5.1.12 Cases Requiring Special Handling

Manual Transmittal

December 20, 2017

Purpose

(1) This transmits revisions to IRM 5.1.12, Field Collecting Procedures, Cases Requiring Special Handling.

Material Changes

(1) IRM 5.1.12.1, Program Scope and Objectives, updated the IRM to include Program Scope and Objectives.

(2) IRM 5.1.12.2.8, Summons Enforcement, updated the IRM to include procedures for cancelling or postponing a summons appearance during the enforcement suspension period, and clarifying summons enforcement procedures.

(3) IRM 5.1.12.25, Outgoing Mutual Collection Assistance Requests, updated the IRM to remove material superseded by IRM 5.21.7.4.7, Outbound Mutual Collection Assistance Request, and IRM 5.21.7.4.8, Procedures for Requesting an Outbound MCAR.

(4) IRM 5.1.12.27, Passport Certification in Case of Certain Tax Debts, inserted new subsection on the Fixing America’s Surface Transportation (FAST) Act as it relates to the Passport Certification program.

(5) IRM 5.1.12.27.1, Passport Certification Overview, inserted new subsection with overview of the Passport Certification program.

(6) IRM 5.1.12.27.2, Seriously Delinquent Tax Debt, inserted new subsection showing eligibility for the Passport.

(7) IRM 5.1.12.27.3, Statutory Exclusions from Certification, inserted new subsection showing statutory exclusions from the Passport Certification program.

(8) IRM 5.1.12.27.4, Discretionary Exclusions from Certification, inserted new subsection showing discretionary exclusions from the Passport program.

(9) IRM 5.1.12.27.5, Identification of Levy on the Taxpayer’s Account, inserted new subsection showing identification of levy for the Passport Certification program.

(10) IRM 5.1.12.27.6, Identification of Certification of Seriously Delinquent Debt, inserted new subsection showing identification of cases for the Passport Certification program.

(11) IRM 5.1.12.27.7, Taxpayer Notification, inserted new subsection describing the taxpayer notification process for the Passport Certification program.

(12) IRM 5.1.12.27.8, Reversal of Certification, inserted new subsection with information about Certification reversals and Expedited Decertifications.

(13) IRM 5.1.12.27.9, Appeals Process and Judicial Review of Certification, inserted new subsection describing possible judicial review of the Service’s certification to the State Department of taxpayer debt certified as seriously delinquent.

(14) Editorial changes and IRM reference corrections throughout.

Effect on Other Documents

This IRM supersedes IRM 5.1.12 dated March 9, 2017

Audience

Revenue officers and other collection caseworkers in SB/SE Collection

Effective Date

(01-08-2018)

Kristen E. Bailey
Director, Collection Policy
Small Business/Self Employed

Program Scope and Objectives — Cases Requiring Special Handling

  1. While many topics are touched upon in this section, comprehensive guidance about all of them cannot be included here. Remain alert for references to other resources, such as related IRM sections and websites, and access that guidance as needed to ensure a thorough understanding of topics.

  2. Purpose. This IRM provides instructions and guidelines for working cases which require special handling. Specifically, IRM 5.1.12 provides the appropriate procedures when you are working the types of cases shown below:

    • Disaster/Emergency Relief

    • Taxpayer Request to Record an In-Person Interview

    • Authorized IRS e-file Provider

    • Income Tax Assessed Against a Child

    • Household or Agricultural Employee

    • Innocent Spouse

    • Non-Petitioning Spouse

    • Child Support Obligation (CSO)

    • Taxpayer Exempt from Taxation for Religious Reasons

    • Foreign Insurance Company

    • Political Activity

    • Criminal Probation

    • Math or Clerical Error

    • Non-Receipt of Refund Check

    • False Refund Claim

    • Manual Refund

    • Refund Offset

    • U.S. Tax Court Subpoena

    • Backup Withholding (BWH)

    • Indian Tribal Governments

    • Mutual Collection Assistance Requests (MCARs)

    • Passport Revocation and Denial

     

    Note:

    Refer to IRM 5.1.8.7, Courtesy Investigations Requiring Special Handling, for guidance on courtesy investigations which require special handling.

  3. Audience. These procedures and guidance apply to Small Business/Self-Employed (SB/SE) Field Collection Revenue Officers, Group Managers, Territory Managers and Area Directors; however, employees in other organizations and functions may also refer to these procedures as appropriate.

    Note:

    GMs must direct any procedural questions or concerns to the appropriate area contact for possible referral to Headquarters.

  4. Policy Owner. The Director of Collection Policy is the policy owner.

  5. Program Owner. SB/SE Collection organization is the program owner of this IRM section.

  6. Primary Stakeholders. The primary stakeholder is the SB/SE Collection.

  7. Program Goals. This guidance is provided to communicate the responsibilities to SB/SE Field Collection employees regarding cases that require special handling. By following the processes and procedures provided in the IRM, Field Collection personnel will be able to correctly address a wide range of cases requiring special handling.

  8. Contact Information. Recommendations and suggested changes to this IRM should be e-mailed to the Content Product Owner. The owner is indicated on the Product Catalog Information page which is found in the Form/Pubs/Products IRM listing of the Media and Publications web site.

Background

  1. This IRM section provides guidelines and procedures for working cases that require special handling.

Authority

  1. Congress has delegated to the IRS the responsibility of administering the tax laws, known as the Internal Revenue Code, found in Title 26 of the United States Code. Congress enacts these tax laws, and the IRS enforces them.

Responsibilities

  1. The Director, Collection Policy is the executive responsible for the policies and procedures to be employed by collection personnel.

  2. Field Collection Group Managers, Territory Managers and Area Directors are responsible for ensuring compliance with the guidance and procedures described in this IRM.

Program Management and Review

  1. Program Reports:

    1. Director, Field Collection Report - This monthly report encompasses all Field Collection including International and provides measures on the performance of Field Collection.

    2. Case reviews are conducted by Group Managers to ensure compliance with procedural requirements.

    3. Operational reviews are conducted by the Territory Manager and Area Director annually to evaluate program delivery and conformance to administrative and compliance requirements.

    4. Passport Report - This report is maintained to monitor trends and conduct analysis of passport certifications and decertifications.

  2. Program Effectiveness. The efficacy of Field Collection groups is measured by the program reports and reviews listed in IRM 5.1.12.1.4(1).

Program Controls

  1. Managerial approval of certain case actions by Group Managers, Territory Managers and Area Directors ensure compliance with the procedural requirements.

  2. Reports in the Entity case management system as well as the reports and notifications in Integrated Collection System (ICS) are utilized by Group Managers to monitor the programs which encompass cases that require special handling.

  3. Reports maintained by Collection Policy to monitor trends relating to passport certifications and decertifications.

  4. For purposes of passport certification in the case of certain tax debts, the Notice CP 508C and list of certifications will be retained for 15 years from the date of issuance.

Terms

  1. Frequently used terms in this IRM along with their definition include:

    1. Campus - A centralized Internal Revenue Service processing site.

    2. Certification - This refers to the process by which a taxpayer's account is systemically identified by the IRS as having a seriously delinquent tax debt and notification is systemically sent to the taxpayer and the State Department. When this notification is received from the IRS, the State Department is generally required to deny the certified individual a U.S. passport (or renewal of a U.S. passport) or may revoke any U.S. passport previously issued to that individual. Revocation is a possible consequence of certification. The State Department retains sole authority to revoke a passport.

    3. Certified - This refers to a taxpayer or their account when the process is complete for certification, which results in the IRS systemically notifying the State Department to take action with respect to denying that individual's application for a U.S. passport or renewal, or possible action with respect to revocation of a previously issued U.S. passport.

    4. Claim - A formal claim is a request prepared by or for the taxpayer submitted on Form 1040X, Form 843 or Form 1120X to reduce liabilities previously assessed. It can also be an amended return. An informal claim is a letter or other document, not on Form 843, but prepared and signed by the taxpayer, requesting changes to obtain a correct and accurate reflection of his/her tax liability.

    5. Control base - In IDRS, this is a marker placed on the taxpayer's account to alert other IRS employees that the identified employee is taking action on the taxpayer's account. A control base facilitates communication and prevents account-related problems or errors.

    6. Cycle - In IDRS, this refers to a time measurement equal to one week.

    7. Decertification - This refers to the process by which the passport certification on a taxpayer's account is systemically or manually reversed. Notice of the reversal of certification is systemically sent to the taxpayer and the State Department. The terms “decertification” and “reversal of certification” are synonymous and used interchangeably.

    8. Decertified - This refers to a taxpayer or their account when the process is complete for decertification, which results in the IRS notifying the State Department to cease action with respect to denying that individual's application for a U.S. passport or renewal on the basis of a seriously delinquent tax debt.

    9. Denial of Application for Passport or Renewal - The State Department generally will not issue or renew a U.S. passport to a certified individual after receiving notice of the certification from the IRS. Pursuant to IRC § 7345, the IRS is authorized to notify the State Department when an individual is certified as owing a seriously delinquent tax debt.

    10. Digital signature - A digital signature provides the digital identification of the signer and ensures an electronic document is authentic. For purposes of this IRM section, a digital signature is generally used in PDF files created by the Adobe Acrobat program.

    11. Discretionary Exclusion - For the purpose of passport certification, categories of tax debt listed in IRM 5.1.12.27.4 are excluded from certification even if the debt meets the criteria of seriously delinquent tax debt. The term discretionary exclusion does not mean IRS employees have discretion in applying these exclusions. The agency made a policy decision that discretionary exclusions apply to all taxpayers who meet the exclusion criteria.

    12. Economic Hardship - For the purpose of manual refunds, this is defined as the taxpayer's inability to meet reasonable basic living expenses.

    13. False Refund Claim - Returns with overstated federal income tax withholding or federal refundable credits.

    14. Freeze - In Master File, a freeze places a taxpayer’s account in a condition which requires additional action before the account can be settled.

    15. Injunctive Relief - A legal remedy in a civil lawsuit for a court order for the defendant to stop a specified act or behavior.

    16. Manual Refund - A refund on a taxpayer account that is not generated through normal Master File processing.

    17. Master File - A magnetic tape record containing all information regarding the taxpayer’s filing of returns and related documents.

    18. Passport Certification - This refers to the process by which a taxpayer's account is systemically identified by the IRS as having a seriously delinquent tax debt and notification is systemically sent to the taxpayer and the State Department. When this notification is received from the IRS, the State Department is generally required to deny the certified individual a U.S. passport (or renewal of a U.S. passport) or may revoke any U.S. passport previously issued to that individual.

    19. Representative- Except when this term is paired with an organizational name, this refers to a person who is authorized to represent a taxpayer before the IRS.

    20. Reversal of Certification - For the purpose of passport certification, this is the process by which a taxpayer's account is systemically or manually reversed as having a seriously delinquent tax debt. Notice of the reversal of certification is systemically sent to the taxpayer and the State Department. The terms “decertification” and “reversal of certification” are synonymous and used interchangeably.

    21. Seriously Delinquent Tax Debt - For the purpose of passport certification, a seriously delinquent tax debt is the unpaid, legally enforceable federal tax liability, which has been assessed and meets the other conditions listed in IRM 5.1.12.27.2. The taxpayer's account must be considered seriously delinquent tax debt before the account is certified to the State Department for action with respect to denying that individual's application for a U.S. passport or renewal.

    22. Standard Employee Identifier (SEID) - A computer generated alpha numeric string that provides a unique identifier for each IRS employee, eliminating the need for social security number identification.

    23. Statutory Exclusion - For the purpose of passport denial, categories of tax debt listed in IRC § 7345 are excluded from certification even if the debt meets the criteria of seriously delinquent tax debt.

    24. Undue Hardship - For purposes of processing Form 1127, Application for Extension to Pay Due to Financial Hardship, this means more than an inconvenience to the taxpayer such as a substantial financial loss.

Acronyms

  1. This table lists commonly used acronyms and their definitions:

    Acronym Definition
    AC Action Code
    ACA Affordable Care Act
    AD Area Director
    A/ER Accounts/Erroneous Refund
    AGI Adjusted Gross Income
    AMS Account Management System
    Bal Due Balance Due
    BMF Business Master File
    BPI Bypass Indicator related to Treasury Offset Program
    BWH Backup Withholding
    CAP Collection Appeals Program
    CC Condition Code or Computer Condition Code
    CCP Centralized Case Processing
    CCS Campus Compliance Services
    CDP Collection Due Process
    CFO Chief Financial Officer
    CFOL Corporate Files On-Line
    CI Criminal Investigation
    CIS Collection Information Statement
    CNC Currently Not Collectible
    CP Computer Paragraph
    CSCO Compliance Services Collection Operations
    CSED Collection Statute Expiration Date
    CSO Child Support Obligation
    Del Ret Delinquent Return
    DETL Disqualified Employment Tax Levy
    DLN Document Locator Number
    EH Equivalency Hearing
    EIN Employer Identification Number
    EPMF Employee Plans Master File
    FAST Fixing America’s Surface Transportation Act
    FC Field Collection
    FEDCON Federal Contractor
    FMS Financial Management Service
    FTP Failure to Pay Tax Penalty
    GM Group Manager
    ICS Integrated Collection System
    IDRS Integrated Data Retrieval System
    IMF Individual Master File
    IRAF Individual Retirement Account File
    IRC Internal Revenue Code
    ITG Indian Tribal Government
    KCSC Kansas City Campus, formerly Kansas City Service Center
    L1058 Letter 1058
    LLC Limited Liability Company
    MCAR Mutual Collection Assistance Request
    MF Master File
    MFT Master File Transaction
    NC Name Control
    NFTL Notice of Federal Tax Lien
    NMF Non-Master File
    NMFL Non-Master File Liability
    OBR Offset Bypass Refund
    OCSE Office of Child Support Enforcement
    PSC Philadelphia Campus, formerly Philadelphia Service Center
    RO Revenue Officer
    RSN Refund Schedule Number
    SEID Standard Employee Identifier
    SP Submission Processing
    SRP Shared Responsibility Payment
    SSA Social Security Administration
    SSN Social Security Number
    TAS Taxpayer Advocate Service
    TC Transaction Code
    TDA Tax Delinquent Account
    TE/GE Tax Exempt and Government Entities
    TETR Telephone Excise Tax Refund
    TFRP Trust Fund Recovery Penalty
    TIN Taxpayer Identification Number
    TM Territory Manager
    TOP Treasury Offset Program
    Treas.Reg Treasury Regulations
    USC United States Code

Related Resources

  1. IRM 1.2.40.50, Certification of Seriously Delinquent Tax Debt, under IRC § 7345, Delegation Order 1-65.

  2. Web resources:

Disaster Assistance and Emergency Relief

  1. This section contains disaster assistance and emergency relief operating guidance for Field Collection (FC) employees.

  2. Many taxpayers and tax practitioners in a covered disaster area may be unable to meet filing deadlines or make timely federal tax payments that become due shortly after the event.

  3. See IRM 25.16.1, Disaster Assistance and Emergency Relief, Program Guidelines, for administrative and policy procedures for the Disaster Assistance and Emergency Relief Program.

  4. See http://mysbse.web.irs.gov/opsupport/hc/facilitiesorganizationalsupport/continuityofop/disaster/default.aspx for additional disaster program information.

  5. See http://www.tris.irs.gov/fema/ for a listing of IRS assistance determinations by year.

Disaster Freeze Codes

  1. There are two types of disaster freeze codes, the –O freeze and the –S freeze. Both freezes are established systemically for a specific period of time and for location(s) identified by postal zip code(s).

    1. The –O freeze provides systemic penalty, interest, and compliance relief and stops most compliance notices.

    2. The –S freeze will perform the same functions as the –O freeze but does not provide automatic compliance relief and will not stop generation of notices.

Case Activity

  1. Cases remain in status 26 when the -O freeze is input. Group managers (GMs) may move cases out of revenue officer (RO) inventory into hold files pending the release of the -O freeze.

  2. Taxpayer contact is restricted on all –O freeze cases during the specified freeze period unless exigent circumstances apply, e.g., jeopardy condition, statute expiration, etc.

    Note:

    If the taxpayer initiates contact during the freeze period, interaction is permissible but agreements are voluntary and not enforceable for the period the -O freeze remains in effect.

Field Collection (FC) Management Guidelines for Response to Disasters

  1. Within 24–48 hours following a major disaster, the Field Collection Territory Manager (TM) has the following options involving taxpayers residing in the general disaster area (by county or by zip code) pending receipt of the Disaster Relief Guidelines memorandum:

    1. Initiate Soft Contact Procedures per IRM 5.1.12.2.7 with the taxpayer to determine impact status prior to resumption of collection activity.

    2. Initiate an initial suspension of ALL collection activity (including soft contact) pending the initial determination of the exact disaster zip code areas and magnitude - no contact whatsoever.

  2. Based on the Disaster Relief Memorandum, the TM may be required to suspend compliance actions in each of the covered disaster zip code areas.

    Note:

    The -O freeze may cause drops in revenue officer case loads due to lack of assigned work when freeze is maintained in excess of 4–6 weeks.

General Field Collection Operation Procedures

  1. If the taxpayer is affected in some way by the disaster, document the case history with information provided by the taxpayer and determine if a taxpayer needs any of the following:

    • Additional time to assess their impact of the disaster

    • An opportunity to provide a new financial statement to update their ability to pay

    • Information about filing a claim for a loss on his/her preceding year's income tax return.

  2. When collection activity is suspended because of a disaster:

    1. Do not initiate contact with taxpayers; however, taxpayers may wish to contact us to resolve their accounts.

    2. If a taxpayer-initiated contact occurs at any time after a disaster, use Soft Contact procedures per IRM 5.1.12.2.7 and ascertain the damage and hardship, if any, sustained by the taxpayer.

    3. If contacted by a taxpayer who states that they are not affected by the disaster, resume normal collection activity with managerial approval. Document the case history explaining the reason for the resumption of collection activity.

  3. At the end of the suspension period, resume taxpayer contacts within the covered disaster area, using Soft Contact procedures.

  4. When collection activity is not suspended during a disaster period:

    1. Commence taxpayer contact by using Soft Contact procedures and assessing the impact of the disaster event upon the taxpayer.

    2. Provide an opportunity, if appropriate, to defer action for a reasonable period of time.

    3. Resume normal collection activities if the taxpayer was not impacted.

    4. Review any outstanding letters/levies including those that were mailed immediately before the disaster since these are the most stressful to impacted taxpayers.

      Letters/levies issued just prior to the disaster may be rescinded immediately by the initiator to prevent any additional economic hardships to taxpayers unless it is known that the taxpayer has not been affected by the disaster event. Even when compliance activity has not been suspended, it may be appropriate to rescind certain letters or levies. Levies may be put on hold, as an interim measure, while determining whether to rescind or retain.

