8.20.7. Closing Procedures

(1) In February of 2003, Appeals changed the reporting structure of the APS function within Appeals from the local office Chief, to the Director of APS. The Director of APS reports to the Director, Case and Operations Support in Appeals headquarters.

(2) The APS specific Internal Revenue Manuals (IRM) are in IRM 8.20, Account and Processing Support (APS).

(3) APS responsibilities are described in IRM 8.20.7.1.3, Responsibilities.

(1) IRM 8.20, Account and Processing Support (APS), establishes the APS program and policy framework for Appeals.

(1) The Director, Case and Operations Support (COS) is the executive responsible for designing, developing, delivering, and monitoring short- and long-range tax administration policies, programs, strategies, and objectives for the Appeals organization.

(2) The Director, Policy, Planning, Quality and Analysis, is responsible for providing technical and procedural guidance to Appeals employees, establishing and maintaining policies and standard procedures for Appeals work streams.

(3) Policy is comprised of two teams of analysts: Collection Policy and Examination Policy. The analyst(s) responsible for APS programs report to the Manager for Collection Policy.

(4) The Policy analyst shown on the Product Catalog page as the originator is the assigned author of this IRM.

(5) For more information on Appeals Policy, see the About Appeals - Case and Operations Support (COS) page on the Appeals website, where you can navigate to the two Policy teams’ web pages.

(6) The Director, APS, is the senior manager responsible for the control and processing of all Appeals cases. The Director, APS, reports to the Director COS. For more information on APS, see the APS page on the Appeals website.

(7) Appeals Account and Processing Support (APS) has primary responsibility for the following:

• Receiving, controlling and processing ACDS, AIMS, IDRS and other system/account update requests from the Appeals Technical Employees (ATE) and Counsel Attorney.

• Mailing closing letters prepared by the technical employee when appropriate.

• Verifying and updating Assessment Statute Expiration Dates (ASED) for each taxpayer’s account in Appeals’ or Counsel’s jurisdiction.

• Processing and monitoring final account adjustment processing based upon the disposition of the case to ensure the correct billing notice or refund is released to protect the taxpayer’s right to finality for their respective case.

• Identifying account adjustment errors and/or unpostable conditions and expeditiously performing corrective actions to ensure the taxpayer’s account is accurate and resolved.

• Adherence to the Appeals Feedback Loop requirements based upon the case type.

(1) The APS function utilizes a variety of reports from the following systems to verify, control, analyze, monitor and close cases resolved under Appeals and/or Counsel jurisdiction:

• Appeals Centralized Database System (ACDS)

• Automated Information Management System (AIMS)

• Automated Offer In Compromise System (AOIC)

• Innocent Spouse Tracking System (ISTS)

• Integrated Data Retrieval System (IDRS)

• Processing Employee Automated System (PEAS)

(2) The following IRMs provide specific information related to APS program reports:

• IRM 8.10.1, Appeals Reports and Projects - Internal Reports

• IRM 8.20.2, Account and Processing Support (APS) - IDRS Transcripts and Automated Systems

• IRM 8.20.3, Account and Processing Support (APS) - Appeals Centralized Database System (ACDS)

• IRM 8.20.10, Account and Processing Support (APS) - Appeals Processing Employee Automated System (PEAS)

(1) The APS processing IRM terms and acronyms are provided in the following Exhibits:

• Exhibit 8.20.7-10, General Acronyms and Acronym Definitions Included in APS IRMs 8.20.5, 8.20.6, and 8.20.7

• Exhibit 8.20.7-12, Appeals Centralized Database System (ACDS) Acronyms and Codes Included in APS IRMs 8.20.5, 8.20.6, and 8.20.7

• Exhibit 8.20.7-14, Automated Information Management System (AIMS) Acronyms and Command Codes (CC) Included in APS IRMs 8.20.5, 8.20.6, and 8.20.7

• Exhibit 8.20.7-16, Integrated Data Retrieval System (IDRS) and Corporate Files Online (CFOL) Acronyms and Command Codes (CC) Included in APS IRMs 8.20.5, 8.20.6, and 8.20.7

(1) Additional APS program information and resources are available as provided below:

• http://appeals.web.irs.gov/APS/default.htm, Account and Processing Support (APS)

• IRM 8.20.5, Account and Processing Support (APS) - Carding New Receipts

• IRM 8.20.6, Account and Processing Support (APS) - Interim Actions

• IRM 8.20.10, Account and Processing Support (APS) - Processing Employee Automated System (PEAS)

(1) A closing validation is required on all Appeals Cases using the Validation System on ACDS. The ATE first conducts a validation and submits the case for approval. Once the ATM has approved the case, it is then routed to the APS TE for an additional validation. Detailed explanations of these validations are discussed in IRM 8.10.3, Appeals Inventory Validation Process.

(1) APS account adjustment work requires an understanding of multiple AIMS and IDRS Command Codes (CC). The most common CC’s used by APS are listed below and associated with a link to their respective IRMs. When an APS TE receives an error message based upon the data they’ve input, they must access the applicable IRM to locate the Error Message cause and cure. The IRM associated with the respective CC also provides detailed explanations for the various fields applicable to the CC.

(1) When the ATE does not populate the "Instruction to APS" on the Form 5402, APS does not perform feedback loop procedures.

(2) Several work streams e.g. ACDS Category IC and CIC case types among others, require the ATE or ATM to forward the Form 5402 and ACM to the Compliance Function and for these cases, the Form 5402 will not include "Instruction to APS" to forward the Form 5402.

(3) Whenever the ATE provides instructions to transmit a copy of the Form 5402 and ACM back to the Compliance Function, APS must do so via an encrypted electronic process whenever possible, and only when necessary, make a copy of the Form 5402, Appeals Transmittal and Case Memo and Appeals Case Memo (ACM) to retain the original in the administrative file. This electronic storage and transmission process is in accordance with the Government Records Directive, as noted in Office of Management and Budget’s (OMB) memorandum, dated August 24, 2012.

(4) General hardcopy Form 5402 Appeals Feedback Loop distribution procedures are detailed below and are used when electronic transmission is not possible:

1. Transmit all hard copy documentation containing Personally Identifiable Information (PII) via Form 3210/E3210. In a high volume office the Form 5402 and ACM Feedback Copies can be batched and submitted to the appropriate office weekly. In a lower volume office, each Form 5402 "Feedback Copy" may be transmitted individually. Local procedures should be implemented and followed based on efficiency, accuracy and mail cost savings.

2. Use Form 3210/E3210 for the purpose of transmitting ACM Feedback Copies which list the name control and TIN of each case for which PII is being transmitted. Follow existing Form 3210/E3210, suspense and follow-up guidance to verify the PII is received by the designated recipient and the acknowledgement copy is returned timely. In addition, maintain a copy of the Feedback Loop Form 3210/E3210, in a separate binder to verify the feedback was sent to the address designated by the ATE on the Form 5402.

Caution: Do not send the administrative file to the address on the Form 5402 line identified as "APS Mail/FAX Form 5402 and ACM To:"

(1) The IRS Future State transition is in process and APS case receipt, processing and closing actions will adjust as each case type or work stream becomes paperless.

(2) Several paperless case projects involving APS case actions have already been implemented and whenever possible, the processing guidance in this IRM is written in a way to allow for agile inventory management between a paper case processing procedure to a paperless case processing procedure. This is a transition strategy implemented to allow the most efficient use of the guidance in this IRM without requiring extensive updates as well as to mitigate the expense of repetitive IRM clearance and publishing.

(3) The Managing Government Records Directive M-12-18 is accessible via the following link - Office of Management and Budget (OMB), M-12-18 dated August 24, 2012.

(1) When APS closes a case on ACDS and the case is selected for AQMS Review, an automated and completed AQMS Coversheet will appear on the screen indicating where to send the case for AQMS Review. See Exhibit 8.20.7-2 for a sample of the AQMS Coversheet which auto-populates with the name of the AQMS Reviewer and his/her office location.

(2) The APS employee closing the case will:

• Print, the AQMS Coversheet

• Attach the AQMS Coversheet to the front of the case file.

  Exception: ACDS Category "IC" and "CIC" cases selected for AQMS, see IRM 8.20.7.3.2.5.1, ACDS Category IC and CIC Cases Selected for AQMS Review for procedures.

• Process the case and attach the AQMS TE-required reviewer documentation to the file and/or ACDS Record. Verify the AQMS TCS-required reviewer documentation is attached to the ACDS Record and upload missing documentation as necessary.

  Reminder: The ACDS Attachment requirement applies only to AQMS-selected cases closed by APS on ACDS with account adjustment(s) processed by APS.

(1) Four types of cases will be identified for AQMS review:

1. Cases closed on ACDS but account adjustments are not processed by APS - These cases are normally Collection cases. See IRM 8.20.7.3.2.1 for instructions on closing Collection cases selected for AQMS Review. APS will not re-charge the Collection case types identified in IRM 8.20.7.3.2.1 to AQMS.

2. Cases closed on ACDS and Non-AIMS Collection cases* that require account adjustments are processed by APS - *These cases are normally non-AIMS but may include some Collection cases that require APS to process account adjustments. When a case is selected for AQMS review, the case will be identified via the AQMS Coversheet (Exhibit 8.20.7-2) and a six-digit number listed on the AQMSSELECT line located on the case summary card. After processing the AIMS/Non-AIMS adjustment(s), the APS TE will suspense and monitor the taxpayer’s account(s) until all adjustments have posted to the account, and AIMS controls are closed as appropriate. The entire administrative file is then forwarded by APS to the AQMS Reviewer.

