5.19.23 Restitution - Based Assessments Processing

Manual Transmittal

October 27, 2017

Purpose

(1) This transmits revised IRM 5.19.23, Liability Collection, Restitution-Based Assessments Processing.

Material Changes

(1) IRM 5.19.23.1 revised subsection in accordance with Internal Controls requirements.

(2) IRM 5.19.23.1.2(5) added “Corporation” to the bullet list.

(3) IRM 5.19.23.1.3 Clarified that RAPID is established for ALL duplicate assessments and relocated paragraph to IRM 5.19.23.2.2(2).

(4) IRM 5.19.23.1(6) 3rd bullet updated to say payments are received directly from the defendants and the courts.

(5) IRM 5.19.23.2.1(4) added a “Note” to clarify that TC 971 AC 102 is not input on RPP cases or the IMF module of the preparer is the restitution is strictly based on clients returns.

(6) IRM 5.19.23.2.4(1) added TC 290.

(7) IRM 5.19.23.2.4.5(1) added a “Note” that a domestic corporation can be assessed restitution.

(8) IRM 5.19.23.2.4.9(1) added a “Note” that the RBA assessment can be assessed with a TC 290.

(9) IRM 5.19.23.2.6(1) added CC BMFOLT and CC IMFOLT

(10) IRM 5.19.23.2.6(3) and “If And Then” Clarified that Tech Services prepares the forms 3870/3177.

(11) IRM 5.19.23.2.7(2) 2) Changed Client with the “lowest number SSN” to “Client with the earliest dated” assessment.

(12) IRM 5.19.23.3(2) 2) Changed to Court ordered penalties and clarified in the “Note” the order of penalties.

(13) IRM 5.19.23.3.1(1) added an “Exception” when Fee’s and collection costs are cross-referenced.

(14) IRM 5.19.23.3.1 added new (4) Do not attempt to release a freeze on an account with an unreversed TC 780.

(15) IRM 5.19.23.3.4.2(1) added a “Caution” that the MMA is the duplicate amount between linked accounts, do not cross-reference more than the duplicate amount.

(16) IRM 5.19.23.3.5(5) 6th bullet, added clarification that this process applies whenever a TC 400 posts to the account.

(17) IRM 5.19.23.3.5.4(1) added a “Caution” that the MMA is the duplicate amount between linked accounts, do not cross-reference more than the duplicate amount.

(18) IRM 5.19.23.3.6.2(5) first bullet, updated IRM reference from 3.17.243.1 to 3.17.243.3.

(19) IRM 5.19.23.3.6.2.1(2) alpha list a) changed instructions to use CC INTST to determine accrued interest and penalty amounts.

(20) IRM 5.19.23.4(1) added a “Note” that a TC 270 for $0 is input to prevent FTP when it is not included in the restitution order.

(21) IRM 5.19.4(3) added that FTP was included in the restitution order for the following examples and added a “Reminder” that a TC 270 for $0 is input when FTP is not included in the restitution order.

(22) IRM 5.19.23.4.1 example #5 2nd and 3rd bullets reworded for clarity.

(23) IRM 5.19.23.5(1) and (2) re-worded for clarification.

(24) IRM 5.19.23.5 added new (4) that Restitution-based Assessments are not entitled to an interest free period.

(25) IRM 5.19.23.5(5) added “underpayment” interest.

(26) IRM 5.19.23.5(7)(c) “Exception” added additional information and IRM references for LCU interest.

(27) IRM 5.19.23.5(8) bullet list, deleted first bullet and added 2 new bullets for exceptions to the start of the additional 2% interest.

(28) IRM 5.19.23.5(9) re-written for clarity.

(29) IRM 5.19.23.5(10) reworded paragraph for clarification.

(30) IRM 5.19.23.5(12) added a “Note” Interest is computed on the duplicate module and any amount up to what was paid can be cross-referenced.

(31) IRM 5.19.23.5(13) added when it is “mistakenly” created.

(32) IRM 5.19.23.5(14) changed Fraud penalty and Failure to Pay penalties to “all duplicate penalties”.

(33) IRM 5.19.23.5 added new (17) Any assessment that includes a hold code preventing a systemic notice also prevents any accrued failure to pay penalty and accrued interest from posting.

(34) IRM 5.19.23.5 added new (18) to not calculate interest unless you are cross referencing interest.

(35) IRM 5.19.23.5(18) added an “exception” to calculate interest when cross-referencing a payment that predates the TC 340.

(36) IRM 5.19.23.5.1(1) added “when it applies” and reworded for clarity and deleted first “Exception”.

(37) IRM 5.19.23.5.1(1) 2nd reminder deleted “automatic one month suspension for Form 1120.”

(38) IRM 5.19.23.5.1 added new (2) to input TC 971 AC 653 when Rev. Rul 99-40 has been considered.

(39) IRM 5.19.23.5.1 added new (7) for RPP cases when the preparer is in a disaster then the clients are entitled to the disaster suspension.

(40) IRM 5.19.23.5.2(1) reworded for clarity. “Note” changed “would be” to “is to”.

(41) IRM 5.19.23.5.3(4) added an exception for inputting a TC 460 so that interest doesn’t have to be restricted.

(42) IRM 5.19.23.6(2)2) clarified that the Form 3870 was received and request it be sent to CCO RBA.

(43) IRM 5.19.23.6(6)(b)(2) added a note to transfer DPC 26 credits to MFT 31 accounts with the earliest CSED.

(44) IRM 5.19.23.7(3) "Step list" added a note to step 3) to contact TFRP even if CSED is expired to verify the documentation on AMS wasn't missed or the case was worked systemically.

(45) IRM 5.19.23-1 added exhibit of Acronyms.

(46) IPU 17U1084 issued 06-30-2017 IRM 5.19.23.1.1 added Automated Non-Master File (ANMF) to list of systems. This has moved to 5.19.23.1.9(1)

(47) IPU 17U1084 issued 06-30-2017 IRM 5.19.23.1.2(4) clarified the definition of a duplicate assessment. This has moved to 5.19.23.1.1(2).

(48) IPU 17U1084 issued 06-30-2017 IRM 5.19.23.1.4(5) update CCO functional responsibilities to include adjustments and account linkage.

(49) IPU 17U1084 issued 06-30-2017 IRM 5.19.23.2.2 TC 971 / Action Code 18X Definitions table, updated AC 182, 183 and 187.

(50) IPU 17U1084 issued 06-30-2017 IRM 5.19.23.2.6(2) 3rd bullet, added an "Exception" for AC 182/183.

(51) IPU 17U1084 issued 06-30-2017 IRM 5.19.23.3.1 added new (3) to use blocking series 79 when cross-referencing to MFT 05.

(52) IPU 17U1084 issued 06-30-2017 IRM 5.19.23.3.2 added (2) to clarify payments on MFT 31 are immediately available for cross-refernceing.

(53) IPU 17U1084 issued 06-30-2017 IRM 5.19.23.3.6.2(4) removed "Note" that a NMF transcript is required with F1331b.

(54) IPU 17U1084 issued 06-30-2017 IRM 5.19.23.3.6.2(5) revised first bullet to input "Reversal of Previously Posted RBA Credit" in the subject line on the 2-Way memo.

(55) IPU 17U1084 issued 06-30-2017 IRM 5.19.23.3.6.2(8) step list 3) added current ANMF transcript.

(56) IPU 17U1084 issued 06-30-2017 IRM 5.19.23.3.6.2 added (13) to advise that request for NMF transcripts may be received from RO’s via the *SBSE Ogden RBA mailbox.

(57) IPU 17U1084 issued 06-30-2017 IRM 5.19.23.4 added new paragraph (2) for treatment of court ordered penalties assessed without tax.

(58) IPU 17U1084 issued 06-30-2017 IRM 5.19.23.4(7) removed IRM reference IRM 3.17.243.9.9 and changed IRM reference from IRM 20.1.2.1.5 to IRM 20.1.2.2.10.

(59) IPU 17U1084 issued 06-30-2017 IRM 5.19.23.5 added new (8) and 4 bullets for information on NOL’s.

(60) IPU 17U1084 issued 06-30-2017 IRM 5.19.23.5(11) added a "Caution" do not cross-reference more interest than what is owed on the duplicate amount.

(61) IPU 17U1084 issued 06-30-2017 IRM 5.19.23.5(14) added a "Reminder" to verify that all interest computations are included when updating interest.

(62) IPU 17U1084 issued 06-30-2017 IRM 5.19.23.5 add (15) and an "Example" for - Restricted interest on MFT 31 must be updated. If the interest is restricted due to an interest-free period, make sure that the suspension amount is not more than the original refund or credit elect

(63) IPU 17U1084 issued 06-30-2017 IRM 5.19.23.5 add (16) reference to IRM 20.2.11.13 for Restitution-Based Assessment information.

(64) IPU 17U1084 issued 06-30-2017 IRM 5.19.23.5.1(1) added IRM reference 20.2.11.13.1 for interest on RBA related accounts.

(65) IPU 17U1084 issued 06-30-2017 IRM 5.19.23.5.1(4) corrected IRM reference from IRM 20.2.8 to IRM 20.2.5.

(66) IPU 17U1084 issued 06-30-2017 IRM 5.19.23.7(3) step list 3) Note, added to check AMS for TFRP documentation.

(67) IPU 17U1084 issued 06-30-2017 IRM 5.19.23.9(6) 2nd step list .3) changed IRM reference from IRM 20.2.8.3 to IRM 20.2.5.6.

(68) IPU 17U1084 issued 06-30-2017 IRM 5.19.23.10.1(1) Added a note that IDRS controls should be updated during follow-up case actions.

(69) IPU 17U1084 issued 06-30-2017 IRM 5.19.23.10.1(2) Revised Daily Transcript Review description and associated steps.

(70) IPU 17U1084 issued 06-30-2017 IRM 5.19.23 Multiple updates to clarify that AMS should be documented with all initial & follow-up case actions.

(71) IPU 17U0822 issued 05-08-2017 IRM 5.19.23.1.1 Audience, changed Compliance campus to Campus Collection Operations. This has moved to 5.19.23 “Audience”

(72) IPU 17U0822 issued 05-08-2017 IRM 5.19.23.1.1 changed CSCO to CCO (Campus Collection Operations) throughout the document. This has moved to 5.19.23.

(73) IPU 17U0822 issued 05-08-2017 IRM 5.19.23.1.4 removed "Criminal" from the title. This has moved to 5.19.23.1.5 and changed to Roles and Responsibilities.

(74) IPU 17U0822 issued 05-08-2017 IRM 5.19.23.1.4(2) 4th bullet changed "generation and " "to initiate actions for" . This has been removed from the IRM.

(75) IPU 17U0822 issued 05-08-2017 IRM 5.19.23.1.4(3) changed IRM reference from 3.17.243.9.9 to 3.17.243.10.9. This IRM reference has been removed for the IRM.

(76) IPU 17U0822 issued 05-08-2017 IRM 5.19.23.2.1(10) added "in detail, all actions taken" for AMS documentation, added details to 1st and 2nd examples AMS histories and added a 3rd example.

(77) IPU 17U0822 issued 05-08-2017 IRM 5.19.23.2.5(3) changed paragraph to state Large RPP cases with 100 or more clients have specific procedures and the IRM reference to refer to.

(78) IPU 17U0822 issued 05-08-2017 IRM 5.19.23.2.6(2) added 2nd exception for linkages when it is a large RPP case, 100 or more clients.

(79) IPU 17U0822 issued 05-08-2017 IRM 5.19.23.2.7(3) changed criteria for RPP cases when inputting linkage when there is 100, 150 or more clients, and 350 or more clients.

(80) IPU 17U0822 issued 05-08-2017 IRM 5.19.23.2.7 added (5) to contact Exam Tech Services when there has been an abatement on an account to ask if the linkages need to be updated.

(81) IPU 17U0822 issued 05-08-2017 IRM 5.19.23.3.1 added (3) for instructions when working RPP transcript cases.

(82) IPU 17U0822 issued 05-08-2017 IRM 5.19.23.3.1 added (4) for the documentation of any action taken and added an example.

(83) IPU 17U0822 issued 05-08-2017 IRM 5.19.23.3.2(10) added "clear and concise" and "all actions taken" for AMS documentation.

(84) IPU 17U0822 issued 05-08-2017 IRM 5.19.23.3.4(2) added "Exception" for when there are multiple BMF assessments and some have LCU.

(85) IPU 17U0822 issued 05-08-2017 IRM 5.19.23.3.5 added (4) for instructions when cross-referencing multiple payments from multiple clients.

(86) IPU 17U0822 issued 05-08-2017 IRM 5.19.23.3.5 added (5) for instructions when cross-referencing on accounts with potential overflow conditions and added IRM reference 5.19.23.3.6.2 for RBA Non Master File Accounts.

(87) IPU 17U0822 issued 05-08-2017 IRM 5.19.23.3.6.2(1) added a "Note" for when a TC 402 is present on an account, do research to verify the accounts location.

(88) IPU 17U0822 issued 05-08-2017 IRM 5.19.23.3.6.2(4) bullet added a "Note" that a NMF transcript is required with the F1331b.

(89) IPU 17U0822 issued 05-08-2017 IRM 5.19.23.3.6.2(8) added "if the payment is secured by a Revenue Officer they will send F3244 to notify CCO of the payment posting to NMF" and corrected IRM reference in "step list - 5)" from 5.19.23.3.6.3 to 5.19.23.3.6.2.

(90) IPU 17U0822 issued 05-08-2017 IRM 5.19.23.3.6.2 added (12) to monitor and review the ANMF account for the F1331b request and if incomplete or inaccurate, follow up with NMF to correct.

(91) IPU 17U0822 issued 05-08-2017 IRM 5.19.23.3.6.2.1(1) added specific criteria when to do a manual account transfer to ANMF.

(92) IPU 17U0822 issued 05-08-2017 IRM 5.19.23.3.6.2.1(9) added a note to notate "Return Preparer RBA Case" in the remarks section on Form 12810.

(93) IPU 17U0822 issued 05-08-2017 IRM 5.19.23.3.6.2.1(10) added the word" detailed" for the AMS history documentation.

(94) IPU 17U0822 issued 05-08-2017 IRM 5.19.23.5(13) added a second "Note" for when there is an IMF and Multiple BMF adjustments.

(95) IPU 17U0822 issued 05-08-2017 IRM 5.19.23.5(14) added to document "all actions taken" .

(96) IPU 17U0822 issued 05-08-2017 IRM 5.19.23.6(9) 2nd bullet added exception for credits received prior to RBA assessment not refunded or offset within 2 years of the RBA assessment will be considered expired.

(97) IPU 17U0822 issued 05-08-2017 IRM 5.19.23.9(6) added a note to the last bullet to always put the MFT and Tax Period the history item is for.

(98) IPU 17U0822 issued 05-08-2017 IRM 5.19.23.9(7) changed 6th bullet from "change RBA amount" to "delete" RBA amount.

(99) IPU 17U0822 issued 05-08-2017 IRM 5.19.23.9(7) added 7th bullet for adding a history item that says the TIN/Tax Period was abated.

(100) IPU 17U0822 issued 05-08-2017 IRM 5.19.23.10.2 added (2) for what should be included in the documentation.

(101) IPU 17U0798 issued 05-03-2017 Revalidating changes issued with IPU 15U1788 issued 12-14-2015 for IRM 5.19.23.

(102) IPU 16U1619 issued 11-01-2016 IRM 5.19.23.1.4(3) changed IRM 3.17.243.8.9 to 3.17.243.9.9. The IRM referenced has been removed from this IRM

(103) IPU 16U1619 issued 11-01-2016 IRM 5.19.23.2.1 re-added (7) for the input of STAUP 22.

(104) IPU 16U1619 issued 11-01-2016 IRM 5.19.23.2.6(3) if and then chart changed 60 days to 30 days.

(105) IPU 16U1619 issued 11-01-2016 IRM 5.19.23.6(2) changed 60 days to 30 days.

(106) IPU 16U1619 issued 11-01-2016 IRM 5.19.23.6(9) added an exception to not take any action on non MFT 31 accounts when expired credit exists and there are no other modules with balance due with related RBA’s.

(107) Editorial changes made throughout document

(108) IPU 16U1416 issued 09-23-2016 IRM 5.19.23.1.3(3) (5) and (6) changed IRM 2.4.60.3 to IRM 2.4.60.2. This has moved to 5.19.23.2.2(2).

(109) IPU 16U1416 issued 09-23-2016 IRM 5.19.23.1.4(3) updated IRM 3.17.243.7.9 to IRM 3.17.243.8.9. The IRM referenced has been removed from this IRM.

(110) IPU 16U1416 issued 09-23-2016 IRM 5.19.23.2.1(5) Added BMFORGNLCR, RPPORGNLCR and the generation of Potential Overflow Transcript "CROFLOW"

(111) IPU 16U1416 issued 09-23-2016 IRM 5.19.23.2.1(7) Deleted paragraph (7) subsequent paragraphs will be renumbered.

(112) IPU 16U1416 issued 09-23-2016 IRM 5.19.23.2.1(9) Clarified timeliness requirements.

(113) IPU 16U1416 issued 09-23-2016 IRM 5.19.23.2.6(2) fourth bullet, added Exception and three examples to the MMA larger then smallest assessment rule.

(114) IPU 16U1416 issued 09-23-2016 IRM 5.19.23.2.7(3) Added requirement to use *SBSE TECH Svs Criminal Restitution mailbox to return Form 3177.

(115) IPU 16U1416 issued 09-23-2016 IRM 5.19.23.3.2 Added new paragraph (4) required input of X-Ref information during cross-referencing. Renumbered old paragraphs (4) through (9) to (5) through (10) new (7) If and Then Chart TC680 changed to “do not cross-reference until all tax is paid”.

(116) IPU 16U1416 issued 09-23-2016 IRM 5.19.23.3.6.2(2) Added new paragraph to explain the generation of the "CROFLOW" transcript.

(117) IPU 16U1416 issued 09-23-2016 IRM 5.19.23.3.6.2(6) and (8) Revised to change input a history to AMS in place of ANMF

(118) IPU 16U1416 issued 09-23-2016 IRM 5.19.23.3.6.2(10) Removed "and CC RAPID" to input a history.

(119) IPU 16U1416 issued 09-23-2016 IRM 5.19.23.4(7) Updated IRM 4.4.12.4.19.6 to IRM 4.4.12.5.19.

(120) IPU 16U1416 issued 09-23-2016 IRM 5.19.23.4(9) Updated IRM 20.1.2.2.8 to IRM 20.1.2.2.8.1.2 and added a note to clarify that the preparer is not entitled to the 1/4% decrease.

(121) IPU 16U1416 issued 09-23-2016 IRM 5.19.23.5(8) Updated IRM 20.2.8 to IRM 20.2.5.6.3.

(122) IPU 16U1416 issued 09-23-2016 IRM 5.19.23.5(9) Updated IRM 20.2.6.4 to IRM 20.2.1.6 and added "and Reports" and updated IRM 20.2.6.6 to IRM 20.2.5.1.3.

(123) IPU 16U1416 issued 09-23-2016 IRM 5.19.23.5(13) Added an exception and example to computing interest where there are multiple assessments.

(124) IPU 16U1416 issued 09-23-2016 IRM 5.19.23.5.1(2) Added new paragraph (2) for interest-free periods for employment returns and renumbered paragraphs (2),(3) (4) to (3),(4) (5).

(125) IPU 16U1416 issued 09-23-2016 IRM 5.19.23.5.1(3) Updated IRM 20.2.8.7 to IRM 20.2.7.8.

(126) IPU 16U1416 issued 09-23-2016 IRM 5.19.23.5.1(4) Updated IRM 20.2.8.2 to IRM 20.2.7.9.

(127) IPU 16U1416 issued 09-23-2016 IRM 5.19.23.5.1(5) after last bullet updated IRM 20.2.7.10 to IRM 20.2.7.11.2.

(128) IPU 16U1416 issued 09-23-2016 IRM 5.19.23.5.2(1) Added sentence to clarify 13-day back-off prior to 01-01-2012 and revised back-off from 13 days to 18-day back-off on second example.

(129) IPU 16U1416 issued 09-23-2016 IRM 5.19.23.5.3 Added new paragraph (3) for FTD penalty and renumbered old (3) (4) to (4) (5) and added a Note to (4) on interest start dates for civil penalties.

(130) IPU 16U1416 issued 09-23-2016 IRM 5.19.23.6 Added new paragraph (10) for deposits under IRC 6603. Renumbered old paragraphs (10), (11), (12) to (11), (12), (13).

(131) IPU 16U1416 issued 09-23-2016 IRM 5.19.23.6(9) Added two cautions to clarify RBA assessments/payments and RSED.

(132) IPU 16U1416 issued 09-23-2016 IRM 5.19.23.7(3) removed TFRP State Mapping Table and referred to SERP Who/Where for that information.

(133) IPU 16U1416 issued 09-23-2016 IRM 5.19.23.9(6) forth bullet corrected IRM 20.2.8.3 to IRM 20.2.8.3.

Effect on Other Documents

This supersedes IRM 5.19.23 dated 07-31-2015. The following IPUs are incorporated into this IRM:. IPU 16U1416, 16U1619, 17U0822, 17U1084, and 17U0798 issued from September 23, 2016 through May 03, 2017.

Audience

This document is intended for use by Small Business Self Employed (SB/SE) Campus Collection Operations employees who process Collection work.

Effective Date

(10-27-2017)

Kristen Bailey, Director
SBSE Headquarters Collection
Collection Policy

Program Scope and Objectives

  1. Purpose: The Internal Revenue Service (IRS) is mandated to assess and collect the amount of court ordered restitution in a criminal case in the same manner as tax. These assessments often create duplicate IRS debts for the same type of tax and tax periods as an existing original return or a civil exam assessment. IRS manually calculates and cross-references all applicable payments and credits to related duplicate assessments. Casework is complex due to the diversity of calculations that must be performed to determine specific tax, penalty and interest applications on the vast array of account types. This methodology facilitates adherence to the legislative mandate to collect the full amount of the liability only once.

  2. Audience: This Internal Revenue Manual (IRM) section contains instructions for Restitution-Based Assessments (RBA) Program collection functions in Campus Collection Operations. Campus personnel includes tax examiners, clerks, and associated management staff.

  3. Policy owner: Director, Small Business / Self Employed, Collection Operations, Headquarters Collection, Collection Policy.

  4. Program owner: Small Business / Self Employed, Collection Operations, Headquarters Collection, Collection Policy, Employment Tax.

  5. Primary Stakeholders: External stakeholders include, but are not limited to: the Department of Justice, Government Accountability Office, taxpayers, and taxpayer representatives. Internal stakeholders include, but are not limited to: Criminal Investigation, Examination, Collection, Accounting, Chief Financial Officer, and Counsel.

    • Criminal Investigation (CI) notifies Examination and the Collection Advisory Probation Liaison when they close a case with a judgment that may require Examination and/or Collection action(s).

    • SB/SE Examination Technical Services (Exam TS): All closed CI cases are routed to Exam TS for appropriate civil disposition. When a case with restitution is ordered payable to the IRS by the court, it may include a possible civil examination. Exam TS is responsible for determining duplicate assessment amounts, creation of the MFT 31 accounts, initiating account linkages, and ensuring the assessments are posted to IDRS. See IRM 4.8.6, Criminal Restitution and Restitution-Based Assessments, if additional information is required.

    • W&I Kansas City (KC) Restitution Unit is responsible for processing restitution payments that are received either directly from the defendants or the courts. KC posts the payments to IDRS or holds them in the Revenue Account Control System (RACS) 6400 account until Exam TS advises them that the RBA account is being established. See IRM 3.17.243.10.9, Miscellaneous Accounting, if additional information is required.

    • SB/SE Exam Centralized Case Processing (CCP) processes Forms 3177 and Forms 3870 from Exam TS to establish MFT 31 accounts, input original RBA assessments, and create IDRS CC RAPID for all RBA accounts.

    • SB/SE Field Collection is comprised of Collection Advisory and Collection Field Areas. Collection Advisory coordinates and monitors probation and restitution cases and ensures timely exchange of information. The Advisor, or Advisory Probation Liaison (APL) monitors the Conditions of Probation (COP) and reports noncompliance to the Department of Justice (DOJ), and coordinates Civil and criminal aspects of probation and restitution cases with Field Area ROs, other internal customers, U.S. Probation, and the Department of Justice Financial Litigation Units. Collection Field Areas consist of RO groups that investigate RBA balance due cases received systemically or as requested by Advisory. They make collectibility determinations and take administrative actions to collect the assessed restitution and other amounts owed by the taxpayer. See IRM 5.1.5, Balancing Civil & Criminal Cases, if additional information is required.

    • Taxpayer Advocate Service (TAS) is an independent organization within the IRS whose employees assist taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working as it should. TAS criteria include economic burden, systemic burden, best interest of the taxpayer, and public policy (as determined solely by the National Taxpayer Advocate (NTA)). TAS is responsible for assisting taxpayers who have unresolved problems with the IRS. See IRM 13.1.7, Taxpayer Advocate Service, (TAS) Case Criteria, if additional information is required.

  6. Program Goals: Duplicate assessments artificially inflate the dollar amount of total IRS balance due accounts. It is critical that RBA cross-referencing of payment and credit case actions adhere to a very high standard of account accuracy and timeliness requirements in order provide quality customer service, maintain public trust in the Organization, and satisfy GAO & CFO requirements associated to the IRS Financial Statements that go to Congress.

Background

  1. In a criminal case, a court can require a defendant to pay the losses incurred by the government by ordering restitution be paid to the IRS. The amount of the tax loss is calculated from evidence admitted at trial or from information contained in the plea agreement and presented to the court at sentencing. This court ordered restitution is assessed and collected in the same manner as tax.

  2. RBA may be duplicate wholly or in part to original tax return or civil assessments. Because these debts stem from the same underlying tax liability, the full amount can only be collected once. Therefore, any payments that wholly or in part satisfy the RBA and any associated penalties and interest must also be applied against the underlying tax liability for the same type of tax and tax periods (e.g., duplicate civil and/or co-defendant assessments), provided the RBA and/or penalties and interest relate to the underlying tax liability. Conversely, any payments/credits that wholly or in part satisfy the underlying tax liability and any associated penalties and interest for the same type of tax and tax periods will be applied against the RBA and/or penalties and interest.

  3. The defendant ordered to pay restitution may be one or more of, but is not limited to the following:

    • Individual Taxpayer

    • Spouse on a joint account

    • Officer or employee of a corporation

    • Partner or employee of a partnership

    • Employee of a sole proprietorship

    • Corporation

    • Corporate Director

    • Client of Return Preparers

    • Return Preparers

    • Tax Shelter Promoter

  4. Duplicate assessments include the RBA which are generally made on MFT 31 accounts, and civil tax, penalties, and interest assessed and accrued on each respective party's underlying tax account. Two defendants may owe different duplicate assessment amounts for the same period. The duplicate assessment may or may not be equal to the RBA amount. Those accounts include, but are not limited to, the following forms:

    • Form 1040 US Individual Income Tax Return (MFT 30)

    • Form 720 Excise Tax Return (MFT 03)

    • Form 941 Employer's Quarterly Federal Tax Return (MFT 01, 17*)

    • Form 940 Employer's Annual Federal Unemployment Tax Return (MFT 10)

    • Form 1120 US Corporation Income Tax Return (MFT 02)

    Note:

    *Indicates Non-Master File (NMF)

  5. RBA MFT 31 accounts are established to separate assessment modules to ensure that collection action is taken individually against joint accounts. Each defendant may be liable for different amounts, and each defendant may have different penalty and/or interest suspension periods. When duplicate assessments have been identified against an individual or defendant, those assessments can only be collected once.

Authority

  1. Public Law No. 111-237 amended IRC § 6201 to provide that the IRS shall assess and collect the amount of restitution ordered in a criminal case for failure to pay any tax imposed by the Internal Revenue Code in the same manner as if such amount were such tax. The law applies to restitution orders entered after August 16, 2010. Whether a criminal restitution order can be assessed as a tax under IRC § 6201(a)(4) depends on whether the restitution ordered is traceable to a tax imposed by Title 26. The law also amended IRC § 6213(b)to stipulate that a notice of assessment of restitution is not a notice of deficiency and may not be petitioned to Tax Court, and IRC § 6501(c) to address the unlimited assessment period for restitution-based assessments (RBAs).

Roles and Responsibilities

  1. Director, Collection Policy, is responsible for overseeing program coordination for Restitution-Based Assessments policies, strategies, objectives, and procedures. Directs evolving program issues and collaborates with stakeholders to ensure RBA financial reporting requirements meet GAO & CFO standards. Clarifies tax code issues within this IRM.

  2. Director, Campus Collection, has administrative responsibility for all Campus managerial and RBA program responsibilities. Provides adequate funding and staffing of Campus personnel to ensure RBA financial reporting requirements meet GAO & CFO standards. Promotes adherence to RBA IRM program processes and procedures to ensure IRS meets the needs of the customers and the Organization.

  3. Director, Campus Operations, has administrative responsibility for Campus management and RBA employees. Maintains adequate RBA staffing and ensures full and efficient utilization of RBA funding allocations. Promotes adherence to RBA IRM program processes and procedures. Certifies the accuracy and timeliness of RBA casework on a quarterly basis.

  4. Campus Operations Manager oversees RBA department, team and employee actions. Ensures RBA employees are provided with appropriate tools and training to perform their jobs and casework meets RBA IRM accuracy and timeliness requirements. Facilitates efficient usage of RBA funding allocations and performs all necessary actions to maintain proper staffing levels.

  5. Campus Department Manager oversees RBA team and employees actions. Ensures RBA employees are provided with appropriate tools and training to perform their jobs and casework meets RBA IRM accuracy and timeliness requirements. Reviews all local RBA program inventory and quality review reports to confirm accuracy. Initiates and monitors actions to identify and resolve case errors and error trends. Resolves internal campus RBA processing issues. Elevates complex RBA program questions to Collection Policy Headquarter (HQ) Analysts.

  6. Campus Team Manager is responsible to manage employees and programs in their team. Oversees employee actions and assigns inventory. Ensures employees are provided with appropriate tools and training to perform their jobs and casework meets RBA IRM accuracy and timeliness requirements. Oversees the preparation of RBA team quality review and inventory reports and checks them for accuracy. Suggests actionable items to identify and resolve errors and error trends. Resolves routine internal campus RBA processing issues. Elevates complex RBA program issues to RBA Department Manager.

  7. Campus Tax Examiners work their assigned cases in accordance with RBA IRM accuracy and timeliness requirements. Their responsibilities include, but are not limited to, the cross-referencing of all payments and credits to related duplicate assessments, establishing account linkages on IDRS, adjusting existing RBA assessments, responding directly to taxpayers and/or their representatives on inquiries regarding these accounts, performing quality reviews, preparing inventory and quality review reports, and varied interactions with other RBA program functions within the organization.

Program Management and Review

  1. Program Reports: Local campus reports are submitted via the Batch/Block Tracking System (BBTS) to the Work Planning & Control (WP&C) reports. The WP&C is used to monitor rates, receipts and closures to determine if cases are being received and subsequently closed. WP&C reports are located on the Business Objects platform. Accounts Management Services (AMS) reports also provide information on inventory and inventory age. Integrated Data Retrieval System (IDRS) Case Control Activity System (CCA) reports detail the cases assigned to an operation, department, team or employee; they are located on Control D.

  2. Program Effectiveness: The program goals and results are housed on the Collection Program and Campus Reports SharePoint site in the Monthly Monitoring Report (MMR).The MMR captures monthly and cumulative data on inventory and rates, as well as periodic snapshots of aged case percentages.

Program Controls

  1. IRS Master File is programmed to generate transcripts when specified activity occurs on RBA and / or related duplicate tax modules. These transcripts are loaded into AMS and then distributed to tax examiners. Taxpayer correspondence and Form 4442 referrals are controlled and assigned to the tax examiners on IDRS. Additionally, *SBSE Ogden RBA is a designated and secured e-mail box that is utilized by other areas (largely Exam TS) to communicate case action requests to the RBA Team. These inventory mechanisms and employee actions are monitored by the Campus Operation, Department, and Team managers, along with Collection Policy HQ Analysts.

Terms & Acronyms

  1. The following is a list of commonly used terms in this IRM.

    Term Definition
    generally in most cases; usually
    appropriate or applicable suitable or proper in the circumstances
  2. See Exhibit 5.19.23-1 for a list of Acronyms (abbreviations) commonly used in this IRM.

Related Resources

  1. This program may require research specific to the program including access and input to the Integrated Data Retrieval System (IDRS) with and without Integrated Automation Tools (IAT), the Accounts Management System (AMS), the Automated Insolvency System (AIS), the Automated Non-Master File (ANMF) system, and use of the Decision Modeling Inc.(DMI) / Automated Computational Tool (ACT) penalty and interest calculation tool.

  2. The RBA program involves both paper and telephone contact with internal and external customers, and follows additional guidelines set forth in the Taxpayer Advocate Program and other relevant IRMs referenced in this document.

Transcripts

  1. Restitution-Based Assessments are identified by a tax adjustment TC 290 or TC 298 containing an Adjustment Reason Code 141 through 150. See the chart below for code definitions.

    Reason Code Definition
    141 Criminal restitution assessment with IMF client returns of the preparer the basis for the underlying tax liability, with duplicate or possible duplicate Civil assessments

    Note:

    Prior to January 2014, RC 141 represented restitution assessments with IMF underlying tax liability, no duplicate assessment.

    142 Criminal restitution assessment with BMF client returns of the preparer the basis for the underlying tax liability, with duplicate or possible duplicate Civil assessments

    Note:

    Prior to January 2014, RC 142 represented restitution assessments with BMF underlying tax liability, no duplicate assessment.

    143 Criminal restitution assessment with IMF underlying tax liability, with duplicate or possible duplicate Civil assessment
    144 Criminal restitution assessment with BMF underlying tax liability, with duplicate or possible duplicate Civil assessment
    145 Criminal restitution assessment with IMF underlying tax liability, with duplicate criminal restitution assessment
    146 Criminal restitution assessment with BMF underlying tax liability, with duplicate criminal restitution assessment
    147 There is reasonable cause to waive the FTP penalty, if known.
    148 There is NO reasonable cause to waive the FTP penalty, if known.
    149 RESERVED
    150 Used with CRN 337 to cross-reference payments

Restitution Case Processing Overview

  1. A Restitution-Based Assessment (RBA) case is defined as all related accounts that are associated with specific MFT(s) and tax period(s) that have been ordered by the court to pay unpaid taxes and/or restitution resulting from criminal conduct. Payments and/or credits that have posted to the account(s) require manual cross-referencing to ensure the amount owed is collected only once.

  2. Ogden CCO Operation is responsible for the RBA program actions pertaining to the cross-referencing of payments and credits that are applied to those accounts on IDRS.

  3. RBA transcript case processing consists of transcripts delivered either by paper, Control-D, or AMS. Any transactions(s) required to be input must be input directly to IDRS.

  4. Generally, a TC 971 AC 102 is input on the underlying tax liability account in order to establish the MFT 31 accounts (for jointly filed accounts, this will be the primary taxpayer).

    Exception:

    The TC 971 AC 102 is not input to an associated BMF tax module. TC 971 AC 18X is used to link accounts and identify duplicate assessment amounts, if any, in the Memo Money Amount (MMA) field.

    Exception:

    When restitution is ordered on a preparer, the RBA is strictly based on client returns. A TC 971 AC 102 is not input on the preparer’s IMF module or the client modules. It is input on the MFT 31 account only to identify it as a RBA account.

  5. Campus RBA inventory is initiated by the following computer generated transcripts:

    • ORIGINALCR – generated to notify CCO that a RBA posted to an IMF account;

    • BMFORGNLCR - generated to notify CCO that a RBA posted to a BMF account

    • RPPORGNLCR - generated to notify CCO that a RBA posted to an RPP account

    • CRPAYMTMIR – generated to notify CCO that a payment/debit or credit posted to an Individual Master File account with a RBA.

    • RESTPAYT - generated to notify CCO that a payment/debit or credit posted to a Business Master File account with a RBA.

    • REF766337 - generated to notify CCO that a payment or credit has posted to a module containing a TC 766 CRN 337 and the module balance is credit.

    • CROFLOW - generated to notify CCO when MFT 31 modules with a posted TC 971 AC 102 are nearing overflow status.

  6. Transcripts will systemically generate when a RBA TC 29X RC 14X posts to an account, and when an unreversed TC 971 AC 18X and/or TC 29X RC 14X is posted to the module and:

    1. A payment transaction, debit or credit posts to the module (TC 6XX through TC 8XX), excluding TC 76X CRN 337

    2. Any TC 29X, 30X or 32X for an amount more than $.00 posts to the module,

    3. A module goes Status 12 or becomes full paid including accruals

  7. Upon receipt of an ORIGINALCR, BMFORGNLCR, or RPPORGNLCR transcript, input a STAUP 22 for 9 Cycles. See SERP Job Aids for CC STAUP input information. Review the account and input a TC 472 if an unreversed TC 470 cc 90/93 is posted.

  8. Upon receipt of any RBA transcript, review the Adjustment Reason Code associated with the RBA to determine the case type, i.e., IMF, BMF or RPP. If MFT 31 has a posted TC 971 AC 184/185 with a cross-reference MFT 30, input TC 290 as indicated below:

    If RBA Adj RC contains AND Then input to the associated MFT 30
    141 or 142 and the TC 290 posted after Jan. 31, 2014 A TC 290 $.00 with same RC, 141 or 142 is not posted to the MFT 30 module TC 290 $.00 with same RC, 141 or 142. Input with hold code (HC) 4 and priority code (PC) 5.
    144 or 146 A TC 290 $.00 with same RC, 144 or 146 is not posted to the MFT 30 module TC 290 $.00 with same RC, 144 or 146. Input with hold code (HC) 4 and priority code (PC) 5.
  9. Payments and credits must be cross-referenced to all related accounts by the later of;

    • 43 days from the date of the transcript

    • 9 cycles from the assessment posting cycle

    • 9 cycles from the posting cycle of the pair of TC 971 AC 18X linkage that is in accordance with IRM 5.19.23.2.6

    ; or .

    Note:

    If the related TC 971 AC 18X is not posted to the account, or the MMA is not in accordance with IRM 5.19.23.2.6 , perform all case actions that can be accomplished and close the transcript case. Request Form 3177 in accordance with IRM 5.19.23.2.6 .

    Reminder:

    All related cross-referencing resulting from a transfer or offset of the originating payment or credit must be completed within 14 days of the date of the initial case action.

  10. When processing RBA payments and or credits, take all necessary actions to ensure that posted payments have been cross-referenced to all appropriate accounts. Input a detailed history item on AMS to document all actions taken including the payment allocation (e.g., tax, type of penalty, interest) and method and/or tool used to calculate the interest.

    Example:

    A payment was made for tax period 2006 in the amount of $1,000.00 of which $300.00 was applied to pay the remaining duplicate assessment balance for the 200612 tax period and was cross-referenced to related accounts. $700.00 of the $1,000 payment was transferred to tax period 200712 and cross-referenced to the duplicate assessment. History AMS as follows:

    “$300 from pmt dtd MMDDYY for $1,000 xref’d to MFT 30= $200 RBA; $100 int was computed to MMDDYY using suspension period of 4/15/07 to 5/2/07 on $$$$; $700 from pmt dtd MMDDYY transferred to 200712 and xref’d to MFT 30 = RBA”

    Example:

    A payment for $1,000.00 has posted to the RBA module. The duplicate RBA and Civil assessment balance for 2006 is paid in full. A duplicate Fraud penalty in the amount of $775.00 and a Failure to Pay (FTP) penalty of $225.00 remain on the 200612 RBA module. FTP computed on the Civil assessment is $125.00. $900.00 is cross-referenced to fully pay the duplicate Fraud penalty and the computed FTP on the Civil assessment. Since the amount cross-referenced for FTP is limited to the amount computed for the Civil assessment, only $125.00 can be cross-referenced. The remaining $100.00 of the $1,000 payment is applied to FTP on the RBA. History the account as follows:

    “$1,000.00 pmt dtd MMDDYY; $900.00 xref’d to MFT 30= $775 Fraud P; $125 FTP

    Example:

    Three payments were made on MFT 30 for tax period 2009. $500.00 dated 2-10-2011, 500.00 dated 3-10-2011 and $700.00 dated 4-10-2011. All three payments were cross-referenced to MFT 31 and fully paid the dup RBA. AMS was documented as follows; “AMS history dated 3-20-2016; $500.00 dated 2-10-11, $500.00 dated 3-10-11 and $700.00 dated 4-10-11 cross-referenced from MFT 30 to MFT 31 and full pays dup RBA. Then a payment for $500.00 dated 1-15-2011 posted to MFT 30. This payment was cross-referenced to MFT 31 causing the previously cross-referenced payment for $700.00 dated 4-10-2011 to be reallocated. $200.00 full pays the dup RBA, $300.00 pays assessed interest and $200.00 pays FTP on the civil account. History AMS as follows:

    “$500.00 dated 1-15-2011 xref’d from MFT 30 to MFT 31 for dup RBA. Correction to previous history dated 3-20-2016, $700.00 dated 4-10-11 previously xref’d from MFT 30 to MFT 31 for dup RBA was reallocated due to the earlier dated payment being xref’d after the $700.00. Reallocation of $700.00 = $200.00 full pays dup RBA, $300.00 pays assessed interest and $200 was reversed and pays non dup FTP on MFT 30.

