4.24.8 Examination Guidance for Excise Claims for Refund or Abatement

Manual Transmittal

November 09, 2017

Purpose

(1) Revised IRM 4.24.8, Excise Tax, Examination Guidance for Excise Claims for Refund or Abatement.

Material Changes

(1) The August 5, 2014 IRM 4.24.8 is updated to reflect the material changes listed in the following table:

Old IRM Section Number Description of Change
4.24.8.1 through 4.24.8.1.6 New section and subsections added to include information involving internal controls as required by IRM 1.11.2, Internal Management Documents System, Internal Revenue Manual (IRM) Process. New section titles include Program Scope and Objectives, Background, Authority, Responsibilities, Program Management and Review, Program Controls and Definitions/Acronyms.
4.24.8 Excise Tax, Examination Guidance for Excise Claims for Refund or Abatement Editorial changes made based on IRM Style Guide. Also updated links, update cites and organizational titles throughout this IRM Section.
4.24.8.2 Overview Paragraph 3 content moved to IRM 4.24.8.1.6, Related Resources.
4.24.8.3 (1) through (9) Claim Form Types Edited paragraph (1) for clarity and to provide claim examples for Form 720X. Paragraph (2) edited to include Form 8849 Schedules. Paragraph (4) edited to provide claim examples for Form 4136. Paragraph (5) edited to provide claim examples for Form 3800. Note also added to reflect that the neat biodiesel credit is no longer available, but an income tax credit is. New paragraph (8) references Form 730 and provides claim examples. New paragraph references Form 2290 and provides claim examples.
4.24.8.3.1 Excise Tax Claims Processing New bullet added in paragraph (1) to reflect the excise tax claims processed by the Cincinnati Campus. Note added to reflect that Form 4136, Form 8864 and Form 6478 are attached to income tax returns and processed where the taxpayer files there return.
4.24.8.4 Claim Types Paragraph (1) edited for clarity and better flow.
Previous IRM Section 4.24.8.3.1 IRC 6402 Administrative Claim for Refund Section removed entirely.
4.24.8.4.2 IRC 6415, Persons who Collected Certain Taxes Section content edited for clarity and better flow. New bullets in paragraph (1) regarding criteria for allowing a claim.
4.24.8.4.3 IRC 6416, Overpayment of Tax Imposed by Chapter 31 and 32 Section title change. Section content edited for clarity and better flow.
4.24.8.4.4 IRC 6419 Excise Tax on Wagering Section title changed slightly. Section content edited for clarity and better flow.
4.24.8.4.5 IRC 6420, Gasoline Used on Farms Edited paragraph (1) by inserting “for farming purposes.”
4.24.8.4.6 IRC 6421, Gasoline Used for Certain Non-Highway Purposes, Used by Local Transit Systems, or Sold for Certain Exempt Purposes Section title changed.
4.24.8.4.7 IRC 6426, Credit for Alcohol Fuel, Biodiesel, and Alternative Fuel Mixtures Section title changed. Content edited for clarity and better flow.
4.24.8.4.8 IRC 6427, Fuels not Used for Taxable Purposes Paragraph (2), table edited for clarity.
4.24.8.5 Statute of Limitation for IRC 6416(a)(4), 6420, 6421, 6426 and 6427 Paid Claims New IRM reference added to paragraph (1) directing readers to IRM 25.6.23, Examination Process, Assessment of Statute of Limitations. Section edited for clarity and better flow.
4.24.8.5.1 Examples of Statute of Limitation Dates for Claims Deleted Paragraph (1), content moved to section IRM 4.24.8.5, Statute of Limitation for IRC 6416(a)(4), 6420, 6421, 6426 and 6427 Paid Claims. Tables in paragraph (3), (4) and (5) edited for clarity.
4.24.8.6 Excise Tax Claim Classification and Control Procedures Section content edited for clarity and better flow. Paragraphs rearranged. New paragraph (4) regarding the excise examiner to verify AMDISA claim amounts. Note added to paragraph 2 providing additional IRM references for determining the received date.
4.24.8.6.1 Use of Revenue Protection Codes (RPC) in IMS The last sentence that references IMS in Paragraph (3) deleted.
4.24.8.7 Claim Categories Section title change. Edited and rearranged section for clarity. Paragraph (4), second bullet changed from “Credit against tax” to “Business related credit.”
4.24.8.7.1 Amendment to Form 720, 11-C, 730 and 2290 Edited to insert the word “mixture” after biodiesel and alternative fuel and deleted reference to alcoholfuel. Removed paragraph (2)(b) pertaining to any amended Form 720, Quarterly Federal Excise Tax Return, requesting an increase of less than $5000.00 will be processed as an amended Form 720 and Form 720X, Amended Quarterly Federal Excise Tax Return, will not be required. Paragraph (3) now includes a link for Form 8849 guidance.
4.24.8.6.1.1, Previous IRM Section, Report Writing Procedures for Examined Amended Form 720 Content moved to section to IRM 4.24.8.7.5, Report Writing Procedures for Examined Amended Form 720.
4.24.8.7.2 Refundable Credit Section content edited for clarity and better flow.
4.24.8.7.3 Business Related Credits Section content edited for clarity and better flow. Deleted content referring to IRC 40 and IRC 38. Remaining paragraphs renumbered.
4.24.8.7.4 Third Party Claims Edited section for clarity and better flow.
4.24.8.8 Unpaid Claims (AIMS Source Code 30) - Introduction Section title change. Paragraph (1) edited to explain that unpaid claims are controlled with AIMS source code 30. Bullets removed from paragraph (1). New paragraph (2) indicating that source code 30 requires a claim amount to be present on AIMS and ERCS.
4.24.8.8.1 Unpaid Claims - Survey New paragraph (6) referring readers to IRM 4.10.25.4, Surveying Claims, for additional survey procedures.
4.24.8.8.3 Form 5344, Examination Closing Record, Unpaid Claims - Surveyed Paragraph (3) IRM reference corrected for surveyed claims.
4.24.8.9 Unpaid Claims - Report Writing and Case Processing Procedures - Agreed Claims Section title change. Section content edited for clarity and better flow. Paragraph (2) has new content moved from 4.24.8.8 regarding the four possible results when a claim is examined. Paragraphs (3), (4) and (5) contain new IRM references. Deleted paragraph (6), content now in paragraph (5).
4.24.8.9.1 Report Writing Regular Agreed Cases - Unpaid Claim Disallowed in Full or in Part Section title change. Edited and rearranged entire section for better flow and clarity. Added content from August 5, 2014 IRM 4.24.8.8.1, Form 5384, Excise Tax Examination Changes and Consent to Assessment & Collection, Unpaid Claim - Disallowed in Full - Report Writing, into this section
4.24.8.9.2 Form 5344, Examination Closing Record (Form 5344) - Unpaid Claim - Disallow In Full or in Part Section title change. New link added in paragraph (1) to assist with the completion of Form 5344, Examination Closing Record. Paragraph (2) contains a new IRM reference for Form 5344 completion. Added content from August 5, 2014 IRM 4.24.8.8.2, Form 5344, Examination Closing Record, Unpaid Claim - Disallow in Full, into this section.
4.24.8.9.3 Form 3198, Special Handling Notice for Examination Case Processing, Unpaid Claim Disallow In Full or in Part Section title change. Paragraph (1) edited to provide examples of how to complete Form 3198 . New paragraph (2) regarding claims partially disallowed and how to complete Form 3198 . New paragraph (4) ensuring employees verify AMDISA. New paragraph (5) containing content regarding a certified notice of disallowance and how to complete Form 3198. Added content from August 5, 2014 IRM 4.24.8.8.3, Form 3198, Special Handling Notice for Examination Case Processing, Unpaid Claim - Disallow in Full, into this section.
4.24.8.9.4 Report Writing Regular Agreed Cases - Unpaid Claim Allow in Full Section title change. Previous paragraph (1) referencing the various forms deleted and the remaining content re-numbered. New paragraph (1) content provides guidance for when the examiner proposes to allow the claim in full. Paragraph (4) provides that Letter 4121 can be used to transmit the agreed report to the taxpayer.
4.24.8.9.5 Form 5344, Examination Closing Record, Unpaid Claim - Allow In Full Added a new link in paragraph (1) for ease in completing Form 5344. Remaining section edited for flow and clarity.
4.24.8.9.6 Form 3198, Special Handling Notice for Examination Case Processing, Unpaid Claim - Allow In Full Deleted sentence in paragraph (1) stating “If this is an interest bearing claim provide the allowable credit interest date, which would be the later of the due date of the claim or claim received date. New paragraph (4) requiring the examiner to verify AMDISA claim amounts with the return claim amounts.
4.24.8.9.7 Report Writing Regular Agreed Cases - Unpaid Claim - Increase to Original Amount Section title change. Entire section edited for better flow and clarity. Previous paragraph (4) moved to paragraph (3). New paragraph (4) provides that Letter 4121 can be used to transmit the agreed report to the taxpayer.
4.24.8.9.8 Form 5344, Examination Closing Record, Unpaid Claim - Increase to Original Amount Link added to paragraph (1) for ease in completing Form 5344. Remaining content edited for better flow and clarity.
4.24.8.9.9 Form 3198, Special Handling Notice for Examination Case Processing, Unpaid Claim - Increase to Original Amount Deleted sentence in paragraph (1) stating “If this is an interest bearing claim provide the allowable credit interest date, which would be the later of the due date of the claim or claim received date.
4.24.8.10 Unpaid Claims - Unagreed and Excepted Agreed Cases Paragraph (1) edited to include an IRM reference for additional guidance on excepted agreed cases. IRM cites edited in paragraphs (3), (4), (8), (9) and (10).
4.24.8.11 Paid Claims (AIMS Source Code 31) - Introduction Paragraphs (1), (2) and (4) include new IRM sites for additional guidance.
4.24.8.12 Paid Claims (AIMS Source Code 31) - Survey After Assignment Paragraph (1) edited to include an IRM reference for additional guidance on survey after assignment cases. Paragraph (6) removed due to outdated IRM cites.
4.24.8.13 Paid Claims - Report Writing and Case Processing Procedures Section content edited for better flow and clarity.
4.24.8.13.1 Paid Claim Report Writing and Case Processing Procedures - No Change/No Adjustments Section title change. Entire section edited for better flow and clarity.
4.24.8.13.2 Form 5344, Examination Closing Record, Paid Claims - No Change Link added in paragraph (1) for ease in competing Form 5344. New paragraph (2) with IRM references for additional guidance.
4.24.8.13.3 Form 3198, Special Handling Notice for Examination Case Processing, Paid Claim - No Change Paragraph (3) edited to include an IRM reference for additional guidance on completing Form 3198.
4.24.8.13.4 Paid Claim Report Writing and Case Processing Procedures - Agreed Section title change. Entire section edited for better flow and clarity. New paragraph (1) explaining the section purpose and providing new IRM references. Paragraph (3) letter changed from 4121X to 987X. Paragraph (5) combined into paragraph (4).
4.24.8.13.5 Form 5344, Examination Closing Record, Paid Claims - Agreed Link added in paragraph (1) for ease in competing Form 5344. New paragraph (2) provides IRM references for additional guidance.
4.24.8.14 Paid Claims Report Writing and Case Processing Procedures - Unagreed Section title change. Paragraph (1) provides IRM references for unagreed procedures.
4.24.8.18 Overview of Examination Assessment Abatement Claims Paragraph 3 edited to add that a claim for refund may be filed after payment of the assessed tax.
4.24.8.19 No Consideration Given to Certain Refund Claims Content added in paragraph (3) to state that other actions may need to be taken (e.g. document actions, update master file).
4.24.8.20 Claims Previously Considered by Appeals Paragraph (2) regarding Appeals moved from this section to IRM 4.24.8.23, Request for Reconsideration of Disallowed Claims.
4.24.8.23 Request for Reconsideration of Disallowed Claims Paragraph (6) edited with content moved from IRM 4.24.8.20, Claims Previously Considered by Appeals, regarding not forwarding cases to Appeals if the period of limitations will expire in 6 months or less unless an agreement to extent time to bring suit is secured (Form 907, Agreement to Extend the Time to Bring Suit).
Exhibit 4.24.8-1 Claim Types, Filing Methods and Claim Due Dates Added an additional column in table to include pertinent IRC cites.

Effect on Other Documents

This material supersedes IRM 4.24.8, dated August 5, 2014.

Audience

This section is for SBSE Excise Managers, Examiners and Specialists.

Effective Date

(11-09-2017)

Alfredo Valdespino
Director, Examination - Specialty Policy
Small Business/Self Employed

Program Scope and Objectives

  1. Purpose - This IRM section provides general guidelines and report writing procedures for closing excise tax claims. This information primarily affects excise Revenue Agents (RAs) and Fuel Compliance Agents (FCAs) (collectively and hereinafter, the “excise examiners”), excise managers, and the personnel at the Cincinnati Campus who process excise claims for refund or credit. Excise examiners located in field offices conduct excise claim examinations.

  2. Audience - The audience of this IRM Section include the Director, Specialty Examination, Chief, Estate & Gift and Excise Tax Examination, Territory Managers, Group Managers and Excise Examiners.

  3. Policy Owner - The Director Examination - Specialty Policy is responsible for the administration, procedures and updates related to the technical guidance and information processing steps and methods specific to excise claim examinations.

  4. Program Owner - The Director, Specialty Examination owns Excise Tax.

  5. Primary Stakeholders - Other areas that follow these policies and procedures include Appeals, Agency Wide Shared Services (AWSS), Counsel, SB/SE Examination, Large Business and International (LB&I) and Tax Exempt and Government Entities (TEGE).

  6. Program Goals - The processes and procedures provided in this IRM are consistent with the objectives or goals for Excise Tax - Examination that are addressed in IRM 1.1.16.3.3.1, Organization and Staffing, Small Business and Self/Employed (SB/SE), Excise Tax Examination.

Background

  1. This IRM section provides the intended audience the policies and procedures for excise claim examinations.

Authority

  1. IRC 6402, Authority to make credits or refunds, provides the general rule in the case of any overpayment, the Secretary, within the applicable period of limitations, may credit the amount of such overpayment, including any interest allowed thereon, against any liability in respect of an internal revenue tax on the part of the person who made the overpayment and shall, refund any balance to such person, less:

    • Any past-due support (as defined in section 464(c) of the Social Security Act),

    • Debts owed to Federal agencies, past-due, legally enforceable State income tax obligations, and

    • Unemployment compensation debts.

  2. IRC 6206, Special Rules applicable to excessive claims under certain sections, provides that any portion of a refund made under section IRC 6416(a)(4) and any portion of a payment made under section IRC 6420, IRC 6421, or IRC 6427, which constitutes an excessive amount (as defined in section 6675(b)), and any civil penalty provided by IRC 6675, may be assessed and collected as if it were a tax imposed by IRC 4081 (with respect to refunds under IRC 6416(a)(4) and payments under IRC 6420 and IRC 6421), or IRC 4041, or IRC 4081 (with respect to payments under IRC 6427) and as if the person who made the claim were liable for such tax. The period for assessing any such portion, and for assessing any such penalty, shall be 3 years from the last day prescribed for the filing of the claim under IRC 6416(a)(4), IRC 6420, IRC 6421, or IRC 6427, as the case may be.

Responsibilities

  1. Director, Examination - Specialty Policy is responsible for the procedures and policies addressed in this IRM.

  2. Program Manager, Excise Fuel Policy is responsible for ensuring that the procedures are accurate and updated regularly, as needed.

  3. The Chief, Estate & Gift and Excise Tax Examination is responsible for ensuring the procedures within this IRM are adhered to by employees in the Excise Tax Examination.

  4. Territory Manager(s) are responsible for ensuring that the group managers are aware and adhere to the procedures in this IRM.

  5. Excise Group Managers are responsible for ensuring their employees have current copies of this IRM and are adhering to the procedures in this IRM.

  6. Excise examiners are responsible for following the procedures and policies addressed in this IRM.

Program Management and Reviews

  1. Program Reports - Information regarding the reporting of program objectives are included on, but not limited to:

    • Examination Headquarters Monthly Briefing

    • Program Manager Monthly Briefing

    • SB/SE and Examination Operational Reviews and Business Performance Review

  2. Program Effectiveness - Program goals are measured with Excise Embedded Quality Performance Reports that monitor whether quality attributes are applied uniformly and consistently.