   Reminder: APS must suspense and monitor the case until all required Appeals adjustments, credit transfers, etc., are posted to the account(s) before submitting the case to AQMS. APS must also Use CC: ACTON to close any Open Appeals IDRS Control Base, 66XXX, prior to releasing the case to AQMS.

3. ACDS Category IC and CIC Cases Selected for AQMS Review - see IRM 8.20.7.3.2.5.1 for APS procedures.

(1) AQMS reviewed cases requiring account correction(s) will be returned to APS.

(2) AQMS will:

• Email the Potential Error Report (PER) to the APS Director

• Ship the administrative file to the APS Office to the attention of the PTM or Tax Examiner

• Notify the PTM if PTM is not co-located with the TE, and transmit the administrative file to the TE

(3) APS will:

• Verify the ASED for each tax period requiring correction.

• Import and Assign as a New Case on PEAS, do not reopen the closed PEAS case, and ensure the correct ASED is reflected for each tax period to be corrected as required by the AQMS Potential Error Report (APERT).

Exception: Opening a new PEAS record for AQMS corrections, is different from other Post Closing procedures outlined in IRM 8.20.10, Import and Assign where the prior PEAS Record is reopened.

• Identify the case as a Post Closure case by using the PEAS Feature Code PC.

• Process the correction(s) to the taxpayers' account as identified by AQMS.

• Document the PEAS Case Activity Record to reflect actions taken and apply direct time.

• Place case in PEAS Suspense and monitor adjustments until fully posted.

• Notify PTM when account corrections have posted.

• Close case on PEAS and send to campus files or refile as appropriate.

(1) The following list provides an explanation of errors that result in AQMS-selected cases being returned to APS but do not require issuance of a PER:

• Form 3210/E3210 prepared incorrectly or incomplete.

• Errors that must be corrected by APS but are not caused by APS e.g. Incorrect Item Reference Number adjustment amount or adjustment omitted from 5403 Instruction Worksheet.

(2) Upon returning the case to APS for their action, an email is also sent to the APS Area Manager, Processing Team Manager (PTM) and APS Tax Examiner (TE). Appeals AQMS has no provision for informally returning or referring cases with errors to the Tax Computation Specialist (TCS), Appeals Examination, Appeals Collection, or Appeals Specialty Examination Program and Referrals (SEPR.)

(3) The APS TE who processes the account correction is also responsible for suspense and monitoring actions until the adjustment/correction is fully posted.

(4) When AQMS returns a case to an ATE or TCS for correction(s), APS is responsible for processing any account corrections based upon the ATE/TCS-corrected forms/schedules/documentation as necessary.

(1) When an APS Tax Examiner prepares the Form 2859, Request for Quick or Prompt Assessment, a complete manual re-computation of the interest for the account which is also known as a "running module balance" is required. See IRM 20.2.5, Manual Computations and the specific paragraphs identified below in ( ) for the following information:

• (1) Interest accuracy review requirements

• (2) Random quality review requirements

• (3) Source document and interest computation attachment requirements

• (3) c. Note: Non-Restricting Transaction Code (TC) 340 guidance

• (5) Manual debit interest transactions must include "DB-INT-TO-DT"

• (6) Use of TC 190 on quick and prompt assessments unless the interest already is restricted, or must be restricted with a TC 340

• (7) Mandatory module recomputation for all manually calculated interest

• (8) Reversal of some tax credits require manual computation and restriction of debit interest

• (9) Posting Delay Code (PDC) and adjustment cycling procedures are required when a TC 772 is included on the adjustment document but the taxpayer’s account is in credit balance status so the credit must be held via a hold code to avoid an erroneous refund or incorrect computer generated overpayment interest

• (10) Use of TC 342 and Priority Code 5

• (11) IRC § 6631 Notice Requirement Letter 3535, Interest Computation Cover Letter

• (12) All manual interest computations must be associated with the applicable documentation supporting the interest computation

• (13) All manual interest computations must be uploaded to ACDS as an attachment.

(2) The online Form 2859, Request for Quick or Prompt Assessment includes detailed instructions on page 3. Instruction 5, directs the reader to a table of Special Instructions specific to the respective Tax Return Form Number. Part C entries must be completed per the instructions based upon the MFT being assessed.

(3) The interest transaction code (TC) and interest amount are entered in Item 17 of the Form 2859, using Transaction Code (TC) 190 (manually computed interest not restricted), or TC 340 (manually computed interest restricted.)

(4) When a manual interest computation is prepared, the tax examiner who manually calculates the interest, must prepare and mail to the taxpayer, Letter 3535, Interest Computation Cover Letter and the ACT Report 490 Activity Summary in compliance with IRC 6631. Adherence to this requirement supports the Taxpayer Bill of Rights:

• The Right to Be Informed

• The Right to Quality Service

• The Right to Pay No More than the Correct Amount of Tax

(5) A PEAS CAR entry is required to document the date Letter 3535 and Report 490 Activity Summary are prepared and mailed to the taxpayer. A dated copy of the Letter 3535 and Report 490 Activity Summary must also be included in the administrative file.

(6) Letter 3535, Interest Computation Cover Letter can be accessed via the IRS publishing web site, or ACDS APGolf.How to Access Letter 3535

(7) For additional information on the requirement to provide manual interest computations to the taxpayer, see IRM 20.2.5 Manual Computations (11).

(8) See IRM 4.4.25, Research and Actions Required Prior to Quick Assessment, CCP or Campus Examination Procedures for IDRS related actions.

(9) See IRM 4.4.25, Quick Assessment Procedures, CCP or Campus Examination Procedures for additional guidance of preparation of the Form 2859, Request for Quick or Prompt Assessment.

(10) See http://serp.enterprise.irs.gov/databases/who-where.dr/prompt-quick-jeopardy-termination-assessments.html, SERP - Prompt, Quick, Jeopardy & Termination Assessments for a list of Campus fax numbers and After-hours Assessment Contacts for each Campus Accounting Function.

(11) See IRM 4.4.25, Quick Assessment Verification Form 3552, CCP or Campus Examination Procedures paragraphs (1) - (3) are included below for emphasis and insertion of specific APS actions:

• (1) Receipt of a copy of Form 3552, Prompt Assessment Billing Assembly, is verification the assessment has been "journalized." The transaction codes will not yet be posted to the account, but the assessment DLN has been assigned and the ASED is protected for that particular assessment.

• (2) Upon receipt, verify the accuracy of the assessment amount, as well as the name, address, TIN, and tax period on Form 3552 by comparing the items with the Form 2859 entries.

• (3) If any errors are detected on Form 3552, IMMEDIATELY contact the campus accounting function for issuance of a corrected bill. Do not remove the statute date from ACDS, and do not enter the Statute Code ASESD until a corrected Form 3552 is received and verified to be correct.

(12) IRM 4.4.25, Follow-up on Form 3552 paragraphs are partially duplicated below for emphasis and insertion of specific APS actions:

• Upon submission of the Form 2859 to the campus function for processing, the APS TE will place the case in PEAS Suspense and set a PEAS Follow-up for the 23C Date.

• (1) The APS TE must:
  ▸ Follow-up with the campus if verification of the assessment is not received by the 23C Date entered on the Form 2859.
  ▸ Document the follow-up action(s) in the PEAS CAR and include the name of the person contacted and their phone number.
  ▸ Alert their Lead and/or PTM if the Form 3552 is not faxed as requested, and the ASED is within 30 days of expiring.
  Reminder: All follow-up actions must be documented on the PEAS CAR.

• (2) Upon receipt of the Form 3552 assessment verification:
  ▸ Enter the Document Locator Number (DLN) of the assessment in the PEAS record for each respective tax period.
  ▸ Remove the statute date on ACDS, and enter the Statute Code "ASESD" to exclude the ACDS record from appearing on a future ACDS or PEAS Statute Reports.
  ▸ Use PEAS suspense and monitor the account(s) until all transactions are fully posted.

(13) When quick assessment procedures are used to process the account adjustments, the APS TE must record the Form 5403 Item 800 and 801 entries in the same manner as if the account adjustments had been included in Items 12 and 15. The Item 80X entry process ensures that the AIMS database correctly reflects systemic accounting for Appeals and Counsel audit adjustment results and reporting purposes.

(14) The PEAS record can be closed upon completion of the following actions:

• AMCLSA input

• Verification of the Quick Assessment DLN(s)

• Mailing of the Letter 3535 and Report 490 Activity Summary

• Conclusion of all suspense and monitoring requirements

• Shipment of the administrative file to AQMS or Campus Files

(1) Once the tax, penalty (if any) and interest has been processed for assessment using a Form 2859, Request for Quick or Prompt Assessment, the APS TE must also prepare a Form 5403 to post the item and reference entries to the taxpayer’s account, update the AIMS database and properly close the AIMS controls.

(2) The following acronyms and abbreviations are used within Exhibit 8.20.7-14, Entries for the Final Form 5403 Preparation to Close AIMS After a Quick Assessment has been Processed:

• AIMS Adjustment (Doc. Cd. 47)

• AIMS Status Code (ST)

• Assessment Statute Expiration Date (ASED)

• Blocking Series (BS)

• Carry-Back (C/B)

• Command Code (CC)

• Credit Reference Number (CRN)

• Delinquent Return Indicator (Del-Ret-Ind)

• Disposal Code (DC)

• Document Code (Doc. Cd.)

• Document Locator Number (DLN)

• Failure to File Penalty (FTF) and (TC 160)

• General Adjustment (GA)

• Hold Code (HC)

• Item Reference Number (IRN)

• Manual Assessment (Doc. Cd. 51)

• Master File (MF)

• Overpayment (OP)

• Penalty Reason Code (PRC)

• Priority Code (PC)

• Quick Assessment (Q/A)

• Transaction Code (TC)

• Revenue Accounting Control System (RACS)

• Restricted Interest (RI)

• Return Due Date (RDD)

• Underpayment (UP)

• Unpostable Code (UPC) and UPC Reason Code (RC)

(3) See Exhibit 8.20.7-14, Entries for the Final Form 5403 Preparation to Close AIMS After a Quick Assessment has been Processed for detailed instructions.