      Example:

      RO secured a Collection Information Statement (CIS) that indicates the case is Currently Not Collectible (CNC) but the taxpayer did not send in the verification of income and expenses by the deadline set by the RO and the levy was sent a few days prior to the disaster event. In this instance, since the CIS indicates this case is probably a CNC, the levy may potentially cause an additional hardship to the taxpayer if not released.

  5. Collection activities requiring action:

    1. Seizures in place during a disaster must be evaluated to ascertain possible seized property damage, security issues and, if applicable, disaster-related hardship conditions indicating that a release would be appropriate.

    2. For taxpayers whose addresses are not within a covered disaster area (and are not otherwise considered to be affected taxpayers), but who self-identify as being impacted and request disaster relief, input a disaster freeze code -S using the disaster relief dates as published in the Disaster Relief Memorandum. (See IRM 21.5.6.4.30(1) for information regarding the -S Freeze code.) The -O freeze may be input by Compliance employees if suspension of collection activities is warranted in accordance with the Disaster Relief Memorandum. (See IRM 21.5.6.4.37(7) for information regarding the -O Freeze code.) See disaster freeze input procedures at IRM 25.16.1.6, Disaster Systemic Account Indicators.

Revenue Officer Inventory with “-O Freeze”

  1. Upon expiration of the suspension of field collection contacts, implement Soft Contact procedures.

  2. If the contact results in information indicating that the taxpayer is not affected by the disaster and an -O freeze was placed on the entity:

    • Resume normal collection activity immediately with managerial approval. Do not remove the -O freeze as doing so will reinstate the penalty and interest that were previously waived.

    • Document the case history with the taxpayer's status regarding the disaster.

  3. Conversely, the taxpayer may provide information indicating that they have been impacted by the disaster event. If so:

    • Retain the -O freeze, do not take collection actions until after the predetermined release date has passed.

    • After the release date, ensure that the impact is not continuing prior to further collection action.

    • Document the case history with the taxpayer's status regarding the disaster.

  4. If an -O freeze is not present on the entity, but the taxpayer self-identifies as a disaster victim:

    • Establish a reasonable follow-up date with the taxpayer.

    • Submit Form 4844, Request for Terminal Action, to have a TC 971, Action Code 087 input on the tax account.

    • Document the case history with the taxpayer's status regarding the disaster.

Revenue Officer Inventory with “-S Freeze”

  1. The -S freeze code provides filing and payment relief (interest and penalty relief) without systemically suspending collection activity.

  2. The -S freeze applies to returns and payments that are due during the disaster relief window. The -S freeze is not applicable to late filing and payment situations established prior to the filing and payment relief period that occurred in the Disaster Relief Memorandum.

Soft Contact Procedures

  1. A soft contact entails approaching the taxpayer with caution and extreme sensitivity to their personal circumstances. Stress and fatigue are factors to consider even in instances where the taxpayer did not experience any personal, monetary, or physical damage from the disaster.

  2. Soft contact must be used when initiating a taxpayer contact to determine whether collection activity is appropriate. Soft contact is required in the following situations:

    1. Taxpayer is still affected by the disaster after the implementation of an -S freeze.

    2. Taxpayer is situated in an area where a disaster event has occurred, but collection activity has not been suspended.

    3. Taxpayer is situated in an area where collection activity was suspended, and the suspended end date has now passed.

    4. As a follow-up to a prior soft contact where it was determined that the taxpayer was affected by the disaster event at that point in time.

    5. Taxpayer initiated contact where the -O freeze is present.

    6. Voluntary commitments have not been made upon conclusion of the freeze.

  3. Any enforcement-related contact with a taxpayer in a covered disaster area must begin with an assessment of impact of the disaster on the taxpayer. The soft contact provides the opportunity to make that assessment on a case-by-case basis, enabling either:

    1. Resumption/initiation of collection activity because the disaster-related impact upon the taxpayer is no longer applicable.

    2. Postponement of collection activity to avert further hardship upon the taxpayer temporarily suffering the effects of a disaster event, or

    3. Identification of long-term disaster-related hardship that may indicate a currently not collectible case closure.

Summons Enforcement

  1. If a summons was issued to the taxpayer prior to the enforcement suspension period for appearance during the enforcement suspension period:

    1. Do not contact the taxpayer if located within the -O freeze area, except to cancel or postpone a scheduled appearance date.

      Note:

      In the case of designated summons under IRC 6503(j), the statute of limitations on assessments is suspended for the period beginning when a lawsuit is filed in a court of law to either enforce or quash the summons. Discuss the proper enforcement action with your manager, Counsel, or other appropriate personnel

      .

    2. Do not enforce the summons.

    3. If the taxpayer initiates contact to comply with the summons, this is acceptable.

    4. If the taxpayer initiates contact to express inability to comply with the summons, attempt to reach agreement on a new enforcement date that falls after the suspension period. Reissue the summons after the suspension period for the agreed upon date, allowing for normal time lapse between service date after the suspension period ends and the summons appearance date. Confirm the taxpayer's future location for service of that summons.

    5. Once the suspension period has ended, a summons that was not complied with (other than designated under IRC 6503(j)) must be reissued.

  2. Summonses issued to the taxpayer or to third parties for appearance before the enforcement suspension period began need not be reissued and may be enforced after the suspension period ends.

Taxpayer Recording of Interviews

  1. The taxpayer has the right under IRC 7521, Procedures Involving Taxpayer Interviews, to make an audio recording of an in-person interview. Under Notice 89-51, 1989-17 I.R.B. 21, ten calendar days advance written notice from the taxpayer is required.

  2. If the taxpayer does not provide ten calendar days advance written notice, then you have the option to either proceed with the interview as scheduled or to set a new date for the interview. The taxpayer must supply his/her own means of recording. The recording can be by tape, stenography, or other means at the taxpayer’s own expense. Taxpayers have no specific right to make video recordings of taxpayer interviews.

  3. The taxpayer or representative does not have the right to record a telephone interview, with or without the Service's knowledge. If a taxpayer begins to record a conversation during a telephone call, and you are aware of it, advise the taxpayer or representative that the recording must be stopped. If the recording is not stopped, politely terminate the call, and document your case history accordingly.

Agree with the Request

  1. Agree to the request to record an interview after receiving GM approval. Upon receiving a proper written request, notify the GM, and ensure that the interview is scheduled for an IRS location and that working recording equipment will be available for the IRS to use to record the interview.

  2. When the recording equipment and/or a suitable location are not available, postpone and reschedule the meeting until the necessary equipment and a suitable location are available.

Deny Requests for Video or Film Interviews

  1. Deny any request to videotape or film an interview.

  2. Attach a copy of the taxpayer's written request to film or videotape the interview to the case file.

When to Interrupt the Recording

  1. The GM may stop an audio recording when the taxpayer’s behavior is clearly disruptive of the normal collection process.

  2. Attach a copy of the taxpayer's written request to make an audio recording of the interview to the case file.

  3. Note in your case history that your GM stopped the recording.

  4. Attach a copy of the recording to the case file.

Audio Recording Procedures

  1. Arrange for your GM to be present at all times when a recording is being made.

    Exception:

    Arrange for another Service employee to be present if your GM is not available.

  2. Identify yourself, the date, time, place, and purpose of the meeting at the outset of the recording.

  3. Ask each participant in the meeting to do the following:

    1. identify themselves

    2. state their role in the proceeding

    3. acknowledge and consent to the making of an audio recording.

  4. Announce and identify additional participants when they arrive or when they leave during the meeting.

  5. Describe any written records presented during the proceeding in sufficient detail to make the verbatim recording a meaningful record when matched with the other documentation contained in the case file.

  6. State that the proceeding is completed and the recording is ended at the conclusion of the meeting.

  7. Turn the recording equipment off at the conclusion of the meeting.

  8. Attach a copy of the written request and the recording to the case file.

Transcript of Recording

  1. Transcribe all or part of the recording when necessary to make the verbatim recording a meaningful record which can be matched with the documentation contained in the case file.

  2. The taxpayer may obtain a duplicate of the recording or a copy of our transcript of the interview provided the taxpayer pays for the cost of the reproduction or transcript in advance.

Authorized IRS e-file Provider — Monitoring and Suitability

  1. The IRS performs monitoring and suitability checks on Authorized IRS e-file Providers. Monitoring may include reviewing IRS e-file submissions, investigating complaints, scrutinizing advertising material, checking adherence to electronic filing signature requirements, examining files, observing office procedures, and conducting suitability checks. Suitability checks are performed continuously regarding compliance issues.

  2. See IRM 3.42.10, Authorized IRS e-file Providers.

  3. See IRM 4.21.1, Monitoring the IRS e-file Program.

  4. Make a referral to the Andover Campus when you believe there are suitability issues regarding a Provider that need to be addressed:

    1. Send a suitability referral via email to "*IRS E~Helpmail " .

    2. Use secure email, as appropriate.

  5. Make a referral when you believe an e-file Provider requires monitoring.

    1. See IRM 4.21.1.4, Referrals .

    2. Exhibit 4.21.1-15, IRS e-File Monitoring Referral and Follow Up, contains the referral form template.

Affordable Care Act (ACA) Shared Responsibility Payment (SRP)

  1. SRP assessments are not subject to levy or the filing of Notices of Federal Tax Lien.

  2. See IRM 5.12.2.3.1.1, Affordable Care Act's (ACA) Shared Responsibility Payment (SRP) Exception, for information regarding treatment of Notices of Federal Tax Lien (NFTL) where there are SRP assessments.

  3. See IRM 5.11.1.4.14, Affordable Care Act's (ACA) Shared Responsibility Payment (SRP), for information regarding treatment of Notices of Levy where there are SRP assessments.

Income Tax Assessed Against a Child

  1. IRC 6201(c), Compensation of Child, permits IRS to treat certain income tax assessed against a child, to the extent of the amount attributable to income included in the gross income of the child solely by reason of IRC 73(a), Treatment of amounts received , if not paid by the child, as having also been properly assessed against the parent.

  2. Refer to IRC 6201(c) and the related regulations for the authority to assess against a child and to treat such assessment as having been properly made against the parent.

  3. Attempt to collect income tax assessed against a minor child from the minor child. Use good judgment when collecting from the income/assets of a minor child.

  4. Attempt to collect income tax assessed against a minor child from the parent only if you are unable to directly collect it from the minor child.

  5. Do not assess any amount of unpaid estimated tax required to be paid under IRC 6654, Failure by individual to pay estimated income tax, or IRC 6655, Failure by corporation to pay estimated income tax.

    Note:

    Area Directors and Campus Directors are not allowed to assess any amount of unpaid estimated tax required to be paid under IRC 6654 or IRC 6655.

  6. Base any assessments on tax returns of the minor child rather than estimates.

Household or Agricultural Employee

  1. Follow normal BAL DUE processing to collect tax on the wages of household or agricultural employees.

  2. To help prevent future delinquencies, ensure that taxpayers know about voluntary withholding of income tax from the wages of household and agricultural employees. .

  3. Follow these procedures if taxpayers' employees want their employers to withhold tax from their wages:

    1. assist the taxpayer in preparing Form W–4 , Employee’s Withholding Allowance Certificate , and

    2. furnish the taxpayer with a copy of Circular E, Employer’s Tax Guide, for the taxpayer to deliver with Form W–4 to the employer.

Taxpayer in High Assault Risk Area

  1. The designation of a taxpayer in High Assault Risk Area is no longer in use. See IRM 5.1.3, Safety, Security, and Control, relating to employee safety, security and assault procedures.

Innocent Spouse Cases

  1. IRM 25.15, Relief from Joint and Several Liability, contains procedures for innocent spouse cases.

  2. Follow the procedures in IRM 25.15.8, Procedures for Working Innocent Spouse Relief Cases, and in the other IRMs, as applicable, to resolve cases with requests for relief from joint and several liability.

Non-Petitioning Spouse Cases

  1. When one spouse files a U.S. Tax Court petition on a joint return deficiency and the other spouse agrees to the deficiency or takes no appeal action, two separate IMF MFT 31 BAL DUE cases will be issued. When the campuses prepare separate accounts, the BAL DUE and DEL RET separate accounts will be annotated as follows:

    1. One separate account will be annotated "Non-Petitioning Spouse" and the other separate account will be annotated "Petitioning Spouse" .

    2. Additionally, if two Areas are involved, both separate accounts will be annotated "two Areas" .

Non-Petitioning Spouse Procedures

  1. There is no legal basis to abate the liability under IRC 6404. Instead, the payment by one spouse should be cross-referenced to the other, just as TFRP payments made by one responsible person are cross-reference to the other as provided in IRM 5.7.7.3, Cross-Referencing of Payments Made on Employer Balance Due and TFRP Accounts.

  2. Contact any other Area involved to determine if any collections have been made on the other spouse when these types of cases are in your inventory.

Abatement of a Petitioning or Non-Petitioning Spouse's Liability

  1. Request a cross-reference of the payment to the other spouse's account when you collect some or all of the liability from either spouse.

  2. See IRM 5.7.7.3, Cross-Referencing of Payments Made on Employer Balance Due and TFRP Accounts.

Additional Assessments to a Non-Petitioning Spouse’s Account

  1. Do not add additional assessments made as a result of a Tax Court decision to the non-petitioning spouse’s account.

  2. Consult Counsel if you have questions regarding the correct amount you should attempt to collect if a split-payment situation occurs.

  3. Prepare Form 3870, Request for Adjustment, to request any necessary adjustment.

  4. Attach a copy of the Tax Court decision to Form 3870.

Child Support Obligation

  1. IRC 6305, Collection of Certain Liability, provides for the assessment and collection of certified Child Support Obligations (CSO) in the same manner and with the same powers and limits (such as CSED) as if the amount was a tax imposed by Subtitle C (Employment Taxes). Certain exceptions apply.

  2. To meet Code requirements, Cincinnati Submission Processing will hold an account in Notice Status for 60 days after issuing notice and demand in the case of a first assessment against an individual.

  3. As new CSO certifications are received, but prior to assessing the liability, Cincinnati Submission Processing will send them to Campus Compliance Services (CCS) for review by a revenue officer.

  4. After assessing the liability, CSO BAL DUE cases will be assigned directly to Field Collection (FC).

  5. Upon issuance, CSO BAL DUE accounts are subject to immediate collection action by Field Collection (FC).

  6. BAL DUE accounts under this program will:

    1. reflect MFT 59, Tax Class 6

    2. bear the legend CSO, and

    3. include a copy of the certification sent to the revenue officer on a Form 3210, Document Transmittal, so that the pertinent information secured by the state agency will be available for revenue officer use.

  7. Since the CSO liability has been determined by a state court, the Service does not have abatement or compromise authority.

  8. In cases where a FC employee determines that there is an obvious error in the CSO assessment or the taxpayer produces evidence that he/she paid the respective state after the CSO assessment was made, any required changes to the amount of liability must be initiated by the state of jurisdiction. To modify or cancel a previous application, the state must submit a Form OCSE 20, Application for the Collection of Delinquent Support Payments by the Internal Revenue Service, to the Area Office of Child Support Enforcement (OCSE). In turn, the Area OCSE office will send the amended Form OCSE 20 to the Internal Revenue Service.

Field Collection Review Prior to CSO Assessment

  1. Review any new CSO certifications you receive from Cincinnati Submission Processing.

    Reminder:

    Cincinnati Submission Processing may send new CSO certifications to Field Collection (FC) prior to assessing the liability as discussed above.

  2. Take the following action, as applicable:

    Field Collection Review Prior to CSO Assessment
    If Then
    The certification appears to be in order Return it to Cincinnati Submission Processing for assessment.
    1. Attach a copy of this IRM sub-section (IRM 5.1.12.10).

    The certification is not in order Return it to the approving Area official of the Office of Child Support Enforcement (OCSE), Department of Health and Human Services:
    1. Attach a cover memorandum explaining the reason for rejection.

    2. Send copies of the memorandum to Cincinnati Submission Processing and to the Campus Disclosure Manager for information purposes.

Child Support Obligation Procedures

  1. Ensure the assignment of this type of case is appropriate for your grade level as these BAL DUE cases will not be generated with a predicted grade level.

    Note:

    Group managers will review the cases for level of difficulty and will assign the cases accordingly.

  2. Input TC 130, if it has not already been input, to put a freeze on any refund(s).

  3. Review all the state information forwarded with the certification.

  4. Follow normal field collection procedures in the collection of CSO BAL DUE cases subject to these five exceptions:

    1. Do not charge interest or penalties. See Treasury Regulation 301.6305-1(a). Normal and reasonable collection costs may be assessed and collected. See Treasury Regulation 301.6305-1(c)(1).

      Exception:

      The penalty under IRC 6657, Bad checks, for bad checks and the penalty under IRC 6332(d)(2), Penalty for violation, for failure to surrender property subject to levy, may be imposed.

    2. Do not request waiver of a CSED. Instead, the child support agency must recertify the liability, which begins a new ten year period for collection.

    3. Do not levy upon salary, wages or other income being withheld pursuant to a judgment for the support of minor children.

    4. Do not apply IRC 6334(a), Property Exempt from Levy, with respect to unemployment benefits and certain annuity and pension payments to CSO liabilities.

      Note:

      See IRM 5.11.1.3.3.12, Issuing Notice of Intent to Levy for Child Support Obligation BAL DUEs, for further guidance.

    5. Do not abate or compromise a CSO liability. However, you may agree to an installment agreement with the taxpayer.

  5. Become familiar with the guidance in this subsection prior to making taxpayer contact.

Contact with the Taxpayer
  1. Make contact with the taxpayer.

  2. Demand full payment.

  3. Make a collection determination:

    1. determine the maximum collection potential, as states are only to certify cases with good collection potential, and

    2. contact the state in cases where there does not appear to be good collection potential.

  4. Attempt to collect full payment.

  5. Take the following action, as applicable, if you do not collect full payment:

    1. Schedule a mandatory review when reporting a CSO BAL DUE currently not collectible for follow-up at intervals of no less than two years (unless the circumstances of a particular case indicate that such a review is unwarranted).

    2. Handle the account as a NMF installment agreement if you establish an installment agreement for regular payments. See IRM 5.14 , Installment Agreements.

  6. Follow the procedures below if you need to make contact with the OCSE Area representative or the state representative listed on the certification.

Contact with the State on a Child Support Obligation
  1. Contact the OCSE Area representative whose name and telephone number are shown on the certification when it is necessary to discuss the case because:

    1. a CSO case has been in your inventory for 90 days,

    2. there is an obvious error in the assessment or the taxpayer produces evidence that he/she paid the respective state after the assessment was made,

    3. the case does not appear to have good collection potential,

    4. the state intervenes after the case has been certified to Collection (i.e., subsequent state court action, etc.), or

    5. you need to transfer a CSO account.

