25.23.10. Compliance Identity Theft Case Processing

(1) The instructions in this section should be used in conjunction with the instructions in IRM 25.23.4.3.4, IDTVA Specialties - Case Referrals from Compliance Functions and IRM 25.23.10.2, Case Batching

(2) Upon receipt of potential IDT correspondence, the IDTVA Specialties, Automated Collection System Support (IDTVA Specialties ACSS) group should:

1. Verify that appropriate documentation was received (Form 14039, Identity Theft Affidavit, police report or Form 14157, Return Preparer Complaint). If none is present return to ACSS for them to take actions to obtain the appropriate form.

2. Ensure that TC 971 AC 522 UNWORK is on the account per IRM 25.23.2.4.2, Tracking IMF Tax-Related Identity Theft Inventory. For BMF see IRM 25.23.2.4.3, Tracking Individual Taxpayers Reporting to be Victims of Business-Related Identity Theft.

3. Suspend collection and input TC 470 with no closing code.

4. Refer to screener for review. See IRM 25.23.10.7.2.1.2, IDTVA Specialties ACSS Screener Procedures, for details.

(3) Upon return from the screener, the clerk should:

1. Update Account on ACS to appropriate function code with 180-day follow-up “TOXX,180,IDT”.

2. Send appropriate acknowledgement letter per IRM 25.23.4.18.1, General IDTVA Letter Procedures, to the address on the documentation unless a better address is available.

3. If the taxpayer has requested an installment agreement with the documentation, send case to the screener to review for input of the TC 971 AC 043 and mark the case with a tag to identify "IA Requested" for additional actions later.

   Note: If the taxpayer has requested an IA, input TC 971 AC 043 when the request meets pending IA criteria, see IRM 5.19.1.6.4.7, Pending IA Criteria, and the clerk will complete Letter 5064C, ID Theft In-Process Letter, with the IA notification paragraph if referred out.
   "We have received your installment request; however, we cannot setup the installment agreement until the Identity Theft issue has been resolved. If you believe you will have a balance due after those actions, you may continue to make voluntary payments to reduce the balance due while we resolve your identity theft issue. Once that is completed, we will set up the installment agreement for you."

(1) A screener is being utilized to identify the appropriate place for the case to be resolved and identify any levy issues.

(2) Determine if a levy is active on the account. Release the levy, if applicable. See IRM 25.23.10.7.2.4, Levies, for additional information.

(3) Research to identify the appropriate IDTVA function to work the case and document with the appropriate category code for the clerk. Proceed with IRM 25.23.10.7.2.1.1, IDTVA Specialties ACSS Initial Receipt Clerical Actions.

(1) Provide Forms 3870 received from Field Collection to the IDTVA Specialties ACSS screener for determination of the category code for batching. These cases should be batched with Priority Code 2. No other batching action is required (i.e., no acknowledgement letters should be issued).

(1) If an active levy:

• When the taxpayer claims to be a victim of ID Theft and the Form 14039 and/or police report has been received, the levy should be released only for the tax modules affected by the ID Theft.

• Follow IRM 5.19.4.4.10, Levy Release: General Information, for full and partial levy release procedures.

(1) If there is a balance due not attributable to Identity Theft, collection activities, including the appropriate use of enforced collection action, are not prohibited when a taxpayer has established that they were a victim of Identity Theft.

• Be sensitive to the adverse impact that being a victim of Identity Theft may have upon a taxpayer and his/her ability to pay.

• Consider temporarily suspending the account until the Identity Theft incident is resolved in cases where you determine the Identity Theft will have an adverse impact on the taxpayer’s ability to pay.

(2) If the taxpayer claims financial hardship as a result of a tax-related Identity Theft issue:

1. Prepare and submit Form 911, Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order). If the taxpayer requests to contact Taxpayer Advocate Service directly, advise the taxpayer to call 1-877-777-4778 toll-free, or go to http://www.irs.gov/advocate/.

Exception: If IRS can provide relief or take a substantive action towards providing relief within 24 hours, do not send the case to TAS, unless the taxpayer requests TAS assistance and the case meets TAS criteria see IRM 13.1.7.5, Same Day Resolution by Operations for additional information.

2. If the taxpayer is an individual, refer to IRM 25.23.2.2.1, Taxpayer Interaction.

3. If the ID Theft situation involves a business, refer to IRM 25.23.2.4.3, Tracking Individual Taxpayers Reporting to be Victims of Business-Related Identity Theft.

(3) Review the case history for outstanding enforcement activity that may need to be corrected, (i.e., levies, liens).

(4) A levy attaching the assets of the victim in a mixed entity case must be immediately released. Refer to IRM 25.23.10.7.2.2(8), IDTVA Specialties ACSS Preliminary Research Needed for Determining Identity Theft on Cases Meeting ACS IDT Criteria for guidance on mixed entity cases.

(5) A levy attaching to assets of non-owner of the TIN for which:

1. The Service assessed the liability in the name of the non-owner of the TIN,

2. The Service issued all pre-levy notices properly to non-owner of the TIN,

3. The Service assessed the liability under the TIN/SSN of the victim,

4. The assessment is based solely on the income of the non-owner of the TIN, and

5. There are no credits (payment offset, etc.) attributable to the victim for the assessment listed on the levy, may remain in effect unless a circumstance outlined in IRM 5.11.2.3.1, Legal Basis for Releasing Levies, is present. The assessment is not invalid for the sole reason that it was made under the victim's TIN/SSN.