  3. Annual Review - Excise Tax Policy - Program Manager is responsible for reviewing the information in this IRM annually to ensure accuracy and promote consistent tax administration.

Terms

  1. Below are definitions for terms frequently used throughout this IRM:

    Word Definition
    Abstract Number or Abstract The IRS Number on Form 720 that identifies the type of excise tax.
    Credit Reference Number The IRS reference number that identifies the type of tax credited or refunded.
    Form 720 Form 720, Quarterly Federal Excise Tax Return, is used to report federal excise liability by IRS No. listed on the form.
    Schedule C (Form 720) Schedule C (Form 720) is used to claim a credit if the taxpayer reports a liability on Part I or Part II, of Form 720.
    Form 720X Form 720X, Amended Quarterly Federal Excise Tax Return, is used to make adjustments (increases or decreases) to tax liability reported on a previously filed Form 720.
    Form 720X (Line 1) Line 1 on Form 720X is used to make adjustments to a previously filed Form 720, (Abstract Number).
    Form 720X (Line 2) Line 2 on Form 720X is used to make changes to claims made on Schedule C (Form 720) for the IRC 4051(d) tire credit and IRC 6426 credits, (Credit Reference Number).
    Form 8849 Form 8849, Claim for Refund of Excise Taxes, is used to claim a refund for excise taxes.
    Form 637 Form 637, Application for Registration (For Certain Excise Tax Activities), is used to apply for excise tax registration for activities under IRC 4101, IRC 4222, and IRC 4682.
    UV Registrant A person that has been issued a Letter of Registration under IRC 4101 for a registered ultimate vendor, activity letter “UV.”
    CC Registrant A person that has been issued a Letter of Registration under IRC 4101 for a credit card issuer, activity letter “CC.”

Acronyms

  1. Below are the acronyms and their definitions used throughout this IRM.

    Acronym Definition
    AIMS Audit Information Management System
    AMDISA AIMS command Code
    CCP Centralized Case Processing
    CCOC Campus Compliance Operations, Cincinnati
    CRN Credit Reference Number
    CSTO Centralized Specialty Tax Operations
    ERCS Examination Returns Control System
    IMS Issue Management System
    MFT Master File Tax
    NPEO Nonprofit Educational Organization
    RPC Revenue Protection Code
    SLG State or Local Government
    SOL Statute of Limitation
    SFR Substitute for Return
    TC Transaction Code
    WSD Excise Workload Selection and Delivery

Related Resources

  1. Refer to IRM 4.24.1, Introduction to Excise Taxes, for general information about basic excise examiner responsibilities, excise IRM sections, materials about non-fuel excise tax abstracts (abstracts), primary excise returns and excise claims forms.

  2. For general guidance, procedures, the law and regulations on a wide variety of excise issues, My SB/SE Web Page - Excise Tax Program - Issues and Procedures. located at: http://mysbse.web.irs.gov/examination/specialty/excise/issues/default.aspx.

  3. For additional claim information that includes IRC citations, filing due dates, type of use tables, statute dates, and legislative developments refer to the My SB/SE Web Page - Claims, located at:http://mysbse.web.irs.gov/examination/specialty/excise/issues/claims/default.aspx.

  4. Refer to IRM 4.24.10, Excise Tax, Appeals Referral Procedures, for additional guidance and procedures in the Appeals referral process for unagreed or partially agreed claim cases.

  5. Refer to IRM 4.24.20, Excise Tax, Excise Tax Report Writing Guide, for guidelines on the preparation of excise examination reports, in terms of content and format.

  6. Refer to IRM 4.24.21, Excise Tax, Case Closings, provides information on procedures for concluding an examination of excise tax returns and case closing.

  7. IRS formally adopted a Taxpayer Bill of Rights (TBOR) in June 2014, which provides the nation’s taxpayers with a better understanding of their rights and helps reinforce the fairness of the tax system. In 2015, Congress charged the Commissioner with ensuring IRS employees are familiar with and act in accordance with taxpayer rights as afforded by IRC 7803(a)(3). IRS employees must be informed about taxpayer rights and be conscientious in the performance of their duties to honor, respect and must communicate effectively those rights that may aid in reducing taxpayer burdens. IRS employees must administer the law with integrity and fairness and exercise professional judgment in conducting enforcement activities. Refer to Pub 1, Your Rights as a Taxpayer, for more information.

Overview

  1. This section provides general guidelines and procedures for excise tax claims. A claim is a request for refund or a request for an adjustment of tax paid or credit not previously reported or allowed. This includes protective claims and requests for abatement of interest/penalty.

  2. A claim is either a "formal" or "informal" request.

    1. Formal claims are filed on any of the forms listed in IRM 4.24.8.3, Claim Form Types.

    2. An "informal claim" is a request for a refund submitted by the taxpayer either on a non-standard form (written request) or by some other means as long as the required claim elements are identified. An informal claim must have a written component apprising the Service that a refund is sought and describe the legal and factual basis for the refund so that the Service may investigate the claim. See IRM 25.6.1.10.2.6.3, Informal Claims, and IRM 4.10.8.9, Claims.

  3. Claims include:

    • Claims for credit

    • Claims for refund

    • Requests for abatement. A request for abatement is a request for reduction of tax, penalty and interest that has not been paid.

  4. Protective Claims are formal claims or amended returns for credit or refund normally based on expected changes in a:

    • Current regulation,

    • Pending legislation, or

    • Current litigation.

  5. Protective claims are filed to protect the claimant's right to recover tax paid to the Treasury before the expiration of the statute of limitations. Any claim identifying a pending court case or decision should be considered a Protective Claim. See IRM 21.5.3.4.7.3, Protective Claims. Examiners may contact the Protective Claim Coordinators in Technical Service in their area regarding questions or issues involving Protective Claims at: http://mysbse.web.irs.gov/examination/tip/claimcases/contacts/33727.aspx.

  6. The excise tax claims web page is at: http://mysbse.web.irs.gov/examination/specialty/excise/issues/claims/default.aspx The web page provides additional claim information that includes IRC citations, filing due dates, type of use tables, statute dates, and legislative developments.

  7. An excise examination includes analysis of all claims and Form 720, Quarterly Federal Excise Tax Return, abstracts reported in the primary, prior, and subsequent periods. IRM 4.24.6.3.6, Excise Tax, Excise Tax Examiner Responsibilities, Required Filing Checks (RFC), states that a summary of the analysis and conclusion is included on the B200-1, Multi-Period and Related Returns Checksheet.

  8. This IRM section does not contain information for every possible claim for credit or refund situation. Excise examiners should exercise care and conduct necessary research specific to the examination.

  9. Excise examiners should refer to procedures found in IRM 4.24.6.15, Excise Tax, Excise Tax Examiner Responsibilities, Requesting Excise Subject Matter Expert (SME) Assistance, to request the assistance or advice of an SME.

    Note:

    CAUTION: The section 6426 credits and section 6427 payments for biodiesel mixtures, renewable diesel mixtures and alternative fuels expired for sales and uses after December 31, 2014, but were reinstated for sales and uses through 2016 by the Protecting Americans from Tax Hikes Act of 2015 (PATH Act). The PATH Act also reinstated Code provisions authorizing credits for second generation biofuel producers (§ 40(b)(6)) and biodiesel and renewable diesel used as fuel (§ 40A), respectively. The second generation biofuel producer credit expired for production after December 31, 2014, and was reinstated for production through 2016. The credit for biodiesel and renewable diesel used as fuel expired for sales and uses after December 31, 2014, and was reinstated for sales and uses through 2016. See Notice 2015-3 and Notice 2016-05 for more information. This IRM discusses these types of claims.

Claim Form Types

  1. Form 720X, Amended Quarterly Federal Excise Tax Return, is used to make adjustments (increases or decreases) to tax liability reported on a previously filed Form 720. IRM 21.7.8.4.1.7, Form 720X, Amended Quarterly Federal Excise Tax Return, provides additional Form 720X information. IRM 4.24.8.6, Excise Tax Claim Classification and Control Procedures, describes the Campus Compliance Operations, Cincinnati (CCOC) processing of amended excise tax returns. Adjustments reported on Form 720X are made as follows:

    • Form 720X (Line 1) - Used to make adjustments to a previously filed Form 720 (IRS Abstract Number)

    • Form 720X (Line 2) - Used to make changes to claims made on Schedule C (Form 720) for the IRC 4051(d) tire credit and IRC 6426 credits (Credit Reference Number (CRN)

  2. Form 8849, Claim for Refund of Excise Tax, is used to claim a refund for excise taxes. IRM 21.7.8.4.5, Form 8849, Claim for Refund of Excise Tax, provides additional information on Form 8849. The following Schedules are used with Form 8849:

    • Form 8849, Schedule 1, Nontaxable Use of Fuels

    • Form 8849, Schedule 2, Sales by Registered Ultimate Vendors

    • Form 8849, Schedule 3, Certain Fuel Mixtures and the Alternative Fuel Credit

    • Form 8849, Schedule 5, Section 4081(e) Claims

    • Form 8849, Schedule 6, Other Claims

    • Form 8849, Schedule 8, Registered Credit Card Issuers

  3. Schedule C (Form 720), Quarterly Federal Excise Tax Return, Claims, is used to claim credits against current excise tax liabilities reported in Part I or II on Form 720.

  4. Form 4136, Credit for Federal Tax Paid on Fuels, is used to claim an income tax credit rather than an excise tax refund on Form 8849, Claim for Refund of Excise Taxes. Form 4136 is attached to the claimant’s annual income tax return and can be used to claim a credit for the following:

    • Certain nontaxable uses or sales of fuel

    • Alternative fuel credit

    • Biodiesel or renewable diesel mixture credit

    • Blending a diesel-water fuel emulsion

    • Exporting dyed fuels or gasoline blendstocks

  5. Form 6478, Biofuel Producer Credit, along with Form 3800, General Business Credit, is used to claim the Section 40 biofuel producer credit against income tax for certain sales or uses of:

    • Qualified second generation biofuel production

    • Cellulosic biofuel production

      Note:

      The Section 40 cellulosic bio-fuel producer credit was retroactively extended to include fuel sold or used before January 2, 2013. After January 2, 2013, cellulosic biofuel is renamed second generation biofuel, which adds any cultivated algae, cyanobacteria, or lemna. The second generation biofuel producer credit is for fuel produced after January 2, 2014, and before January 1, 2017. This credit has frequent retroactive enactments. The second generation biofuel producer credit expired for production after December 31, 2014, and was reinstated for production through 2016. See Notice 2015-03 and Notice 2016-05 for additional information.

    .

  6. Form 8864, Biodiesel and Renewable Diesel Fuel Credit, along with Form 3800, General Business Credit, is used to claim Section 40A, Biodiesel and Renewable Diesel Used as Fuel, general business credit. The credit is claimed against income tax for certain sales and uses of biodiesel and renewable diesel fuels not claimed, or that cannot be claimed, on Schedule C (Form 720, Quarterly Federal Excise Tax Return), Form 4136, Credit for Federal Tax Paid on Fuels, or Form 8849, Claim for Refund of Excise Taxes.

    Note:

    The excise tax credit for neat biodiesel is no longer available, but an income tax credit is.

  7. Form 843, Claim For Refund and Request for Abatement , is used to claim a refund or request an abatement of certain taxes, interest, penalties, fees, and additions to tax. See Form 843 instructions. IRM 4.24.16.3, Excise Tax, Excise Fuel Compliance Report Writing, Case Processing and Appeals Procedures, Claim for Refund of Fuel Compliance Penalties, contains additional information on fuel compliance penalty claim procedures.

  8. Form 730, Monthly Tax Return for Wagers, Line 5, can be used to claim a credit for tax paid in the two circumstances:

    1. When there is an overpayment of tax.

    2. When there has been tax imposed with respect to a wager the taxpayer laid off with another person who is liable for the wagering tax.

  9. Form 2290, Heavy Highway Vehicle Use Tax Return, Line 5, can be used to claim a credit for tax paid in the four circumstances. If the vehicle was:

    • Sold,

    • Destroyed, or

    • Stolen before June 1 of the taxable period and is not later used by the taxpayer during the period; or

    • Used during the prior period 5,000 miles or less (7,500 for agricultural vehicles).

Excise Tax Claims Processing

  1. The following excise tax claims are filed and processed at the Cincinnati Campus by Centralized Specialty Tax Operations (CSTO):

    • Form 720X

    • Schedule C (Form 720)

    • Form 730, Claims

    • Form 2290, Claims

    Note:

    Forms 4136, 8864, and 6478 are not centralized at the Cincinnati Campus. These forms are attached to an income tax return and processed at the Submission Processing Center where the taxpayer files the related income tax return.

  2. IRM 21.7.8, Business Tax Returns and Non-Master File Accounts-Excise Taxes, outlines excise tax claim processing.

  3. CSTO may allow, disallow, select for exam, or not consider (based on criteria found in IRM 4.24.8.19, No Consideration Given to Certain Refund Claims) a claim.

  4. IRM 4.24.8.9 through IRM 4.24.8.14, Examination Guidance for Excise Claims for Refund or Abatement, Unpaid Claims/Paid Claims, provide claim report writing guidance.

Claim Types

  1. IRC 6402 provides the legal authority to make credits or refunds of overpayments to the person who made the overpayment. The Secretary may credit or refund any tax overpayment, (plus allowable interest), less any past-due support (as defined in section 464(c) of the Social Security Act), debts owed to Federal agencies, past-due, legally enforceable State income tax obligations, and unemployment compensation debts.

  2. The IRC sections listed below allows for specific excise tax claims for refund or credit:

    • IRC 6412 - Floor Stocks Refunds

    • IRC 6415 - Credits or refunds to persons who collected certain taxes

    • IRC 6416 - Certain taxes on sales and services

    • IRC 6419 - Excise tax on wagering

    • IRC 6420 - Gasoline used on farms

    • IRC 6421 - Gasoline used for certain non-highway purposes, used by local transit systems, or sold for certain exempt purposes

    • IRC 6426 - Credit for alcohol fuel, biodiesel, and alternative fuel mixtures

    • IRC 6427 - Fuels not used for taxable purposes

    Note:

    The following subsections contain an overview of the code sections listed above. The excise examiner should refer to the specific code sections and regulations to research applicable examination issues.

IRC 6412, Floor Stock Refunds

  1. IRC 6412 allows a claim for credit or refund (without interest) for excise tax paid on floor stocks where there has been a reduction or repeal of the tax involved, or the statute expired.

IRC 6415, Credits or Refunds to Persons who Collected Certain Taxes

  1. IRC 6415 allows a credit or refund of any overpayment of tax imposed by IRC 4251, Communication Services, IRC 4261, Taxable Transportation of any Person, or IRC 4271, Taxable Transportation of Property, to the person who collected the tax and paid it to the Secretary if the claimant establishes:

    • The tax has been re-paid to the person from whom the tax was collected, or has obtained the consent of that person to the allowance of the credit or refund.

    • Alternatively, the person who paid the tax may claim a refund under IRC 6402.

  2. A claim may be filed within the limitation period prescribed by IRC 6511(a), Limitations on credit or refund, Period of limitation on filing claim. However, instead of filing a claim for refund, a taxpayer may apply the overpayment claim amount against the same tax on a subsequent return.

  3. Refunds are reflected on Master File Tax (MFT) 03 account.

IRC 6416, Overpayment of Tax Imposed by Chapter 31 and 32

  1. Generally, IRC 6416 allows a credit or refund for an overpayment of tax imposed by Chapter 31 (Retail Excise Taxes) or Chapter 32 (Manufacturers Taxes) to the person that paid the tax to the government if certain conditions are met.

  2. However, if an ultimate vendor purchases any gasoline on which tax imposed by IRC 4081 has been paid and sells it to a state or local government (SLG), or a nonprofit educational organization (NPEO), then the ultimate vendor is treated as the person (and the only person) who paid the tax, but only if the ultimate vendor is registered under IRC 4101, Registration and Bond, as an “UV registrant”

  3. If the SLG or NPEO uses a credit card to purchase the gasoline, then the person extending the credit to the SLG or NPEO is treated as the only person who paid the tax, but only if the person is registered as a “CC registrant” under IRC 4101.

