irweb.irs.gov/ and click on the, "SERP," link. Then, click on the, "Who/Where," tab. Next, click on the, "RO by TSIGN/ZIP/STATE" link and select the drop-down, "Search By:" button and select Zip Code and enter the taxpayer's zip code. Send the completed Form 2209 to the point of contact listed. If Integrated Collection System (ICS) is available it is permissible to make the Courtesy Investigation request using ICS.

      Figure 3.17.80-17

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      Note:

      If Form 2209 has already been sent, complete Form 2209-A to inform RO of partial payment (see Figure 3.17.80-18a and 3.17.80-18b). While updating the case status on the Integrated Collection System (ICS) is optional, Form 2209-A is required.

      Figure 3.17.80-18a

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    3. Indicate only the unassessable erroneous refund amount; include in remarks: ERSED date and "Take No Enforcement Actions" .

    4. Suspend case for three months (90 days). If no reply, follow up with Form 2209-A. (see Figure 3.17.80-18a and Figure 3.17.80-18b)

      Note:

      Updating ICS is optional but not a requirement. Form 2209-A is required.

    5. Continue processing as outlined in IRM 3.17.80.1.11, Maintaining Case Files.

  4. If repayment is received after expiration of 2 or 5-year statute, process as outlined in IRM 3.17.80.1.16, Erroneous Refund Repayments After the 2 or 5-year Statute Has Expired.

  5. When taxpayers agree to repay in installments, process cases as outlined in IRM 3.17.80.1.12(13-20).

Statute Barred Refunds
  1. If an Erroneous Refund is issued after the statute for refund has expired (RSED), establish a case file and work as an Erroneous Refund.

  2. Statute Barred Refund cases are rare. Cases identified by master file (MF) analysis (e.g., STEX -B Freeze, etc.).

    1. Process as unassessable, although no credit taken from Account 1540 and suspense pending ERSED. No debit or false credits are placed on the accounts.

    2. Correspondence is issued by the discovering site. Suspense, monitor to ERSED and close case. The site Refund Schedule Number (RSN) defines where case assigned; usually to the RSN of the site where the refund was released (TC 840/846).

    3. See IRM 3.17.80.1.16, Erroneous Refund Repayments after ERSED has expired.

    4. If the taxpayer does repay, post the repayment to the taxpayer's account as a TC 720, Refund Repayment. Prepare Form 8758, Excess Collections File Addition, to move credit to Excess Collections File (6800 Account). (see Figure 3.17.80-19).

      Note:

      Interest may be included within the TC 720 payment and will be included when applying the payment to the 6800 account.

      Figure 3.17.80-19

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    5. If the taxpayer(s) do not repay, continue processing as outlined in IRM 3.17.80.1.11, Maintaining Case Files.

    6. Hold case in the "Suspense" file until the ERSED expires for any potential of offset with related documentation.

    7. When ERSED expires, close IDRS control base "ERSEDEXP,C."

    8. When the ERSED expires, initiate write-off procedures in IRM 3.17.80.1.18 even though no credit was taken from Account 1540.

    9. Annotate actions on History Sheet. Retain in the closed case file.

      Note:

      Do not reverse any interest allowed on a refund with TC 772 until payment is received.

Hardship Manual Refund Request
  1. Accounting Operations' employees may receive OARs from TAS requesting a manual refund to relieve an economic hardship. These accounts would not normally require a manual refund however based on the facts and circumstances of the case TAS has determined that a systemic refund will not be received in time to relieve the hardship.

  2. When a request for a hardship manual refund is received on an erroneous refund case, refer to the W&I TAS Service Level Agreement (SLA) for further information about OAR processing and procedures. Then, take the following actions:

    1. If the overpayment has not been offset to the erroneous refund balance due, advise TAS bypassing the –U freeze is approved for the amount of the Hardship request. TAS has the delegated authority to issue manual refunds per Delegation Order No. 13-2 (Rev. 1)

    2. If the overpayment has already been offset to the erroneous refund balance due, reverse the offset for the approved Hardship requested amount and advise TAS the overpayment is now available and bypassing the –U freeze is approved. TAS has the delegated authority to issue manual refunds per Delegation Order No. 13-2 (Rev. 1)

    3. If TAS submits a Taxpayer Assistance Order (TAO) requesting to bypass the –U freeze on a Hardship request, immediate action must be taken by the Accounting, Erroneous Refund function to issue the manual refund requested. The Accounting, Erroneous Refund function will adjust the account as appropriate and issue the manual refund request (See IRM 21.4.4.2). Advise TAS of all actions taken.

    4. If Accounting initiates the manual refund, the procedure to monitor the manual refund must be followed. See IRM 21.4.4.5.1 , Monitoring Manual Refunds.

    5. If a duplicate, manual or systemic, erroneous refund occurs, erroneous refund procedures must be followed. See IRM 21.4.5.5.14 , Account Actions for Category D Erroneous Refunds instructions.

Transferring Refunds Erroneously Posted (For Information Only - Accounts Management Procedures)

  1. The following procedures apply to transferring refunds erroneously posted (TC 840/846) to the incorrect account. The unique TC 840 using the following blocking series will identify these as "dummy refunds," , and not refunds which are going to be issued. This should coincide with input of a TC 971.

  2. Prepare Form 12857, Refund Transfer Posting Voucher, to post a TC 841 to the injured taxpayer's account and a TC 840 to the account of the taxpayer who received the erroneous refund (Refer to IRM 21.5.2.4.23.1010). The TC 841 date must be the date of the erroneously posted TC 840 or TC 846. (see Figure 3.17.80-20)

    Figure 3.17.80-20

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    Note:

    Form 12857, Refund Transfer Posting Voucher, per IRM 21.4.5, Erroneous Refunds, has been developed, and must be received by Accounting Operations to accomplish these transfer actions. Form 12857 carries 920 Blocking, with a true Julian Date. Form 12857 should contain cross-reference DLN, tax Period, taxpayer's name and TIN, and file location, to indicate the erroneous original posting. These actions for a "dummy refund" will not result in a refund being released. Forms 3809 and 3753 may be used together in lieu of Form 12857.

  3. If using Form 3753 (original only) to post the "dummy refund" (TC 840), include in "Remarks" "Not an Erroneous Refund."

    1. Enter in Section 1, Block 10, "MAKE CHECK PAYABLE TO" block print the phrase "DO NOT ISSUE CHECK."

    2. Assign Document Code 45 (TC 840) with a unique Blocking Series, starting with 920. This Blocking Series will identify "dummy refunds."

    3. Cross-reference the Form 3753 to its related Form 3809 and to the DLN of the original, erroneously posted refund. This transaction reverses the erroneous posting of the refund.

    4. Input TC 971 (use Action Code 030) via CC FRM77. (see IRM 2.4.19, IDRS Terminal Input - CCs REQ77, FRM77 and FRM7A)

  4. Before being transcribed, these documents must be hand-carried to the appropriate area responsible for processing Form 3753, Form 12857, and Form 3809.

  5. Retain copies of Form 3753, Form 12857, and Form 3809 in the Erroneous Refund case file.

  6. Annotate the History Sheet with all actions taken.

  7. Input TC 971 on both accounts to cross-reference the injured and Erroneous Refund taxpayers.

  8. Additional instructions may be found in IRM 21.5.2.4.23.10, Moving Refunds.

Maintaining Case Files

  1. Maintain the cases in one of the following orders:

    • DOC-ID

    • TIN

    • Alphabetical

  2. Organize the case file as follows:

    1. Completed case History Sheet.

      Note:

      All actions should be dated and recorded in detail on the History Sheet They should be legible and abbreviations are not acceptable. GAO has requested that the case history files should have documentation narratives that read as if they are reading a book..

    2. A current TXMOD print showing any new activity on the account should be maintained in the case folder (print TXMOD pages showing NEW activity ONLY) directly under the History Sheet. If there is no activity (Do Not print the TXMOD) annotate History Sheet: "No activity on TXMOD" . The TXMOD should be updated when a review is conducted (see IRM 3.17.80.1.11(3)) or when an action is taken on the account (discard old TXMOD prints except for the original. (see Note below)

      Note:

      The "ORIGINAL" TXMOD should always be kept in case file under the History Sheet. This print will show the original account activity prior to being worked by the Erroneous Refund function.

    3. Place the original Erroneous Refund case on the bottom of the right hand side of the case file (Information from the identifying area, copy of 510-C letters, TXMOD print, supporting documents, etc.) stack of information (oldest documents should be at the back end of the case file).

      Note:

      If a Manual Refund (TC 840) caused the erroneous refund, yellow highlight the approver and refund issuer of the TC 840 on TXMOD and attach the TXMOD..

    4. Each time an action is taken on the account place all prints and/or copies associated with the actions on the right side of the folder. "Exception:" Do not include Form 3809 (see IRM 3.17.80.1.11(2) f). Keep the most current on top.

    5. A balance sheet showing the remaining balance on the Erroneous Refund should be stapled to the left side of the case folder and updated with each transaction.

    6. Forms 3809 (copies or original forms) should be stapled to the left side of the folder, the most current on top with a journal number clearly printed on each form.

  3. Pull the case every 3-months for review. Cases will be pulled based on the previously-established review date for each case. Continue corresponding with the taxpayers every 3-months or until the 2 or 5-year ERSED expires. (see IRM 3.17.80.1.18 for write-off procedures). Perform the following actions when performing the 3-month, quarterly, review:

    1. Follow-up reviews (primarily for credits that are available to be applied to the tax module) and issuance of follow-up taxpayer correspondence (generally, a 510-C letter) must be done within 3-months and 10-days of the previous correspondence action.

    2. When reviewing the case and it is noticed that there are ID-theft indicators on the tax account, verify if another TC 700, false credit has attempted to post to the account and causing a credit balance on the account. Complete the following actions under this situation:

    If - Then -
    If there is a credit balance caused by a second TC 700 with a blocking series of 745 - 749: Refer to points of contact listed in IRM 3.17.243.6.4 and contact (telephone or E-mail) the RICS or AM personnel who should have a control base on the tax account and ask if the erroneous refund was caused by ID-theft. Notate the conversation and results on the case history sheet.
    If there is a credit balance caused by a second TC 700 and was caused by RICS or AM and it truly is an ID-Theft case: Complete a Form 3809 and reverse the first posted TC 700 (Doc. Code 58, blocking series 950-999) and return the "false credit" back to the 1540 account. Notate actions on the case history sheet. Make contact with the appropriate individual in IRM 3.17.243.6.4 and have them follow their appropriate ID-theft procedures to initiate their procedures..
    If there is a credit balance caused by two TC 700s and both have a blocking series of 745 - 749: Complete a Form 3809 and reverse the second posted TC 700 and return the"false credit" back to the 1545 account. Notate actions on the case history sheet.
  4. The case History Sheet MUST reflect that the 3 month reviews are being performed. Refer to the below chart:

    Month Case was 1st Received/Reviewed 2nd Month To Review Case 3rd Month To Review Case 4th Month To Review Case
    January 2016 April 2016 July 2016 October 2016
    February 2016 May 2016 August 2016 November 2016
    March 2016 June 2016 September 2016 December 2016
    April 2016 July 2016 October 2016 January 2016
    May 2016 August 2016 November 2016 February 2016
    June 2016 September 2016 December 2016 March 2016
    July 2016 October 2016 January 2016 April 2016
    August 2016 November 2016 February 2016 May 2016
    September 2016 December 2016 March 2016 June 2016
    October 2016 January 2016 April 2016 July 2016
    November 2016 February 2016 May 2016 August 2016
    December 2016 March 2016 June 2016 September 2016
  5. If no correspondence is pending with the taxpayer. File the case if:

    1. No reply is received 45 days after the second or any additional notification or correspondence is sent to the taxpayer, and no Form 2209 was sent to the Technical/Collection function.

    2. Form 2209 is closed by Technical/Collection without securing repayment, a signed waiver or a recommendation for Civil Suit.

  6. Enter on the History Sheet the interest start date (date of demand or date of refund).

  7. Mail the 510-C/3414-C/3064-C letter to the taxpayer with a return envelope. Place a copy of the letter in the case file.

    1. Determine when the ERSED expires, and annotate the ERSED date on the outside of the case file folder and on the History Sheet in the box labeled ERSED.