(1) When the taxpayer claims to be a victim of ID Theft and the Form 14039 and/or police report has been received, the levy should be released only for the tax modules affected by the ID Theft.

(2) Follow IRM 5.19.4.4.10, Levy Release: General Information, for full and partial levy release procedures.

(1) A thorough review of the account must be conducted to ensure that all tax years affected by tax related Identity Theft are blocked from the FPLP program.

(2) When a TC 971 AC 501 or AC 506 has not posted to the entity for tax administrative ID Theft, employees must take steps to block outstanding FPLP levies.

1. When a module has been selected for FPLP (unreversed TC 971 AC 060) it may be necessary to input a manual block. Refer toIRM 5.19.9.4.7, FPLP Levy Release: General.

2. When a FPLP account is matched with a federal payment or FPLP account (unreversed TC 971 AC 062) and the disbursement of the Federal payment is imminent, an immediate FPLP release through the FPLP coordinator may be necessary, see IRM 5.19.9.4.7.1, Immediate Release Through the FPLP Coordinator.

(3) All manual blocks expire after 52 cycles regardless of the actions on the case. If you want the block to remain beyond the allowed cycles, you will have to re-input the TC 971 AC 061 (and have it post to the MF) before the end of the expiration cycle.

(4) When a TC 971 AC 501 or AC 506 is posted, FPLP will automatically block the tax modules entered into the secondary date field. However, depending on when the TC 971 AC 501 or AC 506 was input, there may be a need for an immediate release where the disbursement of the Federal payment is imminent. Follow the procedures in IRM 5.19.9.4.7.1, Immediate Release Through the FPLP Coordinator.

(1) This section was developed to provide guidance for cases that involve ID Theft issues where the individual calling was levied, and levy proceeds have been sent to the Service. The caller may be the owner or non-owner of the TIN. Ensure the levy has been released.

(2) The IRC distinguishes between "wrongful" levies and other types of improper or "erroneous" levies.

1. A "wrongful" levy is one that improperly attaches property belonging to a third party in which the taxpayer has no rights. (See IRC 6343(b)) The Code specifically authorizes the IRS to return property wrongfully levied upon (or an amount of money equal to the amount levied upon). See IRM 5.11.2.3.2.1, Wrongful Levy, for wrongful levy procedures.

2. An "erroneous" levy is one that properly seeks to capture a taxpayer's property (rather than a third party's property), but nevertheless is served prematurely or otherwise in violation of an administrative procedure or law. (See IRC 6343(d).) SeeIRM 5.11.2.3.2.3, Erroneous Levies, for erroneous levy procedures.

Note: Do not confuse this situation with one where the taxpayer (SSN owner) does not owe a liability. See IRM 25.23.10.7.2.4.7, Returning Proceeds from Wrongful Levy (Non-Owner).

(1) These procedures address cases where the owner of the SSN claims the Service levied on property they had an interest in to satisfy the tax liability that does not belong to them.

(2) When the SSN owner is claiming a refund (i.e., levy proceeds), because of an assessment not belonging to the taxpayer, the limitations for returning the payments falls under normal statute procedures and time frames (2 years from the payment date). However, if the SSN owner is claiming a refund after more than 2 years from the payment date, follow the chart in IRM 25.6.1.10.3.3, Claims for Credit or Refund - General Time Period for Submitting a Claim.

(3) Under the following circumstances, the levy proceeds should be returned to the SSN owner:

1. An ID thief (non-owner of the SSN) has filed a return in the taxpayer’s name.

2. The SSN owner (taxpayer) did not have a filing obligation or at least didn’t file a return, which delayed discovery of the ID Theft.

3. The ID Theft return either was audited or reviewed and there is an assessed balance on the victim (SSN owner) account that the IRS is attempting to collect (defaulted deficiency or summary assessment of overstated withholding).

4. The IRS has used its levy authority to collect against the assessment.

5. The IRS determines it should abate the assessments created as a result of the return filed by the non-owner of the SSN. The taxpayer’s account will have a zero liability and a credit balance equal to the amount of levy proceeds.

(1) The non-owner of the TIN may file a wrongful levy claim for return of levy proceeds (from the assets of the non-owner of the TIN) already received and processed by the Service. See IRM 25.23.10.7.2.4.5, Identity Theft and Disposition of Levy Proceeds, for definition of "wrongful" levy.

(2) A "wrongful" levy claim may be appropriate when:

1. The assessment is based solely on the SSN owner's income, since the levy improperly attaches to property belonging to a third party (the non-owner(s) of the TIN).

2. The assessment is based on the combined income of the non-owner(s) of the TIN and the owner's, since the levy may have improperly attached to property belonging to a third party (the non-owner of the TIN).

3. The assessment is based on the combined income of multiple non-owners, since the levy may have improperly attached to property belonging to the third parties.

(3) When speaking with the caller, secure information to determine that the individual requesting the return of levy proceeds is the non-owner of the SSN and not the owner of the original SSN. Verify the following:

1. Name, address and SSN/ITIN.

2. The levy issued was to a source belonging to the non-owner of the SSN based on the taxes assessed under the SSN of the rightful owner or assessed in the name of the victim based on the earnings of the non-owner of the SSN.

