25.24.2. Return Preparer Misconduct Victim Assistance Specialized Accounts Management Processing

(1) Unscrupulous return preparers may alter taxpayer tax data without the taxpayer’s knowledge or consent (for example, by falsifying dependent information, expenses, deductions, credits, income, refund amount, etc.) and/or misdirect a portion or all of the refund for their personal benefit. Taxpayers may become aware of misconduct through taxpayer initiated contact (Toll-Free, Field Assistance, Taxpayer Advocate Service, etc.) or through IRS enforcement investigative processes (Revenue Agent (RA) or Tax Compliance Officer (TCO) contact, Automated Underreporter (AUR) correspondence, campus examination correspondence, Revenue Officer (RO) contact, Criminal Investigation (CI) inquiries, etc.).

(1) The policy statement relating to RPM can be found in IRM 1.2.1.16.1, Policy Statement 25-2, Return Preparer Misconduct.

(2) IRC 6201 provides the IRS authority to assess taxes imposed by Title 26. IRC 6402 authorizes the IRS to make credits and refunds.

(3) The Taxpayer Bill of Rights (TBOR) lists rights that already existed in the tax code, putting them in simple language and grouping them into 10 fundamental rights. Employees are responsible for being familiar with and acting in accord with taxpayer rights. See IRC 7803(a)(3), Execution of Duties in Accord with Taxpayer Rights. For additional information about the TBOR, see https://www.irs.gov/Taxpayer-Bill-of-Rights.

(4) The Taxpayer Advocate Service is an independent organization within the Internal Revenue Service (IRS), led by the National Taxpayer Advocate, that helps taxpayers and protects taxpayer rights. TAS offers free help to taxpayers when a tax problem is causing a financial difficulty, when they’ve tried and been unable to resolve their issue with the IRS, or when they believe an IRS system, process, or procedure just isn't working as it should. TAS strives to ensure that every taxpayer is treated fairly and knows and understands their rights under the Taxpayer Bill of Rights. TAS has at least one taxpayer advocate office located in every state, the District of Columbia, and Puerto Rico.

(1) IDTVA employees specialized in RPM are responsible for the evaluation and resolution of RPM complaints.

(2) IDTVA employees are required to use the mandated Integrated Automation Technologies (IAT) tools per IRM 21.2.2.4.4.14, Integrated Automation Technologies.

(1) Key RPM terminology used throughout this guidance is defined below.

(2) Preparer Misconduct: Return preparer misconduct generally involves the orchestrated preparation and filing of false income tax returns (in either paper or electronic form), including Form 1040-X, Amended U.S. Individual Income Tax Return, by unscrupulous preparers without the taxpayer’s knowledge or consent. Preparers may change direct deposit information or claim tax benefits improperly. Examples of improper claims for tax benefits include:

• Inflated personal or business expenses,
• False deductions,
• Excessive exemptions, or
• Fraudulent tax credits such as the Earned Income Tax Credit (EITC).

The preparer's clients do not have knowledge of the false expenses, deductions, exemptions and/or credits shown on their tax returns.

(3) Return Preparer Definitions: The preparer definitions below are for the purposes of this guidance only.

(4) RPM Complaint: Taxpayers alleging preparer misconduct are required to provide Form 14157-A, Tax Return Preparer Fraud or Misconduct Affidavit, signed under penalties of perjury and Form 14157, Return Preparer Complaint, along with additional required documentation to support their allegations.

(5) Complete Complaint: Sufficient documentation is provided, and the preparer information is considered verified and valid.

(6) Acceptance of Complaint: Acceptance of an RPM complaint is dependent upon the receipt of sufficient documentation, verification of the preparer, the facts and circumstances of each complaint gathered from the taxpayer’s documentation and account research. When a complaint is accepted, the IRS determines the type of relief the taxpayer is entitled to receive.

(7) Actual Return or Return As Intended To Be Filed: The taxpayer’s tax return submitted with the RPM complaint reflecting the return unaltered by the preparer and as intended to be filed.

(8) Relief/Resolution: Relief and resolution is based upon the specific category defined in (10) and may consist of a combination of the following:

• The taxpayer’s actual return (return as intended to be filed) is accepted as the return of record and account is adjusted to reflect that return.

• Removal of the preparer portion of the refund attributable to preparer misconduct using a General Ledger (GL) account.

• Issuance of an additional refund, with applicable interest.

(9) Refunds: Terminology used to describe the refund portion include:

(10) RPM Categories: RPM complaints have been categorized into four (4) basic fact patterns. Within each of the 4 categories, different procedures may apply depending upon the specific facts and circumstances, such as whether there is a signing preparer or a non-signing preparer (ghost), and/or the method of refund issuance (e.g., refund anticipation check (RAC), split refund, paper check). These facts and circumstances, the specific documentation requirements for each category, verification requirements and account information determine the treatment stream and whether the taxpayer is entitled to a refund, or a portion of the refund misdirected by the preparer.

(11) Refer to the table below for a list of acronyms used throughout this guidance.

(1) Employees are responsible for familiarizing themselves with and utilizing all linked/referenced IRMs, as appropriate. This includes, but is not limited to, sections within the following:

• IRM 3, Submission Processing

• IRM 4, Examining Process

• IRM 5, Collecting Process

• IRM 20.1, Penalty Handbook

• IRM 21, Customer Account Services

• IRM 25, Special Topics

• IRM 25.23, Identity Protection and Victim Assistance

(2) IRM 25.24.1, Return Preparer Misconduct Victim Assistance - General Overview, should be used in conjunction with specific functional RPM guidance.

(1) Taxpayers claiming to be victims of RPM must submit a complaint, affidavit and other required documentation to the IRS to request relief. Policy Statement P-21-3 applies, and interim letters are systemically generated through CII. Refer to IRM 21.3.3.4.2.2, Interim Responses, for additional information.

(2) The Return Preparer Office (RPO) may also send Form 14157-A, Tax Return Preparer Fraud or Misconduct Affidavit, or Form 14157, Return Preparer Complaint, or its equivalent, without the Form 14157-A to IDTVA when there is indication that the taxpayer is requesting account resolution. RPO does not make account determinations. Do not reject these cases. IDTVA continues with resolution of these cases. Refer to IRM 25.24.2.3.1.1, RPO Receipts Case Batching, for procedures on intake of these receipts.

(3) RPM complaints can also be received from non-specialized functions identifying IDTVA criteria. Follow the table below if a case is referred in error.

(4) If a CII case is assigned to all zeros, research to locate a TIN for the taxpayer. See IRM 2.3.60, Command Codes NAMES, NAMEE, NAMEI, NAMEB, FINDS, FINDE, and TPIIP, for information to query national files of name and address data for research purposes. If a TIN cannot be located and there is sufficient mailing information on the complaint, issue correspondence to the taxpayer requesting the taxpayer’s TIN and any other required RPM documentation. If no response is received, issue a 5956C letter to tell the taxpayer no action can be taken since we have no record of a response being received. If correspondence cannot be issued then leave a CII case note stating insufficient information to issue correspondence and close the case no action.

