Part 3. Submission Processing

Chapter 14. Notice Review

Section 2. Notice Review - Business Master File (BMF) Notice Review

3.14.2 Notice Review - Business Master File (BMF) Notice Review

Manual Transmittal

November 06, 2023

Purpose

(1) This transmits revised IRM 3.14.2, Notice Review - Business Master File (BMF) Notice Review.

Material Changes

(1) IRM 3.14.2 - Removed Form 990-C which is obsolete throughout the IRM

(2) IRM 3.14.2 - Changed 94X series returns from -PR to (sp) per Spanish language naming convention changes updated throughout the IRM

(3) IRM 3.14.2.1.1 - Updated background information and added the goals for notice review

(4) IRM 3.14.2.1.5 - Added CRN, DPE, EPE, IRN, MEC, and RPC to the acronym list

(5) IRM 3.14.2.1.6 - Added AMS to list of available resources

(6) IRM 3.14.2.1.8(3) - IPU 23U0405 issued 03-16-2023 changed prioritization of work to current list

(7) IRM 3.14.2.1.8(4) - IPU 23U0405 issued 03-16-2023 added addition of HQ priority list when sample will not be completed

(8) IRM 3.14.2.1.8(4) - Removed lowest accuracy and clarified priority review

(9) IRM 3.14.2.2 - Changed heading to Notice Review Program Guidelines and moved what is Notice Review to 3.14.2.1.1 Background

(10) IRM 3.14.2.2.1(1) - IPU 23U0405 issued 03-16-2023 added math error codes and clarified associated notices for the same taxpayer

(11) IRM 3.14.2.2.1(1) - Clarified that math error code and taxpayer notice code are used interchangeably

(12) IRM 3.14.2.2.1(5) - IPU 23U0714 issued 06-09-2023 Notice Review Processing System (NRPS) was replaced with Online Notice Review as the correct report system

(13) IRM 3.14.2.2.1(5) - Added report information to clarify OLNR disposition as a tool

(14) IRM 3.14.2.2.1(8) - IPU 23U0405 issued 03-16-2023 added statement to include local personnel when reporting IRM issues

(15) IRM 3.14.2.2.2(1) - IPU 23U0405 issued 03-16-2023 deleted desktop and added web-based to identify new OLNR platform and added caution about IDRS inputs in cycle

(16) IRM 3.14.2.3(3) - Clarified TIN is included on notices and in note updated that SSN is used for Forms 706 and 709

(17) IRM 3.14.2.3(4) - IPU 23U0405 issued 03-16-2023 restructured format of CP notices to match rest of the section per processing feedback and updated SNIP URL

(18) IRM 3.14.2.3(4) a - Removed exception to Form 1065 as CP 161 will be valid for MFT 06 in processing year 2024

(19) IRM 3.14.2.4 - Added OLNR information to NRPS and realigned entire section for user clarity

(20) IRM 3.14.2.4(1) d - Added rejected transactions to the table

(21) IRM 3.14.2.4.1(2) - Added refer to BMF Job Aid for more information since the BMF National Job Aid has been updated

(22) IRM 3.14.2.4.1(12) - IPU 23U0405 issued 03-16-2023 added (c) to include Service Center address issues

(23) IRM 3.14.2.4.1(12) c- Added MM type of manual intervention to the list moved c to d (SC addresses)

(24) IRM 3.14.2.4.1.1 - Rearranged section for research ease and retitled NRPS Selection Keys

(25) IRM 3.14.2.4.1.2 - Rearranged section for research ease and retitled NRPS Output Files

(26) IRM 3.14.2.4.1.2 (4) - Removed NRP 1420 since it is an invalid report

(27) IRM 3.14.2.4.1.3 - Rearranged section for research ease and retitled NRPS Batch Sheet

(28) IRM 3.14.2.4.1.4 - Rearranged section for research ease and retitled NRPS Packages

(29) IRM 3.14.2.4.1.5 - Rearranged section for research ease and retitled NRPS Selection List

(30) IRM 3.14.2.4.1.6 - Rearranged section for research ease and retitled Other NRPS Output

(31) IRM 3.14.2.4.2 - Added OLNR Information section to explain the system and how it works with NRPS

(32) IRM 3.14.2.4.2.1 - Added section OLNR Retype Capabilities for processing information previously missing from the IRM

(33) IRM 3.14.2.4.2.2 - Added section OLNR Notice Conversion for processing information previously missing from the IRM

(34) IRM 3.14.2.4.2.3 - Added section OLNR Access and Notice Disposition for processing information previously missing from the IRM

(35) IRM 3.14.2.4.2.4 - Added section OLNR Notice Disposition Codes for processing information previously missing from the IRM

(36) IRM 3.14.2.4.2.5 - Added section OLNR Quality Review and Held Notices for processing information previously missing from the IRM

(37) IRM 3.14.2.4.2.5(2) - Added procedures for a lead to work systemically held notices on Monday

(38) IRM 3.14.2.4.2.5(5) - Added held notice restrictions and clarified guidelines for quality review

(39) IRM 3.14.2.4.3(2) - IPU 23U0405 issued 03-16-2023 removed OLNR Job Aid reference in NRPS section and added IMF Job Aid for more information

(40) IRM 3.14.2.5.1 - IPU 23U0405 issued 03-16-2023 added SC manual interventions to clerical function list

(41) IRM 3.14.2.5.1(1) - Added MM manual interventions to clerical function list

(42) IRM 3.14.2.5.2.1(1) - Updated note to contact local P&A for correct files fax information

(43) IRM 3.14.2.5.2.4(1) - Removed the date that NR was no longer required to stop refunds for other areas

(44) IRM 3.14.2.5.3 - IPU 23U0405 issued 03-16-2023 changed heading title to add SC type manual intervention

(45) IRM 3.14.2.5.3 - Changed heading to add MM type of manual intervention

(46) IRM 3.14.2.5.3(2) - IPU 23U0405 issued 03-16-2023 added SC to the list of manual intervention types

(47) IRM 3.14.2.5.3(2) - Added MM to the list of manual intervention types

(48) IRM 3.14.2.5.3(3) - Added Large Corp manual intervention batches

(49) IRM 3.14.2.5.3(8) - IPU 23U0405 issued 03-16-2023 added Service Center manual intervention definition

(50) IRM 3.14.2.5.3.1(3) - IPU 23U0405 issued 03-16-2023 added review of CAF standing and updated decision fields to match IDRS fields in CFINK

(51) IRM 3.14.2.5.3.1(4) - IPU 23U0405 issued 03-16-2023 updated decision fields to match IDRS fields in CFINK and updated void the notice to delete the notice

(52) IRM 3.14.2.5.3.1(6) - IPU 23U0405 issued 03-16-2023 moved note to 3a and deleted (6)

(53) IRM 3.14.2.5.3.2(3) - Updated to include review steps for RFINK and NAP indicator impact to RAF notices

(54) IRM 3.14.2.5.3.2(4) - Added NAP column indicator fields and how to identify notice allowance for representatives

(55) IRM 3.14.2.5.3.2(4) a - IPU 23U0405 issued 03-16-2023 updated table to include specific notice steps for OLNR

(56) IRM 3.14.2.5.3.2(5) - Updated to change references from RFINK L to RFINK R to research

(57) IRM 3.14.2.5.3.2(6) - IPU 23U0405 issued 03-16-2023 deleted (6) and combined all information in (5)

(58) IRM 3.14.2.5.3.3 - Added Processing Manual Intervention Notices with CAF and RAF Mismatch (MM)

(59) IRM 3.14.2.5.3.3 - IPU 23U0405 issued 03-16-2023 section created to include processing steps to resolve SC Manual Interventions

(60) IRM 3.14.2.5.4(4) - IPU 23U0405 issued 03-16-2023 updated table to NRP97 field literals

(61) IRM 3.14.2.6 - Moved section to 3.14.2.7 under Case Resolution since NOREF should not be done until all information has been reviewed

(62) IRM 3.14.2.6(3) - Added disposition of H needs to be approved by HQ

(63) IRM 3.14.2.6.1(1) - IPU 23U0405 issued 03-16-2023 added preferred use of IAT NOREF tool

(64) IRM 3.14.2.6.1(2) - IPU 23U0405 issued 03-16-2023 updated reference to the number below in the same section and deleted the HAL note from 2013

(65) IRM 3.14.2.6.1.1(1) - IPU 23U0405 issued 03-16-2023 updated assignment from A to B. Notice Review should be B for background on controls

(66) IRM 3.14.2.6.1.2(1) d - Updated note to correct heading for citation

(67) IRM 3.14.2.6.1.3.3(5) - Added release refund with 290 .00

(68) IRM 3.14.2.6.1.3.4(3) a - Removed extra postmark data not needed and corrected grammar to identify the specific order for determining the correct RRD

(69) IRM 3.14.2.6.1.3.6(1) - Updated bullets to add all types of forms processed without signatures

(70) IRM 3.14.2.6.1.3.6(4) - Changed employer tax returns to employment and certain types of information and clarified list of forms indicating that Form 941-SS is valid for TY 2023 and prior

(71) IRM 3.14.2.6.1.3.6(5) - Clarified process as normal if CCC 3 or E

(72) IRM 3.14.2.6.1.3.6(6) - Corrected when a signature is required and added information to sent a 143C letter and correspondence reply monitoring information

(73) IRM 3.14.2.6.1.3.7 - Changed title to be clear about correspondence attached to the return

(74) IRM 3.14.2.6.1.5(1) - Updated offset information for IRC 6402 (a) offset is allowed not required

(75) IRM 3.14.2.6.1.5(4) - Corrected top offset priority

(76) IRM 3.14.2.6.1.5(7) - Clarified the note for when payments can be moved

(77) IRM 3.14.2.6.1.5.1(1) - Removed credit elect statement from the notes that contradicts -E freeze programming

(78) IRM 3.14.2.6.1.5.3(8) - IPU 23U0484 issued 04-03-2023 added MFT 03 to those subject to TOP Offset and removed MFT 55 per Master File programming requirements

(79) IRM 3.14.2.6.1.5.3(8) - IPU 23U0484 issued 04-03-2023 updated Note to add title of 21.4.6, Refund Offset

(80) IRM 3.14.2.6.1.7.2.2(1) - Update use of IAT tool is suggested

(81) IRM 3.14.2.6.1.7.2.2(2) - Updated note to suggest IAT not mandatory

(82) IRM 3.14.2.6.2 - Updated section with tables for clarity and added response screen information also removed uncommon command codes RFUNDR, URINQ and XSINQ

(83) IRM 3.14.2.6.2(4) - GATT threshold for COMPAC clarified to match IRM 20.2.4

(84) IRM 3.14.2.6.2.2 - IPU 23U0804 issued 07-07-2023 changed all manual refund references in the section from $100,000,000 to $100 million

(85) IRM 3.14.2.6.2.2(3) - IPU 23U0804 issued 07-07-2023 added review citations 21.4.4.3 and 3.14.2.7.7.2 to the table

(86) IRM 3.14.2.6.2.2(4) - IPU 23U0804 issued 07-07-2023 deleted note since monitoring is no longer required per IRM 21.4.4

(87) IRM 3.14.2.6.2.2.2 - IPU 23U0804 issued 07-07-2023 changed heading name to remove monitoring no longer required per IRM 21.4.4

(88) IRM 3.14.2.6.2.2.2(4) - IPU 23U0804 issued 07-07-2023 changed $10 million or more to $100 million or more

(89) IRM 3.14.2.6.2.2.2(5) - IPU 23U0804 issued 07-07-2023 changed $10 million or more to $100 million or more

(90) IRM 3.14.2.6.2.2.2(7) - IPU 23U0804 issued 07-07-2023 deleted since monitoring is no longer required per IRM 21.4.4

(91) IRM 3.14.2.6.3.1(3) - Changed terminology per Counsel request to taxpayer reported penalties instead of self-assessed

(92) IRM 3.14.2.6.4.5(1) b - Deleted if lead is unavailable notify the Headquarters analyst

(93) IRM 3.14.2.6.4.5(1) f - Updated note clarify Form 4868 extends Form 709 also

(94) IRM 3.14.2.6.4.6(2) - Removed regulation and interest and penalties check for short period 1120 and replaced with ensure correct period information

(95) IRM 3.14.2.6.4.6(3) - Added c to clarify the current short period due dates are for 2016-2026

(96) IRM 3.14.2.6.4.6.1 - Deleted section since it only applied to 2016

(97) IRM 3.14.2.6.4.9(1) - Updated note to address the possibility of Failure to File returns electronically penalty

(98) IRM 3.14.2.6.4.10(2) - Changed second note to identify the difference between sections of the Relief Act

(99) IRM 3.14.2.6.4.10(3) - Corrected date for qualifying wages to before June 30, 2021

(100) IRM 3.14.2.6.4.10.1 - Separated COVID section by Form number to assist production

(101) IRM 3.14.2.6.4.10.1.1 - Added section Credit for Qualified Sick and Family Leave Wages Form 941 to process by Form type

(102) IRM 3.14.2.6.4.10.1.2 - Added section Credit for Qualified Sick and Family Leave Wages Form 943 to process by Form type

(103) IRM 3.14.2.6.4.10.1.3 - Added section Credit for Qualified Sick and Family Leave Wages Form 944 to process by Form type

(104) IRM 3.14.2.6.4.10.2(2) - Updated chart to update layout to match in 2020 and 2021

(105) IRM 3.14.2.6.4.10.2(4) - Updated to clarify that Form 7200 must have been processed timely

(106) IRM 3.14.2.6.4.10.2(5) - Updated to use past tense verbiage since credits are no longer available

(107) IRM 3.14.2.6.4.12 - Added Inflation Reduction Act IRA summary section

(108) IRM 3.14.2.6.4.12.1 - Added Elective Payment Election (EPE) Overview section

(109) IRM 3.14.2.6.4.12.2 - Added Elective Payment Election (EPE) Account and Notice Impact section

(110) IRM 3.14.2.6.4.12.3 - Added Credit Transfer Election (TRE)

(111) IRM 3.14.2.6.5(2) - Changed deemed payable to tax due

(112) IRM 3.14.2.6.5(4) - Updated IRC 965 inclusion to add rare instances in 2020

(113) IRM 3.14.2.6.5(16) - Changed deemed payable to tax assessed per Counsel feedback

(114) IRM 3.14.2.6.5.2(2) - Changed deemed payable to tax assessed per Counsel feedback

(115) IRM 3.14.2.6.5.2.1(1) - Added that leads only should do 965(i) adjustments with the exception of 971/AC 165

(116) IRM 3.14.2.6.5.3.1(1) - Added that leads only should do 965(h) adjustments

(117) IRM 3.14.2.6.5.3.1(9) - Changed the numbered steps to bullets and updated the 965 tool note with the Job Aids tab

(118) IRM 3.14.2.6.6.27 - Changes not saved from IPU 23U0566 updated section to the correct CI email box and clarified when to contact CI updated again publishing

(119) IRM 3.14.2.6.7(4) - Updated Form 1065 not informational only starting in tax year 2023

(120) IRM 3.14.2.6.7.1(1) d - Deleted incorrect information about SFR processing

(121) IRM 3.14.2.6.7.1(3) - Added as approved by Headquarters

(122) IRM 3.14.2.6.7.3(7) - Added the following the month the employees are paid per Counsel suggestion

(123) IRM 3.14.2.6.9(1) - Updated Form 1065 not informational only starting in tax year 2023

(124) IRM 3.14.2.6.9(10) - Added Form 8752 procedures for MFT 15 CP 161

(125) IRM 3.14.2.6.9(17) - Added Form 2290 exhibit 3.14.2-29 citation

(126) IRM 3.14.2.6.10.1(1) - Revised section to include legislative updates to requirements to electronically file after December 2023

(127) IRM 3.14.2.6.10.1(2) - Revised to identify differences in electronic requirements before January 1, 2024

(128) IRM 3.14.2.6.10.1(4) - Reordered table and updated with TY 2023 information

(129) IRM 3.14.2.6.10.2(9) b - Reordered table and updated with TY 2023 information

(130) IRM 3.14.2.6.10.3(5) - Deleted section and referred tax examiners to previous section due to duplicate information

(131) IRM 3.14.2.6.10.4(1) - Added due to IRA legislation Form 1065 is not informational only starting in TY 2023

(132) IRM 3.14.2.6.12 - Clarified process and updated OLNR language and restructured section and split transcripts into four sections

(133) IRM 3.14.2.6.12.1 - New section Million Dollar Transcript added for ease of processing

(134) IRM 3.14.2.6.12.1(1) - Changed lead review from 10 million to over 100 million must be reviewed by lead or experience Subject Matter Expert and deleted table referring to lead processing

(135) IRM 3.14.2.6.12.2 - New section Normal Refund Transcripts added for ease of processing

(136) IRM 3.14.2.6.12.3 - New section Highly Questionable Transcripts added for ease of processing

(137) IRM 3.14.2.6.12.4 - New section Refund Interest Transcript added for ease of processing

(138) IRM 3.14.2.6.13(4) - Removed outdated bullets and clarified Form 8752 information

(139) IRM 3.14.2.6.14.1(6) b - Clarified pending transactions refunding

(140) IRM 3.14.2.6.14.4(1) - Changed insurance to offer of per Counsel feedback

(141) IRM 3.14.2.6.15 - Clarified what ERS TE does when assigning a TPNC 90

(142) IRM 3.14.2.6.15(1) b - Updated chart for clarity of disposition and removed redundant rows

(143) IRM 3.14.2.6.15(1) e - Clarified that TPNC 90 open paragraph entries are allowed

(144) IRM 3.14.2.6.15(2) - Changed for to in 2004 so tax examiners do not think 2004 is the only year impacted

(145) IRM 3.14.2.6.15(2) b - Added REQ77 to clarify procedures for adding extension

(146) IRM 3.14.2.6.15(2) d - Added credit transfer information for payments

(147) IRM 3.14.2.6.15(2) e - Added 709 module to assist tax examiners with review and corrective actions

(148) IRM 3.14.2.6.15(2) f - Added retype and address interest and penalties

(149) IRM 3.14.2.6.15(4) - Added note indicating Key 54 processes are for current tax years only

(150) IRM 3.14.2.6.16(6) a - Reminder changed from typed to voided or retyped

(151) IRM 3.14.2.6.17.3(4) - Added tax year 2023 minimum penalty, reordered table current to past and deleted the note

(152) IRM 3.14.2.7 - IPU 23U0405 issued 03-16-2023 renamed heading to match the rest of the IRM for general review procedures

(153) IRM 3.14.2.7(3) - IPU 23U0484 issued 04-03-2023 added bullet to address MeF and scanned to MeF documents

(154) IRM 3.14.2.7.1 - Moved Refund Intercepts using NOREF and all NOREF sections to Case Resolution from 3.14.2.6.1

(155) IRM 3.14.2.7.1(6) - Updated NOREF chart for processing year 2024

(156) IRM 3.14.2.7.1.3 - IPU 23U0804 issued 07-07-2023 changed $100,000,000 to $100 million

(157) IRM 3.14.2.7.1.6 - IPU 23U0804 issued 07-07-2023 changed title from $100,000,000 to $100 million

(158) IRM 3.14.2.7.1.6(2) - IPU 23U0804 issued 07-07-2023 deleted monitor the case and changed numbered lists to bullets for clarity

(159) IRM 3.14.2.7.1.6(5) - IPU 23U0804 issued 07-07-2023 changed $100,000,000 to $100 million, deleted monitor the case, and changed numbered lists to bullets for clarity

(160) IRM 3.14.2.7.1.6(6) - IPU 23U0804 issued 07-07-2023 deleted ERS reference for Manual Refunds as is does not apply to Notice Review processes

(161) IRM 3.14.2.7.2 - Moved Reconciling Refund Deletion Requests to Case Resolution from 3.14.2.6.2

(162) IRM 3.14.2.7.2.1 - Moved Erroneous Refund section to Case Resolution from 3.14.2.6.2.1

(163) IRM 3.14.2.7.2.1(6) b - Changed the AM manual refund routing form from Form 3465 to Form 5101

(164) IRM 3.14.2.7.2.1(9) - Added Note to express mandatory use of the IAT ERRF too and included link to IAT job aids

(165) IRM 3.14.2.7.2.1(9) e - Added input of TC 971 AC 663 per IRM 21.4.5

(166) IRM 3.14.2.7.2.1(9) f - Changed the manual refund routing form from Form 3465 to Form 5101

(167) IRM 3.14.2.7.2.1(10) a - Restructured sentence for clarity and added label 15 and 16 definitions

(168) IRM 3.14.2.7.2.1(11) a - Restructured sentence for clarity and added label 15 and 16 definitions

(169) IRM 3.14.2.7.2.1(12) - Added citation for IRM 21.4.5.6.1 for Category D Erroneous Refund account actions

(170) IRM 3.14.2.7.2.1(12) a - Restructured sentence for clarity and added label 15 and 16 definitions

(171) IRM 3.14.2.7.2.1(12) i- Changed the manual refund routing form from Form 3465 to Form 12356 and added citation for IRM 21.4.5.6.2

(172) IRM 3.14.2.7.2.2 - Moved Manual Refund sections to Case Resolution from 3.14.2.6.2.2

(173) IRM 3.14.2.7.2.2.3(6) - Deleted caution from credit interest on or after 1/1/95 as it pertains only in the last box of the table where the interest IRM is cited

(174) IRM 3.14.2.7.3 - Moved Controlling cases section to Case Resolution from 3.14.2.7.19.1

(175) IRM 3.14.2.7.4 - Moved Documenting Adjustment cases section to Case Resolution from 3.14.2.7.19.2

(176) IRM 3.14.2.7.4.4(2) - IPU 23U0484 issued 04-03-2023 added link to disaster situations on IRS.gov

(177) IRM 3.14.2.7.5 - Moved Entity Adjustments section to Case Resolution from 3.14.2.7.19.3

(178) IRM 3.14.2.7.6 - Moved Tax Adjustment cases sections to Case Resolution from 3.14.2.7.19.4

(179) IRM 3.14.2.7.6.6 - Moved Credit Reference and Item Reference Number Exhibit to section and added each Form type separately to Case Resolution

(180) IRM 3.14.2.7.6.12(2) - IPU 23U0484 issued 04-03-2023 updated Cincinnati Excise group phone number and address

(181) IRM 3.14.2.7.6.19(5) - IPU 23U0484 issued 04-03-2023 added to include link to disaster situations on IRS.gov

(182) IRM 3.14.2.7.6.27 - IPU 23U0566 issued 04-28-2023 updated section to the correct CI email box and clarified when to contact CI

(183) IRM 3.14.2.7.7.1(6) e - IPU 23U0484 issued 04-03-2023 moved the note and changed to a caution at the beginning of e, clarified that KCSPC cannot make adjustments to 706 and 709, and updated Cincinnati routing information

(184) IRM 3.14.2.7.7.2(11) - IPU 23U0484 issued 04-03-2023 changed table information from -K freeze to -R freeze

(185) IRM 3.14.2.7.7.2(12) g,h,i - IPU 23U0484 issued 04-03-2023 updated freeze process to REQ77 TC 570 to set a -R freeze

(186) IRM 3.14.2.7.7.2(13) a - IPU 23U0484 issued 04-03-2023 updated freeze process to do not set a freeze for zero tax

(187) IRM 3.14.2.7.8(1) - IPU 23U0484 issued 04-03-2023 added the section title for Q- minus freeze

(188) IRM 3.14.2.7.8(5) b - IPU 23U0484 issued 04-03-2023 clarified research steps, added description of TC 150 .00 return, and changed freeze to -R

(189) IRM 3.14.2.7.8(15) d - IPU 23U0405 issued 03-16-2023 clarified steps in assigning TPNC if a math error is found

(190) IRM 3.14.2.7.10.6 - Notice Disposition section updated to include each label as a section since figures were deleted

(191) IRM 3.14.2.7.10.6.24 - Added Label 24 to match notice and OLNR programming

(192) IRM 3.14.2.7.10.7 - Updated section for correct Notice Review language and to identify only leads can approve hold as a disposition

(193) IRM 3.14.2.7.11 - Added signature letter section and steps per Counsel feedback

(194) IRM 3.14.2.7.12(9) g - IPU 23U0804 issued 07-07-2023 deleted reference to Exhibit 3.14.2-7 which has been deleted

(195) IRM 3.14.2.7.14.1(8) a - IPU 23U0405 issued 03-16-2023 added if balance will be less than $5.00 retype the notice

(196) IRM 3.14.2.7.15(3) - IPU 23U0405 issued 03-16-2023 clarified key 52 generation criteria

(197) IRM 3.14.2.7.17.3(4) - IPU 23U0484 issued 04-03-2023 added exception for certain forms filed before September 2022 due to Notice 2022-36

(198) IRM 3.14.2.7.17.4(3) - IPU 23U0405 issued 03-16-2023 removed MIC 48 it is not currently used in pipeline processing

(199) IRM 3.14.2.7.17.8 - IPU 23U0405 issued 03-16-2023 updated note to explain OLNR display of 01/01/0001

(200) IRM 3.14.2.7.19 - Case Resolution removed from general review procedures to a stand alone section 3.14.2.7

(201) IRM 3.14.2.7.19.1(2) c - IPU 23U0405 issued 03-16-2023 removed if unable to pull check as HAL process was stopped in 2013

(202) IRM 3.14.2.7.19.1(3) a - IPU 23U0405 issued 03-16-2023 added exception to clarify when not to contact another TE

(203) IRM 3.14.2.7.19.2(1) - IPU 23U0484 issued 04-03-2023 removed adding machine tape and changed to worksheets, screen shots, etc

(204) IRM 3.14.2.7.20(15) - IPU 23U0484 issued 04-03-2023 added and the taxpayer does not need to receive a notice suppress the CP 260

(205) IRM 3.14.2.7.23.5(3) b - IPU 23U0405 issued 03-16-2023 added information to print the notice when unpostable is in question

(206) IRM 3.14.2.7.23.5(5) - IPU 23U0405 issued 03-16-2023 emphasized all other information is correct before using Entity disposition

(207) IRM 3.14.2.7.23.5(5) a - IPU 23U0405 issued 03-16-2023 added use of IAT address tool for entity changes

(208) IRM 3.14.2.7.23.5(9) - IPU 23U0405 issued 03-16-2023 label 3 information changed. Not allowable on notices other than balance due

(209) IRM 3.14.2.7.24 - Deleted Federal Payment Levy Program section as Notice Review does not review these notices

(210) IRM 3.14.2.9.1(1) - IPU 23U0484 issued 04-03-2023 updated note to remove obsolete 941C information

(211) IRM 3.14.2.9.3(1) b - Changed protective claim to protective return per Counsel feedback

(212) IRM 3.14.2.9.4(1) - IPU 23U0484 issued 04-03-2023 added titles to citation

(213) IRM 3.14.2.9.4(2) - IPU 23U0484 issued 04-03-2023 added titles to citation

(214) IRM 3.14.2.9.4(3) - IPU 23U0484 issued 04-03-2023 corrected title of Form 3244

(215) IRM 3.14.2.9.4(4) - IPU 23U0484 issued 04-03-2023 changed subsequent to pending when talking about credits and added found to payments to meet void criteria

(216) IRM 3.14.2.9.5 - IPU 23U0484 issued 04-03-2023 added citation heading for Manual Intervention CAF/RAF/SC

(217) IRM 3.14.2.9.7 - IPU 23U0484 issued 04-03-2023 added words to form complete sentences

(218) IRM 3.14.2.9.7(2) - IPU 23U0484 issued 04-03-2023 updated if/then chart to explain account correction procedures more clearly

(219) IRM 3.14.2.9.7(6) - IPU 23U0484 issued 04-03-2023 deleted paragraph due to incorrect processing information

(220) IRM 3.14.2.9.7(7) - IPU 23U0484 issued 04-03-2023 added the word taxpayer to figures

(221) IRM 3.14.2.9.7(8) - IPU 23U0484 issued 04-03-2023 deleted paragraph due to incorrect processing information

(222) IRM 3.14.2.9.7(9) - IPU 23U0484 issued 04-03-2023 deleted paragraph due to incorrect processing information

(223) IRM 3.14.2.9.10(1) - IPU 23U0405 issued 03-16-2023 updated FIRPTA information by a foreign seller and acronym

(224) IRM 3.14.2.9.10(3) - IPU 23U0405 issued 03-16-2023 updated resources and definition of FIRPTA Act

(225) IRM 3.14.2.9.10(4) - IPU 23U0405 issued 03-16-2023 FIRPTA AMT removed from IRM due to processing changes

(226) IRM 3.14.2.9.12 - IPU 23U0405 issued 03-16-2023 international added to heading

(227) IRM 3.14.2.9.20(2)b - IPU 23U0484 issued 04-03-2023 added Form 7004 can be filed for filing extension for Form 1042

(228) IRM 3.14.2.9.21(2) - IPU 23U0484 issued 04-03-2023 added must be filed on or before March 15

(229) IRM 3.14.2.9.21(4) - IPU 23U0484 issued 04-03-2023 added refer to the table below for requirement for withholding payments

(230) IRM 3.14.2.9.26(1) - Changed personal representative to executor per Counsel feedback

(231) IRM 3.14.2.9.26(2) - Changed Non Resident Alien not a citizen of the United States to nonresident not a citizen

(232) IRM 3.14.2.9.26(2) b - Deleted repealed Section 2521 and changed Non Resident Alien not a citizen of the United States to nonresident not a citizen

(233) IRM 3.14.2.9.31(2) b - Changed other foreign sourced income to certain other foreign sourced income per Counsel feedback

(234) IRM 3.14.2.10 - Removed date replies ended and updated CP replies received are not worked in Notice Review

(235) IRM 3.14.2.11 - Added section for TPNCs and provided each form with a subsection

(236) Figure 3.14.2-3 - Changed figure from Form 3465 to the correct Form 5101

(237) Figure 3.14.2-4 - Deleted as the figure contained incomplete data. Information has been incorporated into the IRM for Erroneous Refund labels 3.14.2.6.2.1

(238) Figure 3.14.2-5 - Deleted incorrect Form 3465 as correct Form is 12356

(239) Figure 3.14.2-11 - Deleted figure and moved to IRM 3.14.2.7.10.6

(240) Figure 3.14.2-12 - Deleted figure and moved to IRM 3.14.2.7.10.6

(241) Figure 3.14.2-13 - Deleted figure and moved to IRM 3.14.2.7.10.6

(242) Figure 3.14.2-14 - Deleted figure and moved to IRM 3.14.2.7.10.6

(243) Figure 3.14.2-15 - Deleted figure and moved to IRM 3.14.2.7.10.6

(244) Figure 3.14.2-16 - Deleted figure and moved to IRM 3.14.2.7.10.6

(245) Figure 3.14.2-17 - Deleted figure and moved to IRM 3.14.2.7.10.6

(246) Figure 3.14.2-18 - Deleted figure and moved to IRM 3.14.2.7.10.6

(247) Figure 3.14.2-19 - Deleted figure and moved to IRM 3.14.2.7.10.6

(248) Figure 3.14.2-20 - Deleted figure and moved to IRM 3.14.2.7.10.6

(249) Figure 3.14.2-21 - Deleted figure and moved to IRM 3.14.2.7.10.6

(250) Figure 3.14.2-22 - Deleted figure and moved to IRM 3.14.2.7.10.6

(251) Figure 3.14.2-23 - Deleted figure and moved to IRM 3.14.2.7.10.6

(252) Figure 3.14.2-24 - Deleted figure and moved to IRM 3.14.2.7.10.6

(253) Exhibit 3.14.2-1 - IPU 23U0405 issued 03-16-2023 updated CP 161 to include Form 1065

(254) Exhibit 3.14.2-1 - IPU 23U0484 issued 04-03-2023 updated possible Form types for CPs 126, 132, and 133

(255) Exhibit 3.14.2-1 - IPU 23U0484 issued 04-03-2023 changed the CP type for CPs 147, 173, 225, 267 and 268

(256) Exhibit 3.14.2-1 - IPU 23U0484 issued 04-03-2023 deleted obsolete CP 368

(257) Exhibit 3.14.2-1 - Updated to add Form 1065 to CPs 131, 131A, 132, 133, and 268

(258) Exhibit 3.14.2-2 - Updated to add Form 1065 to CPs 131, 131A, 132, 133, and 268

(259) Exhibit 3.14.2-3 - IPU 23U0484 issued 04-03-2023 clarified wording for CP 173 a reduced overpayment due to assessed ES penalty

(260) Exhibit 3.14.2-3 - Updated to add Form 1065 to CPs 131, 131A, 132, 133, and 268 and changed CP 161 to all BMF forms

(261) Exhibit 3.14.2-4 - Updated Form 1065 as of 1-1-2024 no longer informational only

(262) Exhibit 3.14.2-5 - Removed duplicate key 06 in Category H

(263) Exhibit 3.14.2-6 - Deleted TPNC exhibit to add to section 3.14.2.11 for TPNCs with ERS links when applicable

(264) Exhibit 3.14.2-6 - Updated BMF NRPS title and input 1420 for the correct Control D report

(265) Exhibit 3.14.2-7 - IPU 23U0804 issued 07-07-2023 deleted exhibit as it is incomplete and outdated. A full Form 5792 with information will be added to the Notice Review BMF National Job Aids

(266) Exhibit 3.14.2-7 - Updated title Control D NRPS Appended Data Pending Transactions TEP for clarity

(267) Exhibit 3.14.2-8 - Updated title Control D NRPS Appended Data Unpostable GUF for clarity

(268) Exhibit 3.14.2-9 - Updated title Control D NRPS Appended Data Pending Resequencing for clarity

(269) Exhibit 3.14.2-10 - Updated to match programming updates for 2024 for CPs 107, 117 to CP 161 conversion and adding Form 1065 to CPs 131, 131A, 132, and 133

(270) Exhibit 3.14.2-11 - Changed title for clarity Adding and Deleting Extensions FRM77 and reversed adding and deleting extensions on the page

(271) Exhibit 3.14.2-14 - Deleted since Form 990-C is obsolete

(272) Exhibit 3.14.2-20 - Added to suppress an adjustment notice, changed title for clarity and added balance due original figures notice disposition and changed title Applying Credit Flow Chart- Tax Examiner Manual Credit Transfer

(273) Exhibit 3.14.2-21 - Changed title Pending Transaction Flow Chart - Systemic (Rolled) Pending Credit Transfer for clarity and added balance due original figures notice disposition

(274) Exhibit 3.14.2-22 - IPU 23U0484 issued 04-03-2023 added OLNR/NRPS heading to explain penalty codes for other than IDRS

(275) Exhibit 3.14.2-22 - Deleted exhibit and moved data to a more usable section 3.14.2.7.4.6.6

(276) Exhibit 3.14.2-24 - Lines updated for ease of reading

(277) Exhibit 3.14.2-26 - Added information to verify BRTVU figures with the exhibit tax rates to verify the tax period as a possible reprocess may be needed and made pictures a chart to be 508 compliant

(278) IRM 3.14.2 - IPU 23U0405 issued 03-16-2023 minor editorial changes have been made throughout this Internal Revenue Manual (IRM) (e.g., line number updates, spelling, punctuation, links, etc.) and editorial changes to tables to ensure 508 compliance

(279) IRM 3.14.2 - Minor editorial changes have been made throughout this Internal Revenue Manual (IRM) (e.g., line number updates, spelling, punctuation, links, etc.) and editorial changes to tables to ensure 508 compliance

Effect on Other Documents

IRM 3.14.2, Notice Review - Business Master File (BMF) Notice Review, dated November 8, 2022, effective January 1, 2023, is superseded. This IRM incorporates the following IRM Procedural Updates (IPUs): IPU 23U0405 issued 03-16-2023, IPU 23U0484 issued 04-03-2023, IPU 23U0566 issued 04-28-2023, IPU 23U0714 issued 06-09-2023 and IPU 23U0804 issued 07-07-2023.

Audience

Business Master File (BMF) Notice Review tax examiners primarily in Kansas City and Ogden, Submission Processing Campuses.

Effective Date

(01-01-2024)

James L. Fish
Director, Submission Processing
Wage and Investment Division

3.14.2.1 (01-01-2020)

Program Scope and Objectives

  1. This section provides instructions to the Submission Processing Notice Review function for reviewing Business Master File (BMF) Computer Paragraph (CP) notices. These notices are selected for review by the Notice Review Processing System (NRPS).

    Note:

    Notices may also be mandated for review by Treasury Inspector General for Tax Administration (TIGTA), management, policy statements, etc.

  2. Purpose: This section provides BMF Notice Review personnel with instructions for reviewing CP notices that have been selected by the Notice Review Processing System (NRPS). Reviews are conducted with the goal of improving both the accuracy and quality of information the IRS sends to the taxpayers. The Notice Review process helps to ensure the information received by taxpayers is complete and correct.

  3. Audience: These procedures apply to Wage and Investment (W&I) Submission Processing (SP) Business Master File (BMF) Notice Review personnel, located primarily in Kansas City and Ogden:

    • Supervisory Tax Examining Technician

    • Lead Tax Examining Technician

    • Tax Examining Technician

    • Supervisory Clerk

    • Lead Clerk

    • Clerk

  4. Policy Owner: Director, Submission Processing

  5. Program Owner: Specialty Programs Branch, Post Processing Section

  6. Primary Stakeholders: Other areas that may be affected by these procedures include (but are not limited to):

    • Accounts Management (AM)

    • Chief Counsel

    • Compliance

    • Information Technology (IT) Programmers

    • Large Business and International (LB&I)

    • Submission Processing (SP)

    • Tax Exempt and Government Entities (TEGE)

3.14.2.1.1 (01-01-2024)

Background

  1. Notice Review is the process where tax accounts with specific, pre-determined account activity, are selected for manual review. Most cases involve review of a generated notice, but some account conditions trigger a review to intercept and correct possible processing errors and potential erroneous refunds (example: refund transcript). This process allows tax examiners (TEs) to analyze the account and the notice to decide if the information on the notice is complete and represents the most current account information before the BMF Computer Paragraph (CP) notice is mailed to the taxpayer. Notice Review employees use the Notice Review Processing System (NRPS) Package, Control D, and Integrated Data Retrieval System (IDRS) to ensure the information for each notice and account is correct. Any changes to the notices are made using the On Line Notice Review (OLNR) system.

  2. The ultimate goal of this process is to allow the Service the opportunity to change inaccurate information on the notice before mailing to reduce taxpayer inquiries, both written and by phone. The end result will give the taxpayer the most accurate and current tax account information available at the time of mailing. The review of refund transcripts can decrease taxpayer burden and reduce the cost to the Service for recovery efforts of erroneous refunds.

3.14.2.1.2 (01-01-2023)

Authority

  1. The following provide authority for the instructions in this IRM:

    1. Title 26 of the United States Code (USC) or more commonly known as the Internal Revenue Code (IRC).

    2. All Policy Statements are contained in IRM 1.2.1, Servicewide Policies and Authorities, Servicewide Policy Statements. All Policy Statements for Submission Processing are contained in IRM 1.2.1.4 , Policy Statements for Submission Processing Activities.

3.14.2.1.3 (11-09-2017)

Responsibilities

  1. The Campus Director is responsible for monitoring operational performance for the Submission Processing campus.

  2. The Operations Manager is responsible for monitoring the performance of their assigned operation.

  3. The Team Manager/Lead is responsible for performance monitoring and ensuring employees have the tools to perform their duties.

  4. The Team Employees are responsible to follow the instructions contained in this IRM and maintain updated IRM procedures.

3.14.2.1.4 (11-09-2017)

Program Management and Review

  1. Program Goals: Review Computer Paragraph (CP) notices to verify the accuracy of the information to ensure notices received by the taxpayer are complete and correct.

  2. Program Reports: The NRPS system produces several types of reports, which can be accessed on Web Control-D. See IRM 3.14.2.4.1.2 NRPS Output Files for more information.

  3. Program Effectiveness: The program goals are measured by using the following tools:

    • Embedded Quality Submission Processing (EQSP)

    • Balanced Measures

    • Managerial Reviews

  4. Annual Review: The processes outlined in this IRM should be reviewed annually to ensure accuracy and promote consistent tax administration.

3.14.2.1.5 (01-01-2024)

Acronyms/Abbreviations/Definitions

  1. This table lists Acronyms, Abbreviations and Definitions.

    Acronyms and Abbreviations Definition
    AC Action Code
    AM Accounts Management
    BFS Bureau of Fiscal Services
    BMF Business Master File
    CADE Customer Accounts Data Engine
    CAF Centralized Authorization File
    CC Command Code
    CNM Contact Not Made
    COB Close of Business
    CP Computer Paragraph
    CRD Correspondence Received Date
    CRN Credit Reference Number
    DC Document Code
    DLN Document Locator Number
    DP Data Processing
    DPE Deemed Payment Election
    EFT Electronic Funds Transfer
    EFTPS Electronic Federal Tax Payment System
    EIN Employer Identification Number
    ELF Electronic Return Filing
    EPE Elective Payment Election
    ERS Error Resolution System
    ES Estimated Tax
    EUP Employee User Portal
    FTD Federal Tax Deposit
    FTF Failure to File
    HCTC Health Coverage Tax Credit
    IAT Integrated Automation Technologies
    IDRS Integrated Data Retrieval System
    IRC Internal Revenue Code
    IRM Internal Revenue Manual
    IRN Item Reference Number
    LB&I Large Business and International
    LCF Local Control File
    MEC Math Error Code or Minimum Essential Coverage
    MeF Modernized Electronic Filing
    MFT Master File Tax Code
    MMDDYY Month Month Day Day Year Year
    NR Notice Review
    NRPS Notice Review Processing System
    OLNR On Line Notice Review
    OSPC Ogden Submission Processing Center
    POA Power of Attorney
    RA Reporting Agent
    RAF Reporting Agent’s File
    RDD Return Due Date
    RPC Return Processing Code
    RPD Return Processable Date
    RPS Remittance Processing System
    RTF Return Transaction File
    RTR Remittance Transaction Research System
    SERP Servicewide Electronic Research Program
    SSN Social Security Number
    TAS Taxpayer Advocate Service
    TBOR Taxpayer Bill of Rights
    TC Transaction Code
    TE Tax Examiner
    TEGE Tax Exempt & Government Entities
    TIGTA Treasury Inspector General for Tax Administration
    TIN Taxpayer Identification Number
    TOP Treasury Offset Program
    TPNC Taxpayer Notice Code
    TRS Transcript Request System
    UPC Unpostable Code
    W&I Wage and Investment
    XREF Cross Reference
3.14.2.1.6 (01-01-2024)

Related Resources

  1. The following resources may assist in performing the work as outlined in this IRM:

    • Servicewide Electronic Research Program (SERP)

    • Notice Review Processing System (NRPS)

    • On Line Notice Review (OLNR)

    • Integrated Data Retrieval System (IDRS)

    • Employee User Portal (EUP)

    • Remittance Transaction Research (RTR) System

    • Control D

    • Account Management System (AMS)

3.14.2.1.7 (01-01-2016)

IRM Deviations

  1. Service Center Directors, Headquarter Branch Chiefs, and Headquarter Analysts do not have the authority to approve deviations from IRM procedures. Any request for an exception or deviation to an IRM procedure must be elevated through appropriate channels for executive approval. This will ensure other functional areas are not adversely affected by the change, and it does not result in disparate treatment of taxpayers.

  2. See specific guidelines in IRM 1.11.2, Internal Management Documents System, Internal Revenue Manual (IRM) Process. Request for an IRM deviation must be submitted in writing and signed by the Field Director, following instructions from IRM 1.11.2.2.4(3). Any disclosure issues will be coordinated by the Program Owner. No deviations can begin until reviewed by the Program Owner and approved at the Executive Level. All requests must be submitted to the Submission Processing Headquarters IRM Coordinator.

3.14.2.1.8 (01-01-2024)

Prioritization of Work for BMF Service Centers

  1. The goal of the Notice Review Departments is to complete their BMF selected notices by the established cutoff times.

  2. The cycle will load Friday and will close out the second Monday at 2:00 AM.

  3. If there is a possibility that the entire cycle will not be reviewed, the centers cannot extend the cycle and must prioritize the work in the following order:

    • TPNC (sometimes referred to as Math Error Code) 90 (Key 009)

    • Large Corp Notices (Key 006). These are worked by the Large Corp Teams but should be completed in their entirety each cycle.

    • IRC 965 Keys (Keys 16, 50)

    • Manual Intervention Listing. If listings are not processed within cycle, they will default to "held" inventory creating a backlog of inventory in Notice Review.

    • Any notice selected through the LCF (Keys 82, 85, 86, 87, 88, 89, 90, 91, 92, 93, 94, 95, 96, 97, 98, 99).

    • BPD/IPF Notices (Key 18) OGDEN ONLY.

  4. If after the priorities listed above are completed and resources are available to continue cycle processing, then process the remaining notices in the following order:

    • Follow any priority updates provided by Headquarters if 100% of sample cannot be completed.

    • Refund Selection Keys (start with refund transcripts)- Be mindful of command code NOREF cutoff times.

    • Balance Due Keys (start with Keys 40, 42, 43, 44, 45, 46, 47, 48, 49 ).

    • CP 267 (Keys 11, 12, 34, 36, 71, 72, 83).

    • All other selected notices not mentioned above.

  5. Notify the BMF Notice Review HQ analyst if cycle review will not be completed. Provide the HQ analyst with the reason why the cycle was not completed.

    Note:

    These priorities may be modified by the HQ analyst based on organizational requirements.

3.14.2.2 (01-01-2024)

Notice Review Program Guidelines

  1. Notice Review employs the following to achieve its goal:

    • Quality

    • Timeliness

    • Interest Reduction

    • Effectiveness

    • Completeness

3.14.2.2.1 (01-01-2024)

Quality

  1. The Notice Review area performs reviews on the following products:

    • Math Error Notices - These notices are generated as a result of the assignment of taxpayer notice codes (TPNCs) also known as math error codes(MECs) by ERS/Rejects. Review is conducted to ensure the return was processed correctly and the appropriate Taxpayer Notice Code/ .Math Error Code was assigned during processing. MEC is often used synonymously with TPNC throughout the IRM and in Notice Review training.

    • Adjustment Notices - These notices are generated as a result of adjustments input by areas throughout the Service. Review is conducted to ensure the adjustment was input correctly and is correctly reflected on the notice.

    • Settlement Notices - These notices generate based upon specific conditions of issuance upon settlement/posting of the return. Review is conducted to ensure the return was processed/posted correctly and the appropriate notice was issued.

    • Associated Notices - If a notice is selected for review, any additional notice that generated for the same taxpayer as the selected notice is reviewed for accuracy.

    • CAF/RAF Notices - These are notices that are issued to an authorized representative. Research is performed to ensure the recipient is listed as an authorized representative for the return and tax period listed on the notice and whether or not they are authorized to receive notices.

    • BMF Refund Transcripts - These are service center notices that contain information on pending refunds. Review is conducted to ensure the accuracy of the refund prior to issuance to minimize erroneous refunds.

  2. Notice accuracy is increased when appropriate feedback is provided to all areas that contribute to the generation of erroneous notices or refunds.

  3. An effective method must be developed to provide feedback to the responsible processing functions at a local level.

    Reminder:

    This feedback must be provided weekly during the current filing season.

  4. For the process to work, Notice Review TEs must be allowed time to assemble and provide feedback information to the team lead, who will contact the appropriate functional area.

  5. The Online Notice Review (OLNR) Disposition Reports can be used as a tool to identify error trends with CPs and keys that could indicate processing issues. There are two basic formats for these reports:

    1. The CP Format provides a breakdown of each selection key by CP number for a given cycle.

    2. The Key Total Format provides a breakdown of each notice by selection key for a given cycle.

  6. The Cumulative history reports show year-to-date totals for the above reports. The weekly reports only show data for those keys with current cycle activity. The history reports show data for keys that have had activity at any time during the year.

  7. The historical records are used to assist in feedback sessions with functional areas that cause the generation of notices. Provide your Headquarters Analyst a monthly list of error trends so that it can be shared with the appropriate Headquarters processing analyst.

  8. If the IRM contains inconsistencies and/or conflicting information, immediately submit this information to the Headquarters Analyst for resolution. Be sure to include all applicable local analysts and personnel.

    Caution:

    Do not establish local procedures without first contacting the Headquarters Analyst.

  9. The Servicewide Electronic Research Program (SERP) is the program used to distribute IRM changes and IRM alerts to the service centers. IRM changes are sent to the SERP Area who then posts the updated version on SERP the next business day. IRM alerts are issued for a variety of reasons and generally will not update the IRM. These include changes that affect only the current cycle. Examples can be Command Code NOREF day or time change due to Holiday processing.

3.14.2.2.1.1 (01-01-2023)
Quality Assurance Research

  1. The following resources are utilized to review and correct notices, transcripts and accounts for accuracy:

    • Paper Tax Return (as appropriate)

    • Employee User Portal (to review electronic returns)

    • IDRS

    • OLNR

    • RTR

    • IAT

    • Control D

    • SERP (IRM Research/Job Aids/Tools)

  2. Information common to all returns must be verified and compared to the CP notice and the information contained in IDRS and the NRPS package. Research is required to ensure that the tax return was processed correctly and accurately reflected in IDRS. The notice, IDRS or both are updated as appropriate.

  3. Some of the most common IDRS research command codes used by Notice Review can be found in IRM 3.14.2.6.2 , Common Command Codes Used in Notice Review.

3.14.2.2.2 (03-16-2023)

Timeliness

  1. ALL selected notices must be reviewed, corrected and timely mailed to minimize any negative impact to the taxpayer. For Notice Review, timely means ALL of the following:

    • Marking the disposition of ALL selected notices using the OLNR web-based application on or before the closeout .

    • Completing ALL adjustments affecting refunds within one week of the transaction code (TC) 841 posting

    • Inputting adjustment actions on ALL other cases by the notice 23C Date

    Caution:

    Every effort should be made to input all necessary IDRS transactions during the notice cycle.

3.14.2.2.3 (01-01-2023)

Interest Reduction

  1. To help reduce the amount of interest IRS pays on refunds:

    1. IRS has a 45-day interest-free period (from the later of the return due date, return received date, or the date the return was received in processable form) in which to process taxpayer refunds. By law, refunds not issued within the 45-day period (180 days for qualifying overpayments resulting from tax deducted and withheld under Chapter 3 and Chapter 4 of the Internal Revenue Code) must include credit interest.

    2. Revisions to the process are made when necessary to review AND correct overpaid accounts without paying unnecessary interest.

  2. Reviewing, correcting, and mailing ALL notices timely allows the taxpayer the full allotted time to pay any outstanding balances. Generally, a taxpayer has 21 calendar days from the date of the notice and demand for payment (10 business days for notice amounts of $100,000 or more) to pay the outstanding balance without incurring interest charges after the date of the notice and demand. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  3. For proper guidance when reducing, computing or discussing interest, refer to IRM 20.2, Interest.

  4. BMF Refund Transcript (CP 388) is reviewed to ensure the interest being paid on applicable refunds is accurate and corrected if necessary prior to issuance. See IRM 3.14.2.6.12 for more information on BMF Refund Transcripts.

3.14.2.2.4 (01-01-2023)

Effectiveness

  1. The review of Math Error notices helps to identify those notices that historically have high error rates. It also provides valuable feedback that is used to refine selection criteria.

  2. The review of adjustment notices helps to identify and correct erroneous adjustments to ensure the accuracy of the module and the notice.

  3. The review of settlement notices allows the Notice Review area to identify deficiencies in programming changes to ensure that all notices are generated in accordance with established conditions of issuance.

  4. The review of CAF/RAF and manual intervention notices ensures that only authorized representatives receive a copy of the notice to prevent unauthorized disclosure.

  5. The review of BMF Refund Transcripts ensure the accuracy of refunds and interest paid on refunds (as applicable) prior to issuance. Refund Transcript selection criteria can be modified to address and combat fraud, schemes, etc. to prevent erroneous refunds.

  6. The LCF can be utilized to select notices based on specific criteria to ensure accuracy with regard to the implementation of new legislative changes and/or the creation of new notices, etc.

3.14.2.2.5 (01-01-2023)

Completeness

  1. Generally, you must review the entire tax return, and ALL tax modules related to a notice or transcript selected for review by utilizing the NRPS Package and IDRS. The review can include, but is not limited to the review of items below:

    • Entity Module(s)

    • Outstanding Credit Balance Modules

    • Cross-reference Taxpayer Identification Numbers (TINs)

    • Related Names

    • Freeze Conditions

  2. See IRM 3.14.2.6 (General Review Procedures), for additional guidance.

  3. The ultimate goal of Notice Review is to verify the accuracy of the information contained in all notices selected for review before mailing. All changes made to the taxpayer's account must be correct and completed before the cycle close out. (There are some exceptions.)

3.14.2.3 (01-01-2024)

Computer Paragraph (CP) Notices

  1. A CP notice is a computer-generated message resulting from:

    • A tax examiner entering taxpayer notice codes (TPNCs) on a return

    • A Master File analysis of a taxpayer’s account

    • Certain transactions posting to an account

  2. Notices can generate to:

    • Request information or payment from a taxpayer

    • Educate a taxpayer

    • Clarify an issue (i.e., explain a Math Error identified on their tax return)

  3. Most notices contain the following information:

    • Taxpayer’s name

    • Address

    • Taxpayer Identification Number (TIN)

    • Tax period

    • Tax form

    • A computer generated message

      Note:

      An EIN, SSN, ITIN or IRSN can be used for Form 8288. An IRSN will have a W following the number and an SSN/ITIN will have a V following the number. An SSN will be used for Forms 706 and 709. Valid SSNs will be input with a V following the number and invalid SSNs will be input with a W following the number.

  4. Three types of notices worked in Notice Review are:

    • Settlement

    • Information

    • Campus

    1. Settlement Notices tell the taxpayer of payments due, interest and/or penalties due, math errors, or adjustments the Campus has made to the taxpayer’s account. The three types of settlement notices reviewed by Notice Review are:

      • Math Error Notices generate when a tax return, containing a math error, posts to the Master File. Error Resolution normally identifies the math errors. The tax module may include math, clerical, or credit errors.

      • Non-Math Error Balance Due Notices generate when a return, with no math error, posts to the Master File. The tax module may include tax, credits, penalties, interest, or a combination of all four. The CP 161 is the balance due notice for all BMF forms .

      • Adjustment Notices generate when certain types of Data Processing (DP) or Examination adjustments post to an account. All adjustments made in Notice Review are Data Processing adjustments.

        Reminder:

        All types of Settlement Notices are subject to review.

    2. Information Notices generate when information needs to be sent to a taxpayer. Notice Review selects Informational type notices that explain credit elect and the offsetting of money to other balance due tax modules within the account. These notices are referred to as Associated Notices.

    3. Campus Notices generate to notify the Campus, Territory Office, or Area Office of a condition that needs further action to bring the taxpayer’s Master File account into current status. This category includes Refund Transcripts, which are the only Campus notices reviewed in Notice Review.

      Note:

      For a description of all notices, see Document 6209 Section 9. To view an exhibit of a notice, refer to SNIP http://gatekeeper.web.irs.gov/snipmain.aspx.

3.14.2.4 (01-01-2024)

Notice Review Processing System (NRPS) and Online Notice Review (OLNR)

  1. The Notice Review Processing System (NRPS) selects settlement notices, adjustment notices, associated notices and refund transcripts for review by analyzing data from the following sources:

    1. CP Notice Records: NRPS also uses this information to print a copy of selected notices for the review.

    2. Entity and Tax Modules: NRPS uses the Transcript Request System (TRS) to obtain data. This information is sent to each campus exclusively for NRPS processing. NRPS prints this information in transcript format as part of the NRPS package.

    3. Return Transaction File (RTF): NRPS extracts RTF data records for each selectable settlement notice. NRPS packages also contain printouts of this information.

    4. Pending Transactions: NRPS uses data from transactions that have not yet posted at the campus as part of the selection criteria for certain keys. See table below for Pending Transaction Sources and Possible Pending Transactions.

      Pending Transaction Sources Possible Pending Transactions
      Enterprise Computing Center at Martinsburg (ECC-MTB) Resequence File Adjustments (TC 29X/30X)
      Unidentified Remittance Files (URF) Extensions (TC 460)
      Tape Edit Program (TEP) (pipeline and corrected unpostable files) Merge Transactions (TCs 001, 011, and 04X)
      Generalized Unpostable Framework (GUF) and Current Cycle ECC-MTB Unpostable Files Credit Transfers [Document Codes (DC) 24, 34, 48, or 58 transactions]
      Excess Collection (XSC) File Credit Transfers [Document Codes (DC) 24, 34, 48, or 58 transactions]
      Generalized Mainline Framework (GMF) Error File All other significant (non-zero) transactions
      Reject File Rejected transactions

  2. The Online Notice Review (OLNR) System allows Tax Examiners to review notice elements, determine notice disposition, and retype notices online. OLNR is used in conjunction with NRPS. It does not replace the need to review the NRPS package for each notice.

    1. Selected taxpayer notices are not printed until after the NRPS batches have been reviewed and OLNR goes through its weekly "closeout" process (term used for end-of-cycle processing that controls notice printing). This allows the system to avoid printing notices that should be voided, and also allows full editing capabilities in case a notice needs correction prior to mailing.

    2. Notices that are not reviewed before cycle closeout will automatically default to the "NR" (Not Reviewed) disposition and after cycle closeout will be printed and mailed to the taxpayer. This default provides a more correct notice accuracy rate, since only notices that are reviewed in a given cycle are compiled into notice accuracy numbers for reporting.

3.14.2.4.1 (01-01-2024)

Notice Selection Process

  1. Notices are selected by NRPS based on established selection criteria. These criteria are divided into categories. Each category contains a list of Keys that have been assigned specific selection criteria. The categories were established to separate notice types and help establish a priority of review. Notices are selected in category order as follows:

    • Category A - Special Handling Required

    • Category B - High Priority Selection-Local Selection

    • Category C - Federal Tax Deposit (FTD) Rollover

    • Category D - Balance Due and Even Balance Notices

    • Category E - Overpaid Notices

    • Category F - Adjustment Notices

    • Category G - Refund Transcripts

    • Category H - Low Priority Local Selection

    • Category I - Balance Due Low Priority

  2. Within each category the notice is analyzed in sequence by selection priority. Once a notice meets the criteria for a key within a category, the remaining selection keys in that category are bypassed and the analysis continues through the remaining categories. If the notice meets selection criteria in another category, it is assigned a secondary selection key; all remaining categories are bypassed, and analysis stops. (Analysis is limited to one primary and one secondary selection key.)

  3. The selection process continues from category to category in alphabetical order. When completed, the process will result in one of the following conditions:

    1. All selection criteria was applied to the notice, but the notice was not selected for review.

    2. The notice was selected for review meeting only one selection criteria.

    3. The notice was selected for review meeting two selection criteria.

  4. Selection Criteria-The NRPS selection criteria is only applied to selectable notices and transcripts.

    1. The selection criteria is divided into categories containing similar conditions or notice types.

    2. Each category is assigned a priority based on the importance of the selection criteria within the category.

    3. Each selection criteria is assigned a two-digit numerical selection key and a numerical priority.

    4. The selection criteria is applied against the notice in ascending priority order until either the notice is selected for review or the selection criteria for the category is exhausted.

    5. If the notice is selected for review, the remaining selection criteria for the category is not applied against the notice.

      Note:

      A numerical group number is assigned during the selection analysis, and is used to sort and batch the NRPS packages. The group number is decided by the priority of the review and is used to associate similar selections together.

  5. The selection process requires the following:

    1. Entity and Tax Modules: The Transcript Request System provides Master File data for use in the analysis process. This data is separated from other Master File data, then shipped to each Campus for use by NRPS processing and displayed in transcript format as part of the NRPS package.

    2. Transcribed Tax Return Data: an RTF data record is extracted for each settlement notice subject to NRPS selection. This data is used in the selection process and included in the NRPS package for selected notices.

  6. The selection process requires in-house transactions-certain transactions which have not posted to the Master File by the notice cycle are required by NRPS processing, they include:

    • Adjustments (TC 29X) (TC 30X)

    • Credit Transfers (Document Codes 24, 34, 48, and 58)

    • Merge Transactions (TCs 001, 011, 04X)

    • Extensions of Time to File (TC 460)

    • Any transactions with non-zero transaction amounts

  7. The transactions listed above are extracted from the following files:

    • ECC-MTB Resequence

    • Unpostables (current cycle at ECC-MTB and GUF)

    • TEP (all pipeline transactions)

    • Unidentified Remittance File

    • Excess Collections (XSC)

    • GUF Error

    • Rejects (Transaction failed campus validity check)

    • FTD File

  8. Notice Data-All selected notices are displayed in the NRPS package.

  9. The NRPS package will include all current cycle notices, selected/associated notices and/or refund transcripts.

  10. A contents sheet will be included with each package, and will provide the following information:

    • Selected notice

    • Selection Key and literal key description

    • Pending transactions

    • Documents requested

    • Other (non-selected) notices

  11. A NRPS batch consists of the following:

    • NRPS Batching Sheet: Identifies the beginning of each batch

    • NRPS Packages: 1 to 20 notices per batch

    • NRPS Selection List: A list of the notices contained within the batch

  12. Manual Intervention List-This list will show, in notice sequence number order, all notices that were not selected for review but require manual intervention for any of the following conditions:

    1. Central Authorization File (CAF) Mismatch: Central Authorization File name/address information to be added.

    2. Reporting Agent File (RAF) Mismatch: Reporting Agent File name/address information to be added for Form 940, Form 941, Form 944, and Form 945.

    3. Both CAF and RAF Mismatch (MM): Central Authorization File name/address information to be added and Reporting Agent File name/address information to be added for Form 940, Form 941, Form 944, and Form 945.

    4. Service Center Mismatch Address File (SC): address information needs to be reviewed and verified.

  13. NRPS Batch Control Sheet: Contains a line for each batch (Notice Review copy) or a line for each batch with a document request (Files copy). It is also used as an assignment control document.

3.14.2.4.1.1 (01-01-2024)
NRPS Selection Keys

  1. For specific information on NRPS Selection Keys, see Exhibit 3.14.2-5.

    Note:

    For detailed information on the Local Control File, see IRM 2.4.45 , Command Code NRP97. For detailed information on the Notice Review Processing system, See Program Requirement Package (PRP) 160 Section 54. Valid percentages for Local Control File: 1%, 10%, 25%, 33%, 50%, 75%, and 100%.

3.14.2.4.1.2 (01-01-2024)
NRPS Output Files

  1. After NRPS completes the selection process, it combines all of the selection information into NRPS Batches. A NRPS Batch consists of the following:

    • NRPS Batching Sheet

    • NRPS Packages

    • NRPS Selection List

  2. NRPS are viewed using Control-D. See BMF Job Aids for additional information on NRPS.

  3. NRPS produces several additional types of output:

    • NRPS Batch Control Sheet

    • NRPS Document Charge-Out

    • NRPS Batch Return Request List

    • Manual Intervention List

    • NRPS Selection Report

    • NRPS Non-package Selection List

    • NRPS Duplicate Selection List

    • NRPS Associated Notice Listing

      Note:

      A description of each of these is in IRM 3.14.2.4.1.6 (Other Output).

  4. All of the above print-outs generate from the following Listing of Output Files:

    File Name Description
    NOT 1320/P Notice [Quick (Q) Print] Listing
    NOT 1330 NRPS Selection
    NOT 3431 Back-end Notices
    NOT 3440 Back-end Notices
    NOT 3445 Back-end Assistant Commissioner International (ACI) Notices - Ogden Service Center (OSC)
    NOT 3446 Back-end ACI CP 220 (OSC)
    NOT 3480 Back-end Routing and Stuffer
    NOT 394/AG Redesign Notices (CPs 101, 102, 103, 104, 105, 106, 107, 111, 112, 113, 114, 115, 116, 117, 123, 124, 125, 128, 134 R/B, 138, 145, 161,162, 169, 173, 210, 215, 220, 225, 260, 267, 268)
    NOT 3135 CP 297 and CP 297A Selected Certified Mail Listing
    NRP 1410 NRPS Selected and Associated Report
    NRP97 Command Code used to update, add, delete or change requested NRPS Packages
    NRP 9841 Local Control File records
    NORI - B NOREF Tape
    NOR0 142 Refund Intercept
    1603D12 NRP CP Totals

3.14.2.4.1.3 (01-01-2024)
NRPS Batch Sheet

  1. The Batch Sheet is the first sheet of each batch. It contains the following information:

    • Page Number

    • Batch Number

    • Sort Group- Special, BALANCE DUE NOTICE or OVERPAID NOTICE

    • Current Cycle

  2. See figure below for what is contained in the NRPS Batch Sheet.

    Figure 3.14.2-1

    This is an Image: 32201001.gif

    Please click here for the text description of the image.

3.14.2.4.1.4 (01-01-2024)
NRPS Packages

  1. NRPS packages contain various types of information needed to review each selected CP Notice or Refund Transcript. Each batch may contain up to 20 selected notices.

    Note:

    Packages for overpayment notices must be viewed online first. Most packages contain only one notice. However, the NRPS Package will contain all Selectable or Associated CP Notices that generate in the current cycle for a taxpayer if one or more is selected for review. Each NRPS package contains the following:

    1. Package Contents Page : View online as the first page of each NRPS Package. This page contains the following information:

      NRPS Package Contents:
      A list of all Selected or Associated CP Notices or Refund Transcripts in the package with CP number and Document Locator Number (DLN)
      The Selection Key Number along with a brief description of the Key
      A list of pending transactions
      A list of requested vouchers and documents
      Manual Intervention Indicators

    2. Online Notice Information : Depending on the CP number of the selected notice, this may either be a duplicate of the live notice, or a shortened version. The shortened version, displays only the notice record information, such as dollar amounts and TPNC numbers, as opposed to Taxpayer Bill of Rights language and TPNC explanations.

    3. Entity Transcript: This displays the entity information for the notice Taxpayer Identification Number (TIN).

    4. Tax Module Transcript (optional) : This displays the tax module transactions for the notice TIN.

    5. Transcribed Posted Return Data: This displays transcribed return fields for selected Settlement Notices

    6. 813 List: This list displays only for Remittance Processing System (RPS) Discrepancy cases.

3.14.2.4.1.5 (01-01-2024)
NRPS Selection List

  1. This list is the last page of each batch. It shows the following information for each Selected CP Notice in the batch:

    • Count (item number on the list)

    • Sequence Number

    • DLN

    • CP Number

    • Primary Selection Key

    • Secondary Selection Key

3.14.2.4.1.6 (01-01-2024)
Other NRPS Output

  1. NRPS produces two different (but related) Batch Control Sheets.

    1. The Notice Review copy has one line for each batch, showing the number of Selected and Associated CPs and Document Requests in each batch.

    2. The Files Function copy has a line for each batch, showing the number of Document Charge-outs in each batch.

  2. The NRPS Document Charge-out provides information that the Files Function needs to pull documents for Notice Review to use in reviewing CP Notices.

  3. The NRPS Batch Return Request List is a cover sheet that separates the Document Charge-outs by batch and contains a line for each charge-out.

  4. The Manual Intervention List provides a list (in notice sequence number order) of all notices that were not selected for review but may require manual intervention.

    1. See IRM 3.14.2.5.3 (Manual Intervention CAF/RAF/MM/SC) for additional information and procedures.

  5. The NRPS Selection Report contains various statistical data including the number of CPs selected. This report is sorted by CP Number and Selection Key. See Exhibit 3.14.2-6 (BMF NRPS Selection Report).

3.14.2.4.2 (01-01-2024)

OLNR Information

  1. The OLNR program was developed to eliminate manual correction of physical notices. Before OLNR, Notice Review clerks were required to pull paper notices and retype or use sticker labels to update the notice.

  2. OLNR allows users to easily monitor and track production of notice inventory.

  3. OLNR allows access to disposition reports that provide year-to-date information and allow managerial users to track patterns in notice changes.

3.14.2.4.2.1 (01-01-2024)
OLNR Retype Capabilities

  1. OLNR allows users to edit most notice fields so that notices can be retyped to reflect current account data in IDRS.

  2. Some specific OLNR retype capabilities are:

    1. the ability to correct entity on selected and associated notices.

    2. the ability to correct data fields on most selected notices including Penalties and Interest fields.

    3. the ability to add, change or delete MECs/TPNCs using a drop-down list.

    4. the ability to add a label to applicable notices.

    5. the ability to correct or void entity fields on manual intervention notices.

    6. the ability to correct or void the entity on CAF/RAF copies of notices or void the entire notice (even if the primary notice is mailed).

    7. the ability to convert from one CP to another CP.

    8. the ability to void an unnecessary notice so the taxpayer does not receive it.

  3. For specific information on how to utilize the OLNR program, refer to the BMF Notice Review Job Aid 2533-701BMF Notice Review Job Aid 2533-701.

3.14.2.4.2.2 (01-01-2024)
OLNR Notice Conversion

  1. The OLNR system allows the user to convert one CP Notice type to another, when account actions/adjustments require a different type of notice be sent to the taxpayer. Example: An incorrectly transcribed return identified during review of the notice, needs an adjustment to the account on IDRS. The review and adjustment results in the removal of all math errors but the taxpayer account will still have a balance due. The original notice must be converted from a math error notice to a non-math error, balance due notice (CP 161).

  2. Most field values from the original notice will be transferred into the conversion notice, where they can then be adjusted by the examiner, if necessary.

  3. If any IDRS adjustment actions will be reflected in the converted notice, use the appropriate adjustment hold code to prevent unnecessary adjustment notices.

  4. When converting from an overpaid to a balance due notice you will need to input the correct pay by date. Refer to the posting cycle chart in the BMF Notice Review Job Aid 2533-701.

3.14.2.4.2.3 (01-01-2024)
OLNR Access and Notice Disposition

  1. OLNR for the correct site production must be requested in BEARS. OLNR manager is used by specific personnel to monitor inventory and run data reports. OLNR manger requires a separate BEARS request.

  2. Once access has been approved navigate to OLNR with the correct site link. Refer to the OLNR section of the BMF Notice Review Job Aid 2533-701 BMF Notice Review Job Aid 2533-701.

  3. Once the correct OLNR link has been accessed, choose the BMF inventory. Then locate the correct batch to be worked using the search box. Enter the batch in the box and hit enter on your keyboard. Open the correct batch by mouse clicking on the number displayed.

  4. The Notice Disposition screen will then appear on the screen. It contains all of the sequence numbers for the selected batch. As each case in the batch is reviewed, the user selects the disposition code for the desired notice action.

  5. The OLNR Notice Disposition Program sends the selected disposition codes to the mainframe. The disposition data is used to compile the Notice Disposition Report. The disposition code entered for each notice will determine how the notice will be handled by the back-end printing programs.

3.14.2.4.2.4 (01-01-2024)
OLNR Notice Disposition Codes

  1. Available notice disposition codes in alpha order are:

    1. E - Entity-Only Notice Change. The notice is completely correct except for a name or address issue.

    2. H - Hold Notice - The notice will not be mailed in the current cycle. This disposition must be approved by Headquarters with the exception of a quality error.

    3. L - Label Notice - Informational labels will be added to the top of the notice. Follow IRM 3.14.2.7.23.5 for when to label.

    4. P - Print Notice - The notice matches account data and the taxpayer needs the information.

    5. R - Retype Notice - When the notice needs to be changed to match current account conditions or multiple actions must be taken such as Entity and Label.

    6. V - Void Notice - The taxpayer should not receive a notice. These notices are removed from the print file and will never be received by the taxpayer. See IRM 3.14.2.7.23.3 for voiding notices.

  2. If a refund is intercepted/ deleted /stopped then the correct notice disposition above should be used in conjunction with "I" . Example: Review of the notice and account conditions identify a misapplied payment. The refund should be stopped and the misapplied payment transferred out of the module, however, the taxpayer still needs the notice for another math issue. Choose "RI" as the OLNR notice disposition to make the appropriate notice changes.

3.14.2.4.2.5 (01-01-2024)
OLNR Quality Review and Held Notices

  1. Every effort must be made to review, correct, and select disposition of notices in the current cycle to minimize negative impact to the taxpayer. Do not use "H" disposition in OLNR to hold notices past cycle without Headquarter analyst approval.

    Exception:

    If quality review of a notice results in a Tax Examiner error, the quality review unit should mark the notice disposition as" H" to allow for review and correction of the error. The notice must be corrected by the TE or production team in the cycle the notice generated.

  2. The OLNR system has programming limitations which can cause notices to fall out as a systemic held when the cycle closes out. On Mondays, (except Monday holiday weeks then Tuesday) a lead needs to research and resolve the systemically held notice and make sure the notice disposition is marked and any interest and penalties updated.

  3. If the TE or production team disagree with the quality review error, the production team has two business days to rebut the error. If the error is being rebutted, the production team must notify Headquarters analysts if the notice will be held past cycle close out.

  4. If the held notice disposition is allowed by HQ, notices should be worked as soon as the necessary information or document(s) are received to minimize any further delay to the taxpayer and possible additional accrual of penalties and/or interest.

  5. If a Balance Due notice is held beyond cycle (with approval), change the pay-by date to be consistent with the pay-by date of balance due notices generating in the cycle of the held notice's release. Recalculate the interest, penalties, and any other applicable fields. When inputting a disposition of “H” you must put a control status of “B” on the module and enter a STAUP for 8 weeks. When releasing the hold, reduce the STAUP to the appropriate number of weeks so that a collection notice is mailed to the taxpayer in the appropriate timeframe.

3.14.2.5 (01-01-2016)

Clerical Procedures

  1. This section describes the clerical procedures performed during the Notice Review process.

3.14.2.5.1 (01-01-2024)

Clerical Function

  1. The clerical function provides a wide variety of services critical to the NRPS system. These services, outlined in this section and in IRM 3.14.2.5.2, assist Notice Review TEs (and other customers) in providing accurate information to the taxpayer. The clerical support staff:

    • Orders and sorts tax returns

    • Distributes NRPS packages and related documents to the TEs

    • Corrects erroneous, and undeliverable notices

    • Stops refunds

    • Resolves CAF, RAF, MM, and SC mismatches on notices that generate on the Manual Intervention List

3.14.2.5.2 (01-01-2016)

Clerical Function Priorities

  1. This subsection contains instructions dealing with clerical function priorities. It includes instructions for associating tax returns and payment vouchers, reviewing priority, intercepting requests from other areas, notice corrections, and releasing notices to Receipt and Control.

3.14.2.5.2.1 (01-01-2024)
Associating Documents from Files

  1. When a return is needed to review a notice and/or transcript, request the document(s) needed using Form 2275 and route to Files per campus directions. The clerical staff is to monitor this basket daily and manually fax the Form 2275 requests to Files with a cover sheet identifying them as Notice Review NRPS Document Requests.

    Note:

    If Efax is being utilized then, input “Notice Review NRPS Document Request” in the subject line when sending the Efax to Files. Contact your local Planning and Analysis (P&A) analyst to identify the preferred method of communication with your Files site.

  2. All necessary documents (adjustment documents and tax returns) are associated with each batch before releasing to TEs. All NRPS batch sheets that do not need documents are routed directly to Notice Review.

3.14.2.5.2.2 (01-01-2016)
Additional LCF Selection

  1. Error Resolution System (ERS) may request that Notice Review select and correct a specific notice:

    1. ERS Tax Examiner must prepare Form 3465 and send it with the return to Notice Review.

    2. Local Control File (LCF) Key 091 is used to select the notice for review by DLN.

    3. Notice Review Clerical Support will associate the return and Form 3465 with the NRPS batch and release the case to the Tax Examiner Unit.

3.14.2.5.2.3 (01-01-2023)
Priority of Review

  1. The Clerical Support Unit will distribute the work in the order indicated below: Refer to IRM 3.14.2.1.8 for additional information.

    1. Selected Overpayment Notices and Refund Transcripts-Tax examiner must complete this review before the pre-determined cut-off of CC NOREF (4:00 PM Eastern Time, Thursday). Local management must decide the disposition of overpayment notices not reviewed by the cut-off. In doing so, consider prior cycle error rates of the individual CP Notices and selection keys.

      Caution:

      Treat notices selected by BMF Key 52 as overpayment notices because the current cycle refund is the reason for the review.

    2. Selected Balance Due Notices.

3.14.2.5.2.4 (01-01-2024)
Intercept Requests from Other Areas

  1. It is not the responsibility of Notice Review to stop refunds at the request of another area. If a request is received via phone or fax, inform the requestor that they should contact their own area to have the refund stopped. If the requestor indicates that they do not have access to IDRS or do not have CC NOREF in their profile, they should contact their area to address this issue.

  2. Other functions may request that an incorrect notice be corrected or stopped. However, it has to be a selectable notice, and the request has to be received in Notice Review within established deadline cut off times.

    1. See below for the deadlines for requesting a notice:

      If the request is for Then the Request Must Be Received By
      A current cycle notice Close of Business (COB) Thursday before the 23C Date of the notice.
      A subsequent cycle notice The request must be received by 12:00 PM Thursday (local time) before the notice cycle.

    2. Notice Review Clerical Team uses Command Code NRP97 (Local Control File) to select the notice.

      Note:

      Tell other functions that the notice request deadline is Thursday 12:00 PM local time per LCF local procedures.

3.14.2.5.3 (01-01-2024)

Manual Intervention CAF/RAF/MM/SC

  1. Manual intervention may be required on selected and non-selected notices.

  2. The notices generated on the Manual Intervention List do not meet NRPS selection criteria, however, it has been decided that they do require some sort of manual review and correction. Manual intervention conditions are as follows:

    1. Central Authorization File (CAF) mismatch.

    2. Reporting Agent’s File (RAF) mismatch.

    3. Both CAF and RAF (multiple) mismatch issues (MM)

    4. Service Center (SC) address mismatch.

  3. If the notice is not selected by NRPS, the notice (and the manual intervention condition) appears on the Manual Intervention List. These appear in batches beginning in the 9000 series (9xxx) in OLNR. Manual Intervention batches 96XX are worked by Large Corporation employees only.

    1. The list shows one line for each notice, sorted by notice sequence number.

    2. Maximum of 25 to a batch.

  4. If the notice is also selected by NRPS, the manual intervention information will be on the Package Contents page of the NRPS Package/Control D. If a manual intervention condition is present, the tax examiner must resolve it in addition to resolving the potential notice issue during the review. The clerical staff is only responsible for resolving the notices that generate on the Manual Intervention Listing.

  5. The Centralized Authorization File (CAF) is a computerized system of records which houses authorization information from both powers of attorney and tax information authorizations. The CAF system contains several types of records, among them taxpayer and representative records, tax modules and authorizations. For more information see IRM 21.3.7, Processing Third Party Authorizations onto the Centralized Authorization File (CAF).

  6. Authorizations recorded on the CAF are generally submitted on:

    1. Form 2848, Power of Attorney and Declaration of Representative

    2. Form 706, U.S. Estate Tax Return

    3. Form 8821, Tax Information Authorization

    4. Oral Tax Information Authorization (OTIA), paperless Form 8821

  7. Form 8655, Reporting Agent Authorization, is used to authorize a designated agent to assist an employer in making required tax deposits and tax information filings to federal, state, and local governments. For more information refer to IRM 21.3.9, Processing Reporting Agents File Authorizations. The Form 8655 allows a reporting agent the authorities listed below:

    1. File and sign certain tax returns filed electronically.

    2. Prepare FTDs and submit FTD information electronically.

    3. Receive duplicate copies of official notices, correspondence, transcripts or other information with respect to the electronic returns filed by the agent.

    4. Receive duplicate copies of official notices, correspondence, transcripts, filing frequency information or other information with respect to the FTDs submitted electronically by the agent.

    5. Provide information, as an “other third party,” to assist the IRS in deciding whether or not reasonable cause exists for penalty abatement when related to a filing or payment made electronically by the agent. Under these circumstances, the agent can be advised as to whether or not the penalty will be abated at the time the determination is made.

  8. Service Center Manual Intervention resolutions are required when the address is missing fields (example 00000 for the zip code) or the input fields do not match the United States Postal Service verified address.

3.14.2.5.3.1 (03-16-2023)
Processing Notices with a Central Authorization File (CAF) Mismatch

  1. The CAF copy of the notices should generate with the representative’s name and address on the notice. If the CAF copy is missing this information, it is considered a CAF mismatch condition and will be notated on the Notice List.

  2. NRPS will compile all CAF mismatch notices and include them on the Manual Intervention Listing. A literal will print out on the list indicating the CAF mismatch by notice sequence number and CP number.

  3. Research a CAF mismatch on CC CFINK with Taxpayer's TIN, and the specific MFT and tax period of the notice module.

    1. Review CFINK fields carefully to decide if the representative is authorized to receive notices.

      Caution:

      Make sure CAF STATUS on CFINK is GOOD STANDING before updating CAF notice information. Only representatives in GOOD STANDING and listed as YES for notice should receive notices.

    2. If a representative is found in good standing and yes for notice receipt, update CC CFINK with the CAF number(example XXXX-XXXXXR) overlaying the EIN and transmit to view the representative’s address. Repeat for each listed representative who is eligible to receive a notice. See below for CFINK Representative Decision Table:

      If Then
      YES is present in the CC CFINK NOTICE field

      1. The representative is authorized to receive notices. Use the CAF Status Decision table below to verify the representative should receive a notice.

      2. Type the name and address of each representative(s) on the notice tab and send the notice.
      NO is present in the CC CFINK NOTICE field.

      1. The representative is not authorized to receive notices.

      2. Delete the CAF notice using the Delete CAF/RAF check box on the CAF/RAF entity tab in OLNR.

  4. Check the CAF status line for any of the following words; Undeliverable, Suspended, Deceased, Disbarred, Retired or Good Standing. If present, follow the instructions in the CAF Status Decision table below:

    If Then
    The word Undeliverable is present on the CAF status line;

    1. The representative is no longer authorized or the mail is undeliverable.

    2. Delete the CAF notice using the Delete CAF/RAF check box on the CAF/RAF entity tab in OLNR.
    The words Disbarred, Suspended, Retired or Deceased is present on the CAF status line;

    1. The representative is no longer authorized.

    2. Delete the CAF notice using the Delete CAF/RAF check box on the CAF/RAF entity tab in OLNR.
    The words Good Standing are present on the CAF status line;

    1. The representative is authorized.

    2. Type a % then input the representative's name on the Sort Name Line in OLNR and include the representative's address, city, and state on the appropriate lines under the CAF Mismatch Tab.

      Note:

      More than one representative may be authorized to receive notices. Repeat the steps above for each representative.

    Note:

    If the name of the second representative is the same or similar to the first representative, and the address is identical, do not use the second representative. Delete the second CAF copy if applicable. If the representative for the CAF is the same representative for the RAF, delete the RAF copy.

  5. If RECORD NOT FOUND for the taxpayer on the CAF file, the representative is NOT authorized. Delete the representative notice copy.

    Note:

    For more information regarding notice disposition for representative notices , see, IRM 3.14.2.6.1.2.

3.14.2.5.3.2 (01-01-2024)
Processing Notices with a Reporting Agents File (RAF) Mismatch

  1. The RAF contains information about the authorizations that taxpayers give to their reporting agents for employment tax modules. The authorization allows reporting agents to file Forms 940, 940(sp), 941, 941(sp), 941-SS, 941-NMI, 943, 943(sp), 944, 945, 1042 or CT-1 for the taxpayer. The authorization also allows for reporting agents to make payments or deposits for Forms 940, 941, 943, 944, 945, 720, 1041, 1042, 1120 and/or CT-1.

  2. Reporting Agents File (RAF) notices are similar to CAF notices, in that a copy of the notice will generate to the taxpayer, and a copy will generate to the Reporting Agent. The RAF copy of the notice should generate with the representative’s name and address on the notice. If the RAF copy is missing any or all of this information, it is considered a RAF mismatch condition and will be identified on the Manual Intervention Listing with the literal RAF MIS.

  3. Use CC RFINK to obtain authorization information regarding the reporting agent.

    1. When CC RFINK is input with the Taxpayer EIN only, a list of MFTs and beginning tax period for the taxpayer will be displayed along with the reporting agent’s name, EIN and authorization information. Delete the RAF notice copy in OLNR if all representative tax periods (column TAXPRD) are after the notice tax period.

  4. When CC RFINK is input with the Taxpayer EIN only, the last column on the response screen is the Notice/Action/Payment (NAP) column. This column contains three fields which provide representative information:

    1. The first field in the NAP column is the Notice Indicator. The Notice Indicator identifies whether the reporting agent is authorized to receive copies of notices with a Y for yes or an N for no. See the Table below for a description of the values available for the Notice Indicator.

      Caution:

      The Notice indicator and Action indicator must be reviewed before taking action in OLNR.

      If RFINK NAP Notice Indicator is: Then
      Y The reporting agent is authorized to receive notices
      N The reporting agent is not authorized to receive notices

    2. The second field in the NAP column is the Action Indicator field. The Action Indicator field identifies the status of the representative.

      Note:

      See the Table below for a description of the values available for the Action Indicator

      If RFINK NAP Action indicator is Then
      A - Add Representative has been added and is allowed to receive a notice if the Notice indicator is also yes.
      D - Delete Representative has been deleted and is not allowed to receive a notice for that tax period regardless of the Notice indicator. Delete the RAF notice using the Delete CAF/RAF check box on the CAF/RAF entity tab in OLNR.
      E - End Dated Representation has ended but a notice may still be sent if the tax period is before the end date period and the Notice indicator is also yes.
      I - Inactive Representative status is not active and is not allowed to receive a notice for that tax period regardless of the Notice indicator. Delete the RAF notice using the Delete CAF/RAF check box on the CAF/RAF entity tab in OLNR.
      R - Revoked Representative status has been revoked and is not allowed to receive a notice regardless of the tax period or Notice indicator. Delete the RAF notice using the Delete CAF/RAF check box on the CAF/RAF entity tab in OLNR.
      U - Undeliverable Previous representative notices have been returned as undeliverable. Do not send a notice. Delete the RAF notice using the Delete CAF/RAF check box on the CAF/RAF entity tab in OLNR.

    3. The third field in the NAP is the Payment Indicator Field. The Payment Indicator identifies whether the reporting agent is authorized to make payments/deposits. This field does not have impact on notices.

      Note:

      See the Table below for a description of the values available for the Payment Indicator:

      If Then
      “P” is present The reporting agent is authorized to make payments and/or deposits.
      Blank The reporting agent is authorized to sign and file returns but not authorized to make payments and/or deposits.

      Note:

      Electronic Federal Tax Payment System (EFTPS) modules will have a payment indicator of P.

      Note:

      See IRM 2.3.16-4 Command Code RFINK - Output Format for more information.

  5. If a representative is found, after transmitting CC RFINK with the notice EIN, without a definer, verify the starting tax period. If the notice tax period and MFT are identified as having a representative, verify the Notice Indicator and Action Indicator have statuses allowing representative notices per paragraph 4 above.

    1. If the Notice Indicator and Action indicator statuses allow notices, input RFINK definer R and type or copy and paste the reporting agent’s EIN over the taxpayer EIN and transmit to receive detailed information which contains the representative mailing address.

      If Then
      CC RFINK shows a Notice Indicator Y , the tax period on the notice is within the range of beginning and ending tax periods, and the Action Indicator allows a notice Choose E disposition in OLNR and type the name and address of each representative(s) on the CAF/RAF entity tab to send the notice.
      CC RFINK shows a Notice Indicator N or the tax period is not within date range, or the Action Indicator does not allow a notice Delete the RAF notice using the Delete CAF/RAF check box on the CAF/RAF entity tab in OLNR.

      Note:

      If the representative for the CAF is the same representative for the RAF, void the RAF copy.

  6. For more information regarding notice disposition for representatives see, IRM 3.14.2.6.1.2.

3.14.2.5.3.3 (01-01-2024)
Processing Manual Intervention Notices with CAF and RAF Mismatch (MM)

  1. Research the CAF Mismatch using IRM 3.14.2.5.3.1.

  2. Research the RAF Mismatch using IRM 3.14.2.5.3.2.

  3. Update all OLNR entity tabs as necessary.

3.14.2.5.3.4 (03-16-2023)
Processing Manual Intervention Notices with an Address Mismatch (Service Center Issues-SC)

  1. Service Center Manual Intervention cases require careful review of the full address due to possible missing fields (example: 00000 for the zip code) or state and zip code mismatch conditions verified against United States Postal Service Zip Code Lookup.

  2. Use all available research tools including but limited to CCs FINDE, NAMEE, and the IAT Address tool.

  3. Once a full address is identified, use the USPS Zip code look up tool to verify the found address against postal service standards.

  4. Update the OLNR entity tab with the new/corrected address.

  5. Update the address in IDRS. For more information see IRM 3.14.2.7.1.3.3.

    Note:

    The Integrated Automation Technologies (IAT) Address tool MUST be used by the centers to make address changes in IDRS.

3.14.2.5.4 (01-01-2024)

NRPS Local Control File

  1. The NRPS Local Control File processing is designed to allow each Campus the option to obtain additional notices for review. BMF has a priority option that when exercised, moves the analysis for the selection from Category H to the second highest Category B. The Local Control File priority option does not override the Category A selection criteria.

  2. There are three programs used by Clerical to update and maintain the NRPS Local Control Database.

    1. Program NRP97 is used by Notice Review to add, change and delete records on the Local Control Database. Program NRP97 is an IDRS Command Code accessed from any IDRS terminal. The request must be done by 12:00 PM (local time) Thursday before the new cycle is loaded. For more information see IRM 2.4.45, Command Code NRP97.

    2. Program NRP98 is a batch processing program executed by operations each Friday. This program creates Local Control File tapes for input into the weekly NRPS processing. Local control reports are produced detailing the contents of the Local Control File. These reports are intended to be reviewed by Notice Review before the input of the Local Control tape files into the weekly National Account System (NAS) program. NRP98 is run on Saturday AM before running NRP11.

    3. Program NRP99 is a batch processing program executed by Operations after the completion of the weekly NRPS processing. This program deletes records from the Local Control Data Base as a result of the NRPS processing, or when a TIN or DLN record has remained on the Data Base for six weeks. Local Control reports are produced by this processing. These reports show which records were deleted and why they were deleted and detail the records remaining on the Data Base.

      Note:

      Refer to IRM 2.4.45, IDRS terminal input of CC NRP97.

  3. NRPS Local Control Data Base consist of ten NRPS record types:

    • NRPS-TIN-REC

    • NRPS-DLN-REC

    • NRPS-TPNC-REC

    • NRPS-MFT-TAXPRD-REC

    • NRPS-CPNUM-REC

    • NRPS-BAL-DUE-REC

    • NRPS-LG-CORP-REC

    • NRPS-ADJ-REC

    • NRPS-Employment-CD-REC

    • NRPS-MISC-REC

  4. Each record type may be updated by command code NRP97 with a unique command code definer. The NRP97 CC Definer table below is a list of both the definer codes and the record types:

    Definer Record Type
    T SSN/EIN
    D DLN
    N TPNC
    M MFT/PERCENTAGE
    C CP NUMBER/PERCENTAGE
    B Balance due amount
    L Large Corporation
    A ADJ REASON CODE/PERCENTAGE
    E EMPLOYMENT CODE/AMOUNT
    I Miscellaneous IMF/BMF OPTIONS

    1. These command code literals appear on the BASIC OPTIONS menu screen generated by command code NRP97.

    2. Besides the updating options (display, change, add, delete), there are two options provided on the command code screens. The OPTION-MENU is used to display the Basic Options menu screen on which the user may select another option to continue updating another NRPS record type. The EXIT TAP option is used to clear the entire screen and continue to input another command code if desired, or to sign off the IDRS terminal.

  5. Do not run NRPS command code to update records in between the weekly runs NRP98 and NRP99. However, you can use them for research during this period. If any records have been updated in between these two runs, these updated records will not appear on the NRPS Data Base after NRP99 run. This restriction will ensure continuity in the data base throughout the weekend NRPS runs.

  6. Data Retention: Records will only be deleted from the NRPS Local Control Data Base under the following circumstances:

    1. EIN (except Large Corporation), ERS DLN and Full DLN records are automatically deleted when selected for review or after six weeks if not selected.

    2. Any record may be manually deleted by selecting the appropriate Option from the Option Menu, keying in enough information to identify the record. Then use the X to select the Delete action and hit XMIT key.

  7. Data change: Any existing local control record may be altered as desired. To use this capability:

    1. Select the appropriate Option from the Option Menu.

    2. Enter enough information to identify the record.

    3. Alter the record as desired and use X to select the change action.

    4. Hit the XMIT key to save the changes.

  8. Selection Keys- The following is a list of the Selection Keys assigned when a notice is selected for review by Local Control:

    1. 06 - Large Corporation selection

    2. 90 - EIN Selection

    3. 91 - ERS DLN selection

    4. 92 - CP number Selection

    5. 93 - Balance Due Amount Selection

    6. 94 - Full or Partial DLN Selection

    7. 95 - Penalty Code Selection

  9. Substitute Keys: Selection Keys 85, 86, 87, 88, 89, and 99 are reserved for use as Substitute Selection Keys. Substitute Keys can only be used to replace Selection Keys 90 through 96. Large corporation, TPNC, Exception Override and normal criteria selections do not have substitute keys. Terminology:

    1. Batch processing is simply a computer term for any computer program that executes without human intervention except for duties normally performed by a computer operator.