   Example: The non-owner proves use of the SSN via pay stubs or any other substantiating document and has rent/utility receipts where current name/address is the name/address on CC IRPTR print out and pay stubs show use of that SSN.

3. The non-owner must provide substantiation to show ownership of the levy payments.

4. Taxes were assessed on the account of the rightful owner of the SSN or assessed based on the earnings of the non-owner of the SSN.

5. The true owner’s account (SSN) is being used by the owner and the non-owner (not merely by the non-owner to work).

6. Written contact from non-owner must be within 9 months (If the date of levy was on or before March 22, 2017) or two years (If the date of levy was on or after March 23, 2017) of the date of the levy and must be given to the appropriate office listed in Publication 4235, Collection Advisory Group Numbers and Addresses. See also IRM 5.11.2.3.2.1 (3), Wrongful Levy.

   Caution: A request for the return of property wrongfully levied is not effective if it is sent to the wrong office. Advise the caller to carefully read Publication 4235.

   Note: If IRS is contacted more than 9 months (If the date of levy was on or before March 22, 2017) or two years (If the date of levy was on or after March 23, 2017) after the date of the levy, we have no authority to return the wrongful levy payments. See also IRM 5.11.2.3.2.1 (3), Wrongful Levy.

(4) SeeIRM 5.11.2.3.2.1, Wrongful Levy, for appropriate action. Contact Collection Advisory to determine if the non-owner of the TIN would qualify for wrongful levy claim consideration.

1. Collection Advisory will evaluate a properly filed claim. If the claim is disallowed, Collection Advisory should notify the third party in writing of the reason for disallowing the claim and of the right to bring suit against the government. If the claim is disallowed because it was not made within nine months from the date of the levy, Collection Advisory should send Letter 3973, Wrongful Levy Claim Rejection Letter - Untimely Claim, via certified mail.

   Note: Disallowance of the claim may be appealed through the Collection Appeals Program (CAP).

2. If the claim is disallowed for another reason, Collection Advisory should send the claimant Letter 3974, Wrongful Levy Claim Rejection Letter, via certified mail. Disallowance of the claim may be appealed through the Collection Appeals Program (CAP).

(5) If a levy is served where the Service:

• Assessed the liability in the name of the non-owner of the SSN,

• Issued all pre-levy notices properly to non-owner of the SSN,

• Assessed the liability under the TIN of the SSN owner,

• The assessment is based solely on the income of the non-owner, and

• There are no credits (payment, offset, etc.) attributable to the SSN owner for the assessment listed on the levy, the levy may remain in effect unless there is an independent basis for releasing it. See IRM 5.11.2.3.1, Legal Basis for Releasing Levies. The assessment is not invalid for the sole reason that it was made under the victim's TIN/SSN.

(1) IRM 5.11.2.3.2.1, Wrongful Levy, and IRM 25.23.10.7.2.4, Levies, provides guidance for cases that involve ID Theft issues and wrongful levies.

(1) O0 inventory contains ACS accounts awaiting managerial approval. This inventory must be functioned out weekly.

(2) ACSS CII referrals received from V1 work. This inventory must be functioned out weekly.

(1) The O2 inventory is for IDTVA Specialties ACSS Correspondence cases received with the required Form 14039 and/or police report.

(2) This inventory will also include faxed IDT documents forwarded from the ACS Call-sites currently in the V1 inventory. The case should be batched on CII to OFP 40231 (IMF) or OFP 10412 (BMF) and reassigned "TOO2,120,CORR".

(3) See IRM 25.23.10.7.2.6, Expired O Inventories, for guidance on processing the expired follow-ups.

(1) The IDTVA Screener will review incoming cases in O3 to ensure they meet the conditions for O3. If they do not meet O3 conditions, the screener will request IDTVA move the case to the proper Oscar inventory or return the case to ACS Compliance for appropriate action.

(2) After the Screener in (1) above confirms the correct placement of the case in O3, IDTVA ACSS will refer BMF cases using guidance in IRM 25.23.2.4.3, Tracking Individual Taxpayers Reporting to be Victims of Business-Related Identity Theft.

(3) BMF cases are assigned to the O3 inventory with a 90-day follow-up. (e.g., TOO3,90,IDTBMF)

(4) Expired O3 cases follow IRM 25.23.10.7.2.6.1.2, Processing Expired O3-O7 & O9 Inventories.

(1) The O4 inventory is for cases not meeting IDTVA Specialties ACSS criteria that are referred to IDTVA Specialties ASFR due to an ASFR assessment that needs an IDT determination by that function.

(2) The cases are reassigned to the O4 inventory with a 90-day follow-up (e.g., TOO4,90,IDTASFR).

(3) See IRM 25.23.10.7.2.6.1.2, Processing Expired O3-O7 & O9 Inventory, for additional information on cases meeting these criteria.

(1) The O5 inventory is for cases not meeting IDTVA Specialties ACSS criteria that are referred to IDTVA Specialties AUR due to an AUR assessment that needs an IDT determination by that function.

(2) The cases are reassigned to the O5 inventory with a 90-day follow-up (e.g., TOO5,90,IDTAUR).

(3) See IRM 25.23.10.7.2.6.1.2, Processing Expired O3-O7 & O9 Inventory, for additional information on cases meeting these criteria.