  4. Refer to IRM 4.24.2, Form 637 Excise Tax Registrations, for additional registration information.

  5. The table below summarizes the claim filing rules for the sale of gasoline to a SLG and NPEO:

    Payment Type Purchase From Claimant IRC
    SLG and NPEO pays by cash or check
    • Unregistered ultimate vendor

    • SLG or NPEO

    6421(c), Notice 2005-80 4(b)(1)(v)
    SLG and NPEO pays by cash or check
    • UV registrant

    • UV registrant

    6416(a)(4)(A), Notice 2005-80 4(b)(1)(iii)
    SLG and NPEO pays by credit card
    • UV registrant

    • Unregistered ultimate vendor

    • Unregistered credit card issuer

    • SLG or NPEO

    6416(a)(4)(B), Notice 2005-80 4(b)(1)(v)
    SLG and NPEO pays by credit card
    • CC registrant

    • CC registrant

    6416(a)(4)(B), Notice 2005-80 4(b)(1)(ii)

    Note:

    Fuel vendors who have Form 637, Application for Registration (For Certain Excise Tax Activities), Registration Activity Letter UV or CC cannot file gasoline claims on Form 4136.

  6. Any portion of a refund made under IRC 6416(a)(4), Registered ultimate vendor or credit card issuer to administer credits and refunds of gasoline tax, which constitutes an excessive amount, as defined in IRC 6675(b), Excessive claims with respect to the use of certain fuels, Excessive amount defined, and any civil penalty provided by IRC 6675, may be assessed and collected as a tax imposed by IRC 4081, Imposition of tax. The assessment period is three years from the last day prescribed for the filing of the claim. IRM 4.24.8.5, Excise Tax, Examination Guidance for Excise Claims for Refund or Abatement, Statute of Limitation for IRC 6416(a)(4), 6420, 6421, 6426 and 6427 Paid Claims, provides additional statute of limitation information.

  7. A registered ultimate vendor or credit card Issuer claim cannot be less than $200 and must be for a period of not less than one week.

  8. IRC 6206, Special rules applicable to excessive claims under certain sections, prescribes a three year period (from the last day prescribed for filing the claim), to assess an excessive claim penalty under IRC 6675.

IRC 6419, Excise Tax on Wagering

  1. A claim for refund or credit may be allowed for an overpayment of tax imposed under IRC 4401, but only if the person who paid the tax attaches a complete statement of facts involving the overpayment as prescribed in Treas. Reg. § 44.6419–1 to the claim or subsequent return. The claimant may either file a claim for refund on Form 843,Claim for Refund and Request for Abatement, or Form 8849, Schedule 6, Claim for Refund of Excise Taxes, Other Claims, or take a credit against the tax due on a subsequent monthly return. This claim type is non-interest bearing.

  2. IRM 21.7.8.4.4.6, Form 730, Claims, and IRM 21.7.8.4.5.6.7, Form 8849, Schedule 6, Claims Relating to Taxes Reported on Form 730, provide additional information relating to Form 730 claims.

IRC 6420, Gasoline Used on Farms

  1. In general, owners, tenants or operators of a farm may be eligible to claim a credit or refund (without interest) of excise taxes included in the price of gasoline used on a farm for farming purposes. Persons subject to income tax may claim only a credit on Form 4136. Persons not subject to income tax may claim a refund in lieu of a credit on Form 8849, Schedule 1.

  2. Persons not subject to income tax, i.e. the United States, a state, political subdivision of a state, or the District of Columbia, or organizations exempt from income tax under IRC 501(a), Exemption from tax on corporations, certain trusts, etc., Exemption from taxation, (provided that the organization is not required to file Form 990-T, Exempt Organization Business Income Tax Return, for that taxable year) are permitted to file annual claims on Form 8849 Schedule 1, Claim for Refund of Excise Taxes, Nontaxable Use of Fuels.

  3. Any portion of a refund made under IRC 6420, Gasoline used on farms, which constitutes an excessive amount, as defined in IRC 6675(b), and any civil penalty provided by IRC 6675, Excessive claims with respect to the use of certain fuels, may be assessed and collected as a tax imposed by IRC 4081, Imposition of tax. The assessment period is three years from the last day prescribed for the filing of the claim. IRM 4.24.8.5, Excise Tax, Examination Guidance for Excise Claims for Refund or Abatement, Statute of Limitations for IRC 6416(a)(4), 6420, 6421, 6426 and 6427 Paid Claims, provides additional statute of limitation information.

IRC 6421, Gasoline Used for Certain Non-highway Purposes, Used by Local Transit Systems, or Sold for Certain Exempt Purposes

  1. In general, tax paid for gasoline used for certain non-highway purposes or used by certain transit systems may be claimed by the ultimate purchaser as a non-interest bearing, annual (one-claim rule) claim. However, an exception to the annual claim exists for quarterly payments on aggregate amounts (at least $ 750) payable under IRC 6421 and 6427 are permitted and must be filed during the first quarter following the last quarter included in the claim. See IRC 6427(i)(2), Fuels not used for taxable purposes, Time for filing claims, Exceptions, for additional information.

  2. Persons not subject to income tax, i.e. the United States, a state, political subdivision of a state, or the District of Columbia, or organizations exempt from income tax under IRC 501(a) (provided that the organization is not required to file Form 990-T, Exempt Organization Business Income Tax Return, for that taxable year) are permitted to file annual claims on Form 8849, Schedule 1, Claim for Refund of Excise Taxes, Nontaxable Use of Fuel.

  3. Any portion of a refund made under IRC 6421, which constitutes an excessive amount, as defined in IRC 6675(b), and any civil penalty provided by IRC 6675, may be assessed and collected as a tax imposed by IRC 4081. The assessment period is three years from the last day prescribed for the filing of the claim. IRM 4.24.8.5 provides additional statute of limitation information.

IRC 6426, Credit for Alcohol Fuel, Biodiesel, and Alternative Fuel Mixtures

  1. The biodiesel and alternative fuel mixture credits are first required to be offset against taxes paid under IRC 4081 and the alternative fuel credit is first required to be offset against the tax imposed by IRC 4041. The claimant must obtain a producer/reseller certificate from the producer of the biodiesel to file with the biodiesel mixture credit claim. To claim the alternative fuel and alternative fuel mixture credits, the claimant must be registered under IRC 4101. The credit or payment is typically reported on Schedule C (Form 720) or Form 8849.

    Note:

    The section 6426 credits and section 6427 payments for biodiesel mixtures, renewable diesel mixtures and alternative fuels expired for sales and uses after December 31, 2014, but were reinstated for sales and uses through 2016. A one-time claim for payment of credits and payments under sections 6426(c), 6426(d), and 6427(e) relating to 2015 biodiesel and alternative fuel incentives were allowed. See Notice 2015-3 and Notice 2016-05 for more information.

IRC 6427, Fuels Not Used for Taxable Purposes

  1. Claims under this code section include:

    • Intercity, local, or school buses

    • Use for farming purposes

    • Use by certain aircraft museums or in certain other aircraft uses

    • Biodiesel and alternative fuel

    • Blend stocks not used for producing taxable fuel

    • Nontaxable uses of diesel fuel and kerosene

    • Diesel fuel used to produce emulsion

    Note:

    Treas. Reg. 48.6427-8, Diesel fuel and kerosene; claims by ultimate purchasers, illustrates specific requirements and examples for this claim type.

  2. The table listed below summarizes claim filing rules for the sale of diesel fuel and kerosene to a SLG and NPEO:

    Payment Type Purchase From Claimant IRC
    SLG pays by cash or check
    • Unregistered ultimate vendor

    • No proper claimant

    Notice 2005-80 4(b)(2)(ii)
    NPEO pays by cash or check
    • Unregistered ultimate vendor

    • NPEO

    6427(I)(1)
    SLG or NPEO pays by cash or check
    • UV registrant

    • UV registrant

    6427(I)(5)(A), 6427(I)(5)(C), Notice 2005-80 4(b)(2)(ii)
    SLG or NPEO pays by credit card
    • UV registrant

    • Unregistered credit card issuer

    • Unregistered ultimate vendor

    • SLG or NPEO

    6427(I)(5)(D), 6427(I)(1), Notice 2005-80 4(b)(2)(iii)
    SLG or NPEO pays by credit card
    • CC registrant

    • CC registrant

    6427(I)(5)(D), Notice 2005-80 4(b)(2)(i)

    Note:

    An SLG may not claim a credit or refund related to the tax paid on diesel fuel or kerosene purchased with cash or a check from a registered or unregistered ultimate vendor. Only the registered ultimate vendor may file a claim for refund or credit. See section 4(b)(2)(ii) in Notice 2005-80.

  3. Any portion of a refund made under IRC 6427, which constitutes an excessive amount, as defined in IRC 6675(b) and any civil penalty provided by IRC 6675, may be assessed and collected as a tax imposed by IRC 4041, or IRC 4081. The assessment period is three years from the last day prescribed for the filing of the claim. IRM 4.24.8.5 provides additional statute of limitation information.

  4. In general, an annual claim for an income tax credit may be filed by the ultimate purchaser for tax included in the purchase prices of certain fuels not used for taxable uses, and for certain uses and sales for use of biodiesel, biodiesel mixtures, alternative fuels, and alternative fuel mixtures.

  5. An exception to the annual claim limitation exists for nontaxable use of certain fuels and certain other activities. These quarterly claims are allowed if the claim amount is at least $750 and the claim is filed during the first quarter following the last quarter included in the claim. They are filed on Form 8849, Claim for Refund of Excise Taxes, or Schedule C (Form 720, Quarterly Federal Excise Tax Return).

  6. Claims for biodiesel mixtures (but not neat biodiesel), alternative fuel mixtures, and for alternative fuels may be filed weekly if the claim amount is at least $200. If the claim is filed electronically, there is no minimum claim amount. These claims must be filed on or before the last day of the first quarter following the earliest quarter included in the claim on Form 8849 or Schedule C (Form 720). Interest is paid to the claimant if the claim is not paid within 45 days (20 days if electronically filed).

  7. Registered ultimate vendor claims may be filed weekly on Form 8849, Claim for Refund of Excise Taxes, or Schedule C (Form 720, Quarterly Federal Excise Tax Return), if the amount is at least $200 (at least $100 in the case of kerosene).

  8. Persons not subject to income tax, i.e. the United States, a state, political subdivision of a state, or the District of Columbia, or organizations exempt from income tax under IRC 501(a) (provided that the organization is not required to file Form 990-T, Exempt Organization Business Income Tax Return, for that taxable year) are permitted to file annual claims on Form 8849, Schedule 1, Claim for Refund of Excise Taxes.

  9. Tax-exempted taxable fuel purchased by a SLG from a UV or CC registrant that is resold by SLG to another SLG for the exclusive use by the SLG does not change the character of the taxable fuel sale and is permitted. A resale by a SLG to a nonprofit organization (other than the Red Cross) or to any non-state or non-local government entity would invalidate the taxable fuel tax-exempt status. The parties responsible in the SLG are required to inform the UV or CC registrant that the taxable fuel was disposed of in a manner that did not amount to an exclusive use by a SLG. For additional information, refer to Treas. Regs. 48.4221–5, Tax-free sale of articles to State and local governments for their exclusive use.

Statute of Limitations for IRC 6416(a)(4), 6420, 6421, 6426 and 6427 Claims

  1. The excise examiner determines and protects the Statute of Limitation (SOL) of all examinations. IRM 25.6.23, Examination Process - Assessment of Statute of Limitations Controls, provides general information on SOL protection actions.

  2. Any portion of a claim made under IRC 6416(a)(4), IRC 6420, IRC 6421, or IRC 6427, which constitutes an excessive amount (as defined in section IRC 6675(b), and any civil penalty provided by IRC 6675 may be assessed 3 years from the last day prescribed for the filing of such claim. The SOL cannot be extended.

  3. Any portion of an IRC 6426 claim, which constitutes an excessive amount may be assessed within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever of such periods expires later, or if no return was filed by the taxpayer, within 2 years from the time the tax was paid. IRC 6511(c) allows the SOL to be extended by agreement.

  4. A biodiesel mixture or alternative fuel claim filed on Schedule C (Form 720) may include both IRC 6426 and IRC 6427 claims. The IRC 6427 portion of a paid claim may not be extended. The claims must be closed separately if the IRC 6426 exam period is extended.

Examples of Statute of Limitations Dates for Claims

  1. Exhibit 4.24.8-1 lists various claim type due dates to help determine an SOL expiration date.

  2. The following claim examples serve as additional guidance:

    • Form 8849 Claims - examples 1 through 5

    • Schedule C (Form 720) - examples 6 and 7

    • Annual claim by SLG - examples 8 through 10

  3. Below are 5 Form 8849 claim statute examples:

    Facts Synopsis
    Example 1:
    • Claimant – UV Registrant, calendar year income tax filer

    • Return – Form 8849, Schedule 2, Sales by Registered Ultimate Vendors

    • Claim Type – Sale for use by a state or local government

    • Claim Period – January 1, 2009 to March 31, 2009

    • Claim File Date – June 15, 2009

    • Claim Paid Date – Timely Paid

    This claim falls under IRC 6427(i)(4), which requires this claim to be filed by June 30, 2009 (last day of the first quarter following the earliest quarter included in the claim). The SOL date is June 30, 2012 (3 years from the last day that the claim may be filed). IRC 6427 paid claims are assessed under IRC 6206, which means that the SOL cannot be extended.
    Example 2:
    • Claimant – UV Registrant, calendar year income tax filer

    • Return – Form 8849, Schedule 2, Sales by UV Registrants

    • Claim Type – Sale for use by a state or local government

    • Claim Period – January 1, 2009 to May 31, 2009

    • Claim File Date – June 15, 2009

    • Claim Paid Date – Timely Paid

    This claim falls under IRC 6427(i)(4), which requires this claim to be filed by June 30, 2009 (last day of the first quarter following the earliest quarter included in the claim). The SOL date is June 30, 2012 (3 years from the last day that the claim may be filed). IRC 6427 paid claims are assessed under IRC 6206, which means that the SOL cannot be extended.
    Example 3
    • Claimant – Construction Company, calendar year income tax filer

    • Return – Form 8849, Schedule 1, Nontaxable Use of Fuels

    • Claim Type – Nontaxable use of diesel fuel

    • Claim Period – January 1, 2009 to June 30, 2009

    • Claim File Date – July 1, 2009

    • Claim Paid Date – Timely Paid

    This claim falls under IRC 6427(i)(2)(B), which requires this claim to be filed by September 30, 2009 (last day of the first quarter following the last quarter included in the claim). The SOL date is September 30, 2012 (3 years from the last day that the claim may be filed.) IRC 6427 paid claims are assessed under IRC 6206, which means that the SOL cannot be extended.
    Example 4
    • Claimant – M Registrant Blender, calendar year income tax filer

    • Return – Form 8849, Schedule 3, Certain Fuel Mixtures and the Alternative Fuel Credit

    • Claim Type – Biodiesel Mixture Credit

    • Claim Period – January 1, 2009 through January 31, 2009

    • Claim File Date – February 20, 2009

    • Claim Paid Date – Timely paid

    • Supplemental Claim Information – The Form 8849 claim amount exceeded the 2009 first quarter 4081 tax liability. Form 720 was filed April 21, 2009.