(1) Appeals is the second IRS function approved to utilize the SB/SE Corporate Database Initiative (CDI) Transmittal Database. This transition. when fully implemented, will replace the paper Form 3210 printing multiple copies, filing, follow-up, physical retention and maintenance, storage and manual purge process with an electronic process. The SBSE Corporate Database Initiative (CDI) Transmittal Database SharePoint Site provides an active user with the following benefits and efficiencies:

• Electronic process for creating document transmittals (E3210) with auto-population of initiator’s identifying information as well as auto-population of recipient information using a Distribution ID list item selected by the user

• Systemic process to acknowledge an E3210 when the recipient is also an active user of the CDI Transmittal Database

• Systemic process to "self-acknowledge" an E3210 when the receipted E3210 is returned to the initiator via a tradition method or EEFax

• Systemic retention of the acknowledged/self-acknowledged E3210 for 12 months from the acknowledgement date

• Systemic transfer of the acknowledged E3210 at 12 months to an inactive archive for an additional 6 month retention

• Systemic deletion of the electronic record at 18th months from the acknowledgement date

• Research capability for any E3210 by the transmittal number assigned by the database, or by the TIN throughout the 12 month retention period

(1) IRM 1.2.17, Policy Statement 8-48, states that Appeals may consider and accept proposals for "Specific Dollar Settlements". Whenever the ATE resolves their case by means of a "Specific Dollar Settlement", they will provide the following statement on the Form 5402 in the Remarks Section: "This is an Appeals Settlement for a specific dollar amount. There is no audit statement or schedule or adjustments, and the change to AGI and TXI can’t be determined."

(2) The ATE must provide APS with the "interest-related" forms, schedules, worksheets, and spreadsheets in the same manner as any other case despite the fact that the "Specific Dollar Settlements" will not go through a Tax Computation Specialist (TCS). See Exhibit 8.20.7-12, "Interest-Related" Internal Revenue Codes (IRC), Revenue Procedures (Rev. Proc.), Revenue Rulings (Rev. Rul.), and Applicable Internal Revenue Manual (IRM) References for additional information.

(1) When Counsel resolves their case by means of a "Specific Dollar Settlement", the Counsel Attorney will include a Counsel Settlement Memorandum within the case as well as a notation on the Form 1734, Transmittal Memorandum to alert APS that there are no tax computations associated with the case that match the tax and/or penalty included in the Entered Decision Document. See Chief Counsel Directives Manual, Settlements by Counsel 35.5.2.9 for additional information.

(2) The Counsel Attorney must provide APS with the "interest-related" forms, schedules, worksheets, and spreadsheets in the same manner as any other case despite the fact that the "Specific Dollar Settlements" will not go through a Tax Computation Specialist (TCS) for the purpose of a tax computation or Rule 155 Computation. See Exhibit 8.20.7-12, "Interest-Related" Internal Revenue Codes (IRC), Revenue Procedures (Rev. Proc.), Revenue Rulings (Rev. Rul.), and Applicable Internal Revenue Manual (IRM) References for additional information.

(1) Each tax return/tax class has a variety of Credit Reference Numbers (CRN) and Item Reference Numbers (IRN) which populate and/or update the associated field on the transcript of account when reported on a filed return, or are adjusted during the IRS review, correction, or audit process.

(2) Document 6209, IRS Processing Codes and Information contains a detailed listing of CRNs and IRNs for the following types of Tax Returns/Forms:

• Form 706, United States Estate (and Generation Skipping Transfer) Tax Return

• Form 709, United States Gift (and Generation Skipping Transfer) Tax Return

• Form 720, Quarterly Federal Excise Tax Return

• Form 940, Employer's Annual Federal Unemployment Tax Return

• Form 941, Employer's Quarterly Federal Tax Return

• Form 943, Employer’s Annual Federal Tax Return for Agricultural Employees

• Form 944, Employer’s Annual Federal Employment Tax Return

• Form 945, Annual Return of Withheld Federal Income Tax

• Form 990, Return of Organization Exempt From Income Tax

• Form 1040, U.S. Individual Income Tax Return

• Form 1041, U.S. Income Tax Return for Estates and Trusts

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

• Form 1116, Foreign Tax Credit (Individual, Estate or Trust)

• Form 1120, U.S. Corporate Income Tax Return

• Form 2441, Child and Dependent Care Expenses

• Form 3468, Investment Credit

• Form 3800, General Business Credit

• Form 4136, Credit for Federal Tax Paid on Fuels

• Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts

• Form 5695, Residential Energy Credits

• Form 5884, Work Opportunity Credit

• Form 5884-A, Credits for Employers Affected by Hurricane Katrina, Rita, or Wilma

• Form 6478, Alcohol and Cellulosic Biofuel Fuels Credit

• Form 6765, Credit for Increasing Research Activities

• Form 8396, Mortgage Interest Credit

• Form 8586, Low-Income Housing Credit

• Form 8801, Credit for Prior Year Minimum Tax - Individuals, Estates and Trusts

• Form 8804, Annual Return for Partnership Withholding Tax (Section 1446)

• Form 8820, Orphan Drug Credit

• Form 8826, Disabled Access Credit

• Form 8830, Enhanced Oil Recovery Credit

• Form 8834, Qualified Plug-In Electric and Electric Vehicle Credit

• Form 8835, Renewable Electricity, Refined Coal, and Indian Coal Production Credit

• Form 8839, Qualified Adoption Expenses

• Form 8844, Empowerment Zone and Renewal Community Employment Credit

• Form 8845, Indian Employment Credit

• Form 8846, Credit for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips

• Form 8847, Credit for Contributions to Selected Community Development Corporations

• Form 8849, Claim for Refund of Excise Tax

• Form 8860, Qualified Zone Academy Bond Credit

• Form 8861, Welfare-to-Work Credit

• Form 8962, Premium Tax Credit

• Form 8864, Biodiesel and Renewable Diesel Fuels Credit

• Form 8965, Health Coverage Exemptions

• Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits)

• Form 8874, New Markets Credit

• Form 8880, Credit for Qualified Retirement Savings Contributions

• Form 8881, Credit for Small Employer Pension Plan Startup Costs

• Form 8882, Credit for Employer-Provided Childcare Facilities and Services

• Form 8896, Low Sulfur Diesel Fuel Production Credit

• Form 8900, Qualified Railroad Track Maintenance Credit

• Form 8906, Distilled Spirits Credit

• Form 8907, Nonconventional Source Fuel Credit

• Form 8908, Energy Efficient Home Credit

• Form 8910, Alternative Motor Vehicle Credit

• Form 8911, Alternative Fuel Vehicle Refueling Property Credit

• Form 8912, Credit to Holders of Tax Credit Bonds

• Schedule H, Household Employment Taxes

• Schedule R, Credit for the Elderly of the Disabled

• Schedule 8812, Child Tax Credit

(3) For additional information on account analysis and account codes, see:

• IRM 21.5, Account Resolution

• IRM 21.6, Individual Tax Returns

• IRM 21.7, Business Tax Returns and Non-Master File Accounts

• IRM 21.8, International

(1) The Credit Reference Numbers (CRN) and Item Reference Numbers (IRN) provided in this IRM are the most common adjustment types for Appeals’ and Counsel cases accounts. The CRNs and the IRNs are entered in Item 15 of Form 5403 when AIMS controls are open and are entered on a Form 3870 or a Form 8485 when AIMS controls are not open.

(2) Income Tax Credits apply to Income Tax Forms 1040 (MFT 30), 1041 (MFT 05) and 1120 (MFT 02). Income Tax MFT 30/05/02 accounts also include Item Reference fields which must be adjusted to reflect the changes associated with the income tax adjustment whenever applicable. MFT 30 accounts are controlled on the Individual MF (IMF) and MFT 05 and MFT 02 accounts are controlled on the Business MF (BMF).

(3) Form 5403, Appeals Closing Record Items 51, 52, and 53 are used whenever an IMF Reason Code (RC) must be associated with a CRN/IRN adjustment. The AMCLS IMF Reason Codes mimic the purpose of the ADJ54 IMF Reason Codes and their entry, (up to 3), triggers the correlating message on the taxpayer’s notice to explain the item(s) adjusted on their IMF account. When more than one IMF RC is required, enter them in ascending numeric order e.g. lowest IMF RC in Item 51 to highest Item 52 or Item 53. Exhibit 8.20.7-13, Table of the Most Common Credit Reference Numbers (CRN) and Item Reference Numbers (IRN) Applicable to an Income Tax (MFT 30/05/02) Account For a complete listing of IMF Reason Codes, see Document 6209, Section 8C 2-2 IMF Reason Codes or IRM 21.6.7-1 Exhibit Reason Codes.

(4) When the CRN and IRN adjustment entries exceed the maximum number of entries allowable on either type of adjustment document, use the decision table in IRM 8.20.7.10.4 (5) below to accurately process multiple account adjustments input within the same IDRS Cycle.

• See Exhibit 8.20.7-13, Table of the Most Common Credit Reference Numbers (CRN) and Item Reference Numbers (IRN) Applicable to an Income Tax (MFT 30/05/02) Account for additional information.

• See IRM 8.20.7.10.5, Refundable and Non-Refundable Credit Adjustments for additional information.

• See IRM 8.20.7.10.6, Self-Employment Tax Adjustment for additional information.

• See IRM 8.20.7.10.7, Schedule H, Household Employment Tax Adjustments for additional information.