(1) The O6 inventory is for cases not meeting IDTVA Specialties ACSS criteria that are referred to another functional area (other than IDTVA Specialties ASFR, SFR, AUR, or Exam) to make the IDT determination (e.g., RPM, CAWR, FUTA, FRIV, AM, CIB, etc.).

(2) The cases are reassigned to the O6 inventory with a 90-day follow-up (e.g., TOO6,90,IDTxxxx - "xxxx" = the function or operation the case was referred to such as RPM, CAWR, FUTA, FRIV, AM, CIB, etc.).

(3) See IRM 25.23.10.7.2.6.1.2, Processing Expired O3-O7 & O9 Inventory, for additional information on cases meeting these criteria.

(1) The O7 inventory is for cases not meeting IDTVA Specialties ACSS criteria that are referred to IDTVA Specialties Exam due to an Exam assessment that needs an IDT determination by that function.

(2) The cases are reassigned to the O7 inventory with a 90-day follow-up (e.g., TOO7,90,IDTEXAM).

(3) See IRM 25.23.10.7.2.6.1.2, Processing Expired O3-O7 & O9 Inventory, for additional information on cases meeting these criteria.

(1) If an IRSN is required to resolve the case, refer to DITA. Reassign to the O8 inventory with a 90-day follow up (e.g.,TOO8,90,DITA).

(1) O9 inventory is for cases referred from ACS Compliance. Cases include but are not limited to H7, V1, cases identified with CII images.

(2) The cases are reassigned to O9 with a 1-day follow up (e.g., TOO9,01,XXXX).

(3) See IRM 25.23.10.7.2.6.1.2, Processing Expired O3-O7 & O9 Inventory, for additional information on cases meeting these criteria.

(1) If research indicates no Identity Theft involvement and/or the case may have been erroneously reassigned to an O Inventory, update to the appropriate ACS function for next case action.

(2) Document CII. It is imperative/critical that thorough documentation is completed on these cases. Please be sure to include dates of all contacts with other functional areas, as well as documenting the discussion(s), any actions and/or resolutions taken on the account and future next case actions.

(3) If you find a module belongs to IDTVA Specialty, update to the appropriate IDI category code.

(4) Use OFP 40237 when taking next case actions or working O inventory listings. Count each entity processed.

(1) Form 14394, Identity Theft/RPM Case Collection Alert Instructions will also be returned when a different function has completed resolution of the IDT issues and there is still a balance due condition involved

(2) Review the account to ensure that closing actions of the IDT issue have been completed.

(3) Cases should be updated to the next appropriate function based on IRM 25.23.10.7.2.3, Next Case Actions, Remaining Collection Issues, CII should be documented with "IDT issue resolved, to ACS XX for next case action".

(1) All IDT cases, both Open and Recon, require a control base to be opened on all tax year accounts (modules) impacted by identity theft. See IRM 25.23.4.3.1 , CII and IDRS Case Controls for additional information. AUR IDT modules should be opened with a Category Code IDI2, including additional impacted years that do not contain an AUR issue.

(2) IPSO identified IDT1 cases containing a TC 922. These cases were updated to IDI2. If the TC 922 has a last process code that would not be worked by AUR, see the chart below to determine if you will work or refer the case:

(3) IDTVA-I and IDTVA-A will reassign cases containing a TC 922 to IDI2. If the case does not meet the criteria (refer to the table in (2) above) to be worked as an IDI2, return the case to the number that reassigned it with a case message of why it was rejected including the IRM reference.

(4) When cases are assigned, verify that any open AUR case has a process code "SI" input on the AUR system. If a process code "SI" is not present on the AUR system, have the IDTVA Liaison contact the AUR IDT Coordinator to ensure that a process code "SI" is input on the case. Do not suspend the case waiting for the PC SI, continue processing.

(5) IDTVA AUR is allowed up to 120 days from the date the PC "SI" was input to return open cases back to AUR. If the case cannot be resolved within 120 days, the IDTVA Functional Liaison will contact the AUR IDT Liaison to request up to an additional 40 days. If within 160 days the case has not been completed, AUR will close the case with a PC 17. Document the request for additional time in a CII case note.

(6) IDTVA-I and IDTVA-A will send referrals to IDTVA Specialties functions directly rather than through their compliance counterparts. If a referral is received on an open AUR case that is not currently assigned to IDTVA inventory, the IDTVA Liaison should contact the AUR IDT Coordinator to ensure that a process code "SI" is input on the case.

(7) If AUR did not input a TC 971 AC 522 UNWORK upon referral, do not reject the referral. Refer to IRM 25.23.2.4.4, Initial Allegation or Suspicion of Tax-Related Identity Theft – IMF Identity Theft Indicators, to determine if a TC 971 AC 522 is required to be input.

(8) : On cases with potential balance due issues,  ensure the appropriate action(s) are taken to prevent balance due notices, tax offsets, and/or enforcement actions, see IRM 25.23.4.6(3) Research, Actions and Complete Case Analysis - Overview , for further instructions on the suspending of enforcement actions.

(9) An acknowledgement or determination letter must be issued within 30 days of receipt into the function if one has not been issued previously. Follow the instructions in IRM 25.23.4.18.1, General IDTVA Letter Procedures, to send an acknowledgement letter. Upon receiving cases in inventory, the time remaining in the initial acknowledgement letter should be verified and interim letter issued if applicable.