    2. Interactive Processing is the opposite of Batch processing. This is a computer program designed to interact with a person, normally using a remote terminal as the interactive device.

    Note:

    Percentages valid on Command Code NRP97 (Local Control File) -1%, 10%, 25%, 33%, 50%, 75%, and 100%.

3.14.2.6 (01-01-2024)

General Review Procedures

  1. The following section contains procedures Notice Review TEs should follow when reviewing notices and transcripts.

  2. TEs must verify the tax return information, if available, contained on the notice by utilizing the information in the NRPS Package and IDRS research Command Codes to ensure the notice contains correct information.

  3. At the beginning of each cycle, NRPS provides a charge out sheet (based on the assigned selection key) to Files for returns that may be needed for review. However, the selections key is not always an indication that a return should be ordered from Files. The return is not always necessary when reviewing certain keys and notices.

    • Appropriate IDRS research using CC’s TXMODA, BRTVU, TRDBV, etc., should be completed. If the research is not conclusive, the return should be ordered from Files.

    • The return must be ordered from Files if necessary for review to ensure the accuracy of the notice.

    • If the return is needed and was not requested via a NRPS charge-out (described above), request the return using CC ESTAB. If unable to secure the document from files via ESTAB, initiate a special search request, using Form 2275, Records Request, Charge and Recharge. Mark notice disposition H as approved by Headquarters.

    • Efile (ELF) returns can be reviewed using BRTVU or TRDBV. Some Forms 941, 943, 944 and 945 (depending on DLN) can be reviewed using the Employee User Portal (EUP) to access Modernized e-File (MeF) and viewing the Return Request Display. In addition, in 2023 scanned paper 940 and 941 returns received from Lockbox locations, will be viewable in MeF and can be identified with Filing Location Codes (first two digits of the DLN) 40, 42 (KCSPC) and 91(OGSPC).

    • If you are reviewing a math error notice with a balance due of $250,000 or more or an overpayment of $100,000 or more, you are required to have the return. Request the return using CC ESTAB. Input CC NOREF using the IAT tool and mark the notice with an H disposition. Correct the notice disposition when case is completed.

    • The return is generally needed when reviewing Key 54. See IRM 3.14.2.6.15 for complete instructions.

    • If the return is not provided, the entity portion must be reviewed to ensure that the taxpayer will receive the notice and it is correct.

  4. All related tax modules and associated notices must be reviewed and resolved, as applicable, when a notice is resolved. No additional count is permitted for associated notices and/or modules resolved with the notice module.

  5. The notice module may contain multiple issues. All issues must be resolved before marking notice disposition. Refer to all appropriate sections of IRM 3.14.2 to ensure proper analysis and resolution of notice issue(s).

  6. Use the appropriate CC (TERUP, NOREFD, etc.) to reverse actions that may have been performed in error. Be mindful of specific time frames associated with your reversing actions. Contact the team lead for clarification if unsure. Some of the more common Command Codes used by Notice Review can be found in IRM 3.14.2.7.2, Common Command Codes used in Notice Review.

  7. History Items are required when taking action on the notice module. If the notice module is not available on CC TXMOD, a history item is not necessary. Do not create a module just to leave a history item.

  8. If research indicates an OPEN control base on the notice module, take the following actions:

    • Always contact the employee identified on an OPEN control base in "A" status prior to taking any action on the account.

      Exception:

      Do NOT initiate contact with the employee, if the open control is assigned to a clerical unit. Clerical units are often identified by all zeroes in the last 5 digits of the employee number (i.e. XXXXX00000), although numbers other than zero may also be used.

      Caution:

      Certain Freeze Codes require contact regardless of status code on the module. For a listing of these Freeze Codes, refer to IRM 3.14.2.7.6 entitled, Freeze Codes.

    • After two attempts at contact (phone or e-mail) regardless of response, or if no response is received within two days after contact is initiated, take the appropriate action to resolve the notice.

      Note:

      When taking an action on a module with an OPEN case control, place the employee with the OPEN control in “B” status, take the appropriate action, then place the employee back in “A” status.

  9. To ensure consistency and adherence to the processing procedures contained in IRM 3.14.2, do NOT establish local procedures without first contacting the Headquarters analyst. To maintain the accuracy of IRM 3.14.2, corrections and change requests can be sent to the IRM author or program owner in several ways. See, IRM 1.11.6.6, Providing Feedback About an IRM Section - Outside of Clearance, for further details.

    Note:

    Before submitting corrections and/or change requests for IRM 3.14.2 via the SERP Feedback Application, consult the lead or manager for assistance to verify if the request for an IRM change or correction is valid.

  10. The following information and instructions attempt to address situations that are encountered most often when reviewing notices. These instructions cannot address every possible situation and/or issue encountered . They are to be used in conjunction with all the information contained in IRM 3.14.2 and classroom training. When in doubt, contact your team lead or manager.

3.14.2.6.1 (01-01-2023)

Authorized IDRS Access

  1. You are permitted to access only those tax modules required to accomplish your official duties. While working assigned cases, SP employees may come across some accounts that are blocked on IDRS. These accounts can be identified by the IDRS security violation message, “Unauthorized Access to This Account”. If you receive this message, input an H Disposition to hold the notice and forward the case (e.g., BMF Tax Form, copy of IDRS transcript or NRPS quick print) to your manager. Managers will notify the local Planning and Analysis Staff, who will scan the case and send the encrypted information to the≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡account mailbox to request access to the account. Managers will retain the original case in a file awaiting access (can take up to 5 business days). Once access has been granted, the case can be worked following applicable procedures.

3.14.2.6.1.1 (01-01-2023)
Additional Review Requirements

  1. After completing the General Review procedures located in IRM 3.14.2.7, continue with the following instructions found in IRM 3.14.2 as appropriate:

    • Math Error Condition - IRM 3.14.2.7.7

    • CP 267 and CP 268 - Q- Freeze - IRM 3.14.2.7.8

    • CP 161 Balance Due Notices - Non-Math Error IRM 3.14.2.7.9

    • CP 162 Balance Due Notice - Non-Math Error IRM 3.14.2.7.10

    • Reviewing Notices with Remittance Processing System "RPS" indicators - IRM 3.14.2.7.11

    • Refund Transcripts - IRM 3.14.2.7.12

    • Required Payment or Refund under Section 7519 - Form 8752 - IRM 3.14.2.7.13

    • Adjustment Notices - IRM 3.14.2.7.14

    • Selection Keys - Additional Review Required for Notices Generated Under Keys 09, 33,52, 54, 55, and 91 - IRM 3.14.2.7.15

    • CP 173 - ES Penalty - IRM 3.14.2.7.16

3.14.2.6.1.2 (01-01-2024)
Manual Intervention Centralized Authorization File (CAF) and Reporting Agents File (RAF)

  1. If Manual Intervention conditions on the notice module are identified on the NRPS contents page, use the following to determine notice resolution and disposition:

    1. If the notice generates with the representative's name and address in the entity, manual intervention will indicate match.

    2. If the notice generates with the representative's name and address blank, manual intervention will indicate mismatch

    3. Manual intervention may indicate any combination of CAF Match, CAF Mismatch, RAF Match, or RAF Mismatch.

    4. Use CCs CFINK and RFINK on IDRS to decide notice disposition for CAF/RAF mismatch and locate an authorized representative's name and address.

    Note:

    For more complete instructions for reviewing CAF/RAF notices please refer to ,IRM 3.14.2.5.3, Manual Intervention CAF/RAF/MM/SC , IRM 3.14.2.5.3.1, Processing Notices with a Central Authorization File (CAF) Mismatch and/or IRM 3.14.2.5.3.2, Processing Notices with a Reporting Agents File (RAF) Mismatch.

  2. Notice disposition when a valid Authorized Representative is not located. Refer to the Invalid Representative DispositionTable below.

    If And disposition of original CP is Then
    NO is present on CFINK or NO is present on RFINK Print Select OLNR disposition E (Entity) and void the CAF or RAF Entity copy.
    NO is present on CFINK or NO is present on RFINK Label Select OLNR disposition R (Retype) and void the CAF or RAF Entity copy. Then select the appropriate label from the Label Drop Down Menu.
    NO is present on CFINK or NO is present on RFINK Retype Select OLNR disposition R and void the CAF or RAF Entity copy.
    NO is present on CFINK or NO is present on RFINK Void No action required.
    Disbarred, Suspended or Deceased is indicated Print Select OLNR disposition E and void the CAF or RAF Entity copy.
    Disbarred, Suspended or Deceased is indicated Label Select OLNR disposition R and void the CAF or RAF Entity copy. Then select the appropriate label from the Label Drop Down Menu.
    Disbarred, Suspended or Deceased is indicated Retype Select OLNR disposition R and void the CAF or RAF Entity copy.
    Disbarred, Suspended or Deceased is indicated Void No action required.
    If the representative address is undeliverable Print Select OLNR disposition E and void the CAF or RAF Entity copy by checking the box located on the Entity Tab Screen.
    If the representative address is undeliverable Label Mark OLNR disposition R and void the CAF or RAF Entity copy by checking the box located on the Entity Tab Screen. Then select the appropriate label from the Label Drop Down Menu.
    If the representative address is undeliverable Retype Mark OLNR disposition R and void the CAF or RAF Entity copy by checking the box located on the Entity Tab Screen.
    If the representative address is undeliverable Void No action is required.

  3. Notice disposition when an authorized representative's address is located. Refer to the CAF/RAF Notice Disposition table below.

    Disposition of Original CP CAF/RAF Match Additional Action Required CAF/RAF Mismatch Additional Action Required
    PRINT None

    1. Select the OLNR disposition E.

    2. Add the CFINK or the RFINK address information to the CAF or RAF Entity Copy on the OLNR server.
    VOID None None
    RETYPE None

    1. Select OLNR disposition R.

    2. Add the CFINK or the RFINK address information to the CAF or RAF Entity copy on the OLNR server.
    LABEL None

    1. Select OLNR disposition R.

    2. Add the CFINK or the RFINK address information to the CAF or RAF Entity copy on the OLNR server.

    3. Select the appropriate label.

3.14.2.6.1.3 (07-07-2023)
Account Information

  1. Verify the following items for each selected notice:

    • Employer Identification Number

    • Document Locator Number

    • Name

    • Address

    • Return Received Date

    • Tax period

    • Signature(s) for refund returns only

    • Taxpayer correspondence (if applicable)

    • Payments and credits

    • Discovered remittance (if applicable)

    • Dishonored payments and bad check penalties

    • Offsets

    • $100 million refunds

    • Pending transactions

    • Slipped blocks and mixed data blocks

3.14.2.6.1.3.1 (01-21-2021)
Employer Identification Number (EIN)

  1. Compare the EIN on the return (if the return is necessary to complete the review of the notice or if the return is available for viewing on EUP) to the notice quick print. EIN discrepancies must be routed to Entity Control. The majority of business returns require an EIN, but an SSN followed by a one letter code is used for Form 8288, Form 709 and Form 706 (V for valid SSN and W for an invalid SSN on BMF). Use CC NAME with the proper definer if you have reason to believe the EIN may have been changed. It may be necessary to use CC BMFOL if the account is for an EIN that is not available on CC TXMOD.

3.14.2.6.1.3.2 (01-01-2016)
Document Locator Numbers (DLN)

  1. Always verify the DLN on your return with the DLN on the notice or NRPS package to ensure that you are reviewing the proper document. If the DLNs do not match, follow local procedures to request the correct document.

3.14.2.6.1.3.3 (01-01-2024)
Name and Address

  1. Refer to the instructions below to determine if changes should be made to the Primary Name Line.

    • If there is a misspelling, typographical error, or extra characters (e.g., extraneous %) in the first name line or Continuation of first name line (CONT-OF-PRIM-NM), correct the misspelling, typo or extra characters using CC ENREQ.

    • If a Trustee name on the notice is different from the Trustee name on the return, send to Entity. Exception: If et al (and others) following a name, do not forward to Entity.

  2. If the return is available (if the return is necessary to complete the review of the notice or if the return is available for viewing on EUP), compare the name on the tax return to the name on the notice or entity part of the Transcript.

    • If the name on the return is illegible, check the signature, return envelope or other attachments to determine the taxpayer’s name.

    • If the name on the notice is different, check CC INOLE under the EIN for the correct Master File name.

  3. If the taxpayer is requesting a Trustee name change, send to Entity.

  4. Because of the nature of the BMF tax account, ALL OTHER FIRST NAME LINE CHANGES MUST BE SENT TO ENTITY FOR CONSIDERATION. An error will be charged if name changes other than those listed above are initiated by a Notice Review employee.

    Note:

    Follow your local procedures when routing your document to Entity.

  5. Before deleting a refund for a Primary name correction, decide if the taxpayer will be able to cash the check.

    If the taxpayer will be able to cash the check:

    • Allow the refund.

    • Use IAT and OLNR to correct the name on IDRS in accordance with the guidelines in paragraphs 1-4 above.

    If the taxpayer will not be able to cash the check:

    • Stop the refund.

    • Correct the name on IDRS and OLNR if the difference is a misspelling or typographical error.

    • Release the refund ( 290 .00 posting delay of 1).

  6. Address - Compare the address on the tax return if available (if the return is necessary to complete the review of the notice or if the return is available for viewing on EUP) with the notice or refund transcript address. The notice must match the return. If the address is illegible, check the return and all attachments for clarification. If the notice and return do not agree, use the zip code directory, USPS, to verify street, city, state and zip code.

    Note:

    The Integrated Automation Technologies (IAT) tool MUST be used by the centers to make address changes.

  7. The FINALIST program is standardization software used by the United States Postal Service (USPS) to ensure addresses are valid and correct. FINALIST knows if building numbers are valid and is used to ensure the IRS’s outgoing mail, notices, tax packages, etc., comply with the USPS address standards.

    1. An address that is entered into IDRS and does not meet the USPS standards WILL NOT update and/or post with the input address.

    2. The USPS allows thirteen characters (including spaces) for city names. FINALIST will abbreviate city names if needed to reduce the number of characters to thirteen.

    3. FINALIST will also abbreviate street names if over 13 characters. However, a list of abbreviations used by FINALIST is not available.

      Note:

      Abbreviated street or city names are acceptable regardless of the FINALIST program or Pipeline processing. Do not change. Allow the abbreviation.

      Example:

      PENNSYLVANIA AVE posts as PENN AVE; WASHINGTON DR is posting as WA DR

  8. The general guidelines to follow when making address changes are below:

    1. Never change an address to an in care of unless the request is signed by the taxpayer or authorized representative. If a return, extension, etc., is received with an "in care of " address and is signed by the taxpayer, process the change.

    2. Change the address if signed correspondence is received from the taxpayer with the old street address lined through and a new address is written in.

    3. If the return has a response written on it, accept the information as coming from the taxpayer. Process the change even if the return is not signed.

    4. If a photocopy is received without an original signature, do not change.

    5. Requests for changes of address from Certified Public Accountants (CPAs), attorneys, etc., will be honored only if we have a valid Power of Attorney on file. Use CC CFINK to check for Power of Attorney.

  9. The entity must be changed in the following instances:

    1. The notice contains an incorrect or misspelled street suffix. Even though the Post Office can deliver by street name alone in most cases, all street suffixes (e.g., Avenue, Boulevard, Circle, Drive, Road, Street etc., or their acceptable abbreviations) must be correct on the notice, regardless of where the error originates.

    2. If the notice has incorrect or missing bldg./trailer/apartment number/Suite/Room you must make the correction.

    3. If the notice has an “in care of” symbol (%) with no name or representative, remove the “%” from the notice and IDRS. It is not necessary to send to Entity.

    4. If the return or notice contains both a PO Box number and a numbered street address, put the PO Box in the street address field and the street address in the location address on ENMOD. Correct the address on OLNR to the PO Box.

    5. If a number is shown as part of the city, it must be spelled out. See example in the “Guide to Changing City” table below.

      Address on Notice Corrected to Notice
      29 PALMS TWENTY NINE PALMS
      1000 OAKS THOUSAND OAKS

    6. If North, South, East or West, (or N, S, E or W) is shown at the beginning of the city name, no change is necessary.

    7. A city or town name (that is too long) will only be abbreviated for lack of space in the IDRS field.

    8. Correct obviously misspelled cities and incorrect abbreviations. If you have any questions about valid abbreviations refer to IRM 3.24.38.3.4.14.8, Street Address. Use the USPS web site or other internet search engines to determine the correct spelling or abbreviation of an address.

    9. FT and ST are allowable abbreviations and do not need to be spelled out.

      Note:

      Use of the USPS web site is not required on every notice. Refer to the team leader if in doubt about any part of an address.

  10. When notices are printed with LOCAL as the address. The following instructions must be followed:

    1. Use CC ENMOD to find the latest entity information on a taxpayer.

    2. Input a CC FINDS/FINDE to obtain the taxpayer's current address information.

    3. Follow local procedures to find the location address if available.

    4. If none of the procedures shown above give a current address to use, then change the address to GENERAL DELIVERY after using the United States Postal Service (USPS) web-site to verify the zip code.

      Note:

      Do not mail a notice with LOCAL as the address.

    5. If the notice contains % or C/O name on the address line, add to the "In Care Of" line and delete from the address line.

    6. If the notice contains an address in the "In Care Of" name line that is identical to the address line, delete the "In Care Of" line.

3.14.2.6.1.3.3.1 (01-01-2023)
Service Center Addresses

  1. Selected notices may contain a service center address. When the notice has a Service Center Address, follow the instructions below.

  2. Research the module. If there are ID Theft (IDT) Indicators on the notice module, do NOT update the address.

    Note:

    RIVO updates an address to a service center address when working certain IDT cases. For more information on these types of cases see, IRM 25.25.4.5 and IRM 25.25.4.6

    . If RIVO updated the address to a service center address, then RIVO is the area that should update that service center address to an actual address. Do NOT update the address if there is a service center address with identity theft indicators.

    1. ID Theft Indicators (RIVO markers) will appear on CC ENMOD, TXMOD, UPTIN or TRDBV. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡

      Note:

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

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  3. If ID Theft indicators are on the module, input an “H” disposition for the notice and refer the case to the lead who will refer to HQ for additional guidance.

  4. If there are no ID Theft (IDT) Indicators on the notice module, use the following research methods to locate the correct address and update the notice and IDRS module accordingly:

    1. Use CC ENMOD to find the latest entity information on a taxpayer.

    2. Research the return, AMS and EUP, if available to determine the correct address.

    3. Use CC FINDS/FINDE to obtain the taxpayer's current address information.

    4. If the current address is found, mark the E disposition and update the address on the notice, then update the address in IDRS.

3.14.2.6.1.3.4 (01-01-2024)
Return Received Date

  1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Any return received ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ after the RDD must have the envelope attached and will carry the stamped IRS Received Date as the return received date unless the postmark date is on or before the RDD (as extended). See IRS Received Date Decision Table below.

    Exception:

    A late filed return that was overlooked in processing may not be stamped. An incorrect received date will adversely affect penalty and interest computations.

    If the postmark date is Then the return received date is
    On or before the RDD and the postmark was made by the United States Postal Service, or a designated private delivery service under IRC Section 7502(f) The RDD will be the return posting date regardless of when the return was received.
    After the RDD The IRS Received Date (IRS Date Stamp) will be the return posting date.

  2. The TC 610 date on the tax module is the return received date. The DUE/RCVD DATE field in the NRPS package also shows the received date.

  3. If there is a question about the received date, decide the correct received date in the following priority:

    Note:

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

    1. Earliest postmark date on envelope

    2. Taxpayer signature date

    3. Julian control date minus 10 days in the DLN

    4. Current date minus 10 days.

  4. IRC 7503 provides that, in the case where the due date for filing or paying falls on a Saturday, Sunday, or legal holiday, the return or payment is considered to have been timely filed or made on the due date if it is mailed on the next succeeding day which is not a Saturday, Sunday, or legal holiday. “Legal holiday” means any legal holiday in the District of Columbia, or any Statewide legal holiday of the State where the taxpayer files their returns.

  5. The Failure to File (FTF) penalty is the only penalty that should be adjusted manually for Return Received Date recomputation issues. Interest should not be adjusted manually. When the FTF is adjusted manually the computer will adjust the interest. (See IRM 3.14.2.6.17.1 Recomputation of Interest and Penalties-General.)

3.14.2.6.1.3.5 (01-01-2023)
Tax Period

  1. For Business Returns, the type of return filed can have varied period/year endings. They are:

    1. Calendar Year: These are for a consecutive 12-month period ending on December 31. The tax period for this type of return is in the format CCYYMM. The acronym CCYYMM stands for the Century (CC), the Year (YY). the Month (MM). Each acronym is represented in 2 digit format, so it would appear on Business Returns as 202312.

    2. Fiscal Year: These are for a consecutive 12-month period ending on the last day of a month other than December.

      Example:

      A return with a tax period ending January 31, 2023, would indicate a tax period of 202301.

    3. Short Year: These are for a consecutive period of fewer than 12 months. (See IRM 3.14.2.6.4.6 Short Period Returns.)

    4. Quarterly: These returns are filed 4 times a year (within a consecutive 12-month period beginning January 1, and ending December 31)

      Example:

      A first quarter return (January - March 31) would indicate a tax period of 202303 in format CCYYMM; second quarter, (April -- June 30) would indicate a tax period of 202306 in format CCYYMM, etc.

  2. Compare the year on the tax return (if the return is necessary to complete the review of the notice or if the return is available for viewing on EUP) to the tax period on the notice or on the NRPS Package Contents Page.

    1. Look for cross-outs and changes to the tax period part of the return.

      Note:

      Taxpayers often file their returns using the incorrect year tax forms.

    2. Fiscal year returns are indicated at the top of the tax return.

    3. If the return is posted to the wrong tax period, reprocess the return to the correct tax period. (See IRM 3.14.2.6.18 Reprocessing Returns.)

3.14.2.6.1.3.6 (01-01-2024)
Signatures

  1. Tax returns are legal documents and must have a signature.

    Exception:

    The following are processed without signatures:

    • Returns prepared by IRS under IRC 6020(b), referred to a Substitute for Returns or SFRs.

      Note:

      If the taxpayer signs the SFR it becomes the return of such person under IRC 6020(a).

    • Returns prepared by Examination, for example SFR (Substitute for Return).

    • Dummy returns filed by IRS.

    • Returns filed under IRC 501(d) (Religious or Apostolic Organizations).

    • A blank return with a CP 139 attached (e.g., notification that Form 941 or Form 940 may no longer be required because four consecutive 941 tax years were received with "NO LIABILITY").

    • Correspondence containing a signature and jurat is attached showing that the taxpayer is responding to an IRS letter.

    • Re-entry returns originally filed electronically (MeF). The presence of E-File printouts or Tax Return Print (TRPRT) may identify these returns as in lieu of an actual return.

  2. A signature must be on the return, statement or other document required under the tax laws and regulations, unless, the signature is on an attachment to the return or other required document (e.g. letter/check, etc.) and contains a JURAT that the taxpayer is signing the return or other required document under penalties of perjury.

  3. Tax return preparers may use a signature stamp to facilitate signing large numbers of returns; see facsimile signature, below. Taxpayers, however, must continue to sign returns with original signature.

  4. Facsimile signatures- Internal Revenue Procedure 2005-39 outlines the use of facsimile signatures by corporate officers or duly authorized agents when filing certain employment tax returns or certain information returns. The Revenue Procedure includes the following tax forms:

    • Form 94X series and any variant, including but not limited to Form 940, Employer's Annual Unemployment (FUTA) Tax Return; Form 941, Employer's QUARTERLY Federal Tax Return; Form 941-SS, Employer's QUARTERLY Federal Tax Return (American Samoa, Guam, the Commonwealth of the Northern Mariana Islands, and the U.S. Virgin Islands 2023 and prior); Form 943, Employer's Annual Federal Tax Return for Agricultural Employees; Form 944, Employer's ANNUAL Federal Tax Return; Form 945, Annual return of Withheld Federal Income Tax, and Form 941X, Form 943X, Form 944X, and Form 945X

    • Form 1042, Annual Withholding Information Return for U.S. Source of Foreign Persons.

    • Form 8027, Employer's Annual Information Return of Tip Income Allocated Tips.

    • Form CT-1, Employer's Annual Railroad Retirement Tax Return.

      The facsimile signature may be in the form of a rubber stamp, mechanical device or computer software program. The corporate officer or authorized agent is responsible for ensuring their facsimile signature is affixed to return. For more detailed information, please refer to Revenue Procedure 2005-39.

  5. If the signature is missing on a tax return requesting a refund and the tax module contains a Computer Condition Code (CCC) 3 or E in IDRS, process the notice module as if the tax return was signed.

  6. If CCC 3 or E are NOT present review the return attachments and ENMOD to verify a letter has been sent to the taxpayer requesting a signature. If indication of a signature request letter cannot be found, stop the refund and send a 143C letter requesting a signature. Follow procedures in IRM 3.14.2.7.11.

3.14.2.6.1.3.7 (01-01-2024)
Taxpayer Correspondence Attached to Return

  1. If taxpayer correspondence is discovered attached to the return, review it and follow through as necessary. Follow Policy Statement P-21-3 (formerly Action 61) requirements if more than 25 days have elapsed from the date the return was received.

  2. If the correspondence is requesting action to be taken on the notice module, see Correspondence Decision Table below.

    If Then
    The action can be taken Take the necessary action.
    Retype the notice as appropriate.
    Update History on IDRS, indicting CORRW/RTN as first History Item; indicate notice disposition with second History Item.
    Mailing of the notice within cycle will satisfy Policy Statement P-21-3 (formerly Action 61) requirement.
    The action cannot be taken Photocopy the tax return and the original letter.
    Attach the photocopy of the letter to the original tax return.
    Route the original letter with a copy of the tax return to Accounts Management. (Write photocopy on the copy of the tax return.)
    An Interim letter is required if more than 25 days have elapsed from the return received date.
    Update the account History to indicate action(s) taken.

  3. If the taxpayer is requesting an Installment Agreement or indicates an inability to pay and there is no indication the letter was forwarded to Collections:

    1. Copy the letter and attach the copy to the return.

    2. Notate the original letter was sent to collections.

    3. Route the original letter to Collections.

    4. Make sure the taxpayer's name, address, and EIN is indicated on the correspondence.

    5. Input a CC STAUP for 9 cycles.

    6. An Interim letter is required if more than 25 days have elapsed from the return received date.

    7. Update the account History to indicate action(s) taken.

  4. Route Reasonable Cause requests to Accounts Management.

    1. If the account is in balance due status, input CC STAUP for 9 cycles.

    2. An Interim letter is required if more than 25 days have elapsed from the return received date.

    3. Update the account History to indicate action(s) taken.

    4. The table below can be used as a guide to determine reasonable cause.

    Examples of Reasonable Cause
    Death, serious illness, or injury of the taxpayer or their immediate family
    Unavoidable absence of the taxpayer
    Destruction by fire or other casualty of the taxpayer's place of business or records
    Delay due to erroneous information from an Internal Revenue Service employee. See IRM 20.1.1.3.2.2.5, Erroneous Advice or Reliance, regarding the conditions for reasonable cause.
    Delays caused by, or related to, civil disturbances outside of the taxpayer's control
    Timely requested forms not received timely
    Advice or aid sought in preparing returns from Internal Revenue Service representative on or before the due date, but through no fault of the taxpayer, they were unable to see a representative
    Taxpayer is unable to determine the amount of deposits or tax due for reasons beyond the taxpayer's control
    Taxpayer does not have access to their records
    Events beyond the control of the taxpayer. For example, the Post Office shredded the taxpayer's return, a bank substantiates the taxpayer's claim that the delay was caused by the bank, etc.
    Taxpayer relies upon their accountant, and reasonable cause for the accountants' failure can be established
    While inability to pay is not reasonable cause forlate filing, lack of funds is reasonable cause for failure to pay ONLY when it is shown that the taxpayer was unable to pay despite their exercise of ordinary business care and prudence. (Make this determination using the information available in the taxpayer's statement.)

  5. If correspondence indicates missing information that was not added when the tax return was processed, or requests assistance in computing tax or credits that is beyond the scope of Notice Review:

    1. Void the notice.

    2. Route to Accounts Management.

    3. Make sure the taxpayer's name, address, and EIN is indicated on the correspondence.

    4. Input CC STAUP for 9 cycles if the account is in balance due status.

    5. An Interim letter is required if more than 25 days have elapsed from the return received date.

    6. Update the account History to indicate action(s) taken.

  6. If the correspondence is referencing a tax module(s) other than the notice module:

    1. Check IDRS for an open control base. See IDRS Open Control Base Decision Table below.

      If Then
      There is an open control base Route the original letter to the tax examiner who has the case controlled.
      Indicate correspondence attached to original return on routing document.
      There is no open control base and the requested action has not been taken Input CC STAUP for 9 cycles.
      Route case to Accounts Management.
      Indicate correspondence attached to original return on routing document.

  7. The guidelines for Policy Statement P-21-3 (formerly Action 61) are established to ensure the taxpayer receives an accurate, professional and timely response to correspondence submitted to the Service. In Notice Review, we will be responsible for sending interim responses to correspondence attached to original tax returns when it is decided the action requested has not been taken. If it can be decided the action requested has been taken, the mailing of the notice will satisfy our responsibility for the requirement.

3.14.2.6.1.4 (01-01-2016)
Payments and Credits

  1. This subsection contains instructions dealing with payments and credits. It includes information on discovered remittance, dishonored payments, Bad Check Penalties and Bank Adjustments.

3.14.2.6.1.4.1 (01-01-2016)
Discovered Remittance

  1. When reviewing tax returns, especially Non-Math Error Balance Due notices, thoroughly search all attachments (including envelopes) for payments.

  2. Use the following procedures to process a discovered remittance:

    1. Prepare Form 3244 (Payment Voucher) in duplicate.

    2. Attach the carbon copy to the front of the tax return under the Entity section.

    3. Use CC ACTON to input a history item of DISCREMIT on IDRS.

    4. Input CC STAUP for 8 cycles on all balance due modules.

    5. Void, retype, or label the original notice as required.

    6. Prepare Form 4287 - Record of Discovered Remittance.

    7. Give remittance and the original copy of Form 3244 to team lead.

3.14.2.6.1.4.2 (01-01-2023)
Dishonored Payments and Bad Check Penalties

  1. A penalty is imposed on dishonored checks or other forms of payment that are returned from a financial institution unpaid.

  2. Bad checks penalty associated with the dishonored payment will be identified on Master File and IDRS as a TC 280 (manually computed and assessed penalty) or TC 286 (systemically computed and generated penalty).

  3. If a Dishonored Payment transaction (TCs 611, 641, 651, 661, 671, 681, or 691) and penalty (TC 280 or 286) are pending on the notice module:

    1. Delete any refund resulting from the dishonored/bad check.

    2. If the refund was deleted, wait for the TC 841 to post.

    3. Input CC STAUP for 6 cycles if a balance due remains.

    4. Retype the notice to include the Dishonored Payment Penalty (Notice Penalty Code 04). Update the balance due, refund amount, or credits on the notice using CC COMPA and CC INTST.

      Note:

      Use CC COMPA to update the module because CC INTST will not be accurate until the TC 280 or 286 posts.

    5. Issue a manual refund for large dollar refunds if it can be done within the 45 day period, if the taxpayer is still entitled to a refund despite the dishonored payment/bad check.

  4. For additional information, see IRM 20.1.10.7.

3.14.2.6.1.4.3 (01-05-2016)
Bank Adjustments

  1. There may be instances where payments are encoded incorrectly on a taxpayer’s account. If an obvious encoding error is discovered, refer to the Bank Adjustments Decision Table below.

    If And Then
    The payment can be located on Remittance Transaction Research (RTR) system The amount of the check matches the amount posted to the account No further research is needed. Resolve the notice issue.
    The payment can be located on RTR The amount of the check does not match the amount posted to the account This may be an encoding error. Print a copy of the check from RTR and follow the directions in the boxes below.
    Math error notice and the notice module is overpaid and a refund is scheduled to be released The payment is less than what the taxpayer is claiming 1. Allow the refund.
    2. Mail the notice.
    3. Contact the Payment Correction Team (at the SP site that processed the payment) for resolution.
    Math error notice and the notice module is overpaid and a refund is scheduled to be released The payment is more than what the taxpayer is claiming

    Note:

    If the verified payments total $5,000.00 or more, issue a manual refund for the corrected refund amount. Void the notice, leave a history and follow Item 4 in next box.

    		 1. Intercept the refund using CC NOREF via the IAT tool.
    2. Use Refund Deletion code 99.
    3. Close your control base.
    4. Contact the Payment Correction Team (at the SP site that processed the payment) for resolution.
    The notice is a non-math error notice Notice is balance due Void notice.
    Leave History Item
    Input CC STAUP for 9 cycles.
    Contact the Payment Correction Team at the SP site that processed the payment) for resolution.
    Notice is a non-math error notice Notice is credit or even balance Void notice.
    leave History Item.
    Intercept Refund and/or freeze credit on module.

    Note:

    When working CP 267 or CP 210, if there is a bank adjustment, the credit must be frozen or refund intercepted so the bank adjustment can be done prior to the credit being erroneously refunded.


    Contact the Payment Correction Team at the SP site that processed the payment) for resolution.
    The notice is a math error notice with a balance due The notice has EFTPS payment(s) Mail the notice. Contact the Ogden Payment Correction Team at 801-620-7801 for resolution.
3.14.2.6.1.5 (01-01-2024)
Offsets

  1. Internal Revenue Code IRC 6402 (a) allows the IRS to offset payments against tax liability. Internal Revenue Code IRC 6402 (c)-(f) require a taxpayer’s overpayment be applied to any outstanding non-tax debts including child support, federal agency non-tax debt, state income tax obligations or certain unemployment compensation debts owed to a state. Offsets under IRC 6402 (c)-(f) must be made prior to crediting the overpayment to a future tax (credit elect) or allowing a refund. This application of a tax overpayment is called a refund offset. Refund offsets to child support, federal agency non-tax debts, state income tax obligations and unemployment compensation debt are handled by the Bureau of the Fiscal Service (BFS) through the Treasury Offset Program (TOP). This occurs after a refund is certified by Internal Revenue Service (IRS) for payment by BFS, but before the refund check is issued or direct deposit is transferred to the taxpayer’s bank account. For additional information see IRM 21.4.6.

  2. There are three types of refund offsets:

    • Tax offset,

    • Treasury Offset Program (TOP) offset, effective 01/11/1999

    • Debtor Master File (DMF) offset, prior to 01/11/1999

  3. A tax overpayment must offset to an outstanding tax debt before it offsets to non-tax debts or is applied to a credit elect.

  4. The priority of offsets within TOP are:

    1. Office of Child Support Enforcement: Temporary Assistance to Needy Families (TANF) (payments to the state) and/or

    2. Non-Temporary Assistance to Needy Families (non-TANF) (payments to the custodial parent through the state)

    3. Federal Agencies

    4. State income tax obligations

    5. Unemployment compensation

  5. Command Code (CC) INOLE contains debt liability indicators based on information received from BFS. BFS debt records are updated daily; however, IRS CC INOLE is only updated weekly. Therefore, CC INOLE may not have the most current debt information. The indicators are used to identify an IRS freeze or tax debt, TOP non-tax debt, or both. These indicators are shared with Electronic Return Originators (EROs) on the Electronic Filing (ELF) acknowledgement file, and used by the EROs to determine whether to approve a Refund Anticipation Loan (RAL) The indicators are the letters: N, I, F, B. For a complete explanation of each code refer to IRM 21.4.6.4 .

  6. CC TXMOD also contains debt liability indicator, found directly below the TC 846 and is displayed in the form of the number “0” or “1”. The indicator is set at the time the TC 846 is generated on the module and is shown as: DMFLIAB-> 1 or DMF-LIAB-IND>0.

  7. Offsets occur when credit is moved between different tax modules and/or taxpayer accounts. Credits can be moved manually, or are computer generated.

    Note:

    "Money should not be moved manually with offset or lump sum transaction code if the Refund Statute Expiration Date (RSED) has expired. However, a payment can be moved if it was made less than 2 years before the claim was filed."

    Caution:

    All existing modules with a balance due≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡must be satisfied before inputting a manual refund or manually transferring a credit elect.

3.14.2.6.1.5.1 (01-01-2024)
Credit Elect-TC 830/TC 710 and 836/TC 716

  1. Review the return to decide if the taxpayer requested that all or part of their overpayment be applied to the subsequent tax period.

    Caution:

    If any balance due module contains an -E Freeze, do not manually offset credit to satisfy the module.

  2. When the request is transcribed properly from a current period return, the computer will automatically offset the credit (TC 836/716) if it is available.

    Caution:

    If credit elect is $ .99 or less the amount will not be automatically offset by the computer. In this instance the tax examiners do not have to manually transfer the credit.

  3. If the full amount of the credit is not available when the return posted:

    1. For Form 1041, Form 1120, Form 1120-C, Form 990-T, and Form 990-PF, the computer continues to offset as more credit becomes available until the full credit elect amount is satisfied. This capability only exists up to one year after the original tax period ending date.

      Example:

      Up to December 31, 2021 for a 202012 tax return.

    2. For Form 940, Form 941, Form 943, Form 944, Form 945, Form 720, Form CT-1, and Form 1042 the computer will not offset additional credit elect after the return posting cycle. A manual credit elect transfer must be input for subsequent offsets on these forms. (Input CC ADD48 on IDRS using TC 830/TC 710.)

  4. The following notices pertain specifically to credit elect situations:

    1. CP 147 - will only generate on an income tax return. It is issued when additional credit(s) become available and are computer offset.

    2. CP 145 - must be pulled and associated with the case when adjusting an account if the credit elect will be affected.

  5. Forms 940, 941, 943, 944, and 945 - When the refund box is checked, Integrated Submission and Remittance Processing (ISRP) System or Data Input System (DIS) will input a Refund Indicator, which generates the Computer Condition Code S at posting. When neither box is checked or the Applied to Next Return box is checked, the refund indicator is not input, Computer Condition Code E generates at posting, and the overpayment is applied to the next return (credit elect). Follow the instructions below:

    1. Verify that the entries match the Computer Condition Code posted to the notice module.

    2. If there is an overpayment on the account that will refund, and any of the following occur, apply the credit elect using (6) below:

      • Neither of the boxes are checked.
      • The return is not available.
      • The Computer Condition Code E is present on the notice module.

  6. If the Data Transcriber did not properly transcribe the credit elect request and the credit is refunding:

    1. Delete the refund.

    2. Use CC ADD48 to manually transfer the credit elect amount as a TC 830/TC 710. Be sure to use posting delay codes to allow time for the TC 841 to post to the module before the TC 830 posting.

  7. For Form 941 and Form 944, if the taxpayer entered the credit elect or total FTD credits on the Advanced Earned Income Credit line in error and an erroneous TC 766 credit is present, delete the refund. Adjust the TC 766, using CC REQ54 on IDRS. Manually transfer the claimed credit elect if not already offset by the computer.

  8. Master File will not automatically offset requests for credit elect on prior year income tax returns and/or subsequent requests on all non-income tax returns.

    1. Use CC BMFOL to review the subsequent period.

    2. Manually input all subsequent credit elects on all prior year returns.

      Caution:

      Never transfer credit elect from a module with an expired RSED.

    3. Transfer claimed credit elect directly to a module separated by more than one tax period (e.g., 20XX03 to 20XX09), if all of the modules in between claim the same credit elect, are settled modules, and no penalties or interest will abate. Use the correct dates and an Override Code "2" on the Doc Code 48 transfer.

    4. All other offsets (TC 826 or 896) have priority over a credit elect offset. Only reverse one of these offsets in favor of a credit elect when a TC 826 offsets to the subsequent period, and penalties and interest will decrease if a timely credit elect posts.

    5. Refer to the Credit Elect and Credit Offset Decision Table below.

    If Then
    The subsequent tax period has a balance due Delete the refund.
    The credit elect will cause penalties and interest assessed on the subsequent period to partially or fully abate Retype the settlement notice or void the CP 145.
    Taxpayer claimed the credit on the subsequent tax period and the credit elect field on the subsequent module has a significant amount Manually offset the credit elect.
    Otherwise Allow the refund.

  9. When increasing tax or reversing credits on the notice module, reverse all or part of a notice cycle credit elect to cover the debit. Input CC ADC48 using TC 832/712 on IDRS.

    1. Delete any current cycle refund on the subsequent module. Reverse the offset using a posting delay code to allow time for the TC 841 to post before the TC 712.

    2. Do not reverse a credit elect that was offset in a different cycle from the notice cycle.

      Example:

      If the notice generated in cycle 20XX15 and the TC 836 posted in cycle 20XX08, do not reverse the TC 836.

    3. Retype the original notice to include the CP 145. If a notice cannot be mailed take no action.

  10. If the credit elect from the prior year module (TC 716) was intended for another account, use CC ADD48 to transfer the credit with a TC 712/TC 710:

    1. Use the TC 716 date as the TC 712 date

    2. Use the date the credit was originally available as the TC 710 date.

    3. Reverse a TC 826 offset if there is a pending manual credit transfer

  11. When manually transferring credit elect, input TC 830/TC 710:

    1. If all payments or credits are timely ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, use the due date of the return as the 830/TC 710 date. Otherwise, use the date of the credit creating the overpayment as the TC 830/TC 710 date. In the case of a tax decrease (TC 291/295), use the due date of the return or latest payment date.

      Exception:

      For Form 1120 with a tax period ending in 06, the TC 830/836 date is the RDD plus one month. For example: on a 20XX06 return the due date is 101520XX and the TC 830/836 date is 111520XX. For Form 1120 returns beginning after 12/31/2015 (excluding those with a tax period ending in 06) , the TC830/836 date is the RDD (there is no need to add a month). Refer to IRM 21.7.4.4.5 (5), Estimated Tax Overpayment Credit Elect-General, IRM 21.7.4.4.5.

      Note:

      Multiple TC 830s may need to be input depending on the date the credit is available. Always transfer the most recent credits first.

    2. If a tax adjustment or credit transfer creates, or is a part of the overpayment, time the offset (TC 830) to post after the adjustment or credit transfer, by inputting a Posting Delay Code (See Use of Posting Delay Codes Table).

      Note:

      Timing the actions will allow all of the transactions to post and will prevent unintentional refunds and unpostables. If the required overpayment amount is not available, the computer will resequence the TC 830 for one cycle. The exact amount of credit must be available or the TC 830 will unpost.

      Reminder:

      An adjustment notice will generate the same cycle as a penalty reversal if a Failure to Deposit (FTD), Failure to File (FTF), Failure to Pay (FTP) (decrease only) or Estimated Tax (ES) Penalty recomputes.

    3. Refer to the Use of Posting Delay Codes chart below.

      If Then
      The penalty or interest will recompute because of an adjustment action.

      Note:

      If penalties and interest will not recompute, the Posting Delay Code on the TC 830 is not required.

      		 Use appropriate Posting Delay Codes to time the transactions to post in the following order:

      1. Adjustment or credit transfers and TC 290 .00 adjustments, if preventing an adjustment notice.

        Note:

        When inputting a credit transfer follow instruction in IRM 3.14.2.7.20

      2. The TC 830.

      3. The TC 571, if required.

        Caution:

        Check prior periods for debit modules before inputting the TC 830/TC 710. If no E Freezes are present, manually offset applicable credit to the debit module(s) with the earliest CSED(s) before applying forward. Use TC 820/700 with CC ADD24. Time the transaction to post in the same cycle as the TC 830/TC 710.
      A Doc Code 34 credit transfer will create the overpayment, use a Freeze Code 1 on the transfer.

      1. Input TC 290.00, Hold Code 3, appropriate Posting Delay Code, if the adjustment notice must be suppressed. See Note below.

      2. Input TC 830/TC 710, Doc Code 48, appropriate Posting Delay Code on the debit side of the transfer.

      3. Release module freeze, appropriate Posting Delay Code to post after the TC 830 if there is remaining credit that must refund.
      A Doc Code 24 or 48 credit transfer will create the overpayment, use a TC 570 on the credit side of the transfer.

      1. Input TC 290.00, Hold Code 3 if the adjustment notice must be suppressed. See Note below.

      2. Input TC 830/TC 710 with Doc Code 48.

      3. Release module freeze. Use appropriate Posting Delay Code to post after the TC 830 if there is remaining credit that should refund.
      A Doc Code 54 adjustment will create the overpayment, use Hold Code 4 on the adjustment. Input the TC 830/TC 710 on a Doc Code 48.

      Reminder:

      The TC 830 will release any remaining credit on the module when Hold Code 4 is used.

      Note:

      For more information on selecting the appropriate Hold Code, see, IRM 3.14.2.7.6.3, Hold Codes and IRM 20.1.2.2.10, Hold Codes and Notices.

    4. See the Credit Elect Notice Disposition chart below to determine the correct notice disposition.

      If And Then
      The CP 145 or settlement notice with the credit elect pop-in paragraph will be mailed to the taxpayer. Master File cannot systemically offset the additional credit elect.

      1. Manually transfer the credit elect (see above).

      2. Use label #7 to reflect the credit elect.
      The CP 145 or settlement notice with the credit elect pop-in paragraph will be mailed to the taxpayer. Master File can systematically offset the additional credit elect.

      1. Let Master File offset the credit. Do not input a TC 830/TC 710.

      2. Use Label #2. Allow the CP 147 to generate.
      All of the requested credit elect amount has now been applied. A CP 145 generated. Void the CP 145.
      All of the requested credit elect amount has now been applied. A settlement notice generated with the credit elect pop-in paragraph. Retype the notice to exclude the pop-in paragraph or void if returning to taxpayer’s original figures.
      The total credit elect applied is still less than the taxpayer’s figures. A CP 145 generated. Retype the CP 145.
      The total credit elect applied is still less than the taxpayer’s figures. A settlement notice generated with the credit elect pop-in paragraph. Retype the notice to correct the dollar amounts in the pop-in paragraph.

  12. Keep the following in mind when manually transferring credit elect:

    1. Use an Override-Date Indicator 2 on both sides of a Doc Code 48 if the debit and credit transaction dates are different.

    2. Use the date of the credit being reversed as the reversal transaction date.

    3. Do not transfer credit elect for an amount exceeding the available credit on the module.

    4. Do not transfer credit elect with a transaction date earlier than the due date of the return.

    5. Do not transfer credit elect with a transaction date earlier than the credit or payment that created the overpayment.

      Note:

      In the case of a tax decrease (TC 291/295), use the due date of the return or latest payment date.

3.14.2.6.1.5.2 (01-01-2016)
Lump Sum Credit Offset-TC 826/706 and 820/700

  1. Master File offsets available credit (with a TC 826/706) to an account on which a taxpayer has a balance due. A notice will generate to tell the taxpayer of the offset:

    Note:

    This offset to a debit account has priority over a requested credit elect except when an -A Freeze is present.

  2. CP 138 generates when an overpayment offsets to another tax liability.

  3. Use a Doc Code 24 credit transfer with a TC 701/821 to reverse an offset to a tax liability. Include a TC 570 on the credit side (TC 821) if the credit must be held. A Bypass Indicator is unnecessary.

    1. Make sure the reversal date matches the original offset date. Use CC BMFOLT to review a module that is not in the NRPS package or on IDRS.

      Caution:

      The TC 826 date may differ from the corresponding TC 706 date.

    2. Reverse multiple transactions in the order that the TC 826s appear on the module. Do not lump transactions together.

    3. Reverse a TC 826 offset if there is a pending manual credit transfer

  4. If an adjustment will leave a balance due on a module:

    1. Reverse the offset. Refer to the Offset Reversal Decision Table below.

      If Then
      There is a current cycle TC 826/706 offset Reverse it in whole or in part to satisfy the balance due. Do not reverse a prior cycle TC 826 unless timely credits are located to satisfy the account.
      The module that received the offset has a current cycle refund Delete the refund. Reverse the TC 826 using a Posting Delay Code to allow time for the TC 841 to post before the TC 821.

  5. Use CC ADD24 with a TC 731/851 to reverse offset interest (TC 736/ 856).

    Note:

    Use CC REQ54 with a TC 772 to reverse the TC 776. Use Hold Code 3 if needed.

  6. Void or retype the CP 138.

  7. When manually transferring offsets, input TC 820/700 on CC ADD24.

    1. Use the later of the Return Due Date (RDD) or the date of the credit creating the overpayment as the TC 820/700 date.

      Caution:

      Never transfer lump sum credit from a module with an expired RSED.

    2. Multiple TC 820s may need to be input depending on the date credit is available. Always transfer the earliest available credits first.

3.14.2.6.1.5.3 (04-03-2023)
TOP OFFSET

  1. Bureau of the Fiscal Service (BFS) initiates refund offsets to outstanding federal tax debts, child support, state income tax obligations and unemployment compensation debts via the Treasury Offset Program (TOP). These offsets are referred to as TOP offsets. A TOP offset appears on the module as:

    • TC 898 with an Offset Trace Number (OTN), an offset amount, and a debtor-TIN field, if the offset is for a secondary spouse.

    • OTN - Starting with 1 indicates primary taxpayer debt.

    • OTN - Starting with 2 indicates secondary taxpayer debt.

  2. TOP offsets occur after the IRS has certified a refund to BFS for payment (TC 840/846 on account), but before BFS direct-deposits the refund overpayment or mails the refund check.

  3. A TOP offset reduces the amount of the IRS refund by the amount of the TC 898 offset.

  4. A TOP offset does not affect IRS’ ability to stop a refund through (CC) NOREF, or the time frame involved to do so.

  5. A TOP offset Bypass Indicator (BPI) is assigned to all manual and systemic refunds issued to BFS by IRS. The BPI is a one-digit indicator that identifies for BFS whether the refund is eligible for offset by TOP.

  6. The BPI is posted/displayed along with the TC 840/846 on all output screens such as TXMOD, IMFOL, BMFOL, and on MFTRA transcripts.

  7. There are ten BPIs, 0 through 9. For a complete definition of BPI codes refer to IRM 21.4.6.4.2.1.

  8. TOP offsets are made against any refund issued from the following MFTs: 02, 03, 07, 10, 13, 29, 34, 44, 46, 52, 60, 63, 64, 77, and 78, unless a BPI is systemically generated on the refund or input on a manual refund. See IRM 21.4.6.4.2.1, TOP Offset Bypass Indicator (BPI).

    Note:

    For specific questions concerning offsets refer to IRM 21.4.6, Refund Offset.

3.14.2.6.1.6 (07-07-2023)
$100 Million Refunds

  1. An account with an overpayment of $100 million or more requires that a manual refund be issued because a TC 846 will not generate. Assign these cases to a work leader the same day they are received in the unit.

    Note:

    Refer to Document 6209 Document 6209 Freeze Codes for release of the -X Freeze.

  2. Use current procedures for resolving deletes to work the case:

    • Verify all unclaimed credits.

    • Offset the overpayment as needed to cover any debit balances.

    • Abate any interest caused by an overpayment not due the taxpayer.

  3. The account must be satisfied or in debit status before closing the control. If another area has an open control on the case, contact that area, and route all available documents to that area (remember to document this action on IDRS).

    Exception:

    The control base may be closed if there is an -L Freeze (see IRM 3.14.2.6.6.13 ) on the module and a Revenue Agent (RA) has advised that the credit not be refunded due to legal implications. Remember to document this action on IDRS.

  4. If, after any adjustments, the account has a credit balance less than $100 million :

    1. Offset credit to any debit-balance modules.

    2. Prepare a manual refund for the excess credit.

    3. Input manual refund using CC RFUNDR.

  5. If, after any adjustments, the account has a credit balance of $100 million or more, the Accounting Function must issue the manual refund:

    • Prepare Form 3753.

    • Send a copy of the original return, transcript, Form 3753, all prints essential to manual refunds, and any other documents about the case to the Accounting function. Refer to IRM 3.14.2.6.2.2, Manual Refunds, for more information.

  6. Close the control base after all account transactions post.

  7. Keep photocopies of the return and the transcript on file for future reference.

3.14.2.6.1.7 (01-01-2016)
Analyzing NRPS Data Sheet Appended

  1. NRPS extracts this data from the following sources:

    • Generalized Unpostable Framework (GUF) and Unpostable Files

    • Taped Edited Program (TEP) File

    • Error Resolution System (ERS) File Revenue Receipts

    • Unidentified Remittance and Excess Collection File

    • Resequencing File (RS)

    • Generalized Mainline Framework (GMF) Error, Block Out of Balance (BOB), and Reject Files (RF)

3.14.2.6.1.7.1 (01-01-2023)
Pending Transactions

  1. Pending transactions are account actions that have not posted to the taxpayer’s account by the notice cycle.

  2. Pending transaction data consist of transaction codes, dates, and amounts, account identifying information, and other pertinent data. This data appears with the name of its source file (GUF, TEP, etc.) under the Pending Transaction heading on the NRPS Package Contents Page. (See Document 6209, Section 14, Document 6209 Pending Transaction Identification Codes/IDRS Merge Related Transaction Codes ).

  3. Due to CADE 2 accelerating IDRS updates the amount of pending transactions should be reduced.

3.14.2.6.1.7.2 (01-01-2023)
Unpostable Transactions

  1. Unpostable transactions are transactions that require corrective action before posting to the Master File.

  2. Unpostable Codes (UPCs) identify the set of conditions that caused the transaction to be unpostable. Unpostable Reason Codes specify the various conditions that can be present for each UPC.

    Note:

    Document 6209, Section 8, contains descriptions of UPCs and RCs along with a list of unpostable resolution codes (URCs). This information will help decide the corrective action to take. See Document 6209 Section 8B Unpostable Codes and/or Document 6209 Unpostable Resolution Codes

  3. The GUF and the Unpostable Files show pertinent information about unpostable transactions on IDRS, including:

    • Transaction Code

    • Date

    • Dollar Amount

    • TIN

    • MFT

    • Tax Period

    • Cross Reference (XREF) Account

3.14.2.6.1.7.2.1 (01-01-2021)
Reviewing Unpostable Transactions

  1. A pending Unpostable will display one of the following identification codes next to the Transaction Code:

    1. Unnn or UP-An open unpostable transaction nnn is a numeric unpostable codes (e.g., 198 or 175).

    2. CU -A corrected unpostable. The transaction should post in the cycle displayed on IDRS

    3. DU -A deleted unpostable. This transaction will not post and has been deleted from the module.

    4. NU-A nullified unpostable to be resolved by the Rejects Function or by the originating tax examiner.

      Reminder:

      If the account is not on your local database, research controls or actions being taken on the remote database.

  2. Use CC UPTIN on cases open on the Unpostable File to provide useful information to the Unpostables Function. Only the Unpostables Function can correct and close a case on the Unpostable File.

    Note:

    The originating tax examiner may need to resolve closed cases.

    1. Use the unpostable code to decide what caused the unpostable.

    2. If Unpostables has closed the case, an Unpostable Resolution Code (URC) will describe the resolution (See Document 6209, Section 8b and reference IRM 3.12.279). Use this information to decide how the transaction will affect the notice and the notice module. Correct the notice (See IRM 3.14.2.7.10 Notice Disposition and IRM 3.14.2.6.14 , Adjustment Notices) and resolve the case. No further action is required on the unpostable.

    3. If the case is still open, check the transaction information to decide the cause of the unpostable. Overlay the CC UPDIS response screen with CC UPCASZ and input any history item information that will be useful in resolving the unpostable case.

      Note:

      If the case is still open ,check the transaction information to determine the cause of the unpostable and how it will effect the notice module and add the appropriate disposition to the notice.

    4. If the transaction can be posted as it is, leave a history item indicating that Unpostables should post the transaction without a change. The transaction may have been unpostable when it first reached the Master File.

  3. When a Notice Review Tax Examiner receives notification of an unpostable, the transaction has usually been deleted on IDRS. Use the Unpostable Code information to correct the transaction. Refer to the Unpostable Decision Table below.

    Note:

    Unpostables will open a control base for the originating tax examiner and include the transaction on the Nullified Distribution Listing.

    If the Then
    Error condition can be corrected Reinput the transaction with the corrected information.
    Error condition cannot be corrected Close the base. Input any necessary history items, TC 570s or CC STAUPs. Delete any incorrect refunds.
    Adjustment or credit transfer was already input by someone else Do not enter a duplicate transaction. Close the control base.

  4. Refer to the chart below for Common Unpostable Codes and Resolutions.

    UNPOSTABLE CODE ERROR CONDITION RESOLUTION
    UPC 305 A credit transfer input without a Bypass Indicator or a TC 570, attempts to post to a settled module.

    • When transferring a payment to a settled module, use CC UPTIN to tell the Unpostable (UP) Unit to allow the credit to post.

    • If the module balance changes to a credit balance and the credit is not to be released, input a TC 570 using REQ77, FRM77.
    UPC 313 Incorrect TC was used to reverse original TC in module. (no matching TC found) Determine what the correct TC should have been. Use CC UPTIN to alert the Unpostables unit to post with the correct TC. ( Input correct TC in remarks)
    UPC 316 Transaction date of credit transfer does not match date of the related TC. Use UPTIN to tell UP unit to post with the correct date. (Input correct date in remarks)
    UPC 316 Money amount not matching Input credit transfer with correct amount.
    UPC 316 Doc Code 24 credit transfer input for EFT payment without inputting the EFT indicator Re-input credit transfer using ADD/ADC24 with EFTPS indicator 1 or using ADD/ADC 34. (EFTPS indicator is not required)
    UPC 325 TC 820 or 830 amount exceeds the credit balance in the module Re-input the transaction by either waiting until the credit will be available or reducing the amount of the TC 820/830.
    UPC 328 A tax adjustment without Priority Code 8, is within $10.00 of a previous tax adjustment Decide if the adjustment is not a duplication. Re-input the adjustment with Priority Code 8.

  5. See IRM 3.12.279, titled BMF, Combined Annual Wage Reconciliation (CAWR), PMF Unpostable Resolution, for further information concerning resolving any of the UPC’s listed above.

    Note:

    UPTIN can only be used if the case is open on the UPTIN file.

    Note:

    The Unpostables Unit cannot correct money amounts.

3.14.2.6.1.7.2.2 (01-01-2024)
Preventing Unpostable Transactions

  1. Avoiding unpostables requires that the proper Priority Codes, Hold Codes, Bypass Indicators, Freeze Codes (or TC 570), and Posting Delay Codes be input with adjustment actions. When inputting a credit transfer, follow instructions in IRM 3.14.2.7.20. Use of the IAT tool is suggested to help prevent date and transaction code unpostable transactions. The following are actions to take to prevent unpostables:

    • Decide the correct TC.

    • Use Doc Code 24 to transfer credits between Master Files when a secondary TC is needed, or when changing the date on a posted transaction.

    • The debit and credit parts post separately on ADC 34 (3 cycle) and ADD 34 (2 cycle).

    • The debit and credit parts post together on ADC 24 and ADD 24.

  2. Review each account carefully before entering an adjustment or credit transfer.

    Note:

    The use of Integrated Automation Technologies (IAT) when inputting credit transfers is preferred. The IAT tool was designed to help reduce unpostable transactions and to prevent erroneous transactions from posting.

  3. Consider the effects of pending transactions, previous actions, freeze codes, module balances, and posted manual penalty and interest adjustments. Also consider the effects of the transaction being input.

  4. Contact any tax examiner with an open control base in A status only to coordinate actions on modules and prevent erroneous and duplicate adjustments. See IRM for additional instructions for contacting IRM 3.14.2.7(8).

  5. To prevent Unpostable Tax Adjustments (Doc Code 54):

    1. Be sure the adjustment is not a duplicate of a previous adjustment.

    2. Consider previous tax adjustments before inputting a subsequent adjustment, especially those within $10 of a previous adjustment.

    3. Look for manual adjustment of penalties and interest (TCs 160, 161, 170, 171, 340, 341 and 240 with PRN 722 or 723) that need correction or recognition when inputting an adjustment.

    4. Use the correct MFT, tax period, and name control.

    5. Input the correct Item and Credit Reference codes. Consider posted amounts and limitations for each code being input. Do not reduce Reference Number 886 below zero.

  6. To prevent Unpostable Credit Transfers (Doc Codes 24, 34, or 48):

    1. Follow instructions in IRM 3.14.2.7.7 Credit Transfers.

    2. Use the correct reversal transaction code for the posted transaction code.

      Example:

      Use TC 672 to reverse TC 670.

    3. Use the correct MFT, name control, and tax period.

    4. When transferring overpayments, make sure the credit to be transferred is available on the module. The TC 830/820 amounts cannot exceed the credit balance on the module.

    5. When transferring payments from an account, make sure the dates on both sides of the credit transfer match. The money amounts must not exceed the amounts of the transactions being reversed.

      Exception:

      TC 826 and TC 706 can have different transaction dates. Use the correct dates for the debit and credit transactions when reversing these transactions. See IRM 3.14.2.6.1.5.2 Lump Sum Credit Offset (TC 826/706 and TC 820/700) procedures.

    6. Use a Bypass Indicator 1 to allow the credit to refund, or use a TC 570 or Credit Freeze Code 1 to freeze the credit when transferring TCs 650, 660, or 670 to a full paid tax module (status 10 or 12) and the posting of the credit will create an overpayment of $1.00 or more.

    7. Use a Bypass Indicator 1 to allow the credit to refund, or use a TC 570 or Credit Freeze Code 1 to freeze the credit when transferring TCs 650 or 670 to a balance due tax module when the payment is dated later than the period ending and the posting of the credit will create a credit balance of $10.00 or more.

    8. Use a Credit Freeze Code 1 or input a TC 570 on the credit side of the transfer if the credit will be held. This will generate a -R Freeze.

      Note:

      Two TC 570s will not post simultaneously on a module, you should use only one TC 570 for multiple credit transfers.

    9. An EFT indicator is required on a 24 Doc Code for EFT deposits.

    10. Use a Posting Delay Code to delay the posting of a transaction so that it matches the posting cycle of another transaction. Enter 1 through 6 to delay the posting of a transaction for one to six cycles, respectively.

      Example:

      Use a Posting Delay Code to delay the posting of a Doc Code 48 debit transaction until a Doc Code 34 credit transaction posts.

3.14.2.6.2 (01-01-2024)

Common Command Codes Used in Notice Review

  1. Command Codes are used to perform taxpayer account research to aid in case resolution and to initiate changes to taxpayer accounts on IDRS (Integrated Data Retrieval System).

  2. The BMF Notice Review employees should use the Integrated Automation Technologies (IAT) tools. The IAT tools simplify taxpayer account processing by assisting the user with IDRS research and input. They are desktop productivity enhancing tools.

  3. If an IAT tool is not available, or an employee has a problem with the IAT TASK Manager (ITM), the account action should be processed manually on IDRS. If you have any questions or concerns contact your lead for help. For additional information regarding IAT functionality, reference the Job Aids on the Integrated Automation Technologies website..

  4. Below are the most commonly used IDRS Command Codes in Notice Review with a brief description of its use. For more information on the command codes listed below refer to the IDRS Command Code Job Aid:

      1. See Command Codes ACTON - BMFOL in the table below.

        Command Code: Used to:
        ACTON Open or close control base and input history items. See IRM 2.3.12, Command Code Acton, for more information.
        ADD/ADC24 Transfer one payment at a time or reverse one offset at a time.
        ADD/ADC34 Transfer one to four payments at one time. The credit side of the transaction will post one cycle after the debit side.
        ADD/ADC48 Input credit elect transactions
        ADJ54 (response screen for REQ54) Input adjustments including 290.00 freeze releases.
        AMDIS Review a display of any action or potential action initiated by the Examination Function.

        Note:

        The definer A (AMDIS A) limits access to a particular module.

        .
        BMFOL Research of nationwide entity and tax data information posted to the Business Master File (BMF)

      2. BMFOL is a very important research tool for Notice Review tax examiners. The below table defines the BMFOL definers used for research.

        Definer Display File Source MFT and Tax Period Result
        A Y Y Adjustment transactions including trans code, posted date, among, cycle, DLN, codes and other dates
        B Y Y CFOL038 Screen message or error screen.
        C N N Tax Module screen associated with input check symbol/check number, CFOL041, or CFOL042
        D Y N Deposit Schedules for Forms 941, CT-1, 943, and 945.
        E Y N Entity information including cross-ref TIN, freeze codes, indicators, codes, and posted transactions
        F Y N FTD coupon ordering information
        H N N Help screen
        I Y N On/off-line status of entity and tax modules, merge information, sign of module balance, posted return indicator, and IDRS service centers
        K Y Y Form 941 Lookback information
        L Y N Last tax module satisfied
        N Y N Index of Retention Register Tax Modules that do not have an associated Vestigial Entry
        O Y N Exempt organization information
        P Y N Payment Summary
        R Y Y Return DLN, cycle posted, transaction date, some schedules, codes, exemptions, amounts
        S Y Y Status histories
        T Y Y Control DLN, exemption total, settlement information, amounts, freezes, indicators
        U Y Y CAWR information
        V Y N Vestigial data (retention register)
        W Y Y Quarterly Form 941 information.
        Z Y N Audit history information
        # N Y Refund Checks (up to 5) associated with a particular TIN/MFT/Tax Period.

      3. See Command Codes BMFOR - COMPA in the table below.

        Command Code: Used to:
        BMFOR Access BMF retention tax modules from accounts that merged to a new TIN after the tax module had been dropped to retention IRM 2.3.59.4.
        BRTVU Review the transcribed and posted data for BMF returns. For more information refer to IRM 2.3.57.
        BNCHG (response screen for ENREQ input) Enter an entity change to an account on the TIF.
        CFINK Access the Centralized Authorization File (CAF), which contains information on the type of authorization that a taxpayer has granted a representative. For more information refer to IRM 2.3.31.
        COMPA Manually compute penalties and interest. The correct definer must be used when calculating the penalty. Refer to the CC COMPA Definers chart below. For more information refer to IRM 2.3.29.

      4. COMPA must be input with the correct definer to accurately manually compute penalties and interest. Follow the chart below for definer input.

        Definer Description
        C

        1. Before 01/01/1999 for a Non-Corporate Taxpayer

        2. Before 01/01/1995 for a Corporate taxpayer, regardless of the overpayment amount.

        3. On or after 1/1/95 for a Corporate taxpayer and the overpayment amount is less than or equal to $10,000.

          Caution:

          If the overpayment exceeds the $10,000 GATT threshold, the excess amount represents the portion of the overpayment that is subject to the lower GATT rate, and the overpayment will be computed at the GATT interest rate (COMPAG), regardless of the overpayment amount. See IRM 20.2.4.9.2 , Determining the GATT Threshold.
        A On or after 01/01/1999 for a Non-Corporate taxpayer
        D Used to compute debit interest. Provides percentages, factors, and dates for the computation. Limited to one computation per request.
        E Used to compute Estimated (ES) Penalty, accumulates and displays page totals, and provides estimated tax from and to dates in a formatted screen display for MFTs 02, 05, 33, and 44.
        F Used to compute Failure to Pay Penalty (FTP) (TC 276).
        G Credit interest after 12/31/94 for a Corporate taxpayer and the overpayment amount is greater than $10,000, or the GATT threshold has previously been met (See IRM 20.2.4.9.2, Determining the GATT Threshold.)
        M Used to compute multiple independent credit interest computations on the same page.
        R Used whenever several independent interest calculations are desired on the same page.
        S Used for the manual computation of the Estimated Tax Penalty.
        4 Used with certain estate tax modules. Computes interest at 4%.
        5 Used to compute interest at 45% of the current normal interest rate, and displays details of the interest computation on the response screen.

      5. See Command Codes ENMOD - INOLE in the table below.

        Command Code: Used to:
        ENMOD Request a display of a particular taxpayer's name, address, Fiscal Year Month (FYM) and filing requirements.

        Note:

        This CC is a prerequisite for CC ENREQ.
        ENREQ Make name, address, and miscellaneous changes to the data recorded on a taxpayer’s entity module (ENMOD).
        ESTAB Request or recharge documents. For more information refer to IRM 2.3.62.
        FIND (Definer E or S) Search for matching name(s) and address(es). For more information refer to IRM 2.3.60.
        FRM49 Reprocess a return to a prior year (quarter) module with a TC 140 present. For more information refer to IRM 2.4.26.
        FRM77 Response screen for REQ77 allows input of informational transactions on an account.
        FTDPN Manually compute FTD penalty on Form 940, Form 941, Form 943, Form 944, Form 945, Form 1042 and Form CT-1. For more information refer to IRM 2.3.28.
        IADIS Display all Installment Agreement data available on IDRS.
        INOLE Research the National Account Profile (NAP) file, which contains Master File entity information on all taxpayers by TIN. For more information, see IRM 2.3.47. Refer to the CC INOLE Definers chart below.

      6. The chart below explains which definer to use when researching TIN information with CC INOLE.

        Definer Description
        G Used when TIN type is unknown.
        S Displays name line information available for any account associated with the TIN.
        T Displays name line and street address for all accounts with the same EIN.

      7. Command code INTST computes the correct outstanding balance, including interest and failure to pay accruals, to the date specified in the input of the command code. For more information refer to IRM 2.3.29. The list of INTST definers is in the chart below:

        INTST definer: Definer Functionality:
        A Has the same capabilities as INTST no definer. In addition, accruals will be computed to the input date plus 10 days, 15 days and 21 days or any dates input, as long as they are less than 30 days.
        B Has the same capabilities as CC INTST no definer. In addition, it computes a separate total for other assessed penalties.
        D Is used to display FTP and Interest calculations.
        N Has the same capabilities as INTST no definer. In addition, accruals will be computed to the input date plus 30 days, input date plus 45 days, and input date plus 60 days.

      8. See Command Codes LETER -TRDPG in the table below.

        Command Code: Used to:
        LETER Input IDRS letters. For more information refer to IRM 2.4.6
        LPAGD Delete IDRS letters on the same day the letter was input.
        MFREQ Bring a module to the TIF for review on TXMOD.

        Note:

        Various definers can be used. For more information refer to IRM 2.3.10
        NAME (Definers B and E) Allow IRS employees access to the national file name and address data located at ECC-MTB. For more information refer to IRM 2.3.60.
        NOREF Delete (or intercept) a refund. Automatically establishes a control base with use.

        Note:

        Refer to IRM 3.14.2.6.1(4) (Refund Intercept) for valid definers for CC NOREF and IRM 2.4.37.
        PIEST Display an explanation of an estimated tax penalty (TC 176) computation. For more information refer to IRM 2.3.41.
        PIFTD Display an explanation of an FTD penalty (TC 186) computation.
        PIFTF Displays the computation of the Failure to File Penalty (TC 166).

        Note:

        CC PIFTF must be used to decide if the FTF penalty will recompute after payments are moved into and out of a module.
        PWACT Input answers to security questions which Activates PWMGT. This allows users the capability to reset their IDRS password and unlock their profile.
        RECON Show updates to for TXMOD to match BMFOL, bypassing the normal one to two week processing cycle. This is especially helpful to compute correct interest and penalty. See IRM 2.3.10 for more information.
        REQ54 Originate an adjustment to a tax module for tax, penalty, interest and other dollar amount information. For more information please see IRM 2.4.16.
        REQ77 Originate an informational transaction (such as an extension or reprocess information) input on the response screen FRM77.
        RFINK Research the Reporting Agent File. For more information refer to IRM 2.3.16
        SFDISP Display all authorized CC in an employee’s security profile. Also displays accessible sites and password management status.
        STAUP Delay, accelerate, or skip the issuance of notices to taxpayers. For more information refer to IRM 2.4.28.
        SUMRY Request a chronological listing of all available tax modules on IDRS (active on the TIF) for a particular TIN. For more information refer to IRM 2.3.11.
        TERUP Delete/ "tear up" an adjustment transaction, including credit transfers, name and address changes, etc., made to a taxpayer's account. For more information refer to IRM 2.4.13.

        Caution:

        The originator of the adjustment must input CC TERUP by 6:00 p.m. of the same day of input to ensure the transaction will be deleted/ "torn up" . For specific swing shift cutoff times, see your work lead.
        TRDBV Review tax return and related schedule data transcribed or received from electronically filed returns. Similar to BRTVU. For more information refer to IRM 2.3.73.
        TRDPG Response screen from input of TRDBV allows specific input of return data/pages.

      9. Command Code TXMOD is used to request all tax module information for a specific tax period on the Tax Information File (TIF). The display consists of Entity data, posted returns, posted transactions, pending transactions, control base information and reject data if available on IDRS TIF. The display shows the latest control DLN of the return. Use the following definers to access a specific module of a particular TIN. Refer to the CC TXMOD Definers chart below. For more information go to IRM 2.3.11

        Definer Description
        A Displays all tax module information for an account.
        C Displays control base and history data.
        L Displays pending transactions only.
        N Displays notice data.
        P Displays posted and pending transaction data.
        S Displays Campus and Master File status history data.
        X Displays status history and notice data.

      10. See the table below for common Notice Review unpostable command codes.

        Command Code: Used to:
        UPCASZ Add history information and comments to the CC UPRES screen.
        UPDIS Input the unpostable sequence number to bring up the response screen CC UPRES on IDRS. For more information refer to IRM 2.3.48.
        UPRES Review and resolve an unpostable case. Response screen to input of CC UPDIS with unpostable sequence number.
        UPTIN Display unpostable case data, including the unpostable sequence number used to input CC UPDIS. For more information refer to IRM 2.3.37.

3.14.2.6.3 (01-01-2016)

Unidentified Remittance and Excess Collections Files

  1. When there is insufficient information to properly apply credits to a taxpayer’s account (e.g., when a taxpayer does not claim a payment and the correct taxpayer cannot be located), funds may be transferred to the Unidentified Remittance File (URF - 4260 Account) or the Excess Collections File (XSF - 6800 Account). If a return is later filed claiming those payments, it may be necessary to request a transfer to move the payments from URF or XSF to the Master File. Please refer to IRM 3.17.220 Accounting and Data Control - Excess Collections File, for further guidance. If the credit is an FTD/EFTPS payment, the last five digits will reflect the FTD/EFTPS number into 9 through 13 digits of the original DLN. This will create a unique control number which reflects the credit’s origin.

  2. When a credit or payment is moved to the Excess Collection File (XSF) or the Unidentified Remittance File (URF), a Transaction Code (TC) 971, Action Code (AC) 296 must be input on the module, please refer to IRM 21.2.4.3.10.1(1) b . This is the final audit trail that indicates that all available research sources have been used. This requirement was part of the Excess Collection Task Group and was started in 1/2007. This applies to Excess Collection only.

    Note:

    TC 820 may indicate that a payment has been moved from the taxpayer’s account to URF or XSF. If the cross-reference TIN and tax period (next to the transfer DLN) are all zeros or nines, the credit was transferred to either the URF or the XSF. Matches with these files are displayed on the NRPS Appended Data page.

    1. Research CC XSINQ/URINQ for credits claimed by taxpayers.

    2. Credits less than 12 months old are applied to the Unidentified Remittance File. Credits over 12 months old are applied to Excess Collections. An application to move credits to Unidentified Remittances can be made in the 11th month.

      Exception:

      Credits with Document Codes 48, 58, or 65 may be added to the XSF regardless of age.

    3. Generated Refundable Credit (TC 766) will be accepted by Excess Collections.

  3. Excess Collections File (6800 Account)

    1. When credits and payments are over one year old and have not been applied back to a taxpayer's account on Master File, they are moved into the 6800 Account.

  4. If necessary to transfer credits or payments to the Unidentified Remittance File or Excess Collections File, see work lead.

3.14.2.6.3.1 (01-01-2024)
Requesting Payments from Unidentified Remittance File (Form 8765)

  1. Use CC URINQ to verify the availability of the credit.

    1. Complete the Form 8765. (See Figure 3.14.2-6, entitled, Form 8765 and Instructions listed below.) Attach current prints of CC's URINQ, BMFOL, or TXMOD to Part 1 of the form.

      Note:

      Current, for the purpose described throughout this section (3.14.2.7.3), denotes less than 7 days old before routing cases for payment application.

      Note:

      Remember Form 8765 must be forwarded to the correct Campus based on the DLN of where the money was applied.

    2. Input a CC STAUP for 9 cycles on balance due modules. This will prevent the generation of a notice while the transfer is being processed.

  2. After requesting application of payment, treat the notice as if payment(s) will be applied to the module.

  3. If the refund statute has expired, the application to move credits from Excess Collections File (XSF) must not exceed the tax liability, interest, and penalties. There can be no refund or credit elect. Timely payments will abate all but taxpayer-reported assessed penalties. However, timely payments will result in the abatement of taxpayer-reported assessed estimated tax penalties which can be identified with a TC 170 with a DLN that matches the return DLN. If the module contains a TC 170 with a DLN that matches the return DLN, use CC ADJ54 to post TC 170 .00 to prevent abatement of the taxpayer-reported assessed estimated tax penalty.

  4. Follow local procedures if the notice module is a statute year, before routing it to the Excess Collection unit.

    Figure 3.14.2-2

    This is an Image: 32201995.gif

    Please click here for the text description of the image.

  5. The instructions for Form 8765 are as follows:

    1. Source of Credit - Select the IDRS Control File where the credit is located. Choices are XSF or URF.

    2. Application Type - Use M when the credit is to be applied to a Masterfile account (use N when credit is to be applied to a Non-Masterfile account or use T when the credit is to be applied to a general account rather than to a taxpayer’s account).

    3. File Control Number - Must match the number shown on the XSF or URF record. Attach an IDRS print of CC XSINQ or CC URINQ.

    4. Notice Indicator- Check only if Letter 2349G is to be sent to the taxpayer. Note: If the "M" or "N" application was not based upon information received from taxpayer, then Letter 2349CG should be sent to the taxpayer

    5. Date Return Filed - IRS Received Date of the return. Enter in MM/DD/YY format. If received date is unknown, leave blank.

    6. File Name Control- Enter 4-character name control as shown on XSF or URF.

    7. Application Name Control- Enter 4-character name control of the module to which the credit is to be applied (if M application).

    8. Transaction Code (1) - See IRM 3.17.10-11 for URF or IRM 3.17.220-13 for XSF for a valid list of TCs to be used on M applications.

    9. Transaction Code (1) Amount - Amount of the credit to be applied in relation to TC (1).

    10. Transaction Code (2) - See IRM 3.17.10-11 for URF or IRM 3.17.220-13 for XSF for a valid list of TCs to be used on M applications.

    11. Transaction Code (2) Amount - Amount of the credit to be applied in relation to TC (2).

    12. Transaction Code (3) - See IRM 3.17.10-11 for URF or IRM 3.17.220-13 for XSF for a valid list of TCs to be used on M applications.

    13. Transaction Code (3) Amount - Amount of the credit to be applied in relation to TC (3).

    14. Taxpayer Identification Number- TIN to which credit is to be applied (used on M and N applications only)

    15. Tax Period- Enter the tax period to which the M or N application is to be made. Enter in YY/MM format

    16. MFT- Enter 2-digit MFT if application is M or N.

    17. Remarks - Required Entry on all requests for application.

    18. Preparer Name - Required Entry. Enter name of the person preparing Form 8765.

    19. Employee Number - Required Entry. Enter the IDRS employee number of the person preparing Form 8765.

    20. Stop Number - Required Entry. Enter the Stop Number of the person preparing Form 8765.

    21. Phone Number - Required Entry. Enter the phone number of the person preparing the Form 8765

    22. Manager’s Signature - Required Entry.

    23. Date - Required Entry. Enter the date the Form 8765 was completed.

3.14.2.6.3.2 (01-01-2016)
Requesting Payments From Excess Collections (Form 8765)

  1. To request a payment from Excess Collections File (XSF):

    1. Use CC XSINQ to verify the credit(s) is available.

      Note:

      The credit is not available if the remarks section of the XSINQ record indicates CLOS. Do not request transfer of the credit.

      Reminder:

      Remember Form 8765 must be forwarded to the correct Campus based on the DLN of where the money was applied.

    2. Complete Form 8765 to request the Excess Collection Function transfer payment/credit from XSF to the taxpayer's account. (See Figure 3.14.2-6, Form 8765 and Instructions.)

    3. Include a complete explanation of the reason for the request in the remarks section of Form 8765.

    4. Attach a current print (less than 7 days old) of CC TXMOD or BMFOLT and CC XSINQ to Form 8765.

    5. Route Form 8765 with attached research to the Excess Collection Team.

      Caution:

      If the refund statute has expired, the credit application must not exceed the tax liability, interest and penalties. Follow local procedures if the notice module is a statute year.

  2. After requesting application of the credit, complete notice disposition as if payment(s) will post to the module. Refer to the Notice Disposition Decision Table below.

    If Then
    Payment(s) is timely and all penalties will abate. Void notice and request subsequent notice utilizing LCF.
    Payment(s) is late or unsure of TC 186 penalty recomputation. Apply Label #2 and allow subsequent notice to generate.

  3. Input CC STAUP for 9 cycles on balance due accounts to prevent erroneous notices.

3.14.2.6.4 (01-01-2016)

Special Notice Review Issues

  1. This subsection contains instructions related to miscellaneous issues such as:

    • Taxpayers meeting Taxpayer Advocate Service (TAS) Criteria

    • Slipped or Mixed Blocks

    • Natural Disaster

    • Large Dollar Review

    • Short Period

    • Undeliverable

    • Conversion of Form 944 to Form 941

    • American Recovery Reinvestment Act of 2009

    • PII fraudulent returns

3.14.2.6.4.1 (01-01-2016)
Taxpayers Meeting Taxpayer Advocate Service (TAS) Criteria

  1. Taxpayers meeting TAS criteria will get priority handling. See IRM 13.1.7, Taxpayer Advocate Case Criteria, for additional information.

  2. If you are able to resolve and close the issue meeting TAS case criteria on the same day as the taxpayer contact, input history item (one day/CL). The definition of same day is within 24 hours. There will be times you can completely resolve the issue within 24 hours. There will also be times that you cannot completely resolve the issue within 24 hours. If you have taken steps within 24 hours to resolve the taxpayer's issue, these cases also meet the definition of same day. Do not refer these cases to TAS unless the taxpayer asks to be transferred to TAS. Refer to IRM 13.1.7.4, Same-Day Resolution by Operations.

    1. A case that meets the criteria above may be kept in the general area when the problem has been corrected.

    2. The taxpayer is advised of the name, phone number, and Identification (ID) number of the employee who resolved the problem.

    3. The taxpayer is provided the National Taxpayer Advocate toll-free number (877-777-4778) or TTY/TDD 800-829-4059, and is advised that TAS is available if further assistance is needed.

  3. When referring cases to TAS, use Form 911, Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance order) and forward to TAS in accordance with your local procedures.

3.14.2.6.4.2 (01-01-2021)
Frivolous Claims

  1. The IRS is faced with a growing number of individuals who file frivolous tax returns based upon tax avoidance arguments that are not supported by law. A frivolous argument is used for the purpose of expressing dissatisfaction with the substance, form or administration of the tax laws by attempting to illegally avoid or reduce tax liabilities. A list of potential frivolous return arguments can be found in IRM 3.12.38-8.

  2. If it can be determined that a return is a frivolous claim, refer the notice and return to the Return Integrity Verification Operation (RIVO), Frivolous Return Program immediately.

  3. Use the procedures outlined in IRM 21.5.3.4.16.7, Identifying Frivolous Returns/Correspondence and Responding to Frivolous Arguments, when referring frivolous claims and/or correspondence to the Ogden Campus Frivolous Return Program.

3.14.2.6.4.3 (01-01-2016)
Slipped Blocks and Mixed-Data Blocks

  1. "Slipped blocks" and mixed-data blocks occur when data from a document or payment posts to a module related to a different document or payment in the same block of DLNs. The erroneous data on the notice module usually belongs to the taxpayer whose document or payment is immediately before or after the notice document or payment in the DLN block sequence.

  2. Slipped Blocks have the following characteristics:

    1. A block (or part of a block) of documents or payments posted to the Master File incorrectly.

    2. The incorrect transactions have DLNs from other documents or payments in the same block.

    3. The DLN is usually from the document or payment immediately before or after the notice document or payment in the block sequence.

    4. A slipped block may result in erroneous refunds, incorrect notices, and/or lost or missing documents, returns, or payments.

  3. Mixed-Data Blocks have the following characteristics:

    1. A block (or part of a block) of documents or payments posted to the Master File incorrectly.

    2. The data is incorrect due to a transcription error.

    3. A mixed-data block may result in erroneous refunds and/or incorrect notices.

  4. Suspect a slipped block or a mixed-data block if any of the following conditions are present:

    1. The data on the notice module does not match the data on the document.

    2. A posted payment amount does not match the amount listed on the payment voucher.

    3. A payment is missing or is misapplied.

  5. Research and inspect the block:

    1. Review the Remittance Transaction Research (RTR) system to match checks with name/EIN. Refer to the RTR Decision Table below.

      If the Situation Involves And the Case is a Then
      Two or fewer taxpayers Slipped or mixed data block Resolve the case in Notice Review. (See IRM 3.14.2.7.19 , Case Resolution.)
      More than two taxpayers Slipped block Recharge and route the BMFOL prints and RTR check prints to the Accounts Management Function's Adjustments/Payment Tracer Unit.
      More than two taxpayers Mixed-data block Recharge and route the BMFOL prints and RTR check prints to the Accounts Management Function (Adjustments).

  6. When routing the case:

    1. Input CC STAUP for 9 cycles on any balance due account.

    2. Input a TC 570 on any credit balance account.

    3. Close the Notice Review control base.

    4. Enter appropriate history items.

    5. Indicate in the remarks section of Form 3465 that a. through d. above have been completed.

  7. Make every effort to resolve or route slipped and mixed data situations in cycle.

3.14.2.6.4.4 (04-03-2023)
Natural Disaster Procedures

  1. Use CC BMFOLT and/or CC ENMOD to check for FEMA disaster areas and use the date shown to calculate interest and penalties.

    Note:

    CC ENMOD can have several FEMAs listed, so verify you are using the dates for the correct filing period.

  2. Notice Suppression - The Disaster Relief Memorandum identifies the covered disaster area (zip codes) and the beginning and ending dates for notice suppression and/or stuffer requirements. If systemic notice suppression is established by an - O Freeze, no further action is required to suppress notices.

    Note:

    If an -O freeze is not reflected on the taxpayer’s account, whose address of record is in the covered disaster area, then input a TC 971 with an AC 688 via the IDRS tool to ensure that the account will not have any penalties and/or interest being assessed on it. Verify the area using Tax Relief in Disaster Situations before inputting a TC 971 AC 688.

  3. Penalty Adjustments - If the -O Freeze is not on the module, notices with zip codes in the impacted disaster areas may require penalty adjustments for the period designated in the Disaster Relief Memorandum. Use Local Control to select those notices with zip codes in the impacted disaster areas.
    Notice Review will review notices generated for taxpayers who have filed late tax returns, or submitted late payments during the disaster period. Notice Review will only address the Failure to File and Failure to Pay penalties if the following apply:

    1. If only the Failure to File penalty (TC 166) is assessed, the original or extended due date is within the disaster period, and the return received date is timely based on the disaster extended due date, abate the TC 166 for each month, or part of a month the penalty was assessed. See Federal Disaster Area IRC 7508A, IRM 20.1.2.2.2.2 .

    2. If only the Failure to Pay penalty (TC 276) was assessed and the original due date is within the disaster period, abate the penalty for each month and/or part of the month from the original due date to the extended due date that the tax remained unpaid.

    3. If both TC 166 and TC 276 penalties were assessed and the original or extended due date is within the disaster period, abate the part of the FTF penalty from the original or extended due date (if the original due date is within the disaster period). (See IRM 20.1.1 , Introduction to Penalty Relief and IRM 20.1.2, Failure to File/Failure To Pay Penalties for abatement procedures.)

  4. If the taxpayer notates on the front of the return the designated disaster phrase, abate the TC 166 and TC 276 per instructions in (2) above.

  5. If the taxpayer correspondence attached to the return is requesting relief of any penalty because of disaster damage or disruption, take the following actions:

    1. Decide if the taxpayer qualifies for TC 166 and/or TC 276 relief based on the disaster criteria. If the taxpayer qualifies, abate the penalty(s).

    2. If taxpayer does not qualify for relief based on the disaster criteria but may qualify based on the Reasonable Cause criteria, route the case to Accounts Management. This includes taxpayer requests for FTD Penalty abatement.

  6. FTD and Reasonable Cause - All requests for abatement for FTD penalties received in Notice Review must be routed to Accounts Management for determination and resolution.

  7. Estimated Tax Penalty - If an Estimated Tax Penalty (TC 176) has been assessed, decide if the taxpayer was required to make an estimated tax payment during the disaster period. If the payment was received by the date required by the Disaster Relief Memorandum, abate the part of the estimated tax penalty assessed for the underpayment. Notate on the adjustment document, "Adjustment Due to Disaster" . If in doubt, send case to Accounts Management for determination and resolution.

3.14.2.6.4.5 (01-01-2024)
Large Dollar Review

  1. Upon identification, all Balance Due Notices of $100,000.00 or more must be reviewed for accuracy.

    1. An in-depth review of the entire account must be performed, because problems with other modules or TINs not directly related to the notice often surface at this time and must be expeditiously resolved to prevent future taxpayer and/or Accounts Receivable impact.

    2. Refer the case to the work lead if a questionable situation is identified, and corrective action cannot be determined by the tax examiner.

    3. When reviewing Form 1065 with partnership penalties review the prior year to see if the number of partners appear to be in error. Erroneous penalties may have been assessed because various other fields were picked up for the number of partners. If the penalty is in error, recompute and make the necessary adjustment, and retype the notice. For CP 162 instruction refer to IRM 3.14.2.7.10.

    4. Form 706 is filed under the decedent’s Social Security Number (SSN). When researching IDRS, input a "V" behind the decedent’s SSN (i.e., 000-00-0000V). The MFT is 52 and the tax period consists of six zeros (000000). Although the return is filed under the decedent’s SSN, research via BMF CC such as BMFOL and BRTVU. Also, input a "W" behind the decedent’s SSN to research accounts on the invalid segment.

    5. For Forms 706/709, use CC IMFOL to research the IMF SSN for possible misapplied payments.

      Note:

      An SSN beginning with 909-17 or any temporary TIN will not have any Master File information.

    6. For Form 709, the missing credit may be posted to the Form 1040 account (for returns check both SSNs). If the Form 1040 is overpaid, research CC RTVUE for the amount of credit the taxpayer claimed on the Form 1040 return. If credit is available for the Form 709, refer to the Form 709 Decision Table below.

      Form 709 Decision Table
      Delete the refund on the 1040 account. If the TC 846 has already posted, then print the notice. Do not debit the IMF account if the TC 846 has posted.
      Transfer the credit
      Input a CC STAUP for 9 Cycles on the Form 709 account
      Transfer the extension if no extension is posted on the 709

    Note:

    If the taxpayer obtains an extension of time to file a calendar year income tax return (e.g., Form 1040) using Form 4868, the time to file Form 709 is also extended.

3.14.2.6.4.6 (01-01-2024)
Short Period Returns

  1. A short period return must be filed by a subsidiary corporation when it becomes affiliated with a consolidated group (parent corporation). This step allows the subsidiary corporation to file an initial consolidated return with the parent corporation. Income not included in the consolidated return by a corporation, because it was not in the group for the complete taxable year, must be reported on a separate return. The due date of the return is decided by using the earlier of the due date of the original tax period of the parent corporation, or the due date of the original tax period of the subsidiary corporation. Do not confuse the original tax period with the short period.

    1. Research of the parent corporation accounts may be required to decide the due date.

  2. Review any short period Form 1120 to make sure the return was processed with the correct period information.

  3. Change in Accounting Period.

    1. An approved accounting period change for a Form 1120 can be identified on the Entity module by a TC 053 or a TC 054.

    2. For tax years beginning January 2016 through December 2025, the Form 1120 due date is the 15th day of the 4th month after the end of the tax year. See Exhibit 3.14.2-19 for more information.

    3. For tax periods prior to December 31, 2015 the Form 1120 return due date is the 15th day of the 3rd month after the end of the tax period. Example: A tax period ending December 31, 2015 is due March 15, 2016.

  4. Tax entities not in existence the entire year may file a short period return. Requirements for filing the return and figuring the tax are generally the same as if the return was for a full tax year that ended on the last day of the short tax year.

  5. Watch for any reprocessable returns.

3.14.2.6.4.7 (01-01-2017)
Researching Undeliverable Notices

  1. Research ENMOD, NAMEE or FINDED for PN and AP address changes. Use the new address, if present.

  2. Use the address on the yellow Post Office Forwarding Label if it is different from the notice address.

  3. Use the address on the 3 x 5 card from the Files Function if a more current address was not found and the notice has an original DLN.

  4. Use the following procedures if a more current address is NOT FOUND:

    1. Use local procedures to send the notice to the Files function to be attached to the return.

    2. Input CC STAUP 51 for no cycles to issue a Taxpayer Delinquent Account (TDA) to the Collection function and suspend all Collection procedures.

3.14.2.6.4.7.1 (01-01-2016)
Resolving Undeliverable Notices

  1. Do not change the entity based on the address on the 3 x 5 from Files, the Post Office label, or research:

    1. Follow local procedures to change only the address on the notice.

    2. Include Form 8822 (Change of Address) with the notice.

      Note:

      The taxpayer will use this form to authorize an address change.