    2. If the Erroneous Refund balance is $600.00 or more notify the taxpayer, before the end of the calendar year in which the ERSED expires, that a Form 1099-C will be issued, if not repaid. Include the below verbiage but revise it for the correct dates: The statute for collection on your Erroneous Refund will/has expired on Month DD, YYYY. We will continue to accept voluntary repayment. However, if we do not receive repayment by Dec. 31, YYYY, we will issue a Form 1099-C, Cancellation of Debt. You will be required to report the amount you owe to the IRS on your Federal Income Tax Return.

      Note:

      The 1099-C notification is required but it is also a courtesy to the taxpayer, and should be sent in the same year the statute expires. Do not include this notification on the interest letter.

    3. See IRM 3.17.80.1.19, Forms 1099 - Unrecoverable unassessable erroneous refunds, for Forms 1099-C procedures.

    4. Annotate the History Sheet with all action taken.

    5. Notate the case file for the next follow-up.

  8. Although it may rarely occur, if there are excess credits on the taxpayers account (e.g. because misapplied payments have posted to the account where there is a full-paid erroneous refund, continue closing the case but input a TC 570 and ensure it posts before inputting the closing TC 845.

    Note:

    There may also be a situation where the taxpayer is not aware that their erroneous refund is fully-paid and the taxpayer continues to send payments. If this appears to be the situation, correspond with the taxpayer and ask if the taxpayer would like a refund of the excess payments or if they would like the excess payments applied to another tax year/tax module. Close the case after correspondence has been received informing the Service what the taxpayer wants with the excess credits. If the case is held over another quarterly review, close the case with a TC 845 and write a final letter (3414C or 510C) informing the taxpayer that we are returning the excess credits and did not receive any correspondence after the previous request for information.

  9. If a 510-C letter is returned as undeliverable, search for a more current address (for example: IDRS, ENMOD, INOLE, IRPTR, etc.) and document actions on History Sheet. If a better address is found, include Form 8822, change of address, with the re-mailing of the letter. Completion of this form by the taxpayer authorizes an address change. and re-mail. If a notice is returned as undeliverable again and:

    1. Total Erroneous Refund is less than ≡ ≡ ≡ ≡ ≡ ≡ ≡ continue to review the case on a quarterly basis for offset of credits which may become available. When all applicable Statutes have expired, refer to IRM 3.17.80.1.18, Write-Off Procedures for Unrecoverable Erroneous Refunds.

    2. If Erroneous Refund is ≡ ≡ ≡ ≡ ≡ or more, prepare Form 2209 as required in IRM 3.17.80.1.11(9) below.

    3. Notate the History Sheet and file.

  10. Form 2209:

    1. If the Statute expiration period is less than 3 months and the amount is less than≡ ≡ ≡ ≡ ≡ ≡ , annotate History Sheet, "No Form 2209 Issued," and file (after letter(s) has or have been mailed) pending possible offset or write-off.

    2. If the Statute expiration period is 3 months and the amount is ≡ ≡ ≡ ≡ ≡ or more, route copies to the Collection function with Form 2209. Annotate Form 2209 as Erroneous Refund Case. Specify ERSED statute expiration date under remarks: Civil Suit Statute Expires (Month, DD, YYYY), Unassessable Take No Enforcement Action. Be sure to use date of check and not date of TC 846/840 for 2 year ERSED on Form 2209. Watch for accelerated cycles. Refer to 21.4, Refund Inquiries, for cycle and check dates.

    3. Annotate History Sheet with actions taken.

    4. Note the case file with the next review date (90 days).

  11. Initiate follow-up action using Form 2209-A when Form 2209 was issued over 90 days prior, if appropriate.

    Note:

    For all of the above 2209 instructions, it is permissible to access/use Integrated Colleciton System (ICS) as another option of making contact with the appropriate Field Collection area.

  12. When a case indicates the applicable 2 or 5-year ERSED has expired and the Internal Revenue Service no longer has the legal right to recover the Erroneous Refund:

    1. Refer to IRM 3.17.80.1.18, Write-Off Procedures for Unrecoverable Erroneous Refunds.

    2. Annotate on case History Sheet: ERSED expired, no letter sent to taxpayer.

      Exception:

      If the Erroneous Refund is $600.00 or more and the ERSED expired in the current calender year, issue a voluntary repayment letter.

  13. Remove case to the "closed" file when TC 845 is input to release the Erroneous Refund Freeze, if appropriate.

  14. Retire the closed Erroneous Refund case file according to the guidelines in IRM 1.15.4, Retiring and Requesting Records, and IRM 1.15.2, Records Management - Types of records and Their Life Cycles.

Maintaining Case Files (Cases ≡ ≡ ≡ ≡ or Less Only)
  1. Erroneous Refund Cases received where the Erroneous Refund is ≡ ≡ ≡ ≡ ≡ or less will be worked as follows:

    1. Prepare case file.

    2. Monitor the case for payments and/or credits for 45 days after the first Demand (510-C) Letter.

    3. If not fully repaid after 45 days, initiate 2nd 510-C (Demand letter) or Interest letter (within 10-days after the 45th day).

    4. Send no more letters after the 2nd Demand or interest letter listed in c above.

    5. If fully repaid, follow procedures in IRM 3.17.80.1.9.4, Taxpayer Repays in Full.

    6. If there is no reply or if a partial payment is received, at the ERSED, follow normal write-off procedures and no more collection actions will be taken.

    Note:

    If the refund amount is ≡ ≡ ≡ ≡ or less the system will reverse the amount with a TC 606. If there are other outstanding balances follow normal write-off procedures.

Working the Monthly TC 844 (-U Freeze) Listing
  1. On a quarterly basis, MITS provides each site with a Control-D file containing newly input TC 844s. The purpose of this file is to ensure that all new erroneous refund cases have a TC 844 (-U Freeze) input prior to being received in Accounting as instructed in IRM 21.4.5 , Erroneous Refunds.

  2. Open the file and click on your site corresponding tab on the lower left corner of the spreadsheet.

  3. There should be a TIN on the spreadsheet for each erroneous refund case received in Accounting from the functional area (AM, TAS, etc.). The listing should be worked as follows:

    1. If there is a TIN on the listing and no corresponding case file, research should be conducted to verify the validity of the TC 844. If there was never a case file after research, the TC 844 should be reversed.

    2. If there is no TIN on the listing but a case file is present, notify the originator that a TC 844 should be input. (see IRM 3.17.80.1.2(3)(d)

Refund Cancellation, Repayments and Replies to Correspondence

  1. When replies are received from the taxpayer in response to the 510-C letter, pull case file and research.

  2. If the taxpayer returns the original refund check the category code on TXMOD history will update to 3913. If you receive the returned check forward to Refund Inquiry to be batched and sent to the Regional Financial Center. Monitor account for the TC 841 to post. The cancellation credit will generate a TC 777 for the amount of credit interest in the refund. Update case History Sheet and IDRS control base.

  3. If you receive a payment and the Erroneous Refund is not fully repaid, reply to taxpayers correspondence giving the new balance due, arrangements for a payment plan, etc. (see IRM 3.17.80.1.9.5, Processing Partial Payments)

    1. When payments post to the Master File prepare the Form 3809 for the TC 702 as appropriate.

    2. If it is determined that the taxpayer should be assessed debit interest, verify that a TC 777 posted for the correct amount. If the credit interest is incorrect input a TC 772.

  4. Prepare Form 3809 for a TC 702 to reverse TC 700:

    • TC700, 58 Document Code, 950-999 Blocking Series.

    • TC702, 58 Document Code, 900-949 Blocking Series.

  5. If the Erroneous Refund is fully repaid and there is additional credit remaining on the tax account, assess interest as follows:

    1. If the available credit exceeds the interest due, assess the full amount of interest and allow the remaining credit to refund.

    2. If the interest due exceeds the available credit by less than $25.00, assess interest only for the amount of available credit and close the case.

    3. If the interest due exceeds the available credit by $25.00 or more, assess interest for the amount of available credit and use letters 285-C, 3414-C, 672-C, or 3064-C to notify the taxpayer of the amount of interest still due

  6. When the Erroneous Refund is fully repaid, if applicable, verify TC 702 has posted:

    1. Input TC 845 using CC REQ77 and close control base.

    2. Release TC 470 when other balances are due.

    3. If the account is overpaid, release any applicable Freezes (Refer to Document 6209).

    4. Annotate History Sheet with payments and other actions and close case.

      Note:

      If a TC 777 generates to reverse credit interest that has already been manually reversed via TC 772, correct the account by using TC 770 prior to closing case.

    Note:

    If a TC 777 generates to reverse credit interest that has already been manually reversed via TC 772, correct the account by using TC 770 prior to closing case.

  7. If the taxpayer claims non-receipt of the check(s), see IRM 21.4.2 , Refund Inquiries.

    Note:

    Prior to initiating IDRS CHKCL actions , verify that the refund was not fully offset through the TOP (TC 898s) for the same amount.

    1. After inputting CC CHKCL, a photocopy of the check(s) is subsequently received from Bureau of Fiscal Services (BFS, formerly known as Financial Management Service (FMS)) Check Claims with an BFS Form 1133, BFS Form 3858, indicating proper endorsement by the taxpayer. Send the taxpayer a photocopy of the negotiated check(s) and BFS Form 1133.

  8. When there is no response from the taxpayer within 45 days, and the Erroneous Refund is over ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , within 10-days of the 45th day, initiate Form 2209 procedures, if not already completed, include the following when mailing Form 2209:

    1. The taxpayer's initial correspondence;

    2. The photocopy of the check; and

    3. History Sheet.

      Note:

      Accessing Indegrated Access System (ICS) is an optional method to contact Field Colllections instead of issuing F. 2209.

  9. If the Erroneous Refund is less than ≡ ≡ ≡ ≡ ≡ ≡ follow guidelines in IRM 3.17.80.1.11, Maintaining Case Files.

  10. If photocopy of the check(s) received from Check Claims, with an accompanying BFS Form 1133 and BFS Form 3858 indicate different endorsement(s).

    1. Send the taxpayer a photocopy of the negotiated check(s), BFS Form 1133, and a 206-C or 3414-C letter as appropriate.

    2. Explain per the taxpayer's request, a copy of the refund check(s) is attached and BFS Form 1133 for each check.

    3. Taxpayers must complete the Form 1133 for each check and send back to the Erroneous Refund function, in the self-addressed envelope provided.

  11. If no response from the taxpayer within 45 days and the interest letter has not already been sent then follow procedures in IRM 3.17.80.1.11, Maintaining Case Files.

  12. When the taxpayer returns completed Form 1133 , follow procedures in IRM 3.17.80.1.2.4, Processing Payments Over Cancellation.

  13. If the taxpayer requests to pay by installments, and the ERSED is still open, accept the offer made by the taxpayer and send the taxpayer pre-addressed envelopes to make payments (Refer to Note in IRM 3.17.80.1.12(3)).

  14. If the taxpayer requests to pay by installments, but no offered amount is provided by the taxpayer, , determine the status of the 2 or 5 ERSED. Divide the amount of the Erroneous Refund by the number of months it would take the taxpayer to repay before the ERSED expires. The payment plan should not be extended beyond the ERSED.

    Exception:

    If the Erroneous Refund is $600.00 or more and the ERSED expired in the current calender year, issue a voluntary repayment letter.

    1. A suggested payment schedule is shown in Figure 3.17.80-21.

    Figure 3.17.80-21

    This is an Image: 47865197.gif

    Please click here for the text description of the image.

    Note:

    Each case must be considered individually. Consult with lead/manager.

  15. Send the taxpayer a 3414-C or 3064-C letter.

  16. If the taxpayer requests to pay after the ERSED (2 or 5 years from the date of the refund), inform the taxpayer that voluntary payments are accepted. However:

    1. Inform the taxpayer that he/she is not legally obligated to repay.

    2. Inform the taxpayer if the amount is not repaid and the amount is $600.00 or more, the Service will consider the amount income and the Service will issue Form 1099-C, Cancellation of Debt.

    3. Process as outlined in IRM 3.17.80.1.16, Repayments after ERSED Expires.

  17. Monitor installment payments. If the taxpayer defaults on an installment, contact the taxpayer and send 3414-C letter stating another area is handling the remaining balance due on his/her account. Forward taxpayers original request for installments and brief explanation of case to the Collection or CSCO function. Retain a copy of letter from the taxpayer in the Erroneous Refund case file (See IRM 3.17.80.1.13, Replies to Form 2209 Cases from Collection Field Function.