    This claim falls under IRC 6426 (up to Form 720IRC 4081 tax liabilities) and IRC 6427 (the amount that exceeds Form 720 IRC 4081 liabilities). The SOL for the IRC 6426 claim is April 30, 2012 (generally 3 years from the time Form 720 was filed (but not less than the required filing date) or 2 years from the time the tax was paid, whichever is later). The SOL for IRC 6426 claim may be extended by agreement under IRC 6511(c). The claim portion that exceeds Form 720IRC 4081 tax liabilities falls under IRC 6427(i)(3)(C), which required the claim be filed by June 30, 2009 (last day of the first quarter following the earliest quarter included in the claim). The SOL date is June 30, 2012 (3 years from the last day that the claim may be filed.) However, IRC 6427 paid claims are assessed under IRC 6206, which means that the SOL cannot be extended.
    Example 5
    • Claimant – M Registrant Blender, calendar year income tax filer

    • Return – Form 8849, Schedule 3, Certain Fuel Mixtures and the Alternative Fuel Credit

    • Claim Type – Biodiesel Mixture Credit

    • Claim Period – December 15, 2009 through January 13, 2010

    • Claim File Date – January 27, 2010

    • Claim Paid Date – Timely paid

    • Supplemental Claim Information – The Form 8849 claim amount exceeded the 2009 fourth quarter and 2010 first quarter IRC 4081 tax liabilities. Form 720 was timely filed for the 2009 4th quarter and 2010 1st quarter.

    This claim falls under IRC 6426 (up to Form 720IRC 4081 tax liabilities) and IRC 6427 (the amount that exceeds Form 720IRC 4081 liabilities). The claim period may carry over to the next calendar year. The SOL for the IRC 6426 claim is January 31, 2013 and April 30, 2013 (generally 3 years from the time Form 720 was filed (not less than the required filing date) or 2 years from the time the tax was paid), The SOL for IRC 6426 claims may be extended by agreement under IRC 6511(c). The claim portion that exceeds IRC 4081 falls under IRC 6427(i)(3)(C), which requires this claim to be filed by March 31, 2010 (last day of the first quarter following the earliest quarter included in the claim). The SOL date is March 31, 2013 (3 years from the last day that the claim may be filed.) IRC 6427 paid claims are assessed under IRC 6206, which means that the SOL cannot be extended.

    .

  4. Below are 2 Schedule C (Form 720 ) statute examples :

    Facts Synopsis
    Example 6
    • Claimant – AL Registrant Alternative Fueler

    • Return – 2009 1st Quarter Form 720, Quarterly Federal Excise Tax Return

    • Amounts Reported: IRS No. 120 CNG for $183 and Schedule C line 14c CRN 428 credit for $500

    • Claim Type – CNG Credit

    • Claim Period – January 1, 2009 through March 31, 2009

    • Claim File Date – on or before April 30, 2009

    • Claim Paid Date – Timely Paid

    This CRN claim falls under IRC 6426 (up to Form 720, IRC 4041 tax liability) and IRC 6427 (the amount that exceeds Form 720IRC 4041 liability) $183 and $317, respectively. The SOL for the $183 IRC 6426 claim is April 30, 2012 (generally 3 years from the time Form 720 was filed (not less than the required filing date) or 2 years from the time the tax was paid), The SOL for IRC 6426 claim may be extended by agreement under IRC 6511(c). The $317 IRC 6427 claim portion that exceeds IRC 4041 falls under IRC 6427(i)(3)(C), which requires the claim be filed by June 30, 2009 (last day of the first quarter following the earliest quarter included in the claim). The SOL date is June 30, 2012 (3 years from the last day that the claim may be filed). IRC 6427 paid claims are assessed under IRC 6206, which means that the SOL for $317 cannot be extended.
    Example 7
    • Claimant – UV Registrant

    • Return – 2009 1st Quarter Form 720, Quarterly Federal Excise Tax Return

    • Claim Type – Diesel fuel sale for use by a state or local government

    • Claim Period – January 1, 2009 through March 31, 2009

    • Claim File Date – on or before April 30, 2009

    • Claim Paid Date – Timely paid

    This claim falls under IRC 6427(l)(5), which required the claim to be filed by June 30, 2009 (last day of the first quarter following the last quarter included in the claim). The SOL date for the claim is June 30, 2012 (3 years from the last day that the claim may be filed). IRC 6427 paid claims are assessed under IRC 6206, which means that the SOL cannot be extended. The code defines claim and statute requirements and not the return used to report the information. If Form 720 was due 4/30/2009 it would have a 4/30/2012" SOL date. Form 720X, generally cannot be used to amend Schedule C (Form 720), claims or extend the statute of limitation. IRM 25.6.22, Statute of Limitations, Extension of Assessment Statute of Limitations by Consent, provides guidelines on statute extensions.
  5. Listed below are 2 examples of SOL dates for annual claims filed by SLG:

    Facts Synopsis
    Example 8
    • Claimant – SLG, fiscal year-end March 31

    • Return – Form 8849, Schedule 1, Nontaxable Use of Fuels

    • Claim Type – Ultimate purchaser - nontaxable use of gasoline

    • Claim Period – April 1, 2009 to March 31, 2010

    • Claim File Date – March 31, 2010

    • Claim Paid Date – Timely paid

    • Supplemental information – The gasoline was not purchased from a registered ultimate vendor or registered credit card issuer.

    IRC 6416(a)(4) requires the registered ultimate vendor or registered credit card issuer to file gasoline claims for exempt sales to a SLG. In the event that the ultimate vendor and credit card issuer are not registered then the SLG may file a claim. For this example, the claim must be filed by March 31, 2013, (no later than three years following the close of the SLG’s taxable year Treas. Reg. 48.6421-3(b)). The SOL date for the claim is March 31, 2016 (3 years from the last day that the claim may be filed). IRC 6416(a)(4) paid claims are assessed under IRC 6206, which means that the SOL cannot be extended. Note: IRC 6416(a)(4) permits SLGs to claim refunds for non-taxable use of gasoline only if the fuel is purchased with a credit card and neither the credit card issuer nor the ultimate vendor is registered. If the credit card issuer is registered, the credit card issuer must file the claim, regardless of whether the ultimate vendor is registered.
    Example 9
    • Claimant – SLG, fiscal year-end April 30

    • Return – Form 8849, Schedule 1, Nontaxable Use of Fuels

    • Claim Type – Ultimate purchaser – nontaxable use of gasoline

    • Claim Period – May 1, 2012 to July 31, 2012

    • Claim File Date – August 31, 2012

    • Claim Paid Date – timely paid

    • Supplemental information – The gasoline was not purchased from a registered ultimate vendor or registered credit card issuer

    IRC 6416(a)(4) requires the registered ultimate vendor or registered credit card issuer to file claims for gasoline sold to a SLG. In the event that the ultimate vendor and credit card issuer are not registered a SLG may file a gasoline claim. In this example, the SLG filed a quarterly gasoline claim. A SLG may file quarterly gasoline claims under IRC 6427(i)(2). The SOL date for the claim is October 31, 2015 (3 years from the last day that the claim may be filed). Note that the quarterly periods are based on the claimant’s fiscal year, not on a calendar year. IRC 6416(a)(4) paid claims are assessed under IRC 6206, which means that the SOL cannot be extended. Note: IRC 6416(a)(4) permits SLGs to claim refunds for nontaxable use of gasoline only if the fuel is purchased with a credit card and neither the credit card issuer nor the ultimate vendor is registered. If the credit card issuer is registered, that is the person that must make the claim, regardless of whether the ultimate vendor is registered.

Excise Tax Claim Classification and Control Procedures

  1. Excise tax paid and unpaid claims and amended returns are classified by Centralized Specialty Tax Operations (CSTO) at Campus Compliance Operations, Cincinnati (CCOC). Interest bearing fuel claims (Form 8849, Schedules 2, 3, and 8, Claim for Refund of Excise Taxes) are always paid claims. IRM 21.7.8.3.2(2), Excise Tax Research, describes the classification criteria. IRM Exhibit 21.5.3-2 highlights mandatory selection criteria. Claims related to an original excise tax return assigned to a field group are not classified by CSTO, but forwarded to the field group for association with the original return.

  2. Excise tax paid claims are also classified by Excise Case Selection and Excise Workload Selection and Delivery (ECS - WSD). In addition, ECS - WSD may classify claims that meet specific criteria. IRM 4.24.18.3.4, Operations Support, provides claims classification and control procedure information.

    Note:

    In situations where a claim case assignment does not include the manually filed claim envelope or does not include a scan of the envelope used to submit the claim, guidelines provided under IRM 25.6.1.6.15, When a Document is Treated As Filed Under the IRC, IRM 25.6.1.6.13, Determining the Received Date, and IRM 3.11.3.8.2, Determining the Received Dates, may be used

  3. The excise examiner must begin working unpaid claim cases within 30 days of case assignment.

  4. The excise examiner must verify that the AMDISA claim amount matches the claim amount per return. If the AMDISA does not, the excise examiner must complete Form 5348, AIMS/ERCS Update (Examination Update), (Form 5348), to update the AMDISA claim amount.

Master File Control Procedures for Form 8849 Claims

  1. CSTO unpaid claim selection process:

    1. Check for Transaction Code (TC) 150 on Master File to determine if excise tax return posted. If yes, Form 8849, Claim for Refund of Excise Taxes, claims are established with MFT 40, Source Code 30 (unpaid claim), and no push code. If TC150 is not posted, the claim is established the same way but with push code 036.

    2. The activity code will be the applicable abstract code.

    3. Unpaid claims established on MFT 40 will have a statute date of AA.

    4. Claims filed on Form 720X, Amended Quarterly Federal Excise Tax Return, will have the statute date of the original filed Form 720, Quarterly Federal Excise Tax Return. Excise examiners need to verify and update the statute as appropriate.

    5. Claim cases will be established on Examination Returns Control System, (ERCS), in status code 08.

    6. Claim cases will be updated to status code 10 and shipped via Form 3210, Document Transmittal, to field groups.

    7. Source code and status code are determined by CSTO.

  2. Excise WSD paid claim selection process:

    1. If MFT 03 is on Audit Information Management System (AIMS), establish Source Code 31, under tax period that corresponds to claim period.

    2. If MFT 03 is not on AIMS follow IRM 4.24.6.10, Substitute for Return (SFR) procedures, establish Source Code 31, Push Code 051, and assign tax period that corresponds to claim period.

    3. Paid claims are established with an activity code directly related to the Credit Reference Number (CRN) claim. The use of an activity code requires a numeric SOL.

      Note:

      The use of Push Code 051 does not remove the IRM 1.4.40.4.3(3) requirement for the manager to screen the return to determine the accuracy of the assessment statute information and to identify the need for establishing statute controls.

  3. CSTO Paid Claim control procedures:

    1. Push Code 051 is used to establish SFR controls for paid claims, Source Code 31, and using MFT 03 for Form 720, Quarterly Federal Excise Tax Return.

    2. Paid claims have "live" statutes of limitation.

    3. The CSTO AIMS/ERCS unit updates the paid claim statute from EE to the correct statute date before the case is sent to the field. The excise group manager is responsible to verify and update the paid claim statute date as warranted within 5 days of receipt of the case.

  4. Paid claims may be processed under various tax modules. Examiners may have to review all tax modules to locate the claim. See Exhibit 4.24.8-2 for more information.

    Note:

    No filing requirements are established for the substitute module.

  5. Check command code AMDISA to identify claims in transit from CSTO prior to closing an examination.

  6. IRM 21.7.8.4.5.6.9, Form 8849, Schedule 6, Later Events That Give Rise to an Overpayment by Someone Other than the Form 720 Taxpayer, describes establishment of a claim with or without a Form 720, Quarterly Federal Excise Tax Return.

  7. Paid claim cases are established under cycle type EX-Regular and unpaid claims under cycle type EX-Claim in IMS. IRM 4.24.6.2 provides IMS information.

Determining the Form 8849 Examination Period
  1. Form 8849, Claim for Refund of Excise Taxes, claims can aggregate over multiple quarterly periods within a claimant’s income tax year.

  2. A Form 8849 examination period is established using the quarter that includes the last day included in the claim. For example:

    • A 2010 annual Form 8849, Claim for Refund of Excise Taxes, claim with claims for all four quarters will be established with a 4th quarter 2010 claim period since the last day included in the claim falls in the 4th quarter.

    • A 2/1/2010 to 4/15/2010 claim will be established with a 2nd quarter 2010 claim period since the last day included in the claim falls in the 2nd quarter.

  3. For fiscal year taxpayers who file an annual Form 8849, Claim for Refund of Excise Taxes, the examination period is the last quarter of the claim. For example a Form 8849, Schedule 1, Claim for Refund of Excise Taxes, claim filer with a fiscal year end of June 2010 that includes claims from all four quarters of the fiscal year, filed on September 30, 2010 will have an examination control period of June 30, 2010.

    Note:

    Transactions reported on Form 8849, Claim for Refund of Excise Taxes, are separate and distinct from Form 720 reported transactions for SOL and examination purposes.

Use of Revenue Protection Codes (RPC) in IMS
  1. Time spent working cases is tracked under three different codes, referred to as Protection of Revenue Base (P of RB) codes. The three codes are:

    • N − Used when there is no filed request for refund. "N" applies to regular examination activities prior to any request for refund. Once there is a request for refund, all subsequent time charges should be made to either "P" or "R" .

    • P − Used to record time spent protecting the revenue base (i.e., working the claim issue).

    • R − Used to record time spent examining regular (non P of RB) issues on returns where a request for refund has been filed.

    Note:

    Once an examiner charges either "P" or "R" time to a return, ERCS will no longer allow “N” time to be charged. Once a protection code issue is identified, IMS users should refer to IMS Help under “Update RP Code” for assistance.

  2. The issue must be checked out to edit the Revenue Protection Code (RPC) in IMS.

  3. Charging time to "P" and "R" does not change the process for requesting an update to the return for claim purposes.

Claim Categories

  1. Excise claims can be differentiated as:

    • First party claims, and

    • Third party claims.

  2. First Party Claims are normally filed on Schedule C (Form 720, Quarterly Federal Excise Tax Return) or on an amended return by the taxpayer who filed the original return to change or reduce the original taxes reported and paid against the Abstract/IRS number.

  3. Third party claims are filed by a person other than the person who paid the tax to the government. These are almost always filed using the CRN. Examples include:

    1. A farmer who files a claim for fuel used on a farm for farming purposes, or

    2. A registered ultimate vendor who sells taxable fuel tax exempt to a SLG or NPEO.

  4. There are four categories of refunds, each with unique processing:

    • Amended Forms 720, 11-C, 730 and 2290,

    • Refundable credit

    • Business related credits

    • Third party claims

    .

Amendment to Form 720, 11-C, 730 and 2290

  1. Form 720X is used to amend excise tax liabilities reported on a previously filed Form 720 . Form 720X is not used to make changes to claims made on Schedule C (Form 720), except for the IRC 4051(d) tire credit and IRC 6426 credits (biodiesel mixture, alternative fuel mixture, and alternative fuel credits).

    Note:

    The section 6426 credits and section 6427 payments for biodiesel mixtures, renewable diesel mixtures and alternative fuels expired for sales and uses after December 31, 2014, but were reinstated for sales and uses through 2016. See Notice 2015-3 and Notice 2016-05 for more information.

  2. CCOC receives all Form 720X returns. Form 720X is processed as a “duplicate return”.

  3. Claims for overpayments relating to Forms 720, 11-C, 730 and 2290 are made on Form 8849, Schedule 6. Refer to: https://www.irs.gov/uac/About-Schedule-6-Form-8849.

  4. A claim for credit for tax paid on vehicles that were sold, destroyed, stolen, or used 5,000 miles or less (7,500 miles or less for agricultural vehicles) can also be made on line 5 of Form 2290, .

Refundable Credit

  1. A refundable credit refers to a payment for the claim amount that reduces a tax liability below zero. A non-refundable credit is limited to the tax liability.

  2. IRC 34, Certain uses of gasoline and special fuels, credits are refundable credits claimed on Form 4136, Credit for Federal Tax Paid on Fuels. The credit is for amounts equal to the sum payable to a taxpayer under IRC 6420, IRC 6421 and IRC 6427. Note that if any payment is made under these sections, no credit is allowed under IRC 34.

  3. These refunds are reflected on the corresponding tax module, which includes:

    1. Form 1040 - U.S. Individual Income Tax Return

    2. Form 1120 - U.S. Corporation Income Tax Return

    3. Form 1120S - U.S. Income Tax Return for an S Corporation

    4. Form 1065B - U.S. Return of Income for Electing Large Partnership

    5. Form 1041 - U.S. Income Tax Return for Estates and Trusts

    6. Form 990T - Exempt Organization Business Income Tax Return

    7. Form 1120C - U.S. Income Tax Return for Cooperative Association

Business Related Credits

  1. IRC 40A, Biodiesel and renewable diesel used as fuel, credits are allowable as a general business credit under IRC 38. The credit is claimed on Form 8864, Biodiesel and Renewable Diesel Fuel Credit. Note that these credits expired for sales or uses after 12/31/2016.”