(5) If a CII case is scanned as an RPM case in error and it does not fit any other case type, review case to determine whether an interim letter generated. If a closing letter is required, send a Letter 544C or equivalent, advising taxpayer that an interim letter was issued in error and to disregard.

(6) If a Form 3949-A, Information Referral, is received that clearly relates to an RPM issue and the taxpayer used the wrong form, continue with normal RPM case assignment.

(7) If a CII case is scanned as RPM from a 3rd party informing on a taxpayer, consider this an informant case. If a closing letter is required, send a Letter 544C or equivalent, advising taxpayer that an interim letter was issued in error and to disregard. Informant cases (generally Form 3949-A) are worked in Ogden. Review where case originated to determine whether the case should be referred to Ogden. Route to IRS, Attention: Entity, Mail Stop 6273, 1973 N Rulon Blvd., Ogden, UT 84404, after sending closing letter. If Form 14157-A was included, indicate in remarks on CII reroute, Not RPM - Informant Correspondence.

(8) If a complaint is received for an EIN alleging preparer misconduct, elevate to ITVA HQ (copy IDTVA P&A POC) for coordination with BMF.

(9) Refer to IRM 25.23.4.19, Requesting Translations of Certain Languages , for translation services guidance.

(1) All RPM allegations that come into an IDTVA Specialty Function team must be controlled on CII.

(2) All correspondence should be researched on IDRS and CII to determine whether there are existing open CII cases.

(3) Any new correspondence received on an open RPM CII case must be associated with the existing open case. Complete a CII Association sheet and send to ICT.

(4) Prior to sending a case to ICT for batching:

1. Perform research to ensure that the case meets the requirements to be worked in IDTVA.

2. Address all collection activities. See IRM 25.23.4.12, Collection Activity - Form 14394/13794.

(5) If a Form 14394, Identity Theft/RPM Case Collection Alert, or Form 13794, Request for Release or Partial Release of Federal Tax Lien, is sent to Automated Collection System Support (ACSS) or Collection Advisory, include a copy of the completed form with the other documents being sent to ICT for imaging.

(6) The IDTVA Specialty Function team receiving correspondence completes the IDTVA RPM Batch Sheet for each piece of correspondence. This form and its instructions can be found under Specialty Only heading on the IDTVA Hub.

(7) Make sure that the Image Control Team Batch Cover Sheet contains all necessary information so the case can be accurately controlled.

1. All IDTVA Specialty Function RPM cases contain category code IDII. See IRM 25.23.2-16, IDTVA IDRS Category Controls by Function.

2. Input priority codes on the ICT batch sheet as appropriate following IRM 25.24.2.3.4, Priority Codes for Identity Theft Victim Assistance (IDTVA) CII Cases.

(8) Any cases that were previously closed and re-opened must be updated to the correct case type, category code and program code immediately after re-opening the case. Cases should only be re-opened if worked and closed in the same day.

(1) RPM complaints meeting IDTVA Specialty Function criteria are scanned to the Correspondence Imaging Inventory (CII) with Doc Type COMP RPM. The Category Code is IDII and program code 710-85431.

(2) RPM complaints meeting IDTVA-A criteria are scanned to CII with Doc Type Return Preparer Misconduct, Category Code RPMC, and Program Code 710-85440.

(3) All RPM cases are required to have a CII control. If multiple years are listed in the RPM complaint, the Image Control Team (ICT) creates the case for the earliest year identified. Review the RPM complaint to identify all years impacted. A new CII case must be created for each year listed in the RPM complaint. Use the same "IRS Received Date" as the existing related RPM case containing the complaint. Link the newly created CII case to the related RPM case containing the complaint.

(1) All RPM cases should be treated as priority; however, some cases require immediate attention.

(2) IDTVA Specialty Function priority codes are listed below. When sending a case to ICT for CII batching, certain cases require a priority code to be noted on the batch sheet, per the chart below.

(3) It may be necessary to update the priority code of a case as it is being processed.

(4) IDTVA Specialty Function cases must be worked in priority order due to agreements with the referring functions (AUR and Exam).

(1) Refer RPM cases involving allegations against a return preparer to the Return Preparer Office (RPO) when the claim is received in IDTVA or as early as possible. Refer only the cases received for the current processing year or any of the prior 3 years. This includes:

1. Complaints against a preparer that meet RPM criteria, regardless of the completeness of the complaint.

2. ID theft involving a preparer.

(2) If any of the scenarios below apply, do not notify the RPO. Leave an appropriate case note.

1. There is an indication the case was previously sent to RPO or indication the case originated in RPO (for example, RPO control number, RPO date stamp or RPO routing sheet is present).

2. Reroute criteria are met. The receiving function forwards to RPO, if applicable.

3. There is a general account or tax return issue that otherwise demonstrates it is an issue other than RPM (for example, transposition error, open Exam issue not involving RPM) and it is determined no misconduct has occurred.

4. RPM complaint that does not involve a preparer (for example, complaint against a spouse, dependent issues, etc.) and RPM criteria are not met.

5. Return preparation at Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) sites including AARP.

(3) If no exceptions apply, Customer Service Representatives (CSRs) and Correspondence Exam Technicians (CETs):

1. Create a spreadsheet and notate the taxpayer identification number (TIN), taxpayer name and tax periods involved, for each case.

2. Leave a case note: "TIN to RPO" on CII to indicate information was sent.

3. Weekly - Send secure email with spreadsheet attachment and subject line: IDTVA (site name) - Form 14157 to: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

4. Proceed to work the RPM case following current procedures.

(4) If the case is being sent to RPO per paragraph 3 above, inform the taxpayer you forwarded the information to RPO. Taxpayer notification is not required if case meets any criteria in paragraph 2 above.

(1) In a typical RPM case, there is a single point of contact for a taxpayer when allegations of RPM involve multiple years.

(2) Employees are required to perform Integrated Data Retrieval System (IDRS) research to determine whether reroute/reassignment criteria exists and determine:

• If there are controls for related cases

• If there are multiple controls on the account e.g., AUR, Exam or AM

(3) When multiple years are involved and at least one year has Compliance involvement, all years are worked by IDTVA Specialty Function.

(4) Accounts showing another function or team is responsible for resolution should be routed/reassigned per IRM 25.24.1.4.1, Routing Information - Paper.

1. Compliance involvement received in IDTVA-A should be routed to IDTVA Specialty Function.

   Exception: Accounts in status 22 with no other compliance involvement (e.g., Exam or AUR) are resolved in IDTVA-A. Refer to IRM 25.24.2.5.2.1, Collection Activity - Form 14394/13794 Referrals, for additional information.

   Exception: If -L freeze posts with AIMS status code 09 or less while working the case, IDTVA-A continues to work the case. For example, there was no -L freeze on the account initially, correspondence was sent to the taxpayer and while the case was in suspense, a -L freeze posted. Once final closing determination has been made, send an email to Exam per the Employee Group Code (EGC) Listing Contacts chart on Servicewide Electronic Research Program (SERP), advising of the actions taken and attach the email to the CII record. If AIMS status code is over 09, reassign to IDTVA Specialty team.