    3. Label the notice with the appropriate label.

    4. Use CC ACTON to enter a history item if CC TXMOD is up on IDRS.

    5. Input a CC STAUP for six cycles on balance due accounts.

  2. Refer to the Label Decision Table for Refund and Overpaid Notices below to determine the appropriate label for Refund and Overpaid notices.

    If Then Mail the Notice With
    A TC 846 posted to the module in the notice cycle Labels #11 and #12.
    A TC 740 posted to the module with 99999 in the DLN, setting an S- Freeze Labels #11 and #12 if a new address is found. Note: The S- Freeze means that a refund check was returned as undeliverable
    A TC 740 posted to the module between two TC 846s for the same amount Labels #11 and #12 to the address shown on CC ENMOD. Note: The original refund check was returned as undeliverable and subsequently reissued.
    No TC 846 is present on the module Label #11.

  3. Refer to the Label Decision Table for Undeliverable Balance Due Notices below to determine the appropriate label for Undeliverable Balance Due Notices:

    If a Payment Then Mail the Notice With:
    Posted since the notice cycle or is pending on the module, Labels #3 and #9. Use CC INTST to decide the new account balance.
    Has not posted since the notice cycle, Label #9. Use CC INTST to decide the new account balance.

  4. Resolve Even Balance and Information notices by mailing the notice with Label #11.

    Note:

    Use CC BMFOL if the account is not available on IDRS.

  5. Resolve Adjustment notices by mailing the notice with Label # 9 or any other applicable label from IRM 3.14.2.7.23.5, Labeling Notices.

  6. Assume that any subsequent notice that was mailed is also undeliverable. Update the original notice using the above instructions.

    Exception:

    If module conditions indicate that the entity was corrected before the subsequent notice generated, assume that the notice was deliverable and take no action other than to correct the undelivered notice.

    1. If the subsequent notice is going out in the current cycle, void the notice if possible.

    2. Input a history item on IDRS.

  7. Paper clip all stuffers and attachments to the notice. Do not discard anything. Return the completed Undeliverables to the Clerical Unit to be mailed within the same cycle as received.

3.14.2.6.4.8 (01-01-2016)
Form 944 Issues

  1. Taxpayers who file Form 944 should have total taxes of $1,000 or less. If over that amount, then a taxpayer can receive 3 notices for this condition depending on when the return is processed. All three notices give the taxpayer instructions on what form to file. The notices are

    1. CP 250A - You Are No Longer Eligible to File Form 944

    2. CP 250B - You Are No Longer Eligible to File Form 944

    3. CP 250C - You Are No Longer Eligible to File Form 944

  2. CP 250A is issued to taxpayers who file Form 944 and have a total tax liability on line 7 of Form 944 of more than $1,000, but the returns met the PCD (Program Completion Date), posting in or before cycle 09. This notice instructs the taxpayer that they are no longer eligible to file Form 944 and they must file quarterly using Form 941 for the current year.

  3. CP 250B is issued to taxpayers who file Form 944 and have a total tax liability on line 7 of Form 944 of more than $1000, but the return did not meet the PCD of cycle 09. This notice is for the returns processed between cycles 10 - 49. This notice instructs the taxpayer they will remain a Form 944 filer for the current year and to make the appropriate FTD's as required by the lookback analysis. These taxpayers will be allowed to remain Form 944 filers for the year because there is not a sufficient amount of time to notify them to file quarterly. Taxpayers that receive CP 250B will also receive CP 250C later in the year informing them that they will be changed to a Form 941 filer beginning in January the subsequent year.

  4. CP 250C is issued to Form 944 filers who received CP 250B earlier in the year, or File Form 944 after cycle 49 of the current calendar year. These taxpayers will not receive CP 250B, only CP 250C. This notice informs the taxpayer that because they exceeded the threshold for the Form 944 participation, they must file Form 941 for the upcoming year. This notice is generated in cycle 52.

3.14.2.6.4.8.1 (01-01-2019)
Instruction for Form 944

  1. If the Taxpayer receives a CP 250A and a selected notice, generally a CP 145 Notice Review should:

    1. Transfer any credit elect amount(s) from Form 944 to the Form 941 first quarter return of the following year.

    2. Retype CP 145 to reflect Form 941.

      Exception:

      Use Label 7 to notify the taxpayer where the credit elect has been applied.

      Exception:

      If credit elect amount is zero mail CP 145.

  2. Notice Review will not be required to take any action for CP 250B and CP 250C.

3.14.2.6.4.9 (01-01-2024)
Credit Payments to Issuers of Qualified Bonds

  1. The following are General Review Procedures for the Issuers of Qualified Bonds related to Form 8038-CP (MFT 46) procedures:

    a) The following disposition codes are the only ones allowed to be used for CP 116s, CP 138s, CP 210s, CP 220s for Form 8038-CP (MFT 46) when utilizing the Online Notice Review (OLNR) application:

    • E (Entity): Use this disposition to make entity information changes or updates.

    • V (Void) : Use this disposition to void the notice completely because of inaccurate information.

    • VI (Void/Intercept): Use this disposition to void the notice and to intercept any refund on the module. It will only be applicable to CP 210s or CP 220s.

    • P (Print): Use this disposition to mail the notice to the taxpayer.

    • PI (Print/Intercept): Use this disposition to mail the notice and intercept the refund on the module. It will only be applicable to CP 210s or CP 220s.

    Note:

    Generally, these notices will not carry any penalties.. However, CP 116, CP 210 and CP 220 may include Failure to File 8038-CP electronically or Failure to Pay penalty if a previously claimed credit was disallowed after a refund was issued .

    b) The following disposition codes are the only ones allowed to be used for CP 380s , CP 384s and CP 388s generating for Form 8038-CP (MFT 46) when utilizing the OLNR application:

    • T (Transcript): Use this disposition to mark the account as a transcript and no other updates are needed.

    • TI (Transcript/Intercept): Use this disposition to just mark the account as a transcript and intercept the refund

    Note:

    A CP 386s will never generate for a Form 8038-CP (MFT 46).

3.14.2.6.4.10 (01-01-2024)
COVID-19 Related Employment Tax Relief

  1. This section of the IRM provides guidance on applying recently enacted legislation and administrative tax relief applicable to employment taxes.

  2. COVID-19 legislation includes:

    • Sections 7001, 7003 and 7005 of P.L. 116-127, Families First Coronavirus Response Act (FFCRA) established new refundable employment tax credits for employers that provide qualified sick & family leave wages. Originally these credits were applicable to the period of leave employees took beginning April 1, 2020 through December 31, 2020. Sections 286 and 288 of the COVID-related Tax Relief Act of 2020 (P.L. 116-260) modified employment tax credits for qualified sick and family leave wages and extended these credits for leave taken through March 31, 2021. For more information see, IRM 21.7.2.7.1, Credit for Qualified Sick and Family Leave Wages.

      Note:

      The qualified leave wages under FFCRA (as amended by the COVID-related Tax Relief Act of 2020) are not subject to the employer’s share of social security tax (or the equivalent portion of the Railroad Retirement Tax Act Tier 1 tax). However, qualified leave wages under the American Rescue Plan Act of 2021 (ARP) are subject to the employer’s share of social security tax but the available credit is increased by such amount.
      The American Rescue Plan of 2021 (ARP) under IRC 3131 and 3132 amended and codified similar credits to include qualified leave wages and certain other wage-related expenses (such as health plan expenses and certain collectively bargained benefits) paid for leave taken after March 31, 2021 and before October 1, 2021. The paid leave credits under ARP are tax credits against the employer's share of Medicare tax (or the equivalent portion of the Railroad Retirement Tax Act Tier 1 tax).

    • Section 2301 of P.L. 116-136, Coronavirus Aid, Relief and Economic Security (CARES) Act established a new refundable Employee Retention Credit applicable to qualified wages paid after March 12, 2020 and before January 1, 2021.

      Note:

      Section 206 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (P.L. 116-260) modified the Employee Retention Credit for qualified wages paid after March 12, 2020 and before January 1, 2021. Section 207 of the Taxpayer Certainty and Disaster Relief Act of 2020 (P.L. 116-260) modified the Employee Retention Credit and extended it through June 30, 2021 and Section 9651(a) of ARP, amended and codified this credit under IRC 3134 to include wages paid after June 30, 2021 and before January 1, 2022. For more information see, IRM 21.7.2.7.2.3, Employee Retention Credit (ERC) - The American Rescue Plan Act of 2021 (ARP) Provisions.
      Section 80604 of the Infrastructure Act amended IRC 3134 to limit the availability of the Employee Retention Credit (ERC) in the fourth quarter of 2021 to employers that are recovery startup businesses. See IRM 21.7.2.7.2.4, Employee Retention Credit (ERC)- Infrastructure Investment and Jobs Act (Infrastructure Act) Provisions.

    • Section 3606 of P.L. 116-136, Coronavirus Aid, Relief and Economic Security (CARES) Act authorized the Service to provide advance payment of the FFCRA credits to employers prior to the filing of their employment tax return. Form 7200, Advance Payment of Employer Credits Due to COVID-19, was created for that purpose. For more information see, IRM 21.7.2.7.5, Form 7200, Advance Payment of Employer Credits Due to COVID-19.

      Note:

      Section 3606 of P.L. 116-136, Coronavirus Aid, Relief, and Economic Security (CARES) Act, authorized advance payments of the Credit for Qualified Sick and Family Leave Wages. Advance payments of the these credits associated with wages paid after March 31, 2021 and before October 1, 2021.
      Section 2301(l) of the CARES Act authorized advance payments of the Employee Retention Credit. Advance payments of the ERC associated with wages paid after June 30, 2021 and before January 1, 2022.
      IRC 6432, added by Section 9501(b) of P.L. 117-2, The American Rescue Plan Act of 2021 ( ARP), includes a provision authorizing advance payments of the COBRA premium assistance credit. See, IRM 21.7.2.7.3, COBRA Premium Assistance Credit — The American Rescue Plan Act of 2021 ( ARP), for more information about that credit.

    • Section 2302 of P.L. 116-136, Coronavirus Aid, Relief and Economic Security (CARES) Act defers the required payment due date for the employer’s share of social security taxes for wages paid between March 27, 2020 through December 31, 2020, as well as deposits and payments due after December 31, 2020 that are required for wages paid during the quarter ending on December 31, 2020. See IRM 21.7.2.7.8, Deferred Payment of Social Security Taxes for 2020, for more information.

    • Notice 2020-22 states that employers that reduced deposits will not be subject to FTD penalties, so long as they paid qualified wages prior to the time such deposit was due and the amount not deposited was less than or equal to the anticipated amount of the associated credits as of when the deposit was due and the employer did not request an advanced payment of credits on Form 7200 in addition to reducing deposits.

    • Notice 2020-23 extended the due date for filing a claim for credit or refund due on or after April 1, 2020, and before July 15, 2020 for eligible persons (including individuals, trusts, estates, corporations, and any type of unincorporated business entities) to July 15, 2020.

      Note:

      The relief outlined in Notice 2020-23 applies to: filing returns or other documents, making payments, time-sensitive acts, such as filing a petition with the United States Tax Court, filing a claim for credit or refund of any tax, bringing suit upon a claim for credit or refund of any tax and all acts listed in Rev. Proc. 2018-58, 2018-50 IRB 990.

    • Notice 2020-35 extended the timeframe for making interest-free adjustments to correct employment tax reporting errors.

    • Notice 2020-65 allows for the deferment of the employee share of social security tax or the equivalent portion of Tier 1 railroad retirement taxes (RRTA) for wages paid during the period beginning on September 30, 2020 and ending on December 31, 2020, if an employee’s wages are less than $4,000 in any bi-weekly pay period (or the equivalent threshold amount for other pay period intervals). The due date for withholding and payment of the employee’s share of social security or the equivalent portion of Tier 1 railroad retirement taxes (RRTA) on applicable wages is postponed until the period beginning on January 1, 2021 and ending on April 30, 2021.

      Note:

      Section 274 of the COVID-related Tax Relief Act of 2020 (P.L. 116-260) extended the due date for payment of employee social security taxes deferred per guidance in Notice 2020-65 to December 31, 2021.

    • Notice 2021-11 modifies Notice 2020-65, 2020-38 I.R.B. 567 (September 14, 2020), by extending the time period during which employers must withhold and pay applicable taxes (as defined in Notice 2020-65). This notice provides that the end date of the period during which employers must withhold and pay applicable taxes is postponed from April 30, 2021, to December 31, 2021, and associated interest, penalties, and additions to tax for late payment with respect to any unpaid applicable taxes will begin to accrue on January 1, 2022, rather than on May 1, 2021. See Notice 2021-11, for more information.

  3. The American Rescue Plan Act (ARPA) of 2021 (P.L. 117-2), was enacted on March 11, 2021. It altered and/or extended COVID-19 related relief for employment tax, including:

    • Section 9641 of ARP added new sections 3131, 3132, 3133 to the Internal Revenue Code to allow eligible employers to claim refundable tax credits that reimburse them for the cost of providing qualified sick and family leave wages with respect to qualifying leave taken by employees beginning on April 1, 2021 through September 30, 2021.

    • Section 9651 of ARP added new Section 3134 to the Internal Revenue Code, amended the Employee Retention Credit to include qualified wages paid after June 30, 2021 and before January 1, 2022.

      Note:

      The Infrastructure Investment and Jobs Act retroactively terminated the ERC for the fourth quarter of 2021 for all but a “recovery startup business.” The ERC under section 3134 of the Code, as amended by the Infrastructure Investment and Jobs Act, was limited to wages paid after June 30, 2021, and before October 1, 2021, unless the employer was a recovery startup business. An employer that was a recovery startup business could claim the employee retention credit for wages paid after September 30, 2021, and before January 1, 2022. See Notice 2021-65, for more information.

    • Section 9501 of ARP added new Section 6432 to the Internal Revenue Code, provides a temporary reduction in the premium that individuals would have to pay when they elect COBRA continuation health coverage following a reduction in hours or an involuntary termination of employment. The new law provides a corresponding tax credit for eligible employers. COBRA premium assistance is available for periods of coverage beginning on or after April 1, 2021 through periods of coverage beginning on or before September 30, 2021. This provision allows a credit (COBRA Premium Assistance Credit) against the employer share of Medicare tax in an amount equal to the premiums not paid by assistance eligible individuals for COBRA continuation coverage. The COBRA Premium Assistance Credit may be claimed on employment tax returns for the second, third and fourth quarters of 2021 depending on when the employer (or other entity that maintains the health plan) becomes eligible for the credit.

  4. There have been several revisions to Form 941 to administer the COVID relief specified above, beginning with the 2nd quarter of 2020. Annual employment tax forms (Form 943, Form 944, and Form CT-1) were also revised for tax year 2020.

3.14.2.6.4.10.1 (01-01-2023)
Credits for Qualified Sick and Family Leave Wages

  1. Qualified Sick and Family Leave Wages tax credits apply to qualified sick and family leave wages paid during the period beginning April 1, 2020 and ending September 30, 2021 (due to legislative extensions) and are included in the calculation of the Balance Due or Overpayment amounts reported in Part 1 of the Form 941 if claimed by the taxpayer.

    Note:

    For more information on how to adjust these credits see, IRM 21.7.2.7.6.1, Form 94XX — Credit for Qualified Sick and Family Leave Wages for Leave Taken Before April 1, 2021 and IRM 21.7.2.7.6.2, Form 94XX — Credit for Qualified Sick and Family Leave Wages for Leave Taken After March 31, 2021.

    1. The Sick Leave Credit can be claimed for the employee’s regular rate of pay, up to $511 per day and $5110 in total up to 80 hours for qualified sick leave wages paid, if the employee is unable to work or telework because they are subject to a COVID-19 quarantine or isolation order, advised to self-quarantine or if they have COVID symptoms and are seeking a medical diagnosis, and for leave taken after March 31, 2021 and before October 1, 2021 if they are seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of COVID-19 and the employee has been exposed to COVID -19 or the employee’s employer has requested the test or diagnosis, or obtaining an immunization in relation to COVID-19 or recovering from any injury, disability, illness or condition related to the immunization.
      The Sick Leave Credit can be claimed for 2/3 of the employee’s regular rate of pay up to $200 per day and $2000 in total for up to 80 hours per eligible employee, if the employee is unable to work due to caring for a qualified individual in relation to a specified COVID-related reason. The employer is also eligible for credits for allocable qualified health plan expenses for the employee and the employer’s portion of Medicare Tax, as well as for sick leave taken after March 31, 2021 and before October 1 ,2021, the employer portion of OASDI and certain collectively bargained contributions allocable to the sick leave wages during the sick leave period.

      Note:

      Under ARP, the 80 hours of maximum qualified sick leave wages is determined without regard to any qualified sick leave wages paid with respect to leave taken prior to April 1, 2021, meaning ARP reset the number of hours effective April 1, 2021.

    2. The Family Leave Credit can be claimed for 2/3 of the employees regular rate of pay capped at $200 per day or $10,000 in total up to 10 weeks. The employer is also eligible for allocable qualified health plan expenses for the employee and employer’s portion of Medicare Tax, as well as, for family leave taken after March 31, 2021 and before October 1 ,2021, the employer portion of social security tax and certain collectively bargained contributions allocable to the family leave wages during the family leave period. Beginning April 1, 2021, the aggregate cap on qualified family leave wages was increased to $12,000 in accordance with the American Rescue Plan. The $12,000 maximum in qualified family leave wages is determined without regard to any qualified family leave wages paid with respect to leave taken prior to April 1, 2021, meaning ARP reset the family leave wages effective April 1, 2021.

      Note:

      The Family Leave Credit can be combined with the Sick Leave Credit for pay up to 12 weeks (i.e. 2 weeks of sick leave and 10 weeks of family leave as outlined above).

  2. Qualified sick and family leave wages paid to employees by eligible employers are exempt from the employer’s share of social security taxes under the FFCRA, however, they ARE subject to the employer’s share of social security tax under ARP but the available credit is increased by such amount.

    Note:

    Generally, the same wages can’t be used as both qualified sick leave wages and qualified family leave wages. The taxpayer may not benefit from both the credit for qualified sick and family leave wages and the employee retention credit with respect to the same wages. Additionally, under ARP, the credit for qualified sick leave wages and qualified family leave wages doesn't apply to wages taken into account as payroll costs for a Small Business Interruption Loan under the Paycheck Protection Program (PPP) that have been forgiven or in connection with shuttered operator grants and restaurant revitalization grants.

  3. Employers can elect to take advantage of these credits by:

    1. Retaining (i.e. not paying) the federal income tax withholding, employee’s share of social security and Medicare taxes and/or the employer’s share of social security and Medicare taxes for all employees up to the amount of the eligible Sick Leave and/or Family Leave credits.

    2. If deposits were reduced to zeroes as a result of (a) above and do NOT cover the full credit amount, the taxpayer could request an advanced payment(s) of the eligible Sick and/or Family Leave Credits (excluding any amounts retained by the reduction of federal tax deposits or payments outlined in (a) above) by submitting Form 7200 Advance Payment of Employer Tax Credits Due to COVID-19

      Note:

      The taxpayer will NOT be subject to federal tax deposit penalties for retaining eligible deposits/payments as outlined in (a) above provided the employer did not also seek payment of an advance by filing a Form 7200 for the same credit amount that is used to reduce deposits (an employer cannot avoid penalties by reducing deposits and seeking an advance for the same amount).

  4. These credits will post to the module as a TC 766 CRN 299 using the first day of the tax period as the transaction date unless the TC 766/767 is the result of an adjustment with an interest computation date, in which case, the interest computation date should be used as the transaction date. Keep this in mind when researching payment patterns and liability schedules.

    Reminder:

    For 2020, CRN 299 is being used to identify COVID sick leave and family leave credit amounts. This 2020 CRN applies to MFTs 01, 11, 14 and 09.

  5. On Forms 941, 943, 944 and CT-1 returns, the taxpayer can claim a refundable credit for Qualified Sick and Family Leave Wages for Leave Taken After March 31, 2021. Credit Reference Number 271 has been created for this purpose. These credits with post to the module as a (TC 766 CRN 271) using the first day of the tax period as the transaction date unless the TC 766/767 is the result of an adjustment with an interest computation date, in which case, the interest computation date should be used as the transaction date.

  6. The credit for Qualified Sick and Family Leave Wages can be a non-refundable credit, a refundable credit or both depending on the amount of the Credit for Qualified Sick and Family Lave Wages that can be claimed for a specific period and the amounts of other non-refundable credits being reported.

  7. For more information on the Credits for Qualified Sick and Family Leave Wages, see IRM 21.7.2.7.1.1, Credit for Qualified Sick and Family Leave Wages-Families First Corona virus Response Act (FFCRA) Provisions, IRM 21.7.2.7.1.2, Credit for Qualified Sick and Family Leave Wages-COVID-related Tax Relief Act of 2020 Provisions, IRM 21.7.2.7.1.3, Credit for Qualified Sick and Family Leave Wages-The American Rescue Plan Act of 2021 ( ARP) Provisions and IRM 21.7.2.7.1.4, Timing Considerations Applicable to Reporting Qualified Sick and Family Leave Wages, Tax and Associated Credits.

3.14.2.6.4.10.1.1 (01-01-2024)
Credit for Qualified Sick and Family Leave Wages Form 941

  1. The table below shows how the Credit for Qualified Sick and Family Leave Wages are to be reported on Form 941:

    Tax Period Reported To administer these credit Form 941 was revised to include:
    202006, 202009 and 202012 If the taxpayer is reporting any qualified sick and family leave wages for leave taken before April 1, 2021, these wages are reported on lines 5a(i) and 5a(ii), respectively, and taxed at 6.2% for social security tax purposes. For leave taken before April 1, 2021, the credit for qualified sick and family leave wages is reported on line 11b (nonrefundable portion) and, if applicable, line 13c (refundable portion).

    • Line 5a(i) Qualified Sick Leave Wages

    • Line 5a(ii)Qualified Family Leave Wages

    • Line 11b Nonrefundable Portion of Credit for Qualified Sick and Family Leave Wages from Worksheet 1

    • Line 13c Refundable Portion of Credit for Qualified Sick and Family Leave Wages from Worksheet 1

      Note:

      This amount will post as a TC 766 CRN 299 on the module.

    • Line 19 Qualified Health Plan Expenses Allocable to Qualified Sick Leave Wages

    • Line 20 Qualified Health Plan Expenses Allocable to Qualified Family Leave Wages
    202103 If the taxpayer is reporting any qualified sick and family leave wages for leave taken before April 1, 2021, these wages are reported on lines 5a(i) and 5a(ii), respectively, and taxed at 6.2% for social security tax purposes. For leave taken before April 1, 2021, the credit for qualified sick and family leave wages is reported on line 11b (nonrefundable portion) and, if applicable, line 13c (refundable portion).

    • Line 5a(i) Qualified Sick Leave Wages

    • Line 5a(ii) Qualified Family Leave Wages

    • Line 11b Nonrefundable Portion of Credit for Qualified Sick and Family Leave Wages from Worksheet 1

    • Line 13c Refundable Portion of Credit for Qualified Sick and Family Leave Wages from Worksheet 1

      Note:

      This amount will post as a TC 766 CRN 299 on the module

    • Line 19 Qualified Health Plan Expenses Allocable to Qualified Sick Leave Wages

    • Line 20 Qualified Health Plan Expenses Allocable to Qualified Family Leave Wages
    202106 and subsequent

    1. If the taxpayer is reporting any qualified sick and family leave wages for leave taken before April 1, 2021, these wages are reported on lines 5a(i) and 5a(ii), respectively, and taxed at 6.2% for social security tax purposes. For leave taken before April 1, 2021, the credit for qualified sick and family leave wages is reported on line 11b (nonrefundable portion) and, if applicable, line 13c (refundable portion).

    2. Taxable qualified sick and family leave wages for leave taken after March 31, 2021, are included on line 5a and taxed at 12.4% for social security tax purposes. For leave taken after March 31, 2021, the credit for qualified sick and family leave wages is reported on line 11d (nonrefundable portion) and, if applicable, line 13e (refundable portion); and the nonrefundable portion of the credit is against the employer share of Medicare tax.

    • Line 5a(i) Qualified Sick Leave Wages*

    • Line 5a(ii) Qualified Family Leave Wages*

      Note:

      Taxable qualified sick and family leave wages for leave taken after March 31, 2021 are included on Line 5a. Line 5a(i) and 5a(ii) are ONLY used for wages paid after March 31, 2020 for leave taken before April 1, 2021.

    • Line 11b Nonrefundable Portion of Credit for Qualified Sick and Family Leave Wages for Leave Taken Before April 1, 2021

    • Line 11d Nonrefundable Portion of Credit for Qualified Sick and Family Leave Wages for Leave Taken after March 31, 2021

    • Line 13c Refundable Portion of Credit for Qualified Sick and Family Leave Wages for Leave Taken Before April 1, 2021

      Note:

      This amount will post as a TC 766 CRN 299 on the module.

    • Line 13e Refundable Portion of Credit for Qualified Sick and Family Leave Wages for Leave Taken After March 31, 2021

      Note:

      This amount will post as a TC 766 CRN 271 on the module.

    • Line 19 Qualified Health Plan Expenses Allocable to Qualified Sick Leave Wages for Leave Taken Before April 1, 2021

    • Line 20 Qualified Health Plan Expenses Allocable to Qualified Family Leave Wages for Leave Taken Before April 1, 2021

    • Line 23 Qualified Sick Leave Wages for Leave Taken After March 31, 2021

    • Line 24 Qualified Health Plan Expenses Allocable to Qualified Sick Leave Wages Reported on Line 23

    • Line 25 Amounts Under Certain Collectively Bargained Agreements Allocable to Qualified Sick Leave Wages Reported on Line 23

    • Line 26 Qualified Family Leave Wages for Leave Taken After March 31, 2021

    • Line 27 Qualified Health Plan Expenses Allocable to Qualified Family Leave Wages Reported on Line 26

    • Line 28 Amounts Under Certain Collectively Bargained Agreements Allocable to Qualified Family Leave Wages Reported on Line 26

  2. The nonrefundable portion of the credit for qualified sick and family leave wages for leave taken before April 1, 2021, is limited to the employer share of social security tax reported on Form 941 remaining after being reduced by the following credits:

    • Form 8974 credit claimed for qualified small business payroll tax credit for increasing research activities,

    • the work opportunity credit for qualified tax-exempt organizations hiring qualified veterans and

    • any disaster credit claimed for qualified tax exempt organizations on Form 5884-D.

    Note:

    Any credit for qualified sick and family leave wages for leave taken before April 1, 2021, that is remaining at the end of the quarter because it exceeds the employer share of social security tax for the quarter is claimed on line 13c as a refundable credit.

  3. The nonrefundable portion of the credit for qualified sick and family leave wages for leave taken after March 31, 2021, is limited to the employer share of Medicare tax on wages paid in the quarter.

    Note:

    Any credit for qualified sick and family leave wages that is remaining at the end of the quarter because it exceeds the employer share of Medicare tax for the quarter is claimed on line 13e as a refundable credit.

  4. Qualified wages should NOT include wages that were used as payroll costs in connection with a Shuttered Venue Operator Grant under section 324 of the Economic Aid to Hard-Hit Small Businesses, Non-profits, and Venues Act; or a restaurant revitalization grant under section 5003 of ARP.

  5. For leave taken after March 31, 2021 and before October 1, 2021, employers can receive both a Small Business Interruption Loan under the Paycheck Protection Program (PPP) and the credit for qualified sick and family leave wages; however, employers cannot receive both loan forgiveness and a credit for the same wages.

3.14.2.6.4.10.1.2 (01-01-2024)
Credit for Qualified Sick and Family Leave Wages Form 943

  1. The table below shows how the Credit for Qualified Sick and Family Leave Wages are to be reported on Form 943:

    Tax Year Reported To administer these credits Form 943 was revised to include:
    2020 The nonrefundable credit for qualified sick and family leave wages for leave taken before April 1, 2021 is reported on line 12b and, if applicable, the refundable credit is reported on line 14d. These qualified sick leave wages and qualified family leave wages are reported on lines 2a and 2b, respectively. The employee share of social security tax on qualified sick and family leave wages are reported on lines 3a and 3b, respectively. Qualified sick and family leave wages for leave taken before April 1, 2021 aren’t subject to the employer share of social security tax. Qualified sick and family leave wages not included on lines 2a and 2b because the wages reported on that line are limited by the social security wage base are included on line 4. Qualified health plan expenses allocable to qualified sick and family leave wages are reported on lines 18 and 19.

    • Line 2a Qualified Sick Leave Wages

    • Line 2b Qualified Family Leave Wages

    • Line 3a Social Security Tax on Qualified Sick Leave Wages (multiply line 2a by 6.2% (0.62))

    • Line 3b Social Security Tax on Qualified Family Leave Wages (multiply line 2b by 6.2% (0.62))

    • Line 12b Nonrefundable Portion of Credit for Qualified Sick and Family Leave Wages from Worksheet 1

    • Line 14d Refundable Portion of Credit for Qualified Sick and Family Leave Wages from Worksheet 1

      Note:

      This amount will post as a TC 766 CRN 299 on the module.

    • Line 18 Qualified Health Plan Expenses Allocable to Qualified Sick Leave Wages

    • Line 19 Qualified Health Plan Expenses Allocable to Qualified Family Leave Wages
    2021 The nonrefundable credit for qualified sick and family leave wages is reported on line 12b for leave taken before April 1, 2021 and on line 12d for leave taken after March 31, 2021. The refundable credit, if applicable, is reported on line 14d for leave taken before April 1, 2021 and on line 14f for leave taken after March 31, 2021. The qualified sick and family leave wages for leave taken after March 31, 2021 is reported on line 2 while lines 2a and 2b are ONLY used to report wages paid for leave taken before April 1, 2021. The employee share of social security tax on qualified sick and family leave wages are reported on lines 3a and 3b, for wages paid for leave taken before April 1, 2021. Qualified health plan expenses allocable to qualified sick and family leave wages for leave taken before April 1, 2021 are reported on lines 18 and 19 and for leave taken after March 31, 2021 on lines 23 and 26. Amounts under certain collective bargaining agreements allocable to qualified sick and family leave wages for leave taken after March 31, 2021 are reported on lines 24 and 27.

    • Line 2 Wages Subject to Social Security Tax*

    • Line 2a Qualified Sick Leave Wages*

    • Line 2bLine 2b Qualified Family Leave Wages*

      Note:

      Taxable qualified sick and family leave wages for leave taken AFTER March 31, 2021 are included on line 2. Line 2a & 2b are ONLY used to report wages paid for leave taken BEFORE April 1, 2021.

    • Line 12b Nonrefundable Portion of Credit for Qualified Sick and Family Leave Wages for Leave Taken Before April 1, 2021.

    • Line 12d Nonrefundable Portion of Credit for Qualified Sick and Family Leave Wages for Leave Taken After March 31, 2021

    • Line 14d Refundable Portion of Credit for Qualified Sick and Family Leave Wages Taken Before April 1, 2021

      Note:

      This amount will post as a TC 766 CRN 299 on the module.

    • Line 14f Refundable Portion of Credit for Qualified Sick and Family Leave Wages Taken After March 31, 2021

      Note:

      This amount will post as a TC 766 CRN 271 on the module.

    • Line 18 Qualified Health Plan Expenses Allocable to Qualified Sick Leave Wages for Leave Taken Before April 1, 2021

    • Line 19 Qualified Health Plan Expenses Allocable to Qualified Family Leave Wages for Leave Taken Before April 1, 2021

    • Line 22 Qualified Sick Leave Wages for Leave Taken After March 31, 2021

    • Line 23 Qualified Health Plan Expenses Allocable to Qualified Sick Leave Wages Reported on Line 22

    • Line 24 Amounts Under Certain Collectively Bargained Agreements Allocable to Sick Leave Wages Reported on Line 22

    • Line 25 Qualified Family Leave Wages for Leave Taken After March 31, 2021

    • Line 26 Qualified Health Plan Expenses Allocable to Qualified Family Leave Wages Reported on Line 25

    • Line 27 Amounts Under Certain Collectively Bargained Agreements Allocable to Family Leave Wages Reported on Line 25

  2. The nonrefundable portion of the credit for qualified sick and family leave wages for leave taken before April 1, 2021, is limited to the employer share of social security tax reported on Form 943 remaining after being reduced by the following credits:

    • Form 8974 credit claimed for qualified small business payroll tax credit for increasing research activities,

    • the work opportunity credit for qualified tax-exempt organizations hiring qualified veterans and

    • any disaster credit claimed for qualified tax exempt organizations on Form 5884-D.

    Note:

    Any credit in excess of the remaining amount of the employer share of social security tax is refundable and reported on Form 943, line 14d.

  3. The nonrefundable portion of the credit for qualified sick and family leave wages for leave taken after March 31, 2021, is limited to the employer share of Medicare tax on wages paid.

    Note:

    Any credit for qualified sick and family leave wages that is remaining because it exceeds the employer share of Medicare tax is claimed on line 14f as a refundable credit.

  4. Qualified wages should NOT include wages that were used as payroll costs in connection with a Shuttered Venue Operator Grant under section 324 of the Economic Aid to Hard-Hit Small Businesses, Non-profits, and Venues Act; or a restaurant revitalization grant under section 5003 of ARP.

  5. For leave taken after March 31, 2021 and before October 1, 2021, employers can receive both a Small Business Interruption Loan under the Paycheck Protection Program (PPP) and the credit for qualified sick and family leave wages; however, employers cannot receive both loan forgiveness and a credit for the same wages.

3.14.2.6.4.10.1.3 (01-01-2024)
Credit for Qualified Sick and Family Leave Wages Form 944

  1. The table below shows how the Credit for Qualified Sick and Family Leave Wages are to be reported on Form 944:

    Tax Year Reported To administer these credits Form 944 was revised to include:
    2020 The nonrefundable credit for qualified sick and family leave wages for leave taken before April 1, 2021 is reported on line 8b and, if applicable, the refundable credit is reported on line 10d. The employee share of social security tax on these qualified sick and family leave wages is reported on lines 4a(i) and 4a(ii). Qualified sick and family leave wages for leave taken before April 1, 2021 aren’t subject to the employer share of social security tax. Qualified health plan expenses allocable to qualified sick and family leave wages are reported on lines 15 and 16.

    • Line 4a(i) Qualified Sick Leave Wages

    • Line 4a(ii) Qualified Family Leave Wages

    • Line 8b Nonrefundable Portion of Credit for Qualified Sick and Family Leave Wages from Worksheet 1

    • Line 10d Refundable Portion of Credit for Qualified Sick and Family Leave Wages from Worksheet 1

      Note:

      This amount will post as a TC 766 CRN 299 on the module.

    • Line 15 Qualified Health Plan Expenses Allocable to Qualified Sick Leave Wages

    • Line 16 Qualified Health Plan Expenses Allocable to Qualified Family Leave Wages
    2021 Taxable qualified sick and family leave wages for leave taken after March 31, 2021, are included on line 4a and taxed at 12.4% for social security tax purposes. However, if the taxpayer is reporting any qualified sick and family leave wages for leave taken before April 1, 2021, these wages are reported on lines 4a(i) and 4a(ii), respectively, and taxed at 6.2% for social security tax purposes. For leave taken before April 1, 2021, the credit for qualified sick and family leave wages is reported on line 8b (nonrefundable portion) and, if applicable, line 10d (refundable portion). For leave taken after March 31, 2021, the credit for qualified sick and family leave wages is reported on line 8d (nonrefundable portion) and, if applicable, line 10f (refundable portion); and the nonrefundable portion of the credit is against the employer share of Medicare tax.

    • Line 4a Taxable Social Security Wages*

    • Line 4a(i) Qualified Sick Leave Wages*

    • Line 4a(ii) Qualified Family Leave Wages*

      Note:

      Taxable qualified sick and family leave wages for leave taken AFTER March 31, 2021 are included on line 4a. Line 4a(i) & 4a(ii) are ONLY used to report wages paid for leave taken BEFORE April 1, 2021.

    • Line 8b Nonrefundable Portion of Credit for Qualified Sick and Family Leave Wages for Leave Taken Before April 1, 2021

    • Line 8d Nonrefundable Portion of Credit for Qualified Sick and Family Leave Wages for Leave Taken After March 31, 2021

    • Line 10d Refundable Portion of Credit for Qualified Sick and Family Leave Wages for Leave Taken Before April 1, 2021

      Note:

      This amount will post as a TC 766 CRN 299 on the module.

    • Line 10f Refundable Portion of Credit for Qualified Sick and Family Leave Wages for Leave Taken After March 31, 2021

      Note:

      This amount will post as a TC 766 CRN 271 on the module.

    • Line 15 Qualified Health Plan Expenses Allocable to Qualified Sick Leave Wages for Leave Taken Before April 1, 2021

    • Line 16 Qualified Health Plan Expenses Allocable to Qualified Family Leave Wages for Leave Taken Before April 1, 2021

    • Line 19 Qualified Sick Leave Wages for leave Taken After March 31, 2021

    • Line 20 Qualified Health Plan Expenses Allocable to Qualified Sick Leave Wages Reported on Line 19

    • Line 21 Amounts Under Certain Collectively Bargained Agreements Allocable to Sick Leave Wages Reported on Line 19

    • Line 22 Qualified Family Leave Wages for leave Taken After March 31, 2021

    • Line 23 Qualified Health Plan Expenses Allocable to Qualified Family Leave Wages Reported on Line 22

    • Line 24 Amounts Under Certain Collectively Bargained Agreements Allocable to Family Leave Wages Reported on Line 22

  2. The nonrefundable portion of the credit qualified sick and family leave wages for leave taken before April 1, 2021 is limited to the employer share of social security tax reported on Form 944 remaining after being reduced by the following credits

    • Form 8974 for the qualified small business payroll tax credit for increasing research activities

    • the work opportunity credit for qualified tax‐exempt organizations hiring qualified veterans and

    • any disaster credit claimed for qualified tax exempt organizations on Form 5884-D.

    Note:

    Any credit in excess of the remaining amount of the employer share of social security tax is refundable and reported on Form 944, line 10d

  3. The nonrefundable portion of the credit for qualified sick and family leave wages for leave taken after March 31, 2021, is limited to the employer share of Medicare tax on wages paid.

    Note:

    Any credit for qualified sick and family leave wages that is remaining at the end of the quarter because it exceeds the employer share of Medicare tax is claimed on line 10f as a refundable credit..

  4. Qualified wages should NOT include wages that were used as payroll costs in connection with a Shuttered Venue Operator Grant under section 324 of the Economic Aid to Hard-Hit Small Businesses, Non-profits, and Venues Act; or a restaurant revitalization grant under section 5003 of ARP.

  5. For leave taken after March 31, 2021 and before October 1, 2021, employers can receive both a Small Business Interruption Loan under the Paycheck Protection Program (PPP) and the credit for qualified sick and family leave wages; however, employers cannot receive both loan forgiveness and a credit for the same wages.

3.14.2.6.4.10.2 (01-01-2024)
Employee Retention Credit

  1. The Employee Retention Credit (ERC) is a fully refundable tax credit claimed against certain employment taxes reported on quarterly and annual tax returns for 2020 and 2021.

  2. The table below explains the ERC and distinguished the changes made to the credit from 2020 to 2021.

    Form 2020 2021
    ERC Explained

    • The amount of the ERC is equal to 50% of the qualified wages that an eligible employer pays to employees beginning March 13, 2020 and ending December 31, 2020.

      Note:

      Qualified wages up to $10,000 (including certain health plan costs) per employee, can be used to determine the Employee Retention Credit amount.

    • The maximum ERC that can be claimed is $5,000 per employee.

    • The refundable portion of the ERC will post to IDRS as a TC 766 CRN 296 using the first day of the tax period as the transaction date unless the TC 766/767 is the result of an adjustment with an interest computation date, in which case, the interest computation date should be used as the transaction date.

    • The amount of the ERC is equal to 70% of the qualified wages that an eligible employer pays to employees after December 31, 2020 and before January 1, 2022.

      Note:

      Qualified wages up to $10,000 (including certain health plan costs)per employee per quarter can be used to determine the Employee Retention Credit amount.

    • The maximum ERC that can be claimed per employee is $7,000 per quarter for a total of $28,000 annually.

    • The refundable portion of the ERC will post to IDRS as a TC 766 CRN 296 using the first day of the tax period as the transaction date unless the TC 766/767 is the result of an adjustment with an interest computation date, in which case, the interest computation date should be used as the transaction date.

    Note:

    The nonrefundable portion of the employee retention credit changed for 3rd and 4th quarters of 2021 wherein the nonrefundable portion of the credit is limited to the employer share of Medicare.
    Form 941

    • For 202006 the Form 941 was revised to administer the ERC as follows:

      • Line 11c Nonrefundable Portion of the Employee Retention Credit from Worksheet 1

      • Line 13d Refundable Portion of the Employee Retention Credit from Worksheet 1

        Note:

        This amount will post as a TC 766 CRN 296 on the module.

      • Line 21 Qualified Wages for the Employee Retention Credit

      • Line 22 Qualified Health Plan Expenses Allocable to Wages Reported on Line 21

      • Line 24 Qualified Wages Paid March 13 through March 31, 2020, for the Employee Retention Credit (use this line for the second quarter filing of Form 941)

      • Line 25 Qualified Health Plan Expenses Allocable to Wages Reported on Line 24(use this line for the second quarter filing of Form 941)

    • For 202009 and 202012 the Form 941 was revised to administer the ERC as follows:

      • Line 11c Nonrefundable Portion of the Employee Retention Credit from Worksheet 1

      • Line 13d Refundable Portion of the Employee Retention Credit from Worksheet 1

        Note:

        This amount will post as a TC 766 CRN 296 on the module.

      • Line 21 Qualified Wages for the Employee Retention Credit

      • Line 22 Qualified Health Plan Expenses Allocable to Wages Reported on Line 21

    • For 202103 the Form 941 was revised to administer the ERC as follows:

      • Line 11c Nonrefundable Portion of the Employee Retention Credit from Worksheet 1

      • Line 13d Refundable Portion of the Employee Retention Credit from Worksheet 1

        Note:

        This amount will post as a TC 766 CRN 296 on the module.

      • Line 21 Qualified Wages for the Employee Retention Credit

      • Line 22 Qualified Health Plan Expenses Allocable to Wages Reported on Line 21

    • For 202106 and subsequent the Form 941 was revised to administer the ERC as follows:

      • Line 11c Nonrefundable Portion of the Employee Retention Credit

      • Line 13d Refundable Portion of the Employee Retention Credit

        Note:

        This amount will post as a TC 766 CRN 296 on the module.

      • Line 21 Qualified Wages for the Employee Retention Credit

      • Line 22 Qualified Health Plan Expenses for the Employee Retention Credit
    Form 943 Form 943 was revised to administer the ERC as follows:

    • Line 12c Nonrefundable Portion of Employee Retention Credit from Worksheet 1

    • Line 14e Refundable Portion of Employee Retention Credit from Worksheet 1

      Note:

      This amount will post as a TC 766 CRN 296 on the module.

    • Line 20 Qualified Wages for the Employee Retention Credit

    • Line 21 Qualified Health Plan Expenses Allocable to Wages Reported on Line 20

    		 Form 943 was revised to administer the ERC as follows:

    • Line 12c Nonrefundable Portion of Employee Retention Credit

    • Line 14e Refundable Portion of Employee Retention Credit

      Note:

      This amount will post as a TC 766 CRN 296 on the module.

    • Line 20 Qualified Wages for the Employee Retention Credit

    • Line 21 Qualified Health Plan Expenses for the Employee Retention Credit

    • Line 28 If you’re eligible for the employee retention credit in the third quarter solely because your business is a recovery startup business, enter the total of any amounts included on lines 12c and 14e for the third quarter

    • Line 29 If you’re eligible for the employee retention credit in the fourth quarter solely because your business is a recovery startup business, enter the total of any amounts included on lines 12c and 14e for the fourth quarter
    Form 944 Form 944 was revised to administer the ERC as follows:

    • Line 8c Nonrefundable Portion of Employee Retention Credit from Worksheet 1

    • Line 10e Refundable Portion of Employee Retention Credit from Worksheet 1

      Note:

      This amount will post as a TC 766 CRN 296 on the module.

    • Line 17 Qualified Wages for the Employee Retention Credit

    • Line 18 Qualified Health Plan Expenses Allocable to Wages Reported on Line 17

    		 Form 944 was revised to administer the ERC as follows:

    • Line 8c Nonrefundable Portion of Employee Retention Credit

    • Line 10e Refundable Portion of Employee Retention Credit

      Note:

      This amount will post as a TC 766 CRN 296 on the module.

    • Line 17 Qualified Wages for the Employee Retention Credit

    • Line 18 Qualified Health Plan Expenses for the Employee Retention Credit

    • Line 25 If you’re eligible for the employee retention credit in the third quarter solely because your business is a recovery startup business, enter the total of any amounts included on lines 8c and 10e for the third quarter

    • Line 26 If you’re eligible for the employee retention credit in the fourth quarter solely because your business is a recovery startup business, enter the total of any amounts included on lines 8c and 10e for the forth quarter

  3. Beginning with the 2nd quarter Form 941, the refundable portion of the Employee Retention Credit is reported on Line 13d. For tax years 2020 and 2021 the refundable portion of the ERC is reported on line 14e of Form 943, line 10e of Form 944 and on line 24 of Form CT-1. This credit will post to the module as a TC 766 CRN 296 using the first day of the tax period as the transaction date unless the TC 766/767 is the result of an adjustment with an interest computation date, in which case, the interest computation date should be used as the transaction date.

    Reminder:

    For 2020 and 2021, CRN 296 is being used to identify Employee Retention Credit amount. This 2020 CRN applies to MFTs 01, 11, 14 and 09.

  4. Employers could have elected to take advantage of this credit in 2020 and 2021 by following the steps below:

    1. Retaining (i.e. not paying) the federal income tax withholding, employee’s share of social security and Medicare taxes and/or the employer’s share of social security and Medicare taxes for all employees up to the amount of the eligible Employee Retention Credit, taking into account any reduction for deposits taken in relation to the Sick Leave and/or Family Leave credits, and

    2. If deposits are reduced to zeroes as a result of (a) above and do NOT cover the full credit amount, the taxpayer can request an advanced payment(s) of the Employee Retention Credit (excluding any amounts retained by the reduction of federal tax deposits or payments outlined in (a) above) by submitting Form 7200 Advance Payment of Employer Tax Credits Due to COVID-19.

      Note:

      The taxpayer will NOT be subject to federal tax deposit penalties for retaining eligible deposits/payments as outlined in (a) above provided the employer does not also seek payment of an advance by filing a timely Form 7200 in 2020 or 2021 for the same credit amount that is used to reduce deposits (an employer cannot avoid penalties by reducing deposits and seeking an advance for the same amount).

  5. Form 7200, Advance Payment of Employer Credit Due to COVID-19 was created to request advanced payment of the tax credits for , and the Employee Retention Credit, in addition to the credits for qualified sick and family leave wages, and the COBRA Premium Assistance Credit claimed on Forms 941, 941(sp), 941-SS, 943, 943(sp), 944, 944(sp) and CT-1.

    Note:

    The employee retention credit was available for wages paid before January 1, 2022. Additionally, the credit for the qualified sick and family leave wages were available for leave taken before October 1, 2021, and COBRA premium assistance is only available for periods of coverage beginning on or after April 1, 2021, through periods of coverage beginning on or before September 30, 2021. However, the COBRA premium assistance credit could be claimed on employment tax returns for the second, third, or fourth quarter of 2021, depending on when the employer (or other person) becomes entitled to the credit.

    The credits are applicable to the following MFTs and tax periods:
    MFT Tax Period
    01 (Form 941, 941(sp), 941-SS) 202006, 202009, 202012, 202103, 202106, 202109, and 202112 only

    Note:

    Employers were permitted to reduce otherwise required federal tax deposits for the 1st quarter in anticipation of claiming the Employee Retention Credit attributable to the 1st quarter when they filed their Form 941 for the 2nd quarter of 2020, as such, some taxpayers may have a balance due on their 1st quarter account after filing.
    11 (Form 943, 943(sp)) 202012 and 202112 only
    14 (Form 944, 944-SP) 202012 and 202112 only
    09 (Form CT-1) 202012 and 202112 only

    Note:

    Advance payments of the employee retention credit for 2021 were limited to small employers that averaged 500 or fewer full-time employees in 2019. For employers that weren't in existence in 2019, advance payments were limited to small employers that averaged 500 or fewer full-time employees in 2020.

    Note:

    For 2021, the amount requested on Form 7200 could not exceed 70% of average quarterly wages paid in calendar year 2019.

  6. When Form 7200 was received timely, a TC 290.00 with CRN 299, Reason Code (RC) 219 is input with a hold code of 3 with the amount of the advanced payment in the Misc Field. The transaction posted as a TC 766 CRN 299 on the module. Once posted an immediate TC 846 systemic refund for the same amount as the TC 766 less any offsets generated. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ These credits post to the module and refund/offset prior to the posting of the TC 150. Advanced refunds are NOT permitted after the posting of the TC 150.

    Note:

    Although a HC 3 is used when inputting the TC 290.00 CRN 299 RC 219 adjustment to suppress the notice, if there is an offset on the module a CP 138 will generate and should go out to notify the taxpayer of the offset.

  7. Advance credit payments are reconciled by the Service when the taxpayer’s employment tax return is processed. Once processed, the system will reverse all the TC 766 CRN 299 advance payment transactions previously posted and replace them with a:

    • TC 766 CRN 299 for the amount on Form 941, line 13c or the equivalent lines on annual employment tax returns.

    • TC 766 CRN 296 for the amount on Form 941, line 13d or the equivalent lines on annual employment tax returns.

    Note:

    The "temporary" TC 766 CRN 299 credit figure used to generate advance payment(s) is essentially replaced with actual total credit amounts for which the taxpayer is eligible once the return is filed. Once reconciled, the system will calculate the remaining balance due, overpayment or even balance amount and post it to the module and generate the appropriate notice if necessary.

    Caution:

    Once a TC 150 has been posted to the tax account and the computer has reversed the CRN 299 advanced payment amounts, any CRN 299 amount with Reason Code 219 attempting to post to the module will unpost with UPC 306 RC 3. Any corrections to refundable credits allowed with the original return must be made with CRN 296 or with CRN 299 and any corrections to non-refundable credits must be made with a TC 29X and appropriate IRNs. Corrections made after the TC 150 posts cannot contain a RC 219. See the table in paragraph (2) of IRM 21.7.2.7.6, for more information on IRN usage for the 2020 Form 941.

  8. For additional information on the Employee Retention Credit and Form 7200, see IRM 21.7.2.7.2, IRM 21.7.2.7.2.1, IRM 21.7.2.7.2.2 and IRM 21.7.2.7.2.3 for information regarding the ERC. See IRM 21.7.2.7.5, Form 7200, Advance Payments of Employer Credits Due to COVID-19.

3.14.2.6.4.10.3 (01-01-2021)
Deferred Payment of the Employer’s Share of Social Security Taxes for 2020

  1. The CARES Act allows all employers to defer the deposit/payment of the employer’s share of social security taxes and certain railroad retirement taxes.

  2. This deferral applies to deposits/payments of the employer’s share of social security tax that would otherwise be due on or after March 27, 2020 and before January 1, 2021, as well as, deposits and payments due after January 1, 2021, that are required for wages paid on or after March 27, 2020, and before January 1, 2021.

  3. The maximum amount that could be deferred each quarter was the smaller of:

    • The employer’s share of social security tax, or

    • The total taxes after adjustments (Form 941, line 10) less any amount of QSB Research Credit (Form 941, line 11a) less total deposits made for the quarter (Form 941, line 13a).

      Note:

      Qualified Sick and Family Leave Wages are NOT subject to the employer’s share of social security tax, therefore, employers CANNOT include the employee social security taxes reported on Form 941, lines 5a(i) and 5a(ii) when determining the amount for which payment can be deferred.

      Reminder:

      Employers CANNOT reduce the maximum amount for which payment can be deferred by any amounts of the non-refundable credits reported on Form 941, lines 11a, 11b or 11c.

  4. Form 941 was revised to administer the deferral beginning with the 2nd quarter of 2020 as follows:

    Line Item Purpose TC 970 Field Name
    13b Used to report the deferred amount of the employer share of social security tax.

    Caution:

    In response to the Presidential memorandum authorizing the deferral of the employee portion of social security taxes, line 13b was renamed “Deferred Amount of Social Security Tax” and can now include both the deferred employer and the employee share of social security tax.

    Note:

    The employee social security taxes reported on lines 5a(i) and 5a(ii) should not be included in the Line 13b calculation for the employer share of social security tax, however, these lines can be used to calculate the employee share of social security tax deferred. The amount reported on line 13b shouldn’t be reduced by any credits claimed on line 11a, 11b, or 11c. Tax that has already been paid cannot be deferred, therefore, the maximum amount that can be deferred each quarter is the smaller of (1) the employer share of social security tax and/or the employee share of social security tax, or (2) the excess of line 10 (reduced by the amount, if any, on line 11a) and line 13a.

    Reminder:

    The amount on line 13b will post to the module as a TC 766 CRN 280.

    		 DEFERRED-SECT-2302-AMT

  5. Amounts eligible to be deferred MUST be paid by the following dates in order to avoid penalty and interest:

    1. 50% of the deferred amount is due on or by December 31, 2021.

    2. The remaining 50% of the deferred amount is due on or by December 31, 2022.

      Example:

      The employer’s share of social security tax for the second quarter of 2020 was $20,000. The employer deposited $5,000 of the $20,000 during the quarter and reported a deferred payment amount of $15,000 on Form 941, line 13b. In this situation, the employer must pay $5,000 by December 31, 2021 (half of the $20,000 maximum deferral minus the $5,000 already paid), and the remaining $10,000 by December 31, 2022.

      Example:

      The employer’s share of social security tax for the second quarter of 2020 was $24,000. The employer deposited $18,000 of the $24,000 during the second quarter and reported a deferred payment amount of $6,000 on Form 941, line 13b. In this situation, no payment is due by December 31, 2021 because the amount already paid exceeds the 50% due by that date. The remaining $6,000 must be paid in full by December 31, 2022.

  6. Reminder notices with a payment voucher will be issued to the taxpayer prior to the payment due dates.

  7. Employers can make deferred payments via EFTPS, check or money order.

    Caution:

    The taxpayer should notate the appropriate 2020 tax period for which the payment is being made. All payments made towards the deferred liability should post to the appropriate 2020 tax period in which the deferral was made. If, when the payment is made, it is erroneously credited to a 2021 or 2022 module, transfer the payment to the appropriate 2020 tax period.

  8. The deferral of the employer’s share of social security tax for the quarter is entered on Form 941, Line 13b and will post to the module as a TC 766 with CRN 280. The TC 766 CRN 280 “credit” transactions will post to communicate the deferral amount reported on the original return and TC 767 CRN 280 debit transactions will reverse the credit as payments are received and applied towards the deferral or when the payment of the deferred amount comes due (i.e. December 31, 2021 and December 31, 2022), whichever is sooner.

    Caution:

    The amounts posted with CRN 280 do NOT represent a refundable credit. The CRN 280 amounts are a false credit used to mask balances owed towards the deferred portion of the employer’s share of social security taxes for 2020 until the earlier of the payments toward the deferred tax being made or the due date(s) for payment coming due (i.e. December 31, 2021 and December 31, 2022). This methodology is used to ensure penalty and interest calculations associated with the 2020 deferred payment amounts are accurately computed.

  9. Upon the posting of the return, Master File programming will ensure the TC 766 CRN 280 “credit” does not erroneously cause an overpayment condition that includes a portion of the CRN 280 deferred credit by posting a TC 767 CRN 280 to ensure any overpayment consists solely of amounts permitted to refund or offset.

    Note:

    A refund cannot be more than the sum of the COVID credits (Form 941 Form lines 11b, 11c, 13c & 13d) when there is a TC 766 CRN 280 on the module. For Form 941, if the account module balance (AMB) upon the posting of the TC 150, is more than the sum of the unreversed COVID credits (Form 941, lines 11b, 11c, 13c & 13d), then a TC 767 CRN 280 will post for the excess amount (the AMB minus the applicable COVID credits specified above), up to but not to exceed the amount of the posted TC 766 CRN 280.

  10. After the posting of the TC 150, any payment made to the account or overpayment on the account will generally be applied to the deferred payment amounts prior to being considered for refund or offset when there is a CRN 280 amount on the 2020 module.

  11. If the deferred amount is not paid by the applicable due dates, Master File programming will post a TC 767 CRN 280 reversal for the appropriate amount owed and penalties and interest will begin to accrue from the applicable due date.

  12. For more information on payment of the deferred employer’s share of social security tax, see , IRM 21.7.2.8.1 Deferred Payment of Employer’s Share of Social Security Taxes for 2020. For additional information on CRN 280, see ,IRM 21.7.2.8.3 Credit Reference Number (CRN) 280 Computer Maximum Deferral Figure, UPC 306-3 and Reason Code 195.

3.14.2.6.4.10.3.1 (11-04-2021)
Deferred Payment of the Employee’s Share of Social Security Taxes for 2020

  1. On August 8, 2020, the President issued a presidential memorandum directing the Secretary of the Treasury to defer the withholding, deposit and payment of certain payroll tax obligations.

  2. For wages paid during the period beginning on September 30, 2020 and ending on December 31, 2020, if an employee’s wages are less than $4,000 in any bi-weekly pay period (or the equivalent threshold amount for other pay period intervals), the due date for withholding and payment of the employee’s share of social security or Tier 1 railroad retirement taxes (RRTA) on applicable wages is postponed until the period beginning January 1, 2021 and ending on December 31, 2021.

  3. If the employer does not fully pay taxes that were deferred by December 31, 2021, applicable interest, penalties and addition to tax will begin to accrue on the unpaid amounts on January 1, 2022.

    Note:

    Reminders notices will NOT be issued for the payment due in relation to the employee’s share of social security taxes.

  4. Form 941 is being revised for the third and fourth quarters of 2020 to enable employers to report deferred amounts of the employee’s share of social security taxes.

    1. Taxpayers will be instructed to include the deferred amounts of the employee’s share of social security on line 13b, in addition to any amount for the deferral of the employer’s share of social security taxes. A single TC 766 CRN 280 will post reflecting both the employee and employer shares of social security taxes that were deferred.

    2. Taxpayers will also be instructed to enter the amount of deferred employee’s share of social security taxes on Form 941, line 24. The figure entered by the taxpayer on Line 24 will be used by the IRS in combination with the Line 13b entry to determine the amounts due on the respective due dates for employee’s share deferred social security taxes (December 31, 2021 ) and employer’s share of the deferred social security taxes (December 31, 2021 and December 31, 2022) reported as a total figure on Line 13b. The figures from line 24 will appear on TXMOD and BMFOL as reflected in the table below:

      Tax Period Form 941, Line 24 Description TC 970 Field Name (thru December 2020) Display in Posted Return Data on TXMOD/BMFOL (beginning January 2021)
      202006 Qualified wages paid March 13th thru March 31, 2020 for Employee Retention Credit QLFY-EMPL-MARCH-WG-PD-AMT QLFY-EMPL-MARCH-WG-PD-AMT
      202009 Deferred amount of the employee share of social security tax included on line 13b QLFY-EMPL-MARCH-WG-PD-AMT DEFERRED-EE-FICA-AMT
      202012 Deferred amount of the employee share of social security tax included on line 13b N/A DEFERRED-EE-FICA-AMT

      Note:

      IRN 208 will be used to adjust the fields described above for all three referenced tax periods. Programming will apply the IRN 208 change to the correct field based on the tax period associated with the input and alter the field value appropriately. See the table in (2) of IRM 21.7.2.7.6(2), for more information on IRN usage for the 2020 Form 941.

  5. The deferral of the employee’s share of social security tax for the quarter (in addition to any deferral of the employer’s share of social security tax) entered on Form 941, line 13b and will post to the module as a TC 766 CRN 280. The TC 766 CRN 280 “credit” transactions will post to communicate the deferral amount reported on the original return and TC 767 CRN 280 debit transactions will reverse the credit as payments are received and applied towards the deferral or when the payment of the deferred amount comes due (i.e. December 31, 2021) whichever is sooner.

    Caution:

    The amounts posted with CRN 280 do NOT represent a refundable credit. The CRN amounts are a false credit used to mask balances owed towards the deferred portion of the employee’s share of social security taxes for 2020 until the earlier of the payment towards the deferred tax being made or the due date for payment coming due (i.e. December 31, 2021). This methodology is used to ensure penalty and interest calculations associated with the 2020 deferred payment amounts are accurately computed.

  6. For more information on the Deferral of the Employee’s Share of Social Security Taxes for 2020, see IRM 21.7.2.8.2.

3.14.2.6.4.10.4 (01-01-2023)
COBRA Premium Assistance Credit

  1. The American Rescue Plan Act of 2021 ( ARP), provides for COBRA premium assistance in the form of a full reduction in the premium otherwise payable by certain individuals and their families who elect COBRA continuation coverage due to a loss of coverage as the result of a reduction in hours or an involuntary termination of employment.

  2. COBRA premium assistance is available for periods of coverage beginning on or after April 1, 2021, through periods of coverage beginning on or before September 30, 2021.

  3. Section 9501(b) of ARP added new IRC 6432 allowing a credit (COBRA premium assistance credit) against the employer share of Medicare tax (or the equivalent portion of Tier 1 RRTA taxes) for each calendar quarter in an amount equal to the premiums not paid by assistance eligible individuals for COBRA continuation coverage.

  4. This credit may be claimed on employment tax returns for the second, third or fourth quarter of 2021 depending on when the employer (or other person) becomes entitled to the credit.

  5. Employers eligible to claim the COBRA premium assistance credit may reduce federal tax deposits by an amount equal to (or less than) their anticipated associated employment tax credit.

    Note:

    Employers who reduce deposits will not be subject to FTD penalties if (1) the employer is a person to whom premiums are payable; (2) the amount of employment taxes that the employer does not timely deposit (after reduction for other credits) is less than or equal to the amount of the employer’s anticipated COBRA premium assistance credit for the calendar quarter as of the time of the required deposit; and (3) the employer did not seek payment of an advance credit by filing Form 7200 with respect to the anticipated credits it relied upon to reduce its deposits.

  6. Employers may request an advance by filing Form 7200 if the anticipated COBRA premium assistance credit exceeds the available reduction in deposits.

  7. For Form 941 tax periods 202106, 202109, 202112, and 202203 the COBRA premium assistance credit can be a non-refundable credit, a refundable credit, or both, depending on the amount of the COBRA premium credit that can be claimed for a particular tax period and the amount(s) of certain other non-refundable credit(s) being reported. See the Table below for information regarding the application of the COBRA Premium Assistance Credit on Form 941:

    Form How Credit is Reported Application of Credit
    941 The nonrefundable portion of the credit is reported on line 11e and, if applicable, the refundable portion of the credit is reported on line 13f. If the taxpayer claims this credit, they must also report the number of individuals provided COBRA premium assistance on line 11f. The refundable portion of the credit will post as a TC 766 CRN 276. The taxpayer should NOT include any amount that was included as qualified wages for the employee retention credit or included as qualified health plan expenses allocable to qualified sick leave and family leave wages when determining the nonrefundable credit. The refundable portion of the credit is allowed after the employer share of Medicare tax is reduced to zero by nonrefundable credits that are applied against the employer share of Medicare tax.

  8. For Form 943, Form 944 and Form CT-1 tax periods 202112 and 202212, the COBRA premium assistance credit can be a non-refundable credit, a refundable credit, or both, depending on the amount of the COBRA premium credit that can be claimed for a particular tax period and the amount(s) of certain other non-refundable credit(s) being reported.

  9. For more information on the COBRA Premium Assistance Credit and how it is claimed, see IRM 21.7.2.7.6.4. For information on how to adjust the credit, see IRM 21.7.2.7.6.5.

3.14.2.6.4.11 (01-01-2021)
COVID-19 Notice Review Processing for the Delayed Filing of Form 720, Sport Fishing and Archery (SFA) Returns ***Ogden Only***

  1. Effective immediately, ERS/Rejects will deliver Form 720 returns identified with “Notice 2020-48” or “Notice 2020-55” written across the top of the return to Notice Review. Upon receipt, a delegate from Notice Review will enter the DLN of the return into the Local Control File (LCF) using IDRS Command Code (CC) NRP97 to select the notice for review (Input into the LCF must be made by Friday before 10:00 a.m. ET in order to be selected same cycle.).

    Note:

    If the return requires scanning prior to assignment, then Notice Review will scan the document and assign it accordingly.

    Reminder:

    If there is NO balance due on the module, then NO action needs to be taken by Notice Review.

  2. When the return posts, the notice will be selected, upon review make the following adjustment(s) to the module:

    • If the taxpayer parts out the SFA related tax from other excise tax, immediately input a TC 291 for the SFA tax (SFA tax is identified by IRS numbers 41, 42, 44, 106, 110, 114). Use a HOLD CODE 4 when inputting this adjustment.

  3. Beginning 9/1/2020, returns received after 9/1/2020 can be processed to completion by assessing the sport-fishing related excise tax using TC 298 with 10/31/2020 entered in the INTCMP-DT> field of the ADJ54 adjustment screen. Also, enter the applicable abstract numbers and amounts on the ADJ54 screen. Use a posting delay code to prevent posting prior to 10/31/2020 as follows:

    • Input 09/01/2020 - 09/07/2020 — use posting delay 6.

    • Input 09/08/2020 - 09/14/2020 — use posting delay 5.

    • Input 09/15/2020 - 09/21/2020 — use posting delay 4.

    • Input 09/22/2020 - 09/28/2020 — use posting delay 3.

    • Input 09/29/2020 - 10/05/2020 — use posting delay 2.

    • Input 10/06/2020 - 10/12/2020 — use posting delay 1.

    • Input after 10/12/2020 — do not enter a posting delay code.

      Note:

      Do not use a Hold Code when inputting the TC 298 transaction. The adjustment notice needs to go out to notify the taxpayer of the balance due on the account.

  4. After all the adjustments have been made, VOID the CP 161 balance due notice.

  5. When addressing the FTP Penalty for Failure to pay the tax shown on the return:

    1. If all tax shown on the return (including SFA tax shown on any supplemental return) was paid on or before 10/31/2020, then no action is necessary.

    2. If non-SFA tax was paid late then the FTP penalty will be automatically computed on that amount from the return due date. If the SFA tax was paid on or before 10/31/2020 then there will be no FTP penalty with respect to the SFA tax.

    3. If any tax was paid after 10/31/2020 then the FTP penalty must be calculated manually using CC COMPAF. FTP penalty on non-SFA tax shown on the original return is computed from the original return due date without regard to extensions. FTP penalty on SFA tax shown on the original return or on a supplemental return is computed from 10/31/2020. Use TC 270 to assess computed FTP penalty in excess of previously assessed FTP penalty.

  6. Maintain reports identifying the module along with the total volume of notices reviewed in relation to Form 720 SFA Delayed Filings. Provide this report to the HQ analyst(s) each week by COB Friday.

3.14.2.6.4.12 (01-01-2024)
Inflation Reduction Act (IRA) of 2022

  1. The IRA of 2022, Pub. L. No. 117-169, is a law that includes tax and climate provisions. It enacted various clean energy provisions, a corporate alternative minimum tax on adjusted financial statement income and an excise tax on stock repurchases by publicly traded corporations. These changes apply to tax years that begin January 1, 2023 and after.

3.14.2.6.4.12.1 (01-01-2024)
Elective Payment Election (EPE) Overview

  1. Under the Inflation Reduction Act of 2022, IRC 6417(d)(4)(B) provides that the EPE is treated as being made on the later of the return due date without extensions (RDD) or the date on which the return is filed. The EPE must be made on a timely-filed, original return for the taxable year. These credits were briefly termed Deemed Payment Elections (DPE) so returns could indicate either terminology. By choosing this election, the amount of the credit is treated as a payment of tax. Any overpayment will result in a refund.

  2. Applicable MFTs are 02, 05, 06 and 34.

  3. Taxpayers must pre-register with the IRS before filing a tax return or claiming any credits as an EPE.

  4. These proposed regulations affect tax-exempt organizations, State and local governments, Indian Tribal governments, Alaska Native Corporations, the Tennessee Valley Authority, and rural electric cooperatives. These are the thirteen credits that apply to the above entities including Credit Reference Number (CRN) and/or Item Reference Number (IRN):

    Credit Name CRN IRN
    Advanced Manufacturing Investment 455 951
    Alternative Fuel Vehicle Refueling Property 456 953
    Renewable Electricity Production for Qualified Facilities placed in service after December 31, 2022 457 949
    Carbon Oxide Sequestration for Qualified Facilities from equipment placed in service after December 31, 2022 458 956
    Zero-Emission Nuclear Power Production 459 954
    Clean Hydrogen Production Credit for facilities placed in service after December 31, 2012 460 950
    Qualified Commercial Clean Vehicles but only for tax-exempt entities described in IRC 168 461 957
    Advanced Manufacturing Production 462 947
    Clean Electricity Production Credit 463 958
    Clean Fuel Production Credit 464 952
    Clean Energy 465 959
    Qualifying Advanced Energy Project 466 948
    Clean Electricity Investment 467 955

  5. These are the three credits which non-tax-exempt businesses (and individuals) are also eligible to elect for the elective payment of credit:

    Credit Name CRN IRN
    Carbon Oxide Sequestration for Qualified Facilities 458 956
    Clean Hydrogen Production 460 950
    Advanced Manufacturing Production 462 947

3.14.2.6.4.12.2 (01-01-2024)
Elective Payment Election (EPE) Account and Notice Impact

  1. IRA, Pub. L. No. 117-169, Section 6417(d)(4)(B), provides that the EPE is treated as having been made on the latter of the return due date (RDD), extended return due date (XRDD) or disaster due date (DDD) on an original return for the taxable year. Therefore, all refunds including an EPE in excess of total tax, cannot be released before the RDD of the tax return claiming the EPE.

  2. Tax returns filed before the RDD that include "refundable" EPE will be held with a C- freeze until the due date of the return.

  3. EPE is disallowed for late filed returns. If the taxpayer is claiming EPE on a late filed return a systemic math error notice will be issued to the taxpayer. These notices will only be selected for review if the notice also contains a TPNC 90.

  4. Notices with EPE can be identified in NRPS with **EPE** at the top of the notice record and in OLNR with notice status type of "Q" . The systemic paragraph is not visible in OLNR or on the NRPS quick print.

  5. The only disposition available for these notices is retype. Entity information and the addition of a label, if necessary, will need to be edited using retype disposition.

    Caution:

    Void is not an option for EPE disallowance notices.

  6. For tax periods 202201-202212, the taxpayer should indicate "IRA22DPE" on the return and the claim will be identified in IDRS with a Return Processing Code (RPC) "J" .

    1. For tax periods after 202212, all applicable tax forms have been updated with EPE lines, therefore no special RPCs will be assigned.

  7. If the EPE has been allowed on a timely filed return, the corresponding credit will be on TXMOD. See IRM 3.14.2.7.4.12.1(4)for information regarding specific CRNs and IRNs.

3.14.2.6.4.12.3 (01-01-2024)
Credit Transfer Election (TRE)

  1. A taxpayer can elect to transfer all or a portion of the following 11 credits to another taxpayer their Elective Payment Election (EPE) "credit" to another taxpayer if the amount of EPE the original taxpayer claimed exceeds the amount of tax they owe. The transfer of the credit to another taxpayer is called Credit Transfer Election (TRE).

    EPE Transferable Credit Name
    Alternate Fuel Vehicle Refueling Property
    Renewable Electricity Production for Qualified Facilities placed in service after December 31, 2022
    Carbon Oxide Sequestration for Qualified Facilities from equipment placed in service after December 31, 2022
    Zero-Emission Nuclear Power Production
    Clean Hydrogen Production Credit for facilities placed in service after December 31, 2012
    Advanced Manufacturing Production
    Clean Electricity Production
    Clean Fuel Production
    Clean Energy
    Qualifying Advanced Energy Project
    Clean Electricity Investment

  2. For tax periods after 202212, all applicable tax forms have been updated with EPE/TRE lines, therefore no special RPCs will be assigned.

  3. For tax periods 202201-202212, the taxpayer should indicate "IRA22TRE " on Form 3800 or an attachment at the top of the return. A TRE can be identified on the claimants tax account with an RPC "K" .

3.14.2.6.5 (01-01-2024)

IRC 965 Transition Tax Overview

  1. IRC 965 is a provision of the Tax Cuts and Jobs Act that requires certain taxpayers to pay a transition tax on the untaxed foreign earnings of certain specified foreign corporations as if those earnings had been repatriated to the United States.

  2. The following persons/entities are required to report amounts under section 965 of the code on their tax return:

    • US shareholders of a deferred foreign income corporation

    • Certain direct/indirect domestic partners in domestic partnerships that are United States shareholders of specified foreign corporations

    • Shareholders in a S corporation that is a United States shareholder of a specified foreign corporation

    • Certain beneficiaries of another pass-through entity that is a United States shareholder of a specified foreign corporation

    • Certain beneficiaries of a cooperative association that is a United States shareholder of a specified foreign corporation

    Note:

    A United States shareholder is generally a United States person who owns 10 percent or more of the foreign corporation’s stock, applying the indirect stock ownership principles of section 958.

  3. In general, foreign income held in the form of cash and cash equivalents is intended to be subject to an effective tax rate of 15.5 percent for calendar year domestic corporate taxpayers, and the remaining earnings are intended to be taxed at 8 percent.

  4. The IRC 965 inclusion period, was 201712 through 201911. After November 2019, no new IRC 965 inclusions can be made.

    Exception:

    In extremely rare cases, due to pass-through partnership claims, an IRC 965 inclusion could be made in 2020.

  5. During the inclusion period (201712-201911) taxpayers could elect one or more of the following on the inclusion year return:

    • to pay the Section 965 transition tax in full,

    • eligible S Corporation shareholders could defer the assessment and payment of the Section 965 transition tax until a triggering event occurred by making a 965(i) election, and/or

    • the taxpayer could defer the payment of the Section 965 transition tax over the course of 8 annual installments by making a 965(h) election,

    • eligible REITs could defer the reporting of Section 965 income over an 8 year period, and/or

    • eligible taxpayers could exclude 965 income when determining the net operating loss (NOL) deduction and when determining the amount of income that can be reduced by a NOL carryback or carry forward, thereby making the NOL available to offset the non-965 income ONLY for the inclusion year return.

  6. A person/entity that has income under section 965 of the Code for its 2017 taxable year was required to include with its return an IRC 965 Transition Tax Statement signed under penalties of perjury and, in the case of an electronically filed return, in Portable Document Format (.pdf) with a filename of “965 Tax”. Multiple IRC 965 Transition Tax Statements can be combined into a single .pdf file. The IRC 965 Transition Tax Statement was required to include the following information:

    • The total amount required to be included in income under section 965(a) of the Code

    • The aggregate foreign cash position, if applicable

    • The total deduction under section 965(c) of the Code

    • The deemed paid foreign taxes with respect to the total amount required to be included in income by reason of section 965(a)

    • The disallowed deemed paid foreign taxes pursuant to section 965(g)

    • The total net tax liability under section 965 (as determined under section 965(h)(6))

    • The amount of the net tax liability under section 965 to be paid in installments (including the current year installment) under section 965(h) of the Code, if applicable, which will be assessed

    • The amount of the net tax liability under section 965, the assessment and payment of which has been deferred, under section 965(i) of the Code, if applicable

    • A listing of all elections under section 965 of the Code or the election provided for in Notice 2018-13 that the taxpayer has made, if applicable

  7. In taxable year 2018, Form 965 with Forms 965-A or 965-B replaced the IRC 965 Transition Tax Statement.

    1. Any individual taxpayer or taxpayer taxed like an individual (i.e. Form 1041 filer) who has a net IRC 965 tax liability for any tax year or has any net IRC 965 tax liability remaining unpaid at any time during a tax year must file Form 965-A.

      Note:

      Taxpayers that made a, IRC 965(i) election must file Form 965-A with their Form 1041 each year until the IRC 965 liability is assessed and paid in full. Form 1041 filers, that made an IRC 965(h) election in the year of inclusion or in the year of the triggering event must file a Form 965-A each year with their Form 1041 until the IRC 965 liability is paid in full.

    2. Any corporate taxpayer who has a net IRC 965 tax liability for any tax year or has any net IRC 965 tax liability remaining unpaid at any time during a tax year, or an electing REIT with any IRC 965 amount taken into account in accordance with IRC 965(m) or not taken into account at any time during a tax year, must file Form 965-B until the liability is paid in full or in the case of 965(m) until all of the 965 income has been reported.

      Note:

      Corporate taxpayers that made an IRC 965(h) election in the year of inclusion must file a Form 965-B each year with their corporate income tax return until the IRC 965 liability is paid in full.

  8. For BMF returns with an IRC 965 inclusion, there will be a CCC “J” present on BRTVU Response Screen R1 and/or TRBDV “Codes” Response Screen. Computer Condition Codes may also be viewed on the TXMODA response screen in the Posted Return Information section.

  9. The table below explains where the IRC 965 tax was reported during the inclusion period, on the 2017 BMF return and/or IRC 965 Transition Tax Statement.

    BMF Form Location of IRC 965 Tax Deferred Pursuant to IRC 965(h) Reported on BMF Form Location of IRC 965 Total Tax Reported on BMF Form
    IRC 965 Transition Tax Statement IRC 965(h) Deferred Tax reported on Line 6 IRC 965 Total Tax reported on Line 5
    Form 1120 Page 3, Schedule J, Part II, Line 19d Page 3, Schedule J, Part 1, Line 11
    Form 1120-C Page 1, Line 29i Page 4, Schedule J, Line 9 or Page 1, Line 28
    Form 1120-L Page 1, Line 29k Page 6, Schedule K, Line 10
    Form 1120-PC Page 1, Line 14k Page 1, Line 13
    Form 1120-REIT Page 1, Line 24h Page 3, Schedule J, Line 7 or Page 1, Line 23
    Form 1120-RIC Page 2, Part I, Line 28i Page 3, Schedule J, Line 7
    Form 1120-S N/A- IRC 965 deduction amount reported on Page 3, Schedule K, Line 12d N/A- IRC 965 income amount reported on Page 3, Schedule K, Line 10
    Form 990-T Page 2, Part IV, Line 45g Page 2, Part IV, Line 44
    Form 990-PF Not eligible for IRC 965(h) election Page 4, Part VI, Line 5
    Form 1041 (965h) election (Form 1041 where Net IRC 965 amount was not distributed to the beneficiary and an IRC 965(h) election was made) Page 1, Line 24a Page 2, Schedule G, Line 7
    Form 1041 (965i) election (Form 1041 where Net IRC 965 amount was not distributed to the beneficiary and an IRC 965(i) election was made) N/A- When an IRC 965(i) election is made the tax assessment and payment of tax is deferred. After a “triggering event” occurs, the tax is assessed and the payment is due. A taxpayer who has made an IRC 965(i) election can also make a 965(h) election but not until a “triggering event” occurs and the tax deferred by the 965(i) election is assessed and payable. N/A- No IRC 965 Tax is reported on the Form 1041 when an IRC 965(i) election is made. The IRC 965 total tax amount is reported on the Transition Tax Statement, Line 5 and the amount deferred pursuant to IRC 965(i) is reported on the Transition Tax Statement, Line 7.
    Form 1065 N/A- IRC 965 deduction amount reported on Page 4, Schedule K, Line 13d N/A- IRC 965 income amount reported on Page 4, Schedule K, Line 11

  10. The table below explains where the IRC 965 tax was reported on the 2018 BMF returns and/or Forms 965-A and 965-B and how BMF programming systemically posted the TC 971 AC 114 and TC 766 CRN 263 amounts on the 2018 inclusion year module.

    BMF Form Net 965 Tax Liability (Generates TC 971 AC 114) Net 965 Tax Liability Paid (Installment or Total Tax) Deferred Net IRC 965 Tax Remaining Unpaid (Generates TC 766 CRN 263)
    Form 965-B Part I, Column (d), Line 2 Part II, Column (k), Line 2 Part II, Column (j), Line 2
    Form 965-A (965h) Part 1, Column (f), Line 2 Part II, Column (k), Line 2 Part II, Column (j), Line 2
    Form 965-A (965i) Part I, Column (e), Line 2 N/A N/A
    Form 1120 Schedule J, Line 22 Page 1, Line 32 Computed as Net 965 Tax Liability- Net Tax Liability Paid
    Form 1120-C Page 1, Line 30i Page 1, Line 29 Computed as Net 965 Tax Liability- Net Tax Liability Paid
    Form 1120-L Page 1, Line 28i Page 1, Line 27 Computed as Net 965 Tax Liability- Net Tax Liability Paid
    Form 1120-PC Page 1, Line 15d Page 1, Line 14 Computed as Net 965 Tax Liability- Net Tax Liability Paid
    Form 1120-REIT Page 1, Line 25h Page 1, Line 24 Computed as Net 965 Tax Liability- Net Tax Liability Paid
    Form 1120-RIC Page 1, Line 29i Page 1, Line 28 Computed as Net 965 Tax Liability- Net Tax Liability Paid
    Form 1120-POL N/A (Reports income on Line 7) N/A Line 23d
    Form 990-T Page 2, Line 44 Page 2, Line 49 Part V, Line 50g
    Form 990-PF Page 1, Line 11 N/A N/A (Not eligible for deferred tax)
    Form 1041 (965h) Page 1, Line 25f Page 1, Line 24 Computed as Net 965 Tax Liability- Net Tax Liability Paid
    Form 1041 (965i) N/A- Computer generates TC 971 AC 114 of zero when CCC “J” is present N/A N/A- When an IRC 965(i) election is made the assessment and payment of tax is deferred. A taxpayer who has made an IRC 965(i) election can also make a 965(h) election but not until a “triggering event” occurs and the tax deferred by the 965(i) election is assessed and payable.
    Form 1120-S N/A- Computer generates TC 971 AC 114 of zero when CCC “J” is present N/A N/A
    Form 1065 N/A- Computer generates TC 971 AC 114 of zero when CCC “J” is present N/A N/A

  11. The table below explains where the IRC 965 tax was reported on the 2019 BMF returns and/or Forms 965-A and 965-B and how BMF programming systemically posted the TC 971 AC 114 and TC 766 CRN 263 amounts on the 2019 inclusion year module.

    BMF Form Net 965 Tax Liability (Generates TC 971 AC 114) Net 965 Tax Liability Paid (Installment or Total Tax) Deferred Net IRC 965 Tax Remaining Unpaid (Generates TC 766 CRN 263)
    Form 965-B Part I, Column (d), Line 3 Part II, Column (k), Line 3 Part II, Column (j), Line 3
    Form 965-A (965h) Part 1, Column (f), Line 3 Part II, Column (I), Line 3 Part II, Column (j), Line 3
    Form 965-A (965i) Part I, Column (e), Line 3 N/A N/A
    Form 1120 Schedule J, Line 22 Page 1, Line 32 Computed as Net 965 Tax Liability- Net Tax Liability Paid
    Form 1120-C Page 2, Line 30i Page 2, Line 29 Computed as Net 965 Tax Liability- Net Tax Liability Paid
    Form 1120-L Page 1, Line 28i Page 1, Line 27 Computed as Net 965 Tax Liability- Net Tax Liability Paid
    Form 1120-PC Page 1, Line 15d Page 1, Line 14 Computed as Net 965 Tax Liability- Net Tax Liability Paid
    Form 1120-REIT Page 2, Line 25h Page 2, Line 24 Computed as Net 965 Tax Liability- Net Tax Liability Paid
    Form 1120-RIC Page 2, Line 29i Page 2, Line 28 Computed as Net 965 Tax Liability- Net Tax Liability Paid
    Form 1120-POL N/A (Reports income on Line 7) N/A Line 23d
    Form 990-T Page 2, Line 45 Page 2, Line 50 Part V, Line 51g
    Form 990-PF Page 1, Line 11 N/A N/A (Not eligible for deferred tax)
    Form 1041 (965h) Page 1, Line 25 Page 1, Line 24 Computed as Net 965 Tax Liability- Net Tax Liability Paid
    Form 1041 (965i) N/A- Computer generates TC 971 AC 114 of zero when CCC “J” is present N/A N/A- When an IRC 965(i) election is made the assessment and payment of tax is deferred. A taxpayer who has made an IRC 965(i) election can also make a 965(h) election but not until a “triggering event” occurs and the tax deferred by the 965(i) election is assessed and payable.
    Form 1120-S N/A- Computer generates TC 971 AC 114 of zero when CCC “J” is present N/A N/A
    Form 1065 N/A- Computer generates TC 971 AC 114 of zero when CCC “J” is present N/A N/A

  12. IRC 965 payments can be identified by a Designated Payment Code of 64.

  13. If the taxpayer remits more than is currently due with respect to an IRC 965 installment and/or their undeferred income tax liability, for the inclusion year, the excess remittance will be applied to the next successive IRC 965 installment amount until the full amount of the excess credit has been applied or the full income tax liability (including net tax liability under section 965) for the inclusion year (generally, 2017 or 2018) is satisfied. Only payments and credits that are in excess of the full income tax liability (including net tax liability under section 965) may be characterized as overpayments and subject to refund or application as a credit elect.

  14. For returns where an IRC 965 inclusion was made during the inclusion period (201712-201911), there will be a TC 971 AC 114 posted with the original return. The Miscellaneous Field will show the total amount of the IRC 965 transition tax minus any amount deferred under 965(i), as shown on the original return. This amount will be included in the TC 150 amount. For 2017 BMF returns, if the taxpayer elected the IRC 965(h) tax deferral method, there will also be a TC 971 AC 115 posted for the deferred tax amount with the original return.

    Note:

    The only time that a TC 971 AC 114 should be input on a module after November 2019, is if the taxpayer has an already established 965(i) election and experiences a triggering event (which they should report on Form 965-A, Part 4, Column (f) as a negative number and transfer to column (f) on one of lines 5 through 8 in Part I as a positive number) in which case the triggered liability should be input as a TC 971 AC 114 on the module in which the triggering event occurred.

  15. For returns with an IRC 965(h) election made in the inclusion year and/or in the year of the triggering event, a TC 766 with Credit Reference Number (CRN) 263 should be posted to the module indicating the remaining unpaid IRC 965 liability amount (deferred amount) to be paid in installments.

    Example:

    A taxpayer’s regular tax is $5,000. The transition tax is $25,000. The TC 150 is $30,000. Because 8 percent of the transition tax is due in year one ($25,000 x .08 = $2,000), a TC 766 is posted for $23,000.

    Caution:

    The TC 971 AC 114 will unpost, if there is no CCC “J” present. The TC 971 AC 115 will unpost if the TC 971, AC 114 unposts and so on.

    Note:

    The TC 971 AC 114 will reflect an amount of “0” for Forms 1120-S and 1065 because no IRC 965 tax is assessed on the returns.

  16. For returns with an IRC 965(i) election made on Form 1041, the IRC 965(i) deferral is for both the assessment and payment of the IRC 965 tax amount. In the case of an IRC 965(i) election on Form 1041, there will be a TC 971 AC 114 for zero input on the module for the year of inclusion. The 965(i) election deferral will remain intact until a triggering event occurs at which time the tax is assessed. A TC 971 AC 165 should be input on the 965(i) inclusion year tax module and on every Form 1041 tax year module thereafter until the year of the triggering event when the IRC 965 liability is assessed.

  17. For more information on elections and reporting IRC 965 amounts, see “Questions and Answers about Reporting Related to Section 965 on 2017 Tax Returns” https://www.irs.gov/newsroom/questions-and-answers-about-reporting-related-to-section-965-on-2017-tax-returns and “Questions and Answers about Tax Year 2018 Reporting and Payments Arising under Section 965” https://www.irs.gov/newsroom/questions-and-answers-about-tax-year-2018-reporting-and-payments-arising-under-section-965.
    For more information on general Section 965 questions and answers including Transfer and Consent Agreements, seehttps://www.irs.gov/newsroom/general-section-965-questions-and-answers-including-transfer-and-consent-agreements.
    For more information on Carrybacks of NOLs for taxpayers that had Section 965 inclusions, see https://www.irs.gov/newsroom/frequently-asked-questions-about-carrybacks-of-nols-for-taxpayers-who-have-had-section-965-inclusions.

3.14.2.6.5.1 (01-01-2023)
TC 971 AC 114 Explained

  1. The TC 971 AC 114 represents the IRC 965 Total Tax Liability minus any amount that was deferred under IRC 965(i).

    1. TC 971 AC 114 is only applicable to BMF MFTs 02, 05, 06, 34 and 44.

      Note:

      After 201911, no new IRC 965 inclusions can be made, so there should not be a TC 971 AC 114 on MFT 02, 06, 34 or 44 modules after 201911. If a TC 971 AC 114 is present on an MFT 02, 06, 34 or 44 it is an indication of a late election or it is erroneous. If an erroneous TC 971 AC 114 is present on a module, reverse it.

      Note:

      Although no new IRC 965 inclusions can be made after the inclusion period, if Form 1041 filers (MFT 05) that made a 965(i) election during the inclusion period subsequently experience a triggering event, there should be a TC 971 AC 114 input on the triggering event year module when the IRC 965(i) tax is assessed. This is the only time that TC 971 AC 114 should be present on a tax module after 2020. If an erroneous TC 971 AC 114 is present on a module, reverse it.

    2. A TC 971 AC 114 should ONLY be present on the IRC 965 inclusion year module and/or the triggering event year module.

    Caution:

    There should NOT be a TC 971 AC 114 on non-inclusion year and/or non-triggering event year modules. See the Table below for a description of when a TC 971 AC 114 should be present on the module:

    If Then
    A 965 income inclusion and/or election is being made on a tax period 201712-201911 (MFT 02, 05, 06, 34, or 44) return A TC 971 AC 114 should be present on the inclusion year module.
    A triggering event is being reported on Form 1041 and Form 965-A for the reporting year, A TC 971 AC 114 should be present on the triggering event year module.
    The taxpayer is ONLY reporting a 965 installment payment that is being made towards a 965(h) election that was made during the inclusion period on Form 965-A or Form 965-B attached to the reporting year return A TC 971 AC 114 should NOT be present on the reporting year module.
    The taxpayer is ONLY reporting that the 965(i) election that was made during the inclusion period remains intact for the reporting year on Form 965-A attached to the reporting year return A TC 971 AC 114 should NOT be present on the reporting year module, however a TC 971 AC 165 for the amount of the intact 965(i) election should be present on the reporting year module.

  2. For additional information on how TC 971 AC 114 is reported in relation to IRC 965(i) elections, see IRM 3.14.2.6.5.2. For additional information on how TC 971 AC 114 can be adjusted in relation to IRC 965(i) elections, see IRM 3.14.2.6.5.2.1. For additional information on how TC 971 AC 114 is reported in relation to IRC 965(h) elections, see IRM 3.14.2.6.5.3. For additional information on how TC 971 AC 114 can be adjusted in relation to IRC 965(h) elections, see IRM 3.14.2.6.5.3.1.

3.14.2.6.5.2 (01-01-2024)
IRC 965(i) Elections

  1. An election made under Section 965(i)(1) allows a shareholder of an S corporation that is an IRC 958(a) US shareholder to defer the assessment and payment of the Section 965 liability.

  2. An IRC 965(i) deferral is indefinite and will remain intact until a triggering event occurs, at which time the IRC 965(i) deferred liability is assessed.
    Triggering events include:

    • The corporation ceases to be an S corporation (i.e. the S Corporation changes its status),

    • A liquidation or sale of substantially all the assets of the S corporation, a cessation of business by the S corporation, the S corporation ceases to exist, or any similar circumstance, and

    • The electing shareholder transfers any share of stock in the S corporation,

    • A material misrepresentation or omission on a transfer agreement.

  3. IRC 965(i) elections could be made on BMF Form 1041 (MFT 05).

  4. A 965(i) election was made in the inclusion year (201712-201911), by including the 965 income and reducing the tax by the amount of the 965(i) deferral on the inclusion year return.

    1. A Transition Tax Statement & IRC 965(i) Election Statement should be attached to the TY 2017 income tax return for the purpose of reporting the 965 inclusion/election amounts.

    2. A Form 965 & 965-A should be attached to the inclusion year return, in lieu of a Transition Tax Statement, if the inclusion/election was made in TY 2018 or 2019.

    3. A Form 965-A is required to be attached to the income tax return, each year thereafter until the full amount of the 965(i) liability is triggered, assessed and paid in full.

  5. The table below explains where the IRC 965(i) elections were reported on the inclusion year return:

    Tax Year Form 965(i) Deferral Amount Reported on
    2017 1041 Transition Tax Statement, Line 7 and 965(i) Election Statement
    2018 1041 Form 965 and Form 965-A, Part I, Column (e), Line 2 and Part III, Column (g), Line 2
    2019 1041 Form 965 and Form 965-A, Part I, Column (e), Line 3 and Part III, Column (g), Line 3

  6. For BMF returns with an IRC 965 inclusion, there will be a CCC “J” present on BRTVU Response Screen R1 and/or TRBDV “Codes” Response Screen on the inclusion year module. Computer Condition Codes may also be viewed on the TXMODA response screen in the Posted Return Information section.

    Note:

    IRC 965(i) elections will be identified with a CCC “B” in addition to the CCC “J”.