  11. The Integrated Automation Technologies (IAT) provides tools that simplify research, reduce keystrokes, eliminates repetitive typing, and increases the accuracy of regular work processes.

  12. The use of IAT is mandatory and limited to the certain IAT Tools listed below. Additional IAT tools will be added to the list when one is deemed beneficial and seen as adding quality to Campus Collection work processes. For User Guides, see the IAT web site at http://iat.web.irs.gov/JobAids/iat.asp

    • Manual Refund

    • Erroneous Refund

    • Credit Transfer

    • Fill Forms

  13. If an IAT tool is not available, or an employee has a problem with the IAT Task Manager, the case should be processed through IDRS, following established procedures. See the IAT Website at http://iat.web.irs.gov/ for how to report/fix problems with IAT tools.

  14. IAT tool users can visit the IAT Website, to become a subscriber to the IAT newsletter. The iNews details all ongoing IAT activity with tool retirements and rollouts.

Initial Case Creation

  1. TC 971 AC 18X action codes are used to define and link Restitution-Based Assessments (RBA) and associated Fraud penalties to duplicate and non-duplicate RBA, Civil, and Fraud penalty assessments and/or to underlying tax liabilities for a specific TIN, MFT, and tax period. The linkages are applied to the accounts in pairs (i.e., TC 971 “points” to a TIN / MFT / tax period and the corresponding TIN / MFT / tax period “points” back). The Memo Money Amount (MMA) field is used to identify the duplicate dollar amount of the common tax issues. See IRM 5.19.23.2.6.

    Exception:

    For co-defendants where the only duplicate assessment is the co-defendants restitution assessments and there is no duplicate Civil tax assessment on the individual income tax module(s), a TC 971 AC 180/181 should not be coded.

    .

    TC 971 / Action Code 18X Definitions

    ACTION CODE NO DUPLICATE ASSESSMENT
    180 Input on RBA module (MFT 31) to cross-reference the module with the underlying tax liability (MFT 30, 01, 02, 10, etc.). No duplicate assessment (MMA = Zero). Taxes Receivable
    181 Input on module with underlying tax liability (MFT 30, 01, 02, 10, etc.) to cross-reference the RBA module (MFT 31) where the tax is assessed and collected as Restitution-Based Assessment. No duplicate assessment (MMA = Zero).
    187 Input on RBA module (MFT 31) to cross-reference the module with the underlying tax liability (MFT 30, 01, 02 etc.) when NO associated tax module exists. No duplicate assessment (MMA = Zero). Taxes Receivable.
    Action Codes DUPLICATE PENALTY ASSESSMENT

    (182/183 Codes not used unless a duplicate exists)
    182 Input on module with duplicate Fraud Penalty with or without associated tax assessment(MMA = $$$ amount of the duplicate), or for other court ordered penalties without associated tax assessment (MMA = Zero), where module assessment(s) is smaller, to cross-reference module(s) with duplicate assessment where module assessment(s) is larger. If assessments are the same, put the TC 971 AC 183 on either the primary SSN (TPH/TPW) or the Lead Co-Defendant account and the TC 971 AC 182 on the remaining duplicates.
    183 Input on module with duplicate Fraud Penalty with or without associated tax assessment,(MMA = $$$ amount of the duplicate) or for other court ordered penalties without associated tax assessment (MMA = Zero), where module assessment(s) is larger, to cross-reference module(s) with duplicate Civil assessment where module assessment(s) is smaller. If assessments are the same, put the TC 971 AC 183 on either the primary SSN (TPH/TPW) or the Lead Co-Defendant account and the TC 971 AC 182 on the remaining duplicates.
    Action Codes DUPLICATE RBA/CIVIL ASSESSMENT
    184 Input on module with duplicate RBA/Civil assessment, where module assessment(s) is smaller, to cross-reference module(s) with duplicate RBA/Civil assessment where module assessment is larger. (MMA = $$$ amount of the duplicate) EXCEPTION: On cases with multiple co-defendants where one or more parties are Civilly assessed, link Civil to co-defendant with TC 971 AC 184 to TC 971 AC 184.
    185 Input on module with the duplicate RBA/Civil assessment, where module assessment(s) is larger, to cross-reference module(s) with duplicate RBA/Civil assessment where module assessment(s) is smaller. (MMA = $$$ amount of the duplicate)Taxes Receivable. ⋆⋆When RBA and Civil assessment amounts are equal, normally the TC 971 AC 185 will be on the MFT 31 module - EXCEPTION: if the Fraud Penalty (TC 320) or Fraudulent Failure to File Penalty (TC 240 PRN 686) has been assessed on MFT 30 creating a larger assessed balance, then Action Code TC 971 AC 185 will be used on MFT 30 and TC 971 AC 184 will be on MFT 31.
    Action Codes DUPLICATE RBA WITH CO-DEFENDANT
    188 Input on Co-Defendant module with duplicate RBA, where module assessment(s) is the same or smaller, to cross-reference module(s) with duplicate RBA on the Lead (primary) co-defendant assessment is the same or larger. (MMA = $$$ amount of the duplicate) EXCEPTION: On cases with multiple co-defendants, the Lead co-defendant will have the TC 971 AC 189 and linked to all co-defendants, and all co-defendants will have a TC 971 AC 188 linked to another TC 971 AC 188 on each other's co-defendant.
    189 Input on RBA module(s) of Lead (primary) defendant to cross-reference duplicate RBA module to all other co-defendants, (MMA = $$$ amount of the duplicate).Taxes Receivable

     

  2. Restitution Based Assessment Database (IDRS Command Code RAPID)

    • The Restitution Assessment Database (commonly referred to as RAPID) is established for all duplicate assessments. It contains a record of the duplicate amount of the restitution assessment for the defendant taxpayer; and the related entities for each tax period where a duplicate RBA, original tax return, or Civil assessment exists. The file is established by Exam Consolidated Case Processing (CCP) during assessment processing using IDRS CC RAPID.

    • CC RAPID, along with one of four definers, will allow an individual to research, establish, change and delete restitution assessment cross-reference information on the Restitution Assessment Database using IDRS. The four definers are space, “R”, “C” and “D”.

    • CC RAPID with definer space is used to establish a primary assessment record or related account record on the Restitution Assessment Database. The first step will be to enter the CC RAPID, the definer space, a TIN, and Request Type of “P” (Primary) or “R” (Related) on line 1. In response, one of two screen formats will be displayed. The information that will be input with each of these screen formats must be input on designated line numbers. See IRM 2.4.60.2, CC RAPID with Definers, for the designated line numbers.

    • CC RAPID with definer “R” is used to research restitution assessment cross-reference information on the Restitution Assessment Database utilizing IDRS. Information can be researched about a primary assessment or about any of the related account of an assessment.

    • CC RAPID with definer “C” is used to change information on or add information to the Restitution Assessment Database for a primary or related account that is presently on the Restitution Assessment Database. The information that is being input must be entered on designated line numbers. See IRM 2.4.60.2, CC RAPID with Definers, for the designated line numbers. The CC RAPID with definer space is a prerequisite for using the CC RAPID with definer “C”.

    • CC RAPID with definer “D” is used to delete information from the Restitution Assessment Database for a primary or related account. The information that is being deleted must be entered on designated lines. See IRM 2.4.60.2, CC RAPID with Definers, for the designated line numbers. The CC RAPID with definer “R” is a prerequisite for using the CC RAPID with definer “D”.

Linking IMF Restitution Accounts

  1. IMF case types are the result of a tax loss to the government, where the basis for the RBA is an individual income tax return. IMF case types are identified by an Adjustment Reason Code 143 or 145 associated with the RBA TC 290. The following examples demonstrate how TC 971 action codes are applied for IMF RBA cases.

Single Defendant and/or Married Taxpayers Filing Separate Returns with No Co-defendant
  1. See Examples 1 though 5 below.

    Example:

    #1

    RBA/No Duplicate Civil Assessment

    MFT 30 MFT 31
    TC 971 AC 102 to create MFT 31 TC 971 AC 102 generated from MFT 30
      TC 290 $10,000.00
    TC 971 AC 181 to point to MFT 31 TC 971 AC 180 to point to MFT 30

     

    Example:

    #2

    RBA with Duplicate Civil Assessment

    MFT 30 MFT 31
    TC 971 AC 102 to create MFT 31 TC 971 AC 102 generated from MFT 30
    TC 300 $10,000.00 TC 290 $10,000.00
    TC 971 AC 184 to point to MFT 31 TC 971 AC 185 to point to MFT 30

     

    Example:

    #3

    Duplicate RBA and Civil Assessments Fraud Penalty that is not a Duplicate

    MFT 30 MFT 31
    TC 971 AC 102 to create MFT 31 TC 971 AC 102 generated from MFT 30
    TC 300 $10,000.00
    TC 320 $3,000.00
    TC 290 $8,000.00
    TC 971 AC 185 to point to MFT 31 TC 971 AC 184 to point to MFT 30

     

    Example:

    #4

    Duplicate RBA and Civil Assessments Fraud Penalty that is not a Duplicate

    MFT 30 MFT 31
    TC 971 AC 102 to create MFT 31 TC 971 AC 102 generated from MFT 30
    TC 300 $10,000.00 TC 290 $8,000.00
    TC 320 $3,000.00
    TC 971 AC 184 to point to MFT 31 TC 971 AC 185 to point to MFT 30

     

    Example:

    #5

    Duplicate RBA and Civil Assessments Duplicate Fraud Penalty

    MFT 30 MFT 31
    TC 971 AC 102 to create MFT 31 TC 971 AC 102 generated from MFT 30
    TC 300 $9,000.00
    TC 320 $2,000
    TC 290 $10,000.00
    TC 320 $3,000.00
    TC 971 AC 184 to point to MFT 31
    TC 971 AC 182 to point to MFT 31
    TC 971 AC 185 to point to MFT 30
    TC 971 AC 183 to point to MFT 30
Single Defendant and/or Married Taxpayers Filing Separate Returns with Co-Defendant
  1. In cases where taxpayers file separate returns, the Civil assessment is a duplicate only to the same individual’s RBA.

    Example:

    #6


    Taxpayer Husband (TPH) and Taxpayer Wife (TPW) Liable No Duplicate Civil Assessment Duplicate RBA TPH = Taxpayer Husband- Lead-Defendant; TPW = Taxpayer Wife-Co-Defendant

    TPH MFT 30 TPW MFT 30

    TC 971 AC 102 to create TPH MFT 31
    TC 971 AC 181 to point to TPH MFT 31

    TC 971 AC 102 to create TPW MFT 31
    TC 971 AC 181 to point to TPW MFT 30
    TPH MFT 31
    TC 971 AC 102 generated from TPH MFT 30
    TPW MFT 31
    TC 971 AC 102 generated from TPW MFT 30
    TC 290 $15,000.00 TC 290 $10,000.00
    TC 971 AC 180 to point to TPH MFT 30
    TC 971 AC 189 to point to TPW MFT 31
    TC 971 AC 180 to point to TPW MFT 30
    TC 971 AC 188 to point to TPH MFT 31

    Example:

    #7


    Taxpayer #1 and Taxpayer #2 Liable No Duplicate Civil Assessment Duplicate RBA Fraud Penalty that is not Duplicate TP1 = Taxpayer -Lead-Defendant; TP2 = Taxpayer Co-Defendant

    TP1 MFT 30
    TC 971 AC 102 to create TP1 MFT 31
    TC 971 AC 181 to point to TP1 MFT 31
    TP2 MFT 30
    TC 971 AC 102 to create TP2 MFT 31
    TC 971 AC 181 to point to TP2 MFT 31
    TP1 MFT 31
    TC 971 AC 102 generated from TP1 MFT 30
    TP2 MFT 31
    TC 971 AC 102 generated from TP2 MFT 30
    TC 290 $15,000.00
    TC 320 $3,000.00
    TC 290 $10,000.00
    TC 971 AC 180 to point to TP1 MFT 30
    TC 971 AC 189 to point to TP2 MFT 31
    TC 971 AC 180 to point to TP2 MFT 30
    TC 971 AC 188 to point to TP1 MFT 31

    Example:

    #8


    Taxpayer Husband (TPH) and Taxpayer Wife (TPW) Liable No Duplicate Civil Assessment Duplicate RBA Duplicate Fraud Penalty TPH = Taxpayer Husband- Lead-Defendant; TPW = Taxpayer Wife-Co-Defendant

    TPH MFT 30 TPW MFT 30

    TC 971 AC 102 to create TPH MFT 31
    TC 971 AC 181 to point to TPH MFT 31

    TC 971 AC 102 to create TPW MFT 31
    TC 971 AC 181 to point to TPW MFT 31
    TPH MFT 31
    TC 971 AC 102 generated from TPH MFT 30
    TPW MFT 31
    TC 971 AC 102 generated from TPW MFT 30
    TC 290 $15,000.00
    TC 320 $3,000.00
    TC 290 $10,000.00
    TC 320 $3,000.00
    TC 971 AC 180 to point to TPH MFT 30
    TC 971 AC 189 to point to TPW MFT 31
    TC 971 AC 183 to point to TPW MFT 31
    TC 971 AC 180 to point to TPW MFT 30
    TC 971 AC 188 to point to TPH MFT 31
    TC 971 AC 182 to point to TPH MFT 31
Single Defendant and/or Married Taxpayers Filing Separate Returns with More Than One Co-Defendant
  1. In cases where taxpayers file separate returns, the Civil assessment is a duplicate only to the same individual’s RBA.

    Example:

    #9


    Taxpayer Husband (TPH), Taxpayer Wife (TPW), & Taxpayer #3 (TP3) Liable Duplicate RBA No Duplicate Civil Assessment Fraud Penalty that is not Duplicate TPH = Taxpayer Husband-Lead-Defendant; TPW = Taxpayer Wife-Co-Defendant; TP3 = Taxpayer-Co-Defendant

    TPH MFT 30
    TC 971 AC 102 to create MFT 31
    TC 971 AC 181 to point to TPH MFT 31
    TPW MFT 30
    TC 971 AC 102 to create MFT 31
    TC 971 AC 181 to point to TPW MFT 31
    TP3 MFT 30
    TC 971 AC 102 to create MFT 31
    TC 971 AC 181 to point to TP3 MFT 31
    TPH MFT 31
    TC 971 AC 102 generated from TPH MFT 30
    TPW MFT 31
    TC 971 AC 102 generated from TPW MFT 30
    TP3 MFT 31
    TC 971 AC 102 generated from TP3 MFT 30
    TC 290 $10,000.00
    TC 320 $3,000.00
    TC 290 $10,000.00 TC 290 $10,000.00
    TC 971 AC 180 to point to TPH MFT 30
    TC 971 AC 189 to point to TPW MFT 31
    TC 971 AC 189 to point to TP3 MFT 31
    TC 971 AC 180 to point to TPW MFT 30
    TC 971 AC 188 to point to TPH MFT 31
    TC 971 AC 188 to point to TP3 MFT 31
    TC 971 AC 180 to point to TP3 MFT 30
    TC 971 AC 188 to point to TPW MFT 31
    TC 971 AC 188 to point to TPH MFT 31
Married Taxpayers Filing Joint Returns with No Co-Defendant
  1. See Examples 10 and 11 below.

    Example:

    #10


    Taxpayer Husband (TPH) Liable
    Duplicate RBA and Civil Assessment

    TPH (primary SSN on joint) MFT 30 TPH MFT 31

    TC 971 AC 102 to create TPH MFT 31

    TC 971 AC 102 generated from MFT 30
    TC 300 $10,000.00 TC 290 $11,000.00
    TC 971 AC 184 to point to TPH MFT 31 TC 971 AC 185 to point to TPH MFT 30

    Example:

    #11


    Taxpayer Wife (TPW) Liable Duplicate RBA and Civil Assessment

    TPH (primary SSN on joint) MFT 30  

    TC 971 AC 102 to create TPW MFT 31
     
    TC 300 $10,000.00  
    TC 971 AC 184 to point to TPW MFT 31  
      TPW MFT 31
    TC 971 AC 102 generated from TPH MFT 30
      TC 290 $10,000.00
      TC 971 AC 185 to point to TPH MFT 30
Married Taxpayers Filing Joint Returns with Co-Defendant
  1. See Examples 12 through 15 below.

    Example:

    #12


    Taxpayer Husband (TPH) and Taxpayer Wife (TPW) Liable Duplicate RBA and Civil Assessment TPH = Taxpayer Husband Lead-Defendant; TPW = Taxpayer Wife Co-Defendant

    TPH (primary SSN on joint) MFT 30  

    TC 971 AC 102 to create TPH MFT 31
    TC 971 AC 102 to create TPW MFT 31
     
    TC 300 $10,000.00  
    TC 971 AC 184 to point to TPH MFT 31
    TC 971 AC 184 to point to TPW MFT 31
     
    TPH MFT 31
    TC 971 AC 102 generated from MFT 30
    TPW MFT 31
    TC 971 AC 102 generated from TPH MFT 30
    TC 290 $10,000.00 TC 290 $10,000.00
    TC 971 AC 185 to point to TPH MFT 30
    TC 971 AC 189 to point to TPW MFT 31
    TC 971 AC 184 to point to TPH MFT 30
    TC 971 AC 188 to point to TPH MFT 31

    Example:

    #13


    Taxpayer Husband (TPH) and Taxpayer Wife (TPW) Liable Duplicate RBA and Civil Assessment Fraud Penalty That is Not Duplicate TPH = Taxpayer Husband Primary Lead-Defendant; TPW = Taxpayer Wife Co-Defendant

    TPH (primary SSN on joint) MFT 30  

    TC 971 AC 102 to create TPH MFT 31
    TC 971 AC 102 to create TPW MFT 31
     
    TC 300 $10,000.00  
    TC 971 AC 184 to point to TPH MFT 31
    TC 971 AC 184 to point to TPW MFT 31
     
    TPH MFT 31
    TC 971 AC 102 generated from MFT 30
    TPW MFT 31
    TC 971 AC 102 generated from TPH MFT 30
    TC 290 $10,000.00
    TC 320 $3,000.00
    TC 290 $10,000.00
    TC 971 AC 185 to point to TPH MFT 30
    TC 971 AC 189 to point to TPW MFT 31
    TC 971 AC 184 to point to TPH MFT 30
    TC 971 AC 188 to point to TPH MFT 31

    Example:

    #14


    Taxpayer Husband (TPH) and Taxpayer Wife (TPW) Liable Duplicate RBA and Civil Assessment Fraud Penalty That is Not Duplicate TPH = Taxpayer Husband Co-Defendant; TPW = Taxpayer Wife Primary Lead-Defendant

      TPW (primary SSN on joint) MFT 30
     
    TC 971 AC 102 to create TPW MFT 31
    TC 971 AC 102 to create TPH MFT 31
      TC 300 $10,000.00
      TC 971 AC 184 to point to TPH MFT 31
    TC 971 AC 184 to point to TPW MFT 31
    TPH MFT 31
    TC 971 AC 102 generated from TPW MFT 30
    TPW MFT 31
    TC 971 AC 102 generated from MFT 30
    TC 290 $10,000.00 TC 290 $10,000.00
    TC 320 $3,000.00
    TC 971 AC 184 to point to TPW MFT 30
    TC 971 AC 188 to point to TPW MFT 31
    TC 971 AC 185 to point to TPW MFT 30
    TC 971 AC 189 to point to TPH MFT 31

    Example:

    #15


    Taxpayer Husband (TPH) and Taxpayer Wife (TPW) Liable Duplicate RBA and Civil Assessment, Duplicate Fraud Penalty, TPH = Taxpayer Husband Primary Lead-Defendant TPW = Taxpayer Wife Co-Defendant

    TPH (primary SSN on joint) MFT 30  

    TC 971 AC 102 to create TPH MFT 31
    TC 971 AC 102 to create TPW MFT 31
     
    TC 300 $8,000.00
    TC 320 $2,000.00
     
    TC 971 AC 184 to point to TPH MFT 31
    TC 971 AC 184 to point to TPW MFT 31
    TC 971 AC 182 to point to TPH MFT 31
    TC 971 AC 182 to point to TPW MFT 31
     
    TPH MFT 31
    TC 971 AC 102 generated from MFT 30
    TPW MFT 31
    TC 971 AC 102 generated from MFT 30
    TC 290 $10,000.00
    TC 320 $2,000.00
    TC 290 $10,000.00
    TC 320 $2,000.00
    TC 971 AC 185 to point to TPH MFT 30
    TC 971 AC 189 to point to TPW MFT 31
    TC 971 AC 183 to point to TPH MFT 30
    TC 971 AC 182 to point to TPW MFT 31
    TC 971 AC 184 to point to TPH MFT 30
    TC 971 AC 188 to point to TPH MFT 31
    TC 971 AC 182 to point to TPH MFT 30
    TC 971 AC 182 to point to TPH MFT 31
Married Taxpayers Filing Joint Returns with More Than One Co-Defendant
  1. See Examples 16 through 18 below.

    Example:

    #16


    Taxpayer Husband (TPH), Taxpayer Wife (TPW), & Taxpayer #3 (TP3) Liable Duplicate RBA TPH = Taxpayer Husband Lead-Defendant; TPW = Taxpayer Wife Co-Defendant; TP3 = Taxpayer Co-Defendant

    TPH (Primary SSN on joint) MFT 30   TP3 MFT 30

    TC 971 AC 102 to create TPH MFT 31
    TC 971 AC 102 to create TPW MFT 31
    TC 971 AC 181 to point to TPH MFT 31
    TC 971 AC 181 to point to TPW MFT 31
     
    TC 971 AC 102 to create MFT 31
    TC 971 AC 181 to point to TP3 MFT 30
    TPH MFT 31
    TC 971 AC 102 generated from TPH MFT 30
    TPW MFT 31
    TC 971 AC 102 generated from TPH MFT 30
    TP3 MFT 31
    TC 971 AC 102 generated from TP3 MFT 30
    TC 290 $10,000.00 TC 290 $10,000.00 TC 290 $10,000.00
    TC 971 AC 180 to point to TPH MFT 30
    TC 971 AC 189 to point to TPW MFT 31
    TC 971 AC 189 to point to TP3 MFT 31
    TC 971 AC 180 to point to TPW MFT 30
    TC 971 AC 188 to point to TPH MFT 31
    TC 971 AC 188 to point to TP3 MFT 31
    TC 971 AC 180 to point to TP3 MFT 30
    TC 971 AC 188 to point to TPW MFT 31
    TC 971 AC 188 to point to TPH MFT 31

    Example:

    #17


    Taxpayer Husband (TPH), Taxpayer Wife (TPW), & Taxpayer #3 (TP3) Liable Duplicate RBA and Civil Assessments TPH = Taxpayer Husband Co-Defendant; TPW = Taxpayer Wife Lead-Defendant; TP3 = Taxpayer Co-Defendant

    TPH (Primary SSN on joint) MFT 30   TP3 MFT 30

    TC 971 AC 102 to create TPH MFT 31
    TC 971 AC 102 to create TPW MFT 31
     
    TC 971 AC 102 to create MFT 31
    TC 300 $10,000.00
    TC 971 AC 184 to point to TPH MFT 31
    TC 971 AC 184 to point to TPW MFT 31
    TPH MFT 31
    TC 971 AC 102 generated from TPH MFT 30
    TPW MFT 31
    TC 971 AC 102 generated from TPH MFT 30
    TP3 MFT 31
    TC 971 AC 102 generated from TP3 MFT 30
    TC 290 $10,000.00 TC 290 $10,000.00 TC 290 $10,000.00
    TC 971 AC 184 to point to TPH MFT 30
    TC 971 AC 188 to point to TPW MFT 31
    TC 971 AC 188 to point to TP3 MFT 31
    TC 971 AC 185 to point to TPH MFT 30
    TC 971 AC 189 to point to TPH MFT 31
    TC 971 AC 189 to point to TP3 MFT 31

    TC 971 AC 188 to point to TPW MFT 31
    TC 971 AC 188 to point to TPH MFT 31

    Example:

    #18


    Taxpayer Husband (TPH), Taxpayer Wife (TPW), & Taxpayer #3 (TP3) Liable Duplicate RBA and Civil Assessments Duplicate Fraud Penalty TPH = Taxpayer Husband Lead Defendant; TPW = Taxpayer Wife Co-Defendant; TP3 = Taxpayer Co-Defendant

    TPH (Primary SSN on joint) MFT 30   TP3 MFT 30

    TC 971 AC 102 to create TPH MFT 31
    TC 971 AC 102 to create TPW MFT 31
     
    TC 971 AC 102 to create MFT 31
    TC 300 $15,000.00
    TC 320 $11,250.00
    TC 971 AC 185 to point to TPH MFT 31
    TC 971 AC 184 to point to TPW MFT 31
    TC 971 AC 183 to point to TPH MFT 31
    TPH MFT 31
    TC 971 AC 102 generated from TPH MFT 30
    TPW MFT 31
    TC 971 AC 102 generated from TPH MFT 30
    TP3 MFT 31
    TC 971 AC 102 generated from TP3 MFT 30
    TC 290 $10,000.00
    TC 320 $7,500.00
    TC 290 $10,000.00 TC 290 $10,000.00
    TC 971 AC 184 to point to TPH MFT 30
    TC 971 AC 189 to point to TPW MFT 31
    TC 971 AC 189 to point to TP3 MFT 31
    TC 971 AC 182 to point to TPH MFT 30
    TC 971 AC 184 to point to TPH MFT 30
    TC 971 AC 188 to point to TPH MFT 31
    TC 971 AC 188 to point to TP3 MFT 31

    TC 971 AC 188 to point to TPW MFT 31
    TC 971 AC 188 to point to TPH MFT 31

Linking BMF Restitution Accounts

  1. BMF case types are the result of a tax loss to the government, where the basis for the RBA is a business tax return. BMF case types are identified by an Adjustment Reason Code 144 or 146 associated with the RBA TC 29X. Generally, it is a TC 298, but a TC 290 may also be used. RBA modules containing assessments for BMF tax liabilities are classified as BMF case types even if other assessment types have posted. The following examples demonstrate how TC 971 action codes are applied for BMF RBA cases.

Employment Tax – Form 941
  1. See Examples 1 through 4 below.

    Example:

    #1


    Employment Tax – Form 941
    No Duplicate RBA/Civil Assessment

    MFT 01 XX-XXX1234 / 200703 MFT 31 XXX-XX-0987 / 200703
      TC 298 $10,000.00
    TC 971 AC 181 points to MFT 31
    XXX-XX-0987 / 200703
    TC 971 AC 180 points to MFT 01
    XX-XXX1234 / 200703

    Example:

    #2


    Employment Tax - Form 941 Duplicate RBA/Civil Assessment

    MFT 01 XX-XXX1234 / 200703 MFT 31 XXX-XX-0987 / 200703
      TC 971 AC 102 to x-ref MFT 01
    TC 300 $10,000.00 TC 298 $10,000.00
    TC 971 AC 184 points to MFT 31
    XXX-XX-0987 / 200703
    TC 971 AC 185 points to MFT 01
    XX-XXX1234 / 200703

    Example:

    #3


    Employment Tax – Form 941 Multiple Tax Periods No Duplicate RBA/Civil Assessment Tax Period 200703

    MFT 01 XX-XXX1234 / 200703 MFT 31 XXX-XX-0987 / 200703
      TC 971 AC 102 to x-ref MFT 01
      TC 298 $10,000.00
    TC 971 AC 181 points to MFT 31
    XXX-XX-0987 / 200703
    TC 971 AC 180 points to MFT 01
    XX-XXX1234 / 200703


    Tax Period 200706

    MFT 01 XX-XXX1234 / 200706 MFT 31 XXX-XX-0987 / 200706
      TC 971 AC 102 to x-ref MFT 01
      TC 298 $10,000.00
    TC 971 AC 181 points to MFT 31
    XXX-XX-0987 / 200706
    TC 971 AC 180 points to MFT 01
    XX-XXX1234 / 200706

    Example:

    #4


    Employment Tax - Form 941 Multiple Tax Periods Duplicate RBA/Civil Assessment Tax Period 200703

    MFT 01 XX-XXX1234 / 200703 MFT 31 XXX-XX-0987 / 200703
      TC 971 AC 102 to x-ref MFT 01
    TC 300 $10,000.00 TC 298 $10,000.00
    TC 971 AC 184 points to MFT 31
    XXX-XX-0987 / 200703
    TC 971 AC 185 points to MFT 01
    XX-XXX1234 / 200703


    Tax Period 200706

    MFT 01 XX-XXX1234 / 200706 MFT 31 XXX-XX-0987 / 200706
    TC 971 AC 102 to x-ref MFT 31 TC 971 AC 102 to x-ref MFT 01
    TC 300 $10,000.00 TC 298 $10,000.00
    TC 971 AC 184 points to MFT 31
    XXX-XX-0987 / 200706
    TC 971 AC 185 points to MFT 01
    XX-XXX1234 / 200706
Federal Unemployment Tax Act – Form 940
  1. See Examples 5 through 7 below.

    Example:

    #5


    Federal Unemployment Tax Act Tax – Form 940 No Duplicate RBA/Civil Assessment

    MFT 10 XX-XXX1234 / 200812 MFT 31 XXX-XX-0987 / 200812
      TC 971 AC 102 to x-ref MFT 10
      TC 298 $15,000.00
    TC 971 AC 181 points to MFT 31
    XXX-XX-0987 / 200812
    TC 971 AC 180 points to MFT 10
    XX-XXX1234 / 200812

    Example:

    #6


    Federal Unemployment Tax Act Tax – Form 940 Duplicate RBA/Civil Assessment

    MFT 10 XX-XXX1234 / 200812 MFT 31 XXX-XX-0987 / 200812
      TC 971 AC 102 to x-ref MFT 10
    TC 300 $15.000.00 TC 298 $10,000.00
    TC 971 AC 185 points to MFT 31
    XXX-XX-0987 / 200812
    TC 971 AC 184 points to MFT 10
    XX-XXX1234 / 200812

    Example:

    #7


    Federal Unemployment Tax Act Tax – Form 940 Duplicate RBA/Civil Assessment Duplicate Fraud Penalty

    MFT 10 XX-XXX1234 / 200812 MFT 31 XXX-XX-0987 / 200812
     
    TC 971 AC 102 to x-ref MFT 10
    TC 300 $15,000.00
    TC 320 $ 11,250.00

    TC 971 AC 185 points to MFT 31
    XXX-XX-0987 / 200812
    MMA = $10,000
    TC 971 AC 183 points to MFT 31
    XXX-XX-0987 / 200812
    MMA = $3,000
    TC 298 $10,000.00
    TC 320 $7,500.00

    TC 971 AC 184 points to MFT 10
    XX-XXX1234 / 200812
    MMA = $10,000
    TC 971 AC 182 points to MFT 10
    XX-XXX1234 / 200812
    MMA = $3,000
Corporate Tax – Form 1120 Fiscal Year Filer
  1. See Examples 8 and 9 below.

    Example:

    #8


    Corporate Tax - Form 1120 Fiscal Year Filer No Duplicate RBA/Civil Assessment

    MFT 02 XX-XXX1234 / 200810 MFT 31 XXX-XX-0987 / 200810
      TC 971 AC 102 to x-ref MFT 02
      TC 298 $10,000.00
    TC 971 AC 181 points to MFT 31
    XXX-XX-0987 / 200810
    TC 971 AC 180 points to MFT 02
    XX-XXX1234 / 200810

    Example:

    #9


    Corporate Tax - Form 1120 Fiscal Year Filer Duplicate RBA/Civil Assessment

    MFT 02 XX-XXX1234 / 200810 MFT 31 XXX-XX-0987 / 200810
      TC 971 AC 102 to x-ref MFT 02
    TC 300 $10,000.00 TC 298 $10,000.00
    TC 971 AC 184 points to MFT 31
    XXX-XX-0987 / 200810
    TC 971 AC 185 points to MFT 02
    XX-XXX1234 / 200810
Corporate Tax – Form 1120 Calendar Year Filer
  1. See Examples 10 and 11 below.

    Example:

    #10


    Corporate Tax - Form 1120 Calendar Year Filer No Duplicate RBA/Civil Assessment

    MFT 02 XX-XXX1234 / 200812 MFT 31 XXX-XX-0987 / 200812
      TC 971 AC 102 to x-ref MFT 02
      TC 298 $10,000.00
    TC 971 AC 181 points to MFT 31
    XXX-XX-0987 / 200812
    TC 971 AC 180 points to MFT 02
    XX-XXX1234 / 200812

    Example:

    #11


    Corporate Tax - Form 1120 Calendar Year Filer Duplicate RBA/Civil Assessment

    MFT 02 XX-XXX1234 / 200812 MFT 31 XXX-XX-0987 / 200812
      TC 971 AC 102 to x-ref MFT 02
    TC 300 $10,000.00 TC 298 $10,000.00
    TC 971 AC 184 points to MFT 31
    XXX-XX-0987 / 200812
    TC 971 AC 185 points to MFT 02
    XX-XXX1234 / 200812
Corporate Tax - Corporation is Assessed Restitution
  1. Example 12 illustrates TC 971 AC 18X linkage when restitution is asserted against a foreign or domestic corporation where the defendant is not a US citizen and does not have a Social Security Number.

    Example:

    #12


    Form 1120 No Duplicate Assessment

    MFT 02 XX-XXX1234 / 200812 NO MFT 31 Module is established
    TC 971 AC 102 to identify Restitution-Based Assessment module (X-ref TIN/MFT/Tax Period is TIN/MFT/Tax period where assessment is posted.  
    TC 300 $10,000.00  
    TC 971 AC 187 points to MFT 02
    XX-XXX1234 / 200812
     
Corporate Tax and Individual Income Tax Duplicate RBA/Civil Assessments
  1. Examples 13–14 illustrate TC 971 AC 18X linkage when there is a duplicate RBA and Civil assessment involving both Corporate tax and Individual Income tax (IMF) returns.

    Example:

    #13


    Form 1120 and Form 1040 Duplicate RBA/Civil Assessment

    MFT 30 XXX-XX-0987 / 200712 MFT 02 XX-XXX1234 / 200712

    TC 971 AC 102 to x-ref MFT 31
     
    TC 300 $10,000.00 TC 300 $15,000.00
    TC 971 AC 184 points to MFT 31
    XXX-XX-0987 / 200712 MMA= $10,000
    TC 971 AC 184 points to MFT 31
    XXX-XX-0987 / 200712 MMA = $15,000
    MFT 31 XXX-XX-0987 / 200712
    TC 971 AC 102 to x-ref MFT 30
     
    TC 290 $10,000.00
    TC 298 $15,000.00
     
    TC 971 AC 185 points to MFT 30
    XXX-XX-0987 / 200712 MMA = $10,000
    TC 971 AC 185 points to MFT 02
    XX-XXX1234 / 200712 MMA = $15,000
     

    Note:

    TC 971 AC 102 is input to identify the RBA module. It is not necessary to input more than one TC 971 AC 102 to any tax module.

    Example:

    #14

    Form 1120 (Fiscal Year) and Form 1040 (Calendar) Duplicate RBA/Civil Assessments

    MFT 30 XXX-XX-0897 / 200712 MFT 02 XX-XXX1234 / 200710

    TC 971 AC 102 to x-ref MFT 31
    XXX-XX-0897 / 200712

    TC 300 $10,000.00

    TC 971 AC 184 points to MFT 31
    XXX-XX-0897 / 200712
    MMA = $10,000

    TC 300 $15,000.00

    TC 971 AC 184 points to MFT 31
    XXX-XX-0897 / 200710
    MMA = $15,000
    MFT 31 XXX-XX-0897 / 200712
    TC 971 AC 102 to x-ref MFT 30

    TC 290 $10,000.00

    TC 971 AC 185 points to MFT 30
    XXX-XX-0897 / 200712
    MMA = $10,000
    MFT 31 XXX-XX-0897 / 200710
    TC 971 AC 102 to x-ref MFT 02

    TC 298 $15,000.00

    TC 971 AC 185 points to MFT 02
    XX-XXX1234 / 200710
    MMA = $15,000
Employment Tax, Corporate Tax and Individual Income Tax Duplicate RBA/Civil Assessments
  1. Example 15 illustrates TC 971 AC 18X linkage when there is a duplicate RBA and Civil assessment involving Employment Tax, Corporate Tax and Individual Income Tax returns.

    Example:

    #15

    Form 941, Form 940, Form 1120 and Form 1040Duplicate RBA/Civil Assessments

    MFT 01 XX-XXX1234 / 200712 MFT 10 XX-XXX1234 / 200712 MFT 02 XX-XXX1234 / 200712


    TC 300 $10,000.00

    TC 971 AC 184 points to MFT 31
    XXX-XX-0987 / 200712
    MMA = $10,000.00


    TC 300 $10,000.00

    TC 971 AC 184 points to MFT 31
    XXX-XX-0987 / 200712
    MMA = $10,000.00


    TC 300 $15,000.00

    TC 971 AC 184 points to MFT 31
    XXX-XX-0987 / 200712
    MMA = $15,000.00
    MFT 30 XXX-XX-0987 / 200712

    TC 300 $5,000.00
    TC 971 AC 102 to x-ref MFT 31
    TC 971 AC 184 points to MFT 31
    XXX-XX-0987 / 200712
    MMA = $5,000.00
       
      MFT 31 XXX-XX-0987 / 200712

    TC 298 $10,000.00
    TC 298 $10,000.00
    TC 298 $15,000.00
    TC 290 $5,000.00

    TC 971 AC 102 to x-ref MFT 30
    TC 971 AC 185 points to MFT 01
    XX-XXX1234 / 200712
    MMA = $10,000.00
    TC 971 AC 185 points to MFT 10
    XX-XXX1234 / 200712
    MMA = $10,000.00
    TC 971 AC 185 points to MFT 02
    XX-XXX1234 / 200712
    MMA = $15,000.00
    TC 971 AC 185 points to MFT 30
    XXX-XX-0987 / 200712
    MMA = $5,000.00
     
BMF Tax Liability - No BMF TIN established
  1. Example 16 illustrates TC 971 AC 18X linkage when there is no BMF TIN established and no return filed.

    Example:

    #16

    Form 730; Monthly filer No Duplicate Assessment

    No MFT 64 Module available MFT 31 XXX-XX-0987 / 200801
    no returns ever filed (an EIN is required but was never obtained by defendant) TC 971 AC 102 to x-ref MFT 64. XREF TIN will be TP SSN and must be entered in BMF TIN format, i.e., XX-XXX0987
      TC 298 $10,000.00
    There will not be a TC 971 AC 18X TC 971 AC 187 points to MFT 64
    XX-XXX1234 / 200801
BMF Tax Liability - Corporation Assessed Restitution
  1. Example 17 illustrates TC 971 AC 18X linkage when restitution is asserted against a Corporation instead of an individual.

    Example:

    #17


    Form 941
    No Duplicate Assessment

    MFT 01 XX-XXX1234 / 200812 NO MFT 31 Module is established
    TC 971 AC 102 to identify Restitution-Based Assessment module (X-ref TIN/MFT/Tax Period is TIN/MFT/Tax period where assessment is posted.  
    TC 298 $10,000.00  
    TC 971 AC 187 points to MFT 01
    XX-XXX1234 / 200812
     

    Note:

    The RBA assessment may be assessed as a TC 290.

Linking RPP Restitution Accounts

  1. RPP case types are the result of a tax loss to the government where the basis for the RBA is generally related to a Return Preparer tax scheme. RPP case types are identified by an Adjustment Reason Code 141 or 142 associated with the RBA TC 290.

  2. Unlike IMF and BMF case types, RPP restitution assessments that are not duplicate to another RBA or Civil assessment are not coded with AC 180/181; only duplicate assessments are coded.

  3. IDRS Master File is not able to accept an unlimited number of transactions on any given account module and when the limit is reached, the account is systemically moved to Automated Non Master File (ANMF). Therefore, large RPP cases with 100 or more clients have specialized linkage procedures. See IRM 5.19.23.2.7, Form 3177 Processing, for instructions regarding the input of account linkages.

Return Preparer with Duplicate Client Civil Assessments
  1. Example 1 illustrates TC 971 AC 18X linkage when there is a duplicate assessment involving the clients of a Return Preparer.

    Example:

    #1


    RPP Defendant with Client Returns
    Duplicate Client Civil Assessments

    RPP MFT 31 Client #1 MFT 30 Client #2 MFT 30
     
    XXX-XX-XXX1 / 30 / 200412

    XXX-XX-XXX2 / 30 / 200412
    TC 290 $15,000.00 TC 767 $7,500.00
    TC 290 $.00
    TC 767 $7,500.00
    TC 290 $.00
    TC 971 AC 185 to point to Client #1 XXX-XX-XXX1 MFT 30 MMA = $7,500.00
    TC 971 AC 185 to point Client #2 XXX-XX-XXX2 MFT 30 MMA = $7,500.00
    TC 971 AC 184 to point to RPP MFT 31 MMA = $7,500.00 TC 971 AC 184 to point to RPP MFT 31 MMA = $7,500.00
Return Preparer with Duplicate and Non-Duplicate Client Civil Assessments
  1. Example 2 illustrates TC 971 AC 18X linkage when the RBA includes duplicate Civil assessments of client returns and client returns with no duplicate Civil assessment.