• See IRM 8.20.7.27, EITC Recertification Program (Refundable Credits (ACTC/CTC/AOTC/EIC)

(5) When two separate adjustment documents must be used in order to input the full range of CRNs/IRNs applicable to that tax period’s account, use the decision table below to determine how the first and the final adjustment documents must be prepared for the AIMS or the Non-AIMS adjustment(s).Decision Table when more than one adjustment document is required to process the changes to the taxpayer’s account

(1) Credits associated with a taxpayer’s account can serve the purpose of reducing the net tax amount due, or they can serve the purpose of reducing the amount the taxpayer owes once the tax amount is determined. The Internal Revenue Tax Code differentiates between a credit which is refundable (Refundable Credit), and a regulated credit which only serves the purpose of reducing the amount of tax due (Non-Refundable Credit). Some Non-Refundable Credits are limited to the current years tax liability, and others can be carried back to prior years or carried forward to subsequent years to offset a tax deficiency. IDRS uses specific codes to identify and record the refundable credits and credit amounts. Whenever a refundable or non-refundable credit is adjusted as a result of an Appeals or Counsel settlement, the TCS will provide the IRN and CRN adjustment information to APS via the Form 5403 Instruction Worksheet.

(2) A credit which is refundable serves a dual purpose, first, it is applied to pay the tax liability and if any excess credit remains, it becomes available for offset to pay another outstanding liability for the taxpayer or it can be released as a refund to the taxpayer.

(3) A regulated credit is Non-Refundable and is limited to the amount of the tax liability.

(4) See IRM 21.6.3, Non-Refundable Credits Procedures and IRM 21.6.3, Refundable Credits for additional information.

(5) See IRM 8.20.7.27, EITC Recertification Program (Refundable Credits ACTC/CTC/AOTC/EIC) for detailed processing requirements subject to Recertification procedures.

(1) Self-employment adjustments for returns posted after December 31, 1985, are updated using reference numbers on the Form 5403, Appeals Closing Record in Item 15. The ATE or TCS who prepares the settlement computation provides the correct Item Reference Number(s) (IRN) and adjustment amount(s) via the Form 5403 Instructions to APS Worksheet.

(2) The Form 5403, Appeals Closing Record, for a no-change case with self-employment income/tax adjustments must reflect any adjustments to IRN 878/879, 895/896, and 889. Complete as follows for Items 12, 13, and 15:

1. Item 12 - Enter TC 300 for 0.00

2. Item 13 - Enter Disposal Code 12

3. Item 15 - Enter appropriate Item Reference Number(s) and amount(s)

(3) To view the Social Security Tax Rate Table and Wage Limitation established for each tax year see:
✓ http://serp.enterprise.irs.gov/databases/irm.dr/current/6209.dr/6209ch03.14.htm.

(4) See the following resources for additional information:

• IRM 8.17.5, Form 5403 Instructions to APS Worksheet

• IRM 8.20.7.63, Unpostables

(1) Schedule H can be filed with a Form 1040, Form 940, Form 941 or it can be filed separately. Schedule H carries it’s own Assessment Statute Expiration Date (ASED) which is NOT based on the filing requirements of the taxpayer’s F-1040, F-940, F-941. Schedule H taxes can be assessed even if the original filer’s ASED has expired per IRM 21.6.4, Schedule H, Household Employment Taxes (7).

(2) Schedule H adjustments, when are authorized by a signed Form 2504 or a signed Form 2504-AD. Schedule H adjustment amount(s) are provided to APS via the following forms:

• Form 5278

• Form 5403 Instructions

• Schedule H

(3) The following Item Reference Numbers are used to process Social Security and Medicare adjustments to the MFT 30 Schedule H account fields:Schedule H Item Credit Reference Numbers (CRN) and Item Reference Numbers (IRN) and Titles

(4) See IRM 21.7.2, Advanced Earned Income Tax Credit (AEITC) - Form 941, Form 943, Form 944, and Schedule H for additional information on how this credit was allowed and when it was eliminated.

(5) When the ATE identifies that IRC § 6205, Interest-free provision applies, use a TC 308/298 for the Schedule H Medicare Tax amount only. If there is also a general tax adjustment use a TC 300/290 for the applicable assessment amount. A TC 308/298 requires an Interest Computation Date entry to identify the underpayment interest start date for the amount of tax entered with the TC 308/298. The applicable interest start date is provided by the ATE. See IRM 21.6.4, Schedule H, Household Employment Taxes - Interest - Free Provisions - Underpayments for additional information.

(6) The following Item Reference Numbers are used to process Federal Unemployment Tax Act (FUTA) adjustments to the MF Schedule H account fields:Schedule H FUTA State Code and Item Reference Numbers (IRN) and Titles

(7) Schedule H adjustments must be processed correctly to avoid the following Unpostables:

• UPC 189 RC 1 - Input reference number attempts to reduce the related field below zero

• UPC 291 RC 3-1 - Input reference number input without a significant money amount (cannot be 0.00)

• UPC 290 RC 4 j - Input attempts to post to an invalid tax period

• UPC 169 RC 8 - Secondary taxpayer reference numbers input on other than a MFJ account (903, 904, 907, 973, 994, 995, 996)

• UPC 169 RC 0 - Schedule H adjustment input and no EIN is present for the primary/secondary taxpayer

• UPC 150 RC 3 - Schedule H tax assessment is input to a module where the ASED has expired and Priority Code 1 is not used

(1) Item Reference Numbers (IRN) for Form 706 Estate Tax Return and Form 709 Gift Tax Return, are provided by the TCS or the ATE who prepare the computations and Form 5403 Instruction Worksheet.

(2) Estate and Gift tax IRNs are used to identify adjustments to each specific tax type:

• 074 - Generation Skipping Tax (MFT 51 and MFT 52)

• 076 - Net Estate Tax (MFT 52)

• 077 - Net Gift Tax (MFT 51)

(3) IRN 074 when entered on either an Estate Tax or Gift Tax adjustment will be combined with the IRN 076 or IRN 077 amount to = the TC 300 amount.

(4) IRN 076 is required on all Estate Tax adjustments and will = the TC 300 amount unless IRN 074 is also entered per IRM 8.20.7.10.8 (3) above.

(5) IRN 077 is required on all Gift Tax adjustments and will = the TC 300 amount unless IRN 074 is also entered per IRM 8.20.7.10.8 (3) above.

(6) The following fields are also entered for MFT 51/54 on page 2 of Form 5403, when adjustment amounts are included on the Form 5403 Instructions to APS prepared by the TCS:

• Item 422, Applicable Credit Adj Amount

• Item 425, DSUE Amount (Deceased Spousal Unused Exclusion)

(7) The employee who prepares the settlement computation is responsible for completing the Form 5403 Instruction Worksheet. If a Counsel case is received by APS and the Form 5403 Instruction Worksheet is not included, APS can submit a Form 3608, Request for TCS Service to request preparation of a Form 5403 Instruction Worksheet. See IRM 8.20.7.2 (10) for instructions on how to prepare and submit Form 3608.

(1) Report Generation Software (RGS) version 16.0 (and subsequent versions) use more specific penalty reference numbers (PRN) for the accuracy related penalty previously entered in Item 15 of Form 5403, via a single PRN "680." When the TCS does not use the RGS generated From 5403 to prepare the tax computation and report, then the TCS should identify the correct PRN for APS on the Form 5403 Instructions.

(2) The new more specific PRNs are as follows:

• PRN 681 - IRC § 6662A - Accuracy-Related Penalty on Reportable Transactions

• PRN 683 - IRC § 6662(b)(7) and IRC 6662(j) - Undisclosed foreign financial assess understatement

• PRN 780 - IRC § 6662(b)(6) - Transaction lacking economic substance

• PRN 781 - IRC § 6662(i) - Non-disclosed noneconomic substance transactions

• PRN 786 - IRC § 6662(b)(1) and IRC 6662(c) - Negligence

• PRN 787 - IRC § 6662(b)(2) and IRC 6662(d) - Substantial understatement

• PRN 788 - IRC § 6662(b)(3) and IRC 6662(e) - Substantial valuation misstatement

• PRN 789 - IRC § 6662(b)(4) and IRC 6662(f) - Substantial overstatement of pension liabilities

• PRN 790 - IRC § 6662(b)(5) and IRC 6662(g) - Substantial estate of gift tax valuation understatement

• PRN 792 - IRC § 6662(h) - Increase in penalty in case of gross valuation misstatements

(3) Interest on Accuracy Related Penalties is applicable per IRM 20.2.5, Interest on Penalties and Additions to Tax.

(1) Penalty Reason Codes (PRCs) were established to enable the IRS to systemically track the abatement and suppression of penalties. Accurate reporting of the PRC is vital for the Service to generate an accurate report to Congress. PRCs provide the basis for determining a taxpayer’s compliance history and also provides the foundation for analyzing trends in penalty abatements. PRCs are used with both BMF and IMF Document Code 54 and 47 transactions. See IRM 20.1.1, MF Penalty Reason Codes for source guidance and additional information.

(2) IRM 20.1.1, Master File Penalty Reason Codes (4) c. "Appeals: The PRC must be used to identify the reason for the abatement or non-assertion of a penalty when completing any of the following forms: Form 5403, Appeals Closing Record (CC: ADJ47), Form 5402, Appeals Transmittal and Case Memo (CC: ADJ54), and Form 8278, Assessment and Abatement of Miscellaneous Civil Penalties (CC: ADJ54)."