  7. A TC 971 AC 114 should be present on the inclusion year module and the triggering event year module ONLY..

    1. If only an IRC 965(i) election was made in the inclusion year, a TC 971 AC 114 for zero should be displayed on the inclusion year module because IRC 965(i) defers both the assessment and the payment of the IRC 965 tax liability. Because the tax is not assessed and no other elections were made, the 965(i) total tax amount recorded in the TC 971 AC 114 should be zero.

    2. If an IRC 965(i) election was made in conjunction with an IRC 965(h) election in the inclusion year, a TC 971 AC 114 for the amount of the IRC 965 Total Tax Liability minus the 965(i) deferred tax amount , should be displayed on the inclusion year module.

    3. TC 971 AC 165 represents an intact IRC 965(i) election. If a 965(i) election was made by itself or in conjunction with a 965(h) election, a TC 971 AC 165 reflecting the 965(i) deferral amount, should be input on the 965(i) inclusion year tax module along with the TC 971 AC 114.

      Caution:

      A TC 971 AC 114 should only be input on the inclusion year module and the triggering event year module, however, a TC 971 AC 165 should be input on the inclusion year module AND each subsequent year module that the 965(i) election remains intact and untriggered. A TC 971 AC 165 should NOT be input on the triggering event year module UNLESS only a portion of the 965(i) liability was triggered and assessed and a portion remains deferred, in which case a TC 971 AC 165 should be input on the triggering event year module for the amount of the remaining 965(i) deferral, in addition to the TC 971 AC 114 for the amount of the triggered liability.

      Note:

      If there is no TC 971 AC 165 on a module with an intact 965(i) election, input a TC 971 AC 165 with the amount of the outstanding 965(i) deferred liability amount reflected in the MISC field. The remaining 965(i) deferral should be reflected on Form 965-A, Part IV, the sum of Column (i) for the reporting year return.

  8. Taxpayers that made a 965(i) election during the inclusion period (201712-201911) are required to file Form 965-A with their income tax return each year until the 965(i) election is triggered in full, assessed and paid in full.

    1. Form 965-A, Part IV is used to report information regarding an IRC 965(i) election that was made during the inclusion period on an annual basis.

      Caution:

      If the Form 965-A is simply reporting that the 965(i) election made in the inclusion year remains intact for the reporting year, there should NOT be a TC 971 AC 114 input on the reporting year module. The only time a TC 971 AC 114 should be input on a module after 201911, is if the taxpayer is reporting a triggered liability on the reporting year return and attached Form 965-A.

      Note:

      The table below shows where 965(i) amounts are reported on Form 965-A:

      965-A, Part IV Reporting 965-A, Part IV Should Reflect 965-A, Part I Should Reflect
      An intact 965(i) election with no adjustments/triggered liabilities

      • Column (a)- year of inclusion/transfer

      • Column (b)- S Corp Name

      • Column (c)- S Corp EIN

      • Column (d)- should match the prior year Form 965-A, Part IV, Column (i) Total

      • Column (f)-(h) should be blank

      • Column (i) - sum should equal the Column (d) amount

      		 Part I should reflect the original 965 inclusion amounts reported on one of lines 1-3 depending on the year the inclusion was made

      Note:

      Part III should also reflect the original 965 inclusion amounts reported on one of lines 1-3 depending on the year the inclusion was made.
      A triggered liability

      • Column (a)- year of inclusion/transfer

      • Column (b)- S Corp Name

      • Column (c)- S Corp EIN

      • Column (d)- should match the prior year Form 965-A, Part IV, Column (i) Total

      • Column (f)- should reflect the triggered liability as a negative amount

      • Columns (g)-(h)- should be blank unless there is a transfer in/out reported with the triggered liability

      • Column (i) - sum should equal the Column (d) amount minus any amounts reflected in columns (f)-(h)

      • Part I should reflect the original 965 inclusion amounts reported on one of lines 1-3 depending on the year the inclusion was made

      • When a 965(i) deferred liability is triggered, it must be transferred from Form 965-A, Part IV, where it is annually reported, to Part I, on one of lines 5 through 8 as follows: In column (a), the tax year in which the triggering event occurred is reported. Columns (b) through (e) are skipped and the triggered liability is reported in column (f) as a positive number.

      • If the taxpayer elects to pay the triggered liability in full in the year of the triggering event, the amount in Column (f) should be carried to Column (h) and the corresponding line in Part II, column (b), Paid for Year 1, should report the payment made to pay the 965 liability in full.

      • If the taxpayer makes a 965(h) election in the year of the triggering event, to pay the triggered liability in installments, “Yes” should be checked in column (g) to indicate a 965(h) election is being made. The amount in Column (f) should be carried to Column (i) and the corresponding line in Part II, column (b), Paid for Year 1, should reflect the 1st installment payment.

      Note:

      Part III should also reflect the original 965 inclusion amounts reported on one of lines 1-3 depending on the year the inclusion was made.

  9. For more information on annual reporting of IRC 965(i) deferred liabilities, see the Instructions to Form 965-A.

3.14.2.6.5.2.1 (01-01-2024)
IRC 965(i) Adjustment Procedures

  1. Please see a lead if an IRC 965(i) election case needs an adjustment. IRC 965(i) elections should only be adjusted by leads.

    Exception:

    A missing TC 971 AC 165 can be input by all personnel.

  2. A TC 971 AC 165 reflecting the 965(i) deferral amount, should be input on the 965(i) inclusion year tax module and on every Form 1041 tax year module thereafter until the year of the triggering event when the full IRC 965(i) liability is assessed and deemed payable.

    Caution:

    If the amount in the TC 971/165 MISC field is incorrect, do NOT input a TC 972 AC 165 to reverse it. Simply input another TC 971 AC 165 for the correct amount. BMF programming will systemically mark the original posting with an “R” to indicate the reversal once the new TC 971, AC 165 is input. Only use TC 972 AC 165 to reverse a posted TC 971 AC 165, if there is a TC 971 AC 165 posted to a module when there should not be one at all.

  3. The TC 971 AC 165 is input using CC REQ77/FRM77 as follows:

    FRM77 Field Name Input
    TC> “971”
    TRANS-DT> Current Date “MMDDYYYY”
    SECONDARY-DT> Current Date “MMDDYYYY”
    TC971/151-CD> “165”
    MISC> Input the 965(i) deferred liability amount (dollars only, no cents, no special characters)

    Note:

    For the inclusion year module this amount will be reflected on the Transition Tax Statement, Line 7 and the 965(i) Election Statement for TY 2017 or on the Form 965-A, Part I, Column (e) and Part III, Column (g), line 2 for 2018 or line 3 for 2019.

    Note:

    For the annual reporting year this amount should match the amount reflected on Form 965-A, Part IV, the sum of Column (i) for the reporting year.
    REMARKS “NSD, 965i Tax”

  4. Refer to the Table below when researching and inputting adjustments to IRC 965 transactions related to a 965(i) election on the inclusion year module:

    If And Then
    The inclusion year (201712-201911) return indicates a 965(i) election was made There is no TC 971 AC 165 on the inclusion year module Use CC REQ77/FRM77 to input a TC 971 AC 165 on the inclusion year module reflecting the amount of the 965(i) deferral in the MISC field.

    Note:

    The MISC amount should be input as dollars only (no cents), with no special characters. For example, an amount of $12,500.00 should be entered as 12500 in the Misc. Field. Enter the current date (MMDDYYYY) in both the TRANS-DT field and the SECONDARY-DT field.

    Reminder:

    The 965(i) liability amount is reported on the Transition Tax Statement, Line 7 and on the 965(i) Election Statement if the 965(i) inclusion/election was made in TY 2017. The 965(i) liability amount is reported on Form 965-A, Part I, Column (e), Line 2 for TY 2018 and Line 3 for TY 2019 and Form 965-A, Part III, the sum of Column (g) which is carried forward to Part I, Column (e) on the applicable line.
    The inclusion year (201712-201911) return indicates a 965(i) election was made There is an amount greater than zero in the TC 971 AC 114 posted to the module

    1. Ensure there is a TC 971 AC 165 input with the amount of the 965(i) deferral in the MISC. field. If not, input the TC 971 AC 165.

    2. Research the inclusion year return and/or amended inclusion year return to identify if a Section 965(h) election was made in addition to the 965(i) election in the same inclusion year.

    3. If there was no Section 965(h) election made with the Section 965(i) election in the same inclusion year and there is a TC 971 AC 114 amount posted to the module, for an amount greater than zero, use CC REQ77/FRM77 to input a new TC 971 AC 114 for zero.

    4. If a 965(h) election was made with the 965(i) election, make sure the amount reflected in the TC 971 AC 114 MISC field equals the 965 total tax liability minus the amount deferred under 965(i).

      Note:

      The TC 971 AC 114 amount should equal the sum of Line 5 minus line 7 on the Transition Tax Statement for 2017 inclusions or Form 965-A, Part I, Column (f) for 2018 and 2019 inclusions.

    5. If the TC 971 AC 114 amount equals the 965 total tax liability minus the amount deferred under 965(i), no further action is needed with regard to the TC 971 AC 114.

    6. If the TC 971 AC 114 dos not equal the 965 total tax liability minus the amount deferred under 965(i), input a new TC 971 AC 114 for that amount.
    There is a TC 971 AC 165 posted to a module There is no indication on the reporting year or prior year return(s)/amended return(s) or attachments that a 965(i) election was ever made Use CC REQ77/FRM77 to input a TC 972 AC 165 to reverse the erroneous TC 971 AC 165.

    Note:

    Do NOT input an amount in the MISC field or a date in the SECONDARY-DT field when inputting the TC 972 AC 165.
    There is a TC 971 AC 114 for zero posted to a module There is no indication on the reporting year return/amended return or attachments that a 965(i) election was made Use CC REQ77/FRM77 to input a TC 972 AC 114 to reverse the erroneous TC 971 AC 114.

    Note:

    Do NOT input an amount in the MISC field when inputting the TC 972 AC 114.

  5. Taxpayers that made an IRC 965(i) election are required to file Form 965-A with their return each year until the IRC 965 liability is assessed and paid in full. When reviewing a notice on an account where an IRC 965(i) election was made, review the return and all attachments. Refer to the table below for guidance on when to input a TC 971 AC 165 on a non-inclusion year module (i.e., 201912 or later).

    Caution:

    Do NOT input a TC 971 AC 114 on a non-inclusion year module, if the taxpayer is simply reporting that the 965(i) election that they made during the inclusion year remains intact for the reporting year. The only time a TC 971 AC 114 should be on a module other than the inclusion year module (i.e., after 201911), is when the taxpayer reports the 965(i) deferral was triggered in the reporting year, then and only then, should a TC 971 AC 114 be input on the triggering event year module.

    If Then
    Form 965-A is attached to the reporting year return indicating that a timely IRC 965(i) election was made during the inclusion period and remains intact for the reporting year Input a TC 971 AC 165 on the current year module using CC REQ77.

    Note:

    Input the total IRC 965(i) tax liability amount in the Miscellaneous Field. The amount should be input as dollars only (no cents), with no special characters. For example, an amount of $12,500.00 should be entered as 12500 in the Misc. Field. Enter the current date (MMDDYYYY) in both the TRANS-DT field and the SECONDARY-DT field.

    Caution:

    The taxpayer may have made an IRC 965(i) election in more than one inclusion year. If the Form 965-A indicates more than one 965(i) election was made, combine the 965(i) liability amounts and enter that amount in the Miscellaneous Field.

    Caution:

    If the taxpayer is a shareholder in more than one S corporation with section 965 amounts, the taxpayer could have elected to defer more than one S corporation-related net 965 tax liability until a triggering even occurs. There can be instances where an S-Corp(s) (whose related net 965 liability was deferred) experience a triggering event while others do not, meaning the triggered liability becomes due while the non-triggered liabilities remain deferred. So the amount of 965(i) deferred tax that was reported in the inclusion year is subject to change as the deferred liabilities are triggered. The sum of Form 965-A, Part IV, Column (i) should reflect the remaining deferred IRC 965(i) net tax liability at the end of the reporting year. This total is the amount that is input into the TC 971 AC 165 Misc Field each year a 965(i) election remains intact.
    If a taxpayer fails to report an intact 965(i) liability annually by attaching a complete Form 965-A to their income tax return reflecting the amount of the 965(i) deferred liability for the reporting year Refer the case for penalty assessment. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Note:

    There should NOT be a TC 971 AC 165 input on the triggering event year module UNLESS, only a portion of the 965(i) deferred liability was triggered resulting in a portion of the 965(i) liability remaining deferred under 965(i), in which case there should be a TC 971 AC 165 for the remaining 965(i) deferral amount.

  6. Follow the Table below if a TC 971 AC 165 is identified on a 201912 or later module in error:

    If And Then
    There is a TC 971 AC 165 on a non-inclusion year module (i.e., module 201912 or later Research indicates the amount of the TC 971 AC 165 posted to the reporting year module is incorrect Research the reporting year, Form 965-A, Part IV, Column (i) and input a new TC 971 AC 165 with the sum of Column (i) in the MISC. field on the reporting year module.
    There is a TC 971 AC 165 on a non-inclusion year module (i.e., module 201912 or later) There is no indication of an intact 965(i) election (i.e., no Form 965-A attached to the reporting year return, or a Form 965-A attached but not reporting an intact 965(i) election, or a Form 965-A reporting a triggering event for the reporting year resulting in the full 965(i) deferral being triggered and assessed Use CC REQ77/FRM77 to input a TC 972 AC 165 to reverse the erroneous TC 971 AC 165.

    Note:

    Do NOT input an amount in the MISC field or a date in the SECONDARY-DT field when inputting the TC 972 AC 165.

3.14.2.6.5.3 (03-14-2022)
IRC 965(h) Elections

  1. An IRC 965(h) election is a deferral election to pay the Section 965 transition tax in 8 annual installments.

  2. IRC 965(h) elections are applicable to Forms: 1120 (MFT 02), 1120-C (MFT 02), 1120-L (MFT 02), 1120-PC (MFT 02), 1120-RIC (MFT 02), 1120-REIT (MFT 02), 990-T (MFT 34) & 1041 (MFT 05).

  3. A 965(h) election could be made during the IRC 965 inclusion period (201712-201911), by including both the Section 965 income and Section 965 tax and deferring a portion of the Section 965 tax on the inclusion year return.

    1. A Transition Tax Statement & IRC 965(h) Election Statement should be attached to the TY 2017 income tax return for the purpose of reporting the 965 inclusion/election amounts.

    2. A Form 965 andForm 965-AForm 1041 only Form 965-B should be attached to the inclusion year return, in lieu of a Transition Tax Statement, if the inclusion/election was made in TY 2018 or 2019.

    3. A Form 965-A (Form 1041 Only) ORForm 965-B is required to be attached to the income tax return, each year thereafter until the Section 965 liability is paid in full.

    Note:

    The only time a Section 965(h) election can be made after 201911 is if a taxpayer has an already established 965(i) election that was timely made during the inclusion period (201712-201911), and subsequently experiences a triggering event. The taxpayer may make an IRC 965(h) election, at that time, to pay the triggered S corporation-related net 965 tax liability in 8 installments, beginning in the year of the triggering event.

  4. Section 965(h) elections MUST be made by the due date of the inclusion year/triggering event year return (including extensions).

  5. Section 965(h) Annual installments are due on the due date of the return (not the extended due date). Failure to timely pay a required installment could result in the assessment of an addition to tax, which could accelerate the entire IRC 965 tax balance and cause it to become immediately due.

  6. For the convenience of the Service, taxpayers are instructed to make two separate payments; one for the non-IRC 965 tax and another for the IRC 965 installment.

    Note:

    IRC 965 payments can be identified by a TC 670 with a Designated Payment Code (DPC) of 64.

  7. For BMF returns with an IRC 965 inclusion, there will be a CCC “J” present on BRTVU Response Screen R1 and/or TRBDV “Codes” Response Screen. Computer Condition Codes may also be viewed on the TXMODA response screen in the Posted Return Information section. For BMF returns with an IRC 965(h) election, there will also be a CCC “X” that will set the -R freeze to prevent any excess remittance from refunding or offsetting. Although the taxpayer deferred payment of the tax attributable to IRC 965, the deferred amount is still part of the assessed liability for the tax year and must be paid before a refund may be issued on the inclusion year module.

  8. The transaction codes used to administer Section 965(h) elections are listed below. These transaction codes work in tandem with one another to record the 965(h) liability remaining unpaid:

    1. The TC 971 AC 114 represents the Total IRC Section 965 tax amount (minus any amount deferred under 965(i)). This transaction should be present on the inclusion year module and the triggering event year module ONLY.

      Caution:

      If the amount in the TC 971/114 MISC field is incorrect, do NOT input a TC 972 AC 114 to reverse it. Simply input another TC 971 AC 114 for the correct amount. BMF programming will systemically mark the original posting with an “R” to indicate the reversal once the new TC 971 AC 114 is input. Only use TC 972 AC 114 to reverse a posted TC 971 AC 114, if there is a TC 971 AC 114 posted to a module when there should not be one at all.

      Note:

      A TC 971 AC 114 should NOT be input on a module where the Form 965-A or Form 965-B is simply reporting that the annual installment amount was paid. The table below shows how IRC 965(h) installment payments are reported annually on Form 965-A and Form 965-B.

      Form How 965(h) Installment Payments are Reported Annually
      Form 965-A (MFT 05) or (MFT 34 Trust Only)

      • Form 965-A, Part I- The original 965 inclusion/election amounts will continue to be reported in Part I, on the applicable line depending on the year the inclusion/election was made.

      • Form 965-A, Part II- IRC 965(h) installment payments paid in Columns (b)-(i). The net 965 liability remaining unpaid for the reporting year is reported in Part II, Column (j) and the amount paid for the reporting year is clarified in Part II, Column (k).
      Form 965-B (MFT 02) or (MFT 34 Corporation Only)

      • Form 965-B, Part I- The original 965 inclusion/election amounts will continue to be reported in Part I, on the applicable line depending on the year the inclusion/election was made.

      • Form 965-B, Part II- IRC 965(h) installment payments paid in Columns (b)-(i). The net 965 liability remaining unpaid for the reporting year is reported in Part II, Column (j) and the amount paid for the reporting year is clarified in Part II, Column (k).

      Note:

      The only time a TC 971 AC 114 should be posted to a BMF module later than 201911, is if the taxpayer had an already established 965(i) election that was made on Form 1041, during the inclusion period (201712-201911), and subsequently experiences a triggering event, in which case a TC 971 AC 114 for the amount of the triggered liability, should be input in the triggering event year module. A taxpayer may also make a Section 965(h) election to pay the triggered S corporation-related net 965 tax liability in 8 installments, in the year of the triggering event. The Table below reflects how a triggering event is reported on Form 1041 and Form 965-A for the reporting year. There should be no TC 971 AC 114 in put on an MFT 02 or MFT 34 (Corporation) module after 201911. A TC 971 AC 114 on an MFT 02 or MFT 34 module after 201911 is an indication of an erroneous TC 971 AC 114 transaction or a late IRC 965 inclusion/election.

      Form How a Triggering Event and/or a Triggering Event with a Section 965(h) Election is Reported
      1041
      Triggered Liability Paid in Full in the Year of the Triggering Event

      Reminder:

      A TC 971 AC 114 in the amount of the 965(i) triggered liability should be posted to the triggering event year module. If there is not a TC 971 AC 114 posted to the triggering event year module, input it.

      • When a 965(i) deferred liability is triggered, it must be transferred from Form 965-A, Part IV, where it is annually reported, to Part I, on one of lines 5 through 8 as follows: In column (a), the tax year in which the triggering event occurred is reported. Columns (b) through (e) are skipped and the triggered liability is reported in column (f) as a positive number. “No” is then entered in column (g) to indicate a 965(h) election is NOT being made to pay the triggered liability in installments. The amount in Column (f) should be carried to Column (h) and the corresponding line in Part II, column (b), Paid for Year 1, should report the payment made to pay the 965 liability in full.

      • In addition to reporting the triggered liability on the Form 965-A, the taxpayer should report the triggered net 965 tax liability on the Form 1041 “Other Taxes & Amounts Due Line” (2018 = Sch G Line 7, 2019/2020/2021= Sch G Line 8), thereby including the 965 liability in the “Total Tax” calculation (2018 = Line 23, 2019/2020/2021= Line 24), and report the Net 965 Tax Liability from Form 965-A, Part 1, Column F” on line (2018= Line 25f, 2019/2020/2021= Sch G Line 15). The taxpayer should also report the full amount of the Net 965 Tax Liability being paid for the reporting year (2018= Line 24, 2019/2020/2021= Line 25).
      1041
      Section 965(h) Election Made to Pay the Triggered Liability in 8 Annual Installments

      Reminder:

      A TC 971 AC 114 in the amount of the triggered liability should be posted to the triggering event year module. If there is not a TC 971 AC 114 posted to the triggering event year module, input it.

      Reminder:

      When a 965(h) election is made in the year of the triggering event, a TC 766 CRN 263 should be entered in the amount of 92% of the triggered liability along with the TC 971 AC 114 in the amount of the triggered liability. Additionally, there should be a TC 767 CRN 263 for each payment and/or credit applied towards the 965 tax liability.

      • The triggered liability amount must be transferred from Form 965-A, Part IV, where it is annually reported, to Part I, on one of lines 5 through 8 as follows: In column (a), the tax year in which the triggering event occurred is reported. Columns (b) through (e) are skipped and the triggered liability is reported in column (f) as a positive number. “Yes” is then entered in column (g) to indicate a 965(h) election is being made to pay the triggered liability in installments. The amount in Column (f) should be carried to Column (i) and the corresponding line in Part II, column (b), Paid for Year 1, should report the 1st installment payment.
        The taxpayer may also file a Form 965-E when making a 965(h) election in the year of the triggering event.

      • In addition to reporting the triggered liability & subsequent 965(h) election on the Form 965-A, the taxpayer should report the triggered net 965 tax liability on the Form 1041 “Other Taxes & Amounts Due Line” (2018 = Sch G Line 7, 2019/2020/2021= Sch G Line 8), thereby including the 965 liability in the “Total Tax” calculation (2018 = Line 23, 2019/2020/2021= Line 24), and report the Net 965 Tax Liability from Form 965-A, Part 1, Column F” on line (2018= Line 25f, 2019/2020/2021= Sch G Line 15). The taxpayer should also report the amount of the Net 965 Tax Liability Paid (965 installment amount paid) for the reporting year (2018= Line 24, 2019/2020/2021= Line 25)

        Note:

        The total tax, ES Penalty and the 965 installment paid are netted against the total payments. If the Total Payments are lesser than this net amount, then the difference (which consists of 965 installment due plus any other unpaid tax/penalty will be reported as the balance due with the return thus deferring the remaining 92% of the 965 tax liability.

    2. The TC 766 CRN 263 is a faux credit that masks the IRC 965 liability on the inclusion year module or triggering event year module when a 965(h) election is made to pay the triggered liability in installments. It represents the unpaid IRC 965(h) liability (deferred amount) to be paid in installments.

      Note:

      TC 766 CRN 263 is input manually using CC REQ54/ADJ54 to input a TC 290.00 CRN 263 if the transaction is supposed to carry the inclusion year/triggering event year return due date, otherwise a TC 298.00 CRN 263 should be input, with a specific interest computation date if the transaction should carry a date other than the inclusion year/triggering event year return due date. For TY 2018 and TY 2019 inclusion BMF programming systemically posted the TC 766 CRN 263 based off of entries on the applicable BMF return, see the applicable inclusion year table in IRM 3.14.2.6.5, for more details

      .

    3. The TC 767 CRN 263 reverses the TC 766 CRN 263 by the amount of a payment(s) made against or credit(s) applied to the IRC 965(h) liability.

      Note:

      The TC 767 CRN 263 is input manually using CC REQ54/ADJ54 to input a TC 290.00 CRN 263 with a minus sign behind the “263” amount if the date of the transaction should be the inclusion year/triggering event year return due date, otherwise it must be input with a TC 298.00 CRN 263 with an interest computation of the received date of the installment payment or due date of the installment, whichever is earlier, unless, there is interest on the module in which case the due date of the installment should be used.

      Reminder:

      BMF programming will post a reversed TC 766 CRN 263 with an “R” behind it, to match the TC 767 CRN 263 and reduce the unreversed TC 766 CRN 263 on the module by the amount of the payment/credit that was applied to the deferral.

    4. The Designated Payment Code (DPC) 64 represents an IRC 965 designated payment. IRC 965 designated payments should post to the inclusion year module/triggering event year module as a TC 670 DPC 64.

      Note:

      Beginning 2019, BMF programming systemically generates a TC 767 CRN 263 when a TC 670 DPC 64 posts to the inclusion year module or triggering event year module if a 965(h) election was made to pay the triggered liability in installments. For more information on IRC 965 Designated Payments, see IRM 3.14.2.6.5.

  9. IRC Section 965(h) installments should be made in adherence to the IRC 965(h) Payment Schedule. The IRC 965(h) payment schedule is reflected in the Table below. The “Maximum Unpaid Percentage per Year” column represents the max deferral allowed under the law for the given year, meaning no more than the amount listed in the “Maximum Unpaid Percentage per Year” column can be left unpaid by the due date of the return for the applicable year.

    Note:

    If the due date below falls on a Saturday, Sunday or legal holiday, the due date will be the next business day.

    Year Annual Payment Schedule Maximum Unpaid Percent Per Year Due Date if 965(h) Election was Made in TY 2017 Due Date if 965(h) Election was Made in TY 2018 Due Date if 965(h) Election was Made in TY 2019
    1 8% 92% 4/15/2018 4/15/2019 7/15/2020
    2 8% 84% 4/15/2019 7/15/2020 4/15/2021
    3 8% 76% 7/15/2020 4/15/2021 4/15/2022
    4 8% 68% 4/15/2021 4/15/2022 4/15/2023
    5 8% 60% 4/15/2022 4/15/2023 4/15/2024
    6 15% 45% 4/15/2023 4/15/2024 4/15/2025
    7 20% 25% 4/15/2024 4/15/2025 4/15/2026
    8 25% 0% 4/15/2025 4/15/2026 4/15/2027

    Example:

    In a perfect scenario, the unreversed TC 766 CRN 263 amount should be 92% of the IRC 965 total tax amount (the TC 971, AC 114 amount) for the first year, 84% for the 2nd year and so on as payments are applied).

    To determine the payment schedule for a specific account, follow the steps below:

    1. To determine the installment due for a given year, multiply the IRC 965 Total Tax amount by the percentage due for the year.

      Example:

      To determine the 1st through 5th installment amounts, multiply the IRC 965 Total Tax amount by .08 because 8% is due in years 1-5. In year 6, multiply the IRC 965 Total Tax amount by .15, in year 7 multiply it by .20 and in year 8 multiply it by .25.

    2. To determine the Maximum Deferral Amount, multiply the IRC 965 Total Tax amount by the Max Unpaid percentage due per year.

      Example:

      To identify the Maximum Deferral Amount in year 1, multiply the IRC 965 Total Tax amount by .92, in year 2 multiply it by .84, in year 3 multiply it by .76, in year 4 multiply it by .68, in year 5 multiply it by .60, in year 6 multiply it by .45, in year 7 multiply it by .25. The remaining 25% is due in year 8 so that maximum deferral in year 8 is zero.

  10. Taxpayers were instructed to make a separate designated payment for their IRC Section 965 liability and/or 965(h) installment payment. CP 256/956 was created for this purpose. The CP 256/956 is a 965(h) installment reminder notice that is sent 8-10 weeks prior to the due date of the return to remind taxpayers of their 965 payment obligation. There is a payment voucher that can be utilized to send in the 965(h) installment payment. Taxpayers may also pay their 965(h) installments electronically.

  11. These 965 designated payments should be applied to the inclusion year module and/or the triggering event year module where the Section 965 liability was assessed and remains due and should post as a TC 670 DPC 64. Once posted, BMF programming systemically generate a TC 767 CRN 263 in the amount of the payment.

3.14.2.6.5.3.1 (01-01-2024)
IRC 965(h) Adjustment Procedures

  1. Please see a lead if an IRC 965(h) election case needs an adjustment. IRC 965(h) elections should only be adjusted by leads.

  2. The TC 971 AC 114 amount represents the total IRC Section 965 tax minus any amount deferred under 965(i). For TY 2017, the TC 971 AC 115 represented the IRC 965(h) deferred tax amount as reported by the taxpayer and was used to generate the TC 766 CRN 263 faux credit.

  3. For TY 2018 and TY 2019, BMF programming systemically posted a TC 766 CRN 263 from amounts reported on applicable BMF returns, see the tables located in IRM 3.14.2.6.5 for additional information on how the TC 766 CRN 263 was systemically posted on TY 2018 and TY 2019 modules.

  4. IRC 965 designated payments are identified with a Designated Payment Code (DPC) of 64. They should post to the inclusion year module as a TC 670 DPC 64. Once posted, BMF programming systemically generate a TC 767 CRN 263 in the amount of the payment.

  5. If, when reviewing an inclusion year module or triggering event year module where a Section 965(h) election was made to pay the triggered liability in installments, it appears that the taxpayer failed to pay an installment that was due, research the inclusion year/triggering event year module and each subsequent year module to see if the installment payment was misapplied and/or mis-coded and therefore not applied to the deferral. Refer to the table below when researching and transferring IRC 965 designated payments and/or applying payment to the Section 965 deferral:

    If And Then
    The IRC 965 designated payment (TC 670 DPC 64) posted to a non-inclusion year module or non-triggering event year module

    Example:

    A TC 670 DPC 64 posted to a module without a TC 971 AC 114 and/or TC 76X CRN 263

    		 Research indicates there was a Section 965 inclusion/election on a preceding tax period and the liability has not been full paid Transfer the credit to the inclusion year or triggering event year module using CC ADD24. The DPC 64 must be input on both the credit and debit side of the transfer.

    Caution:

    If using the IAT Credit Transfer Tool to complete the transfer, you must select “Override All ADD34 with ADD24” and manually add the “64” to the “Reverse DPC” field on the debit side of the transfer. The DPC 64 must be input on both the credit and debit side of the transfer or it will unpost.
    The IRC 965 payment posted to the inclusion year module without a DPC 64 and has NOT been manually applied towards the 965 liability (i.e. no TC 767 CRN 263 was input that included the payment amount)   Input an in-module credit transfer to add the DPC 64 to the payment so it posts as a TC 670 DPC 64 on the module. Once posted, BMF programming will systemically post a TC 767 CRN 263 in the amount of the payment.

    Caution:

    Do NOT perform an in-module credit transfer if the mis-coded DPC 64 payment has already been manually applied towards the 965 liability, as doing so will double credit the module in the amount of the payment.
    The IRC 965 payment posted to a non-inclusion year module without a DPC 64 and the credit is still available (i.e. the payment hasn’t refunded or credit elected in error) Research indicates there was a Section 965 inclusion/election on a preceding tax period and the liability has not been full paid Transfer the 965 payment to the inclusion year module or triggering event year module and post as a TC 670 DPC 64. Once posted, BMF programming will systemically post a TC 767 CRN 263 in the amount of the payment.

  6. When reviewing an account with an IRC Section 965(h) election, review the TC 971 AC 114 and TC 76X CRN 263 amounts to ensure they were entered correctly.

  7. If an adjustment is needed to the TC 971 AC 114, use CC REQ77/FRM77 to input the adjustment as follows:

    FRM77 Field Name Input
    TC> “971”
    TRANS-DT> Current Date “MMDDYYYY”
    SECONDARY-DT> Tax Period Ending Date “MMDDYYYY”

    Example:

    If the TC 971 AC 114 is being input the 201812 module, it should be input as 12312018.
    TC971/151-CD> “114”
    MISC> Input the 965 Total Tax Liability amount minus any amount deferred under 965(i) (dollars only, no cents, no special characters)

    Note:

    For the inclusion year module this amount will be reflected on the Transition Tax Statement for TY 2017, the line 5 minus line 7 amount or on the Form 965-A, Part I, Column (f).
    REMARKS “NSD, 965 Tax”

  8. Refer to the Table below when researching and making an adjustment to the TC 971 AC 114 amount:

    If And Then
    The TC 971 AC 114 amount posted to the module is greater than the TC 150 amount Research indicates that is how it was reported on the inclusion year return and/or triggering event year return Refer the case to your lead to be referred to HQ.
    The TC 971 AC 114 on the inclusion year module or triggering event year module was input for an amount that differs from the amount listed on the inclusion year return/attachments and/or the triggering event year return/attachments Research indicates there was no amended return filed Use CC REQ77 to input the TC 971, AC 114 amount reflected on the return/attachments.

    Note:

    Input the total IRC 965 tax liability minus any amount deferred under 965(i) in the Miscellaneous Field. The amount should be input as dollars only (no cents), with no special characters. For example, an amount of $12,500.00 should be entered as 12500 in the Misc. Field. Enter the tax period ending date (MMDDYYYY) in the SECONDARY-DT Field.

    Caution:

    Do NOT input a TC 972 reversal when adjusting the TC 971, AC 114 amount. BMF programming will systemically mark the original posting with an “R” to indicate the reversal once the new TC 971, AC 114 is input.

    Note:

    If an amended return was filed amending a timely 965 liability, the TC 971 AC 114 should reflect the 965 total tax amount reported with the amended return minus any amount deferred under 965(i).
    No TC 971 AC 114 was posted to the inclusion year module The inclusion year return/attachments or amended return indicate both a timely IRC 965 inclusion and an IRC 965(h) election were made Use CC REQ77 to input the TC 971, AC 114 to reflect the IRC 965 total tax amount minus any amount deferred under 965(i).

    Note:

    Input the total IRC 965 tax liability amount in the Miscellaneous Field. The amount should be input as dollars only (no cents), with no special characters.

    Reminder:

    A TC 766 CRN 263 should also be input in the year of the triggering event for 92% of the triggered liability amount when a 965(h) election is made. TC 767 CRN 263 adjustments should be input accordingly as payments/credits are applied to the 965 deferral.
    No TC 971 AC 114 was posted to the triggering event year module (MFT 05 ONLY) The reporting year Form 965-A reflects a triggered liability amount and the IRC 965 triggered liability being paid in full in the year of the triggering event Use CC REQ77 to input the TC 971 AC 114 to reflect the triggered liability amount.

    Reminder:

    The triggered liability amount is reported on Form 965-A, Part IV, Column (f) as a negative number and transferred to Part I, Column (f) as a positive number on one of lines 5-8.

    Note:

    Input the IRC 965 triggered liability amount in the Miscellaneous Field as a positive number. The amount should be input as dollars only (no cents), with no special characters.
    No TC 971 AC 114 was posted to the triggering event year module (MFT 05 ONLY) The reporting year Form 965-A reflects a triggered liability amount WITH an IRC 965(h) election being made to pay the triggered liability in 8 annual installments Use CC REQ77 to input the TC 971 AC 114 to reflect the triggered liability amount.

    Reminder:

    The triggered liability amount is reported on Form 965-A, Part IV, Column (f) as a negative number and transferred to Part I, Column (f) as a positive number on one of lines 5-8. Additionally, in Part I, Column (a), the tax year in which the triggering event occurred is reported. Columns (b) through (e) are skipped and “Yes” is entered in column (g) to indicate a 965(h) election is being made to pay the triggered liability in installments.

    Note:

    Input the IRC 965 triggered liability amount in the Miscellaneous Field as a positive number. The amount should be input as dollars only (no cents), with no special characters.

    Reminder:

    A TC 766 CRN 263 should also be input in the year of the triggering event for 92% of the triggered liability amount when a 965(h) election is made. TC 767 CRN 263 adjustments should be input accordingly as payments/credits are applied to the 965 deferral.
    A TC 971 AC 114 was input on a non-inclusion year or non-triggering event year module in error Research confirms there was no IRC 965 inclusion and/or no IRC 965 election made by the taxpayer for the tax period in question Use REQ77 to reverse the TC 971 AC 114 using TC 972, AC 114.

    Note:

    When inputting a TC 972 AC 114, do NOT input an amount in the MISC. field.

    Caution:

    A TC 971 AC 114 should be input on an inclusion year module and a triggering event year module ONLY. The IRC 965 inclusion period was 201712-201911, no new inclusions can be made after 201911, however, if the taxpayer (MFT 05 ONLY) made a 965(i) election during the inclusion period and subsequently experiences a triggering event, the taxpayer may make a 965(h) election to pay the triggered liability in installments in the year of the triggering event. Moreover, taxpayers are required to file Form 965-A, (MFT 05 ONLY) or Form 965-B annually until the IRC 965 liability is paid in full. Do NOT mistake the reporting of an annual 965(h) installment payment or the annual reporting of a 965(i) deferred liability as a new IRC 965 inclusion or election. See IRM 3.14.2.7.5.3 IRM 3.14.2.6.5.3 for an explanation of how annual 965(h) installment payments and triggered liabilities are reported.

  9. If an adjustment to a TC 76X CRN 263 is required, use CC REQ54/ADJ54 to input the adjustment as follows:

    Field Adjustment More Information

    • EIN

    • MFT

    • TX-PRD

    • NM-CTRL

    		 N/A These fields will auto-populate.
    SEQ-NUM> Input sequence number of the adjustment Start with “1” each day and continue to number each adjustment in sequential order
    BLK> Input “15” unless MFT 05 then input “17” Input “17” for MFT 05, Input “15” for all other applicable MFTs
    INTCMP-DT> Input the interest computation date for the adjustment as applicable This field is used when inputting a TC 298.00 CRN 263 adjustment. The TC 298.00 CRN 263 adjustment should carry an interest computation date of the installment due date OR the date of the payment (whichever is earlier) UNLESS, there is interest on the module, in which case, the installment due date should be used.

    Note:

    No INTCMP-DT> is needed when inputting a TC 290.00 CRN 263 because the date defaults to the return due date for the module the adjustment is being input on when inputting a TC 290.00.
    CASE-STS-CD> Input the following as appropriate:

    • A- Assigned

    • B- Background

    • C- Close

    		 When inputting TC 76X CRN 263 adjustments, input an “A” and leave until all adjustments have posted.
    IRS-RCVD-DT> * Will generate the current date.
    CTRL-CAT> Notice Review input “OURV”, “RFDL” or in rare instances “IRRQ”. Input “OURV” to indicate the case was reviewed/adjusted by Notice Review

    Note:

    If adjustment is part of a recovery project use category code “IRRQ”.

    Note:

    If CC NOREF was input use “RFDL”
    TC>

    • Input “290.00” if the 766/767 transaction should carry the return due date of the module being adjusted

    • Input “298.00” if the transaction should carry a date other than the return due date of the module being adjusted.

    • When inputting a TC 766 CRN 263 or TC 767 CRN 263 adjustment to correct an erroneous TC 76X CRN 263 posted to the module, use “TC 290.00” and “TC 298.00” as appropriate to ensure the transaction you are inputting carries the date of the transaction you are correcting.

    Caution:

    TC 290.00 defaults to the return due date of the module being adjusted, so if the transactions needs to carry a date other than the return due date use TC 298.00.

    • When applying an overpayment to a future installment, use TC 298.00 for the current date.

    Example:

    If all installments have been timely paid and all TC 76X CRN 263 transactions and the TC 971 AC 114 are correct and there is a credit balance on the module and the 965 liability has not been full paid, input a TC 298.00 CRN 263 using the current date to generate a TC 767 CRN 263 to apply the overpayment to the 965 liability.
    AMT> Enter .00 Enter .00 when inputting a TC 290/298 to adjust the TC 76X CRN 263 transactions.
    RSN-CDS> Input “192” Reason Code “192” is required when inputting/adjusting TC 76X CRC 263 adjustments.
    HOLD-CD> Follow the guidance in IRM 3.14.2.7.6.3 to input the appropriate hold code.

    • When inputting adjustments to correct the TC 76X CRN 263 amount(s) and there will be an outstanding 965 deferral remaining on the module, use of HC 4 is appropriate in most cases, however, if there is also a balance due of non-965 tax on the module, the notice should go out.

    • When inputting adjustments to correct the TC 76X CRN 263 amount(s) and the adjustments result in the 965 tax liability being full paid with an overpayment on the module, the notice should go out.
    PSTING-DLAY-CD> Input the number of cycles as appropriate. The accepted values are 1-6. No posting delay code is required when inputting multiple TC 76X CRN 263 adjustments, however, if you are inputting other adjustments in addition to the TC 76X CRN 263 adjustment(s), then a posting delay code is needed.

    Example:

    If an adjustment to tax is needed, in addition to the TC 76X CRN 263 adjustments, input adjustment to tax prior to the TC 76X CRN 263 adjustments and the use a posting delay code of “1” when inputting the TC 76X CRN 263 adjustments.
    CD> Input “263” Ensure “263” is input when adjusting TC 76X CRN 263 amounts.
    AMT> Input the amount of the payment/credit being applied to and/or the amount of the adjustment being made to the 965 deferral

    Caution:

    When attempting to post a TC 767 CRN 263 to reduce the deferral, there MUST be a minus sign after the amount, otherwise the adjustment will post as a TC 766 CRN 263 increase to the deferral amount.
    SOURCE-DOC-ATTACHED> Enter “Y” if yes. Enter “N” if no. If you do not have the original or amended return/correspondence in hand, input ”N”.
    REMARKS Input “965 DEF ADJ” or “965 TGR TM”

    • Enter “965 DEF ADJ” if the adjustment is being done as part of normal inventory

    • Enter “965 TGR TM” if the adjustment is being done as part of a recovery.

    Note:

    A 965(h) Tool has been created to assist in determining the adjustments needed to correct the 965 deferral. The 965(h) Tool is located on the BMF Notice Review Portal in SERP under the Job Aids tab.

  10. The TC 766 CRN 263 amount should NEVER be greater than the TC 971, AC 114 amount.

    If Then
    The TC 766 CRN 263 amount exceeds the TC 971, AC 114 amount Review the Transition Tax Statement or Form 965-A or Form 965-B for the correct section 965 total tax and deferred tax amounts
    The TC 971, AC 114 amount was entered incorrectly Use CC REQ77 to input a new TC 971, AC 114 with the correct amount entered in the “Miscellaneous Field”.

    Note:

    This is a dollars only input. Do NOT include cents or special characters in the amount.
    The TC 766 CRN 263 amount was entered incorrectly Use CC REQ54 to input a TC 290.00 CRN 263 or TC 298.00 CRN 263 to correct the deferred tax amount.

  11. Refer to the table below when researching and inputting adjustments to the TC 971, AC 114 and TC 766 CRN 263 amounts on Section 965(h) accounts:

    If And Then
    The TC 971 AC 114 & TC 766 CRN 263 amounts are the same The transition tax statement/return/Form 965-A or Form 965-B reflect that the deferred tax amount should be an amount less than the amount posted Use CC REQ54 to input a TC 290.00 CRN 263 to reduce the deferred tax amount

    Note:

    To figure the amount, subtract the correct deferred tax amount per the return from the posted TC 766 CRN 263 amount reflected on the module and input a TC 290.00 CRN 263 for the difference. Once this adjustment is made a TC 767 will post to the account.

    Caution:

    If decreasing a posted TC 766 CRN 263, input the CRN amount with a minus sign. For example, a CRN 263 for $2,500.00- will generate a TC 767 CRN 263 for $2,500.00
    A TC 971 AC 114 has posted, but no TC 766 CRN 263 posted The inclusion year return indicates an IRC 965(h) deferred tax amount and/or the Form 965-A reflects the triggered liability amount and an IRC 965(h) election being made in the year of the triggering event Ensure the TC 971 AC 114 amount was entered correctly and use CC REQ54 to input a TC 290.00 CRN 263 to establish the 965 deferral on the module.

    Reminder:

    No minus sign is needed when inputting the CRN amount when establishing or increasing the posted TC 766 CRN 263 amount.

    Caution:

    If inputting a TC 29X CRN 263 adjustment and inputting a TC 971, AC 114, a Posting Delay Code (PDC) 1 is required on the TC 29X adjustment.
    Both the TC 971 AC 114 and TC 766 CRN 263 were input in error There is no indication on the return and/or return attachments of an IRC 965 inclusion and/or 965(h) election being made by the taxpayer Reverse the erroneous TC 766 CRN 263 using CC ADJ54 to input a TC 290.00 CRN 263 with a minus sign to reverse the deferred tax amount in its entirety, then input the TC 972, AC 114 reversal using a Post Delay Code 1.
    Research indicates that a single payment was credited to the module more than once

    Example:

    A payment posted to the module without a DPC 64 but was included in a manual TC 767 CRN 263 transaction AND an in-module credit transfer is input to add the DPC 64 causing the systemic TC 767 CRN 263 to generate for the amount of the payment, thereby double crediting the module.

    		   Use CC REQ54 to input a TC 290.00/TC 298.00 CRN 263 as appropriate, to generate a TC 766 CRN 263 to reverse one of the duplicate TC 767 CRN 263 postings.

    Reminder:

    No minus sign is needed when inputting the CRN amount to increase the posted TC 766 CRN 263 amount.

  12. Erroneous TC 76X CRN 263 postings resulting from the use of TC 290.00 CRN 263 instead of the TC 298.00 CRN 263 to apply installment payments to the deferral are very common on inclusion year modules. Refer to the Table below when correcting TC 76X CRN adjustments that were input in error:

    If Then
    A manual TC 767 CRN 263 was input using a TC 290.00 to apply an installment payment that was received and due after the due date of the inclusion year/triggering event year return

    1. Input a TC 290.00 CRN 263 to generate a 766 CRN 263 in the amount of the credit that was reversed in error to add the credit back in.

    2. Input a TC 298.00 CRN 263 with a minus sign in the amount of the payment using the date of the payment or the installment due date whichever is earlier unless there is interest on the module in which case the installment due date should be used as the interest computation date.

  13. Refer to the table below when applying credits on the inclusion year module and/or the triggering event year module to the IRC 965(h) deferral:

    If And Then
    The 965 inclusion year module or triggering event year module where a 965(h) election was made is in a credit balance All installment payments due to date were timely paid and properly applied and the Section 965 liability is NOT full paid Input a TC 298.00 CRN 263 for the amount of the credit with a minus sign using the current date to apply the credit to the next installment(s).
    The 965 inclusion year module or triggering event year module where a 965(h) election was made is in a credit balance Research indicates the overpayment is caused because a 965 designated payment posted without a DPC 64 Perform an in-module credit transfer to post the payment as a TC 670 DPC 64. Once posted, BMF programming will post a systemic TC 767 CRN 263, to apply the payment to the deferral.

  14. Refer to the table below when the inclusion year and/or triggering event year module is in a debit balance:

    If And Then
    The 965(h) inclusion year module and/or the triggering event year module is in a debit balance All TC 76X CRN 263 transactions on the module accurately reflect the payments posted to the module

    1. Research the module and each subsequent module looking for misapplied and/or mis-coded IRC 965 Designated Payments.

    2. If any available IRC 965 payments are identified, move them to the inclusion year/triggering event year module and post them as a TC 670 DPC 64. Once posted, BMF programming will systemically post a TC 767 CRN 263 in the amount of the payment.

    3. If after the payment(s) are moved to the inclusion year/triggering event year module, the module balance is zero, no further action is needed.

    4. If after the payment(s) are posted to the inclusion year/triggering event year module, the module remains in a debit balance, refer the account for possible acceleration. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    5. If after the payment(s) are posted to the inclusion year/triggering event year module, the module is in a credit balance and the Section 965 liability has not been paid in full, input a TC 298.00 CRN 263 for the amount of the credit using the current date as the interest computation date to apply the credit to the next installment due.

      Caution:

      When attempting to post a TC 767 CRN 263, input the CRN amount with a minus sign.

    6. If after the payment(s) are posted to the inclusion year/triggering event year module, the module is in a credit balance and the Section 965 liability has been paid in full, the credit can refund or offset as normal
    The 965(h) inclusion year module and/or the triggering event year module is in a debit balance No misapplied/mis-coded IRC 965 payments are located AND there is no indication on the module that the Section 965 liability has been accelerated Refer the account for possible acceleration. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    The 965(h) inclusion year module and/or the triggering event year module is in a debit balance There is an open control base and one of the following history items on TXMOD: “L6154”, “965/L6154”, “6154SNT” Contact the employee with the open control, before taking any action on the account.
    The 965(h) inclusion year module and/or the triggering event year module is in a debit balance There is a history item on TXMODA of “965ACCEL” The liability has been accelerated and payment of the entire Section 965 liability is due in full. Do NOT input a TC 766 CRN 263 to re-establish the deferral.

3.14.2.6.5.4 (01-01-2023)
IRC 965 CP Notices

  1. The following notices were created for BMF IRC 965 processing:

    • CP 247A - Tax Assessed - Notification of the Requested Credit Elect/Refund Being Applied to Section 965 Tax Liability

    • CP 247B - Tax Assessed - Notification of Credit Elect/Refund Being Applied to Section 965 Tax Liability

    • CP 247C - Tax Assessed - Including Section 965 Tax Liability

    • CP 256 - Annual Section 965(h) Installment Notice

    • CP 947A - Tax Assessed - Notification of the Requested Credit Elect/Refund Being Applied to Section 965 Tax Liability (Spanish)

    • CP 947B - Tax Assessed - Notification of Credit Elect/Refund Being Applied to Section 965 Tax Liability (Spanish)

    • CP 947C - Tax Assessed - Including Section 965 Tax Liability (Spanish)

    • CP 956 - Annual Section 965(h) Installment Notice (Spanish)

  2. CPs 247A/B/C and CPs 947A/B/C are notice and demand correspondence issued to notify the taxpayer of their IRC 965(h) tax liability.

  3. When reviewing CPs 247A/B/C and CPs 947A/B/C research the account to ensure the TC 971 AC 114 amount and TC 766 CRN 263 were input correctly.

    • If correct, and the amount on the notice accurately reflects the information on the return and on the module, print the notice.

    • If the TC 971 AC 114 and/or the TC 766 CRN 263 were input incorrectly, input the appropriate adjustment in accordance with IRM 3.14.2.6.5.3.1 . If there is a remaining IRC 965 tax liability after the adjustments are made, print the notice.

    • If there was no IRC 965 inclusion and/or IRC 965(h) election made and the TC 971 AC 114 and/or the TC 766 CRN 263 were input in error, input the appropriate reversals in accordance with IRM 3.14.2.6.5.3.1 and void the notice.

  4. When reviewing CP 256 and 956, research the account to ensure the TC 971 AC 114 amount and TC 76X CRN 263 transactions were input correctly.

    Research to ensure the following:
    Ensure the non-965 tax and the 1st installment payment were paid by the due date of the 1st installment.
    Ensure all subsequent installment payments were made by the due date of the installment and full paid the installment due.

    Note:

    The posted TC 767 CRN 263 should carry the due date of the installment or the payment date, whichever, is sooner except when there is interest on the module in which case the posted TC 767 CRN 263 should carry the due date of the installment. When applying an overpayment to a future installment the current date should be utilized when inputting the TC 290.00/298.00 CRN 263 to generate the TC 767 CRN 263.

    If the date of a posted TC 767 CRN 263 is incorrect, input an adjustment to correct it (i.e. reverse the erroneous TC 767 CRN 263 by inputting a TC 290.00/298.00 CRN 263 adjustment to post a TC 766 CRN 263 using the same date and amount as the erroneous TC 767 CRN 263 and then input the TC 290.00/298.00 CRN 263 to post the TC 767 CRN 263 with the correct date.

    Reminder:

    The IRC 965 Tool can be used to help determine the needed adjustments to the IRC 965(h) deferral.
    Ensure the TC 76X CRN 263 transactions posted to the module accurately reflect the payments made or credits applied to the IRC 965 deferral.

    Note:

    The net unreversed TC 766 CRN 263 transactions should reflect the IRC 965 Total Tax minus payments made or credit applied towards the IRC 965 deferral on BMF accounts.

    • If correct and the amounts on the notice accurately reflect the IRC 965(h) deferral amount and payments and credits applied to the deferral on the module, print the notice.

    • If the TC 971 AC 114 and/or the TC 76X CRN 263 transactions were input incorrectly, input the appropriate adjustment(s) in accordance with IRM 3.14.2.6.5.3.1. If there is a remaining IRC 965 tax liability after the adjustments are made, and the installment is still owed retype the notice to include the correct “Total Unpaid IRC Section 965 Amount” and/or “Installment Amount Due.”

      Note:

      The Total Unpaid IRC Section 965 Amount is the net of all the unreversed TC 766 CRN 263 transactions on the module on BMF accounts.

      Caution:

      Be aware of pending transactions that could impact the accuracy of this amount on the notice and update the notice accordingly. If the pending transaction(s) will reduce the Total IRC 965 deferred tax to zero, void the notice.

      Note:

      The Installment Amount Due will be equal to the applicable percentage (8% in years 1-5, 15% in year 6, 20% in year 7 and 25% in year 8) of the most recently posted TC 971 AC 114 amount unless a prior payment paid a portion of the installment amount that is due for the reporting year, in which case the Installment Amount Due will be less than the applicable percentage (8% in years 1-5, 15% in year 6, 20% in year 7 and 25% in year 8) of the most recently posted TC 971 AC 114 . If a previous payment paid all of the installment due for the reporting year, then the Installment Amount Due on the notice should be zero.

    • If there is a remaining IRC 965 tax liability, research to ensure all designated IRC 965 payments were properly applied to the appropriate module and accounted for. If an IRC 965 designated payment was misapplied, transfer the credit to the appropriate module and retype the notice to include the correct “Total Unpaid IRC Section 965 Amount” and/or “Installment Amount Due.”

    • If there was no IRC 965 inclusion and/or IRC 965(h) election made and the TC 971 AC 114 and/or the TC 766 CRN 263 were input in error, input the appropriate reversals in accordance with IRM 3.14.2.6.5.3.1 and void the notice.

    • If the TC 971 AC 114 amount is less than the TC 766 CRN 263, void the notice.

    • If the TC 971 AC 114 and TC 766 CRN 263 amounts are correct and the notice module has a credit balance, void the notice.

    • If the 965 liability has been accelerated due to failure to timely pay installments, void the notice. See table below for more details.

      If Then
      There is a history item on TXMODA of “965ACCEL” and/or the net 76X CRN 263 transactions on the module equal zero Void the notice.
      There is an open control base and one of the following history items is on TXMOD: “L6154”, “965/L6154”, “6154SNT”

      1. Ensure the 965 amounts on the module are accurate and match the notice. If so, print the notice.

      2. If an adjustment is needed to the module, contact the employee with the open control prior to making any adjustment and retype the notice accordingly.

    • If there is an indication of a transfer agreement on the module and you are unable to determine the accuracy of the notice, refer the case to the lead who will contact SB/SE Brookhaven for assistance. See the table below for information on how to identify transfer agreements on IRC 965 modules.

      Transaction Code Meaning
      TC 971 AC 507 An unreversed TC 971 AC 507 indicates an approved IRC 965 Transfer Agreement. This transaction creates an MFT 83 Transferee module which mirrors the Transferor’s module. Once established any payment made towards the transferred 965 liability will be recorded on both modules until it is paid in full. TC 971 AC 507 links the transferor and transferee accounts.
      TC 76X CRN 337 RC 160 Indicates a payment made to a mirrored account. This transaction code is used to cross reference (mirror) payments made towards 965(h) installments to the joint and severally liable, transferee and transferor accounts.
      MFT 83 Indicates an IRC 965 liability was transferred. MFT 83 is the transferee’s module and IRC 965 payments/credits on this account should mirror the IRC 965 payments/credits on the transferor’s 965 inclusion year module until the 965 tax liability is paid in full.

3.14.2.6.5.5 (11-05-2019)
IRC 965(h) Liability Schedule CFOL Screen (Command Code BMFOLM)

  1. Command Code BMFOL with Definer M was created to assist in identifying the IRC 965(h) deferral payments on the account.

  2. The amount listed under the title, “Tax Liabilities and Installments” reflects the latest TC 971, AC 114 (Total Net Tax Liability under Section 965) reported by the taxpayer.

  3. The amount listed under the title, Deferred Amount reflects the latest TC 766 CRN 263 remaining deferred amount.

  4. The remainder of the screen display reflects the yearly percentage of the 8 installments based on the latest TC 971, AC 114 and the remaining installment amounts due based on the latest TC 766 CRN 263, along with the yearly due dates of the installments.

  5. This display screen will assist in determining the amount of the IRC 965 deferral amount paid, as well as, the remaining deferral amount still owed. It will allow you to determine if an installment amount was paid, overpaid with the overpayment being credited to the next installment or if the installment was underpaid.

  6. The BMFOLM display screen will recalculate with the input of a new TC 971, AC 114 and/or a new TC 766/767 CRN 263 amount.

    Note:

    See IRM 2.3.59-117, Command Code BMFOL IRC 965 Liability Schedule Screen for a detailed display.

3.14.2.6.6 (01-01-2023)

Reviewing Notices with Freeze Codes

  1. Consider all existing freeze codes before taking any action on a tax module.

  2. Refer to Document 6209 Section 8A for a complete listing of Master File Freeze Codes with explanations of the codes, conditions on the account, and freeze release instructions. Consult your work lead for instructions for resolving cases with freeze codes not mentioned in the following sections.

3.14.2.6.6.1 (01-01-2023)
Duplicate Return Freeze (-A)

  1. The -A Freeze is set when a duplicate or amended return (TC 976 or TC 971 (AC 010)) posts to a tax module that contains a posted original return.

  2. The freeze generates a CP 193 transcript that is routed to Accounts Management (Adjustments) for resolution.

  3. If the notice is selected for review, follow the procedures in the -A Freeze Decision Table below.

    If Then
    The Category Code is DUPF or 941X

    • Do not transfer credit into or out of the notice module.

    • Do not assess the TC 160 penalty .

    • Mail notice

    • The return posted to an incorrect tax period and has to be reprocessed, and

    • Either the receiving or losing module contains an -A Freeze

    		 Void the notice.

    • If box 1 above applies, and

    • The notice module contains excess credit, and

    • The TC 976 tax liability on CC BMFOL or CC BRTVU matches the excess credit amount

    		 Void the notice.
    The notice module has an -A freeze with no current open control and there is a pending payment (TC 6XX) Label the notice.
    The notice module is in balance due status with no current open control and a payment is located. Transfer payment into notice module and determine the correct notice disposition.
    If payment found on Losing module contains -A Freeze and no open control base. Transfer payment into notice module and determine the correct notice disposition. See IRM 3.14.2.7.10 Notice Disposition.
    The notice module has an -A freeze with no current open control. Mail the notice. Do not assess TC 160.
    Controlled to a tax examiner outside Accounts Management Contact the tax examiner for case resolution (notice disposition, etc.) for all other instances see IRM 3.14.2.7 and IRM 3.14.2.7.19.1 .
    There is a pending adjustment with no Hold Code or Hold Code 1 on the notice module. Label the notice.
    CP 267 Refer to IRM 3.14.2.7.8.
3.14.2.6.6.2 (01-01-2016)
STEX Freeze (-B)

  1. This freeze prevents credits from refunding or offsetting (including Credit Elect) from the module.

  2. It is set when the Statute of Limitations for refunds expires.

  3. You must contact the Statute Unit for all notices with a tax increase selected with a -B Freeze to determine notice disposition. Use chart below for disposition.

  4. Follow any special instructions given by the Statute Unit when making an adjustment to the tax module.

  5. If increasing the tax, input a HC 4 to hold any remaining credit.

  6. If transferring credit with a TC 820, input a secondary TC 570 on the debit side of the transfer to create a -R Freeze and hold any remaining credit on the module.

  7. Any of the following actions will release the freeze:

    • TC 820

    • The module balance becomes zero or debit, or less than $5.00 credit.

  8. Follow procedures in -B Freeze Decision Chart below.

    IF THEN
    Notice with refund selected with -B Freeze Void the notice.
    Notice with tax increase selected with -B Freeze Contact the local Statute Unit. Your contact should state that if you do not receive any instructions from the Statute Unit before cycle closeout, the notice will be voided.

3.14.2.6.6.3 (01-01-2016)
Offset Overflow Freeze (C-)

  1. This freeze delays a TC 846 for one or two cycles.

  2. Master File generates this freeze when an offset overflow (computer capacity exceeded) exists.

  3. Follow normal review procedures.

  4. If the delayed refund needs to be reduced:

    1. Hold the notice.

    2. Monitor the case for posting of the TC 846.

    3. Delete the refund.

3.14.2.6.6.4 (01-01-2024)
Refund Statute Expiration Date (RSED) Freeze (-D)

  1. This freeze prevents credits from refunding or offsetting (including Credit Elect) from the module.

  2. The -D Refund Statute Expiration Date (RSED) Freeze is set when:

    • An RSED is present

    • A BMF adjustment (TC 29X/TC 30X) posts to the account

    • A return posts to a Substitute for Return (SFR) tax module and the IRS received date of the taxpayer’s return (received after previous SFR assessment) is more than three years after the due date or extended due date, whichever is later

    • All or part of the credit must be made up of prepaid credits (prepaid credits are credits posted by the due date of the return). The credit is frozen and an RSED-STAT transcript is generated and distributed to the Statute Function for resolution 4 cycles after the -D Freeze is set.

  3. If the conditions above are met, void the notice.

    Caution:

    The following conditions will release the -D Freeze:

    • A TC 29X with a Priority Code 4 posts to the module

    • The module balance becomes zero or debit

3.14.2.6.6.5 (01-01-2016)
Amended Return Freeze (E-)

  1. This freeze prevents overpayments from refunding or offsetting into or out of the frozen module.

  2. The following conditions will set this freeze:

    • No original return (TC 150) has posted, but a duplicate (TC 976) return posts to a tax module

    • TC 971 Action Codes 010, 012, 013, 014, or 015 is input

  3. Any of the following actions will release the freeze:

    • TC 150

    • TC 971 with Action Code (AC) 002

    Note:

    If the case is controlled to a Tax Examiner (TE), contact the tax examiner for case resolution.

3.14.2.6.6.6 (01-01-2016)
Rollback Freeze (-E)

  1. This freeze prevents credits from offsetting into a debit module the computer has performed a rollback analysis on or to a debit module that has no modules in status 22, 23, 24, or 26 for the previous 12 months.

  2. Any of the following actions will release the freeze:

    • Computer released after 10 cycles

    • The credit discrepancy is resolved

    • The module balance becomes zero or credit

    • The module reaches status 22, 23, 24, or 26

      Caution:

      Overpayments must be transferred into modules with -E Freezes only if the credit is claimed on the module, intended to be applied, or the taxpayer requested the credit transfer.

3.14.2.6.6.7 (11-05-2019)
Math Error Freeze (-G)

  1. This freeze grants Appeal Rights to the taxpayer and prevents the tax module from updating to TDA status.

  2. One of the following conditions usually sets this freeze:

    • An original return with a Math Error Notice Code (TPNC) posts to the module

    • An adjustment in Blocking Series 770-789 posts to the module

  3. The freeze will automatically release in twelve weeks. Any of the following actions will release it earlier:

    • TC 472 with Closing Code 94

    • TC 290 with Priority Code 6

3.14.2.6.6.8 (01-01-2016)
Restricted Failure to Pay Penalty Freeze (G-)

  1. This restricts the Failure to Pay penalty.

  2. Any of the following conditions will set the freeze:

    • TC 270/271 (except with Reason Code 62)

    • TC 320 (Return due date is before 1-1-87)

    • TC 534 (for significant amount)

    • TC 780 with a TC 480

  3. Any of the following actions will release the freeze:

    • TC 272 (zero amount)

    • TC 321

    • TC 535 (if the TC 534 amount is completely reversed)

    • TC 781 or TC 782

  4. Manually compute the penalty and retype the notice if necessary.

    Note:

    Any transaction with Doc Code 52 will restrict FTP penalty and interest (credit and debit) in the module with that transaction. This restriction is permanent and cannot be released. This condition does not set the G- freeze. Nevertheless, manual penalty and interest computation is required. Exception: A transaction with Doc Code 52 with Julian Date 999 will not restrict the Failure to Pay penalty and interest.

3.14.2.6.6.9 (01-01-2016)
Restricted Credit Interest Freeze (I-)

  1. This freeze restricts credit interest.

  2. One of the following conditions will set the freeze:

    • TC 770

    • TC 780

    • TC 534 (for significant amount)

  3. Any of the following actions will release the freeze:

    • TC 771

    • TC 772

    • TC 535 (must completely reverse TC 534 amount)

    • TC 781 or TC 782

    • Net module balance becomes zero or debit

    Note:

    Any transaction with Doc Code 52 will restrict FTP penalty and interest (credit and debit) in the module with that transaction. This restriction is permanent and cannot be released. This condition does not set any I freeze. Nevertheless, manual penalty and interest computation is required. Exception: A transaction with Doc Code 52 with Julian Date 999 will not restrict the Failure to Pay penalty and interest.

  4. Follow normal review procedures.

3.14.2.6.6.10 (01-01-2023)
Restricted Debit Interest Freeze (-I)

  1. The -I (Debit Interest) Freeze sets when a manual abatement or assessment requirement is placed on an account. The -I Freeze is generated when a TC 340/ TC 341 posts or when CCC “Z” is placed on an account identifying combat zone taxpayers entitled to an automatic postponement of a deadline. You must manually compute interest on adjustments input on an account with the -I Freeze. It also prevents credits from refunding or offsetting into or out of the module for eight weeks.

  2. A TC 340/341 sets this freeze.

  3. TC 342 will release this freeze.

  4. Manually compute the interest and retype the notice if necessary.

    Reminder:

    Electronically document reason for action taken when available to function inputting adjustment.

    Example:

    If case is located on Accounts Management Services (AMS) system and/or the CIS (Correspondence Imaging System) - effective February 17, 2009 renamed as AMS (Accounts Management Services) - notate the following in case history:
    • reason interest has been restricted
    • relevant interest computation dates/amounts for that adjustment
    • any specific information helpful in reconstructing the posted restricted interest adjustment.

    Reminder:

    Any transaction with Doc Code 52 will restrict FTP penalty and interest (credit and debit) in the module with that transaction. This restriction is permanent and cannot be released. This condition does not set any I freeze. Nevertheless, manual penalty and interest computation is required. Exception: A transaction with Doc Code 52 with Julian Date 999 will not restrict the Failure to Pay penalty and interest.

  5. For a complete list of conditions for -I Freeze refer to Document 6209 Section 8A, Document 6209 Freeze Codes., .

3.14.2.6.6.11 (01-01-2016)
Credit Balance Freeze (-K)

  1. This freeze prevents the credit balance from refunding or offsetting from the module.

  2. Any of the following conditions will set the freeze:

    • TC 29X with Hold Code 1, 2, or 4

    • TC 30X with Hold Code 1, 2, or 4

    • Form 1120 with CCC "N" (Joint Committee Case) is posted

      Note:

      A TC 290 .00 with Hold Code 4 sets this freeze on a refund delete case.

    Caution:

    Do not set a -K freeze unless it is necessary for case resolution. Be aware of the conditions for the release of the freeze. Do not release a refund erroneously.

  3. Any of the following actions will release the freeze:

    • TC 150 posts to the module

    • TC 29X posts to the module

    • TC 30X posts to the module

    • TC 820 posts to the module

    • TC 830 posts to the module

    • A Doc Code 24 or 34 credit transfer

    • The module balance becomes zero or debit

3.14.2.6.6.12 (04-03-2023)
Form 2290 (L-)

  1. This freeze is set when MFT 60 (Form 2290) module has a credit balance of $10.00 or more.

    1. The freeze was created to prevent erroneous refunds.

    2. The credits are recorded on the Form 2290 Credit Report which is worked by the Excise Group at Cincinnati Campus.

    3. The module is frozen from refunding and offsets.

  2. ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡If the form is requested by the Excise Team route to Internal Revenue Service, Excise Operation, Stop 5701-G 7940 Kentucky Drive, Florence, KY 41042.

3.14.2.6.6.13 (01-01-2016)
AIMS Indicator Freeze (-L)

  1. A TC 420 or TC 424 sets this freeze.

    Note:

    This freeze will not prevent a refund.

  2. Follow normal review procedures.

    Note:

    If a CC REQ54 adjustment is needed, use Priority Code 1.

  3. Freeze is released by certain TC 30X or TC 42X transactions.

3.14.2.6.6.14 (01-01-2021)
Disaster Freeze (-O)

  1. The -O freeze allows the Service to provide special processing related to any filing, payment or interest relief, granted for a geographical area. It is input systemically at the request of the Disaster Program Office.

  2. This freeze is set by TC 971 (Action Code 086 or 087).

    Note:

    As of 2007, TC 971 AC 086 is no longer used to set the -O freeze, therefore, TC 971 AC 086 represents disaster relief that started prior to 2007. TC 971 AC 087 is the transaction code used to set the -O freeze after 2007.

  3. The -O freeze provides the following relief:

    • Suspends the mailing of notices with the exception of assessment notices required by IRC 6303 and notices pertaining to the Release of Levy/Release of Property from Levy.

    • Establishes a filing and payment postponement period for eligible taxpayers with a filing or payment due date/extended due date within the disaster period.

    • Allows for special penalty/interest computation for taxpayers meeting the criteria for the filing and payment relief granted.

    • Suspends a number of collection and examination activities.

  4. The -O freeze does NOT freeze the module from refunding.

  5. The -O freeze is released when the current date is beyond the secondary date (disaster ending date) of the TC 971 AC 087.

    Note:

    When performing account research, the -O freeze can be viewed using IDRS CC ENMOD and/or BMFOLE. The Disaster Victim Code will also post on the Entity portion of IDRS. For more information on the Disaster Victim Code see, IRM 3.14.2.7.6.19, Disaster Freeze (-S).

  6. Please refer to IRM 3.14.2.7.4.4, Natural Disaster Procedures, for more information.

3.14.2.6.6.15 (11-04-2021)
Refund Deletion Freeze (P-)

  1. This freeze prevents overpaid balances from refunding or offsetting from the module.

  2. Any of the following conditions will set the freeze:

    • TC 720

    • TC 841

    • TC 842 with a posted TC 150

  3. Any of the following actions will release the freeze:

    • TC 29X posts to the module

    • TC 30X posts to the module

    • TC 721 posts to the module

    • TC 722 posts to the module

    • TC 820 posts to the module

    • TC 830 posts to the module

    • A Doc Code 24 or 34 credit transfer

    • A TC 571 or TC 572 AFTER a TC 570 has previously posted

    • The module balance becomes zero or debit

    Caution:

    If an open control base is on the module regardless of status, do not release the freeze without contacting the originator.

3.14.2.6.6.16 (01-01-2021)
Rollover Freeze (Q-)

  1. The Q-Freeze is set when a return posts with unclaimed excess credits.

  2. The account is frozen from refunding or offsetting for 15 cycles for MFTs 01, 02, 03, 05, 10, 11, 12,16 and 33.

  3. Any of the following actions will release the freeze:

    • Automatically at the end of 15 cycles

    • A TC 652 or TC 662 posts and remaining credits are within $10.00 of the claimed amount (including penalties and interest)

    • A TC 290 .00 with Hold Code 3 and Priority Code 4 posts

    • The module balance becomes zero or debit

3.14.2.6.6.17 (01-01-2016)
Additional Liability Freeze (-R)

  1. A manual or systemic TC 570 sets this freeze.

  2. Any of the following conditions will generate a TC 570:

    • A TC 150 with CCC X posts

    • A TC 291 with Priority Code 7 posts

  3. Any of the following actions will release the freeze:

    • TC 571

    • TC 572

    • TC 29X

    • TC 180 posts for zero to a module with an unreversed TC 186

    • The module balance becomes zero

3.14.2.6.6.18 (01-01-2016)
RPS Multiple 610 Freeze (R-)

  1. Any of the following actions will set this freeze:

    • Multiple TC 610s on module when the TC 150 posts

    • Multiple TC 610s posted with no TC 150 posted on module

  2. Any of the following actions will release the freeze:

    • TC 29X

    • TC 30X

    • TC 612 (to reverse the TC 610)

    • The module becomes zero or debit

3.14.2.6.6.19 (04-03-2023)
Disaster Freeze (-S)

  1. The -S freeze is a systemic disaster indicator that gives the IRS flexibility to grant filing and payment relief without suspending compliance activities and the generation of notices when the impact and scope of a federally declared disaster does NOT warrant the use of the -O Freeze.

    Note:

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

  2. The -S freeze is set/reset by TC 971/972 with AC 688 with disaster beginning and ending dates for all taxpayers located within zip codes in the IRS covered disaster areas.

    Note:

    The Disaster Victim Code will post on the Entity portion of IDRS. The Disaster Victim Code is a value indicator that is defined in the table below:

    Disaster Victim Code Definition
    1 -S freeze active
    2 -O freeze active
    3 Both -S and -O freezes are active
    4 Historical indicator reflecting that the -S freeze or -O freeze were active at some point in the past but are not currently active

  3. The -S freeze is released when the current date is beyond the secondary date (disaster ending date) of the TC 971 AC 688.

  4. Please refer to IRM 3.14.2.7.4.4, Natural Disaster Procedures, for more information.

  5. For detailed disaster information and impacted state list see Tax Relief in Disaster Areas.

3.14.2.6.6.20 (01-01-2016)
Undelivered Refund Check Freeze (S-)

  1. This freeze prevents any overpayment from refunding. It also causes a CP 231 to be issued to the taxpayer.

  2. A TC 740 sets the freeze

  3. Any of the following actions will release the freeze:

    • TC 018

    • TC 742 (net of all TC 74X is zero and debit)

    • TC 014

    • The module balance becomes zero or debit

3.14.2.6.6.21 (01-01-2016)
Outstanding Liability Freeze (V-)

  1. This freeze indicates an outstanding liability on another tax account.

  2. A TC 130 sets this freeze.

  3. Any of the following actions will release the freeze:

    • TC 131

    • TC 132

    • TC 824

  4. Follow normal review procedures.

3.14.2.6.6.22 (01-01-2016)
Bankruptcy Freeze (-V)

  1. This freeze causes the Campus Status to become 72.

  2. A TC 520 with Closing Codes 60-67, 83, 85-89 sets the freeze.

  3. A TC 521/522 with Closing Codes 60-67, 85-89 releases the freeze.

  4. Follow normal review procedures.

  5. Closing Code 81 usually indicates that the Department of Justice (DOJ) is litigating a bankruptcy matter relating to the account. Follow procedures below. Caution: Taking actions on these cases before seeking DOJ concurrence/approval may have a negative and serious impact on the ongoing litigation or secured judgment.

  6. If during review, it is decided that the Territory Office Special Procedures function needs to be contacted:

    1. Give the case to the work lead.

    2. The work lead will contact the Territory Office Special Procedures function for case resolution.

    3. The work lead will return the case to the tax examiner with instructions for case resolution.

    4. The tax examiner will resolve the case.

3.14.2.6.6.23 (11-05-2019)
Claim Pending Freeze (W-)

  1. This freeze indicates that a claim is pending.

  2. A TC 470 or TC 976 posting to a balance due module sets the freeze.

    Note:

    A TC 470 without a Closing Code or with a Closing Code 90 will prevent offsets into the account.

  3. Follow normal review procedures.

  4. If during review it is decided that the Territory Office Special Procedures function or the Appeals Office needs to be contacted:

    1. Give the case to the work lead.

    2. The work lead will contact the Special Procedures function and/or Appeals Office for case resolution. (To inquire about the status of a case in Appeals Office, call the Appeals Customer Service Line at (559) 233-1267 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.)

    3. The work lead will return the case to the tax examiner with instructions to resolve the case.

    4. The tax examiner will resolve the case.

3.14.2.6.6.24 (11-05-2019)
Litigation Pending Freeze (-W)

  1. A TC 520 with various closing codes sets this freeze.

  2. Follow normal review procedures.

  3. If during review it is decided that the Territory Office Special Procedures function or the Appeals Office needs to be contacted:

    1. Give the case to the work lead.

    2. The work lead will contact the Special Procedures function and/or Appeals Office for case resolution. (To inquire about the status of a case in Appeals Office, call the Appeals Customer Service Line at (559) 233-1267 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.)

    3. The work lead will return the case to the tax examiner with instructions to resolve the case.

    4. The tax examiner will resolve the case.

    5. The following defines a Department of Justice (DOJ) case:

    • Any module in Status 72 and/or an unreversed TC 520 with closing codes 70, 75, 80 and 82.

    • Any module with a TC 550 and definer code 04.


    Caution: Taking actions on these cases before seeking DOJ concurrence/approval may have a negative and serious impact on the ongoing litigation or secured judgment.

3.14.2.6.6.25 (01-01-2016)
Accounting Manual Refund Freeze (-X)

  1. A manual refund worked by Accounting sets this freeze. Follow normal procedures.

3.14.2.6.6.26 (02-26-2016)
Offer in Compromise Freeze (-Y)

  1. A -Y freeze indicates an Offer in Compromise is pending.

  2. A TC 480 or TC 780 sets this freeze.

  3. Void the notice.

3.14.2.6.6.27 (01-01-2024)
≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

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

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

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

    Exception:

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

    Note:

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

3.14.2.6.7 (01-01-2024)

Math Error Condition

  1. A math error notice generates whenever a mathematical error is made by the taxpayer on the return or the posted payment information does not agree with the amount claimed on the return.

    1. The taxpayer notice code (TPNC), also called the math error code, is a two-digit numerical code assigned by ERS or ECC-MTB for the specific error condition.

    2. The computer translates this code into a literal message that prints on the math error notice.

    3. This message notifies the taxpayer of the error on the return or account.

  2. Complete all general review procedures in IRM 3.14.2.7before reviewing the math error condition. The return may or may not be included with the NRPS package, depending on the error condition.

  3. The Main Math Error Notices:

    1. Overpayment Notices

      Return Computer Paragraph Notice
      940, 940-EZ 111
      941, 943, 944, 945 112
      CT-1, CT-1X 113
      720 114
      11-C, 2290, 706, 709, 730 115
      5227, 990PF, 4720 116
      1042 117
      1120, 1120X, 1041, 1120-C, 990-T 133
      720, 940, 940-EZ, 941, 943, 944, 945, 1120, 1120-C, 1120X, 1041 268

    2. Even/Balance Due Notices

      Return Computer Paragraph Notice
      940, 940-EZ 101
      941, 943, 944, 945, 941X, 943X, 944X, 945X 102
      CT-1, CT-1X 103, 123
      720 104, 124
      11-C, 2290, 706, 709, 730 105, 125
      5227, 990PF, 4720 106, 126
      1042 107, 127
      1120-C, 1120X, 990-T, 1041, 1120 131, 131A and 132

  4. The balance due non-math error notices are the CP 161 and CP 162 (Form 1065 and 1120-S).

  5. The overpaid non-math error notices generated at return settlement (TC 150) are the CP 267 (Q- Freeze), the CP 173 (ES Penalty notice) and the CP 210 (adjustment notice):

  6. To view an exhibit of a notice, refer to The Office of Taxpayer Correspondence website at SNIP.

3.14.2.6.7.1 (01-01-2024)
Reviewing Return Math Errors

  1. Verify the validity of the taxpayer notice codes.

    1. Refer to the Taxpayer Notice Codes(TPNC), IRM 3.14.2.11 for the Form you are reviewing.

    2. The TPNCs on the notice must clearly state the taxpayer's error on the return.

    3. If the assigned TPNC is incorrect, retype the notice to reflect the correct TPNC.

  2. Review, from the point of error, all lines and schedules affected by the error.

    1. The required review is limited to those items directly related to the point of error (ripple errors)

      Note:

      Refer to the Instructor’s Corner for Submission Processing and reference the Business Master File Notice Review Job Aid 2533-701 for a list of applicable TPNCs by form type. This job aid identifies which TPNC should be assigned based on the line number of the form in which the math error calculation was made.

    2. Correct any other obvious errors found during the review

  3. If you are reviewing a math error notice with a balance due of $250,000 or more or an overpayment of $100,000 or more, then you are required to have the return. If it is not provided then you should request the document by using CC ESTAB. If the document is not received and the accuracy of the overpayment cannot be confirmed before the close out, you must input CC NOREF if there is a TC 846 present on TXMOD and input an H Disposition, as approved by Headquarters, until the return is received.

    Note:

    If the document is not received within the applicable timeframes for CC ESTAB, request the document using Form 2275.

  4. Analyze for the taxpayer’s intent. If the taxpayer entered a line incorrectly it could affect the whole return. This can sometimes be discovered by working a line calculation backwards.

    Example:

    On a Form 941 with TPNC 07, the taxpayer's figure for Total Social Security and Medicare Taxes (line 5d), divided by the correct percentage equals the Taxable Social Security Wages (line 5a). If this amount does not match the taxpayer's figure for line 5a, it could equal the entry for Wages, Tips and Other Compensation for (line 2). Verify taxpayer intent before adjusting the account.

    Note:

    Line 5c will be greater than or equal to the total of lines 5a and 5b.

    Example:

    A CP may generate when the taxpayer is claiming total payments as estimated payments. Void the notice if the refund matches the amount the taxpayer is expecting and there are no other error conditions present.

  5. Check for incorrect input of the tax data, such as transcription errors or a misplaced decimal point.

    Note:

    If the tax return is not included in the NRPS package and you suspect a decimal point transposition and/or a transcription error, request the return using CC ESTAB, assign a disposition of “H” if the return is not received in time for cycle close-out.

    1. If research confirms a misplaced decimal point or transcription error, input the appropriate adjustment(s).

      Example:

      A CP 111 generated with tax of $5.60. NRPS shows taxable income of $700.00. The taxpayer made deposits of $56.00. The remaining $50.40 is refunding. Your review indicates a transcription error was made. Taxable wages will be $7,000.00 with a tax of $56.00. Delete the refund using CC NOREF and adjust back to the taxpayer figures using CC REQ54.

  6. If the tax is incorrect, input CC REQ54 on IDRS:

    1. Change other items, such as taxable income, as needed.

    2. Do not adjust other items unless also changing the tax.

    3. See IRM 3.14.2.7.6.6 and Document 6209, Document 6209 Item Adjustment Codes and Credit Reference Numbers for specific item reference numbers.

      Reminder:

      If adjusting tax on Employment Tax Returns, the FTD Penalty (TC 186) must be addressed. (Refer to IRM 3.14.2.7.17.8, Failure to Deposit Penalty.)

    4. Refer to IRM 3.14.2.7.19.4 when inputting tax adjustments.

    5. If an adjustment is needed on Form 706/709 accounts, take the following actions:

    Caution:

    Due to the consolidation of the Cincinnati Submission Processing Center (CSPC), Forms 706/709 are now processed through Kansas City Submission Processing Center (KCSPC), therefore, the instructions contained in 6(e) above, pertain to Kansas City Notice Review ONLY. However, KCSPC cannot adjust these cases. If an adjustment is needed the return must be routed to Cincinnati SB/SE.

    • Route the return to Internal Revenue Service Estate and Gift Tax Operation, Stop 824G, 7940 Kentucky Drive Florence, KY 41042 Estate and Gift at the Cincinnati Campus, mail stop 824G. Attach a note explaining the adjustment needed.

    • Recharge the return to 0283000000.

    • Leave a history item on IDRS.

    • Stop the refund on overpaid notices.

    • Input STAUP on balance due notices.

    • Void the notice on reprocessables.

    • Mail the notice with Label #1

  7. Delete a refund using CC NOREF:

    1. If increasing the tax

    2. If decreasing the refundable credits

    3. For a pending debit transaction.

    4. Refer to IRM 3.14.2.6.1 for instructions on inputting Command Code NOREF

  8. Special condition on CP 102 and CP 112. For returns where Line 5 d Taxable wages and tips subject to Additional Medicare Tax withholding contains a significant entry, NR tax examiners should:

    • Retype notice on OLNR to the figures on Q-Print

    • Make tax adjustments as necessary to correct tax.

    • If CP 112, enter Label 5 on OLNR.

    • Refer to IRM 3.14.2.7.19.4 when inputting tax adjustments.

3.14.2.6.7.2 (04-03-2023)
Credit Discrepancy - Excess Credits

  1. Excess credits occur when more credits are posted to the module than claimed by the taxpayer. The credit may belong on another module or the taxpayer may have forgotten a payment was made. To decide the excess credit amount:

    1. Subtract the total credits claimed by the taxpayer from the actual amount posted.

    2. Consider that any credit elect (TC 716/TC 710) or credit applied (TC 700) posted to the module may not be claimed by the taxpayer.

    3. Consider that the taxpayer may not have received the full credit elect amount requested on the previous return.

      Note:

      Because the taxpayer may be requesting a refund or credit elect, use the credit amount the taxpayer claimed on the return to decide the discrepancy. Do not use the tax amount.

  2. Examples of notices reviewed are CP 111, CP 112, CP 117, CP 134R and CP 834R. List is not all inclusive.

  3. Use the selection keys to serve as a guideline to assist in the review of the notice.

  4. Use the NRPS notice module data to decide which credit(s) or part of a credit is creating the discrepancy.

    Exception:

    If discrepancy is $ .99 or less void notice.

  5. Review all other NRPS modules to decide if the excess credit is claimed or belongs on another module. If the excess credit is in line, transfer the credit. Use the following to analyze the account for the taxpayer's intent.

    1. Look at the payment pattern.

    2. Check payments claimed by the taxpayer and underpaid tax amounts.

    3. Check liability schedules on balance due modules (IDRS research is required).

    4. Review the NRPS package for evidence of a previous transfer to or from another TIN (Research any other TIN on IDRS).

  6. Several payments may be misapplied between two or more modules.

    1. Analyze the entire account (IDRS research is required).

    2. Multiple transfers may be required.

  7. If the date of the overpayment is timely for a prior year or quarter return, decide if the payment belongs on the prior account (IDRS research is required).

  8. Transfer a payment into a full paid module only if the transfer(s) will reduce penalty and/or interest, or if the transfer into the account will overpay the module and a misapplied payment will then be transferred to a different module. Otherwise, allow the refund to generate from the notice module. When inputting a credit transfer follow the instructions in IRM 3.14.2.7.7 and IRM 2.4.17, Command Codes ADD24/34/48, ADC24/34/48, FRM34 and DRT24/48

  9. Research unclaimed out of line credits.

    1. Research the voucher, FTD payment, or copy of check as needed.

    2. If a payment is made on the Electronic Federal Tax Payment System, (EFTPS) do not research unless significantly out of line (Follow local procedures).

    3. Verify that all unclaimed, refunding TC 670 payments belong to the taxpayer.

      Note:

      Payment with return (TC 610) will not create a credit discrepancy notice. However, if the TC 610 amount is not the balance due per taxpayer, and NRPS/IDRS research does not explain the payment, verify the payment through research on the RTR system.

  10. Check for misplaced line entries creating erroneous credits.

    Example:

    Deposits or extension payments may be entered on withholding or refundable credits lines on income tax returns. Compare the tax and liability data on the notice module with credits posted on other modules.

    Note:

    Do not void a CP 161 if fully paid by credits that offset (TC 706) into the notice cycle. A CP 138 will generate from the losing module. Print Notice.

    Note:

    Do not label if the offset partially pays the module. A CP 138 will generate from the losing module. Print Notice.

     
    If And Then
    Tax liability or claimed credits match timely credits posted on another tax module. TC 150 has not posted to the other module. Request the return using CC ESTAB (if not included in the NRPS package). The return may need to be reprocessed. Use Disposition Code H to hold the notice until a determination can be made regardless of selection key.
    Tax liability or claimed credits match timely credits posted on another tax module. TC 150 has posted to the other module and the tax liability matches the credit on the notice module. Request returns for both modules using CC ESTAB (if not included in the NRPS package). If the returns posted incorrectly, do not reprocess the returns. Adjust the tax on each module to agree with the information on the correct tax period. Use Disposition Code H to hold the notice until a determination can be made regardless of selection key.

  11. After completing the review, refer to the “Refund Decision” tables below to determine whether to intercept or to allow the refund as appropriate:

    Intercept the Refund for Excess Credits When:
    There is a pending (AP, PN, UP, CU, TP, or RS) debit transaction listed in the NRPS package and on IDRS.

    Reminder:

    Delete the refund and use the LCF to request CP 260 or Adjustment notice.
    The taxpayer requested credit elect and TC 836 has not posted

    Reminder:

    The credit must be available before credit elect can be moved forward.
    A credit is claimed on or intended for another module.
    An unclaimed credit is timely and in-line for the next tax period or another MFT

    Reminder:

    If credits are transferred to another module, use posting delay codes to ensure TC 841 posts before the credit transfer.
    The taxpayer entered the credit elect, total deposit amount, or extension amount on the Refundable Credits line or withholding line on the return

    Reminder:

    A TC 766 generates, giving the taxpayer a double credit or erroneous withholding credit. Reverse the TC 766 or TC 806 on CC REQ54.
    The return posted to the incorrect tax module and requires reprocessing.
    Verification of out of line credits, or TC 670s or TC 610 is required and the research has not been received before the refund intercept cutoff

    Reminder:

    If the taxpayer does not send the payment voucher with the return to the Lockbox bank, a photocopy of the top part of the return is used as the voucher. The photocopy does not verify the payment. The check is required in this instance.
    Unable to determine where payment should be applied, intercept refund and set -R freeze.
    TC 976 , TC 971 (AC 010) or TC 150 is pending on the notice module.
    TC 976 is posted on BMFOLT.

    Note:

    Check BMFOLT to decide if TC 976 posted with tax liability information. If the tax liability matches the refund amount, void the notice.
    There is a TC 840 on the module for a manual refund and the TC 846 has not been intercepted.
    Allow the Refund for Excess Credits When:
    The excess credit is timely and in line with other posted credits in the module and does not belong on any other module.
    The excess credit is an unclaimed Credit Elect (TC 716 or TC 710).
    The excess credit is an extension payment that does not belong on another module.
    Information on the return explains the excess credit or indicates the taxpayer is requesting a refund for the amount of the excess credit.
    CCC F- Final Return and payments or credits are not posted on subsequent module.

  12. Excess Credits with Zero Liabilities (TC 150 for .00)

    1. Check for other TINs. Research CC NAME with appropriate definer for another TIN. Check the return if provided for any other TINs.

    2. Check for name changes. Use CCs INOLE and ENMOD for possible name changes. Check the return if provided for any other names.

      Note:

      Sole proprietors may incorporate and file incorrect preprinted forms. If a Doing Business As (DBA) is entered on the return if it is provided, check CC NAME with the appropriate definer B for a corporation TIN. If an indication of previous sole proprietor is found on the return if provided, check CC NAMEB/NAMEI for a sole proprietor's TIN.

    3. If another TIN is found, use IDRS to decide if credit belongs on the other TIN.

    4. Decide if the taxpayer is liable for other types of tax. The credit may belong on a different MFT.

    5. Research TC 670 to verify credits belong to the taxpayer and have posted correctly.

    6. Request the return using CC ESTAB, if not included in the NRPS package, but is required to complete the review of the notice.

    7. Refer to “Refund Criteria” tables below.

      Allow the refund if any of the following apply:
      The payments are not claimed or do not belong on another module
      Research, including taxpayer history, indicates the payment(s) belong to the taxpayer
      Similar payments are not posted to other TIN's or MFT's
      There is no indication an amended return will post to the notice module
      Intercept the refund if any of the following apply:
      The payment(s) belong on other TIN's or MFT's
      Prior history indicates the taxpayer has filed returns with tax liability and payment patterns are in line with the payments posted to the notice module (see h. below) If CCC F, allow refund if final return and payments or credits are not posted on subsequent module.

      Note:

      Your prior history research is limited to 2 years.
      A posted payment is out of line (amount and/or date)
      TC 670 verification has not been completed before end of cycle
      TC 570 is pending on the notice module
      TC 976, TC 971 (AC 010) or TC 150 is pending on the notice module
      TC 976 is posted on BMFOLT

      Note:

      Check BMFOLT to decide if TC 976 posted with tax liability information. If the tax liability matches the refund amount, void the notice.
      Unable to determine where payment should be applied, intercept refund and input a REQ77 TC 570 to set the -R freeze.

    8. If prior history indicates the taxpayer is liable for tax on the notice module and payments are refunding, refer to the “Case Processing” chart below.

      Case Processing
      If CCC F, allow refund if final return and payments or credits are not posted on subsequent module. If no CCC F intercept the refund.
      Print the notice in cycle
      Input a REQ77 TC 570 to set the -R freeze.
      Close case control

    9. Electronically Filed Employment Returns -- When a taxpayer changes Reporting Agent (RAF) within a given quarter and does not terminate the contract with the old agent, the old agent is still required to file tax returns until the contract is terminated. Any credits posted to the module must be held until the new agent files the correct return. Refer to the “ELF TC 150 $.00 Returns” table below.

      If And Then
      Prior history indicates taxpayer did not file returns for prior quarters

      Note:

      Your prior history research is limited to 2 years.

      		 Then Follow instructions above in 3.14.2.7.7.2 (11)
      Prior history indicates taxpayer is liable for tax and payments are posted to the module There is no posted or pending TC 976 on the module and TC 846 IS NOT present.

      1. Void the notice.

      2. Input a REQ77 TC 570 to set the -R freeze..

      3. Add ELF150ZERO as an additional History Item.
      Prior history indicates taxpayer is liable for tax and payments are posted to the module There is no posted or pending TC 976 on the module and a TC 846 IS present.