2. No compliance involvement on any involved years received in IDTVA Specialty Function should be routed to IDTVA-A.

3. RICS/RIVO Involvement and RPM claim involves the original return - Route to RICS/RIVO only when 1 or more of the following conditions are met:
   • Open RICS/RIVO control
   • Open TPP unpostable - TC 971 AC 121 or TC 971 AC 124 with UPC 126 and return has not posted
   • Unreversed RICS/RIVO indicators are present, the tax return is posted but the refund is frozen by RICS/RIVO

   Note: Do not refer to RIVO if the refund is being held by another function, for example refund held by Error Resolution (ERS) or Exam.

   
   • TC 971 AC 129 is present, and the refund is frozen

4. Frivolous Return Program (FRP) involvement - FRP involvement takes precedence over any other compliance involvement. Route only the year with the frivolous filing indicators. Any other years are retained and worked in accordance with the guidance set forth in IRM 25.24, Return Preparer Misconduct Program, as applicable. For example:
   • F- freeze and an unreversed TC 971 AC 089
   • MFT 55 or MFT 13 account with posted TC 240 reference code 666

5. Request from Criminal Investigation (CI) for case transfer. Route to agent and address as provided by CI. Input TC 290.00 RC 131.

(5) Send an 86C letter if required per IRM 21.3.3.4.2.1, Use of 86C Letter - Referring Taxpayer Inquiry/Forms to Another Office.

(1) The next sections provide guidance for accounts with specific miscellaneous issues.

(1) In certain instances, it is necessary to refer the complaint information to a specific function as notification of an existing RPM complaint and to confirm with that function that there are no implications when resolving the complaint in IDTVA. If the RPM complaint or account condition involves any of the following, the employee must follow the guidance in the specific subsection for referral.

1. Collection Activity

2. Criminal Investigation (CI)

3. International Issues 

4. Return Preparation Programs (e.g., Volunteer Income Tax Assistance (VITA))

(1) Complete research must be performed to determine the appropriate actions to take on a case. The employee must review the documentation provided by the taxpayer along with the account information from CII, Account Management Services (AMS), and IDRS etc. to assist with a determination. Compare the tax return as taxpayer intended it to be filed with the posted information to determine if the taxpayer complaint is supported. Perform complete IDRS research to confirm a tax return was filed or the taxpayer does not have a filing requirement. Research should include but is not limited to the use of command codes TXMOD to review posted information; RTVUE, TRDBV and/or access of EUP to review MeF original tax return information; IRPTR to review income information, etc.

(2) Employees reviewing RPM claims involving compliance issues must also (when applicable):

• Review CEAS (Campus or Field Exam as appropriate) to determine the audit issues on open or closed Exam cases. This will assist with determining whether the audit should continue, or assessments abated. Input a CII case note providing a concise summary of the CEAS information.

• Review the AUR system to determine the issues on open or closed AUR cases. This will assist with determining whether the AUR inquiry should continue, or assessments abated. Input a CII case note providing a concise summary of the AUR information.

(3) CII case notes are used to clearly identify research completed, analysis of documentation, determination and action completed. Case documentation must include sufficient information to support the determination and information used to justify the determination.

(4) If in telephone contact with the taxpayer, leave a CII case note with the pertinent information to the case. For example, if taxpayer clarifies what was stated in the documentation or confirms the receipt of a refund, this should be included in the case notes.

(5) Case notes should include any pertinent information from the Exam/AUR case information available from AIMS, CEAS, and/or AUR. Refer to IRM 25.23.2.3.4, Required Case and History Notes, and IRM 4.19.13.6, Workpapers for All Cases, for additional guidelines.

• Pertinent Exam information may include the AIMS disposal code, technique code, project code, and summary of any Exam action or response to Exam, including cross-reference TINs.

• Pertinent AUR information may include the process code and AUR issues.

(1) RPM complaints alleging the unauthorized filing of a Form 1040-X, Amended U.S. Individual Income Tax Return, must be reviewed to ensure the complaint involves a 1040-X and not another scenario. Complete research should be performed to ensure the taxpayer statements are supported by the account conditions.

(2) If information is consistent with the taxpayer allegations, then follow chart below for resolution.

(3) The resolution of RPM complaints with allegations regarding the unauthorized filing of an amended return or an authorized filing of an amended return that was altered, follows the same path as the resolution of normal RPM procedures involving the original return. However, the category determination and required documentation would be applied to the amended return information. For example:

• Return as intended to be filed would be an amended return as intended to be filed.

• Ghost preparer vs. signing preparer information would be determined from the amended return filed. A document request of the 1040-X adjustment might be required, if not available on CII.

• Refund trace if applicable, would be performed on the refund generated from the amended return adjustment.

• Law enforcement report should include information regarding the allegations pertaining to the amended return.

(1) When restitution is ordered by a Court, it must be determined whether the order reflects restitution payments be paid to the IRS (Criminal restitution) or to the taxpayer (civil restitution) directly. The following subsections provide guidance.

(1) RPM complaints involving accounts that contain RIVO indicators may be worked by IDTVA in certain circumstances. Complete research must be performed.

(2) If the RICS/RIVO reroute conditions are not met, IDTVA follows the procedures below for the resolution of the RPM complaint. Refer to IRM 25.24.2.3.6, Reroute/Reassignment Criteria, for routing conditions.

(3) Follow No Consideration procedures (5956C) in IRM 25.24.2.4, RPM Criteria Not Met, only when:

1. Return was unpostable (TC 971 AC 121/124 or UPC 126) and there is clear indication the TPP letter was issued to the address of the taxpayer and,

   Note: Review the address on the posted return with the address on the taxpayer’s complaint or taxpayer’s account history (AMS history shows taxpayer went to a TAC to respond to the TPP issues, IRPTR addresses, or prior returns with no issues). If an association can be made with the taxpayer, then consider it an indication that the letter was issued to the taxpayer.

2. Return is currently posted with the refund issued and,

3. Refund was not a ≡ ≡ ≡ ≡ ≡ ≡ ≡.

(4) Follow normal RPM procedures when:

1. Reversed RIVO indicators are present on the account, return is posted and refund was issued as ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, and the taxpayer states they did not receive the refund.

2. Reversed RIVO indicators are present on the account, the return is posted on MFT 32 and the taxpayer claims preparer misconduct regarding that return. During the TPP process, if the taxpayer stated the return was altered the return was treated as ID theft and the taxpayer advised to file a paper return allowing the return as intended to be filed to post as the TC 150.

   Note: If the return on MFT 32 is the taxpayer’s return as intended to be filed and it is determined the MFT 32 should be reversed, please elevate case information to ITVA HQ (copy IDTVA P&A POC) prior to making any account adjustments.

3. Return was unpostable and there is indication the TPP letter was not issued to the address of the taxpayer. For example, the address on the return matches that of the preparer.

4. Unreversed RIVO Indicator (e.g., TC 971 AC 052) on account; however, the return is posted, and refund has been issued.