  2. Do not make inappropriate disclosures of taxpayer information.

Appropriate Disclosure
  1. Refer to IRM 11.3.33, Other Disclosures to State and Local Governments, for guidance.

  2. Exercise care so that you disclose nothing more than the necessary CSO information, i.e., restrict disclosure to information specific to the CSO case including phone numbers, addresses, levy sources, etc.

  3. Disclose only activities relative to the collection of the CSO obligation to the state.

  4. Do not disclose information relative to the taxpayer's other tax obligations.

    A good rule of thumb is, if in doubt about what information should be disclosed, forward the issue to the local Disclosure Office for review and approval prior to making the disclosure. The key is that any information to be disclosed will be limited to information about the investigation and collection of the CSO.

    Example:

    If the child support agency asked if the person owing the obligation owed any other federal taxes, that question would not relate to the CSO, so no information in that regard should be disclosed.

Contacting the State
  1. Contact the state child support agency by phone and/or mail to attempt to resolve a CSO issue.

  2. Prepare a brief narrative report in memorandum format if a phone call and/or letter with the state child support agency does not resolve the issue:

    1. outline the present status of the case, and

    2. define any issues.

  3. Route the memorandum as follows, via secure email:

    1. original — to the state — through the Area Disclosure Managers for review and mailing, and

    2. copy — to the Area Director's office — through your group manager and territory manager.

    Note:

    Your Area office will retain a copy of this report for possible review by Headquarters.

  4. Prepare Form 5482, Record of Disclosure, the first time you send a report to the state child support agency.

    Note:

    You do not need to complete a record of disclosure every time you contact a state child support agency. See paragraph (5) of IRM 11.3.19.3, Form 5482 Procedure, to clarify when a record of disclosure might not be required.

  5. See IRM 11.3.19.3, Form 5482 Procedure, for further guidance.

CSO Case in Inventory over 90 Days
  1. Prepare a brief narrative report in memorandum format outlining the present status of the case after a CSO case has been in your inventory for 90 days.

  2. Follow the steps listed above in IRM 5.1.12.11.2.2.2 regarding preparing and routing your report and preparing Form 5482 when you need to make a written report.

Obvious Error in CSO Assessment or Paid CSO Assessment
  1. Follow these procedures after you make contact with the taxpayer if you determine that there is an obvious error in the CSO assessment or the taxpayer produces evidence that he/she paid the respective state after the CSO assessment was made:

    1. cease further collection action

    2. contact the Area OCSE representative whose name and telephone number are listed on the certification.

  2. Contact the state representative whose name and telephone number also appear on the certification if you were not able to resolve the problem with the Area OCSE representative.

  3. Follow the steps listed above in IRM 5.1.12.10.2.2.2 regarding preparing and routing your report and preparing Form 5482 when you need to make a written report.

Case without Good Collection Potential
  1. Follow these procedures after you make contact with the taxpayer if you determine that the case does not appear to have good collection potential:

    1. contact the Area OCSE representative whose name and telephone number are listed on the certification, and

    2. determine if they can provide additional asset or income information.

  2. Follow the steps listed above in IRM 5.1.12.11.2.2.2 regarding preparing and routing your report and preparing Form 5482 when you need to make a written report.

State Intervention after CSO Certification
  1. Follow these procedures if the state intervenes after the case has been certified to Collection (i.e., subsequent state court action, etc.):

    1. handle any request for state contact on a CSO BAL DUE assigned to you,

    2. contact the Area OCSE representative whose name and telephone number are listed on the certification

    3. determine what the issue is, and

    4. try to resolve the problem.

  2. Follow the steps listed above in IRM 5.1.12.11.2.2.2 regarding preparing and routing your report and preparing Form 5482 when you need to make a written report.

Transferring a CSO Account
  1. Follow these procedures to transfer a CSO account:

    1. follow procedures for the transfer of NMF cases, and

    2. prepare a memorandum notifying the Area OCSE official of the transfer of the case.

  2. Follow the steps listed in IRM 5.1.12.11.2.2.2 above regarding preparing and routing your report and preparing Form 5482 when you need to make a written report.

Taxpayer Exempt from Taxation for Religious Reasons

  1. Taxpayers can request exemption from social security and Medicare taxes for religious reasons. A taxpayer can request exemption from taxation by filing one of either of the two following forms:

    • Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners, or

    • Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits.

  2. Refer to IRM 4.19.6, SSA Correspondence, Minister Waivers, and Application for Exemption from Social Security and Medicare. Sections 3 and 4 provide the actions the IRS takes to process these requests for exemption.

  3. Refer to Publication 517, Social Security and Other Information for Members of the Clergy and Religious Workers, for more detailed information about Form 4361 and Form 4029 exemptions.

  4. See IRM 5.1.8.7.4, Exemption From Self-Employment Taxes, for procedures to follow when you receive a courtesy investigation on a religious exemption case.

Form 4361 Exemption from Self-Employment Tax

  1. Form 4361 is submitted to apply for an exemption from self-employment tax by the following:

    • a duly ordained, commissioned, or licensed minister of a church

    • a member of a religious order (other than a member of a religious order who has taken a vow of poverty as a member of such order)

    • a Christian Science practitioner.

  2. An applicant must certify that he or she, for reasons of either conscience or religious principles, is opposed to the acceptance (with respect to services performed in his or her capacity as a minister, member of a religious order not under a vow of poverty, or Christian Science practitioner) of any public insurance which makes payments in the event of death, disability, old age, or retirement, or makes payments toward the cost of, or provides services for, medical care (including the benefits of any insurance system established by the Social Security Act).

Form 4029 Exemption from Social Security and Medicare Taxes

  1. Form 4029 is submitted by members of recognized religious groups to apply for an exemption from Social Security and Medicare taxes. Form 4029 is first filed with the Social Security Administration (SSA), which determines whether the religious sect or division meets requirements for exemption. SSA then forwards Form 4029 to the Philadelphia Campus (the centralized Internal Revenue Service processing site for these forms) which is responsible for ensuring that:

    • the taxpayer is a member of the sect or division, and

    • the taxpayer waived all benefits and other payments under Titles II and XVIII of the Social Security Act.

    Note:

    While the IRS does keep track of whether a particular sect or a particular individual is exempt, it does not collect or maintain lists of members by religious sects or divisions.

    Note:

    The exemption does not apply to federal income tax.

IDRS Religious Exemption Indicators

  1. Taxpayers are exempt from self-employment tax if the IRS approved their requests on Form 4361. These taxpayers are either:

    • ministers,

    • members of a religious order, or

    • Christian Science practitioners.

  2. Taxpayers are exempt from Social Security and Medicare taxes if they have an approved Form 4029 on file. These taxpayers are members of a sect or division that waived all benefits and other payments under Titles II and XVIII of the Social Security Act.

  3. IDRS should reflect an indicator if the taxpayer applied for an exemption from the following:

    • Social Security and Medicare taxes, or

    • self-employment tax.

  4. The indicator should reflect if the application was approved or denied.

  5. CC IMFOLE displays the "Ministerial SE Code." The display will show whether or not the taxpayer has filed for an exemption. It shows the "output code" as the "MINISTER SE CD." IMFOLE will display one of the following possible values:

    • 1 = Form 4361 Approved

    • 2 = Form 4361 Denied

    • 3 = Form 2031 Processed

    • 4 = Form 4029 Approved

    • 8 = Form 4029 Denied

    Note:

    The Form 2031, Waiver Certificate For Use By Ministers, Certain Members of Religious Orders, and Christian Science, indicator will remain on IDRS even though the form is now obsolete. This form will be reactivated for use if Congress passes a law to allow taxpayers to opt out of the exemption. Congress has done this twice:
    The Tax Relief Extension Act of 1999, Public Law 106–170 provided a limited period, during which ministers, certain members of religious orders, and Christian Science practitioners, who had an approved Form 4361 in place for tax year 1999, could file Form 2031 . This was an irrevocable election back into Social Security coverage for their ministerial earnings. This opportunity did not apply to Form 4029 filers.
    Congress provided a similar limited time waiver for ministers as a part of the Tax Reform Act of 1986 for tax years 1986 and 1987. Form 2031 was also used for this period.

Religious Exemption Procedures

  1. Check for an indicator on IDRS to confirm that the taxpayer has received approval for exemption if a taxpayer states he/she is:

    1. exempt from Social Security and Medicare taxes, or

    2. exempt from self-employment tax.

  2. Find the "Ministerial SE Code" using CC IMFOLE to determine whether or not the taxpayer has filed for an exemption. It shows the "output code" as the "MINISTER SE CD." Check the value displayed on IMFOLE:

    • 1 = Form 4361 Approved

    • 2 = Form 4361 Denied

    • 4 = Form 4029 Approved

    • 8 = Form 4029 Denied

    Reminder:

    The Form 2031 indicator will remain on IDRS even though the form is now obsolete.

Indicator is on IDRS
  1. Remember the following if an indicator is present:

    • An approved exemption only applies to earnings received for qualified services; it does not apply to any other income.

    • The exemption does not apply to federal income tax.

  2. Proceed with collection if the taxpayer owes federal taxes or federal tax returns for which he/she is not exempt.

Indicator is not on IDRS
  1. Check IDRS for an indicator.

  2. Request that taxpayer provide an approved copy of his/her application if the indicator is not present or the taxpayer claims they received an exemption. Taxpayers must keep an approved copy of Form 4361 and 4029 in their permanent records.

  3. Request the taxpayer to prepare either Form 4361 or Form 4029 to request the appropriate exemption if the taxpayer does not provide an approved copy of his/her application.

  4. Obtain a completed Form 4361 or Form 4029, as applicable. Obtain the appropriate form in triplicate (an original and two copies).

Form 4361
  1. Send the original and two copies of Form 4361 to the Philadelphia Campus Minister Waiver Unit. Philadelphia Campus P.O. Box 16325 Philadelphia, PA 19114-0425 Attn: BLN 4-G08-151 Minister Waiver Processing.

  2. Inform the taxpayer that after the IRS has reviewed Form 4361 and has made a determination, the IRS will return a copy of the Form 4361 to the taxpayer to inform him/her whether or not his/her exemption has been approved.

  3. If the copy of Form 4361 was not approved, the taxpayer is not exempt and is liable for all applicable taxes.

    Note:

    If the application was denied due to the lack of specific information, consider allowing the taxpayer to resubmit Form 4361. Be sure the taxpayer includes all required information that was lacking from the original submission.

  4. Proceed with collection if the taxpayer is not exempt.

Form 4029
  1. See Exhibit 5.1.12-1 for suggested text to use for taxpayers seeking this exemption.

  2. Send Form 4029, the original and two copies, by mail to the SSA address in the Form 4029 instructions.

  3. Inform the taxpayer that before he/she will be notified by the IRS whether or not exempt status has been accepted:

    • SSA has to process Form 4029, and

    • IRS has to review Form 4029.

  4. The Commissioner of Social Security must determine that:

    • the sect or division has established teachings meeting exemption requirements,

    • it is the practice, and has been for a substantial period of time, for members of the sect or division to provide for their dependent members in a manner that is reasonable in view of the members' general level of living, and

    • the sect or division has existed at all times since December 31, 1950.

  5. If the copy of Form 4029 was not approved, the taxpayer is not exempt and is liable for all applicable taxes.

    Note:

    If the application was denied due to the lack of specific information, consider allowing the taxpayer to resubmit Form 4029. Be sure the taxpayer includes all required information that was lacking from the original submission.

  6. Proceed with collection if the taxpayer is not exempt.

Enforced Collection Action in Religious Exemption Cases

  1. Attempt to secure voluntary payment if the taxpayer:

    1. does not have an approved form, and/or

    2. does not file the appropriate form with you when requested to do so.

  2. Take any necessary enforced collection action within the limitations of IRM 5.11, Notice of Levy , if you do not secure voluntary payment.

Foreign Insurance Company

  1. In accordance with Rev. Proc. 2003-78, 2003-2 C.B. 1029, Notice 89-79, 1989-2 C.B. 392 and Rev. Proc. 2003-45, 20032 C.B. 11, the Internal Revenue Service occasionally enters into agreements with foreign insurance companies (also known as captive insurance companies). One of the conditions of these agreements is that the insurance company provide a clean, irrevocable letter of credit to be held by the Area Director.

  2. Determine if a letter of credit is being held when you receive a BAL DUE on Form 720, Quarterly Federal Excise Tax Return, for a foreign insurance company with abstract number 30.

  3. Contact an advisor in Specialty Collection - Advisory regarding a Foreign Insurance Company to help you make the determination and assist in the resolution of any BAL DUE/DEL RET issues.

    1. Advisors in Foreign Insurance Company Specialty Collection - Advisory are located in the Plantation, FL, post of duty.

    2. Click on the link below to take you directly to the advisor in Specialty Collection - Advisory web site: http://mysbse.web.irs.gov/collection/collectionorg/ola/default.aspx.

Political Organizations

  1. IRC 527 discusses political organizations . Public Law 93–625 established filing requirements for political organizations, such as committees, parties, associations, or funds, for tax years beginning after December 31, 1974.

  2. A political organization, whether or not it is tax-exempt, must file Form 1120-POL, U.S. Income Tax Return for Certain Political Organizations, if it has any political organization taxable income.

    Note:

    An exempt organization that is not a political organization must file Form 1120-POL if it is treated as having political organization taxable income under IRC 527(f)(1).

  3. IRC 527(c) defines political organization taxable income as the excess of the following:

    1. gross income for the tax year (excluding exempt function income, defined below) over

    2. deductions directly connected with the earning of gross income (excluding exempt function income).

  4. Taxable income is figured with the following adjustments:

    1. A specific deduction of $100 is allowed (but not for newsletter funds),

    2. The net operating loss deduction is not allowed, and

    3. The dividends-received deduction and other special deductions for corporations are not allowed.

  5. Frequently, political organizations establish temporary entities during political campaigns. MFT 02 with a filing requirement 09 and a Computer Condition Code "G" identifies entities that are political organizations.

Procedures for "G" Coded Political Activity Taxpayers

  1. Conduct a full compliance check on all "G" coded taxpayers.

  2. Recognize a "G" coded BMF taxpayer by TC 976.

    Note:

    The "G" code is placed on a return (by a campus employee during return processing) to indicate that the return is an amended, corrected, supplemental, tentative, or revised return. TC 976 is generated to replace a "G" coded TC 150 on the BMF. The "G" code applies to all BMF returns except setting of a freeze on Form 1065. The "G" code also applies to EPMF and IRAF. See Doc 6209 for more information.

  3. Review "G" coded accounts carefully for transferee situations, and pay particular attention to any periods not reflected on the "G" coded account.

  4. Process "G" coded accounts routinely in the absence of transferee situations.

Criminal Probation

  1. Following conviction for a criminal tax violation, the taxpayer will be sentenced. The sentence may include probation with specific conditions to be met by the taxpayer during a specified time period.

  2. For procedures relating to probation cases, see IRM 5.1.5, Balancing Civil and Criminal Cases.

Math or Clerical Error

  1. Returns filed with math or clerical errors are usually corrected at the campus before notice and BAL DUE issuance, but sometimes a BAL DUE is issued before the error is resolved.

  2. The campus will input Freeze Code "G," on returns filed with math or clerical errors.

  3. Freeze Code "G" :

    • allows first notice issuance, and

    • suspends the account for 12 cycles.

  4. The 12-cycle suspense period is known as the "appeal period " .

  5. The campus will issue notices and a BAL DUE after the appeal period if:

    • the taxpayer responds within the appeal period and agrees with the assessment, or

    • the taxpayer does not respond within the appeal period.

  6. The campus will input TC 470 CC 94 "Claim Pending" if the taxpayer responds within the appeal period and does not agree with the assessment.

    Note:

    TC 470 CC 94 extends the appeal period with Freeze Code "J" .

  7. The campus will input TC 470 CC 94 "Claim Pending" if the taxpayer responds after the appeal period and does not agree with the assessment.

  8. The campus will abate the tax with TC 291:

    • if the taxpayer's claim is justified, the campus will issue a notice(s) and a BAL DUE(s) for that(those) module(s).

    • if the taxpayer’s claim is not justified, the campus will refer the case to Examination.

  9. The campus will freeze any existing credit while Examination works the case.

    Exception:

    Exempt organization returns are an exception, so any existing credit is not frozen.

    Note:

    The campus will issue notices and a BAL DUE for any module not affected by the claim.

  10. Refer to IRM 5.1.15, Abatements, Reconsiderations and Adjustments.

  11. TC 470 CC 90 is used for abatements, adjustments, and complicated payment tracers. TC 470 CC 90:

    • prevents the automatic offset of a credit balance on one module to a BAL DUE on another module,

    • changes a module to Status 53 on IDRS, and

    • is reversed by TC 472.

  12. The campus will input TC 470 CC 90 to restrict offset-in.

    Note:

    A credit may offset-in to a BAL DUE module when a credit or payment posts to a BAL DUE module that is full paid and the taxpayer has another open BAL DUE module(s); the computer offset process will offset the credit into the other BAL DUE(s). Offset-in happens when a taxpayer is due a refund on a module but has not paid another module(s). All or part of a refund may be used to pay all or part of a past-due amount. This includes past-due federal income tax, other federal debts (such as student loans), state income tax, and child and spousal support payments. The taxpayer will be notified if the refund he/she claimed is used to offset against a debt(s). See IRM 21.4.6, Refund Offset.

  13. Unless reversed sooner by TC 472, a module that was previously in:

    • Bal Due status will stay in Status 53 until resolved.

    • Notice status will remain in Status 53 until resolved, even after the restriction on offset-in expires.

  14. The restriction on offset-in caused by TC 470 CC 90 automatically expires after 26 cycles (weeks) for modules in notice status.

  15. There is no automatic reversal of the offset-in restriction for modules in BAL DUE status.

Math or Clerical Error Procedures

  1. As noted above, the campus will input TC 470 CC 94 when they process a taxpayer response after the appeal period.

  2. Suspend collection action when you receive ICS notification TC 470 CC 94 input on a BAL DUE account.

  3. Do not take collection action against the portion of the liability affected by the math or clerical error.

  4. Contact the campus unit identified by the TC 470 CC 94 control base on IDRS if immediate collection action is necessary.

  5. Determine the amount affected by the claim and its status.

  6. Pursue collection only on the portion of the BAL DUE not affected by the claim.

  7. Do not pursue collection on the portion of the BAL DUE affected by the claim.

Non-Receipt of Refund Check

  1. Instruct a taxpayer to do the following if the taxpayer claims not to have received a refund shown as transaction code (TC) 840 or 846 on the account:

    1. Prepare Form 3911, Taxpayer Statement Regarding Refund, or

    2. Call the IRS toll-free line 1-800-829-1040 and request a refund trace.

  2. Advise the taxpayer regarding the various ways to obtain Form 3911:

    • Call the toll-free number 1-800-829-1040.