      1. Void the notice.

      2. Intercept the refund using CC NOREF.

      3. Input a REQ77 TC 570 to set the -R freeze.

      4. Close base and input ELF150ZERO as Case Activity (history).
      Prior history indicates taxpayer is liable for tax and payments are posted to the module If a pending or posted TC 976 IS on the module and no TC 846 is present.

      1. Void the notice.

      2. Add ELF150ZERO as an additional History Item.
      Research indicates there is a partial offset of the refund and a CP 138 has generated in the same cycle as the notice cycle. There is no posted or pending TC 976 on the module and a TC 846 IS present. Print the notice and the CP 138. Do not reverse the offset.

  13. Form 1120/1120-S -- Specific Review-

    1. If an MFT 02 return has been filed with a TC 150 .00 and a TC 610 payment is refunding, it may be a Form 1120-S. In some instances, a Form 1120-S may not have tax liability and the income reported is taxed to the shareholders on their individual tax returns (Schedule K-1).

      Caution:

      Please be aware that the tax can be for $ .00 if the taxpayer’s income is less than their deductions. In these instances, allow the refund, do not set afreeze on these accounts.

    2. To decide if a return is a Form 1120 or a Form 1120-S, check CC ENMOD and refer the Form 1120/1120-S Decision Table below.

      If Then Action
      TC 091 or TC 096 has posted with Blocking Series 950 - 999 The return was originally a Form 1120-S and the filing requirements have been changed to Form 1120. The taxpayer will be liable for tax. If the return is available:

      • Delete the refund using CC NOREF.

      • Assess the tax using CC REQ54 with Hold Code 3.

      • Void the notice

      If the return is not available:

      • Request return using CC ESTAB.

      • Delete refund if applicable using CC NOREF.

      • Input a H disposition if return is not received before cycle closeout.

      • Once the return is obtained, follow instructions above under the heading, “If the return is available”.
      No TC 091 or TC 096 has posted Tax must not be assessed. Allow the refund.

  14. Form 1041T, Transmittal of Estimated Taxes Credited to Beneficiaries- Specific Review -

    Note:

    Form 1041T is used by an estate or trust to make an election to transfer the estimated tax payment from the 1041 account to the individual accounts of the beneficiaries.

    1. Review the account to decide if estimated credits have already been transferred to the beneficiaries. Refer to the Decision Table below.

      If Then
      The credits have already been transferred No action is required.
      The credits have not been transferred and are frozen with a -P Freeze No action is required.
      The credits have not been transferred and are refunding Contact Accounts Management Function for correct resolution.

      Note:

      If Form 1041T is attached to the Form 1041, detach it and route it to Accounts Management.

3.14.2.6.7.3 (01-01-2024)
Credit Discrepancy - Missing Credit

  1. Missing credits occur when the total credits posted to the module are less than the amount claimed by the taxpayer. The credit may have posted to another module or the taxpayer may not have made the payment. To decide the missing credit amount:

    1. Subtract the posted credits from the amount claimed on the return.

    2. Consider that any credit elect (TC 716/TC 710) or credit applied (TC 700) posted to the module may not be claimed on the return.

    3. Consider that the taxpayer may have claimed credit elect, but not received any or not received the full amount.

      Reminder:

      If there has been activity on account by Accounts Management or some other area, involving the transferring of credits or payments, (i.e., AP, PN, CU, RS, TP credits), reflect payment and use appropriate label.

  2. Examples of notices reviewed are CP 101, CP 102, CP 107, CP 134B and CP 834B. List is not all inclusive.

  3. Check the selection key for an indication of how to find the missing credit. See Exhibit 3.14.2-5 for a complete listing of selection keys.

    Note:

    If the selection key is Key 31, OR The taxpayer is claiming a credit or payment(s) that refunded in a prior year, prior quarter, or from a different MFT, then use Label # 8.

  4. Look for pending (AP, PN, CU, RS, TP) credits on the contents page of the NRPS package and IDRS.

    Note:

    If a TC 650/660 (Doc Code 97) payment dated later than the last day of the tax period is unclaimed and overpays the module, the payment may roll to the subsequent tax period or into the FTD module. (A rolled payment will post on BMFOLT as TC 650/660 for .00). Refer to Payment Decision Table below.

    If Then
    The payment is not claimed and does not appear to belong on the notice module Do not include the payment amount on the notice.
    The payment belongs on the module but has or will roll (i.e., is posted on BMFOLT as TC 650/660 for .00) it may require monitoring for correct determination Transfer the payment back into the notice module. (Use bypass indicator(s) or freeze code(s) as applicable)
    The payment has posted but does not belong on the notice Decide where the payment belongs and transfer to the correct module.
    The taxpayer is claiming a credit or payment(s) that refunded in a prior year, prior quarter, or from a different MFT Mark your disposition and add Label # 8 to the notice.

  5. Using the NRPS package and IDRS, look for credits that match the missing credit amount, the underpaid tax amount, or the liability schedule.

  6. Look for credits that match taxpayer's payment pattern. Compare the number of payments made on the notice module to the prior and subsequent tax modules. Also compare the dates and money amounts of the payments.

  7. Like payments on employment tax returns are payments for the same amount, made weekly, biweekly or monthly based on the taxpayer's deposit requirements. Most employers with like liabilities and like payments are monthly depositors with deposits due by the 15th day of the month following the month the employees are paid.

    1. Transfer a like payment only if timely for the module based on the liability due date or payment pattern.

    2. Do not transfer a like payment if the payment is dated earlier than the beginning of the tax period for the notice module. Multiple transactions may be required to transfer payments into correct modules. IDRS is required to research prior tax periods not included in the NRPS package.

      Example:

      The notice module's missing credit is a like payment. Payment found in the FTD module is dated early for the notice module but timely for the prior module. A payment dated timely for the notice module has posted to the prior module. Multiple transfers are required.

  8. If the missing credit(s) is found on an open module (no TC 150), before transferring the credit determine if it is "in-line" with the other payments in the notice module. In-line refers to similar payment amounts that have posted to your module.

    Note:

    When inputting a credit transfer, follow instructions in IRM 3.14.2.7.7 and IRM 2.4.17.

    1. Transfer a late payment if there is a clear indication based on payment amount, liability schedule, total deposits or balance due amounts (does not apply to like payments).

      Example:

      A payment is a dollar and cents payment that matches a liability or is the amount of the missing credit.

    2. Do not transfer credits posted earlier than the beginning day of the tax period.

    3. If credits posted earlier than the tax period are claimed on the return, this may indicate the return has posted to the wrong tax period.

    4. Decide the correct Filing Requirements if Form 941 is filed and the credit(s) have posted to a Form 943 open module, or if Form 943 is filed and the credit(s) have posted to a Form 941 open module. The taxpayer may have filed the incorrect form. Check for tax liability on prior tax modules using CC BMFOLT to decide which form the taxpayer is liable to file. If the taxpayer has filed the incorrect form, do not transfer the credit(s). Print the notice instead.

      Note:

      The taxpayer's entity (first name line and/or DBA) may serve as a guideline to decide if the taxpayer is an agricultural Form 943 filer.

    5. If the return is available for review, verify the tax period and refer to the Tax Period Verification Decision Table below.

      If Then
      The tax period matches Print the notice.
      The tax period is incorrect and belongs on the tax period where the credits have posted Reprocess the return to the correct tax period. See IRM 3.14.2.6.17, Reprocessing Returns.

    6. When the return is not available for review, refer to the decision table below:

      If And Then
      An incorrectly posted return regardless of selection key is suspected (not certain the return is a reprocess)


      or


      The return posted incorrectly based on 2 or more claimed credit(s) or one payment for the full amount of tax, that posted timely to an open module (no TC 150) regardless of selection key      		 The notice is reviewed before Friday of current cycle 1. ESTAB for the return.
      2. Open Control Base.
      3. Use notice disposition H (Hold).
      4. Input STAUP for 9 weeks.
      5. After the return is received, reprocess if posted incorrectly. See IRM 3.14.2.6.18 Reprocessing Returns. Input Hold Code 4 on CC REQ54.
      6. If the return is not a reprocess, reduce STAUP to 5 cycles.
      7. Close the control base.

  9. Missing credit is found on a module with TC 150 posted :

    If Then
    The liability schedules or payment dates indicate misapplied payments between multiple modules. Transfer multiple credits. Use proper bypass indicators to prevent unpostables and ensure all credits post in the same cycle to prevent an erroneous notice. Transfer the credit in before transferring credit out to prevent a settled module from going into a balance due status.

    Caution:

    Do not put a full paid (settled) module into balance due.
    Credits located on another module match the missing credits or tax of the notice module, and the credits posted on the notice module match the tax or credits claimed on the other module. Do not transfer the credits or reprocess the returns. Order the other return(s) and adjust the tax for both modules.
    Missing credit has previously refunded from another module Do not transfer the credit.
    Missing credit is located on a full paid module (balance .00) Do not transfer the credit. (Do not put a full paid module into balance due.)
    Missing credit is located on a balance due module and the taxpayer has received a previous notice that included the credit Do not transfer the credit.
    The missing credit is located on a module with a Q- Freeze and credit is available for transfer. Transfer the credit. Taxpayers often claim the Q- Freeze credit on a subsequent module.
    The missing credit is on a module with a Q- Freeze and is the amount of overpayment before any penalty and/or interest Transfer the credit and allow CP 260 to generate for penalty and interest.
    The missing credit is on a Q- Freeze but is not the total amount of overpayment (partial credit is needed to full pay tax on Q- Freeze module) Transfer the available credit as a lump sum module balance (TC 820/700). EXCEPTION to IRM 3.14.2.6.1.5.2 (Lump Sum Credit Offset TC 826/706, 820/700): For this situation, use the date of the payment claimed as the credit availability date.

    Note:

    Refer to IRM 3.14.2.6.8 CP 267 and CP 268 review for additional information.

    Reminder:

    At least three cycles must remain when transferring credits from a Q- Freeze to allow sufficient time for the transfer to post. When less than three cycles remain on the Q- Freeze, refer to the Q- Freeze Decision Table below.

    If Then
    All debit modules have -E Freeze 1. Transfer credit with applicable posting delay codes to allow transfer to post after TC 841.
    2. Complete notice disposition in cycle.
    3. Monitor for TC 846 and intercept the refund.
    All debit modules do not have -E Freeze Credit will offset to the earliest debit module.
    1. Complete notice disposition in cycle (Label the notice if FTD penalty is on the account and unable to decide recomputation).
    2. Monitor for any TC 846 posting and intercept the refund.
    3. Reverse offsets as required and transfer credit to notice module.

  10. Review NRPS package and return (if included in the NRPS package) for evidence of another EIN.

    1. Research IDRS for missing credit(s) for any other EIN found.

    2. Verify the return has posted to the correct EIN.

    3. Transfer available missing credit(s) or reprocess return based on review.

      Caution:

      Do not transfer credit(s) or reprocess a return with a merge in process. CC BMFOLI will not display an index of tax modules when accounts are merging. Instead, MRG-PRO will be indicated. TC 011 is located on CC ENMOD on the losing module's TIN. The XREF TIN listed under TC 011 is the receiving module. (The account with TC 011 will merge to the XREF TIN listed) If credits will be merged into a balance due notice module, consider the credits as pending to the notice module and input CC STAUP to prevent the generation of an erroneous CP 504.

    4. If credit will fully pay module void notice. Use Local Control File to select any adjustment notice.

    5. If the credit will not full pay module use appropriate label .

3.14.2.6.8 (04-03-2023)

CP 267 and CP 268 Review - Notice of Excess Credit Q- Freeze

  1. A Q- Freeze (Rollover Freeze) is set and CP 267 or CP 268 generates when the module contains more credits than claimed on the return. The credit is frozen from refunding or offsetting for 15 cycles from the posting of the TC 150. See IRM 3.14.2.6.6.16, Rollover Freeze (Q-) for more information.

    • CP 267 is a non-math error notice with unclaimed excess credit(s) that were rolled into the notice module because it met roll-over criteria. This notice informs the taxpayer of possible misapplied payments and allows them to advise the IRS of their correct application. This notice requires a response from the taxpayer.

    • The CP 268 is a math error notice with unclaimed excess credit that was rolled into the notice module because it met roll-over criteria. This notice informs the taxpayer of a math error on the return and possible misapplied payments, resulting in an overpayment. It allows the taxpayer the opportunity to advise IRS of the validity of the math error and of proper application of the credits. This notice requires a response from the taxpayer.

  2. To view an exhibit of a CP 267 or CP 268 refer to The Office of Taxpayer Correspondence at SNIP.

  3. The Q- Freeze will release when any of the following occurs:

    1. The module balance becomes zero or debit balance.

    2. A TC 652/662 posts and the credit discrepancy is resolved - any remaining credit is within ≡ ≡ ≡ ≡ ≡ of the credit amount claimed on the return or the remaining credit is ≡ ≡ ≡ ≡ ≡ or less.

    3. A CC REQ54 is input with Hold Code 3 and Priority Code 4.

    4. 15 cycles have elapsed and no corrective action was taken on the account.

  4. CPs 267 and 268 Review

    1. Complete all General Review Procedures. See IRM 3.14.2.7.

      Exception:

      If the return is not signed, do not correspond for a signature unless releasing the refund. Reference IRM 3.14.2.6.1.3.6 as a guide on requesting signatures on a refund.

    2. CP 268 only - Verify the math error condition.

    3. Use the selection key as a guideline to assist in the review of the notice.

    4. Review the account for -A Freeze conditions that may affect notice disposition. Refer to the -A Freeze Condition chart below.

      If Then
      The module contains a -A freeze with no case control or open control base to Accounts Management. Do not input CC REQ54 TC 290 .00. Void the notice.
      The control base indicates the case is assigned to another employee Contact employee to decide case resolution and notice disposition.
      TC 976, TC 971 (AC 010) or TC 150 is pending on the notice module, or TC 976 is posted on BMFOLT

      Note:

      A pending TC 971 (AC 010) or TC 150 on the notice module will post as a TC 976 and create an -A Freeze.

      		 Void the notice.
      The overpayment is caused by a rolled payment and the module that the credit rolled from now has a -A freeze or pending TC 976 Print the CP 267. DO NOT release the credit (Q freeze).

      Exception:

      If the -A freeze is being released with a pending TC 290.00 with no change to tax, release the Q- freeze and apply Label 22.

    5. Compare the tax amount on the notice module with the tax amount on the return (if the return is necessary to complete the review of the notice or if the return is available for viewing on EUP) .

      If Then
      The tax return is not included in the NRPS package and you suspect a decimal point, transposition or transcription error If the return is necessary to complete the review of the notice, request the return using CC ESTAB or view the return on EUP, if available). If return is needed for review and not received in time for cycle close-out, input a disposition of “H” until the return is received and the notice can be reviewed.
      The tax amount differs from the tax amount on the return and is not an obvious transposition or decimal point error Research to determine the cause. If the cause cannot be determined, then request the entire block to determine if a slipped block condition exists. Reference Section IRM 3.14.2.6.4.3 Slipped Blocks and Mixed Data Blocks. Mark Notice disposition H until the block is received.

      Note:

      Review the return for taxpayer request for credit elect. If credit elect is requested but not transcribed, manually transfer the amount requested on the return.

    6. When inputting a credit transfer follow the instructions in IRM 3.14.2.7.7 and IRM 2.4.17.

    7. Review the NRPS contents page and IDRS for pending transactions (AP, PN, UP, CU, RS or TP) that may affect notice disposition.

      Note:

      If a TC 650 or 660 is pending and the payment is dated later than the last day of the notice module, the payment may roll to the subsequent period or into the FTD module. Check CC BMFOLT; a TC with a dollar amount .00 indicates the credit rolled while attempting to post. If the rolled payment belongs on the notice module, then transfer the payment back into the notice module. Decide if other payments will be transferred out and excess credit released.

      IF THEN
      The taxpayer indicates on their return to apply credit to the next quarter (year) Manually transfer the amount requested and void/retype the notice as appropriate.
      There is no indication because the return does not show either a refund or credit elect box is checked. Mail the notice.
      If the CCC is set to E but there is no credit available or the balance on the return is zero. Mail the notice.

    8. If a TC 670 and TC 570 with the same DLN created the overpayment, look for an incoming correction to the original return (i.e., pending TC 976, TC 971 (AC 010) or pending TC 150). If present, void the notice. If not present, mail the notice.

  5. Researching CP 267 / CP 268

    1. Use the NRPS notice module data (including liability schedule, if available) to decide which credit(s) or part of a credit created the excess credit discrepancy. Subtract the total credits claimed on the return from the actual total credits posted.

    2. If prior history indicates the taxpayer is liable for tax on the notice module but the notice module contains a TC 150 for $.00 and is not a $ .00 tax return for all fields in BRTVU, you must follow procedures to set a -R Freeze on the account. See the case processing table below:

      Case Processing
      1. If CCC F, do not set the -R Freeze
      2. Mail the notice in cycle
      3. Input REQ77 TC 570

    3. Review other NRPS modules to decide if the unclaimed credit on the notice module is claimed or belongs on another module.

    4. Review the return (if included in the NRPS package) for any explanation of the unclaimed credit.

    5. Research the NRPS package and the return (if included in the NRPS package) for any indication of another TIN. If another TIN is found, research IDRS to decide if the unclaimed credit belongs on the other TIN.

    6. If a payment(s) rolled or was transferred in from another module or TIN creating the overpayment, verify there is no balance due or pending assessment on that module or TIN. If a -A Freeze is on the losing module, do not release the Q- Freeze. Mail the notice. (Requires IDRS research.)

    7. If the date of the overpayment is timely for an earlier tax period, or is timely and the payment amount is in-line for another MFT, research to decide if the payment belongs on the earlier tax period or other MFT. (Requires IDRS research if the prior tax module or other MFT is not on NRPS.)

    8. Compare the tax liability data on the notice module with credits posted on other modules. If the tax matches credits posted timely on another module, decide if the return posted to an incorrect tax period and should be reprocessed. (Refer to IRM 3.14.2.7.18 Reprocessing Returns.)

    9. It is not necessary to order vouchers or checks to verify payments. If a payment does not appear to belong to the taxpayer, (dated 10-28-03 and subsequent) use RTR to verify that the payment belongs to the taxpayer. Review the check and voucher (if applicable) for an indication of another TIN or for correct posting of the payment. Follow instructions below for Q- Freeze resolution and notice disposition.

  6. Resolving CP 267 / CP 268 Q- Freeze -- Releasing Q- Freeze

    1. If the overpayment is caused by a rolled payment and the module that the credit rolled from now has a -A freeze or pending TC 976, print the CP 267. DO NOT release the credit (Q freeze).

    2. Input TC 290 .00, Blocking Series 05/15/17, HC 3, PC 4, NSD, on CC REQ54 to release the Q- Freeze if the Over Payment amount is $10 or more in following situations:

      IF AN UNCLAIMED OVERPAYMENT IS CAUSED BY THEN RELEASE THE CREDIT AND

      • Credit Elect TC 716/710

      • TC 700 credit from another module

      • Rolled payment (99 in DLN)

      • Payment transferred in (Doc 24/34)

      • COBRA Premium Assistance Credit TC 766

      • HIRE Credit TC 766

      		 Apply Label # 22. The TE must look for the actual, specific, unclaimed overpayments that are exact or within $10.00 of the overpayment.

      Caution:

      If the overpayment is not exact, but is equal to any combination of these credits within $10.00 BEFORE penalty and interest, release the credit and apply Label 22.

      Reminder:

      If overpayment amount is $ 9.99 or less, a REQ54 290.00 is not necessary. The payment will release automatically.

    3. Do not input CC REQ54 TC 290 .00 if a -A Freeze is on the module. Posting of the TC 290 .00 would release the -A Freeze. Void the notice if Accounts Management does not have an open control base otherwise reference section on the -A Condition If and Then table in IRM 3.14.2.6.8 (4)d.

  7. Resolving CP 267 / CP 268/ Q- Freeze - Transferring credit(s) to balance due module(s)

    1. To decide if a payment will be transferred to a balance due module: review the account for balance due modules, liability amounts, previous notice amounts, credits claimed by the taxpayer minus credits posted to the module and other payments posted.

    2. Transfer only those credits that belong on the balance due module. Do not transfer credits based only on the availability of the Q- Freeze credit.

    3. Transfer the entire payment if claimed on another module. Do not split a payment unless taxpayer intent can be determined.

    4. Research TC 670 payments on the RTR system - may be intended for a balance due module or for another MFT or TIN. Check for balance due amounts, previous notice amounts, and taxpayer intent. If check or voucher indicates the payment belongs on another TIN, transfer the payment. If the payment belongs to the taxpayer, but a determination to transfer the payment cannot be made, mail the notice.

      Reminder:

      If TC 670 and 570 with the same DLN is creating the overpayment, and a TC 976, TC 971 (AC 010), or TC 150 (correction to the module) is pending, void the notice.

  8. Resolving CP 267 / CP 268/ Q- Freeze -- Transfer credit(s) to a subsequent open module(s) (No TC 150) when all the following conditions are met:

    1. The payment(s) have valid dates for the subsequent period

    2. The payment amounts are in-line with prior history payment patterns

    3. A payment is missing on the subsequent module (based on posted data and history of payment patterns)

  9. Use the Decision Table below when the credit transfer resolves the Q- Freeze as follows:

    If the credit transfer Then

    Results in a partial excess credit remaining on the module and the taxpayer is not in a balance due status.
    Retype the notice,
    or
    Void the notice if the remaining credit is $9.99 or less of the overpayment the taxpayer expected.

    Note:

    The Q- Freeze does not need to be resolved.
    Resolves any remaining excess credit on the module and the account is in zero balance. Void the CP.
    Does not resolve the Q- Freeze but the unclaimed excess credit remaining on the module meets the criteria for releasing the Q- Freeze. Retype the notice to remove the transferred credit, add label 22 to the CP 267 and release credit with TC 290 .00, HC 3 and PC 4 and PD 1.
    Results in a balance due on the notice module for penalty and/or interest only. Transfer the credit and retype CP 267 to a CP 161 balance due notice.
    Results in a balance due for underpaid tax on the notice module when the underpayment can be decided by comparing the liability schedule with the tax deposits. Transfer the credit and retype to a CP 161 balance due notice.
    Results in a balance due for underpaid tax but the missing liability payment cannot be decided by comparing the liability schedule with the deposits. Do not transfer the credit. Mail the notice.

  10. Q- Freeze Retype Condition Flow Chart.

    1. Use the flow chart below to determine the actions that should be taken on notices with Q-Freeze on the module.

      Figure 3.14.2-3

      This is an Image: 32201055.gif

      Please click here for the text description of the image.

    2. This chart can be used in conjunction with Reference Chart for Retyping most BMF Notices. The conditions listed are those that remain after all corrective actions have been input on IDRS. The notice disposition for CP 267 and CP 268 is decided from a combination of conditions:

    • Math Error means an error with the figures on the tax return.

    • Overpaid Math Error are notices that include credit discrepancies and return math errors.

    Note:

    The OLNR application allows a CP 267 or a CP 268 to be retyped to the following CP Notice Types: Follow instructions in IRM 3.14.2.6.8 when retyping a CP 267 to a one of the notices listed below:

    CP
    CP 267 CPs 101, 102, 104, 111, 112, 114, 132, 133, 145,161, 268
    CP 268 CPs 101, 102, 104, 111, 112, 114, 132, 133, 267

  11. Resolving CP 267 / CP 268/ Q- Freeze -Transfer a payment to another MFT when the payment fits the pattern per date and amount. Examples are:

    If a Then
    Small payment posted to a Form 941, 944, 945, or 1120 module Decide if the payment belongs on the Form 940 account.
    Large payment posted to a Form 940 module Decide if the payment belongs on a Form 941, 944, 1120, or 1041 account.
    Large even payment posted to the notice module Decide if the payment belongs on a Form 1120 or 1041 account. (See specific review -- Form 1120, 1041, 990 T (12 a and 12 b below).
    Form 944 filer does not meet the qualification (whose annual liability for social security, Medicare, and withheld federal income taxes is not $1000 or less). TE will move the credits to a Form 941.

  12. Specific Review Form 1120, Form 1041 and Form 990 series

    1. Check the notice module for posted estimated tax payment(s). Transfer payment(s) from the notice module to the correct module if the payment amount matches other posted payments and the date is in line with required estimated tax payments.

    2. Transfer the payment if it is one-fourth or a multiple of one-fourth of the total tax liability on the notice module and the payment date is in line for the subsequent tax year module.

      Example:

      The subsequent module is missing the first two Estimated Tax deposits. The overpayment on the Q- Freeze is one-half of the notice module's tax liability. Transfer the payment per taxpayer intent to combine both payments.

    3. If a misapplied payment is transferred from a notice module with an estimated tax penalty, and the overpayment per the taxpayer is reduced by the penalty, retype the notice to a CP 173 (if no other discrepancy exists).

    4. Review module for the incorrect posting of TC 806 (Credit for Withheld Taxes) or TC 766 (Refundable Credits). Check for payment(s) posting to the module that match the TC 806 or TC 766 amount. If the credit is incorrect, reverse the TC 806 with CR REF CD 807 and TC 766 with CR REF CD 767.

  13. If transferring a timely misapplied payment from a notice module for Form 940, 941, 943, 944, or 945, check CC FTDPN or PIFTD for FTD penalty computation:

    IF THEN
    An FTD penalty (TC 186) has not posted on the notice module, but CC FTDPN indicates a penalty amount over tolerance The FTD penalty will assess when the credit transfer posts. Refer to Q- Freeze Retype Condition Chart to decide if notice must be retyped to the applicable notice or voided and allow CP 210 to generate.
    AN FTD penalty (TC 186) has posted on notice module and CC FTDPN or PIFTD indicates the penalty will recompute The penalty will recompute when the credit transfer posts. Use LCF to void adjustment notice or suppress adjustment notice on CC REQ54, 290 .00, Hold Code 3. (See Q- Freeze Retype Condition Chart for notice disposition.)

    Note:

    Specific Review Credit Elect -- If a Credit Elect (TC 836) has offset from the notice module to the subsequent module (TC 716), and a debit balance results when a misapplied payment is transferred, reverse the amount of offset needed on the notice module. Reverse offset with TC 832/712.

    Notify the taxpayer of any reduced Credit Elect amount on the retype if retyping to a settlement with the pop-in paragraph. Type CP 145 if the Credit Elect pop-in paragraph is not included on the retyped notice (such as CP 173 or CP 210).

  14. Specific Selection Key Review -- Follow applicable procedures above to review, research and resolve CPs 267/268:

    1. Selection Keys 01 or 03 -- CP 267 overpaid for $250,000.00 or more. If the taxpayer claimed at least a $1,000,000.00 but less than $10,000,000.00 refund initiate a manual refund to avoid additional credit interest. If additional unclaimed credits remain on the module, do not release the Q- Freeze. Retype the notice to reflect the unclaimed payments. (Do not address the $1,000,000.00 manual refund because the taxpayer is expecting it.) However , if the refund is questionable in nature and taxpayer intent cannot be decided, mail the notice.

    2. Selection Key 11 -- The overpayment amount is equal to or greater than 100 times the tax liability -- verify tax amount for decimal error, transposition error, or transcription error. If the tax is incorrect, adjust on CC REQ 54. For Forms 941, 943, 944, and 945, compute FTD penalty on CC FTDPN and assess if penalty amount is ≡ ≡ ≡ ≡ ≡ or more.

    3. Selection Key 18 -- TC 186 and Schedule Indicator Code (SIC) 1 with Schedule B attached to return -- Ensure the criteria for SIC Code 1 is met. If the liability schedule has been disregarded incorrectly or transcription errors are found, verify addition on the Schedule B. If the schedule is valid, compute the FTD penalty on CC FTDPN and adjust penalty according to the computation.

    4. Selection Key 34 -- Select if the overpayment amount is equal to the TC 716/TC 710 +/- $10.00 before penalty and interest. If so, release credit and apply Label #22.

    5. Selection Key 12 -- The overpayment amount is between $500.00 and $24,999.99 and no other CP 267 / CP 268 selection criteria are met.

    6. Selection Key 36 -- When the CP 267 / CP 268 notice amount is $500.00 or more and a TC 766 or TC 806 is present.

  15. Notice Disposition

    1. Void if returning to taxpayer's figures.

    2. Void if TC 976 or TC 971 (AC 010) is posted or pending.

    3. Mail if no changes are made or no action is taken on the account -- determination to transfer or release the overpayment cannot be made.

    4. Retype CP 267 / CP 268 or retype to the appropriate notice based on corrective actions taken on the module.
      * If a math error is found add the appropriate TPNC(s) that clearly state the taxpayer’s error to the retyped notice (CP 268 or other math error notice as appropriate if no credit discrepancy remains) .
      * OLNR will populate the fields depending on what notice you are attempting to retype the notice to.
      * Use a Hold Code when retyping the original notice to prevent the subsequent notice or use the Local Control File, IRM 3.14.2.5.4 to intercept the subsequent notice
      * Use CC ACTON to enter a history item on IDRS when retyping, voiding and/or labeling a notice. If retyping to a different notice, include both CP numbers in the history item, such as RYT267-102 as an example.
      * If a Balance Due Notice is held past the notice cycle, update the Pay by date to the current cycle Pay by date. Update the balance due, penalties, and interest to the 23C date. Refer to the Posting Cycle Chart in the BMF Notice Review Job Aid 2533-701 located on the BMF Notice Review Research Portal.
      * For additional instructions refer to IRM 3.14.2.7.10.5 .

    5. Apply Label 22 only when releasing a credit elect TC 716/710, TC 700 credit from another module, rolled payments(s) or transferred in payments(s), COBRA, or HIRE credit TC 766. (See IRM 3.14.2.6.8 (10), Q- Freeze Retype Condition Chart).

      Note:

      The Q- Freeze will remain on the notice module if an unclaimed credit balance of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ remains. Retype the CP 267/268 to reflect the correct credit balance.

      Reminder:

      A CP 260 credit reversal notice generates when the credit reversal transaction results in a debit balance ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. Suppress CP 260 with input of TC 570 on debit side of Doc Code 24 . A secondary TC 570 will not suppress an adjustment notice. To suppress an adjustment notice, input CC REQ54, TC 290 .00, Hold Code 3.

      Note:

      Doc Code 34 input with a credit freeze will not suppress the CP 260.

  16. Multiple IDRS transactions:

    IF THEN
    Releasing a Q- Freeze and completing a credit transfer (DOC Code 24, 34 and 48) Retype notice to remove the transferred credit and add Label 22. Release the Q- Freeze with HC 3, PC 4. Use PD 1 to cycle CC REQ54 one cycle past the credit transfer to avoid creating an unpostable condition.
    The remaining credit after completing a credit transfer is ≡ ≡ ≡ ≡ or less of the credit claimed by the taxpayer or the remaining credit is ≡ ≡ ≡ ≡ or less CC REQ54, Priority Code 4 is not required. The remaining credit will release automatically.

    Note:

    The Q- Freeze will remain in effect if the difference between the credit claimed and the remaining credit on the module is ≡ ≡ ≡ ≡ or more.
    Adjusting the tax or credits and releasing the Q- Freeze CC REQ54 must be input. Input the second CC REQ54 with Hold Code 3, Priority Code 4 to release the refund. (Posting Delay is not required.)

    Note:

    A CC REQ54 does not apply to a tolerance of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. Credit of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and over must be manually released with a second CC REQ54, Hold Code 3, Priority Code 4.

    Caution:

    Do not input CC REQ54 if a -A Freeze or a pending TC 976, TC 971 (AC 010) or TC 150 is on the notice module. Void the notice.

3.14.2.6.9 (01-01-2024)

CP 161 Balance Due Notice - Non-Math Error

  1. The CP 161 is a non-math error notice informing the taxpayer of a balance due of $5.00 or more. The balance due may be the result of any combination of tax, penalties, and interest.

  2. Use the selection key as a guide for reviewing the notice. See Exhibit 3.14.2-5.

  3. Look for pending (AP, PN, TP, RS, UP or CU) credits in the NRPS package and IDRS. If the payment overpays the module and is not pending on TXMOD or posted on BMFOLT, decide if the payment belongs on the notice module before including the payment on the notice.

  4. If the payment is UP, check UPTIN for the Unpostable Resolution Code to decide if the payment will post to the module. If the unpostable case is open, use CC UPCASZ to enter information to facilitate posting of the payment.

    Reminder:

    Input CC STAUPS for 9 cycles.

  5. Look for misapplied payments in the NRPS package. Look for credits that match the underpaid tax amount on the tax return and the liability schedule. When inputting a credit transfer follow instructions in IRM 3.14.2.7.7 and IRM 2.4.17

    Reminder:

    Do not transfer credits dated earlier than the tax period.

  6. Check for credits on others MFTs and Fiscal year ending returns. Decide correct Filing Requirements before transferring credit.

  7. If timely credits have posted to a module with no TC 150, and they match the tax liability of the notice module, the return may have posted to the wrong tax period. Verify the tax period. Follow instructions in IRM 3.14.2.6.18 ; Reprocessing Returns.

  8. Do not void a CP 161 if fully paid by credits that offset (TC 706) into the notice cycle. A CP 138 will generate from the Losing module. Print the notice.

  9. Do not label if the offset partially pays the module. A CP 138 will generate from the losing module. Print the notice.

  10. Do not move TC 766 credits from a different module on a Form 8752, MFT 15 generating a CP 161. Only misapplied payments should be moved.

  11. Form 8288 MFT 17 (OSPC Only)-Specific Review: Research using IDRS and BMFOLI for possible misapplied payment(s). The missing payment may have posted to the incorrect tax period. In this case, BMFOLI will show the account you are working and the account the payment posted to.

    Note:

    Tax Period is always the “Date of Transfer” from Form 8288.
    Example: If “DT-OF-TRFR>” on TXMODA is 20XX0403, the Tax Period will be 20XX04. The Date of Transfer on TXMODA is always in YYYYMMDD format. If the Tax Period on CP 161 is 20XX10 and the payment is on Tax Period 20XX11, look at the “DT-OF-TRFR>” on TXMODA to determine if the payment belongs to your module.

    If And Then
    The payment will satisfy the debit balance Penalties will recompute (TCs 166, 186, 176 or decrease TC 276)

    1. Transfer the payment in

    2. TC 290.00, HC 3, DT-OF-TRFR>

      Note:

      On this screen (REQ54), input the DT-OF-TRFR as MMDDYYYY.

    3. Input a CC STAUP for 9 cycles

    4. Void the notice

  12. Forms 941/943/944/945 - Specific Review - If a tax liability schedule is attached but not transcribed, and a FTD Penalty (TC 186) is assessed on the notice module, refer to IRM 3.14.2.7.17.8 , Failure to Deposit Penalty.

  13. Forms 1041/1120/990 series - Specific Review - ES Penalty (TC 170): If the module contains an Estimated Tax Penalty (TC 170), the missing payments may include the balance of tax, plus the taxpayer's computed ES Penalty. Add TC 170 to the balance due to decide the missing payment amount.

    Note:

    When timely credits are applied to a module containing a TC 170, a CP 234 transcript will generate. Accounts Management will review and recompute the ES Penalty if necessary.

  14. Forms 1041/1120/990 series - Specific Review - Penalty (TC 276, 166) and Interest (TC 196): The taxpayer may have included any combination of FTP penalty, FTF penalty, and interest in the balance due amount on the return. If the return is included in the NRPS package, review thoroughly for any notation. Also, consider the taxpayer's addition of penalty and interest when looking for a missing payment.

    Note:

    Return not included in the NRPS package : If a payment is dated close to the received date of the return, but overpays the tax due, check CC INTST to the date of the payment. If the balance due on INTST is the amount of the payment, the taxpayer computed penalty and interest, transfer the payment.

  15. Forms 1041/1120/990 series - Specific Review - Extensions : Search for timely credits and an extension of time to file. A timely filed extension with or without credits can post to an incorrect tax period or EIN. If you decide the extension was intended for the notice module, transfer the extension. See IRM 3.14.2.7.9 , Extensions.

  16. Form 990 Series - Specific Review - CP 161 generates as a settlement notice for missing credits. Decide missing credit amount by subtracting claimed credits from credits posted. Check for tax due, tax due plus penalty and/or interest, and missing claimed credits. If payments posted to other modules appear to be timely for the notice module, use CC BRTVU to decide total claimed credits. (Extension payments may not appear on NRPS as claimed credits.

  17. Form 2290 - Specific Review CP 161 is issued when there is an L- Freeze present on the account. The NRPS package, IDRS and BMFOL indicates multiple TC 610 payments have posted to a prior module. If the module has a credit balance, then decide if the taxpayer claimed the payment on the notice module. Verify the tax period of the return using BRTVU page R2 to match to the tax rates in IRM Exhibit 3.14.2-29. If the TC 150 (tax amount) and the figure below do not match, a reprocess may be required. If a MeF return follow IRM 3.14.2.7.18.1 and if a paper return request the document from files and follow IRM 3.14.2.7.18. If a notice needs to be held past cycle, the lead must notify the Headquarters analyst. Follow the chart below for notice disposition.

    If And Then
    1. The taxpayer is claiming the payment on the notice module Moving the payment will not place the "from" module in debit status Transfer the payment.
    2. The taxpayer is claiming the payment on the notice module Additional credit will remain after the claimed payment is transferred out Use a TC 570 on the debit side of the credit transfer to hold any remaining credit.
    3. If the payment is timely Full pays the notice module (penalty and/or interest will abate) Void the notice.
    4. If the payment is applied It is not timely, or there is still a remaining balance Use the appropriate label.

  18. Forms 706/709 - Specific Review - Use CC IMFOL to research the IMF SSN (for joint returns check both SSNs) for possible misapplied payments. For Form 709, a missing extension payment may be posted to the Form 1040 account:

    If And Then
    There is excess credit on Form 1040 that is refunding The overpayment equals the amount claimed on the Form 709
    1. Delete the refund on the Form 1040 account.
    2. Transfer the credit.
    3. Input a CC STAUP for 9 cycles on the Form 709 account.
    4. Add the extension to Form 709 account if no extension has posted.

3.14.2.6.10 (03-14-2022)

CP 162 Series Balance Due - Non-Math Error Notices

  1. Prior to January 1, 2022, CP 162 was a balance due notice used to notify taxpayers of penalties assessed on Form 1065 (MFT 06) and Form 1120-S (MFT 02). This notice was issued when Form 1065 or Form 1120-S was assessed a penalty for failure to file by the return due date (including extensions), for failure to include required information on a return, or (for Form 1065) for failure to file electronically when required.

  2. After December 31, 2021, the CP 162 was revised and will now only be used to inform Partnerships with more than 100 partners that they are being assessed a penalty for failure to file electronically. After December 31, 2021 TC 16X will no longer be used to assess IRC 6698/6699 penalties.

    1. After December 31, 2021, the CP 162 will generate for Form 1065 (MFT 06) ONLY, when the failure to file electronic media penalty is assessed using TC 24X PRN 688.

  3. In January 2022, CP 162A was created to inform a partnership, Real Estate Mortgage Investment Conduit or S corporation that a penalty has been assessed for failure to timely file Form 1065, 1066 or 1120-S.

    1. A CP 162A will generate for Forms 1065, 1066 and 1120-S when a failure to file/late filing penalty is assessed using TC 24X PRN 722 with or without a PRN 688.

  4. Also, in January 2022, CP 162B was created to inform a partnership or S corporation that a penalty is being assessed for missing or incomplete information in relation to Form 1065 or 1120-S.

    1. A CP 162B will generate for Forms 1065 and 1120-S when a missing/incomplete information penalty is assessed using TC 24X PRN 723 with or without a PRN 688.

3.14.2.6.10.1 (01-01-2024)
CP 162 Failure to File Electronic Partnership Return

  1. For partnership returns that are due in calendar years beginning after December 31, 2023, partnerships are required to file their partnership return electronically if :

    • the partnership is required to file 10 or more returns during that calendar year or

    • the partnership had more than 100 partners during the partnership’s taxable year

  2. For returns due before January 1, 2024, partnerships with 100 partners or less can file a paper return or can voluntarily file their returns electronically. Partnerships with more than 100 partners are required to file electronically if they are able to do so.

    Note:

    See IRM 21.7.4.4.2.8.1.1 and IRM 20.1.2.5 for more information on partnerships that are required to file electronically.

  3. For years ending December 31, 2000 and later, IRC 6011(e)(6) requires partnerships with more than 100 partners to file electronically, unless an exception applies. Treas. Reg. 301.6011-3(c) provides for a penalty for partnerships that fail to file electronically when required to do so. (See information concerning waivers for this requirement in IRM 21.7.4.4.2.8.1.2 and IRM 20.1.2.5.1).

  4. If a partnership is required to file their return electronically and they fail to do so, a penalty will be assessed for each schedule K-1 over 100. See the table below for a list of penalty amounts by year:

    For Returns Due Penalty Per Partner in Excess of 100 Higher Maximum Penalty Lower Maximum Penalty
    In 2024 $310 $3,783,000 $1,261,000
    In 2023 $290 $3,523,500 $1,777,500
    In 2022 $280 $3,426,000 $1,142,000
    In 2021 $280 $3,339,000 $1,130,500
    In 2020 $270 $3,339,000 $1,113,000
    In 2019 $270 $3,275,500 $1,091,500
    In 2018 $260 $3,218,500 $1,072,500
    In 2017 $260 $3,193,000 $1,064,000
    In 2016 $260 $3,178,500 $1,059,500
    Between January 1, 2011 & December 31, 2015 $100 $1,500,000 $500,000
    Before January 1, 2011 $50 $250,000 $100,000
           

    Note:

    Partnerships with average gross receipts of $5,000,000 or less in the three most recent taxable years qualify for a lower maximum penalty; however, the penalty per partner over 100 remains the same.

    For example, if a partnership return with 120 partners is due between January 1, 2011 and December 31, 2015, the penalty would be $2,000 (20 x $100). If the return was due between January 1, 2016 and December 31, 2016, the penalty would be $5,200 (20 x $260) because the penalty is determined by multiplying the number of partners over 100 by the base penalty amount.

  5. The penalty is assessed as TC 246 with reference number 688.

    Note:

    A return with over 100 partners may have both the TC 166 and the TC 246 penalties assessed if the return is filed late and is not filed electronically.

    Reminder:

    If a partnership was assessed a penalty in excess of the lower maximum penalty, and has shown its average gross receipts for the previous three years was $5,000,000 or less, the excess penalty should be abated with TC 241 using penalty reason code (PRC) 045.

3.14.2.6.10.2 (01-01-2024)
CP 162A Failure to File Form 1065, Form 1066 or Form 1120-S General Review Procedures

  1. CP 162A was developed to inform a partnership, Real Estate Mortgage Investment Conduit or S corporation that a penalty has been assessed for failure to timely file Form 1065, 1066 or 1120-S. The following conditions upon posting will generate a CP 162A:

    Form And
    MFT 02 & TC 150 doc code = 16 (Form 1120-S) TC 24X with PRN 722 posted in cycle
    MFT 06 (Form 1065 or 1065-B) TC 24X with PRN 722 posted in cycle with or without PRN 688
    MFT 07 (Form 1066) TC 24X with PRN 722 posted in cycle

  2. The following conditions upon adjustment will generate a CP 162A:

    Form And IRN 851 IRN 852
    MFT 02 (Form 1120-S) TC 29X input with PRN 722 to generate a TC 24X Number of Shareholders Number of Months
    MFT 06 TC 29X input with PRN 722 to generate a TC 24X Number of Partners Number of Months
    MFT 07 TC 29X input with PRN 722 to generate a TC 24X Number of Residual Interest Holders Number of Months

    Note:

    IRN 851 will pass the number of Shareholders/Partners/Residual Interest Holders to the notice. IRN 852 will pass the number of months late/incomplete to the notice. When a CP 162A generates as a result of an adjustment made to assess the penalty, compare the “Number of Partners/Shareholders” and “Number of Months” in OLNR to the values in IRNs 851 and 852 reflected on the module and the amounts reported on the return, if the return is available. If the amounts are incorrect on the module or in OLNR, correct them and retype the notice accordingly.

    Reminder:

    If a TC 29X adjustment with a PRN 722 is input to generate a TC 241 PRN 722 to reduce, abate or remove a penalty assessment, a CP 210/220 will generate in lieu of a CP 162A.

  3. Follow general review procedures in IRM 3.14.2.7 to determine the timeliness of the return. If the return was filed late follow the procedures below to determine the number of months for which the penalty needs to be assessed.

    • IRS date stamp

      Note:

      Earliest date stamp by Campus, Area Office, US Consulate, or Revenue Officer.

    • The earliest legible postmark date (U. S. Postal Service, Foreign Postmark, or Private Delivery Service) on the return.

      IF THEN
      An envelope is not attached Use the postmark date stamped on the face of the document
      An envelope has both a USPS or Foreign postmark and private metered postmark, Always use the USPS or Foreign postmark
      An envelope has two private metered postmarks, Always use the latest private metered postmark
      An envelope has only one private metered postmark, Use the private metered postmark.

    • Taxpayer signature date

    • Julian date minus 10 days

    • Current date minus 10 days

    Note:

    All other issues should be referred to your lead or manager so that a determination can be made.

  4. If received date as figured above is different than the date on CC TXMOD you must manually adjust the FTF Penalty.

    Reminder:

    When Adjusting these accounts you must input the correct received date in the REQ54 adjustment screen by entering the correct date in the Ret Proc Date field.

  5. If a partnership terminates before the end of the tax year, Form 1065 must be filed for the short period. The short period consists of the period from the beginning of the tax year through the date of termination. Therefore, the return is due the 15th day of the third month following the termination. If more time is needed to file, the Form 7004 must be filed by the short period return due date (the 15th day of the third month following the date of termination).

  6. If a Form 1120-S is used to file a short period return, it must filed by the 15th day of the 3rd month following the end of the short tax year. A dissolving corporation is required to file a return for the short period from the first day of its normal accounting period to the date of dissolution. The return is due the 15th day of the 3rd month following the close of the short tax year.

  7. Research the module and return if the return is available, to verify the number of partners/shareholders on the module match the number of partners/shareholders displayed in OLNR. If the number listed on the module is correct and the number of partners/shareholders in OLNR differs from that amount, retype the notice with the correct number of partners/shareholders and update the penalty amount in OLNR as appropriate.

  8. Research the module and return if the return is available, to verify the number of months matches the number of months on the module match the number of months displayed in OLNR. If the number listed on the module is correct and the number of months in OLNR differs from that amount, retype the notice with the correct number of months and update the penalty amount in OLNR as appropriate.

  9. Research the module to verify that the base penalty amount displaying in OLNR is correct.

    1. The penalty for failure to file or failure to file a complete return, Form 1065, U.S. Return of Partnership Income or Form 1066, U.S. Real Estate Mortgage Investment Conduit (REMIC) Income Tax Return is charged for each month (or part of a month) that the failure continues for up to 12 months (after December 20, 2007). See IRM 20.1.2.4.2, entitled, Penalty Computation for more information on these penalties.

    2. The penalty for the failure to file or failure to file a complete return, Form 1120-S, U.S. Income Tax Return for an S Corporation, is charged for each month (or part of a month) that the failure continues for up to 12 months. See IRM 20.1.2.6.2, entitled, Penalty Computation for more information on these penalties.

      Note:

      See the Table below for 2017-2022 base penalty amounts for failure to file and/or failure to file complete Forms 1065, 1066 & Form 1120-S, see, IRM 20.1.2.4.2 and IRM 20.1.2.6.2 for information on base penalty amounts for previous years not mentioned below.

      Form 1065/1066/1120-S Return Due Base Penalty Amount
      After December 31, 2023 $235
      Between January 1, 2023 & December 31, 2023 $220
      Between January 1, 2022 & December 31, 2022 $210
      Between January 1, 2021 & December 31, 2021 $210
      Between January 1, 2020 & December 31, 2020 (without regard to extension) $205
      Between January 1, 2019 & December 31, 2019 (without regard to extension) $200
      Between January 1, 2018 & December 31, 2018 (without regard to extension) $200
      Between January 1, 2017 & December 31, 2017 $195

  10. The “Late filing/Incomplete Ret Pen” amount displayed in OLNR should equal the sum of the “Number of Partners/Shareholders x the “Base Penalty Amount” x the “Number of Months” late. If it does not, and the information on the module is correct, retype the notice to match the information displayed on the module.

    Note:

    If when retyping the notice, there is a payment reflected on the module and in the “Payments Section” at the bottom of the OLNR display screen, add the total payment amount to the “Less Penalty Paid” field.

  11. If research determines the received date is different than the date on CC TXMOD, manually adjust the FTF penalty and retype the notice.

  12. If a CP 162 should have generated instead of a CP 162A (i.e. the penalty is assessed with a PRN 688 only without no PRN 722), then input an “H” disposition to hold the notice and provide your lead with the notice information who will refer it to HQ immediately.

  13. If the information on the notice is correct, print the notice.

  14. Refer any other issues with the CP 162A not addressed in this section, to your lead or manager who will refer it to HQ, so that a determination can be made.

3.14.2.6.10.3 (01-01-2024)
CP 162B Missing Information on Form 1065 and Form 1120-S General Review Procedures

  1. CP 162B was developed to inform a partnership or S corporation that a penalty is being assessed for missing or incomplete information in relation to Form 1065 or 1120-S. The following conditions will generate a CP 162B:

    Form AND
    MFT 02 & TC 150 doc code = 16 (Form 1120-S) PRN 723 present in cycle
    MFT 06 (Form 1065 or 1065-B) PRN 723 present in cycle with or without PRN 688

  2. The penalty is assessed with Transaction Code (TC) 24X PRN 723.

    Note:

    The penalty is abated systemically with TC 241/247 if changes post to the account that cause the system to compute a lower penalty or no penalty.

  3. The following conditions upon adjustment will generate a CP 162B:

    Form And IRN 851 IRN 852 IRN 853
    MFT 02 (Form 1120-S) TC 29X input with PRN 723 to generate a TC 24X Number of Shareholders Number of Months Missing Information Code (MIC)

    Note:

    Acceptable MIC codes for MFT 02 are: 33, 34, 36, 45, 46, 47, or 49.
    MFT 06 TC 29X input with PRN 723 to generate a TC 24X Number of Partners Number of Months Missing Information Code (MIC)

    Note:

    Acceptable MIC codes for MFT 06 are: 33-39 and 45-52.

    Note:

    IRN 851 will pass the number of Shareholders/Partners/Residual Interest Holders to the notice. IRN 852 will pass the number of months late/incomplete to the notice. IRN 853 will pass the missing information code.

    Reminder:

    If a TC 29X adjustment with a PRN 723 is input to generate a TC 241 PRN 723 to reduce, abate or remove a penalty assessment, a CP 210/220 will generate in lieu of a CP 162B.

  4. When a CP 162B generates as a result of an adjustment made to assess the penalty, compare the “Number of Partners/Shareholders”, “Number of Months” and the “Missing Information Code” in OLNR to the values in IRNs 851, 852 and 853 reflected on the module and the amounts reported on the return, if the return is available. If the amounts are incorrect on the module or in OLNR, correct them and retype the notice accordingly.

    Note:

    If when retyping the notice, there is a payment reflected on the module and in the “Payments Section” at the bottom of the OLNR display screen, add the total payment amount to the “Less Penalty Paid” field.

  5. Research the module to verify that the base penalty amount displaying in OLNR is correct. See IRM 3.14.2.6.10.2 paragraph 9. The steps to review 162A and 162B and the base penalty amounts are the same.

  6. If a CP 162B generates as a result of an abatement in lieu of a CP 210/220, void the notice and notify HQ.

  7. If a secondary assessment was input on a module and the balance on the CP 162B only reflects the current adjustment and not the total penalty assessed and owed on the module, retype the notice to reflect the total penalty amount owed.

  8. Verify the information on the notice is accurate. Retype, Void, Print as appropriate.

    Note:

    If when retyping the notice, there is a payment reflected on the module and in the “Payments Section” at the bottom of the OLNR display screen, add the total payment amount to the “Less Penalty Paid” field.

  9. If an S corporation return is both late and incomplete, the penalty will be assessed for filing an incomplete return, unless the return is 12 months or more late.

3.14.2.6.10.4 (01-01-2024)
Return and Extended Due Dates for Forms 1065 and 1120-S

  1. Starting in tax year 2023, due to IRA legislative changes, the Form 1065 can claim credits and have an overpayment or balance due. Before tax year 2023, Form 1065 was an information return and therefore had no tax. Each partner's distributive share of each partnership item is reported on the partner's return of income.

  2. See table below for the Form 1065 Return and Extended Due Dates for tax periods beginning before January 1, 2016:.

    Note:

    Form 1065 filers with a tax year beginning BEFORE January 1, 2016 were granted an 5 month extension with upon receipt of a timely filed Form 7004 extension request.

    Period Ending Return Due Date Extended Due Date
    Jan. 31 5-15 10-15
    Feb. 28 6-15 11-15
    Mar. 31 7-15 12-15
    Apr. 30 8-15 1-15
    May 31 9-15 2-15
    June 30 10-15 3-15
    July 30 11-15 4-15
    Aug. 31 12-15 5-15
    Sept. 30 1-15 6-15
    Oct. 31 2-15 7-15
    Nov. 30 3-15 8-15
    Dec. 31 4-15 9-15

    Note:

    The due date for Form 1065 for tax periods beginning before January 1, 2016 is the 15th day of the 4th month following the end of the tax period.

  3. See table below for Form 1065 Return and Extended Due Dates for tax periods beginning January 1, 2016 and subsequent.

    Note:

    Form 1065 filers with a tax year beginning ON or AFTER January 1, 2016 were granted a 6 month extension with upon receipt of a timely filed Form 7004 extension request.

    Period Ending Return Due Date Extended Due Date
    Jan. 31 4-15 10-15
    Feb. 28 5-15 11-15
    Mar. 31 6-15 12-15
    Apr. 30 7-15 1-15
    May 31 8-15 2-15
    June 30 9-15 3-15
    July 30 10-15 4-15
    Aug. 31 11-15 5-15
    Sept. 30 12-15 6-15
    Oct. 31 1-15 7-15
    Nov. 30 2-15 8-15
    Dec. 31 3-15 9-15

    Note:

    The due date for Form 1065 for tax periods beginning January 1, 2016 and subsequent is the 15th day of the 3rd month following the end of the tax period.

    Note:

    As a result of Public Law 114-41 Section 2006, the return due date changed for partnership returns (Forms 1065, 1065-B and 8804) and for corporations (with the exception of Forms 1120-C, 1120-IC-DISC and Form 1120-S) effective for tax periods beginning after December 31, 2015. HOWEVER, this law did NOT change the due date for Corporate return periods that end June 30. They will remain the same until tax period 202606, at which time they will also change.

  4. See table below for Form 1120-S Return and Extended Due Dates . Form 1120-S is due the 15th day of the 3rd month following the end of the tax period (March 15 for a calendar year return).

    Period Ending Return Due Date Extended Due Date
    Jan. 31 4-15 10-15
    Feb. 28 5-15 11-15
    Mar. 31 6-15 12-15
    Apr. 30 7-15 1-15
    May 31 8-15 2-15
    June 30 9-15 3-15
    July 30 10-15 4-15
    Aug. 31 11-15 5-15
    Sept. 30 12-15 6-15
    Oct. 31 1-15 7-15
    Nov. 30 2-15 8-15
    Dec. 31 3-15 09-15

3.14.2.6.10.5 (01-01-2023)
Selection Key for CP 162, CP 162A and CP 162B

  1. The selection key for CP 162 is 53. See the chart below for an explanation of Key 53.

    CP 162 Selection Key Explanation
    Key 53 The return is filed late and an extension has posted to a different, open module (no TC 150) or a posted TC 610 has a Julian date that indicates the return may be filed timely by extended due dates.

    Note:

    CP 162, CP 162A and CP 162B can also be selected through the LCF and as such can appear in LCF keys.

3.14.2.6.10.6 (04-13-2022)
Specific Review Procedures for Key 53

  1. The selection criteria for Key 53 is a balance due notice with a delinquency penalty with an extension of time to file pending or a potentially mis-posted extension of time to file.

  2. Refer to the Key 53 Decision Table below.:

    IF THEN
    The EIN and/or tax period are incorrect and the tax return is not available, check BRTVU or TRDBV for the number of partners Decide if the return needs to be reprocessed. If so, follow the reprocessing returns procedures. IRM 3.14.2.6.18 (Penalty must be abated on CC REQ54).
    The number of partners transcribed is incorrect (compare the number of partners on the notice with the number on the return)

    Note:

    If the return is not available for partner verification, check BRTVU or TRDBV for number of partners on previous tax years.

    		 Abate or adjust the penalty (CC REQ54, Blocking Series 00, TC 16X or TC 24X with applicable PRN, Hold Code 3) based on the penalty computation using the correct number of partners. Void or retype the notice, as applicable.
    The postmark is timely for the Return Due Date or for a posted extension Abate the TC 166 or TC 24X penalty and void the notice for Key 53.
    A payment(s) or refundable credit is on the module or in the payment tab area of OLNR for notice generating from Form 1120-S

    1. Retype CP162, CP 162A or CP 162B and add the total payment amount to the LESS Penalty Paid Field. Change MIC Code to 00 except if retyping a CP 162B where the correct MIC code is required (see IRM 3.14.2.6.10.3 for more information on MIC codes.

    2. Void any additional current cycle notices that are selected for the same EIN, MFT and Tax period. (They will be in the same batch.)
    The return was filed by an extended due date and the extension has posted on an open tax module (no TC 150) Transfer the extension to the notice module using CC REQ77. Void CP 162, CP 162A or CP 162B. Input TC 290 .00, appropriate Blocking Series, Hold Code 3 to suppress the adjustment notice.
    Extension was timely filed and Form 1065 is received by the short period extended due date, (the 15th day of the third month following the date of termination) Input the extension to the notice module using CC REQ77 to abate the penalty and void CP 162, CP 162A or CP 162B. Input TC 290 .00, appropriate Blocking Series, Hold Code 3 to suppress the adjustment notice.
    Extension was timely filed and Form 1120-S is received by the short period extended due date (third month following the date of termination) Input the extension to the notice module using CC REQ77 to abate the penalty and void CP 162, CP 162A or CP 162B. Input TC 290 .00, appropriate Blocking Series, Hold Code 3 to suppress the adjustment notice.
    The extension was processed to an incorrect tax period (prior year end)

    • To determine timeliness of the extension, use Julian date of TC 460 and/or TC 620.

    • If the Julian date makes the extension timely filed, input TC 460 using REQ77

    • Void CP 162, CP 162A or CP 162B

    • If the Julian date doesn’t exist, compare TC 620 and TC 460 to determine timeliness.

    Note:

    If Form 1065 or Form 1120-S is used to file a short period return, it must be filed by the Return Due Date of short tax year.

    Reminder:

    Indicate on CC REQ54 in remarks field that the penalty is being abated based on a timely filed extension for a short period return.

3.14.2.6.10.7 (01-01-2023)
Reasonable Cause Requests for Form 1065

  1. All Reasonable Cause (RC) requests for penalty abatement on partnership returns with over 100 partners are processed at the Ogden Campus.

    1. If there is a "1382C letter" action trail in the left margin of the return or CCC "R" is present on the return, Code & Edit has already addressed the Reasonable Cause statement and no further action is required.

    2. If there is no indication that Code & Edit has addressed the Reasonable Cause statement, it must be either faxed or routed to Accounts Management. Either method is acceptable. See below.

    To fax to Accounts Management

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • Input CC STAUP for 9 cycles and mail the notice

    • An Interim letter is required if more than 25 days have elapsed from the return received date
    To route to Accounts Management

    • Photocopy the first page of the return and the original Reasonable Cause Statement letter (Notate "photocopy" )

    • Attach the photocopy of the letter to the original return

    • Route original letter and photocopy of the first page of the return to Ogden Accounts Management at:
      Ogden Service Center
      1973 N. Rulon White Blvd
      Ogden, UT 84404
      M/S 6552

    • Input CC STAUP for 9 cycles and mail the notice

    • An Interim letter is required if more than 25 days have elapsed from the return received date

3.14.2.6.11 (01-01-2023)

Reviewing Notices with Remittance Processing System (RPS) Indicators (Key 02)

  1. An RPS coded return (TC 150) posts to the Master File and the corresponding RPS TC 610 or TC 670 payment transaction is not present on the module.

  2. An RPS timely coded return (TC 150) posts and there is a corresponding RPS TC 610 or TC 670 payment transaction with a delinquent service center received date.

  3. RPS notices are designated as selection Key 02 or by the literal RPS-Discrepancy or the Appended Data page. Review all notices with the RPS indicator.

  4. Follow General Review Procedures. See General Review Procedures at IRM 3.14.2.7.

  5. To locate the missing TC 610 or TC 670 payment:

    1. Check the NRPS Appended Data for a pending, unpostable, or reject transaction.

    2. Check the NRPS tax modules and the tax modules on IDRS.

      IF THEN
      The payment posted to an incorrect tax period Transfer the payment. Use appropriate notice disposition. Refer to IRM 3.14.2.7.10
      The payment is found on another EIN (look for any cross-referenced data on the NRPS package tax modules) and research CC NAMEE ON IDRS Transfer the payment. Use appropriate notice disposition. Refer to IRM 3.14.2.7.10

    3. When researching IDRS:

      Research CC SUMRY, TXMOD, or BMFOL
      Input CC UPTIN to check the Generalized Unpostable Framework (GUF)
      If an open case is found, use UPCASZ to notify Unpostables of the correct information

  6. The TC 610 payment can be posted to the notice module but may have an incorrect date. The payment may have been delayed in processing or batched incorrectly. The payment date may need to be changed.

    1. Verify the return is timely.

    2. To correct the payment date, input CC ADD24 and use the same tax period on the debit and credit sides.

      Input the corrected transaction date on the credit side:
      Use an Override Date Indicator 2 on both sides
      Input a TC 570 on the credit side

  7. If the payment cannot be located or transferred, mail the notice.

    Note:

    In cases where the TC 610 cannot be found, the returns could have been blocked incorrectly, causing the RPS indicator to generate in error.

  8. Overpaid RPS Notices-Three different conditions are possible with overpaid RPS notices:

    1. Multiple TC 610s posted on the notice module (R- Freeze). Research the excess payment through local ISRP procedures.

    2. The posted TC 610 does not match the DLN of the TC 150 (R- Freeze). Research any TC 610 payment with a DLN different from the TC 150. The payment may belong to another taxpayer.

    3. The TC 610 payment is missing on the module. Other payments posting to the module may have created the overpayment. Look for the missing TC 610 payment and research any extra payments on the module.

      IF THEN
      The TC 610 document is available, Follow instructions in IRM 3.14.2.6.4.3 . (Slipped Blocks and Mixed Data Blocks) or perform additional research.
      The payment belongs to another taxpayer, Transfer the payment to the correct account.
      The payment belongs on the EIN where posted, Follow the taxpayer's intent. The payment may be intended for a subsequent period.

  9. For pending payments, credit transfers, or changing the payment date, follow the notice disposition instructions. See IRM 3.14.2.7.10.

3.14.2.6.12 (01-01-2024)

Refund Transcripts

  1. Refund Transcripts are reviewed to decide if the account overpayment should be allowed to refund. Refund transcripts are identified on NRPS as CPs and marked in OLNR.. However, a CP notice is not issued. Transcripts are selected for NRPS and reviewed by key. There are four types of Refund Transcripts:

    • CP 380 - Refund of 1 Million dollars or more

    • CP 384 - Normal NRPS Refund Transcript

    • CP 386 - Highly Questionable Refund

    • CP 388 - Refund Interest Transcript

  2. Allowable OLNR dispositions for refund transcripts are:

    • T (Transcript) - Use this disposition to mark the account as a transcript and the money should be allowed to refund to the taxpayer.

    • TI (Transcript/Intercept) - Use this disposition to mark OLNR when the refund needs to be stopped using NOREF.

  3. Disposition TI should only be used if Notice Review intercepts the refund.

    Note:

    Use the T disposition if another area input the Refund Intercept/NOREF request.

  4. CPREF shown on CC TXMOD (in the CP notice section) indicates Refund Transcript. Refund Transcripts generate from the same file as CP notices.

  5. A transcript is issued when:

    1. The refund amount includes interest of more than $50.00 on a module that contains a TC 766

    2. The refund amount is $500.00 or more for Form 941 (MFT 01), or $1000 or more on all other forms

    3. The amount of the overpayment claimed by the taxpayer differs by more than $100 from the Service amount.

  6. TC 570 blocking series 55555 is input by Frivolous Return Program (FRP) on BMF accounts to stop frivolous BMF refunds. Do not release these refunds.

3.14.2.6.12.1 (01-01-2024)
Million DollarTranscript (CP 380)

  1. Refunds of $100 million or more must be reviewed by a lead or experienced Subject Matter Expert (SME).IRM 3.14.2.6.1.6 for more information.

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

    2. The select key for Million Dollar NRPS Transcripts is Transcript key 020.

    3. If there is an open control base, contact the employee identified as having control over the account.
      This contact should be done as an E-mail notification that this account has an X- Freeze posted that is 15 cycles old.
      Once the contact has been made, leave a case history using IDRS that the employee identified as having control over the account was notified.

      Note:

      A refund for $100 million dollars or more will not generate a TC 846. A manual refund is required if the refund must be allowed. See

3.14.2.6.12.2 (01-01-2024)
Normal Refund Transcripts (CP 384)

  1. Review the transcript module using the keys below to help focus IDRS research to identify if the refund should be allowed to refund to the taxpayer.

  2. Normal NRPS Refund Transcript selection keys are:

    • Key 024 - selected if there is a pending debit transaction

    • Key 025 - selected if a TC 670 is causing the refund

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • Key 027 - selected when no other select key criteria is met

  3. Delete the refund under the following circumstances:

    1. Payment(s) that appear to be misapplied. Determine taxpayer intent by evaluating payment patterns, amount claimed on return, missing payments on other modules, and liability schedule(s). Use research tools such as RTR, if available, to verify payment(s) . Look for a history of misapplied payments that have been moved to other other modules (See IRC 965 note below).

      Note:

      If the payment that is attempting to refund has a designated payment code (DPC) of 64, research to determine if an IRC 965 inclusion was made on a 201712-201911 module. If an IRC 965(h) election is identified on an inclusion year module and the 965(h) liability has not been paid in full (i.e. there is still an outstanding deferral on the inclusion year module, intercept the refund and move the payment to the inclusion year module and post as a TC 670 DPC 64. See IRM 3.14.2.6.5.3 and IRM 3.14.2.6.5.3.1 for more information on IRC 965(h) deferrals.

      Note:

      If a payment is attempting to refund on a 94X module, research all 2020 quarters to determine if there is an unreversed TC 766 CRN 280. If the payment matches the amount due on the deferral, intercept the refund and move the payment to the 94X deferral module. See IRM 3.14.2.6.4.10.3 for more information on COVID deferrals.

    2. Unclaimed payments are refunding on another tax period. The following situations apply:

      Unclaimed Payment Requirements
      TC 620 (payment with extension) posted to the incorrect tax year -- transfer to correct year
      TC 660 or TC 650 posts to the incorrect tax period or year (per date and amount of payment) -- move to the appropriate tax period or MFT
      The overpayment matches the tax due per taxpayer for another module, or the amount on a balance due notice -- move to the appropriate tax period or MFT
      The overpayment is refunding from MFT 67 (Form 990) and is not a result of a payment made for a penalty that was subsequently abated -- transfer the credit to MFT 34 or 44 if filing requirements, previous filing history, or payment history indicates payment will be transferred

    3. A TC 610 payment substantially overpays the module and does not match the taxpayer's figures. Complete the following:

      TC 610 Over Pays Module
      Check other modules on the taxpayer's account for debit balances (with or without penalty and interest) that match the overpayment

      Note:

      Taxpayer may submit one payment intended for tax on two or more modules. If this is the case, then move the payment(s) to the correct module(s).
      Check account for a pending debit transaction as the payment may belong there. If so, move the payment.
      Check for any indication that the refunding TC 610 is actually a subsequent year ES payment (i.e., one-fourth of the tax liability). If so, move the payment.
      Research the TC 610 payment to ensure the payment was credited to the correct taxpayer and/or tax period. If research determines the payment was credited to the incorrect taxpayer and/or tax period then move the payment to the correct taxpayer and/or tax period.

    4. If unclaimed payments are refunding and the reason for the payment cannot be determined.

      Exception:

      TC 670 with Designated Payment Codes 05, 07, or 15 do not require verification. These refunds should not be deleted. These payments are in response to levies/liens. Transcripts are generated and resolved by the Collection Function for these payments.

    5. The overpayment is the amount of TC 670 payment(s) and the following apply:
      The taxpayer did not previously receive a balance due notice for the amount;
      RTR research and/or balance(s) due on other module(s) indicate the payment is misapplied.

      Unclaimed Refunding Payments
      Research the payment, and delete the refund if the required research has not been received before the CC NOREF delete deadline.
      Check the notice history for a CP 207, and CC FTDPN for an indication of a potential FTD penalty

      Note:

      TC 670 may be in response of the CP 207. (The FTD penalty will assess fifteen weeks after the CP 207 generates unless a TC 180 is input by the Accounts Management (Adjustments) Function).

      Note:

      Research an Electronic Federal Tax Payments System (EFTPS) payment if it is extremely out-of-line or if the taxpayer has not previously made EFTPS payments. Transfer to the correct module or MFT if possible. If a determination cannot be made, contact with the taxpayer may be necessary to verify the payment.

    6. The refund is due to erroneous IRS math error condition, duplicate posting of payment (same date and amount), or decimal point error (such as a TC 150 for $20.00 instead of $2,000.00). Make the necessary correction to resolve the error condition(s). Input adjustment using REQ54.

    7. The wrong line entry created erroneous credits (such as ES payments entered as withholding or as refundable credits). Watch for double credit situations. Make the necessary correction to resolve the erroneous credit(s). Input adjustment using REQ54.

    8. The credit elect intended for the next period is refunding.

    9. TC 976 or TC 971 (AC 010) is pending on the module.

    10. A pending or unpostable Transaction Code would reduce the refunding credit or leave the module in debit status.

    11. A TC 570 is pending.

      Note:

      If CP 260 or CP 210/220 will generate before the TC 841 posts use Local Control File to intercept the notice.

  4. If deleting a refund to transfer a credit from the refunding module will create a balance due, and:

    IF THEN
    The taxpayer was not issued a previous settlement notice Type the appropriate settlement notice. Input TC 570 on debit side of credit transfer to suppress the CP 260 or input CC REQ54, TC 290 .00, Hold Code 3, to suppress an Adjustment notice. (See note below)
    The taxpayer was issued a previous notice for the same balance due amount Input TC 570 on debit side of credit transfer to suppress the CP 260 or input CC REQ54, TC 290 .00, Hold Code 3, to suppress an Adjustment notice.
    The taxpayer was issued previous notices for amounts other than the resulting balance due or previous refunds Allow the CP 260 or Adjustment notice to generate. Use the appropriate posting delay code on the credit transfer.

    Note:

    Because penalties may be assessed when timely credit is transferred out of the module, Local Control File may be used to obtain the CP 260 or Adjustment notice. This will ensure the correct penalty amounts are included on a typed settlement notice.

  5. Allow the Refund under any of the following circumstances:

    1. The taxpayer requested the credit to be refunded.

    2. The refund is caused by an action not requiring verification, such as an abatement of interest or penalty, or a valid Doc Code 24 or 34 credit transfer.

    3. TC 700 or TC 706 posted to the module and a subsequent TC 670 is causing the refund.

    4. Notice history indicates a bill was issued on the account for the refunding amount, but the module has since been satisfied.

      Note:

      Ensure the refunding amount is not a TC 650 or TC 660 that posted to the incorrect tax period.

    5. The module has two 670 payments for the total tax amount and one is Doc Code 18. The taxpayer has paid the balance due twice.

    6. The module has multiple TC 670 payments for the same amount as part of an installment agreement and the module has been satisfied.

    7. Over-estimated tentative tax was paid with a request for an Extension of Time to File (TCs 620 or 670 obviously submitted as an extension payment) for Forms 1120, 1041, or 990 Series.

      Note:

      The amount must be reasonable and the extension payment date applicable for the module. The TC 620 may belong on the subsequent year tax module.

    8. TC 29X adjustment or TC 30X Examination Tax Adjustment created the refund.

    9. TC 571 or TC 290 .00 has released the credit freeze.

    10. Claimed TC 650 or TC 660 payments are posted and a subsequent TC 610 for the amount of tax due posts to the module.

3.14.2.6.12.3 (01-01-2024)
HQ (Highly Questionable) Refund Transcript (CP 386)

  1. Carefully review the transcription errors and review payment dates for possible posting errors like incorrect tax period.

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

    2. The select key for HQ NRPS Transcript is 021.

    3. If criteria exists to generate a CP 112, the HQ Transcript will be suppressed and a CP 112 will generate with select key 021.

3.14.2.6.12.4 (01-01-2024)
Refund Interest Transcript (CP 388)

  1. These transcripts must be reviewed to decide if a manual refund will be issued to meet the interest free period . (See IRM 3.14.2.6.2.2.3, Computing Credit Interest on Manual Refunds.)

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

    2. The select key for Refund Interest Transcripts is 022.

  2. Credit interest is allowed on overpayments if a refund is not issued on or before 45 days (180 days on any overpayment resulting from tax deducted and withheld under Chapter 3 or Chapter 4) from the later of :

    Credit Interest Allowed:
    The Return Due Date (determined without regard to any extension of time for filing the return)
    The Return Received Date (used when the return is filed after the return due date, determined without regard to any extension of time for filing the return)
    The Return Processable Date (date required information is received if the return is received in an unprocessable form)

  3. Verify if it is possible to meet the interest free period, using the following steps:

    Decision Table for 45-Day and 180-Day Interest Free Period:
    Count two work days past the current date on the calendar
    Subtract 45 days (180 days for Chapter 3 or Chapter 4 withholding) from the Julian date

    1. No interest is allowed on refunds if the refund is issued within 45/180 days of the dates outlined in the table above.

    2. For returns received or due on the day and later, it is still possible to prepare an interest free manual refund

    3. Input CC NOREF to delete the TC 846 on the module and complete the Manual Refund procedures in IRM 3.14.2.6.2.2.

    4. Prepare Form 5792 for the manual refund.

      Note:

      For BMF, the date of the refund check is the 23C Date of the TC 846 plus 1 calendar date. The date of the direct deposit is the 23C Date of the TC 846 minus 6 calendar days. The date of the refund check for a manual refund is the date certified by Accounting for allowing the refund.

3.14.2.6.13 (01-01-2024)

Required Payment or Refund Under Section 7519 - Form 8752

  1. Notices in relation to Form 8752 are typically selected in batches 7600-7699, which are processed by Accounts Management Large Corp teams. If the selected notice is in Batch 7600-7699, then Large Corp personnel will review and input the appropriate disposition into OLNR for the notice. For additional information regarding the required payment or refund under Section 7519 - Form 8752, see IRM 21.7.4.4.7.

  2. Partnerships and S-Corporations file Form 8752when they make the Section 444 election to file their income tax return on a fiscal year basis instead of the required calendar year. The Form 8752 is used to remit the required payment intended to represent the value of the tax deferral using a taxable year other than the required calendar year.

  3. Taxpayers electing Section 444 are not required to remit a payment until they incur a total liability for the current year and all previous years in excess of $500.00. Later, the taxpayer must make their required payment even when the amount is below the $500.00 threshold.

  4. The Form 8752 return will post to the Business Master File (BMF) as MFT 15, Document Code 23 and Tax Class 2.

    Note:

    Personal Service Corporations do not file Form 8752.

  5. Form 8752 is an annual return due on or before May 15th of each year for which the election is in effect

  6. See the Form 8752 instructions for specific line by line computation instruction. All Form 8752 notices are selected by NRPS using Select Key 75.

  7. IRC section 6651 penalties (failure to file and pay) will not be applied to Form 8752 MFT 15 underpayments.

  8. The required payment (line 9b) will post as the TC 150 amount. The system will credit the payment and automatically roll that amount forward to the following year’s account and post the credit with a TC 766; there will not be a corresponding debit for that amount. When the return posts, one of three things can occur:

    1. TC 150 $5,000, TC 766 $8,000 (excess credit) the system will roll over $5,000 and issue a refund of $3,000.

    2. TC 150 $8,000, TC 766 $5,000 (Balance due) if paid with the return, TC 610 for $3,000 and the system will roll over a credit of $8,000. If not paid with the return, a Balance Due Notice for $3,000 plus penalty and interest will be issued to the taxpayer. The system will roll over the credit of $5,000 and when paid, the system will roll over an additional $3,000.

    3. TC 150 $5,000, TC 766 $5,000 (account in balance); The system will roll over a credit of $5,000.

  9. Review Instructions:

    1. Follow general review procedures. Verify the correct tax period. The tax period is the election year on the Form 8752. If it is incorrect, then route the case to Accounts Management (Adjustments) with a Form 3465 and void the notice.

    2. Search for a missing TC 610 or TC 670 payment on a balance due case. If found on another module, transfer the payment to the notice module. Void or retype the notice. An adjustment notice will not generate from the 10% penalty (TC 246) recomputation. In addition:
      • Void the notice if the tax will be full paid after transferring the payment
      • Retype the notice if the tax will be only partially paid
      • Refigure the 10% penalty on the new underpaid tax amount

    3. If the missing payment posted on another MFT 15 module that has a return, route the case to the Accounts Management (Adjustments) Function. Void the notice.

    4. If the TC 766 amount does not match Line 10 of Form 8752, the fault lies with the prior year return. Mail the notice .

    5. The TC 150 can be adjusted. If line 9b was transcribed in error, input a TC 290 or TC 291 to adjust the TC 150. Void or retype the notice.

  10. The IRS will issue a refund after April 15 and not later than the 90th day after the claim is filed. The taxpayer must file a final Form 8752 when terminating the Section 444 Election.

    1. The taxpayer should check box c on Form 8752, or write at the top of the form Termination of Section 444 Election.

    2. Credit interest will not be added to any refund made under this Section.

  11. Do not manually adjust the TC 76X credit.

    • Programming will prohibit the manual input of a TC 76X

    • The system will automatically adjust the TC 766 credit when the required payment (TC 150) is adjusted

    • The computer will accept a TC 290 or TC 291.

  12. Section 7519 required payments will be treated as deposits rather than tax for the purpose of the statute of limitations on credits or refunds.

3.14.2.6.14 (01-01-2023)

Adjustment Notices

  1. Adjustment Notices are CP 210, CP 220, CP 225 and CP 260.

  2. Adjustment Notices generate to tell the taxpayer of adjustments or credit transfers made on the account. For example:

    • Examination (Doc Code 47)

    • Data Processing (DP) (Doc Code 54)

    • Changes to penalties, Failure to File (FTF - TC 166/167, TC 240 PRN 722 or 723), Failure to Pay - decrease only (FTP - TC 277), Failure to Deposit (FTD - TC 186/187), Estimated Tax Penalty (ES - TC 176/177)

    • Penalty assessed on an overpaid, non-math error return (CP 210 as first notice)

    • Credit transfer on Doc Code 34 with Correspondence Received Date entered on the credit side of FRM 34 (CP 225)

    • Credit reversal on an overpaid or even balance module resulting in a debit balance of ≡ ≡ ≡ ≡ ≡ ≡ or more (CP 260)

  3. To view an exhibit of the above CPs, refer to The Office of Taxpayer Correspondence web site at SNIP.

  4. An adjustment notice will not generate with posting of TC 290 .00 without a Credit Transaction Code.

  5. Notice Review TEs are responsible for determining the effects any adjustments or credit transfers will have on the module. Proper use of Hold Codes, Local Control File, TC 570, and unpostable bypass indicators is essential for preventing incorrect adjustment notices. When inputting a credit transfer follow instructions in IRM 3.14.2.7.7 .

3.14.2.6.14.1 (01-01-2024)
CP 210 and CP 220

  1. Notice Elements of CP 210: Account adjustment notice.

    1. The adjustment results in an overpayment, an even balance, or a balance due of less than ≡ ≡ ≡ (≡ ≡ ≡ ≡ ≡ ≡ for MFT 61), or the adjustment results in a balance due of ≡ ≡ ≡ ≡ or more (≡ ≡ ≡ ≡ for MFT 61), and the module was in TDA Status (22, 24, or 26) before the adjustment for the conditions listed in b.

    2. The adjustment is a change to tax (DP or Exam) or credits (TCs 637, 766, or TC 767), penalties (FTF, FTP (decrease only), FTD or ES), or Civil Penalty (TC 240 with Reference Numbers 680-682, 686 for MFTs 05, 51, and 52).

    Reminder:

    When an account has more than one pending payment (such as TCs 610, 620, 640, 650, 660, 670, 700 or 710) that are resequencing (RS), tepping (TEP), adjustment pending (AP), corrected unpostable (CU) or pending transaction (PN), then label the notice with the appropriate label and mail out the notice.

  2. Notice Elements of CP 220 -- Account adjustment notice.

    1. The adjustment results in a balance due of ≡ ≡ ≡ or more (≡ ≡ ≡ for MFT 61) and the module was not in TDA Status (22, 24, or 26) before the adjustment for the conditions listed in (b).

    2. The adjustment is a change to tax (DP or Exam) or credits (TCs 637, 766, or 767), penalties (FTF, FTP (decrease only), FTD or ES), or Civil Penalty (TC 240 with Reference Numbers 680-682 for MFTs 05, 51, and 52).

      Note:

      There is no minimum money amount tolerance for the notices. If the balance due is less than ≡ ≡ ≡ ≡ ≡, the balance due amount will print as none.

  3. An adjustment notice will have the DLN of the TC 150 if it generated for the recomputation of FTF (TC 166), FTP (TC 276 decrease only), ES (TC 176), or FTD (TC 186) penalties to a timely credit or extension posting after the notice module has settled or at settlement if the notice module is overpaid with no math error.

  4. The notice will have an adjustment DLN only if generated by a Doc Code 54 or 47 adjustment action. The 4th and 5th digits of the DLN will carry the Doc Code of the adjustment document. Doc Code 54 indicates an adjustment input on CC REQ54. Doc Code 47 indicates an adjustment input on CC REQ47 by Examination.

  5. CP 210 and CP 220 Review Procedures

    1. Review Adjustment Notices on IDRS to accurately decide notice disposition. Ensure the action creating the adjustment notice:
      • Is not a duplicate of a previously posted credit or adjustment
      • Is a valid credit and has not unposted on the debit side of the credit transfer

    2. Reviewing a notice generated by a Doc Code 47 or 54.

      If Then
      The validity of the assessment or abatement is an unreasonable amount (i.e., ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡) or a duplicate Compare the adjustment item with the source document. Verify the adjustment was input correctly.
      The adjustment appears to be incorrect Contact the originator (lead or manager if originator cannot be contacted) for advice in taking corrective action such as notice disposition or deleting refund.
      The originator or lead or manager cannot be contacted Take case to Notice Review lead to decide possible corrective action.

      Note:

      Verification of the adjustment action is required only if the source document is provided with the NRPS package.

    3. If the notice module has a TC 300 .00 adjustment, look for a refunding TC 640 (advance payment of decided deficiency) on the module. If the TC 640 is refunding, check the Disposal Code on CC AMDISA.

      If Then
      Disposal Code is 01 or 02 Allow the refund and mail the notice.
      Disposal Code is other than 01 or 02 Delete the refund and contact Exam for notice disposition.

  6. CP 210 and CP 220 Notice Disposition for Doc Code 47 or 54 Transactions .

    1. Notice disposition for pending Doc Code 47 or 54 tax decrease or credit increase transaction:

      IF THE PENDING IS A TAX DECREASE OR CREDIT INCREASE Then
      Input with Hold Code 0 or Hold Code 1 A subsequent notice will generate. Apply Label #1.
      Input with Hold Code 2 and Doc Code 24 or 34 will post in the same cycle A subsequent notice will generate. Apply Label #1.
      Input with Hold Code 2 (no Doc Code 24 or 34 transfer) or Hold Code 4 A subsequent notice is suppressed and credit is held. Retype the notice.
      Input with Hold Code 3 A subsequent notice is suppressed. Retype Notice.

    2. Notice disposition for pending Doc Code 47 or 54 tax increase or credit decrease transaction: (See below)

      If the pending transaction was input with Hold Code 0, 1, or 2 and Doc Code 24 or 34 will post in the same cycle, a subsequent notice WILL generate.

      If Account IS Refunding (and pending transaction will reduce the refund)
      1. Delete refund using CC NOREF.
      2. Retype notice to remove credit interest (if on notice).
      3. Apply Label #1 to selected notice
      If Account is NOT Refunding
      1. Apply Label #1 to selected notice.

      If the pending Transaction was input with Hold Code 2 and Doc Code 24 or 34 and will not post in the same cycle, or input with Hold code 3 or 4, a subsequent notice WILL NOT generate.

      If Account IS Refunding
      1. Delete refund using CC NOREF.
      2. If the correct amounts can be determined prior to the posting of a TC 841, retype the notice.
      3. If the correct amounts cannot be determined prior to the posting of a TC 841, hold the notice.

      1. After TC 841 posts back, retype notice to reflect correct module information.
      If Account is NOT Refunding (regardless of module balance)
      1. Retype the notice to reflect correct module balance.

    3. Notice disposition for Resequencing (RS) and Unpostable (UP) Doc Code 47 or 54 transaction.

      If Then
      The transaction is resequencing (RS) The transaction will post unless conditions on the module or the transaction data will cause it to unpost. Decide notice disposition based on Hold Code per previous chart.
      The transaction is unpostable (UP) Decide if transaction will post. If determination cannot be made, print the notice. If determination is made that transaction will post, decide notice disposition based on the Hold Code input per b above.

      Example:

      A Doc Code 47 or 54 pending transaction with an L Freeze on the module will unpost without priority code 1.

  7. Reviewing CP 210 and CP 220 with a Pending Credit or Debit Transaction.

    1. If review of the module indicates pending credits or debits will post to the module, the transaction may result in systemic recomputation of penalty and/or interest. Recomputation of interest (TC 196) does not generate an adjustment notice. Recomputation of penalties will result in the issuance of a CP 210 or 220:

      If Then
      TC 166 (FTF Penalty) CC PIFTF recomputes
      TC 176 (ES Penalty) CC PIEST recomputes
      TC 186 (FTD Penalty) CC PIFTD recomputes
      TC 276 (Paying Late) CC INTST decrease only

      Note:

      CC INTST does not provide correct computation of FTP or Interest if pending payment on IDRS is Unpostable (UP), Resequencing (RS), or Tepping (TP). Use CC COMPAF to obtain this information.

    2. The penalty period for FTP (TC 276) is calculated from the date the penalty period begins (the Return Due Date) to the same date in each following month. TC 276 will not recompute if the payment is late and dated within the same monthly period as the 23C Date of the notice. If the return is due the 15th of the month, the penalty will not recompute until the 15th of the month after the 23C Date of the notice.

      Note:

      If the payment is timely (≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡), the FTP will recompute and generate an adjustment notice even if the payment is dated within the same monthly period as the 23C Date of the notice.

    3. If timely credit is removed from a module, an FTF or FTD penalty may assess on the module. See below.

      If Then
      CC FTDPN indicates penalty TC 186 will be assessed and an adjustment notice will generate.
      CC PIFTF indicates penalty TC 166 will be assessed and an adjustment notice will generate.

  8. CP 210 and CP 220 Notice Disposition for Pending Credit Transactions.

    1. Notice disposition for pending (PN, RS, TP or UP) credit transactions such as TCs 610, 640, 650, 660, 670, 700 or 710:

      If Then
      The notice module is overpaid, a refund will issue, and no subsequent notice will generate Apply Label #6.
      The notice module is balance due, the balance due will be reduced, and no subsequent notice will generate Apply Label #3. If balance will be less than $5.00 retype the notice. See caution below.
      The notice module is balance due or even balance, changes to overpaid, and no subsequent notice will generate Apply Label #4. See caution below.
      A subsequent notice will generate due to recomputation of penalty (FTF - TC 166, ES - TC 176, FTD - TC 186, or FTD - TC 276 (decrease only) Apply Label #2.

      Caution:

      INTST does not reflect recomputation of CCs PIFTD, PIFTF, or PIEST. If FTD penalty (TC 186), FTF (TC 166), or ES Penalty (TC 176) is on the module and timely credits are applied, CC INTST will not reflect any changes to the penalties in the balance due amount.

    2. Multiple pending credit transactions on the notice module may post in different cycles. Decide the cycle the credit will post and complete notice disposition:

      If Then
      A subsequent notice will generate Apply Label #2; Address only the pending credits that will be reflected in the adjustment on the subsequent notice.
      A subsequent notice will not generate Apply applicable label or retype per instructions in (8) a above. Address all pending credits.

    3. If credit is unpostable, decide if the credit will post. If determination cannot be made, do not reflect the credit on the notice.

    4. If the PN (pending), RS (resequencing) or TP (tepping) credit is listed on the NRPS contents page but not on BMFOLT or TXMOD, decide if the credit will post to the module. If determination cannot be made, do not reflect the credit on the notice.

      Note:

      DLN of payment will indicate campus location of payment.

    5. CC INTST does not compute correct module information if the pending transaction is a RS, TP or UP. If the payment belongs on the module and a correct balance is required on the label:

      If Then
      Payment is RS or TP and reflected on CC BMFOLT Use CC RECON to bring the information to TXMOD and overlay with CC INTST to view the updated balance, then enter CC COMPA.
      Payment is RS or TP but not reflected on CC BMFOLT Compute correct balance using CCs COMPA and COMPAF.
      Payment is UP and belongs on the module Compute correct balance using CCs COMPA and COMPAF.

    6. Ensure the transaction creating the adjustment notice is correct and valid. The credit transfer may be a duplicate transaction. If TC 700 or TC 710, ensure the debit side of the transfer is not unpostable and the credit is available for transfer.

    7. If the transaction has unposted on the debit side, do not reverse the transaction. Unpostables will reverse the credit side of the transaction in a future cycle. Void the adjustment notice and request and void any subsequent notice utilizing LCF.

      Example:

      TC 710 posts to the notice module but has unposted on the debit side. Unpostables will reverse the TC 710 in a future cycle. Any previous penalty decrease will reverse and generate a subsequent notice.

  9. CP 210 and CP 220 Notice Disposition for Pending Debit Transactions

    1. Notice disposition for pending (PN, RS, TP or UP) debit transactions such as TCs 612, 642, 652, 662, 672, 701 or 702):

      If Then
      The notice module is balance due and a subsequent notice will generate or overpaid and a subsequent notice will generate and the module balance will change to balance due. 1. Delete the refund if applicable using CC NOREF.
      2. Retype as appropriate.
      3. Remove any incorrect credit interest.
      The notice module is overpaid and a subsequent notice will not generate and the balance will change to balance due. 1. Delete the refund if applicable using CC NOREF.
      2. Retype the notice after all transactions have posted. You may have to remove credit interest
      The notice module is overpaid and the module balance will remain in credit or even balance. 1. Delete the refund if applicable using CC NOREF.
      2. Apply Label #7.
      3. Retype to remove credit interest included on the notice if applicable.

      Note:

      Void the notice (rather than label) if the pending transactions is a reversal of the transaction that generated the adjustment notice.
      The notice module is balance due and a subsequent notice will not generate. Retype the notice.
      A subsequent notice will generate and the notice is reviewed after LCF cutoff and the notice requires retyping (per above procedures). 1. Delete the refund if applicable using CC NOREF.
      2. Retype the notice after all transactions have posted.
      3. Apply label #13.
      The pending transaction will transfer the credit to another EIN. Follow applicable instructions above, except in all instances, retype (do not label) the notice.
      You are reviewing a CP 210 and, your module contains two different credits that are PN on an overpaid module and they are being transferred to two different modules with the same EIN Apply label # 21

    2. Notice Disposition for Pending Debit Transactions -- (PN, RS, or UP) TC 820 or 830. If the pending transaction is a TC 820 or TC 830, the transaction will unpost if the overpayment is refunding or the module balance is less than the transaction amount (because the credit is not available to be transferred). See below.

      If Then
      TC 820 or TC 830 is correct and is pending on an overpaid, non-refunding module and the full credit is available. 1. Retype to remove credit interest included on the notice if applicable.
      2. Apply Label #7.
      3. If credit will remain on the account after the TC 820/830 posts, release the -R Freeze with TC 571 or TC 290.00 Hold Code 3, Posting Delay Code 1.

      Note:

      If the full amount of credit is not available, the transaction will unpost.
      TC 820 or TC 830 transaction must be reinput if credit transfer has not been corrected and the module is refunding.

      Note:

      If unpostable record is open on CC UPCASZ leave history item if you are inputting the credit transfer.

      		 1. Delete the refund using CC NOREF.
      2. Apply Label #7.
      3. Retype to remove credit interest included on the notice if applicable.

      Reminder:

      Notice Review Tax Examiner is responsible for notices generating on the credit side of the transactions.


      4. Close case control.

      Note:

      Do not input 290.00 on account. Doc Code 24/48 will release the P- Freeze when the transaction posts.
      The TC 820 or TC 830 transaction has been reinput already and the module is refunding. 1. Delete the refund using CC NOREF.
      2. Apply Label #7.
      3. Retype to remove credit interest included on the notice if applicable.
      4. Close case control.