    Example:

    #2


    RPP Defendant with Client Returns
    Duplicate Client Civil Assessments
    No Client Civil Assessment

    RPP MFT 31 Client #3 MFT 30 Client #4 MFT 30
     
    XXX-XX-XXX3 / 30 / 200212

    XXX-XX-XXX4 / 30 / 200212
    TC 290 $30,000.00 TC 767 $7,500.00
    TC 290 $.00
    TC 767 $7,500.00
    TC 290 $.00
    TC 971 AC 185 to point to Client #3 XXX-XX-XXX3 MFT 30 MMA = $7,500.00
    TC 971 AC 185 to point Client #4 XXX-XX-XXX4 MFT 30 MMA = $7,500.00
    TC 971 AC 184 to point to RPP MFT 31 MMA = $7,500.00 TC 971 AC 184 to point to RPP MFT 31 MMA = $7,500.00

    The defendant was ordered to pay $30,000.00 of restitution for tax loss involving four client returns. Clients #1 and #2 were not audited; therefore, there is no TC 971 AC 18X to link their individual income tax account, MFT 30, to the preparer's restitution account, MFT 31. TC 971 AC 184/185 is input to Clients #3 and #4 to link the duplicate assessments.

Return Preparer with Duplicate Civil Assessment and Duplicate Client Civil Assessments
  1. Example 3 illustrates TC 971 AC 18X linkage when the RBA includes duplicate Civil assessments of the preparer defendant and client returns.

    Example:

    #3


    RPP Defendant with Client Returns
    Duplicate Defendant Civil Assessment
    Duplicate Client Civil Assessments

    RPP MFT 31 XXX-XX-0987 / 200712 RPP MFT 30 XXX-XX-0987 / 200712

    TC 290 $22,500

    TC 971 AC 102 generated from MFT 30
    TC 971 AC 185 points to RPP MFT 30
    XXX-XX-0987 / 200712 MMA = $7,500
    TC 971 AC 185 points to Client #1 MFT 30 XXX-XX-XXX1 / 200712 MMA = $7,500
    TC 971 AC 185 points to Client #2 MFT 30 XXX-XX-XXX2 / 200712 MMA = $7,500

    TC 300 $15,000.00

    TC 971 AC 102 to generate MFT 31 module
    TC 971 AC 184 points to MFT 31
    XXX-XX-0987 / 200710 MMA = $7,500
    Client #1 MFT 30 XXX-XX-XXX1 / 200712
    TC 767 $7,500
    TC 290 $.00
    TC 971 AC 184 points to RPP MFT 31
    XXX-XX-0987 / 200712
    MMA = $7,500
    Client #2 MFT 30 XXX-XX-XXX2 / 200712
    TC 767 $7,500
    TC 290 $.00
    TC 971 AC 184 points to RPP MFT 31
    XXX-XX-0987 / 200712
    MMA = $7,500

    The defendant was ordered to pay $22,500.00 of restitution for tax loss involving his individual income tax return and the tax returns of Clients #1 and #2. Clients #1 and #2 are not duplicate assessments associated to the Civil assessment of the preparer defendant; therefore, there is no TC 971 AC 18X to link their individual income tax account, MFT 30, to the preparer's individual income tax account, MFT 30. TC 971 AC 184/185 is input to Clients #1 and #2 to link the accounts to the duplicate restitution assessments.

Return Preparer with Co-Defendant / No Duplicate Client Civil Assessment
  1. Example 4 illustrates TC 971 AC 18X linkage when the RBA includes duplicate Civil assessments of the preparer defendant and client returns.

    Example:

    #4


    RPP Lead Defendant with Co-Defendant
    Duplicate RBA

    RPP Lead Defendant MFT 31 XXX-XX-0897/ 200912 RPP Co-Defendant MFT 31 XXX-XX-1234 / 200912


    TC 290 $22,500

    TC 971 AC 189 points to RPP Co-Defendant MFT 31 XXX-XX-1234 / 200912 MMA = $15,000


    TC 290 $22,500.00

    TC 971 AC 188 points to RPP Lead-Defendant MFT 31 XXX-XX-0897 / 200912 MMA = $15,000

    The defendants were ordered to pay restitution based on the tax loss of client returns. They each have their own clients, but conspired together in filing fraudulent information. Because their restitution assessments were based on the same tax scheme, they are duplicate to each other. TC 971 AC 188/189 are input to link the duplicate assessments. The clients returns were not audited and were not assessed additional tax resulting from the tax fraud; therefore, there is no TC 971 AC 18X to link to the client accounts.

Return Preparer with Co-Defendant And Duplicate Client Civil Assessment
  1. Example 5 illustrates TC 971 AC 18X linkage when the RBA includes duplicate RBA of the preparer defendant and co-defendant, and duplicate Civil assessments of client returns.

    Example:

    #5


    RPP Defendant and Co-Defendant with Client Returns
    Duplicate RBA
    Duplicate Client Civil Assessments

    RPP Lead Defendant MFT 31 XXX-XX-0897 / 200912 RPP Co- Defendant MFT 31 XXX-XX-1234 / 200912


    TC 290 $15,000

    TC 971 AC 189 points to RPP Co-Defendant MFT 31 XXX-XX-1234 / 200912 MMA = $15,000
    TC 971 AC 185 points to Client #1 MFT 30 XXX-XX-XXX1 / 200912 MMA = $7,500
    TC 971 AC 185 points to Client #2 MFT 30 XXX-XX-XXX2 / 200912 MMA = $7,500


    TC 290 $15,000

    TC 971 AC 188 points to RPP Lead Defendant MFT 31 XXX-XX-0897 / 200912 MMA = $15,000
    TC 971 AC 184 points to Client #1 MFT 30 XXX-XX-XXX1 /200912 MMA = $7,500
    TC 971 AC 184 points to Client #2 MFT 30 XXX-XX-XXX2 / 200912 MMA = $7,500
    Client #1 MFT 30 XXX-XX-XXX1 / 200912
    TC 767 $7,500
    TC 290 $.00
    TC 971 AC 184 points to RPP Lead Defendant MFT 31 XXX-XX-0897 / 200912
    MMA = $7,500
    TC 971 AC 184 points to RPP Co Defendant MFT 31 XXX-XX-1234 / 200912
    MMA = $7,500
    Client #2 MFT 30 XXX-XX-XXX2 / 200712
    TC 767 $7,500
    TC 290 $.00
    TC 971 AC 184 points to RPP Lead Defendant MFT 31 XXX-XX-0897 / 200912
    MMA = $7,500
    TC 971 AC 184 points to RPP Co-Defendant MFT 31 XXX-XX-1234 / 200912
    MMA = $7,500

    The defendants were ordered to pay restitution based on the tax loss of client returns. They conspired together in filing fraudulent information. Because their restitution assessments were based on the same tax scheme, they are duplicate to each other and the clients. TC 971 AC 188/189 are input to link the duplicate assessments. The client returns were audited and assessed additional tax; therefore, TC 971 AC 184/185 are input to their individual income tax account, MFT 30, to link the duplicate assessment to the Lead Defendant restitution module, MFT 31, and TC 971 AC 184/184 is input to link their individual income tax account to the Co-Defendant restitution module, MFT 31.

Return Preparer with Co-Defendant / Duplicate and Non-Duplicate Client Civil Assessment
  1. Example 6 illustrates TC 971 AC 18X linkage when the RBA includes duplicate RBA of the preparer defendant and co-defendant, and duplicate assessments of client returns and client returns with no duplicate Civil assessment

    Example:

    #6


    RPP Defendant and Co-Defendant with Client Returns
    Duplicate RBA
    Duplicate Client Civil Assessments
    No Client Civil Assessments

    RPP Lead Defendant MFT 31 XXX-XX-0897 / 200912 RPP Co- Defendant MFT 31 XXX-XX-1234 / 200912


    TC 290 $85,000

    TC 971 AC 189 points to RPP Co-Defendant MFT 31 XXX-XX-1234 / 200912 MMA = $85,000
    TC 971 AC 185 points to Client #8 MFT 30 XXX-XX-XXX8 / 200912 MMA = $7,500
    TC 971 AC 185 points to Client #9 MFT 30 XXX-XX-XXX9 / 200912 MMA = $7,500


    TC 290 $85,000

    TC 971 AC 188 points to RPP Lead Defendant MFT 31 XXX-XX-0897 / 200912 MMA = $85,000
    TC 971 AC 184 points to Client #8 MFT 30 XXX-XX-XXX8 / 200912 MMA = $7,500
    TC 971 AC 184 points to Client #9 MFT 30 XXX-XX-XXX9 / 200912 MMA = $7,500
    Client #8 MFT 30 XXX-XX-XXX8 / 200912
    TC 767 $7,500
    TC 290 $.00
    TC 971 AC 184 points to RPP Lead Defendant MFT 31 XXX-XX-0897 / 200912
    MMA = $7,500
    TC 971 AC 184 points to RPP Co-Defendant MFT 31 XXX-XX-1234 / 200912
    MMA = $7,500
    Client #9 MFT 30 XXX-XX-XXX9 / 200712
    TC 767 $7,500
    TC 290 $.00
    TC 971 AC 184 points to RPP Lead Defendant MFT 31 XXX-XX-0897 / 200912
    MMA = $7,500
    TC 971 AC 184 points to RPP Co-Defendant MFT 31 XXX-XX-1234 / 200912
    MMA = $7,500

    The defendants were ordered to pay restitution based on the tax loss of client returns. They conspired together in filing fraudulent tax returns. Because their restitution assessments were based on the same tax scheme, they are duplicate to each other and the clients. TC 971 AC 188/189 are input to link the duplicate assessments. Each Defendant was responsible for the preparation of 15 clients. Tax returns for Clients #8 and #9 were audited and assessed tax based on the fraudulent returns. TC 971 AC 184/185 are input to their individual income tax account, MFT 30, to link the duplicate assessment to the Lead Defendant restitution module, MFT 31, and TC 971 AC 184/184 is input to link them to the Co-Defendant restitution module, MFT 31.

    Note:

    TC 971 AC 180/181 is not input to link the accounts of the client returns that were not audited and/or assessed.

Memo Money Amount (MMA)

  1. The Memo Money Amount (MMA) field of the TC 971 AC 18X is used to identify the amount of the Restitution-Based Assessment (RBA) and/or Fraud penalty ordered as part of the restitution that is duplicate. The dollar amount of the MMA is displayed on CC TXMOD, CC BMFOLT, or CC IMFOLT, only when an amount greater than $.00 has been entered.

  2. Review accounts to determine if:

    • Missing and/or broken links (a broken link is where one link points to a TIN / MFT / tax period, but that corresponding TIN / MFT / tax period does not point back)

      Exception:

      A TC 971 AC 18X will not be input to a module containing an unreversed TC 400 because the module has been moved to Non -Master File.

      Exception:

      For large RPP cases with 100 or more clients, linkage is input on all client accounts with duplicate assessments; however, only one linkage for the client with the lowest number SSN on the preparer’s account.

      Reminder:

      For RPP case types, TC 971 AC 180/181 is not input to link the accounts of client returns where no duplicate RBA exists. Therefore, these case types may not have a TC 971 AC 18X posted to the RBA module(s).

    • TC 971 AC 180/181 has Memo Money Amount (MMA) more than zero present in the MMA field

    • TC 971 AC 182 -185 and 188-189 MMA is zero

      Exception:

      TC 971 AC 182/183 MMA may = zero for court ordered penalties without a tax assessment. See IRM 5.19.23.2.2, TC 971 / Action Code 18X Definitions, for more information.

    • TC 971 AC 182 -185 and 188-189 MMA of the pair of linkages is greater than the smallest duplicate assessment amount

      Exception:

      Specific conditions exist when the MMA can appear to be larger than assessed tax or no assessment is posted.

      Example:

      A preparer was ordered restitution based on a client’s return. A client filed a return and was credited with Additional Child Tax Credit and Earned Income Credit. A refund was issued and was returned/repaid with a TC 720. The TC 150 was abated and the Child Tax credit and Earned income credits were reversed. The account does not show any other assessments. The preparer’s account and the client’s account are linked with TC 971 AC 185/184. Since a portion of the preparer’s restitution is based on the client’s return, as indicated by the TC 971 AC 185/184 linkage, the preparer is entitled to the TC 720 credit. The TC 720 is cross-referenced to prevent double collection of the restitution assessment.

      Preparer’s MFT 31 201112 Client’s MFT 30 201112

      TC 290 02-25-2015 $20,000.00

      TC 971 AC 102
      TC 971 AC 185 points to Client’s MFT 30 MMA = $4,000.00



      TC 766 CRN 337 02-13-2012 $4,000.00

      TC 150 02-13-2012 $500.00
      TC 766 04-15-2012 $1,000.00
      TC 768 04-15-2012 $3,000.00
      TC 846 02-13-2012 $3,500.00

      TC 767 04-15-2012 $1,000.00
      TC 765 04-15-2012 $3,000.00
      TC 291 04-15-2012 $500.00
      TC 720 02-13-2012 $4,000.00

      TC 971 AC 184 points to preparer’s MFT 31 MMA = $4,000.00

      Example:

      A preparer was ordered restitution based on client’s returns. A client filed a return for zero dollar amount and was credited with Additional Child Tax credit. A refund was issued and then the refund was cancelled/credited back to the client’s account with TC 841. The client’s account was assessed and the TC 767 was reversed. The preparer and the client’s accounts are linked with TC 971 AC 185/184. Since a portion of the preparer’s restitution is based on the client’s return, as indicated by the TC 971 AC 185/184 linkage, the preparer is entitled to the TC 841 credit. The TC 841 is cross-referenced using the TC 841 date.

      Preparer’s MFT 31 200812 Client 1 MFT 30 200812

      TC 290 $ 65,000.00

      TC 971 AC 102
      TC 971 AC 185 points to Client’s MFT 30 MMA = $5,400.00



      TC 766 CRN 337 08-24-2009 $5,400.00

      TC 150 08-24-2009 $0.00
      TC 766 04-15-2009 $5,400.00
      TC 846 08-24-2009 $5,400.00

      TC 767 04-15-2009 $5,400.00
      TC 300 06-20-2011 $0.00
      TC 841 08-24-2009 $5,400.00

      TC 971 AC 184 MMA = $5,400.00

      Example:

      A preparer was ordered restitution based on client’s returns. A client filed a return for zero dollar amount and was credited with Making Work Pay credit, Refundable Education credit, and Earned Income credit, resulting in a credit balance on the module. A refund was issued in the amount of the module balance. The refund was undelivered / re-deposited and posted back to the client’s MFT 30 account with TC 740 putting the module back in credit status. The preparer and the client’s accounts are linked with TC 971 AC 185/184. Since a portion of the preparer’s restitution is based on the client’s return, as indicated by the TC 971 AC 185/184 linkage, the preparer is entitled to the TC 740 credit. The TC 740 is cross-referenced using the TC 740 date

      Preparer’s MFT 31 201012 Client 1 MFT 30 Module Balance 1,696.00-
      TC 290 06-27-2016 $1,000,000.00

      TC 971 04-21-2016 AC 102

      TC 971 05-13-2016 AC 185 points to Client’s MFT 30 MMA = $1,696.00




      TC 766 CRN 337 02-13-2012 $1,696.00
      TC 150 02-06-2012 $0.00
      TC 766 04-15-2011 $400.00
      TC 766 04-15-2011 $876.00
      TC 768 04-15-2011 $420.00

      TC 846 02-13-2012 $1,696.00


      TC 740 02-13-2012 $1,696.00

      TC 971 AC 184 05-13-2016 MMA = $1,696.00

      Reminder:

      The RBA for RPP case types may include amounts for multiple duplicate client Civil assessments; therefore, the MMA can't be validated. For these case types, confirm that the MMA amount of the linked pairs is the same and the amount does not exceed the tax assessed on the Civil module.

      Note:

      The MMA for co-defendants linked with TC 971 AC 188/189 may equal the total amount of all restitution assessments that each is jointly responsible for.

      Example:

      TP husband and wife are each assessed restitution on their MFT 31 tax modules for income related to their jointly filed Form 1040 (TC 290 for $1,000.00). Each is also assessed restitution on their MFT 31 tax modules for income related to their corporate income tax liabilities (TC 298 for $5,000.00). The MMA for the TC 971 AC 188/189 linking the MFT 31 modules is $6,000.00 and includes the assessed amounts for both the TC 290 and TC 298.

    • TC 971 AC 18X MMA dollar amounts of pair of linkages do not match

    Note:

    The combination of a TC 767 posted with the TC 30X or TC 29X amounts may represent the duplicate assessment amount.

  3. The transactions for the RBA, MMA amount, and associated TC 971 AC 18X’s are initiated by Exam Technical Services (TS) who prepares Form 3870 and /orForm 3177. These forms are input by either Exam Centralized Case Processing (CCP), located in the Memphis Campus or Ogden CCO.

    If ... And ... Then ...
    Missing or broken linkage OR MMA is incorrect as described in, see IRM 5.19.23.2.6 above  
    1. Send a secure e-mail to *SBSE TECH Svs Criminal Restitution and request Form 3177 to update and/or correct account.

    2. Close the transcript case.

    3. Open a monitor control on IDRS and monitor for 5 business days.

    4. When Form 3177 is received, process in accordance with IRM 5.19.23.2.7,Form 3177 Processing, and send Form 3177 to Files as the source document. Perform necessary action(s) to cross-reference available payments and credits in accordance with IRM procedures and close case.

    5. If no response, send a follow up request, update case control and monitor for 10 business days.

    6. If no response, elevate to local management.

    TC 971 AC 180 is posted on Civil tax module, i.e., MFT 30, 01, 02, etc. (NOT MFT 31) Subsequent TC 29X / 30X posts to the Civil tax module
    1. Send a secure e-mail to *SBSE TECH Svs Criminal Restitution

    2. In the SUBJECT line, type: “Subsequent TC 29X/30X Posted To Module with AC 181.”

    3. In the body of the message type: “For review and possible action. Subsequent TC 29X/30X posted to TIN / MFT / Tax Period.”

    4. Take necessary action(s) to resolve transcript case in accordance with IRM procedures and close case.

    TC 971 AC 188/189 is posted on the restitution module (MFT 31) TC 971 AC 184/185 is posted on a Civil tax module, i.e., MFT 30, 01, 02, etc. (NOT MFT 31) of a defendant for the same restitution assessment liability AND there is no AC 184 linking the co-defendant MFT 31
    1. Send a secure e-mail to *SBSE TECH Svs Criminal Restitution

    2. In the SUBJECT line, type: “TC 29X/30X Posted To Module with AC 184/185.”

    3. In the body of the message type: “ For review and possible action. TC 29X/30X posted to TIN / MFT / Tax Period with duplicate RBA on co-defendant account.”

    4. Take necessary action(s) to resolve transcript case in accordance with IRM procedures and close case.

    TC 971 AC 18X is pending or posted and there is no pending or posted TC 29X/30X for the associated RBA. A history item "3870/RECVD " IS recorded on CC TXMOD for 30 or more days from today’s date
    1. Input TC 570 on module to hold credits.

    2. Contact Memphis Centralized Case Processing (CCP), verify F3870 was received and request the Form 3870 for the missing assessment. CCP RBA contact names can be found at http://mysbse.web.irs.gov/examination/cp/cont/21759.aspxthe SBSE Centralized Case Processing web site

    3. Control the case on IDRS and monitor for 10 business days.

    4. When Form 3870 is received, process in accordance with IRM 5.19.23.9.

    5. If no response is received within 10 business days, elevate to local management.

    TC 971 AC 18X is pending or posted for more than 30 days from today’s date and there is no pending or posted TC 29X/30X for the associated RBA. A history item "3870/RECVD" IS NOT recorded on CC TXMOD
    1. Input TC 570 on module to hold credits.

    2. Send a secure e-mail to *SBSE TECH Svs Criminal Restitution and request Form 3870 for the missing assessment

    3. Control the case on IDRS and monitor for 10 business days.

    4. When Form 3870 is received, process in accordance with IRM 5.19.23.9 .

    5. If no response is received within 10 business days, elevate to local management.

    TC 971 AC 18X is pending or posted for less than 30 days from today’s date and there is no pending or posted TC 29X/30X for the associated RBA. Payments or credits are posted on the account. Input TC 570 on module to hold credits and close the transcript case.
    TC 971 AC 18X is pending or posted for less than 30 days from today’s date and there is no pending or posted TC 29X/30X for the associated RBA. No payments or credits are posted on the account. Take no action and close the transcript case.
  4. Document all initial and follow-up actions on AMS history.

Form 3177 Processing

  1. Exam TS will forward Form 3177 for TC 971 AC 18X linkage to CCS RBA for input to IDRS. Review the form to validate the following boxes are complete:

    • Initiator

    • Date

    • Taxpayer name. This is the name on the account the TC is input to.

    • EIN or SSN

    • Transaction Code (TC)

    • Other - must specify Action Code, cross-reference TIN, MFT and tax period, and MMA if AC indicates a duplicate assessment.

    • MFT code. This is the MFT the TC is input to.

    • Tax Period. This is the tax period where the TC is input.

  2. Forms 3177 received for RPP case types must be reviewed and perfected in accordance with IRM 5.19.23.2.6, prior to being input to IDRS. IDRS Master File is not able to accept an unlimited number of transactions on any given account module. After perfecting the forms, if there is 150 or more associated clients or 100 or more associated clients and one or more of those clients has an existing installment agreement:

    1. Input TC 971 AC 18X linkage to the Client accounts as indicated on Forms 3177.

    2. Input one linkage for the Client with the earliest dated assessment on the Preparer’s (MFT 31) account.

    3. Populate and store a “RPP Client List” according to local procedures.

    4. Document a history item on AMS for the MFT 31 account that includes all Client SSNs.

    If there is 350 or more associated clients:

    1. Input TC 971 AC 18X to the client accounts. Do not input the related TC 971 AC 18X on the Preparer account.

    2. Create an EXCEL spreadsheet for each Preparer (MFT 31) with 350 or more clients. Record the client name, TIN, tax period, assessment date and amount for each duplicate assessment indicated by TC 971 AC 18X on Form 3177 and save it to the RPP shared folder according to local procedures. The shared file will be used for reference when processing current and future cases of that preparer.

    3. Open an IDRS control and monitor the MFT 31 account until the TC 29X posts and follow procedures in, see IRM 5.19.23.3.6.2.1, to transfer the account to ANMF.

  3. IDRS CC REQ 77 is used to input transaction codes notated on Form 3177. Forms 3177 must be processed within 5 business days of receipt. Incomplete forms and forms received where the tax module is not present on IDRS must be returned to the initiator using the *SBSE TECH Svs Criminal Restitution mailbox with **EXPEDITE** on the subject line and must include a complete explanation of the reason for the rejection.

    Note:

    When Form 3177 is received for input of TC 972 AC 18X, review the module to determine if there is more than one TC 971 AC 18X posted with the same AC and transaction date as the one that will be reversed.

    1. If there is not more than one TC 971 AC 18X posted with the same AC and transaction date as the one that will be reversed, OR the transaction being reversed is the first one listed, input TC 972 as indicated on Form 3177.

    2. If there is more than one TC 971 AC 18X posted with the same AC and transaction date as the one that will be reversed:

    1. Input a TC 972 AC 18X for each TC 971 AC 18X posted with the same AC and transaction date as the one that will be reversed.

    2. Re-input TC 971 AC 18X for all transactions that were reversed without Form 3177. Do not request Form 3177.


    For BMF accounts, the input of a TC 972 AC 18X will reverse all posted TC 971 AC 18X in the module:

    1. If there is not more than one TC 971 AC 18X posted with the same AC and transaction date as the one that will be reversed, OR the transaction being reversed is the first one listed, input TC 972 as indicated on Form 3177.

    2. If there is more than one TC 971 AC 18X posted with the same AC and transaction date as the one that will be reversed:

    1. Input a TC 972 AC 18X as indicated on Form 3177.

    2. Using a post delay code 1, re-input TC 971 AC 18X for all other posted TC 971 AC 18X on the module. Do not request Form 3177.

  4. Forms 3177 may be received that update or change existing TC 971 action codes. See chart below.

    If E-Mail Subject Line States: And ... Then ...
    EXPEDITE F3177 to Change AC 180/181 a duplicate assessment posted on a Civil module after the TC 971 AC 180/181 posted.
    1. Process F3177(s) in accordance with IRM 5.19.23.2.3 , above.

    2. review all related accounts for posted payments/credits and cross-reference in accordance with IRM 5.19.23.3.

    EXPEDITE F3177 to Input AC 184/185. a duplicate assessment is identified on a Client account for RPP case type subsequent to the posting of the RBA
    1. Process F3177(s) in accordance with IRM 5.19.23.2.3, above.

    2. review all related accounts for posted payments/credits and cross-reference in accordance with IRM 5.19.23.3.

    EXPEDITE F3177 to Correct (MMA or TC 971 AC XXX) F3177 requests a change to the MMA only
    1. Process F3177(s) in accordance with IRM 5.19.23.2.3, above.

    EXPEDITE F3177 to Correct (MMA or TC 971 AC XXX) the RBA was incorrectly coded as a duplicate assessment with TC 971 AC 184/185
    1. Process F3177(s) in accordance with IRM 5.19.23.2.3, above.

    2. Review all related accounts and reverse any previously cross-referenced payments/credits.

  5. Whenever there is an abatement on an RBA account or related account that have established linkages posted, contact Exam Technical Services via e-mail to ask if the linkages need to be updated.

Payment Application

  1. A duplicate assessment is created when there is a Civil tax assessment in addition to the amount assessed as RBA, or when co-defendants are assessed restitution that relates to the same or similar tax issues. The duplicate assessment amounts may or may not be equal dollar amounts. A duplicate Fraud penalty is created when the Fraud penalty is asserted for both, the Civil and RBA.

  2. RBA payments or credits are applied in the following order:

    1. Restitution-Based Assessment/Civil assessment

    2. Court ordered Penalty assessments

    3. Collection costs and fees

    4. Other assessed penalties

    5. Assessed interest

    6. Other accrued penalties to date of payment

    7. Accrued interest to date of payment

    Note:

    Payments are applied first to fraud, then to failure-to-file (FTF), then to accuracy related penalty, and then to other penalties in ascending TC number order. The Failure-to-Pay (FTP) penalty is paid after all other penalties have been paid. See IRM 20.1.2.2.8.2, Application of Payments, for more information regarding additional assessments to tax.

  3. Payments secured by the courts and sent to IRS to be applied to the RBA are identified with a designated payment code (DPC) 26.

  4. If TC 91X and “Z” freeze is present on the account, contact Criminal Investigation/Scheme Development Center (SDC) and proceed per their instructions. Open an IDRS control on the account and continue to monitor every 30 days until the issue is resolved. Document AMS history during initial contact with CI and for all follow-up actions. Contact information can be located on SERP Who/Where tabs at http://serp.enterprise.irs.gov/serphome/who.html..

    Note:

    Payments applied prior to July 2013 were input to MFT 31 as TC 670 DPC 26 and could not be cross-referenced with TC 766 CRN 337 on MFT 30 due to systemic limitations. As a result, payments were transferred to MFT 30 with TC 670 DPC 08 and then cross-referenced to MFT 31 with TC 766 CRN 337.

Points To Remember

  1. When cross-referencing payments always consider the following:

    • Payments are cross-referenced to all related accounts with a duplicate assessment in earliest date order

    • Payments applied to fees and collection costs are not cross-referenced

      Exception:

      Fees and collection costs are only cross-referenced when they are included in the court order and duplicate to the related module.

      .

    • If an offset to another period results from incorrect posting of payments, reverse the offset.

  2. If a TC 971 AC 100/101/104 is present on MFT 31 account(s) contact the designated area to communicate that the posting of TC 971 AC 102 has prevented systemic mirroring of payments and accounts will need to be manually monitored. Contact information can be located on SERP Who/Where tabs at http://serp.enterprise.irs.gov/serphome/who.html.

  3. Always use blocking series 79 when cross-referencing payments / credits with a TC 76X / CRN 337 to MFT 05.

  4. Do not attempt to release a freeze on an account with an unreversed TC 780.

  5. When working RPP Transcript cases, do not validate previous actions on the case unless the current transcript is generated because the Return Preparer or Client module(s) has full paid the duplicate tax; or the module(s) has reached full paid Status 12; or a TC 604 or TC 608 posts to the account. Perform case actions based on the transcript you are working and the AMS histories.

    Upon Receipt of the RPP transcript:

    • Review the transcript account module to determine if the duplicate tax is fully paid or the module is full paid Status 12 or a TC 608/604 posted.

    • If the duplicate tax is fully paid, or the module is full paid Status 12, or a TC 608/604 is posted, take all necessary actions(s) to validate all previous case actions, resolve the transcript case in accordance with IRM 5.19.23 procedures, and close case.

    • If the duplicate tax or the module is not full paid or does not have a TC 608/604 posted, review current transcript and AMS histories and take necessary actions to resolve the transcript issue. Do not validate previous actions on the case.

    • If the volume of transactions creates a potential overflow to NMF condition follow procedures outlined in, see IRM 5.19.23.3.5.

    • Document a detailed history item on AMS when the current transcript issue/actions are completed.

  6. All actions taken must be documented on AMS with complete and concise information for all affected accounts. Documentation must include, but is not limited to: payment application, details of corrections/reversals, details of interest calculation including suspension periods, grace periods, LCU, dates, amounts, etc.

    Example:

    An RBA account that has multiple assessments, payments are being cross-referenced and an interest adjustment, history AMS as follows; X-ref the following payments from XXX-XX-XXXX MFT 31 to XX-XXXXXX MFT 02
    670 mm-dd-yyyy $$$.$$ dup tax
    670 mm-dd-yyyy $$$.$$ = $$$.$$ dup tax, $$.$$ dup int
    Manually adjusted interest, input TC 341 ($$$.$$) figured to 23c date mm-dd-yyyy. Was unable to match prior TC 340, the adjustment was unrestricted in error, should be restricted due to LCU. IMF & BMF computation was previously not figured separately. Appears the prior LCU date used had the wrong year.
    IMF $$$.$$ figured to mm-dd-yyyy, Used IMF RDD mm-dd-yyyy on TC 290 $$$.$$
    FTP $$.$$ for IMF, TC 276 mm-dd-yyyy $$$.$$
    IMF interest input: TC 340 mm-dd-yyyy $$$.$$
    TC 340 mm-dd-yyyy $$$.$$
    Total IMF Interest posted = $$$.$$
    Notice grace dates given:
    670 mm-dd-yyyy $$$.$$ - mm-dd-yyyy
    BMF $$$.$$ figured to mm-dd-yyyy, Used BMF RDD mm-dd-yyyy on TC 290 $$$,$$$.$$
    2% int. applies to BMF assessment TC 290 $$$,$$$.$$ - LCU start date mm-dd-yyyy
    FTP for BMF, maximum 25% - $$,$$$.$$ used
    TC 276 mm-dd-yyyy $$,$$$.$$
    BMF Interest input:
    TC 340 mm-dd-yyyy $$$,$$$.$$
    TC 196 mm-dd-yyyy $$$.$$
    Total BMF Interest posted $$$,$$$.$$
    3535 Letter sent

Cross-Referencing Payments

  1. When payment(s) or credit(s) post to an account where a duplicate RBA/Civil or Fraud penalty assessment exists, cross-reference the available amount to the applicable TIN(s), MFT(s), and tax period(s) of the duplicate assessments including modules in Status 53, 72 and 71. A thorough review of the account where the payment or credit posted is necessary to determine the amount available for cross-referencing. Only payment(s) and credit(s) applied to the tax, penalties or interest of the duplicate assessment amount is cross-referenced.

  2. Payments applied to MFT 31 accounts are immediately available as cross-references to pay duplicate tax, penalties, and / or interest. Payments applied to non-MFT 31 accounts must first pay non-duplicate (generally original tax return) assessments before they are applied to the duplicate (generally civil) assessments and are available for cross-referencing to the MFT 31.

    Caution:

    Payments and credits posted to a Civil tax account when a taxpayer is sentenced may be considered in the restitution order to reduce the amount assessed. When reviewing the account(s) caution must be taken to ensure payment(s) and credit(s) previously considered are not cross-referenced.

    Example:

    Taxpayer was assessed restitution for a refund of overstated withholding in the amount of $672,781. A withholding repayment, TC 720, in the amount of $132,781 was submitted and posted to the MFT 30 module prior to the RBA. The repayment was considered when the restitution was ordered reducing the RBA to $540.000. Therefore, the withholding repayment is not available for cross-referencing to the MFT 31 module.

  3. If the MMA can’t be matched, subtract available payments/credits applied to the civil assessment that is the basis for the restitution until the MMA is reached. Payments and credits already considered that reduce the amount of restitution assessed are not cross-referenced. Cross-reference any amounts paid towards the duplicate tax, penalty and/or interest to all related accounts.

    Example:

    A Return Preparer is assessed RBA of $32,750. A civil audit of Client A results in the reversal of the First Time Homebuyer Credit of $7,500. The reversal of the credit is the basis for the restitution. The MMA on the account is $2,310. A TC 670 for $2,300 and a TC 706 for $3,503 are posted to the module. Subtracting the payments from the assessment does not validate the MMA. $7,500 - $2,300 (TC 670) = $5,200 which is larger than the MMA. $5,200 - $3,503 (TC 706) = $1,697, which is smaller than the MMA. Since the MMA can’t be matched, the payments are subtracted from the civil assessment until the MMA is reached. The MMA of $2,310 is reached using a portion of the $3,503 payment ($5,200 - $2,890 = $2,310) leaving the remaining $613 available to cross-reference to the MFT 31. A payment or any part of a payment that reduces the duplicate amount is cross-referenced.

  4. Payments and credits are cross-referenced using Transaction Code (TC) 290 $.00 and Credit Reference Number (CRN) 337 that may also require a reason code and/or priority code: Hold code 3 is always used.

    If Cross-Referencing payment to: Then:
    MFT 30 Input TC 290 CRN 337 RC 150 PC 9
    MFT 31 Input TC 290 CRN 337 RC 150 PC 9
    Other than MFT 30/31 Input TC 290 CRN 337 with no RC or PC

    Note:

    Cross-referenced payments and credits will post to Master file as TC 766 RC 337

  5. The X-Ref TIN and dollar amount of the payment/credit being cross-referenced must be input during cross-referencing.

  6. Payments are cross-referenced to related accounts until the duplicate RBA is full paid. Then apply payments to Fraud penalty assessments, fees and collection costs, other assessed penalties and assessed interest, then to accrued penalties and accrued interest. Continue to apply payments in this order until the account is full paid. Amounts applied to fees and collection costs are not cross-referenced.

    Example:

    #1

    Duplicate RBA and Civil Assessment
    Civil Penalty that is not a Duplicate

    MFT 31 MFT 30
    TC 290 $5,000.00
    TC 276 $200.00
    TC 300 $8,000.00
    TC 240 $3,000.00
    TC 276 $900.00
    TC 971 AC 184 MMA= $5,000.00 TC 971 AC 185 MMA= $5,000.00
    TC 670 DPC 26 10-15-2012 $2,500.00
    TC 766 12-15-2012 $2,500.00
    TC 766 CRN 337 10-15-2012 $2,500.00
    TC 670 12-15-2012 $8,000.00
    • The payment dated 10-15-2012 for $2,500.00 is cross-referenced to MFT 30 to reduce the duplicate Civil assessment (TC 300).

    • $2,500.00 of the payment dated 12-15-2012 for $8,000.00 is cross-referenced to MFT 31 to fully pay the amount of the RBA that is duplicate. $3,000.00 of the remaining $5,500.00 is applied to fully pay the balance of the Civil assessment. Since the Civil assessment amount exceeds the duplicate amount of $5,000.00, it is not cross-referenced. Because all other assessed penalties are paid before assessed Failure to Pay Penalty, the remaining $2,500 is applied to the Civil Penalty and is not cross-referenced.

    Example:

    #2

    Duplicate RBA and Civil Assessment
    Fraud Penalty that is not a Duplicate

    MFT 31 MFT 30
    TC 290 $8,000.00
    TC 320 $6,000.00
    TC 276 $200.00
    TC 300 $8,000.00
    TC 276 $900.00
    TC 971 AC 184 MMA = $8,000.00 TC 971 AC 185 MMA = $8,000.00
    TC 670 DPC 26 10-15-2012 $7,000.00
    TC 670 DPC 26 11-30-2012 $7,200.00
    TC 766 CRN 337 10-15-2012 $7,000.00
    TC 766 CRN 337 11-30-2012 $1,200.00
    • The payment dated 10-15-2012 for $7,000.00 is cross-referenced to MFT 30 to reduce the duplicate Civil assessment (TC 300)

    • $1,200.00 of the payment dated 11-30-2012 for $7,200.00 is cross-referenced to MFT 30. $1,000.00 is applied to the remaining RBA that is duplicate and $200.00 is applied to the assessed Failure to Pay penalty. The remaining $6,000.00 is applied to pay the Fraud penalty assessment. Since the Fraud penalty assessment is not duplicate, the payment is not cross-referenced

  7. When a payment on the RBA module or duplicate account is reversed or refunded, debit the amount on the related account(s) using TC 767 CRN 337 with a corresponding amount and date. DO NOT use a Reason Code or Priority code when reversing previously cross-referenced payments.

  8. Payments must be posted to reflect the originating payment application; for example, payments applied to tax are cross-referenced to tax; payments applied to penalties are cross-referenced to the same type of penalties, etc. See chart and examples below.

    If ... And ... Then ...
    TC 670 or other credit transaction is present The total credits are not greater than the RBA amount Cross-reference the payment and/or credit amount(s) to the related accounts with a duplicate assessment. Apply the payment/credit up to the amount(s) owed for the duplicate assessment. Do not overpay the account.
    TC 670 or other credit transaction The credit was fully reversed prior to cross-referencing Do not cross-reference.
    TC 670 or other credit transaction The credit was fully or partially reversed subsequent to cross-referencing Input TC 767 for the reversed, refunded, or offset amount.
    TC 670 or other credit transaction The credit was partially reversed, refunded or offset prior to cross-referencing Cross-reference only the remaining payment/credit amount(s) to the related account(s). Do not cross-reference amounts that were reversed/refunded or offset.
    TC 670 or other credit transaction Any part of the payment/credit is applied to Failure to File (FTF) penalty Cross-reference the payment/credit amount to the related accounts with a duplicate FTF assessment. Do not cross-reference amounts credited to FTF to other penalty amounts. Do not overpay the account.
    TC 670 or other credit transaction Any part of the payment/credit is applied to pay Failure to Pay (FTP) penalty Cross-reference the payment/credit amount to the related accounts with a duplicate FTP assessment. Do not cross-reference amounts credited to FTP to other penalty amounts. Do not overpay the account.
    TC 680 Designated Interest Posted to IMF/BMF Do not cross-reference until all tax is paid.
    TC 690 Designated Penalty Posted to IMF/BMF Cross-reference using normal payment application based on earliest date and type of penalty, i.e., designated penalty payments applied to FTF are cross-referenced to FTF on related accounts and designated penalty payments applied to FTP are cross-referenced to FTP on related accounts.
  9. If one or more Defendants makes a payment with the same date that does not fully pay the duplicate RBA, cross-reference each payment to all related accounts.

    Example:

    #3

    TP1 MFT 31
    TC 290 $4,000.00
    TP2 MFT 31
    TC 290 $4,000.00
    TP3 MFT 31
    TC 290 $4,000.00
    TC 320 $1,000.00
    TC 971 AC 188 to x-ref TP2 MFT 31 MMA = $4,000.00
    TC 971 AC 188 to x-ref TP3 MFT 31 MMA = $4,000.00
    TC 971 AC 188 to x-ref TP1 MFT 31 MMA = $4,000.00
    TC 971 AC 188 to x-ref TP3 MFT 31 MMA = $4,000.00
    TC 971 AC 189 to x-ref TP1 MFT 31 MMA = $4,000.00
    TC 971 AC 189 to x-ref TP2 MFT 31 MMA = $4,000.00
    TC 706 04-15-2009 $1,500.00
    TC 766 CRN 337 04-15-2009 $945.00
    TC 766 CRN 337 04-15-2009 $85.00
    TC 706 04-15-2009 $945.00
    TC 766 CRN 337 04-15-2009 $1,500.00
    TC 766 CRN 337 04-15-2009 $85.00
    TC 706 04-15-2009 $85.00
    TC 766 CRN 337 04-15-2009 $945.00
    TC 766 CRN 337 04-15-2009 $1,500.00
    • The payment dated 04-15-2009 for $1,500.00 is cross-referenced to TP2 and TP3 to reduce the duplicate RBA.

    • The payment dated 04-15-2009 for $945.00 is cross-referenced to TP1 and TP3 to reduce the duplicate RBA

    • The payment dated 04-15-2009 for $85.00 is cross-referenced to TP1 and TP2 to reduce the duplicate RBA.