    • Call 1-800-TAX-FORM (1-800-829-3676) to request the Form 3911 by mail.

    • Access the Form 3911 at http://www.irs.gov.

  3. Refer to the procedures in IRM 21.4.2, Refund Trace and Limited Payability, for further guidance. See IRM 21.4.2.3, Refund Trace Process and IRM 21.4.2.4.4, Responding to Taxpayers' Subsequent Inquiries.

Erroneous Refund Procedures for the Field

  1. When an individual receives money from the Service to which the recipient is not entitled, an erroneous refund has occurred.

  2. This definition includes all erroneous refunds regardless of the taxpayer’s intent or whether the error that caused the erroneous refund was made by the IRS, the taxpayer or a third party.

  3. IRM 21.4.5.2, Examples and Causes of Erroneous Refunds, provides a complete discussion of erroneous refunds, including examples.

  4. When you discover an Erroneous Refund situation, document the ICS (Integrated Collection System) case history and the AMS (Account Management System) and complete and process Form 12356, Erroneous Refund Worksheet.

Completing and Processing Form 12356, Erroneous Refund Worksheet

  1. Complete Form 12356, Erroneous Refund Worksheet, Parts 1 and 13-15. See IRM 3.17.80.2.4.2, Undeliverable or No Taxpayer Reply, Figure IRM 3.17.80-45, for instructions for completing Form 12356.

  2. Send completed Form 12356 to the Accounts/Erroneous Refund (A/ER) Unit identified in Exhibit 3.17.80-4, Erroneous Refund Coordinators.

  3. If necessary, contact the A/ER Unit noted above for assistance in completion of Form 12356.

  4. To determine the appropriate campus/contact, use the 8th and 9th position of the Refund Schedule Number (RSN). See Exhibit 3.17.79-5, Refund Schedule Number Format.

    Example:

    A refund has an RSN showing 2010046281Z. The 8th and 9th position is 28, which represents Philadelphia.

    Note:

    Due to Submission Processing consolidation, the RSN may not correspond to the site where the Form 12356 is to be sent. See the following table:

    If RSN shows the following Submission Processing site: Then send Form 12356 to the following Submission Processing site:
    Atlanta Kansas City
    Brookhaven and Memphis Cincinnati
    Andover Fresno
    Philadelphia Ogden
  5. When contacting the A/ER, request input of TC 971 cc 663, TC 844, and TC 470 on the account. The TC 971 cc 663 identifies the case as an erroneous refund case, the TC 844 generates a –U freeze on the account and the TC 470 will stop all systemic notices and collection processes. The A/ER Unit will complete the remainder of the Form 12356. Once the TC 470 has been input, the module will go into status 53.

  6. Do not issue L1058 or use administrative lien or levy action to collect these taxes. Do not issue a summons to secure records of any type. If any of these administrative actions have been taken, contact Advisory.

  7. If necessary, consult with the Collection Campus Liaison in your area. See http://mysbse.web.irs.gov/collection/projects/projover/contacts/16616.aspx for assistance in the preparation and perfection of Form 12356.

False Refund Claim

  1. A return with a “false refund claim” occurs when taxpayers overstate their federal income tax withholding or federal refundable credits.

    1. Returns with false federal income tax withholding such as W-2, Wage and Tax Statement, and 1099-OID, Original Issue Discount, are assessed under IRC 6201(a). See IRM 21.4.5.4.3, Category B Erroneous Refunds.

    2. Returns with false refundable credits such as Form 2439, Notice to Shareholder of Undistributed Long-Term Capital Gains, are assessed under IRC 6213 (b). See IRM 4.10.12.4.3, Reparations and Other Illegal Credit Filings.

    3. Returns with other false refundable credits such as Form 4136, Credit for Federal Tax Paid on Fuels, are subject to statutory notice of deficiency procedures.

    .

  2. False refund claim cases:

    • are assigned to Field Collection for refund recovery. In certain cases jeopardy levy procedures may apply.

    • may lead to criminal prosecution. Contact the Fraud Technical Advisor for guidance on the potential for fraud development, if warranted.

False Refund Claim Procedures

  1. Identify false refund claim cases by the following BAL DUE issuance codes:

    • N — False refund claim BAL DUE

    • TRSF–N — False refund claim BAL DUE transferred from another office

    • 914–N — False refund claim BAL DUE where Criminal Investigation is involved with another module in the account.

  2. Handle false refund claim cases on a priority basis. They are a priority because of the potential impact on compliance.

    Note:

    False refund claim cases are exempt from the normal BAL DUE tolerances.

  3. Attempt immediate personal contact with the taxpayer.

    Exception:

    Do not attempt immediate personal contact on 914–N coded cases. See further guidance below.

  4. Take appropriate enforcement action to collect the assessment plus accruals if the taxpayer does not voluntarily resolve his/her balance due account.

Code 914–N Procedures
  1. Contact Criminal Investigation (CI) before attempting contact with the taxpayer on all cases coded 914-N. You may contact Advisory to determine whether the taxpayer has filed other false claims.

  2. Arrange for a CI Special Agent to accompany you when attempting contact with the taxpayer if the case involves a potentially dangerous taxpayer (PDT).

  3. See IRM 5.1.3.3, Taxpayer in the Employee Protection System Database, for guidance on potentially dangerous taxpayers.

  4. See IRM 5.1.3.5, Armed Escort to Contact a Taxpayer, for guidance on securing armed escorts.

Manual Refund

  1. A manual refund is a refund that is not generated through normal Master File processing. IRM 21.4.4.2, Why Would A Manual Refund Be Needed?, discusses various reasons for issuing a manual refund, including hardship.

  2. A taxpayer may request a manual refund upon the filing of a tax return under certain circumstances. Some of the most common reasons for manual refunds are as follows:

    • the taxpayer has a hardship situation that necessitates a quicker refund than normal systemic processing can provide,

    • systemic constraints are preventing a normal computer-generated refund, e.g., the taxpayer’s account has a bankruptcy freeze, or

    • the taxpayer is affected by a federally declared disaster.

  3. A taxpayer may obtain a manual refund upon the filing of a tax return when hardship exists under the following circumstances:

    • no tax liability exists and the taxpayer owes no debt under certain agreements for either past-due Child Support Obligation debts or debts owed to other federal agencies as provided under IRC 6402(c) or IRC 6402(d).

      Note:

      IRC 6402(c), (d), and (e) require the Service to offset a debt for past-due support, a debt owed to a federal agency under certain agreements, or a state income tax obligation. The Code requires that excess credits be applied to tax debt first, then to the past-due support obligation, federal agency debt, or state income tax obligation. Any amount of the excess credit may be refunded to the taxpayer after all tax and non-tax debts (Debtor Master File accounts) have been paid.

  4. Hardship for purposes of requesting a manual refund is economic hardship. Economic hardship is defined as the taxpayer’s inability to meet reasonable basic living expenses. Hardship is not based on the amount of the refund or the taxpayer’s desire to avoid further interest payments.

  5. In rare instances when economic hardship exists, a manual refund may be issued upon the filing of a tax return and prior to assessment of that return without first satisfying any outstanding tax liability. This type of refund is called an Offset Bypass Refund (OBR). See IRM 5.1.12.20.2.

  6. Otherwise, follow the procedures below in IRM 5.1.12.20.1 to prepare requests for manual refunds.

Manual Refund Procedures

  1. This IRM subsection provides general manual refund procedures.

  2. Follow these procedures to process a manual refund when the taxpayer does not owe a federal tax liability.

    Exception:

    The Service has levied and has made a determination under IRC 6343(d) that a manual refund should be issued to return the funds even if the taxpayer owes a federal tax liability..

  3. Refer to IRM 5.1.12.20.2, Offset Bypass Refund Procedures, which provides specific procedures for an Offset Bypass Refund (OBR) when the taxpayer owes a federal tax liability.

    Exception:

    The manual refund process should be used instead of the offset bypass refund process when the taxpayer owes a federal tax liability if a determination is made by the Service to return levy proceeds for economic hardship.

  4. Determine if a manual refund is appropriate.

  5. Do not do either of the following:

    1. bypass a Treasury Offset Program (TOP) obligation, and/or

    2. refund credits holding on an account to the extent that they will satisfy a TOP obligation.

  6. Refer to the following for additional guidance:

    • IRM 3.13.222.15.1, Offset Bypass Refund (OBR)

    • IRM 3.17.79.6.4.2, Certifying ACH/Direct Deposit Hardship Refunds

    • IRM 21.4.4.2 I, Why Would A Manual Refund Be Needed?

    • IRM 13, Taxpayer Advocate Service.

    • IRM 21.6.4.4.21, Individual Shared Responsibility Provision (SRP).

Make an Economic Hardship Determination
  1. To determine economic hardship, consider any information provided by the taxpayer as outlined in Treasury Regulation 301.6343-1(b)(4)(ii), including the following:

    1. the taxpayer's age, employment status, employment history, ability to earn, number of dependents, and status as someone else's dependent

    2. the amount reasonably necessary for food, clothing, housing, medical expenses, transportation, current tax payments, alimony, child support or other court ordered payments, and expenses necessary to the taxpayer's production of income

    3. the cost of living in the taxpayer's geographic area

    4. the amount of property exempt from levy and available to pay the taxpayer's expenses

    5. extraordinary circumstances, such as special education needs, medical catastrophe, or natural disaster.

    6. other factors that show an economic hardship.

  2. Evaluate the financial statement, i.e., Form 433-A and Form 433-B, as applicable.

  3. Refer to IRM 5.11.2.4, Returning Levied Property to the Taxpayer, for additional guidance in cases where the IRS took a levy action.

  4. Make the hardship determination yourself unless it is for a direct deposit manual refund:

    1. All manual refund requests except hardship direct deposit manual refunds can go directly to Submission Processing (SP), where they will receive expedited processing regardless of the originating office. For hardship direct deposit manual refunds, the Taxpayer Advocate Service (TAS) must process the manual refund. Thus, all hardship manual refund direct deposit cases should be referred to TAS.

    2. Refer a non-direct deposit hardship determination to the TAS only when the case meets TAS referral criteria (see IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria), and you cannot resolve the taxpayer's issue the same day. The definition of "same day" is within 24 hours. "Same day" cases include cases you can completely resolve In 24 hours, as well as cases in which you have taken steps within 24 hours to begin resolving the taxpayer's issues. Do not refer "same day" cases to TAS unless the taxpayer asks to be transferred to TAS and the case meets TAS referral criteria. Refer to IRM 13.1.7.4, Same Day Resolution by Operations.

    3. When you refer cases to TAS, use Form 911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance Order).

  5. Refer a hardship determination to TAS only if:

    1. you cannot take steps to begin resolving the taxpayer’s issue within 24 hours, or

    2. the taxpayer asks to be referred to TAS.

Bypass the Freeze Code
  1. Do not issue a manual refund without following these procedures if certain freeze codes exist on an account.

  2. Check with the controlling function if any of the following freeze codes or case conditions exist:

    1. "-Z" or "Z-" freeze, (Criminal Investigation function).

    2. "V" freeze, (Bankruptcy—Insolvency function).

    3. "-U" freeze (Erroneous Refund—TC 844).

    4. "-Q" freeze (Unallowable Hold—TC 574, do not include the TC 576 amount in the refund).

    5. The statute for refund has expired.

    6. Invalid Social Security Number (SSN) condition.

  3. Determine if you can bypass the freeze code.

    1. Proceed processing the manual refund if you get approval from the controlling function to bypass the freeze code.

    2. Cease processing the manual refund if you do not get approval from the controlling function to bypass the freeze code.

Review the Return
  1. Ensure the return is complete by checking that all line entries appear to be completed and the return includes all of the appropriate following items:

    • signatures,

    • schedules,

    • documents which verify the taxable income and credits claimed, e.g., Form W-2 and Form 1099, and

    • necessary calculations.

  2. Research IDRS and/or MFTRA as appropriate.

  3. Verify the following are correct:

    • income and deduction items (whenever possible),

    • calculations of AGI, taxable income, tax, and credits

    • the estimated tax credits, and/or

    • the carry-over credits claimed by the taxpayer.

Make Your Recommendation
  1. Use extreme care in recommending the issuance of a manual refund pursuant to a request from a taxpayer.

  2. Attempt to determine if economic hardship exists.

  3. Look for indication that income, assets, or other resources may be available to avoid the hardship..

  4. Make your recommendation carefully by taking the appropriate action displayed in the following table:

    When the taxpayer has an open BAL DUE
    If Then
    Assigned to you... Make a determination based on the available information.
    Assigned to another revenue officer or other employee... Contact the individual or unit the BAL DUE is assigned to for:
    • information, and

    • a recommendation of the appropriate action you need to take.

Prepare a Report Memorandum
  1. Prepare a report to your group manager (GM) in memorandum format to request approval of a manual refund once you have determined that a manual refund is appropriate.

  2. Include all of the following information in your report:

    1. Taxpayer Identification Number — e.g., SSN or EIN

    2. Return Period — Enter as "YY/MM"

    3. Master File Tax Code Name of Taxpayer — As shown in the Master File

    4. Address of Taxpayer — As shown on the Master File

    5. Form number of the return

    6. Document Locator Number of the return

    7. Make check payable to — Advise when the payee is someone other than the taxpayer.

    8. Amount of overpayment or erroneous payment — Amount to be refunded, without consideration of additional interest to be calculated

    9. Reason for manual refund — Specify the hardship condition or processing error warranting expedite processing.

    10. Interest date — Specify the date from which interest is to be computed; e.g., from the date money is seized.

  3. Attach a scanned copy of the portion of the case file justifying manual refund processing, (e.g., history sheet, taxpayer correspondence) to your report.

  4. Save the Report Memorandum as a PDF file.

Prepare Form 5792
  1. Complete Form 5792, Request for IDRS Generated Refund. If necessary, consult with the Collection Campus Liaison in your area (see http://mysbse.web.irs.gov/collection/projects/projover/contacts/16616.aspx) to assist in the preparation and perfection of this form. See Exhibit 5.1.12-2, Instructions for Use of Form 5792.

    Note:

    Even though instructions for completing Form 5792 are located in IRM 21.4.4, those IRM instructions do not clearly specify which employee is responsible for completing which fields. This exhibit contains specific instructions for Field Collection (FC) processing of Form 5792 .

  2. Save Form 5792 as a PDF file.

  3. As of January 1, 2016, digital signatures are required on Form 5792.

Prepare Form 3753
  1. Complete Form 3753, Manual Refund Posting Voucher, if the refund is $10 million or more, a direct deposit is necessary, or the module(s) is(are) not on IDRS.

  2. Save Form 3753 as a PDF file.

Forward the Request for Manual Refund
  1. Prepare a secure email message to your GM to request his/her approval of the request for manual refund.

  2. Type "Request for Approval of Manual Refund" in the subject line of the message.

  3. Attach the following to the secure email message:

    1. PDF Form 5792

    2. PDF Form 3753, if applicable

    3. Report Memorandum

  4. Send the message to your GM via secure email.

    Note:

    Requests for manual refund must be sent by email unless it is not practical (e.g., the Report Memorandum attachment is too large or a scanner is not available to scan the relevant documentation).

    Note:

    The GM is responsible for ensuring good judgment in manual refund processing and following the applicable procedures in the table below. Additionally:
    The GM will provide the revenue officer (RO) with a courtesy copy when he/she sends the request for manual refund to the Territory Manager (TM).
    The TM will provide the RO and the GM with a courtesy copy when he/she sends the request for manual refund to the Area Director (AD).
    The AD will provide the RO and the GM with a courtesy copy when he/she sends the approved/disapproved request for manual refund back to the TM. As of January 1, 2016, digital signatures are required on Form 5792.

    Request for Approval of Manual Refund
    GM Processing
    (1) Review the message from the RO. Prepare a "Forward" message.
    (2) Indicate approval or disapproval in the body of the message.
    1. If approved, go to Step 3.

    2. If disapproved, indicate disapproval by returning the PDF form(s) back to the RO and include the reason for disapproval in the body of the message. Do not continue with Steps 3 and 4.

    (3) Attach the following to the message:
    1. Approved Form 5792

    2. Approved Form 3753, if applicable.

    3. Report Memorandum

    (4) Forward the message (and the attachments) to the TM via secure email with a copy to the RO.
    TM Processing
    (1) Review the message from the GM. Prepare a "Forward" message.
    (2) Indicate approval or disapproval in the body of the message:
    1. If approved, go to Step 3.

    2. Indicate disapproval by returning the PDF form(s) back to the GM (with a copy to the RO). Include the reason for disapproval in the body of the message. Do not continue with Steps 3 and 4.

    (3) Attach the following to the message:
    1. Approved Form 5792

    2. Approved Form 3753, if applicable.

    3. Report Memorandum

    (4) Forward the message (and the attachments) to the AD via secure email with a copy to the RO and the GM.
    AD Processing
    (1) Review the message from the TM. Prepare a "Forward" message.
    (2) Indicate approval or disapproval in the body of the message:
    1. Indicate approval by digitally signing Form 5792 and, if applicable, Form 3753.

      Note:

      In order to assure the integrity of the digital signature, the digital signature must include digitally signed by “SEID and name or email.”

      Note:

      The digital signature format used must include the “SEID and name or email” of the approving official on the active Form 14031- Section II on file.

      Note:

      The Approving Official's digital signature certifies to the Accounting Function that the form was reviewed for accuracy and completeness and is correct.

    2. Disapproval — Indicate disapproval by returning the unsigned PDF form(s) back to the TM (with a copy to the GM and the RO).

    3. Include the reason for disapproval in the body of the message.

    4. Do not continue with Steps 3 and 4.

    (3) Attach the following to the message:
    1. Approved Form 5792

    2. Approved Form 3753, if applicable.

    3. Report Memorandum

    (4) Forward the message (and the attachments) to the TM via secure email with a copy to the RO and the GM.
  5. Take the following action once you receive approval from the GM, the TM, and the AD:

    1. Forward approved Forms 5792, Request for IDRS Generated Refund, including those for wrongful levies, to *SBSE PSC CSCO Man Ref, via secure email.

      Note:

      The campus only requires the approved form(s). The campus does not require the Report Memorandum.

  6. Email the request for manual refund to *SBSE PSC CSCO Man Ref

  7. Follow these procedures when emailing the request for manual refund is not practical:

    1. Send the manual refund to Accounting Manual Refund Function:

    • Efax 855-297-1028, or

    • By USPS to
      IRS
      Accounting Manual Refund Function
      MS 6250
      1973 N. Rulon White Blvd.
      Ogden, UT 84404

Offset Bypass Refund Procedures

  1. This IRM section provides specific procedures for processing an Offset Bypass Refund (OBR). As discussed above, an OBR may be processed in cases of economic hardship even if the taxpayer owes a tax liability.