  2. As described in IRM 4.24.8.7.2(3), Refundable Credit, the refund is made to the corresponding tax module.

Third Party Claims

  1. Third party claims are filed by claimants other than the taxpayer that reported the related excise tax return liability.

  2. If a Form 720, Quarterly Federal Excise Tax Return, was not filed for the claim period (i.e. no transaction code 150) of a paid claim, a SFR is established on MFT 03, using push code 051.

  3. Third party refund claims (other than for fuel taxes) for collected taxes and certain retail or manufacturer taxes are controlled on AIMS using Master File procedures. Some examples of this type of claim include:

    • Tire and retail tax for exported items

    • Communication tax

    • Air transportation tax claims filed by the airline or other air transportation provider

  4. Claims that are processed prior to the filing of an income tax return for the associated period are posted to a "substitute" module using the appropriate income tax MFT until the Transaction Code 150 for the income tax return posts.

Report Writing Procedures for Examined Amended Form 720

  1. Use Form 5384, Excise Tax Examination Changes and Consent to Assessment and Collection, for agreed exams, and Form 5385, Excise Tax Examination Changes, for unagreed exams.

  2. For a full disallowance, the Form 5384, Excise Tax Examination Changes and Consent to Assessment & Collection, or Form 5385, Excise Tax Examination Changes, will include the following "Other Information" section language:

    On (date) you filed an Amended Form 720X, Amended Quarterly Federal Excise Tax Return, for refund of ($ amount) for (tax period). As a result of our examination, we have disallowed the entire ($ amount) of the amended return.

  3. For a partial disallowance, the Form 5384, Excise Tax Examination Changes and Consent to Assessment & Collection, or Form 5385, Excise Tax Examination Changes, will include the following "Other Information" section language:

    On (date) you filed an Amended Form 720X, Amended Quarterly Federal Excise Tax Return, for refund of ($ amount) for (tax period). As a result of our examination, we have allowed ($ amount) of the amended return.

  4. For a full allowance, the Form 5384, Excise Tax Examination Changes and Consent to Assessment & Collection, or Form 5385, Excise Tax Examination Changes, will include the following "Other Information" section language:

    On (date) you filed an Amended Form 720X, Amended Quarterly Federal Excise Tax Return, for refund of ($ amount) for (tax period). As a result of our examination, we have allowed the entire ($ amount) of the amended return

Unpaid Claims (AIMS Source Code 30) - Introduction

  1. Unpaid claims selected for field examination are controlled with AIMS Source Code 30 if research shows the original return has never been examined and the return, if applicable, does not otherwise warrant examination, and the requested refund has not been paid by the campus.

  2. Source Code 30 requires a claim amount be present on AIMS and ERCS.

  3. Claims for refund, request for abatements, and audit reconsiderations will use a variety of Disposal Codes (DISP-CD) depending on the situation. Disposal Codes are used to indicate the disposition of an examination. Examiners should refer to IRM 4.4.4.4, AIMS Procedures and Processing Instructions, Claims, Disposal Codes, for the appropriate DISP-CD when closing claim cases with Source Code 30.

  4. Additional examination DISP-CDs are also listed in Section 12 of Document 6209, IRS Processing Codes and Information, and in Document 6036, Examination Division Reporting Codes Booklet. For a list of DISP-CDs and their definition, see the Disposal Codes tab on the AIMS/ERCS website at:. http://mysbse.web.irs.gov/examination/mis/data/default.aspx.

  5. The excise examiner must verify that the AMDISA claim amount matches the claim amount per return. If the AMDISA does not, the excise examiner must complete Form 5348, AIMS/ERCS Update (Examination Update), to update the AMDISA claim amount.

Unpaid Claims - Survey

  1. Activity Code 615 is used for examination survey time.

  2. Unpaid claims selected for examination must be assigned to an examiner. If after review, the examiner determines that a claim is clearly allowable-in-full and the related excise tax return (if applicable) does not warrant examination, the claim should be "Surveyed After Assignment" .

  3. Claims previously closed by Appeals cannot be surveyed. See IRM 4.24.8.20, Claims Received in Cases Previously Considered by Appeals.

  4. Form 2503, Survey After Assignment-Excise or Employment Tax, must be completed for unpaid claims surveyed after assignment. The examiner will prepare Form 2503 and briefly explain why the claim is being surveyed. A copy of Form 2503, Survey After Assignment-Excise or Employment Tax, signed and approved by the group manager, must be uploaded into the IMS case file for record. Form 5384, Excise Tax Examination Changes and Consent to Assessment & Collection, is not required.

  5. The claim is stamped "Survey After Assignment" , signed and dated by both the examiner and group manager.

  6. Additionally, examiners must prepare Letter 570-X, Examination Report (Claim Allowed in Full), and leave in case file to be mailed by CCP.

  7. Additional survey procedures are found in IRM 4.10.2.5,Decision to Survey a Return.

Form 3198, Special Handling Notice for Examination Case Processing, Unpaid Claims - Surveyed

  1. On Form 3198, Special Handling Notice for Examination Case Processing, examiners must check the Surveyed Claim and Other Instructions boxes in the Special Features section. In the Other Instructions section, indicate the CRNs and claim amount(s) allowed. Provide the claim type, e.g., registered ultimate vendor or end user. Under Letter Instructions for CCP, check the boxes Claim Letters and Fully Allowed - L570.

    Note:

    If necessary, indicate Letter 570-X, Examination Report (Claim Allowed in Full), on Form 3198, Special Handling Notice for Examination Case Processing, since form has "Fully Allowed – L570."

  2. If the claim is a non-interest bearing claim, on the Form 3198, Special Handling Notice for Examination Case Processing, under the Special/Restricted Interest Features section, the examiner must check the box Other Code Section and include a comment that provides the applicable code section. See IRM 4.24.8.24, Restricted Interest, for applicable code sections.

Form 5344, Examination Closing Record, Unpaid Claims - Surveyed

  1. There is an IMS option to survey claims after assignment. IMS will generate the Form 2503 but the excise examiner will need to prepare a manual Form 5344, Examination Closing Record, in order for the case to close through CCP. Refer to IMS help menu for more information.

  2. Complete Form 5344, Examination Closing Record, and include in case file when closed to CCP. Do not apply time to the survey case. Complete the taxpayer information section and item 21, claim amount.

  3. Disposal Code 34 will be used for unpaid claim survey cases. Do not complete items 22, 23, 24, or 404 on Form 5344.

  4. See IRM 4.4.12.3, Surveyed Claims, Disposal Code 34, for additional instructions for the preparation of Form 5344, Examination Closing Record, when closing surveyed claims.

Unpaid Claims Report Writing and Case Processing Procedures - Agreed Cases

  1. Generally, regular agreed cases involving claims are similar to other regular agreed cases. See IRM 4.10.8.9, Claims, for more information. This section provides case closing and general report writing procedures for unpaid excise tax claims related to:

    • Schedule C (Form 720, Quarterly Federal Excise Tax Return),

    • Form 720X, Amended Quarterly Federal Excise Tax Return, Lines 1 and 2,

    • Form 8849, Claim for Refund of Excise Taxes, and

    • Informal claims.

  2. There are four possible results when a claim is examined. The claim may be:

    • Allowed in full,

    • Disallowed in full,

    • Partially allowed, or

    • Offset by other adjustments.

  3. See IRM 4.24.21, Excise Tax, Case Closings, for additional information on case closing procedures specific to excise tax cases.

  4. Before preparing a report on a case involving a claim, examiners must have a current transcript of the taxpayer’s account. See IRM 4.10.8.9.1, Transcript of Account, for additional information.

  5. IRC 6675, Excessive Claims, with Respect to the Use of Certain Fuels, penalty must be addressed in excise tax claim case files. IRM 4.24.9.6, IRC 6675 Excessive Claims with Respect to the Use of Fuels Penalty, provides IRC 6675 guidance.

  6. In determining whether a case is regular agreed, a case involving a claim is considered agreed if the claim is allowed in full, or if agreement is secured on Form 5384, Excise Tax Examination Changes and Consent to Assessment & Collection, and Form 3363, Acceptance of Proposed Disallowance of Claim for Refund or Credit, even though the taxpayer will not execute Form 2297, Waiver of Statutory Notification of Claim Disallowance.

Report Writing Regular Agreed Cases - Unpaid Claim Disallowed in Full or in Part

  1. In agreed cases where the claim is disallowed in full or in part and no other adjustments to the tax liability are necessary, secure agreement on Form 3363, Acceptance of Proposed Disallowance of Claim for Refund or Credit.

  2. In agreed cases where the claim is being disallowed in full or in part with additional adjustments to the tax liability, both Form 3363, Acceptance of Proposed Disallowance of Claim for Refund or Credit, and an examination report (Form 5384, Excise Tax Examination Changes and Consent to Assessment & Collection) should be secured.

  3. If applicable, secure agreement on Form 5384, Excise Tax Examination Changes and Consent to Assessment & Collection, and complete the top portion. Complete columns 1 through 8 as follows:

    1. For Schedule C (Form 720), Form 720X (Line 2), or Form 8849, Claim for Refund of Excise Taxes, complete Form 5384, Excise Tax Examination Changes and Consent to Assessment & Collection, columns 1 through 8 for the items in the claim using the Credit Reference Numbers (CRNs) shown on the return.

    2. For Form 720X, Amended Quarterly Federal Excise Tax Return, (Line 1) complete columns 1 through 8 for the items in the claim using the abstract numbers shown on the return.

      Note:

      Negative numbers are not permitted in columns 4 and 5.

    3. Input any other proposed adjustments or issues not related to the claim that taxpayer agrees with using the appropriate abstract numbers.

    4. In the Other Information section include a statement regarding the disposition of the claim. For example:

    Claim Disallowed in Full:

    "On (date) you filed (Form ______), or an informal claim for a refund of ($ amount) for (tax period). As the result of our examination, we disallowed your claim in full, as shown in this report."

    Claim Disallowed in Full with Additional Tax Due:

    "On (date) you filed (Form ____), or an informal claim for a refund of $ (amount) for (tax period). As the result of our examination, we disallowed your claim in full. However, we increased your tax liability by other adjustments as shown in this report."

    Claim Allowed in Part:

    "On (date) you filed (Form ______), or an informal claim for a refund of ($ amount) for (tax period). As the result of our examination, we allowed your claim in part, as shown in this report."

  4. Letter 569X, Claim Disallowance Letter, is used to transmit the preliminary full or partial claim disallowance. The examiner will prepare the letter and insert his/her information in the contact section. The Group Manager must sign the letter. Letter 569X, Claim Disallowance Letter, does not replace Letter 905, Final Partial Claim Disallowance Letter, or Letter 906, Final Full Claim Disallowance Letter, which is prepared, signed and mailed by Technical Services.

  5. Solicit Form 2297, Waiver of Statutory Notification of Claim Disallowance. Form 2297 is used when a claim for refund or credit is disallowed in whole or in part. Securing waiver means the IRS is not required to issue a Statutory Notice of Claim Disallowance (Letter 905 or Letter 906). A signed Form 2297 starts the two-year period for the taxpayer to file suit as allowed in IRC 6532. See IRM 4.10.8.9.4, Form 2297, Waiver of Statutory Notice of Claim Disallowance, for additional information on Form 2297.

  6. If the Form 2297, Waiver of Statutory Notification of Claim Disallowance, is not secured when a claim for refund or credit is disallowed in whole or in part, a statutory notice of claim disallowance, Letter 905, Final Partial Claim Disallowance, or Letter 906, Final Full Claim Disallowance, is issued by Technical Service after all other administrative actions have been concluded.

Form 5344, Examination Closing Record (Form 5344 ) - Unpaid Claim Disallowed in Full or in Part

  1. When generating a Form 5344, Examination Closing Record, in IMS, the required fields should be pre-populated. The excise examiner should verify these pre-populated fields and fields the examiner is responsible for completing at the following link: See http://mysbse.web.irs.gov/examination/tip/CloseaCase/Examined/general/10026.aspx.. These fields include, but are not limited to the items in (2) through (4) below.

  2. Form 720X, Amended Quarterly Federal Excise Tax Return, (Line 1 or 2), Schedule C (Form 720, Quarterly Federal Excise Tax Return), and Form 8849, Claim for Refund of Excise Taxes, enter the claim information in Form 5344, Examination Closing Record, items 20, 21, 22, 23 and 24. Refer to IRM 4.4.12.5.2, Form 5344 Entries, for additional information on completing Form 5344, Examination Closing Record.

    Note:

    Claim type should be coded “Z”. For a list of definitions for the claim type, see the AIMS/ERCS website article at http://mysbse.web.irs.gov/examination/mis/data/10053.aspx.

  3. Form 720X, Amended Quarterly Federal Excise Tax Return, (Line 1) abstract adjustments, ONLY, complete Item 404 as follows:

    1. 404a and 404b

    2. 404(c) - The time should reflect non-claim time and equal time on item 28 for other non-claim issues examined.

    3. 404(d) - Enter the amount of the Form 720X, Amended Quarterly Federal Excise Tax Return, issues allowed and circle the negative sign.

    4. 404(e) - The time should reflect claim time and equal time on item 23 for the Form 720X, Amended Quarterly Federal Excise Tax Return, issues.

    5. If no other issues are examined, item 28 is blank with claim time in item 23.

    Note:

    No CRN adjustments are reflected in item 404. If the examination results in a reduction in the amount of the abstract claim on Form 720X, Amended Quarterly Federal Excise Tax Return, (Line 1) or in additional tax due, enter the adjustment amount in item 404.

  4. Item 404 is NOT completed for unpaidForms 8849, Form 720X, Amended Quarterly Federal Excise Tax Return, (Line 2), or Schedule C (Form 720, Quarterly Federal Excise Tax Return).

Form 3198, Special Handling Notice for Examination Case Processing - Unpaid Claim Disallowed in Full or in Part

  1. In the Special Features section, check the box Other Instructions and include a statement on the disposition of claim. For example:

    • "Unpaid claim disallowed in full" , or

    • "Unpaid disallowed in part, pay CRN # and $ amount." Provide claim type: Ultimate Vendor or End User.

  2. For claims partially disallowed, if the claim is a non-interest bearing claim, on the Form 3198, Special Handling Notice for Examination Case Processing, under the Special/Restricted Interest Features section, the examiner must check the box Other Code Section and include a comment that provides the applicable code section. See IRM 4.24.8.24, Restricted Interest, for applicable code sections.

  3. If there are no audit adjustments, check the No letter required to be sent by CCP in the Letter Instructions for CCP section, otherwise check the appropriate letter box.

  4. In all cases involving the disallowance of a claim for refund in whole or in part, a notification letter will be issued to the taxpayer. If a certified notice of disallowance is to be issued, the examiner will indicate on Form 3198, Special Handling Notice for Examination Case Processing, in the "Forward to Technical Services " section and check “Statutory Notice of Claim Disallowance – Letters 905 and 906”. The case will then be updated to Status Code 21. See IRM 4.4.7.3.8, Claim Disallowance Letters, for additional information.

Report Writing Regular Agreed Cases - Unpaid Claim Allowed In Full

  1. This section contains instructions for the preparation of reports when the taxpayer agrees with the examiner’s proposal to allow the claim in full. Regular agreed report forms require the taxpayer’s signature, see IRM 4.10.8.3, Regular Agreed Cases (SB/SE Field and Office Examiners Only).

  2. Secure agreement on Form 5384, Excise Tax Examination Changes and Consent to Assessment & Collection, and complete as follows:

    1. For Schedule C (Form 720), Form 720X, Amended Quarterly Federal Excise Tax Return, (Line 2), or Form 8849, Claim for Refund of Excise Taxes, complete columns 1 through 8 using the items in the claim using the CRN shown on the return.

      Note:

      Negative numbers are not permitted in columns 4 and 5.