  18. Monitor items where follow-up action is needed.

  19. When the 15XX Account is written off and there is a debit balance due on the taxpayers installment account, assess interest only on the amount of the Erroneous Refund from either:

    • the date of demand

    • or the date of refund (TC 840 or TC 846 Transaction Code date)

    Interest will be calculated to the 23C date of the cycle that TC 340 is input. Establish in the control base of TXMOD on IDRS and indicate on the History Sheet. Input the date you computed interest to and amount on module.

  20. Send taxpayer a 3414-C letter stating another area is handling the remaining balance due on his/her account. Forward taxpayers original request for installments and brief explanation of case to the appropriate Collection Field Function group. Retain a copy of letter from the taxpayer in the Erroneous Refund case file.

  21. If an erroneous refund involving a direct deposit has been returned or refused from a bank but the bank has taken bank fees, there is still an outstanding balance from the original erroneous refund:

    1. Look at the tax module to determine if the case involved ID-theft (or suspected ID-theft because the taxpayer has an address belonging to an IRS Processing Center.

    2. See instructions in Figure 3.17.80-22 below:

    Figure 3.17.80-22a

    If ID-Theft If Not ID-Theft
    Make contact with the appropriate point of contact in IRM 3.17.243.6.3 and ask them 1) what should be done with the remaining erroneous refund balance or 2) need of determining the taxpayer’s correct mailing address. If no better address is found, follow normal procedures through the time when the ERSED has expired. Release the TC 844 and proceed to write off the remaining amount after the Erroneous Refund Expiration Date.

    Figure 3.17.80-22b

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    Please click here for the text description of the image.

Replies to Form 2209 Cases from Collection Field Function

  1. When replies are received from the Collection Field Function, note the information from Form 2209 on History Sheet

    Note:

    Integrated Collection System may be used as an option to Form 2209 requests or replies. So, consider using ICS instead of Form 2209/Form 2209-Afor all the below instructions in 3.17.80.1.13.

    .

  2. If the reply indicates the taxpayer will not repay, note on the History Sheet whether or not civil suit was recommended or an extension was signed. Associate with the case file. Store case file in the "Suspense" file.

    Note:

    IRC Section 6159 only authorizes installment agreements for the payment of "tax" . Extensions under Section 6532(b) should always contain an expiration date and should be obtained only when (1) the taxpayer is willing to repay the Erroneous Refund but needs time beyond the ERSED, or (2) the taxpayer disputes that the refund is erroneous and the amount at issue is significant (i.e., the Service will file an Erroneous Refund civil suit if the taxpayer does not repay the Erroneous Refund).

  3. Hold the case in the "Suspense" file until a credit becomes available for offset (2 or 5-year). When offset(s) have satisfied the 15XX Account or the 2 or 5-year statute has expired, input TC 845 using CC REQ77, close the IDRS control base and file the case in the closed file. If no offset(s) become available or the 2 or 5-year statute expires, write-off the unrecoverable refund as outlined in IRM 3.17.80.18.1.

    Note:

    Be sure and follow procedures for interest considerations in IRM 3.17.80.1.8.4 before you close case.

  4. If the taxpayer claims non-receipt of the refund check, the Collection Field Function will retain Form 2209, but will return Form 2209-A, Status Report, and the taxpayer's statement (if practical). Initiate CC CHKCL or SF 1184 for an unavailable check cancellation and attach the taxpayer's statement, if available. Photocopy all information for the case file. When a reply is received from inquiry to CHKCL/Form 1184, notify the originator of the status.

    1. If the reply to SF 1184 indicates the cancellation or that Treasury will take further action, prepare Form 2209-A to recall the original Form 2209. Retain the case in the file.

    2. If the photocopy of the check indicates a proper endorsement, forward the photocopy to the originator of the Form 2209-A.

    3. Annotate the History Sheet of the 510-C letter, photocopy the document and retain the case in the file.

  5. If a repayment agreement has been accepted, retain case in the cycle file under a review date for the date payments are expected.

    1. As payments are received, process as outlined in IRM 3.17.80.1.8.5 and re-file under the new anticipated payment date.

    2. When full payment is achieved, input TC 845 using CC REQ77, close the IDRS control base, annotate History Sheet, and place the case in the closed case file.

    3. If there has been payment default for 2 or more months, communicate with the Collection Field Function via Form 2209 and inform Collection Field Function there has been a payment default. Collection Field Function will return Form 2209-A providing an update.

Processing 844 Transcripts (TRANS-844) (-U Freeze)

  1. Background: When a TC 844 is input to a taxpayer's module, it Freezes the entire account (-U Freeze) for credits becoming available for offset. No credits are refunded to the taxpayer or offset to another outstanding balance within the account until the (-U Freeze) is released by a TC 845. TC 845 has restricted input by Accounting/Erroneous Refund employees only. TC 845 must be input on the same module where the TC 844 is present.

    1. See IRM 3.17.80.1.9.2(5) for TC 844 actions.

    2. TC 844 , Erroneous Refund Freeze (-U Freeze) transcripts (Trans-844) electronically generated via Control-D for Accounting/Erroneous Refund function, when credits become available on the frozen account.

    3. If no case file, research account to determine area responsible for identifying the Erroneous Refund or for other Freeze conditions or status codes.

    4. If case is a Category D, Unassessable Erroneous Refund, and has not been sent to the Erroneous Refund Unit, contact the responsible area by phone/E-mail and request case documentation history unless there is enough credit to full pay the Erroneous Refund then process accordingly. If only partial credit is available then offset and request documentation. Maintain TC 844 transcript as a case file. Update IDRS and history sheet.

    5. If case is NOT a Category D erroneous refund, forward transcript to appropriate area. Update IDRS with actions taken and the area it was forwarded to.

  2. Verify that the taxpayer's account has an open control base.

    1. If another site has an open control base and the case was not transferred to your site, notify them of the available credit by faxing the Transcript. (See Exhibit 3.17.80-4, Erroneous Refund Coordinators)

    2. If no 15XX Account or case reference is found, input TC 845 to release the Freeze.

  3. Determine if the credit is available for transfer to the 15XX Account. Other liability Freezes may be involved. If the credit is not available for transfer, associate the transcript with the case file. Inform the appropriate function of the available credit.

  4. If a TC 150 is not present on the transcript, the credit is not available for transfer unless the payment is designated for the ERRF repayment (payment was misapplied).

  5. Transfer the available credit for the amount of the Erroneous Refund, plus any interest due, to the period involved. Input CC ADD24 or CC ADC24 with appropriate Transaction Code per IRM 2.4, IDRS Input Instructions . (see Figure 3.17.80-23)

    Figure 3.17.80-23

    This is an Image: 47865201.gif

    Please click here for the text description of the image.

  6. If the -U Freeze (TC 844) has not been released, transfer available credit to the 15XX Account, to the debit balance held in the 15XX Account. (see Figure 3.17.80-24) The remaining credit, is applied to the debit balance including any interest due on the tax module. Notify the taxpayer using the 285-C letter.

    Figure 3.17.80-24

    This is an Image: 47865202.gif

    Please click here for the text description of the image.

  7. If the statute for offset (ERSED 2 or 5 years) expired and a TC 700 is on the account, input the TC 845 using CC REQ77 to release the (" -U" Freeze). Do not transfer the credit to the 15XX Account without approval from the taxpayer. If approval is not received, initiate action to write-off the unrecovered amount in the 15XX Account, per IRM 3.17.63.0, Accounting Control. Follow write-off procedures outlined in IRM 3.17.80.1.18, Write-Off Procedures for Unrecoverable Erroneous Refunds.

  8. Notate the case History Sheet that a TC 844 transcript was received and what actions were taken.

  9. Release TC 844 Freeze when the 15XX Account is repaid, or when written off and annotate History Sheet with actions taken. Follow procedures for interest in IRM 3.17.80.1.9.4(6). Close IDRS control base and file in the closed case file.

  10. A TC 130 may be used to legally offset the issuance of the refund to the Erroneous Refund 15XX Account. Although TC 844 is usually sufficient if the ERSED has not passed, the TC 130 is needed to Freeze a refund on an account other than that which had the Erroneous Refund such as:

    1. Cases where a joint account received an Erroneous Refund and taxpayers are now filing separate returns or filing under a different Social Security Number.

    2. If a judgment or waiver has been secured without any limitation to time (for example: for Court-Ordered Restitution Cases, there is no expiration of the 10 year Collection statute).

  11. If a manual refund is prepared for any remaining credit, follow IRM 21.4.4 manual refund procedures and you must research for:

    1. Any outstanding balances (OBLs).

    2. Balance due or open control bases or a "V" Freeze on the account.

    3. Centralized Authorization File (CFINQ)" Should the refund be issued to the representative?"

  12. Releasing TC 844 (-U Freeze) for offset.

    1. TC 845 is restricted to Accounting/Erroneous Refund IDRS organization codes.

    2. Other areas desiring to release an Erroneous Refund Freeze must request (-U Freeze) release in writing or by a phone call.

    3. State actions requiring release of (-U Freeze) if the Erroneous Refund was not repaid nor credit was offset.

    4. Copy of completed History Sheet with closing actions taken.

    5. Current TXMODA showing all posted actions.

    6. IDRS Employee number and area requesting input of TC 845.

    7. IDRS Employee number of employee inputting TC 845.

    8. Update IDRS History Item on TXMODA with requestor of TC 845 and reason.

    9. Update History Sheet in Case file and retain if future questions arise pending expiration of statutes or write-off actions.

  13. Annotate the case file. Maintain in the closed case file.

Dishonored Check Erroneous Refund Repayments

  1. Upon notification of a dishonored refund repayment from the Dishonored Check Unit, research file, 15XX Account, etc., to determine if the case is still active.

  2. If the Erroneous Refund case is active, research TXMOD and case file to determine the status of the dishonored check. Verify that:

    1. The dishonored check has been reversed;

    2. The debit has been applied to the 15XX Account; and

    3. TC 844 is on the module, re-input if necessary.

  3. Determine if all 510-C letters have been issued to the taxpayer and the status of the 2 or 5-year statute.

  4. If the 5-year statute has not expired and the 510-C letters have not been issued, monitor case for 45 days, awaiting a reply to Form 2287 (c) notice, Check Not Accepted By Bank (issued by the Dishonored Check Unit). If no repayment is received within 45 days, send taxpayer a second 510-C letter as outlined in IRM 3.17.80.1.11, Maintaining Case Files.

  5. If the 5-year Statute has not expired and the 510-C letters have been issued, follow instructions in IRM 3.17.80.1.14(4) above, except do not send 510-C letter. Send 3064-C letter to taxpayer, using open paragraphs as follows: "The check you submitted for repayment of an Erroneous Refund issued to you has been dishonored. Form 2287 (c) has been issued to you requesting payment. Therefore, your account remains in balance due status, accruing penalties and interest until paid in full." The issuance of a letter 3064-C is limited to the specifications of the 5-year Statute.

  6. If the 5-year statute has expired, follow write-off procedures as outlined in IRM 3.17.80.1.18.

  7. Notate History Sheet with actions taken and re-file case for follow-up.

Erroneous Refund Repayments After the ERSED Has Expired

  1. When a repayment is received, or when credit has been available, after the 2 or 5-year recovery Statute has expired, follow procedures below:

    1. Notify the taxpayer that the Service no longer has a legal right to recover the Erroneous Refund (e.g. 3414-C letter).

    2. However, the taxpayer may choose to apply the money to the Erroneous Refund liability or

    3. The taxpayer may designate the payment be applied to an outstanding tax liability or refunded.

    Note:

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

  2. If the taxpayer repays:

    1. Reopen case file and establish IDRS control base.

    2. Post repayment to taxpayer's account as a TC 720. Reverse TC 700 on the account with a TC 702 to the 15XX/6920 Account.

    3. Update case file with actions taken. Monitor case for transactions and repayments from the taxpayer to post.

    4. When all transactions post, re-close control and re-file in closed case file.

  3. If the taxpayer chooses not to repay the Erroneous Refund after expiration of the ERSED:

    • Review the case file and ensure that the taxpayer was advised that should he/she fail to repay the Erroneous Refund, the ERSED has expired and the Erroneous Refund balance is $600.00 or more, the Service would consider the amount income and issue Form 1099-C, Cancellation of Debt. If documentation exists that the taxpayer was adequately advised (the same year the ERSED expired in) , forward to area to issue Form 1099-C for the Erroneous Refund amount (Follow write-off procedures at IRM 3.17.80.1.18).