(10) There are instances in which case files may not be scanned into CII that were referred by AUR. These cases are discovered by working the ADR Report Blanks tab, see IRM 25.23.4-15, ITVA HQ AUR ADR Report. A CII case will be created. The case should contain CII note "Case created from ADR report, work using internal research," or similar verbiage. Attempt to make a determination and work the case using internal research. If a determination cannot be reached through internal research, follow the instructions in IRM 25.23.4.18.2, Requests for Additional Information (Telephone and/or Written), to obtain the necessary information from the taxpayer.  In your out call or outgoing letter, acknowledge the lost response, and include an apology.

(1) To determine when additional documentation is needed to support an ID Theft claim, see IRM 25.23.2.3.6, When to Request Additional Information to Support an Allegation of Identity Theft.

(2) Identity theft claims made on cases that have AUR involvement have an additional document requirement. On cases with AUR involvement the taxpayer must also identify in a statement which AUR issues they are disagreeing with. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If sending a letter to the taxpayer to obtain the information, include the following special paragraph or similar verbiage: “Although you indicated that you are a victim of identity theft, you have not stated which items reflected on the Notice CP 2000 , previously issued for the tax period stated above, were attributable to identity theft. Please send us a signed statement indicating which items or tax returns are results of identity theft.”

(3) Use the following table to determine when additional information must be requested from the taxpayer.

(1) If the taxpayer's response indicates they filed the TC 150 return and some or all of the AUR issue(s) are the result of identity theft, follow the table below:

(2) When the IRs are TIN Perfected, refer to the table below:

(3) If the taxpayer responds and only disagrees with the amount of the underreported income, take one of the following steps below:

(4) If the taxpayer is claiming possible BMF ID theft (i.e., the taxpayer claims to have no affiliation with the business/EIN) on a Form 14039 or Form 14039-B, follow IRM 25.23.2.4.3(8), Tracking Individual Taxpayers Reporting to be Victims of Business-Related Identity Theft.

(1) When correcting AUR tax assessments made on accounts subsequently determined to involve identity theft (employment or a fraudulent tax return), determine if any overpayment previously offset is refundable. Adjust the transactions posted on the module to reflect the identity theft victim's tax return as allowable including all line items (such as tax, AGI, TXI, W/H, and credits). For more information see IRM 25.23.4.6.2, IDTVA - Additional Research and Required Actions.

(2) If the taxpayer has submitted a unprocessed return with their response, process it as filed following these instructions.

• Follow the procedures in IRM 25.23.10.3, Unprocessed/Secured Returns - General, to process the taxpayer’s good return.

  Reminder: Ensure the account ASED is adjusted to reflect the appropriate date based on the new valid return. When the ASED on the impacted module is expired, a transaction date one day prior to the expiration must be used when inputting the TC 560 to prevent Unpostable Code 178-2.

  Note: Input a TC 560 with a DLN-CD of 70 or 99 to prevent Unpostable Code 178-2. Use DLN-CD 70 when correcting the ASED to a later date than the posted ASED. Use DLN-CD 99 when correcting the ASED to an earlier date than the posted ASED.

  Caution: If the valid taxpayer has filed two returns, and the second return is intended to be superseding, the ASED will be calculated using the received date of the first return. The account will be adjusted to the correct figures on the second return, as allowable.

  Example: For TY 2015, the timely filed TC 150 return is determined to be fraudulent and will be nullified. The valid taxpayer files his original return (posted TC 976) on 6/1/2016 reporting income from 2 employers. The valid taxpayer files a second return (posted TC 976) on 7/15/2016 reporting income from 3 employers. This income is verifiable on CC IRPTR. The ASED will be set based on the valid taxpayer’s original return on 06/01/2019. The account will be adjusted to the allowable figures on the TC 976 return dated 7/15/2016.

• If the posted return needs to be moved to an IRSN account, refer the case to DITA using the instructions in IRM 25.23.10.6, Post Function Referral Procedures.

(3) When the taxpayer submits a return but has not submitted a statement addressing which AUR issues they disagree with, take the following actions:

• Request the required information from the taxpayer by following IRM 25.23.4.18.2, Requests for Additional Information (Telephone and/or Written) andIRM 25.23.10.7.3.2.2(2), Document Requirements for Cases with AUR Involvement as appropriate.

(4) If the taxpayer’s response does not include a tax return, determine if the taxpayer has a filing requirement following the instructions in IRM 25.23.4.17(3), Determining Tax Liability/Form 2209 Instructions, and take the following action:

(1) The instructions in this section should be used in conjunction with the instructions in IRM 25.23.4.3.4, IDTVA Specialties - Case Referrals from Compliance Functions and IRM 25.23.10.2, Case Batching.

(2) Identity theft correspondence received in Campus Examination will be referred to IDTVA-Exam by the Exam IDT Coordinator. For TS campuses, the referrals will be sent to the co-located IDTVA-Exam team. For SBSE campuses, the referrals will be sent to the Brookhaven IDTVA-Exam team.

(3) Upon receipt of potential IDT correspondence, IDTVA-Exam will verify that appropriate claim documentation was received.