(3) APS TEs process adjustments on AIMS and Non-AIMS cases. The Form 5403 is an AIMS adjustment document (Document Code 47), and the Form 5403 Item 02, Penalty Reason Code is a 2 digit code entered by the APS TE to identify the justification provided by the ATE or Counsel Attorney for reducing or suppressing the penalty(ies) proposed by the Compliance Revenue Agent. Reduction of a proposed penalty is different than reduction of a previously assessed penalty because although the penalty amount was proposed, it has not been assessed prior to being transferred into Appeals’ or Counsel Jurisdiction. For procedures on partially or fully abating "previously assessed" penalties using a Non-AIMS Command Code ADJ54, see the following IRM section(s) as applicable:

• IRM 8.20.7.14.2, Non-AIMS CC: REQ54/ADJ54

• IRM 8.20.7.16, Civil Penalty MFT 13 (BMF) MFT 55 (IMF) Closing Procedures

• IRM 8.20.7.50, Penalty Appeal (PENAP) Case Closing Procedures

(4) When the Appeals Technical Employee (ATE) considers a case on which a penalty is proposed, the ATE must always select the appropriate Penalty Resolution Reason ID (1 through 10) when preparing the Form 5402. Identification of the applicable Penalty Resolution Reason ID communicates the ATE’s penalty determination for the respective case and provides APS with the necessary case processing information to accurately adjust the taxpayer’s account and accurately employ penalty suppression techniques as appropriate to avoid erroneous computer generated penalty assessments.

(5) Whenever a docketed case decision is entered and the penalty is NOT fully sustained and the penalty relief reason is not otherwise identified, APS will enter the correct PRC based upon the disposition of the penalty Item 02 on Form 5402.

(6) The APS TE must recognize and determine the appropriate processing actions to take when the proposed (not yet assessed) penalty is only partially sustained, or when the taxpayer is granted full relief from the penalty assessment. Master File (MF) programming will systemically assess IRC 6651(a)(1), Failure to File Penalty (TC 166) and IRC 6651(a)(2), Failure to Pay Tax Shown on Return Penalty (TC 276) on a balance due delinquent return unless the penalty is manually restricted via input of a TC 160 or TC 270 for a specific dollar amount or manually suppressed via input of a TC 160 or TC 270 for 0.00+.

(7) When the FTP (TC 27X) is sustained but has not previously been restricted and has not been calculated to be assessed at a specific dollar amount, APS may use a Priority Code (PC) to trigger the IDRS programming computation and adjustment for FTP (TC 27X). See list below for PC 5 and PC 9 criteria:

• PC 5 - "Causes IMF or BMF MCC posting process to generate and post assessments (or abatements) of accrued, unrestricted FTP penalty and/or interest based upon the adjustment to which it is associated. PC 5 may be used with TC 290 or TC 300 for any amount and in combination with other transaction codes."

• PC 9 - "FTP back to RDD for TC 300 adjustment - Only necessary on IMF. BMF automatically generates FTP from RDD unless TC 270 is input. Entering a TC 270 amount will prevent MF from computing back to RDD even though PC 9 is input. Use PC 9 when inputting a return or adjustment, if the module contains an SFR, to compute FTP from return due date."

• Additional information on Priority Code 5 and 9 is provided via the following online references:

Reference Link	Title
http://serp.enterprise.irs.gov/databases/irm.dr/current/6209/section-8c-2-4.html	Document 6209, Section 8C 2 - Source Codes, Reason Codes, Hold Codes and Priority Codes See 4 - Priority Codes
IRM 4.13.5	Recalculating SFR Penalties
IRM 20.1.1	The Appeals Function Pre-Assessment Appeals Post-Assessment Appeals Deficiency Procedures Non-Deficiency Procedures Master File Indicators Master File Penalty Reason Codes Penalty Transaction Codes Penalty Reference Numbers Corporate Files On-Line (CFOL)
IRM 20.1.2	Manual Penalty Adjustments
IRM 20.2.5	Assessment of Interest Accruals

(8) When the taxpayer’s AIMS account reflects a late filed return (AMDISA Del-Ret-Ind = 1) and the ATE does not sustain assessment of the Failure to File Penalty (FTF) and/or Failure to Pay Tax (FTP) Penalty shown on the Revenue Agent Report (RAR) Form 4549 prepared by Compliance, the APS TE must systemically "suppress" Master File programming from generating the TC 16X and/or TC 27X penalty. APS will enter the applicable PRC in Item 02 of Form 5403, and also enter the applicable penalty TC in Item 12 with a 0.00 to suppress the FTF and FTP penalty.

• TC 16X = Failure to File (FTF) Penalty IRC 6651(a)(1)

• TC 27X = Failure to Pay Tax Shown on the Return (FTP) Penalty IRC 6651(a)(2)

(9) To suppress master file programming from generating the FTF and/or FTP enter the manual assessment TC 160 and/or TC 270 in Item 12 Form 5403 with 0.00+. The TC 160 0.00 entry in Item 12 of Form 5403, bypasses the Delinquent Return Indicator (Del- Ret- Ind) and restricts MF from computer generated updates for this TC. The TC 270 0.00 entry in Item 12 of Form 5403, restricts computer generated updates of the IRC 6651(a)(2) FTP Penalty.

(10) IRC 6651(a)(1) (FTF Penalty suppression) and IRC 6651(a)(2) TC 270 0.00 (FTP Penalty suppression). When ACDS includes an amount in the PropdPen field on ACDS and the APS TE enters a lesser amount in the Revsdpen field, then the APS TE must also enter the applicable PRC in Item 02 of F-5403.

(11) IRC 6662, Accuracy Related Penalty (TC 240 assessed via entry of the applicable Penalty Reference Number (PRN) in Item 15). The Accuracy Related Penalty is not systemically assessed by MF programming, thus a proposed Accuracy Related Penalty which is not sustained only requires entry of the PRC on Form 5403 in Item 02 but does not require a manual entry of a penalty suppression TC 240 for 0.00 in Item 12 or Item 15. The IRC 6662 Accuracy Related Penalty is only posted and adjusted via a manual assessment or a manual abatement entry input via CC: AMCLS or CC: REQ54.

(12) The PRCs available for manual input in Item 02 of Form 5403 on a non-docketed or docketed case are as follows:Crosswalk of Penalty Relief Reason and Applicable Penalty Reason Code Entry in F-5403 Item 02

(1) Restricted interest and/or special processing actions may apply to a variety of case types. APS TE's will perform interest computation and special processing actions as appropriate to each tax period. The TCS prepares the following forms and/or notates the Form 5403 Instructions to APS Worksheet when specific interest provisions apply:

• Form 2285, Concurrent Determinations of Deficiencies (Increases in Tax) and Overassessments (Decreases in Tax) in Cases Involving Restricted Interest Provisions of the Internal Revenue Code

• Sequa Worksheet when Revenue Ruling 99-40 applies

• IRC 6404(g), Interest Suspension Worksheet when applicable on an Individual MF account.

Reminder: IRM 20.2.7, Recording IRC 6404(g) Notice Date (1) states "Examiners must notate IRC § 6404(g) does not apply or IRC § 6404(d) does apply and the date the notice was provided on the following forms or equivalent:"Forms Prepared by Compliance and Used to Identify if IRC 6404(g) Applies

6404(g) Documentation	Form Title	Appeals Use For 6404(g) Awareness
Form 3198	Special Handling Notice for Examination Case Processing	The ATE selects one of the following when preparing the Form 5402 6404(g) Applies: Yes No When 6404(g) Applies is Yes, the ATE will also include the 6404(g) Worksheet to provide APS with the Interest Suspension Start and End Dates and Amount.
Form 4549	Income Tax Examination Changes	The ATE selects one of the following when preparing the Form 5402 6404(g) Applies: Yes No When 6404(g) Applies is Yes, the ATE will also include the 6404(g) Worksheet to provide APS with the Interest Suspension Start and End Dates and Amount.
Form 4605-A	Examination Changes - Partnerships, Fiduciaries, Small Business Corps. & Domestic Intl. Sales Corp.(Unagreed and Excepted Agreed)	The ATE selects one of the following when preparing the Form 5402 6404(g) Applies: Yes No When 6404(g) Applies is Yes, the ATE will also include the 6404(g) Worksheet to provide APS with the Interest Suspension Start and End Dates and Amount.

Reminder: The APS TE must ensure that the 6404(g) TC 971 AC 064 is posted whenever IRC § 6404(g) applies. For additional information see IRM 20.2.7, Input of IRC § 6404(g) Notice Date on MF.

Caution: Whenever the ATE determines IRC § 6404(g) does not apply, but the TC 971 AC 064 indicator is present on the taxpayer’s account, APS must reverse the 6404(g) indicator via a TC 972 AC 064. CC: FRM77 is used to post or reverse the 6404(g) indicator. The IRC § 6404(g) notice date is entered in the TRANS-DT field, and the liability amount eligible for IRC § 6404(g) interest suspension must be entered in the FREEZE-RELEASE-AMT field. For additional information see IRM 20.2.7, Input of IRC § 6404(g) Notice Date on MF.

• Earliest 30-Day or 90-Day Notice Date and Amount when IRC § 6621(c) Large Corporate Underpayment Interest applies.

(2) See IRM 8.17.6, Interest Issues in Settlement Computations for additional information.

(3) See IRM 20.2, Interest for service-wide guidance and procedures for all "Interest-related" topics.

(4) See IRM 20.2.1, Notice Requirements for guidance on providing the manual interest computation to the taxpayer.