  10. If one or more defendants makes a payment that exceeds the duplicate RBA balance, apply payments in accordance with IRM 5.19.23.6. Caution must be taken to ensure payments are cross-referenced for “like” assessments, i.e., Fraud penalty to Fraud penalty, FTP to FTP, interest to interest, etc.

  11. Always input detailed history items into AMS to document all actions taken and the specifics of the payment application. Input the history for the MFT and tax period of the originating payment AND the MFT and tax period where the credit is applied.

Payment Cross-Referencing / IMF Case Types

  1. The following examples describe payment cross-referencing for IMF based Restitution Assessments.

Single Defendant and/or Married Taxpayers Filing Separate Returns with No Co-Defendant
  1. The following examples describe payment cross-referencing for single defendant and/or married taxpayers filing separate returns with no co-defendant

    Example:

    #1


    Duplicate RBA and Civil Assessment

    MFT 31 MFT 30
    TC 290 $5,000.00 TC 300 $5,000.00
    TC 971 AC 185 MMA= $5,000.00 TC 971 AC 184 MMA= $5,000.00
    TC 670 DPC 26 10-15-2012 $2,500.00
    TC 670 DPC 26 10-30-2012 $2,500.00
    TC 766 CRN 337 10-15-2012 $2,500.00
    TC 766 CRN 337 10-30-2012 $2,500.00
    • The payment dated 10-15-2012 for $2,500.00 is cross-referenced to MFT 30 to reduce the duplicate Civil assessment (TC 300).

    • The payment dated 10-30-2012 for $2,500.00 is cross-referenced to MFT 30 to fully pay the duplicate Civil assessment (TC 300).

    Example:

    #2


    Duplicate RBA and Civil Assessment
    Fraud Penalty that is not a Duplicate

    MFT 31 MFT 30
    TC 290 $5,000.00 TC 300 $8,000.00
    TC 320 $6,000.00
    TC 971 AC 184 MMA= $5,000.00 TC 971 AC 185 MMA= $5,000.00
    TC 670 DPC 26 10-15-2012 $2,500.00
    TC 670 DPC 26 10-30-2012 $2,500.00
    TC 766 CRN 337 10-15-2012 $2,500.00
    TC 766 CRN 337 10-30-2012 $2,500.00
    TC 670 12-15-2012 $3,000.00
    • The payment dated 10-15-2012 for $2,500.00 is cross-referenced to MFT 30 to reduce the duplicate Civil assessment (TC 300).

    • The payment dated 10-30-2012 for $2,500.00 is cross-referenced to MFT 30 to fully pay the amount of the Civil assessment (TC 300) that is duplicate.

    • The payment dated 12-15-2012 for $3,000.00 is applied to fully pay the remaining Civil assessment, then to the Fraud penalty. The remaining Civil assessment exceeds the duplicate amount and the Fraud penalty is not duplicate; therefore, the payment is not cross-referenced.

    Example:

    #3


    Duplicate RBA and Civil Assessment
    Duplicate Fraud Penalty

    MFT 31 MFT 30
    TC 290 $5,000.00
    TC 320 $3,000.00
    TC 300 $8,000.00
    TC 320 $6,000.00
    TC 971 AC 184 MMA= $5,000.00
    TC 971 AC 182 MMA= $3,000.00
    TC 971 AC 185 MMA= $5,000.00
    TC 971 AC 183 MMA= $3,000.00
    TC 670 DPC 26 10-15-2012 $5,000.00
    TC 766 CRN 337 11-3-2012 $2,000.00
    TC 670 DPC 26 12-15-2012 $1,000.00
    TC 766 CRN 337 10-15-2012 $5,000.00
    TC 670 11-3-2012 $5,000.00
    TC 766 CRN 337 12-15-2012 $1,000.00
    • The payment dated 10-15-2012 for $5,000.00 is cross-referenced to MFT 30 to fully pay the amount of the Civil assessment (TC 300) that is duplicate.

    • The payment dated 11-3-2012 for $5,000.00 fully pays the remaining $3,000.00 of the MFT 30 Civil assessment and $2,000.00 of the Fraud penalty. $2,000.00 is cross-referenced to MFT 31 Fraud penalty (TC 320) that is a duplicate.

    • The payment dated 12-15-2012 for $1,000.00 is cross-referenced to MFT 30 to fully pay the amount of the Fraud penalty (TC 320) that is a duplicate.

    Example:

    #4


    Duplicate RBA and Civil Assessment
    Duplicate Fraud Penalty
    Previous Balance on MFT 30 Account

    MFT 31 MFT 30
    TC 290 $7,000.00
    TC 320 $3,000.00
    TC 150 $5,000.00
    TC 300 $8,000.00
    TC 320 $3,000.00
    TC 971 AC 184 MMA= $7,000.00
    TC 971 AC 182 MMA= $3,000.00
    TC 971 AC 185 MMA= $7,000.00
    TC 971 AC 183 MMA= $3,000.00
    TC 670 DPC 26 10-15-2012 $2,500.00
    TC 766 CRN 337 11-03-2012 $3,000.00
    TC 670 DPC 26 12-15-2012 $1,000.00
    TC 766 CRN 337 03-12-2013 $3,500.00
    TC 670 07-26-2011 $3,000.00
    TC 766 CRN 337 10-15-2012 $2,500.00
    TC 670 11-03-2012 $5,000.00
    TC 766 CRN 337 12-15-2012 $1,000.00
    TC 670 03-12-2013 $4,500.00
    • The payment dated 07-26-2011 for $3,000.00 pays part of the TC 150 for $5,000.00. It is not cross-referenced.

    • Designated Restitution payment dated 10-15-2012 for $2,500.00 pays part of the TC 290 for the duplicate RBA of $7,000.00, leaving a balance of $4,500.00. It is cross-referenced to the MFT 30 to reduce the duplicate amount of the Civil assessment TC 300 for $8,000.00, leaving a balance of $5,500.00.

    • Payment dated 11-3-2012 for $5,000.00 pays the balance of the $2,000.00 from the TC 150. The remaining $3,000.00 reduces the TC 300 of $8,000.00 to $2,500.00, and is cross-referenced to the MFT 31 RBA of $7,000.00, now leaving a balance of $1,500.00.

    • Designated Restitution payment dated 12-15-2012 for $1,000.00 reduces the RBA balance to $500.00 and is cross-referenced to the Civil assessment, now leaving a balance of $1,500.00.

    • Payment dated 03-12-2013 for $4,500.00 fully pays the remaining $1,500.00 of the Civil Assessment and the entire TC 320 for the $3,000.00 Fraud penalty. $3,500.00 is cross-referenced to the MFT 31 to pay the remaining $500.00 of the RBA and fully pay the duplicate Fraud penalty of $3,000.00.

Single Defendant and/or Married Taxpayers Filing Separate Returns with Co-Defendants
  1. The following example describes payment cross-referencing for single defendants and/or married taxpayers filing separate returns with co-defendant.

    TPH = Taxpayer Husband - Lead Defendant
    TPW = Taxpayer Wife Co-Defendant

    Example:

    #5


    No Duplicate Civil Assessment
    Duplicate RBA

    TPH MFT 31 TPW MFT 31
    TC 290 $5,000.00 TC 290 $5,000.00
    TC 971 AC 189 MMA= $5,000.00 TC 971 AC 188 MMA = $5,000.00
    TC 670 DPC 26 10-15-2012 $3,000.00
    TC 670 DPC 26 10-30-2012 $2,000.00
    TC 766 CRN 337 10-15-2012 $3,000.00
    TC 766 CRN 337 10-30-2012 $2,000.00
    • $3,000.00 of the payment dated 10-15-2012 is cross-referenced to TPW MFT 31 to credit the duplicate RBA (TC 971 AC 188 MMA).

    • The payment dated 10-30-2012 for $2,000.00 is cross-referenced to TPW MFT 31 to fully pay the remaining amount of the duplicate RBA.

  2. When payment(s) or credit(s) post to a defendant or co-defendant account where the duplicate restitution assessment amounts are different, cross-reference the payment or credit to the associated TIN(s), MFT(s), and tax period(s) of the duplicate assessments up to the amount of the assessment. Do not overpay the account.

    Example:

    #6


    Married Taxpayers Filing Separate Returns
    Duplicate RBA
    TPH = Taxpayer Husband-Lead Defendant
    TPW = Taxpayer Wife-Co-Defendant

    TPH MFT 31 TPW MFT 31
    TC 290 $10,000.00
    TC 971 AC 189 MMA= $5,000.00

    TC 670 DPC 26 10-15-2012 $5,000.00
    TC 670 DPC 26 10-30-2012 $2,500.00
    TC 290 $5,000.00

    TC 971 AC 188 MMA = $5,000.00

    TC 766 CRN 337 10-15-2012 $5,000.00
    • The payment dated 10-15-2012 for $5,000.00 is cross-referenced to TPW MFT 31 to fully pay the amount of the RBA that is duplicate.

    • The payment dated 10-30-2012 for $2,500.00 is applied to the remaining balance of the TPH RBA and is not cross-referenced.

    Caution:

    When defendants owe different duplicate assessment amounts for the same period, do not apply more than the duplicate assessment amount.

     

    Example:

    #7


    Married Taxpayers Filing Separate Returns
    Duplicate RBA
    TPH = Taxpayer Husband-Lead Defendant
    TPW = Taxpayer Wife-Co-Defendant

    TPH MFT 31 TPW MFT 31
    TC 290 $10,000.00
    TC 971 AC 189 MMA= $5,000.00

    TC 670 DPC 26 07-15-2013 $5,000.00
    TC 670 DPC 26 10-30-2013 $2,500.00

    TC 766 CRN 337 10-01-2012 $3,000.00
    TC 290 $5,000.00
    TC 971 AC 188 MMA = $5,000.00

    TC 670 DPC 26 10-01-2012 $3,000.00

    TC 766 CRN 337 07-15-2013 $2,000.00
    TC 766 CRN 337 10-30-2013 $200.00
    • The payment dated 10-01-2012 for $3,000.00 is cross-referenced to TPH MFT 31 account

    • $2,000.00 of the payment dated 07-15-2013 for $5,000.00 is cross-referenced to TPW MFT 31 to fully pay the duplicate RBA. The remaining $3,000.00 reduces the remaining RBA on TPH MFT 31

    • $2,000.000 of the payment dated 10-30-2013 for $2,500.00 fully pays the remaining RBA on TPH MFT 31. The remaining $500.00 is applied to interest

    • Interest in the amount of $200.00 is computed for the RBA on TPW MFT 31 and $200 from the payment dated 10-30-2013 is cross-referenced.

    Caution:

    When defendants owe different duplicate assessment amounts for the same period, do not apply more than the duplicate assessment amount.

Married Taxpayers Filing Joint Returns with No Co-Defendant
  1. See Examples 8 and 9 below.

    Example:

    #8
    Taxpayer Husband (TPH) Liable
    Duplicate RBA and Civil Assessment

    TPH (primary SSN on joint)MFT 30 TPH MFT 31


    TC 300 $10,000.00
    TC 320 $3,000.00


    TC 971 AC 185
    MMA = $10,000.00


    TC 670 10-15-2011 $7,500.00
    TC 670 10-30-2012 $2,500.00
    TC 670 12-15-2012 $3,000.00


    TC 290 $10,000.00

    TC 971 AC 184
    MMA = $10,000.00

    TC 766 CRN 337 10-15-2011 $7,500.00
    TC 766 CRN 337 10-30-2012 $2,500.00
    • The payment dated 10-15-2011 for $7,500.00 is cross-referenced to MFT 31 to reduce the duplicate RBA (TC 290).

    • The payment dated 10-30-2012 for $2,500.00 is cross-referenced to MFT 31 to fully pay the duplicate RBA (TC 290).

    • The payment dated 12-15-2012 for $3,000.00 is applied to fully pay the Fraud penalty. The Fraud penalty is not duplicate; therefore, the payment is not cross-referenced.

    Example:

    #9
    Taxpayer Wife (TPW) Liable
    Duplicate RBA and Civil Assessment

    TPH (primary SSN on joint) MFT 30  

    TC 300 $8,000.00
    TC 320 $3,000.00

    TC 971 AC 184 MMA= $8,000.00
    TC 971 AC 182 MMA= $3,000.00

    TC 766 CRN 337 10-15-2012 $5,000.00
    TC 670 11-3-2012 $5,000.00
     
      TPW MFT 31
    TC 290 $15,000.00
    TC 320 $3,000.00

    TC 971 AC 185 MMA= $8,000.00
    TC 971 AC 183 MMA= $3,000.00

    TC 670 DPC 26 10-15-2012 $5,000.00
    TC 766 CRN 337 11-03-2012 $5,000.00
    TC 670 DPC 26 12-15-2012 $3,000.00
    • The payment dated 10-15-2012 for $5,000.00 is cross-referenced to MFT 30 to reduce the amount of the Civil assessment (TC 300) that is duplicate.

    • The payment dated 11-3-2012 for $5,000.00 fully pays the remaining amount of the Civil assessment that is duplicate and $2,000.00 of the assessed Fraud penalty. $5,000.00 is cross-referenced to MFT 31; $3,000 fully pays the amount of the RBA that is duplicate, leaving a balance of $7,000.00, and $2,000.00 reduces the Fraud penalty (TC 320) that is duplicate.

    • The payment dated 12-15-2012 for $3,000.00 is applied to the outstanding RBA balance of $7,000.00 and is not cross-referenced to MFT 30.

Married Taxpayers Filing Joint with Co-Defendants
  1. See Examples 10 through 13 below.

    Example:

    #10
    Duplicate RBA and Civil Assessment
    TPH = Taxpayer Husband Lead-Defendant

    TPH MFT 30  

    TC 300 $5,000.00

    TC 971 AC 184 points to TPH MFT 31
    MMA = $5,000.00
    TC 971 AC 184 points to TPW MFT 31
    MMA = $5,000.00

    TC 766 CRN 337 10-15-2012 $2,500.00
    TC 766 CRN 337 10-30-2012 $2,500.00
     
    TPH MFT 31
    TC 290 $5,000.00

    TC 971 AC 185 points to TPH MFT 30
    MMA = $5,000.00
    TC 971 AC 189 points to TPW MFT 31
    MMA = $5,000.00

    TC 670 DPC 26 10-15-2012 $2,500.00
    TC 670 DPC 26 10-30-2012 $2,500.00
    TPW MFT 31
    TC 290 $5,000.00

    TC 971 AC 184 points to TPH MFT 30
    MMA = $5,00.00
    TC 971 AC 188 points to TPH MFT 31
    MMA = $5,000.00

    TC 766 CRN 337 10-15-2012 $2,500.00
    TC 766 CRN 337 10-30-2012 $2,500.00
    • The payment dated 10-15-2012 for $2,500.00 is cross-referenced to TPH MFT 30 to reduce the duplicate Civil assessment (TC 300) and TPW MFT 31 to reduce the duplicate RBA (TC 290).

    • The payment dated 10-30-2012 for $2,500.00 is cross-referenced to TPH MFT 30 to fully pay the duplicate Civil assessment (TC 300) and TPW MFT 31 to fully pay the duplicate RBA (TC 290).

    Example:

    #11
    Duplicate RBA and Civil Assessment
    Fraud Penalty that is not a Duplicate
    TPH = Taxpayer Husband Lead-Defendant

    TPH MFT 30  

    TC 300 $8,000.00
    TC 320 $3,000.00

    TC 971 AC 185 points to TPH MFT 31
    MMA = $5,000.00
    TC 971 AC 184 points to TPW MFT 31
    MMA = $5,000.00

    TC 766 CRN 337 10-15-2012 $2,500.00
    TC 766 CRN 337 10-30-2012 $1,000.00
    TC 670 12-15-2012 $3,000.00
    TC 670 1-27-2013 $2,000.00
     
    TPH MFT 31
    TC 290 $5,000.00
    TC 971 AC 184 points to TPH MFT 30
    MMA = $5,000.00
    TC 971 AC 189 points to TPW MFT 31
    MMA = $5,000.00

    TC 670 DPC 26 10-15-2012 $2,500.00
    TC 670 DPC 26 10-30-2012 $1,000.00
    TC 766 CRN 337 12-15-2012 $1,500.00
    TPW MFT 31
    TC 290 $5,000.00

    TC 971 AC 184 points to TPH MFT 30
    MMA = $5,000.00
    TC 971 AC 188 points to TPH MFT 31
    MMA = $5,000.00
    TC 766 CRN 337 10-15-2012 $2,500.00
    TC 766 CRN 337 10-30-2012 $1,000.00
    TC 766 CRN 337 12-15-2012 $1,500.00
    • The payment dated 10-15-2012 for $2,500.00 is cross-referenced to TPH MFT 30 to reduce the amount of the Civil assessment (TC 300) that is duplicate and to TPW MFT 31 to reduce the amount of the RBA (TC 290) that is duplicate.

    • The payment dated 10-30-2012 for $1,000.00 is cross-referenced to TPH MFT 30 to pay the amount of the Civil assessment (TC 300) that is duplicate and to TPW MFT 31 to pay the duplicate RBA (TC 290).

    • The payment dated 12-15-2012 for $3,000.00 is applied to the remaining TPH MFT 30 Civil assessment. $1,500.00 of that payment is cross-reference to the TPH MFT 31 and the TPW MFT 31 to fully pay the Restitution-Based Assessment (TC 290).

    • The payment dated 1-27-2013 for $2,000.00 fully pays the remaining $1,500.00 of the TPH MFT 30 Civil assessment and $500.00 is applied to reduce the TPH MFT 30 Fraud penalty. The Fraud penalty is not a duplicate; therefore, the payment is not cross-referenced.

    Example:

    #12
    Duplicate RBA and Civil Assessment
    Duplicate Fraud Penalty
    TPW = Taxpayer Wife Lead-Defendant

    TPH MFT 30  

    TC 300 $8,000.00

    TC 971 AC 184 points to TPH MFT 31
    MMA = $5,000.00
    TC 971 AC 184 points to TPW MFT 31
    MMA = $5,000.00

    TC 766 CRN 337 10-15-2012 $2,500.00
    TC 766 CRN 337 10-30-2012 $2,500.00
     
    TPH MFT 31
    TC 290 $5,000.00
    TC 320 $3,000.00

    TC 971 AC 184 points to TPH MFT 30
    MMA = $5,000.00
    TC 971 AC 188 points to TPW MFT 31
    MMA = $5,000.00
    TC 971 AC 182 points to TPW MFT 31
    MMA = $3,000.00

    TC 670 DPC 26 10-15-2012 $2,500.00
    TC 670 DPC 26 10-30-2012 $2,500.00
    TC 670 12-15-2012 $2,500.00
    TPW MFT 31
    TC 290 $5,000.00
    TC 320 $3,000.00
    TC 971 AC 185 points to TPH MFT 30
    MMA = $5,000.00
    TC 971 AC 189 points to TPH MFT 31
    MMA = $5,000.00
    TC 971 AC 183 points to TPH MFT 31
    MMA = $3,000.00

    TC 766 CRN 337 10-15-2012 $2,500.00
    TC 766 CRN 337 10-30-2012 $2,500.00
    TC 766 CRN 337 12-15-2012 $2,500.00
    • The payment dated 10-15-2012 for $2,500.00 is cross-referenced to TPH MFT 30 to reduce amount of the Civil assessment (TC 300) that is duplicate and to TPW MFT 31 to reduce the duplicate RBA (TC 290).

    • The payment dated 10-30-2012 for $2,500.00 is cross-referenced to TPH MFT 30 to fully pay the amount of the Civil assessment (TC 300) that is duplicate and to TPW MFT 31 to fully pay the duplicate RBA (TC 290).

    • The payment date 12-15-2012 for $2,500.00 is cross-referenced to TPW MFT 31 to reduce the duplicate Fraud penalty (TC 320). The payment is not cross-referenced to TPH MFT 30 since there is no Fraud penalty assessment.

    Example:

    #13


    Married Taxpayers Filing Joint Return
    Duplicate RBA and Civil Assessment
    TPH = Taxpayer Husband Lead-Defendant
    TPW = Taxpayer Wife Co-Defendant

    TPH MFT 30  

    TC 300 $10,000.00

    TC 971 AC 184 points to TPH MFT 31 MMA= $10,000.00
    TC 971 AC 184 points to TPW MFT 31 MMA= $10,000.00

    TC 766 CRN 337 10-15-2012 $5,000.00
    TC 766 CRN 337 10-30-2012 $5,000.00
     
    TPH MFT 31
    TC 290 $15,000.00

    TC 971 AC 185 points to TPH MFT 30 MMA= $10,000.00
    TC 971 AC 189 points to TPW MFT 31 MMA= $10,000.00

    TC 670 DPC 26 10-15-2012 $5,000.00
    TC 670 DPC 26 10-30-2012 $5,000.00
    TC 670 DPC 26 11-15-2012 $5,000.00
    TPW MFT 31
    TC 290 $10,000.00

    TC 971 AC 184 points to TPH MFT 30 MMA= $10,000.00
    TC 971 AC 188 points to TPH MFT 31 MMA= $10,000.00

    TC 766 CRN 337 10-15-2012 $5,000.00
    TC 766 CRN 337 10-30-2012 $5,000.00
    • The payment dated 10-15-2012 for $5,000.00 is cross-referenced to TPW MFT 31, and to the joint MFT 30 account.

    • The payment dated 10-30-2012 for $5,000.00 is cross-referenced to TPW MFT 31, and to the joint MFT 30 account to fully pay the duplicate RBA (TC 290) and the duplicate Civil assessment (TC 300)

    • The payment dated 11-15-2012 for $5,000.00 is applied to TPH MFT 31 to full pay the RBA (TC 290). It not cross-referenced.

      Caution:

      When defendants owe different duplicate assessment amounts for the same period, do not apply more than the duplicate assessment amount.

Married Taxpayers Filing Joint Returns with More Than One Co-Defendant
  1. See Example 14 & 15 below.

    Example:

    #14
    Duplicate RBA and Civil Assessments
    Duplicate Fraud Penalty
    Duplicate RBA with more than one Co-Defendant

    TPH MFT 30    

    TC 300 $10,000.00
    TC 320 $3,000.00

    TC 971 AC 185 points to TPH MFT 31. MMA = $5,000.00
    TC 971 AC 184 points to TPW MFT 31. MMA = $5,000.00
    TC 971 AC 184 points to TP3 MFT 31. MMA = $5,000.00
    TC 971 AC 183 points to TPH MFT 31. MMA = $3,000.00

    TC 766 CRN 337 10-15-2012 $5,000.00
    TC 670 10-30-2012 $4,000.00
    TC 766 CRN 337 12-15-2012 $3,000.00
    TPH MFT 31
    TC 290 $5,000.00
    TC 320 $3,000.00

    TC 971 AC 184 points to TPH MFT 30. MMA = $5,000.00
    TC 971 AC 182 points to TPH MFT 30. MMA = $3,000.00
    TC 971 AC 189 points to TPW MFT 31. MMA = $5,000.00
    TC 971 AC 189 points to TP3 MFT 31. MMA = $5,000.00

    TC 670 DPC 26 10-15-2012 $5,000.00
    TC 670 DPC 26 12-15-2012 $3,000.00
    TPW MFT 31
    TC 290 $5,000.00

    TC 971 AC 184 points to TPH MFT 30. MMA = $5,000.00
    TC 971 AC 188 points to TPH MFT 31. MMA = $5,000.00
    TC 971 AC 188 points to TP3 MFT 31. MMA = $5,000.00


    TC 766 CRN 337 10-15-2012 $5,000.00
    TP3 MFT 31
    TC 290 $5,000.00

    TC 971 AC 184 points to TPH MFT 30. MMA = $5,000.00
    TC 971 AC 188 points to TPH MFT 31. MMA = $5,000.00
    TC 971 AC 188 points to TPW MFT 31. MMA = $5,000.00



    TC 766 CRN 337 10-15-2012 $5,000.00
    • The payment dated 10-15-2012 for $5,000.00 is cross-referenced to TPH MFT 30 to reduce the Civil assessment (TC 300) that is duplicate and to TPW MFT 31 and TP3 MFT 31 to fully pay the duplicate RBA (TC 290).

    • Since the duplicate amount of the RBA is full paid, the payment dated 10-30-2012 for $4,000.00 is not cross-referenced to TPH MFT 31, TPW MFT 31 or TP3 MFT 31. Since the payment is applied to further reduce the Civil tax assessment, it can’t be cross-referenced to reduce the Fraud penalty on TPH MFT 31.

    • The payment dated 12-15-2012 for $3,000.00 fully pays the TPH MFT 31 Fraud penalty (TC 320), and is cross-referenced to TPH MFT 30 to fully pay the duplicate Fraud penalty (TC 320). A balance of $1,000.00 remains on the non-duplicate TPH MFT 30 Civil Assessment.

    Example:

    #15


    Duplicate RBA
    TPH = Taxpayer Husband Lead Defendant
    TPW = Taxpayer Wife Co-Defendant
    TP3 = Taxpayer Co-Defendant

    TPH MFT 31 TPW MFT 31 TP3 MFT 31
    TC 290 $20,000.00 TC 290 $15,000.00 TC 290 $8,000.00
    TC 971 AC 189 points to TPW MFT 31 MMA= $15,000.00
    TC 971 AC 189 points to TP3 MFT 31 MMA= $8,000.00

    TC 670 DPC 26 7-15-2014 $5,000.00

    TC 766 CRN 337 10-30-2011 $8,000.00
    TC 766 CRN 337 10-15-2012 $5,000.00
    TC 971 AC 188 points to TPH MFT 31 MMA= $15,000.00
    TC 971 AC 188 points to TP3 MFT 31 MMA= $8,000.00

    TC 670 DPC 26 10-15-2012 $5,000.00

    TC 766 CRN 337 10-30-2011 $8,000.00
    TC 766 CRN 337 7-15-2014 $2,000.00
    TC 971 AC 188 points to TPH MFT 31 MMA= $8,000.00
    TC 971 AC 188 points to TPW MFT 31 MMA= $8,000.00

    TC 670 DPC 26 10-30-2011 $8,000.00
    • The payment dated 10-30-2011 for $8,000.00 is cross-referenced to TPH and TPW MFT 31 accounts to fully satisfy the duplicate amount of RBA attributed to TP3

    • The payment dated 10-15-2012 for $5,000.00 is cross-referenced to TPH to reduce the duplicate RBA and because the duplicate amount has been fully satisfied for TP3, the payment is not cross-referenced to that account

    • $2,000.00 of the payment dated 7-15-14 for $5,000.00 is cross-referenced to TPW to fully satisfy the duplicate amount. The remaining $3,000.00 is applied to remaining balance of RBA for TPH and is not cross-referenced.

Payment Cross-Referencing / BMF Case Types

  1. The following examples describe payment cross-referencing for BMF based Restitution Assessments.

  2. BMF case types may include duplicate RBA and/or Civil assessments related to the Defendant’s individual income tax (MFT 30), in addition to multiple BMF tax types (MFT 01, 02, 10, etc.). These assessments will appear as multiple assessments on MFT 31 however, they are not duplicate assessments to each other.

    • Apply payments/credits or debits from the restitution module MFT 31 to the assessments in the order they appear on the module.

      Exception:

      On BMF accounts with multiple assessments where some have LCU, the payments must be applied to the account with the earliest effective date with the highest tax first. See IRM 20.2.5.8, Large Corporate Underpayments (LCU), and IRM 20.2.11.13, Restitution Based Assessments (RBA).

      Note:

      When multiple assessments are posted for the same amount and LCU applies, request the assessment (TC 298) Document Locator Number (DLN) and review the source document(s) to identify which assessment(s) belong to those accounts where the LCU applies.

    • Cross-reference the payment to the corresponding tax module to reduce the duplicate assessment amount.

    • Cross-reference payments/credits/debits from the tax module(s) only to the restitution module, MFT 31 to reduce the duplicate RBA.

Employment Tax - Form 941
  1. The following example describes payment cross-referencing for duplicate RBA with a Civil assessment on Form 941.

    Example:

    #1


    Duplicate RBA and Civil Assessment

    MFT 31 200603 111-XX-XXXX MFT 01 200603 XX-XXX0123
    TC 298 12-31-2012 $5,000.00 TC 300 06-18-2012 $5,000.00
    TC 971 AC 185 points to MFT 01 MMA = $5,000.00 TC 971 AC 184 points to MFT 31 MMA = $5,000.00
    TC 670 01-15-2013 $1,000.00
    TC 670 03-05-2013 $1,000.00

    TC 766 CRN 337 05-15-2013 $2,000.00
    TC 766 CRN 337 01-15-2013 $1,000.00
    TC 766 CRN 337 03-05-2013 $1,000.00

    TC 670 05-15-2013 $2,000.00
    • The payments dated 01-15-2013 and 03-05-2013 are applied to MFT 31 to reduce the RBA assessment (TC 298) and are cross-referenced to MFT 01 to reduce the Civil Assessment (TC 300)

    • The payment dated 05-15-2013 is applied to MFT 01 to reduce the Civil assessment (TC 300) and is cross-referenced to MFT 31 to reduce the RBA assessment (TC 298).

Federal Unemployment Tax Act Tax – Form 940
  1. The following example describes payment cross-referencing for duplicate RBA with a Civil assessment on Form 940.

    Example:

    #2


    Duplicate RBA and Civil Assessment

    MFT 31 200812 111-XX-XXXX MFT 10 200812 XX-XXX0123
    TC 298 $10,000.00 TC 300 $15.000.00
    TC 971 AC 184 points to MFT 10 XX-XXX0123 MMA = $5,000.00 TC 971 AC 185 points to MFT 31 111-XX-XXXX MMA = $5,000.00
    TC 670 DPC 26 06-12-2012 $10,000.00 TC 670 10-15-2012 $2,500.00
    TC 766 CRN 337 06-12-2012 $5,000.00
    • The payment dated 06-12-2012 for $10,000.00 is applied to MFT 31 full paying the Restitution Assessment (TC 298). $5,000.00 of the payment is cross-referenced to MFT 10 to full pay the duplicate amount of the Civil Assessment (TC 300)

    • The payment dated 10-15-2012 for $2,500.00 is applied to MFT 10 to reduce the Civil Assessment (TC 300). Since the Civil Assessment is more than the duplicate RBA amount, the payment is not cross-referenced to MFT 31.

    Caution:

    The MMA amount is the duplicate amount between linked accounts. The MMA does not always match the assessment amount. Do not cross-reference more than the duplicate amount for tax.

Corporate Tax – Form 1120 Fiscal Year Filer
  1. The following example describes payment cross-referencing for duplicate RBA with a Civil assessment for a fiscal year filer of Form 1120.

    Example:

    #3


    Duplicate RBA and Civil Assessment

    MFT 31 200810 222-XX-XXXX MFT 02 200810 XX-XXX1234
    TC 298 $10,000.00 TC 300 $10.000.00
    TC 971 AC 185 points to MFT 02 XX-XXX1234 200810 MMA = $10,000.00 TC 971 AC 184 points to MFT 31 222-XX-XXXX 200810 MMA = $10,000.00
    TC 670 DPC 26 06-15-2012 $2,500.00
    TC 670 DPC 26 07-15-2012 $2,500.00 TC 670 DPC 26 08-15-2012 $2,500.00
    TC 766 CRN 337 06-15-2012 $2,500.00
    TC 766 CRN 337 07-15-2012 $2,500.00 TC 766 CRN 337 08-15-2012 $2,500.00
    • The payment dated 06-15-2012 for $2,500.00 is applied to MFT 31 to reduce the duplicate Restitution Based Assessment (TC 298) and is cross-referenced to MFT 02 to reduce the duplicate Civil Assessment (TC 300)

    • The payment dated 07-15-2012 for $2,500.00 is applied to MFT 31 to reduce the duplicate Restitution Based Assessment (TC 298) and is cross-referenced to MFT 02 to reduce the duplicate Civil Assessment (TC 300)

    • The payment dated 08-15-2012 for $2,500.00 is applied to MFT 31 to reduce the duplicate Restitution Based Assessment (TC 298) and is cross-referenced to MFT 02 to reduce the duplicate Civil Assessment (TC 300).

    Note:

    A business may be assessed RBA for multiple tax periods and/or tax types for the same tax year; however, these are not considered duplicate assessments. Separate MFT 31 accounts are established for each tax period.

Corporate Tax Form 1120 and Form 1040
  1. The following example describes payment cross-referencing for duplicate RBA with a Civil assessment for Form 1120 and the defendants individual income tax Form 1040.

    Example:

    #4


    Duplicate RBA and Civil Assessment

    MFT 31 200712 222-XX-XXXX  

    TC 290 $10,000.00
    TC 298 $15,000.00

    TC 971 AC 185 points to MFT 30 222-XX-XXXX 200712 MMA = $10,000
    TC 971 AC 185 points to MFT 02 XX-XXX3456 200712 MMA = $15,000

    TC 670 05-15-2012 $10,000.00
    TC 670 01-15-2013 $2,000.00
    TC 670 03-05-2013 $3,000.00
     
    MFT 30 200712 222-XX-XXXX
    TC 300 $10,000.00

    TC 971 AC 184 points to MFT 31 222-XX-XXXX 200712 MMA = $10,000.00

    TC 766 CRN 337 05-15-2012 $10,000.00
    MFT 02 200712 XX-XXX3456
    TC 300 $15,000.00

    TC 971 AC 184 points to MFT 31 222-XX-XXXX 200712 MMA = $15,000.00

    TC 766 CRN 337 01-15-2013 $2,000.00
    TC 766 CRN 337 03-15-2013 $3,000.00
    • The payment dated 05-15-2012 for $10,000.00 applied to MFT 31 is cross-referenced to MFT 30 to full pay the duplicate Civil Assessment (TC 300) since it is the first assessment on the module

    • The payment dated 01-15-2013 for $2,000.00 applied to MFT 31 is cross-referenced to MFT 02 to reduce the duplicate Civil Assessment (TC 300) since it is the second assessment (TC 298) on the module

    • The payment dated 03-05-2013 for $3,000.00 applied to MFT 31 is cross-referenced to MFT 02 to reduce the duplicate Civil Assessment (TC 300) since it is the second assessment (TC 298) on the module. Leaving a balance of $10,000.00.

Employment Tax - Form 941; Federal Unemployment Tax Act Tax – Form 940 and Individual Income Tax Form 1040
  1. The following example describes payment cross-referencing for duplicate RBA with a Civil assessment for Forms 941, 940 and the defendants individual income tax Form 1040.

    Example:

    #5
    Duplicate RBA and Civil Assessments

    MFT 31 333-XX-XXXX 200712    

    TC 298 $5,000.00
    TC 290 $10,000.00
    TC 298 $5,000.00

    TC 971 AC 185 points to MFT 01 XX-XX4567 200712 MMA = $5,000.00
    TC 971 AC 185 points to MFT 30 333-XX-XXXX 200712 MMA = $10,000.00
    TC 971 AC 185 points to MFT 10 XX-XX4567 200712 MMA = $5,000.00

    TC 670 DPC 26 03-15-2012 $5,000.00
    TC 766 CRN 337 04-01-2012 $2,500.00
    TC 670 DPC 26 04-15-2012 $7,500.00
    TC 670 DPC 26 06-15-2012 $5,000.00
    MFT 01 XX-XXX4567 200712
    TC 300 $5,000.00

    TC 971 AC 184 points to MFT 31 333-XX-XXXX 200712 MMA = $5,000.00

    TC 766 CRN 337 03-15-2012 $5,000.00
    MFT 10 XX-XXX4567 200712
    TC 300 $5,000.00

    TC 971 AC 184 points to MFT 31 333-XX-XXXX 200712 MMA = $5,000.00

    TC 766 CRN 337 06-15-2012 $5,000.00
    MFT 30 333-XX-XXXX
    TC 300 $10,000.00

    TC 971 AC 184 points to MFT 31 333-XX-XXXX 200712 MMA = $10,000.00

    TC 670 04-01-2012 $2,500.00
    TC 766 CRN 337 04-15-2012 $7,500.00
    • The payment dated 03-15-2012 for $5,000.00 is applied to MFT 31 to reduce the duplicate Restitution Based Assessment(s) (TC 290 and 298). The payment is cross-referenced to MFT 01 to full pay the duplicate Civil Assessment (TC 300) since it is the first assessment (TC 298) on the module

    • The payment dated 04-01-2012 for $2,500.00 is applied to MFT 30 to reduce the duplicate Civil Assessment (TC 300) and is cross-referenced to MFT 31 to reduce the duplicate Restitution Based Assessment (TC 290). The payment is not cross-referenced to MFT 10 because the assessment is not duplicate to that Civil assessment

    • The payment dated 04-15-2012 for $7,500.00 is applied to MFT 31 to reduce the duplicate Restitution Based Assessment(s) (TC 290 and 298). Since the duplicate assessment listed first (TC 298 $5,000) was paid with a prior payment, the payment is cross-referenced to MFT 30 and full pays the duplicate Civil Assessment (TC 300) for that module. The payment is not cross-referenced to MFT 10 because the assessment is not duplicate to that Civil assessment

    • The payment dated 06-15-2012 for $5,000.00 is applied to MFT 31 to full pay the duplicate Restitution Based assessment(s) (TC 290 and 298) and is cross-referenced to MFT 10 to full pay the duplicate Civil Assessment (TC 300).

Federal Unemployment Tax Act Tax – Form 940 With Duplicate Fraud Penalty
  1. The following example describes payment cross-referencing for duplicate RBA with a Civil assessment for Form 940 with a duplicate Fraud penalty.

    Example:

    #6
    Duplicate RBA and Civil Assessments
    Duplicate Fraud Penalty

    MFT 31 200812 111-XX-XXXX MFT 10 200812 XX-XXX5678
    TC 298 $15,000.00
    TC 320 $5,000.00
    TC 300 $15.000.00
    TC 320 $ 3,000.00
    TC 971 AC 185 points to MFT 10 XX-XXX5678 MMA = $10,000.00
    TC 971 AC 183 points to MFT 10 XX-XXX5678 MMA = $3,000.00
    TC 971 AC 184 points to MFT 31 111-XX-XXXX MMA = $10,000.00
    TC 971 AC 182 points to MFT 31 111-XX-XXXX MMA = $3,000.00
    TC 670 DPC 26 03-10-2012 $5,000.00
    TC 670 DPC 26 04-10-2012 $5,000.00 TC 670 DPC 26 05-10-2012 $5,000.00
    TC 670 06-10-2012 $5,000.00
    TC 766 CRN 337 03-10-2012 $5,000.00
    TC 766 CRN 337 04-10-2012 $5,000.00 TC 766 CRN 337 06-10-2012 $3,000.00
    • The payment dated 03-10-2012 for $5000.00 is applied to MFT 31 to reduce the duplicate Restitution Based Assessment (TC 298) and is cross-referenced to MFT 10 to reduce the duplicate Civil Assessment (TC 300).

    • The payment dated 04-10-2012 for $5000.00 is applied to MFT 31 to full pay the duplicate Restitution Based Assessment (TC 298) and is cross-referenced to MFT 10 to reduce the duplicate Civil Assessment (TC 300).

    • The payment dated 05-10-2012 for $5000.00 is applied to MFT 31 to full pay the Restitution Based Assessment (TC 298) and is not cross-referenced.

    • The payment dated 06-10-2012 for $5000.00 is applied to MFT 31 to full pay the duplicate Fraud Penalty and $3,000.00 of it is cross-referenced to MFT 10 to full pay the duplicate Fraud Penalty (TC 320).

FICA Tax – Form 941 with More Than One Co-Defendant
  1. See example 7 and 8 below.

    Example:

    #7
    Duplicate RBA
    No Duplicate Civil Assessment
    More than one Co-Defendant
    Defendant #1 – Primary (TP1), Co-Defendant #2 (TP2), & Co-Defendant #3 (TP3)

    MFT 01 XX-XXX6789 200809    
    TP 1 MFT 31 111-XX-XXXX 200809
    TC 971 AC 102 to x-ref MFT 01

    TC 298 $10,000.00

    TC 971 AC 189 points to TP2 MFT 31 222-XX-XXXX MMA = $10,000.00
    TC 971 AC 189 points to TP3 MFT 31 333-XX-XXXX MMA = $10,000.00

    TC 670 DPC 26 02-10-2012 $2,500.00

    TC 766 CRN 337 03-10-2012 $2,500.00
    TC 766 CRN 337 04-10-2012 $2,500.00
    TP 2 MFT 31 222-XX-XXXX 200809
    TC 971 AC 102 to x-ref MFT 01

    TC 298 $10,000.00

    TC 971 AC 188 points to TP1 MFT 31 111-XX-XXXX MMA = $10,000.00
    TC 971 AC 188 points to TP3 MFT 31 333-XX-XXXX MMA = $10,000.00

    TC 670 DPC 26 03-10-2012 $2,500.00

    TC 766 CRN 337 02-10-2012 $2,500.00
    TC 766 CRN 337 04-10-2012 $2,500.00
    TP 3 MFT 31 333-XX-XXXX 200809
    TC 971 AC 102 to x-ref MFT 01

    TC 298 $10,000.00

    TC 971 AC 188 points to TP1 MFT 31 111-XX-XXXX MMA = $10,000.00
    TC 971 AC 188 points to TP2 MFT 31 222-XX-XXXX MMA = $10,000.00

    TC 670 DPC 26 04-10-2012 $2,500.00

    TC 766 CRN 337 02-10-2012 $2,500.00
    TC 766 CRN 337 03-10-2012 $2,500.00
    • The payment dated 02-10-2012 for $2,500.00 is applied to TP1’s MFT 31 to reduce the duplicate Restitution Based Assessment (TC 298) and is cross-referenced to TP2 and TP3’s MFT 31 to reduce the duplicate Restitution Based Assessment (TC 298).