    2. For Form 720X, Amended Quarterly Federal Excise Tax Return, (Line 1) complete Form 5384, Excise Tax Examination Changes and Consent to Assessment & Collection, columns 1 through 8 for the items in the claim using the Abstract Number shown on the return.

      Note:

      Negative numbers are not permitted in columns 4 and 5.

    3. Input any other proposed adjustments, or issues not related to the claim that taxpayer agrees with, using the appropriate Abstract Numbers.

      Note:

      If offsetting adjustments are proposed, which reduce the amount refundable, the claim will be treated as a partially or wholly disallowed claim. The report writing procedures for claims disallowed in full or in part should be followed. See IRM 4.10.8.9.2, Claims Allowed in Full, for additional information.

    4. In the Other Information Section, include a statement regarding the disposition of the claim. For example:

    Claim Allowed in Full:

    "On (date) you filed Form ( _______), or an informal claim for a refund of ($ amount) for (tax period). As the result of our examination, we have allowed your claim in full, as shown in this report."

    Claim Allowed in Full but Offset by Other Adjustments:

    "On (date) you filed Form (_______), or an informal claim for a refund of $ (amount) for (tax period). As the result of our examination, we allowed your claim in full. However, the total amount of the refund is increased or decreased by other adjustments, as shown in this report."

  3. Letter 570-X, Examination Report (Claim Allowed in Full), is used on an examined claim allowed in full. The excise examiner will prepare Letter 570-X, Examination Report (Claim Allowed in Full), include his or her contact information in the contact section and retain an undated letter in case file. The group manager will sign the letter on behalf of the Chief, Estate & Gift and Excise Tax Examination. CCP will date and mail Letter 570-X, Examination Report (Claim Allowed in Full), to the taxpayer and representative, if applicable.

  4. Letter 4121, Letter to Transmit Expected Agreed Examination Report, can be used to transmit the agreed report to the taxpayer.

Form 5344, Examination Closing Record, Unpaid Claim - Allow In Full

  1. When generating a Form 5344, Examination Closing Record, in IMS the required fields should be pre-populated. The excise examiner should verify these pre-populated fields at the following link: See http://mysbse.web.irs.gov/examination/tip/CloseaCase/Examined/general/10026.aspx. These fields include but are not limited to the items in (2) through (4) below.

  2. Form 720X, Amended Quarterly Federal Excise Tax Return, (Lines 1 and 2), Schedule C (Form 720) Quarterly Federal Excise Tax Return, and Form 8849, Claim for Refund of Excise Taxes, enter the claim information in Form 5344, Examination Closing Record, items 21, 22, 23 and 24.

    Note:

    Item 24 should be coded claim type "Z" .

  3. Form 720X, Part 1 abstract adjustments ONLY, complete Form 5344, Examination Closing Record, items:

    1. 404a and 404b

    2. The time on item 404c should reflect non-claim time and equal time on item 28 for the other issues examined.

    3. Enter the amount allowed in item 404d and circle the negative sign.

    4. The time on item 404e should reflect claim time on item 23.

    5. If no other issues are examined, leave item 28 blank with claim time in item 23.

    Note:

    No CRN adjustments are reflected in item 404. If the examination results in a reduction in the amount of the abstract claim on Form 720X, Part 1 or in additional tax due, enter the adjustment amount in item 404.

  4. Item 404 is NOT completed for unpaidForm 8849, Schedule C (Form 720), or Form 720X, Amended Quarterly Federal Excise Tax Return, Line 2.

Form 3198, Special Handling Notice for Examination Case Processing, Unpaid Claim - Allow In Full

  1. In the Special Features "Other Instructions" box include the phrase "Unpaid claim allowed in full pay CRN # and $ amount. " Provide claim type: Registered Ultimate Vendor or End User.

  2. In the Special/Restricted Interest Features Section, check the "Other Code Section" box and add the appropriate IRC sections if the claim does not require interest to be paid. These sections include IRC 4081(e), IRC 6416(b), IRC 6419(b), IRC 6421(a, (b) and (c), or IRC 6427(a) {except ultimate vendor claims}.

  3. In the “Letter Instructions for CCP,” mark the box "Claims - Fully Allowed - L570-X” for closing instructions to CCP.

  4. If there are no other audit adjustments, check the “Fully Allowed - L570-X” in the Letter Instructions for CCP section, otherwise check the appropriate letter box.

Report Writing Regular Agreed Cases - Unpaid Claim Increase to Original Amount

  1. For Form 720X, Amended Quarterly Federal Excise Tax Return, (Lines 1 and 2), Schedule C (Form 720, Quarterly Federal Excise Tax Return), and Form 8849, Claim for Refund of Excise Taxes:

    1. Complete the top portion of Form 5384, Excise Tax Examination Changes and Consent to Assessment & Collection.

    2. For Form 720X, Amended Quarterly Federal Excise Tax Return, (Line 2), Schedule C (Form 720), or Form 8849, Claim for Refund of Excise Taxes, complete columns 1 through 8 for the items in the claim using the CRN shown on the return.

      Note:

      Negative numbers are not permitted in columns 4 and 5.

    3. For Form 720X (Line 1) complete columns 1 through 8 for the items in the claim using the Abstract Numbers shown on the return.

      Note:

      Negative numbers are not permitted in columns 4 and 5.

    4. Input any other proposed adjustments, or issues not related to the claim that taxpayer agrees with, using the appropriate Abstract Numbers.

    5. In the “Other Information” Section, include a statement regarding the disposition of the claim. For example:

      On (date) you filed Form (______), or an informal claim for refund of ($ amount) for (tax period). On (date) you provided additional information to increase the amount claimed by ($ additional amount). As a result of our examination, we allowed your claim in full, as shown in this report.

    6. Secure agreement on Form 5384.

  2. Complete Form 5348, ERCS/AIMS Update (Examination Update), to reflect the new (adjusted) claim amount.

  3. Prepare Letter 570-X, Examination Report (Claim Allowed in Full), and include in case file. CCP will issue upon case closing. See IRM 4.24.8.9.4(3) above.

  4. Letter 4121, Letter to Transmit Expected Agreed Examination Report, can be used to transmit the agreed report to the taxpayer.

Form 5344, Examination Closing Record, Unpaid Claim - Increase to Original Amount

  1. When generating a Form 5344, Examination Closing Record, in IMS the required fields should be pre-populated. The excise examiner should verify these pre-populated fields at the following link: See http://mysbse.web.irs.gov/examination/tip/CloseaCase/Examined/general/10026.aspx.These fields include but are not limited to the items in (2) through (4) below.

  2. Form 720X (Lines 1 and 2), Schedule C (Form 720), and Form 8849, enter the claim information in Form 5344 items 21, 22, 23 and 24.

    Note:

    Item 24 should be coded claim type "Z" .

  3. Form 720X (Line 1 ) abstract adjustments ONLY, complete Form 5344 items:

    1. 404a and 404b

    2. The time on item 404c should reflect non-claim time and equal time on item 28 for the other issues examined.

    3. Enter the amount allowed in item 404d and circle the negative sign.

    4. The time on item 404e should reflect claim time on item 23.

    5. If no other issues are examined, leave item 28 blank with claim time in item 23.

    Note:

    No CRN adjustments are reflected in item 404. If the examination results in a reduction in the amount of the abstract claim on Form 720X Line 1, or in additional tax due, enter the adjustment amount in item 404.

  4. Item 404 is NOT completed for unpaidForm 8849, Schedule C (Form 720), or Form 720X, Line 2.

Form 3198, Special Handling Notice for Examination Case Processing, Unpaid Claim - Increase to Original Amount

  1. In the Special Features "Other Instructions" box include the phrase "Unpaid claim allowed in full pay, CRN # and $ amount." Provide claim type: Registered Ultimate Vendor or End User.

  2. In the Special/Restricted Interest Features Section, check the "Other Code Section" box and add the appropriate IRC Sections if the claim does not require interest to be paid. These sections include IRC 4081(e), 6416(b), 6419(b), 6421(a), (b) and (c) or 6427(a) {except ultimate vendors}.

  3. In the “Letter Instructions for CCP,” mark the box "Claims - Fully Allowed - L570-X” for closing instructions to CCP.

  4. If there are no other Form 720 adjustments, check the “Fully Allowed - L570-X” in the Letter Instructions for CCP section, otherwise check the appropriate letter box.

Unpaid Claims - Unagreed and Excepted Agreed Cases

  1. Excepted agreed cases are exams where the taxpayer agrees to proposed adjustments, but the examination results are subject to review or additional processing or some other condition. In these instances, a taxpayer may waive the statutory restriction of assessment and collection to a tax deficiency. The signing of the waiver does not preclude the Commissioner from asserting additional deficiencies or the taxpayer requesting further consideration, which lends the case to being “excepted” from case reopening criteria. See IRM 4.10.8.4, Excepted Agreed Cases, for additional information on cases requiring excepted agreed reports..

  2. Generally, report writing procedures for unagreed and excepted agreed cases involving claims are similar to unagreed and excepted cases not involving claims.

  3. IRM 4.24.21.5.2.1, Closing Procedures for Partially Agreed and Excepted Agreed Examinations, provides information on closing partially agreed and excepted agreed cases.

  4. IRM 4.24.10, Appeals Referral Procedures, provides specific guidance and case routing procedures for unagreed excise cases referrals to Appeals. .

  5. In an excepted agreed case, secure agreement on Form 2504-E, Agreement to Assessment and Collection of Additional Tax and Acceptance of Overassessment, on issues to which taxpayer does agree.

  6. Issue Letter 569-X, Claim Disallowance Letter, which serves in place of Letter 950-E, Straight Deficiency or Over-Assessment for Excise Tax Examination Cases.

  7. Issue Form 2297, Waiver of Statutory Notification of Claim Disallowance, with Form 5385, Excise Tax Examination Changes, and Letter 569-X, Claim Disallowance Letter.

  8. Complete Form 5385, Excise Tax Examination Changes, using the procedures as those for Form 5384, Excise Tax Examination Changes and Consent to Assessment & Collection, found in IRM 4.24.8.9.1(3),Report Writing Regular Agreed Cases - Unpaid Claim Disallowed in Full or in Part, for unpaid claims disallowed in full or in part.

  9. See IRM 4.24.8.9.2, Claim Disallowed in Full or in Part, for completion of Form 5344, Examination Closing Record, for unpaid claim disallowed in full or in part.

  10. See IRM 4.24.8.9.3, Form 3198, Special Handling Notice for Examination Case Processing - Unpaid Claim Disallowed in Full or in Part, for completion of Form 3198 , Special Handling Notice for Examination Case Processing, for unpaid claim disallowed in full or in part.

Paid Claims (AIMS Source Code 31) - Introduction

  1. Paid claims selected for field examination are controlled with AIMS Source Code 31. Paid claims follow regular exam procedures found in IRM 4.24.21, Excise Tax, Case Closings, with the exceptions addressed in each of the sections below. DISP-CDs used when closing paid claims cases follow regular exam procedures DISP-CDs found in IRM 4.24.21. For a listing of DISP-CDs and definitions, see the link found in IRM 4.24.8.8.

  2. The examination is normally established using MFT 03 that corresponds to the claim period or by using substitute for return procedures. See IRM 4.24.8.6.1, Master File Control Procedures for Form 8849 Claims, for the control procedures.

  3. Examination adjustments for paid claims under IRC 6416(a)(4), IRC 6420, IRC 6421, or IRC 6427 are assessed and collected as tax imposed by IRC 4041 or 4081.

  4. IRC 6675, Excessive Claims with Respect to the Use of Certain Fuels Penalty, must be addressed in excise tax claim case files. See IRM 4.24.9.6, IRC 6675 Excessive Claims with Respect to the Use of Fuels Penalty, for additional guidance.

Paid Claims (AIMS Source Code 31) - Survey After Assignment

  1. IRM 4.24.21.5.1, Closing Procedures for Surveyed Returns, describes case closing procedures for surveyed returns; and IRM 4.24.21.4.1, Paper Closing / Electronic (IMS) Closing, describes the case closing process for paper and electronic closings.

  2. Activity Code 615 is used for examination survey time.

  3. For the Form 3198, Special Handling Notice for Examination Case Processing, check the "Other Instructions" box, in the Special Features Section, and write "Survey After Assignment - Paid Claim"

  4. Form 5344 is not required.

  5. See IRM 4.24.8.8.1, Unpaid Claims - Survey, for additional survey procedures.

Paid Claims - Report Writing and Case Processing Procedures

  1. Examinations of paid claims result in one of the following dispositions:

    • No Change

    • Agreed

    • Unagreed

  2. IRC 6675, Excessive claims with respect to the use of certain fuels, penalty must be addressed in excise tax claim case files. IRM 4.24.9.6 provides IRC 6675 guidance.

  3. Generally, a paid claim reported on Schedule C (Form 720 ), Form 720X (Line 2), or Form 8849 falls under the one-claim rule where an increase at the exam level is barred by statute. However, there are certain instances where a claim may be processed at the exam level, e.g., retroactive credits permitted by Notice.

  4. Persons not required to file a tax return are organizations exempt from tax under IRC 501(a), Exemption from tax on corporations, certain trusts, etc., e.g., a state or local government or the United States Government. An annual Form 8849 claim must be made within 3 years of the exempt organization's fiscal year end.

Paid Claim Report Writing and Case Processing Procedures - No Change/No Adjustments

  1. This section contains report writing procedures when the examination results in no adjustments, or there are adjustments that result in no additional liability. IRM 4.24.20.2.3, No Change Reports, IRM 4.24.21.5.3, Closing Procedures for No Change Examinations, and IRM 4.10.8.2, No Change and No Liability Cases, provides report writing procedures for closing “No Change” cases.

  2. The IRS abstract number that corresponds to the CRN must be used for the report. Complete Form 5384, Excise Tax Examination Changes and Consent to Assessment & Collection, as follows:

    1. Complete form number and taxpayer information fields.

    2. Complete columns 1 through 8. Enter “0” in column 5 if the taxpayer did not report a tax liability for the abstract used in place of the CRN, otherwise enter the reported tax liability per Master File. Column 4 will equal column 5 for a no change exam.

      Note:

      Negative numbers are not to be entered in columns 4 and 5.

    3. "Include the following language in the “Other Information” section: “On (date) you filed Form (_____), or an informal claim for refund of ($ amount) for (tax period). The claim was paid on (date). As the result of our examination, we have made no changes to your paid claim, as shown in this report."

  3. Issue Letter 3401-E, No Change Report Transmittal Letter, as the transmittal letter to Form 5384, Excise Tax Examination Changes and Consent to Assessment & Collection.

    Note:

    Taxpayer does not need to return a signed copy of the report.

  4. Prepare Letter 570-X, Examination Report (Claim Allowed in Full), and include in case file. CCP will issue upon case closing.

Form 5344, Examination Closing Record, Paid Claims - No Change

  1. When generating a Form 5344, Examination Closing Record, in IMS the required fields should be pre-populated. The excise examiner should verify these pre-populated fields per the following link. See http://mysbse.web.irs.gov/examination/tip/closeacase/examined/general/10026.aspx.

  2. IRM 4.4.12.5, Examined Closings, and IRM 4.24.21.4.4, Form 5344 - Examination Closing Record, provides additional guidance on completing Form 5344, Examination Closing Record.

Form 3198, Special Handling Notice for Examination Case Processing, Paid Claim - No Change

  1. Complete Form 3198, Special Handling Notice for Examination Case Processing, check the Other Instructions box, in the Special Features Section, and write No change to previously paid claim.

  2. Check the Fully Allowed - L570-X in the Letter Instructions for CCP section.

  3. IRM 4.24.21.4.3, Form 3198 - Special Handling Notice for Examination Case Processing, provides guidance on completing Form 3198, Special Handling Notice for Examination Case Processing.

Paid Claim Report Writing and Case Processing Procedures - Agreed

  1. This section contains report writing procedures when the taxpayer agrees with the examiner’s proposed liability. IRM 4.24.20.1, General Overview of Excise Examination Reports, and IRM 4.24.21.5.2, Procedures for Agreed Examinations, provides report writing procedures for closing excise tax Agreed cases.