    1. Any IRS employee may request the issuance of the OBR. Refer to IRM 21.4.6.5.11.1, Offset Bypass Refund .

    2. An OBR cannot be issued, when there is past-due child support (as defined in section 464 of the Social Security Act), a federal agency non-tax debt, or a state income tax obligation to be collected.

      Note:

      Section 464 of the Social Security Act defines past due support as the amount of a delinquency for support and maintenance of a child and the parent with whom the child is living as determined by a court order or other state administrative procedure.

    3. The Service may issue a manual refund of excess credits without first satisfying (offsetting) outstanding federal tax liabilities and, instead, refund the overpayment to the taxpayer.

  2. Follow these Offset Bypass Refund (OBR) procedures when the taxpayer owes a federal tax liability but requires a manual refund to be issued upon the filing of a tax return prior to assessment of the return.

    Note:

    Follow the general manual refund procedures in the preceding subsection to process a manual refund when the taxpayer does not owe a federal tax liability. The manual refund procedures should also be followed when the taxpayer owes a federal tax liability and the Service has levied if a determination has been made to return the levy proceeds under IRC 6343(d).

  3. Determine if an OBR is appropriate.

  4. Refer to IRM 3.13.222.15.1, Offset Bypass Refund (OBR), and IRM 21.4.6, Refund Offset, for guidance on OBR processing.

  5. Do not do the following:

    1. bypass a Treasury Offset Program (TOP) obligation, and/or

    2. refund credits holding on an account to the extent that they will satisfy a TOP obligation.

  6. Prepare a report to your manager in memorandum format to request approval of an OBR once you have determined that an OBR is appropriate.

  7. Include all of the information listed in IRM 5.1.12.20.1.5 , Prepare a Report Memorandum, in your report except for items (f) and (j).

  8. Attach the following to your report:

    1. Copy of the portion of the case file justifying OBR processing, (e.g., history sheet, taxpayer correspondence),

    2. Copy of the return,

    3. Copy of any IDRS or CFOL research confirming credits claimed on the return,

    4. Copy of Form 433-A and Form 433-B completed by the taxpayer, if available,

    5. Copy of any documentation of the condition causing economic hardship,

    6. Request for terminal input of TC 971 (CC FRM77) Action Code (AC) 36, IRS Offset Bypass Refund.

  9. Forward the request to your manager for approval.

    Reminder:

    Immediately request input of TC 972 AC 36 to reverse the identification of the type of manual refund if the request for refund is rejected.

Refund Offset

  1. When a taxpayer owes a liability and an overpayment is available, the Master File generally recognizes this and prevents a refund from being issued. The refund is applied to the outstanding liability. These refund offsets usually happen automatically; however, Collection employees must recognize cases when the offset will not happen automatically. In those cases, input of a TC 130 must be requested to stop a refund from being issued to a taxpayer with a liability.

  2. Several conditions exist which may cause the same refund to be offset. The priority in deciding where to apply the money is:

    • Automatic offset within the Master File

    • Automatic offset across the Master Files

    • Offset requested using TC 130 to pay outstanding taxes which are not offset automatically

    • Offset requested by Financial Management Service (FMS) to pay debts other than taxes, e.g., child support and student loans

  3. Be alert for case situations when the offset will not happen automatically.

  4. Request input of TC 130 to stop a refund from being issued to a taxpayer with a liability according to the following procedures.

Types of Refund Offset

  1. There are four types of refund offset:

    • IMF Automatic Refund Offset

    • Offset into a BMF Module

    • Offset out of a BMF Module

    • Offset across both IMF and BMF.

  2. Each type of offset is discussed below.

  3. Follow the applicable procedures for each type of offset.

Individual Master File Automatic Refund Offset
  1. When an IMF taxpayer files a refund return:

    • the Master File automatically recognizes whether the taxpayer owes for another module within the IMF,

    • the refund is offset to pay the amount owed on the other module, and

    • the campus will send an automated notice to the taxpayer which shows where the refund was applied.

  2. A refund on an IMF return will be offset without a TC 130 in certain situations. The following example explains those situations. In all of the following situations, TC 130 input is not required for IMF refund offset. The offset will happen automatically.

    Example:

    Richard and Mary Brown owe a joint IMF liability and then subsequently:

    • Richard and Mary Brown file a joint return.

    • Richard and Mary file a joint return as Mary and Richard Brown (primary and secondary switch positions on the return).

    • Richard Brown files a refund return separately from Mary.

    • Richard Brown files a joint return as the primary taxpayer with a new secondary taxpayer.

    • Mary Brown files a refund return separately from Richard.

Offset into a Business Master File Module
  1. When a balance due return is filed on the BMF and the credits claimed agree with the credits posted, the module will allow offsets into it.

  2. When a balance due return is filed on the BMF and the credits claimed do not agree with the credits posted, the campus will send an automated notice to the taxpayer which shows the total amount of credits posted to the module.

    Note:

    If this notice is sent, offsets are not allowed into the module until the taxpayer has a chance to respond.

  3. Once the notice is sent, offsets will be allowed into the module if:

    • the taxpayer does not respond to the notice within 10 cycles, or

    • the taxpayer acknowledges that the amount is owed.

  4. Handle a BAL DUE like any other payment tracer or adjustment case when the taxpayer says the amount is not owed.

  5. Request input of TC 130 when the BMF Name Control does not match the IMF Name Control.

    Reminder:

    When the LLC is a disregarded entity, the single member owner remains liable for tax periods ended before January 1, 2009 for any outstanding employment tax liabilities. For tax periods beginning on or after January 1, 2009, the LLC is the liable taxpayer. Since the individual is not liable, TC 130 should not be requested. See IRM 5.1.21, Collecting from LLCs, to identify the liable taxpayer.

Offset Out of a Business Master File Module
  1. If there is an overpayment on a BMF module and the credits claimed on the return filed agree with the credits posted, the taxpayer can request the overpayment be transferred to another module with a balance due. Any remaining overpayment will be applied to other balance due modules. If there are no other balance due modules, the overpayment will be refunded.

  2. If there is an overpayment on a BMF module and the payments claimed on the return filed do not agree with the amounts credited, the campus will send an automated notice to the taxpayer which shows the amount of credits posted to the module. The notice will,

    • list all credits posted (if there is enough room), or

    • show only the total credit (if there is not enough room to list all credits posted), and

    • ask where the overpayment should be applied.

    Note:

    If this notice is sent, offsets are not allowed out of the module until the taxpayer has a chance to respond.

  3. Once the notice is sent, offsets will be allowed out of the module if:

    • the taxpayer does not respond to the notice within 10 cycles, or

    • the taxpayer acknowledges there is an amount owed on another module.

  4. Apply the overpayment as requested by the taxpayer if the taxpayer says where the overpayment should be applied.

  5. Refund the overpayment if the taxpayer asks for a refund and there are no BAL DUE modules.

  6. Request input of TC 130 when the BMF Name Control does not match the IMF Name Control.

    Reminder:

    For an LLC, request input of TC 130 only when an individual owner is identified as the liable taxpayer for liabilities assessed in the name and EIN of the LLC. For excise tax periods beginning on or after January 1, 2008 and for employment tax periods beginning on or after January 1, 2009, the LLC is the liable taxpayer, so TC 130 should not be requested. See IRM 5.1.21, Collecting from LLCs.

Offset Across the Individual and Business Master Files
  1. When an IMF refund return is filed and it includes an Employer Identification Number (EIN) on a Schedule C or F, this EIN is automatically checked for any amounts owed for BMF taxes. If there are BMF taxes owed, the IMF refund will generally be offset to the BMF to pay the BMF taxes. However, no automated notice will be sent by the campus.

  2. If the IMF refund is not automatically offset to the BMF to pay the BMF taxes, it is never "too late" to input TC 130. You can request input of TC 130 any time within the applicable period of limitations. However, if the existence of a relationship of liability has not been previously established, offset(s) is (are) not allowed into a module until the taxpayer has had a chance to confirm or deny the existence of a relationship of liability. Offsets will be allowed into a module when a taxpayer acknowledges that the BAL DUE(s) is (are) owed.

  3. Request input of TC 130 only if:

    1. either the IMF or BMF return(s) reflect(s) a cross-referenced TIN,

    2. review of INOLES confirms matching name and address information, or

    3. you make personal contact with either the IMF or BMF taxpayer to confirm the existence of a relationship of liability.

    Example:

    Several years ago, a taxpayer filed a final Schedule C for his business along with his Form 1040. The business still had a balance due. The IMF refund was not offset for several years. Then the revenue officer (RO) working the BMF BAL DUE realized TC 130 needed to be input on the IMF because he/she obtained a copy of the Form 1040 and Schedule C that reflected the BMF TIN. The RO ensured the BMF BAL DUE(s) was (were) the result of voluntarily filed returns, and the notice of the assessments was sent to the current IMF address on INOLES. The RO requested TC 130 input and the taxpayer's refund was offset the subsequent year and full paid the BMF BAL DUE.

    Note:

    If the taxpayer's Form 1040 return has multiple Schedules C or F attached, only the EIN from the first one will be input for offset.

  4. Request current BMF address information and explain the impact on the taxpayer regarding the cross-referencing of IMF and BMF entities prior to requesting input of TC 130 when:

    1. the IMF and BMF addresses on INOLES do not match, and

    2. the BMF assessment(s) is (are) not the result of voluntarily filed returns.

  5. Request input of TC 130 only if you confirm the existence of a relationship of liability.

Limited Liability Company Offset
  1. The widespread adoption of limited liability companies (LLCs) has caused frequent failure of IMF refunds to automatically offset to BMF liabilities, when appropriate.

  2. When the owner of an LLC is the liable taxpayer and reports employment taxes in the owner's name, the BMF Name Control (NC) will match the IMF NC. If there are BMF taxes owed, the IMF refund will generally be offset to the BMF to pay the BMF taxes.

  3. When the liability of an individual owner of an LLC is reported in the name of the LLC, the BMF NC is different from the IMF NC and the system will not perform the offset. Input of TC 130 should only be requested for those tax periods where an individual owner is identified as the liable taxpayer for liabilities assessed in the name and EIN of the LLC.

    Reminder:

    When the LLC is a disregarded entity, the single member owner remains liable for tax periods ended before January 1, 2009 for any outstanding employment tax liabilities. For tax periods beginning on or after , the LLC is the liable taxpayer. Since the individual is not liable, TC 130 should not be requested. See IRM 5.1.21, Collecting from LLCs.

  4. For excise tax periods beginning on or after January 1, 2008 or employment tax periods beginning on or after January 1, 2009, the LLC is the liable taxpayer. TC 130 should not be requested, except before the assessment of a Trust Fund Recovery Penalty, as described below.

Determine if TC 130 Input is Necessary

  1. Screen your assigned BAL DUEs periodically to determine if it is necessary to request input of TC 130.

    Note:

    When a new inter-Area transfer-in BAL DUE is issued, it will already have TC 130 input by the Campus Compliance Services (CCS).

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

  3. Request input of TC 130 if an overpayment can reasonably be expected as a credit to the outstanding liability before the expiration of the collection statute.

    Note:

    Do not request input of TC 130 if less than six months remain on the collection statute.

  4. Request input of TC 130, if applicable, when you:

    • report a BAL DUE(s) currently not collectible, or

    • enter into an installment agreement for longer than six months.

  5. Be alert to situations where a taxpayer submits a refund return and the refund would normally be offset within the Master File without a TC 130, but because of the timing, the refund may be issued.

    Example:

    Taxpayer submits a refund and a balance due return at the same time. The refund return may post before the balance due return. To prevent the refund from being issued, input TC 130 so the refund will be held until the balance due return posts.

    Example:

    Taxpayer files a refund return and the refund has not been issued yet. Then the taxpayer files a balance due return. To prevent the refund from being issued, request input of TC 130.

  6. Request input of TC 130 when a refund:

    1. may be issued before the assessment of a Trust Fund Recovery Penalty. See IRM 5.7.4.7, Notification of Proposed Assessment.

    2. will be issued because a taxpayer with an outstanding liability files a refund return with you.

  7. Close a BAL DUE by requesting input of TC 470 CC 93 if the taxpayer files a refund due return with you and:

    • the return appears to be prepared correctly, and

    • the refund will full pay the BAL DUE.

Request Refund Offset with TC 130

  1. Follow the appropriate procedures below to request input of TC 130 to offset a refund.

TIN Not on MF
  1. Sometimes a taxpayer's Taxpayer Identification Number (TIN) is not established on the Master File.

  2. Follow these procedures to request input of TC 130 on a taxpayer whose Taxpayer Identification Number (TIN) is not established on the Master File:

  3. Request input of TC 130 and:

    1. request input of TC 000 with a mail filing requirement of 3, and

    2. include the taxpayer's last known address on the TC 000 request.

Offset an IMF Refund
  1. Request input of TC 130 to offset an IMF refund in the situations displayed in the following table. Otherwise, any overpayment will be refunded without TC 130 present on the account.

    Example:

    John and Carol Blue owe a joint liability. John dies and Carol marries Tom Green. Unless a TC 130 is input on Tom Green's SSN, any overpayment on a Tom and Carol Green return (Carol as secondary taxpayer) will be refunded.

    Example:

    Diane Yellow owes a single liability. She marries William Red. Unless a TC 130 is input on William Red's SSN, any overpayment on a William and Diane Red return (Diane is the secondary taxpayer) will be refunded.

    Example:

    Steven and Marcia Orange owe a joint liability. They divorce and Marcia marries James Purple and they file a joint return as Marcia (primary) and James (secondary) Purple. Unless a TC 130 is input on Marcia's SSN, the refund will be issued.

    Note:

    Even though certain IMF refunds are automatically offset against BMF liabilities as discussed above, there are exceptions.

    Example:

    Timothy Black is the single member owner of an LLC, and is identified as the liable taxpayer for unpaid employment taxes. Unless a TC 130 is input on Timothy Black's SSN, any overpayment on a Timothy and Bridgette Black income tax return will be refunded.

  2. Input a TC 130 under the primary SSN when the secondary taxpayer owes either under a single liability or jointly with another primary taxpayer.

    When to Request TC 130 Input to Offset an IMF Refund
    If Then
    (1) A taxpayer owes outstanding joint IMF liabilities and then the taxpayer filed as a secondary taxpayer with someone not liable for the amount due. Request input of TC 130 on the primary individual's SSN so any overpayments will be applied to the outstanding joint IMF liabilities.
    (2) A taxpayer owes outstanding joint IMF liabilities, and the secondary taxpayer filed as a primary taxpayer on a joint return with someone other than the spouse who was liable for the tax. Request input of TC 130 on the primary individual's SSN so any overpayments will be applied to the outstanding joint IMF liabilities.
    (3) A taxpayer owes Non-Master File (NMF) liabilities. Request input of TC 130 on the individual's SSN so any overpayments will be applied to the outstanding NMF liabilities.
    (4) A taxpayer is a partner in a partnership and owes partnership liabilities. Request input of TC 130 on the general partner's SSN so the refund will offset to the outstanding partnership liability when outstanding partnership liabilities exist and the general partner files a personal refund return.
    (5) A taxpayer is a sole proprietor and owes sole proprietor liabilities. Request input of TC 130 on the sole proprietor's SSN so the refund will offset to the outstanding liability when outstanding sole proprietor liabilities exist and the proprietor files a personal refund return without a Schedule C or F.
    (6) A taxpayer is the single member owner of an LLC, and the owner is liable for its employment taxes. Request input of TC 130 on the owner's SSN so the refund will offset to the outstanding liability assessed in the name and EIN of the LLC when the owner is identified as the liable taxpayer for employment taxes and files a personal refund return.

    Reminder:

    For tax periods ended prior to January 1, 2009, the single member owner would still be liable for any outstanding employment tax liabilities. After that time, if the LLC is identified as the liable taxpayer, the individual is not liable and TC 130 should not be requested. See IRM 5.1.21, Collecting from LLCs.

Offset a BMF Refund
  1. Request input of TC 130 to offset a BMF refund in the situations displayed in the following table, otherwise, any overpayment will be refunded without TC 130 present on the account.

    When to Request TC 130 Input to Offset a BMF Refund
    If Then
    (1) A taxpayer owes IMF liabilities and also has an active sole proprietorship. Request input of TC 130 on the individual's Employer Identification Number (EIN) so any overpayments on the BMF will be applied to the IMF liabilities.
    (2) A taxpayer owes Individual Retirement Account File (IRAF) liabilities and also has an active sole proprietorship Request input of TC 130 on the individual's EIN so any overpayments on the BMF will be applied to the IRAF liabilities.
    (3) A taxpayer owes Non-Master File (NMF) liabilities and also has an active sole proprietorship Request input of TC 130 on the employer identification number so any overpayments will be applied to the NMF liabilities.
    (4) A taxpayer owes BMF liabilities under more than one Employer Identification Number (EIN). Request input of TC 130 on the other EIN(s) so any overpayments will be applied to any outstanding liabilities.
    (5) A taxpayer owes IMF liabilities and is identified as the liable taxpayer on the BMF as the single member owner of an LLC Request input of TC 130 on the EIN of the LLC where the individual is identified as the liable taxpayer so any overpayments on the BMF will be applied to the IMF liabilities.

    Reminder:

    Overpayments from BMF tax periods where the LLC is identified as the liable taxpayer should not be applied to IMF liabilities.

Document Preparation to Request TC 130

  1. Use Form 3177, Notice of Action for Entry on Master File, for all other requests for input of TC 130.

    Exception:

    The following procedure applies for reporting a BAL DUE account Currently Not Collectible (CNC).

  2. Use Form 53, Report of Currently Not Collectible Taxes , to request input of TC 130 when you are reporting a BAL DUE account CNC.

    Note:

    ICS will electronically submit Form 3177 to CCP.

  3. See IRM 5.1.12.21.3.1 for guidance on requesting input of TC 130 on a taxpayer whose Taxpayer Identification Number (TIN) is not established on the Master File.

  4. Include the following on all documents requesting input of TC 130:

    • Form number, tax period, and Taxpayer Identification Number of the cross-referenced liabilities, and

    • Social Security Number and name of each taxpayer responsible for any joint liability.

      Note:

      Always request input of the TC 130 on the primary number if a joint return is filed.

  5. Do not request any other type of input on the same document.

  6. If you prepare a manual Form 53 (not on ICS), send Form 3177 by secure email to Centralized Case Processing (CCP).

Use TC 131 to Release a TC 130 Freeze

  1. Request release of the TC 130 freeze when:

    1. the liability is paid or the assessment is abated in full before receipt of CP 44, 188, or NMFL transcript, or

    2. the liability is closed by an adjustment (TC 470 CC 90).