(1) If the adjustment involves railroad retirement tax Form CT-1, Employer's Annual Railroad Retirement Tax Return (MFT 09) and/or Form CT-2, Employee Representative's Quarterly Railroad Tax Return (MFT 72), the ATE or ATCL will prepare the disclosure information package for APS to forward to the Railroad Retirement Board (RRB):

• Form 5402, Appeals Transmittal and Case Memo;

• Appeals Case Memorandum, if prepared in addition to Form 5402;

• Form 4549, Income Tax Examination Changes and/or Form 5278, Statement - Income Tax Changes; and

• Settlement Computations

For Docketed Tax Court Cases, APS will secure and also include the following document:

• Entered Decision Document, or

• Entered Order of Dismissal

(2) APS will use Form 3210/E3210 to transmit the disclosure package to the Railroad Retirement Board (RRB) at the following address:

Railroad Retirement Board

Attention: Chief Financial Officer

844 N. Rush Street

Chicago, IL 60611

(3) APS will not enter a Disclosure Code in Item 39 on Form 5403 for RRB Disclosures.

(1) Below is a list of forms prepared in different cases but not necessarily in every case. The following guidance is provided for associating these forms with the tax return at closing.

1. Agreement Forms with AD Extensions Form 870-AD, Form 2504-AD, etc. – Send a copy of the agreement form to the taxpayer with the closing letter. Include the original agreement in the administrative file.

2. Form 885-E, Schedule for FICA Tax Adjustment of Wages not Previously Reported - Attach behind the return or to the face of the return.

3. Form 885-F, Self-Employment Tax Adjustment - Attach behind the return or to the face of the return.

4. Form 885-T, Adjustment of Social Security Tax on Tip Income Not Reported to Employer - Attach behind the return.

5. Form 866 and Form 906 (Closing Agreements) - Attach a copy of the closing agreement to each applicable return. Include a copy with the closing letter. Send a copy to Compliance if noted on Form 5402, Appeals Transmittal and Case Memo by the ATE.

   Reminder: Since APS no longer creates a Closed Office File, the APS TE must transmit one of the duplicate Original Closing Agreements to the address below, using Form 3210/E3210, where all Closing Agreements will be retained for 6 years to comply with the Appeals Records Control Schedule retention period.

6. Form 1331 or Form 1331-B, Notice of Adjustment - Attach the original to Form 5403.

7. Form 2285 (for Restricted Interest) - Attach original form to reverse side of the front page of return.

8. Form 2859, Request for Quick or Prompt Assessment - Attach the original form to the front page of the return.

9. Form 3753, Manual Refund Posting Voucher - Attach the original form to the front page of the return.

10. Form 3870, Request for Adjustment - Attach the original form to the front page of the return.

11. Form 5792, Request for IDRS Generated Refund (IGR) - Attach the original form to the front page of the return.

12. Form 5403, Appeals Closing Record - Attach Form 5403 and Form 5403 Instructions to APS Worksheet, on top of the return.

13. Form 8485, Assessment Adjustment Case Record, - Attach the completed form to the front page of the return.

14. Form 8758, Excess Collections File Addition - Prepared by APS when refundable credits are barred from refund and must be moved to Excess Collections in order to resolve the taxpayer’s account. Attach the completed form to the front page of the return.

15. Form 8765, IDRS Control File Credit Application - Prepared by APS to request credits that have been moved to Excess Collections be returned to offset an outstanding balance on the same tax period from which they were originally applied. Attach the completed form to the front page of the return.

Appeals

Attn: Closing Agreement Suspense

55 North Robinson

Oklahoma City, OK

73102-9226

(1) Appeals sends a closing letter to notify taxpayers that their case is being closed.
The ATE:

• Prepares the letter

• Signs it if authorized to do so, or leaves the signature section blank and prepared for the ATM’s signature

• The letter is left undated in the administrative file

(2) Generally, APS dates and mails the closing letter, although an ATM may direct a secretary or other employee under their supervision to date and send the closing letter. The date on the closing letter must be on or after the ACAPDATE.

(3) The employee who sends the closing letter will:

1. Date the closing letter

2. Mail the closing letter to the taxpayer and if there is a Power of Attorney (POA), also mail a copy to the closing letter to the POA using cover Letter 937.

3. Include copies of applicable enclosures (870-AD, 2504-AD, Form 906 Closing Agreement, Form 872-T, etc) as stated on the closing letter

4. Retain copies in the administrative file

(1) If the statute is open under a Form 872-A and the return is closed no-change, the ATE will prepare a Form 872-T which APS will mail to the taxpayer with the closing letter.

(2) Exercise caution prior to sending a Form 872-T on a no change case. You must ensure carryback years with statutes controlled by the originating year Form 872-A are protected or assessed. The statute date for any carryback returns open under an originating year Form 872-A is 90 days from the date Form 872-T is mailed.

(1) Account and Processing Support (APS) also receives cases for closing action which are not controlled on AIMS.

(2) These Non-AIMS adjustment closings are explained within this IRM under each case type:

• Abatement of Interest Claim

• Campus Source Claim

• Collection Due Process

• Identity Theft

• Offer in Compromise (OIC DATC and certain OIC DATL)

• Penalty Appeal (PENAP)

(1) Form 3870, Request for Adjustment is prepared and approved by the ATE/ATM and is submitted to APS for processing Non-AIMS account adjustments via CC: REQ54/ADJ54. The Approving Official Signature authorizes APS to process the account adjustments requested by the ATE.

(2) IRM 2.4.16, IDRS Terminal Input - Command Codes REQ54 and ADJ54 provides detailed item entry instructions and explanations for reference by APS TEs authorized to input Non-AIMS adjustments.

(3) APS must verify the following items when entered by ATE, or complete the following items on Form 3870 as follows:

• Item 15 Sequence Number, identified by IDRS upon completion of the adjustment input action.

• Item 16 Blocking Series:
  ⇒ 00 - Original return is associated with the Non-AIMS adjustment Source Document (SD)
  ⇒ 05 - IMF adjustment made without the original return
  ⇒ 15 - BMF adjustment made without the original return
  ⇒ 18 - Adjustment without the original return - creates a Refile DLN
  ⇒ 96 - Penalty Appeal Indicator -N Master File freeze is set - creates a Refile DLN
  ⇒ 97 - Penalty Appeal Indicator -N Master File freeze is released
  ⇒ 98 - Certified Claim Disallowance Letter issued by Appeals - adjustment SD without original return
  ⇒ 99 - Certified Claim Disallowance Letter issued by Appeals - adjustment SD includes the original return

• Item 17 Deficiency Interest to Date, MM-DD-YYYY when restricted interest TC 34X is adjusted.

• Item 18 Source Code, this is a required field for IMF TC 29X adjustments. The Source Code (SC) chooses the beginning explanation appearing on the taxpayer's adjustment notice with the reason code (RC) completing the statement. See Document 6209, Section 8C - Master File Codes, Source Codes, Reason Codes, Hold Codes and Priority Codes to identify the appropriate Source Code for the Appeals adjustment. The most common SC used for Appeals adjustments is "02" which begins the adjustment notice with "We changed your [YYYYMM]" account to correct your [RC].

• Item 19 Reason Code, this is a required entry and up to 3 RC's may be input. When a Penalty RC is also appropriate, it is entered in position #4. When multiple RC's are input, enter them in numeric order from lowest number to highest number. RC 099 is used when other RC's do not apply and to complete the notice statement with "Account Information". See Document 6209, Section 8C - Master File Codes, Source Codes, Reason Codes, Hold Codes and Priority Codes to identify the appropriate Reason Code for the Appeals adjustment.

• Item 21 Hold Code, is entered when appropriate. See Document 6209, Section 8C - Master File Codes, Source Codes, Reason Codes, Hold Codes and Priority Codes to identify the appropriate Hold Code for the Appeals adjustment.

• Item 23 Priority Code, is entered by APS whenever necessary and must be used when certain conditions exist on the module. The most common PC used on Appeals non-AIMS adjustments is "1" whenever the taxpayer’s account includes an unreversed TC 420 or a TC 424. Input of PC 1 will bypass the following Unpostable Codes:
  ✓ UPC 150 RC 3
  ✓ UPC 160 RC 0
  ✓ UPC 328 RC 1
  ✓ UPC 330 RC 1
  ✓ UPC 330 RC 2
  See Document 6209, Section 8C - Master File Codes, Source Codes, Reason Codes, Hold Codes and Priority Codes to identify the appropriate Priority Code for the Appeals adjustment.

• Item 24 Posting Delay Code (PDC), is entered by APS when the adjustment is input during the current cycle, but the posting of the transactions must be delayed from 1-6 cycles. A PDC is only entered when needed.

• Item 25 Source Document (SD) Attached, this is a required entry.
  "Y", means the SD will be submitted to files for association with the REQ54/ADJ54 Form 5147, IDRS Transaction Record
  "N" means no SD "NSD" will be submitted to files
  "R", means the SD is being retained by the input function

• Item 29 TC No. is where the Transaction Code(s) being adjusted are entered along with the increase or decrease dollar amount for each respective TC entered on the associated row i.e. 291, 161, 271, 341, etc.

  Caution: In the rare instance where a Non-AIMS Adjustment is authorized for a TAX Increase (TC 290/298) and an Agreement Date (Waiver Date) must also be associated with the tax assessment (ASED must be open and at least 90 days from the REQ54 input date*), the TE uses the "Correspondence Received Date (CRD)" field for entry of the applicable Agreement Date. Master File programming recognizes the CRD for underpayment interest computation in the same manner as the 870 Agreement Date (TC 30X AIMS assessment). See IRM 8.20.7.14.2 (8) for applicable IRS and Appeals IRM references.
  * If the ASED is less than 90 days from the current date, Quick Assessment processing is required. The Agreement Date is entered in the Form 2859 Correspondence Received Date field (instead of the 870 Agreement Date (TC 30X Only) field, and the Non-AIMS Tax Assessment amount is entered in row 4a Tax - Adjustment TC 290.

• Item 29 Ref. No. Item Adjustment is where the IRN(s) being adjusted are entered along with the increase or decrease amount for each respective IRN i.e. 888, 886, 889, 878, 887, etc.