  4. If repayments are received after the ERSED has expired and when the taxpayer is making payments, the Service will continue to issue a 510C letter (or 3414C) to the taxpayer on a quarterly basis until the erroneous refund is paid.

  5. If repayments are received after the Forms 1099-C were issued, initiate requests and prepare a corrected 1099-C via the 1099 software that is made available to the Site Accounting Operations:

    1. Adjust the 15XX/4910/6920 Accounts as appropriate.

    2. Monitor case for posting actions. Reverse the 15XX/4910/6920 Accounts accordingly as payment or posting documents are received (reverse TC 700 with 702, as necessary).

    3. Post repayments as TC 720. Once transactions post, close case and re-file.

  6. "If the taxpayer does not reply:"

    1. After monitoring account for 45 days, update IDRS and History Sheet.

    2. Reverse the TC 700 for the amount of the credit.

    3. Follow write-off procedures as outlined in IRM 3.17.80.1.18 for any remaining Erroneous Refund balance due.

  7. The procedures above leave a proper audit trail of repayments.

Treasury Offset Program (TOP) Erroneous Refund Cases

  1. TOP erroneous refunds can occur before or after the creditor agency reports to IRS that they made a refund to the taxpayer of an IRS offset.

    1. Errors may result from the reversal of a Debtor Master File (DMF) offset.

    2. See IRM 21.4.6, Refund Inquiries - Refund Offset, for instructions.

  2. Refer to IRM 21.4.6.5.22.1, Injured Spouse Returned Refunds.

  3. TOP erroneous refunds that occur after BFS reported that they issued a refund of the offset are processed using Erroneous Refund procedures found in IRM 21.4.5, Erroneous Refunds.

  4. Erroneous Refunds occur on TOP offsets when:

    1. a manual refund was issued, that also required reversal of an offset made in error.

    2. the creditor agency reports a refund of the offset that posts as a TC 131 on ENMOD with the year of offset the same as the offset being reversed.

    3. the offset reversal, TC 897, attempts to post after the cycle of the TC 131 and the amount is greater than the offset available for reversal (TC 896 TC 131).

    4. an Unpostable Code (UPC) 142 results.

  5. These erroneous refunds may occur on TOP offsets when:

    1. a manual or systemic refund was issued that required reversal of a TOP offset

    2. the creditor agency or BFS made a refund of the offset (TC 899, type 2 or 3) or BFS has already initiated an offset reversal as a result of a Check Claim, undelivered refund, etc.

    3. the offset reversal, TC 766 with OTN, Offset Trace Number, attempts to post after the TC 899 posts, the amount is greater than the offset available for reversal and a manual refund was issued; or, the TC 766 posts and BFS rejects the reversal because an agency refund or Check Claim is being processed.

    4. TC 766 will cause a UPC 189 if the amount is greater than the offset available for reversal. If the TC 766 is rejected in whole or in part by BFS, it will appear on the BFS TC 766 Reject Listing. Refer to subsection 21.4.6 entitled Tax Refund Offset.

      Note:

      See Figure 3.17.80-25 and Figure 3.17.80-26.

    Figure 3.17.80-25

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    Figure 3.17.80-26

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Write-Off Procedures for Unrecoverable Erroneous Refunds

  1. Unrecoverable Erroneous Refund disbursement losses are written off when the 2 or 5-year ERSED expires unless one of the exceptions below is present.

    • A judgment or extension has been secured on the erroneous refund

    • The taxpayer is on a payment plan for the erroneous refund and indicates payments will continue

    • A signed waiver by the taxpayer has been obtained

  2. The conditions below should be met to prepare the case for the Accountable Officer.

    1. History Sheets must be current.

    2. IRM 3.0.167, Losses and Shortages, provides specific instructions for requesting relief of the Accountable Officers.

    3. Expired Statute or uncollectible cases should be transferred from the 1530 or 1540 Account to the 4910 Account when relief is requested.

      Note:

      For Statute Barred Refunds described in IRM 3.17.80.1.9.6, no credit was taken from Account 1540 so, no transfer will take place to the 4910 or 6920 Account. It will only be necessary to be sure to include these losses within the report described in the Losses and Shortages IRM.

    4. Once relief is granted, transfer from the 4910 Account to the 6920 Account.

    5. See Exhibit 3.17.80-3, Erroneous Refund Accounts 1530 and 1540.

    Note:

    When an Erroneous Refund, Direct Deposit account owner cannot be identified, and the BFS Form 150.1 has been returned stating that fact, you may choose to take write-off actions immediately, as long as there is reasonable assurance that employee fraud is not involved. This may be a local decision, but should receive a next management level of review for approval.

  3. When reviewing or working an Erroneous Refund case and the 2 or 5-year ERSED has expired, follow the procedures below unless an exception in (1) above is met.

    Note:

    See IRM 21.4.5.14.1, Collection Statute Expiration Date for Category D Erroneous Refunds.

    1. Prepare and process Form 3809 to debit and credit the appropriate accounts. (see Figure 3.17.80-27)

      Figure 3.17.80-27

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      Note:

      The amount on Form 3809 is the amount in the 15XX Account.

    2. If the ERSED has expired in the current calendar year, send the taxpayer a 510-C, 3414-C, or 3064-C letter via IDRS.

    3. Also explain that the taxpayer is no longer legally obligated to repay the Erroneous Refund amount, however, if the ERSED expired in the current calendar year and erroneous amount is $600.00 or more the Service considers the amount income and will issue Form 1099-C, Cancellation of Debt if it is not repaid by December 31st. (see IRM 3.17.80.1.10(7)(b) for suggested wording)

      Note:

      ALL LETTERS MUST/WILL BE REVIEWED BY LEAD TECHNICIAN AND/OR MANAGER FOR LANGUAGE AND CONTENT.

    4. Before closing case, review for possible accruals of Interest. If accruals are present and in error, input TC 340 (.00). Attach back-up documentation.

    5. Monitor the case file until the 15XX Account amount posts.

    6. Input a TC 845 using CC REQ77 if a TC 844 (-U Freeze) is still on the module.

    7. Update the IDRS control base for write-off.

    8. Ensure the case is marked as a "Write-Off" on the outside of the folder in black marker.

    9. Update case History Sheet.

    10. Send a Form 2209-A to recall Form 2209, if there is still one outstanding. (See Figure 3.17.80-28)

      Note:

      It is optional to use Integrated Colleciton system (ICS) instead of issuing/recalling Form 2209.

    Figure 3.17.80-28

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  4. If Erroneous Refund repayments are received after write-off actions have taken place (Refer to IRM 3.17.80.1.15, Erroneous Refund Repayments After the 2 -year or 5-year Statute Has Expired).

Form 1099 - Unrecoverable unassessable erroneous refunds

  1. Unrecoverable erroneously paid refunds may be considered income to the recipient. Forms 1099-C, Cancellation of Debt, or 1099-MISC, Miscellaneous Income, are issued to IMF and BMF taxpayers receiving such refunds instructing them to include these amounts as income on their returns for the year indicated on the 1099s.

  2. In situations where the unassessable erroneous refunds income in the year it is received, a Form 1099-C should not be issued for any year. Instead the Service should issue a Form 1099-MISC, Miscellaneous Income, with respect to the year the unassessable erroneous refunds received and include the amount of the refund under line item entry number 3, "Other Income" .

    1. A taxpayer does not have income if the taxpayer returns the check to the government within the same tax year.

    2. If a taxpayer cashes the unassessable erroneous refund check, but repays the amount within the same tax year received, it is not income.

    3. Most unassessable erroneous refunds are not income in the year they are received.

  3. Erroneous Refunds, whether Assessable or Unassessable, should not be reported on Form 1099–C in the year the Erroneous Refund was received if:

    1. the Service intends to recover these amounts,

    2. various periods for collection (CSED and ERSED) have not yet expired,

    3. and collection activity, including offsets, will continue.

  4. Careful case review is necessary to report discharges of indebtedness on Forms 1099-C or 1099-MISC of more than $600.00 in a calendar year. Although filing is not required under Statute or regulations, it is consistent with reporting history, agency and sound tax administration.

  5. Enterprise Computing Center (ECC) - Martinsburg, Information Returns Program (IRP) publishes annual revisions to the Instructions and Specifications for preparing Forms 1099, 1098, 5498 and W2-G Reporting (Publication 1220).

    1. The Headquarters Erroneous Refund Analyst will transmit information to IRS, ECC, as described in the instructions using the appropriate transmittal, Form 1096, Annual Summary and Transmittal of U.S. Information Returns, for fewer than 250 items reported. The due date for filing information returns is generally by February 28, annually.

    2. The Site Accounting Operations will retain copies of Forms 1099-C and 1099-MISC for 4 years.

    3. The Site Accounting Operations will ensure that Forms 1099-C and 1099-MISC are issued by January 31 annually.

  6. Review case files. Prepare Forms 1099-C, Cancellation of Debt, if the outstanding Erroneous Refund balance is $600.00 or more.

    1. Report the amount of the discharged debt in Box 2 of Form 1099-C.

    2. Enter the date of the discharge in Box 1.

    3. Review the case file to ascertain that the taxpayer was notified in the year of the Statute expiration that this amount would be considered income and reported to IRS if not repaid.

    4. The Restructuring and Reform Act of 1998 (RRA 98), Section 3705(a) requires a contact name, and telephone number in the event the taxpayer has questions about the document. Include the appropriate site Unit's telephone number in the Form 1099-C and 1099-MISC box entitled" Creditor's name, address " . If this is not a toll-free telephone number, indicate not toll-free. This will ensure that the taxpayer will reach the appropriate area to pose questions.

  7. When no reply is received from a taxpayer after the second letter is sent and/or if Form 2209 is closed by Technical or Collections without repayment, and/or if the statutory periods have expired (or about to expire).

    1. Review cases to determine the year in which the Erroneous Refund would be considered income to the taxpayer.

    2. If correspondence or notification of the Services intent to issue Form 1099-C or 1099-MISC was sent to the taxpayer in the year the ERSED expired a Form 1099-C will be issued.

    3. If correspondence or notification of the Service's intent to issue Form 1099-C or 1099-MISC cannot be determined, review by manager is required.

  8. For cases where it has been determined that a Form 1099-C or 1099-MISC should be issued and a 3414-C/510-C/3064-C letter has been sent:

    1. Determine whether a Form 1099-INT for interest paid was or will be issued.

    2. If Form 1099-INT has already been or will be issued for the interest amount but the Erroneous Refund principal has not been recovered, photocopy the 1099-C notification letter. Note the copy for issuance of the Form 1099-C, principal amount only, and forward to the appropriate area.

    3. If Forms 1099-INT have not or will not be issued, follow the instructions in IRM 3.17.80.1.19(4), above to issue Form 1099-C or 1099-MISC for the Erroneous Refund Principal and Interest. Add the following statement in Box 5, Debt Description - Erroneous Refund dated 06/21/20XX for $1,100.00 Notice Dated 07/15/20XX. (see Figure 3.17.80-29)

      Figure 3.17.80-29

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  9. The appropriate function will process the case by completing the Form 1099-C only if the taxpayer was previously notified. If taxpayer was NOT previously notified, send a 3414-C letter informing the taxpayer why they are going to receive a Form 1099-C or 1099-MISC.

  10. Complete the Form 1099-C/1099-MISC:

    1. Always use "Detroit Computing Center" in first name line.

    2. Always use "Internal Revenue Service" in the second name line.

      Note:

      Important: Include the contact name and telephone number of the unit "not a toll-free number" in name line. This is required by RRA 98, Section 3705.

    3. Always use Submission Processing site Address (Where the 1099-C originates) as the Filer's address.

    4. Creditor's Federal Identification Number should always be: "≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "

    5. Debtor's identification number: taxpayer name, SSN or EIN

    6. Box 1: Enter the date the debt was cancelled. Use format MMDDYY.

    7. Box 2: Enter amount of the cancelled debt.

    8. Box 3: Enter Interest amount which is included in the cancelled debt (Box 2), if appropriate. Use for 1099-MISC.

    9. Box 4: Enter Penalty amount, if any (and there should never be a penalty amount.

    10. Box 5: Enter Erroneous Refund, Date: and Amount: as a description of the origin of the debt.

    11. Box 5: Enter Enter X, since the debitor was personally liable fopr the repayment of the debt.

    12. Box 6: Enter "C" or identifiable event code.

  11. Copy A of all paper Form 1099s must be sent to IRS with Form 1096, Annual Summary and Transmittal of U.S. Information Returns; Copy B is furnished to the taxpayer/debtor unless this process has been automated by your site.