  2. Use Form 3177 with a TC 131 in the "Other" block to release the TC 130 freeze.

  3. Request input of TC 131 if a TC 130 was input in anticipation of assessing a Trust Fund Recovery Penalty (TFRP) pursuant to IRM 5.7.4.7, Notification of Proposed Assessment, and IRM 5.1.12.20.2(6), Offset Bypass Refund Procedures, and:

    1. the recommendation to assess the TFRP is rejected,

    2. the penalty is not assessed within two weeks after Campus Compliance Services (CCS) contacts the revenue officer about a refund that has been frozen, or

    3. the TFRP is assessed, unless it is assessed against a person who files as a secondary taxpayer, and the spouse is not assessed, then overpayments will be refunded if a TC 130 is not present.

  4. Include an explanation about why you are requesting TC 131 on the Form 3177.

  5. Record the date and reason in the case history.

  6. Send Form 3177 requesting input of TC 131 by secure email to Centralized Case Processing (CCP).

Procedures upon Receipt of CP 44 or CP 188

  1. After offset within the Master File, Master File entities containing a TC 130 are frozen from refunding. A notice is generated when a frozen credit is available:

    • Notice CP 44 is generated for IMF cases, and

    • Notice CP 188 is generated for BMF cases.

  2. Non Master File Liability (NMFL) transcripts are generated when a second credit posts to a module after a CP 44 or a CP 188 is issued and the frozen credit condition is unreversed. A TC 740 causes a transcript to be generated, but a CP 44 or a CP 188 is not issued.

  3. Campus Compliance Services (CCS) processes all CP 44 and CP 188 notices and NMFL transcripts.

  4. The CP 44 and CP 188 notices and NMFL transcripts:

    • indicate that a refund credit is available for offset against a "130 case" , and

    • serve as a turnaround document informing CCS where to apply the overpayment.

  5. Use Part 2 of the CP 44/188 or the NMFL transcript to:

    • request transfer of the credit,

    • notify CCS to release the frozen credit, or

    • request input of TC 131.

  6. Send Parts 2 and 3 of the CP 44/188 and/or the NMFL transcript to Advisory via Form 3210, Document Transmittal .

    Note:

    You can send these to Advisory on a daily basis, or you can accumulate them and send them on a weekly basis. Advisory will send Parts 2 and 3 of the CP 44/188 and/or NMFL transcripts to CCS via Form 3210, Document Transmittal.

U.S. Tax Court Subpoena

  1. At the request of a Chief Counsel attorney, Internal Revenue Service employees may be called upon to serve a subpoena issued by the United States Tax Court.

    1. Subpoenas are available to Chief Counsel attorneys through the office of the Clerk of the Court and also may be downloaded directly from the Tax Court web site. A Chief Counsel attorney will forward the subpoena to the Field Territory Manager for the vicinity in which the witness resides.

    2. The letter or memorandum to the Field Territory Manager transmitting the subpoena for service will contain any special instructions that Area Counsel wishes communicated to the official serving the subpoenas, or to the witness.

    3. The Field Territory Manager should promptly assign Tax Court subpoenas using Form 2209, Courtesy Investigation.

  2. See IRM 5.1.8, Courtesy Investigations.

U.S. Tax Court Subpoena Procedures

  1. Accomplish service by personally showing the witness the original subpoena and delivering a copy of the subpoena to the witness.

  2. Mark "Return on Service" on the original subpoena.

  3. Acknowledge such return before a Service official authorized to administer oaths.

  4. Forward the original to the Chief Counsel attorney after you have properly served a copy of the subpoena.

Backup Withholding — Overview

  1. Financial Institutions (including banks) and other businesses that make certain kinds of payments must file an information return with the IRS. Generally, these payments are not subject to withholding; however they may be subject to "backup withholding (BWH)."

  2. The IRS has two separate Backup Withholding (BWH) programs that require payers to withhold at the BWH rate from certain reportable payments. They are:

    • BWH "B" -- Notice Incorrect/Missing TIN process, and

    • BWH "C" -- Notice Underreporter/Nonfiler process.

"B" Backup Withholding Program

  1. The "B" BWH program provides notices to payers (a financial institution, business or person) who file information returns (the Forms 1099 listed below) with incorrect or missing Taxpayer Identification Numbers (TINs). Payers are required to send notices pursuant to Treasury Regulation 31.3406(d)-5(d) or 5(g).

  2. Notices CP 2100 and CP 2100A advise payers that BWH could become necessary if a payee (the recipient of a Form 1099) fails to certify his/her TIN.

  3. The "B" BWH program includes the following information returns:

    • Form 1099-B,

    • Form 1099-DIV,

    • Form 1099-G

    • Form 1099-INT,

    • Form 1099-MISC,

    • Form 1099-OID,

    • Form 1099-PATR, and

    • Form 1099-K.

  4. Refer to the BWH "B" procedures contained in IRM 5.19.3.4.1, TIN-Related "B" BWH Notices (CP 2100 & CP 2100A), when you have a BWH "B" BAL DUE assigned to you.

  5. Find more detailed information on the BWH B rules and procedures for payers in Publication 1281, Backup Withholding for Missing and Incorrect Name/TIN(s).

"C" Backup Withholding Program

  1. The "C" BWH program provides notices to payees (recipients of the Forms 1099 listed below) who have underreported their interest or dividend income or failed to file a tax return reporting such income when required. Pursuant to Treasury Regulation 31.3406 (c)-1, payers are required to send notices.

  2. These notices inform payees that they are subject to BWH, and what payees can do to prevent BWH.

  3. The "C" BWH program includes the following information returns:

    • Form 1099-DIV,

    • Form 1099-INT,

    • Form 1099-OID, and

    • Form 1099-PATR.

  4. Refer to the BWH "C" procedures contained in IRM 5.19.3.4.2, Underreporter/Nonfiler "C" BWH Notices, when you have a case involving BWH "C" assigned to you.

  5. Find additional information for payers who need to start BWH "C" in Publication 1335, Underreporter Backup Withholding Questions and Answers.

"C" Program Backup Withholding Procedures

  1. When a taxpayer requests to have BWH discontinued, and you have determined that one of the satisfying transactions listed in IRM 5.19.3.4.2.9, "C" BWH Satisfying Transactions, has posted to the taxpayer's account, prepare Form 4442, Inquiry Referral.

  2. Forward the completed Form 4442 to the Compliance Services Collection Operations (CSCO) operations in KCSC or PSC. See IRM 5.19.3.4.2.11(4), "C" BWH Procedures.

  3. Advise the taxpayer that he/she may file (or ask you to complete on his/her behalf) Form 911, Request for Taxpayer Advocate Service Assistance and Application for a Taxpayer Assistance Order. Explain that TAS only takes cases that meet its case criteria as explained in IRM 13.17.7. Situations where TAS case handling is appropriate include those where:

    1. the taxpayer is experiencing or may experience economic harm because he/she has limited income which is needed to meet necessary living expenses,

    2. BWH at the applicable rate will cause significant over-withholding, or

    3. the IRS office will not grant the relief requested or will not grant the relief in time to avoid the economic harm.

      Example:

      A taxpayer on a fixed income dealing with a catastrophic illness (and the related costly unreimbursed medical expenses) may want to file Form 911.

Indian Tribal Governments

  1. IRC 7871,Indian Tribal Governments Treated as States for Certain Purposes, creates a unique relationship between Indian tribal governments and the United States government.

  2. The Indian Tribal Governments/Tax Exempt Bonds (ITG/TEB) office in the Tax Exempt and Government Entities (TE/GE) Operating Division was established to assist Indian tribes with federal tax issues. The ITG/TEB office coordinates all aspects of tax administration as it impacts Indian tribes including direct assistance, indirect assistance, compliance checks, and examination of returns. The ITG/TEB office:

    • is responsible for ensuring that the Service is in compliance with the various Executive Orders outlining the relationships and protocols required in working with Indian tribes,

    • provides primary front-line service by five field groups which are aligned respective to tribal affiliations wherever possible, and

    • serves as the central point for all Service contacts with federally recognized Indian tribes.

  3. Refer to the following IRM sections for additional information:

    • IRM 4.86.1, Indian Tribal Governments Administration and Policy, and

    • IRM 4.88.1, Examination Issues Pertaining to ITG Cases.

The Role of the ITG Specialist

  1. Indian tribal governmental accounts can be complex and involve an array of legal issues. The Indian Tribal Governments (ITG) personnel (i.e., ITG specialists) are specially trained in the unique areas of tax law and protocol that apply to Indian tribes.

  2. The ITG specialist will:

    • act as a liaison and central point of contact between the Indian tribal officials and the revenue officer (RO) assigned to the case and will advise the officials in advance of a visit from the RO.

    • assist the RO with case-related technical issues specific to Indian tribes.

  3. Tribal constitutions or tribal resolutions may designate a specific person to address tax matters. Land ownership legalities are outlined by treaty to ensure that legal rights are not violated. Technical issues specific to Indian tribes are listed below. This list is not all-inclusive.

    • Determining appropriate contacts within a tribe

    • Determining land ownership legalities unique to Indian tribes

    • Filing requirements

    • Conducting full compliance checks

    • Identifying leviable and non-leviable assets

    • Regulations

    • Treaties

    • Court decisions

    • Statutes

    • Tax law

    • Disclosure issues

  4. Special rules apply to Indian tribes for some tax returns. See IRM 4.88.1.5.3, Filing Requirements.

Indian Tribal Government Procedures

  1. Identify Indian tribal government entities on IDRS by the business operating division (BOD) code "TE" and the employment code" I."

  2. Refer to IRM 4.88.1.4, Federal Tax Status of Indian Tribal Governments, for information on federal taxation issues involving Indian tribal governments.

  3. Contact the local Area ITG group manager before making initial contact on Indian tribal government (ITG) accounts. Access the "How to Contact ITG" page at http://www.irs.gov/Government-Entities/Indian-Tribal-Governments/How-to-Contact-ITG to determine the appropriate ITG field contact.

    Note:

    The ITG Manager will assign an ITG specialist to work with you.

  4. Contact the ITG specialist when you:

    1. need to visit an individual tribal member on tribal land to work an IMF account,

    2. have questions about specific filing requirements, or

    3. you are contemplating taking any enforcement action.

  5. Do not assume that the CFO, Treasurer, or Tribal Administrator is the designated tribal contact.

  6. Work closely with an ITG specialist to determine the appropriate contacts within the tribes because the specific person to address tax matters with may be designated in a tribal constitution or through a tribal resolution.

  7. Coordinate with the ITG specialist as your central point of contact with the tribal officials. The ITG specialist will advise the officials of your planned visit.

  8. Keep the ITG specialist involved in material interactions between you, as the representative of the Service, and the tribal government.

  9. Maintain contact with the ITG specialist regarding:

    1. updated plans of action, and

    2. general case developments such as receipt of a new BAL DUE or DEL RET.

  10. Have the ITG specialist assist you in conducting a full compliance check.

  11. Inform the ITG specialist about any new ITG case issuances that are not properly identified as Indian tribal government accounts.

Enforcement Action on ITG Cases
  1. The Service must comply with Presidential Executive Orders. See IRM 4.86.1.11, Tribal Sovereignty Overview.

  2. Special care must be taken to avoid violating Indian tribal legal rights because there are tribal sovereignty and land ownership legalities unique to Indian tribes which are outlined by treaty.

  3. Work closely with the ITG specialist before you take any enforcement action on an ITG account, including

    • filing a Notice of Federal Tax Lien

    • serving a levy

    • serving a summons

    • considering a seizure

    • assessing a Trust Fund Recovery Penalty (TFRP)

    .

  4. Ensure that you secure approval of the ITG Director before serving a summons, including summonses on tribal government or a third party for information concerning a tribal government.

Outbound Mutual Collection Assistance Requests

  1. The U.S. Tax Treaties with Canada, Denmark, France, the Netherlands, and Sweden provide that the treaty partner may request assistance from the IRS in collecting taxes owed to the treaty partner by its own citizens or residents, or other persons owing taxes to the treaty partner. This subsection discusses Mutual Collection Assistance Requests (MCARs) in general and specifically outgoing MCARs . See IRM 5.21.7.4.7, Outbound Mutual Collection Assistance Request, and IRM 5.21.7.4.8, Procedures for Requesting an Outbound Mutual Collection Assistance Request.

Form 1127, Application for Extension to Pay Due to Financial Hardship

  1. IRC 6161(a)(1) provides that the IRS may extend the time for payment of the amount of the tax shown, or required to be shown, on any return for a reasonable period not to exceed 6 months from the date payment is due. Such extension may exceed 6 months in the case of a taxpayer who is abroad.

  2. IRC 6161(b)(1) provides generally that the IRS may extend the time for the payment of an amount determined as a deficiency of a tax for a period not to exceed 18 months from the date payment of the deficiency is due. In exceptional cases, this time period may be extended for a further period not to exceed 12 months.

    Note:

    If the deficiency is due to negligence, intentional disregard of rules and regulations, or to fraud with intent to evade tax, no extension shall be granted. IRC 6161(b)(3).

  3. An application for an extension of time to pay certain tax liabilities under IRC 6161 is made by timely filing Form 1127 (Rev. 02-2010), Application for Extension of Time for Payment of Tax Due to Undue Hardship. The types of taxes for which an extension to pay may be requested on Form 1127 are listed in the instructions to the form. These include income taxes, gift taxes, and certain excise taxes.

    Note:

    While IRC 6161 also provides for extensions of time to pay estate tax, such extensions must be requested on Form 4768, Application for Extension of Time to File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes. See IRM 5.5.5, Processing Estate Tax Extensions.

  4. Treas. Reg. 1.6161-1(b) provides that an extension to pay shall be granted only upon a satisfactory showing that payment on the due date will result in an undue hardship. The extension will not be granted upon a general statement of hardship.

    1. The term “undue hardship” means more than an inconvenience to the taxpayer.

    2. It must appear that substantial financial loss, for example, loss due to the sale of property at a sacrifice price, will result to the taxpayer from making payment on the due date.

    3. If a market exists, the sale of property at the current market price is not ordinarily considered as resulting in an undue hardship.

Processing Form 1127 Applications

  1. With the exception of applications for an extension of time to pay a gift tax, all Form 1127 applications must be filed with the Advisory Group for the area where the taxpayer maintains his or her legal residence or principal place of business. See Pub 4235, Collection Advisory Group Addresses.

  2. Form 1127 applications for an extension to pay a gift tax reportable on Form 709 must be filed with the Estate and Gift Tax Unit in the Cincinnati campus.

  3. If a Form 1127 application is received in the wrong office, the receiving office will promptly forward the application to the correct office for processing.

  4. Treas. Reg. 1.6161-1(c) provides that Form 1127 applications will be examined, and within 30 days, if possible, will be denied, granted, or tentatively granted subject to certain conditions of which the taxpayer will be notified. The appropriate box at the bottom of Form 1127 must be checked to indicate whether the application has been approved, denied, or returned. A summary of the reason(s) for this determination should be included on the form and more specifically explained in a cover letter sent to the taxpayer.

Returning Form 1127 as Nonprocessable

  1. The Form 1127 application must clearly be a request under IRC 6161 for an extension of time to pay due to undue hardship. These applications are often used incorrectly by taxpayers and their representatives. For example, Form 1127 may not be used to request an extension of time to file a return.

  2. Examples of possible incorrect uses of Form 1127 are listed in the Determination Chart on page three of the form. The chart also lists the correct forms to use, or actions to take, in order to obtain the relief incorrectly being sought by the taxpayer on Form 1127.

  3. There are strict time requirements for when a Form 1127 application must be filed with the IRS. If the form is not timely filed, it will be returned as nonprocessable. Use the postmark date of the application to determine whether it was timely filed.

    If Then
    the taxpayer is requesting an extension of time to pay a tax due on an upcoming return, the Form 1127, with supporting documents, must be filed on or before the due date of that return, not including extensions.
    the taxpayer is requesting an extension of time to pay an amount determined as a deficiency, the Form 1127, with supporting documents, must be filed on or before the due date for payment indicated in the tax bill.
  4. In addition to timely filing, there are a number of requirements for the Form 1127 application to be processable. The Form 1127 application must include the following information:

    • Taxpayer's name, address, and Tax Identification Number (TIN).

      Note:

      If the application is for a tax shown on a joint return or a joint liability for a deficiency, then both spouse's names should be included on the form in the order in which the names appear or will appear on the tax return, with the TIN of the spouse whose name appears first.

    • Whether the extension is being requested for a tax shown or required to be shown on a return, or for an amount determined as a deficiency.

    • The due date of the return or the due date for paying the deficiency.

    • The extension date proposed by the taxpayer.

      Note:

      An extension of more than six months to pay the tax shown on a return will generally not be granted. However, except for taxes due under IRC § 4981, 4982, and 5881, an extension for more than six months may be granted if the taxpayer is out of the country. An extension to pay a deficiency is generally limited to 18 months. However, in exceptional circumstances, an additional 12 months may be granted.

    • The amount of the tax liability for which an extension to pay is being requested.

    • The form number relating to the tax.

    • The calendar year or fiscal year of the tax.

    • An explanation of the undue hardship that will result to the taxpayer if the extension is denied.

  5. The following supporting documents must be filed with the Form 1127 in order for the application to be processable:

    • A statement of the taxpayer's assets and liabilities.

    • An itemized list of the taxpayer's income and expenses for each of the three months prior to the due date of the tax.

  6. The application must be signed by the taxpayer(s) or the taxpayer(s)' representative under penalties of perjury and dated.

  7. If the Form 1127 application does not meet the requirements listed above, it will be returned to the taxpayer(s) as nonprocessable. Check the "Returned" box at the bottom of the form and provide the reason(s) why the application is being returned.

  8. Applications that are nonprocessable may be signed by the Advisory Group Manager and returned to the taxpayer by form letter under the signature of the Advisory Group Manager. See Exhibit 5.1.12-3, Sample Letter Returning Form 1127 Application as Nonprocessable.

  9. Record the actions taken in the ICS history.

Approving or Denying Form 1127 Applications

  1. If the Form 1127 application is processable, Advisory will determine whether the taxpayer has made a satisfactory showing of "undue hardship." See IRM 5.1.12.26, above.