      Note:

      Do not input 290.00 on account. Doc Code 24/48 will release the P- Freeze when the transaction posts.
      TC 820 or TC 830 is incorrect due to insufficient credit available Follow above instructions as applicable and reinput transaction with correct amount.

      Note:

      It may be necessary to contact the originating tax examiner to determine if the transaction is valid.

  10. Review all aspects of the CP 210 and CP 220 notice module before voiding. CP 210 or CP 220 can only be voided if:

    1. The original notice was voided (returning to taxpayer's figures)

    2. The original notice was retyped to reflect the information on the adjustment notice or the information on the adjustment notice was previously communicated to the taxpayer

    3. An adjustment notice reflecting the correct module information will be retyped in a subsequent cycle

    4. The Doc Code 47 or 54 is incorrect and subsequent pending transaction will correct the module

    5. The credit transaction that created the notice is invalid and will unpost in a subsequent cycle

    6. A pending transaction on the notice module is a reversal of the adjustment action that created the adjustment notice

      Note:

      If subsequent notice generates, request the notice on LCF and void or retype to exclude incorrect transaction as applicable.

  11. CP 210 and CP 220 cannot be voided if:

    1. The taxpayer has not previously received the information and will not receive the information on a subsequent notice.

    2. If the original Balance Due Notice was voided in error and the subsequent CP 210/220 is selected, release the CP 210/220 with the current notice module information. If the taxpayer contacts Customer Service to inquire why a previous notice was not sent, the Customer Service Representative will be able to read the account history and explain the account activity to the taxpayer.

  12. For Ogden Notice Review only.

    1. In January 2011, the IRS started to use the information submitted on Form 8947 to calculate the annual fee for branded prescription drug (BPD) sales ("the fee"). The fee was imposed by section 9008 of Public Law 111-148 (Patient Protection and Affordable Care Act), as amended by Public Law 111-152 (Health Care and Education Reconciliation Act of 2010) (the “Act”).

    2. Branded prescription drug sales are sales of branded prescription drugs made to specified government programs (or sales due to coverage under the programs). A branded prescription drug is any prescription drug for which an application was submitted under section 505(b) of the Federal Food, Drug, and Cosmetic Act (21 USC 355(b)), or any biological product the license for which was submitted under section 351(a) of the Public Health Service Act (42 USC 262(a)).

    3. Section 9008(b)(4) sets an applicable fee amount for each year, beginning in 2011, that will be allocated among covered entities with aggregate branded prescription drug sales of over $5 million to specified government programs or pursuant to coverage under such programs.

    4. Branded Prescription Drug Fees will always have a tax period ending in August and MFT of 03. Example 03 201908.

    5. They will generally kick out under Key 018, but may be selected by other key selection criteria.

    6. CP 210 or CP 220 will be the only notice generating for these accounts.

      Caution:

      These notices are not to be worked in Notice Review or Large Corp/Technical. Clerical should not batch with the regular cycle work. Do not input dispositions.

3.14.2.6.14.2 (01-01-2016)
CP 225 - Notice of Credit Transfer

  1. CP 225 is issued to tell the taxpayer that a missing payment(s) inquired about either through correspondence or telephone, has been located and applied. It generates if the CORRESP-DT field on FRM 34 is overlaid with a correspondence received date and will not be voided.

    1. There are four versions of CP 225. See below:

      Complete CP 225: 1. Balance Due Generates if no other notice of demand is generated in the same cycle (a CP 210/220).

      • Informs taxpayer of payment(s) located and applied to the requested tax module.

      • Fully explains the balance due (including tax data and penalty information).
      Partial CP 225: 2) No Return Filed - Informs taxpayer that payment(s) was located and applied.
      3) Overpayment - Informs taxpayer that payment(s) was located, applied and the resulting overpayment amount.
      4) Even Balance - Informs the taxpayer that payment(s) was located, applied and account is full paid.

    2. The partial CP 225 and the CPs 210/220 generate in the same cycle.

    3. Use the NRPS package and IDRS to review a partial or a complete CP 225. Ensure the credit transfer creating the CP 225 is valid.

      Note:

      If both CP 225 and CP 210 are selected for review, both notices are to be reviewed. Verify tax period, all credits, tax assessed, prepayments, penalty and interest amounts. Verify balance due, even and overpayment amounts.

    4. Review the CP 225 for accuracy :

      If the CP 225 is Then
      Even balance Verify the validity of the action that settled the account.
      Overpaid Verify that the action is valid and the refund must not be intercepted.
      Balance Due Verify that the action is valid; search for remaining claimed credit(s) that match the balance due. If found, transfer in.

      Note:

      If the credit transfer that settled the account is being removed from the account with a pending TC 652, or the validity of the transfer is questioned, mail the notice. Another CP 225 will generate after the pending transactions posts.

    5. Review the NRPS package and IDRS for any AP, PN, or RS transaction that affect the notice module. For complete balance due CP 225 notices:

      IF AND THEN
      Credit(s) are pending (AP, PN, or RS) Penalties will recompute Mail the CP 225 with Label #2.
      Credit(s) are pending (AP, PN, or RS) Penalties will not recompute Mail the CP 225 with Label #3 or #4.
      A TC 29X or 30X is pending A subsequent notice will generate Mail the CP 225 with Label #1.
      A credit balance is refunding A debit transaction is pending that will decrease the refund Delete the refund. Mail CP 225 with Label #7 or #14.
      A credit balance is refunding The overpayment is the result of a duplicate credit transfer Delete the refund and retype the notice.

      Note:

      Follow procedures in IRM 3.14.2.6.14.1 - Notice Disposition of Adjustment Notices for any other condition.

    6. Review a partial CP 225 to ensure the credit transfer is valid. If valid, mail the notice.

    7. Because the partial CP 225 is verification to the taxpayer of the payment transfer, do not label to reflect other transactions pending on the module. An additional CP 225 will generate in subsequent cycles for pending Doc Code 34 credit transfers, if correspondence received dates were input. The CP 210/220 generating in the same cycle as the CP 225 will be labeled or retyped with any changes affecting the notice module. The partial CP 225 must be mailed. When inputting a credit transfer follow instructions in IRM 3.14.2.7.7.

3.14.2.6.14.3 (01-01-2016)
CP 260 - Credit Reversal Adjustment Notice

  1. CP 260 is generated to tell the taxpayer of a credit reversal on the tax module. The notice generates under the following conditions:

    1. The resulting module balance is a debit of ≡ ≡ ≡ ≡ ≡ or more.

    2. The credit reversal does not cause a recomputation or assessment of penalties resulting in the generation of CP 210 or 220 adjustment notice (FTF, FTD, ES or decreased FTP penalties).

      Note:

      TC 570 on the debit side of a credit transfer suppresses the CP 260 but does not suppress a CP 210 or CP 220. Hold Code 3 input on CC REQ54 does not suppress CP 260.

  2. Use the NRPS package and IDRS to review CP 260 for possible resolution of the debit balance.

    1. Check all other tax modules for a credit claimed on the notice module. If located and available for transfer, process the credit transfer. Check NRPS and the tax module on IDRS for pending (AP, PN, RS, UP, and TP ) transactions.

      IF THEN
      The credit will satisfy the debit balance (overpay, even balance, or balance due less than ≡ ≡ ≡ ≡) Void the notice.
      The credit will not satisfy the entire debit balance, and penalties will not recompute Label the notice with Label #3. Input CC STAUP if necessary.
      The credit will not satisfy the entire debit balance but penalties will recompute (TCs 166, 186, 176 or decrease TC 276) Void the CP 260 and allow the adjustment notice to mail to the taxpayer. Input CC STAUP if necessary.
      If the credit is unpostable on the notice module or another module Input CC STAUP for 9 cycles. Notify Unpostables by utilizing CCs UPTIN, UPDIS, and UPCASZ. Follow the above for correct notice disposition.

    2. Check the tax module on NRPS and IDRS to decide if the credit needed has offset (TC 826/706).

      IF THEN
      TC 826 generated from another module in the notice cycle 1. Reverse enough of the offset to cover the debit balance (if available).
      2. Transfer the credit to the notice module.
      3. Void, retype or label the CP 260, as applicable.
      4. Void CP 138. (Retype if only part of the offset was reversed.) Pull and void or retype CP 128 if it generates.
      TC 826 offset in a prior cycle from the notice module or from another module Do not reverse the offset unless the credit is refunding or available for reversal, because the taxpayer has previously received the CP 138 (notification of the offset).
      TC 856 (offset of generated interest) and TC 776 (generated interest) are present and the offset is reversed. Use CC ADD24 to reverse TC 856 with TCs 731/851. Then use CC REQ54 to reverse TC 776 with TC 772 (Hold Code 3).

    3. Check the tax module for a prior cycle refund.

      IF AND THEN
      The refund was deleted and the TC 841 will satisfy the debit balance - Void the CP 260 and input CC STAUP for 9 cycles. (STAUP is not required if TC 841 has posted on CC BMFOLT.)
      The refund was deleted but the TC 841 will not completely satisfy the debit balance A notice or a refund previously generated Retype the CP 260 with the current account information.
      The refund was deleted but the TC 841 will not completely satisfy the debit balance A notice or a refund did not previously generate Retype the CP 260 to the appropriate settlement notice.
      The case control history shows a category 3913 - Void or retype the CP 260 using the above criteria. Input CC STAUP for 9 cycles.
      The refund (TC 846 was not deleted and a category 3913 is not present). - Mail the CP 260.

      Note:

      Use CC COMPA to compute penalties and interest when CP 260 retype is required. Input CC STAUP for 9 cycles.

    4. Check the module for a pending tax adjustment:

      If And Then
      The adjustment contains:
      1. No Hold Code
      2. Hold Code 1 or
      3. Hold Code 2, with a pending Doc Code 24/34 credit transfer      		 - Void CP 260.
      The adjustment contains:
      1. A Hold Code 2, with no pending Doc Code 24/34 credit transfer
      2. Hold Code 3
      3. Hold Code 4      		 The module balance will be full paid or credit Void CP 260.
      The adjustment contains:
      1. A Hold Code 2, with no pending Doc Code 24/34 credit transfer
      2. Hold Code 3
      3. Hold Code 4      		 The module will remain in balance due Retype CP 260 with the correct balance due.

  3. If the payment was transferred to a module for another taxpayer, (different TIN), mail CP 260.

  4. It is important to know that the penalties and interest shown on CP 260 are accrued, and not yet assessed on the module and the taxpayer has not been previously notified of these accruals.

  5. Always input history items when voiding, labeling or retyping CP 260.

    Reminder:

    When deleting a refund for a pending credit reversal, use Local Control File to pull the CP 260. Retype or void CP 260 based on the TC 841 amount.

3.14.2.6.14.4 (01-01-2024)
Employer Shared Responsibility Payment (ESRP)

  1. Large employers (generally, employers with at least 50 full-time employees, including full-time equivalents employees, in the prior calendar year) may be assessed an employer shared responsibility payment (ESRP) under IRC 4980H(a) if they do not offer health insurance with minimum essential coverage (MEC) to full-time employees (and their dependents) and at least one full-time employee receives a premium tax credit (PTC) under IRC 36B. The ESRP may also be assessed under IRC 4980H(b) if the employer offers MEC to its full-time employees (and their dependents), but at least one full-time employee receives a PTC because the employer's offer of MEC was not affordable or did not provide minimum value or because the employee was not one of the at least 95 percent of full-time employees offered MEC.

  2. Form 1094-C and Form 1095-C are used to report information about offers (or non-offers) of health coverage and enrollment in health coverage to an employee by the employer. ESRP will not be self-reported by the taxpayer but will be assessed by the Exam function based on information reported to the Service. Form 1094-C and Form 1095-C are used by Exam in determining whether an employer owes an ESRP.

  3. The ESRP assessments are processed on the BMF (Business Master File) under MFT43.

  4. On MFT 43, the assessment posts as a TC 290 for 00 and/or a TC 298 for any amount (including zero), with a three-digit reference number which identifies the type of assessment. These reference numbers can be 240, 241, 242, 243, or 244 which identifies the type of assessment (reference number of 240 is the most common). A TC 150 never posts to this module.

3.14.2.6.14.4.1 (02-16-2018)
CP 220J/CP 233J, 4980H Adjustment Balance Due, Even Balance or Overpayment (ESRP) Notices

  1. CP 220J/233J are assessment/adjustment notices - issued to employers once assessment has been posted or adjusted on MFT 43.

  2. CP 220J is systemically issued when an assessment posts on MFT 43 as a TC 290 for 00 and/or a TC 298 for any amount (including zero) with a reference number 240.

  3. CP 233J is systemically issued when any subsequent TC 298 or TC 299 posts on the MFT 43 module.

  4. CP 220J/233J are selected via the LCF as a KEY 092 and will be included in the NRPS package.

  5. Verify the information contained on the notice by utilizing the information in the NRPS Package and IDRS research command codes to compare the information contained on the notice to the information displayed on the applicable MFT 43 module to ensure the notice contains correct information. Verify the ESRP amount, Payments/Credits and Amount Due on the notice match the amounts on the MFT 43 module.

    If Then
    The amounts on the notice match the amounts displayed on the MFT 43 module Print the Notice
    The amounts on the notice do NOT match the amounts displayed on the MFT 43 module Retype the notice to reflect the correct module information

    Note:

    Do NOT void the notice if there is a zero balance due on the notice. If the information on the notice matches the information contained on the MFT 43 module, print the notice.

3.14.2.6.15 (01-01-2024)

Selection Keys - Additional Review Required for Notices Generated Under Keys 09, 33, 52, 54, 55, 90 and 91

  1. Key 09 - TPNC 90 - When none of the standard TPNCs adequately describe an error condition on the return, the Error Resolution System (ERS) Tax Examiner writes a specific math error explanation on a 3 X 5 slip of paper and attaches it to the return or selects an approved 90 Math Error Code and writes 90 with the literal number on the corner of the tax return.

    Example:

    90-210

    .
    IF THEN
    The return is not included in the NRPS Package Check with Notice Review Clerical Team to identify if the return was received from ERS.
    Return is not located in Clerical Use CC BRTVU to decide Math Error.

    Reminder:

    Coordination with ERS may be necessary in order to ensure the TPNC 90 returns are sent to Notice Review timely. Follow local procedures for providing feedback to ERS.

    1. Follow normal review procedures.

    2. Review the validity of the 90 Error Code written on or attached to the front of the return. Refer to the 90 Error Code Decision Table below.

      IF THEN
      The taxpayer is correct with no math error on the return Void the notice if all conditions are met for voiding the notice per IRM 3.14.2.7.23.3 .
      A standard TPNC is indicated and is correct Select the correct TPNC in OLNR.
      The standard TPNC is incorrect Research the case and delete the incorrect TPNC and select correct TPNC.
      If the 90 literal written on the 3 X 5/ return is correct Select the TPNC 90 literal code from the TPNC 90 Literals-Copy and Paste Job Aid code or
      If the 90 literal written on the 3 X 5/ return is incorrect Research the case to identify the correct TPNC. Select the correct standard TPNC, , type the appropriate paragraph in the TPNC 90 open box in OLNR or select the TPNC 90 code from the TPNC 90 Literals-Copy and Paste Job Aid(TPNC, 90 Error Code, or appropriate paragraph).

      Note:

      ERS may indicate a standard TPNC for the math error rather than a 90 Error Code.

    3. Beginning in 2014, some of the TPNC 90 literals have been numbered and are programmed for use in OLNR. They can be selected in the same manner as any other TPNC. A list of these programmed TPNC 90s can be found on the BMF Notice Review SERP Portal under “Job Aids”, titled TPNC 90 Math Error Code Job Aid. http://serp.enterprise.irs.gov/databases/portals/sp/bmf/notice-review/jobaids.html

    4. TPNC 90 literals that are not programmed into OLNR can be copied and pasted from the TPNC 90 Literals-Copy and Paste Job Aid. This job aid can be found on the BMF Notice Review SERP Portal under “Job Aids”, titled TPNC 90 Literals-Copy and Paste. http://serp.enterprise.irs.gov/databases/portals/sp/bmf/notice-review/job-aids/tpnc-90-literals.txt

    5. TPNC 90 is still available to be used as an open fill-in paragraph box in OLNR.

  2. Key 33 - CP 161, MFT 51 -- Form 709 ***Kansas City Only*** -- The selection for Key 33 changed in 2004. The TC 460 will no longer be placed on the Form 709 tax module. Therefore, the criteria was changed to select any CP 161 with an MFT 51. To decide if the taxpayer filed an extension on their Form 1040 and the payment intended for the Form 709 is available on the Form 1040 module, do the following:

    1. Use CC IMFOL to research the IMF SSN for a TC 460 on the tax module applicable to the Form 709 filing. If a joint return, research both SSN's.

    2. If timely extension is found, input the TC 460, using REQ77, on the Form 709 notice module. See IRM 3.14.2.7.22 , Extensions, for more information.

    3. If the 1040 module is overpaid, check CC RTVUE to decide the amount of credit claimed by the taxpayer.

    4. If the credit is available and can be transferred to the Form 709 notice module without placing the IMF module into a balance due status, transfer the credit using the appropriate credit transfer transaction code. Do not consider penalty and/or interest charges not claimed on the tax return if they create the balance due left on the account.

    5. If the above actions will systemically abate any penalty and/or interest charges in full, on the Form 709 module, void the notice.

    6. If a balance due remains after completing (a) and/or (b) above, retype the notice including updates to penalties and interest.

  3. Key 52 -- Generates if the notice balance due amount is less than or equal to the amount being refunded this cycle (TC 846) from another tax period for the same taxpayer. Intercept the refund where the credit is posted (must be a claimed credit or exact amount needed). Move the credit with a posting delay code 2 on the debit side of the credit transfer. Apply appropriate notice disposition.

  4. Key 54 -Delinquency Penalty (TC 166) was not assessed on a potentially delinquent return. The Balance Due Notices are selected if returns that appear to be late are processed with timely received dates.

    Note:

    Key 54 process as outlined below is only for current year tax returns. If the tax year is other than current, do not request the return (unless needed for another issue), process the notice and notice module following normal procedures outlined in IRM 3.14.2.6 .

    1. You must have the return to review this key. If the return is not available, you must request it using CC ESTAB. Mark notice disposition H. When the return is received, follow the remaining instructions.

      Exception:

      Do not order the return or assess the penalty in the following situations:

      Do Not Order Return or Assess the Penalty If:
      There is a -A freeze on the account.
      It is a 6020b return (not liable for penalties). A 6020b return is a substitute for a return using Forms 4549, 886-A, and 13496 in place of a return under IRC Section 6020b. These forms are completed during an Examination case.
      It is a Dummy Return.

    2. Check CC BMFOLT and/or CC ENMOD for FEMA disaster areas and use the date shown to calculate interest and penalties.

      Note:

      CC ENMOD can have several FEMAs listed, so verify you are using the dates for the correct filing period.

    3. Refer to IRM 3.14.2.6.17.3 for more information concerning FTF penalty.

    4. Use the following guidelines to decide the correct received date of the return and conclude if Failure to File penalty (TC 160) will be assessed:

      Note:

      7 days after the due date the return is considered on time. 8 days past the due date the return is considered 1 month late.

      Received Date Decision Table
      IRS stamped Received Date or edited Received Date, unless a timely postmark date is present.
      Earliest postmark date, if the envelope is attached,

      Note:

      The return is not late if the postmark is on or before the Return Due Date (RDD), regardless of the IRS Received Date stamp.
      Use the taxpayer signature date if there is no IRS Received Date or postmarked envelope, (Do not use the preparer's signature date).
      Julian control date of DLN (i.e., if more than one DLN is present, then use the earliest DLN Julian Date posted) minus 10 days.

      Caution:

      Do not use correspondence issued from Code and Edit to decide the received date. That correspondence is often sent on timely filed returns after the due date.

    5. If the return is delinquent, compute and assess the FTF penalty using the following steps:

      FTF Penalty Assessment
      1. Identify the penalty period -- From the Return Due Date to the return received date (the number of months or any part of a month the return is late, up to a maximum of 5 months).
      2. Identify the penalty rate -- 4 1/2 percent per month (maximum 22 1/2 percent) or 5 percent per month (maximum 25 percent) if FTP is not assessed for the same time period.
      3. Identify the amount subject to penalty -- the TC 150 tax amount minus timely credits received on or before the RDD.

      Note:

      Payments received after the RDD will not be used in the penalty computation.
      4. Multiply: amount subject to penalty X penalty rate X penalty period = the penalty amount. Example 10000 x 5 % x 3 = $ 1,500.00.

      Caution:

      Please keep in mind the minimum penalty amounts.
      5. Assess TC 160 on CC REQ54, Blocking Series 00, Hold Code 3.
      6. Use CC COMPA to compute the interest, but do not assess the additional interest.

      Reminder:

      Interest is charged on FTF penalty. Include the penalty amount when computing the interest due.
      7. Retype the notice to reflect the assessed FTF penalty and the correct interest amount due.

      Reminder:

      If a notice has been held, then update other penalties on the notice as required.

    6. Figure the TC 160 amount using the following chart.

      # of Months TC 160 (no TC 276) TC 160 (TC 276 on module)
      1 month Underpayment x 5% Underpayment x 4.5% (.045)
      2 months Underpayment x 10% Underpayment x 9% (.09)
      3 months Underpayment x 15% Underpayment x 13.5% (.135)
      4 months Underpayment x 20% Underpayment x 18% (.18)
      5 months Underpayment x 25% Underpayment x 22.5% (.225)

      1. Attach adjustment tag to the return, being careful that you do not cover any portion of the entity, and put return in gusset folder. You may still use the pink adjustment tag if preferred.

      2. Attach completed Form 10550 to gusset folder.

    7. To figure the interest on the Retype, use CC COMPA and input as follows:

      Figure 3.14.2-4

      This is an Image: 32201046.gif

      Please click here for the text description of the image.

      COMPA - - - -
      XXXXXXXX sp XXXXXXXX sp $$$$.$$
      Due date of return sp 23C date sp Underpayment plus 160 penalty amount

    8. If there are late payments, figure interest as follows:

      COMPA - - - -
      XXXXXXXX sp XXXXXXXX sp $$$$.$$
      (Due date of return) sp (1st late payment date) sp (Total tax minus any timely payments, plus TC 160 penalty amount)
      XXXXXXXX sp XXXXXXXX sp $$$$.$$
      (Repeat 1st late payment date) sp (2nd late payment date, if necessary) sp (Subtract 1st late payment)

    9. If the notice disposition is retype,

    • Change Interest Field to the new amount found on COMPA. Do not assess the interest, but include it in the retype.

    • Select the Penalty Tab and input 01 amount (TC 160 amount).

      Reminder:

      FTF is charged on the amount of tax due at the normal RDD (Return Due Date). This includes all timely credits and does not include any late credits. There is a ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ on payments. The computer does not take this grace period into account, so you must use the due date. (e.g., Payment dated May 5th should be input with an April 30th payment date). Interest is charged on the Failure to File penalty.

    Caution:

    Do not assess FTF penalty if reasonable cause indicator R for filing late is on the return.

  5. Key 55: Balance Due Notices are selected if an acceptable reason for not filing a return (TC 590 or TC 591) is posted to the notice module. The Collections function inputs a TC 590 or TC 591 on the module where a return is not required to indicate no further filing is required for an EIN.

    1. Because taxpayers may change EINs for various reasons research is required:

      EIN Changes:
      Use NRPS and IDRS to research previous tax modules
      Check the return for an indication of any other EIN
      Use CC NAMEB

      Note:

      Research the Doing Business As (DBA), as well as the primary name on the return. The business may have been incorporated.

    2. See below for Required Action for EIN Changes.

      IF AND THEN
      Another EIN is found The return has posted to the correct EIN for the notice module Transfer any missing claimed credits located to the notice module.
      Another EIN is found The return has posted to the incorrect EIN for the notice module Reprocess the return to the correct EIN (rather than transferring credits).
      No other EIN is found - Mail the notice.

  6. Key 91 -The Error Resolution System (ERS) has no provision for correcting a record after the document has been completed in ERS. If a defect is detected, ERS will notify Notice Review to modify the notice as follows:

    1. Error Correction TEs will prepare Form 3465, and send it with the return to Notice Review

    2. Upon receipt of Form 3465, use Key 91 under Local Control to select the notice for review

    3. Follow General Review procedures in addition to the Key 91 information below:

      IF THE ACTION REQUESTED ON FORM 3465 IS THEN
      Correct 1. Delete the refund if necessary.
      2. Input the adjustment (use Posting Delay Code if necessary).
      3. Take corrective action on the notice.
      4. Use appropriate notice disposition.
      Incorrect, unclear, or an action not normally completed in Notice Review Follow local procedures for requesting clarification from or providing feedback to ERS.

3.14.2.6.15.1 (10-04-2017)
Special Review-Patient Centered Outcomes Research (PCOR) Review on Form 720

  1. Patient Centered Outcomes Research (PCOR) is an annual tax that is reported only on second quarter Form 720.

  2. If payments have been misapplied, transfer to the correct module.

  3. The following adjustment reference numbers are available to adjust the fields:

    • DRN 906 is used to overlay the SHIP-COUNT field.

    • CRN 813 is used to adjust the SHIP-AMT field.

    • DRN 907 is used to overlay the ASIHP-COUNT field.

    • CRN 814 is used to adjust the ASIHP-AMT field.

    NOTE: If adjustments are made to a PCOR return, SHIP and ASHIP fields must also be adjusted. For example: If the PCOR tax liability is reduced to zero, the SHIP and ASIHP fields must also be reduced to zero.

  4. If reprocessing of the return is required, recharge the return to 0280200000 and route to Excise Stop 5701G.

3.14.2.6.16 (01-01-2024)

CP 173 - ES Penalty

  1. Purpose: CP 173 is a settlement notice generated to tell the taxpayer of a computer generated Estimated Tax penalty assessment (TC 176) on Form 990-T , Form 990-PF,Form 1041and the Form 1120series. The notice is issued in the cycle the TC 150 posts with a full paid module (Status 10 or 12) and in the absence of any other taxpayer settlement notice.

  2. To view an exhibit of the CP 173, refer to The Office of Taxpayer Correspondence at SNIP.

  3. Review Instructions:

    1. Use the NRPS selection key as a guideline to assist in the review of the notice.

    2. Follow General Review procedures. If the return is not included with the NRPS package, work the case without it.

    3. Verify that the ES payments on the notice module match the ES credits claimed on the return. If the credits do not match, then some or all of the ES payments may have been misapplied. This applies to:

      Misapplied ES Payments
      Late or timely unclaimed or excess payments posting incorrectly to the module
      Timely missing payments posting incorrectly to a different module or TIN

  4. Research

    1. Research the NRPS package and IDRS for any timely payments that must be applied or removed from the notice module:

      Research for Timely Payments
      Request payment voucher according to local procedures
      Check for an indication of the correct placement of questionable payments
      Use CC BMFOL and TXMOD
      Research additional EINs indicated on the return or in account history.

  5. Case Resolution-If found:

    1. Transfer the payment(s) to and/or from the notice module

    2. Use CC PIEST to decide if the ES Penalty will recompute

      Reminder:

      An adjustment notice generates when the ES Penalty recomputes.

    3. Research additional TINs indicated on the return or in the NRPS package for missing payments or resolution of excess credits

  6. Check dates and amounts of unclaimed payments and take the following action:

    1. If the payments are timely for the subsequent tax year, delete the refund (if applicable) and transfer the payment(s) (Use proper Posting Delay Code)

      Note:

      To resolve a CP 173 case, transferring missing payments into the module and excess payments out of the same module may be necessary.

      Reminder:

      Credit Elect may need to be reversed and CP 145 voided or retyped when transferring credits from a notice module with a TC 830/836 (Credit Elect Transaction Code).

    2. Verify any payments that are out-of-line (date and amount) for the notice module but will not be transferred to the subsequent tax year

  7. Follow instructions in IRM 3.14.2.7.10, Notice Disposition.

3.14.2.6.17 (01-01-2023)

Penalties and Interest

  1. Certain penalties and interest must be specifically addressed when adjusting tax, credits or payments within a module. Document 6209 Section 10, provides penalty and interest policy guidelines, processing codes and additional information from the Office of Servicewide Penalties (OSP) and the Office of Servicewide Interest (OSI). The following websites provide additional penalty and interest information:
    Penalties Knowledge Base: The Penalties Knowledge Base (KB) is owned and maintained by the Office of Servicewide Penalties (OSP). It provides guidance, resources, and information for all employees considering assessment and/or abatement of civil penalties.
    Interest Knowledge Base.: The Interest Knowledge Base is owned and maintained by the Office of Servicewide Interest and provides guidance, resources, and information for all employees that consider assessment and/or abatement of interest.

  2. The Table below lists penalty types:

    Type of Penalty Transaction Code Used to Assess Penalty Rate & Information BMF Impacted Forms
    Failure to File (FTF) IRC 6651(a)(1) Assessment Codes
    Manual- TC 160
    Systemic- TC 166
    Abatement Codes
    Manual- TC 161
    Systemic- TC 167    		 The penalty is 5% of the tax unpaid on the return due date (without regard to extensions) for each month or part of a month that the return is late, not to exceed 25%. When an income tax return is 60 days or more late, the minimum penalty amount is listed in IRM 20.1.2.3.7.4, or 100% of the unpaid tax, whichever is less.

    Note:

    The minimum penalty amount applies to income tax returns ONLY. It does NOT apply to employment tax, excise tax, gift tax, estate tax or penalties assessed under IRC 6698/6699 in relation to Forms 1065, 1066 and 1120-S.

    		 706, 709, 720, 730, 940, 941, 943, 944, 945, 990-PF, 990-T, 1041, 1042, 1065-B, 1120, 1120-C, 1120-F, 1120-FSC, 1120-H, 1120-L, 1120-ND, 1120-PC, 1120-POL, 1120-REIT, 1120-RIC, 1120-SF, 2290
    Failure to Pay (FTP) Tax Shown on the Return IRC 6651(a)(2) Assessment Codes
    Manual- TC 270
    Systemic- TC 276
    Abatement Codes
    Manual- TC 271
    Systemic- TC 277    		 In general, the penalty is 1/2% of the tax shown on the return that is not paid by the return due date without regard to extensions. The penalty is charged on the unpaid tax for each month or part of a month that the tax remains unpaid, but it cannot exceed 25% in the aggregate. When both FTF & FTP penalties apply for the same month, the Failure to File penalty is reduced by the amount of the Failure to Pay penalty for that month, unless the minimum Failure to File penalty applies. See IRM 20.1.2.3.8.4 for more information. 706, 709, 720, 730, 940, 941, 943, 944, 945, 990-PF, 990-T, 1041, 1042, 1065-B, 1120, 1120-C, 1120-F, 1120-FSC, 1120-H, 1120-L, 1120-ND, 1120-PC, 1120-POL, 1120-REIT, 1120-RIC, 1120-SF, 2290
    Failure to File IRC 6698 Assessment Codes
    Manual- TC 240
    Systemic- TC 246
    Abatement Codes
    Manual- TC 241
    Systemic- TC 247    		 For taxable years beginning after December 31, 1978, IRC 6698 imposes a penalty on a partnership that fails to file a timely or complete return
    Prior to January 1, 2022 this penalty was assessed using TC 160/166.
    After December 31, 2021, these penalties will be assessed with a PRN and IRN:
    Failure to File Partnership Return Using Electronic Media

    • PRN 688 is used


    Failure to File

    • PRN 722 is used

    • IRN 851 lists number of partners

    • IRN 852 lists number of months late


    Failure to File a Complete Return

    • PRN 723 is used

    • IRN 851 lists number of partners

    • IRN 852 lists number of months late

    • IRN 853 lists the missing schedule code

    		 1065, 1066
    Failure to File IRC 6699 Assessment Codes
    Manual- TC 240
    Systemic- TC 246
    Abatement Codes
    Manual- TC 241
    Systemic- TC 247    		 For S corporation returns due after December 20, 2007, IRC 6699 imposes a penalty on an S corporation that fails to file a timely or complete return as required by IRC 6037.
    Prior to January 1, 2022 this penalty was assessed using TC 160/166.
    After December 31, 2021, these penalties will be assessed with a PRN and IRN:
    Failure to File

    • PRN 722 is used

    • IRN 851 lists number of shareholders

    • IRN 852 lists number of months late


    Failure to File a Complete Return

    • PRN 723 is used

    • IRN 851 lists number of shareholders

    • IRN 852 lists number of months late

    • IRN 853 lists the missing schedule codes

    		 1120-S
    Failure to Pay Estimated Tax (ES) IRC 6654 & IRC 6655 Assessment Codes
    Manual- TC 170
    Systemic- TC 176
    Abatement Codes
    Manual- TC 171
    Systemic- TC 177    		 Estates and Trusts must pay estimated tax by its due date if the estate or trust is expected to owe at least $1,000 after subtracting its withholding credits. A penalty is applied if the estate or trust did not pay enough estimated tax, or it did not make the payments on time, or in the required amount.
    Corporations must make quarterly estimated tax installment payments if it expects its estimated tax to be $500 or more. The Corporation is subject to an underpayment penalty for failing to pay the required installment of estimated tax by its due date.
    Exempt organizations and private foundations are subject to an underpayment penalty for failing to pay the required installment of estimated tax by its due date.
    Partnerships that are required to withhold income tax on effectively connected income from their foreign partners use Form 8804 to compute their estimated tax penalty.    		 1041, 1120, 1120-C, 1120-F, 1120-FSC, 1120-H, 1120-L, 1120-ND, 1120-PC, 1120-POL, 1120-REIT, 1120-RIC, 1120-SF, 8804, 8805, 990, 990-T, 990-PF,
    Failure to Deposit Taxes (FTD) IRC 6656 Assessment Codes
    Manual- TC 180
    Systemic- TC 186
    Abatement Codes
    Manual- TC 181
    Systemic- TC 187    		 For deposits required after December 31, 1989, there is a four-tiered penalty. The penalty is 2% for deposits 1-5 days late, 5% for deposits 6-15 days late, 10% for all direct payments and those deposits more than 15 days late, but paid on or before the 10th day following notice and demand, and 15% (actually, a 5% addition to the 10%) for late undeposited taxes still unpaid after the 10th day following the first balance due notice or the day on which notice and demand for immediate payment is given. See IRM 20.1.4 for more information. 940, 941, 943, 944, 945, CT-1, 1042, 720
    Dishonored Check Penalty Assessment Codes
    Manual- TC 280
    Systemic- TC 286
    Abatement Codes
    Manual- TC 281
    Systemic- TC 287    		 A penalty is imposed on dishonored checks or other forms of payment that are returned from a financial institution unpaid. See IRM 20.1.10.7 for more information. 706, 709, 720, 730, 940, 941, 943, 944, 945, 990-PF, 990-T, 1041, 1042, 1065-B, 1120, 1120-C, 1120-F, 1120-FSC, 1120-H, 1120-L, 1120-ND, 1120-PC, 1120-POL, 1120-REIT, 1120-RIC, 1120-SF, 2290
    Information Return Penalty Assessment Codes
    Manual- TC 240
    Abatement Codes
    Manual- TC 241    		 Information Return Penalty - Failure to File Correct Information Returns Due to Intentional Disregard. When any failure, or combination of failures, related to certain Information Returns is due to Intentional Disregard, the penalty rate is increased. The penalty rate per return depends on when the return is due. There is no maximum limitation.
    PRN 600 is used to assess this penalty.
    A penalty is also charged when a payee statement is not timely or correctly furnished to recipient.
    For more information, see IRM 20.1.7.    		  
    Fraud Assessment Codes
    Manual- TC 320
    Abatement Codes
    Manual- TC 321    		 Fraud Penalty. A civil fraud penalty will be imposed when there is clear and convincing evidence to prove that some part of the underpayment of tax is due to fraud. The penalty rate is 75% of the underpayment of tax which is attributable to fraud.
    For more information, see IRM 20.1.5.16.    		 706, 709, 720, 730, 940, 941, 943, 944, 945, 990-PF, 990-T, 1041, 1042, 1065-B, 1120, 1120-C, 1120-F, 1120-FSC, 1120-H, 1120-L, 1120-ND, 1120-PC, 1120-POL, 1120-REIT, 1120-RIC, 1120-SF, 2290
    Civil Penalty for Frivolous Returns Assessment Codes
    Manual- TC 240
    Abatement Codes
    Manual- TC 241    		 PRN 666 is used to assess this penalty. A penalty is imposed against a person who files a return based on a frivolous position identified under IRC 6702(c). The penalty rate for each return deemed frivolous is $5,000 if filed after March 16, 2007. $500 for income tax returns filed prior to March 17, 2007.
    For more information, see IRM 20.1.10.12.1.    		 All BMF returns
    Debit Interest Assessment Codes
    Manual- TC 340
    Systemic- TC 196
    Abatement Codes
    Manual- TC 341
    Systemic- TC 197    		 Debits the tax module for the amount of interest due when a tax module is underpaid and/or a tax return is not timely filed.
    For more information, see IRM 20.2.1, Interest Introduction, Standards and Guidelines, IRM 20.2.5, Interest on Underpayments, IRM 20.2.7, Abatement and Suspension of Debit Interest, IRM 20.2.10, Interest o Estate, Excise, Employment and Foreign Taxes, IRM 20.2.11, Miscellaneous Interest Provisions, and IRM 20.2.14, Netting of Overpayment and Underpayment Interest.    		  
    Credit Interest Assessment Codes
    Manual (Restricted Interest)- TC 770
    Systemic- TC 776
    Abatement Codes
    Manual (Restricted Interest)- TC 771
    Systemic- TC 777    		 Credits the Tax Module for the amount of interest due when a Tax Module is overpaid as the result of a credit or an abatement.
    For more information, see IRM 20.2.4, Overpayment Interest and IRM 20.2.14, Netting of Overpayment and Underpayment Interest.    		  

3.14.2.6.17.1 (01-01-2023)
Recomputation of Interest and Penalties - General

  1. See IRM 20.2 (Interest) for information on computing interest. Even though this IRM has instructions for manually adjusting penalty and interest, input manual restrictions only after determining that the computer cannot correctly assess or abate the penalty, interest, or both.

  2. If the taxpayer requests abatement of a penalty due to reasonable cause, then refer to IRM 3.14.2.6.1.3.7 , Taxpayer Correspondence.

  3. The computer may assess and abate penalties on the Master File when:

    • An exam adjustment posts

    • A tax adjustment posts

    • An approved Extension of Time To File posts after the tax and penalties were computer assessed

    • An adjustment to a refundable credit posts

    • A payment posts, or is transferred to or from the account

    Note:

    A manual penalty assessment will prevent systemic recomputation.

  4. See IRM 20.2.14, Netting of Overpayment and Underpayment Interest for an explanation of Interest Netting.

  5. Miscellaneous penalty issues:

    1. If the tax is full paid and the taxpayer requests reasonable cause consideration on FTF or FTP penalties and the amount of each is under ≡ ≡ ≡ ≡, allow the request and abate the penalty

    2. If the taxpayer requests abatement of Estimated Tax (ES) penalty and the amount is under ≡ ≡ ≡ ≡ ≡ ≡ ≡, allow the request and abate the penalty

3.14.2.6.17.2 (01-01-2023)
Definitions

  1. Start Date: The date the penalty starts for a specific unpaid tax liability. This date indicates the beginning of the first monthly period.

    • Multiple Start Dates are possible when there are different tax liabilities assessed at different times on the same module

    • The most common Start Dates are the normal return due date (RDD), the extended payment due date, and the twenty-second day after an assessment date of demand (23C Date)

    • In the case of an installment agreement, the start date for the reduced penalty rate is the later of 1/1/2000 or the transaction date of the TC 971/Action Code 063

  2. Monthly Period: The period that begins on the Start Date and ends on the numerically corresponding day in the following calendar month. If the following month does not have a matching day, use the last day of that month.

    Example:

    If the Start Date is August 31, the Monthly Period ends on September 30.

  3. Penalty Rate: The fixed amount or percentage charged with respect to a penalty. For example the penalty rate for a Failure to Pay (FTP) Tax Shown on the Return IRC 6651(a)(2) is 1/1% per month or fraction of a month. The penalty is figured on the first day of the monthly period. The rate changes to 1% per month on:

    1. The beginning of the first month following the tenth day after the Status 58 date or TC 971 with Action Code 035, or 069, or

      Example:

      If the Status 58 date is September 25, the 1% would begin on the first day of the monthly accrual period following October 5.

    2. The 1% rate begins on the 23C Date of a Jeopardy assessment (TC 370, Doc Code 51 Blocking Series 100-119).
      Example: If the 23C Date is September 25, the 1% would begin on October 1.

      Note:

      The maximum FTP penalty rate charged on the unpaid balance of each assessment is 25%.

  4. Reduced Penalty Rate: The reduction of the fixed amount or percentage charged based on specific criteria with respect to a penalty. An example of this is the 1/4 Percent Penalty Rate provision. For information regarding the 1/4 Percent Penalty Rate for IRC 6651 FTP penalties, see IRM 20.1.2.3.8.1.2, 1/4 Percent Penalty Rate - IRC 6551(h).

  5. Penalty Amount: Computed on the balance of unpaid tax at the beginning of each monthly period.

    Note:

    A payment received after the beginning of the monthly period will not affect that month’s penalty amount.

  6. Assessments: Tax assessments are any of the following Transaction Codes: 150, 290, 298, 300, and 308.

3.14.2.6.17.3 (01-01-2024)
Failure to File (Delinquency) Penalty Recomputation

  1. The Failure to File (FTF) penalty is assessed for the failure to file a tax return by the date prescribed (including extensions) (i.e. returns received after the normal or extended return due date (RDD).

    Note:

    For additional information concerning this penalty please go to IRM 20.1.2.

  2. For each month or part of a month the return is late, the penalty is 5% of the amount subject to the penalty. See IRM 20.1.2.3.7.1 for more information on determining the months a return is late. See IRM 20.1.2.3.7.2 for more information on determining the amount subject to the penalty.

  3. The maximum penalty is 25% of the unpaid tax on the payment due date, unless the minimum penalty applies.

  4. The minimum penalty applies ONLY to income tax returns. It does NOT apply to employment tax, excise tax, gift tax or estate tax returns. If the income tax return is more than 60 days late and the normal computed penalty is less than the amount listed in the table below, then a minimum tax applies:

    Return Due Date Without Extension Minimum Amount
    After 12/31/2023 $485.00
    Between 1/1/2023 and 12/31/2023 $450.00
    Between 1/1/2020 and 12/31/2022 $435.00
    Between 1/1/2018 and 12/31/2019 $210.00
    Between 1/1/2016 and 12/31/2017 $205.00
    Between 1/1/2009 and 12/31/2015 $135.00
    On or before 12/31/2008 $100.00

    Exception:

    FTF penalty is waived for certain tax year 2019 and 2020 returns listed in Notice 2022-36, filed on or before September 30, 2022. BMF forms include: 1120 (MFT 02), 1041 (MFT 05), 1066 (MFT 07), 990-T (MFT 34), and 990-PF (MFT 44).

    1. If the total unpaid tax on the return due date is less than the amount in the table above, then the penalty is the lesser amount.

    2. TC 161 with Penalty Reason Code 045 is used to abate any excessive minimum penalty.

  5. After inputting an adjustment action, compute the penalty manually to decide whether the FTF penalty will recompute when the adjustment posts:

    Note:

    A PC or the TIPS program will assist with the manual computation.

    1. Determine unpaid tax ≡ ≡ ≡ ≡ ≡ ≡ ≡ following RDD or disaster due date, whichever is later. This is the amount subject to penalty. (Disaster due date for this purpose is determined without regard to any extension of time to file.)

    2. Count the number of months from the latest of RDD, disaster due date, or extended due date, to the date the return was filed, but not more than 5 months. This is the number of months subject to penalty.

      Note:

      Any part of a month counts as a full month.

    3. Count the number of months between the latest of RDD, disaster due date, or extended due date, during which any part of the tax remains unpaid, but not more than the number of months subject to penalty. This is the number of months subject to both FTP and FTF penalty.

      Note:

      Any part of a month counts as a full month.

    4. Compute the FTP penalty for the months subject to FTF penalty.

    5. Multiply the number of months subject to penalty by 5%.

    6. Multiply the amount subject to penalty from a) by the penalty rate from e).

    7. Subtract d) from f).

      Rate FTF Penalty Rates
      5% When the Failure to Pay (FTP) penalty is not assessed at the same time as the FTF penalty.
      41/1% When the FTP penalty is assessed at the same time as the FTF penalty.
      5% On all subsequent tax (TC 290/300) assessments.

      Note:

      Use the same percentage rate for abating that was used for assessing the FTF on the same unpaid tax amount. Different penalty rates may apply to different amounts of tax for the same time period. The maximum penalty rate is 25%, or 221/1% if FTP is also assessed.

      Example:

      The original unpaid tax may be penalized at the 41/1% monthly rate and a TC 290 amount at 5% per month. Add the two amounts to decide the total FTF penalty.

    8. Multiply the amount of unpaid tax at the normal due date (decided without regard to filing extensions) by the penalty rate. Then multiply this amount by the number of months that the return was filed late, up to 5 months. The result is the FTF penalty.

      Note:

      TC 291 or 301 will reverse the most recent unreversed TC 290 or 300, then the next most recent, etc. If there is no unreversed TC 290 or 300 then the TC 291 or 301 will reverse the TC 150.

3.14.2.6.17.3.1 (01-01-2023)
Failure to File Penalty (IRC 6698/6699)

  1. Prior to processing year 2022, the IRC 6698/6699 penalty was assessed systemically on applicable Form 1065, Form 1066 or Form 1120-S modules, using Transaction Code (TC) 166 for filing late, or with TC 246 without a penalty reference number (PRN) if required information was missing. The penalty was abated systemically with TC 167 or TC 247 (if changes post to the partnership's account causing IRS's computers to compute a lower penalty or no penalty) or manually abated using TC 161 if assessed as TC 16X or TC 241 without a PRN if assessed as TC 24X.

    1. Refer to the Penalties Knowledge Base SharePoint site, IRC 6698 and 6699 Penalty Information, to access information on IRC 6698 and 6699 Penalties. See IRM 20.1.2.4 and IRM 20.1.2.6 for more information.

    2. Refer to the Penalties Knowledge Base SharePoint site, IRC 6698 Penalty Knowledge Base to access information on the IRC 6698 & 6699 Penalty Computation Tool.

  2. Beginning processing year 2022, if the return is complete but received late, the penalty is assessed systemically with TC 246 PRN 722.

    Note:

    PRNs 722 can only be assessed using TC 290.00 or TC 300.00 with the applicable IRNs. The Table below shows the PRN and IRNs needed to assess the FTF penalty under IRC 6698/6699:

    Form/MFT PRN 722 IRN 851 IRN 852
    1120-S (MFT 02) PRN 722 lists the Total Penalty Amount Number of Shareholders

    Note:

    number of shareholders is input in two decimal format 2.00 or higher

    		 Number of Months

    Note:

    Number of Months is input in two decimal format up to 12.00
    1065 (MFT 06) PRN 722 lists the Total Penalty Amount Number of Partners

    Note:

    number of partners is input in two decimal format 2.00 or higher

    		 Number of Months

    Note:

    Number of Months is input in two decimal format up to 12.00
    1066 (MFT 07) PRN 722 lists the Total Penalty Amount Number of Residual Interest Holders

    Note:

    number of Residual interest holders is input in two decimal format 2.00 or higher

    		 Number of Months

    Note:

    Number of Months is input in two decimal format up to 12.00

  3. If a partnership or shareholder return is both late and incomplete, do NOT assess two penalties. The incomplete return penalty takes precedence unless the return is 12 months or more late.

  4. Input a manual FTF assessment (TC 240 PRN 722) or abatement (TC 241 PRN 722) when the computer cannot correctly compute the penalty or when the module was previously restricted. A manual restriction is necessary when:

    1. A late return received date was not transcribed (i.e., the return posted as being timely)

    2. An incorrect received date posted (i.e., a timely return posted as being late)

    3. The taxpayer states a reasonable cause for filing late

  5. Form 1120-S - Do not compute Failure to File Penalty if:

    1. There is a TC 160 or TC 161 posted on the module.

    2. The TC 150 contains Condition R.

    3. RDD/XRDD falls in a disaster period.

    4. The return is a SFR return.

    Note:

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

  6. See IRM 3.14.2.6.17.4 for information on assessing the Missing Information Penalty for Form 1120-S.

  7. See IRM 3.14.2.6.10.1, CP 162 Failure to File Electronic Partnership Return, IRM 3.14.2.6.10.2, CP 162A Failure to File Form 1065, 1066 or 1120-S General Review Procedures, IRM 3.14.2.6.10.3, CP 162B Failure to File Form 1065 or 1120-S General Review Procedures, for information regarding penalty rates, penalty assessment and notice information in relation to IRC 6698/6699 penalties.

3.14.2.6.17.4 (03-16-2023)
Missing Information Penalty IRC 6698/6699

  1. Beginning processing year 2022, if the return is incomplete, the penalty will be assessed with a TC 246 PRN 723. See IRM 20.1.2.4.4.1 for specific procedures to assess the IRC 6698 penalty manually on Form 1065 and Form 1066. See IRM 20.1.2.6.4.1, for procedures to assess the IRC 6699 Penalty on Form 1120-S.

  2. Compute Form 1120-S Missing Information Penalty (TC 246) using the following conditions:

    1. Return is MFT 02.

    2. Posting Form 1120-S does not have a RDD/XRDD that falls in a disaster period.

    3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, or

    4. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, or

    5. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    6. Missing Schedule Code of 33, 34, 36, 45, 46, 47 or 49 (formerly Missing Information Code of 1-7) is present on the input TC 150 indicating the following:

    • 33 - Missing Schedules K-1

    • 34 - Missing Balance Sheet

    • 36 - Missing Schedules K-1 and Balance Sheet

    • 45 - Missing Schedules K

    • 46 - Missing Schedules K and K-1s

    • 47 - Missing Schedules K and L (Balance Sheet)

    • 49 - Missing Schedules K, K-1s and Balance Sheet

    PRN 723 can only be assessed using TC 290.00 or TC 300.00 with the applicable IRNs. The Table below shows the PRN and IRNs needed to assess the Missing Information penalty under IRC 6698/6699 for Form 1120-S:

    Form/MFT PRN 723 IRN 851 IRN 852 IRN 853
    1120-S (MFT 02) PRN 723 lists the Total Penalty Amount Number of Shareholders

    Note:

    number of shareholders is input in two decimal format 2.00 or higher

    		 Number of Months

    Note:

    Number of Months is input in two decimal format up to 12.00

    		 Missing Information Code (MIC)

    Note:

    Acceptable MIC codes for MFT 02 are: 33, 34, 36, 45, 46, 47, or 49.

    Note:

    The Missing Schedule Code is input in 2 decimal format (e.g. 33.00 or 34.00)

    Note:

    If all the conditions above are met, assess the penalty as follows:

    1. Determine the number of months or fraction of month late.

    2. If the number of shareholders is not present assume 1 shareholder is present.

    3. Compute the penalty by multiplying the number of months, by the number of shareholders, by the base penalty amount.

    4. Refer to IRM 20.1.2.6 or IRM 20.1.2.6.4 for information on penalty assessment and computation.

  3. The missing or incomplete information penalty is assessed on Form 1065 with a TC 246 PRN 723 with IRNs 851, 852 and 853.

    1. Return is MFT 06

    2. Number of partners is 2 or more

    3. Number of months

    4. Missing Schedule Code of 33-39, 45-45, and 49-52 indicating the following:

    • 33 - Missing Schedules K-1

    • 34 - Missing Balance Sheet

    • 35 - Missing K-1 TINs (5 or more)

    • 36 - Missing Schedules K-1 and Balance Sheet

    • 37 - Missing Schedule K-1s and K-1 TINs

    • 38 - Missing Balance Sheet and K-1 TINs

    • 39 - Missing K-1s, Balance Sheet and K-1 TINs

    • 45 - Missing Schedules K

    • 46 - Missing Schedules K and K-1s

    • 47 - Missing Schedules K and L (Balance Sheet)

    • 49 - Missing Schedules K, K-1s and Balance Sheet

    • 50 - Missing Schedule K, K-1 and K-1 TINs

    • 51 - Missing Schedule K, Balance Sheet and K-1 Tins

    • 52 - Missing Schedule K, K-1, Balance Sheet and K-1 Tins (5 or more)

    The Table below shows the PRN and IRNs needed to assess the Missing Information penalty using PRN 723 under IRC 6698/6699 for Form 1065:

    Form/MFT PRN 723 IRN 851 IRN 852 IRN 853
    1065 (MFT 06) PRN 723 lists the Total Penalty Amount Number of Partners

    Note:

    number of partners is input in two decimal format 2.00 or higher

    		 Number of Months

    Note:

    Number of Months is input in two decimal format up to 12.00

    		 Missing Information Code (MIC)

    Note:

    Acceptable MIC codes for MFT 06 are: 33-39 and 45-47 and 49-52.

    Note:

    The Missing Schedule Code is input in 2 decimal format (e.g. 33.00 or 34.00)

    Note:

    If all the conditions above are met, assess the penalty as follows:

    1. Determine the number of months or fraction of month late.

    2. Determine the number of partners. If the number of partners is not present assume 2 partners are present.

    3. Compute the penalty by multiplying the number of months, by the number of partners, by the base penalty amount.

    4. Refer to IRM 20.1.2.4.4.1 for information on penalty assessment and computation.

3.14.2.6.17.5 (01-01-2023)
Failure to Pay Penalty Recomputation

  1. The Failure to Pay (FTP) penalty is assessed after the Return Due Date (RDD) when there is an unpaid tax liability on the tax return, or as a result of an Audit or DP tax adjustment and there is no exclusion for failure to pay the tax owed. For more information please go to IRM 20.1.2.

    Note:

    FTP is generally computed on the tax shown on the return (IRC 6651(a)(2) or on subsequently assessed tax (TC 290/300) that is not shown on the return (IRC 6651(a)(3).

  2. Decide when the FTP penalty begins: (Note: All have a ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡)

    1. On original balance due returns, FTP begins on the payment due date (generally the return due date) and ends on the date the payment(s) is made.

    2. On math error assessments, FTP begins on the twenty-second day (or the eleventh business day if the module balance is $100,000 or greater) after the 23C Date (the notice and demand date), or the payment due date, whichever is later.

    3. On adjustments to tax that cause a balance due, FTP begins on the twenty-second day (or the eleventh business day if the module balance is $100,000 or greater) after the 23C Date.

      Example:

      If the 23C Date was September 8, the FTP begins on September 30.

      Note:

      An adjustment to income tax withholding will not change the FTP start date, which is the normal RDD (not including extensions).

3.14.2.6.17.6 (11-05-2019)
Failure to Pay (FTP) Penalty Command Codes

  1. CC INTST displays the FTP penalty computation, including both posted and accrued amounts, up to the date specified. CC INTST with definer "D" shows how the computer figured the penalty. This is accurate unless there is an FTP restriction (TC 270/271) or a pending TC 28X, 29X, or 30X on the account. See IRM 20.1.2 or IRM 2.3.39 for other situations when INTST cannot correctly compute the FTP penalty. Use these CC for updating a notice to include pending payments and credit transfers. When inputting a credit transfer follow instructions in IRM 3.14.2.7.7.

    Note:

    For additional information refer to IRM 3.14.2.6.14.1 .

  2. CC COMPAF -Use this command code to manually compute the FTP penalty. CC COMPAF computes the penalty on a specified amount for a specified time period. Input a separate CC COMPAF for each Start Date on the module. See IRM 3.14.2.6.17.2 for more information regarding Start Dates.

    Note:

    Use CC COMPAF to compute FTP when the account is restricted after an adjustment or when a credit is pending but does not yet show on IDRS.

    1. Input the to and from dates and the underpaid amounts. Begin with the Start Date and end on a notice 23C Date.

    2. Add payments on their respective received dates and subtract their amounts from the underpaid liability amount.

    3. If multiple CC COMPAF screens are input for multiple Start Dates, add the totals of each screen to compute the total FTP penalty.

3.14.2.6.17.7 (01-01-2017)
Estimated Tax Penalty

  1. IRC Section 6655 provides for a penalty when a corporation (C or S), private foundation (including those organized as a trust), charitable trust, or a tax exempt organization liable for unrelated business income tax, underpays any required installments of estimated tax liabilities reportable on Forms 1120, 990 series, and certain Form 1041s. Other Form 1041s are subject to the same requirements as individuals filing Form 1040, per IRC Section 6654.

  2. Corporation Requirements:

    1. For tax years 198812 to 199211 corporations were required to prepay the lesser of 90% of the current year tax liability, 100% of the prior year tax liability, or the amount decided under the annualized or adjusted seasonal income installment method. The prior year must have been a 12-month taxable year with a tax liability greater than zero.

    2. For tax years 199212 to 199305, the rate for the current year liability is 93% of the tax shown on the return, less any refundable credits.

    3. For tax years 199306 to 199411, the current year rate is 97%.

    4. For tax years 199412 and later, the current year rate is 100%.

    5. Charitable trusts and private foundations filing Form 1041 are subject to the same rules as corporations, except with respect to the payment due dates.

  3. Large Corporation

    1. A large corporation is any corporation having a taxable income of $1,000,000 or more during any of the preceding three tax years.

    2. A large corporation may use 100% of the prior year liability as a basis for the first installment payment only.

    3. When the 100% prior tax base is used for the first installment, the difference between the 100% prior rate and the current rate must be added to the second installment payment.

  4. Form 1041 Requirements (except private foundation and charitable trust):

    1. The following fiduciaries are exempt from paying estimated tax for the tax years ending before the date two years from the date of death: Decedent’s estates, grantor trusts that receive the residual of a probate estate under the decedents will, and for tax years after 8711 (if there is no will to probate), a trust that is primarily responsible for paying taxes, debts, and expenses of administration.

    2. The estimated tax base is the lesser of: 90% of the current tax liability, or 100% of the prior year liability if (1) the prior year was 12 months and (2) a return was filed for the prior year.

  5. Form 1120 Installments

    1. The installment payments are due on the 15th day of the 4th, 6th, 9th, and 12th months of the taxable year.

    2. When the installment date falls on a weekend or legal holiday, the payment is considered timely if made on the next business day.

    3. Payments are applied against the earliest underpayment regardless of the date the payment was received.

    4. The installment due dates for charitable trusts and private foundations filing Form 1041 are the 15th day of the 5th, 6th 9th and 12th month of the taxable year.

  6. Form 2220

    1. Taxpayers use Form 2220 to compute estimated tax penalty. The taxpayer is assessed the amount shown on the Form 2220. A CP 234 is generated to the Accounts Management (Adjustments) Function to verify the penalty amount.

    2. The estimated tax penalty is computed on the tax shown on the original taxpayer return, whether the return is filed timely or late. The penalty is not increased or decreased with subsequent changes to the tax after the return due date without a manual adjustment to the penalty being processed.

    3. In case of a math error, the computer is programmed to compute the penalty on the lesser amount of tax as computed by the taxpayer or corrected by the IRS.

  7. Recomputation of ES Penalty

    1. The computer automatically recomputes the estimated tax penalty when an adjustment to TC 806 or 807 is made or a transaction code 43X, 61X, 62X, 66X, 67X, 700, 702, 71X, 760, 762, or 97X is present or transferred in with a transaction date before the return due date.

    2. The computer will not automatically recompute estimated tax penalty when there is a CCC P or exception 5. If CCC "A" , or a TC 170, or both are on the module, the computer will issue a CP 234 rather than posting a TC 17X.

  8. Use CC PIEST to view the computation of a TC 176. It will show any changes to the TC 176 after inputting a credit transfer, withholding adjustment, or a refundable credit (TC 766) adjustment. If a payment is pending on the module, and ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Input Hold Code 3 if the adjustment notice will be suppressed.

    1. The amount shown on CC PlEST is used as the ES Penalty amount on a retyped notice.

    2. CC PIEST cannot be used if there is a TC 170 (with DLN other than return DLN), 171, or no ES Penalty charged on the tax module.

  9. Use CC COMPAE to manually figure the ES Penalty.

    1. Input CC COMPAE with the MFT and tax period of the return. The response format is CC COMPAS with the due date of each installment in the left column and the return due date in the right column.

    2. Overlay the dates with the appropriate from and to dates, if necessary, and enter the underpayment amounts, then input.

    3. More lines may be entered if payments were not made on the due dates.

    4. Each installment date adds to the liability and each payment subtracts from the liability.

    5. CC COMPAS can be entered directly but all dates and amounts must be filled in manually. Input COMPAS with the MFT and tax period of the return.

3.14.2.6.17.8 (03-16-2023)
Failure to Deposit Penalty

  1. Taxpayers filing Forms 940, 941, 943, 944, 945, CT-1, 720, and 1042 are required to pay taxes through the Electronic Federal Tax Deposit System (EFTPS). Forms 941, 943, 944, 945 and CT-1 filers must deposit taxes either monthly or semi-weekly. Taxpayers who report less than $2,500.00 in taxes for a tax period on Form 941, Form 943, or Form 944, or Form 945, may send the tax payment with their return when filing timely. For tax periods beginning after December 21, 2004, taxpayers who report less than $500.00 in taxes for a tax period on Form 940 may send the tax payment with their return when filing timely.

    Note:

    Beginning January 2010, employers who file Form 941 will not have to make deposits during a quarter if their total tax liability for either the current quarter or the prior quarter is less than $2,500 and they did not incur a $100,000 next-day deposit obligation during the current quarter and they fully pay the amount due with a timely filed return for the current quarter.

  2. A taxpayer’s status, for Forms 941, 943, 944, 945, and CT-1 filers, will be decided by a review of a preceding 12-month period . See IRM 20.1.4.8.2 Lookback Periods for Employment Tax (Forms 941, 943, 944, 945, and CT-1.) This is the look back period. If the sum of taxes reported during the look back period is $50,000 or less, the taxpayer will be considered a monthly depositor. If the sum of the taxes reported during the look back period is more than $50,000.00, the taxpayer will be considered a semi-weekly depositor. Taxpayers can make their tax deposits, through the Electronic Federal Tax Payment System (EFTPS). Taxpayers required to use EFTPS may be subject to a penalty if they use a FTD coupon instead of EFTPS. (FTD coupons were eliminated after December 31, 2010). See IRM 20.1.4.7.1 Time Sensitive Four Tier Penalty System, for additional information.

  3. The FTD penalty has a four-tier rate structure of 2%, 5%, 10%, and 15%, charged as follows:

    1. 2% : for deposits 1 to 5 days late.

    2. 5% : for deposits made 6 to 15 days late.

    3. 10% : for all payments made directly to IRS.

    4. 10% : for amounts subject to electronic deposit requirements but not depositing using EFTPS or for depositing in an incorrect method (when required to use EFTPS).

    5. 10% -: for deposits made more than 15 days late, but on or before the 23C Date plus 10 days.

    6. 15% : for all undeposited taxes still unpaid after the 10th day following the first Balance Due Notice or the day on which notice and demand for immediate payment is given.

  4. Deposits are generally applied to the most recently ended tax deposit period within a specific tax return period to which the deposit relates, however per IRC 6656(e) and Revenue Procedure 2001-58 taxpayers can designate the period(s) orally or in writing. (See IRM 21.5.2.4.9, Penalty Overview, for more information). For penalty computation purposes, the TC 716 availability date is the date on which the overpayment actually occurred. If more than one deposit makes up the overpayment, the date of the earliest deposit is the TC 716 availability date (see IRM 20.1.4.7.4, Application of Payments). The failure to deposit penalty (TC 186) will automatically recompute whenever timely credits are transferred into or out of a module that is not restricted (TC 180/181) (see IRM 20.1.4.22, Master File Assessments and Recomputations). An adjustment notice will generate when an automatic recomputation of the FTD penalty occurs.

    Note:

    If the FTD penalty changes by less than ≡ ≡ ≡ ≡ an adjustment notice will not generate.

  5. A review of this penalty will be made whenever timely payments are transferred into or out of an account containing an FTD penalty.

    1. Command Code PIFTD (with no definer code) can be used to obtain the computer’s FTD computation on a screen display for Forms 940, 941, 943, 944, 945 and 1042.

    2. Command Code FTDPN ( Definer Code A) can be used to manually compute the FTD penalty. For more information on CC FTDPN, see, IRM 2.3.28. The penalty can be adjusted with a TC 180 and the applicable Penalty Computation Code (PCC) to increase the penalty or a TC 181 with the applicable Penalty Reason Code (PRC) to decrease the penalty, using Blocking Series 00 or 15.

    3. When transferring credits, use CC FTDPN (with no definer code) to decide penalty recomputation See the caution in item d) below.

    4. The computer will abate the FTD penalty if the penalty when computed using the Most Recent or First in First Out (FIFO) method is less than ≡ ≡ ≡ ≡ ≡ for returns due after January 1, 2001. Before January 1, 2001, the computer will abate the FTD penalty if it recomputes under ≡ ≡ ≡ ≡ ≡ ≡.

      Note:

      When retyping a notice, use the appropriate FTD penalty code to ensure the taxpayer receives the correct explanation. OLNR displays a date of 01/01/0001 as a placeholder date for an account without an originally assessed FTD penalty. This field does not need to be addressed when retyping a notice for reasons other than FTD.

  6. The FTD penalty will be reviewed whenever an adjustment to tax is made on the notice module.

    1. If the tax is being increased and there is an unreversed TC 180 or TC 186 on the account, the TC 290 tax adjustment will post without addressing the FTD penalty. Manually recompute the penalty and adjust any increase/decrease with TC 180/181.

    2. If the total tax is being decreased and there is an unreversed TC 180 on the account, the TC 291 will unpost if the FTD penalty is not addressed.

    3. A partial tax decrease will post without the FTD penalty being addressed. The penalty may also need to be decreased (TC 181) to avoid an erroneous notice. See, IRM 20.1.4.21.3(13), Amended or Supplemental Return (Tax Decrease or Non-Interest-Free Tax Increase).

    4. If the TC 291 abates the entire tax, then the TC 186 will abate in full.

    5. The penalty may be abated if reasonable cause applies. Reasonable cause is determined separately for each payment.

  7. A CP 207 or a CP 207L proposed averaged FTD penalty notice may be issued on Forms 940,941, 943, 944, 945, CT-1 and 1042 when the Record Of Federal Tax Liability (ROFTL) or liability schedule is incomplete, illegible, or the liability does not equal the net taxes.

    1. For tax periods beginning January 1, 2001, and subsequent, Code and Edit must enter Schedule Indicator Code (SIC) 1 on the return when:

      Schedule Indicator Codes
      Net Tax is less than ≡ ≡ ≡ ≡ ≡ ≡
      Net Tax is ≡ ≡ ≡ ≡ ≡ or more and the ROFTL is blank without an attached liability schedule
      Net Tax is ≡ ≡ ≡ ≡ ≡ ≡ or more and there is a difference of ≡ ≡ ≡ ≡ ≡ ≡ ≡ or more between Net Taxes and Total Liability
      Negative amount of ≡ ≡ ≡ ≡ ≡ or more is on ROFTL or Liability Schedule

      Note:

      If no entry for Net Tax, use Total Tax.

    2. Data Input System (DIS) does not enter the liability schedule when SIC 1 is edited; tax liabilities will be averaged and a CP 207 or a CP 207L proposed averaged FTD penalty notice will be issued.

    3. If Code and Edit does not edit SIC 1 and the liabilities on the ROFTL do not equal the net tax within ≡ ≡ ≡ ≡, the return will reject to ERS. ERS will try to resolve the discrepancy. If it cannot be resolved, SIC 1 is entered and a CP 207 or a CP 207L proposed averaged FTD penalty notice will be issued.

      Note:

      Watch for transcription errors and obvious transposition errors, the FTD penalty may need to be adjusted manually.

    4. Ensure the liability schedule was entered by DIS unless the criteria of SIC 1 is met. If the liability schedule has been omitted in error or transcription errors are found, verify the taxpayer’s addition on the schedule. If the schedule is valid, compute the FTD penalty on CC FTDPN definer A and adjust the module according to the computation.

3.14.2.6.17.9 (01-01-2019)
Computing Normal and Restricted Interest - General Rules and Information

  1. The purpose of recomputing interest is to ensure that all outstanding balances, late posting credits, subsequent assessments, etc., are considered in determining the amount of interest due on a tax module up to the current 23C Date, and to make adjustments, if necessary. See IRM 3.14.2.6.2 for applicable command codes.

  2. If the due date for filing a return or making a payment is on a weekend or legal holiday, taxpayers may file or pay on the following first workday without being charged penalties or interest.

    Note:

    If the taxpayer pays after the following workday, penalties and interest will accrue from the due date, even though the normal return due date was a weekend or legal holiday.

  3. Apply payments in the following order:

    1. Tax

    2. Penalties

    3. Interest

  4. Add additional tax assessments to the original tax to arrive at the total corrected balance of tax due on the RDD. Because of the above order in which payments are applied, a payment which previously paid penalty and/or interest on an earlier assessment may now pay an additional tax assessment. Any remaining credit will apply to the penalty and interest. This actually reduces the amount of interest assessed on additional tax assessments, and may also reduce or completely eliminate the FTP penalty.

  5. When manually computing interest on a tax module, use the running module balance method so that all transactions in the module are in included in the computation. See IRM 20.2.5.2.3, Steps to Compute Interest

    Reminder:

    Previous restricted interest transactions must be verified before recomputing a module. If you are unable to verify the TC 34X/77X amount, secure the adjustment document or case file.

  6. Compute interest on tax and interest on penalties at normal interest rates.

  7. Interest computations on an account where a refund or offset was previously allowed depend on the amount of interest, if any, allowed on the refund or offset:

    If Then compute interest on
    The refund did not include interest The part of the assessment up to the amount of the refund/offset from the refund date. See IRM 20.2.5.7, Revenue Ruling 99-40.
    The refund did not include interest Any part of the assessment greater than the amount of the refund/offset from the unextended due date of the return.
    The refund did include interest Any additional assessment from the unextended due date of the return. During the period interest was paid on the refund/offset, interest will be charged at the same rate on the portion of the underpayment (including accruing interest) that does not exceed the refund/offset principal. See IRM 20.2.14.4 , Within Module Interest Netting under Revenue Procedure 94-60.
3.14.2.6.18 (01-01-2019)

Reprocessing Returns

  1. A Reprocessable return is a return that posted to an incorrect tax period or TIN and needs to be corrected and re-entered through the processing system. For information on Credit Reference Numbers and Item Reference Numbers see IRM 3.14.2.7.6.6 .

  2. Definitions:

    • Receiving module-The module the return will be reprocessed to

    • Losing module-The module the return will be moved from

    • Zeroing-out the module-Adjusting the TC 150, withholding, Advance Earned Income Credit (AEIC), TC 766, Reference Numbers, and certain penalties to zero

  3. If the return is an Electronically Filed (Electronic File (ELF)) return, refer to IRM 3.14.2.6.18.1, Reprocessing/Adjusting E-Filed Returns.

  4. If the return is a Form 706 or Form 709, refer to IRM 3.14.2.7.7.1.

  5. If the return was not included you must request the document following local procedures. If return is not received before the cycle close out you must input an H Disposition.

  6. Form 13596, Reprocessing Returns, is used to process a return to the correct account or module that had previously posted to the wrong account or module.

  7. If a return was not edited according to current processing instructions, circle out any action codes, Computer Condition Codes (such as CCC G) and any other edited marks that are no longer applicable. Re-edit according to current processing instructions.

    Note:

    Do not edit CCC G on an amended return.

  8. If the return was edited according to current processing instruction, then ensure that the information from Form 13596 is correct on the return.

    Form 13596: Action Taken:
    TIN correction Edit correct TIN on return
    Tax Period correction Edit correct tax period on the return
    Reasonable Cause, Edit appropriate Computer Condition Code:

    1. Edit CCC R if the FTF box is checked.

    2. Edit CCC D if the FTP box is checked.

  9. Examine returns that have any color other than green edit in the tax data section to decide if the corrections are the results of improper perfection of taxpayer error.

    IF THEN
    Improper perfection, Edit the same correction in green .
    Taxpayer error, Leave the entries as shown on the document.

  10. A received date must be present on all reprocessed returns.

    IF THEN
    Received date is not present, Edit a received date to the middle of the return.
    Multiple received dates are present, Circle all but the earliest date.

  11. Circle out the green rocker and edit marks that may indicate a receipt of remittance.

  12. Certain circumstances prevent a return from being reprocessed:

    If Then
    A TC 150 has posted to the receiving module

    1. Request both returns.

    2. Do not zero-out the posted tax and reference amounts. Adjust them on both modules to agree with the information from the proper return.

    3. Transfer the TC 610 payments if necessary.

    4. Pull all current cycle notices for both modules.

    5. Follow normal notice disposition procedures in IRM 3.14.2.7.10 , (Notice Disposition).
    The return posting incorrectly to the losing module is a duplicate return of the TC 150 posted to the receiving module

    1. Zero out the tax on the losing module.

    2. Input TC 971 Action Code 001.

    3. Do not reprocess return using 13596

    4. Input TC 290 .00 using Blocking Series 10, 15 or 17 as appropriate and hold code, on the receiving module.

    5. Use the return that posted incorrectly as the source document.
    Either module has:

    • A pending or posted Doc Code 47, 51, or 54 transaction

    • A pending or posted TC 976 or TC 971 (AC 010) on TXMOD or BMFOLT

    • An erroneous refund

    		 Void the notice.

    Note:

    If the notice module has a pending or posted TC 150, the transaction will post as TC 976.

  13. If the Assessment Statute Expiration Date (ASED) is within six months of expiring, do not use Form 13596 to reprocess the return. The Statute Unit must clear and stamp the case to avoid barred assessments. Do not abate tax on the incorrect module before referring the case to the Statute Unit.

    Caution:

    Hand-carry returns with an ASED that has expired, or will expire within 120 days to the Statute Unit immediately.

  14. When reprocessing a return edit the following:

    1. Received Date: see IRM 3.14.2.6.1.3.4 , Return Received Date to decide correct received date.

      Caution:

      Do not edit Return Received Date based on the TC 610 date of the losing module.

      If And Then
      The return is timely filed (for the receiving module) - Do not enter the Received Date unless reprocessing to a prior period. (See note below.)
      The return is timely filed for the receiving module The return date is stamped or edited on the return Edit the received date (circle the received date).
      The return is received after the due date of the receiving module - Enter the received date in the center of the first page of the return.
      The return is received after the due date of the receiving module The return date is stamped or edited on the return Do not edit the received date.

      Note:

      All prior period returns must have a received date stamped or edited on the return.

    2. Edit other necessary information as follow:

      Remittance Circle out RPS money amount (TC 610) or the green rocker to indicate a non-remittance return.

      Reminder:

      Transfer the TC 610 to the receiving module on IDRS.
      Tax Period

      Note:

      Handwritten entries from the taxpayer must be considered when determining the correct tax period.

      		 Circle the incorrect tax period.
      1. Quarterly returns -- Enter correct quarter in YYYYMM format. All quarterly returns must be edited.
      2. Annual returns -- Enter correct year in YYYYMM format. All prior year returns must be edited even if the return clearly indicates the correct year.
      Name and Address Circle out incorrect name and/or address and enter the correct information directly above the circled information. Underline the name control if name changes.
      TIN Circle out incorrect TIN and enter correct TIN in entity section of the return if reprocessing return to a different TIN.
      Income, Tax and Credits Enter any changes to the tax information and credits by placing an X to the left of the incorrect amounts. Enter the correct amounts to the left of the X.

      Note:

      Changes to taxpayer entries must only be made for corrections to obvious taxpayer transposition or line entry errors.
      Preparer Information Circle out information to prevent duplication.
      DLN Line through

      Note:

      All BMF forms will receive a new DLN.

    3. If a remittance amount (TC 610) is present, circle out the money amount to the left of the DLN, or the green rocker on the balance due line.

      Reminder:

      Use IDRS to transfer the TC 610 to the receiving module.

    4. Correct any other necessary information:

      Caution:

      Never erase, line through, or in any way obscure taxpayer entries.

  15. Prepare a Form 13596 (a Reprocessing Document Control Sheet).

    Reprocessing Returns
    IDRS Employee Number: _________________________ Date: __________
    Complete applicable items below
    Correcting the TIN to: Correcting yearly return tax period to _____________ or Quarterly returns year _______ 1st qtr. ___ 2nd qtr. ___ 3rd qtr. ___ 4th qtr. ___ (EP/EO only)
    Correcting the Plan/Report number to: ___ CP 190/29 - Requestor must Input TC 971 with AC 002 to prevent CP/TRNS 193/36 and - A freeze generating. (Reprocess as the original to the same TIN and tax period)
    Reasonable Cause:______________ FTD ___ FTF ___ FTP ___ DDP (EP/EO only)
    Remarks (optional):
    Form 13596 (6-2004) Catalog Number 38636Y Department of the Treasury-Internal Revenue Service

  16. Input a REQ54/ADJ54 to zero out the incorrect module. (See Figure 3.14.2-5 , Check List for Return Reprocessing.) See IRM 21.7.2.4.1 Item Reference Numbers (IRNs) and Credit Reference Numbers (CRNs)-Employment Taxes, for valid IRNs for tax periods 2004 and prior and 2005 and subsequent.

    Figure 3.14.2-5

    This is an Image: 32201985.gif

    Please click here for the text description of the image.

  17. Transfer the credits claimed on the return to the correct TIN or Tax Period. Input TC 570 on transfer to hold any remaining credit on the losing module. Delete refund if applicable.

  18. Use CC REQ77/FRM77 to input a TC 971 on the losing module to identify a cross-reference TIN or tax period when an original, amended or duplicate return posted to an incorrect TIN or tax period and is being reprocessed.

    1. TC 971 requires an Action Code. Always use valid Action Code 001 to indicate that the TC 150 posted to the wrong TIN or tax period.

    2. The transaction date of the return being reprocessed (TRANS-DT>) is the return received date indicated on RET-RECD-DT field on CC TXMOD screen; not the TC 610 date shown on NRPS notice module. (See Figure 3.14.2-6 , CC REQ77/FRM77 with TC 971.)

      Figure 3.14.2-6

      This is an Image: 32201984.gif

      Please click here for the text description of the image.

  19. When reprocessing a return to a prior year module that has a TC 14X or Master File (MF) status of 02 or 03, use CC FRM49 to input a TC 599 with Closing Code 18. This will prevent any further Tax Delinquent Investigation (TDI) action.

  20. Input TC 971 with the appropriate Action Code (AC) on the incorrect module (to identify cross reference TIN's/tax period data) whenever an original or amended/duplicate return posted to an incorrect TIN/tax period and is being reprocessed to a correct module (See IRM 21.7.9.4.1.1, CP/TRNS 193s Involving Reprocessing Returns). Input TC 971 AC 017 on the receiving module regardless of the MF status. When inputting TC 971, use the correct TRNS-DT on REQ77:

    • 971-001 indicates reprocessing TC 150; use the return received date on TXMOD for the TRANS-DT

    • 971-002 indicates reprocessing TC 976; use the posted TC 976 date on TXMOD for the TRANS-DT

    • 971-017 indicates a processed return is being reprocessed to this period; date depends on whether the original TC 150 is being reprocessed or the TC 976

    Note:

    If the tax return was posted to an earlier tax period with an incorrect date, or to a later tax period whose due date has not yet arrived, use a timely received date for the return as the transaction date of the TC 971 AC 017.

  21. After completing all of the above:

    1. Void the notice.

    2. Input the appropriate history item on IDRS for notice disposition (e.g., CP 102 VOID).

    3. Attach Form 13596 to the front of the return and release with the NRPS package. Clerical will route the Form 13596 to Receipt and Control for processing.

3.14.2.6.18.1 (01-01-2016)
Reprocessing/Adjusting E-filed Returns

  1. Use CC TRDBV or CC BRTVU if TRDBV is unavailable, to verify return information in lieu of requesting an Electronic File (ELF) return (hard copy print.)

    Caution:

    CC TRDBV or CC BRTVU prints cannot be sent to the taxpayer.

  2. Only obtain a hard copy of the Electronic File (ELF) return if it must be reprocessed or reinput.

    1. For tax years before 1998, use CC ESTAB or CC ELFRQ.

      Note:

      ELFRQ may only be used in the Campus that processed the electronic return and the Form 8453-P (Form 1065).

    2. On returns submitted via the Legacy e-File program, use CC TRPRT for requesting graphic (form image) prints. The TRPRT graphic will be available nationwide regardless of where the return was filed. The TRPRT print is not considered the original return. The print will be labeled TRPRT PRINT DO NOT PROCESS. However, when the return must be reprocessed, the TRPRT print will be used.

    3. On returns submitted via the MeF e-File program, use the EUP (Employee User Portal) to obtain prints to be used for the reprocessing of the returns.

    4. If an adjustment is made as the result of case closure, use Blocking Series 05/15 (non-refile DLN) for BMF. Do not use Blocking Series 18.

      Caution:

      Use Universal IDRS to verify that no one else is taking action on the account.

  3. Request Form 8453-P, if needed. When using:

    • CC ESTAB, enter Form 8453-P needed in the remarks section

    • CC ELFRQ, use action 2

  4. Information (e.g., loose forms, schedules, and correspondence) may not be attached to an Electronic File (ELF) return.

    1. File the information using TC 290 in block series 05/15 (non-refile DLN).

    2. DO NOT use an attachment or association form.

    3. Electronic File (ELF) may forward Forms 3465 to the Accounts Management (Adjustments) Function with a problem annotated. Take normal adjustment action.

  5. Follow local editing procedures.

  6. Route the case to the Processing Function and request a new DLN.

  7. Zero out the module. (See Figure 3.14.2-9 Check List for Return Reprocessing.)

3.14.2.7 (01-01-2024)

Case Resolution

  1. The term "case resolution" refers to actions that need to be taken on the tax account in order to resolve a case. There are several different elements that comprise case resolution some of which are:

    • Preventing Refunds

    • Controlling Cases

    • Monitoring Overage Report

    • Entity Adjustments

    • Tax Adjustments

    • Credit Transfers

    • Notice Disposition

    • Correspondence

    Note:

    This list includes examples of case resolution actions. No all items are not required on every case. This list is not all encompassing.

3.14.2.7.1 (01-01-2024)

Refund Intercepts using Command Code (CC) NOREF

  1. Use CC NOREF to input all refund intercept requests. The preferred method is the NOREF tool in IAT.

    Note:

    To intercept an International refund, input the DLN of the TC 846 as the LOC code on the NOREF screen.

  2. The cutoff for BMF Refunds utilizing CC NOREF is Thursday 4:00 PM (Eastern Time). Refer to chart in (6) below for exact days and times.

  3. CC NOREF cannot be used to intercept refunds for MFT 02 (Form 1120) and MFT 05 (Form 1041) during accelerated refund cycles. During these cycles, the refund checks are mailed one week early to reduce credit interest paid on the refund. Follow normal review procedures in conjunction with Erroneous Refund procedures (see IRM 3.14.2.7.2.1, Erroneous Refunds).

  4. The following CC NOREF definers are used in Notice Review:

    • CC NOREF intercepts refunds and updates the Refund Information File.

    • CC NOREFD deletes an intercept request in the same cycle the request was input.

    • CC NOREFC updates the Refund Information File when an intercept is requested by phone.

    • CC NOREFM updates the Refund Information File if a check was not intercepted by the Regional Disbursing Office.

    CC NOREF Format Example:

    1. NOREF

    2. C#,Cycle#N,B,RFDL

    3. 10 Digit TE#, * (Use*,* When TE does own NOREF)

    4. Leave Blank

    5. TC 846 Amount

    6. Location Code (from TXMOD PRIMARY-LOC> first two digits)

    7. XX (Refund Deletion Code)

    Figure 3.14.2-7

    This is an Image: 32201999.gif

    Please click here for the text description of the image.

  5. This chart contains a list of Refund Deletion Codes.

    Code Reason for Delete
    00 No Signature
    13 Schedule D
    21 Other Income
    22 Total Income
    31 Total Adjustments to Income
    32 Adjusted Gross Income
    34 Tax Computation
    38 Investment Credit
    39 Foreign Tax Credit
    43 Total Credits
    45 Minimum Tax on Alternative Tax
    51 Withholding
    52 Estimated Tax Payments
    56 Tax on Special Fuels and Oils (Form 4136)
    58 Total Payments
    75 Taxable Income
    77 Credit Elect
    78 Payment with Return
    79 Incorrect Tax
    80 Manual Refund
    81 Phone Request to Stop Refund
    82 Bad Check
    83 FTD Payment
    84 Misapplied Credit
    85 Correspondence with Taxpayer
    86 Assessment to Post
    87 Duplicate Filing
    88 670 Verification
    89 Transfer Payment to Another Period
    90 No Document
    99 All Other Reasons

  6. Use the chart below for the 2024 CC NOREF CUT OFF day and time.

    CYCLE CUT OFF DAY AND TIME 4:00 PM ET
    202403 02/01/2024
    202404 02/08/2024
    202405 02/15/2024
    202406 02/22/2024
    202407 02/29/2024
    202408 03/07/2024
    202409 03/14/2024
    202410 03/21/2024
    202411 03/28/2024
    202412 04/04/2024
    202413 04/11/2024
    202414 04/18/2024
    202415 04/25/2024
    202416 05/02/2024
    202417 05/09/2024
    202418 05/16/2024
    202419 05/23/2024
    202420 05/30/2024
    202421 06/06/2024
    202422 06/13/2024
    202423 06/20/2024
    202424 06/27/2024
    202425 07/02/2024
    202426 07/11/2024
    202427 07/18/2024
    202428 07/25/2024
    202429 08/01/2024
    202430 08/08/2024
    202431 08/15/2024
    202432 08/22/2024
    202433 08/29/2024
    202434 09/05/2024
    202435 09/12/2024
    202436 09/19/2024
    202437 09/26/2024
    202438 10/03/2024
    202439 10/10/2024
    202440 10/17/2024
    202441 10/24/2024
    202442 10/31/2024
    202443 11/07/2024
    202444 11/14/2024
    202445 11/20/2024
    202446 11/26/2024
    202447 12/05/2024
    202448 12/12/2024
    202449 12/19/2024

  7. CC NOREF will establish a case control base on TXMOD. See IRM Figure 3.14.2-2 (CC NOREF) for input format.

3.14.2.7.1.1 (03-16-2023)
CC NOREFD

  1. CC NOREFD will cancel a NOREF intercept request if input before the Thursday cutoff. See CC NOREFD Example for NOREFD input.

    NOREFD
    Cancels a NOREF but it must be input before Thursday's deadline

    • NOREFD(MFT) TXPD NC

    • Cxx, CYCLE#C,C,RFDL

    • 10 digit TE#,* (or *,*)

    Note:

    If the control base has been closed and a CC NOREF was erroneously input, you must re-establish a new control base using CC ACTON to input the CC NOREFD . This must be done within the same cycle the CC NOREF was input. If there is any doubt on how to perform this procedure, contact the team lead for assistance.

    To Establish an Open Control

    • ACTON

    • C#,ASSIGN,B,OURV

    • *,*

3.14.2.7.1.2 (01-01-2017)
CC NOREF Activity Code

  1. CC NOREF creates an activity code in the format, ppxxxxxxyy. See CC NOREF Activity Code chart below:

    PP Activity Code
    RR RR-Initial Refund Intercept Request
    RD RD-Intercept Request Deleted
    RC RC-Intercept Request Correct
    RM RM-Intercept Request Missed
    xxxxxx TC 846 (refund) posting cycle
    yy Refund Deletion Code refer to IRM 3.14.2.6.1(5), Processing Refund Deletion Codes.

3.14.2.7.2 (01-01-2016)

Reconciling Refund Deletion Requests

  1. A Control D report will be generated weekly showing a detailed record of all NOREF actions. Conduct research on the following applicable report(s) to determine if any refunds initiated by the campus Notice Review area were not held. These will appear in the "Status" column as "Not Held" See Campus Refund Deletion Report chart below.

    Campus Report Name
    Austin 160-3R-18
    Brookhaven 160-3R-19
    Cincinnati 160-3R-17
    Fresno 160-3R-89
    Kansas City 160-3R-09
    Memphis 160-3R-49
    Ogden 160-3R-29
    Philadelphia 160-3R-28
    Campus Totals Summary 160-3R-15

  2. Use CC NOREFM to update the IDRS account information for the refunds that were not held.

  3. Follow the Erroneous Refund procedures in IRM 3.14.2.6.2.1 on any refunds that are determined to be erroneous.

3.14.2.7.2.1 (01-01-2024)
Erroneous Refunds

  1. This section provides information on processing erroneous refunds. The IRS sometimes issues a refund to a taxpayer who is not entitled to the money. When this occurs, the refund is known as an Erroneous Refund. See IRM 21.4.5, Erroneous Refunds, for more detailed instructions on classifying and processing Erroneous Refunds and for procedures not listed below.

  2. An Erroneous Refund is defined as any receipt of money from the Service to which the recipient is not entitled. This definition includes all erroneous payments to taxpayers, even if the non-entitlement could not have been known at the time of the refund. The taxpayer may or may not have made an intentional misstatement of income or credits to the IRS.

  3. When an erroneous refund is identified, determine the appropriate erroneous refund category :

    • Category A1 involves the following types of taxes: income tax, estate tax, gift tax and excise tax. The Category A1 erroneous refund occurs when the tax liability has been understated due to an error on either a tax assessment or on an adjustment to the tax liability and the error results in a refund. See IRM 21.4.5.5.1 for more information.

    • Category A2 involves errors on refundable or non-refundable credits that are subject to deficiency procedures. See IRM 21.4.5.5.2 for more information.

    • Category B involves the overstatement of Federal income tax withholding credits or estimated income tax payments on a return or a claim for refund. See IRM 21.4.5.5.3 for more information.

    • Category C involves Business Master File (BMF) accounts and taxes reported on forms such as Form 940, Form 941, Form 943, Form 944 and Form 945. The erroneous refund can result from an error made by the taxpayer or by the IRS. See IRM 21.4.5.5.4 for more information.

    • Category D include any erroneous refund that is not included in any other erroneous refund category. See IRM 21.4.5.5.5 for more information.

    • Duplicate Manual Erroneous Refunds (DMERs) are created anytime a manual refund (TC 840) and a computer-generated refund (TC 846) or two manual refunds are issued for the same overpayment, one of which the taxpayer is not entitled to receive. See IRM 21.4.5.5.6 for more information.

      Note:

      See IRM 21.4.5.5, for more information on erroneous refund categories and procedures.

  4. The following situations may cause or create an erroneous refund. This list is not all encompassing and other causes and effects do exist.

    1. Misapplied payments - A payment applied to the wrong TIN. The misapplied payment overpays the account, causing an erroneous refund.

    2. A taxpayer's designated payment posts to the correct TIN but the wrong type of tax or tax year.

    3. A credit refund, of any type, if the taxpayer is not entitled.

    4. Return of court ordered restitution.

    5. An incorrect tax assessment, such as an incorrect use of Hold Codes or Priority Codes causing an incorrect refund.

    6. An incorrect tax adjustment causing an erroneous refund.

    7. Two taxpayers file refund returns , using the same TIN, and the refund goes to the wrong taxpayer.

    8. A taxpayer fraudulently or by mistake, receives refunds from more than one TIN for the same tax period.

    9. A taxpayer receives a manual refund (TC 840) and a computer- generated refund (TC 846) for the same overpayment.

    10. A taxpayer files a claim on a lost check, receives a replacement check, finds the original check and cashes both.

    11. A taxpayer makes an advance payment against a pending tax increase, and the money refunds before tax assessment posts.

    12. Incorrectly computed interest.

    13. A Direct Deposit is applied to the wrong taxpayer's account due to IRS error. (Owner of account may or may not be known.)

    14. Improper release of the TC 700 (false credit) -U Freeze. See Document 6209 Section 8 for a complete description of TC 700.

      Note:

      On Category D Erroneous Refunds, the Submission Processing Accounting/Erroneous Refund Unit (A/ER), inputs a TC 700 to remove the erroneous refund amount on Master File and the account is reestablished in Accounting. This action is taken to prevent administrative collection action (liens or levies) from occurring on the erroneous refund liability. Do NOT release the TC 700 credit.

    15. Statute Barred Refunds.

    16. Taxpayer receives erroneous Health Care Tax Credit (HCTC).

  5. Erroneous refund procedures are not necessary in the following situations:

    1. A signature is missing.

    2. Credit elect requested by the taxpayer has refunded.

    3. In a situation, where an error found in Notice Review increases the original tax (TC 150) and there was not a previous tax decrease, treat the tax increase as a regular turnaround case instead of an erroneous refund. Make the adjustment using Blocking Series 00 (non-income tax returns) or 77 (income tax returns) with Hold Code 0. Apply Label #16 and mail the original notice.

  6. Route returns that need to be reprocessed that also have an erroneous refund to Accounts Management and follow the procedures listed below:

    1. Order the return if it is not already with the case.

    2. Complete Form 5101, explaining the erroneous refund and the reason for the adjustment.

    3. Void the notice.

    4. Recharge and route the case to Accounts Management.

  7. Once an Erroneous Refund has been identified, it must be categorized to decide what further actions will be taken. The most common categories worked in Notice Review are A1 , A2 , B, C, and D.