  12. Record keeping Form 1099 instructions indicate filers of Forms 1099 are required to retain a copy of Forms 1099 or be able to reconstruct the data (case file) for at least 4 years from the due date of the return/date of issue.

Forms 1099 MISC. and Whistleblower Activities (Ogden Only)

  1. When the RACS team receives the Whistleblower package there are three items:

    • Memo signed by the Submission Processing Director for the award payment and one for funds transfer to special funds receipt. The second one releases money from the whistleblower account to the 4625 informant account.

    • Memo for funds transfer to special funds receipt, releasing money from the Whistleblower account to the 4625 Informant account.

    • Manual refund form which is processed by the Manual Refund team.

  2. For each informant, a Form 1099 Misc. must be completed and sent to the taxpayer no later than the last work-day of the month of January.

Researching and Resolving Undeliverable Forms 1099-C

  1. If the undeliverable letter has received a Return address containing an IRS address, the tax return may involve ID-theft. Make contact with the appropriate point of contact in IRM 3.17.243.6.4 and make any address update based on those communications.

  2. Research Undeliverables using CC ENMOD, CC NAMES, CC NAMEI, CC IMFOLE, CC BMFOLE, CC IRPTR, CC TPIIP, and RTR (submitted checks often contain a more current address). Check ENMOD, BMFOLE, or IMFOLE for recently-posted or pending address changes (some are made by the National Change of Address (NCOA) Program and are indicated by the presence of TC014 and the unique DLN of xx26399599999Y, with “xx” representing the IRSC of each campus. Update the Form 1099-C using the more current address or the pending change-of-address. Do not change the address on CC ENMOD

    Note:

    Any change created by National Change of Address (NCOA) will update the taxpayer's entity information.

    Note:

    CC TPIIP researches for taxpayer account information using components/fields other than the full SSN.

  3. If a yellow USPS forwarding label is attached, verify the address on the label using CC ENMOND and CC NAMES.

  4. Perfect any new address by entering into USPS.COM - Zip Code Finder. http://zip4.usps.com/zip4/welcome.jsp

  5. If a better address is found, include Form 8822, Change of Address, with the re-mailing of the Form 1099-C. Completion of this form by the taxpayer authorizes an address change.

  6. Use CC ACTON to enter a history item, "8822toTP" if CC TXMOD is present on IDRS. Do not create a dummy module to input a history item

  7. If no better address is found:

    1. E-filed tax returns involving the erroneous refund: void (“X” through) the 1099-C.

    2. After a second undelivered 1099-C has been returned and a paper tax return is involved with the erroneous refund: attach Form 9856, Attachment Alert, to send the Form 1099-C (along with envelope and any stuffers) to Files to be associated with the return.

    3. Each time (no more than 2) a 1099-C is returned undelivered, use CC ACTON to enter a history item, "UNDL1099C" if CC TXMOD is present on IDRS. Do not create a dummy module to input a history item

Release Claim Form Secured by Secret Service

  1. When Form 1081/Treasury Receivable Accounting, and Collection System (TRACS) and Bureau Fiscal Services (BFS) 1133R (Release of Claim Against the United States for Proceeds of a Government Check) are received in Accounting, follow the procedures outlined in IRM 3.17.80.1.18, Write-off Procedures for Unrecoverable Erroneous Refunds.

  2. If the taxpayer's response to 510-C letter or by telephone inquiry is: he/she did not cash the refund check, or did not understand when he/she signed the release Form BFS 1133R (provided by Secret Service), follow the instructions outlined below.

    1. Inform the taxpayer to submit a signed letter to the IRS stating that he/she did not understand the claim form he/she signed or did not cash the check in question.

    2. Upon receipt of the taxpayer's correspondence, prepare and send a 2 way memo or Form 3864 (see Figure 3.17.80-30) explaining the situation to BFS. Attach the following information:

      • Letter from the taxpayer.

      • Copy of the check in question.

      • Release claim form secured by Secret Service.

      Figure 3.17.80-30

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    3. Send the taxpayer an interim letter stating his/her correspondence has been received and was forwarded to BFS for further investigation.

    4. Update the IDRS control base.

  3. Monitor the case for 60 days. If no reply after 60 days:

    1. Follow-up with BFS on Form 3864 or 2 way memo allowing 30 days for a reply.

    2. If no reply from BFS to the follow-up, call the BFS Check Information telephone answering unit at (855) 868-0151. Have the following information available: check number, check symbol, check date, payee's name, and the dates the initial follow-up information was sent to BFS.

      Note:

      This information can be obtained from IDRS using CC IMFOL#.

  4. If the reply to Form 3864 or 2-way memo indicates the taxpayer benefited from the proceeds of the check:

    1. Resume the manual billing process and send a 2218-C letter informing the taxpayer of Bureau Fiscal Services' decision that they benefited from the proceeds of the check and she/he should repay the amount.

    2. Inform the taxpayer that his/her only recourse is through civil suit action through the courts system.

  5. If the taxpayer did not benefit from the check and BFS indicates that a future Form 1081/TRACS or a Limited Payability credit will be issued to IRS:

    1. Inform the taxpayer that his/her account is being settled.

    2. Monitor for the credit to be sent from BFS. Close the case file and IDRS control base once the credit has been reversed.

      Note:

      If the situation in IRM 3.17.80.1.22.(5) above occurs and the debit is in the 15XX Account, reverse the appropriate debit back to the taxpayer's account before posting TC 841.

Transferring Category D, Unassessable Erroneous Refund Cases

  1. Identify Unassessable types of erroneous refunds and determine the correct Accountable Officer for recovery actions. These procedures serve as guidelines for transferring cases due to Director's accountability for Category D, unassessable erroneous refunds.

    1. Manual refunds (TC 840) are usually considered the Erroneous Refund when there are duplicate generated system refunds (TC 846) or duplicate manual refunds. Erroneous Refunds are generally caused due to improper monitoring of accounts and failure to intercept duplicate generated refunds. When the TC 846 went to the incorrect individual or is part of the Refund Intercept Program the TC 846 is considered the Erroneous Refund.

    2. If a duplicate TC 846 (due to a duplicate or reprocessed return), use the latest TC 846 date.

    3. Submission Processing site codes in the Refund Schedule Number (RSN) for TC 846 and TC 840 determine the site with recovery responsibilities for the Erroneous Refund. The former use of the Document Locator Number (DLN) or the File Location Code (FLC) may be overruled by the sort by Refund Schedule Number.

    4. Amounts may be required to be reported as a disbursement loss if not repaid or recovered, and may also require issuance of Forms 1099-C, Cancellation of Debt. (see IRM 3.17.80.1.19, Forms 1099 - Unrecoverable unassessable erroneous refunds)

    5. However, if it is determined that the Erroneous Refund was caused by another location due to improper monitoring and actions, the DLN area of the transaction causing the Erroneous Refund will be held responsible for documenting the circumstances for the loss.

    6. Review cases for completeness and be on the lookout for cases identified as misapplied credit or estimated payments. Ensure appropriate actions have been taken to properly allocate payments on the appropriate accounts.

  2. If Unassessable Category D Erroneous Refund cases must be transferred to another site:

    1. Contact the gaining site Erroneous Refund Coordinator by fax or phone,

    2. Prepare accurate transfer documentation,

    3. Update IDRS with actions taken to maintain control of the case.

    4. Send the taxpayer a letter (e.g. 86-C letter) stating that the case is being transferred. Provide the name, telephone number and address of the gaining site Erroneous Refund Coordinator. (see Exhibit 3.17.80-4, Erroneous Refund Coordinators)

    5. Do not transfer original returns or original posting vouchers.

    6. Retain complete copy of file (including pertinent check copies) in the closed case file for 2 years.

  3. The losing SP site must:

    1. Contact the gaining site Erroneous Refund Coordinators. (see Exhibit 3.17.80-4)

    2. Update IDRS, CC TXMOD, showing the transfer, e.g., TRSFTO63.

    3. Ensure/Update status to "A." Do not close control base.

    4. Do not input TC 845 or TC 700.

    5. Take actions to prevent erroneous or duplicate notices to taxpayer.

    6. Prepare Form 3210, Document Transmittal and maintain record of cases transferred to and received from other sites.

      1. Attach TXMOD Print

      2. Issue transfer letter to taxpayer

      3. Attach taxpayer correspondence or Form 4442 (if applicable)

      4. Attach and update History Sheet

      5. Attach other pertinent information

    7. Update status only after the receiving site updates existing control base on IDRS and acknowledges receipt of Form 3210.

    8. Provide documentation related to the case (History Sheet from the point the Erroneous Refund was discovered, 510-C letter, Form 2209, Form 3809, correspondence, transcripts, etc.).

    9. Monitor the gaining site CC TXMOD via IDRS (IMFOL, C, Refund Research Screen) until the case is updated.

      Note:

      Follow-up should be made for transfer requests not acknowledged by the gaining site within 30 days from the Release Date on Form 3210 (Refer to 3.17.243, Miscellaneous Accounting).

    10. Transfer cases to the site of the Accountable Office as soon as possible no matter the date of the first 510-C letter.

    Exception:

    If the ERSED is expired and no 510-C letter was issued, transfer the account immediately. Ensure that Form 12356, TC 470 CC 93, TC 971 AC 663, and TC 844 are input. Do not input TC 700.

  4. The gaining SP site must:

    1. Update existing IDRS control base within 30 days.

    2. Acknowledge (sign) receipt of Form 3210 and return copies to originator within 30 days from the Release Date on Form 3210.

      Note:

      If case(s) are forwarded to an incorrect site for processing, reject the cases to the originator and include feedback that the case(s) belong(s) to another site and Accountable Officer.

    3. Input a NEW TC 844. This allows the TRANS-844 transcript to generate to the Submission Processing site maintaining the account.

    4. Do not return cases. Communicate with the originator to secure necessary documentation.

    5. Input TC 700 and TC 844.

    6. Determine if a 510-C letter has been issued. If a second 510-C letter is due, issue the second 510-C letter.

    Exception:

    If the ERSED is expired, do not issue any notices or correspondence unless the unpaid Erroneous Refund balance is $600.00 or more and the ERSED expired in the current calender year then issue 3414-C letter advising of 1099-C issuance. Input TC 700 and TC 844 and prepare case for relief request. See IRM 3.17.80.1.18, Write-Off Procedures for Unrecoverable Erroneous Refunds and IRM 3.0.167, Losses and Shortages.

  5. Cases already in Litigation are exempt from these procedures and will not be transferred.

  6. TC 844 transcripts must be forwarded to the appropriate Submission Processing site.

  7. Before closing cases with TC 845, research account(s) and IDRS to determine whether any other open control bases exist.

Processing Payments Over Cancellation (POC) - Preliminary Processes before an Erroneous Refund

  1. A "Payment Over Cancellation (POC)" case occurs when a taxpayer files a claim for non-receipt of a refund check, a replacement (Recertified) check is issued, and it is determined that both checks were cashed. The taxpayer should have received only one (not both) refunds. Therefore, there is an erroneous refund, POC condition.

  2. When a taxpayer files a claim for non-receipt of a refund, the Bureau Fiscal Services (BFS) issues one of the following to the IRS:

    1. Credit SF 1081 or IPAC Bill - When the first check is still outstanding (not cashed or expired), the BFS issues SF 1081 to return the credit to the IRS for application to the taxpayer's account and issuance (Recertification) of a second refund. The original check remains negotiable until it expires.