(4) If cases are referred by Exam to IDTVA-Exam not fitting the criteria listed in IRM 25.23.4.3.4, IDTVA Specialties - Case Referrals from Compliance Functions, IDTVA-Exam will return the case to the referring Exam site. A listing of functional coordinators may be found on the Servicewide Electronic Research Program (SERP) Who/Where tab at SBSE Campus Identity Theft (IDT) or Return Preparer Misconduct (RPM) POC or AIMS Coordinator for the TS campus Exam AIMS coordinator.

(5) It is important to review CC AMDISA, ENMOD/IMFOLE, and IMFOLT/TXMODA to determine if there was prior IDT resolution and the examination was reopened post-IDT resolution. Duplicate identity theft claims will be closed following procedures in IRM 25.23.4.10.13, Identity Theft (IDT) - Previous Action. Indicators of previous action are:

1. AMDISA tracking code 990 and/or ARC 14

2. ENMOD/IMFOLE TC 971 AC 501/506 closing or TC 972 AC 522 reversal

3. IMFOLT/TXMODA TC 290 adjustment with reason code 139

4. CII record with duplicate IDT claim documents and CII notes determination

(6) For any cases rejected or returned to Exam, prepare Form 3210, Document Transmittal, listing all social security numbers (SSN) and tax year(s) that are being returned. Return any cases and the Form 3210 to the appropriate functional coordinators as indicated in (4) above. The full SSN will be input on the Form 3210 provided to Exam. The Form 3210 may be emailed to the Exam contact.

(7) All correspondence received must be controlled on CII. Refer to IRM 25.23.10.2, Case Batching, for instructions to ensure correspondence is properly controlled.

(8) Attach any Form 3210 or secure email sent to Exam to the CII record or to documents sent for ICT batching.

(9) Send the appropriate acknowledgement letter per IRM 25.23.4.18.1, General IDTVA Letter Procedures, to the address on the documentation unless a better address is available. Save the letter to the existing CII record or print the letter and attach to paper documents sent for ICT batching.

(10) If multiple year or multiple function referrals include open AUR issues, research the AUR system to ensure that a PC "SI" was input. If the last PC code entered on the AUR system is not PC "SI", notify the appropriate AUR IDTVA coordinator to have the process code input. See IRM 25.23.10.7.3.2.1, Technical - Initial Handling Procedures, for additional AUR initial action requirements.

(1) All Exam IDT cases require a control base to be opened on all tax year accounts (modules) impacted by identity theft. See IRM 25.23.4.3.1, CII and IDRS Case Controls for additional information. Exam IDT modules should be opened with a Category Code IDI1, including additional impacted years that do not contain an Exam issue.

(2) IDT cases will have the activity code updated when specific case actions occur. Suspense dates will be indicated using Julian date format. Refer to IRM 25.23.4-11, IDRS Activity Codes and Definitions, for recommended activity codes.

(3) Refer to IRM 25.23.2.4.4, Initial Allegation or Suspicion of Tax-Related Identity Theft - IMF Identity Theft Indicators, to determine if a TC 971 AC 522 is required to be input.

(4) It is critical that the taxpayer is not harmed by the Service's actions once it has been determined that the taxpayer is a victim of IDT. To ensure that the taxpayer is not being harmed from a collection action or cases with potential balance due issues,  ensure the appropriate action(s) are taken to prevent balance due notices, tax offsets, and/or enforcement actions, see IRM 25.23.4.6(3) Research, Actions and Complete Case Analysis - Overview for further instructions on suspending enforcement actions.

(5) An acknowledgment or determination letter must be issued within 30 days of receipt into IDTVA-Exam. Follow the instructions in IRM 25.23.4.18.1, General IDTVA Letter Procedures, to send an acknowledgment letter if one has not already been issued.

(6) All statute year receipts will be reviewed for potential statute issues. See IRM 25.23.2.5, Statute Protection.

(7) If multiple year or multiple function referrals include open AUR issues, research the AUR system to ensure that a PC "SI" was input. If the last PC code entered on the AUR system is not PC "SI", notify the appropriate AUR IDTVA Coordinator to have the process code input. If no access to the AUR system, contact the appropriate AUR IDTVA coordinator for assistance. See IRM 25.23.10.7.3.2.1, Technical - Initial Handling Procedures, for additional initial action requirements.

(8) At any time during the account review, if there is evidence the taxpayer has a filing requirement but has not filed a return, solicit and encourage the taxpayer for a signed return. This applies to any years reviewed and impacted by the IDT incident. Follow guidance in IRM 25.23.4.17, Determining Tax Liability/Form 2209 Instructions is used to determine if the TP has a tax liability. Form 2209, Courtesy Investigation, will be completed at case closure if no return has been submitted per IRM 25.23.4.17, Determining Tax Liability/Form 2209 Instructions.

(9) Field Exam will work all cases where IRS employee(s) allege IDT and the tax year(s) are currently open or closed in Exam. Return or forward any IDT claims to the site where the audit is in process or was completed. If the exam issue is open in the Field, forward any documents directly to the Field Exam liaison. If the exam issue is closed, refer the claim to the co-located Exam function for referral to Field Exam per IRM 4.19.11.2.22, Employee Returns.

(10) When ICT is unable to determine the correct TIN, the CII case is assigned to all zeros. If:

• A TIN cannot be located using all available resources and there is sufficient mailing information on the complaint, issue Letter 5064C to the taxpayer requesting the taxpayer’s TIN and any other required IDT documentation.