    Note:

    Input TC 971 action code (AC) 663 on the erroneous refund module, regardless of the category. AC 663 is used for reporting purposes. Refer to IRM 21.4.5-1 for input instructions.

  8. See Erroneous Refund Categories chart below.

    If Example Then the Category is
    The Erroneous Refund relates to TCs 150, 29X, and/or 30X and the MFT's are not01, 09, 10, 11, 12, 16, or 88. 1. The IRS lowered the tax when originally processing the Form 1120.
    2. Incorrect tax assessment or incorrect adjustments (TC 29X or TC 30X), on a Form 1120X.    		 A1
    Refer to Exam for deficiency processing. (Only refer cases if ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, do not pursue. See, IRC 6211 (b) (2) and IRM 21.4.5.5.1.
    The erroneous refund relates to disallowed EITC, TCs 764, 766 OR 768 or disallowed refundable or nonrefundable tax credits. The taxpayer income tax return not claiming any Rate Reduction Credit (RRC). An error was made during processing and IRS allowed $300.00 in RRC causing a refund of $300.00 RRC. TP contacts IRS explaining that they have already received the maximum amount of credit the previous year and is not entitled to the credit. A2 This was an IRS error. Refer to Exam for deficiency processing. (Only refer cases if ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ do not pursue. See IRC 6211 (b) (2) and IRM 21.4.5.5.2.
    The Erroneous Refund relates to taxpayer overstatement of withholding (TC 80X) or ES payments (TC 66X). The taxpayer claimed withholding of $1,000.00 on Form 1041 and the supporting documentation only states $500.00, B
    The Erroneous Refund relates to TCs 150, 29X, and/or 30X and the MFTs are 01, 09, 10, 11, 12, 16 or 88. 1. The IRS makes an incorrect tax assessment (TC 150) on Form 940 or Form 941.
    2. The IRS makes an incorrect adjustment to tax (TC 29X or TC 30X) on Form 940 or Form 941.    		 C
    Refer to Exam for deficiency processing.
    The Erroneous Refund relates to any error not included in the above categories. 1. A misapplied payment (TCs 6XX).
    2. Incorrect refundable credits (HCTC) or other credits not included in Category "B " .
    3. TC 840 and TC 846 posted for the same overpayment, or
    4. Refunds issued after expiration of the Statute of Limitations, or
    5. Entity errors.    		 D

  9. Category A1- Rebate Erroneous Refunds

    Note:

    All employees with access to IAT must use the IAT ERRF Tool to process erroneous refunds. This tool is programmed for use with all ERRF categories. For more information, see irs.gov.sharepoint.com/sites/IAT/SitePages/Job-Aids.aspx for IAT Job Aids.

    1. Do not input the adjustment.

    2. Mail the notice with no changes or labels.

    3. Input history item CATA1/XXXM or IDRS. (XXX=CP#)

    4. Recharge the paper return to Exam using CC ESTABDT.

    5. Input a TC 971 action code (AC) 663. See IRM Exhibit 21.4.5-1 , TC 971 AC 663 - Identifying Erroneous Refunds, for more information.

    6. Prepare Form 5101 showing the adjustment action to be taken. Staple the Form 5101 to the front of the return (or to a a print of CC BRTVU for Electronic File (Electronic File (ELF)) returns) below the Entity. (Figure 3.14.2-8 Form 5101).

    7. Staple a copy of TXMOD to the front of the return (or to the back of the BRTVU print for Electronic File (ELF) returns).

    8. Route the Erroneous Refund package to Exam.

      Figure 3.14.2-8

      This is an Image: 32201840.gif

      Please click here for the text description of the image.

  10. Category B- Non-rebate Erroneous Refunds for income tax returns.

    Caution:

    If the IRS caused the overstated amount (key input error or misapplied payments), this case is considered a Category "D" (Non-rebate) case. Follow procedures for Category D cases.

    1. . Mark the disposition in OLNR as L. Add the appropriate erroneous refund label to the notice. If the notice has already been mailed, skip this step. See Erroneous Refund Labels chart below. ).

      If Then
      The entire refund is erroneous Use Label #15. You were issued an erroneous refund due to a processing error. Please return the uncashed check or a substitute payment.
      A part of the refund is erroneous Use Label #16. We sent you a refund in error. The correct amount of the adjustment is $____. You will receive a separate notice explaining the correction. We apologize for any inconvenience this may have caused you.

    2. Input the adjustment on IDRS with Hold Code 0. Use the return (or a print of BTRVU for Electronic File (ELF) returns) as a source document. Attach adjustment tag to return/BRTVU and refile as usual.

    3. If any offsets have occurred due to the erroneous credits, reverse the offsets.

  11. Category C - Rebate Erroneous Refunds limited to MFTs 01, 09, 10, 11, 12,16 or 88:

    Caution:

    If the IRS caused the overstated amount (key input error or misapplied payments), this case is considered a Category D (Non-rebate) case. Follow procedures for Category D cases.

    1. Mark the disposition in OLNR as L. Add the appropriate erroneous refund label to the notice. If the notice has already been mailed, skip this step. Refer to Figure 3.14.2-3. See Erroneous Refund Labels chart below.

      If Then
      The entire refund is erroneous Use Label #15. You were issued an erroneous refund due to a processing error. Please return the uncashed check or a substitute payment.
      A part of the refund is erroneous Use Label #16. We sent you a refund in error. The correct amount of the adjustment is $____. You will receive a separate notice explaining the correction. We apologize for any inconvenience this may have caused you.

    2. Input the adjustment on IDRS with Hold Code 0. Use the return (or a print of BTRVU for Electronic File (ELF) returns) as a source document. Attach adjustment tag to return/BRTVU and refile as usual.

  12. Category D : Non-rebate Erroneous refunds. See IRM 21.4.5.6.1, Account Actions For Category D Erroneous Refunds, for more information.

    1. Mark the disposition in OLNR as L. Add the appropriate erroneous refund label to the notice. If the notice has already been mailed, skip this step. Refer to Figure 3.14.2-3. See Erroneous Refund Labels chart below.

      If Then
      The entire refund is erroneous Use Label #15. You were issued an erroneous refund due to a processing error. Please return the uncashed check or a substitute payment.
      A part of the refund is erroneous Use Label #16. We sent you a refund in error. The correct amount of the adjustment is $____. You will receive a separate notice explaining the correction. We apologize for any inconvenience this may have caused you.

    2. If the erroneous refund involves misapplied payments, reverse the payment(s) on IDRS using ADC/ADD24. Input a TC 570 on the debit side of the credit transfer to suppress a CP 260. Transfer the credit only if it belongs to another taxpayer.

    3. If the erroneous refund is due to an incorrect tax or credit, input the adjustment with a Hold Code 3. Use a copy of the return or a print of BRTVU for Electronic File (ELF) returns as a source document. Attach the adjustment tag to the source document.

    4. If any offsets have occurred due to the erroneous credits, reverse the offsets.

    5. Input TC 470 on REQ77 with closing code 93, Posting Delay Code 1. This holds notices for 26 cycles.

    6. Send 510C Letter to tell the taxpayer of the erroneous refund.

    7. Input TC 844 on REQ77. Do not input until after the TC 846 date.

    8. See TC 844 Decision Table below.

      If Then Input
      The taxpayer is not at fault and the amount of the refund is $50,000.00 or less

      1. TC 844

      2. Extension Date: Use the date of input of 510C Letter plus 5 working days

      3. Transaction Date: Use the date of TC 846

      4. Freeze Release Amount: Erroneous part of the refund (including any erroneous credit interest)

      5. Remark: Erroneous Refund
      The taxpayer is at fault or the amount of the refund is more than $50,000.00

      1. TC 844

      2. Transaction Date: The date of TC 846

      3. Remarks: Erroneous Refund

    9. Complete Form 12356. See IRM 21.4.5.6.2, Preparing Form 12356, Erroneous Refund Worksheet, for more information.

    10. Attach a print of TXMOD, a copy of the 510C Letter, a copy of the payment voucher or check (if caused by a misapplied payment), and any other pertinent documentation to Form 12356. If the adjustment involves withholding, attach a copy of the return (or BRTVU for Electronic File (ELF) returns).

    11. Route the Erroneous Refund package to Accounting. If sending the original return, recharge the document.

3.14.2.7.2.2 (07-07-2023)
Manual Refunds

  1. A manual refund is an IDRS generated refund request (TC 840). It is exception processing. When possible, allow the system to generate the TC 846 refund as appropriate. Do NOT initiate a manual refund if a generated refund will be released within (2) cycles except under conditions outlined in IRM 21.4.4.3, Why Would A Manual Refund Be Needed.

  2. Thorough analysis of the case is required before requesting a manual refund as it can greatly increase the possibility of a duplicate refund situation and can increase the processing cost of issuing a refund to the taxpayer.

  3. Refer to the Manual Refund Decision Table below for assistance in determining whether a manual refund is appropriate.

    If Then
    A refund must be issued before or instead of computer generated refunds (TC 846) as outlined in IRM 21.4.4.3 Issue a manual refund.
    A refund was intercepted to verify unclaimed payments; the documents were unavailable and the taxpayer did not respond to requests for clarification Issue a manual refund for the substantiated payments if needed after following Excess Credits IRM 3.14.2.7.7.2.

    Example:

    A taxpayer claims three verified payments of $2,000 and an additional payment of $2,260 that cannot be verified. Because the total of the verifiable payments exceed $5,000, issue a manual refund for $6,000. Do not refund the $2,260 payment that cannot be verified.
    A refund is for $100 million or more An account with an overpayment of $100 million or more requires that a manual refund be issued because a TC 846 will not generate. Assign these cases to a work leader the same day they are received in the unit. See IRM 3.14.2.7.1.6 ($100 Million Refunds) for more information.
    The refund is for a prior year return with an original name line that has changed Issue a manual refund in the taxpayer's current name.

    Caution:

    Do not take any action on a case controlled by the Technical or Taxpayer Advocate Service (TAS) Functions. Contact the controlling area and take action only if instructed by the area to do so.

  4. Before requesting an IDRS refund:

    1. Make sure that a computer-generated refund will not generate.

    2. Intercept the refund (TC 846).

  5. Be sure the case is complete and correct before issuing a manual refund. To avoid the generation of a TC 846:

    1. When an adjustment is input and a manual refund is being requested, a Hold Code (HC) 1 (if original notice was mailed), 2 (as appropriate) or 4 (as appropriate) must be input with the adjustment. If HCs are not input by the initiator, the Accounting function will reject the request back to the initiator. Do NOT use HC 0 or 3 when inputting a credit adjustment and initiating a manual refund. HC 0 and 3 will not hold the credit and will allow a systemic refund or offset to generate.

      Note:

      If multiple adjustments are required, a HC 1, 2 or 4 must be used on all adjustments.

    2. Use a TC 570 on a credit transfer. If a TC 570 is not input on the debit side of the credit transfer to establish a -R freeze, the credit transfer will release the -K freeze (established by using the HC 1, 2, or 4 on the adjustment) and a systemic refund (TC 846) will be generated.

  6. Form 3753, Manual Refund Posting Voucher and Form 5792, Request for IDRS Generated Refund are used to request a manual refund. See IRM 3.14.2.7.2.2.2, Initiating Manual Refunds, for more information.

3.14.2.7.2.2.1 (01-01-2021)
Manual Refund Research

  1. Obtain all necessary documents.

  2. Use the IDRS research Command Codes to review the taxpayer's account for a debit balance on another module.

    1. Do not transfer credit to satisfy a balance due if the assessed liability on TXMOD is less than ≡ ≡ ≡ ≡ ≡ ≡ and the accrued liability on INTST is less than ≡ ≡ ≡ ≡ ≡ ≡.

    2. All Freeze Codes must be addressed before a manual refund is issued. Refer to IRM 3.14.2.6.6 , Reviewing Notices With Freeze Codes, for additional Freeze Code information.

    3. Do not transfer payments/credits to a module containing a freeze code that would prevent the computer from offsetting credits unless it is certain the payments belong on the debit module.

      Note:

      For Z- Freeze, refer to IRM 3.14.2.6.6.27 for complete instructions.

    4. For parent-subsidiary cases, only research the parent EIN for open liabilities.

    5. Large Corp cases are identified on TXMOD as <LARG-CORP>, These notices should be routed to the Large Corp/Technical Function in the center.

    6. Do not transfer money to accounts in Installment Status 14.

  3. Decide whether to allow credit interest. See IRM 3.14.2.6.2.2.3 (Computing Credit Interest On Manual Refunds).

  4. See IRM 21.4.4.4, What Research Is Required? for additional guidance on the account research required prior to requesting a manual refund.

3.14.2.7.2.2.2 (07-07-2023)
Initiating Manual Refunds

  1. Manual refunds are requested using Form 3753, Manual Refund Posting Voucher or Form 5792, Request for IDRS Generated Refund.

  2. Once prepared and signed, Forms 3753 and/or 5792 are routed to the Submission Processing Accounting function where the manual refund will be scheduled and certified.

    Note:

    Digital signatures are required on Form 3753 and Form 5792. See IRM 3.17.79.3.5.5 , Manual Refund Digital Signature Requirement, for the required authorized digital signature format.

  3. The manual refund document must be prepared using the Integrated Automation Technology (IAT) Manual Refund Tool.

  4. Form 3753 is designed for non-IDRS input. Systemic refunds can now be generated in IDRS (TC 846) for refunds under $100 million, unless a manual refund is required. When a manual refund of $100 million or more is required, Form 3753 must be used. For additional information on Form 3753 and how to complete it, see IRM 21.4.4.5.2, Preparation of the Form 3753, Manual Refund Posting Voucher.

  5. Form 5792 is used with CC RFUND to request an IDRS refund. This form cannot be used to request manual refunds of $100 million or more. Refer to Exhibit IRM 3.14.2-7, Form 5792 Request for IDRS Generated Refund or IRM 21.4.4.5.1, Preparation of Form 5792, Request for IDRS Generated Refund for more information on completing Form 5792. Refer to IRM 21.4.4.5.1.1, IDRS Generated Refund CC RFUND for additional information on inputting CC REFUND.

    Caution:

    Form 5792 must be sent forward the same day the RFUND command is input. All manual refunds will be sent to Accounting via email or saved to an established shared drive file.

  6. When referring cases to the Accounting function, ensure the following steps are taken:

    1. When sending the manual refunds to the Accounting Function, the email or file on the shared drive will consist of two attachments. One attachment will be the Form 5792 or Form 3753 and the second attachment will consist of the supporting documentation. There can be no other documents attached to the Form 5792 or Form 3753. Each document must be saved by a specific naming convention.

      Example:

      The naming convention for the Form 5792 and Form 3753 attachment will use: Name Control, Last 4 digits of the TIN/EIN, Tax Period and document identifier. The naming convention for the supporting documentation will use: Name Control, Last 4 digits of the TIN/EIN, Tax Period and Doc identifier. Refer to the Naming Convention Table below:

      Type of Attachment Naming Convention Naming Convention for More than One Form/Attachment
      Form 5792 MOUS 1234 202112 5792.pdf MOUS 1234 202112 5792_1.pdf
      Form 3753 MOUS 1234 202112 3753.pdf MOUS 1234 202112 3753_1.pdf
      Supporting Documentation MOUS 1234 202112 5792 Doc.pdf or MOUS 1234 202112 3753 Doc.pdf MOUS 1234 202112 5792 Doc_1.pdf or MOUS 1234 3753 Doc_1.pdf

      Note:

      See IRM 21.4.4-3, Accounting Function - Manual Refund Team Contact Information, to determine the proper email address to send your manual refund request.

    2. Take all necessary action to prevent an erroneous refund or erroneous notices from generating.

    3. In the remarks area of the Form 5792 or Form 3753, include the taxpayer's TIN, the tax period, and the transaction code where the supporting document will be filed.

    4. If a manual refund will be issued to an address other than the Master File address, explain the different address in the remarks area and indicate where the supporting documentation will be filed.

  7. Input the Return Processable Date (RPD) on IDRS if the correspondence was received after the Return Due Date. See the Changing the Correspondence Date chart below for more information.

    If Then
    A CC REQ54 adjustment is needed Include the Return Processable Date with that adjustment. Use Hold Code 1 or 4, if necessary.
    A CC REQ54 adjustment is not needed Use CC REQ54 to input the Return Processable Date. Input a TC 290 .00, Blocking Series 15, NSD, and a Hold Code 4.

  8. Attach a copy of the IDRS screen prints for the following Command Codes: COMPA, ENMOD, TXMODA, RFUNDR, REQ54/ADJ54, credit transfers (if input), and any additional supporting documents, as required by your local Accounting Branch.

  9. Submit the completed Form 5792 or Form 3753 to your team lead/manager for digital signature.

3.14.2.7.2.2.3 (01-01-2023)
Computing Credit Interest on Manual Refunds

  1. Credit interest is mandatory on an overpayment or refund if certain conditions specified in the Internal Revenue Code (IRC 6611) are met. Compute credit interest using CC COMPA, CC COMPAC and/or CC COMPAG. The Service currently approves and supports the use of IDRS (e.g., CC COMPA) and a commercial off-the-shelf (COTS) software program, Interest Net by Decision Modeling, Inc., which is commonly referred to as ACT/DMI, to perform manual interest computations. See IRM 20.2.4, Overpayment Interest, for more details.

  2. An overpayment is defined as an amount paid in excess of the tax liability. Tax liability includes tax, penalties and interest. Interest is paid on the available net overpayment.

  3. Generally, no interest is allowed for overpayments on an original return if the overpayment is refunded within 45 days of the later of the return due date, return received date, or the date the return was received in processable form.

  4. If the return is not in processable form, suspend the 45 day interest-free period. The return or case is not considered to be in processable form until, among other requirements, all the required information, correspondence, or supporting documentation needed to permit the mathematical verification of tax liability shown on the return is received. The start date for the 45 day interest-free period, for these cases, is the correspondence received date (CRD). See IRM 20.2.4.5, Unprocessable Returns, for more information.

  5. If the date of the manual refund check (certification/scheduled date) is not on or before 45 days from the later of the return due date, return received date, or the date the return was received in processable form, interest generally, must be allowed on the refund. To determine the “From” date, see the Determining the “From” Date chart below.

    If the Taxpayer Then Allow Interest From the Later of
    Timely filed (i.e., return received by the original or extended due date), The return due date (determined without regard to any extension of time for filing), the payment date or return processable date (provided the RPD is after the due date), including any extensions of time for filing).
    Late filed (i.e., return not received by the original or extended due date) The late return received date, the payment date, or the CRD/RPD (if present).

    To determine the payment date, see the Determining the Date of the Overpayment chart below.
    If the Payment resulting in an overpayment is a Then the date of the overpayment is the
    Prepaid or timely credit, e.g., estimated tax payment, withholding (Form 1041), or a payment before the due date (determined without regard to any extension of time for filing) Due date of return. (determined without regard to any extension of time for filing).
    Subsequent payment made after the due date (determined without regard to any extension of time for filing) Payment received date.
    ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    To determine the “To” date, see the Determining the “To” Date chart below.
    If the Return Then
    Indicates an overpayment The interest To date is the date certified by the Accounting Function for allowing the refund, which date must not precede the date of the refund check by more than 30 days.

    Note:

    The Manual Refund scheduled Date cannot be a Saturday, Sunday, or Holiday.

    Reminder:

    Night shifts must use local procedures.

  6. Use the appropriate CC COMPA definer to compute credit interest for the period decided in (5) above. See the COMPA Definer Decision Chart below.

    IF THEN
    Credit interest before 1/1/99 for a "Non-Corporate" taxpayer Compute using COMPAC
    Credit interest on or after 1/1/99 for a "Non-Corporate" taxpayer Compute using COMPA or COMPAD.
    Credit interest before 1/1/95 for a "Corporate" taxpayer, regardless of the overpayment amount (See IRM 20.2.4.9 , Special Credit Interest Rules for Corporations, for the definition of a "Corporate" taxpayer.) Compute using COMPAC
    Credit interest on or after 1/1/95 for a "Corporate" taxpayer and the overpayment amount is less than or equal to $10,000 Compute using COMPAC
    Credit interest after 12/31/94 for a "Corporate" taxpayer and the overpayment amount is greater than $10,000, or the GATT threshold has previously been met (See IRM 20.2.4.9.2, Determining the GATT Threshold.) Compute using COMPAG (GATT).

    Note:

    Add the COMPAC (first $10,000) with the GATT interest (over $10,000) for the total interest allowed

3.14.2.7.3 (01-01-2024)

Controlling Cases

  1. Establish a control base on IDRS for all cases held in suspense past the notice cycle. This will cause the case to appear on the weekly Adjustment Overage Report. This aged listing should be reviewed each week.

    Caution:

    Do not hold a notice without prior approval from Headquarters staff.

    Reminder:

    The control base must be closed when all actions have been taken and/or notice disposition has been decided.

  2. A control base is automatically established with the input of NOREF. The preferred NOREF input method is IAT Stop Refund tool.

  3. Intercept refunds on overpaid cases requiring adjustments, that will decrease the overpayment.

    1. Make the necessary adjustment in cycle to reduce the refund.

    2. If after the adjustment the taxpayer should still received ensure to post delay the adjustment by at least one cycle.

    3. Be sure to leave your case control in "B" status after all necessary actions and monitor the case until the appropriate actions have posted.

  4. The Regional Financial Center issues a listing of refund cancellations (refund deletions) that indicates which refunds were canceled and which were missed.

    If a Refund Was Then
    Not Held Change activity to RM.
    Stopped The TC 841 will post in three to four weeks. The Category Code will automatically change from RFDL to 841P.

  5. Monitor the overage listing so the case can be worked and closed within one week of the TC 841 posting. After one week, the case will count as an aged case. (See IRM 3.30.123, Processing Timeliness.)

    Note:

    These cases can be worked in the current cycle by using a posting delay code. Monitor the account and maintain the "B" status.

  6. If a case is controlled by another tax examiner in A Status only and action should be taken:

    1. Contact the tax examiner with the open control to decide who will resolve the case.

      Exception:

      Contact is not necessary if the open control is assigned to a clerical unit. (Clerical units are often identified by all zeroes in the last 5 digits of the employee number (i.e. XXXXX-00000), although numbers other than zero may also be used.) This means the case has not been assigned to a tax examiner in another area and can be worked per Notice Review procedures.

    2. If the other tax examiner agrees to accept the case, transfer the case and close your control base. Use CC ESTABDT to recharge the return is paper and in Notice Review. Route the return and all pertinent documents to the other area tax examiner.

      Note:

      Include documentation of your discussion as part of the case.

3.14.2.7.4 (01-01-2024)

Documenting Adjustment Cases

  1. Leave a legible working trail and/or Action Trail when making adjustments. If your Campus has written in-house agreements which vary from the instructions below, you may follow them.

    If Then
    The return or other documents, such as a taxpayer letter, is available as a source document (SD) Attach an explanation, which might include calculations, worksheet prints, or screen shots of REQ54, etc., to the document to leave a paper trail for other TEs to follow. Make sure to use the correct blocking series and associate the document and adjustment back to files. Enter the explanation in the remarks section of the CC REQ54 or credit transfer screen.
    A document is not available as a source document (NSD) Enter a complete explanation of the adjustment in the remarks section of the CC REQ54 or credit transfer screen on IDRS.

3.14.2.7.5 (01-01-2024)

Entity Adjustments

  1. A non-critical entity adjustment is when the taxpayer will receive the notice or be able to cash the refund as addressed.

  2. A critical entity adjustment is when the taxpayer will not receive the notice or be able to cash the refund unless the name or address is corrected:

    1. Delete a current cycle refund only if the taxpayer will not receive or be able to cash the check.

    2. Correct the entity in the current cycle. After the TC 841 posts, release the P- Freeze with a TC 290 .00.

  3. Review the tax return and the entire module to decide the most current taxpayer information:

    1. Use IAT to correct the name lines, address, and name control. Update the address if necessary. Correct any misspelled or transposed information.

      Caution:

      Never update a prior year name line with current processing year information.

    2. Correct the notice entity.

  4. Route major entity changes to Entity Control for necessary action using local control procedures.

3.14.2.7.6 (01-01-2024)

Tax Adjustments

  1. Input CC REQ54 on IDRS to generate ADJ54, which is used to correct the tax, penalty, interest, refundable credits, income, and other information. The following sections give TEs instructions for Blocking Series, Reasons Codes, Priority Codes and Source Codes. For more information refer to Document 6209 Section 8C and IRM 21.5.1 and IRM 21.5.2. For International Tax Adjustments refer to IRM 21.8.2. For Form706/709, refer to IRM 3.14.2.6.7.1 .

3.14.2.7.6.1 (01-01-2024)
Blocking Series

  1. The Blocking Series (BS) decides whether a DLN will be a refile or a non-refile DLN. When an incorrect Blocking Series is used on an adjustment, the Files Function will return the source document and adjustment printout (Form 5147) for correction.

  2. Use Blocking Series 00 when entering an adjustment that uses the original return as the source document.

    1. The original return will be renumbered using the adjustment DLN.

    2. Line through the original DLN on the return unless local procedures dictate otherwise.

  3. Use Blocking Series 05, 15 or BS 17 for Form 1041 when making an adjustment that does not use the original return as the source document.

    Note:

    Blocking Series 05 is also used when adjusting Electronically Filed Returns.

    Example:

    An adjustment to penalties, interest, or to release a freeze.

    1. The original return will not be renumbered.

    2. Do not line through the original DLN.

  4. Effective 2007, please do not use Blocking Series 18 any more when making an adjustment that does not use the original return as the source document.

    Note:

    Adjustments made to electronically filed return accounts must be done using Blocking Series 05 (do not use Blocking Series 18).

  5. Use Blocking Series 77 whenever the taxpayer’s original, amended, superseding, or supplemental return is corrected (regardless of whether the correction is an increase or a decrease) if the resulting final tax amount is greater than that shown by the taxpayer.

    Note:

    Use Blocking Series 78 instead of 77 if making the adjustment without the original return.

    1. This will set a -G Freeze or extend an existing one, allow the taxpayer 60 days from the 23C Date to appeal the assessment, and suspends Collection activity for 12 cycles.

3.14.2.7.6.2 (01-01-2024)
Reason Codes

  1. Reason Codes appear on IDRS to describe adjustment or other changes made to taxpayers account.

    • Reason Code 062 is valid for penalty abatements/adjustments, based on reasonable cause

    • Reasonable cause codes are used in the 4th position of RSN-CDS field in the REQ54/ADJ54 format

    • When adjusting FTD penalties, Penalty Computation Codes 003, 011, 041, 042, 043,044 and 045, are used in the 1st position of the RSN-CDS field in the REQ54/ADJ54 format

    • See Document 6209 for additional valid 4th position Penalty Reason Codes

    Caution:

    Do not enter Source Codes, Reason Codes, or Item Reference Numbers on a TC 290 .00 input to release a P- Freeze.

3.14.2.7.6.3 (01-01-2024)
Hold Codes

  1. Use a Hold Code for one or both of the following reasons:

    • To prevent a refund by freezing an overpayment

    • To suppress the Adjustment Notice (CPs 210 or 220)

  2. Use a Hold Code 0 when the taxpayer needs to receive an adjustment notice.

    If an Then the taxpayer needs an Adjustment notice to explain
    Adjustment will create a second refund The adjustment and the second refund.
    Original notice was mailed in error The change to the taxpayer.

  3. Notice Review may only use the following Hold Codes:

    Hold Code Prevents Notice Prevents Refund Description
    0 No No Use when no other hold code is needed.
    1 No Yes Sets a -K Freeze to hold the overpayment until one of the following:

    • Doc Code 24 or 34 credit transfer posts.

    • A TC 830 or TC 820 posts. A Doc Code 51 TC 300 posts.

    • The module balance becomes zero or a debit.

    • A TC 29X or TC 30X posts. Caution:

    The -K Freeze will not be set if any of these conditions post in the same cycle as the adjustment with the Hold Code. Example: A Doc Code 24 transfer posting in the same cycle as a CC REQ54 adjustment needs a TC 570 to hold the credit.
    3 Yes No Use when retyping or voiding the original notice to reflect an adjustment other than a math error increase in the taxpayer’s liability.
    4 Yes Yes Use when the original notice will be retyped or voided because of an adjustment that will result in an overpayment, and the overpayment is to be held. Sets a -K Freeze. See Hold Code 1, above.

    Note:

    IRC 6303 requires a notice of assessment and demand for payment after the making of an assessment. A retyped notice cannot meet this criteria because it is dated prior to the date of the assessment, therefore, hold code 3 or 4 should NOT be used when increasing tax above the amount shown on the taxpayer’s return as originally filed. For additional information, see Hold Codes & Notices, IRM 20.1.2.2.10.

3.14.2.7.6.4 (01-01-2024)
Priority Codes

  1. Priority Codes bypass certain unpostable checks.

  2. Use Priority Code 1 when entering a CC REQ54 adjustment on an account with a -L Freeze (open TC 420 or 424).

    Note:

    Use Priority Code 1 if both 1 and 8 are required to adjust an account.

  3. Use Priority Code 4 to:

    • Release the -Q Freeze when inputting TC 290 .00

    • This allows the credit to refund

  4. Use Priority Code 8 when entering:

    • A TC 29X adjustment within $10.00 of a previous adjustment to bypass UPC 328 Condition RC 1.

      Exception:

      Priority Code 8 is unnecessary if the previous TC 29X is a TC 29X .00 with Priority Code 6.

3.14.2.7.6.5 (01-01-2024)
Return Processable Date (RPD)

  1. A return is not considered complete and processable until all taxpayer information needed to permit the mathematical verification of a tax liability shown on the return (such as missing signatures, Form 1310, or any missing forms or schedules) is received.

  2. When the taxpayer sends the necessary correspondence, enter the correspondence received date in the RET-PROC-DT field on IDRS to update the Return-Processable-Date field on CC TXMOD.

  3. This will also restrict credit interest for 45 days. Future computations of credit interest will be figured from the date of the Correspondence Received Date (CRD) or the Return-Processable-Date Field.

3.14.2.7.6.6 (01-01-2024)
Credit Reference (CRN) and Item Reference Numbers (IRN)

  1. CRN and IRN are sometimes used interchangeably, when discussing adjustments. IRNs (also known as Item Adjustment Codes) are used to adjust tax, wages and general ledger information recorded in IDRS. CRNs are used to adjust applicable credits.

  2. CRNs and IRNs are input in IDRS in the CD field of CC ADJ54 the response screen from the input of CC REQ54.

  3. A maximum of four credit reference numbers can be input at one time on MFTs 02, 05, 33, 34 and 61. All other MFT’s accept a maximum of eight credit reference numbers.

  4. Review IRNs and CRNs carefully before transmitting REQ54 adjustments. Forgetting a trailing minus or an incorrect input of cents (as applicable) can cause adjustments to unpost.

  5. If you have further questions on credit and item reference numbers for adjustments, see the following subsections for specific CRN and IRN numbers by Form and MFT. In addition, for more information see IRM 21.7, Business Tax Returns and Non-Master File Accounts and Section 8C of the Doc 6209.

3.14.2.7.6.6.1 (01-01-2024)
CRNs/IRNs for Forms 706 [NA, GS(T)] (MFT 52) and 709 (MFT 51)

  1. Form 706 is used for certain estates of a deceased resident or citizen.

  2. Form 709 is used to report transfers subject to the Federal gift and certain generation-skipping transfer (GST) taxes and figure the tax, if any, due to those transfers.

  3. Forms 706 and 709 may require some or all of the following IRNs when adjusting accounts. These are used in conjunction with TC 29X.

    Caution:

    Do not adjust Forms 706 and 709. Route to Cincinnati SB/SE per IRM 3.14.2.6.7.1(6)e

    Number Definition
    074 8610/Generation-skipping transfer taxes
    075 IRC 4981A tax (In 1997, P.L. 105-34, Section 1073(a) repealed IRC 4980A.)
    076 Estate tax
    077 Gift Tax
    078 Interest Assessed for State death tax credit taken but not paid
    115 Taxable Gifts Current Period Amount
    116 Taxable Gifts Prior Period Amount
    117 Total Gifts Current Period Amount

3.14.2.7.6.6.2 (01-01-2024)
CRNs/IRNs for Form 720 (MFT 03)

  1. Form 720 is used to report liability by IRS number and to pay excise taxes levied on specific services and the manufacturing and sale of certain items. The items are identified by an IRS Abstract Number on the return. When the tax is adjusted on Form 720 the IRS Abstract Number must be adjusted also.

    Note:

    If Abstract 133 (PCOR) is adjusted, the SHIP and ASIHP fields must be reviewed for a possible adjustment. For example: If the PCOR tax liability is reduced to zero, the SHIP and ASIHP fields must also be reduced to zero.

  2. See Doc 6209 Form 720- All IRS Abstract numbers and IRM 3.14.2.6.15.1 for specific adjustment information.

3.14.2.7.6.6.3 (01-01-2024)
CRNs/IRNs for Form 940 (MFT 10)

  1. Form 940 is used to report employer annual Federal Unemployment Tax Act (FUTA) tax. FUTA tax, together with state unemployment systems, provides for payments of unemployment compensation to workers who have lost their jobs. Most employers pay both federal and state unemployment taxes.

  2. The only items adjusted on Form 940 are TC 29X and FUTA wage and tax amounts.

  3. All increases and decreases in tax and wages must use reference alphas in conjunction with the state indicated on the return. Use the appropriate alpha below followed by the state code.

    1. "W" is used to increase or decrease the wages posted for Form 940.

    2. "T " is used to increase or decrease the taxes posted for Form 940.

      Example:

      To adjust wages posted for Missouri on Form 940 the CD field of the adjustment is WMO.

  4. The total of the tax reference "T " amounts must equal the TC 290 or the TC 291 tax adjustment.

3.14.2.7.6.6.4 (01-01-2024)
CRNs/IRNs for Form 941 (MFT 01)

  1. Form 941 is used to report the employer share and employee share of social security tax and Medicare tax, withheld federal income tax, and, if applicable, withheld Additional Medicare tax.

  2. All increases and decreases in tax must use reference numbers for employment tax returns.

    Reminder:

    The sum of the reference numbers 111, 112, and 113 must equal the TC 290 or TC 291 amount. The sum of the reference numbers 104 through 110 must equal 113.

    Number Definition
    004 Taxable Social Security Wages
    005 Taxable Social Security Tips (Form 941 only) (FITP)
    007 Adjusted total of Social Security/Medicare taxes
    073 Taxable Medicare Wages and Tips
    074 Taxable Wages & tips subject to Additional Medicare Tax withholding
    079 ETE/ETAP IRC 3509 Rate
    104 Special additions to federal income tax
    105 Special additions to social security and Medicare tax
    106 Current quarter fractions of cents
    107 Current quarters sick pay
    108 Current quarters adjustments for tips and group life insurance
    109 Current years income tax withholding adjustments
    110 Prior quarters social security and Medicare taxes
    111 Total income tax withheld
    112 Total social security and Medicare tax
    113 Total adjustments
    114 Section 3121(q) Notice and Demand - Tax due on unreported tips (Form 941 only), tax period 201103 and subsequent
    119 Qualified Small Business Payroll Tax Credit for Increasing Research Activities NOTE: For ease of reference, this credit is generally referred to as the "QSB Research Credit".
    280 COVID-19 CARES Act - 2302 Payment Deferral Credit
    290 Work Opportunity Credit (for tax periods after 201112)
    296 COVID-19 CARES Act - Employee Retention Credit, effective 04/01/2020 - 12/31/2020
    299 COVID Sick & Family Leave Credit - For 2020 only
3.14.2.7.6.6.5 (01-01-2024)
CRNs/IRNs for Form 943 (MFT 11)

  1. Form 943 is filed by agricultural employers to report income tax withheld and social security and Medicare taxes on wages paid to farm workers, including household employees working in a private home on a for-profit farm.

  2. On all Form 943 series adjustments, all increases and decreases in tax must use reference numbers for employment tax returns.

    Reminder:

    The sum of the reference numbers 003 and 007 must equal the TC 290 or TC 291 amount.

    Number Definition
    003 Adjusted Total of Income Tax Withheld
    004 Taxable Social Security Wages
    007 Adjusted total of Social Security/Medicare taxes
    073 Taxable Medicare Wages and Tips
    074 Taxable Wages & tips subject to Additional Medicare Tax withholding
    119 Qualified Small Business Payroll Tax Credit for Increasing Research Activities NOTE: For ease of reference, this credit is generally referred to as the "QSB Research Credit".

    Caution:

    For Form 943, IRN 119 is only valid for tax periods 201712 and later.
    185 Adjustment to Withheld Social Security/Medicare tax -only used on Form 943 adjustments for fractions of cents and third-party sick pay.
    280 COVID Deferral Amount -See IRM 3.14.2.6.4.10 for more information.
    290 Work Opportunity Credit (for tax periods after 201112)
    296 COVID Employee Retention Credit- For 2020 only
    299 COVID-19 FFCRA Sick and Family leave Credit, effective 04/01/2020 - 12/13/2020. Formerly COBRA premium assistance credit (for tax year 2009 through 03/31/2020)

3.14.2.7.6.6.6 (01-01-2024)
CRNs/IRNs for Form 944 (MFT 14)

  1. Form 944 was designed so the smallest employers (those whose annual liability for social security, Medicare, and withheld federal income taxes are $1,000 or less) will file and pay these taxes only once a year instead of every quarter.

  2. On all Form 944 series adjustments, all increases and decreases in tax must use reference numbers for employment tax returns.

    Reminder:

    The sum of the reference numbers 111, 112, and 113 must equal the TC 290 or TC 291 amount. The sum of 104, 105, 106, 109 and 110 must equal 113.

    Number Definition
    004 Taxable Social Security Wages
    007 Adjusted total of Social Security/Medicare taxes
    073 Taxable Medicare Wages and Tips
    074 Taxable Wages & tips subject to Additional Medicare Tax withholding
    079 ETE/ETAP IRC 3509 Rate
    104 Special additions to federal income tax
    105 Special additions to social security and Medicare tax
    106 Current quarter fractions of cents
    107 Current quarters sick pay
    108 Current quarters adjustments for tips and group life insurance
    109 Current years income tax withholding adjustments
    110 Prior quarters social security and Medicare taxes
    111 Total income tax withheld
    112 Total social security and Medicare tax
    113 Total adjustments
    114 Section 3121(q) Notice and Demand - Tax due on unreported tips (Form 941 only), tax period 201103 and subsequent
    119 Qualified Small Business Payroll Tax Credit for Increasing Research Activities NOTE: For ease of reference, this credit is generally referred to as the "QSB Research Credit".
    280 COVID-19 CARES Act - 2302 Payment Deferral Credit
    290 Work Opportunity Credit (for tax periods after 201112)
    296 COVID-19 CARES Act - Employee Retention Credit, effective 04/01/2020 - 12/31/2020
    299 COVID Sick & Family Leave Credit - For 2020 only
3.14.2.7.6.6.7 (01-01-2024)
CRNs/IRNs for Form 945 (MFT 16)

  1. Form 945 is filed by payers of non-payroll payments to report income tax withheld.

    Reminder:

    The sum of the reference numbers 003, 008 and 184 must equal the TC 290 or TC 291.

    Number Definition
    003 Adjusted total of income tax withheld (AITW)
    008 Backup Withholding (BUWH)
    184 Adjustment of Withheld Income Tax (ATWH)

3.14.2.7.6.6.8 (01-01-2024)
CRNs/IRNs for Forms 990 (MFT 67) and 990-T (MFT 34)

  1. Form 990 is used by tax-exempt organizations, nonexempt charitable trusts, and section 527 political organizations to provide the IRS with the information required by section 6033.

    Number Definition
    151 Failure to Distribute Income
    152 Excess Business Holdings
    153 Investments which Jeopardize Charitable Purpose
    154 Taxable Expenditures
    182 Excess Grass Roots Contributions
    183 Excess Lobbying Contributions
    213 Tax on Political Expenditures
    214 Tax on Disqualifying Lobbying Expenditures
    391 Issue Price
    411 Date of Issue
    412 Maturity Date

  2. Form 990-T is an Income tax return filed by exempt organizations with unrelated business income.

    Note:

    Anytime taxable income is changed due to an adjustment, use IRN 886 to correct the taxable income. When decreasing taxable income, use IRN 886 with a minus (-) after the money amount.

    Number Definition
    221 Partnership tax assessment amount
    222 Partnership interest amount

3.14.2.7.6.6.9 (01-01-2024)
CRNs/IRNs for Form 1120 (MFT 02) and Form 1041 (MFT 05)

  1. Form 1120 is used to report the income, gains, losses, deductions, credits, and to figure the income tax liability of a corporation.

  2. Form 1041 is an income tax return filed by a fiduciary for every domestic estate or domestic trust for which they act.

  3. Form 1041 and 1120 can be adjusted with the below IRNs.

    Number Definition
    221 Partnership tax assessment amount
    222 Partnership interest amount
    263 IRC Section 965

3.14.2.7.6.6.10 (01-01-2024)
CRNs/IRNs for Form 4720 (MFT 50)

  1. Form 4720 is used by private foundations, foundations managers, and disqualified persons to compute certain excise taxes which may be due under IRC 42.

    Number Definition
    151 Failure to Distribute Income
    152 Excess Business Holdings
    153 Investments which Jeopardize Charitable Purpose
    154 Taxable Expenditures
    182 Excess Grass Roots Contributions
    183 Excess Lobbying Contributions
    213 Tax on Political Expenditures
    214 Tax on Disqualifying Lobbying Expenditures

3.14.2.7.6.6.11 (01-01-2024)
CRNs/IRNs for Form 5329 in Conjunction with Form 1041 (MFT 05)

  1. Form 5329

    Number Definition
    160 Tax on Excess Contributions.
    162 Tax on Excess Accumulation
    233 Tax on Medical Savings Accounts (MSA)
    235 Education IRA 1997 and later
    236 Roth IRA 1997 and later
    237 Prohibited Tax Shelter Transaction

    Caution:

    The sum of the 160 and 162 amounts must balance to the TC 29X amount.

3.14.2.7.7 (04-03-2023)

Credit Transfers

  1. The use of IAT is preferred for inputting credit transfers in IDRS.

  2. Use a credit transfer to move credits from one tax module to another. Keep the following in mind when transferring a credit:

    1. Check TXMOD and BMFOL to make sure the credit is available for transfer and has not previously been transferred, offset or refunded.

    2. Do not transfer a pending credit unless it has posted on BMFOLT.

    3. The date of the debit reversal must be exact if transferring a payment, because any discrepancy will cause an unpostable.

      Note:

      ADD/ADC24 can be used to change the date of the TC 610 when required. (Use Override Code 2)

    4. Money amounts must be exact unless splitting a payment.

      Note:

      Any credit amount input greater than the posted credit will cause an unpostable.

    5. When transferring two or more credits with the same date, and the credit reversals amounts are exact matches of the posted credit transactions, they may be transferred in any order.

    6. When splitting two or more credits with the same date, input the transaction from the largest to smallest to avoid creating an unpostable.

      Note:

      The computer will look for and reverse an exact match before it will split a payment. If there is no match, the first payment with a sufficient amount will be split.

    Reminder:

    For Notice Review when inputting a credit transfer you are not required to make it a source document to associate to files.

  3. There are three Credit Transfer Doc Codes. Use them in conjunction with the credit transfer Command Code format ADDnn/ADCnn, where nn is the Document Code. Each Document Code identifies the different types of credits to be moved:

    1. Use Doc Code 24 to transfer a single payment, a lump sum, an overpayment, or to reverse an offset. Both the debit and credit sides of the transfer post in two or three cycles (depending on the day of input), unless a Posting Delay Code is used.

    2. Use Doc Code 34 to transfer up to four payments at once. The debit side of the transfer posts in two or three cycles (depending on the day of input). The credit side posts one cycle later.

      Caution:

      When using Doc Code 34 in conjunction with other Doc Codes (24, 48, or 54), make sure that the multiple transactions will all post in the same cycle. Use a Posting Delay Code "1" on the credit side of both the 24 and 48 transactions and on CC ADJ54 to prevent erroneous notices, offsets, and refunds.

    3. Use Doc Code 48 to transfer or reverse Credit Elect. Both the debit and credit sides of the transfer post in the same cycle unless a Posting Delay Code is used. Both sides normally post in two or three cycles, depending on the day of input.

  4. Be aware of timing issues unique to Doc Code 34 transfers. The credit side of a Doc Code 34 transfer posts one cycle after:

    • A CC REQ54 adjustment

    • Both sides of Doc Code 24 and 48 transfers

    • The debit side of a Doc Code 34 transfer

    • A CC REQ77 transaction

    Note:

    If the credit side of a Doc Code 34 transfer needs to post in the same cycle as any of the above transactions, use a Posting Delay Code 1 on your CC REQ54 adjustment immediately after POSTNG-DLAY-CD>__ to avoid erroneous notices, offsets, and refunds.

  5. A credit transfer affects two different tax modules unless the only purpose of the transfer is to change the payment date.

    1. The debit side, which always appears on the upper part of the screen, reflects the module the credit will be transferred from (ADD).

    2. The credit side, which always appears on the bottom part of the screen, reflects the module the credit will be transferred to (ADC).

  6. The last module requested with CC TXMOD (the primary module) decides which command code to use to move the credit. To reduce the chance for errors, use the notice module as the primary module. Decide if the module shown on the IDRS screen is to be debited or credited:

    If the module is to be Then use
    Credited CC ADCnn (nn=Doc Code 24, 34, or 48).
    Debited CC ADDnn (nn=Doc Code 24, 34, or 48).

  7. When reversing an offset, the debit and credit sides may have different dates. Input an Override Code 2 when using different dates. Use the TC 826 date for the TC 821 and the TC 706 date for the TC 701.

  8. Reverse multiple offsets separately. Do not lump them together.

  9. Use a Posting Delay Code to delay the posting of a transaction by up to six cycles.

  10. When transferring a credit into a zero balance (full-paid) module, or a balance due module that will create an overpayment, use a Bypass Indicator 1 on the credit side of the transfer to prevent an Unpostable Condition. A Bypass Indicator 1 is not needed on Forms 1041, 1120, and 990, as long as it is still within one year of the original tax period ending date.

  11. To hold a credit (prevent the credit from refunding or offsetting), enter a Credit Freeze Code 1 on FRM 34 (CR-FR>). On DRT 24, enter TC 570 as the secondary transaction immediately after the second TC>_ on the credit side of the transfer.

    1. The posting of TC 570 will set a -R Freeze Code on the module.

    2. Never leave an unnecessary -R Freeze on a module. Input TC 571 on CC REQ77 with the appropriate Posting Delay Code to reverse TC 570 and release -R Freeze if any remaining credit will refund after the credit posts.

      If the Transfer is Doc Code Then use a Posting Delay Code
      24 or 48 1
      34 2

  12. Use the correct reversal Transaction Codes when transferring payments. See IRM 21.5.8-1, Transaction Codes and Reversals. Use:

    • TC 662 to reverse TC 660 or 430

    • TC 672 to reverse TC 670

    • TC 821/701 to reverse TC 826/706

      Note:

      See Document 6209, Section 8A, for a complete list of transaction codes.

  13. TCs 640, 670, and 700 must have a two-digit Designated Payment Code (DPC) used only for terminal input. (See Document 6209, Section 11, Document 6209 Section 11 Designated Payment Codes) Use of a DPC on all posting vouchers is now mandatory with Transaction Codes 640, 670, 680, 694, 690, and 700.

    1. When transferring these payments, input 00 on the credit side of the Doc Code 24 or 34 screen immediately after DESG-PYMT-CD>__ unless the payment has another code (01-14 or 99).

  14. A TC 820 or 830 on a Doc Code 24 or 48 transfer will release -K and P- Freezes. Make sure the transfer does not inadvertently release a freeze and cause an erroneous refund. When transferring a credit into a module and a tax adjustment is also needed, use either a HC 4 or a posting delay code 1 to prevent an erroneous refund and/or notice.

  15. If a misapplied credit posted to a settled module (containing a TC 150), input a TC 570 on the debit side of the transfer to suppress the CP 260 if transferring the credit will leave a debit balance of $5.00 or more, and the taxpayer does not need to receive a notice.

  16. If transferring a credit into the notice module will resolve the credit discrepancy with no other misapplied credit, do not input a TC 570 on the credit transfer. Use CC REQ54/ADJ54 to input a TC 290 .00 with Hold Code 3 to prevent an adjustment notice.

  17. If transferring a TC 650, 660 or TC 670 into a module will create an overpaid condition, See IRM 3.14.2.6.1.7.2.2 (Preventing Unpostable Transactions) to avoid creating an unpostable condition.

    1. Use a Bypass Indicator 1 on the Doc Code 24 or 34 IDRS screen, if necessary.

    2. If the credit will be held and not refunded, input a TC 570 as a secondary transaction on the credit side of a Doc Code 24 transfer or a Credit Freeze Code 1 on the credit side of a Doc Code 34 transfer.

3.14.2.7.7.1 (01-01-2016)
Penalty Recomputations Caused by Credit Transfers

  1. When inputting a credit transfer follow instructions in IRM 3.14.2.7.7.

  2. Transferring timely credits into a module containing a TC 166 (FTF penalty), TC 176 (ES Penalty), TC 186 (FTD Penalty), or TC 276 (Failure to Pay) will cause these penalties to recompute and generate an adjustment notice CP 210/220. Other penalties may also recompute but will not generate an adjustment notice.

  3. Review CC PIEST or INTST to decide whether the penalties will recompute. (See IRM 3.14.2.6.17.7 , Estimated Tax (ES) Penalty.)

    Note:

    You may need to manually address Estimated Tax Penalty.

  4. When transferring timely payments into the module to resolve an ES or FTD discrepancy condition causes the TC 166, TC 176, TC 186 or TC 276, to recompute, input a TC 290 .00 in Blocking Series 05/15 using a Hold Code 3 to prevent the subsequent CP 210/220.

    1. If the credit transfer is under Doc Code 34, use a Posting Delay Code 1 on the TC 290 so both adjustments will post in the same cycle.

    2. If the credit transfer is under Doc Code 24 or 48, a Posting Delay Code is unnecessary. Both sides of the credit transfer will post in the same cycle as the CC REQ54 transaction.

3.14.2.7.8 (01-01-2019)

Command Code (CC) STAUP

  1. Use CC STAUP to interrupt the normal IDRS balance-due notice routine (CP 5XX collection series) and delay, accelerate, or skip notices. This will generate a history item on the module and change the campus status to 48.

    Note:

    Follow instructions contained in each section to determine if a CC STAUP is necessary.

  2. When adjusting a balance-due account and the account will remain in balance due status:

    1. Retype the original notice.

    2. Use Hold Code 3 on the adjustment to suppress the adjustment notice.

      Note:

      Hold Code 3 will not accelerate IDRS balance-due notices.

  3. When a module contains one or more pending payments (AP, PN, UP, CU, or TEP) that will cause FTF or ES penalty recomputation, enter CC STAUP for 9 cycles to allow the taxpayer adequate time to respond to the recomputation notice.

  4. A STAUP will automatically release after nine cycles if there has never been an open control on the module.

    1. If a control is opened on the module after STAUP is input, it will release nine cycles after the control base is closed.

    2. A STAUP will never remain for more cycles than the number originally input.

  5. Use CC STAUP when a balance due account requires corrective action that cannot be accomplished within the notice cycle.

    1. Delay CP 50X notices by inputting CC STAUP for 9 cycles.

    2. After working the case, input CC STAUP with the same status used in the initial STAUP for 9 cycles. Use the cycles indicated in the chart below for this input:

      If the Original Notice was Then input CC STAUP for
      Labeled 5 cycles
      Retyped 6 cycles

    3. Do not accelerate notices by skipping statuses using CC STAUP.

    4. Input the next status and the number of cycles that IDRS would normally delay the next notice.

      Caution:

      Use the current status (other than 19 or 21) if the IDRS notice is voided or mailed erroneously.

    5. Check the History Section of the module.

    6. Check for any Pending transactions or any current Status 48. Caution: Never use CC STAUP to update the Status to 22 for zero cycles. This causes the account to immediately become TDA.

  6. Input CC STAUP for 9 cycles when routing a balance due case or its correspondence to another area.

  7. Never input CC STAUP for fewer cycles than the normal interval to the next notice. Be aware of the posting cycles of each notice, especially if using the same status.

  8. A STAUP cannot be input when:

    1. The Collection Statute Expiration Date (CSED) is within 6 months of expiring.

    2. An Account is in Status 22, 24, 26, 64, 60, 71, or 72.

  9. A STAUP will only prevent an erroneous IDRS notice if it is input by the Friday before the erroneous notice is scheduled to generate (10 days before the 23C Date).

    1. If the Campus status has just updated, it is too late to use CC STAUP.

      Note:

      If a STAUP is input before the 23C Date, the notice will be selected for review on the IDRS Notice Review Register under the category 48 Status Update and will be voided. If the same notice needs to be regenerated, input CC STAUP in the same SC Status.

    2. If an erroneous notice has been mailed, send an apology letter instructing the taxpayer to disregard the notice and that either the case has been resolved or that a correct notice will be sent, whichever is appropriate.

  10. If the Campus Status is blank or 99, the account is out-of-region. Use Universal Access to input CC STAUP.

3.14.2.7.9 (01-01-2016)

Extensions

  1. IRC 6081 provides that the Secretary of the Treasury may grant a reasonable extension of time for filing any return, declaration, statement, or other document. Additionally, it provides that, except for taxpayers who are abroad, no such extension shall be for more than 6 months.

  2. Check for a misapplied extension of time to file (TC 460) that belongs on another account.

    1. Use CC REQ77 to input a TC 462 to remove the extension from the incorrect account.

    2. Use CC REQ77 to input a TC 460 to post the extension on the correct account. Input the Extension Date (use the latest extension date), the Transaction Date (use the received date of the extension), the DLN-CD:
      • Enter 20 for MFTs 02, 33 and 34
      • Enter 45 for MFTs 05 and 06

      Note:

      If penalties will recompute, input a TC 290 .00 with a Hold Code 3 to suppress the recomputation notice.

    3. Input only one TC 460.

    4. Retype, label, or void the notice according to the effect that the posted TC 460 will have on the module. The TC 460 will cause a recomputation of the FTF penalty (TC 166 if posted) if the return is filed before five months after the extended due date.

3.14.2.7.10 (01-01-2016)

Notice Disposition

  1. Computer Paragraph (CP) notices are the most common form of communication with the taxpayer regarding their account. A notice must have accurate and timely information. All TEs are responsible for understanding the tax module conditions that generate a notice, the notice elements, and what effect any change to the module will have on a notice.

    Note:

    Notices that are retyped, labeled, or mailed must be released in the notice cycle.

  2. The taxpayer may receive a notice when there is:

    • A debit balance on the module

    • A math error on the return

    • An Estimated Tax (ES) payment discrepancy

    • Penalty and interest assessed on the module

    • A subsequent change to the taxpayer’s original figures for tax, credits, or penalties

    • An overpayment offset to another module

    • A reduced Credit Elect

  3. Notice elements can help describe the conditions which characterize a notice. The principal element types most viewed in Notice Review are:

    • Overpayment

    • Balance due

    • Even balance

    • Credit discrepancy

    • Math Error

    • Adjustment of tax, credits, and penalties

    • Reduced credit elect

    • Offset to other modules, accounts, or government agencies

  4. If a tax return is processed and meets math error criteria, even if the refund or balance due is what the taxpayer expects, the appropriate math error notice will generate. The exception would be if the notice module is adjusted back to the taxpayer’s original figures. Then the notice would be voided.

    Note:

    If an incorrect notice was mailed to the taxpayer, you must send the taxpayer the appropriate C-Letter explaining the correction and apologizing to the taxpayer. For special situations, contact your work lead.

  5. Every tax examiner who inputs:

    1. A Doc Code 54 adjustment must decide (before the adjustment) whether to generate or suppress the subsequent notice

    2. An adjustment or credit transfer that will cause the FTF, FTD, or the FTP or the ES Penalties to recompute must decide if a subsequent notice will generate

    Note:

    Proper use of Hold Codes is important during the adjustment process. (See IRM 3.14.2.7.6.3 , Hold Codes.) Proper use of the Local Control File (LCF) is important when a Hold Code or a TC 570 cannot be used to prevent a subsequent notice.

  6. Consider how the adjustments made to the notice module will affect the notice elements when determining whether to mail, void, retype, or label an original notice.

  7. An adjustment notice, CP 210 or 220 will generate when:

    1. A Doc Code 54 or 47 adjustment posts with no Hold Code or with a Hold Code 1

    2. A payment is transferred into or out of a module and FTF, FTD, FTP (decrease only, TC 277) or ES Penalties will assess or recompute only a decrease (TC 277) will generate an adjustment notice

    3. A payment is transferred out of a settled (Full Paid) credit balance module and creates a balance due (generates a CP 260)

  8. If an account action will generate a subsequent notice, label the original notice. If the original notice must be voided or retyped, prevent the subsequent notice:

    1. Use Hold Code 3 with a CC REQ54 adjustment to prevent a subsequent notice. Use Hold Code 4 to prevent a notice and to prevent an overpayment from refunding.

    2. Use a TC 570 on the debit side of a credit transfer to prevent a CP 260 from generating on a settled module.

    3. Use CC REQ54 to input a TC 290 .00, Blocking Series 05,15 or 17 for Form 1041, Hold Code 3, to prevent an adjustment notice from generating on a penalty recomputation caused by a credit transfer. Time the adjustment to post in the same cycle as the credit transfer.

      Note:

      Use a Posting Delay Code 1 if the credit transfer was a Doc Code 34.

      Exception:

      An adjustment with a Hold Code 3 will not suppress a CP 260.

  9. See IRM 3.14.2.7.7 (Credit Transfers), regarding procedures when inputting multiple corrective actions (such as a tax adjustment and a credit transfer or an in and out credit transfer).

  10. Any tax examiner reviewing a pending transaction on the notice module must decide:

    • Which penalties will recompute?

    • Which subsequent notices will generate?

    • Will the subsequent notices be mailed?

    • Will the notice module be overpaid, refunding, underpaid, or even-balance?

    • What is the proper disposition of the original notice?

    • Review the CC BMFOL notice module for the posting of pending credit or debit transactions

    • If a transaction posts on CC BMFOL, any recomputation of penalties and interest will also show on that module. However, any balance showing on CC BMFOL is computed to the date indicated on that module and will not be used on a retyped or labeled notice. Use CC INTST or CC COMPA/COMPAF.

    • If a transaction is posted on CC BMFOL, any refund or offset occurring as a result will also show

    • Note:

      Use CC BMFOL to verify the result of a pending transaction whenever possible.

  11. When making any adjustment to an account, review all affected associated notice modules as part of the resolution process. Tax Examiners are responsible for the disposition of all affected associated notices in addition to the selected notice module.

3.14.2.7.10.1 (01-01-2016)
Notice Disposition Categories

  1. There are six Notice Disposition categories:

    • PRINT

    • VOID

    • RETYPE

    • LABEL

    • ENTITY

    • HOLD

      Note:

      If you are intercepting a refund on the Notice Module, the correct disposition would be PI, VI, RI, LI, or TI for a Transcript.

  2. History Items are required when taking action on your notice account. If your account is not presently available on IDRS, do not input a CC ACTON to input a history item

3.14.2.7.10.2 (01-01-2016)
Printing Notices

  1. Print the notice when:

    1. All the notice elements are correct, no adjustment is pending, and no correction will be made to the account.

    2. There is a requirement to mail the notice.

      Note:

      Do not input a history item on IDRS for mailing a notice.

3.14.2.7.10.3 (01-01-2017)
Voiding Notices

  1. Void the notice when:

    1. The taxpayer does not need to receive the notice information.

      Example:

      Returning to the taxpayer’s original tax figures and the resulting refund is what the taxpayer expected or there is no balance due.

      Caution:

      If the module is zero but the taxpayer is not getting the refund or credit elect they expected, mail the notice.

    2. After the adjustment action, the account will have no math error or ES discrepancy. It will be an overpaid, or an even balance, or have a balance due of less than ≡ ≡ ≡ ≡ ≡ ≡. The adjustments must match the taxpayer’s figures, AND any incorrect refund will be deleted or the module will be an overpaid balance, which will either result in a refund or a credit elect as the taxpayer expected.

    3. It would cause a misunderstanding by the taxpayer.

    4. Reprocessing a return. (Use Hold Code 4 on the tax adjustment.)

  2. If voiding the original notice, prevent the subsequent notice or use the Local Control File to intercept and void the subsequent notice.

  3. Do not void an Adjustment Notice unless one of the following is true:

    1. The original notice was voided and the conditions in Printing Notices are not met.

    2. The original notice is retyped to include the corrected information.

  4. If the original Balance Due Notice was voided in error and the subsequent CP 210/220 is selected, release the CP 210/220 with the current notice module information. If the taxpayer contacts Customer Service to inquire why a previous notice was not sent, the Customer Service Representative will be able to read the account history and explain the account activity to the taxpayer.

3.14.2.7.10.4 (01-01-2024)
Entity Only Disposition

  1. The Entity disposition is to be used when entity information is the only change required on the notice. It is not to be used in conjunction with any other notice disposition.

  2. Entity changes include name and address corrections, as well as manual intervention (CAF/RAF Mismatches) changes. For more information on CAR/RAF, see IRM 3.14.2.5.3.

    Note:

    Entity Disposition can also be used for associated notices.

  3. Resolve an entity issue as follows:

    1. Update the entity on IDRS with the IAT Address Tool.

    2. Select Disposition E and correct the address information on the OLNR Entity display screen.

    Note:

    For more information see IRM 3.14.2.6.1.3.3 and IRM 3.14.2.7.5 .

  4. Route major entity changes to Entity Control for necessary action using local control procedures.

3.14.2.7.10.5 (01-01-2024)
Retyping Notices

  1. Retype a notice when changes to the notice module requires the updating of the notice elements to correctly reflect the updated tax module information. Listed are some of the conditions which require a retype of the original notice:

    1. An adjustment to the taxpayer’s original figures increases tax or decreases credits

    2. The original balance due amount is increased

    3. An adjustment to the notice module changes the module balance from balance due to overpaid

    4. An adjustment to the notice module changes the module balance from overpaid to balance due

    5. The original TPNC(s) requires correction

    6. The original refund interest allowed is reduced or no longer applicable

      Example:

      A CP 210 generated and the amount refunding was requested as a credit elect. If the credit is transferred to another module, the interest shown on the notice will be incorrect. The notice must be retyped to (1) remove the credit interest amount; (2) deduct the erroneous credit interest from the overpayment amount; and (3) apply Label #7 to notice before mailing.

  2. Retype a notice to a CP 173 when the computer assessed an ES Penalty and there is no ES discrepancy or math error on an overpaid module.

  3. Use a Hold Code when retyping the original notice to prevent the subsequent notice or use the Local Control File to intercept the subsequent notice.

  4. Use CC ACTON to enter a history item on IDRS when retyping a notice. If retyping to a different notice, include both CP numbers in the history item, such as RYT112-161 as an example.

  5. If a Balance Due Notice is held past the notice cycle, update the Pay by date to the current cycle Pay by date. Update the balance due, penalties, and interest to the 23C date.

    1. Change the balance due amount only if there is a ≡ ≡ ≡ ≡ or greater increase over the original balance due. Use CC INTST to obtain an updated balance when no restrictive conditions exist on IDRS.

    2. Use CC ACTON to enter a history item on the notice module, e.g., UPDATECP__ or RETYPECP__ . Also input a CC STAUP for 6 cycles on Balance Due Notices.

      Caution:

      Change the Pay by date printed on a CAF Mismatch notice only when the Pay by date printed on the original taxpayer notice is also changed. The CAF Mismatch notice must always be an exact duplicate of the taxpayer copy. (See IRM 3.14.2.7.1.1 and IRM 3.14.2.6.1.2 , Central Authorization File (CAF) Mismatch-Code 01.)

  6. The date printed on the notice is the 23C Date (current cycle assessment date). This date is rarely changed.

    Exception:

    If you delete a refund to cover an adjustment, change the notice date to match the 23C Date of the adjustment. Use the posting cycle calendar in Document 6209 to decide the 23C Date for the posting of the adjustment. In all other cases do not change the notice date. The 23C Date decides the assessments of penalty and interest, collection notices, and TDA issuances. The computer will not recognize a notice date change. The computer does recognize a subsequent tax assessment, which starts a new collection time period.

  7. Sometimes a stuffer is included in the envelope with a notice to give additional information to the taxpayer. These stuffers are identified by an alpha code at the top of the notice.

    1. The most common stuffer is the 746 which explains Math Error Appeal Rights. It is identified by an "A" at the top of the notice. This code must be present on a retyped notice if it was on the original notice. It must also be on the notice if a tax increase above the taxpayer’s figures was input in Blocking Series 77 or 78 DLN, using CC REQ54. (See IRM 3.14.2.7.6.1, Blocking Series.)

    2. If other codes were on the original notice, include them on the retyped notice.

    3. If a multi-page notice is retyped, use local procedures to correct the erroneous information on the notice.

  8. Do not retype the notice if there is a only a change to the name or address on the notice and all other information is correct. See IRM 3.14.2.7.10.4 for Entity Only information.

3.14.2.7.10.6 (01-01-2024)
Labeling Notices

  1. Under certain conditions, a label may be used to update information on the notice or to notify the taxpayer to expect additional account actions. Select the computer-generated label from the list in OLNR that will be reflected in the drop-down menu whenever you select the disposition "L" for Label to for a notice that requires additional information to be conveyed to the taxpayer but Retype is not appropriate.

  2. Some labels require fill-in information which must be completed using the correct form number and period ending in Month, Day, and Year format.

    Example:

    Form 1120 for tax period ending Dec. 31, 2011.

  3. Use caution when applying a label for a pending (AP, PN, RS, UP, CU, or TP) credit transaction.

    1. A TC 650 or TC 660 pending on the NRPS contents page that overpays the notice module and is dated later than the last day of the tax period may not post to the notice module due to computer rollover analysis. (A TC 650/660 .00 will be displayed on BMFOLT to indicate a credit has rolled when attempting to post to the module.) If the payment overpays the module, but does not appear on BMFOLT as a posted payment, decide if the payment will post. If the payment will post to the notice module, label the notice. If unable to decide, do not use a label.

    2. If a pending transaction is unpostable, do not apply a label if unable to determine if the transaction will post, instead print the notice.

    3. If the transaction is RS, TP, or UP, CC INTST will not reflect the penalty computation for FTP and interest. If the correct balance on the module is required, use CC COMPAF to figure the correct FTP amount and CC COMPA to figure the correct interest amount.

      Reminder:

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

  4. Always label a notice when the tax is being increased above the taxpayer’s original figures. Select Label #1 for notice disposition.

    Note:

    Do not void a CP 161 if fully paid by credits that offset (TC 706) into the notice cycle. A CP 138 will generate from the Losing module.

    Note:

    Do not label if the offset partially pays the module in full. A CP 138 will generate from the losing module

  5. The labels shown in this text have been approved for the situations listed. A label must not be used for any other situation unless the label conveys the correct information to the taxpayer.

  6. Campus management has the option of requiring a notice to be retyped instead of labeled.

  7. Headquarters must approve any additional labels before use.

  8. The labels in the following sections IRM are approved for use by Notice Review TEs.

3.14.2.7.10.6.1 (01-01-2024)
Label 1

  1. Label 1 : We’re making an adjustment to your account. You will receive a separate notice explaining the correction.

  2. Use Label 1 when:

    1. the notice module has a pending (AP, PN, CU, UP, or RS) Doc Code 54 or 47 adjustment, with either a Hold Code "0" or Hold Code "1" that was input by another area.

    2. the notice module has a pending (AP, PN, CU, UP, or RS) Doc Code 54 or 47 adjustment, if a hold code 2 with a Doc Code 24 pr 34 credit transfer is posting in the same cycle.

      Note:

      If the above referenced adjustment was input by a Notice Review Tax Examiner, refer the notice to that Tax Examiner for proper notice disposition. If the Notice Review Tax Examiner is unavailable label or retype as appropriate based on the hold code used.

  3. Do not use label 1 when a pending TC 976 or 977 (subsequent or amended return) is on the tax module. Accounts Management will initiate all required correspondence.

    Caution:

    A TC 290 .00 without a credit transaction code or TC 806/807 will not generate an adjustment notice.

3.14.2.7.10.6.2 (01-01-2024)
Label 2

  1. Label 2: We applied an additional credit of [$0.00] to your account. You will receive a separate notice reflecting this credit in 3 – 4 weeks.

  2. Use Label 2 when a credit transaction is pending (AP, PN, CU, UP, RS or TP) and does not show on the notice and all the following applies:

    Caution:

    If the payment pending in the NRPS package is a TC 650 or TC 660 review BMFOLT to verify the payment will post (A rolled payment will post on BMFOLT as TC 650/660 for .00). If the payment will post to the notice module use Label 2. If the payment will not post do not label the notice.

    • a subsequent adjustment notice will generate to the tax payer.

    • the resulting balance on the notice module will be a reduced balance due.

    • Failure to File (TC 166), Failure to Deposit (TC 186), or Estimated Tax (TC 176) penalties will recompute or Failure to Pay (TC 276) will decrease.

      Reminder:

      Failure to Pay (TC 276) will not recalculate if the payment is late and dated within the same monthly period as the 23C date of the notice.

  3. Also, use Label 2 if the notice being reviewed is a settlement notice and an adjustment notice is being generated in the subsequent (next week’s) cycle and the deadline has passed for intercepting the subsequent notice using the Local Control File (LCF).

  4. Do not use Label 2 when there is a pending credit and the following are all true:

    • No math error or credit discrepancy will remain

    • Returning to taxpayer figures

    • Module balance is overpaid or even balance

      Note:

      If all above are true then void the notice.

  5. Do not use Label 2 if the notice being reviewed is a CP 260 and an adjustment notice is being generated in the subsequent (next week’s) cycle. Void the CP 260 and allow the subsequent notice to generate to the taxpayer.

  6. Also, do not use Label 2 if the notice being reviewed is a settlement notice and an adjustment notice is being generated in the subsequent (next week’s) cycle and the subsequent notice can be intercepted using the Local Control File. Instead, using LCF intercept the subsequent adjustment notice and retype the current notice to include all the information to math the updated module information.

3.14.2.7.10.6.3 (01-01-2024)
Label 3

  1. Label 3: We applied a credit of [$0.00] to your account. Your new balance is [$0.00].

  2. Use Label 3 when all the following applies:

    • The notice module is currently in balance due status.

    • Payments or credits are pending (AP, PN, UP, CU, TP or RS) but are not showing on the notice.

    • The resulting balance on the notice module will be a reduced balance due.

    • Failure to File (TC 166), Failure to Deposit (TC 186), Failure to Pay (TC 276), or Estimated Tax (TC 176) penalty will not recompute.

    • A subsequent notice will not generate.

  3. Use INTST or COMPA to compute the new balance for the label fill-in.

    Caution:

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

3.14.2.7.10.6.4 (01-01-2024)
Label 4

  1. Label 4: We applied a credit of [$0.00] to your account. Your account has a credit of [$0.00] .

  2. Use Label 4 when all the following applies:

    • Payments or credits are pending (AP, PN, UP, CU, TP or RS) but are not showing on the notice module.

    • The notice module is in balance due status or an overpayment is frozen and not refunding.

    • The resulting balance on the notice module will be an overpayment.

    • Failure to File (TC 166), Failure to Deposit (TC 186), Failure to Pay (TC 276), or Estimated Tax (TC 176) penalties will not recompute. Therefore, a subsequent notice will not generate.

3.14.2.7.10.6.5 (01-01-2024)
Label 5

  1. Label 5: Due to a processing error, you did not receive the correct refund. You will receive an additional refund in 3 – 4 weeks.

  2. Use Label 5 when all the following applies:

    • The module has a posted refund (TC 846).

    • A CC REQ54 adjustment is being input and will result in an additional refund.

    • The adjustment is input in the current cycle with a hold code "0" . This will cause a subsequent adjustment notice (CP 210) to generate.

      Note:

      Do not stop the current cycle refund.

3.14.2.7.10.6.6 (01-01-2024)
Label 6

  1. Label 6: We applied a credit of [$0.00] to your account. If you don’t owe any other taxes, you will receive a refund in 3 – 4 weeks.

  2. Use Label 6 when all the following applies:

    • The module has a posted refund (TC 846).

    • Payments or credits are pending (AP, PN, UP, CU, TP or RS) but are not showing on the notice module (including credits just transferred into the notice module).

    • There will be an additional refund from the notice module.

    • Failure to File (TC 166), Failure to Deposit (TC 186), Failure to Pay (TC 276), or Estimated Tax (TC 176) penalties will not recompute. Therefore, a subsequent notice will not generate.

    Note:

    Do not stop the current cycle refund.

    Caution:

    Do not use this label for a pending Doc 47 or Doc 54 adjustment. See IRM 3.14.2.7.10.6.5 Label 5.

3.14.2.7.10.6.7 (01-01-2024)
Label 7

  1. Label 7: The overpayment of [$0.00] was applied to Form [XXXX] for tax period ending [MM-DD-YYYY].

    Example:

    The overpayment of $5,000.00 was applied to Form 941 for tax period ending 03-31-2023.

  2. Use Label 7 when all the following applies:

    • The notice module is overpaid.

    • A credit elect (TC 830) or lump-sum offset (TC 820) is shown as pending (AP, PN, UP, CU, TP or RS) for the same EIN or, a debit transaction for a payment (TC 652, 662, 612, 672, 622,642) is pending (AP, PN, UP, CU, TP or RS) for the same EIN and the module is in even or credit balance.

  3. Do not use label 7 if:

    • A payment, credit elect or lump-sum offset is being transferred to a different TIN. If the TIN is different retype the notice.

    • The notice module is changing from an overpayment to a balance due, stop the refund and retype the notice.

    Note:

    If a debit transaction is pending on a CP 210 or CP 220 refer to IRM 3.14.2.6.14 for notice disposition.

3.14.2.7.10.6.8 (01-01-2024)
Label 8

  1. Label 8: According to our records, the credit you claimed has already been refunded.

  2. Use Label 8 when:

    • The taxpayer is claiming a credit or payment(s) that refunded in a prior quarter, prior year or from a different MFT than the notice module.

    • The notice is chosen under Selection Key 31.

      Note:

      IDRS research is not required if the refunded credit or payment does not appear in the NRPS package.

3.14.2.7.10.6.9 (01-01-2024)
Label 9

  1. Label 9: This notice was returned undeliverable. Additional penalties and interest have accrued on your account. The current balance due is [$0.00]. To avoid additional penalties and interest, please pay by [MM-DD-YYYY] .

  2. Label 9 is used when a balance due notice is returned undeliverable from the US postal service and the date of the notice is more than 7 days before the current date.

  3. Label 9 is not used in OLNR. This label is affixed to a paper notice that has been returned to the IRS for improper address information.

  4. Use CC INTST or CC COMPA to recalculate penalties and interest for the correct label fill-in for balance due. The "Interest To" and the "Payment Due" dates are both the current 23C date plus 10 days.

3.14.2.7.10.6.10 (01-01-2024)
Label 10

  1. Label 10: Please pay by [MM-DD-YYYY] to avoid additional penalties and interest.

  2. Label 10 is used when a balance due notice is returned undeliverable from the US postal service and the recomputed balance due changes ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  3. Label 10 is used in conjunction with Label 11 when the taxpayer needs to receive a new pay-by date on an undeliverable notice.

    Caution:

    Do not use Label 10 in conjunction with Label 9.

3.14.2.7.10.6.11 (01-01-2024)
Label 11

  1. Label 11: Your notice was originally mailed on the date of this notice, however, it was returned undeliverable.

  2. Label 11 is used when:

    • An even balance or information notice is returned undeliverable from the US postal service and the recomputed balance due changes or

    • In conjunction with Label 10 on certain balance due notices. See IRM 3.14.2.7.10.6.10 Label 10 for more information. or

    • In conjunction with Label 12 with TC 846 on the notice module. See IRM 3.14.2.7.10.6.12 Label 12 for more information.

3.14.2.7.10.6.12 (01-01-2024)
Label 12

  1. Label 12: Due to a processing error, your refund check may be delayed.

  2. Use Label 12 when an overpaid notice (with a TC 846 on the notice module) is returned undeliverable from the US postal service.

  3. Always use Label 11 in conjunction with Label 12.

3.14.2.7.10.6.13 (01-01-2024)
Label 13

  1. Label 13: This notice is being sent to you in place of the incorrect notice(s) you received. We apologize for our error and any inconvenience this may have caused you.

  2. Use Label 13 when all the following applies:

    • A notice was mailed to the taxpayer with incorrect information.

    • The notice will be retyped and/or labeled to reflect the correct information.

    Note:

    Use STAUP to delay the generation of collection notices until the taxpayer can receive the correct labeled notice.

3.14.2.7.10.6.14 (01-01-2024)
Label 14

  1. Label 14: The payment of [$0.00] was applied to the balance due on Form [XXXX] for tax period ending [MM-DD-YYYY].

  2. Use Label 14 when all the following applies:

    • The notice module is overpaid or refunding.

    • A payment claimed on the notice module has posted or will post to a different module with the same TIN.

    • The receiving module for the payment is in balance due status.

3.14.2.7.10.6.15 (01-01-2024)
Label 15

  1. Label 15: You were issued an erroneous refund due to a processing error. Please return the uncashed check or a substitute payment.

  2. Label 15 is used on cases when the refund cannot be intercepted and the full amount of the refund sent to the taxpayer is erroneous.

3.14.2.7.10.6.16 (01-01-2024)
Label 16

  1. Label 16: We sent you a refund in error. The correct amount of the adjustment is [$0.00]. You will receive a separate notice explaining the correction. We apologize for any inconvenience this may have caused you.

  2. Label 16 is used on cases when the refund cannot be intercepted and only part of the refund sent to the taxpayer is erroneous.

  3. The amount fill-in for this label should state the amount the taxpayer needs to return to the Service.

3.14.2.7.10.6.17 (01-01-2024)
Label 17

  1. Label 17: We will send you an additional refund, if you don’t owe other taxes.

  2. Use Label 17 when all the following applies:

    • The notice module is refunding.

    • There is a pending TC 29X or TC 30X with Hold Code 3.

    • The pending adjustment results in an additional refund.

  3. Do not use Label 14 if:

    • A freeze code is present on the notice module that will prevent any overpayment from refunding.

    • Debit transactions are pending (AP, PN, UP, CU, TP or RS) and when posted will result in a balance due status on the notice module.

3.14.2.7.10.6.18 (01-01-2024)
Label 18

  1. Label 18: A credit of [$0.00] has been added to your account. You will receive an additional notice reflecting the credit. Your installment privilege will be reinstated.

  2. Only use Label 18 when a credit transaction is pending (AP, PN, CU, UP, RS or TP) and does not show on the notice and all the following applies:

    • A subsequent adjustment notice will generate to the taxpayer.

    • The resulting balance on the notice module will be an overpayment or even balance.

    • Failure to File (TC 166), Failure to Deposit (TC 186), or Estimated Tax (TC 176) penalties will recompute or Failure to Pay (TC 276) will decrease.

      Reminder:

      Failure to Pay (TC 276) will not recalculate if the payment is late and dated within the same monthly period as the 23C date of the notice.

3.14.2.7.10.6.19 (01-01-2024)
Label 19

  1. Label 19: Your extension of time to file is currently being processed. Any penalty charged will be adjusted accordingly. You will receive a corrected notice in 3 – 4 weeks.

  2. Use Label 19 when all of the following applies:

    • An extension (TC 460) is pending (AP, PN, CU, UP, RS or TP) on the notice module.

    • A previously posted FTF Penalty (TC 166) or Daily Delinquency Penalty (TC 238) will recalculate and generate an adjustment notice.

      Caution:

      TC 238 will not adjust is Correspondence Code 22, 23, or 24 is present on the module. Do not adjust this penalty.

    • The notice module will be in balance due status or an overpayment amount that does not match the taxpayer refund amount.

  3. Use Label 19 on CP 162 with a pending TC 460 when:

    • The FTF will recalculate and

    • An adjustment notice will generate in the subsequent cycle and

    • The CP 162 is reviewed after the LCF cutoff period.

  4. Do not use Label 19 on CP 162 with a pending TC 460 when:

    • A subsequent notice can be intercepted using the LCF and

    • The TC 166 will be reduced or abate completely. Intercept the subsequent notice and retype or void the CP 162 ass appropriate.

3.14.2.7.10.6.20 (01-01-2024)
Label 20

  1. Label 20: We are transferring the credit of [$0.00] to your Form [XXXX] for the period ending [MM-DD-YYYY]. An additional credit of [$0.00] is also being applied to this account. You will receive a separate notice reflecting this credit in 3 – 4 weeks.

  2. Use Label 20 when all of the following applies:

    • A payment is being transferred from the notice module to a different module with the same TIN and another credit will be applied to the notice module.

    • The debit and credit transactions will post in the same cycle.

    • Failure to File (TC 166), Failure to Deposit (TC 186), or Estimated Tax (TC 176) penalties will recompute or Failure to Pay (TC 276) will decrease.

      Reminder:

      Failure to Pay (TC 276) will not recalculate if the payment is late and dated within the same monthly period as the 23C date of the notice.

    • A subsequent notice will generate.

3.14.2.7.10.6.21 (01-01-2024)
Label 21

  1. Label 21: We are transferring a credit of [$0.00] to your Form [XXXX] for the period ending [MM-DD-YYYY], and a credit of [$0.00] to your Form [XXXX] for the period ending [MM-DD-YYYY].

  2. Use Label 21 when all of the following applies:

    • Two different payments (or credits) are pending (AP, PN, CU, UP, RS or TP) on an overpaid notice module.

    • The payments (or credits) are being transferred to two different modules with the same TIN.

    • The notice is a CP 210.

  3. Before using Label 21:

    • Ensure the pending transactions are correct and the credits/payments have not previously been transferred out.

    • Ensure the module has sufficient credit available for a TC 820 or TC 830 to properly post.

      Caution:

      Delete any refund if the credit will refund before the transfer can post. Retype the notice if other actions have caused the module to change to balance due.

3.14.2.7.10.6.22 (01-01-2024)
Label 22

  1. Label 22: The overpayment on your account is a credit that was not claimed. If you do not owe other taxes, we will refund the overpayment amount in 3 to 4 weeks.

  2. Use Label 22 when all of the following applies:

    • The notice is a CP 267 or 268.

    • There is any type of unclaimed payment on the notice module that does not belong on another module.

    • A CC REQ54 290.00 HC 3, Priority Code 4 has been input to release the Q- freeze and allow a refund.

3.14.2.7.10.6.23 (01-01-2024)
Label 23

  1. Label 23: We recently received a payment of [$0.00]. This notice doesn't reflect that payment in your balances. For updated account information, you may contact the above phone number.

  2. Use Label 23 when all of the following applies:

    • A lead has approved the use of the label.

    • There is a resequenced or unposted pending payment on the notice module.

    • The interest on the notice is incorrect.

    • There are no penalties that will recompute and another notice will generate.

3.14.2.7.10.6.24 (01-01-2024)
Label 24

  1. Label 24: The amount due or overpayment in the summary takes into account the penalty you entered on line 16 of Form 8978, even though that amount is not itemized within the summary.

  2. Use Label 24 when:

    • Reviewing a partnership return and Form 8978 is included with penalty information from Part V.

3.14.2.7.10.7 (01-01-2024)
Hold

  1. The Hold Disposition in OLNR is used when complete information is not available to determine the correct disposition of the notice. If the lead feels more research is necessary to ensure a correct notice is sent to the taxpayer, the lead will contact the Notice Review Headquarters analysts to inform them of the reason for the held notice.

  2. When inputting a disposition of H, open a control base in IDRS on the notice module and enter a STAUP for 9 weeks. Once the issue resulting in the hold disposition has been resolved, reduce the STAUP to the appropriate number of weeks so that a collection (series 50X) notice is mailed to the taxpayer in the appropriate time frame. Refer to IRM 3.14.2.7.21 for instructions on how to use Command Code STAUP.

    Example:

    Use hold disposition if it appears the return has posted to an incorrect module and the requested return is not received before cycle closeout.

    Reminder:

    The IDRS control base must be closed when all actions have been taken and the correct notice disposition has been decided.

  3. When an error is identified by quality they must input an H Disposition to ensure a correct notice is sent to the taxpayer. If necessary, the tax examiner will correct the notice in OLNR to issue a corrected notice.

3.14.2.7.11 (01-01-2024)

Signature Request Letter Process

  1. If an overpaid return is missing a signature and guidelines in paragraph 5 of IRM 3.14.2.6.1.3.6 are not met then research ENMOD and/or the tax return to identify if correspondence was sent requesting a signature.

  2. If correspondence was sent to the taxpayer requesting a signature during pipeline processing (before Notice Review) process the case as normal. Do not correspond.

  3. If there is no indication a signature was requested previously:

    1. stop the refund

    2. mark the notice in cycle if possible (If not request approval to hold the notice)

    3. send a 143C letter

  4. Use the IAT letter tool to input the 143C letter with necessary paragraphs.

    Example:

    A complete 143C letter could include paragraphs: E, K, S, T, U and 3.

  5. See the Correspondex Letter Repository for specific letter information including paragraph requirements for each letter at the bottom of the appropriate letter document.

  6. A correspondence case must be controlled and held in a suspense file (as determined by P&A, manager or lead at each site) for 45 days while awaiting the taxpayer’s reply. Input STAUP if necessary per IRM 3.14.2.7.8.

  7. If the response is received in 45 days:

    1. remove the case from the suspense file

    2. resume processing the case

    3. mark the notice disposition (if not already done)

    4. release the refund using 290 .00 HC 3

      Caution:

      If the reply was received after the normal or extended Return Due Date, overlay the RET-PROC-DT> field with the received date of the reply to set a new 45-day interest-free period.

    5. close the control base

      Reminder:

      Documents received with (and including) the correspondence need to be associated with the original paper return. Associate to files.

  8. If the response is not received in 45 days:

    1. remove the case from the suspense file.

    2. resume processing the case if possible.

    3. mark the notice disposition (if not already done).

    4. input a TC 290 .00 HC 4 to set the -K freeze per correspondence guidelines.

      Note:

      Do not release the refund.

  9. If a response is received after 45 days. Complete Form 3465 and route the taxpayer correspondence and any other information to Accounts Management.

3.14.2.8 (01-01-2016)

International Overview

  1. This section of the Internal Revenue Manual (IRM) contains specific instructions for reviewing International returns and CP notices.

  2. This is a supplement to IRM 3.14.2, BMF Notice Review, it must be utilized when reviewing International notices.

3.14.2.8.1 (01-01-2019)

Related References

  1. Publications relating to International issues can be used as technical reference material. Following is a list of the most common publications used.

    • Pub. 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad

    • Pub. 80, Circular SS, Federal Tax Guide for Employers in the U.S. Virgin Islands, Guam, American Samoa and the Commonwealth of the Northern Marianna Islands

    • Pub. 179, Circular PR, Guia Contributiva Federal Para Patronos Puertorriquenos (Federal Tax Guide for Employers in Puerto Rico)

    • Pub. 519, Tax Information for Visitors to the United States

    • Pub. 514, Foreign Tax Credit for Individuals

    • Pub. 515, Withholding of Tax on Non Resident Aliens and Foreign Corporations

    • Pub. 570, Tax Guide for Individuals with Income from U.S. Possessions

    • Pub. 597, Information on the United States-Canada Income Tax Treaty

    • Pub. 850, English-Spanish Glossary of Words and Phrases Used in Publications Issued by the Internal Revenue Service

  2. The following manuals can give additional information on International returns:

    • See IRM 3.12.13, Employment Tax Returns

    • See IRM 3.12.16, Corporation Income Tax Returns

    • See IRM 3.12.106, Estate and Gift Tax Returns

    • See IRM 21.8.2, BMF International Adjustments

    • See IRM 3.21.25, Miscellaneous Tax Returns

  3. In addition to these publications, some general information publications are also printed in Spanish for the convenience of taxpayers. These can be identified in Publication 900 by an S after the number.

3.14.2.8.2 (01-01-2016)

Program Responsibility

  1. International related documents are processed exclusively in the Ogden Submission Processing Center (OSPC) who has the responsibility for reviewing notices and transcripts.

  2. Service officials and management must communicate security standards contained in IRM 1.4.6, Managers Security Handbook, and IRM 10.8.34 , IDRS Security Controls, to subordinate employees and establish methods to enforce them.

  3. Employees are responsible for taking required precautions in providing security for documents, information and property which they handle in performing official duties.

3.14.2.8.3 (01-01-2016)

Notice Review Processing System

  1. The Notice Review Processing System (NRPS) selects settlement notices, adjustment notices and refund transcripts for review by analyzing data from various sources including but not limited to CP notice records and entity and tax modules, etc.

3.14.2.8.4 (01-01-2016)

Online Notice Review

  1. The Online Notice Review system (OLNR) allows TEs to review online those notices selected by NRPS then decide the disposition and issue a retype notice, if necessary.

  2. Actual paper notices are printed after all scheduled work in the NRPS batches are completed.

  3. OLNR automatically generates a Notice Disposition Report.

  4. Refer to IRM 3.14.2, BMF Notice Review, for instructions about Online Notice Review (OLNR) process.

3.14.2.9 (01-01-2016)

International Documents

  1. An international document is:

    • Return with a foreign address

    • Return with income from a foreign source

3.14.2.9.1 (04-03-2023)

BMF International Tax Returns - For Ogden Service Processing Center (OSPC) only

  1. International Employment Tax Returns include but are not limited to:

    • 940(sp), Employers' Annual Federal Unemployment Tax - Puerto Rico (MFT 10).

    • 941(sp), Employers' Quarterly Federal Tax Return - Puerto Rico (MFT 01).

    • 941-SS, Employers' Quarterly Federal Tax Return - Virgin Islands, Guam, American Samoa, Commonwealth of Northern Marianna Islands (MFT 01).

    • 943(sp), Employers' Annual Tax Return for Agricultural Employees Puerto Rico (MFT 11).

    • 944(sp), Employers' Annual Federal Tax Return - Puerto Rico (MFT 14).

    • 944-SS, Employers' Annual Federal Tax Return - Virgin Islands, Guam, American Samoa, Commonwealth of Northern Marianna Islands (MFT 14).

    Note:

    To correct errors on previously filed Forms 941SS, and 944-SS, taxpayers must use the corresponding X forms: Form 941X, and 944X.

  2. International Corporation Tax Returns include but are not limited to:

    • Form 1120 with Forms 1118, 5712, 5712-A, 5735, 5471, 5472 and Schedule P.

    • Form 1120-F, U.S. Tax Return of a Foreign Corporation (MFT 02).

    • Forms 1120-FSC and Form 8279 (FSC election), U.S. Income Tax Return of a Foreign Sales Corporation (MFT 02).

  3. Foreign Withholding Tax Returns include but are not limited to:

    • Form 1042, Annual Withholding Tax Return for U.S. Income for Foreign Persons (MFT 12).

  4. Foreign Estate Tax Returns:

    • Form 706-NA, United States Estate (and Generation Skipping Transfer) Tax Return (MFT 52).

3.14.2.9.2 (01-01-2021)

General Information

  1. Basic review of international returns varies slightly from domestic. Documents are compared to the computer generated documents, computer paragraph notice and information contained within OLNR system.

  2. Compare the Document Locator Number (DLN) on the return with the DLN on NRPS package.

  3. Compare the name and address on the tax return (if the return is necessary to complete the review of the notice or transcript or if the return is available for viewing on EUP) to the name on the notice or entity part of the refund transcript.

  4. When calculating restricted interest on foreign BMF tax accounts, please refer to the following: IRM 3.14.2.7.17.9, Computing Normal and Restricted Interest

3.14.2.9.3 (01-01-2024)

Extension of Time to File International Returns

  1. For taxable years ending after July 31, 1990, filing deadlines which apply to Non Resident aliens and foreign corporations engaged in a U.S. trade or business or had a permanent establishment are listed below.

    1. Foreign corporations must follow the filing procedures for Form 1120-F and have 18 months to file before losing deductions or credits.

    2. Non Resident aliens and foreign corporations unsure about their status may file a protective return no later than the deadline.

    3. The extension of time to file only applies to the calculation of penalties. Interest accrues from the due date of the return.

3.14.2.9.4 (04-03-2023)

Review for Payments

  1. Missing credits occur when payments posted to the module are less than amount claimed. The credit may have posted to another module or payment was not made. For specific instructions concerning missing credits refer to IRM 3.14.2.7.7.3, Credit Discrepancy-Missing Credit.

  2. Excess credits occur when more credits are posted to the module than the amount claimed on the tax return. The credit may belong to another module or payment not included in the preparation of return. For specific instructions concerning excess credits, refer to IRM 3.14.2.7.7.2 , Credit Discrepancy - Excess Credits .

  3. If Form 3244, Payment Posting Voucher, is attached to the return and payment has not posted, research IDRS for:

    • XSINQ and URINQ for payments.

    • TEP, GUF, PN, or UP payments.

    • Invalid conditions (another name control or number).

  4. If a pending or found missing payment completely pays liability, input command code STAUP with history item and void the notice.