5. The module has a P- freeze and either of the following is present on the account:
   • TC 841 DLN Blocking Series 77711, 77712, 77713 or 77714 which indicates a direct deposit was rejected by the bank or
   • TC 841 and TC 971 AC 123 MISC>TPP RECOVERY and TC 971 AC 805 MISC>REFCANCL18
   Only RIVO can release the overpayment with these account conditions. If allowing the RPM claim, perform any required adjustments and send e-4442 to RICS/RIVO. Use Referral type IRM and select category RIVO – CP53X (TC841 DLN 77711/77712/77713/77714) from drop down. Include remarks stating that the RPM issue has been resolved and request the release of credit, if applicable.

(1) RPM specific letters have been implemented for use when working RPM complaints/claims.

(2) Letter 5955C, Return Preparer Misconduct – Case Incomplete for Processing Request, is used when requesting information from the taxpayer.

(3) Letter 5956C, Return Preparer Misconduct (RPM) –Resolution Closing Letter, is used as the closing letter based on the applicable treatment stream. The letter is broken down into sections based on allowable claims, no consideration, partial disallowance, and full disallowance.

(4) Multiple years can be included on one letter unless separate and distinct determinations are made. For example, 2 years involved and one case is a no consideration and one is disallowed.

(5) If Spanish language RPM complaints/claims are received, a reply must be issued using the Spanish version of the appropriate C letter. Refer to IRM 25.23.4.19, Requesting Translations of Certain Languages , for translation services guidance.

(1) For all categories, when a complaint is determined incomplete, issue correspondence requesting the missing documentation. Tell the taxpayer to provide the requested information within 30 days. Suspend the case for 40 days awaiting the taxpayer response (70 days for overseas taxpayers). If no response is received or insufficient information is provided, then disallow or partially disallow the claim.

(2) For all categories, if case is considered incomplete, initiate a refund trace if no trace has been previously performed. Refer to IRM 25.24.2.5.3.4, Refund Trace Requirements, for additional information.

• For Category 1 and Category 2 cases specifically, if the additional information was requested from the taxpayer and the taxpayer responds before the refund trace information becomes available, do not wait for the refund trace information, resume working the case per IRM 25.24.2.9, Treatment Streams for RPM Claims.

  Note: If Category 1 and Category 2 case are received outside of the refund trace allowable time frame, request the required documentation, following normal procedures. On a complete complaint, no refund trace is required.

• For Category 3 cases, if the return as intended to be filed was requested from the taxpayer and the suspense time frame has expired with no response from the taxpayer, then it is not necessary to wait for the refund trace information if it is still not available. Resume working case.

• For Category 3 and Category 4 cases received outside of the refund trace allowable time frame issue a No consideration 5956C letter. Refer to IRM 25.24.2.11.3, No Consideration of Claims, for guidance.

(3) If the Assessment Statute Expiration Date (ASED) is imminent (90 days) and the taxpayer’s actual return is included with the complaint but there are other missing elements, take into consideration certain factors and timeframes in order to ensure the ASED is protected. Timely follow-up is required on these suspense cases.

(4) Correspond using Letter 5955C, Return Preparer Misconduct – Case Incomplete for Processing Request.

1. Request all information needed for a complete complaint, including preparer information, if applicable.

2. Include contact information providing the IDTVA toll free number 855-343-0057 with the name and six-digit extension of the employee assigned to the case.

(5) Capture letter on CII per IRM 21.5.1.5.1, CII General Guidelines.

(6) Leave a case note on CII indicating the letter that was sent and the list of the information requested.

(7) Update CII data to turn off Auto Interim Letter since correspondence has been sent to taxpayer requesting information.

(8) Suspend case on CII for 40 days (70 days for overseas taxpayers).

(9) Monitor for response. Refer to IRM 25.24.2.6.3, Taxpayer Responses, if a reply is received or the suspense period expires.

(1) Follow the table below when taxpayer responses are received.

(2) Responses received on suspended cases should retain the original IRS received date.

(3) Responses received on previously closed cases should use the IRS received date of the new information and treated as a new complaint.

(1) For allowable or partially allowable Category 1-3 claims, the original return is considered a nullity and the return as intended to be filed presented by the taxpayer with the RPM complaint is the taxpayer’s return of record. If the RPM complaint is received after the ASED based on the originally filed return has expired, the complaint must still be considered. If the claim is allowable or partially allowable the ASED must be updated to reflect the receipt of the taxpayer’s return as intended to be filed. If the ASED based on the taxpayer’s return as intended to be filed has expired, refer to IRM 25.24.2.7.1.1, Extended ASED Expired on Allowable RPM Claims, for additional guidance.

1. Use the following instructions when using TC 560 to correct the ASED:
   •TC 560 on CC REQ77 must be input on IDRS to correct the ASED to show the posting of the correct return.
   • Input with a DLN-CD of 70 when correcting the ASED to a later date than the posted ASED.
   • Input with DLN-CD of 99 when correcting the ASED to an earlier date than the posted ASED.

2. Use the received date of the taxpayer’s signed return as intended to be filed to reflect the date of the return of record.

(2) For disallowed claims, if adjustment action is required (for example: the actual return is treated as an amended return) and the ASED is imminent, input prompt assessment following normal procedures. Refer to IRM 25.6.1.5, Basic Guide for Processing Cases with Statute of Limitations Issues, for additional information. If the complaint is received after the ASED has expired, no tax assessment or credit decrease can be input. Refer to IRM 25.24.2.11.1, Disallowance, for additional information.

(1) Normal RSED procedures or aspects of RSED procedures are to be followed whenever possible.

(2) Category 1 and 3 cases are not solely considered a claim for refund. Since these complaints also involve an allegation that the original return was not authorized (Cat 1) or tax data was altered (Cat 3), the adjustment aspect still needs to be considered.

1. The return as intended to be filed included with the RPM complaint is considered the claim for refund. The IRS received date of the valid signed return should be used to determine whether the claim was filed timely and to determine the amount of any refund the taxpayer may be eligible to receive.

2. If the complaint is complete and the taxpayer did not file their complaint timely, on or prior to the RSED, the claimed overpayment may not be refunded to the taxpayer, but instead must be moved to Excess Collections. Refer to IRM 25.6.1.7.3, Excess Collection File (XSF) and Unidentified Remittance File (URF). Partial disallowance procedures would then be followed. Refer to IRM 25.24.2.11.2, Partial Disallowance, for additional guidance.

3. If the taxpayer provides no response so that the complaint remains incomplete, then normal disallowance procedures apply.

   Note: If a response to the disallowance letter is received providing the requested information, the IRS received date of the previously submitted return as intended to be filed is used to determine whether the RSED is still open, if applicable. Refer to IRM 25.24.2.6.3, Taxpayer Responses, for additional information.