• Item 29 Ref. No. Credit Adjustment is where the CRN(s) being adjusted are entered along with the increase or decrease amount for each respective CRN i.e. 807, 765, 338, 256, 257, etc.

• Item 30 Remarks is used to identify any other specific information needed to complete the adjustment i.e. Refund Statute Control Date (RFSCDT), TCB-DT, and other information not specifically provided an item entry.

• Item 31 Complete as appropriate.

(4) A Form 8485, Assessment Adjustment Case Record or Form 12249, Adjustment Document can be prepared by APS, based on the Form 3870 provided by the ATE, to process the Non-AIMS account adjustments if additional fields are needed since the Form 3870 only allows for 4 TC Numbers to be entered.

(5) The APS TE must verify that their adjustments have posted to the account before closing the PEAS record. PEAS Suspense must be used as appropriate. See IRM 8.20.10, Account and Processing Support - Processing Employee Automated System (PEAS), for additional information.

(6) All adjustments AIMS and Non-AIMS must have the Adjustment Source Document associated with the administrative file as well as a copy of the Adjustment Source Document sent to Campus Files for association with the Form 5147, IDRS Transaction Register when Item 25 SD = "Y".

(7) The adjustment source document must be affixed to the face of the return or if no return is present, on top of the case closing package serving as the administrative file under Appeals jurisdiction.

(8) The following IRM references provide guidance on Non-AIMS Adjustments and the Correspondence Received Date (CRD):

• IRM 2.4.16, Terminal Messages (ADJ54) (Message Numbers are Displayed With the Message on the Screen for Easy Cross Referencing to the Definitions below). see (45) ASED IS IMMINENT/EXPIRED, CLEAR THROUGH STATUTE UNIT (3) states that only certain authorized employee numbers can bypass this validity check. APS TEs must use Quick Assessment procedures.

• Exhibit IRM 2.4.16-4, Input Screen CC ADJ54CORSP-DT (CORRESPONDENCE DATE)

• IRM 3.13.222, Correspondence Received Date (CRD)

• IRM 21.7.7, Correspondence Received Date

(1) The Taxpayer Bill of Rights, A Framework for Effective Tax Administration, requires all account actions to be made in a timely and accurate manner. The APS TE must ensure the account actions/updates/adjustments are completed as authorized and the applicable balance due notice, refund of overpayment, and interest adjustment(s) support the following taxpayer rights are upheld with the closing of the Appeals or Tax Court case:

• The Right to Be Informed

• The Right to Quality Service

• The Right to Pay No More than the Correct Amount of Tax

• The Right to Finality

• The Right to a Fair and Just Tax System

(2) When a case is decided or determined with finality, by Appeals, Counsel, or the United States Tax Court (USTC), the APS Tax Examiner is responsible for taking the following actions:

• Analyze each tax account to identify Master File Freezes or other account conditions which may impact the current account adjustment(s).

• Identify the appropriate processing codes to use when processing the adjustment(s) to avoid an unpostable condition, and or a delay in the release of the refund or notice to the taxpayer.

• Process the legally authorized account adjustment(s) on each respective tax period, which, upon posting will result in the final settlement of the taxpayer's account.

(3) When the taxpayer's account after posting of the adjustment(s) results in a balance due, a notice to the taxpayer is computer generated unless a HC 2, 3, or 4 is input with the adjustment transaction(s).

(4) When the taxpayer's account after posting of the adjustment(s) results in a credit balance, IDRS will (in most cases) offset the credit to any outstanding balance due account(s) for the taxpayer, and then refund the remaining credit with applicable overpayment interest unless a HC 2 is input with the adjustment transaction(s).

(5) A HC should only be used when appropriate. When the APS TE uses a HC for a specific reason i.e., to hold a credit balance until the credit can be offset to an outstanding balance, the APS TE must ensure that upon completion of the transfer action, the HC is released to allow final settlement of the taxpayer's account.

(6) When the taxpayer's accounts require manual processing of the offset of credit to an outstanding balance due account, the tax examiner performing the account adjustment(s) must ensure that their action fully resolves the taxpayer's accounts before the PEAS record is closed.

(1) The ATE will identify a bankruptcy case on Form 5402, Appeals Transmittal and Case Memo.

(2) The following conditions identify a bankruptcy filing:

• Transaction Code TC 520 with bankruptcy closing codes (cc’s 60-67, 81, and 83-89) on TXMODA

• "-V" freeze or a "-W" freeze for cc’s 81 and 84 on TXMODA

• "Bankruptcy" on the 1st page of the AMDISA

• "E/BNK" Status Code on ACDS which is defined as "Inactive, TP in Bankruptcy"

(1) Bankruptcy cases require unique processing, statute control and closing procedures.

(2) The ATE will address all Bankruptcy conditions on their case prior to forwarding the case to APS for processing actions whether the case is agreed, or unagreed. The Service is not prohibited from making assessments and the ASED is not suspended as a result of the bankruptcy filing. APS must be aware that on Non-docketed cases, the assessment must be made or the Statutory Notice of Deficiency (SND) must be issued prior to the existing ASED.

• Agreed cases, the ATE will identify the date the taxpayer filed bankruptcy.

Note: If the ATE did not identify the bankruptcy date, request clarification from the ATE.

• Unagreed field sourced cases are returned to Compliance Technical Services (CTS) as directed by the ATE for monitoring and statute control.

• Unagreed campus sourced cases are returned to the originating campus as directed by the ATE for monitoring and statute control.

(1) Form 5402, Appeals Transmittal and Case Memo, Form 5403, Appeals Closing Record, and closing letter are forwarded to APS by the ATE. The ATE will identify the correct ASED for APS in Item A on the Form 5403.

(2) APS will otherwise use general closing procedures to complete the case processing.

(1) When the ATE submits the unagreed case to APS for issuance of the Statutory Notice of Deficiency (SND), APS will take the following steps:

• Issue the SND using Letter 1384, Notice of Deficiency provided by the ATE.

  Note: The SND MUST be issued within the normal statute of limitations.

  Reminder: When an SND is issued on a bankruptcy case, the case will not be placed in SND suspense but instead the case is forwarded according to the ATE instruction.

• Return field sourced cases to Examination Technical Services.

• Return campus sourced cases to the originating campus function.

• Close ACDS using cc = 05, Defaulted SND.

• If Examination established the AIMS Controls, use CC: AMSTUB to update AIMS controls to appropriate AIMS Status.

• Field Examination Technical Services cases are updated to AIMS Status 21.

• Campus Cases are updated to AIMS Status 20.

• If Appeals established the AIMS Controls, use CC: AMCLSA with Disposal Code 01 and cc 33 to remove the record from the AIMS database.

(2) When the taxpayer files an objection to the Government’s claim during the time the case is in the ATE's active inventory, the ATE will stop working the case, identify the Counsel or the Department of Justice Office address where the administrative file must be sent after issuance of the notice, and forward the case to APS for the following actions:

• Issue an SND using the Letter 1384, Notice of Deficiency prepared by the ATE. The file will not be suspended.

• Close ACDS using CLOSINGCD = 19.

• Close AIMS via CC: AMCLSA using Form 5403, Appeals Closing Record:
  Use the "Copy" Blocking Series 79X,
  Item 12 = TC 300 0.00,
  Enter cc 19 in Item 811.

• Attach a copy of the face of the return and a copy of the Form 5403, Appeals Closing Record to the completed Form 2275, Records Request, Charge and Recharge.

  Reminder: The office and address where the administrative file is transmitted to must be included on Form 2275, Records Request, Charge and Recharge.

• Form 2275 is forwarded to Campus Files for association with the Form 5147, Transaction Record to identify that the administrative file has been "re-charged" to either Counsel or the Tax Division, U.S. Department of Justice.

• Transmit the administrative file to the Counsel or Department of Justice office identified by the ATE, using Form 3210/E3210.

(3) See IRM 8.20.7.11, Integrated Automation Technology (IAT) for a link to the ESTAB Tool and additional information.

(1) Certain docketed cases may be dismissed by the Tax Court due to lack of jurisdiction.

(2) 11 U.S.C.§362(a)(8), states that a case may not be filed with the Tax Court if the automatic stay is in place due to a bankruptcy filing.

(3) To identify these cases, the typical wording from the court on its order of dismissal will state "On (MM-DD-YYYY), respondent filed a Motion To Dismiss for Lack of Jurisdiction, on the ground that the petition was filed in violation of the automatic stay imposed under 11 U.S.C.§362(a)(8). Respondent states in the motion to dismiss that petitioners do not object to the granting of the motion. ORDERED that respondent's Motion To Dismiss for Lack of Jurisdiction is granted and this case is dismissed for lack of jurisdiction."

(4) APS will not process the assessment on these cases.

(5) Docketed cases that are dismissed due to this reason must be returned to the originating function to monitor the bankruptcy. When the automatic stay is lifted or terminates, the originating function will make the assessment at the appropriate time or send the case back to Appeals as a new docketed case if the taxpayer repetitions the Tax Court.

(6) Field sourced cases will be returned to Examination Technical Services Bankruptcy Coordinator. http://mysbse.web.irs.gov/exam/tip/bankruptcy/contacts/12268.aspx

(7) Campus sourced cases will be sent back to the campus functional unit that issued the SND:

• Automated Under Reporter (AUR)

• Automated Substitute for Return (ASFR)

• Correspondence Exam (CORR EXAM)

(8) To return the case to the originating function, APS will take the following actions:Processing Steps for Dismissed Docketed Bankruptcy Cases

(9) Complete Form 3210/E3210 as follows:

1. In the "To" field, place the name and address of the Exam Technical Services coordinator or the name and address of the appropriate campus function where the file is being returned as identified by the ATE.