3.14.2.9.5 (04-03-2023)

Manual Intervention List

  1. If a notice does not meet NRPS criteria but requires subsequent review, a Manual Intervention List generates in notice sequence order.

  2. Refer to IRM 3.14.2.5.3, Manual Intervention CAF/RAF/SC, for complete procedures on Manual Intervention.

3.14.2.9.6 (01-01-2016)

Math Error Notices

  1. Use OLNR and IDRS tax module data to decide disposition of notice.

  2. General guidelines are:

    1. If notice is incorrect; label or retype the notice.

    2. If the taxpayer does not need to be contacted, void the notice.

    3. If the notice is correct, print the notice.

3.14.2.9.7 (04-03-2023)

Overpayment Notices

  1. If the return is not provided , try to work without the document; however, if errors are found, it may be necessary to secure a copy of the return.

  2. Verify name, address, taxpayer identification number (TIN), tax period and DLN as shown on the return with information contained in the notice.

    1. Route major entity changes to Entity Control for necessary action using local control procedures.

    2. If the tax period needs to be corrected reprocess the document to the correct period.

    3. A DLN mismatch may simply be a wrong pull or it could indicate a slipped or mixed block.

    Math Error - Review the math error explanation and decide if it explains the taxpayer error. Verify the tax from point of error through the remainder of the return and review the math error explanation for accuracy.
    If Then
    the math error assigned is incorrect retype to the appropriate TPNC.
    processing made an incorrect change to return. correct the account as needed, intercepting the refund if necessary and void or retype the notice as appropriate
    the taxpayer’s original figures are correct correct the account, intercepting the refund if necessary, and void or label the notice as appropriate

  3. Excess Credits- calculate the excess amount on the module which should match the credit balance on the notice.

    1. Add any assessed penalty or interest amount(s) to the module overpayment (TC 846).

    2. Deduct any overpayment claimed by the taxpayer from the above amount. (An overpayment is the result of credits claimed minus tax per return.)

    3. Use NRPS module data to decide which credit(s) created the excess.

    4. Allow any unclaimed TC 716 to refund.

    5. Review for requested credit elect to be applied to the next tax period. If TC 836 has not posted to the next tax period, intercept the refund.

    6. If the comparison of excess FTD credit(s) is the same as date/amount with the other credits in the module and doesn't belong on any other module, allow the duplicate payment to refund.

    7. Review IDRS for any PN, AP, UP, RS, etc., transactions which could place the module in debit status. Intercept the refund if necessary.

  4. Notice Disposition - Deposit Error (Credit Discrepancy Only) - If transactions are pending and an adjustment notice will generate ((one of these is recomputing: FTF 01, FTD 03 ,FTP 07 or 11) follow the table below.

    If Then
    the module is settled or overpaid Label or void notice as necessary. Then use local control file to intercept and void the subsequent CP 210 / CP 220 or CP 910 / CP 920.
    the module is in balance due status Label or retype the current notice. Then use local control file to intercept and void subsequent CP 210 / CP 220 or CP 910 / CP 920.

  5. Notice Disposition - If transactions are pending and penalties will not recompute (no change to : FTF 01, FTD 03 ,FTP 07 or 1) and an adjustment notice will not generate. Follow the table below.

    If the module Then
    has a zero balance or is overpaid void the notice unless the taxpayer needs to receive an adjustment notice .
    remains in balance due status retype the notice.

  6. If making an adjustment and not returning to original taxpayer figures, retype the notice and use appropriate hold code.

3.14.2.9.8 (01-01-2016)

Balance Due Notices

  1. The NRPS selection key is used as a guideline in reviewing a case. If the document is not provided in NRPS package, try to resolve without document; however, if charged out to another area, it may be necessary secure a copy.

  2. Compare name, address, tax period, DLN with return information on the notice.

    1. Route major entity changes to Entity Control for necessary action using local control procedures.

    2. If correction involves reprocessing to correct period, see IRM 3.14.2.6.18, Reprocessing Returns.

    3. A DLN mismatch may simply be a wrong pull or it could indicate a slipped or mixed block. See IRM 3.14.2.7.4.3, Slipped Blocks and Mixed-Data Blocks, for processing instructions for slipped or mixed blocks.

  3. Math Error - Review math error explanation to decide if error in tax computation or credits. Verify from point of error and decide if correct math error explanation.

  4. If a deposit/credit discrepancy, research for

    • PN, CU, UP, RS etc., credits that may resolve credit discrepancy.

    • Missing credits posted on other modules.

    • Any indication of another EIN.

  5. Notice Resolution - decide if an adjustment to tax (TC 29X) is made.

    If Then
    original figures correct and module will become zero balance or overpaid void the notice.
    accepting original figures and results in a balance due ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ retype to CP 161, (English version), or, if applicable, CP 861, (Spanish version).
    results are different than original figures retype notice.

  6. If applying credits to a module and accepting original submission (taxpayer’s figures) decide the following:

    1. If Then
      module has a zero balance or overpaid void the notice.
      module shows an FTD penalty≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and return filed prior to 1/1/2001. void the notice.
      module shows an FTD penalty ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and return filed after 1/1/2001 void the notice.
      Module remains balance due Label or retype the notice. Label notice if the 01, 03, 07, or 11 penalties will recompute. (BMF Label #2 with money amount. If notice in Spanish, indicate.)
      Module results in different figures than originally submitted Label or retype the notice. If no penalties will recompute, retype the notice.

  7. When changing a notice, input a history item and CC STAUP with appropriate hold code to avoid an incorrect IDRS notice and prevent erroneous refund of credits.

3.14.2.9.9 (01-01-2016)

Labeling Notices

  1. Notices are the most common contact the taxpayers receive from the Internal Revenue Service; therefore, the image of the Service is reflected in these notices.

  2. Under certain circumstances, an explanation of pending actions may be added by affixing a label to the notice.

  3. Do not label a notice when increasing the amount of the balance due. Always retype the notice.

  4. For more information about labeling notices, see IRM 3.14.2.7.10.6.

3.14.2.9.10 (03-16-2023)

Foreign Investment in Real Property Tax Act (FIRPTA)

  1. The Foreign Investment in Real Property Tax Act (FIRPTA) was amended by the Deficit Reduction Act of 1984. This amendment added Section 1445 to Chapter 3, Subchapter A, of the Internal Revenue Code of 1954. Section 1445 requires the withholding of tax on dispositions of certain U.S. Real Property Interests (USRPI) by a foreign seller.

  2. Before FIRPTA, Non Resident aliens and foreign corporations were generally exempt from income tax on capital gains to the extent that they were not effectively connected with a U.S. trade or business.

  3. IRC 897 provides rules for the taxation, on sales or other dispositions of U.S. real property interests (including installment sales, exchanges, foreclosures, and deeds in lieu of foreclosure of U.S. real property interests), of nonresident alien individuals and foreign corporations. Capital gains (or losses) from the disposition of U.S. real property interests are treated as income effectively connected with a U.S. trade or business. In addition, Regulated Investment Companies (RICs) and Real Estate Investment Trusts (REIT) with foreign investors are subject to the FIRPTA rules under IRC 1445 and IRC 897. Consequently, income tax is imposed on the net gains at marginal income tax rates. FIRPTA also imposed withholding tax provisions to ensure the collection of tax. Refer to IRM 3.21.261.1.1, Form 8288 Background and IRM 3.21.25 , Miscellaneous Tax Returns for more information.

  4. Verify Form 8288-A credit indicator sheet for credit claimed. Only one box must be checked. If not attached, forward to the FIRPTA unit.

  5. Review the master file account because of the possibility of an erroneous duplicate credit for the same payment.

    Note:

    Form 8288 can be filed with an EIN, SSN or ITIN. If the return was filed with an SSN, or ITIN use File Source Code "V" for valid or "W" for invalid. It may be necessary to research under both the valid and invalid segments for an erroneous duplicate credit. There should never be any generated refunds on Form 8288 (MFT 17).

3.14.2.9.11 (01-01-2023)

Withholding Tax on Foreign Partners

  1. Form 8804, Form 8805 and Form 8813 are filed by non-publicly traded partnerships to report and pay Section 1446 withholding tax based on effectively connected taxable income allocated to foreign partners without regard to distribution. See IRM 3.14.2.9.20, for forms filed for withholding under section 1446(a) by publicly traded partnerships.

  2. Form 8804, Annual Return for Partnership Withholding Tax (Section 1446), shows the total withholding of tax liability of the partnership. For more information concerning Form 8804, please refer to IRM 3.21.15, International Returns and Document Analysis Foreign Partnership Withholding.

  3. Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, shows amount of effectively connected taxable income and withholding tax allocated to each foreign partner.

  4. Form 8805 must be attached to the foreign partners tax return for proper credit.

  5. Review for the credit as a TC 766 allowance and if needed make the necessary adjustment.

  6. Any U.S. person erroneously made subject to the withholding tax would also receive Form 8805 from a partnership and should attach to Form 1040 or Form 1120 for credit substantiation.

  7. Form 8813, Partnership Withholding Tax Payment Voucher (Section 1446), is used to transmit withholding tax payments from partnerships.

  8. Forms 8288 and 8288-A are filed to report and pay withholding tax due to the acquisition of U.S. real property interests.

    1. Form 8288, U.S. Withholding Tax Return for Dispositions by Foreign Persons of U.S. Real Property Interests, shows the amount subject to withholding and the total amount withheld by the transferee.

    2. Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests, shows the amount of withholding tax. A copy of Form 8288-A, stamped by the IRS, must be attached to the transferor (seller’s) return for proper credit.

3.14.2.9.12 (03-16-2023)

International Refund Transcripts

  1. Refund transcripts are reviewed to decide if overpayment will refund.

  2. Selected transcripts are reviewed by key code.

  3. When the return is included in the NRPS package or is subsequently associated with the case, all general review procedures in IRM 3.14.2.7 must be completed before reviewing the actual key code criteria.

  4. Use category T or TI for disposition on OLNR system.

3.14.2.9.13 (01-01-2016)

CP Notices

  1. This section contains instruction for various BMF International CP notices.

3.14.2.9.14 (01-01-2021)

CP 801, Form 940(sp) Balance Due Notice

  1. CP 801 (CP 101) is a balance due notice generated from a math error on Form 940(sp), Employers Annual Federal Unemployment (FUTA) Tax Return and written in Spanish.

  2. Form 940(sp) is a calendar year return filed by an employer to report unemployment tax.

  3. A calendar year return is due January 31st of the year following the end of the tax period.

  4. Four separate payments are required in April, July, October and January.

  5. Compare payment dates and amounts with liabilities shown on the return (if the return is necessary to complete the review of the notice or if the return is available for viewing on EUP).

    Note:

    Payments sometimes post to Form 941(sp) modules

  6. If payment located in another module, move credit to account.

  7. If possibility of another TIN, research all available systems for missing payments.

  8. Review document for attachments/additional information for incomplete processing(if the document is necessary to complete the review of the notice or if the return is available for viewing on EUP) .

3.14.2.9.15 (01-01-2016)

CP 802, Form 941(sp), Form 943(sp), Form 944(sp), Balance Due Notice

  1. CP 802 (CP 102) is a balance due notice generated from a math error and written in Spanish.

  2. Notice pertains to

    1. Form 941(sp), Employers QUARTERLY Federal Tax Return.

    2. Form 943(sp), Employers Annual Tax Return for Agricultural Employees.

    3. Form 944(sp), Employers ANNUAL Federal Tax Return.

  3. Forms 941(sp) is a quarterly return due April 30, July 31, October 31, and January 31.

  4. Form 943(sp) is an annual return due on January 31st.

  5. Form 944(sp) is an annual return due on January 31st.

  6. If a return is filed late, consider misapplied payments from another tax period.

  7. Compare tax and liability on document with credits/payments on other modules without a TC 150.

  8. Consider the document could have been processed to an incorrect tax period. If necessary, secure original return for verification.

  9. If a credit on a Q- Freeze module is needed, transfer the credit. If Q- Freeze will expire before completion of credit transfer, intercept refund.

    1. Q- Freeze condition expires after 15 cycles.

    2. Intercept refund when TC 846 posts.

    3. Transfer credit with the appropriate posting delay.

    4. Retype or void notice, as necessary.

  10. Check for possible processing errors such as: Federal Insurance Contributions Act (FICA) adjustment on withholding not recognized during processing and created a balance due notice for twice the amount.

3.14.2.9.16 (01-01-2016)

CP 811, Form 940(sp), Overpayment Notice

  1. CP 811 (CP 111) is an overpayment notice generated from a math error on Form 940(sp) Employer's Annual Federal Unemployment Tax (FUTA) Return and written in Spanish.

  2. Compare amount and date with liability section of Form 940(sp).

  3. Verify any unclaimed payments/credits (TC 670).

  4. If able to decide correct posting and payment intended for another module, intercept the refund.

  5. If there are any PN, AP, UP, CU, RS, etc., actions which could result in debit status, intercept refund.

  6. If researching to apply excess credits/payments and unable to resolve before refund deletion deadline, intercept the refund.

  7. If unclaimed credit consistent with Form 941(sp) payments, transfer payment(s) to Form 941(sp) account.

  8. Use CC NOREF to control the case and intercept the refund.

3.14.2.9.17 (01-01-2016)

CP 812, Form 941(sp), Form 943(sp), Form 944(sp), Overpayment

  1. CP 812 (CP 112) is an overpayment notice generated from a math error or deposit error and written in Spanish.

  2. Notice pertains to:

    • Form 941(sp), Employers QUARTERLY Federal Tax Return.

    • Form 943(sp), Employers Annual Tax Return for Agricultural Employees.

    • Form 944(sp), Employers' ANNUAL Federal Tax Return - (Puerto Rico).

  3. If research shows payment (exact amount and date) will post to next period, intercept the refund and transfer credit.

    Note:

    Do not place a module in debit balance.

  4. Verify unclaimed TC 670 payments.

  5. Compare the tax on FICA wages with adjusted total of FICA taxes.

  6. If the difference is the same as TC 716, intercept refund and assess tax because of duplication of credits (Form 941(sp)).

  7. Compare tax and liability data with credits on other tax periods where no assessment made (TC 150). Document may have posted to incorrect period. If credits agree with notice data, intercept refund and reprocess return.

  8. If NRPS package indicates another EIN, research.

  9. Review other accounts for TC 706 (BMF) for possible offsets.

  10. If TC 826 present in module and action offsets part or all of credit to another module but actually belongs on another tax period, reverse TC 826. Void or re-type offset notice CP 838 (CP 138).

  11. If action(s) will create an additional refund, take necessary action for an appropriate label 5/6.

  12. A CP 812, Q- Freeze indicates Schedule A was checked but Back-up Withholding (BUWH) was not assessed reference IRM 21.5.4, General Math Errors Procedures.

    Note:

    Always use appropriate Hold Code to prevent another notice from generating.

3.14.2.9.18 (01-01-2021)

CP 861, Request for Payment

  1. CP 861 (CP 161) is a non-math error notice telling the taxpayer of a balance due of ≡ ≡ ≡ ≡ or more and written in Spanish.

  2. The balance may be the result of tax, penalties and/or interest.

  3. Compare entity and tax period with document (if the document is necessary to complete the review of the notice or if the return is available for viewing on EUP) .

  4. All major entity problems must be routed to Entity Control function with a copy of notice and document using local control procedures.

  5. If return processed to wrong tax period, take necessary action to adjust module and reprocess document. Refer to 21.8.2 , BMF International Adjustments.

  6. Research modules for pending AP, PN, TP, RS, UP, CU credit in the NRPS package. If the credit overpays the module and is not pending on TXMOD or posted on BMFOLT, decide if the payment will post to the module.

  7. If return shows no tax credits but module needs credits for settlement; IDRS system will give information on credits posted to another tax module and/or pending, resequencing or unpostable transactions.

  8. If credits posted to another tax module; transfer credits, void , retype or label the notice as necessary.

  9. VOID the notice if penalty and interest will fully abate after applying credits.

  10. If payments are shown on NRPS appended data sheet but did not post, input CC STAUP for 9 cycles to avoid issuance of erroneous notice.

  11. If applied credit will not settle the account and penalty and interest will not recompute and it's a balance due, then apply label 3.

  12. Label notice if penalties are present and timely credits applied. Penalties will recompute and subsequently generate another notice.

  13. If research shows unpostable payment, input CC STAUP and notify Unpostable Unit by using CC UPASZ to post the credit.

  14. If return shows an overpayment, review for E-credit elect, S-refund or F-final.

  15. If research shows pending credits or credits applied from another module with an ES Penalty, recompute penalty.

  16. If recomputation shows a decrease in the ES Penalty, abate penalty and retype the notice.

  17. Timely filed extensions with or without accompanying credits may be posted to another period or TIN.

  18. If research shows extension of time to file was incorrectly posted to another module, secure the actual document to verify. If necessary, reprocess extension document and transfer any credits made on incorrect module.

  19. If module shows a TC 976, take the necessary action to label notice.

  20. Do not abate penalty if delinquent code Disaster Recovery Code (DRC) or Secured Returns Code (SRC) or TDA status within the last 12 months.

  21. If applied credits will settle the account, then do not void CP 861 because it is fully paid by credit that offset (TC 706) into the notice cycle. Do not label if the offset doesn't pay the module in full. A CP 838 will generate from the losing module.

    Note:

    This is the only situation when the CP 861 will not be voided.

3.14.2.9.19 (01-01-2016)

CP 910 and CP 920, Adjustment Notices (CP 210 and CP 220)

  1. CP 910 and CP 920 (CP 210 and CP 220) generate as a result of an adjustment to an International BMF tax account.

  2. CP 910 generates for a decrease in tax liability.

  3. CP 910 notice also generates when a transaction code 29X/30X (document codes 54/47) or FTD bad check penalty (document codes 24/97 only) posts, unless the notice module is in status 14.

  4. CP 910 can either be a balance due, even balance or an overpayment notice if the account was in a prior TDA status.

  5. CP 920 notice is a balance due notice and generates where there has been an increase in tax liability.

  6. If documents available, review for accuracy of adjustment action. Review appended data sheet and tax module for changes in notice module. Check TEP, GUF, and Unpostables for possible misapplied credits or debits.

    If Then
    applied credit(s) will result in recomputation of penalty or interest use BMF Label #2 (in Spanish) to explain transfer of payment/credit and possible subsequent notice
    applied credit(s) will not result in a recomputation of penalty and interest retype notice based on current results of CC INTST for correct balance due.

  7. Check for pending transactions e.g., TC 29X or TC 30X which will generate another notice.

  8. If research shows an additional notice from TC 29X/30X select label to explain adjustment with another notice send under separate cover (BMF Label #1 - Spanish).

  9. If notice indicates an overpayment (TC 846), research for pending debit transactions or outstanding balances and if found, intercept the refund.

  10. If notice for abatement of penalties and original notice voided (CP 910 / CP 920), void only if original was recent and immediately preceding current CP 910 / CP 920.

  11. If module shows another function has control of the module, contact the employee identified as having control of the account.

  12. If module has an open audit indicator (TC 420), research using CC AMDISA for possible referral to Examination Branch.

  13. Refer to IRM 3.14.2.7.6 , BMF Notice Review for Freeze Codes.

  14. If module shows closed audit indicator (TC 421), DO NOT INTERCEPT refund and print the notice.

3.14.2.9.20 (04-03-2023)

Forms 1042 / Form 1042-S Withholding on U.S. Source Income

  1. Form 1042 is the annual tax return filed by withholding agents to report withholding tax liability and tax withheld on U.S. source income paid to certain nonresident aliens, foreign partnerships and foreign corporations. In addition, these forms are used to report withholding of distributions made by publicly traded partnerships of effectively connected taxable income subject to 1446(a) withholding.

  2. Form 1042-S is filed to report foreign person’s U.S. income subject to withholding and withholding tax liability.

    Note:

    Form 1042-S is processed with a File Location Code 60, Tax Class 5 and Document Code 02 for paper documents.

    1. A signed Competent Authority Letter is acceptable in lieu of a Form 1042-S. The Competent Authority Letter must be signed and state the withholding amount allowed and the correct tax year.

    2. Form 1042-S must be filed on or before March 15th. Taxpayers may request a 30 day extension of time to file Form 1042-S by filing a completed Form 8809, Application for Automatic Extension of Time to File Information Returns. An additional 30 day extension may be requested by filling out a second Form 8809.

      Note:

      The Form 8809, does not extend the time for filing Form 1042. A Form 7004 maybe used to file an extension for Form 1042.

3.14.2.9.21 (04-03-2023)

Form 1042 Filing Requirements

  1. Form 1042 is filed by individuals, corporations, and partnerships having control, receipt custody, disposal, or payment of interest, dividends, rent, salaries, etc., to the extent that such items constitute gross income from U.S. sources for nonresident alien individuals, foreign partnerships, or foreign corporations. Form 1042 also serves as a transmittal.

  2. Form 1042 must be filed on or before March 15th of each year.

  3. Forms 1042 are filed whether or not any tax was withheld or required to be withheld (i.e., income was exempt from withholding).

  4. The dollar amount of withheld taxes determines the frequency of deposits. Refer to the table below for requirements for withholding payments.

    If Then
    undeposited taxes of $2,000 or more at the end of any quarter-monthly period. deposit within three banking days after the end of the quarter-monthly period. (Quarter-monthly periods end on the 7th, 15th, 22nd and last day of the month.)
    undeposited taxes of $200 or more but less than $2,000 at the end of the month. deposit by the 15th day of the following month.
    undeposited taxes of less than $200 at the end of the year deposit via FTD or remit with Form 1042 on or before March 15 in the following year of tax year.

3.14.2.9.22 (11-05-2019)

Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons

  1. Form 1042 is the annual tax return used by withholding agents to report and pay tax due on income derived from sources in the United States. .

  2. Form 1042 is an annual calendar year return due by March 15th and cannot be filed as a fiscal year return.

  3. This form is similar to Form 945, Annual Return of Withheld Federal Income Tax.

  4. Currently Form 1042 (MFT 12) is processed only at the Ogden campus. Form 1042 is processed using a Tax Class of 1, a Doc Code of 25 and one of the following File Location Codes (FLC):

    • FLC 29 - If the withholding agent is located within the U.S.

    • FLC 60 - If the withholding agent is located outside of the U.S.

    • FLC 78 - If the withholding agent is located in one of the U.S. territories or the Commonwealth of Puerto Rico.

  5. See IRM 3.21.110 for Processing Form 1042 Withholding Returns, and IRM 3.22.110, for Code and Edit and Error Resolution specific steps for withholding returns.

  6. The statutory period of limitations on assessment generally expires 3 years from the due date or received date of the return whichever is later.

3.14.2.9.23 (01-01-2018)

Reviewing Notices for Form 1042

  1. Verify entity for a possible address change.

  2. Verify all credits including credit elect and excess FTD payments.

    Note:

    Deposits with TC 620 may have incorrect FTD penalties. See IRM 20.1.4.11.6, TC 620 on Form 1042 Account.

  3. Compare notice with IDRS with emphasis on CP/TRNS 193, TC 976, A- Freeze for subsequent actions.

  4. If necessary, input a CC STAUP for 15 cycles and forward to Accounts Management using local control procedures.

  5. If an address was corrected and there is an overpayment which will be refunded, intercept refund and prepare a manual refund.

    1. If Then
      withholding agent located within the U.S. Form 1042 processed with File Location Code (FLC) 29.
      withholding agent located outside of the U.S. FLC is 60.
      withholding agent located in U.S. Territory FLC is 78.
      only action is to change location code Do not intercept the refund.

      Note:

      When adjusting BMF international tax accounts using CC REQ54, or transferring credits using CC ADD24 or ADD34 or ADD48, input a filing location code (FLC) of 60 or 78 according to the primary location code shown on TXMOD or ENMOD.

  6. Retype notice for correct address, location code and taxpayer's account.

  7. Research for missing payments.

  8. If telephone number unavailable, use “Call your nearest IRS office” when retyping the notice.

  9. Ensure bottom of notice reflect correct Area Office/Service Center.

  10. Q Transcript Review - Input TC 570 on modules reflecting a Q to prevent incorrect notices and/or erroneous refunds.

3.14.2.9.24 (01-01-2016)

CP 107, Balance Due Form 1042

  1. CP 107 is a balance due notice generated from a math error.

  2. Validate error with a math verification.

  3. If the taxpayer's original figures are correct on their return, then adjust the taxpayer's account to reflect those original figures. The notice can be voided.

3.14.2.9.25 (01-01-2016)

CP 117, Overpayment Form 1042

  1. A CP 117 is an overpayment notice generated from a refund.

  2. Validate error with a math verification.

  3. If the taxpayer's original figures are correct on their return, then adjust the taxpayer's account to reflect those original figures. The notice can be voided.

3.14.2.9.26 (01-01-2024)

Form 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Return

  1. The Tax Reform Act of 1976 requires decedent’s executor to file Form 706-NA for the estate of a nonresident who was not a citizen.

  2. This rule also applies if part of the gross estate (as defined by the statute) situated in the U.S. exceeds $60,000 at the date of death reduced by the amount of adjusted taxable gifts within the meaning of Section 2001(b) made by the decedent after December 31, 1976.

    Note:

    Before December 31, 1976, Form 706-NA was filed for the estate of a nonresident who was not a citizen. whose gross estate situated in the U.S. exceeded a value of $30,000 at the date of death.

  3. Form 706-NA is due 9 months after the date of death.

  4. Under Delegation Order 25-4 (Rev. 1), SB/SE Chief of Estate and Gift Tax Director, Campus Compliance Operations, Cincinnati SB/SE Director Advisory & Insolvency Collection Advisory Estate Tax Lien Group Manager, can approve extensions of time for filing. It may be granted even though an application is made later than 9 months from the date of death. However, unless the executor is abroad, the extended due date for filing the estate tax return may not be later than 15 months from the date of the decedent’s death (Sec. 20.6081-1(c) of the Regulations.)

3.14.2.9.27 (11-05-2019)

Form 1120-F, U.S. Income Tax Return of a Foreign Corporation

  1. Every foreign corporation must file a Form 1120-F or Form 1120-FSC if the corporation:

    1. Engages in a trade or business in the U.S. during any time within the taxable year.

    2. Has income from U.S. sources which is not effectively connected with the operation of a trade or business within the U.S and for which the tax liability has not been satisfied by withholding at source.

    3. Has income effectively connected with (or treated as effectively connected with) a U.S. trade or business.

    4. Has overpaid U.S. income tax and is requesting a refund.

  2. Gross income from U.S. sources not effectively connected with a U.S. trade or business is subject to a 30% tax rate or such lower tax specified by tax treaty.

  3. Deductions are not allowed against income not effectively connected with the operation of a trade or business within the U.S.

3.14.2.9.28 (11-04-2021)

Filing Requirements

  1. The income tax return due date is decided as follows:

    If Then
    foreign C Corporation has an office or place of business within the U.S. for tax years beginning after 2015, the due date is the 15th day of the 4th month following the tax year.

    Exception:

    for tax years beginning before 2026, if the taxable year ends on June 30 (or if the return is for a short period that ends on any day in June), the due date is the 15th day of the 3rd month following the close of the tax year.
    foreign C Corporation has an office or place of business within the U.S. for tax years ending prior to January 1, 2016, the due date is the 15th day of the 3rd month following the tax year.
    foreign corporation does not have an office or place of business within the U.S. must file on or before the 15th day of the 6th month following the tax year.
3.14.2.9.29 (01-01-2023)

Payment of Tax Due

  1. A corporation must make estimated tax payments if the tax liability will be $500 or more. If liability less than $500, payment is due at the time the return is due.

  2. Payment of tax depends upon whether or not the corporation has an office or place of business in the United States.

    1. A foreign C Corporation that maintains an office or place of business in the U.S. pays all tax liability by the 15th of the 4th month following the tax year, but if certain conditions are met, the corporation is granted an automatic extension until the 15th day of the 6th month following the close of the taxable year to file the income tax return and to pay the tax.

    2. A foreign corporation that does not maintain an office of place of business in the U.S. must pay all their tax liability by the 15th day of the 6th month following the tax year.

  3. Payments are made directly to the Service and are not governed by depository requirements.

3.14.2.9.30 (11-05-2019)

Withholding Credits

  1. Withholding credits claimed on Form 1120-F are shown on line 5i.

    1. FIRPTA credit on Form 8288-A (requires verification).

    2. Partnerships credits on Form 8805:
      If Form 8805 attached and less than ≡ ≡ ≡ ≡ ≡ ≡, accept without verification.
      If credit is more than ≡ ≡ ≡ ≡ ≡ ≡ ≡, verify with FIRPTA unit.

    3. Withholding at source on Form 1042-S (tax certification required (e.g., Form W-8BEN-E)).

    4. U.S. income tax withheld (Form 1099 and statement that corporation is exempt from backup withholding required).

  2. Withholding credits claimed on Form 1120 FSC are shown on lines 2g and 2h.

    1. Withholding at source on Form 1042-S. (Research EIN of withholding agent to ensure Form 1042 filed to report at least the amount of credit claimed.)

    2. U.S. Income tax paid (withholding statement must be attached).

    3. Form 1099 for credit for amounts claimed for backup withholding reported on line 2h (withholding statement must be attached).

3.14.2.9.31 (01-01-2024)

Effectively Connected/Non Effectively Connected Income

  1. Form 1120-F reports a foreign corporation's income, gains, U.S. losses, deductions, credits and to figure its income tax liability and claim any refunds due.

  2. A foreign corporation can be engaged in a trade or business in the United States with or without having an office or other fixed place of business in the United States.

    1. If the foreign corporation does not have a U.S. office or other fixed place of business, it is only taxed on effectively connected income from U.S. sources.

    2. If foreign corporation has an office or other fixed place of business in the United States, it is taxed on effectively connected U.S. sourced income and certain foreign source income.

  3. Income received by foreign corporations engaged in a U.S. trade or business is considered effectively connected and taxed at corporate rates.

  4. Section II of Form 1120-F is used to compute the tax.

  5. Form 1120-F filers are subject to estimated tax payments if anticipated ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. Payments will be made using the depository method of payment.

3.14.2.9.32 (01-01-2016)

Form 1120-FSC, Income Tax Return of a Foreign Sales Corporation

  1. Before September 2000, a corporation that elected to be treated as a Foreign Sales Corporation (FSC) or a small FSC must have filed Form 8279 and the election must still be in effect.

  2. No new election can be made using Form 1120-FSC.

  3. Form 1120-FSC reports income, gains, losses, deductions, credits and respective income tax liability.

  4. FSC must be organized under the laws of certain qualifying foreign countries or possession of the United States excluding Puerto Rico.

  5. Foreign corporations electing FSC status may not claim the benefits of any U.S. tax treaty.

  6. If Schedule J is not complete or controlled group box is not checked, a math error results with increase to 35% tax rate. FSC must give a corrected apportionment plan in order to allow reduced tax rate.

3.14.2.10 (01-01-2024)

Replies to Computer Paragraph Notices

  1. Notice Review does not process replies to Computer Paragraph notices. If a reply is received in Notice Review, route it to your local ICT area for scanning.

3.14.2.11 (01-01-2024)

Taxpayer Notice Codes (TPNCs)

  1. See the following sections to review the available TPNCs for each form. All forms generating a Math Error CP will also allow TPNC 90, open fill-in paragraph. See TPNC 90 Literals in theTPNC 90 Literals-Copy and Paste Job Aid.

3.14.2.11.1 (01-01-2024)

Form CT-1 MFT 09 TPNCs

  1. See the list of taxpayer notice codes for Form CT-1 in IRM 3.12.13-27.

3.14.2.11.2 (01-01-2024)

11-C MFT 63 and Form 730 MFT 64 TPNCs

  1. See the list of taxpayer notice codes for Form 11-C and Form 730 in IRM 3.12.23.2.11 .

3.14.2.11.3 (01-01-2024)

Form 706 MFT 52 TPNCs

  1. See the list of taxpayer notice codes for Form 706 in IRM 3.12.263.3.12.3 .

3.14.2.11.4 (01-01-2024)

Form 706-NA MFT 52 TPNCs

  1. See the list of taxpayer notice codes for Form 706-NA in IRM 3.12.263.3.12.4 .

3.14.2.11.5 (01-01-2024)

Form 709 and 709A MFT 51 TPNCs

  1. See the list of taxpayer notice codes for Form 709 in IRM 3.12.263.3.12.5 .

3.14.2.11.6 (01-01-2024)

Form 720 MFT 03 and Form 2290 MFT 60 TPNCs

  1. See the list of taxpayer notice codes for Form 720 and Form 2290 in IRM 3.12.220.2.16.

3.14.2.11.7 (01-01-2024)

Form 940 MFT 10 TPNCs

  1. See the list of taxpayer notice codes for Form 940 in IRM 3.12.154-15.

3.14.2.11.8 (01-01-2024)

Form 941 MFT 01 TPNCs

  1. See the list of taxpayer notice codes for Form 941 in IRM 3.12.13-25.

3.14.2.11.9 (01-01-2024)

Form 943 MFT 11, Form 944 MFT 14, and Form 945 MFT 16 TPNCs

  1. See the list of taxpayer notice codes for Form 943, Form 944, and Form 945 in IRM 3.12.13-26.

3.14.2.11.10 (01-01-2024)

Form 990-PF MFT 44 TPNCs

  1. See the list of taxpayer notice codes for Form 990-PF in IRM 3.12.12-20.

3.14.2.11.11 (01-01-2024)

Form 990-T MFT 34 TPNCs

  1. See the list of taxpayer notice codes for Form 990-T in IRM 3.12.12.-22.

3.14.2.11.12 (01-01-2024)

Form 1041 MFT 05 TPNCs

  1. See the list of taxpayer notice codes for Form 1041 in IRM 3.12.14-36.

3.14.2.11.13 (01-01-2024)

Form 1042 MFT 12 TPNCs

  1. See the list of taxpayer notice codes for Form 1042 in IRM 3.22.110.21.17 .

3.14.2.11.14 (01-01-2024)

Form 1065 MFT 06 TPNCs

  1. Starting in tax year 2023, (for tax returns due in 2024) the Form 1065 is no longer an information only return. Due to the allowance for claims of EPE ( See IRM 3.14.2.6.4.12 for more information).

    Number Definition
    73 We changed the amount for the Elective Payment Election (EPE) because the Form 3800, General Business Credit, Part III, was computed incorrectly.
    74 We didn’t allow all or part of the credit claimed as clean vehicle credit on your return because one or more of the Vehicle Identification Numbers (VIN) reported on Schedule A (Form 8936), Clean Vehicle Credit Amount, didn’t match our records.
    75 We found an error in the computation of the total balance due amount.
    76 We found an error in the computation of the amount owed or overpayment amount.

3.14.2.11.15 (01-01-2024)

Forms 1120, 1120-C, 1120-F, 1120-L, 1120-H, 1120-PC, 1120-REIT & 1120-RIC MFT 02 TPNCs

  1. See the list of taxpayer notice codes for Form 1120, Form 1120-C, Form 1120-F, Form 1120-L, Form 1120-H, Form 1120-PC, Form 1120-REIT & Form 1120-RIC in IRM 3.12.251-1.

3.14.2.11.15.1 (01-01-2024)
Form 1120-FSC, 1120-ND, and 1120-SF MFT 02 TPNCs

  1. See the list of taxpayer notice codes for Form 1120-FSC, Form 1120-ND, and Form 1120-SF in IRM 3.12.16.3.4.1.

3.14.2.11.15.2 (01-01-2024)
Form 1120-POL MFT 02 TPNCs

  1. See the list of taxpayer notice codes for Form 1120-POL in IRM 3.12.12.-21.

3.14.2.11.15.3 (01-01-2024)
Form 1120-S MFT 02 TPNCs

  1. See the list of taxpayer notice codes for Form 1120-S in IRM 3.12.217-21.

3.14.2.11.16 (01-01-2024)

Form 4720 MFT 50 and Form 5227 MFT 37 TPNCs

  1. See the list of taxpayer notice codes for Form 4720 and Form 5227 MFT 37 in IRM 3.12.12-23.

3.14.2.11.17 (01-01-2024)

Form 5330 MFT 76 TPNCs

  1. See the list of taxpayer notice codes for Form 5330 in IRM 3.12.22.10.17.1.

3.14.2.11.18 (01-01-2024)

Form 8752 MFT 15 TPNCs

  1. See the list of taxpayer notice codes for Form 8752 in IRM 3.12.249.4.16.

Exhibit 3.14.2-1

CP Notice Descriptions

BMF CP Notices By Type and Module Status
CP Number Form Number CP Type Overpaid/Even/Balance Due
101 940, 940-EZ MATH ERROR BALANCE DUE
102 941, 941C, 941SS, 941X, 943, 943X, 944, 944SS, 944X, 945, 945X MATH ERROR BALANCE DUE
103 CT-1, CT-1X MATH ERROR BALANCE DUE
104 720 MATH ERROR BALANCE DUE
105 11-C, 229, 730, 706, 709 MATH ERROR BALANCE DUE
106 990PF, 4720, 5227 MATH ERROR BALANCE DUE
107 1042 MATH ERROR BALANCE DUE
111 940, 940-EZ MATH ERROR OVERPAID
112 941, 941C, 941SS, 941X, 943, 943X, 944, 944SS, 944X, 945, 945X MATH ERROR OVERPAID
113 CT-1, CT-1X MATH ERROR OVERPAID
114 720 MATH ERROR OVERPAID
115 11-C, 2290, 730, 706, 709 MATH ERROR OVERPAID
116 990PF, 4720, 5227 MATH ERROR OVERPAID
117 1042 MATH ERROR OVERPAID
123 CT-1, CT-1X MATH ERROR EVEN BALANCE 1¢-99¢
124 720 MATH ERROR EVEN BALANCE 1¢-99¢
125 11-C, 2290, 730, 706, 709 MATH ERROR EVEN BALANCE 1¢-99¢
126 990-PF, 5227, 5330 or 4720 MATH ERROR EVEN BALANCE 1¢-99¢
127 1042 MATH ERROR EVEN BALANCE 1¢-99¢
128 ALL BMF FORMS OFFSET BALANCE DUE
131 990-T, 1041, 1065, 1120 (all) MATH ERROR EVEN BALANCE 1¢-99¢
131A 990-T, 1041, 1065, 1120 (all) MATH ERROR BALANCE DUE $1-$4.99
CP Number Form Number CP Type Overpaid/Even/Balance Due
132 990-T, 1041, 1065, 1120 (all), 8804 MATH ERROR BALANCE DUE
133 990-T, 1065, 1041, 1120 (all), 8804 MATH ERROR OVERPAID
134B 720, 940, 941, 943, 944, 945, 1041, 1042, 1120 series, CT-1 CREDIT DISCREPANCY BALANCE DUE
134R 720, 940, 941, 943, 944, 945, 1041, 1042, 1120 series, CT-1 CREDIT DISCREPANCY OVERPAID
138 ALL BMF FORMS Adjustment OFFSET OVERPAID
141C 990, 990-EZ, 990-PF Late and Incomplete Filing Penalty BALANCE DUE
141I 990, 990-EZ, 990-PF Incomplete Filing Penalty BALANCE DUE
141L 990, 990-EZ, 990-PF Late Filing Penalty BALANCE DUE
145 ALL BMF FORMS CREDIT ELECT OVERPAID
147 1041, 1120 (all), 990 SERIES CREDIT ELECT ADDITIONAL AMOUNT APPLIED OVERPAID
161 ALL BMF FORMS NO MATH ERROR BALANCE DUE
162 1065 FAILURE TO FILE ELECTRONICALLY PENALTY BALANCE DUE
162A 1065, 1066, 1120-S LATE FILING PENALTY BALANCE DUE
162B 1065, 1120-S INCOMPLETE FILING PENALTY BALANCE DUE
173 990-T, 1041, 1120 (all) ES PENALTY ASSESSED OVERPAID
210 ALL BMF FORMS ADJUSTMENT OVERPAID/EVEN/ BALANCE DUE
215 CT-1, CT-1X CIVIL PENALTY OVERPAID/EVEN/ BALANCE DUE
220 ALL BMF FORMS ADJUSTMENT OVERPAID/EVEN/ BALANCE DUE
220J ACA 4980H ESRP ADJUSTMENT OVERPAID/EVEN/ BALANCE DUE
225 ALL BMF FORMS MISSING PAYMENT APPLIED OVERPAID/EVEN/ BALANCE DUE
233J ACA ESRP ADJUSTMENT OVERPAID/EVEN/ BALANCE DUE
247A 1041, 1120 series, 990-T IRC 965 NOTICE AND DEMAND BALANCE DUE
247B 1041, 1120 series, 990-T IRC 965 NOTICE AND DEMAND BALANCE DUE
247C 1041, 1120 series, 990-T IRC 965 NOTICE AND DEMAND BALANCE DUE
256 1041, 1120 series, 990-T IRC 965(H) INSTALLMENT REMINDER INSTALLMENT REMINDER
260 ALL BMF FORMS CREDIT REVERSAL BALANCE DUE
267 ALL BMF FORMS EXCESS CREDITS NON MATH ERROR OVERPAID
268 ALL BMF FORMS EXCESS CREDITS WITH MATH ERROR OVERPAID
380 ALL BMF FORMS TRANSCRIPT OVERPAID
384 ALL BMF FORMS TRANSCRIPT OVERPAID
386 ALL BMF FORMS TRANSCRIPT OVERPAID
388 ALL BMF FORMS TRANSCRIPT OVERPAID
947A 1041, 1120 series, 990-T SPANISH IRC 965 NOTICE AND DEMAND BALANCE DUE
947B 1041, 1120 series, 990-T SPANISH IRC 965 NOTICE AND DEMAND BALANCE DUE
947C 1041, 1120 series, 990-T SPANISH IRC 965 NOTICE AND DEMAND BALANCE DUE
956 1041, 1120 series, 990-T SPANISH IRC 965(H) INSTALLMENT REMINDER INSTALLMENT REMINDER
Exhibit 3.14.2-2

Common BMF Forms

Common BMF Forms
Form Form Title Tax Period MFT Due Date Payment Types Overpaid Bal. Due Even Non Math Error CP
11-C Occupational Tax and Registration Return for Wagering Annual Month 07 63 July 1 $50.00 or $500.00 115 105 125 161
706 U.S. Estate Tax Return 00000 52 9 months after Date of Death Tax paid by due date or installments 115 105 125 161
709 U.S. Gift Tax Return Calendar Year 51 April 15 - 115 105 125 161
720 Quarterly Federal Excise Tax Return Quarterly 03 Last day of the month following the end of the quarter. FTD's Monthly or Semi-Weekly 114, 268 104 124 161
730 Tax on Wagering Monthly 64 Last day of month following the month in which the taxable income is earned. - 115 105 125 161
940, 940-EZ Federal Unemployment (FUTA) Tax Return Calendar Year 10 January 31 Quarterly FTD's 111, 268 101 121 161
941 Employer's Quarterly Income Tax Return Quarterly 01 One Month Quarter End FTD's on Various Schedule 112, 268 102 122 161
943 Employer's Annual Tax Return for Agricultural Employees Calendar Year 11 January 31 Monthly or Semi-Weekly FTD's 112, 268 102 122 161
944 Employer's Annual Federal Tax Return Calendar Year 14 January 31 FTD's on Various Schedule 112, 268 102 122 161
945 Annual Return of Withheld Income Tax Calendar Year 16 January 31 FTD's on Various Schedule 112, 268 102 122 161
1041 Estates and Trusts Income Tax Return Fiscal Year 05 3 1/2 Months After Tax Period Quarterly ES Payments 133, 268 132 131 161
1065 U.S. Partnership Fiscal Year 06 2 1/2 Months After Tax Period No Tax Due 133, 268 132 131 161, 162
1120 U.S. Corporation Income Tax Fiscal Year 02 3 1/2 Months After Taxable Year Quarterly ES Payments 133, 268 132 131 161
2290 Heavy Vehicle Use Tax Return Annual Month 07 60 1 Month After Tax Month End TC 610 or 670 115 105 125 161
8752 Required Annual Payment Under Sec. 7519 Annual 15 May 15 - Transcript - - -
Exhibit 3.14.2-3

BMF Notices and Refund Transcripts Table

BMF Notices And Refund Transcripts Table
CP# Output CP Type CAF/RAF NRPS: Select NRPS: MRS NRPS: LCF Notes or Form
101 101 Math Error (ME)/Balance Due Yes Yes Yes Yes 940, 940-EZ
102 102 Math Error (ME)/Balance Due Yes Yes Yes Yes 941, 943, 944, 945
103 103 Math Error (ME)/Balance Due Yes Yes Yes Yes CT-1
104 104 Math Error (ME)/Balance Due Yes Yes Yes Yes 720
105 105 Math Error (ME)/Balance Due Yes Yes Yes Yes 11-C, 706, 709, 730, 2290
106 106 Math Error (ME)/Balance Due Yes Yes Yes Yes 5227, 4720
107 107 Math Error (ME)/Balance Due Yes Yes Yes Yes 1042
108 108 Inquiry Yes No No No FTD
109 109 Inquiry Yes No No No EIN/name
111 111 Math Error (ME)/Overpay Yes Yes Yes Yes 940, 940-EZ
112 112 Math Error (ME)/Overpay Yes Yes Yes Yes 941, 943, 944, 945
113 113 Math Error (ME)/Overpay Yes Yes Yes Yes CT-1
114 114 Math Error (ME)/Overpay Yes Yes Yes Yes 720
115 115 Math Error (ME)/Overpay Yes Yes Yes Yes 11-C, 706, 709, 730, 2290
116 116 Math Error (ME)/Overpay Yes Yes Yes Yes 5227, 4720
117 117 Math Error (ME)/Overpay Yes Yes Yes Yes 1042
120A 120A Notification Yes No No No -
123 123 Math Error (ME)/Even Balance Yes Yes No Yes -
124 124 Math Error (ME)/Even Balance Yes Yes No Yes 720
125 125 Math Error (ME)/Even Balance Yes Yes No Yes 11-C, 706, 709, 730, 2290
126 126 Math Error (ME)/Balance Due Yes Yes Yes Yes 5227, 4720
127 127 Math Error (ME)/Even Balance Yes Yes No Yes 1042
CP# Output CP Type CAF/RAF NRPS: Select NRPS: MRS NRPS: LCF Notes or Forms
128 128 Offset/Balance Due Yes Yes No Yes Associated if another CP is selected
130 130 Notification Yes No No No -
131 131 Math Error (ME)/Even Balance Yes Yes No Yes 1120-S, 1041, 1065, 1120-C, 990-T
131A 131A Balance Due Yes Yes Yes Yes 1120-S, 1041, 1065, 1120-C, 990-T
132 132 Math Error (ME)/Overpaid Yes Yes Yes Yes 1041, 1065, 1120-C, 990-T
133 133 Math Error (ME)/Overpaid Yes Yes Yes Yes 1120-S, 1041, 1065, 1120-C, 990-T
134B 134B FTD/ES Payment Discrepancy Notice (Balance Due) Yes Yes Yes Yes 1120 series, 720, 940, 941, 943, 944, 945, 1041, 1042
134R 134R FTD/ES Payment Discrepancy Notice (Refund) Yes Yes Yes Yes 1120 series, 720, 940, 941, 943, 944, 945, 1041, 1042
135 135 Service Center No No No No -
138 138 Offset to Balance Due Yes Yes No Yes Associated if another CP is selected
139 139 Notification Yes No No No -
141C 141C Balance Due Yes No No No 990, 990-EZ, 990-PF
141I 141I Balance Due Yes No No No 990, 990-EZ, 990-PF
141L 141L Balance Due Yes No No No 990, 990-EZ, 990-PF
142 142 Notification Yes No No No -
143 143 Notification Yes No No No -
145 145 Credit elect Yes Yes No Yes Associated if another CP is selected
147 147 Subsequent credit elect Yes Yes No Yes -
151 151 Notification No No No Yes -
152 152 Notification Yes No No Yes -
153 153 Notification No No No No -
155 155 Service Center No No No No -
156 156 Notification Yes No No Yes -
160 160 Reminder Balance Due Yes No No No -
161 161 Balance due Yes Yes Yes Yes ALL
162 162 FTF ELF Yes Yes Yes Yes 1065
162A 162A FTF Penalty Balance Due Yes Yes Yes Yes 1065, 1066, 1120-S
162B 162B Missing Information Penalty Balance Due Yes Yes Yes Yes 1065, 1120-S
163 163 Reminder Balance Due Yes No No No -
164 164 Service Center files No No No No -
165 165 Bad check penalty Yes No No No -
166 166 Insufficient funds Yes No No No -
169 169 Inquiry Yes No No No -
CP# Output CP Type CAF/RAF NRPS: Select NRPS: Categories NRPS: MRS NRPS: LCF Notes or Forms
170 170 Service Center No No - No No -
171 171 Notification Yes No - No No -
172 172 Notification No No - No No -
173 173 ES Penalty Assessed Reduced refund Yes Yes A/B/E/H Yes Yes 1120-S, 1041, 1120-C, 990-T,
174 174 Inquiry Yes No - No No 940, 940-EZ
177 177 AKPFD Yes Yes A/B/H Yes Yes -
178 178 Inquiry Yes No - No No -
180 180 Inquiry Yes No - No No -
181 181 Inquiry Yes No - No No -
182 182 Inquiry Yes No - No No 1120-S, 1041, 1120-C, 990-T
183 183 Inquiry Yes No - No No 720
185 185 Service Center No No - No No TC 690
187 187 Service Center Exam No No - No No Notice to Exam
188 188 Notification Yes No - No No Impact
190 190 Notification Yes No - No No Impact
191 191 Service Center Accounting No No - No No -
192 192 Service Center No No - No No -
CP# Output CP Type CAF/RAF NRPS: Select NRPS: Categories NRPS: MRS NRPS: LCF Notes or Forms
193A 193 Service Center Adjustment No No - No No -
194 194 Service Center Accounting No No - No No -
195 195 Service Center Adjustment No No - No No -
198 198 Service Center No No - No No -
199 199 Service Center Entity No No - No No -
200 200 Service Center Entity No No - No No -
201 201 Service Center Entity No No - No No -
202 202 Service Center Entity No No - No No -
207 207 Notification Yes Yes - Yes Yes -
208 208 Service Center Adjustment No No - No No -
210 210 Adjustment Yes Yes A/F/H Yes Yes May be balance due, even or overpaid
215 215 Civil penalty Balance Due Yes Yes A/H No Yes -
220 220 Adjustment Balance Due Yes Yes A/F/H Yes Yes Keys 04/06 only
220J 220J ACA Notice Yes No - No Yes -
225 225 Credit Transfer Yes Yes A/H Yes Yes Keys 03/04/06/1040/46/70/74 only.
230 230 Combined Annual Wage Reconciliation (CAWR) Adjustment Yes No - No No -
231 231 Service Center Accounting Yes No - No No -
233 233 Service Center Exam No No - No No -
233J 233J ACA Notice Yes No - No Yes -
234 234 Service Center Adjustment No No - No No -
240 240 Combined Annual Wage Reconciliation (CAWR) Adjustment Yes No - No No -
247A/947A 247A/947A Balance Due Yes Yes A/B/H Yes Yes 1120 series, 1041, 990-T
247B/947B 247B/947B Balance Due Yes Yes A/B/H Yes Yes 1120 series, 1041, 990-T
247C/947C 247C/947C Balance Due Yes Yes A/B/H Yes Yes 1120 series, 1041, 990-T
CP# Output CP Type CAF/RAF NRPS: Select NRPS: Categories NRPS: MRS NRPS: LCF Notes or Forms
250C 250C Notification Yes No - No No 944
251 251 Combined Annual Wage Reconciliation (CAWR) Even balance Yes No - No No Status code 26 posting
252 252 Combined Annual Wage Reconciliation (CAWR) Balance due Yes No - No No Final notice
253 253 Combined Annual Wage Reconciliation (CAWR) Overpay Yes No - No No Requests Forms W-2
254 254 Notification Yes No - No No -
255 255 Combined Annual Wage Reconciliation (CAWR) Inquiry Yes No - No No -
256/956 256/956 Reminder Notice Yes Yes A/B/H Yes Yes 1120 series, 1041, 990-T
259A 259A Notification (TDI Notice) Yes No - No No 990, 990-EZ
259B 259B Notification (TDI Notice) Yes No - No No 990-PF
259C 259C Notification (TDI Notice) Yes No - No NO 990-PF
259D 259D Notification (TDI Notice) Yes No - No No 990-T
259E 259E Notification (TDI Notice) Yes No - No No 990
259F 259F Notification (TDI Notice) Yes No - No No 5227
259G 259G Notification (TDI Notice) Yes No - No No 1120-POL
260 260 Credit Removal Yes Yes A/D/H/I Yes Yes -
261 261 Notification Yes No - No No -
262 262 Notification Yes No - No No -
263 263 Notification Yes No - No No -
264 264 Notification Yes No - No No -
265 265 Notification Yes No - No No -
266 266 Notification Yes No - No No 2553
267 267 Overpay Yes Yes A/B/C/H Yes Yes 940, 941, 943, 944, 720, 1042, 1120, 1120-C
268 268 Math Error (ME)/Overpay Yes Yes A/B/C/H Yes Yes 940, 941, 943, 944, 720, 1042, 1065, 1120, 1120-C
270 270 Service Center Adjustment/Exam No No - No No -
275 275 Notification Yes No - Yes No -
278 278 Service Center No No - Yes No -
284 284 Service Center No No - No No -
293 293 Service Center Exam No No - No No -
295 295 Service Center/Balance Due No No - No No 5500
295A 295A Service Center/Balance Due No No - No No 5500
296 296 Service Center Accounting No No - No No -
297 297 Levy Notification/Balance Due Yes No - No No -
297A 297A Levy Notification/Balance Due Yes No - No No -
298 298 Levy Notification/Balance Due Yes No - No No -
801 801 Math Error (ME)/Balance Due Yes Yes A/B/D/H/I Yes Yes 940(sp)
802 802 Math Error (ME)/Balance Due Yes Yes A/B/D/H/I Yes Yes 941(sp), 943(sp) 944(sp)
811 811 Math Error (ME)/Overpay Yes Yes A/B/E/H Yes Yes 940(sp)
812 812 Math Error (ME)/Overpay Yes Yes A/B/E/H Yes Yes 941(sp), 943(sp) 944(sp)
834B 834B FTD/ES Payment Discrepancy Notice (Balance Due) Yes Yes A/B/D/E/H/I Yes Yes 940(sp), 941(sp), 943(sp), 944(sp)
834R 834R FTD/ES Payment Discrepancy Notice (Refund) Yes Yes A/B/D/E/H/I Yes Yes 940(sp), 941(sp), 943(sp), 943(sp)
838 838 Offset to Balance Due Yes No - No Yes Spanish only
CP# Output CP Type CAF/RAF NRPS: Select NRPS: Categories NRPS: MRS NRPS: LCF Notes or Forms
861 861 Balance due Yes Yes A/B/D/H/I Yes Yes 940(sp), 941(sp), 943(sp)
865 865 Bad check penalty Yes No - No No 940(sp), 941(sp), 943(sp)
874 874 Inquiry Yes No - No No 940(sp)
910 910 Adjustment Yes Yes A/F/H No Yes May be balance due, even or overpay backup withholding with FTD
920 920 Adjustment Balance Due Yes Yes A/F/H No Yes May be balance due, even or overpay backup withholding with FTD
950A 950A Notification Yes No - No No 944(sp)
950B 950B Notification Yes No - No No 944(sp)
950C 950C Notification Yes No - No No 944(sp)
380 (Million Dollar Notices) 380 Transcript No Yes G No No Refund $1,000,000 or more
384 (Refund Notices) 384 Transcript No Yes G No No Highly questionable refund
386 (Highly Questionable Refund) 386 Transcript No Yes G No No Highly questionable refund
388 (Refund with Interest) 388 Transcript No Yes G No No Refund with interest
Exhibit 3.14.2-4

BMF Forms - Standard Information

BMF Forms
FORM TITLE TYPE MFT TAX CLASS DOC. CODE PERIOD DUE DATE
11-C Special Tax Return & Application for Registry Wagering - 63 4 3 Annual Date business opens and then yearly thereafter on July 1
706 U.S. Estate Tax Return - 52 5 6 - 9 months after exact date of death
709 U.S. Gift Tax Return - 51 5 9 Calendar 15-Apr
709A U.S. Short Form Gift Tax Return - 51 5 8 Calendar 15-Apr
720 U.S. Quarterly Federal Excise Tax Return - 3 4 20 Quarterly Last day of month following end of quarter
730 Tax on Wagering - 64 4 13 Monthly Last day of month following earning period
940 Employer′s Annual Federal Unemployment (FUTA) Tax Return - 10 8 40 Calendar 31-Jan
941 Employer′s Quarterly Federal Tax Return W/H and FICA 1 1 41 Quarterly Last day of month following end of the quarter
943 Employer′s Annual Tax Return for Agricultural Employees W/H and FICA 11 1 43 Calendar 31-Jan
945 Annual Return of Withheld Federal Income Tax (from non-payroll payments on Forms 1099 and W-2G) W/H 16 1 97 FTD Pymt. 31-Jan
945 Annual Return of Withheld Federal Income Tax (from non-payroll payments on Forms 1099 and W-2G) W/H 16 1 44 Annual 31-Jan
945 Annual Return of Withheld Federal Income Tax (from non-payroll payments on Forms 1099 and W-2G) W/H 16 1 37 Annual 31-Jan
990 Return of Organization Exempt from Income Tax - 67 4 90 Calendar or Fiscal May 15 or 15th day of 5th month
FORM TITLE TYPE MFT TAX CLASS DOC. CODE PERIOD DUE DATE
990-T Exempt Organization Business Income Tax Return Exempt Organization Corporation 34 3 93 Calendar or Fiscal April 15 or 15th day of 4th month
990-T Exempt Organization Business Income Tax Return Exempt Organization Domestic Addr. 34 3 93 Calendar or Fiscal May 15 or 15th day of 5th month
990-T Exempt Organization Business Income Tax Return Exempt Organization Foreign Addr. 34 3 93 Calendar or Fiscal June 15 or 15th day of 6th month
1041 U.S. Fiduciary Income Tax Return - 5 2 44 Calendar or Fiscal April 15 or 15th day of 4th month
1041A U.S. Information Return - Trust Accumulation of Charitable Amounts Information on Charitable Amts. 36 4 81 Calendar or Fiscal April 15 or 15th day of 4th month
1042 Annual Withholding Tax Return for U.S. Source Income of Foreign Persons W/H 12 1 25 Annual 15th day of 3rd month
1065 U.S. Partnership Return of Income - 6 2 65 Calendar or Fiscal March 15 or 15th day of 3rd month
1120 U.S. Corporation Income Tax Return - 2 3 10 Calendar or Fiscal April 15 or 15th day of 4th month for years beginning after 2015
1120 U.S. Corporation Income Tax Return - 2 3 11 Calendar or Fiscal April 15 or 15th day of 4th month for years beginning after 2015
1120-C U.S. Income Tax Return for Cooperative Association - 2 3 03 Calendar or Fiscal August 15 or 15th day of 8th month
1120-S U.S. Small Business Corporation Income Tax Return - 2 3 16 Calendar or Fiscal March 15 or 15th day of 3rd month
2290 Heavy Vehicle Use Tax Return Heavy Vehicle Use 60 4 95 Period Beginning Option 1st use or 5,000 miles, then from 7/1 to 6/30 Last day of month following month first used and then yearly by August 31
4720 Return of Certain Excise Taxes on Charities and Other Persons Under Chap 41 and 42 of the IRC Under Chapters 41 and 42 50 4 97 Calendar or Fiscal May 15 or 15th day of 5th month
5227 Split - Interest Trust Information Return - 37 4 83 Calendar or Fiscal April 15 or the 15th day of the 4th month
Exhibit 3.14.2-5

NRPS Selection Keys

NRPS Selection Keys
KEY CATEGORY A--Special Handling Required (EXPLANATION)
01 Overpaid amount between $25,000 and $1,000,000.
03 Balance due or overpayment of $1,000,000.00 or more.
04 Balance due amount with penalty or interest amount of $25,000 or more.
06 Large Corporation.
08 Balance due of $100,000.00 or more, but less than $250,000.00.
10 Balance due or adjustment of $250,000.00 or more, but less than $1,000,000.00.
15 CP 225 with Debit/Credit transfer
16 IRC 965 Payment Identified with TC 670 DPC 64
18 CP 210/220 for MFT 03 and with a tax period of YYYY08 (BPD) or CP220/267B for MFT 79 with a tax period of YYYY09 (IPF).
19 Balance due between $75,000.00--$100,000.00.
28 Corporate Examination Program (CEP) Cases.
35 Void CP 267 when specific criteria is found on the tax module.
41 Select any CP with Master File Tax Code (MFT) 02 and form type 1120-C (Doc Code 03)
50 IRC 965 Return Identified with CCC “J”
51 Select if notice amount is an overpayment of $500.00 or more and a TC 766 or TC 806 is present [NTC TXM].
56 Select if notice is a CP 134B/R or CP 834B/R.
75 Form 8752 (Master File Tax Code (MFT) 15).
76 Balance due notice with an Excess Collection situation.
77 Select if a CP 145 with a tax period of 200612 or later if:

  1. Master File Tax Code (MFT) 01 with a filing requirement set to Master File Tax Code (MFT) 14 or

  2. Master File Tax Code (MFT) 14 with a filing requirement set to Master File Tax Code (MFT) 01.
78 CP 267A for MFT 03 and with a tax period of YYYY08.
KEY CATEGORY B--High Priority (EXPLANATION)
07 Form 706 (Master File Tax Code (MFT) 52)/Balance due or overpayment.
NN Local control can be used to increase the priority of any other selection key to this level.
09 Taxpayer notice code 90.
53 Balance due: delinquency penalty and extension of time to file pending or potentially mis-posted extension of Time to File.
KEY CATEGORY C -- FTD ROLLOVERS (EXPLANATION)
11 CP 267 - the overpayment amount is equal to or greater than 100 times the tax liability -- verify tax amount for decimal error, transposition error, or transcription error.
12 CP 267 for $200.00 or more, but less than $25,000.00, or CP 268 for $200.00 or more.
34 CP 267 and CP 268 select if the overpayment amount is equal to the TC 716 or TC 710 greater than or less than $10.00 before penalty and interest.
36 CP 267 and CP 268 select if the notice amount is $200.00 or more and a TC 766 or TC 806 is present.
71 CP 267 select if the notice amount is between $25,000 and $75,000.00.
72 CP 267 select if the notice overpayment amount is between $75,000.00 and $100,000.00.
83 CP 267 select if the notice overpayment amount is between $100,000.00 and $250,000.00
KEY CATEGORY D--Balance Due and Even Balance (EXPLANATION)
02 Remittance Processing System (RPS) discrepancy.
37 Select if notice if for MFT 01, 14, 10, 11, 16 and if the corresponding MF tax module does not contain an -A freeze and has no associated pending transactions and contains no TC 186, TC 27X and no interest assessment and combination of up to 5 TC 650 amount where the payment date is later than the ending date of the tax period and the combined amount equals the notice amount greater than and less than $5.00.
38 Form 1120, when the underpaid tax plus pre-paid ES Penalty is equal to a pending credit transaction, or a credit amount, or the credit balance on another tax period.
39 Form 1120, the extension (FORM 7004) payment is posted to another open module (no TC 150).
40 The underpaid tax amount equals a posted credit transaction/balance due.
42 A refund has been intercepted on another module (TC 841)/and notice is balance due.
43 The underpaid tax of $25.00 or more is within 10% of a credit balance on another tax period.
44 Underpaid tax is equal to 1 to 5 credit transactions pending or posted to another tax period.
45 A credit transfer (Document Code 24, 34, 48, or 58) is pending to the notice module.
46 An adjustment transaction (TC 29X or TC 30X) is pending to the notice module.
47 A credit amount equal to one-fourth of the tax liability amount on Form 2290 is posted to another tax period.
48 A Master File merge transaction (TC 001/011/04X) is pending to this TIN (Balance due Notice).
49 Balance due: amount claimed equal open credit balance or the sum of 1 to 5 pending or posted credits
52 A refund (TC 846) has generated this cycle on another tax period. (Notice is equal to or less than refund.)
54 Delinquency penalty (TC 166) was not assessed on a potentially delinquent return.
55 Acceptable reason for not filing a return (TC 590/591), is posted to the notice module.
57 The prior two tax periods have credit transfers (Doc. Code 24/34/48/58) cross-referenced to another TIN.
58 Balance due per taxpayer or Net Credit Claimed minus Total Credits amount is equal to a credit on open module.
59 Credit on an open module is available for offset.
70 A transaction is pending to the notice module.
KEY CATEGORY E--Overpaid Notices (EXPLANATION)
60 Refund transcript indicator set.
61 Generated Refundable Credit (TC 766) equal to the Overpayment amount or 1 to 5 credit transactions.
62 Amount of overpayment (not including credit interest) is greater than 10 times the tax liability.
63 Overpayment is frozen due to backup withholding.
64 Form 1041 with a TC 806 (withholding) on the module.
65 Overpaid: refund amount equal 1 FTD credit posted to the notice tax period.
66 Form 941: the two prior tax periods (Modules) contain TC 29X or TC 976 transactions. (Trend of Tax Adjustments/Amended returns.)
67 Any overpaid notice not selected under another key.
69 Overpayment (Not including credit interest) equal to one posted subsequent payment (TC 670).
73 The prior two tax periods have credit transfers (Doc. Codes 24/34/48/58) cross-referenced to another TIN
74 An adjustment or a credit transfer (Doc. Code 24/34/48/58) is pending to the notice module.
KEY CATEGORY F--Adjustment Notices (EXPLANATION)
60 Select an overpayment notice and the Refund Transcript indicator is set. Do not select if there is a BMF NRPS refund transcript already associated to the notice.
63 Select for Master File Tax Code (MFT) 16 only, select if Backup Withholding amount is significant.
79 Balance due notice, with a tax increase equal to a payment posted to another open module.
80 Balance due notice with a pending credit.
81 Overpaid notice with a pending debit.
84 Select if a Debit/Credit Transfer (DLN Document Code 24, 34, 48 or 58) transaction is pending [PND] for the same TIN, MFT and tax period as the notice [NTC].
KEY CATEGORY G--Refund Transcripts (EXPLANATION)
20 Million dollar refund.
21 High questionable refunds.
22 Refund interest.
23 Million dollar refund for $10 million or more.
24 Pending debit transaction present.
25 Refund caused by subsequent payment (TC 670).
26 Refundable credit (TC 766) of $10.00 or more.
27 Any refund transcript not selected under another key.
KEY CATEGORY H - Local Control
82 Select the percentage of notices requested that match the Local Control File (LCF) on CP Number, Master File Tax Code (MFT) and Math Error Code. (Taxpayer Settlement Notices only.)
90 Select if the notice matches the Local Control File (LCF) on any of the following:
TIN or
TIN and MFT or
TIN, MFT and Tax Period.
91 Select if the notices matches the ERS DLN on the LCF using all 14 digits of the DLN.
92 Select if the percentage of notices requested that match the LCF on one of the following:
CP Number or
CP Number and ZIP Code range or
CP Number and MFT or
CP Number and Freeze Code.
93 Select if the balance due amount exceeds the amount on LCF but is less than $25,000.00.
94 Select if the notice DLN matches the 1 to 14 significant digits of the DLN on the LCF.
95 Select the percentage of notices requested that match the LCF on:
CP Number and Penalty Code or
CP Number, MFT, and Percentage.
96 Select if the notice matches the LCF on Employment Code and the notice amount exceeds the amount on the LCF.
97 Select the percentage of notices requested that match the LCF on Master File Tax Code (MFT) and Tax Period.
KEY CATEGORY I -- Low Priority Balance Due Notices
31 Credit claimed was refunded in prior period (either year or quarter) with the same Master File Tax Code (MFT) for amount greater than or less than $10.00.
Exhibit 3.14.2-6

BMF NRPS Selection Report - NRP1420

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Exhibit 3.14.2-7

Control D NRPS Appended Data Pending Transaction TEP-Tape Edit Processing File

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Exhibit 3.14.2-8

Control D NRPS Appended Data Unpostable- GUF File - Generalized Unpostable Framework File

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Exhibit 3.14.2-9

Control D NRPS Appended Data - Pending Resequencing File

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Exhibit 3.14.2-10

Reference Chart for Retyping BMF Notices in OLNR

Form Selected/Original Notice Can be Retyped to:
940, 940-EZ CP 101 CP 111 or CP 161
941, 943, 944, 945 CP 102 CP 112 or CP 161
CT-1 CP 103 CP 113 or CP 161
720 CP 104 CP 114 or CP 161
11-C, 2290, 706, 709, 730 CP 105 CP 115 or CP 161
5527, 990-PF, 4720 CP 106 CP 116 or CP 161
1042 CP 107 CP 117 or CP 161
940, 940-EZ CP 111 CP 101 or CP 161
941, 943, 944, 945 CP 112 CP 102 or CP 161
CT-1 CP 113 CP 103 or CP 161
720 CP 114 CP 104 or CP 161
11-C, 2290, 706, 709, 730 CP 115 CP 105 or CP 161
5527, 990-PF, 4720 CP 116 CP 106 or CP 161
1042 CP 117 CP 107 or CP 161
CT-1 CP 123 CP 103, CP 113 or CP 161
720 CP 124 CP 104, CP 114 or CP 161
11-C, 2290, 706, 709, 730 CP 125 CP 105, CP 115 or CP 161
5527, 990-PF, 4720 CP 126 CP 106, CP 116 or CP 161
8804, 1041, 1065, 1120(all), 990-T CP 131 CP 132, CP 133 or CP 161
8804, 1041, 1065, 1120(all), 990-T CP 131A CP 132, CP 133 or CP 161
8804, 1041, 1065, 1120(all), 990-T CP 132 CP 133 or CP 161
8804, 1041, 1065, 1120(all), 990-T CP 133 CP 132 or CP 161
All BMF Forms CP 134B CP 161, CP 210, CP 220 or CP 134R
All BMF Forms CP 134R CP 161, CP 210, CP 220 or CP 134B
All BMF Forms CP 161 CP 101, CP 102, CP 103, CP 104, CP 105, CP 106, CP 107, CP 111, CP 112, CP 113, CP 114, CP 116, CP 117, CP 123, CP 124, CP 125, CP 126, CP 127, CP 131, CP 131A, CP 132 or CP 133
1041, 990-T, 990-PF, 8804, 1120, 1120-SF, 1120-F, 1120-L, 1120-M, 1120-ND, 1120-FSC, 1120-RIC, 1120-REIT, 1120-PC, 1120-C CP 173 CP 161
All BMF Forms CP 210 CP 220
All BMF Forms CP 220 CP 210
1120 Series, 990-T, 1041 CP 247A CP 247B or CP 247C
1120 Series, 990-T, 1041 CP 247B CP 247A or CP 247C
1120 Series, 990-T, 1041 CP 247C CP 247A or CP 247B
All BMF Forms CP 260 CP 101, CP 102, CP 103, CP 104, CP 105, CP 106, CP 111, CP 112, CP 113, CP 114, CP 115, CP 116, CP 131, CP 131A, CP 132, CP 133 or CP 161
All BMF Forms CP 267 CP 101, CP 102, CP 104, CP 111, CP 112, CP 114, CP 132, CP 133, CP 145, CP 161 or CP 268
All BMF Forms CP 268 CP 101, CP 102, CP 104, CP 111, CP 112, CP 114, CP 132, CP 133 or CP 267
940(sp) CP 801 CP 811 or CP 861
941(sp), 943(sp), 944(sp) CP 802 CP 812 or CP 861
940(sp) CP 811 CP 801 or CP 861
941(sp), 943(sp), 944(sp) CP 812 CP 802 or CP 861
All BMF Spanish Forms CP 834B CP 861, CP 910, CP 920 or CP 834R
All BMF Spanish Forms CP 834R CP 861, CP 910, CP 920 or CP 834B
All BMF Spanish Forms CP 910 CP 920
All BMF Spanish Forms CP 920 CP 910
1120 Series, 990-T, 1041 CP 947A CP 947B or CP 947C
1120 Series, 990-T, 1041 CP 947B CP 947A or CP 947C
1120 Series, 990-T, 1041 CP 947C CP 947A or CP 947B

  • Refund Transcripts - Can be converted to the appropriate CP as long as the MFT indicated on the transcript is valid for the respective CP.

  • CPs that begin with 8 or 9 are the Spanish notices.

  • Any notice can be retyped to itself. For example, a CP 101 can be retyped to CP 101 to increase/decrease the balance due, add/subtract a payment, etc.

Exhibit 3.14.2-11

Adding and Deleting Extensions Using FRM77

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Exhibit 3.14.2-12

Form 1041 Estimated Tax Installment Dates

PERIOD ENDING 1ST 2ND 3RD 4TH RETURN DUE DATE
Jan. 31 5/15 7/15 10/15 2/15 5/15
Feb. 28 (29) 6/15 8/15 11/15 3/15 6/15
Mar. 31 7/15 9/15 12/15 4/15 7/15
Apr. 30 8/15 10/15 1/15 5/15 8/15
May 31 9/15 11/15 2/15 6/15 9/15
June 30 10/15 12/15 3/15 7/15 10/15
July 31 11/15 1/15 4/15 8/15 11/15
August 31 12/15 2/15 5/15 9/15 12/15
Sept. 30 1/15 3/15 6/15 10/15 1/15
Oct. 31 2/15 4/15 7/15 11/15 2/15
Nov. 30 3/15 5/15 8/15 12/15 3/15
Dec. 31 4/15 6/15 9/15 1/15 4/15
Exhibit 3.14.2-13

Form 990-PF Estimated Tax Installment Dates

PERIOD ENDING 1ST 2ND 3RD 4TH RETURN DUE DATE
Jan. 31 6/15 7/15 10/15 1/15 6/15
Feb. 28 (29) 7/15 8/15 11/15 2/15 7/15
Mar. 31 8/15 9/15 12/15 3/15 8/15
Apr. 30 9/15 10/15 1/15 4/15 9/15
May 31 10/15 11/15 2/15 5/15 10/15
June 30 11/15 12/15 3/15 6/15 11/15
July 31 12/15 1/15 4/15 7/15 12/15
August 31 1/15 2/15 5/15 8/15 1/15
Sept. 30 2/15 3/15 6/15 9/15 2/15
Oct. 31 3/15 4/15 7/15 10/15 3/15
Nov. 30 4/15 5/15 8/15 11/15 4/15
Dec. 31 5/15 6/15 9/15 12/15 5/15
Exhibit 3.14.2-14

Form 990-T (Org Code 3) Estimated Tax Installment Due Dates

PERIOD ENDING 1ST 2ND 3RD 4TH RETURN DUE DATE
Jan. 31 5/15 7/15 10/15 1/15 5/15
Feb. 28 (29) 6/15 8/15 11/15 2/15 6/15
Mar. 31 7/15 9/15 12/15 3/15 7/15
Apr. 30 8/15 10/15 1/15 4/15 8/15
May 31 9/15 11/15 2/15 5/15 9/15
June 30 10/15 12/15 3/15 6/15 10/15
July 31 11/15 1/15 4/15 7/15 11/15
August 31 12/15 2/15 5/15 8/15 12/15
Sept. 30 1/15 3/15 6/15 9/15 1/15
Oct. 31 2/15 4/15 7/15 10/15 2/15
Nov. 30 3/15 5/15 8/15 11/15 3/15
Dec. 31 4/15 6/15 9/15 12/15 4/15
Exhibit 3.14.2-15

Form 990-T and Form 990 Estimated Tax Installment Due Dates

PERIOD ENDING 1ST 2ND 3RD 4TH RETURN DUE DATE
Jan. 31 5/15 7/15 10/15 1/15 6/15
Feb. 28 (29) 6/15 8/15 11/15 2/15 7/15
Mar. 31 7/15 9/15 12/15 3/15 8/15
Apr. 30 8/15 10/15 1/15 4/15 9/15
May 31 9/15 11/15 2/15 5/15 10/15
June 30 10/15 12/15 3/15 6/15 11/15
July 31 11/15 1/15 4/15 7/15 12/15
August 31 12/15 2/15 5/15 8/15 1/15
Sept. 30 1/15 3/15 6/15 9/15 2/15
Oct. 31 2/15 4/15 7/15 10/15 3/15
Nov. 30 3/15 5/15 8/15 11/15 4/15
Dec. 31 4/15 6/15 9/15 12/15 5/15
Exhibit 3.14.2-16

Form 1120-S Estimated Tax Installment and Return Due Dates

PERIOD ENDING 1ST 2ND 3RD 4TH RETURN DUE DATE
Jan. 31 5/15 7/15 10/15 1/15 4/15
Feb. 28 (29) 6/15 8/15 11/15 2/15 5/15
Mar. 31 7/15 9/15 12/15 3/15 6/15
Apr. 30 8/15 10/15 1/15 4/15 7/15
May 31 9/15 11/15 2/15 5/15 8/15
June 30 10/15 12/15 3/15 6/16 9/15
July 31 11/15 1/15 4/15 7/15 10/15
August 31 12/15 2/15 5/15 8/15 11/15
Sept. 30 1/15 3/15 6/15 9/15 12/15
Oct. 31 2/15 4/15 7/15 10/15 1/15
Nov. 30 3/15 5/15 8/15 11/15 2/15
Dec. 31 4/15 6/15 9/15 12/15 3/15
Exhibit 3.14.2-17

Form 1120 Family Estimated Tax Installment and Return Due Dates (except 1120C, 1120F and 1120-S)

Period Ending 1st 2nd 3rd 4th RETURN DUE DATE 2015 & Prior RETURN DUE DATE 2016 & Subsequent
Jan. 31 5/15 7/15 10/15 1/15 4/15 5/15
Feb. 28 (29) 6/15 8/15 11/15 2/15 5/15 6/15
Mar. 31 7/15 9/15 12/15 3/15 6/15 7/15
Apr. 30 8/15 10/15 1/15 4/15 7/15 8/15
May 31 9/15 11/15 2/15 5/15 8/15 9/15
June 30** 10/15 12/15 3/15 6/15 9/15 9/15**
July 31 11/15 1/15 4/15 7/15 10/15 11/15
Aug. 31 12/15 2/15 5/15 8/15 11/15 12/15
Sept. 30 1/15 3/15 6/15 9/15 12/15 1/15
Oct. 31 2/15 4/15 7/15 10/15 1/15 2/15
Nov. 30 3/15 5/15 8/15 11/15 2/15 3/15
Dec. 31 4/15 6/15 9/15 12/15 3/15 4/15

**

Exception:

June returns 2016 and subsequent due dates are excluded from the additional month.

Note:

1120C are due the 15th day of the 9th month following the date the tax year ended.

Note:

1120F Box D3 checked, due the 15th day of the 4th month following the date the tax year ended. See BRTVUE “US OFFICE CODE: 1”.

Note:

1120F Box D3 not checked, due the 15th day of the 6th month following the date the tax year ended. See BRTVUE “US OFFICE CODE: 2”.

Exhibit 3.14.2-18

Exempt Organization Return Due Dates

FORM MFT DUE DATES
990 67 15th DAY OF THE 5TH MONTH
990-PF 44 15th DAY OF THE 5TH MONTH
990-T 34 15th DAY OF THE 5TH MONTH
990-T (CODE 3) 34 15th DAY OF THE 4TH MONTH
1120-POL 02 15th DAY OF THE 4TH MONTH
Exhibit 3.14.2-19

Types of Penalties and Interest

Computer Generated TC Reversal Name of Penalty NRPS/OLNR Penalty Code Manual Input TC Reversal Adjustment Generated Notice
TC 166 TC 167 Failure to File 01 TC 160 TC 161 YES
TC 176 TC 177 Estimated Tax 02 TC 170 TC 171 YES
TC 186 TC 187 Failure to Deposit 03, 11, 41, 42, 43, 44, 54, 55, 56, 57, 58 TC 180 TC 181 YES
TC 196 TC 197 Interest None TC 340 TC 341 NO
TC 238 TC 239 Daily Delinquency 10 TC 234 TC 235 YES
TC 246 TC 247 Miscellaneous 28 TC 240 TC 241 YES
TC 276 TC 277 Failure to Pay 07 TC 270 TC 271 YES
TC 286 TC 287 Dishonored Check 04 TC 280 TC 281 YES
TC 776 TC 777 Credit Interest None TC 770 TC 771 NO
None None Fraud 05 TC 320 TC 321 YES
None None Negligence 06 TC 350 TC 351 YES

Once a penalty or interest is adjusted manually (REQ 54/47) it becomes restricted. The computer can no longer adjust that penalty or interest, and the transaction code must be manually addressed with any future adjustments.

Exception:

TC 190 is a manual interest transaction code and does not restrict the computer from generating either a correction TC 196/197, nor does it mean all future interest assessments must be manually computed.

Exception:

The non-restricting TC 340 is an enhancement to Master File programming to allow a systemic interest update on a tax module after interest has been manually computed, and it should be used whenever possible. (See IRM 20.2.5.6.3, Interest on Underpayments). This is especially useful for, but not limited to, the following situations:
Multiple waiver dates
Combination adjustments involving carrybacks (Form 2285)
Disaster area adjustments
Abatements due to a delay or error in a ministerial or managerial act
Combat zone participants
Multiple RC 6404(g) notice dates
Rev. Rul. 99-40
Removing the large corporate underpayment (LCU) applicable date (i.e., 2% trigger date) for a tax module in which the LCU rate doesn’t apply.

Upon reviewing a Form 941 for Key 54 (see 3.14.2.7.15(4)) a Notice Review tax examiner does a REQ 54 and assesses FTF penalty (TC 160). If an amended 941 is submitted and a TC 291 is done, a manual TC 161 must also be input.

Manual adjustments with Hold Code 3 will suppress adjustment notices.

Exhibit 3.14.2-20

Pending Transaction Flowchart - Applying Credit – Tax Examiner Manual Credit Transfer

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Exhibit 3.14.2-21

Pending Transaction Flow Chart - Systemic (Rolled) Pending Credit Transfer

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Exhibit 3.14.2-22

Julian Date Calendar (Perpetual)

Day Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Day
1 001 032 060 091 121 152 182 213 244 274 305 335 1
2 002 033 061 092 122 153 183 214 245 275 306 336 2
3 003 034 062 093 123 154 184 215 246 276 307 337 3
4 004 035 063 094 124 155 185 216 247 277 308 338 4
5 005 036 064 095 125 156 186 217 248 278 309 339 5
6 006 037 065 096 126 157 187 218 249 279 310 340 6
7 007 038 066 097 127 158 188 219 250 280 311 341 7
8 008 039 067 098 128 159 189 220 251 281 312 342 8
9 009 040 068 099 129 160 190 221 252 282 313 343 9
10 010 041 069 100 130 161 191 222 253 283 314 344 10
11 011 042 070 101 131 162 192 223 254 284 315 345 11
12 012 043 071 102 132 163 193 224 255 285 316 346 12
13 013 044 072 103 133 164 194 225 256 286 317 347 13
14 014 045 073 104 134 165 195 226 257 287 318 348 14
15 015 046 074 105 135 166 196 227 258 288 319 349 15
16 016 047 075 106 136 167 197 228 259 289 320 350 16
17 017 048 076 107 137 168 198 229 260 290 321 351 17
18 018 049 077 108 138 169 199 230 261 291 322 352 18
19 019 050 078 109 139 170 200 231 262 292 323 353 19
20 020 051 079 110 140 171 201 232 263 293 324 354 20
21 021 052 080 111 141 172 202 233 264 294 325 355 21
22 022 053 081 112 142 173 203 234 265 295 326 356 22
23 023 054 082 113 143 174 204 235 266 296 327 357 23
24 024 055 083 114 144 175 205 236 267 297 328 358 24
25 025 056 084 115 145 176 206 237 268 298 329 359 25
26 026 057 085 116 146 177 207 238 269 299 330 360 26
27 027 058 086 117 147 178 208 239 270 300 331 361 27
28 028 059 087 118 148 179 209 240 271 301 332 362 28
29 029 - 088 119 149 180 210 241 272 302 333 363 29
30 030 - 089 120 150 181 211 242 273 303 334 364 30
31 031 - 090 - 151 - 212 243 - 304 - 365 31
Exhibit 3.14.2-23

Julian Date Calendar (For Leap Years Only)

Day Jan Feb Mar Apr May June July Aug Sept Oct Nov Dec Day
1 001 032 061 092 122 153 183 214 245 275 306 336 1
2 002 033 062 093 123 154 184 215 246 276 307 337 2
3 003 034 063 094 124 155 185 216 247 277 308 338 3
4 004 035 064 095 125 156 186 217 248 278 309 339 4
5 005 036 065 096 126 157 187 218 249 279 310 340 5
6 006 037 066 097 127 158 188 219 250 280 311 341 6
7 007 038 067 098 128 159 189 220 251 281 312 342 7
8 008 039 068 099 129 160 190 221 252 282 313 343 8
9 009 040 069 100 130 161 191 222 253 283 314 344 9
10 010 041 070 101 131 162 192 223 254 284 315 345 10
11 011 042 071 102 132 163 193 224 255 285 316 346 11
12 012 043 072 103 133 164 194 225 256 286 317 347 12
13 013 044 073 104 134 165 195 226 257 287 318 348 13
14 014 045 074 105 135 166 196 227 258 288 319 349 14
15 015 046 075 106 136 167 197 228 259 289 320 350 15
16 016 047 076 107 137 168 198 229 260 290 321 351 16
17 017 048 077 108 138 169 199 230 261 291 322 352 17
18 018 049 078 109 139 170 200 231 262 291 323 353 18
19 019 050 079 110 140 171 201 232 263 293 324 354 19
20 020 051 080 111 141 172 202 233 264 294 325 355 20
21 021 052 081 112 142 173 203 234 265 295 326 356 21
22 022 053 082 113 143 174 204 235 266 296 327 357 22
23 023 054 083 114 144 175 205 236 267 297 328 358 23
24 024 055 084 115 145 176 206 237 268 298 329 359 24
25 025 056 085 116 146 177 207 238 269 299 330 360 25
26 026 057 086 117 147 178 208 239 270 300 331 361 26
27 027 058 087 118 148 179 209 240 271 301 332 362 27
28 028 059 088 119 149 180 210 241 272 302 333 363 28
29 029 060 089 120 150 181 211 242 273 303 334 364 29
30 030 - 090 121 151 182 212 243 274 304 335 365 30
31 031 - 091 - 152 - 213 244 - 305 - 366 31
Exhibit 3.14.2-24

Return Due Dates and Extension Time Frames

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Exhibit 3.14.2-25

Form 11-C Wager Schedule

The table below is used to determine the Form 11-C, Line 2 Tax amount. The $50.00 tax applies if all wagers (including those accepted by an agent for another) are authorized under the laws of the state in which accepted. The $500.00 tax applies if wagers are accepted that are not authorized under the laws of the state.

Note:

The tax is payable for the period that begins July 1 of each year. If the taxpayer begins accepting wagers after July 31, the tax is prorated for the first year as outlined in the chart below.

If You Start Accepting Wagers In $500 Tax $50 Tax
July $500.00 $50.00
August $458.33 $45.83
September $416.66 $41.66
October $375.00 $37.50
November $333.33 $33.33
December $291.66 $29.16
January $250.00 $25.00
February $208.33 $20.83
March $166.66 $16.66
April $125.00 $12.50
May $83.33 $8.33
June $41.66 $4.16
Exhibit 3.14.2-26

Form 2290 Tax Rates

The following table contains Form 2290 Tax Rates for Non-logging Vehicles. This tax rate table reflects the tax rate by category “A-V” by month.

Verify the tax period of the return using BRTVU page R2 to match to the tax rates in the exhibit below. If the TC 150 (tax amount) and the figure below do not match, a reprocess may be required. If MeF return follow IRM 3.14.2.6.18.1 and if a paper return request the document from files and follow IRM 3.14.2.6.18 . The tax rate tables can also be found in Instructions for Form 2290, Heavy Vehicle Use Tax Return

CATEGORY AUG (11) SEP (10) OCT (9) NOV (8) DEC (7) JAN (6) FEB (5) MAR (4) APR (3) MAY (2) JUNE (1)
A 91.67 83.33 75.00 66.67 58.33 50.00 41.67 33.33 25.00 16.67 8.33
B 111.83 101.67 91.50 81.33 71.17 61.00 50.83 40.67 30.50 20.33 10.17
C 132.00 120.00 108.00 96.00 84.00 72.00 60.00 48.00 36.00 24.00 12.00
D 152.17 138.33 124.50 110.67 96.83 83.00 69.17 55.33 41.50 27.67 13.83
E 172.33 156.67 141.00 125.33 109.67 94.00 78.33 62.67 47.00 31.33 15.67
F 192.50 175.00 157.50 140.00 122.50 105.00 87.50 70.00 52.50 35.00 17.50
G 212.67 193.33 174.00 154.67 135.33 116.00 96.67 77.33 58.00 38.67 19.33
H 232.83 211.67 190.50 169.33 148.17 127.00 105.83 84.67 63.50 42.33 21.17
I 253.00 230.00 207.00 184.00 161.00 138.00 115.00 92.00 69.00 46.00 23.00
J 273.17 248.33 223.50 198.67 173.83 149.00 124.17 99.33 74.50 49.67 24.83
K 293.33 266.67 240.00 213.33 186.67 160.00 133.33 106.67 80.00 53.33 26.67
L 313.50 285.00 256.50 228.00 199.50 171.00 142.50 114.00 85.50 57.00 28.50
M 333.67 303.33 273.00 242.67 212.33 182.00 151.67 121.33 91.00 60.67 30.33
N 353.83 321.67 289.50 257.33 225.17 193.00 160.83 128.67 96.50 64.33 32.17
O 374.00 340.00 306.00 272.00 238.00 204.00 170.00 136.00 102.00 68.00 34.00
P 394.17 358.33 322.50 286.67 250.83 215.00 179.17 143.33 107.50 71.67 35.83
Q 414.33 376.67 339.00 301.33 263.67 226.00 188.33 150.67 113.00 75.33 37.67
R 434.50 395.00 355.50 316.00 276.50 237.00 197.50 158.00 118.50 79.00 39.50
S 454.67 413.33 372.00 330.67 289.33 248.00 206.67 165.33 124.00 82.67 41.33
T 474.83 431.67 388.50 345.33 302.17 259.00 215.83 172.67 129.50 86.33 43.17
U 495.00 450.00 405.00 360.00 315.00 270.00 225.00 180.00 135.00 90.00 45.00
V 504.17 458.33 412.50 366.67 320.83 275.00 229.17 183.33 137.50 91.67 45.83

The following table contains Form 2290 Tax Rates for Logging Vehicles. This tax rate table reflects the tax rate by category “A-V” by month.

CATEGORY AUG (11) SEP (10) OCT (9) NOV (8) DEC (7) JAN (6) FEB (5) MAR (4) APR (3) MAY (2) JUNE (1)
A 68.75 62.49 56.25 50.00 43.74 37.50 31.25 24.99 18.75 12.50 6.24
B 83.87 76.25 68.62 60.99 53.37 45.75 38.12 30.50 22.87 15.24 7.62
C 99.00 90.00 81.00 72.00 63.00 54.00 45.00 36.00 27.00 18.00 9.00
D 114.12 103.74 93.37 83.00 72.62 62.25 51.87 41.49 31.12 20.75 10.37
E 129.24 117.50 105.75 93.99 82.25 70.50 58.74 47.00 35.25 23.49 11.75
F 144.37 131.25 118.12 105.00 91.87 78.75 65.62 52.50 39.37 26.25 13.12
G 159.50 144.99 130.50 116.00 101.49 87.00 72.50 57.99 43.50 29.00 14.49
H 174.62 158.75 142.87 126.99 111.12 95.25 79.37 63.50 47.62 31.74 15.87
I 189.75 172.50 155.25 138.00 120.75 103.50 86.25 69.00 51.75 34.50 17.25
J 204.87 186.24 167.62 149.00 130.37 111.75 93.12 74.49 55.87 37.25 18.62
K 219.99 200.00 180.00 159.99 140.00 120.00 99.99 80.00 60.00 39.99 20.00
L 235.12 213.75 192.37 171.00 149.62 128.25 106.87 85.50 64.12 42.75 21.37
M 250.25 227.49 204.75 182.00 159.24 136.50 113.75 90.99 68.25 45.50 22.74
N 265.37 241.25 217.12 192.99 168.87 144.75 120.62 96.50 72.37 48.24 24.12
O 280.50 255.00 229.50 204.00 178.50 153.00 127.50 102.00 76.50 51.00 25.50
P 295.62 268.74 241.87 215.00 188.12 161.25 134.37 107.49 80.62 53.75 26.87
Q 310.74 282.50 254.25 225.99 197.75 169.50 141.24 113.00 84.75 56.49 28.25
R 325.87 296.25 266.62 237.00 207.37 177.75 148.12 118.50 88.87 59.25 29.62
S 341.00 309.99 279.00 248.00 216.99 186.00 155.00 123.99 93.00 62.00 30.99
T 356.12 323.75 291.37 258.99 226.62 194.25 161.87 129.50 97.12 64.74 32.37
U 371.25 337.50 303.75 270.00 236.25 202.50 168.75 135.00 101.25 67.50 33.75
V 378.12 343.74 309.37 275.00 240.62 206.25 171.87 137.49 103.12 68.75 34.37