(3) In Category 4 cases the original return is valid and is considered the claim for refund. There are no adjustments to be made. The taxpayer is asking the IRS to replace the refund alleged to have been stolen by the preparer. The refund claim on the original return is required to be filed on or prior to the RSED before a Category 4 complaint may be allowed. If a Category 4 complaint is received within the time frame allowable to perform a refund trace and the original return was filed timely, continue resolution of the RPM claim and allow the refund based on the completeness of the RPM claim, and the timeliness of the original return. If the original return was filed after the RSED expired, the account would show that statutes applied the overpayment to Excess collections and issued a 105C letter. In this scenario, send a no consideration 5956C letter advising taxpayer there is no evidence of preparer misconduct and explain why the original refund was not issued.

(1) The FTP penalty should be considered when:

1. The taxpayer’s actual return provided with the RPM complaint reflects a tax liability owed and,

2. Tax has not been paid by the due date of the original return.

Note: If the taxpayer received a refund in excess of what they should have received and the actual tax return shows a tax liability owed, then the FTP penalty applies only to the tax shown on the actual return.

(2) When Category 1 and Category 2 claims are allowed, the original return is considered a nullity and the taxpayer’s return submitted with the complaint is considered the return of record. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(3) The January 2016 programming changes allow the computer to recognize the need to charge the FTP penalty from the RDD on a subsequent adjustment with the use of new Item Reference Number (IRN) 871 and priority code (PC) 2. The IRN 871 and PC 2 allows systemic calculation/re-calculation of the FTP penalty, if applicable. Two adjustments (complete back-out of the nullified return and subsequent adjustment to reflect the taxpayer’s return as intended to be filed) are required if the correction to the taxpayer’s return as intended to be filed result in a balance due, or if any of the tax due on the correct return was paid after the original return due date without regard to extensions.

(4) Compute the IRN 871 amount (tax shown) on the return as intended to be filed, which is the amount of tax the taxpayer figured they owe, minus any taxpayer computed refundable and prepaid credits. The IRN 871 amount is included on the adjustment to reflect the taxpayer’s actual return and tells the computer the tax the taxpayer expected to owe on their return and the amount of tax that is assessed the FTP penalty from the due date of the return. The computer systemically recognizes any payments, credit elects, withholding and cancellations of any refunds (TC 841/TC700) when computing the FTP penalty. Follow the guidance in IRM 20.1.2.2.6.2, Incorrect Tax Shown Recorded, for computing the IRN 871 and IRM 20.1.2.2.6.3, Wrong Return Posted First, for additional information.

(5) The PC 2 allows the computer to recognize the need to compute the FTP penalty back to the RDD for the lesser of the IRN 871 amount or the “tax assessed” on the return and tells the computer to ignore any prior tax or credit in the module, and to treat the TC 29X/30X as if it were the TC 150 original return transaction when computing the FTP penalty. This is the reason the original return considered a nullity needs to be completely backed out.

(1) The FTF penalty should be considered when:

1. The taxpayer's actual return reflects a tax liability and,

   Note: If the taxpayer received a refund in excess of what they should have received and the actual tax return does not show a tax liability owed, then FTF penalty does not apply. The FTF penalty is based on unpaid tax only.

2. The taxpayer's actual return provided with the RPM complaint is received after the due date of the return.

Reminder: If applicable, to determine the timeliness of the taxpayer’s paper return filed after a e-file attempt was rejected, refer to (6) in IRM 3.30.123.12.2, Electronic Postmark and Tax Return Due Date.

(2) The FTF penalty needs to be computed manually and included with the adjustment to the account. The computer cannot systemically generate the penalty if the altered return (TC 150) is timely.

(3) The chart below illustrates when FTF penalty may be applied:

(1) Determine if the complaint is complete.

1. Consider the documentation complete: If the ≡ ≡ ≡ ≡ ≡ required documents above are included, consider the documentation requirement complete. In some circumstances all the required documentation is not required as outlined below:

• Tax return is not included because the taxpayer states they are not required to file and research supports that claim (e.g., CC IRPTR or IAT Compliance Suite tool results support no filing requirement).
• Form 14157-A is not included; however, other documentation included contains the required information and the taxpayer provides a statement/explanation signed under penalties of perjury.
• Form 14157 is not included; however, the preparer’s ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ or first and last name and address are included on other documentation.

Note: If the address is not provided, however, the preparer can be verified without this information, then it is not required.


• 3rd party documentation is not included; however, internal research or CI referral response satisfies the 3rd party documentation requirement.

2. Consider the documentation incomplete: If the ≡ ≡ ≡ ≡ required documents above are not included or are included, however, the information provided within the documentation is incomplete.

Example: The taxpayer indicates a refund was received and does not include the amount of the refund received on Form 14157-A or other documentation.

Reminder: For this category, it is possible the taxpayer is not a victim of preparer misconduct but a victim of identity theft. In some cases, judgment must be used to distinguish between the two. Refer to IRM 25.24.2.5.3.1, Identifying RPM Category, for additional information.

(2) If a complaint is considered incomplete refer to IRM 25.24.2.6.2, Incomplete Complaints, for additional information. Suspend the case for 40 days (70 days for overseas taxpayers). If a reply is received or the suspense period ends, refer to IRM 25.24.2.6.3, Taxpayer Responses.

(3) Verify the preparer information. Refer to IRM 25.24.2.5.3.3, Verification of the Preparer, for additional information.

(4) For Category 1, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ cases, a refund trace is required when the claim is disallowed. This is necessary to determine the appropriate handling of the actual return provided with the complaint.

(5) However, if a refund trace was previously performed and the trace information is currently available on a ≡ ≡ ≡ ≡ ≡ ≡ refund, utilize the information to verify the receipt or non-receipt of a refund and to determine the amount, if any, of an additional refund that may be issued.

1. If ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

2. If ≡ ≡ ≡ ≡ ≡ ≡ ≡ determine if a refund trace was previously performed. Refer to IRM 25.24.2.5.3.4, Refund Trace Requirements, for additional information.

3. Verify the taxpayer’s statement regarding whether a refund was issued or deposited into an account in the taxpayer’s name using the available refund trace information.

Example: The taxpayer states no refund was received and available refund trace information shows the refund was NOT deposited into an account in the taxpayer’s name. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

Example: The taxpayer states no refund or portion of the refund was received; however, available refund trace shows the entire refund was deposited into an account in the taxpayer’s name. The refund amount from the refund trace information would be utilized to determine any additional refund amount. (The taxpayer states they received $500.00 and trace shows the taxpayer received $1,000.00. When computing the applicable refund amount allowable, employee would use the $1,000.00.)

4. If trace information is not available or available trace information cannot verify the receipt or non-receipt of the refund, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

   Example: The taxpayer states portion of the refund received and available refund trace information shows the refund was NOT deposited into an account in the taxpayer’s name. We cannot verify the portion the taxpayer received. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(6) If the complaint is considered complete and all required documentation, including 3rd party documentation (if applicable) is present and the preparer information is considered verified, then the complaint is accepted.

(7) The IRS determines the type of relief to which the taxpayer is entitled, and for an allowed claim, considers the original return a nullity and the actual return presented by the taxpayer (unaltered by the preparer) as the taxpayer’s return of record.