    • The payment dated 03-10-2012 for $2,500.00 is applied to TP2’s MFT 31 to reduce the duplicate Restitution Based Assessment (TC 298) and is cross-referenced to TP1 and TP3’s MFT 31 to reduce the duplicate Restitution Based Assessment (TC 298).

    • The payment dated 04-10-2012 for $2,500.00 is applied to TP2’s MFT 31 to reduce the duplicate Restitution Based Assessment (TC 298) and is cross-referenced to TP1 and TP3’s MFT 31 to reduce the duplicate Restitution Based Assessment (TC 298).

      Example:

      #8
      Duplicate RBA and Civil Assessment
      More than one Co-Defendant
      Defendant #1 – Primary (TP1), Co-Defendant #2 (TP2), & Co-Defendant #3 (TP3)

      MFT 01 XX-XXX6789 200809    

      TC 150 10-31-2009 $60,000.00

      TC 971 AC 185 points to TP1 MFT 31 111-XX-XXXX MMA = $20.000.00
      TC 971 AC 185 points to TP2 MFT 31 222-XX-XXXX MMA = $10,000.00
      TC 971 AC 185 points to TP3 MFT 31 333-XX-XXXX MMA = $5,000.00
      TC 650 7-15-2009 $15,000.00
      TC 650 7-28-2009 $15,000.00
      TC 650 8-15-2009 $10,000.00

      TC 766 CRN 337 26 02-10-2012 $2,500.00
      TC 766 CRN 337 03-10-2012 $2,500.00
      TC 766 CRN 337 04-10-2012 $250.00
      TP 1 MFT 31 111-XX-XXXX 200809
      TC 971 AC 102 to x-ref MFT 01

      TC 298 $20,000.00

      TC 971 AC 184 points to MFT 01 XX-XXX6789 200809 MMA = $20,000.00
      TC 971 AC 189 points to TP2 MFT 31 222-XX-XXXX MMA = $10,000.00
      TC 971 AC 189 points to TP3 MFT 31 333-XX-XXXX MMA = $5,000.00

      TC 670 DPC 26 02-10-2012 $2,500.00

      TC 766 CRN 337 03-10-2012 $2,500.00
      TC 766 CRN 337 04-10-2012 $250.00
      TP 2 MFT 31 222-XX-XXXX 200809
      TC 971 AC 102 to x-ref MFT 01

      TC 298 $10,000.00

      TC 971 AC 184 points to MFT 01 XX-XXX6789 200809 MMA = $10,000.00
      TC 971 AC 188 points to TP1 MFT 31 111-XX-XXXX MMA = $10,000.00
      TC 971 AC 188 points to TP3 MFT 31 333-XX-XXXX MMA = $5,000.00

      TC 670 DPC 26 03-10-2012 $2,500.00

      TC 766 CRN 337 02-10-2012 $2,500.00
      TC 766 CRN 337 04-10-2012 $250.00
      TP 3 MFT 31 333-XX-XXXX 200809
      TC 971 AC 102 to x-ref MFT 01

      TC 298 $5,000.00

      TC 971 AC 184 points to MFT 01 XX-XXX6789 200809 MMA = $5,000.00
      TC 971 AC 188 points to TP1 MFT 31 111-XX-XXXX MMA = $5,000.00
      TC 971 AC 188 points to TP2 MFT 31 222-XX-XXXX MMA = $5,000.00

      TC 670 DPC 26 04-10-2012 $2,500.00

      TC 766 CRN 337 02-10-2012 $2,500.00
      TC 766 CRN 337 03-10-2012 $2,500.00
    • The payment dated 02-10-2012 for $2,500.00 is applied to TP1’s MFT 31 to reduce the duplicate Restitution Based Assessment (TC 298) and is cross-referenced to TP2 and TP3’s MFT 31 to reduce the duplicate Restitution Based Assessment (TC 298). Because the basis for the restitution is the unpaid taxes on Form 941 of which the defendants are jointly liable for the payment is also cross-referenced to MFT 01.

    • The payment dated 03-10-2012 for $2,500.00 is applied to TP2’s MFT 31 to reduce the duplicate Restitution Based Assessment (TC 298) and is cross-referenced to TP1 and TP3’s MFT 31 and MFT 01 of the business account. The credit fully pays the duplicate amount of the assessment for TP3.

    • $250.00 of the payment dated 04-10-2012 for $2,500.00 posted to TP3’s MFT 31 is applied to assessed interest. The remaining $2,250.00 is offset to pay other balances due or is refunded if there are no other balances due. Interest computed for the balances remaining on BMF MFT 01 and MFT 31 of TP1 and TP2 exceeds the $250.00 assessed for TP3. The amount allowable to cross-referenced for interest is limited to the amount assessed on the paying account; therefore, $250.00 is cross-referenced to TP1, TP2 and the BMF MFT 01.

    Caution:

    When defendants owe different duplicate assessment amounts for the same period, do not apply more than the duplicate assessment amount.

Payment Cross-Referencing / RPP Case Types

  1. The following examples describe payment cross-referencing for Return Preparer based Restitution Assessments.

  2. RPP case types may include duplicate RBA and/or Civil assessments related to the Defendant’s individual income tax (MFT 30), clients of the return preparer in addition to co-defendants of the return preparer. These assessments will appear as one assessment on MFT 31; however, a TC 971 AC 18X will identify each duplicate assessment and will display the duplicate assessment amount in the associated MMA.

  3. When RBA includes multiple duplicate client Civil assessments, payments and credits posted to the MFT 31 are cross-referenced to the duplicate client Civil assessment with the earliest assessment date. If more than one duplicate Civil assessments have the same date, payments are applied in ascending SSN order.

    Note:

    For client accounts where a TC 604 or TC 608 is posted, cross-reference payments to the next client account with a balance due.

    Reminder:

    When the account has 100 or more associated clients, review the RPP worksheet saved in the RPP shared folder to determine the payment application for duplicate client Civil assessments. When there are less than 100 associated clients, use the RBA RPP Generalized IDRS Interface (GII) tool to determine payment application for duplicate client civil assessments.

  4. If a client or clients have multiple credits / payments to cross-reference to the preparer, limit the input of the cross-references to one client per day to ensure only one TC 290 per client displays on IDRS TXMOD (i.e., client 1 payments on Thursday, client 2 payments on Friday, client payments on Saturday and so on). If a client or clients have only one payment / credit each to cross-reference to the preparer, all transactions can be input on the same day.

  5. When cross-referencing available credits and payments on RPP cases that have a potential IDRS overflow condition (i.e., multiple clients, linkages, transactions, etc.):

    • Cross-reference available credits and / payments, monitor the IDRS module to identify when it reaches page 50.

    • Stop inputting cross-referencing transactions at page 50 and monitor weekly for the TC 400 to post.

    • Do not close the case.

    • Open an IDRS control in “A” Status.

    • If the TC 400 does not post within two weeks, input 10 more transactions and monitor weekly for the TC 400, It may be necessary to repeat this action until the TC 400 post and the account moves to ANMF.

    • When a TC 400 posts to the account due to manual or systemic movement of the tax module, close your case and open up an IDRS control to monitor for movement to ANMF.

    • Once the account has moved to ANMF, follow procedures for ANMF cases. See IRM 5.19.23.3.6.2 ,RBA Non Master File (NMF) Accounts.

Return Preparer with Duplicate Client Civil Assessments
  1. The following example describes payment cross-referencing for duplicate RBA with client Civil assessments.

    Example:

    #1


    Duplicate RBA and Client Civil Assessments

    RPP MFT 31 200812 XXX-XX-1234

    TC 290 03-31-2014 $10,000.00
    TC 971 AC 185 points to Client 1 MFT 30 XXX-XX-1111 200812 MMA = $2,500
    TC 971 AC 185 points to Client 2 MFT 30 XXX-XX-2222 200812 MMA = $2,500
    TC 766 CRN 337 07-15-2009 $2,500.00
    TC 766 CRN 337 07-27-2009 $2,000.00
    TC 766 CRN 337 08-15-2009 $500.00
    Client 1 MFT 30 200812 XXX-XX-1111
    TC 767 04-15-2008 $2,500.00 CRD-ID-NUM>258
    TC 300 05-07-2009 $.00
    TC 971 AC 184 points to RPP Defendant's MFT 31 XXX-XX-1234 200812 MMA = $2,500.00
    TC 670 07-27-2009 $2,000.00
    TC 670 08-15-2009 $500.00
    Client 2 MFT 30 200812 XXX-XX-2222
    TC 767 04-15-2008 $2,500.00 CRD-ID-NUM>258
    TC 300 05-07-2009 $.00
    TC 971 AC 184 points to RPP Defendant's MFT 31 XXX-XX-1234 200812 MMA = $2,500.00
    TC 670 07-15-2009 $2,500.00
    • The payment dated 07-15-2009 for $2,500.00 is posted on Client 2’s MFT 30, fully paying the duplicate Civil assessment and is cross-referenced to the RPP MFT 31 to reduce the portion of the RBA associated with Client 2’s Civil assessment.

    • The payments dated 07-27-2009 for $2,000.00 and 08-15-2009 for $500.00 are posted on Client 1’s MFT 30, fully paying the duplicate Civil assessment and are cross-referenced to the RRP MFT 31, reducing the portion of the RBA associated with Client 1’s Civil assessment

Return Preparer with Duplicate Civil Assessment and Duplicate Client Civil Assessments
  1. The following example describes payment cross-referencing for duplicate RBA and Civil assessment of the Preparer and client Civil assessments.

    Example:

    #2
    Duplicate RBA and Civil Assessments
    Duplicate Client Civil Assessments

    RPP MFT 31 201012 XXX-XX-1234 RPP MFT 30 201012 XXX-XX-1234
    TC 290 02-12-2014 $20,000.00 TC 806 04-15-2009 $705.00
    TC 290 08-15-2012 $6,955.00
    TC 971 AC 185 points to RPP MFT 30 XXX-XX-1234 201012 MMA = $6,250.00
    TC 971 AC 185 points to Client 1 MFT 30 XXX-XX-1111 201012 MMA = $5,000.00
    TC 971 AC 185 points to Client 2 MFT 30 XXX-XX-2222 201012 MMA = $5,000.00
    TC 971 AC 184 points to RPP MFT 31 XXX-XX-1234 201012 MMA = $6,250.00
    TC 766 CRN 337 11-10-2011 $5,000.00
    TC 766 CRN 337 01-15-2012 $2,500.00
    TC 766 CRN 337 02-15-2012 $2,500.00
    TC 766 CRN 337 11-10-2012 $5,000.00
    TC 670 11-10-2012 $5,000.00
    Client 1 MFT 30 201012 XXX-XX-1111 Client 2 MFT 30 201012 XXX-XX-2222
    TC 767 04-15-2010 $5,000.00 CR-ID-NUM>258
    TC 300 07-10-2011 $ .00
    TC 767 04-15-2010 $5,000.00 CR-ID-NUM>258
    TC 300 09-15-2011 $ .00
    TC 971 AC 184 points to RPP MFT 31 XXX-XX-1234 201012 MMA = $5,000.00 TC 971 AC 184 points to RPP MFT 31 XXX-XX-1234 201012 MMA = $5,000.00
    TC 670 01-15-2012 $2,500.00
    TC 670 02-15-2012 $2,500.00
    TC 670 11-10-2011 $5,000.00
    • The payment dated 11-10-2011 for $5,000.00 is posted on Client 2’s MFT 30, fully paying the duplicate Civil assessment and is cross-referenced to the RPP MFT 31, paying the portion of the restitution assessment associated with Client 2’s Civil assessment

    • The payments dated 01-15-2012 and 2-15-2012 totaling $5,000.00 are posted on Client 1’s MFT 30, fully paying the duplicate Civil assessment and are cross-referenced to the RPP MFT 31, fully paying the portion of the restitution assessment associated with Client 1’s Civil assessment.

    • The payment dated 11-10-2012 for $5,000.00 is posted on the RPP MFT 30, reducing the duplicate Civil assessment and is cross-referenced to the MFT 31 to reduce the portion of the restitution assessment associated with the duplicate Civil assessment.

Return Preparer with Multiple Duplicate Client Civil Assessments
  1. The following example describes payment cross-referencing for duplicate RBA with multiple client Civil assessments.

    Example:

    #3


    Duplicate RBA and Multiple Client Civil Assessments
    Restitution payment posted

    RPP MFT 31 200812 XXX-XX-1234

    TC 290 01-31-2014 $15,000.00
    TC 971 AC 185 points to Client 1 MFT 30 XXX-XX-1111 200812 MMA = $2,500
    TC 971 AC 185 points to Client 2 MFT 30 XXX-XX-2222 200812 MMA = $2,500
    TC 971 AC 185 points to Client 3 MFT 30 XXX-XX-3333 200812 MMA = $2,500
    TC 670 DPC 26 02-20-2014 $500.00
    TC 766 CRN 337 07-15-2009 $2,250.00
    TC 766 CRN 337 07-15-2009 $2,300.00
    TC 766 CRN 337 07-27-2009 $2,000.00
    Client 1 MFT 30 200812 XXX-XX-1111
    TC 767 04-15-2008 $2,500.00 CRD-ID-NUM>258
    TC 300 06-07-2009 $.00
    TC 971 AC 184 points to RPP Defendant's MFT 31 XXX-XX-1234 200812 MMA = $2,500.00
    TC 670 07-27-2009 $2,000.00
    TC 766 02-20-2014 $250.00
    Client 2 MFT 30 200812 XXX-XX-2222
    TC 767 04-15-2008 $2,500.00 CRD-ID-NUM>258
    TC 300 07-07-2009 $.00
    TC 971 AC 184 points to RPP Defendant's MFT 31 XXX-XX-1234 200812 MMA = $2,500.00
    TC 670 07-15-2009 $2,300.00
    Client 3 MFT 30 200812 XXX-XX-3333
    TC 767 04-15-2008 $2,500.00 CRD-ID-NUM>258
    TC 300 05-07-2009 $.00
    TC 971 AC 184 points to RPP Defendant's MFT 31 XXX-XX-1234 200812 MMA = $2,500.00
    TC 670 07-15-2009 $2,250.00
    TC 766 CRN 337 02-20-2014 $250.00
    • The payment dated 07-15-2009 for $2,300.00 is posted on Client 2’s MFT 30, reducing the duplicate Civil assessment and is cross-referenced to the RPP MFT 31 to reduce the portion of the restitution assessment associated with Client 2’s Civil assessment.

    • The payment dated 07-15-2009 for $2,250.00 is posted on Client 3’s MFT 30, reducing the duplicate Civil assessment and is cross-referenced to the RPP MFT 31, reducing the portion of the restitution assessment associated with Client 3’s Civil assessment.

    • The payment dated 07-27-2009 for $2,000.00 is posted on Client 1’s MFT 30, reducing the duplicate Civil assessment and is cross-referenced to the RPP MFT 31 to reduce the portion of the restitution assessment associated with Client 1’s Civil assessment.

    • The payment dated 2-20-2014 for $500.00 is posted on the RPP MFT 31, reducing the restitution assessment. $250.00 of the $500.00 is cross-referenced to Client 3 to fully pay the duplicate Civil assessment since the assessment has the earliest assessment date. The remaining $250.00 is cross-referenced to Client 1 to reduce the duplicate Civil assessment, leaving a balance of $250.00 of the duplicate Civil assessment for Client 1. None of the payment is cross-referenced to client 2.

    Note:

    Payments and credits posted to MFT 31 are cross-referenced to the duplicate client Civil assessment with the earliest assessment date. If assessments have the same date, payments are applied to client accounts in ascending SSN order.

Return Preparer with Co-Defendant / No Duplicate Client Civil Assessment
  1. The following examples describe payment cross-referencing for duplicate RBA with co-defendant.

    Example:

    #4
    Duplicate RBA with Co-Defendant

    RPP Lead Defendant MFT 31 200912 XXX-XX-5432 RPP Co-Defendant MFT 31 200912 XXX-XX-2345
    TC 290 02-15-2014 $50,000.00 TC 290 02-15-2014 $50,000.00
    TC 971 AC 189 points to RPP Co-Def. MFT 31 XXX-XX-2345 200912 MMA = $30,000.00 TC 971 AC 188 points to RPP Lead Def. MFT 31 XXX-XX-5432 200912 MMA = $30,000.00

    TC 670 DPC 26 03-20-2014 $10,000.00
    TC 670 DPC 26 04-20-2014 $15,000.00
    TC 766 CRN 337 03-25-2014 $10,000.00
    TC 670 DPC 26 03-25-2014 $10,000.00
    TC 766 CRN 337 03-20-2014 $10,000.00
    TC 766 CRN 337 04-20-2014 $10,000.00
    • The payments dated 03-20-2014 for $10,000.00 and 04-20-2014 for $15,000.00 are posted on the Lead Defendant's MFT 31, reducing the restitution based assessment. The payment dated 03-20-2014 for $10,000 is cross-referenced to the Co-Defendant's MFT 31, and $10,000 of the payment dated 04-20-2014 is applied to fully pay the amount of the RBA that is duplicate. The remaining $5,000 is applied to reduce the Lead Defendant's RBA.

    • The payment dated 03-25-2014 for $10,000.00 is posted on the Co-Defendant's MFT 31, reducing the RBA and is cross-referenced to the Lead Defendant's MFT 31, reducing the amount of the RBA that is duplicate..

    Caution:

    The MMA amount is the duplicate amount between linked accounts. The MMA does not always match the assessment amount. Do not cross-reference more than the duplicate amount for tax.

    Example:

    #5


    Duplicate RBA with Co-Defendant

    RPP Lead Defendant MFT 31 200912 XXX-XX-5432 RPP Co-Defendant MFT 31 200912 XXX-XX-2345
    TC 290 $10,000.00
    TC 971 AC 189 MMA= $5,000.00

    TC 670 DPC 26 07-15-2013 $5,000.00
    TC 670 DPC 26 10-30-2013 $2,500.00

    TC 766 CRN 337 10-01-2012 $3,000.00
    TC 290 $5,000.00
    TC 971 AC 188 MMA = $5,000.00

    TC 670 DPC 26 10-01-2012 $3,000.00

    TC 766 CRN 337 07-15-2013 $2,000.00
    TC 766 CRN 337 10-30-2013 $200.00
    • The payment dated 10-01-2012 for $3,000.00 is cross-referenced to the Lead Defendant's MFT 31 account

    • $2,000.00 of the payment dated 07-15-2013 for $5,000.00 is cross-referenced to the Co-Defendant MFT 31 to fully pay the duplicate amount of the RBA. The remaining $3,000.00 reduces the remaining RBA on the Lead Defendant MFT 31 account

    • $2,000.000 of the payment dated 10-30-2013 for $2,500.00 fully pays the remaining RBA on the Lead Defendant's MFT 31. The remaining $500.00 is applied to interest

    • Interest in the amount of $200.00 is computed for the RBA on the Co-Defendant's MFT 31 and $200 from the payment dated 10-30-2014 is cross-referenced.

    Caution:

    When defendants owe different duplicate assessment amounts for the same period, do not apply more than the duplicate assessment amount.

Return Preparer with Co-Defendant / Duplicate Client Civil Assessment
  1. The following examples describe payment cross-referencing for duplicate RBA with co-defendants with Duplicate Client Civil Assessments

    Example:

    #6

    RPP Lead Defendant and Co-Defendant
    Different Client Returns
    Duplicate RBA Assessments
    Duplicate and Non-Duplicate Client Civil Assessments

    RPP Lead Defendant’s (Joe) MFT 31 XXX-XX-5678 200812 RPP Co-Defendant’s (Mary) MFT 31 XXX-XX-1234 200812

    TC 290 02-12-2014 $25,000.00
    TC 670 DPC26 05-01-2014 $5,000.00
    TC 971 AC 189 points to RPP Co-Def. MFT 31 XXX-XX-1234 200812 MMA = $9,000.00
    TC 971 AC 185 points to Client 1 MFT 30 XXX-XX-1111 200812 MMA = $3,000.00
    TC 971 AC 185 points to Client 2 MFT 30 XXX-XX-2222 200812 MMA = $3,000.00
    TC 971 AC 185 points to Client 3 MFT 30 XXX-XX-3333 200812 MMA = $3,000.00
    TC 971 AC 185 points to Client 4 MFT 30 XXX-XX-4444 200812 MMA = $3,000.00
    TC 971 AC 185 points to Client 5 MFT 30 XXX-XX-5555 200812 MMA = $3,000.00

    TC 766 CRN 337 10-15-2009 $1,500.00
    TC 766 CRN 337 11-15-2009 $1,500.00
    TC 766 CRN 337 9-20-2009 $3,000.00
    TC 766 CRN 337 6-10-2009 $1,000.00
    TC 766 CRN 337 7- 10-2009 $1,000.00
    TC 766 CRN 337 8-10-2009 $1,000.00
    TC 766 CRN 337 9-20-2009 $3,000.00
    TC 766 CRN 337 10-10-2009 $3,000.00

    TC 290 02-12-2014 $9,000.00
    TC 971 AC 188 points to RPP Lead Def. MFT 31 XXX-XX-5678 200812 MMA = $9,000.00
    TC 971 AC 184 points to Client 1 MFT 30 XXX-XX-1111 200812 MMA = $3,000.00
    TC 971 AC 184 points to Client 2 MFT 30 XXX-XX-2222 200812 MMA = $3,000.00
    TC 971 AC 184 points to Client 3 MFT 30 XXX-XX-3333 200812 MMA = $3,000.00

    TC 766 CRN 337 10-15-2009 $1,500.00
    TC 766 CRN 337 11-15-2009 $1,500.00
    TC 766 CRN 337 9-20-2009 $3,000.00
    TC 766 CRN 337 6-10-2009 $1,000.00
    TC 766 CRN 337 7- 10-2009 $1,000.00
    TC 766 CRN 337 8-10-2009 $1,000.00
    Client’s MFT 30s
    Client 1 MFT 30 XXX-XX-1111 200812
    TC 767 04-15-2009 $3,000.00 CR-ID-NUM>258
    TC 300 07-07-2009 $.00
    TC 670 10-15-2009 $1,500.00
    TC 670 11-15-2009 $1,500.00
    TC 971 AC 184 points to RPP Lead Defendant’s MFT 31 XXX-XX-5678 200812 MMA = $3,000.00
    TC 971 AC 184 points to RPP Co-Defendant’s MFT 31 XXX-XX-1234 200812 MMA = $3,000.00
    Client 2 MFT 30 XXX-XX-2222 200812
    TC 767 04-15-2009 $3,000.00 CR-ID-NUM>258
    TC 300 07-07-2009 $.00
    TC 670 09-20-2009 $3,000.00
    TC 971 AC 184 points to RPP Lead Defendant’s MFT 31 XXX-XX-5678 200812 MMA = $3,000.00
    TC 971 AC 184 points to RPP Co-Defendant’s MFT 31 XXX-XX-1234 200812 MMA = $3,000.00
    Client 3 MFT 30 XXX-XX-3333 200812
    TC 767 04-15-2009 $3,000.00 CR-ID-NUM>258
    TC 300 05-07-2009 $.00
    TC 670 06-10-2009 $1,000.00
    TC 670 07-10-2009 $1,000.00
    TC 670 08-10-2009 $1,000.00
    TC 971 AC 184 points to RPP Lead Defendant’s MFT 31 XXX-XX-5678 200812 MMA = $3,000.00
    TC 971 AC 184 points to RPP Co-Defendant’s MFT 31 XXX-XX-1234 200812 MMA = $3,000.00
    Client 4 MFT 30 XXX-XX-4444 200812
    TC 767 04-15-2009 $3,000.00 CR-ID-NUM>258
    TC 300 07-07-2009 $.00
    TC 670 09-20-2009 $3,000.00
    TC 971 AC 184 points to RPP Lead Defendant’s MFT 31 XXX-XX-5678 200812 MMA = $3,000.00
    Client 5 MFT 30 XXX-XX-5555 200812
    TC 767 04-15-2009 $3,000.00 CR-ID-NUM>258
    TC 300 05-07-2009 $.00
    TC 670 10-10-2009 $3,000.00
    TC 971 AC 184 points to RPP Lead Defendant’s MFT 31 XXX-XX-5678 200812 MMA = $3,000.00

    Note:

    The basis of the restitution order was 9 taxpayers with a total tax loss of $25,000. Since only clients 1 through 5 were audited or adjusted they are the only clients linked to the Lead Defendant Joe. The Co-Defendant, Mary, is only responsible for clients 1, 2 and 3.

    • The payments dated 10-15-2009 and 11-15-2009 for $1,500.00 posted to Client 1's MFT 30 fully paid the duplicate civil assessment and are cross-referenced to the Lead Defendant, Joe, and Co-Defendant, Mary's, MFT 31 accounts.

    • The payment dated 9-20-2009 for $3,000.00 posted to Client 2's MFT 30 fully paid the duplicate civil assessment and is cross-referenced to the Lead Defendant, Joe and Co-Defendant, Mary's, MFT 31 accounts.

    • The payments dated 6-10 2009, 7-10-2009 and 8-10-2009 for $1,000.00 posted to Client 3's MFT 30 fully paid the duplicate civil assessment and are cross-referenced to the Lead Defendant, Joe, and Co-Defendant, Mary's, MFT 31 accounts.

    • The payment dated 9-20-2009 for $3,000.00 posted to Client 4's MFT 30 account fully paid the duplicate civil assessment. The payment dated 10-10-2009 for $3,000.00 posted to Client 5's MFT 30 account fully paid the duplicate civil assessment. The payments are cross-referenced to the Lead Defendant, Joe's MFT 31 account, and because the Co-Defendant, Mary, is not responsible for the duplicate Civil assessment for these clients, the payments are not cross-referenced to her MFT 31 account.

    Example:

    #7

    RPP Lead Defendant and Co-Defendant
    Different Client Returns
    Duplicate RBA Assessments
    Duplicate and Non-Duplicate Client Civil Assessments

    RPP Lead Defendant’s (Joe) MFT 31 XXX-XX-5678 200812 RPP Co-Defendant’s (Mary) MFT 31 XXX-XX-1234 200812

    TC 290 02-12-2014 $25,000.00
    TC 670 DPC 26 05-01-2014 $12,000.00
    TC 971 AC 189 points to RPP Co-Def. MFT 31 XXX-XX-1234 200812 MMA = $15,000.00
    TC 971 AC 185 points to Client 1 MFT 30 XXX-XX-1111 200812 MMA = $3,000.00
    TC 971 AC 185 points to Client 2 MFT 30 XXX-XX-2222 200812 MMA = $3,000.00
    TC 971 AC 185 points to Client 3 MFT 30 XXX-XX-3333 200812 MMA = $3,000.00
    TC 971 AC 185 points to Client 4 MFT 30 XXX-XX-4444 200812 MMA = $3,000.00
    TC 971 AC 185 points to Client 5 MFT 30 XXX-XX-5555 200812 MMA = $3,000.00

    TC 766 CRN 337 06-10-2009 $1,000.00
    TC 766 CRN 337 07-10-2009 $1,000.00
    TC 766 CRN 337 08-10-2009 $1,000.00
    TC 766 CRN 337 09-15-2009 $3,000.00
    TC 766 CRN 337 09-20-2009 $3,000.00
    TC 766 CRN 337 10-10-2009 $3,000.00
    TC 766 CRN 337 10-15-2009 $1,500.00
    TC 766 CRN 337 11-15-2009 $1,500.00

    TC 290 02-12-2014 $15,000.00
    TC 971 AC 188 points to RPP Lead Def. MFT 31 XXX-XX-5678 200812 MMA = $15,000.00
    TC 971 AC 184 points to Client 1 MFT 30 XXX-XX-1111 200812 MMA = $3,000.00
    TC 971 AC 184 points to Client 2 MFT 30 XXX-XX-2222 200812 MMA = $3,000.00
    TC 971 AC 184 points to Client 3 MFT 30 XXX-XX-3333 200812 MMA = $3,000.00

    TC 766 CRN 337 06-10-2009 $1,000.00
    TC 766 CRN 337 07-10-2009 $1,000.00
    TC 766 CRN 337 08-10-2009 $1,000.00
    TC 766 CRN 337 09-15-2009 $3,000.00
    TC 766 CRN 337 10-15-2009 $1,500.00
    TC 766 CRN 337 11-15-2009 $1,500.00
    TC 766 CRN 337 05-01-2014 $7,306.05
    Client’s MFT 30s
    Client 1 MFT 30 XXX-XX-1111 200812
    TC 767 04-15-2009 $3,000.00 CR-ID-NUM>258
    TC 300 07-07-2009 $.00
    TC 670 10-15-2009 $1,500.00
    TC 670 11-15-2009 $1,500.00
    TC 971 AC 184 points to RPP Lead Defendant’s MFT 31 XXX-XX-5678 200812 MMA = $3,000.00
    TC 971 AC 184 points to RPP Co-Defendant’s MFT 31 XXX-XX-1234 200812 MMA = $3,000.00
    Client 2 MFT 30 XXX-XX-2222 200812
    TC 767 04-15-2009 $3,000.00 CR-ID-NUM>258
    TC 300 07-07-2009 $.00 TC
    670 09-15-2009 $3,000.00
    TC 971 AC 184 points to RPP Lead Defendant’s MFT 31 XXX-XX-5678 200812 MMA = $3,000.00
    TC 971 AC 184 points to RPP Co-Defendant’s MFT 31 XXX-XX-1234 200812 MMA = $3,000.00
    Client 3 MFT 30 XXX-XX-3333 200812
    TC 767 04-15-2009 $3,000.00 CR-ID-NUM>258
    TC 300 05-07-2009 $.00
    TC 670 06-10-2009 $1,000.00
    TC 670 07-10-2009 $1,000.00
    TC 670 08-10-2009 $1,000.00
    TC 971 AC 184 points to RPP Lead Defendant’s MFT 31 XXX-XX-5678 200812 MMA = $3,000.00
    TC 971 AC 184 points to RPP Co-Defendant’s MFT 31 XXX-XX-1234 200812 MMA = $3,000.00
    Client 4 MFT 30 XXX-XX-4444 200812
    TC 767 04-15-2009 $3,000.00 CR-ID-NUM>258
    TC 300 07-07-2009 $.00
    TC 670 09-20-2009 $3,000.00
    TC 971 AC 184 points to RPP Lead Defendant’s MFT 31 XXX-XX-5678 200812 MMA = $3,000.00
    Client 5 MFT 30 XXX-XX-5555 200812
    TC 767 04-15-2009 $3,000.00 CR-ID-NUM>258
    TC 300 05-07-2009 $.00
    TC 670 10-10-2009 $3,000.00
    TC 971 AC 184 points to RPP Lead Defendant’s MFT 31 XXX-XX-5678 200812 MMA = $3,000.00

    Note:

    The basis of the restitution order was 9 taxpayers with a total tax loss of $25,000. Since only clients 1 through 5 were audited or adjusted, they are the only clients linked to the Lead Defendant, Joe. The Co-Defendant, Mary, is only responsible for clients 1, 2 and 3.

    • The payments dated 10-15-2009 and 11-15-2009, posted on client 1’s MFT 30, fully pay the duplicate Civil assessment and are cross-referenced to both defendant MFT 31 accounts to partially pay the duplicate portion of the restitution-based assessment associated with client 1’s duplicate Civil assessment.

    • The payment dated 09-15-2009, posted on client 2’s MFT 30, fully pays the duplicate Civil assessment and is cross-referenced to both defendants MFT 31 accounts to pay the duplicate portion of the restitution based assessment associated with client 2’s duplicate Civil assessment.

    • The payments dated 06-10-2009, 07-10-2009 and 08-10-2009, posted on client 3’s MFT 30, fully pay the duplicate Civil assessment and are cross-referenced to both defendants MFT 31 accounts to pay the duplicate portion of the restitution-based assessment associated with client 3’s duplicate Civil assessment.

    • The payment dated 09-20-2009, posted on client 4’s MFT 30, fully pays the duplicate Civil assessment and is cross-referenced only to Joe’s MFT 31 accounts to pay the duplicate portion of the restitution based assessment associated with client 4’s duplicate Civil assessment. The RBA for Co-defendant, Mary, is not duplicate to the Civil assessment for client 4; therefore, the payment is not cross-referenced to her MFT 31 account.

    • The payment dated 10-10-2009, posted on client 5’s MFT 30 fully pays the duplicate Civil assessment and is cross-referenced only to Joe’s MFT 31 accounts to pay the duplicate portion of the restitution based assessment associated with client 5’s duplicate Civil assessment. The RBA for Co-defendant Mary is not duplicate to the Civil assessment for client 5; therefore the payment is not cross-referenced to her MFT 31 account

    • $10,000.00 of the payment dated 05-01-2014 fully pays the RBA on Joe’s MFT 31 account and $2,000 is applied to interest. $7,306.05 is cross-referenced to Mary’s MFT 31 to fully pay the remaining duplicate restitution amount of $6,000.00 and total assessed interest of $1,306.05. Interest is computed for the client accounts, and if applicable, would be cross-referenced.

    Caution:

    When defendants owe different duplicate assessment amounts for the same period, do not apply more than the duplicate assessment amount.

Return Preparer with More Than One Co-Defendant / Duplicate Client Civil Assessment
  1. The following example describes payment cross-referencing for duplicate RBA with co-defendant and duplicate client Civil assessments.

    Example:

    #8

    RPP Lead Defendant and Co-Defendants
    Duplicate RBA Assessments
    Duplicate Client Civil Assessments

    RPP Lead Defendant MFT 31 201012 XXX-XX-1234 RPP Co-Defendant #1 MFT 31 201012 XXX-XX-5678 RPP Co-Defendant #2 MFT 31 201012 XXX-XX-6543
    TC 290 02-12-2014 $20,000.00 TC 290 02-12-2014 $20,000.00 TC 290 02-12-2014 $20,000.00
    TC 971 AC 189 points to Co-Def #1 MFT 31 XXX-XX-5678 201012 MMA = $20,000.00
    TC 971 AC 189 points to Co-Def #2 MFT 31 XXX-XX-6543 201012 MMA = $20,000.00
    TC 971 AC 185 points to Client 1 MFT 30 XXX-XX-1111 201012 MMA = $5,000.00
    TC 971 AC 185 points to Client 2 MFT 30 XXX-XX-2222 201012 MMA = $5,000.00
    TC 971 AC 188 points to RPP Lead Def MFT 31 XXX-XX-1234 201012 MMA = $20,000.00
    TC 971 AC 188 points to RPP Co-Def #2 MFT 31 XXX-XX-6543 201012 MMA = $20,000.00
    TC 971 AC 184 points to Client 1 MFT 30 XXX-XX-1111 201012 MMA = $5,000.00
    TC 971 AC 184 points to Client 2 MFT 30 XXX-XX-2222 201012 MMA = $5,000.00
    TC 971 AC 188 points to RPP Lead Def MFT 31 XXX-XX-1234 201012 MMA = $20,000.00
    TC 971 AC 188 points to RPP Co- Def #1 MFT 31 XXX-XX-5678 201012 MMA = $20,000.00
    TC 971 AC 184 points to Client 1 MFT 30 XXX-XX-1111 201012 MMA = $5,000.00
    TC 971 AC 184 points to Client 2 MFT 30 XXX-XX-2222 201012 MMA = $5,000.00
    TC 766 CRN 337 11-10-2011 $5,000.00
    TC 766 CRN 337 01-15-2012 $2,500.00
    TC 766 CRN 337 02-15-2012 $2,500.00
    TC 766 CRN 337 11-15-2012 $5,000.00
    TC 670 11-15-2012 $5,000.00
    TC 766 CRN 337 11-10-2011 $5,000.00
    TC 766 CRN 337 01-15-2012 $2,500.00
    TC 766 CRN 337 02-15-2012 $2,500.00
    TC 766 CRN 337 11-10-2011 $5,000.00
    TC 766 CRN 337 01-15-2012 $2,500.00
    TC 766 CRN 337 02-15-2012 $2,500.00
    TC 766 CRN 337 11-15-2012 $5,000.00
    Client 1 MFT 30 201012 XXX-XX-1111 Client 2 MFT 30 201012 XXX-XX-2222
    TC 767 04-15-2010 $5,000.00 CR-ID-NUM>258
    TC 300 07-10-2011 $ .00
    TC 767 04-15-2010 $5,000.00 CR-ID-NUM>258
    TC 300 09-15-2011 $ .00
    TC 971 AC 184 points to RPP MFT 31 XXX-XX-1234 201012 MMA = $5,000.00
    TC 971 AC 184 points to Co-Def #1 1MFT 31 XXX-XX-5678 201012 MMA = $5,000.00
    TC 971 AC 184 points to Co-Def #2 MFT 31 XXX-XX-6543 201012 MMA = $5,000.00
    TC 971 AC 184 points to RPP MFT 31 XXX-XX-1234 201012 MMA = $5,000.00
    TC 971 AC 184 points to Co-Def #1 1MFT 31 XXX-XX-5678 201012 MMA = $5,000.00
    TC 971 AC 184 points to Co-Def #2 MFT 31 XXX-XX-6543 201012 MMA = $5,000.00
    TC 670 01-15-2012 $2,500.00
    TC 670 02-15-2012 $2,500.00
    TC 670 11-10-2011 $5,000.00
    • The payment dated 11-10-2011 fully pays the Civil assessment for Client 2 and is cross-referenced to the Lead Defendant and both co-defendant accounts, reducing the RBA. Although the payment is dated earlier than the payments posted to the MFT 30 account of Client 1, the Civil assessment for Client 2 is not duplicate to the Civil assessment for Client 1; therefore, the payment is not cross-referenced to that account.

    • The payments dated 01-15-2012 and 02-15-2012 fully pay the Civil assessment for Client 1 and is cross-referenced to the Lead Defendant and both co-defendant accounts, reducing the RBA.

    • The payment dated 11-15-2012 posted to the RBA for Co-Defendant 1 is cross-referenced to the Lead Defendant and Co-Defendant 2 accounts to reduce the remaining RBA. The Civil assessments for both clients is fully paid; therefore, the payment is not cross-referenced to either Client account.