• No Response is received, issue a Letter 4674C to advise the taxpayer no action can be taken since we have no record of a response being received and close the case no action.

• Correspondence cannot be issued, leave a CII case note stating insufficient information to issue correspondence and close the case no action.

(1) Do not assume that the taxpayer filing the IDT claim is the true owner of the TIN. The examiner who reviews the case must consider all information received and available through research to determine the legitimate taxpayer and resolve the case thoroughly and accurately.

(2) Use all available research tools to determine the validity of the IDT claim.

(3) Perform research to determine the impact of the IDT on all tax years. See IRM 25.23.4.6.4, Complete Case Analysis. Creation of CII cases for additional impacted years identified through complete case analysis (CCA) will use the current date as the IRS received date.

(4) When working multi-functional or multiple tax years that include AUR, SFR or ASFR involvement, follow guidance in, IRM 25.23.10.5.1, Identity Theft Cases with AUR Involvement, IRM 25.23.10.5.2, Identity Theft Cases with ASFR Involvement, and IRM 25.23.10.5.2.1, Refund Hold Program.

(5) While resolving accounts, especially compliance-related accounts, other unique circumstances may affect the account resolution.

1. Appeals - IRM 25.23.4.13, Request for Appeals, provides guidance on contacting and referring IDT claims for Appeals consideration. There are no appeal rights for IDT claims, but taxpayers may request review of non-IDT determinations. This type of reconsideration would be reviewed by the manager.

2. Bankruptcy - IRM 25.23.10.5.4, Bankruptcy, provides guidance on researching, contacting, and referring IDT claims to bankruptcy. The IDT claim and resolution may impact the bankruptcy claim filed on behalf of the IRS. If AIMS is open in campus Exam and has bankruptcy indicators, we will not request the AIMS closure. Contact the Campus Exam bankruptcy coordinator, found on the Area and Campus Program Contacts under AIMS/ERCS Contacts for the site to coordinate the IDT claim referral and resolution. Be very aware that bankruptcy court cases affect the account statute and should be closely monitored.

3. Frivolous Return Program (FRP) - IRM 25.23.4-5, IDTVA Routing Matrix, provides guidance on referring only the tax year with FRP indicators.

4. Innocent Spouse - IRM 25.23.10.5.5, Innocent Spouse, provides guidance on identifying and referring IDT claims with Innocent Spouse claims.

(6) For closed Exam accounts with assessments we must be careful to not reverse the Exam TC 300 until we determine the validity and impact of the IDT claim. If the taxpayer claims IDT on the TC 150 return but their unprocessed/secured return claims the same dependents, exemptions, adjustments to income, Schedule A items, or credits, they will not be allowed when resolving the account. IDT does not make determinations on Exam issues. Exam will be notified of the IDT claim and issues for reconsideration after the IDT account resolution.

(7) Questionable Refund Program (QRP) and other Exam programs often lend themselves to false claims of identity theft to avoid re-payment of refundable credits. It is imperative that each IDT claim is researched and reviewed to determine the validity of the claim. It is necessary to review the AIMS project code definition using the Exam Project Code Search tool found on the SERP IRM Supplement tab in addition to IDRS research and viewing CEAS notes.

(8) Non-filer or Substitute for Return may identify income related identity theft issues. It is important to review all payer documents on CC: IRPTRL, the taxpayer filing history and address to determine the correct income for the SSN owner. In addition to determining income ownership, the following factors may need consideration:

1. MFT 32 – the taxpayer’s valid return may be posted to an MFT 32 account. IRM 25.23.2.7.2.2, MFT 32 - Overview, IRM 25.23.4.4.15, MFT 32 Cases – Moved in Error, and IRM 25.25.6.7, MFT 32 Procedures, provide guidance on identifying and adjusting accounts when the valid return was moved to an MFT 32 account in error.

2. Tax Related IDT or Non-Tax Related IDT - Refer to IRM 25.23.4.10, Resolving Identity Theft (IDT) Cases, for scenario specific procedures.

3. Income Related IDT - Follow IRM 25.23.13, Income Related Identity Theft .

4. Complete Form 9409 - Follow IRM 25.23.13.3.1, Form 9409 Procedures - IRS/SSA Wages Worksheet, to notify Social Security Administration of changes to taxpayer income.

5. Non-Compliance - For any year the taxpayer has not filed a tax return, use the Compliance Suite IAT tool to determine filing requirements. Follow guidance in IRM 25.23.4.17, Determining Tax Liability/Form 2209 Instructions, to determine the tax liability. This applies to any years reviewed and impacted by the IDT incident. Encourage the taxpayer to submit a signed return when requesting additional information or at closure. Form 2209, Courtesy Investigation, will be completed at case closure if no return has been submitted per IRM 25.23.4.17, Determining Tax Liability/Form 2209 Instructions.

(1) Follow IDT account resolution guidance found in IRM 25.23.4, IDTVA Paper Process.

(2) If the taxpayer asked specific questions about the IDT claim, the examination, or other issues that will not be answered by the CP01, Letter 4674C is required to fully respond to the taxpayer. Do not include Pub 5 with the Letter 4674C or any letters issued on identity theft claims.