(8) For Category 1 cases, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ information regarding fees paid to the preparer, this amount would be considered part of the preparer portion of the refund. If the taxpayer did not authorize the filing of the tax return, the taxpayer would not be held responsible.

(9) Follow the CAT 1 treatment stream for accepted complaints scenarios and charts below to determine the next actions required.

(1) Determine if the complaint is complete.

1. Consider the documentation complete: If the ≡ ≡ ≡ ≡ ≡ ≡ required documents above are included, consider the documentation requirement complete. In some circumstances all the required documentation is not required as outlined below:

• Tax return is not included because the taxpayer states they are not required to file and research (CC IRPTR) supports that claim.
• Form 14157-A is not included; however, other documentation included contains the required information and the taxpayer provides a statement/explanation signed under penalties of perjury.
• Form 14157 is not included; however, the preparer’s first and last name and address are included on other documentation.

Note: If the address is not provided and the preparer can be verified without this information, then it is not required.


• 3rd party documentation is not included however, internal research or CI referral response satisfies the 3rd party documentation requirement.

2. Consider the documentation incomplete: If the ≡ ≡ ≡ ≡ ≡ ≡ ≡ required documents above are not included or are included, however, the information provided within the documentation is incomplete.

Example: The taxpayer indicates a refund was received and does not include the amount of the refund received on Form 14157-A or other documentation.

Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(2) If the complaint is considered incomplete, refer to IRM 25.24.2.6.2, Incomplete Complaints, for additional information. Suspend the case for 40 days (70 days for overseas taxpayers). If a reply is received or the suspense period ends, refer to IRM 25.24.2.6.3, Taxpayer Responses.

(3) Verify the preparer information. Refer to IRM 25.24.2.5.3.3, Verification of the Preparer, for additional information.

(4) For Category 2, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ cases, a refund trace is required when the claim is disallowed. This is necessary to determine the appropriate handling of the actual return provided with the complaint.

(5) However, if a refund trace was previously performed and the trace information is currently available on a ≡ ≡ ≡ ≡ ≡ ≡ ≡ refund, utilize the information to verify the receipt or non-receipt of a refund and to determine the amount, if any, of an erroneous refund received by the taxpayer.

1. If ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

2. If ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, determine if a refund trace was previously performed. Refer to IRM 25.24.2.5.3.4, Refund Trace Requirements, for additional information.

3. Verify the taxpayer’s statement regarding whether a refund was issued or deposited into an account in the taxpayer’s name using the available refund trace information.

   Example: The taxpayer states they received the correct or expected portion of the refund amount; however, available refund trace differs showing the entire refund was deposited into an account in the taxpayer’s name. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ use the refund trace information to determine the amount of the erroneous refund to the taxpayer.

4. If the trace information is not available or available trace information cannot verify the receipt or non-receipt of the refund, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

   Example: The taxpayer states portion of the refund received and available refund trace information shows the refund was NOT deposited into an account in the taxpayer’s name. We cannot verify the portion that the taxpayer received. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(6) If the complaint is considered complete and all required documentation, including 3rd party documentation (if applicable) is present and the preparer information is considered verified, then the complaint is accepted.

(7) The IRS determines the type of relief to which the taxpayer is entitled, and for an allowed claim, considers the original return a nullity and the actual return presented by the taxpayer (unaltered by the preparer) as the taxpayer’s return of record.

(8) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ information regarding fees paid to the preparer that were deducted from the original refund, it must be taken into account when determining preparer portion of refund and any additional refund amounts. The fee amount would not be considered a part of the preparer portion of the refund due to misconduct. However, when the fee is paid by other methods of payment (cash, personal check, unknown), do not take it into account.

(9) Follow the CAT 2 treatment stream for accepted complaints scenarios and charts below to determine the next actions required.

(1) Determine if the complaint is complete.

1. Consider the documentation complete: If the ≡ ≡ ≡ ≡ ≡ ≡ required documents above are included, consider the documentation requirement complete. In some circumstances all the required documentation is not required as outlined below:


• Form 14157-A is not included; however, other documentation included contains the required information and the taxpayer provides a statement/explanation signed under penalties of perjury.
• Form 14157 is not included; however, the preparer’s first and last name and address are included on other documentation.

Note: If the address is not providedand the preparer can be verified without this information, then it is not required.


• For pre-existing cases, official law enforcement agency report is not included; however, the taxpayer provides an alternative statement documenting the taxpayer’s attempt to secure a police report signed under penalties of perjury along with a statement from TAS documenting their assistance/attempts in obtaining a police report. The taxpayer statement should contain the return preparer’s first and last name and description of the preparer misconduct and theft of refund.
• 3rd party documentation is not included; however, internal research or CI referral response satisfies the 3rd party documentation requirement.

2. Consider the documentation incomplete: If the ≡ ≡ ≡ ≡ ≡ ≡ ≡ required documents above are not included or are included, however, the information provided within the documentation is incomplete.

Example: The taxpayer indicates a refund was received and does not include the amount of the refund received on Form 14157-A or other documentation.

Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(2) If the complaint is considered incomplete refer to IRM 25.24.2.6.2, Incomplete Complaints, for additional information. Suspend the case for 40 days (70 days for overseas taxpayers). If a reply is received or the suspense period ends, refer to IRM 25.24.2.6.3, Taxpayer Responses.

(3) Verify the preparer information. Refer to IRM 25.24.2.5.3.3, Verification of the Preparer, for additional information.

(4) For Category 3, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ cases, a refund trace is required and used to verify whether a refund was issued in the taxpayer’s name. Utilize the trace information to verify the receipt or non-receipt of a refund and to determine the refund amount, if any, that may be issued.

1. If ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

2. If ≡ ≡ ≡ ≡ ≡ ≡ ≡, determine if a refund trace was previously performed. If no trace information is available, initiate a refund trace. Refer to IRM 25.24.2.5.3.4, Refund Trace Requirements for additional information.

3. Verify the taxpayer’s statement regarding whether a refund was issued or deposited into an account in the taxpayer’s name using the refund trace information.

   Example: The taxpayer states no refund was received and refund trace information shows the refund was NOT deposited into an account in the taxpayer’s name. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

   Example: The taxpayer states no refund or portion of the refund was received; however, refund trace shows the entire refund was deposited into an account in the taxpayer’s name. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ use the refund trace information to determine refund amount, if applicable.

4. If trace information cannot verify the receipt or non-receipt of the refund, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

   Example: The taxpayer states portion of the refund received and available refund trace information shows the refund was NOT deposited into an account in the taxpayer’s name. We cannot verify the portion that the taxpayer received. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(5) If the complaint is considered complete and all required documentation, including 3rd party documentation (if applicable) is present and the preparer information is considered verified then the complaint is accepted.

(6) The IRS determines the type of relief to which the taxpayer is entitled, and for an allowed claim, considers the original return a nullity and the actual return presented by the taxpayer (unaltered by the preparer) as the taxpayer’s return of record.