    Example:

    #9

    RPP Lead Defendant with Multiple Co-Defendants
    Different Client Returns
    Duplicate RBA Assessments
    Duplicate and Non-Duplicate Client Civil Assessments

    RPP Lead Defendant’s (Joe) MFT 31 XXX-XX-5678 200812 RPP Co-Defendant’s (Mary) MFT 31 XXX-XX-1234 200812 RPP Co-Defendant’s (Peter) MFT 31 XXX-XX-8912 200812

    TC 290 02-12-2014 $35,000.00
    TC 670 DPC 26 05-01-2014 $12,000.00
    TC 971 AC 189 points to RPP Co-Def. Mary MFT 31 XXX-XX-1234 200812 MMA = $20,000.00
    TC 971 AC 189 points to RPP Co-Def. Peter MFT 31 XXX-XX-8912 200812 MMA = $15,000.00
    TC 971 AC 185 points to Client 1 MFT 30 XXX-XX-1111 200812 MMA = $3,000.00
    TC 971 AC 185 points to Client 2 MFT 30 XXX-XX-2222 200812 MMA = $3,000.00
    TC 971 AC 185 points to Client 3 MFT 30 XXX-XX-3333 200812 MMA = $3,000.00
    TC 971 AC 185 points to Client 4 MFT 30 XXX-XX-4444 200812 MMA = $3,000.00
    TC 971 AC 185 points to Client 5 MFT 30 XXX-XX-5555 200812 MMA = $3,000.00
    TC 971 AC 185 points to Client 6 MFT 30 XXX-XX-6666 200812 MMA = $3,000.00
    TC 971 AC 185 points to Client 7 MFT 30 XXX-XX-7777 200812 MMA = $3,000.00
    TC 971 AC 185 points to Client 8 MFT 30 XXX-XX-8888 200812 MMA = $2,000.00
    TC 971 AC 185 points to Client 9 MFT 30 XXX-XX-9999 200812 MMA = $2,000.00

    TC 766 CRN 337 06-10-2009 $1,000.00
    TC 766 CRN 337 06-15-2009 $2,000.00
    TC 766 CRN 337 07-10-2009 $1,000.00
    TC 766 CRN 337 07-12-2009 $3,000.00
    TC 766 CRN 337 08-10-2009 $1,000.00
    TC 766 CRN 337 09-15-2009 $3,000.00
    TC 766 CRN 337 09-20-2009 $3,000.00
    TC 766 CRN 337 11-10-2009 $3,000.00
    TC 766 CRN 337 10-10-2009 $3,000.00
    TC 766 CRN 337 10-15-2009 $1,500.00
    TC 766 CRN 337 10-17-2009 $2,000.00
    TC 766 CRN 337 11-15-2009 $1,500.00

    TC 290 02-12-2014 $20,000.00
    TC 971 AC 188 points to RPP Lead Def. MFT 31 XXX-XX-5678 200812 MMA = $20,000.00
    TC 971 AC 184 points to Client 1 MFT 30 XXX-XX-1111 200812 MMA = $3,000.00
    TC 971 AC 184 points to Client 2 MFT 30 XXX-XX-2222 200812 MMA = $3,000.00
    TC 971 AC 184 points to Client 3 MFT 30 XXX-XX-3333 200812 MMA = $3,000.00
    TC 971 AC 184 points to Client 6 MFT 30 XXX-XX-6666 200812 MMA = $3,000.00
    TC 971 AC 184 points to Client 7 MFT 30 XXX-XX-7777 200812 MMA = $3,000.00

    TC 766 CRN 337 06-10-2009 $1,000.00
    TC 766 CRN 337 07-10-2009 $1,000.00
    TC 766 CRN 337 07-12-2009 $3,000.00
    TC 766 CRN 337 08-10-2009 $1,000.00
    TC 766 CRN 337 09-15-2009 $3,000.00
    TC 766 CRN 337 10-10-2009 $3,000.00
    TC 766 CRN 337 10-15-2009 $1,500.00
    TC 766 CRN 337 11-15-2009 $1,500.00
    TC 766 CRN 337 05-01-2014 $6,835.12

    TC 290 02-12-2014 $15,000.00
    TC 971 AC 188 points to RPP Lead Def. MFT 31 XXX-XX-5678 200812 MMA = $15,000.00
    TC 971 AC 184 points to Client 4 MFT 30 XXX-XX-4444 200812 MMA = $3,000.00
    TC 971 AC 184 points to Client 5 MFT 30 XXX-XX-5555 200812 MMA = $3,000.00
    TC 971 AC 184 points to Client 8 MFT 30 XXX-XX-8888 200812 MMA = $2,000.00
    TC 971 AC 184 points to Client 9 MFT 30 XXX-XX-9999 200812 MMA = $2,000.00

    TC 766 CRN 337 06-15-2009 $2,000.00
    TC 766 CRN 337 09-20-2009 $3,000.00
    TC 766 CRN 337 11-10-2009 $3,000.00
    TC 766 CRN 337 10-17-2009 $2,000.00
    TC 766 CRN 337 05-01-2014 $6,306.05
    Client’s MFT 30s
    Client 1 MFT 30 XXX-XX-1111 200812
    TC 767 04-15-2009 $3,000.00 CR-ID-NUM>258
    TC 300 07-07-2009 $.00
    TC 670 10-15-2009 $1,500.00
    TC 670 11-15-2009 $1,500.00
    TC 971 AC 184 points to RPP Lead Defendant’s MFT 31 XXX-XX-5678 200812 MMA = $3,000.00
    TC 971 AC 184 points to RPP Co-Defendant Mary’s MFT 31 XXX-XX-1234 200812 MMA = $3,000.00
    Client 2 MFT 30 XXX-XX-2222 200812
    TC 767 04-15-2009 $3,000.00 CR-ID-NUM>258
    TC 300 07-07-2009 $.00 TC
    670 09-15-2009 $3,000.00
    TC 971 AC 184 points to RPP Lead Defendant’s MFT 31 XXX-XX-5678 200812 MMA = $3,000.00
    TC 971 AC 184 points to RPP Co-Defendant Mary’s MFT 31 XXX-XX-1234 200812 MMA = $3,000.00
    Client 3 MFT 30 XXX-XX-3333 200812
    TC 767 04-15-2009 $3,000.00 CR-ID-NUM>258
    TC 300 05-07-2009 $.00
    TC 670 06-10-2009 $1,000.00
    TC 670 07-10-2009 $1,000.00
    TC 670 08-10-2009 $1,000.00
    TC 971 AC 184 points to RPP Lead Defendant’s MFT 31 XXX-XX-5678 200812 MMA = $3,000.00
    TC 971 AC 184 points to RPP Co-Defendant Mary’s MFT 31 XXX-XX-1234 200812 MMA = $3,000.00
    Client 4 MFT 30 XXX-XX-4444 200812
    TC 767 04-15-2009 $3,000.00 CR-ID-NUM>258
    TC 300 07-07-2009 $.00
    TC 670 09-20-2009 $3,000.00
    TC 971 AC 184 points to RPP Lead Defendant’s MFT 31 XXX-XX-5678 200812 MMA = $3,000.00
    TC 971 AC 184 points to RPP Co-Defendant Peter’s MFT 31 XXX-XX-8912 200812 MMA = $3,000.00
    Client 5 MFT 30 XXX-XX-5555 200812
    TC 767 04-15-2009 $3,000.00 CR-ID-NUM>258
    TC 300 05-07-2009 $.00
    TC 670 11-10-2009 $3,000.00
    TC 971 AC 184 points to RPP Lead Defendant’s MFT 31 XXX-XX-5678 200812 MMA = $3,000.00
    TC 971 AC 184 points to RPP Co-Defendant Peter’s MFT 31 XXX-XX-8912 200812 MMA = $3,000.00
    Client 6 MFT 30 XXX-XX-6666 200812
    TC 767 04-15-2009 $3,000.00 CR-ID-NUM>258
    TC 300 05-07-2009 $.00
    TC 670 07-12-2009 $3,000.00
    TC 971 AC 184 points to RPP Lead Defendant’s MFT 31 XXX-XX-5678 200812 MMA = $3,000.00
    TC 971 AC 184 points to RPP Co-Defendant Mary’s MFT 31 XXX-XX-1234 200812 MMA = $3,000.00
    Client 7 MFT 30 XXX-XX-7777 200812
    TC 767 04-15-2009 $3,000.00 CR-ID-NUM>258
    TC 300 07-28-2009 $.00
    TC 670 10-10-2009 $3,000.00
    TC 971 AC 184 points to RPP Lead Defendant’s MFT 31 XXX-XX-5678 200812 MMA = $3,000.00
    TC 971 AC 184 points to RPP Co-Defendant Mary’s MFT 31 XXX-XX-1234 200812 MMA = $3,000.00
    Client 8 MFT 30 XXX-XX-8888 200812
    TC 767 04-15-2009 $3,000.00 CR-ID-NUM>258
    TC 300 05-07-2009 $.00
    TC 670 06-15-2009 $2,000.00
    TC 971 AC 184 points to RPP Lead Defendant’s MFT 31 XXX-XX-5678 200812 MMA = $2,000.00
    TC 971 AC 184 points to RPP Co-Defendant Peter’s MFT 31 XXX-XX-8912 200812 MMA = $2,000.00
    Client 9 MFT 30 XXX-XX-9999 200812
    TC 767 04-15-2009 $3,000.00 CR-ID-NUM>258
    TC 300 08-15-2009 $.00
    TC 670 10-17-2009 $2,000.00
    TC 971 AC 184 points to RPP Lead Defendant’s MFT 31 XXX-XX-5678 200812 MMA = $2,000.00
    TC 971 AC 184 points to RPP Co-Defendant Peter’s MFT 31 XXX-XX-8912 200812 MMA = $2,000.00

    Note:

    The basis of the restitution order was 15 taxpayers with a total tax loss of $35,000. Since only clients 1 through 9 were audited or adjusted, they are the only clients linked to the Lead Defendant, Joe. The Co-Defendant, Mary, is only responsible for clients 1, 2, 3, 6 and 7. The Co-Defendant, Peter, is only responsible for clients 4, 5, 8, and 9.

    • The payments dated 10-15-2009 and 11-15-2009 posted on client 1’s MFT 30 fully pay the duplicate Civil assessment and are cross-referenced to the Lead Defendant and Co-Defendant, Mary's, MFT 31 accounts to partially pay the duplicate portion of the restitution based assessment associated with client 1’s duplicate Civil assessment. The payments are not cross-referenced to Co-Defendant Peter's MFT 31 account because the Civil assessment is not duplicate to his RBA.

    • The payment dated 09-15-2009 posted on client 2’s MFT 30 fully pays the duplicate Civil assessment and is cross-referenced to the Lead Defendant and Co-Defendant,Mary's, MFT 31 accounts to pay the duplicate portion of the restitution based assessment associated with client 2’s duplicate Civil assessment. The payment is not cross-referenced to Co-Defendant Peter's MFT 31 account because the Civil assessment is not duplicate to his RBA.

    • The payments dated 06-10-2009, 07-10-2009 and 08-10-2009 posted on client 3’s MFT 30 fully pay the duplicate Civil assessment and are cross-referenced to the Lead Defendant and Co-Defendant, Mary's, MFT 31 accounts to pay the duplicate portion of the restitution based assessment associated with client 3’s duplicate Civil assessment. The payments are not cross-referenced to Co-Defendant Peter's MFT 31 account because the Civil assessment is not duplicate to his RBA.

    • The payment dated 09-20-2009, posted on client 4’s MFT 30, fully pays the duplicate Civil assessment and is cross-referenced to the Lead Defendant and Co-Defendant, Peter's, MFT 31 accounts to pay the duplicate portion of the restitution based assessment associated with client 4’s duplicate Civil assessment. The RBA for Co-defendant Mary is not duplicate to the Civil assessment for client 4; therefore, the payment is not cross-referenced to her MFT 31 account

    • The payment dated 11-10-2009, posted on client 5’s MFT 30, fully pays the duplicate Civil assessment and is cross-referenced to the Lead Defendant and Co-Defendant, Peter's, MFT 31 accounts to pay the duplicate portion of the restitution based assessment associated with client 5’s duplicate Civil assessment. The RBA for Co-defendant Mary is not duplicate to the Civil assessment for client 5; therefore, the payment is not cross-referenced to her MFT 31 account.

    • The payment dated 07-12-2009, posted on client 6’s MFT 30, fully pays the duplicate Civil assessment and is cross-referenced to the Lead Defendant and Co-Defendant, Mary's, MFT 31 accounts to pay the duplicate portion of the restitution based assessment associated with client 6’s duplicate Civil assessment. The payment is not cross-referenced to Co-Defendant Peter's MFT 31 account because the Civil assessment is not duplicate to his RBA.

    • The payment dated 10-10-2009, posted on client 7’s MFT 30, fully pays the duplicate Civil assessment and is cross-referenced to the Lead Defendant and Co-Defendant, Mary's, MFT 31 accounts to pay the duplicate portion of the restitution based assessment associated with client 7’s duplicate Civil assessment. The payment is not cross-referenced to Co-Defendant Peter's MFT 31 account because the Civil assessment is not duplicate to his RBA.

    • The payment dated 06-15-2009, posted on client 8’s MFT 30, fully pays the duplicate Civil assessment and is cross-referenced to the Lead Defendant and Co-Defendant, Peter's, MFT 31 accounts to pay the duplicate portion of the restitution based assessment associated with client 8’s duplicate Civil assessment. The RBA for Co-defendant Mary is not duplicate to the Civil assessment for client 8; therefore, the payment is not cross-referenced to her MFT 31 account.

    • The payment dated 10-17-2009, posted on client 9’s MFT 30, fully pays the duplicate Civil assessment and is cross-referenced to the Lead Defendant and Co-Defendant, Peter's, MFT 31 accounts to pay the duplicate portion of the restitution based assessment associated with client 9’s duplicate Civil assessment. The RBA for Co-defendant Mary is not duplicate to the Civil assessment for client 9; therefore, the payment is not cross-referenced to her MFT 31 account.

    • $10,000 of the payment dated 05-01-2014 of $12,000 made by Co-Defendant Joe fully pays the RBA on Joe’s MFT 31 account and the remaining $2,000 is applied to interest. $6,835.12 is cross-referenced to Mary’s MFT 31 to fully pay the remaining duplicate restitution amount of $5,000 and total assessed interest of $1,835.12. $6,306.05 is cross-referenced to Peter’s MFT 31 to fully pay the remaining duplicate restitution amount of $5,000 and total assessed interest of $1,306.05. Interest is computed for the client accounts, and if applicable, would be cross-referenced

    Caution:

    When defendants owe different duplicate assessment amounts for the same period, do not apply more than the duplicate assessment amount.

Cross-Referencing Restrictions

  1. Do not cross-reference payments or credits to a module with a posted TC 604 or to accounts that have moved to retention. Payments/credits with dates prior to a posted TC 608 must be cross-referenced to related accounts with a duplicate RBA/Civil assessment. The amount of the cross-reference cannot exceed the amount of the write-off. Payments / credits with dates after the original TC 608 are not cross-referenced to those accounts. When two defendants owe different duplicate assessment amounts for the same period, cross-reference the payment but do not apply more than the duplicate assessment.

  2. Do not post more credit than the balance of the RBA, Civil, or Fraud penalty assessment including accruals. If a credit balance is created, see IRM 5.19.23.6,Resolving Overpayment Cases , for steps to resolve the credit.
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Example:

    #1 Taxpayer A made a payment of $50.00 that fully paid the interest of $50.00 on his 200512 RBA account. Interest was computed on the related duplicate assessment account and $45.35 was cross-referenced to the account. A subsequent TC 196 posted in the amount of $45.90 and a TC 606 posted to clear the $.55 underpayment.


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

    Example:

    #2 A payment of $30.00 was cross-referenced resulting in a credit balance of $.75 that was cleared from the account with a TC 386.
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    When correcting a cleared underpayment that will result in an overpayment of more than ≡ ≡ ≡ ≡ the amount cross-referenced is limited to the balance remaining on the account; however, the amount of an underpayment that has been cleared is not cross-referenced.

     

    Example:

    #3 An incorrect cross-reference caused an underpayment of $2.15 that was subsequently cleared from Taxpayer B’s account with a TC 606. A review of the account and reversal of the incorrect cross-referenced payment resulted in a recalculation of interest and put the account in a balance due for $13.75. Since $2.15 was cleared from the account, only $11.60 of any available credit can be cross-referenced to the account to avoid an overpayment.

  3. TC 848 is used to credit a clients account when a portion of the refund has been issued to the preparer without the clients knowledge. When this occurs, the RBA includes the amount of the credit and because it relates to the preparer's misconduct, the amount is excluded from the MMA. The credit is not cross-referenced to the MFT 31 account.

    Example:

    The basis for the restitution assessment is the reversal of the First Time Homebuyer Credit (TC 766 REF 258) in the amount of $7,500.00. A TC 848 for $1,210.00 is posted to the MFT 30 module for the amount related to the preparer's misconduct. The MMA for the amount of the duplicate assessment is $6,290.00.

TC 150 Designated as Duplicate Civil Assessment
  1. Do not cross-reference payments/credits that are used to pay the original tax (TC 150), penalties and/or interest assessed on the original tax. Original tax, penalty and interest assessed must be paid before any payments/credits posted on the module can be cross-referenced to reduce the duplicate amount of the RBA (unless the TC 150 is designated by Examination as the duplicate assessment).

    Example:

    #1
    The following payments are cross-referenced as follows:
    TC 670 07-31-2012 $7,000.00
    TC 670 10-15-2012 $2,500.00
    TC 670 10-30-2012 $2,500.00

    MFT 31 MFT 30

    TC 290 12-31-2011 $7,000.00





    TC 971 AC 185 MMA = $7,000.00

    TC 670 DPC 26 10-15-2012 $2,500.00
    TC 670 DPC 26 10-30-2012 $2,500.00


    TC 766 CRN 337 07-31-2012 $250.00

    TC 150 04-15-2009 $15,000.00
    TC 806 04-15-2009 $9,000.00
    TC 670 07-31-2009 $4,000.00

    TC 300 06-30-2012 $7,000.00

    TC 971 AC 184 MMA = $7,000.00

    TC 670 07-31-2012 $7,000.00
    TC 276 07-31-2012 $3,000.00
    TC 196 07-31-2012 $1,750.00

    TC 766 CRN 337 10-15-2012 $2,500.00
    TC 766 CRN 337 10-30-2012 $2,500.00
    • $2,000.00 of the payment dated 7/31/2012 for $7,000.00 is applied to fully pay the unpaid tax (TC 150) of $2,000.00. $3,000.00 of the payment is applied to the Failure to Pay (FTP) penalty assessed for the unpaid tax, and $1,750.00 of the payment is applied to interest assessed on the unpaid tax amount. Since the original tax and all associated fees, penalty and interest must be paid before any payment(s) posted to the MFT 30 account can be credited to the RBA, only the remaining $250.00 is cross-referenced to MFT 31.

    • The payments dated 10-15-2012 and 10-30-2012 for $2,500.00 are cross-referenced to MFT 30 to reduce the duplicate Civil assessment (TC 300).

    Example:

    #2
    The following payment is cross-referenced as follows:
    TC 640 04-11-2011 $7,000.00

    MFT 31 MFT 30

    TC 290 12-31-2011 $7,500.00








    TC 971 AC 185 MMA = $7,500.00

    TC 766 CRN 337 04-11-2011 $7,000.00

    TC 150 04-15-2009 $8,000.00
    TC 806 04-15-2009 $9,000.00
    TC 766 04-15-2009 $1,500.00

    TC 846 04-27-2009 $2,500.00

    TC 300 06-30-2011 $.00
    TC 767 04-15-2009 $1,500.00
    TC 807 04-15-2009 $6,000.00
    TC 971 AC 184 MMA = $7,500.00

    TC 640 04-11-2011 $7,000.00
    • The payment dated 04-11-2011 for $7,000.00 is applied to pay the TC 767 reversal of the tax credit and the $6,000.00 reversal of overstated withholding from the original TC 150 tax. A reversal of tax credits subsequent to a refund is considered an additional assessment of tax; therefore, the payment is cross-referenced to reduce the RBA.

    Example:

    #3
    The following payment is cross-referenced as follows:
    TC 670 06-30-2011 $7,000.00

    MFT 31 MFT 30

    TC 290 12-31-2011 $13,500.00









    TC 971 AC 185 MMA = $13,500.00

    TC 766 CRN 337 06-30-2011 $7,000.00

    TC 150 04-15-2009 $8,000.00
    TC 806 04-15-2009 $9,000.00
    TC 766 04-15-2009 $1,500.00

    TC 846 04-27-2009 $2,500.00

    TC 300 06-30-2011 $12,000.00
    TC 767 04-15-2009 $1,500.00

    TC 971 AC 184 MMA = $13,500.00

    TC 670 06-30-2011 $7,000.00
    • The TC 767 reversal of tax credit is included in the RBA and therefore, the payment dated 06-30-2011 for $7,000.00 is fully cross-referenced to MFT 31.

    Example:

    #4
    The following payments are cross-referenced as follows:
    TC 670 04-15-2012 $2,500.00
    TC 670 06-15-2012 $2,500.00

    MFT 31 MFT 01

    TC 298 07-31-2012 $10,000.00






    TC 971 AC 185 MMA = $10,000.00

    TC 670 DPC 26 04-15-2012 $2,500.00
    TC 670 DPC 26 06-15-2012 $2,500.00

    TC 150 04-15-2009 $20,000.00

    TC 650 01-15-2009 $2,500.00
    TC 650 02-15-2009 $2,500.00
    TC 650 03-15-2009 $5,000.00

    TC 971 AC 184 MMA = $10,000.00

    TC 766 CRN 337 04-15-2012 $2,500.00
    TC 766 CRN 337 06-15-2012 $2,500.00
    • The payments dated 01-15-2009, 02-15-2009 and 03-15-2009 are applied to the original tax liability and are not cross-referenced. The remaining unpaid balance is the basis for the RBA.

    • The payments dated 04-15-2012 and 06-15-2012 are cross-referenced to MFT 01 to reduce the duplicate amount of the RBA.

RBA Non Master File (NMF) Accounts
  1. IDRS Master File is not able to accept an unlimited number of transactions on any given account module. When a Master File account contains too many lines and the module has moved into overflow status, a TC 400 with BS 99 (9th and 10th digit of DLN) will systemically post to transfer the account module to Automated Non Master File (ANMF). It may take up to 45 days for the transferred account to post to ANMF. Once the TC 400 has posted to the module, no transactions can be input to IDRS. Therefore, thorough research of CC RAPID is necessary to obtain the TINs for all related accounts with a duplicate Civil assessment.

    Note:

    A TC 402 on the module after the TC 400 is posted indicates the account has been re-transferred-in. Research the account to verify the account’s location when a TC 402 is present; it may have a MFT 31 module.

  2. A “CROFLOW” transcript will generate when a RBA MFT 31 is close to overflow status and before the TC 400 posts. Upon receipt of a “CROFLOW” transcript, review the account to ensure all case actions are accurate and up-to-date. Perform case corrections as needed.

  3. Payments and credits cannot be cross-referenced to the NMF accounts. Upon receipt of the transcript case:

    1. Review CC RAPID, TC 971 AC 18X posted to TXMOD and AMS history to obtain the TINs for all related accounts.

    2. Review all related accounts and current ANMF transcript to determine if there are any payments/credits that have not been applied and/or have been applied incorrectly.

  4. Cross-reference all available payments/credits to applicable Master File accounts in accordance with IRM 5.19.23.3 .

    • Complete Form 1331-B to apply available payments/credits to the NMF account and forward the form to CSC NMF Accounting to request abatement of the RBA. A separate Form 1331-B is not necessary for each payment, or to abate penalty or interest assessments. However, each payment/credit included in the abatement must be listed separately on the form. If abatement of penalty and/or interest is included, the amounts must be listed separately on the Form 1331-B

  5. Reverse any payments/credits incorrectly applied to ANMF.

    • Prepare a 2-Way Memo, Form 3465 and Form 12810 and forward the forms to CSC NMF Accounting to request a “Reversal of Erroneous Abatement” to reduce an amount incorrectly abated on ANMF. Notate Reversal of Previously Posted RBA Credit in the subject line of the memo. See IRM 3.17.243.3, Reversal of Erroneous Abatements, for additional information.

    • Complete Form 1331-B to reverse a TC 766 CRN 337 incorrectly posted to ANMF. A separate form is required for each TC 766 being reversed and must contain the date and amount of the TC 766

    Note:

    Requests for TC 767 reversals cannot be combined with requests for abatement on the same Form 1331-B.

  6. Complete Form 3809 to change the date of a TC 766 CRN 337 posted to ANMF.

  7. Input a history to AMS to document the payment origination and amount for all credits applied.

  8. When a restitution payment is posted to a NMF account with a RBA assessment, the KC Special Services Team will notify the CCO RBA Unit in Ogden via e-mail at *SBSE Ogden RBA. If the payment is obtained by a Revenue Officer, they will send payment details / Form 3244 to notify CCO of the payment posting to NMF. Upon receipt of the notification:

    1. Assign a case on IDRS for each TIN, MFT and Tax Period notated in the e-mail and complete all case actions within 3 business days from the date of the e-mail.

      Note:

      It may take up to 45 days for payment(s) to post to ANMF.

    2. Review CC RAPID, TC 971 AC 18X posted to TXMOD and AMS history to obtain the TINs for all related accounts.

    3. Review all related accounts and current ANMF transcript for any payments/credits that may not have been applied and/or have been applied incorrectly.

    4. Cross-reference all available payments/credits to applicable Master File accounts in accordance with IRM 5.19.23.3.

    5. Complete Form 1331-B for any payments or credits missing from the NMF account. See IRM 5.19.23.3.6.2 (3) (4) and (5) above.

  9. Input a history to AMS to document the payment origination and amount for all credits applied.

  10. Determine if a TC 130 Entity freeze (V- freeze) is on the Master File account that is linked to the account that was moved to NMF. Reverse the TC 130 when the account is fully paid or the CSED has expired.

  11. Input a history to AMS to document accounts that have been moved to Non Master File.

  12. Monitor the ANMF account for the posting of the Form 1331-B request. If review of the ANMF account identifies inaccurate or incomplete action, follow up with NMF to correct the account.

  13. Requests for NMF transcripts may be received from RO’s via the *SBSE Ogden RBA mailbox. Upon receipt of these requests, follow normal procedures to obtain the NMF transcript and send the transcript to the requesting RO.

RBA Master File Account Transfer
  1. An Account Transfer is a means of transferring an account between Master File accounts or between Master File and Non-Master File. For RBA, an Account Transfer is required when there is risk that a module will reach its data limitation and will systemically transfer. For RPP cases with 350 or more clients, perform an immediate Account Transfer.

  2. Before requesting a complete account transfer from MF to NMF via TC 400, the penalty and interest accruals must be posted to the module prior to the transfer. If more than one assessment is still owing (TC 29X, 30X) the accruals must be split to indicate how much belongs to each account balance.

    1. Use CC INTST to determine the accrued penalty and interest amount to the 23C date, then input using TC 270 and TC 340.

    2. If the account is restricted (-I Freeze), manually compute and input penalty and interest, if applicable.

  3. Input TC 470 cc 93 to suspend Collection and monitor the account until all transactions post.

  4. The following Freeze Codes must be resolved prior to requesting the Account Transfer: -Z, -V, -W, -L, -R, and –Y.

  5. All pending transactions must post to IDRS before sending the case to Accounting. An exception is installment agreement payments. Expedite processing when the case involves an installment agreement. These cases will be marked on top of the transfer document. There are payments that will have to post soon after the transfer, so speed is of the essence.

    Caution:

    Do not transfer an account unless the balance is debit or zero.

  6. Transfer of the following transaction codes requires corresponding reversal codes before performing a TC 400.

    • TC 576 must have a corresponding TC 577,

    • TC 608 must have a corresponding TC 609,

    • TC 896 must have a corresponding TC 897.

    Note:

    Caution must be taken when processing a partial account transfer. Do not process a reversing transaction without the corresponding transaction which it is reversing.

  7. Since the Automated Non-Master File (ANMF) system allows for only one 23C date per account, it is extremely important to ensure that the correct 23C date is identified for establishment on NMF if the account carries multiple assessments with multiple 23C dates. See IRM 3.17.21.7.3(4), Transfers to Non Master File (NMF), for processing instructions.

  8. A complete current tax module print (dummy module is not acceptable) including the status history section is required for all transfers. This print should be no more than two weeks old.

  9. Prepare Form 12810, Account Transfer Request Checklist, and forward to the Accounting Function with the tax module print. A separate form is required for each tax period transferred.

    Note:

    Return Preparer RBA Case” must be notated in the remarks section of the Form 12810 or it will be rejected back.

  10. Input a detailed history item to AMS for the action taken.

Computing and Cross-Referencing Penalties

  1. IRC 6651(a)(3) provides for a penalty if tax required to be shown on a return, but which was not shown, is not paid by the date stated in the notice and demand for payment unless it is shown that such failure is due to reasonable cause and not due to willful neglect. IRC 6651(a)(2) provides for a penalty if tax shown on a return is not paid on or before the date prescribed for payment of such tax, determined with regard to any extension of time for payment. The date for payment stated in the notice is 21 calendar days following the date of the notice if the amount in the notice is less than $100,000. Otherwise, the date is 10 business days after the date of the notice.

    Caution:

    Although rare, the court may include FTP penalty and FTF penalty in the Judgment & Commitment Order. If that is the case, FTP penalty ordered as restitution must initially be assessed as shown in the order and cannot be abated. When assessed as restitution, the TC 270 will carry the same DLN as the TC 29X RBA. If additional FTP penalty accrues after the date of the order, assess the amount in a separate adjustment.

    Note:

    If FTP is not part of the restitution order, a TC 270 for $0 is input by Tech Services which prevents FTP from being assessed.

  2. The court may order penalty or penalties without tax. These accounts will carry a TC 971 / AC 182 or 183 with an MMA = $0.00. These penalties do not increase (accrue) from the dollar amount originally assessed. Payments and cross-references applied to these accounts should not exceed the original assessment.

    If ... And ... Then ...
    The amount shown on the notice is less than $100,000 Payment is received within 21 calendar days, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Additional FTP is not computed on the amount paid.
    The amount shown on the notice equals or exceeds $100,000 Payment is received within 10 business days ,≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Additional FTP is not computed on the amount paid.
  3. No tax shall be added for failure to pay under IRC 6651(a)(2) or (a)(3) if it is shown that such failure is due to reasonable cause and not due to willful neglect.

    1. Ordinarily, a taxpayer must make an affirmative showing of all facts alleged as reasonable cause for failure to pay. The failure to pay will be considered to be due to reasonable cause if the taxpayer shows that he exercised ordinary business care and prudence in providing for payment of his tax liability and was nonetheless either unable to pay the tax or would suffer an undue hardship if he paid on the due date. For information on the standards for applying the waiver, see IRM 20.1.1.3.2.1, Standards and Authorities.

    2. An extension of time to file does not extend the time to pay. However, Treas. Reg. 301.6651-1(c)(3) and (4) provide that reasonable cause will be presumed in the case of failure to pay income tax if the taxpayer satisfies the requirements relating to an automatic extension of time to file the applicable (individual or corporate) income tax return and the following criteria are met:

    • In the case of an individual, at least 90 percent of the amount of tax shown on the return must have been paid on or before the due date for payment, and the remainder must be paid with the return.

    • In the case of a corporation, at least 90 percent of the amount of tax shown on the return must have been paid on or before the due date for payment, and the remainder must be paid by the extended return due date.

    IRS computers are programmed to automatically apply this waiver for Individual and Corporate income tax modules if applicable; however, the penalty must be manually computed for the RBA. There are no regulations providing for an automatic extension of time to file employment tax returns, and there is no presumption of a reasonable cause exception for employment tax. Therefore, these returns do not qualify for an extension of time to file.

  4. Provided there is an amount subject to this penalty, the first month subject to the penalty for paying late under IRC 6651(a)(3) begins the day after the date for payment stated in the notice and demand for payment.
    For each month following the date for payment stated in the notice, the amount subject to the penalty is the portion of the net additional tax shown in the notice and demand for payment that is not paid before the beginning of the month. The term "additional tax shown in the notice and demand" refers to tax that:

    • Was not shown on the return, and

    • Was not shown in a prior notice and demand for payment.

  5. IRC 6651(g) provides that for returns due after July 30, 1996 (determined without regard to extensions), the tax assessed under IRC 6020(b) constitutes the tax shown on the taxpayer's return for the purpose of determining the penalty for paying late under IRC 6651(a)(2) and (3). The FTP penalty on amounts shown on SFRs for returns due after July 30, 1996 (determined without regard to extensions) is calculated from the return due date under IRC 6651(a)(2).

  6. For returns due before July 31, 1996, FTP under IRC section 6651(a)(3) begins 21 calendar days (10 business days if the amount on the notice is $100,000 or more) after the 23C date (TC 290 or 300) under IRC 6651(a)(3). If the taxpayer files his own return (due before July 31, 1996) after an SFR assessment, the IRC section 6651(a)(2) FTP penalty on the amount shown on that return should be computed and assessed from the return due date.

  7. If the taxpayer filed his own return (the due date for which, without regard to extensions, is after July 30, 1996) after the 1% FTP penalty rate has taken effect under IRC section 6651(d )the FTP penalty .under IRC 6651(a)(2) is recalculated on the amount showing due on the taxpayer's return by using the ½% rate for the same period the ½% rate was in effect on the SFR and the 1% rate for the same period the 1% rate was in effect on the SFR, not to exceed 25% in the aggregate. The 1% rate, once in effect on the SFR, continues in effect on any remaining unpaid balance showing due on the delinquent return the taxpayer files.

    Note:

    The taxpayer may subsequently qualify for an installment agreement, but the FTP rate would not be reduced to 1/4% because the return was not filed timely.

  8. When a delinquent return is received after SFR processing, the FTP on the SFR is recalculated on the amount due as shown on the delinquent return. To have MF correctly generate the FTP penalty under IRC 6651(a)(2) from return due date, Priority Code (PC) 2 must be input with TC 290, or PC 9 with TC 300. MF will correctly generate FTP under IRC 6651(a)(3) from the 23C date after 21 calendar days (or 10 business days if the total notice amount due is $100,000 or more) on subsequent assessments when PC 2 is not used with TC 290, or PC 9 is not used with TC 300. See IRM 20.1.2.2.10, Substitute for Return - IRC 6651(g), for more information.

  9. IRC section 6651(a)(3) applies to additional amounts assessed as:

    • A deficiency,

    • An amendment to the original return, or

    • A result of a correction of a mathematical error as defined under IRC 6213(b)(1)


    For each month or part of a month during which the underlying tax remains unpaid, the penalty generally is 1/2% of the unpaid tax. However, the penalty rate may increase to 1% per month, or decrease to 1/4% per month.
    IRC 6651(d) provides that the basic failure to pay (FTP) penalty rate increases to 1 percent for any month following—

    1. 10 days after IRS gives notice of intent to levy under IRC 6331(d); or

    2. the day IRS makes demand for immediate payment of a jeopardy assessment under IRC 6331(a).


    For more information about 1 percent penalty rates, see IRM 20.1.2.2.8.1.1, 1 Percent Penalty Rate - IRC 6651(d).

  10. For penalty months beginning after 12/31/1999, IRC 6651(h) provides that an individual's FTP penalty will be reduced to 1/4% for any month in which an installment payment agreement is in effect, provided the individual timely filed (taking extensions into account) the return relating to the liability that is subject to the installment agreement under IRC 6159.
    Even when the 1% FTP rate under IRC 6651(d) has been triggered or is already accruing, the rate will be reduced to 1/4% at the beginning of the next monthly period after an installment agreement (TC 971 AC 063) posts to the account. The FTP penalty rate is also 1/4% whenever a defaulted installment agreement is re-instated. Master File systemically recognizes these conditions for installment agreements posting after the first cycle in 2005. When an installment agreement defaults (CP 523 ) and a 1% FTP penalty rate had been in effect immediately before the installment agreement was approved, the FTP penalty rate is once again 1%.
    For more information about installment agreements and the 1/4% penalty rates, see IRM 20.1.2.2.8.1.2., 1/4 Penalty Rate - IRC 6651(h).

    Note:

    For RPP case types, the preparer is not entitled to the 1/4% decrease when establishing an IA unless the RBA is based solely on their own civil return.

  11. Penalties will continue to accrue until they have reached 25% in the aggregate, or until the underlying tax is paid.

  12. IDRS CC COMPA with definer "F" is available to compute the penalty for paying late. See IRM 20.1.2.2.8.8 , IDRS Command Code COMPA, for computations using CC COMPA.

Cross-Referencing Failure-to-Pay Penalty

  1. IRS computers determine "unpaid tax" by applying specific rules in the application of payments to unpaid liabilities. Manual penalty computations should follow the same rules for the sake of consistency and fairness.

  2. Compute Failure-to-Pay (FTP) penalties for each module and/or account, separately. Use IDRS CC COMPAF to compute the penalty. For each month of the period during which each FTP applies, compute the penalty by multiplying the amount of unpaid tax by the penalty rate. See IRM 5.19.23.4 , above. The total penalty is the sum of the penalties for all months to which a FTP applies.

    Note:

    When the penalty rate and the underpayment amount remain the same over several months, the computation can be simplified by multiplying the number of months X unpaid tax X penalty rate.

  3. The following examples illustrate payment cross-referencing when FTP is included in the restitution order.

    Example:

    #1

    The following payments are cross-referenced as follows:
    TC 640 05-15-2012 $10,000.00
    TC 670 01-15-2013 $2,500.00
    TC 670 03-05-2013 $595.00
    Date of Notice and Demand 12-31-2012

    TPH MFT 31 200312 MFT 30 200312

    TC 290 12-31-2012 $13,000.00

    TC 766 CRN 337 05-15-2012 $10,000.00
    TC 766 CRN 337 01-15-2013 $2,500.00
    TC 766 CRN 337 03-05-2013 $505.00

    TC 300 06-18-2012 $13,000.00

    TC 640 05-15-2012 $10,000.00
    TC 670 01-15-2013 $2,500.00
    TC 670 03-05-2013 $595.00

    TC 276 03-05-2013 $95.00
    • The payments dated 05-15-2012 and 01-15-2013 for a total amount of $12,500.00 are cross-referenced to MFT 31 to reduce the RBA (TC 290). $500.00 of the payment dated 03-05-2013 for $595.00 is applied to fully pay the RBA (TC 290). The remaining $95.00 is applied to the assessed FTP on MFT 30.

    • FTP is computed on the amount of the tax liability that was not paid within 21 ≡ ≡ ≡ ≡ ≡ days of the issuance of the Notice and Demand letter ($500.00) to the date of the payment that fully paid the tax liability. The payment that fully paid the tax liability is 03-05-2013. IDRS computed and posted the FTP (TC 276) in the amount of $95.00.

    • CC COMPAF is used to compute FTP for the amount of the unpaid RBA (TC 290) of $500.00 from the date of the assessment to the date of the payment that fully paid the liability. The liability is fully paid on 03-05-2013. Because the date of the RBA is later than the Civil Tax assessment, the FTP due for the RBA is $5.00.

    • $505.00 of the payment dated 03-05-2013 for $595.00 is cross-referenced to fully pay the RBA and associated FTP for $5.00. A TC 276 will post to TPH MFT 31 when the cross-referenced payment posts. Do not apply more than the computed amount.

    • AMS history is documented showing payment application, ex., “$505 from pmt dtd 3/5/13 x-ref’d to MFT 31 = $500 RA, $5 FTP.”

    Example:

    #2
    The following payments are cross-referenced as follows:
    TC 670 11-10-2012 $30,000.00
    TC 670 02-15-2013 $10,000.00
    TC 670 02-28-2013 $3,080.00
    Date of Notice and Demand 12-31-2012

    TPH MFT 31 200512 MFT 30 200512


    TC 290 12-31-2012 $32,000.00
    TC 766 CRN 337 11-10-2012 $30,000.00
    TC 766 CRN 337 02-15-2013 $2,000.00
    TC 766 CRN 337 02-28-2013 $10.00


    TC 300 06-15-2012 $42,000.00
    TC 670 11-10-2012 $30,000.00
    TC 670 02-15-2013 $10,000.00
    TC 670 02-28-2013 $3,080.00

    TC 276 11-10-2012 $840.00
    TC 276 02-28-2013 $240.00
    • The payment dated 11-10-2012 and $2,000 of the payment dated 02-15-2013 for a total amount of $32,000.00 are cross-referenced to MFT 31 to fully pay the RBA (TC 290). The remaining $8,000.00 reduces the MFT 30 Civil assessment. $2,000 of the payment dated 02-28-2013 for $3,080.00 is applied to fully pay the Civil assessment (TC 300) and the remaining $1,080.00 is applied to posted penalties.

    • IDRS computed FTP (TC 276) in the amount of $840.00 for the remaining unpaid liability (TC 300) of $42,000.00 from the date of the assessment, 06-15-2012, to the payment date of 11-10-2012. Since FTP is computed for each month in which the liability remains unpaid, IDRS computed and posted FTP (TC 276) in the amount of $240.00 on the unpaid liability of $12,000 to the payment date of 02-28-2013. The total FTP assessed on the Civil assessment is $1,080.00.

    • CC COMPAF is used to compute the FTP for the remaining unpaid RBA amount of $2,000. The penalty is computed from the date of the assessment, 12-31-2012, to the date of the payment that fully paid the liability. The RBA is fully paid with the payment dated 02-15-2013. Because the date of the RBA is later than the Civil Tax assessment, and the assessment was fully paid before the Civil Tax assessment, the FTP due for the RBA is $10.00.

    • $1,080.00 of the payment dated 02-28-2013 for $3,080.00 is applied to the assessed FTP, and $10.00 is cross-referenced to MFT 31 to pay the computed FTP on the RBA. A TC 276 will post to MFT 31 once the cross-referenced payment posts to the account.

    Even though the payment dated 02-28-2013 exceeds the amount of the computed FTP for the RBA, the amount cross-referenced is limited to the FTP and cannot be used to reduce any other assessed amount, such as fees or interest.

    Example:

    #3
    The following payments are cross-referenced as follows:
    TC 670 11-10-2012 $30,000.00
    TC 670 01-15-2013 $20,000.00
    TC 670 02-28-2013 $5,000.00
    Date of Notice and Demand 12-31-2012

    TPH MFT 31 200312 MFT 30 200312 (SFR)


    TC 290 12-31-2012 $52,000.00
    TC 670 11-10-2012 $30,000.00
    TC 670 01-15-2013 $20,000.00
    TC 670 02-28-2013 $5,000.00

    TC 276 02-28-2013 $10.00


    TC 300 06-30-2012 $42,000.00
    TC 766 CRN 337 11-10-2012 $30,000.00
    TC 766 CRN 337 01-15-2013 $12,000.00
    TC 766 CRN 337 02-28-2013 $3,000.00

    TC 276 06–30–2012 $10,500.00
    • The payments dated 11-10-2012 for $30,000.00 and $12,000.00 of the payment dated 01-15-2013 for $20,000.00 are cross-referenced to the MFT 30 to fully pay the total amount of the Civil Tax assessment (TC 300).

    • The payment of $30,000.00 pre-dated the assessment date and the $20,000.00 was paid within the grace period of the notice, the assessment balance used for computation of the FTP is reduced. Since FTP is computed for each month in which the liability remains unpaid, IDRS computed FTP (TC 276) in the amount of $10.00 on the unpaid RBA (TC 290) of $2,000.00 from the date of the assessment to the payment date of 02-28-2013.