    2. Debit SF 1081 or IPAC Bill - When the original check is listed as cancelled (expired) and BFS issued the credit back to the IRS, but the BFS later concludes the original check was actually cashed, the BFS will issue SF 1081 requesting that the IRS apply a debit to the taxpayer's account for recovery as an erroneous refund. (see Figure 3.17.80-31)

    3. Payment Over Cancellation notification - When a replacement refund is issued and it is concluded by BFS that both checks were cashed, BFS issues a Payment Over Cancellation notification to the IRS. The site receives a Claims Document Package which includes a BFS Form 3858 (Claims Document), BFS Form 1133 (Claim Against the United States for the Proceedings of a Government Check), and a photocopy of the front and back side of the refund check(s). (see Figures 3.17.80-33, 3.17.80-34, and 3.17.80-35)

      Note:

      Images of endorsed refund checks can be obtained via the Treasury Check Information System (TCIS) and Payment Claims and Enhanced Reconciliation (PACER) systems. A TCIS navigation job-aid can be found in the Erroneous Refund Job aid, 2493-701, found in the Submission Processing Design Center's list of IMF Accounting courses at http://coursebooks.enterprise.irs.gov

    Figure 3.17.80-31

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    Figure 3.17.80-32

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    Figure 3.17.80-33

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    Figure 3.17.80-34

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    Figure 3.17.80-35

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  3. You will receive the original Form 1081, an IPAC Bill or one of the following TRACS listings of SF 1081 cases which list refunds issued by both the IRS and BFS. (see Figure 3.17.80-32)

    1. TRACS Listing: Reclamation Credit (to apply a credit)

    2. TRACS Listing: Unavailable Check Cancellation (to apply a credit)

    3. TRACS Listing: Payment Over Cancellation (to apply a debit)

  4. If the case is complete and the taxpayer has not responded to the first notification within 45 days, follow-up within 10-days, with a 2nd letter, including interest due, and prepare Form 3809 to credit the taxpayer's account and debit the 1543 General Ledger account. Number Form 3809 and post the TC 700 with Document Code 58 in blocking Series 850 through 899 to display the literal Refund Balance Due notification on IMFOL and TXMOD. If reversing, post the TC 702 with Document Code 58 in Blocking Series 800 through 849.

  5. Follow IRM 3.17.80.1. 12 for repayment procedures and additional correspondence.

  6. Follow IRM IRM 3.17.80.1.18 for write-off procedures.

  7. Follow IRM 3.17.80.1.19 for issuance of Forms 1099-C.

TRACS Listing Research

  1. If the TRACS listing provides only the check's "symbol" and "serial" numbers, use CC IMFOLC with the check "symbol" and "serial" number to retrieve the taxpayer information.

  2. Master File will display either the tax period from which the refund issued, or the Refund Research Database record for the check if no tax module exists. The later is common when your case involves the TIN of the secondary taxpayer on a jointly filed tax period where a refund occurred. (see Figure 3.17.80-35)

Processing SF 1081 or TRACS Debits

  1. All processing for TRACS/GOALS transmission and TRACS listings must be completed within 10 workdays from the received date. The TRACS listing which is produced from ECC, provides an individual breakdown of the charges by taxpayer. Included on the listing is (see Figures 3.17.80-36 and 3.17.80-37):

    1. SF 1081/TRACS Schedule number

    2. Date prepared

    3. Agency Location Code

    4. Budget Clearing Account being charged

    5. Agency Reference Information

    6. Check symbol

    7. Check number

    8. Check date

    9. Payee's name and TIN

    10. Applicable status code

    11. Amount being charged

    12. SF 215 number and date

  2. Review each TRACS/GOALS transmission with the TRACS listing, and the TRACS listing with the Payment Over Cancellation () Claims Package when received to ensure the following:

    1. Submission Processing site Agency Location Code (ALC) is correct.

    2. Taxpayer's TIN is provided.

    3. BFS Forms 3858 with taxpayer's name and address are provided.

    4. Photocopies of the front and back of the check(s) are attached.

    5. The charge is intended for the correct Submission Processing site ALC.

    6. The total amount on the TRACS listing is the same as the amount of GOALS transmission.

    7. Account number is present.

    Note:

    Verify that all charges are for tax refunds.

    Figure 3.17.80-36

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    Figure 3.17.80-37

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  3. Contact Check Claims Group (CCG) by telephone (855) 868-0151, Option 1, Sub-option 1, if any of the following discrepancies are found:

    1. Agency Location Code is incorrect.

    2. Account cannot be identified.

    3. Charge belongs to another agency or Submission Processing site.

    4. Charges are not for tax refunds.

    5. Taxpayer identifying information (SSN, EIN, name or address) is missing or incorrect.

    6. Amount of the TRACS/GOALS transmission does not equal the total amount of the detail on the TRACS listing.

    7. Photocopies of the check(s) are not provided.

  4. Check Claims Group (CCG) will:

    1. Provide the missing date.

    2. Reverse the charge via SF 1081/TRACS and, if appropriate, issue a corrected SF 1081/TRACS.

    3. Take the necessary action to correct any differences when the amount shown on the SF 1081/TRACS Listing and SF 1081/TRACS Schedule differ.

  5. Post either a TC 840 or a TC 843. If necessary, use CC IMFOLC to locate the tax period on which the related TC 846/TC 840 posted and take one of the following actions based on the circumstances described:

    1. Post TC 840 when the BFS issues a settlement (replacement) check, but later concludes that the taxpayer did, in fact, cash both checks. The IRS accounts for the duplicate refunds by posting the second refund as a TC 840 (Manual Refund) and IRS pursues recovery of the duplicated refund as a Category D Erroneous Refund with a 5-year Erroneous Refund Statute Expiration Date (ERSED).

    2. Post a TC 843 when a TC 841 was posted based on an earlier non-receipt claim on which, at the time, the first check had not been cashed, and the IRS issued a second refund. The BFS has now concluded that both checks have been cashed. The TC 843 moves the tax account into balance due status and the duplicated refund is pursued as a Category D Erroneous refund with a 5-year ERSED.

  6. TC 840 Procedures - Copy of settlement check present:

    1. Prepare Form 3245 in triplicate to input TC 840 on the taxpayer's account. Use the date of the settlement check as the date of the TC 840 (Schedule date). (see Figure 3.17.80-38)

    2. Attach to both "Copy 1" and "Copy 2" of Form 3245, photocopies of the settlement check, the BFS form or listing, a CC TXMOD printout, and all other documentation.

    3. Use CC ACTON to update and close your control base, then deliver the package to the team that does the numbering.

    4. Retain and file your "Copy 3" of Form 3245 and back-up items according to local procedures.

    5. Once numbered, copy and retain one numbered set with your case file.

    6. Input a TC 470 CC 93 (Input TC 470 CC 93 only if prior TC470 CC 93 has expired or was not previously input) to hold balance due notices, then deliver the numbered sets to Data Control.

    Figure 3.17.80-38

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  7. TC 840 Procedures - No copy of settlement check:

    1. Check CC TXMOD for a TC 971 with Action Code 078 or 079. If present, the Refund Inquiry Function has included a copy of the original refund check with their TC 290 for $.00

    2. Use the "Symbol" and "Serial" numbers from the original refund check (see Figure 3.17.80-39) to search the TCIS database for an image of the cross-referenced replacement check (settlement check). Erroneous Refunds Job Aid 2493-703 contains precise TCIS navigation instructions for this task.

    3. If still unable to locate an image of the settlement check, refer to IRM 3.17.80.2.5(5), or local procedures, for obtaining a copy from the BFS.

      Figure 3.17.80-39

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  8. TC 843 Procedures - follow the instructions in IRM 3.17.80.2.2, Paragraph (6) above, for TC 840s with a check copy except that:

    1. Use Form 3245 to post a TC 843. (see Figure 3.17.80-38)

    2. Form 3245 remarks will carry a different explanation.

    3. There will be no settlement check copy.

  9. Monitor for posting. Once your TC 840 or TC 843 posts, return the case file to the work leader for reassignment. An examiner will correspond with the taxpayer requesting repayment of the settlement check and include a copy of the original refund check, a copy of the settlement check, and a Form 1133 package for each refund. The return address should be that of the Erroneous Refund team.

Processing Debits, SF 1081 or TRACS Credit

  1. In most credit cases, you will only post a TC 841 to the affected tax period. Verify that the proposed credit amount on the SF 1081-TRAC-IPAC matches the refund in question. If they match, take the following actions:

    1. Complete the triplicate Form 3245 Posting Voucher.

    2. Attach copies of the SF 1081 or TRACS listing and a CC TXMOD printout to both copy 1 and copy 2 of Form 3245.

    3. Use CC ACTON to update and close the IDRS control base.

    4. Deliver the package to Accounting Operation's Numbering team.

    5. Retain and file the third copy of Form 3245 and back-up items according to local filing procedures.

    6. Once numbered, copy and retain one numbered set of Form 3245 with your case file and deliver the numbered sets to Data Control.

Corrected SF 1081
  1. A corrected SF 1081 can be identified by Schedule Number "B700. . ." . These items should also contain sufficient information to describe the initial GOALS transmission Schedule Number being reversed or corrected.

  2. BFS Accounts Branch attempts to maintain accurate end-of-month records of paper SF 1081 issued. Each ALC receives a listing of the paper SF 1081 for the prior accounting period. If SP sites do not receive this document to verify transmittals by the 15th of the month following the accounting period, contact the BFS Accounts Branch at FTS (202) 874-7920.

  3. Within 10 workdays of receipt of the SF 1081, using the SF 1081 listing, prepare a Form 3245, Posting Voucher-Refund Cancellation or Repayment, for each taxpayer listed. This will input a TC 843 to the tax module reversing the corresponding TC 841. (see Figure 3.17.80-42)

  4. Not all required information to complete Form 3245 appears on the SF 1081. The DO or ULC code and Schedule date need to be researched on IDRS, IMFOL or specific MFTRA.

    Note:

    IMFOL should be used instead of MFTRA whenever possible.

  5. Control on IDRS. Include a History item showing the Schedule Number.

    ACTON ACTON
    C#, 1081/843, M, MISC H, (SF1081 Number)
    *, (SF1081 Received Date)
  6. After research is complete and Form 3245 is prepared, close the IDRS control base.

    ACTON
    C#, 843TOPOST, C
  7. Verify amounts of Forms 3245 listed with the SF 1081 listing for balancing. Maintain a log of Forms 3245 by DLN and date.

  8. Photocopy (1 copy) of Forms 3245, the SF 1081 listing and any back-up provided (copies of checks, 1133 claims forms, etc.). Make 2 copies of the SF 1081 Schedule.

  9. Prepare Form 813, Document Register, listing all Forms 3245 containing the same DO or ULC and tax class codes. Verify amounts for balancing. (see Figure 3.17.80-40)

  10. Prepare Document Transmittal (to debit Master File). Attach the original SF 1081 Schedule, copy two of the Form 813 and a tape verifying the money amounts to the Document Transmittal. Route to the Redesign Revenue Accounting Control System (RRACS) Unit for journal action.

  11. Hold all other documents until the RRACS Unit returns the Document Transmittal with the journal number. Then:

    1. Route the original Forms 813 with Forms 3245 to Batching and Numbering for processing.

    2. Route a photocopy of the SF 1081, listing and back-up to the Refund Inquiry Unit. Note that a TC 843 will be input to the tax module to reverse the TC 841.

    3. Maintain a photocopy in Accounting of the SF 1081 Schedule, the original SF 1081 listing, any back-up, and a photocopy of all Forms 3245.

  12. Occasionally, an SF 1081 is received stating that the taxpayer received and cashed both an original and recertified (substitute) check.

    1. DO NOT order IMFOL/MFTRA.

    2. Make two copies of the SF 1081 if additional copies are not already available.

    3. Prepare Document Transmittal (Form 3210). Route the Document Transmittal, the original plus a photocopy of SF 1081 to the RRACS Unit for journal action to the 4970 Account. Request that the duplicate SF 1081 be routed with the journal number indicated to the Erroneous Refund Unit.

    4. Maintain one photocopy of the SF 1081 in Accounting.

    Figure 3.17.80-40

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    Figure 3.17.80-41

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BFS Form 3858 - "GOALS" Automated Payments Over Cancellation

  1. When a Payment Over Cancellation (POC) is processed through “Government On–Line Accounting Link System (GOALS)”, you will receive BFS Forms 3858 and 1133 from the BFS. Both transactions 841 and 843 should already be systemically generated on the tax account. The TC 841 will post in Blocking Series 88888. The debit TC 843 moves the account to balance due status by reversing the credit TC 841.