(7) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ information regarding fees paid to the preparer that were deducted from the original refund, it must be taken into account when determining preparer portion of refund and any additional refund amounts. The fee amount would not be considered a part of the preparer portion of the refund due to misconduct. However, when the fee is paid by other methods of payment (cash, personal check, unknown), do not take it into account.

(8) Follow the CAT 3 treatment stream for accepted complaints scenarios and charts below to determine the next actions required.

(1) Determine if the complaint is complete.

1. Consider the documentation complete: If the ≡ ≡ ≡ ≡ ≡ ≡ ≡ required documents above are included, consider the documentation requirement complete. In some circumstances all the required documentation is not required as outlined below:


• Form 14157-A is not included; however, other documentation included contains the required information and the taxpayer provides a statement/explanation signed under penalties of perjury.
• Form 14157 is not included; however, the preparer’s first and last name and address are included on other documentation.

Note: If the address is not providedand the preparer can be verified without this information, then it is not required.


• 3rd party documentation is not included; however, internal research or CI referral response satisfies the 3rd party documentation requirement.
• For pre-existing cases, official law enforcement agency report is not included; however, the taxpayer provides an alternative statement documenting the taxpayer’s attempt to secure a police report signed under penalties of perjury along with a statement from TAS documenting their assistance/attempts in obtaining a police report. The taxpayer statement should contain the return preparer’s first and last name and description of the preparer misconduct and theft of refund.

2. Consider the documentation incomplete: If the ≡ ≡ ≡ ≡ ≡ required documents above are not included or are included, however, the information provided within the documentation is incomplete.

Example: The taxpayer indicates a refund was received and does not include the amount of the refund received on Form 14157-A or other documentation.

Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(2) If the complaint is considered incomplete, refer to IRM 25.24.2.6.2, Incomplete Complaints, for additional information. Suspend the case for 40 days (70 days for overseas taxpayers). If a reply is received or the suspense period ends, refer to IRM 25.24.2.6.3, Taxpayer Responses.

(3) Verify the preparer information. Refer to IRM 25.24.2.5.3.3, Verification of the Preparer, for additional information.

(4) For Category 4, ≡ ≡ ≡ ≡ ≡ ≡ ≡ cases, a refund trace is required and used to verify whether a refund was issued in the taxpayer’s name. Utilize the trace information to verify the receipt or non-receipt of a refund and to determine the amount, if any, of an additional refund that may be issued.

1. If ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

2. If ≡ ≡ ≡ ≡ ≡ ≡, determine if a refund trace was previously performed. If no trace information is available, initiate a refund trace. Refer to IRM 25.24.2.5.3.4, Refund Trace Requirements, for additional information.

3. Verify the taxpayer’s statement regarding whether a refund was issued or deposited into an account in the taxpayer’s name using the refund trace information.

Example: The taxpayer states no refund was received and refund trace information shows the refund was NOT deposited into an account in the taxpayer’s name. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

Example: The taxpayer states no refund or portion of the refund was received; however, refund trace shows the entire refund was deposited into an account in the taxpayer’s name. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡use the refund trace information.

4. If trace information cannot verify the receipt or non-receipt of the refund, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

   Example: The taxpayer states portion of the refund received and available refund trace information shows the refund was NOT deposited into an account in the taxpayer’s name. We cannot verify the portion the taxpayer received. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

(5) If the complaint is considered complete and all required documentation, including 3rd party documentation (if applicable) is present and the preparer information is considered verified, then the complaint is accepted.

(6) The IRS determines the type of relief the taxpayer is entitled. For Category 4 cases the original return is considered valid and not considered a nullity.

(7) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ information regarding fees paid to the preparer that were deducted from the original refund, it must be taken into account when determining preparer portion of refund and any additional refund amounts. The fee amount would not be considered a part of the preparer portion of the refund due to misconduct. However, when the fee is paid by other methods of payment (cash, personal check, unknown), do not take it into account.

(8) Follow the CAT 4 treatment stream for accepted complaints scenarios and charts below to determine the next actions required.

(1) Open AUR cases are considered a priority and must be worked within 120 days of receipt in IDTVA. If a case cannot be closed within 120 days, contact must be made with the appropriate AUR IDT Coordinators to request additional time. This is in addition to leaving a case note on the AUR system. If contact is not made within 120 days, AUR will close the case using process code 17.

(2) The AUR issues on the account must be reviewed and taken into consideration. The handling of the account may differ depending on whether the case is an open AUR or closed AUR case. Follow the applicable subsection for guidance.

(1) The Exam issues on the account must be reviewed and taken into consideration when addressing the RPM issue. The handling of the account may differ depending on whether the case is an open Exam or closed Exam. Per current Exam policy AIMS will be closed disposal code (DC) 12 or 37 prior to routing RPM complaints to IDTVA Specialty Function; however, there may be exceptions and open AIMS cases will be received. Follow the applicable subsection for guidance.

(2) Upon receipt of new inventory, cases must be researched to determine whether AIMS is open (L freeze). If AIMs is open, Exam must be contacted to request AIMS be closed unless the case will be resolved within 5 days of assignment. A listing of functional coordinators can be found on SERP under Job Aids Compliance SBSE campus point of contact (POC) or for TS campus Exam contact the AIMS coordinator found on SERP under Who/Where tab Exam Contact List, AIMS/ERCS Staff by User Location.

(3) A case open in Field Exam is referred to Field Exam in accordance with IRM 25.24.1.4.1, Routing Information - Paper.

(4) If the RPM claim is disallowed and the case was closed by Exam as a DC 12 or 37, prior to the routing of the RPM allegation to IDTVA Specialty Function, return the claim to Exam provided there are ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. These cases can be identified as follows:

• TS Exam - closed DC 12 after December 31, 2015.

• SBSE Exam - closed DC 37 after March 2016.

(1) See IRM 25.23.4.13, Requests for an Appeal, for handling cases with Appeals involvement.

(1) DITA performs all account adjustments for Field and Specialty Collection, Field Exam and Large Business & International (LB&I). Any RPM complaints worked in the Field that require account adjustments are referred to DITA.

(2) Field and Specialty Collection, Field Exam, and LB&I will not control cases on IDRS or refer through CII. RPM claims received from the Field will be scanned to CII document type DITA RPM and category code IDII. The IRS received date will be the date the referral was received in DITA.

(3) If DITA finds the information provided is insufficient or determines to reject a case, DITA should send an email to the referring employee listed on the Form 4442, Inquiry Referral, or Form 3870, Request for Adjustment. DITA should include an explanation outlining the reason for the reject. DITA should not change the determination and account adjustments without approval from the referring employee.

(4) DITA performs refund traces on all Field RPM cases. Requests are made using Form 4844, Request for Terminal Action.

(5) DITA only issues claim disallowance letters (5956C) on RPM cases for Field and Specialty Collection. For claim disallowance for Field and Specialty Collection, enter TC 290.00 with RC 131 and use NSD (No Source Document) when working through CII. In order to complete the C letter, necessary information must be included on the Form 4442 /Form 3870 referral, otherwise reject the referral.