(3) Unprocessed or secured returns will be considered and assessed following IRM 25.23.4.6.5, Documentation Requests, Return Processing and Missing Information. A TRDBV or MeF return can be substituted for the original paper return.

(4) Once a decision is made that the IDT allegation is valid and there is an unprocessed return, the return requires screening per IRM 21.5.2.4.23.6, DIF Score or CLASSIFICATION “Send Return(s) to Examination for Review.” All account adjustments must be completed prior to routing for DIF score bypass review.

(5) If the return filed by the taxpayer contains the same issues included in the examination adjustment, do not reverse the TC 300 as part of the nullification process. The TC 150 will be nullified, and if necessary, the TC 300 adjusted based on the valid return. A referral will be sent to Exam if the taxpayer provided new information for reconsideration.

(6) Hold Code (HC) 4 will be input with any adjustment when there is a need to freeze or continue to freeze any credits and not release a refund on the account. This will be required when referring cases back to Exam to continue the examination.

(7) HC 3 will be input on any account adjustment not requiring the refundable credits held.

(8) If a recertification indicator posted on the account, determine whether the recertification indicators originated from the IDT tax year(s) and whether they need to be reversed. Recertification indicators are found on CC ENMOD and IMFOLE. Refer to IRM 4.19.14.7, Recertification, for additional guidance. If the IDT claim is allowed and the recertification issues were fully addressed by the taxpayer’s valid return, reverse the indicator(s). The indicator reversal is still required if the taxpayer qualifies for the credits based on different dependents/exemptions than those originally disallowed. Do not reverse the recertification indicators if the taxpayer is claiming the same dependents/exemptions, credits, or adjustments disallowed in the examination.

1. Earned Income Tax Credit (EITC) - input TC 971 AC 056.

2. Child Tax Credit/Additional Child Tax Credit (CTC/ACTC) – input TC 971 AC 161.

3. American Opportunity Credit (AOTC) –; input TC 971 AC 160.

(9) Reason Code 139 is required on any account closed through IDT resolution and a CII/IDRS control was established.

(10) The TC 971 AC 5XX closing indicators are required on all resolved accounts. Input appropriate TC 501/506/504 ITVAC closing literals per IRM 25.23.2.6 , Closing Identity Theft Issues.

(1) Follow all normal IDT research paths to determine whether the taxpayer is a victim of IDT.

(2) Field Exam CEAS documents must be reviewed to determine whether the IDT allegation was addressed during the original audit. It may be necessary to request the closed Exam administrative file. Once reviewed, determine whether the case should be retained or returned to the appropriate Field Exam.

(3) Cases that were no shows/no response in the Field Exam will be retained and worked in the campus.

(4) Cases will be transferred back to the Field Exam if:

1. It cannot be determined if IDT was considered during the original audit from the work papers/case notes,

2. The issue is outside the scope of the examiner, or

3. The taxpayer responded to the IDT evaluation with documentation to prove the audit issues.

(5) In cases where the IDT issues was resolved, do not return the case to the Field Exam. Follow normal procedures to resolve the taxpayer’s correspondence.

(6) In cases where there is taxpayer contact and the IDT was addressed but the account was not corrected properly, (i.e., the refund issued due to the identity theft return was not moved to the GL 1545 account), do not return to the Field Exam, resolve the account.

(7) Document CII with the reason the case is/is not being transferred back to the Field Exam (i.e., CEAS notes input by the Field Exam indicate the revenue agent (RA) or tax compliance officer (TCO) had contact with the taxpayer or the taxpayer submitted documentation during the audit).

(1) When it is determined a case will be referred to the Field Exam due to an IDT allegation, the following information must be included as part of the case file:

1. Form 3210 completed with the name and address of the appropriate Field Exam IDT Coordinator found on SERP>WHO/WHERE Exam Contacts - AIMS/ERCS Contacts - Area and Campus Program Contacts. Include the taxpayer’s full SSN, tax year(s), and the reason for the referral.

2. Form 14039, Identity Theft Affidavit, or police report, and all other documents submitted by the taxpayer.

3. The TC 30X administrative file. Two (2) attempts must be made to obtain the administrative file. The first attempt should be a CC ESTABS, so the admin file will be sent directly to ICT scanning and saved to the CII record. If scanned as a new CII case, link to the IDT CII case. If no response in 7 calendar days, the second attempt will be made using Form 2275, Records Request, Charge and Request. If the administrative file cannot be obtained, include copies of the Form 2275, Records Request, Charge or Recharge, showing the results of the search.

(2) Contact the appropriate PSP Contact found on SERP>WHO/WHERE AIMS/ERCS Contacts - Area and Campus Program Contacts to request permission to re-open or re-establish AIMS. The Field Exam coordinator will provide the PBC, SBC, EGC, and status for the AIMS transfer.

(3) Once permission from the Field Exam coordinator is received, forward an email with the Form 3210, Document Transmittal, to the co-located Campus Exam AIMS coordinator who will re-open or re-establish AIMS and transfer the AIMS base. Attach the email and the Form 3210 to the CII record. Suspend the case for 15 days and monitor. If no response or action, follow-up and suspend an additional 5 days. If still no response or action, elevate to ITVA HQ and copy IDTVA P&A.

(4) Once AIMS is re-opened and transferred, mail the IDT package to the IDT coordinator at the applicable Area PSP Office.