  2. Take the following steps when working Payment Over Cancellation cases:

    1. Notate all actions taken on the Form 5706 Case History Sheet and maintain an up-to date Control Base on IDRS.

    2. Review the taxpayer’s account to determine if the TC 841 (Blocking 88888) and the TC 843 are posted.

    3. Determine whether the taxpayer repaid or returned either refund check, or if the BFS sent a “Recertified” credit (TC 841 Blocking 88888) to full pay the account because forgery was established. A “returned” refund check will post with TC 841 in block and series 99999.

    4. If the account is in credit status and no freeze condition is present, research for any pending transactions or open control bases. If either is found, consult your Lead Examiner. If not, open a control base and input a TC 570 to prevent refunding until the TC 843 posts or the account moves to debit status.

    5. Use CC INTST to look for penalty and interest accruals. If present, and the accrual amounts are incorrect, input both Transaction Codes 270 and 340 for zero or 341 for credit (if posted on TXMOD) to remove and restrict the accruals.

    6. If the BFS sent the credit back, your IDRS control base will automatically close with category code “ST32” and the posting of a TC 841 in block and series 88888.

    7. While the posting of a TC 706 (automatic offset credit applied) may fully pay the account, it does not resolve the POC conditions. You will continue with standard POC processing. It may be necessary to reverse the offset at the conclusion of POC processing.

    8. Input a TC 470 CC 93 (Input TC 470 CC 93 only if prior TC470 CC 93 has expired or was not previously input) to prevent the issuance of balance due notices for 26 cycles.

    9. Use CC CHKCL to notify the BFS of the taxpayer’s non-receipt claim, the refund(s) involved, and to request a Form 3858/1133 package from the BFS for inclusion in your taxpayer correspondence. Take the following steps.

      1. Use CC IMFOL# to determine the issue date of each check. (see Figure 3.17.80-42)

        Figure 3.17.80-42

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      2. If the issue dates are in different calendar months, use CC CHKCL. (see Figure 3.17.80-43)

        Figure 3.17.80-43

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      3. If the issue dates are in the same calendar month, use CC CHKCL with the “serial” number and issue month of the check requested. Do not enter the check "symbol" number. (see Figure 3.17.80-44)

        Figure 3.17.80-44

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      4. If for some reason you need to cancel your CC CHKCL input, use CC TERUPC with the TIN, MFT, Tax Period, and Sequence Number to void your CC CHKCL transaction by close of business the same day. If necessary, Quality Review can reject the transaction the next day. After that, there is no way to prevent an “OOPS” update to your control base.

    10. If a TC 971 with Action Code 078 or 079 is present, check for a TC 290 .00 in blocking series 18 (for paper returns) or 05 (for electronic returns). That is the Refund Inquiry Unit’s method of retaining, in files, source documents pertaining to a taxpayer’s refund inquiry. Use CC ESTAB through the "Integrated Automated Technologies (IAT)" application to order that transaction. You may find check copies in the source documents.

    11. If you do not receive the Form 3858/1133 package within 30 days of its request, contact the BFS Check Claims Branch to request the claims package.

    12. Issue correspondence requesting the taxpayer to either repay the duplicate refund, or complete and return the forms provided to claim non-receipt of the refund check.

    13. Update your Control Base to: C#,1133TOTP,M,MISC and file your case in the suspense files pending the taxpayer’s reply.

Limited Payability
  1. U.S. Treasury checks are negotiable for one year. If not cashed and not returned undeliverable after 12 months, a TC 740 in block and series 66666 generates to the account reversing the refund. If you are working a POC case involving a check that is:

    1. Between 12 and 14 months old, and no TC 740 has posted to the account, use CC CHKCL to get a copy of the check and a Form 1133 package.

    2. More than 14 months old, and no TC 740 has posted, obtain a copy of the check through the TCIS (See Exhibit 3.17.80-17 and Exhibit 3.17.80-18) or PACER systems and send Form 13818, Limited Payability Claim, to the taxpayer.

      Note:

      Use CC CHKCL if the check is not found on either system.

  2. Remember to input a TC 971 with Action Code 011 whenever PACER is used.

  3. Refer to IRM 21.4.2.4.7 for further information on Limited Payability Rules.

Undeliverable or No Taxpayer Reply
  1. If the POC erroneous refund amount is ≡ ≡ ≡ ≡ ≡ or less, follow IRM 3.17.80.1.11.1.

  2. Otherwise, if the taxpayer does not reply within 45 days (60 for foreign addresses), process as a POC Erroneous Refund.

    1. Complete Form 12356, Erroneous Refund Worksheet -see Figure 3.17.80-45)

    2. Issue letter 510C

    3. Input TC’s 844, TC 971 AC 663, and 470 CC 93 (Input TC 470 CC 93 only if prior TC470 CC 93 has expired or was not previously input).

    4. Refer toIRM 21.4.5.5.1 if the erroneous refund was issued from a site other than yours.

    5. If the case was issued from your site, monitor the case for payments and/or credits for 45 days after the first demand letter.

    6. If fully repaid, follow procedures in IRM 3.17.80.1.9.4 Taxpayer Repays In Full.

    7. If no reply or partial payment is received then follow normal write-off procedures and no more collection actions will be taken.

      Note:

      If the refund amount is $5.00 or less the system will reverse the amount with a TC 606. If there are other outstanding balances follow normal write-off procedures.

  3. If your correspondence returns undeliverable:

    1. Research IDRS and Master File for a corrected or more recent address.

    2. If a more current address is located or if the address can be corrected, re-mail the BFS Forms 1133 claims package to the taxpayer.

    3. Update the IDRS control base using activity code "Re-mail 1133" .

    4. If a more current address is not available, input TC 844, TC 971 AC 663, and TC 470 CC 93 (Input TC 470 CC 93 only if prior TC470 CC 93 has expired or was not previously input), and treat the case as an erroneous refund.

    5. Complete Form 12356, Erroneous Refund Worksheet. (see Figure 3.17.80-45)

    6. Refer the case to the responsible site immediately after performing initial ERRF procedures.

    Figure 3.17.80-45

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Taxpayer Repayments and Replies to Correspondence
  1. If the taxpayer submits an incomplete Form 1133 package, use an IDRS letter to return the package to the taxpayer and to explain that he or she has 10 days to re-submit the completed claim package.

  2. If the taxpayer responds with a completed Form 3858/1133 or Form 13818 package indicating that two refunds were not received:

    1. Photocopy the completed Form 1133 or 13818 for the case file.

    2. Return page 2 of Form 3858, completed Form 1133, and a copy of the refund check to BFS. As long as the Form 3858 has a Stop Reason of “D”, the package can be sent to BFS no matter how old it is.

    3. Include the BFS Cover Sheet and highlight F"MS DO NOT ISSUE SETTLEMENT CHECK" . Also write "DO NOT OPEN IN MAIL ROOM" on the outside of the envelope. (IRM Exhibit 3.17.80-10)

    4. The Form 13818 package will go to the National Forensic Laboratory (NFL) to determine if the taxpayer’s signatures are genuine.

    5. Place the case in 90-day follow-up file.

    6. Update Control Base to: C#,1133TOBFS,M,MISC or C#,1133TONFL,M,MISC

    7. Issue Letter 206-C to notify the taxpayer that their Form 1133 package was forwarded to the BFS.

  3. If the taxpayer indicates on Form 1133 that he/she did NOT live at or receive mail at the check address (item #9 on Form 1133), proceed with the following before forwarding to Check Claims for adjudication:

    1. Complete a thorough research of all the taxpayer’s tax modules and MFTRA research, including a review of the taxpayer’s current, prior year and Erroneous Refund tax returns to determine why the check was issued to another address.

    2. Review the returns for any attachments including W2’s, etc.

    3. If any evidence can be found to indicate that the taxpayer may have lived at the address in question, photocopy the evidence and forward it along with Form(s) 1133 to FMS Check Claims as outlined in (2) above. Keep a file copy of the evidence should it not be returned from Check Claims.

  4. If the taxpayer responds either by telephone or written response that they did receive two refunds, but they do not have the funds to repay:

    1. Inform the taxpayer of the obligation to repay.

    2. Attempt to get the taxpayer to agree to a repayment plan.

    3. Continue processing the case as an Erroneous Refund with a 5-year ERSED.

  5. If taxpayer repays, consider the payment as an agreement from the taxpayer that they've received two refunds. Complete POC Erroneous refund. For full repayment:

    1. Complete Form 12356, Erroneous Refund Worksheet.

    2. Input TC’s 844, TC 971 AC 663, and 470 CC 93 (Input TC 470 CC 93 only if prior TC470 CC 93 has expired or was not previously input).

    3. Use CC INTST to look for penalty and interest accruals. If present, and the accrual amounts are incorrect, input both TCs 270 and 340 for zero or TC 341 for credit (if posted on TXMOD) to remove and restrict accruals.

    4. Input TC 845 with a post delay 1.

  6. For partial repayment:

    1. Complete Form 12356, Erroneous Refund Worksheet.

    2. Issue letter 510C.

    3. Input TC’s 844, TC 971 AC 663, and 470 CC 93 (Input TC 470 CC 93 only if prior TC470 CC 93 has expired or was not previously input).

    4. Refer to IRM 21.4.5.5.3 if the erroneous refund was issued from a site other than your site.

    5. If the case was issued from your site, monitor the case for payments and/or credits for 45 days after the first demand letter following IRM 3.17.80.1.9.2.

Bureau Fiscal Services (BFS) Determinations
  1. If BFS determines the taxpayer did not receive two refund checks, they will issue a credit, TC 841. Once posted, reverse any offset credits applied (TC 706/700) and allow them to refund from their original tax period.

  2. If a Claim Disposition Notice (CDN) is received from BFS stating "FORGERY ESTABLISHED" , input a TC 971 with Action Code 078.

  3. If BFS determines the taxpayer did receive two refund checks, process as an Erroneous Refund case. Complete Form 12356, Erroneous Refund Worksheet, and send the taxpayer a 2218C letter. Wait for 45 days and then route to the appropriate site.

  4. If BFS or NFL determines that the endorsement on one or more refunds was forged, complete Form 3809 to post the TC 841 credit transaction. (see Figure 3.17.80-46)

    Figure 3.17.80-46

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  5. Attach the following to the 6565 Account Cover sheet.

    1. Form 3809

    2. History Sheet

    3. CC TXMOD print out

    4. Copy of Form 3911, Taxpayer Statement Regarding Refund,

    5. All taxpayer correspondence

    6. Form 13818, Claim Against the United States for the proceeds of an Internal Revenue Refund Check.

    7. Photocopy of front and back of the check(s)

    8. The BFS/NFL response

  6. Monitor for the posting of the TC 841. The DLN will carry Document Code "48" with block and series "88999" .

  7. Limit the refund interest to the amount of the original TC 770/776.

  8. If BFS does not respond within 90 days, follow up with BFS Claims Processing.

Monitor Case for Credits
  1. If the response to the SF 1184 indicates the recertified credit is available (Status 32), a credit will be returned through TRACS.

    1. Maintain an open IDRS control base and monitor for the TC 841 credit to post. If the TC 841 has not posted following the status code date, prepare BFS 3864. Follow instructions in IRM 21.4, Refund Inquiries.

    2. When the TC 841 posts, close the IDRS control and suspense case in closed file. Release any TC 570, as appropriate.

  2. On rare occasions, Check Claims will respond on Form 3859 "settlement recommended" and subsequently reverse their decision claiming that the taxpayer did benefit from the original refund check.

    Note:

    Erroneous Refunds procedures in both IRM 21.4.5, Erroneous Refunds and/or IRM 3.17.80, Working and Monitoring Category D unassessable erroneous refund Cases are available for appropriate handling of the case.

SF 1081 Debits Other Than Status 61 and 65

  1. The following actions should be taken when SF 1081/TRACS involving two checks are received (see Figure 3.17.80-47):

    1. Do not order MFTRA.

    2. Prepare Document Transmittal. Route Document Transmittal, the original or TRACS print and a duplicate SF 1081/TRACS to the RRACS Unit for journaling to the 1530 Account. Request the duplicate or copy of SF 1081/TRACS be routed "with journal number" to the Erroneous Refund Unit.

    3. Maintain a copy of the SF 1081 in Accounting.

  2. If debit SF 1081/TRACS processing is done within the Erroneous Refund Unit, the journaling to the 1530/1540 General Ledger Account will be done within this unit.