    • The Civil Tax assessment is an SFR assessment that was input with a Priority Code (PC) 9 and IDRS systemically computed and posted the FTP at the time the Civil Tax assessment posted. The amount is computed on the amount of the Civil Tax assessment from the due date of the return, 04-15-2004, to the date of the payment that fully paid the assessment, 01-15-2013.

    • $10.00 of the payment dated 02-28-2013 for $5,000.00 is cross-referenced and applied to FTP on the Civil Tax assessment. The amount of FTP cross-referenced to the Civil Tax assessment is limited to the amount paid on the RBA $2,000 of the payment is applied to fully pay the RBA and $2,990.00 is applied to posted interest. Interest is computed and cross-referenced to the MFT 30 for the Civil assessment in accordance with IRM 5.19.23.5, , Computing and Cross-Referencing Interest.

    • AMS history is documented showing payment application, e.g.., “$10.00 from pmt dtd 2-28-13 x-ref’d to MFT 30 = $10 FTP, $2,990.00 int.”

    Example:

    #4
    The following payments are cross-referenced as follows:
    TC 640 03-15-2013 $10,000.00
    TC 670 04-15-2013 $3,000.00
    TC 670 04-30-2013 $1,000.00
    TC 670 05-01-2013 $6,550.00
    TC 670 05-15-2013 $6,625.00
    Date of Notice and Demand 12-31-2012

    TPH MFT 31 200312 MFT 30 200312


    TC 290 12-31-2012 $13,000.00
    TC 766 CRN 337 03-15-2013 $10,000.00
    TC 766 CRN 337 04-15-2013 $3,000.00
    TC 766 CRN 337 05-01-2013 $145.00

    TC 300 06-18-2012 $13,000.00
    TC 640 03-15-2013 $10,000.00
    TC 670 04-15-2013 $3,000.00

    TC 160 06-18-2012 $1,375.00
    TC 670 04-30-2013 $1,000.00
    TC 670 05-01-2013 $6,550.00

    TC 276 05-01-2013 $535.00

    TC 336 06-18-2012 $12,800.00
    TC 670 05-15-2013 $6,625.00
    • The payments dated 03-15-2013 for $10,000.00 and 04-15-2013 for $3,000.00 for a total amount of $13,000.00 is cross-referenced to MFT 31 to fully pay the RBA (TC 290).

    • A Failure to File (FTF) penalty (TC 160) was assessed on the MFT 30 account in the amount of $1,375.00 at the time of the assessment. The payment dated 04-30-2013 for $1,000.00 and $375.00 of the payment 05-01-2013 for $6,550.00 is applied to pay the FTF penalty. There is no FTF penalty assessed on the TPH MFT 31 account; therefore, these payments are not cross-referenced. Of the remaining $6,175.00 from this payment, $535.00 is applied to the assessed FTP penalty (TC 276) and $5,640.00 is applied to assessed interest (TC 336).

    • CC COMPAF is used to compute the FTP for the amount of the RBA that was not paid within 21 ≡ ≡ ≡ ≡ days of the Notice and Demand letter. All of the payments applied to the RBA were received subsequent to this date. Therefore, FTP is computed on the total amount of the RBA from the date of the assessment, 12-31-2012, to the date of the payment that fully paid the liability. The RBA is fully paid with the payment dated 04-15-2013. Because the RBA is later than the Civil Tax assessment, FTP due for the RBA is $145.00.

    • Since the FTP computed on the RBA does not exceed the posted FTP on the MFT 30 Civil tax assessment, $145.00 of the payment dated 05-01-2013 for $6,550.00 is cross-referenced to fully pay the FTP for the RBA. A TC 276 will post to MFT 31 once the payment has been cross-referenced. Do not cross-reference more than the assessment amount.

    • $5,640.00 of the payment dated 05-01-2013 and the payment dated 05-15-2013 for $6,625.00 is applied to posted interest. Interest is computed and cross-referenced to the MFT 31 for the RBA in accordance with IRM 5.19.23.5 ,,Computing and Cross-Referencing Interest.

    Example:

    #5
    The following payments are cross-referenced as follows:
    TC 670 01-15-2012 $10,000.00
    TC 670 04-15-2013 $2,500.00
    TC 670 05-05-2013 $1,200.00
    Notice and Demand Date 12-31-2012

    TPH MFT 31 200712 MFT 30 200712


    TC 290 12-31-2012 $13,000.00

    TC 670 01-15-2012 $10,000.00
    TC 670 04-15-2013 $2,500.00
    TC 670 05-05-2013 $1,200.00

    TC 276 04-15-2013 $45.00
    TC 276 05-05-2013 $2.50


    TC 300 06-18-2012 $13,000.00

    TC 766 CRN 337 01-15-2012 $10,000.00
    TC 766 CRN 337 04-15-2013 $2,500.00
    TC 766 CRN 337 05-05-2013 $547.50

    TC 276 04-15-2013 $135.00
    • The payments dated 01-15-2012 and 04-15-2013 for a total amount of $12,500.00 are cross-referenced to MFT 30 to reduce the Civil Tax assessment (TC 300). $500.00 of the payment dated 05-05-2013 for $1,200.00 is applied to fully pay the RBA. The remainder of the payment is applied to penalties and interest.

    • Since the payment dated 4-15-2013 was not received within the notice period, IDRS computed and posted a FTP penalty (TC 276) in the amount of $45.00 when the payment posted to the account. The penalty was computed on the unpaid RBA assessment of $3,000.00, from the assessment date of 12-31-2012 to the payment date of 04-15-2013.

    • Because the RBA was not fully paid, IDRS computed and posted another FTP penalty (TC 276) in the amount of $2.50 when the payment dated 05-05-2013 posted to the account. The penalty was computed on the unpaid RBA assessment of $500.00 from the assessment date of 12-31-2012 to the payment date of 05-05-2013.

    • IDRS computed and posted a FTP penalty in the amount of $135.00 when the payment dated 4-15-2013 was cross-referenced and posted to the MFT 30 account. CC COMPAF is used to compute the FTP for the unpaid Civil Tax assessment, $500.00, from the date of the assessment, to the date of the payment that fully paid the assessment, 05-05-2013. Because the Civil Tax assessment is dated earlier than the RBA, FTP due for the unpaid Civil Tax assessment is $2.50 for a total penalty assessment of $137.50.

    • $547.50 of the payment dated 05-05-2013 for $1,200.00 is cross-referenced to MFT 31. $500.00 of the payment is applied to fully pay the duplicate Civil Tax assessment and $47.50 is applied to FTP on the Civil Tax assessment. The amount cross-referenced to the Civil Tax assessment for FTP is limited to the amount assessed and paid on the RBA. A TC 276 will post to MFT 30 once the payment has been cross-referenced. The remaining $652.50 of the payment dated 05-05-2013 is applied to interest and cross-referenced in accordance with IRM 5.19.23.5, Computing and Cross-Referencing Interest.

    • AMS history is documented showing payment application, e.g.., “$547.50 from pmt dtd 5/5/13 x-ref’d to MFT 30 = $500.00 RA, $47.50 FTP, $XXX int.”

    Reminder:

    If the FTP was not included in the restitution order, a TC 270 for $0 is input on the restitution module to prevent FTP from being assessed.

Computing and Cross-Referencing Interest

  1. Underpayment interest on RBA is generally computed from the normal return due date, while underpayment interest on any associated fraud, failure-to-file (FTF) or accuracy related penalties is computed from the later of the normal return due date or extended return due date. Underpayment interest is generally computed to the date of payment. Business tax returns have different return due dates based on the type of tax return filed. Refer to Document 6209, for BMF return due dates.

  2. When computing debit interest, consideration must be given to interest free periods provided by Revenue Ruling 99-40, as well as interest rate equalization provided by Revenue Procedure 94-60, when applicable.

  3. Because restitution-based assessments stem from cases involving fraudulent or false returns, interest suspension under IRC 6404(g) does not apply.

  4. Restitution-based assessments are not entitled to an interest-free period per IRC 6601(c), also called 870 waiver, because the taxpayer already received appeal rights in federal court before the restitution amount is finalized and can be assessed.

  5. When calculating underpayment interest the following grace period(s) must be considered:

    If ... And ... Then ...
    The amount shown on the notice and demand is less than $100,000 Payment is received within 21 calendar days, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Payment is considered received as of the date of notice and demand when computing interest. If the taxpayer does not full pay tax, penalties, and interest, then additional interest will apply only on the amount still owed.
    The amount shown on the notice and demand equals or exceeds $100,000 Payment is received within 10 business days, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Payment is considered received as of the date of notice and demand when computing interest. If the taxpayer does not full pay tax, penalties, and interest, then additional interest will apply only on the amount still owed.
    A TC 971 AC 069/169 is posted to the account Payment is received within 30 calendar days, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Payment is considered received as of the date of notice and demand when computing interest. If the taxpayer does not full pay tax, penalties, and interest, then additional interest will apply only on the amount still owed.

    Note:

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

  6. Issuance of notice and demand are identified on Master File or IDRS by Notice Status Codes 19, 20, 21, 54, 56, and 58.

  7. Effective January 1, 1991, IRC 6621(c) increased the debit interest rate by two percentage points above the prevailing underpayment rate for "C" Corporations (includes corporate income, employment and excise tax returns). This increased interest rate is referred to as "Large Corporate Underpayment (LCU) interest" or "2% interest." LCU interest is applicable when:

    1. A notice of underpayment or proposed deficiency (or the assessment of the proposed underpayment/deficiency) is greater than $100,000 (determined without regard to interest, penalties, or additions to the tax), and either:

    2. The amount shown on a proposed deficiency of tax by either a 30/90 Day Letter is not paid within 30 days from the notice date OR

    3. The amount shown in a notice and demand (if deficiency procedures do not apply) is not paid within 30 days of the date of notice and demand (whichever is earlier)

      Exception:

      Prior to January 1, 1998, application of the LCU rate could be triggered by an unpaid notice or letter for any amount, provided other criteria was met. See IRM 20.2.5.8.1.2, Threshold Underpayment for LCU and IRM 20.2.5.8.5 ,Special Application of LCU Interest for Periods Before and After December 31, 1997,, for details.

    Note:

    "C" Corporation is any BMF taxable entity with a significant Form 1120, U.S. Corporation Income Tax Return, filing requirement (except Form 1120S, U.S. Income Tax Return for an S Corporation), and any BMF taxable entity without a significant Form 1120 filing requirement, but having an Exempt Organization Section present with a Corporate Indicator.

  8. The date that starts the additional 2% interest is seldom voided once it is determined. There are a few exceptions

    • The amount shown in the letter or notice is paid within 30 days of the letter or notice date.

    • The letter or notice is mailed to the wrong taxpayer or for the wrong tax period.

    • The tax assessment or proposed assessment for which the letter or notice was sent is subsequently abated in full.

    Even if the underpayment is paid, the applicable date remains, and any large corporate underpayment for that year will accrue an additional 2% interest from the applicable date for any subsequent unpaid balances.

    Note:

    If the underpayment is fully paid within 30 days of the notice or letter, the applicable date is not triggered.

    See IRM 20.2.5.8 , Large Corporate Underpayment (LCU) for more information.

  9. When an underpayment in tax for a particular year is reduced or eliminated as a result of a carryback from a later year (e.g., TC 295, 299, 305, 309), the taxpayer remains liable for interest on its underpayment from the time the tax in question was due until the date the tax was satisfied by application of the carryback per IRC 6601(a). The “date the tax was satisfied by application of the carryback” or its effective date is the due date of the loss year return, determined without regard to any extension of time for filing the loss year return.

    Example:

    An underpayment for the 2013 tax year of an individual taxpayer is eliminated by an net operating loss (NOL) carryback from the 2015 tax year return. Interest on the year 2013 underpayment of Form 1040 will accrue from its due date of April 15, 2014 until the effective date of the carryback allowance: April 15, 2016.

    The effective date of a carryback allowance is displayed in the INT-CMP-DT field that accompanies the carryback transaction code (e.g., TC 295, 299, 305, 309).

    Caution:

    When a carryback allowance adjustment is input prior to the normal loss year return due date, the INT-CMP-DT field will display the date the adjustment was input. The effective date of the carryback credit remains, however, the normal loss year return due date. See IRM 21.5.9.5.32 ,Interest Computation Dates, and IRM 21.5.9.5.40 ,Carryback Form 1040X, Form 1120X, Form 1041, Form 1120-C and Form 990-T Interest Computation Dates.

    Carryback claims are subject to a 45-day interest free processing period. When the 45-day period is met, no interest is paid on the refund. The interest free period begins from the later of the:

    1. due date of the loss year return (determined without regard to extensions);

    2. received date of the delinquent loss year return;

    3. date the loss year return is filed in processible from;

    4. application of claim received date; or

    5. application or claim processible date.

    • If the 45-day period is missed, interest is paid from the later of the: (a) loss year return due date (determined without regard to extensions); (b) received date of the delinquent loss year return; (c) date the loss year return is filed in processible form; or (d) date the overpayment arose.

    • An erroneous carryback allowance that is recaptured may be subject to the large corporate underpayment (LCU) rate when certain conditions are present. See IRM 5.19.23.5(7), and IRM 20.2.5.8, Large Corporate Underpayment (LCU).

  10. Post accrued interest on a module not requiring restriction (i.e., TC 34X) by inputting priority code 5. If interest must be manually computed, , input a non-restricting TC 340 whenever possible See IRM 20.2.5.6.3, Non-Restricting Transaction Code (TC) 340, for more information. Remove erroneous assessments of interest on the MFT 31 module with TC 341.

    Caution:

    When calculating underpayment interest, CC INTST cannot be used when:

    • There are pending payments on the account where interest is being calculated.

    • Making corrections to posted transactions on the account.

    • There are multiple assessments with different suspension periods on the account.

    • There are multiple same date payments.

    • Applying multiple payments with different dates or, the date of payments received within the grace period of a notice date has not updated on CC INTSTD.

  11. See IRM 20.2.1.6, Interest Computation Tools and Reports, and IRM 20.2.5.1.3, Steps to Compute Interest, for more information.

  12. Payments that are applied towards interest for the RBA amount on the originating account must be cross-referenced to pay duplicate interest on the related account(s).

    Note:

    Interest is computed on the duplicate module and any amount up to what was paid on the originating account is cross-referenced.

    Caution:

    Do not cross-reference more interest than what is owed on the duplicate amount.

  13. When cross-referencing interest payments to related accounts, do not overpay the account(s) and cause a credit balance. If a credit balance is mistakenly created, refer to IRM 5.19.23.6, Resolving Overpayment Cases ,for steps to resolve the credit.

  14. Once all RBA/Civil assessments and all duplicate penalties have been paid in full, use CC COMPA, DMI/ACT or INTST to compute interest from the due date of the return to the date of the payment or credit.

    Example:

    #1
    The following payments are cross-referenced as follows:
    TC 670 11-10-2012 $30,000.00
    TC 670 01-15-2013 $10,000.00
    TC 670 02-28-2013 $3,000.00
    Date of Notice and Demand 12-31-2012

    TPH MFT 31 200312 MFT 30 200312

    TC 290 12-31-2012 $32,000.00
    TC 196 12-31-2012 $18,253.14
    TC 766 CRN 337 11-10-2012 $30,000.00
    TC 766 CRN 337 01-15-2013 $2,000.00
    TC 766 CRN 337 02-28-2013 $1,450.00
    TC 196 01-15-2013 $109.93
    TC 196 02-28-2013 $64.03

    TC 300 06-15-2011 $42,000.00
    TC 336 06-15-2011 $21,048.32
    TC 670 11-10-2012 $30,000.00
    TC 670 01-15-2013 $10,000.00
    TC 670 02-28-2013 $7,000.00
    TC 276 02-28-2013 $3,550.00
    TC 196 02-28-2013 $3,198.83
    • The payment dated 11-10-2012 for $30,000.00 and $2,000.00 of the payment dated 01-15-2013 for a total amount of $32,000.00 are cross-referenced to MFT 31 to fully pay the RBA (TC 290). The remaining $8,000.00 is applied to the MFT 30 Civil assessment and because the RBA is fully paid, the amount is not cross-referenced.

    • The Civil assessment has an assessed FTP penalty for $3,550.00. There is no FTP due for the RBA since it was fully paid within 21 ≡ ≡ ≡ ≡ ≡ days of the assessment date.

    • DMI/ACT is used to compute the interest due on the RBA. Interest is computed from the due date of the return on which the RBA is based to the date of the payment. The due date of the return is 04-15-2004. The interest due for the RBA is $18,429.60. A TC 196 for $18,253.14 posted the same cycle as the RBA.

    • $2,000 of the payment dated 02-28-2013 for $7,000.00 is applied to fully pay the Civil assessment (TC 300), $3,550.00 is applied to assessed FTP penalty and $1,450.00 is applied to assessed interest. Because there is no FTP due on the RBA, only the amount applied to assessed interest is cross-referenced to MFT 31.

    • AMS history is documented showing payment application, e.g.., “$1,450 from pmt dtd 2-28-13 x-ref’d to MFT 31 for ass’d int.”

    Example:

    #2
    FTP is included in the restitution order
    The following payments are cross-referenced as follows:
    TC 670 05-15-2012 $10,000.00
    TC 670 01-15-2013 $2,500.00
    TC 670 03-05-2013 $5,000.00
    Date of Notice and Demand 12-31-2012

    TPH MFT 31 200312 MFT 30 200312

    TC 290 12-31-2012 $13,000.00
    TC 196 12-31-2012 $7,310.55
    TC 766 CRN 337 05-15-2012 $10,000.00
    TC 766 CRN 337 01-15-2013 $2,500.00
    TC 766 CRN 337 03-05-2013 $4,910.00

    TC 300 06-18-2012 $13,000.00
    TC 670 05-15-2012 $10,000.00
    TC 670 01-15-2013 $2,500.00
    TC 670 03-05-2013 $5,000.00
    TC 276 03-05-2013 $95.00
    TC 336 06-18-2012 $7,118.00
    TC 196 03-05-2013 $236.84
    • The payments dated 05-15-2012 and 01-15-2013 for a total amount of $12,500.00 are cross-referenced to MFT 31 to reduce the RBA (TC 290). $500.00 of the payment dated 03-05-2013 for $5,000.00 is applied to fully pay the RBA (TC 290). $95.00 of the payment is applied to the assessed FTP penalty (TC 276) and the remaining $4,405.00 is applied to the assessed interest (TC 336).

    • COMPAF is used to compute FTP for the amount of the unpaid RBA (TC 290) of $500.00 from the date of the assessment to the date of the payment that fully paid the liability. The liability is fully paid on 03-05-2013. FTP due for the RBA is $5.00.

    • DMI/ACT is used to compute the interest due on the RBA. Interest is computed from the due date of the return on which the RBA is based to the date of the payment. The due date of the return is 04-15-2004. The interest due for the RBA is $7,354.84. A TC 196 for $7,310.55 posted the same cycle as the RBA.

    • $4,910.00 of the payment dated 03-05-2013 for $5,000.00 is cross-referenced to fully pay the RBA amount of $500.00, the FTP penalty for $5.00, and $4,405.00 of the interest due. A TC 276 for $5.00 and a TC 196 for $236.84 will post to TPH MFT 31 when the cross-referenced payment posts. Do not apply more than the computed amount.

    • AMS history is documented showing payment application, e.g.., “x -ref'd $4,910.00 of MFT 30 3/5/13 payment for $5000.00 on 200312 to MFT 31: $500.00 RBA, $5.00 FTP, $4,405.00 interest.”

    Example:

    #3
    FTP included in the restitution order
    The following payments are cross-referenced as follows:
    TC 670 03-12-2012 $25,000.00
    TC 670 01-10-2013 $25,000.00
    TC 670 03-01-2013 $15,000.00
    Date of Notice and Demand 12-31-2012

    TPH MFT 31 200612 MFT 30 200612

    TC 290 12-31-2012 $56,000.00
    TC 196 12-31-2012 $15,212.89
    TC 766 CRN 337 03-12-2012 $25,000.00
    TC 766 CRN 337 01-10-2013 $25,000.00
    TC 766 CRN 337 03-01-2013 $13,964.00

    TC 300 06-18-2012 $56,000.00
    TC 336 06-18-2012 $15,585.59
    TC 670 03-12-2012 $25,000.00
    TC 670 01-10-2013 $25,000.00
    TC 670 03-01-2013 $15,000.00
    TC 360 10-12-2012 $106.00
    TC 276 03-01-2013 $990.00
    TC 196 03-01-2013 $886.74
    • The payments dated 03-12-2012 and 01-10-2013 for a total amount of $50,000.00 are cross-referenced to MFT 31 to reduce the RBA (TC 290). $6,000.00 of the payment dated 03-01-2013 for $15,000.00 is applied to fully pay the remaining amount of the duplicate RBA/Civil assessment. $106.00 of the payment is applied to pay the lien fee (TC 360), $990.00 is applied to the assessed FTP and the remaining $7,904.00 is applied to the assessed interest (TC 336).

    • COMPA is used to compute FTP for the amount of the unpaid RBA (TC 290) of $6,000.00 from the date of the assessment to the date of the payment that fully paid the liability. FTP due for the RBA is $60.00.

    • DMI/ACT is used to compute the interest due on the RBA. Interest is computed from the due date of the return on which the RBA is based to the date of the payment. The due date of the return is 04-15-2007. The interest due for the RBA is $16,472.33. A TC 336 for $15,585.59 posted the same cycle as the RBA.

    • $13,964.00 of the payment dated 03-01-2013 for $15,000.00 is cross-referenced to MFT 31. $6,000.00 of the payment is applied to the remaining RBA. Since the amount of FTP and interest assessed on the RBA are not the same as the amounts assessed on the Civil assessment, the amount cross-referenced is limited to what is actually paid. Therefore, $60.00 is applied to the assessed FTP and $7,904.00 is applied to interest. The amount applied to the lien fee (TC 360) is not cross-referenced; however, interest computed on the fee is considered as interest assessed on the duplicate assessment and is included when cross-referencing interest. A TC 276 and a TC 196 will post to TPH MFT 31 when the cross-referenced payment posts. Do not apply more than the computed amount.

    • AMS history is documented showing payment application, e.g.., “$13,964 from pmt dtd 3/1/13 x-ref’d to MFT 31 = $6,000 RA, $60 FTP, $7,904 int.”

    Example:

    #4
    This example illustrates an RBAl Assessment that is based on the unpaid portion of the taxpayers Form 941.
    The following payments are cross-referenced as follows:
    TC 650 02-10-2009 $2,500.00
    TC 650 03-10-2009 $2,500.00
    TC 670 02-10-2013 $5,000.00
    TC 670 04-10-2013 $2,500.00
    TC 670 06-10-2013 $2,500.00
    TC 670 08-10-2013 $2,500.00

    MFT 31 200903 MFT 01 200903

    TC 298 12-31-2012 $10,000.00
    TC 340 12-31-2012 $1,409.44
    COMP-INT-AMT> $11,409.44
    DB-CR-INT-TO-DT> 12312012

    TC 670 DPC 26 02-10-2013 $5,000.00
    TC 670 DPC 26 04-10-2013 $2,500.00
    TC 670 DPC 26 06-10-2013 $2,500.00
    TC 670 DPC 26 08-10-2013 $2,500.00
    TC 196 08-10-2013 $97.40

    TC 150 04-30-2009 $15,000.00
    TC 650 02-10-2009 $2,500.00
    TC 650 03-10-2009 $2,500.00
    TC 766 CRN 337 02-10-2013 $5,000.00
    TC 766 CRN 337 04-10-2013 $2,500.00
    TC 766 CRN 337 06-10-2013 $2,500.00
    TC 766 CRN 33708-10-2013 $1,506.84
    • The payments dated 02-10-2009 and 03-10-2009 posted on MFT 01 reduced the amount of the original tax TC 150. The payments were considered when the RBA was assessed, so they are not cross-referenced.

    • The payments dated 02-10-2013, 04-10-2013 and 06-10-2013 are applied to MFT 31 to fully pay the RBA (TC 298) and are cross-referenced to MFT 01 to pay the duplicate Civil assessment.

    • DMI/ACT is used to compute Interest on the Civil Assessment amount, MFT 01, from the due date of the return to the date of the payment that paid the interest. The due date of the return is 04-30-2009. The interest due for the Civil assessment is $1,506.84.

    • DMI/ACT is used to compute interest on the RBA (MFT 31) from the due date of the return, that is the basis for the assessment (Form 941) to the date of the payment that paid the interest. Interest due on the RBA is $1,506.84.

    • Additional interest (TC 196) for $97.40 will post to the RBA account.

      • Computed interest for MFT 01 to payment dated 08-10-2013= $1,506.84

      • Computed interest for MFT 31 to payment dated 08-10-2013= $1,506.84

      • TC 340 12-31-2012 = $1,409.44

      • TC 196 08-10-2013 = $97.40

      • Total interest = $1,506.84 computed to 08-10-2013

    Example:

    #5 This example illustrates a Civil Assessment that is based on the unpaid portion of the taxpayers Form 941. Interest is calculated on the BMF account from the return due date of January 31, 2008, to the date the module is fully paid. Interest assessed on the Restitution Assessment MFT 31 is manually computed on the unpaid balance of the account from the due date of the return which is the basis for the assessment to the 23C date and is posted with TC 340. Since interest will continue to accrue until the account is paid in full, additional interest is computed from the date of the TC 340 to the date of the interest payment.
    The following payments are cross-referenced as follows:
    TC 670 01-24-2012 $224,913.37
    TC 670 11-25-2013 $75,000.00

    MFT 31 200712 MFT 01 200712

    TC 298 11-25-2013 $224,913.37
    TC 340 11-25-2013 $57,782.75
    COMP-INT-AMT> $282,666.12
    DB-CR-INT-TO-DT> 11252013

    TC 766 CRN 337 01-24-2012 $224,913.37
    TC 670 DPC 26 11-25-2013 $75,000.00
    TC 341 11-25-2013 $12,763.76-

    TC150 01-09-2008 $224,913.37



    TC 670 01-24-2012 $224,913.37
    TC 766 CRN 337 11-25-2013 $45,018.99
    • The payment dated 11-25-2013 was posted to the MFT 31 module when the interest was computed for the RBA and is cross-referenced to MFT 01

    • The payment dated 01-24-2012 is crossed-referenced and fully pays the RBA (TC 298).

    • DMI/ACT is used to compute interest on the RBA (MFT 31) from the due date of the return that is the basis for the assessment (Form 941) to the date of the payment that paid the interest. Since the RBA was fully paid with a payment that pre-dates the assessment, the posted interest (TC 340) must be recalculated. The new amount of interest due on the RBA is $45,018.99. A restricted interest adjustment (TC 341) for $12,763.76 is required to decrease the previously assessed interest.

    • The overpayment is resolved in accordance with IRM 5.19.23.6, Resolving Overpayment Cases.

  15. Compute interest for RBA separately when more than one assessment has posted for the same tax period.

    Example:


    The following payments are cross-referenced as follows:
    TC 650 10-10-2007 $5,000.00
    TC 670 05-15-2012 $5,000.00
    TC 670 01-15-2013 $5,000.00
    TC 670 03-05-2013 $5,000.00
    TC 670 05-05-2013 $5,000.00
    TC 670 07-05-2013 $5,000.00
    TC 670 09-05-2013 $5,000.00

    MFT 30 200712 MFT 01 200712

    Return Due Date 04-15-2008
    TC 300 06-20-2011 $10,000.00
    TC 971 AC 184 points to MFT 31/200712 MMA = $10,000.00
    TC 766 CRN 337 05-15-2012 $5,000.00
    TC 766 CRN 337 01-15-2013 $5,000.00
    TC 766 CRN 337 09-05-2013 $2,014.90

    Return Due Date 01-31-2008
    TC 150 21-23-2007 $20,000.00
    TC 971 AC 184 points to MFT 31/200712 MMA = $15,000.00
    TC 650 10-10-2007 $5,000.00
    TC 766 CRN 337 03-05-2013 $5,000.00
    TC 766 CRN 337 05-05-2013 $5,000.00
    TC 766 CRN 337 07-05-2013 $5,000.00
    TC 766 CRN 337 09-05-2013 $2,985.10
    MFT 31 200712
    TC 290 05-15-2011 $10,000.00
    TC 340 05-15-2011 $1,456.72
    DB-CR-INT-TO-DT>05252011
    TC 298 05-25-2011 $15,000.00
    TC 340 05-25-2011 $2,426.20
    COMP-INT-AMT> $28,882.91
    DB-CR-INT-TO-DT> 05252011

    TC 971 AC 185 points to MFT 30/200712 MMA = $10,000.00
    TC 971 AC 185 points to MFT 02/200712 MMA = $15,000.00

    TC 670 DPC 26 05-15-2012 $5,000.00
    TC 670 DPC 26 01-15-2013 $5,000.00
    TC 670 DPC 26 03-05-2013 $5,000.00
    TC 670 DPC 26 05-05-2013 $5,000.00
    TC 670 DPC 26 07-05-2013 $5,000.00
    TC 670 DPC 26 09-05-2013 $5,000.00
    TC 196 09-05-2013 $1,117.08
    • The payment dated 10-10-2007 is applied to MFT 01 to reduce the amount of the original TC 150 and is not cross-referenced.

    • The payments dated 05-15-2012 and 01-15-2013 are applied to MFT 31 to full pay the RBA with the IMF underlying tax liability (TC 290) and are cross-referenced to MFT 30 to fully pay the duplicate Civil Assessment.

    • The payments dated 03-05-2013, 05-05-2013, and 07-05-2013 are applied to MFT 31 to fully pay the RBA with the BMF underlying tax liability (TC 298) and are cross-referenced to MFT 01 to fully pay the duplicate Civil Assessment.

    • The payment date 09-05-2013 is applied to MFT 31 to pay interest. Interest is computed on the IMF Civil Assessment, MFT 30, from the due date of the return to the date of the payment. The amount of interest computed for this assessment is $2,014.90.

    • Interest is computed on the BMF Civil Assessment, MFT 01, from the due date of the return to the date of the payment. The amount of interest computed for this assessment is $3,574.05.

    • Interest is computed on the RBA for the IMF underlying tax liability (TC 290) from the due date of the return that is the basis for the assessment, MFT 30, to the date of the payment. The amount of interest computed for this assessment is $2,014.90.

    • Interest is computed on the RBA for the BMF underlying tax liability (TC 298) from the due date of the return that is the basis for the assessment, MFT 01, to the date of the payment. The amount of interest computed for this assessment is $3,574.05.

    • Since a portion of the 09-05-2013 payment was already allocated to pay interest on the IMF Civil Assessment, the amount available to cross-reference to the MFT 01 is $2,985.10.

    • Additional interest of $1,117.08 will post to MFT 31 as a TC 196.

      • Interest computed on MFT 30 to 09-05-2013 = $2,014.90

      • Interest computed on MFT 01 to 09-05-2013 = $3,574.05

      • Interest computed on MFT 31 to 09-05-2013 = $5,588.95

    Note:

    When there are multiple assessments on one tax period, each assessment will include its own interest amount and each interest amount should be included in the running module computation. This is to ensure that the last interest adjustment amount will not be overstated.

    Note:

    If the case involves an IMF related adjustment and multiple BMF related adjustments, each interest amount prior to the non-restricting TC 340 should apply only to its associated assessment. The interest accruals on the original IMF related adjustment (which posts two cycles prior to the final 23c date) should not be added into the interest computation until the final non-restricting TC 340 interest amount is calculated.

    Be sure that:

    • the COMP-INT-AMT of the non-restricting TC 340 includes all unpaid assessments and interest accruals, including the TC 290.

    • any applicable interest suspension not previously considered, such as the interest-free period per Rev. Rul. 99-40 with the TC 290 should be included in the non-restricting TC 340 interest computation.

    Exception:

    For BMF assessments when multiple MFT 31s are assessed with the exact same tax liability including dates, payments or assessments that would affect interest computation, only the module with the posted TC 971 AC 189 (lead co-defendant) will be used to compute the interest for all related BMF modules.

    Example:

    To compute the interest on the lead co-defendant’s MFT 31 with multiple assessments,
    1) Compute each assessment separately using DMI/ACT making sure to include all posted and/or pending interest adjustments.
    2) Add all computed interest amounts together to get the amount of total interest due on the module to the 23c date.
    3) Add all interest adjustment fields (from DMI/ACT) together.
    4) To get the new module balance add the total amount of adjustments to the module balance.

    To figure the interest adjustment for other linked MFT31’s with the EXACT same assessments,
    1) Take the amount of the interest computed for the lead co-defendant MFT 31 and add the amount of interest posted and pending on the linked MFT 31 .
    2) Subtract the amount of computed interest from the amount of posted/pending interest.
    3) To get the new module balance add the module balance to the interest adjustment.
    Both module (lead co-defendant and linked MFT31) balances should be the same.

    Reminder:

    When updating interest on any module, verify that all previously posted and accrued interest computations are accounted for and are correct.

  16. Restricted interest on the MFT 31 must be updated. If the interest is restricted due to an interest-free period, make sure that the suspension amount is not more than the original refund or credit elect.

    Example:

    MFT 30 has refund without interest of $2,500 and the RBA is $6,200. Only $2,500 is entitled to the interest-free period.

  17. For all MFT’s, any assessment (TC 29X or TC 30X) that includes a hold code preventing a systemic notice to the taxpayer also prevents any accrued failure to pay penalty and accrued interest from posting to the account. Do not use a hold code when adjusting RBA accounts.

    Note:

    For cases with multiple assessments, input all but the last adjustment with a hold code. Interest and/or failure to pay penalty will compute to the final adjustment that posts without the hold code.

     

  18. Do not calculate interest and input a TC 340 unless you are cross-referencing interest.

    Exception:

    You must calculate interest and input a TC 340 when cross-referencing a payment that pre-dates an existing TC 340 in order to prevent an -I Freeze.

  19. For more information on interest computations on RBA’s see IRM 20.2.11.13.1, Interest Computations on RBA’s.

  20. Always input a history item into AMS to document all actions taken and the specifics of the payment application.

Interest-Free Periods

  1. Revenue Ruling 99-40 and Credit-Elects. Restitution-based assessments are entitled to the interest-free periods governed by Rev. Rul. 99-40 when it applies. Under Rev. Rul. 99-40, debit interest is suspended for the amount of any refund on an overpayment from the due date of the return to the date the refund was issued without interest. Revenue Ruling 99-40 will cause underpayment interest on a subsequent assessment to be suspended when an earlier overpayment on the module was applied to a succeeding tax period as a credit elect and /or refunded without credit interest. The interest-free period for credit elects is decided by what quarter the overpayment is needed in the subsequent year. Master File is able to determine and compute the Rev. Rul. 99-40 suspension period for most tax modules, except the interest-free period attributable to credit elects (i.e., May/Sequa). The application of any Rev. Rul. 99-40 suspension period to an MFT 31 module must be determined and computed manually. . See IRM 20.2.5.7, Revenue Ruling 99-40 (Modifies and Supersedes Revenue Ruling 88-98) Use of Money, and IRM 20.2.11.13.1, Interest Computation on RBA’s, for more information.

    Example:

    #1
    The taxpayer was assessed an RBA for $10,000 on his MFT 31 account for tax period 200912. The basis for the RBA is the taxpayer's Individual Income Tax return for 200912 for which a refund for $6,000 was issued on 5/17/2010. Since the refund was issued within 45 days of the return due date, the T/P did not receive any credit interest. Because the refund was issued after the due date of the return, the start date for debit interest for the amount of the refund, $6,000, is the date of the refund, 5/17/2010. The start date for debit interest for the remaining $4,000 is the return due date of 4/15/2010. $6,000 of the RBA is subject to the interest-free period from 4/15/2010 to 5/17/2010.

    Note:

    Prior assessments on the related MFT 30 tax module that are not related to the RBA need to be considered when determining if Rev. Rul. 99-40 applies. For example, If there is a subsequent assessment of $1,000 on the MFT 30 that is not related to the RBA, then this amount reduces the Rev. Rul. 99-40 benefit. In other words, only $5,000 ($6,000 - $1,000) would get the interest-free period from 4/15/2010 to 5/17/2010. A prior assessment on the 1040 module also needs to be considered when the taxpayer has elected to apply his overpayment to the succeeding year's estimated taxes (credit elect), instead of receiving a refund.

    Reminder:

    If the taxpayer elected to have the overpayment applied to the subsequent year, instead of receiving a refund (TC 830/836), then the subsequent year also needs to be reviewed to see what quarter the credit elect was needed. See IRM 20.2.5.7.2 , Rev. Rul. 99-40 and Credit Elects (May/Sequa).

    Example:

    #2
    The taxpayer was assessed an RBA for $50,000 on his MFT 31 account for tax period 200612. The basis for the RBA is the taxpayer's Corporate Tax return for 200612 for which a refund for $40,000 was issued on 4/20/2007. Since the refund was issued within 45 days of the return due date, the T/P did not receive any credit interest. Because the refund was issued after the due date of the return, the start date for debit interest for the amount of the refund, $40,000, is the date of the refund, 4/20/2007. The start date for debit interest for the remaining $10,000 is the return due date of 3/15/2007. $40,000 of the RBA is subject to the interest-free period from 3/15/2007 to 4/20/2007.

    Note:

    Prior assessments on the related MFT 02 tax module, that are not related to the RBA need to be considered when determining if Rev. Rul. 99-40 applies. Using the same facts in the prior paragraph, if a non-RBA assessment of $2,000 was previously assessed on the corporate account, the interest start date for the RBA of $50,000 would be 4/20 for $38,000 and 3/15 for the difference of $12,000.

    Reminder:

    If the taxpayer elected to have the overpayment applied to the subsequent year, instead of receiving a refund (TC 830/836), then the subsequent year must be reviewed to determine what quarter the credit elect was needed. This only applies to Form 1040, and Form 1120 returns. See IRM 20.2.5.7.2 , Rev. Rul. 99-40 and Credit Elects (May/Sequa). Prior assessments on the 1040 or 1120 modules also need to be considered when there is a credit elect. Make sure the benefit is not given twice.

    Note:

    There is a May/Sequa spreadsheet on the Appeals Share Point site that can be used to determine what quarter the credit elect was needed, unless it was annualized, then the actual Form 2210 or 2220 will need to be obtained. To access the “SEQUA” spreadsheet go to https://organization.ds.irsnet.gov/sites/AppealsSEPR/TS/Lists/TCSSpread/AllItems.aspx,under Corporate.

    Example:

    #3
    TC 836 for $120,000 is posted on 200712. The credit elect was not needed until the second quarter 6/15. The non-RBA tax previously assessed was $166,000. The RBA on MFT 31 is $40,000. The interest suspension benefit to 6/15 was already used on the $166,000, so there will not be any suspension needed on the MFT 31 module.

  2. If Rev.Rul. 99-40 has been considered, even if it is determined that Rev. Rul. 99-40 does not apply, Transaction Code (TC) 971 Action Code (AC) 653 is required to be input on IDRS. See IRM 20.2.5.7.2(5), Revenue Ruling 99-40 and Credit Elects (May/Sequa).

  3. Special Rules Applicable to Certain Employment Taxes-IRC 6205 Employment returns may be entitled to an interest-free period on a tax adjustment if the TC 308 indicates an additional tax assessment by Examination or Appeals with Interest Computation Date other than the return due date. If the restitution assessment is based on the TC 308 Examination Audit Adjustment, it will get the same consideration. See IRM 4.5.3.22.3, Special Rules Applicable to Certain Employment Taxes - IRC 6205 Interest Free Adjustments.

    Note:

    This special rule only applies to the tax, not the penalties

  4. 870 Waiver Interest Suspension Periods

    A waiver of appeal rights is signed by a taxpayer when the taxpayer agrees to an Examination assessment. Because this waiver is most often signed on Form 870, it is often referred to as an 870 waiver. Pursuant to IRC 6601(c) , if an assessment is not made and a bill (notice and demand for payment) is not issued within 30 days after a Form 870 waiver is received, interest will not be computed on the deficiency (or on the interest on the deficiency) for the period beginning on the 31st day after the waiver date and ending on the assessment date (23C date). See IRM 20.2.7.8, IRC 6601(c), Suspension of Interest on Deficiencies.
    The suspended interest period applies to the tax, penalties, and interest related to the TC 300 assessment. Credits and credit reversals that are part of the Revenue Agent Report will also be included.
    The 870 waiver date is displayed on TXMODA with the posted TC 300.
    The suspended interest period:

    • begins on the 31st date after the 870-DT

    • ends on the 23C date of the assessment

    Interest will not be charged on tax, penalties, or interest associated with this assessment during the period between these dates.

    Note:

    DMI/ACT must be used to compute interest when the 870 waiver date is present and the account is restricted. If there is more than one waiver suspension period, interest will need to be manually computed. A non-restricting TC 340 can be used. If the account is not restricted, CC INTST can be used.

    Caution:

    The restitution assessment is not entitled to a waiver suspension.