2. In the "Remarks" field, place the following text "Tax Court petition filed in violation of the bankruptcy automatic stay."

3. In the body of the Form 3210/E3210 place the exact name of the taxpayer as it is listed on the SND and list all of the tax year or years included on the SND.

4. Below the listing of the taxpayer's name and tax year, include the following text:

• "APPEALS HAS NO JURISDICTION".

• "The U.S. Tax Court has dismissed this petition due to lack of jurisdiction."

• "This case is being returned to the originating function due to an erroneous Tax Court filing. The automatic stay provisions of bankruptcy code section 362(a)(8) preclude a debtor from filing a petition with the U.S. Tax Court until the stay is lifted or is terminated. The stay in this case remains in effect. The taxpayer may re-file a valid Tax Court petition upon the lifting or termination of the stay. The bankruptcy should be monitored so that the assessment is made at the appropriate time."

(10) Complete the remaining fields of Form 3210/E3210 as appropriate.

(1) The ATE will prepare and provide Form 5402 with the revised penalty amounts APS needs to update ACDS.

(2) Depending on the resolution, a Form 8278, Assessment and Abatement of Miscellaneous Civil Penalties is prepared by the ATE, and is used as the source document for APS processing adjustment(s).

1. If the Abusive Transaction Penalty is fully or partially sustained, assess per Form 8278 using TC 240 and Penalty Reference Number (PRN) 648, Failure to Disclose Reportable Transaction with Return (Form 8886).

(3) The following ACDS cc’s apply to the Abusive Transaction Penalty WUNO:

(4) If there is a related income tax workunit, regular closing codes and procedures apply.

(5) Use general closing guidelines for additional ACDS updates required at closing.

(1) Expedited processing is required for these cases.

(2) All adjustments must be made within 5 business days of receipt of the case in APS.

(3) The ACDS cc’s for these types of cases are as follows:

(4) APS will send a copy of the Form 5402, Appeals Transmittal and Case Memo and ACM to the Compliance location identified by the ATE in the remarks section.

(1) Return Preparer Penalties are closed the same as other civil penalty cases with the following additions:

1. Form 5402 will be included in the closing package from the ATE. It should include information on the revised penalty amounts needed to update ACDS.

2. Depending on the resolution, Form 8278, Assessment and Abatement of Miscellaneous Civil Penalties when prepared by the ATE, is processed by APS.

3. Update ACDS following general closing procedures.

(2) The following ACDS cc’s apply:

(3) Forward copy of ACM and Form 5402 to Compliance per the instructions on the Customized Form 5402.

(4) APS will assess or abate the penalty per the ATE prepared Form 5402 and Form 8278 instructions.

(1) If, in response to a notice of deficiency, the taxpayer submits an agreement or fails to file a petition within the time provided, a notice of claim disallowance must be issued before the case is forwarded for assessment, unless the taxpayer submits Form 2297, Waiver of Statutory Notification of Claim Disallowance.

(2) The tax law provides for interest on overpayments in respect to any internal revenue tax, in accordance with IRC 6611. For an examination-sourced case, Appeals will expedite the closing of an overpayment case that meets the "large dollar criteria" - described in IRM 4.4.18, AIMS Procedures and Processing Instructions, Large Dollar Cases and as shown on Exam’s Form 3198, Special Handling Notice for Examination Case Processing. An overpayment case meets the "large dollar criteria" if the total amount of a period’s tax overpayment plus penalties exceeds $100,000.

• Account and Processing Support (APS) - APS will expedite the closing of a "large dollar" overpayment case, as" flagged" by the ATE. APS will assign the case on PEAS and identify the case as a "high priority" requiring "expedite processing." APS will make every effort to process a large dollar overpayment within 30 days of Appeals’ receipt of a waiver form and/or closing agreement.

(1) Under IRC 6404(e)(1), the Service has the authority to abate interest in certain situations.

(2) The ATE will provide APS with an Abatement of Interest customized Form 5402, an ACM, and Form 3870, Request for Adjustment for each claim period.

(3) For abatement of interest claims allowed in full:

1. Date and send closing Letter 2393, Abatement of Interest - Fully Allowed or Letter 913, Closing Letter - Agreed Cases by regular mail.

2. Review the adjustment document (Form 3870) for the appropriate closing codes, based on the ATE's conclusion to fully allow the interest abatement claim - TC 290 $0.00 and TC 341 with the amount of the interest to be abated. Note "Reason Code (RC) 82" on the adjustment form.

(4) For abatement of interest claims allowed in part:

1. Close as a defaulted disallowance letter, tried case, Counsel settled case, or dismissed from Tax Court. (See (6) below for ACDS closing codes.)

2. Process the adjustment document with TC 290 $0.00, TC 341 interest abatement amount, RC 81 (partially abated), or RC 82 (fully abated), if the Tax Court decides further abatement if allowed.

3. Process the adjustment document with TC 290 $0.00, if the Tax Court decides that no further abatement is warranted or the case is closed as a default or dismissal.

Note: A partial abatement of interest must have been done earlier (with TC 341, RC 81) when Letter 2391, Partial Allowance Letter Abatement of Interest was issued.

(5) For abatement of interest claims disallowed in full:

1. Close as a defaulted Letter 2392, Disallowance Letter for Abatement of Interest, tried case, Counsel settled case, or dismissed from Tax Court. (See (6) table below for ACDS closing codes.)

2. Process with TC 290 $0.00, RC 80 on the adjustment document.

(6) Update ACDS for all abatement of interest closings using general closing procedures and the following cc’s:

CLOSINGCD	Definition
03	Agreed fully allowed abatement of interest non-docketed case - with closing Letter 2393
05	Defaulted disallowance letter for a fully disallowed or partially allowed abatement of interest case
08 10 11 12 17	Agreed Docketed DC Settled Dismissed Lack of Jurisdiction Dismissed Lack of Prosecution Tried
20	Premature Referral

1. RevsdTax - enter the negative amount approved for abatement, e.g. fully sustained will have $-0-.

2. DDAMTDIS - enter only the amount disallowed, e.g. full disallowance reflects the full amount of the claim and full allowance reflects $-0-. Partial allowance reflects the difference between the DDAMTCL and the RevsdTax.

(7) The APS TE must resolve all freeze codes on the taxpayer's account to ensure that any refund due to the taxpayer is released and refunded timely.

(8) Use PEAS Suspense when an account adjustment must be monitored until fully posted.

(9) Upon completion of the account adjustment and verification that the appropriate refund amount has been released to the taxpayer, remove the case from PEAS suspense and close PEAS.

(1) See Exhibit 8.20.7-7, for guidance on processing an Interest Abatement case which can be submitted to APS as a partial (interim) or a final determination closing.

(1) Campus claims are normally not controlled on AIMS.

(2) When AIMS controls have not been established, process the adjustment to IDRS using Non-AIMS CC: REQ54:

1. Form 3870, Request for Adjustment or Form 8485, Assessment Adjustment Case Record.

2. Form 5402, Appeals Transmittal and Case Memo.

(3) A separate Form 3870 or Form 8485 is needed for each tax period being adjusted.

(4) Date and mail one of the following closing letters, prepared by the ATE:

• Letter 2681, Appeals Full Disallowance After Previous Claim Disallowance

• Letter 2682, Appeals Full Claim Allowance

• Letter 2683, Appeals Partial Disallowance After Previous Claim Disallowance

(5) These cases are not held for suspense.

(6) The following are the ACDS entries required at closing:

1. ACDS cc’s

CLOSINGCD	Definition
14	Full Disallowance
15	Full Allowance
16	Partial Disallowance

2. RevsdTax - enter the negative amount approved for abatement/refund. e.g. full disallowance would be $–0–.

3. APPEALS AMTDIS - enter only the amount of the claim disallowed by Appeals.

(7) Actions for inputting the adjustment on claims:

• Input TC 29X for appropriate tax change, along with applicable reason code(s).

• Use blocking series 00 if the original return is with the claim.

• Use blocking series 05 (IMF) or 15 (BMF) if the original return is not with the claim.

(1) Claims for abatement and/or refund may require one or both of the following actions:

• Issuance of a certified letter of claim disallowance

• Account adjustments/abatements

(1) Excess Social Security and Medicare Tax Claims require unique processing of the tax abatement on the BMF Entity and a manual refund of the claim amount allowed to the employee/claimant. The ATE determines the fully or partially allowed withholding adjustment amount which is posted as a TC 291 abatement to the employers' BMF account; but the refund of the abatement must be issued to the employee who filed the claim.

(2) Guidance for processing partially or fully allowed Excess Social Security and Medicare Tax Claims is provided in IRM 21.6.4.4.8.5.1 , Social Security and Medicare Tax Erroneously Withheld - Employee Claims for Refund - Schedule H (2) table row 4.

(3) Excess Social Security and Medicare Tax Claim refunds must be processed via manual refund procedures. See IRM 21.4.4, Why Would A Manual Refund Be Needed?

(4) Guidance for processing the manual refund to the claimant is provided in IRM 21.4.4, Preparation of Manual Refund Forms and IRM 21.4.4, Preparation of Form 5792, IDRS Generated Refund.

(1) Collection CAP cases are transmitted via encrypted email* to the originating Revenue Officer (RO) with a Cc: to the RO Group Manager identified by the ATE on the Form 5402.

(2) APS is responsible for entering the Date on the Closing Letter by using the Typewriter Feature in Adobe.

(3) APS will send an encrypted email to the originating RO with a Cc: to the RO Group Manager and include the following attachments:

• Form 5402

• "Dated" Closing Letter

• Appeals Case Memorandum (ACM), if one is prepared by the ATE