  3. The Erroneous Refund Unit will follow Erroneous Refund procedures as outlined in IRM 3.17.80.

    Figure 3.17.80-47

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Refund Repayments Made to Check Claims Group

  1. In some instances, a taxpayer will erroneously repay the amount of the duplicate refund by personal check made out to the Check Claims Group. When the taxpayers are contacted by IRS, they will submit a copy of the cancelled check showing that the funds were deposited into Check Claims' Reclamation Suspense Account. In these cases, the Submission Processing site should prepare SF 1081 to charge the Reclamation Expense Account and credit the applicable IRS appropriation or Fund Account. The SF 1081 should contain a statement of facts surrounding the case. Attach a copy of the front and back of the check.

  2. If a taxpayer sends a payment to IRS and it is erroneously received and cashed by Check Claims, Accounting will write a memorandum to Check Claims Group requesting that the funds be returned to IRS. Provide the pertinent information; Submission Processing site name and address and Agency Location Code . A copy of the cancelled check should be attached to assist Check Claims in locating the funds.

Erroneous Payments Made by Regional Financial Centers

  1. BFS Regional Financial Centers are responsible for adjusting all check issue discrepancies, such as:

    1. Checks issued for less than, or in excess of, amounts shown by the certified refund schedules (SF 1166 or SPS).

    2. Checks printed in different amounts, thus causing the payees to be underpaid or overpaid.

    3. Two checks issued to one payee and no check issued to a rightful payee.

  2. When taxpayers send these erroneous checks to the Submission Processing site or tender remittances to cover erroneous payments, check cancellation or deposit action will NOT be taken by the Submission Processing site. Rather, the checks and repayments will be routed to the Director of the Regional Financial Center for credit in his accounts. Returned checks are stamped "Not Negotiable" as outlined in IRM 21.4.3, Refund Inquiries - Returned Refunds/Releases, before they are transmitted to the Regional Financial Center.

  3. If the refund appropriation(s) has been erroneously credited with check cancellations or repayments that should have been credited to the Director, Regional Financial Center accounts, the over-assessment clerk will make the necessary adjustment by processing SF 1166 to charge the refund appropriation and pay the amount to the Director, Regional Financial Center.

Erroneous Refund Interest Considerations

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Erroneous Refund Flow Chart

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If/Then Flow Chart for Erroneous Refund Identification
If the: Example Then the Category Is:
Error relates to TCs 150, 29X, and/or 30X and MFTs are not 01, 04, 08, 09, 10, 11, 12, 16, or 88.
  1. IRS lowered the tax when originally processing the Form 1040 or 1120 and later determines the taxpayer's amount was correct.

  2. Incorrect tax or incorrect adjustments (TC 29X or 30X), Form 1040X or 1120.

"A1"
Refund relates to disallowed Earned Income Tax Credit (EITC), TCs 764, 765, and 768 or Child Tax Credit Issue (Refundable part). Non Refund TC 766.
  1. Taxpayer calculates the EITC by including interest in the Earned Income. (TC 764)

  2. Issuance of the refund before finding the error. (TC 846 with 764 credit)

"A2"
Refund was caused by taxpayer's overstatement of prepaid credits (TC 66X or TC 80X)
  1. Taxpayer claimed W/H of $1,000.00 but the correct W/H is $500.00. The refund is $500.00 more than it should be.

"B"
Error relates to BMF TCs 150, 29X, and/or TC 30X and the MFT is 01, 04, 08, 09, 10, 11, 12, 16, or 88.
  1. Incorrect tax (TC 150) on Forms 941 or 940.

  2. Incorrect adjustment to tax (TC 29X or 30X). Refer to IRM 21.4.5.4.4.3

"C"
Error relates to any erroneous refund that is not included in the above categories.
  1. A misapplied payment with TC 650, 660 or 670.

  2. Incorrect refundable credits not included in Categories A2 and B.

  3. TC 840 and TC 846 same overpayment.

  4. Refund issued after Statute expiration.

  5. Entity errors.

"D"

Note:

At times the Category A1 and A2 cases require a Notice of Deficiency to be issued (EITC or other tax decrease errors). Employees must refer cases requiring a tax assessment to Examination for issuance of the Deficiency Notice. Follow local procedures when referring cases to Exam.

Erroneous Refund Accounts 1530, 1540, 1543

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Erroneous Refund Coordinators

Erroneous Refund Coordinators
Submission Processing site Name and Address Telephone # Fax #
Austin
18
IRS - Austin SPC
Attn: SP Accounting Operations Erroneous Refund Coordinator
AUSPC Stop 6271
PO Box 934
Austin, TX 78767
or
3651 S IH 35
Austin, TX 78741
(512) 460-7632 EFax(855)254-0574
Cincinnati
17
IRS - Cincinnati SPC
Attn: SP Accounting Operations Erroneous Refund Coordinator
PO Box 2345
Stop 21, Team 206
Cincinnati, OH 45201
or
201 Rivercenter Blvd.
Covington, KY, 41017
(859) 669-2696 EFax(855)256-0931
Fresno
89
IRS - Fresno SPC
Attn: SP Accounting Operations Erroneous Refund Coordinator
PO Box 12866 - Stop 37103
Fresno, CA 93888
or
5045 E. Butler Ave.
Fresno, CA 93727
(559) 454-6259 (559) 454-6317
Kansas City
09
IRS - Kansas City SPC
Attn: SP Accounting Operations Erroneous Refund Coordinator
333 W. Pershing Rd.
Stop 6250 P-6
Kansas City, Missouri 64108
816-499-5889 EFax(877)929-2351
Ogden
29
IRS - Ogden SPC
Attn: SP Accounting Operations Erroneous Refund Coordinator
PO Box 9950 - Stop 6714
Ogden, UT 84409
or
1973 North Rulon White Blvd. Stop 6714
Ogden, UT 84404
(801) 620-7660 EFax(855)296-7934

Regional Financial Centers

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Blocking Series Chart for Document Code 45, SF 1098 and TRACS Processing

Blocking Series Chart for Document Code "45" For Miscellaneous Processing (i.e. SF 1098, 1081, ID-Theft Processing
AO/SC Code Blocking Series Description Document Code 45 Trans Code Freeze Code Processed By
SC 220-299 Repayment of Erroneous IMF/BMF Form 3245 720 - Receipt & Control
ULC 500-519 IMF/BMF SF 1098
Form 3245
841/740 - Accounting
ULC 520-529 ANMF SF 1098
Form 3245
841/740 - Accounting
ULC 530-539 IMF-IRAF SF 1098
Form 3245
841/740 - Accounting
ULC 540-549 IMF/BMF/ANMF TFS 3813
Form 3245
843/742 - Accounting
ULC 550-554 IMF/BMF SF 1081 Debit/POC TRACS
Form 3245
843 - Accounting
ULC 550-553 IMF/BMF SF 1081 Debit Settlement Authorized Form 3245 840 Accounting
ULC 555 Intercepted Checks Manually Processed 1098 Listing SF 1098/Form 3245 841 P- Accounting
ULC 666 IMF/BMF/ANMF Limited Payability Cancellation Credit/TRACS Form 3245 740 S- Accounting
ULC 800 Repayment of Erroneous Refunds ANMF Form 3245 720 - Receipt & Control
ULC 888 IMF/BMF/ANMF SF 1081 Credit/RC/UCC TRACS Form 3245 841 - Accounting
ULC 889 Use for MFT 06/08 Only SF 1081 Credit/RC/UCC TRACS Form 3245 841 - Accounting
ULC 55555 Intercepted Checks Master File Tape Processing 841 P- Computer Generated
ULC 66666 Limited Payability Master File Tape Processing 740 S- Computer Generated
SC 77777 Undelivered ELF (Electronic Filed Return) Master File Tape Processing 841 - Computer Generated
SC 88888 Recertified Credit Master File Tape Processing 841 - Computer Generated
SC 88899 Returned Credit (Due to CHKCL) Master File Tape Processing 841 P- Computer Generated
SC 99999 Undelivered Check Master File Tape Processing 740 S- Computer Generated
SC 99999 Returned Checks Master File Tape Processing 841 P- Computer Generated

Blocking Series Chart for Document Code 45, Forms 3753 (Manual Refund Posting Voucher)

AO/SC Code Blocking Series Description Document Code 45 Trans Code Processed By
ULC 200-299 IMF/BMF Refunds/Form 3753 840 Accounting
ULC 300-399 BMF (F4466 Only) Refunds/Form 3753 840 Accounting
ULC 900 -0- Amount Form 3753 Dummy Refunds to Release X- Freeze 840 Accounting
ULC 920 IMF/BMF/NMF Form 3753 Used When Transferring Refunds to Proper Account and in Conjunction with Form 3809 (*Optional Form 12857, top portion) 840 Accounting
ULC 600 Manual Refund/Direct Deposit IRS Error 840 Accounting
* Option Form 12857, Refund Transfer, may arrive in accounting to transfer accounts only. These items do not create a refund condition. Forms 12857, top portion only, are numbered Document Code 45 and separated from the bottom portion prior to sending to RRACS area via Form 813.
* If posting document requires DLN for Document Code 45, Blocking Series 92X, aka "dummy refunds" , enter "0" (zero) in Block 4 on Form 3753 (Schedule Number) or Form 12857 (Refund Schedule Number).

BFS Treasury Receivable Accounting, and Collection System Contact List

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Reason For Cancellation Codes (SF 1098)

Reason for Cancellation Codes SF 1098 Electronic Funds Transfer (EFT)
RRC Code Description Trans. Code Freeze Code Block and Serial Number
01 Intercepted Checks 841 P- 55555
02 Undeliverable Checks 740 S- 99999
03 Returned Checks (other than intercepted or undeliverable) 841 P- 99999
08 Unavailable Check Cancellation Credit (returned on outstanding checks as a result of a check claim, CC CHKCL/ Status 32) 841 P- 88899
09 Unavailable Check Cancellation Credit 841 None 88888
09 Reclamation Credit 841 None 88000
09 Outstanding check as the result of a paper 1184. 841 None 88111
11 Taxpayer correspondence attached. (Also could include a photocopy fee refund cancelled that would not show on the MF.) 841 None 99999
40 Limited Payability (LP) expired credit 740 S- 66666 666XX (prior to 1992)
71 Unavailable Check Cancellation Offset Return. As a result of an agency claim, only the TOP offset amount of the original payment is returned. See IRM 21.4.6, Refund Offset 841 See IRM 21.4.6, Refund Offset 88888
72 Unavailable Check Cancellation Partial Payment Return. As a result of an agency claim, only the net amount of the original payment after TOP offset is returned. See IRM 21.4.6, Refund Offset 841 See IRM 21.4.6, Refund Offset 88888
Reason for Cancellation Codes SF 1098 Electronic Funds Transfer (EFT)
RRC Code Description Trans Code Freeze Code Block & Serial Number
60 Invalid/Missing Routing Transit Number 841 None 77777
61 Invalid/Blank Bank Account Number or Account Type. Must indicate (C) Checking or (S) Savings 841 None 77777
62 Direct Deposit Check Receiving Financial Institutions Non-ACH Participant 841 None 77777
63 EFT Payments without Financial Organization Address on Financial Organization Master File (FOMF) 841 None 77777
Note: All EFT cancellation transactions will carry block and serial number 77777 and will flip to paper check.

BFS Coversheet - Do Not issue Settlement Check

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Form 3809 Miscellaneous Adjustment Voucher

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Erroneous Refund Case History Sheet

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Unassessable Erroneous Refund (5-year) Check Sheet

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2016 Enterprise Computing Center (Posting Cycles)

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2016 POSTING CHART

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Business Operating Division (BOD) Points of Contact (POCs) for Duplicate, Manual, Erroneous Refund Feedback, Form 14165-A,

Send the Form 14165-A (with boxes 1-9 completed) and a copy of the completed Form 14165 to both primary and back-up (when listed) BOD POC identified below. That point of contact will forward the form to be completed (boxes 10-12) by the area that caused the duplicate, manual, erroneous refund. Be very specific when completing Box 7 of Form 14165-A so the BOD POC will know where to send the form for completion.
BOD Primary POC Back-up POC Primary POC Contact Information Back-up POC Contact Information
APPEALS ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
Criminal Investigations ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
LB&I ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
SBSE ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
TEGE ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
TAS ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
W&I AM ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
W&I CARE ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
W&I Compliance ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
W&I RICS ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
W&I SP ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
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Treasury Check Information System (TCIS) Query Display - 1

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Treasury Check Information System (TCIS) Query Display - 2

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