  5. IRC 7508 prescribes a period of time to be disregarded when computing interest for individuals who serve in a Combat Zone (CZ). The period of time disregarded because of service in a CZ starts when an individual enters the CZ and ends 180 days after release from the CZ. See IRM 20.2.7.9, IRC 7508, Combat Zone. A CZ account is identified by the following:

    • The COMBAT-ZONE field with an indicator of 1 or 2 on the account entity (CC ENMOD / IMFOLE). A "1" indicates the taxpayer is currently serving in a combat zone, and a "2" means the taxpayer is no longer serving in a combat zone.

    • TC 500 with any of these closing codes (Closing Codes 52/53, 54/55, 56/57) on the entity (CC ENMOD).

    • If applicable, the literal COMBAT ZONE would show on the transcript (CC TXMODA); or

    • A Master File (MF) Freeze Code -C on the transcript (CC TXMODA and CC IMFOLT).

    The transaction date of the TC 500 with a Closing Code of 52, 54, or 56 identifies the date the taxpayer enters a CZ, and the transaction date of the TC 500 with a Closing Code of 53, 55, or 57 identifies the date the taxpayer exits a CZ.
    The Master File and IDRS programs can correctly compute and suspend interest (and penalties) on combat zone (CZ) accounts if there is one CZ period, or in the case of multiple CZ periods, if the second CZ entry date is more than 6 months from the previous CZ exit date. For example:
    Multiple CZ periods with more than 6 months between tours:
    TC 500 04-29-2006 CC 52, TC 500 12-10-2006 CC 53
    TC 500 10-08-2007 CC 56, TC 500 06-08-2008 CC 57

    However, where there are multiple in and out CZ periods and the previous CZ exit date is within 6 months of the next CZ entry date, Master File and IDRS cannot correctly compute interest. Therefore, interest must be manually computed and restricted. For information on the use of TC 34X, refer to IRM 20.2.5, Restricted Interest. In this instance, where the in / out CZ tours are within 6 months, the CZ period is considered as one continuous period starting from the first CZ entry date up through the last CZ exit date.
    Multiple CZ periods within 6 months of each tour:
    TC 500 04-29-2006 CC 52, TC 500 12-10-2006 CC 53
    TC 500 05-31-2007 CC 56, TC 500 06-08-2008 CC 57
    Suspend interest in this example from 04-29-2006 up thru 06-08-2008 plus 180 days.

  6. IRC 7508A prescribes a period of time to be disregarded when computing interest for individuals who are affected by a presidentially declared disaster area.

    • For disasters declared after 12-31-1997 and before 09-11-2001, where the IRS granted an extension of time to file ( IRC 6081) and an extension of time to pay ( IRC 6161) for a taxpayer located in a Presidentially declared disaster area, IRC 6404(h) authorizes the abatement of interest and penalties during the declared disaster period plus the time covered under the extension to file and the extension to pay.

    • For disasters declared on or after 09-11-2001 , IRC 7508A authorizes the IRS to disregard (exclude) a period of up to one year when determining the interest liability for a taxpayer affected by a Presidentially declared disaster. After each Presidentially declared disaster, the IRS issues guidance detailing the type of relief given, the period of time relief is granted, and details of those individuals eligible for the disaster relief. Most individuals "affected" by a declared disaster are systemically identified with a Transaction Code (TC) 971 and an Action Code (AC) 086, 087, or 688. A few may have to self-identify before the TC 971 AC 086, 087, or 688 can be entered onto their account.

      Caution:

      When adjusting a module where the disaster indicator was manually input, verify the disaster number (FEMA number) and the effective dates of the particular disaster before adjusting the interest.

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    See IRM 20.2.7.11, IRC 7508A, Presidentially Declared Disaster or Terroristic or Military Actions, for more information.

  7. For RPP cases, if the preparer was in a disaster, then the clients are also entitled to the disaster suspension.

Within Module Interest Netting Revenue Procedure (Rev. Proc). 94-60

  1. Rev. Proc. 94-60 provides rules on calculating debit interest when a taxpayer has previously received a refund (overpayment) with credit interest for the same tax year in which a deficiency is later determined. During the period interest was payable on an overpayment, interest will be charged at the same rate on the portion of the underpayment (including accrued interest) that does not exceed the refund or offset principal. Because interest rates were equalized for non-corporate taxpayers for interest periods beginning on or after January 1, 1999, no interest netting adjustment is required to achieve interest rate equalization for non-corporate taxpayers. Currently the back-off is 18 days. Prior to 01-01-2012, the back-off was 13 days.

    Example:

    #1
    The taxpayer was assessed an RBA for $15,000 on his MFT 31 account for tax period 199612. A refund for $4,066 (credit interest of $66) was issued from his 199612 Individual Income Tax return on 7/12/1997. Because the refund was issued with interest, debit interest at the credit interest rate will be computed during the overlapping period from 4/15/1997 to 6/29/1997 (7/12/1997 less the 13-day back-off) on $4,000. A debit interest free period on the $4,066 refund will be from 6/29/1997 to 7/12/1997. The previous credit interest of $66 being netted will need to be included in the debit interest assessment. Since TC 772 cannot be input on MFT 31, the $66 will be added to the debit interest.
    The start date for debit interest for the remaining $11,000 is the return due date of 4/15/1997.

    Example:

    #2
    The taxpayer was assessed an RBA for $25,000 on his MFT 31 account for tax period 201212. A refund for $9,125 (credit interest of $125) was issued from his 201212 Individual Income Tax return on 6/30/2013. Because the refund was issued with interest, debit interest at the credit interest rate will be computed during the overlapping period from 4/15/2013 to 6/12/2013 (6/30/2013 less the 18 day back-off) on $9,000. The interest-free period from 6/12/2013 to 6/30/2013 will need to be suspended on the $9,125 refund. The credit interest of $125 will need to be included in the debit interest assessment.
    The start date for debit interest for the remaining $16,000 is the return due date of 4/15/2013.

    Note:

    DMI/ACT must be used to compute interest when within module interest netting is required. See IRM 20.2.14.4, Within Module Interest Netting under Revenue Procedure 97-60.
    When within module netting is involved, then the easiest way to compute the interest is to import on DMI/ACT the related IMF or BMF module and add the appropriate assessment and any credits or payments to that account. Process the interest to the earlier of the full paid date or 23C date. Add the Deficiency Interest Adjustment and the Overpayment Interest Adjustment lines together for the TC 340 input. The total amount owed for the non-restricting TC 340 will be the balance due on the MFT 31 account, including the interest. If the criminal restitution has already been assessed Civilly, then those amounts would not be included twice.

    Caution:

    For 2006 and some FYE 2007 tax periods, a TC 766 CRN 253 will be posted on the module for the Telephone Excise Tax Refund (TETR) credit. A TC 776 right below the TC 766 will show RDD. This is considered part of the credit and the “O” on DMI/ACT should be unchecked.

Interest on Penalties

  1. With certain exceptions, as shown below, penalties (including penalties referred to as “additions to tax”) are due on the date of notice and demand [IRC 6601(e)(2)(A)], which is the assessment date or “23C” Date. Therefore, interest assessed on these penalties is computed from their assessment date. See IRM 20.2.5.3, Interest on Penalties and Additions to Tax, for more information on computing interest on penalties.

    For the following penalties, interest starts on the assessment date or 23C date and continues until paid.
    IRC Code Section Transaction Code Description of Penalty
    6654 – Individuals, Estates, Trusts 17X Failure to Pay Estimated Tax
    6655 – Corps. 17X Failure to Pay Estimated Tax
    6656(a) 18X Failure to Make Timely Deposit (MFT 31 will show TC 240 PRN 721)
    6651(a)(2) 27X Failure to Pay Tax on a Return
    6651(a)(3) 27X Failure to Pay Tax – Subsequent Assessment
    6652(b) 31X Failure to Report Tip Income
    Various 24X Miscellaneous Civil Penalties – (No PRNor other than those listed below)
    6698 16X Failure to File Partnership Return
    6699 16X Failure to File S-Corp. Return

    For the following penalties, interest starts from the later of the return due date or the extended due date and continues until paid.

    IRC Code Section Transaction Code Description of Penalty
    6651(a)(1) 16X Failure to File
    6651(f) 24X Fraudulent Failure to File (PRN 635 or 686)
    6662 24X Accuracy Related (PRN 680)
    6662A 24X Accuracy Related to Reportable Transactions (PRN 681)
    6663 32X Fraud
  2. Underpayment interest for a RBA that is based on a TFRP assessment, MFT 55, is charged from the 23C Date of the TC 240, PRN 618, until the account is fully paid.

  3. When computing interest on a TC 240 PRN 721, which is the FTD penalty for RBA cases, the interest start date is the 23C date and not the return due date. Do not include the interest computation on the FTD penalty for RBA cases until the assessment has posted.

  4. IDRS does not recognize extension dates for the computation of interest on MFT 31 tax modules. Therefore, manual computation of interest for duplicate assessments is necessary when these conditions are present on the duplicate account.

    Exception:

    In lieu of a manual computation and to avoid the restriction of interest on the module, a TC 460 can be input with the extension due date using CC REQ77.

    Note:

    Interest starts on civil penalties from the 23C date, while interest on return related penalties, such as accuracy-related and fraud penalties start on the return due date or extended due date. This includes the fraud penalties assessed on MFT 31. If the related return had a legitimate extension, then interest would start on the extended due date. For more information see IRM 20.2.5.3, Interest on Penalties and Additions to Tax.

  5. When computing Interest on Penalties on BMF assessments, refer to IRM 20.2.5.3, Interest on Penalties and Additions to Tax, for exceptions to the computation dates for specific returns.

Resolving Overpayment Cases

  1. Determine what created the credit balance on the RBA module or a module associated (generally linked) to a RBA module.

  2. If the overpayment is the result of payments or credits posted to a module where TC 971 AC 18X is present, and the associated assessment is not pending or posted but a history item "3870/RECVD" is recorded on CC TXMOD 30 or more days from the present date:

    1. Input TC 570 to prevent payments from refunding.

    2. Contact Memphis Centralized Case Processing (CCP) to verify Form 3870 for the missing assessment has been received and request it to be sent to CCO RBA. CCP RBA contact names can be found at the SBSE Centralized Case Processing web site located at http://mysbse.web.irs.gov/examination/cp/cont/21759.aspx

    3. Control the case on IDRS and monitor the account for 10 business days.

    4. When Form 3870 is received, process in accordance with IRM 5.19.23.9, Processing Adjustments to Restitution-Based Assessments.

    5. If no response is received within 10 business days, elevate to local management.

  3. If the overpayment is the result of payments or credits posted to a module where TC 971 AC 18X is present, and the associated assessment is not pending or posted and a history item "3870/RECVD" is not recorded on CC TXMOD:

    1. Input TC 570 to prevent payments from refunding.

    2. Send a secure e-mail to *SBSE TECH Svs Criminal Restitution and request Form 3870 for the missing assessment.

    3. Control the case on IDRS and monitor the account for 10 business days.

    4. When Form 3870 is received, process in accordance with IRM 5.19.23.9, Processing Adjustments to Restitution-Based Assessments.

    5. If no response is received within 10 business days, elevate to local management.

  4. If the overpayment is the result of payments or credits posted to a module where TC 971 AC 102 is present and the associated TC 971 AC 18X or restitution assessment is not pending or posted, follow procedures in, see IRM 5.19.23.2.6, to secure Form(s) 3177 and Form 3870

  5. When the amount collected exceeds the RBA including accruals, the taxpayer whose payment created the excess should receive a refund of the overpayment.

    1. Verify that all cross-referenced payments are accurate

    2. Reverse any incorrect TC 766 CRN 337 RC 150 PC 9 with TC 767 CRN 337

    3. Verify that the credit is refundable per IRM 25.6.1.10.2, Erroneous Abatement.

    4. If the credit is refundable, resolve as instructed in, see IRM 5.19.23.6, below.

    Note:

    TC 766 CRN 337 is not a refundable credit. See IRM 21.4.5, Erroneous Refunds, for more information .

  6. When cross-referencing a payment results in a credit balance:

    1. Validate the credit and/or amount to be refunded or offset. Caution must be taken to ensure the TC 766 CRN 337 is not refunded.

    2. Verify that the Refund Statute Expiration Date (RSED) has not expired per IRM 21.4.4.3.1, Refund Statute Expiration Date. If the RSED has not expired then take the following actions:

    1. Research IDRS for other outstanding liabilities including NMF on that TIN.

    2. Use IDRS CC ADD 24 to transfer credit to the outstanding liability with the earliest CSED.

      Note:

      If the credit is due to a payment posted with a DPC 26, transfer the credit to the outstanding liability on a RBA assessment (generally a MFT 31) account with the earliest CSED. If all MFT 31 accounts are fully paid, transfer credit to the outstanding liability with the earliest CSED.

    3. If the credit is transferred to a tax period where a duplicate RBA exists:

    If ... Then ...
    The transferred credit does not overpay the RBA, and/or interest Cross-reference the credit to related account(s) with the duplicate Restitution-Based Assessment. See Example 1 below.
    The transferred credit overpays the RBA and/or interest Cross-reference the credit up to the amount owed, to the related accounts with the duplicate RBA.
    Follow the procedures in IRM 5.19.23.6(2), above and transfer the remaining credit. See example 2 below.

    Note:

    Do not wait for the credit transfer to post. Perform all cross-reference actions immediately.

    Example:

    #1

    The taxpayer received a refund offset payment, TC 706 dated 04-15-2010. The offset payment fully paid the remaining module balance and resulted in a $400.00 overpayment from a previously posted TC 670 payment dated 06-15-2011. The $400.00 overpayment was transferred to another MFT 31 account with a RBA balance of $14,500.00 and was cross-referenced to all related accounts.

    Example:

    #2

    An earlier dated TC 706 refund offset caused an overpayment of $3,000.00 on MFT 30 for tax period 200812. Research of IDRS identified a balance due amount of $800.00 on 200912, $4,300.00 on 201012 and $15,000.00 on 201112 MFT 30 tax modules. After calculating the additional interest owed, $950.00 is transferred to tax period 200912 and cross-referenced to the duplicate RBA. The remaining $2,050.00 is transferred to 201012. There is no duplicate assessment for this period, so the payment is not cross-referenced.

  7. Send Letter 672C to notify the taxpayer whenever a payment is transferred.

  8. If there is no additional liability and the credit can be refunded, monitor the account until the payment or credit transaction posts and release any hold code or TC 570 with TC 571. Continue to monitor the account and if a systemic refund does not generate within 14 days, initiate a manual refund. See IRM 21.4.4, Manual Refunds, for instructions on completing a manual refund.

  9. If the RSED has expired, all liabilities are satisfied, and there are no hold codes or freeze codes on the non-RBA (generally MFT 31) account, transfer the credit(s) to the appropriate Excess Collection file following the procedures below. If a hold code or freeze code is present, leave the credit on the module.

    • Use Form 8758, Excess Collection File Addition. Follow IRM 3.17.220.2.1.1, Preparation of Form 8758, Form 8758.

    • Attach the IDRS prints to the Form 8758, Excess Collection File Addition.

    • Input a history item to AMS to indicate the actions taken. (Credit to XSF via Form 8758).

    Note:

    RBA assessments are the result of court ordered restitution and IRS does not abate court ordered restitution. The only time it would be abated would be due to an IRS error. As a result, any RSED payments would then be available for transfer to other balance due accounts or refund.

    Note:

    Accounting applies court collected payments to the earliest RBA tax period with a balance due. Subsequent account reconciliation and payment cross-referencing may impact the tax period balances. If this occurs, any RSED payments on these accounts may be considered “misapplied” and can be moved to other balance due modules or refunded.

    Exception:

    Overpaid credits received prior to the RBA assessment date will be deemed expired if not refunded or offset within 2 years of the RBA assessment.

  10. IRC Section 6603(c) provides that the Service will return to the taxpayer any amount of deposit that the taxpayer request in writing be returned unless the amount has previously been used to pay tax. When the IRC Section 6603 deposit is used to pay tax, it is converted into a payment of tax on the date the payment of tax is paid. The 2-year statute for deposit under IRC 6603 is the date it converts to a payment of tax. The portion of the 6603 deposit not converted to a payment of tax has no statute.

    Example:

    When a TC 640 creates an overpayment and that overpayment from a subsequent year is applied to a civil assessment that has a duplicate assessment to a RBA that will result in an overpayment refund from the RBA account, the TC 640 is considered a payment of tax under IRC 6603.

    See IRM 25.6.1.10.2.12.7, Deposit Made Under IRC Section 6603, for more information.

  11. While tax assessments for the years related to a RBA assessment may be eligible for bankruptcy filing, RBA assessments are not. If an overpayment involves a case identified as a bankruptcy (freeze code -V, -W, and TC 520 with closing code 60 - 67, 81, 83 - 85), access the Automated Insolvency System (AIS) to obtain the appropriate phone and/or address information of the Centralized Insolvency Operation (CIO) or Field Insolvency employee assigned to the case. Inquire about a possible update to the Proof of Claim, and if the credit can be moved to another balance due module or be refunded. Control and monitor the case. Review AIS history for current closing activity 90 days following the initial contact with CIO/Field Insolvency. Follow up with CIO/Field Insolvency every 90 days until the credit balance is resolved or until AIS history indicates current closing activity. If action is in process, document AMS with the AIS history information and close the case. Input a history item on AMS during all initial and follow-up actions to document that CIO/Field Insolvency was contacted and notate any instructions and/or information provided.

  12. If the overpayment involves a case with a freeze code -V or -W that is other than TC 520 with closing code 60 - 67, 81, 83 - 85, control the case and monitor it every 90 days until the TC 520 is reversed. Once the TC 520 is reversed, resolve any remaining credit balance as instructed in, see IRM 5.19.23.6(2), above.

  13. Document all initial and follow-up actions on AMS history.

Trust Fund Recovery Program

  1. Before transferring credits or adjusting a Civil penalty module (MFT 55) with a posted TC 240 RC 618 contact the TFRP Liaison listed in the SERP Who/Where tab http://serp.enterprise.irs.gov/serphome/who.htm.

  2. A TC 538 posting to a BMF module will generate a RESTPAYT Transcript. Upon receipt of a RESTPAYT transcript, review the BMF tax module to see if there is an associated TFRP assessment. Indicators of this would include:

    • Pending or posted TC 971 AC 093

    • Pending or posted TC 538 credit

  3. If the conditions in paragraph (2) above are present and there is a pending or posted TC 538, then:

    1. review the AMS history information on the BMF account for documentation of payment application.
      Sample AMS history documentation may include:
      TC 538 dated 06/15/2012 $100,000.00 from (SSN) 55/200709 for tax.
      TC 538 dated 07/30/2012 $502.93 from (SSN) 55/200709 for interest

      Note:

      The procedures for RBA and TFRP are similar, in that payments must be posted to reflect the originating payment application; for example; tax to tax, interest to interest, etc. See IRM 5.19.23.3.2(8). Unlike RBA, when applying a single payment to TFRP tax and interest, the payment is split and is cross -referenced as separate TC 538s.

    2. If payment application is documented, apply the payments/credits as shown in Example 1 below. The posted TC 971 AC 093 and TC 538 are indicators that there is a TFRP assessment.

      Example:

      #1

      MFT 31 200709 MFT 01 200709
      TC 290 11-25-2013 $242,862.50 TC 150 03-03-2008 $ 242,862.50
      TC 340 11-25-2013 $68,308.73  
         
      TC 971/185 linked to MFT 01 MMA $242,862.50 TC 971/184 linked to MFT 31 MMA $242,862.50
        TC 971/093 linked to MFT 55 MMA $0.00
         
      TC 766/337 01-24-2012 $142,862.50 TC 670 01-24-2012 $142,862.50
      TC 766/337 06-15-2012 $100,000.00 TC 538 06-15-2012 $100,000.00
      TC 766/337 07-30-2012 $502.93 TC 538 07-30-2012 $502.93

      The duplicate amount of the RBA is equal to the TC 150. The TC 670 dated 01-24-2012 has been cross-referenced to the MFT 31. AMS history shows the TC 538 for $100,000.00 is applied to tax, therefore, it is cross-referenced to the MFT 31 with a TC 766 CRN 337. AMS history shows the TC 538 for $502.93 is applied to interest, and therefore, is cross -referenced to MFT 31 with a TC 766/337 for interest.

      Caution:

      When a TC 538 is paying interest, and the related RBA assessment is not full paid, you must compute and restrict the interest amount that is cross-referenced. See IRM 5.19.23.5,

    3. If payment application is not documented, review CC ENMOD of the BMF account to determine the corporate entity state and then identify and contact the appropriate Campus TFRP Liaison using the CCO TFRP Liaison table located on the http://serp.enterprise.irs.gov/serphome/who.htm tab for payment application information.

      Note:

      If TFRP indicator (TC 971 AC 093) is posted and the CSED is expired or the account balance is written-off, check AMS for TFRP documentation. If AMS is not documented, you must contact TFRP. They will determine if a Related Responsible Party (RRP) payment dated after the TC 608 / TC 604 would have been cross-referenced to the business if the collection statute was still active. If so, that credit is available as a possible cross-reference to the RBA account.

  4. If the conditions in paragraph (2) above are present and there is no pending or posted TC 538 work the case following normal IRM procedures. The posted TC 971 AC 093 is an indicator that there is a TFRP assessment. See Example 2 below.

    Example:

    #2

    MFT 31 200709 MFT 01 200709
    TC 290 11-25-2013 $37,619.20 TC 150 11-19-2007 $155,070.30
    TC 340 11-25-2013 $9,503.60  
       
    TC 971/185 linked to MFT 01 MMA $37,619.20 TC 971/184 linked to MFT 31 MMA $37,619.20
       
      TC 971/093 linked to MFT 55 MMA $37,619.20
       
    TC 670 01-24-2012 $28,346.20 TC 650 07-05-2007 $36,279.49
    TC 670 01-30-2012 $9,273.00 TC 650 08-31-2007 $45,524.86
      TC 650 10-30-2007 $35,646.75

    The duplicate amount of the RBA is $37,619.20. The TC 650 payments posted to the MFT 01 had already been considered when the RBA was assessed, so they are not cross-referenced to MFT 31. The two TC 670 payments posted to MFT 31 fully pay the duplicate amount of the assessments. A TC 766/337 dated 01-24-2012 for $28,346.20 and a TC 766/337 dated 01-30-2012 for $9,273.00 will be cross-referenced to the MFT 01 account.

  5. Always record the AMS history for the IMF and the BMF accounts with all cross-reference information, including;

    • Transaction code(s)

    • Payment date(s)

    • Payment amount(s)

    • Originating TIN, MFT and tax period

    • Cross-referenced TIN, MFT and tax period

    • Application of payment(s) (i.e., Tax, Penalty, Interest)

    For example: TC 670 (for IMF documentation); or TC 766/337 (for BMF documentation) dated 01-24-2012 $28,346.20 and TC 670 (for IMF documentation); or TC 766/337 (for BMF documentation) dated 01-30-2012 $9,273.00 from (SSN) 31/200709 for tax.

Processing Restitution-Based Assessment Correspondence and Forms 4442

  1. When a Restitution-Based Assessment (RBA) or Civil Tax is assessed, a Notice and Demand Letter is issued. The Notice and Demand letter informs the taxpayer of the amount due for unpaid taxes and associated interest resulting from RBA and/or Civil Tax Assessments, for all tax periods assessed up to the date of the notice.

  2. The Form 4442, Inquiry Referral is used when a taxpayer's inquiry cannot be resolved during initial contact with the IRS. The initial contact may be received in person, or by telephone. Control Forms 4442 received in CCO as taxpayer correspondence.

  3. Taxpayer inquiries received in CCO must be controlled within 14 days from the IRS received date or 3 business days from the Operation received date. When a final response cannot be initiated within 30 days, an interim response will be initiated by the 30th calendar day from the IRS received date. If correspondence is received from a previous area after the 30 days expires and no interim letter was issued, an interim letter must be sent within five business days of receipt. Subsequent interim letters may be required if you are unable to respond as promised, see IRM 21.3.3.4.2.2 , Interim Responses. Follow all other IDRS control procedures in IRM 21.3.3.4.2.2, Interim Responses.

    Caution:

    The Potentially Dangerous Taxpayer (PDT) and Caution Upon Contact (CAU) system identifies taxpayers who may pose a threat to the safety of IRS employees whose official duties require personal contact with taxpayers. Once a taxpayer is identified as potentially dangerous, a PDT indicator represented by symbol *PDT* is displayed on IDRS and *CAU* will be displayed to inform IRS employees to exercise caution when talking to a taxpayer. The Office of Employee Protection (OEP) is responsible for administration and maintenance of the PDT database. See IRM 25.4.1, Potentially Dangerous Taxpayer, and IRM 25.4.2, ”Caution Upon Contact” Taxpayer, for appropriate action.

  4. If the taxpayer states payments have not been applied or have been applied incorrectly, research IDRS and apply or correct any missing and/or misapplied payments. If payments are applied or corrected, send Letter 672C to inform the taxpayer.

  5. Contact the Kansas City Campus RACS team via secure E-mail at *W&I Criminal Restitution for any questions regarding receipt of restitution payments.

  6. Route to Exam Technical Services correspondence that states:

    • Taxpayer does not understand the Notice and Demand Letter.

    • Taxpayer is not liable or is disputing the tax liability, Fraud penalty and/or Civil assessment.

    • Taxpayer disputes the computation of interest and/or penalties.

    Use Form 3210 to route the case and Include a thorough explanation for the reason the case is being routed.

  7. Route to Centralized Insolvency Operation correspondence that states:

    • Taxpayer is in bankruptcy.

    Use Form 3210 to route the case and Include a thorough explanation for the reason the case is being routed.

  8. If the correspondence states:

    • Taxpayer is unable to pay,

    • taxpayer requests installment agreement,

    • taxpayer is incarcerated, or entitled to military deferment

    • taxpayer is deceased,

    • restitution has been full paid and/or a copy of the Judgment Satisfaction is attached then:

    • Perform thorough research to locate any missing or misapplied payments.

    • If unable to locate missing or misapplied payments, and;

    the case is in Status 26 and assigned to a Revenue Officer (RO) with the last two digits of 01-99, or to an RO Group, use Form 3210 to route the case to the appropriate field group based on state mapping using the SERP "Who/Where" link to the RO by TSIGN/ZIP/STATE site. Include a thorough explanation for the reason the case is being routed.
    If the case is not assigned to an RO or RO Group, use Form 3210 to route the case to Advisory. The listing of Advisors can be found at the SBSE Collection web site located at http://mysbse.web.irs.gov/AboutSBSE/Collection/fieldcoll/aiq/aiqorg/contacts/27786.aspx. Include a thorough explanation for the reason the case is being routed.

    Note:

    All RBA cases where the assessment posted after 6/2/2014 are monitored by the Dallas Advisory Group and correspondence cases meeting the above criteria should be forwarded to that office at:
    Internal Revenue Service
    Advisory Probation/Restitution Program
    1100 Commerce St., Mail Code 5028 DAL
    Dallas, TX 75242


    Send Letter 86C advising the taxpayer that another office has jurisdiction over their account and he/she will be contacted by that office.

  9. Correspondence received for all other issues are routed to the appropriate functional area. Use the Campus Mail Routing Guide located on SERP to determine the appropriate functional area.

  10. Form 4442 is also used to notify CCO that a credit balance exists on a module containing a TC 971 AC 102. Control these forms within 14 days from the IRS received date or 3 business days from the Operation received date and resolve the credit balance in accordance with IRM 5.19.23.6, Resolving Overpayment Cases.

  11. If Form 2848, Power of Attorney (POA) and Declaration of Representative, or Form 8821, Tax Information Authorization (TIA), is attached to the notice or correspondence, use CC CFINK to research the Centralized Authorization File (CAF) to verify if the POA is authorized for the period(s) in question. If the account is not on CAF the Form 2848 must contain the following:

    • Taxpayer's full name, address, and TIN

    • Representative's full name and address

    • Type of tax

    • Tax year(s) or period(s)

    • Signature of/for taxpayer and date of signature

    • Representative must sign declaration

    A POA or TIA must contain the essential elements listed in IRM 21.3.7, Processing Third Party Authorizations onto the Centralized Authorization File (CAF), to be valid. Those essential elements include:

    • Clear intent.

    • Clear identification of the taxpayer, e.g., name, address, TIN (2 out of 3 are sufficient).

    • Clear identification of the third party.

    • Specific tax matter(s) – type of tax and period(s).

    • Taxpayer’s signature and date.

    • For a POA, the representatives signature and date.

      If ... Then ...
      POA does not contain all the items listed above Return original to the taxpayer with the explanation that the form is incomplete. Use Letter 672C when responding to other issue(s). Return using Letter 861C if not responding to other issues.
      POA contains all the items listed above. Fax the original to the Consolidated CAF site for your Campus. Notate "original faxed to CAF" and the date on the form and retain with the case file.
  12. Specific use Powers of Attorney (e.g., Civil penalties and Form 843 ) are entered onto the CAF. This eliminates the need for the taxpayer to resubmit authorization requests each time a third party corresponds on a specific issue. When a valid authorization is received in an office which does not process authorizations to the CAF, FAX the authorization to one of the centralized CAF campuses for processing.

  13. If a valid POA or TIA is received, send responses to correspondence to the taxpayer and to the authorized representative. Replies from a valid POA are treated as if the taxpayer(s) was responding.

    Note:

    Refunds are not sent to Appointees named on Form 8821.

  14. If an unauthorized third party requests information concerning the penalty assessment, send Letter 135C , Power of Attorney Needed to Furnish Information. Do not send or discuss tax information with an unauthorized third party. Correspond directly with the taxpayer.

  15. Refer taxpayers to the Taxpayer Advocate Service (TAS) (see IRM Part 13, Taxpayer Advocate Service) when the contact meets TAS criteria (see IRM 13.1.7, TAS Case Criteria) and you can't 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 issue. Do not refer "same day" cases to TAS unless the taxpayer asks to be transferred to TAS and the case meets TAS criteria. Refer to IRM 13.1.7.4, Same-Day Resolution by Operations. When you refer cases to TAS, use Form 911 , Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance Order), forward to TAS.

  16. Document all initial and follow-up case actions in AMS.

RBA Undeliverable Mail

  1. When correspondence is returned from the Post Office as undeliverable, the following steps should be taken by the tax examiner or other designee:

    1. If the undeliverable letter is returned with a USPS yellow address sticker on original envelope indicating a new address that is not on IDRS, update the address on IDRS to reflect the address on the sticker and re-mail the undeliverable letter in a new envelope.

    2. If no new address is indicated on the returned letter, research IDRS CC ENMOD or IMFOLE to see if there is a new address on file. If there is a new address then re-mail the undeliverable letter in a new envelope.

    3. If a new address cannot be located or no new address is indicated on the returned letter, attach a completed Form 9856, Attachment Alert, and forward the letter to be associated with the closed case. Complete the form as follows:

    • Controlling Document Locator Number (DLN): Enter the DLN to which the documents should be associated. The controlling DLN is displayed at the top of most IDRS command codes

    • Employee IDRS Number: Enter the Employee IDRS number

    • Date Prepared: Enter the date the form is prepared

    • Stop Number and Alpha: Enter the complete address with Stop Number and Alpha. This will ensure timely routing back to the originating office, if needed.

  2. Document Account Management Services (AMS) of actions taken.

Processing Adjustments to Restitution-Based Assessments

  1. Forms 3870 relating to original Restitution-Based Assessments (RBA) are initiated by Exam Technical Services (TS) and are generally input by Exam Centralized Case Processing (CCP), located in the Memphis Campus.

  2. Ogden CCO may receive Forms 3870 from Exam TS in response to a request submitted during transcript processing when TC 971 AC 18X is posted to the restitution module and no associated assessment has posted.

  3. Ogden CCO may also receive Forms 3870 related to partial or full abatement of the RBA from Exam TS. Forms 3870 received in CCO must be processed within 30 days of the Campus received date.

  4. Only Exam TS is authorized to request adjustments to the RBA. Any other Forms 3870 should be forwarded to TS for validation of the requested adjustment.

  5. Forms 3870 received from Exam TS requesting assessment and/or abatement of RBA:

    • Must include the specific reason for the abatement/assessment.

    • Must include managerial approval. If no managerial approval is present, return to originator via Form 3210.

    If Form 3870 cannot be processed, i.e., unclear or incomplete, contact Exam TS for additional information. If unable to contact, reject Form 3870 and return it to the originator via Form 3210. Include a thorough explanation of the reason for the reject.

  6. When Form 3870 is received requesting assessment of an RBA:

    • Review the ASED on the MFT 31 account. If the ASED has expired or is within 45 days of expiration:

    1. Input a TC 560 to extend the date 12 months from the date of input.

    2. Monitor the account until the TC 560 posts.

    • Review the MFT 31 tax module and the tax module that is the basis for the assessment i.e., MFT 30, 01, etc., for interest provisions that affect the RBA interest computation. See IRM 5.19.23.5 .

      Note:

      Restitution-Based assessments are subject to normal interest rules under Title 26. Unless there is a BMF indicator on the module, assessments related to IMF tax liabilities generally will not have interest restricted. However, interest must be restricted for all assessments related to BMF tax liabilities because the interest start date is earlier than the IMF Return Due Date associated with MFT 31.

    • Compute interest in accordance with IRM 5.19.23.5. For BMF liabilities use TC 298 with the interest start date to input the assessment amount. MFT 31 cannot compute interest with a start date prior to an IMF return due date (generally this is 4/15), so this date is for reference only. Use a non-restricting TC 340 to assess interest for accounts that are not full paid.

    1. If payments are posted that fully pay the assessment, calculate interest to the date of the payment that fully pays the tax

    2. If payments are posted but the amount(s) do not fully pay the tax, calculate interest to the 23C date of the assessment.

    • Use CC REQ54 to input TC 290/298 and TC 340 see IRM 20.2.5.6, Manual Computations , and Servicewide Interest website for instructions on computing interest.

    1. Always use blocking series 00

    2. Enter the return due date in the INTCOMP-DT field

    3. Enter the date that interest is computed to in the DB-INT-TO-DT field. See IRM 20.2.5.6 , Restricted Interest.

    4. Enter the total amount owed in the COMP-INT-AMT field

    5. Enter TC 290/298 AMT $$$$

    6. Enter TC 340 AMT $$$$ (If applicable see IRM 5.19.23.5

    7. Hold code 0

    8. Priority Code 5

    9. Reason Code 14X – See IRM 5.19.23.2

    10. Source Doc Attached = Y

    11. Remarks = RBA F3870 Per Exam TS

    • When inputting multiple assessments to the same tax module:

    1. each assessment will include its own interest amount and each interest amount should be included in the running module computation. This is to insure that the last interest adjustment amount will not be overstated;

    2. compute the interest to one cycle past the current 23C date and use hold code 4 for all assessments except the last one input. All assessments input with a hold code 4 will post with the same 23C date. Use hold code 0 for the final assessment. This assessment will systemically re-sequence to the next 23C date and is the date input as the debit-interest-to-date for all the adjustments.

    • Cross-reference any applicable payments

    • Control the case in monitor (M) status on IDRS and monitor the account until all transactions post

    • Notate AMS history to reflect actions taken.

    • Use CC RAPID to establish the RBA history file. See IRM 2.4.60 , Command Code RAPID.

      Note:

      Always include the applicable MFT and Tax Period in the RAPID history comments.

  7. When Form 3870 is received requesting full abatement of an RBA:

    • Abate individual tax periods requested.

    • Abate the lien fee (TC 360) if it has been assessed.

    • Reverse any payments/credits that have been cross-referenced from other related accounts and any payments that have been cross-referenced from the adjusted account to any other related accounts.

    • Control the case in monitor (M) status on IDRS and monitor the account until all transactions post.

    • Notate AMS History to reflect actions taken.

    • Use CC RAPID with definer “D” to delete the RBA amount. See IRM 2.4.60, Command Code Rapid, for input instructions.

    • Use CC RAPID with definer “C” to add a history item that includes the TIN/Tax Period was abated.

  8. When Form 3870 is received requesting partial abatement of an RBA:

    • Adjust individual tax periods requested.

    • Reverse any payments/credits that have been cross-referenced from other related accounts that cause the account to be overpaid. Reverse any payments/credits that have been cross-referenced from the adjusted account to other linked accounts if they will be refunded or offset.

    • Notate AMS History to reflect actions taken.

    • Use CC RAPID with definer “C” to change the RBA amount to reflect the reduced assessment. See IRM 2.4.60, Command Code RAPID, for input instructions.

  9. Resolve any overpayment in accordance with IRM 5.19.23.6 .

    Note:

    Caution must be taken to ensure TC 766 CRN 337 credits are not refunded or offset to other balance due accounts.

  10. Maintain Form 3870 as a source document in the employee adjustment folder.

Reports

  1. The reports in this section are used to monitor and manage the Restitution-Based Assessment (RBA).

Manager Reports

  1. Manager reports are used to monitor employee inventories. Restitution-Based Assessment (RBA) transcript inventory will be controlled on IDRS or AMS and will be monitored utilizing the Assigned Batch Status Report and the CCA 4243 Overage Report. Weekly review of AMS and CCA 4243 Overage reports are mandatory and should be performed by the Department Manager. It may be delegated no lower than the Team Leader level. Documentation of these reviews must be maintained for a period of 6 months.

    Note:

    Employees must update the IDRS controls each time they perform a follow-up action on a case to document the timeliness of their actions.

  2. The Daily Transcript Review (DTR) must be performed on all transcript cases closed during the prior business day. The DTR ensures all applicable cross-referencing of current payments and credits is complete, a practical check for accuracy is performed, and case errors are corrected prior to posting to Master File.

    1. Review the Employee Cases by TIN Report to identify which tax period(s) to examine.

    2. Follow local procedures to prepare report and run GII tool.

    3. Copy and paste the potential errors from the GII report to the Daily Review spreadsheet. Mark the Errors Identified columns for specific error types.

    4. Perform a review and validation of errors identified and record the amount of time spent on the review.

      Note:

      This quick visual review is to be performed without calculators. Do not math verify, validate interest, or check for histories.

    5. After validating errors, reviewer will forward the spreadsheet to the Manager, who will return the case(s) to the originator(s) for immediate correction.

    6. A daily log of the weekly and cumulative results is to be maintained and reviewed by the Department Manager, who will send a digitally signed copy to HQ on a weekly basis by the Thursday of the following week.

    7. The Campus Analyst will perform a monthly review of error types and trends. Report findings to the Department Manager on a monthly basis and send cumulative findings to HQ on a quarterly basis with an analysis of the errors, root cause, and planned actions to prevent reoccurrence.

Team Level Reports

  1. Team Level reports are used to monitor employee inventories. RBA transcript inventory will be controlled on IDRS and AMS and will be monitored utilizing the Assigned Batch Status Report and the CCA 4243 Overage Report. Weekly review of AMS and CCA 4243 Overage reports are mandatory and should be performed by the Department Manager. It may be delegated no lower than the Team Leader level. Documentation of these reviews must be maintained for a period of 6 months.

  2. Documentation must include review findings, case status, non-action or action needed, and confirmation from the tax examiner of action taken,

System Level Reports

  1. The AMS system reports will be utilized to monitor and manage all RBA transcripts Inventory.

Employee Inventory Reports

  1. AMS and CCA 4243 Overage reports are available for employees to monitor individual inventories. Weekly reviews must be performed by the employee to ensure timely case actions are taken. Employees are required to elevate issues that may prohibit these reviews to their manager.

Table of Acronyms & Definitions

Acronym Definition
AC Action Code
ACT Automated Computational Tool
ADJ Adjustment
AIS Automated Insolvency System
AMS Accounts Management System
AMT Amount
ANMF Automated Non Master File
ASED Assessment Statute Expiration Date
BMF Business Master File
CC Command Code
cc Closing Code
CCO Campus Collection Operations
CCP Centralized Case Processing
CI Criminal Investigation
CRN Credit Reference Number
CSED Collection Statute Expiration Date
DLN Document Locator Number
DMI Decision Modeling Incorporated
DOJ Department of Justice
DPC Designated Payment Code
EIN Employer Identification Number
FLC Filing Location Code
FLU Financial Litigation Unit
FTP Failure to Pay
GII Generalized IDRS Interface
HQ Headquarters
IAT Integrated Automation Technologies
IDRS Integrated Data Retrieval System
IDT Identity Theft
IMF Individual Master File
IRC Internal Revenue Code
IRM Internal Revenue Manual
IRS Internal Revenue Service
LCU Large Corporate Underpayment
MFT Master File Tax
MMA Memo Money Amount
NMF Non Master File
NOL Net Operating Loss
OIC Offer in Compromise
POA Power of Attorney
POC Point of Contact
PC Priority Code
RA Revenue Agent
RBA Restitution-Based Assessment
RACS Revenue Account Control System
RC Reason Code
RO Revenue Officer
RPP Return Preparer
RSED Refund Statute Expiration Date
SBSE Small Business / Self-Employed
SERP Servicewide Electronic Research Program
SSN Social Security Number
TIN Tax Identification Number
TC Transaction Code
TP Taxpayer
TS Technical Services
TFRP Trust Fund Recovery Penalty
TXPD Tax Period
TY Tax Year
UPC Unpostable Code
WH Withholding
XREF Cross-Reference