    If Then
    Advisory determines that a taxpayer has made a satisfactory showing of undue hardship, the advisor or tax examiner will prepare a recommendation that the application be approved and forward the recommendation and the application through the Advisory Group Manager to the Advisory Territory Manager for final approval and signature. The advisor or tax examiner will also prepare a cover letter to the taxpayer for the signature of the Advisory Territory Manager.
    Advisory determines that the taxpayer has not made a satisfactory showing of undue hardship, the advisor or tax examiner will make a recommendation that the application be denied and obtain the concurrence and signature of the Advisory Group Manager. The advisor or tax examiner will also prepare a cover letter for the signature of the Advisory Group Manager explaining to the taxpayer the reason(s) why the application is being denied.
  2. The recommendation prepared by the advisor or tax examiner as to whether a taxpayer's application should be approved or denied must be in writing, but the format of the recommendation and the manner in which it is forwarded for review and approval may be established at the local level.

  3. Once a determination is made, the Form 1127 will be completed (marked "Approved" or "Denied" with a brief explanation) and signed by the appropriate IRS official. The advisor or tax examiner will prepare a cover letter for the signature of the Advisory Group Manager or the Advisory Territory Manager, as appropriate, informing the taxpayer whether the application has been approved or denied. The cover letter will be forwarded to the taxpayer along with a copy of the completed Form 1127. See Exhibit 5.1.12-4 Sample Letter Denying Form 1127 Application, and Exhibit 5.1.12-5, Sample Letter Approving Form 1127 Application.

  4. Document the ICS history with the actions taken. Retain a copy of the letter sent to the taxpayer and the Form 1127 with supporting documents in conformance with existing document retention guidelines.

Processing Approved Form 1127 Applications

  1. If a Form 1127 application for an extension to pay for six months is approved, Advisory will prepare two Forms 4844, Request for Terminal Action. The first Form 4844 will request that a Transaction Code (TC) 470, no closing code, be input to the module and an Integrated Data Retrieval System (IDRS) control base opened. The IDRS control base will be assigned to the 10-digit IDRS number of the advisor or tax examiner requesting input of the TC 470, along with a request for input of the literal activity code “F1127EXT.” In addition, the Form 4844 will include a request for input of history bases with the following information: F1127EXT PAYMTDUE MMDDYYYY. The history base(s) will document the extended due date granted in case the taxpayer fails to submit payment when due. See Exhibit 5.1.12-6, Sample Form 4844, First Request for Terminal Action for Approved Form 1127 Extension.

  2. Ensure that the account is in status 20, 21, 54, 56 or 58 at input so that the status changes to status 47 as needed to keep the account in suspense. The TC 470 will delay issuance of the Taxpayer Delinquent Account (TDA). Request input of a second TC 470 after 11 weeks to ensure that the account remains suspended in status 47 as required. This will delay the TDA for a total of 26 weeks.

    Note:

    Without the control base, the TC 470 would release in only nine weeks, and three TC 470s would be needed.

  3. If an extension for a longer period of time is approved, request input of a TC 470 as needed to delay issuance of the TDA for the period of the extension.

    Note:

    Approval of the extension does not relieve the taxpayer from liability for interest that accrues during the period of the extension, but does provide relief from the failure to pay (FTP) tax penalty to the extended due date, even if the taxpayer fails to submit full payment by that date.

  4. To keep the FTP tax penalty from accruing, Advisory will prepare a second Form 4844 requesting input of TC 270, with $0.00 as the amount. See Exhibit 5.1.12-7, Sample Form 4844, Second Request for Terminal Action for Approved Form 1127 Extension. If the taxpayer fails to submit full payment of the tax due by the Form 1127 extension date, manual computations of the FTP tax penalty will be required thereafter. The FTP tax penalty starts accruing after the extension date. The IDRS command code COMPAF is used to complete manual computations of FTP tax penalties. See IRM 20.1.2, Penalty Handbook, Failure to File/Failure to Pay Penalties, for more information regarding the computation of the FTP tax penalty.

  5. Advisory is responsible for requesting input of the appropriate case controls, and manually monitoring the case to ensure the case controls reflect the extension. Advisory will request the abatement of the FTP tax penalty if erroneously assessed for the period the extension was granted. Additionally, Advisory will document the ICS history with the actions taken.

Passport Certification in Case of Certain Tax Debts

  1. The Fixing America’s Surface Transportation (FAST) Act, signed into law December 4, 2015, created new code section IRC § 7345 which requires the IRS to notify the State Department when an individual is certified as owing a seriously delinquent tax debt.

Passport Certification Overview

  1. IRC § 7345 requires the IRS to notify the State Department that an individual is certified as owing a seriously delinquent tax debt. Upon certification, the State Department shall be notified that an individual is certified as owing a seriously delinquent tax debt.

  2. IRS Commissioner approval is required for certification and has not been re-delegated below the Commissioner of an Operating Division.

  3. When this notification of certification is received from the IRS, the State Department is generally required to deny the certified individual a U.S. passport (or renewal of a U.S. passport) or may revoke any U.S. passport previously issued to that individual. The State Department has the sole authority to revoke or limit a passport held by a certified individual. Whether a passport will be revoked or limited is left solely to the discretion of the State Department.

    Note:

    Passport certification is separate and distinct from obtaining passport information from the United States Passport Office in connection with an official investigation. See IRM 5.1.18.13, United States Passport Office, for procedures on how to request a passport check.

    Reminder:

    If after spending a reasonable amount of time researching the issue without success, consulting with your manager, an OJI, or a senior revenue officer, follow the procedures to post questions to the Ask Collection Policy web site at http://mysbse.web.irs.gov/Collection/askcollectionpolicy/default.aspx to seek technical clarification of procedures related to passport legislation or to raise issues that need clarification in future IRM updates. This site does not replace the need to work through management channels to resolve specific taxpayer cases. Questions posted to this site should not contain personally identifiable information.

Seriously Delinquent Tax Debt

  1. For the purpose of passport certification, seriously delinquent tax debt is the unpaid, legally enforceable federal tax liability, which has been assessed, of an individual totaling more than $50,000 for which:

    1. A Notice of Federal Tax Lien has been filed and all administrative remedies under IRC § 6320 have lapsed or been exhausted, or

      Note:

      When a Collection Due Process (CDP) Lien hearing is timely requested, or pending, in connection with the filing of a Notice of Federal Tax Lien, the taxpayer’s remedies under IRC 6320 have not been exhausted until the CDP hearing (and any appeals of the determination) have been concluded. If no CDP Lien hearing is requested for the NFTL, the above criteria is met once the time period for requesting a timely CDP Lien hearing has lapsed.

      Note:

      A pending or requested Equivalent Hearing (EH) in connection with the filing of a Notice of Federal Tax Lien, as described in IRM 5.1.9.3.2.2, will not preclude a liability from being considered a seriously delinquent tax debt.

    2. A levy has been issued.

  2. The $50,000 threshold, which is indexed yearly for inflation, is the aggregate unpaid balance of assessment. The unpaid balance of assessment includes tax and assessed interest and penalties. It does not include accrued interest and penalty.

    Note:

    As of January 1, 2018, the threshold amount indexed for inflation will be $51,000.

    Caution:

    Once the taxpayer is certified, paying the account below the $50,000 threshold (or the threshold amount indexed for inflation effective at the time of certification) will not result in decertification. Certification will not be reversed unless all certified modules for which notice of the certification have been sent have been fully satisfied (e.g. Status 12), become legally unenforceable, or meet the criteria for reversal in accordance with IRM 5.1.12.27.8.

  3. Unless otherwise listed as statutory or discretionary exclusions (in IRM 5.1.12.27.3 or IRM 5.1.12.27.4), a seriously delinquent tax debt includes, but is not limited to, tax assessments made under an individual’s taxpayer identification number (SSN or EIN) such as U.S. individual income taxes, trust fund recovery penalties, business taxes for which the individual is liable and other civil penalties. This does not include other non-tax liabilities such as:

    • ACA assessments, Individual SRP modules (MFT 35 or 65),

    • Employer Shared Responsibility Payments (ESRP) modules (MFT 43),

    • Criminal Restitution assessments (MFT 31 with unreversed TC 971 AC 102),

    • Child Support Obligations (NMF MFT 59). See IRM 3.8.45.6.35, Sub-Pays for Child Support MFT 59

    • Report of Foreign Bank and Financial Accounts (FBAR) assessments.

      Note:

      FBAR penalties are asserted under Title 31 as a non-tax debt and do not appear on IDRS. They are tracked on a separate database at Detroit where payments are posted and notices generated.

Statutory Exclusions from Certification

  1. IRC § 7345(b)(2) excludes the following tax debt from the determination of seriously delinquent tax debt, even if it meets the criteria in IRM 5.1.12.27.2, Seriously Delinquent Tax Debt.

    1. Debt that is being paid in a timely manner under an installment agreement entered into with the IRS under IRC 6159 ,

      Exception:

      Per IRM 5.11.5.6, even though some continuous levies are monitored in status 60 on IDRS, they are not installment agreements and do not meet the criteria for this exclusion.

    2. Debt that is being paid in a timely manner under either an Offer in Compromise accepted by the IRS or a settlement agreement entered into with the Department of Justice under IRC 7122,

    3. Debt on which collection is suspended because a Collection Due Process hearing under IRC 6330 is timely requested, or pending, in connection with a levy to collect the debt, or

      Exception:

      An Equivalent Hearing (EH) in connection with a levy to collect the debt, as described in IRM 5.1.9.3.2.2 does not meet the criteria for this exclusion.

    4. Debt on which collection has been suspended because a request for innocent spouse relief under IRC 6015 has been made.

  2. Certification is postponed under IRC 7508(a) for taxpayers serving in a combat zone. For taxpayers serving in a combat zone who owe a seriously delinquent tax debt, the IRS postpones notifying the State Department and the individual's passport is not subject to denial during this time.

Discretionary Exclusions from Certification

  1. IRC § 7345 provides the IRS discretion to exclude categories of tax debt from certification, even if the debt meets the criteria in IRM 5.1.12.27.2, Seriously Delinquent Tax Debt. The following categories of tax debt will be excluded from the determination of seriously delinquent tax debt of the IRS:

    1. Debt that is currently not collectible (CNC) due to hardship (unreversed TC 530 cc 24 - 32),

    2. Debt that resulted from identity theft (unreversed TC 971 AC 501, 505, 506, 522, 523, and 525),

    3. Debt of a taxpayer in bankruptcy,

    4. Debt of a deceased taxpayer,

      Note:

      Only the individual identified as deceased is excluded from certification.

    5. Debt that is included in a pending Offer in Compromise (unreversed TC 480),

      Exception:

      This exclusion does not apply unless the Offer in Compromise meets pending Offer in Compromise criteria as described in IRM 5.8.2.3.1, Determining Processability.

      Exception:

      This exclusion does not apply if the Offer in Compromise was made solely to delay collection. See IRM 5.8.4.20, Offer Submitted Solely to Delay Collection.

    6. Debt that is included in a pending installment agreement (unreversed TC 971 AC 043),

      Exception:

      This exclusion does not apply unless the installment agreement request meets pending installment agreement criteria as described in IRM 5.14.1.3(4).

      Exception:

      This exclusion does not apply if the installment agreement request was made solely to delay collection. See IRM 5.14.3.2, Installment Agreement Request Made to Delay Collection.

    7. Debt with a pending adjustment that will full pay the tax period (unreversed TC 470 AC 90), and

    8. Taxpayers in a Disaster Zone (-O or -S Freeze).

  2. These discretionary exclusion categories are subject to change in the future.

Identification of Levy on the Taxpayer’s Account

  1. Once levy action has occurred, revenue officers will generally not need to take any further steps for the levy action to be identified on the taxpayer's account. Taxpayer accounts will be systemically identified once levy action has occurred. As described in IRM 5.1.12.27.2, the issuance of a levy is one of the criteria for certifying a tax debt is seriously delinquent. A transaction TC 971 AC 640 has been created to identify tax periods for which levy action has occurred. This transaction code will be systemically uploaded beginning January 2017 the first time a module has been included on levy actions occurring after this date.

    Exception:

    For purposes of passport certification, for modules in which the first levy is manually issued after December 2016, the revenue officer must request a manual input of TC 971 AC 640 via Form 4844 to CCP for each module included on a manual levy that does not already have a TC 971 AC 640. Request the manual input of TC 971 AC 640 only after the taxpayer's right to a post-levy CDP hearing has expired or the CDP hearing is resolved.

  2. The systemic input of TC 971 AC 640 to identify levy action on the taxpayer's account is delayed for eight (8) weeks if the taxpayer is given post-levy CDP rights the first time the module is included on a levy. This will allow the taxpayer time to appeal.

  3. The following are examples from IRC 6330(f) and (h) in which the IRS may serve a levy to collect taxes prior to giving the taxpayer pre-levy Collection Due Process (CDP) rights:

    1. Jeopardy levy,

    2. Disqualified employment tax levy (DETL),

    3. Federal contractor (FEDCON) levy, and

    4. Levy on a State to collect a Federal tax liability from a State tax refund.

      Note:

      For purposes of passport certification, a state income tax refund levy will not be recognized as a levy until CDP notification is provided.

Identification of Certified Seriously Delinquent Tax Debt

  1. Seriously delinquent tax debt will be identified as certified by an unreversed TC 971 AC 641 on each module of a taxpayer’s account eligible for certification. The TC 971 AC 641 will be added to CC ENMOD, TXMODA, IMFOLE and IMFOLT, identifying the certified individual by their SSN and the date of their certification notice.

  2. Each individual identified as certified will be systemically sent a certification Notice CP 508C displaying each certified module balance. The notice will be sent to the individual’s last known address. The issuance of a Notice CP 508C will be displayed in the Notice History Section of CC TXMODA.

  3. On a joint module where both the primary and secondary taxpayers are identified as certified, each individual will have their own TC 971 AC 641.

    Caution:

    Employees should not manually input TC 971 AC 641 or attempt to manually generate Notice CP 508C.

  4. Taxpayer certifications will be provided systemically to State Department on a weekly basis.

  5. A certified module is decertified when the TC 971 AC 641 is reversed with a TC 972 AC 641. A certified module is reversed when it meets one of the conditions listed in IRM 5.1.12.27.8, Reversal of Certification.

  6. Each taxpayer’s certification stands on its own. A taxpayer will be decertified when the last certified module is reversed with a TC 972 AC 641. A decertified taxpayer will be sent a reversal of certification Notice CP 508R. On a joint account where both the primary and secondary taxpayers are identified as certified, each individual will have their own TC 972 AC 641 to reverse the certification.

  7. The Notice CP 508R will be shown in the Notice History Section of CC TXMODA. The TC 972 AC 641 indicating reversal of certification will be displayed on IDRS Command Code ENMOD, IMFOLE, IMFOLT and TXMODA, and reflect the SSN of the decertified individual and date of the decertification (reversal of certification) notice. On a weekly basis, IRS will systemically inform the State Department regarding each newly decertified taxpayer.

Taxpayer Notification

  1. The IRS is required to notify the taxpayer in writing at the time the certification of seriously delinquent tax debt is made to the State Department. Notice CP 508C is sent to the taxpayer.

  2. IRS Commissioner approval is required for certification and has not been re-delegated below the Commissioner of an Operating Division.

  3. The Notice CP 508C may identify more than one TIN related to a specific taxpayer. Both the liabilities of the IMF and BMF accounts may be used to determine whether the taxpayer meets the certification threshold.

  4. The IRS is also required to notify the taxpayer in writing at the time the certification is reversed. Notice CP 508R is sent to the taxpayer.

  5. The IRS will send the notice by regular mail to the taxpayer’s last known address. Notification will be generated systemically.

  6. If an individual certified as having a seriously delinquent tax debt applies for a passport or a passport renewal, the State Department will hold the application of a certified taxpayer open for 90 days to allow the taxpayer to resolve any certification issues, make full payment of the tax debt or enter into a satisfactory payment alternative with the IRS before denying an application for a passport or renewal.

    Note:

    The State Department is responsible for issuance of U.S. passports. The IRS does not have authority to issue or deny a U.S. passport. Under 22 U.S.C. § 2714a, the State Department may, notwithstanding a certification from the IRS, issue a U.S. passport to a taxpayer if the State Department determines emergency circumstances or humanitarian reasons justify issuance of the passport. This does not affect the taxpayer’s certification as a seriously delinquent taxpayer or reverse their certification. If a taxpayer, who is responding to a certification letter from the IRS or a denial letter from the State Department, requests their U.S. passport be issued for non-tax-related reasons, refer them to their local passport office or the contact information provided on their State Department correspondence.

Taxpayer Notification of Subsequent Certified Modules
  1. When a certified individual incurs an additional liability that meets the criteria for certification, the aggregate assessed balance is systemically recalculated to include the previously certified modules as well as the new module. If the total liability meets the seriously delinquent debt criteria in IRM 5.1.12.27.2, Seriously Delinquent Tax Debt, a new Notice CP 508C is systemically generated reflecting all modules including the new module. As a result, the new Notice CP 508C may reflect different balances for previously certified modules due to changes on the account such as any payments or audit adjustments

    Example:

    The taxpayer's account was previously certified for a $65,000 tax debt. When a new module for $2,000 becomes eligible for certification, the new module's balance will be systemically added to the current balance due of all previously certified modules. If the new aggregate assessed balance is $48,000 due to payments or offsets, the new module would not be certified because the aggregate assessed balance is less than the minimum amount for certification in IRM 5.1.12.27.2, Seriously Delinquent Tax Debt. However, the taxpayer's account remains certified based on the previously certified modules, and will not be decertified until all certified modules are satisfied.

  2. If a taxpayer claims they have paid their certified debt on a module based on their Notice CP 508C and the certified module has an additional assessment posted subsequent to the issuance of the notice, the revenue officer sends an explanation of their research results along with a request for assistance through their manager to the Passport Analyst in an e-mail with the subject heading "Review of Subsequent Certified Module" at *SBSE Passport Support.

Reversal of Certification

  1. The IRS will reverse the certification of seriously delinquent tax debt and notify the State Department within 30 days if the previously certified tax debt:

    1. Is fully satisfied (Status 12),

    2. Becomes legally unenforceable,

    3. Ceases to be seriously delinquent tax debt,

      Note:

      A previously certified tax debt ceases to be seriously delinquent tax debt when a statutory exclusion is met. See IRM 5.1.12.27.3, Statutory Exclusions from Certification.

      Exception:

      Certification will not be reversed because the taxpayer pays the debt to below the threshold amount indexed for inflation effective at the time of certification. All certified modules must be fully satisfied (e.g., Status 12), become legally unenforceable, or meet an exclusion for certification to be reversed.

  2. If the certification is found to be erroneous, the IRS will notify the State Department as soon as practicable. The IRS will also notify the taxpayer once the certification is reversed. Examples of erroneous certification are as follows:

    1. A taxpayer is in a Combat Zone, but the service did not receive notification. The account was erroneously certified because no -C Freeze was present.

    2. The taxpayer has an approved installment agreement being paid in a timely manner but the TC 971 AC 063 was not input in IDRS on the taxpayer’s account.