(6) Upon completing all account adjustments, close the case through CII. DITA notifies Field and Specialty Collection, Field Exam, and LB&I examiners of the completed actions via email or fax.

(7) When account adjustments are complete and the adjustments are being monitored for posting, open up a new control with the IDRS category code MISC.

(1) There are circumstances when the taxpayer’s claim is disallowed.

1. In Categories 1, 2, and 3, incomplete complaints are not accepted and the claim disallowed if no response is received or a response is received without the requested information within the specified time frame.

   Exception: For Category 3 - If the only missing element is law enforcement agency report or (for pre-existing cases) alternative statement in lieu of report, then refer to IRM 25.24.2.11.2, Partial Disallowance, section.

2. In Categories 1, 2, and 3, the complaint is not accepted and the claim disallowed when the preparer and/or documentation cannot be verified.

(2) For Categories 1, 2, and 3, if the claim is disallowed, a refund trace is required on ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ cases to determine the treatment of the taxpayer’s actual return if included in the documentation. Refer to IRM 25.24.2.5.3.4, Refund Trace Requirements, for additional information.

(3) Follow the Disallowance scenarios and chart below to determine the next actions required.Disallowance Scenario 1: Research and/or refund trace shows that the ENTIRE refund was deposited into an account in the taxpayer’s name, the entire refund is frozen on the account, or the original return reflected a balance due.

(4) Issue certified 5956C letter when disallowing the RPM claim following the guidelines below.

1. Letter must be sent by certified mail.

2. Letter must contain the specific reason for the claim disallowance.

3. Letter must contain claim amount. This is generally the amount of the refund the taxpayer expected. If the taxpayer did not provide a return as intended to be filed and the amount of the refund the taxpayer expected is unknown, do not select the fill-in for Amount of Claim when issuing the letter.

4. Letter must contain explanation for other actions taken or not taken. For example, the taxpayer must also be advised when:
   ▸ Treating the taxpayer’s return as an amended return.
   ▸Statute issues apply and no actions can be taken.
   ▸Guidance states ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, tell taxpayer to file an amended return.

5. For categories 1-3, provide the taxpayer the right to file suit only.

6. If using CII, save the 5956C letter to PDF and attach it to the case with the Attach File button on the actual tax period involved, instead of capturing the "request completed" screen. See IRM 21.5.1.5.1, CII General Guidelines, for additional information.

(5) Actions for inputting the adjustment on fully disallowed claims:

• Input TC 290.00 with RC 131.

• Use blocking series 98 if the original paper return is not with the claim.

• Use blocking series 99 if the original return is with the claim.

  Note: If the original return was filed electronically, use blocking series 99 and utilize the ‘capture’ feature to attach an IMFOLR print. Do not use blocking series 98.

Reminder: When disallowing a claim in cases where the taxpayer received the entire refund (or the benefit of the entire refund, e.g., offset), an account adjustment is needed (the taxpayer’s return is treated as an amended return). Therefore, a separate TC 290.00 blocking series (BL) 98 or 99 for the disallowance must also be input. (The same applies if statute issues apply.) Include RPM reason code 131 with the adjustment.

(1) Partial disallowance procedures may apply in certain Category 1 and Category 3 cases and also may apply if there are RSED implications.

(2) Depending upon the facts and circumstances including the refund trace results, partial disallowance procedures would apply if issuing less of a refund than the taxpayer expects.

1. The taxpayer may have received more than they stated in the RPM complaint and therefore this would impact the amount of any refund issued.

Example: Category 3: The taxpayer states they received a portion of the refund in the amount of $500.00. Their actual return shows refund of $1,500.00. The complaint is reviewed and considered complete. The refund trace shows that the taxpayer received a refund but in the amount of $1,000.00. The treatment chart would show that the taxpayer is eligible for account adjustment, removal of any preparer portion of the refund and the remaining balance of refund. The computation would affect the preparer portion moved to the general ledger account and in turn affect the additional refund amount due to the taxpayer. Since we are issuing less than the taxpayer expects ($500.00) this would be considered a partial disallow.

2. The taxpayer may have received the benefit of the refund, for example TOP offset or tax offset and is unaware. Tell the taxpayer of any offsets that occurred in correspondence.

3. The taxpayer was reimbursed by the preparer’s company acknowledging RPM or the SPEC referral indicates RPM (intentional act), and the taxpayer was reimbursed by the VITA/TCE partner. In this scenario, the taxpayer is not due the refund claimed since they were subsequently reimbursed; however, the claim that there was preparer misconduct will be acknowledged.

4. The law enforcement agency report contained inconsistent information or taxpayer did not provide an acceptable report upon request; however, the complaint was otherwise complete and therefore the taxpayer is not eligible for a refund but is eligible for account adjustment.

5. The RSED has expired; however, the taxpayer is eligible for account adjustment including removal of the preparer portion of the refund, and the overpayment must be moved to Excess Collections.

(3) Issue certified 5956C letter when partially disallowing the RPM claim following the guidelines below.

1. Letter must be sent by certified mail.

2. Letter must contain the specific reason for the claim partial disallowance as well as the claim amount, if applicable.

3. For all categories, provide the taxpayer the right to file suit only.

   Exception: If the partial disallowance is being issued for expired RSED then appeal rights and right to file suit will be provided.

4. If using CII, save the 5956C letter to PDF and attach it to the case with the Attach File button on the actual tax period involved, instead of capturing the "request completed" screen. See IRM 21.5.1.5.1, CII General Guidelines, for additional information.

(4) Actions for inputting adjustment on partially disallowed claims:

• Input TC 29X as appropriate for the treatment stream with RC 131.

• Use blocking series 00 to reflect the taxpayer’s actual return of record.

• Input TC 971 AC 504 with the applicable MISC code when partially allowing a claim.

(1) There are instances when the claim is not considered rather than a formal disallowance.

(2) Category 3 claims, are not considered when:

• the claim was received more than 6/7 years after the issuance of the original ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ refund as a direct deposit (6) or a paper check (7), and a trace can no longer be performed.

(3) Category 4 claims are not considered when:

• the entire refund was issued to or deposited into an account in the name of the taxpayer, or

• the law enforcement agency requirement is not satisfied, or

• the preparer and/or documentation cannot be verified, or

• the claim was received more than 6/7 years after the issuance of the original refund as a direct deposit (6) or a paper check (7), and a trace can no longer be performed.

(4) Issue 5956C letter when no considering the RPM claim following the guidelines below.

1. Letter must contain the specific reason for the no consideration.

   Note: If the reason for no consideration is the expired refund timeframe, then until the 5956C letter can be updated, skip (K) and include suggested verbiage: We can't process your return preparer misconduct (RPM) claim since we received it more than (include applicable year 6 or 7) years after the original refund was issued. The records permitting the IRS to determine who actually received the refund have been destroyed and without such records the IRS is unable to consider the claim for reimbursement.

2. If using CII, save the 5956C letter to PDF and attach it to the case with the Attach File button on the actual tax period involved, instead of capturing the "request completed" screen. See IRM 21.5.1.5.1, CII General Guidelines, for additional information.