  2. The IRS abstract number that corresponds to the CRN must be used for the report. Complete Form 5384, Excise Tax Examination Changes and Consent to Assessment & Collection, as follows:

    1. Complete form number and taxpayer information fields.

    2. Complete columns 1 through 8. Enter "0" in column 5 if the taxpayer did not report a tax liability for the abstract used in place of the CRN, otherwise enter the reported tax liability.

      Note:

      Negative numbers are not to be entered in columns 4 and 5.

    3. Enter all other agreed adjustments using the appropriate abstract numbers.

    4. Include the following language in the "Other Information" section: "On (date) you filed Claim Form XXXX, for refund of ($ amount) for (tax period). That claim was paid on (date). As a result of our examination, we have determined that ($ amount) constitutes an excessive amount under IRC 6206."

  3. Prepare Letter 987-X, Agreed Excise Tax Change Letter, and include it in the case file for use by CCP.

  4. IRC 6206 does not contain restricted or prohibited interest provisions. IRM 20.2.8 describes restricted and prohibited interest on some excise taxes (for example, IRC 6427 is not included).

Form 5344, Examination Closing Record, Paid Claims - Agreed

  1. When generating a Form 5344, Examination Closing Record, in IMS the required fields should be pre-populated. The excise examiner should verify these pre-populated fields per the following link. See http://mysbse.web.irs.gov/examination/tip/closeacase/examined/general/10026.aspx.

  2. IRM 4.4.12.5, Examined Closings, and IRM 4.24.21.4.4, Form 5344 Examination Closing Record, provides additional guidance on completing Form 5344.

Form 3198, Special Handling Notice for Examination Case Processing, Agreed

  1. Check the "Agreed - Letter 987-X" , Agreed Excise Tax Change Letter, in the Letter Instructions for CCP section.

Paid Claim Report Writing and Case Processing Procedures - Unagreed

  1. Follow normal unagreed report writing and case processing procedures found in IRM 4.24.10, Appeals Referral Procedures, IRM 4.24.20.1, General Overview of Excise Examination Reports, and IRM 4.24.21, Excise Tax, Case Closings.

  2. Prepare Form 5385, Excise Tax Examination Changes, with the IRS abstract number that corresponds to the CRNs.

    1. Complete form number and taxpayer information fields.

    2. Complete columns 1 through 8. Enter "0" in column 5 if the taxpayer did not report a tax liability for the abstract used in place of the CRN, otherwise enter the reported tax liability per Master File.

      Note:

      Negative numbers are not to be entered in columns 4 and 5.

    3. Enter all other agreed adjustments using the appropriate abstract numbers.

    4. Include the following language In the Other Information section: On (date) you filed Form (______), for refund of ($ amount) for (tax period). That claim was paid on (date). As the result of our examination, we have determined that ($ amount) constitutes an excessive amount under IRC 6675(b), as shown in this report.

  3. IRC 6675, Excessive claims with respect to the use of certain fuels, penalty must be addressed in excise tax claim case files. IRM 4.24.9.6, IRC 6675 Excessive Claims with Respect to the Use of Fuels Penalty, provides IRC 6675 guidance.

Agreed Paid Claim Statute of Limitation Considerations

  1. IRC 6206 paid claim adjustments with 60 days or less remaining on the statute require a quick assessment. Follow the provisions outlined in IRM 4.4.25.4, Statute of Limitations Less Than 60 Days (Special Processing), Area Office Group and CCP Procedures.

  2. IRC 6206 paid claim adjustments with more than 60 days but less than 180 days on the statute of limitation are placed in a red folder. The "other information" section of Form 3198, Special Handling Notice for Examination Case Processing, includes the following information: "THE LAST DAY TO MAKE AN ASSESSMENT UNDER IRC 6206 IS MM-DD-YYYY."

  3. In general, paid claim adjustments with more than 180 days close under normal processing procedures. The "other information" section of Form 3198, Special Handling Notice for Examination Case Processing, includes the following information: "THE LAST DAY TO MAKE AN ASSESSMENT UNDER IRC 6206 IS MM-DD-YYYY."

Unagreed Paid Claim Statute of Limitation Considerations

  1. Unagreed cases that fall under IRC 6206 with 270 days or less remaining on the statute are closed by a quick assessment, as outlined in IRM 8.7.10.3.1, Technical and Procedural Guidelines, Excise Taxes and IRA Adjustments and IRM 4.4.25.4, Statute of Limitations Less Than 60 Days (Special Processing), Area Office Group and CCP Procedures.

  2. Excise examiners should contact his/her manager regarding specific unagreed paid claim case processing procedures.

  3. IRS collection activity is suspended during the Appeal process by establishing IDRS command code STAUP as outlined in IRM 2.4.28.1, Command Codes STAUP, STATI, and STATB Overview.

  4. To engage in the Appeal process the taxpayer must agree to the following process:

    • The taxpayer remits a divisible portion payment for each unagreed assessed period.

    • A divisible portion payment may equal a single transaction in each examination period.

    • Payments received by the examiner are processed on Form 3244-A, Payment Posting Voucher, with Code 640 - Advanced Payment on Deficiency.

    • After payments post, the taxpayer submits Form 843, Claim for Refund and Request for Abatement, to the examiner.

    • Upon receipt of Form 843, Claim for Refund and Request for Abatement, the examiner updates AIMS/ERCS to reflect Source Code 30 and the unpaid claim amounts (i.e. the payments made by the taxpayer) for each period with Form 5348, AIMS/ERCS Update (Examination Update).

    • AIMS/ERCS update will include a statute control code of "AA" for any claim period with 180 days or less.

    • The examiner carefully reviews the information provided with Form 843, Claim for Refund and Request for Abatement. If additional consideration of the information justifies allowance, the examiner refunds the divisible portion payments and abates the entire assessment. If the information does not warrant claim allowance, the taxpayer may request an appeals conference of the divisible payments.

  5. Taxpayer failure to remit divisible payments, submit Form 843, Claim for Refund and Request for Abatement, or reach agreement in appeals will result in case transfer to Technical Services for issuance of Letter 906, Final Full Claim Disallowance Letter. The taxpayer may file suit in the United States Court of Claims or United States District Court within two years of the assessment.

  6. Unagreed IRC 6206 cases with 270 days or more remaining on the statute are processed through regular unagreed case closing procedures with the following Appeal case exceptions:

    1. In the "Other Information" section of Form 4665, Report Transmittal, and Special Features Section of Form 3198, Special Handling Notice for Examination Case Processing, include the following language: "The assessment is imposed under IRC 6206 as described in IRM 4.4.25, Quick Assessments, with MM/DD/YYYY as the last date prescribed for making an assessment."

IRC 4081(e) Claims

  1. IRC 4081(e) claims relate to taxable fuel as defined under IRC 4083 that was taxed twice under IRC 4081. The provision applies where the tax is imposed twice on the same fuel. This does not apply where the taxpayer has erroneously paid fuel tax where no second tax is imposed.

  2. The claimant must provide, for each claim, a copy of the First Taxpayer’s Report that relates to the fuel. If the fuel was bought from someone other than the first taxpayer, a copy of the Statement of Subsequent Seller that the claimant received with respect to the fuel must also be provided. See Instructions of Form 8849, Schedule 5, Section 4081(e), Refunds 4081(e), Refunds in certain cases, and Treas. Reg. 48.4081-7 for more information.

  3. Claims received, which obviously do not provide the attachments required by the regulations will be "no consideration" and returned to the taxpayer for perfection by CSTO, which reviews these claims. See IRM 21.7.8.4.5.6, Excise Taxes, Form 8849, Schedule 6, Other Claims, for a listing of the attachments.

  4. Claims selected for examination will be routed to the appropriate excise field office for examination.

  5. Claims approved by the excise field office are to be annotated "Accepted" and returned to CCP in CSTO via Form 3210 with a "Memo to File" for processing.

  6. On the Form 3198, Special Handling Notice for Examination Case Processing, Special/Restricted Interest Features, the excise examiner will check the "Other Code Section" box and enter IRC 4081(e).

  7. Paid IRC 4081(e) claims cannot be assessed under IRC 6206. Erroneous IRC 4081(e) Claims must be recovered by a civil action brought in the name of the United States under IRC 7405. Refer to IRM 21.4.5.4.5, Overview of Category D Erroneous Refunds, for more information.

  8. Unpaid IRC 4081(e) claims are generally controlled on MFT 03. In some situations these claims will be controlled on MFT 40. Follow the Regular Agreed, Unagreed or Excepted Agreed Case procedures as shown in IRM sections above.

  9. If the Form 720, Quarterly Federal Excise Tax Return, for that period is being examined concurrently, any adjustments as a result of that examination will be reflected on the Form 5384, Excise Tax Examination Changes and Consent to Assessment & Collection, and Form 5385, Excise Tax Examination Changes, in addition to the unpaid IRC 4081(e) claim examination results.

Overview of Examination Assessment Abatement Claims

  1. Generally, taxpayers will be required to pay an assessment before a claim for abatement may be filed. According to Policy Statement P-4-103, claims for abatement will be considered only where the taxpayer can establish a valid reason warranting consideration of such a claim. If it is determined that a claim for abatement merits consideration, the taxpayer will be afforded the same opportunities for Appeals Office consideration as they would for a claim for refund.

  2. If a jeopardy assessment is involved, a taxpayer's written request for administrative review of the decision will be considered immediately. The Appeals Office will provide administrative review. Action to abate all or a part of the tax assessed will be initiated by the function responsible for the final determination, in accordance with Policy Statement P-4-88.

  3. Claims for abatement, which do not merit examination will be issued a Letter 924, No Consideration Letter on Abatement Claim - Excise and Employment Taxes. The letter provides an explanation to the taxpayer as to the reason the abatement request was not considered. There are no Appeal rights to these requests; however a claim for refund may be filed after payment of the assessed tax.

No Consideration Given To Certain Refund Claims

  1. Letter 916C, Claim Incomplete for Processing; No Consideration, is used for no consideration or rejected claims. Generally, Letter 916C, Claim Incomplete for Processing; No Consideration, is issued by CSTO. Examples of situations for which a No Consideration letter should be issued include when the claim was:

    1. Not timely filed.

    2. Based solely on alleged unconstitutionality of Revenue Acts.

    3. Based on a return stamped "Waiver of Refund" , or there is other evidence in the case file indicating that a refund was waived as a consideration in a settlement by the Department of Justice, the Office of Chief Counsel etc.

    4. The subject of a final closing agreement under IRC 7121 for the tax liability or specific issues, or the tax liability was compromised under IRC 7122.

    5. Related to a return that was closed by a final court order, unless an exception is allowed by a specific code section.

    6. Filed without the supporting evidence required by the code or regulations.

    7. Based on issues that were allowed in the previous closing of the case.

    8. Filed as a claim for refund but actually is a request for reconsideration of a claim previously disallowed.

    9. Filed with a service center other than the one with which the tax return is filed.

    10. Filed not using a proper claim period.

  2. If a claim is one of the types listed above, CSTO personnel will generally advise the taxpayer that no consideration can be given to the claim.

  3. If a claimant requests the withdrawal of a claim, a certified notice of a claim disallowance will be issued. Other actions may need to be taken (i.e. document action, update Master File).

Claims Received or Cases Previously Considered by Appeals

  1. All claims on cases previously closed by Appeals on Form 2504, Agreement to Assessment and Collection of Additional Tax and Acceptance of Overassessment, or Form 2504-AD, Excise or Employment Tax Offer of Agreement to Assessment and Collection of Additional Tax and Offer of Acceptance of Overassessment, will be processed as provided below. If there is a question as to the action to be taken, the Appeals office that previously considered the case should be consulted.

    Note:

    Appeals uses Form 2504-AD, Excise or Employment Tax Offer or Agreement and Collection of Additional Tax and Offer of Acceptance of Overassessment, when material mutual concessions are made and in situations when taxpayers request greater finality. See IRM 8.6.4.3, Conference and Settlement Practices, Reaching Settlement and Securing an Appeals Agreement Form, Agreements Forms Secured in Appeals Cases.

  2. If the Appeals officer settled and closed the case using Form 2504-AD, Excise or Employment Tax Offer or Agreement and Collection of Additional Tax and Offer of Acceptance of Overassessment, agreement form, the claim and case file will generally be forwarded directly to Appeals. However, if the claim does not relate to an issue considered during the Appeal process, the claim may be processed as though Appeals had not previously acted on the case.

  3. If the Appeals officer closed the case using a Form 2504, Agreement to Assessment and Collection of Additional Tax and Acceptance of Overassessment, agreement form and the claim does not relate to an issue considered during the Appeals process, the claim may be processed as though Appeals had not previously acted on the case. However, if the claim relates to an issue considered during the Appeals process, review the Appeals’ closing documents. Contact the Appeals Office that previously considered the case to retrieve documents and appropriate action.

    Note:

    If the claim clearly falls within the circumstances described in IRM 4.24.8.19, No Consideration Given to Certain Refund Claims, the claim will be processed accordingly and disallowed.

Erroneous Refunds - Suits to Recover

  1. IRM 21.4.5, Refund Inquiries Handbook, Erroneous Refunds, provides instructions for the recovery of erroneous refunds.

  2. Advice should be requested from local Counsel before action is taken to recover an erroneous refund.

Form 907 - Agreement to Extend the Time to Bring Suit

  1. The issuance of a statutory notice of claim disallowance, or the receipt of the Form 2297, Waiver of Statutory Notification of Claim Disallowance, starts the two-year period in which the taxpayer can file suit in court for payment of the disallowed claim. IRC 6532 allows for the two-year period.

  2. Under IRC 6532(a)(2), the period of limitations for filing suit on a disallowed claim may be extended. Carefully consider the need to extend the time for filing suit. The following are examples of satisfactory reasons for extending the time for filing suit under IRC 6532:

    1. If the disposition of a request for reconsideration of a disallowed claim is contingent on a pending court decision, the taxpayer should be given the opportunity of submitting a properly executed Form 907, Agreement to Extend the Time to Bring Suit.

    2. The Service had under consideration a change in position requiring the suspension of action in all similar cases.

    3. When an extension will prevent possible inequities to taxpayers.

  3. The taxpayer and the Service may extend the time for filing suit by executing Form 907, Agreement to Extend the Time to Bring Suit, as long as the parties execute Form 907, Agreement to Extend the Time to Bring Suit, before the 2-year period expires.

  4. Multiple Forms 907, Agreement to Extend the Time to Bring Suit, may be executed by the Service and the taxpayer to extend the period to file a refund suit under IRC 6532(a)(2) - as long as each extension is executed before the period previously agreed upon has expired.

  5. Two original Form 907(s), Agreement to Extend the Time to Bring Suit, must be signed by the taxpayer or by an attorney, agent, trustee, or other fiduciary acting on the taxpayer's behalf pursuant to Form 2848, Power of Attorney. After both agreements are signed, an original is sent to the taxpayer.

    Note:

    Rev. Rul. 76-60 requires the inclusion of special language on Form 2848, Power of Attorney, to authorize an individual to sign Form 907, Agreement to Extend the Time to Bring Suit, on the taxpayer's behalf.

  6. The signature and title line will be signed and dated by the Commissioner of Small Business/Self-Employed for excise tax cases, or the appropriate commissioner of the operating unit executing the agreement.

Request for Reconsideration of Disallowed Claims

  1. Reconsideration of a claim previously disallowed in whole or in part may be granted upon submission of additional information. The request must be filed within the statute period and the information submitted must warrant consideration. If the additional facts submitted warrant reopening of the claim, the claim will be reopened and appropriate adjustments will be made.

  2. An agreement to suspend the running of the statutory period of limitation under IRC 6532(a)(2) should be considered for reconsideration requests forwarded to an excise field group. See IRM 4.24.8.22, Form 907 – Agreement to Extend the Time to Bring Suit.

  3. There is no provision in the IRC or regulations requiring the issuance of a certified notice of denial or disallowance of a claimant's request for reconsideration. Therefore, requests for reconsideration of disallowed claims will not be treated as original claims.

  4. Excise examiner responses or reports on requests for reconsideration of disallowed claims must not contain any language that could lead the claimant to believe the claimant will be issued a certified notice of claim disallowance.