    3. The taxpayer has an innocent spouse relief claim under IRC 6015, and the account was not properly coded.

  3. The Tax Court or a District Court of the United States may order the IRS to reverse the certification. See IRM 5.1.12.27.9, Appeals Process and Judicial Review of Certification.

    Note:

    When decertification is required as a result of litigation, the revenue officer should work with Counsel to provide notification to the Passport Analyst as described in IRM 5.1.12.27.9, Appeals Process and Judicial Review of Certification.

  4. The IRS has the discretion to request a decertification for other reasons. The IRS will decertify a previously certified tax debt that ceases to be seriously delinquent tax debt when a discretionary exclusion is met. See IRM 5.1.12.27.4, Discretionary Exclusions from Certification. Examples of discretionary reversal include:

    1. A certified taxpayer who later files bankruptcy (unreversed TC 520 cc 60-67, 81, 83-89).

    2. A certified taxpayer entering a Combat Zone.

    3. A certified taxpayer who is later determined to be currently not collectible due to hardship (unreversed TC 530 cc 24-32).

    4. The Department of State requests the IRS to decertify.

    5. An adjustment to the account that reduces the original certification amount below the threshold for certification in IRM 5.1.12.27.2. The original return has been filed and processed, or the adjustment has posted.

      Example:

      IRS assesses taxpayer’s liability of $54,000, of which $9,000 is attributable to a penalty. The taxpayer’s seriously delinquent tax debt is certified. The taxpayer requests penalty abatement on the basis of reasonable cause. IRS finds the taxpayer had reasonable cause and abates the penalty, lowering the taxpayer’s total liability to $45,000. Since the liability is reduced below the threshold for certification in IRM 5.1.12.27.2, the taxpayer is eligible for decertification.

      Caution:

      Not all penalty abatements will result in decertification. For example, a penalty abatement of a certified module due to an administrative waiver under the First Time Abate criteria in IRM 20.1.1.3.3.2.1 will not result in decertification, even if the adjusted total liability is less than the threshold amount indexed for inflation.

      Example:

      The taxpayer has a liability of $66,000 for tax period 30/201512 due to an SFR assessment. The taxpayer is certified as a seriously delinquent tax debt and receives a Notice CP 508C. The taxpayer is in the process of renewing their U.S. Passport with the Department of State. The taxpayer files a return for tax period 30/201512 which reduces the tax debt to $30,000. Once the taxpayer’s return for 30/201512 is processed and posted on IDRS, the taxpayer will be eligible for decertification.

    6. The taxpayer claims to have paid their certified debt on a module based on their Notice CP 508C and the certified module has an additional assessment posted subsequent to the issuance of the notice. The revenue officer will request assistance through their management chain. This can be done by sending an email asking for assistance from their manager and including the results of their research. If the issue cannot be resolved, forward the email message to the Passport Analyst with the subject heading "Review of Subsequent Assessment" at *SBSE Passport Support.

  5. A taxpayer's account will remain certified as seriously delinquent tax debt when:

    1. A taxpayer requests a CDP lien or levy hearing for tax periods which are not the basis of certification of a seriously delinquent tax debt.

      Example:

      The taxpayer is already certified as owing a seriously delinquent tax debt. The revenue officer issues L-1058 on an additional tax period to provide notice of CDP levy rights. The taxpayer requests a timely CDP levy hearing. The certification of seriously delinquent tax debt is not reversed for the pending CDP levy hearing on this additional tax period.

    2. A taxpayer requests Innocent Spouse relief for tax periods which are not the basis of certification of a seriously delinquent tax debt.

    3. A taxpayer requests a CDP Lien hearing for a subsequent NFTL filing on the modules that are the basis of certification of a seriously delinquent tax debt.

    4. A taxpayer requests a CDP Lien hearing when the certification was based on a levy.

  6. On a joint module, where both the primary and secondary taxpayers are identified as decertified, a separate TC 972 AC 641 will be input to decertify both spouses.

  7. If the taxpayer's explanation of why their account should be decertified meets decertification criteria, the revenue officer should verify the explanation as appropriate and then utilize existing procedures to update the account with any missing freeze codes or transaction codes that would result in systemically decertifying the taxpayer's account. If the revenue officer is unable to resolve the issue as to why the modules were not decertified, the revenue officer will request assistance through their management chain. This can be done by sending an email asking for assistance from their manager and including the results of their research. If the issue cannot be resolved, forward the email to the Passport Analyst with the subject heading "Review of Certification" at *SBSE Passport Support.

  8. Request expedited decertification when all of the following conditions exist:

    1. A certified taxpayer is eligible for decertification as described above,

    2. The taxpayer states their foreign travel is scheduled within 45 days or less, and

    3. The taxpayer has a pending application for a passport or renewal and can provide their passport application number.

      Note:

      Taxpayers residing outside of the United States may have an urgent need for a passport without having imminent travel plans. When a taxpayer residing outside of the United States meets conditions in IRM 5.1.12.27.5(6)(a) and (c), and self-identifies as having an urgent need for decertification, request expedited decertification.

  9. Given the urgency of the situation, request an expedited decertification as soon as possible according to the following procedures:

    The revenue officer completes Form 14794, Expedited Passport Decertification, secures managerial approval and forwards the form to the Passport Analyst in an e-mail with the subject heading "Expedited Decertification" at *SBSE Passport Group.

    Reminder:

    The taxpayer must provide their passport application number. This number must be entered when completing Form 14794, Expedited Passport Decertification, or it is not processable. If the taxpayer applied for a U.S. passport while outside of the U.S., add the location of the passport application (city, country) on Form 14794.

    Upon securing the appropriate approval for passport decertification, the Passport Analyst will transmit the Form 14794, Expedited Passport Decertification, directly to the State Department for action.

    Caution:

    Do not offer expedited decertification. Explain that decertification will occur systemically and the State Department will be notified within 45 days. If the taxpayer indicates a problem with planned travel that meets the criteria in IRM 5.12.27.8(6),follow expedited decertification procedures.

    Note:

    If a taxpayer residing in the United States plans foreign travel more than 45 days in the future, do not utilize expedited decertification procedures. Instead, advise the taxpayer that decertification will happen systemically.

    Note:

    If it is known that a taxpayer is currently challenging their certification in Tax Court or District Court of the United States and all certified modules for which notice of such certification has been sent have been fully satisfied (e.g. Status 12), become legally unenforceable or meet the criteria for reversal in accordance with IRM 5.1.12.27.8, this information should be communicated to the Counsel attorney handling the taxpayer’s court case so that the case can be dismissed.

Appeals Process and Judicial Review of Certification

  1. Although there is no administrative appeals process for certification of a taxpayer’s account, IRS sends taxpayers Notice CP 508C, Notice of Certification of a Seriously Delinquent Tax Debt. The notice includes an IRS phone number the taxpayers can call to resolve their tax issues.

    Note:

    Taxpayers who do not agree they owe the tax debt, and are subject to collection action, may have appeal rights as described in IRM 5.1.9.4, Collection Appeals Program (CAP). However, notice of certification of a seriously delinquent tax debt by the IRS, or denial of an application for a passport or renewal by the State Department, are not collection actions that entitle CAP rights.

  2. A taxpayer whose debt was certified to the State Department as a seriously delinquent tax debt can file suit in the Tax Court or a District Court of the United States to have the court determine whether the certification is erroneous or the IRS failed to reverse the certification when it was required to do so. If the court determines the certification is erroneous or should have been reversed, it can order the certification reversed.

    Note:

    The taxpayer is not required to file an administrative claim or otherwise contact the IRS to resolve the erroneous certification issue before filing suit in the Tax Court or a District Court of the United States.

     

  3. Counsel will provide notification to the Passport Analyst in an e-mail with the subject heading "Court Ordered Decertification" at: *SBSE Passport Group, when decertification is required as a result of litigation. The e-mail should include:

    • Taxpayer’s name

    • Taxpayer’s tax identification number

    • Docket number, if available.

Suggested Text for Letter to Taxpayer to Apply for Exemption for Religious Reasons

  1. Use Area Office letterhead paper to prepare a letter to notify the taxpayer to apply for exemption.

  2. The following table displays suggested content for this letter.

Suggested Text for Letter to Taxpayer to Apply for Exemption
Letter Content
Name and address of taxpayer
[Insert appropriate salutation]
Federal tax law exempts members of certain religious sects or divisions from paying social security and Medicare tax if they file an application that is approved on Form 4029, Application for Exemption from Social Security and Medicare Taxes and Waiver of Benefits.
We understand you may be eligible for exemption, but we have no record of receiving a Form 4029 from you. If you want to apply for exemption from social security and Medicare tax, please complete the enclosed Form 4029 and return it, with a copy of this letter, by the date shown below. An addressed envelope is enclosed for your convenience.
If we do not receive your application by the date shown, we will have to collect the social security and Medicare tax.
If you have any questions, please contact me at the telephone number shown above.
Thank you for your cooperation.
Sincerely yours,
[Space for signature]
Revenue Officer
Enclosures:
Form 4029
Copy of this letter
Envelope
Last day for filing Form 4029:

Field Collection Processing of Form 5792

  1. Use Form 5792 to request an IDRS manual refund. In Field Collection (FC), the form initiator (i.e., the revenue officer) requesting the manual refund will not complete the entire form because the form initiator will not be the form processor (i.e., the employee inputting CC RFUND). Additionally, Advisory personnel may need to complete certain information on the form.

  2. Use Form 3753, in conjunction with Form 5792, if:

    1. the refund is $10 million or more,

    2. a direct deposit is necessary, or

    3. the module(s) is(are) not on IDRS.

  3. Follow these instructions to properly prepare Form 5792:

    1. Prepare Form 5792 in triplicate.

    2. Complete each block on Form 5792 carefully and ensure all of the entries are legible.

      Note:

      Accounting will reject Form 5792 if the document contains any alterations such as white out, strike through or correction tape. See IRM 21.4.4.5.1 , Monitoring Manual Refunds, for controlling and monitoring requirements.

    3. Follow these line-by-line instructions:

      Section I — Account Information

      1. Block 1: Enter the Taxpayer Identification Number (TIN) and File Source of the account from which the refund will be issued.

      2. Block 2: Enter the Master File Tax Code (MFT).

      3. Block 3: Enter the tax period as YYYYMM. Exception: period ending for MFT 52 is always "000000" .

      4. Block 4: Enter the plan/report number, applicable for MFTs 46,74 and 76.

      5. Block 5: Enter the name control.

      6. Block 6: Leave blank. Campus personnel will enter the TC 840 amount (overpayment, plus allowable interest).

      7. Block 7: Leave blank. Campus personnel will enter the TC 770 amount (allowable interest). If no interest is being computed, campus personnel will enter "0" or ".00."

      8. Block 8: Enter the overpayment amount, (i.e., the amount being refunded, less allowable interest).

      9. Block 9: Enter the appropriate line number; follow these steps to determine the line number:

        • See Exhibit 12 in IRM 2.4.20, Command Codes RFUND and REFAP

        • Locate the MFT code for the applicable form number (i.e., Form 1040, 941, etc.) that corresponds to the MFT code from Block 2.

        • Locate the row that describes the reason for the refund in the columns entitled:

          • "Type of Refund"

          • "Description and Transaction Codes"

        • Use "Type of Refund" = "Other" when requesting a manual refund of levy proceeds.

      10. Block 10: Interest indicator must be entered.

        • Use an "N" for normal interest when interest is payable.

        • Use a "0" (zero) for no interest.

        • Use an "R" for restricted interest.

        Note:

        When requesting a manual refund of levy proceeds there is no interest paid.

        Note:

        If interest will be paid, you must also enter an interest "from" date in Section III. See IRM 20.2, Interest, for interest computations.

        Note:

        If any portion of the overpayment in Block 7 is attributable to a Telephone Excise Tax Refund (TETR), see IRM 21.6.3.5.13, TETR Interest - General Information , for information on TETR interest computations.

      11. Block 11: Leave blank. The form processor (i.e., the person who inputs the RFUND command code to IDRS) will complete this block.

      12. Block 12: Leave blank . The form processor (i.e., the person who inputs the RFUND command code to IDRS) will complete the sequence number.

      13. Block 13: Enter the block series, if needed. Use block series = "3, 4, 6, or 9" to identify why the refund is being issued. The fourth exhibit in IRM 2.4.20, Input Format, CC RFUND, defines some of the block series indicators.

        Note:

        Use block series "9" if the refund is to be issued in an injured spouse case. In most other cases, you will probably not need to complete this item. Enter a Bypass Indicator (BPI) code of "1, 2, 5, or 6" in Block 11, Section II, if you use block series = "9" . See IRM 21.4.6.4.2.1, TOP Offset Bypass Indicator (BPI).

      14. Blocks 14 -19: Enter the name and address of the payee:

        • Print using capital, block letters.

        • Use the ENMOD or INOLES information unless there is a name change, different address, or the refund is being issued to an injured spouse or third party. Ensure the address on Form 5792 (and Form 3753, if applicable) matches the address on Master File. Provide an explanation in the Remarks Section, Block 20, when the address does not match.

        • Do not address the first name line to a deceased taxpayer. Use the name and title, if appropriate, of the person claiming the refund as the payee for refunds issued on decedent accounts. See the following table of examples:

        Example:

        Person claiming the refund is: 1st name line 2nd name line
        Surviving spouse Jane Doe John Decd and Jane Doe
        Executor Jim Jones, Executor Peggy Jones, Decd
        Executrix Pamela Adams, Executrix Donald Duckworth, Decd
        Administrator Harry Johnson, Admin Fred Smith, Decd
        Court appointed or personal representative Joseph Long Ann Sterling, Decd
        Claimant Shelly Smith Jack Black, Decd
      15. Block 20: Annotate the specific reason for the refund in the remarks field. Include all pertinent information. Accounting will need to verify the interest dates are correct and the credit is available for refund.

      16. Block 21: Enter the initiating Business Operating Division (BOD)

      17. Block 22: Enter the document locator number (DLN) of the return or the credit. If the only DLN available is that of an electronically filed return, leave the field blank.

      18. Block 23: Check if the account has a bankruptcy indicator:

      19. Block 24: Check if the account contains a TC 130

        Section II — Manual Refund Authority

      20. Enter the IRM reference in Block 1c and complete all of the other applicable items. Seek Advisory assistance, if necessary:

        • Refer a large dollar manual refund, i.e., $1 million or more, that contains credit interest to Advisory for the interest computation and/or review and approval. See paragraph (6) of IRM 21.4.4.4, Preparation of Manual Refund Forms.

        • Follow these steps when requesting manual refund of levy proceeds:

          • Enter "IRM 5.11.2.4.5" in block 1c.

          • Check all other applicable boxes.

          • Do not request Advisory review/approval if the refund is under $1 million.

        Section III — Interest Computation

      21. Leave blank unless interest will be paid. Follow these steps if interest will be paid:

        • Enter the interest "From" date. See IRM 20.2, Interest, for interest computations.

        • Copy and paste the COMPA calculation into the "Remarks" block of Form 5792 (i.e., Block 20, Section I).

        • Campus personnel will compute the interest for the TC 770 amount and enter it in Block 7, Section I.

        • If the COMPA information will not fit in Block 20, paste it into the body of the transmittal email message.

        • Refer a large dollar manual refund (i.e., $1 million or more) that contains credit interest to Advisory for the interest computation and/or review and approval.

        • See IRM 21.4.4.4(5), Preparation of Manual Refund Forms.

        • Do not request Advisory review/approval when requesting a manual refund of levy proceeds if the refund is under $1 million.

        Note:

        No interest is paid on a manual refund of levy proceeds.

        Section IV — Manual Refund Approval

      22. Block 1: Leave blank. The form processor (the employee inputting CC RFUND) will enter his/her IDRS number.

      23. Block 2-3: Enter your name, employee IDRS number or badge number, and phone number.

      24. Blocks 4, 4a, and 5: Leave blank. The Area Director (AD) will digitally sign in block 4., Campus personnel will ensure the Approving Official who signs the refund is on the Authorized Signature List maintained by the Manual Refund Unit in the Campus Accounting Function.

  4. Review Form 5792 (and Form 3753, if applicable) to verify you completed any necessary IDRS research and completed the form accurately and legibly.

  5. Forward the form to Advisory, if applicable, via secure email.

  6. Secure approval from the group manager (GM), the Territory Manager (TM), and the Area Director (AD). IRM 5.1.12.20.1.8.

    Note:

    Form 5792 is used with CC RFUND to request an IDRS refund. This form cannot be used to issue refunds of $10 Million or more. Use the latest revision of Form 5792. As of January 1, 2016, digital signatures are required on Form 5792. The Approving Official's (i.e., the AD) signature certifies to the Accounting Function that the form was reviewed for accuracy and completeness. Campus personnel will ensure the Approving Official who signs the refund is on the Authorized Signature List maintained by the Manual Refund Unit in the Campus Accounting Function.

  7. Forward Form 5792 (and Form 3753, if applicable), to the Manual Refund Function for processing via secure email. IRM 5.1.12.20.1.8.

    Note:

    Accounting will validate the CC RFUND input with CC REFAP. If the data inputs for both CC RFUND and CC REFAP do not match, the TC 840 will unpost. See IRM 3.17.79.4.2 , RFUND/REFAP Mismatch .

Instructions for Advisory Personnel

Section I

  1. Ensure the form initiator made all the necessary entries on Form 5792 (and Form 3753, if applicable) appropriately and correctly; make corrections to the form(s), if necessary.

    Section II

  2. Ensure all applicable boxes are checked, including the IRM reference in Block 1c; make corrections to the form(s), if necessary.

    Section III

  3. Confirm the form initiator entered the correct "From" date, if applicable. Campus personnel will compute all the interest for the TC 770 amount, if applicable, and will enter the TC 770 amount (allowable interest) in Block 6, Section 1.

    Section IV

  4. Ensure the form initiator appropriately completed his/her name, employee IDRS number or badge number, and phone number in Block 2-3; make corrections to the form(s), if necessary.

  5. Review Form 5792 (and Form 3753, if applicable) to verify that:

    1. the manual refund is appropriate,

    2. proper IDRS research was completed, and

    3. the form(s) was(were) completed accurately and legibly.

  6. Forward Form 5792 (and Form 3753, if applicable), to the revenue officer, via secure email, to secure approval from the GM, the TM, and the AD.

Instructions for Form Processor

  1. The form processor will follow the applicable campus procedures.

Sample Letter Returning Form 1127 Application as Nonprocessable

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Sample Letter Denying Form 1127 Application

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Sample Letter Approving Form 1127 Application for Extension of Time for Payment of Tax

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Sample Form 4844, First Request for Terminal Action for Approved Form 1127 Extension.

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Sample Form 4844, Second Request for Terminal Action for Approved Form 1127 Extension

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