  5. The claimant will be notified on Letter 917, Reply to Taxpayers Request for Reconsideration of Claim, with applicable box checked that no action can be taken on their request for claim reconsideration if:

    1. Such request was filed after expiration of the statutory period for instituting suit, or

    2. Less than 60 days remain on the statutory period to institute suit.

    3. The request meets the criteria outlined in IRM 4.24.8.19, No Consideration Given to Certain Claims.

  6. If the request for reconsideration concerns a claim previously considered and disallowed in whole or in part by Appeals, the claim will be associated with the case file and forwarded promptly to Appeals as long as there is at least six months on the period of limitations for instituting suit. If the period of limitations for instituting suit on the disallowed claim will expire in less than six months, the case will not be referred to Appeals unless that office agrees to accept jurisdiction or a Form 907, Agreement to Extend the Time to Bring Suit, is secured. See IRM 4.24.8.22, Form 907 - Agreement to Extend the Time to Bring Suit.

  7. If it is determined that a request for reconsideration should be disallowed, in whole or in part, the claimant will have the same Appeal rights as a disallowed claim, but only with respect to the additional information provided.

  8. If a request for reconsideration is based on a claim that was issued a "no consideration" , Letter 917, Reply to Taxpayers Request for Reconsideration of Claim, (with applicable box checked) should be issued to the claimant denying the request and referring to the previous "no consideration" letter. In this case the claimant will not have the right of Appeal.

  9. If disposition of a reconsideration request is contingent upon a pending court decision, IRC 6532(a)(2) provides the taxpayer the opportunity to extend the time to bring suit by submitting a properly executed Form 907, Closing Agreement as to Final Determination Covering Specific Matters. See IRM 4.24.8.22, Form 907 - Agreement to Extend the Time to Bring Suit.

Restricted Interest

  1. Interest is paid on an overassessment or overpayment under IRC 6611 for the time the government has the taxpayer’s money. In most instances, the period of time for which interest is paid to the taxpayer begins on the due date of the return. Interest may be limited to specific time periods or rates, or it may be statutorily prohibited, which gives rise to the term restricted interest. Restricted interest is subject to the same variables (time, rate, amount) as normal interest calculated by the IRS.

  2. The primary difference between normal and restricted interest is that the IRS computer systems may not be able to identify all the conditions involved in a restricted interest situation. When IRS computer systems are incapable of calculating interest, it must be manually computed and input.

  3. The IRC contains provisions by which interest is either restricted or prohibited. See IRM 20.2.1, Exhibit 20.2.1-1, Interest, Interest Introduction, Standards and Guidelines, Provisions Restricting Interest. For excise tax claims, interest is restricted on the following overpayments :

    1. IRC 6416(b), Certain Taxes on Sales and Services,

    2. IRC 6420(a), Gasoline used on farms,

    3. IRC 6421(a), (b) and (c), Gasoline Used on Farms or for Non-Highway Purposes, or by Local Transit Systems,

    4. IRC 6419(b), Excise Tax on Wagers Laid-Off by Taxpayer,

    5. IRC 6412(a), Floor Stocks Refunds—Tires and Taxable Fuel,

    6. IRC 6427(a), Nontaxable uses of Fuel,

    7. IRC 4081(e), Refunds in Certain Cases, and

    8. IRC 6404(e)(2), Erroneous Refunds.

    Note:

    The controlling code, regulations and notices should be reviewed for each type of claim to determine whether interest is allowable.

  4. Claims by registered ultimate vendors of undyed diesel fuel, undyed kerosene and gasoline are paid with interest if the refund is not issued within 45 days of receipt (20 days for electronic claims). Master File does not recognize the special interest rules that apply when electronic claims are processed between 20 and 45 days of receipt. Therefore, a manual computation of interest is required in those situations.

  5. IRM 20.2.1, Interest, Interest Introduction, Standards and Guidelines, Exhibit 20.2.1-1, Provisions Restricting Interest, lists the deductions, credits or items of income and the provisions of the Code that “restrict interest.” Additional interest rules applicable to excise taxes can be found in IRM 20.2.10.3, Interest, Interest on Estate, Excise, Employment, and Foreign Taxes, Excise Taxes.

Claims for Refunds of an Overpayment of Excise Tax on Insurance Policies Issued by a Foreign Insurer or Reinsurer

  1. There are various reasons a taxpayer may submit a claim for refund of an overpayment of excise tax paid on insurance policies issued by a foreign insurer or reinsurer. This IRM section will discuss claims for refund of tax paid to insurers or reinsurers in countries with treaty exemptions. Refund claims are made by the claimant on Form 720X or Form 8849, Schedule 6.

  2. Under treaties between the United States and certain foreign countries the policies issued by an insurer or reinsurer that is a resident and eligible for treaty benefits may be exempt from the tax imposed by IRC 4371. Each treaty must be researched to determine the validity of the claim.

  3. The claim must identify the foreign insurer or reinsurer, the treaty country, the taxable period for which the claim is being made, the amount claimed and the name and address and type of person who paid the tax originally, e.g., broker or US insured. See (6) and (7) for more information if the person filing the refund claim is not the same person who originally remitted the tax.

    Note:

    If the claim is on behalf of more than one person, the amount claimed with respect to each must be stated separately.

  4. If the claim for refund is selected for examination, the Examiner must secure the following documentary evidence:

    • The excise tax for which a refund is claimed is within the scope of the Taxes Covered article of the U.S. income tax treaty (see (5) below).

    • Foreign Insurer or Reinsurer is a resident of the treaty country for the period the claim is being made.

    • Foreign Insurer or Reinsurer meets the Limitation on Benefits (LOB) article of the applicable treaty.

  5. If the Taxes Covered article of the relevant treaty permits an exemption only to the extent that the foreign insurer or reinsurer does not reinsure the risks covered by a policy with a person that would not be entitled to an exemption from the tax on such policy (such as the treaty with France), there must be submitted with the claim a statement signed under penalties of perjury for each policy stating:

    • The policy number and name and address of the US insured for which the excise tax refund is claimed

    • Date the policy was issued

    • Whether the risks covered by the policy have been reinsured, and

    • If so, the name of the reinsurer, the country of residence of such reinsurer, and if a treaty country, whether the reinsurer would qualify for an excise tax waiver under that treaty, and the percentage of the risks reinsured with another foreign insurer.

  6. Prior to the allowance of a claim under examination, the examiner must confirm that claim for refund will not be claimed by more than one claimant. If there is uncertainty whether more than one entity will make a request for refund, the person that filed the claim for refund must execute and submit a closing agreement, Form 906, Closing Agreement as to Final Determination Covering Specific Matters. The closing agreement must be executed by the foreign insurer or reinsurer. It must also contain the following statements:

    • The foreign insurer or reinsurer consents to the making of the refund to the person filing the claim.

    • The foreign insurer or reinsurer has not and will not file a claim for such amount.

  7. If the insured is not the person that remitted the tax, and if any amount claimed was added to the premium paid by the insured, the closing agreement must also be executed by the insured.

  8. The following signed statements should appear on Form 906 :

    • For refunds to a person other than the insured: It is agreed that (Name of foreign insurer or reinsurer) consents to the making of the refund to (Name of person filing claim), and that (Name of foreign insurer or reinsurer) has not and will not file a claim for refund.

    • For claims filed on behalf of the insured: It is agreed that (Name of Insured) consents to the making of the refund to (Name of person filing claim) and that (Name of insured) has not and will not file a claim for refund.

  9. The field excise exam group will submit the Form 906, if any, to Technical Services for approval signature, in accordance with IRM 4.8.8.3. Field excise exam is to ensure that the required statement(s) have been signed by the appropriate parties prior to sending Form 906 for approval. It is not necessary to review or audit the claim for refund for accuracy or completeness at the time of signing the Form 906 .

  10. The signed Form 906 should be returned to the examining group for further processing.

  11. The exam group should evaluate the claim and proceed with an audit or survey, as described earlier in this IRM (4.24.8.8, 4.24.8.9, 4.24.8.10).

Claim Types, Filing Methods and Claim Due Dates

Codes sections applicable to the table below include:

  • IRC 6011, General requirement of return, statement, or list

  • IRC 6415, Persons who collected certain taxes

  • IRC 6416, Overpayment of tax imposed by Chapter 31 and 32

  • IRC 6420, Gasoline used on farms

  • IRC 6421, Gasoline used for certain non-highway, local transit systems, or certain exempt purposes

  • IRC 6426, Credit for alcohol fuel, biodiesel, and alternative fuel

  • IRC 6427, Fuels not used for taxable purposes

  • IRC 6501, Limitations on assessment and collection

  • IRC 6511, Limitations on credit or refund

Form and Schedule or Line Items Time to File IRC Cite
Annual Form 8849 – Persons not required to file a tax return such as IRC 501(a) exempt organizations, a state or local government, or the United States Government No later than 3 years following the close of its taxable year for which the claim is made. See Treas. Reg 48.6421-3(b). IRC § 6511
Form 8849, Schedule 1, Nontaxable Use of Fuels By the last day of the first quarter following the last quarter included in the claim. IRC § 6421(d) and 6427(i)(2), IRC § 6416(a)(4)(C), 6427(i)(4) IRC §6421(i) and 6427(k)
Form 8849, Schedule 2, Sales by Registered Ultimate Vendors By the last day of the first quarter following the earliest quarter included in the claim. For example, a calendar-year claimant’s claim for diesel fuel sold during September and October must be filed by December 31. IRC § 6427(i)(4), 6501 and 6511 IRC §6416(a)(4)(C)
Form 8849, Schedule 3, Certain Fuel Mixtures and the Alternative Fuel Credit By the last day of the first quarter following the earliest quarter included in the claim. For example, a calendar-year claimant’s claim for an alternative fuel sold or used during June and July must be filed by September 30. IRC § 6426(c), 6426(d) and 6427(e) Note: The biodiesel or renewable diesel and alternative fuel and fuel mixtures credit mixture credits formerly shown on Schedule 3 expired on December 31, 2015. See Notice 2016-05.
Form 8849, Schedule 5, Section 4081(e) Claims Generally, within 3 years from the time the return for the second tax was filed or 2 years from the time the second tax was paid to the government, whichever is later. IRC §4081(e) and 6511
Form 8849, Schedule 6, Other Claims Depends on the claim type. Refer to specific code sections for time to file claim requirements.
  • Tires - IRC §6511, Treas Regs §301.6511(a)-1, Rev. Rul. 60-58

  • §4091(d) - IRC §6511

  • Communication - IRC §6415(a) and 6415(b)

  • Diesel-Water Emulsion - IRC §6427(i)(3)

  • Form 2290, Form 730 and Form 11C - IRC §6501 and 6511

Form 8849, Schedule 8, Registered Credit Card Issuers By the last day of the first quarter following the earliest quarter included in the claim. For example, a calendar-year claimant’s claim for diesel fuel sold during September and October must be filed by December 31. IRC §6416(a)(4)(C) and 6427(i)(4)
Schedule C (Form 720) (lines 1–6) By the last day of the first quarter following the last quarter included in the claim. For example, a calendar year income taxpayer's claim for the first quarter is due June 30 if filed on Form 8849. However, Form 720 must be filed by April 30. IRC §6421(d)(2), 6011, 6427(i)(2), 6501 and 6511
Schedule C (Form 720) (lines 7–11) By the last day of the first quarter following the earliest quarter included in the claim. For example, a calendar year income taxpayer's claim for the first quarter is due June 30 if filed on Form 8849. However, Form 720 must be filed by April 30.
  • IRC §6427(i)(4), 6011, 6501 and 6511

  • Gasoline to State and Local Government - IRC §6416(a)(4)(C), 6427(i)(4), 6011, 6501 and 6511

Schedule C (Form 720) (lines 13 and 14) IRC §6426 claims against IRC §4081 and §4041 fall under the required filing and amendment requirements of Form 720. See Form 8849, Schedule 3 for the time for filing an IRC §6427 credit in excess of IRC §4081 and §4041. IRC §6427(i)(3), 6011, 6501 and 6511
Schedule C (Form 720) (lines 15b–15d) By the last day of the first quarter following the last quarter included in the claim. For example, a calendar year income taxpayer's claim for the first quarter is due June 30 if filed on Form 8849. However, Form 720 must be filed by April 30.
  • Exported Dyed Diesel/Kerosene - IRC §6427(i)(2), 6011, 6501 and 6511

  • Diesel-Water Fuel Emulsion - IRC §6427(i)(2), 6011, 6501 and 6511

Schedule C (Form 720) (lines 15e) By the last day of the first quarter following the earliest quarter included in the claim. For example, a calendar year income taxpayer's claim for the first quarter is due June 30 if filed on Form 8849. However, Form 720 must be filed by April 30.
  • Registered Diesel/Kerosene - IRC §6427(i)(4), 6011, 6501 and 6511

  • Registered Gasoline - IRC §6416(a)(4)(C), 6427(i)(4), 6011, 6501 and 6511

  • Ultimate Purchaser - Not Registered - IRC §6427(i)(4), 6011, 6501, 6511 and 6416(a)(4)(C)

Schedule C (Form 720) (lines 15f – 15k) Generally, the claim must be filed within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever is later. IRC §6416(d), 6011, 6501 and 6511
Form 4136, Credit for Federal Tax Paid of Fuels Required filing date of the applicable income tax return IRC §6427(i)(1) through 6427(i)(4), 6501 and 6511 CC Gasoline - IRC§6416(a)(4)(C), 6427(i)(4), 6501 and 6511

Searching for Excise Claims on IDRS/CFOL

Nontaxable use of fuel claims are processed on MFT 40. Ultimate vendor and blending claims are processed on the MFT of the claimants income tax return. Gasoline wholesale distributor claims have been replaced by ultimate vendor of gasoline claims, which follow the ultimate vendor provisions. When a paid claim is selected for exam, an SFR under MFT 03 is established. Look for payments under MFT 40, MFT 03, and the MFT of the income tax return module.

Non-fuel Form 720 related claims are processed on MFT 03. Highway Use Tax, Wagering Tax and Occupational Tax and Registration for Wagering Return taxes are processed on the MFT associated with its return.

IRC 4081(e) Claims are processed on MFT 03 or 40.

Claims filed on Schedule C (Form 720) are processed on the MFT 03. Fuel tax credits on Form 4136 are processed in the MFT associated with the income tax return. A partnership (other than a large electing partnership) cannot file a Form 4136. Instead they must include a statement on Schedule K-1, Partner’s Share of Income, Deductions, etc. See Form 4136 instructions.

To find a claim that was filed recently, search BMFOLT. Check SUMRY and/or TXMOD to view activity that has not yet posted to the BMFOLT. Any open income tax modules could denote activity on a recent claim.

TXMODA is the command code that shows CCOC and CSTO activity. SUMRY gives a list of all TXMODAs available on the date of your search.

Schedule 1 – Nontaxable Use of Fuels

These are commonly referred to as end user claims. Unpaid Claims are processed on MFT 40 using the claimant’s fiscal year. Paid claims selected for examination are established on MFT 03 for control purposes.

Schedule 2 – Sales by Registered Ultimate Vendors

These claims are processed on the MFT of the claimant’s income tax return. If the claimant has no income tax filing requirement, or the claim is from an individual, the claim will be processed on MFT 02. Paid claims selected for examination are established on MFT 03 for control purposes.

Schedule 3 – Certain Fuel Mixtures and the Alternative Fuel Credit

These claims are processed on the MFT of the claimant’s income tax return. If the claimant has no income tax filing requirement, or the claim is from an individual, the claim will be processed on MFT 02. Paid claims selected for examination are established on MFT 03 for control purposes.

Schedule 5 – Section 4081(e) Claims

These claims are processed on MFT 03.

Schedule 6 – Other Claims

These claims are generally processed on MFT 03. A substitute module will be created for a claimant that does not file a Form 720.

Schedule 8 – Registered Credit Card Issuers

These claims are processed on the MFT of the claimant’s income tax return. If the claimant has no income tax filing requirement, or the claim is from an individual, the claim will be processed on MFT 02. Paid claims selected for examination are established on MFT 03 for control purposes.

Unpaid Claims

Information for an unpaid claim is on an AMDISA. This will show the amount of the Claim, the Activity Code, and the statute date among other information.