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

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

• Paper Tax Return (as appropriate)

• Employee User Portal (to review electronic returns)

• IDRS

• OLNR

• RTR

• IAT

• Control D

• SERP (IRM Research/Job Aids/Tools)

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

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

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

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

• NRPS Batching Sheet

• NRPS Packages

• NRPS Selection List

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

(3) NRPS produces several additional types of output:

• NRPS Batch Control Sheet

• NRPS Document Charge-Out

• NRPS Batch Return Request List

• Manual Intervention List

• NRPS Selection Report

• NRPS Non-package Selection List

• NRPS Duplicate Selection List

• NRPS Associated Notice Listing

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

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

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

1. Batch Number - Batch numbers are four digits. Batches will start with preceding zeros with the batch numbers getting larger throughout the sample. Example: Batch 001, Batch 0501, Batch 8001, etc.

2. Sort Group - The number assigned to indicate priority sorting of selected notices see IRM 3.14.2.4.1, Notice Selection Process, for more information.

3. Batch Type - Types are special, miscellaneous, overpaid, or balance due.

4. Cycle Information - A six-digit cycle number which contains the year and cycle.

(2) See figure below for the information contained in the first or header page of a NRPS Batch.

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

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

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

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

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

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

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

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

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

• Count (item number on the list)

• Sequence Number

• DLN

• CP Number

• Primary Selection Key

• Secondary Selection Key

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

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

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

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

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

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

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

(5) The NRPS Selection Report contains various statistical data including the number of CPs selected. This report is sorted by CP Number and Selection Key. See Exhibit 3.14.2-6 (BMF NRPS Selection Report-NRP1420).

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

(2) Some specific OLNR retype capabilities are:

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

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

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

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

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

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

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

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

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

(1) The OLNR system allows the user to convert one CP Notice type to another, when account actions/adjustments require a different type of notice be sent to the taxpayer. Example: An incorrectly transcribed return identified during review of the notice, needs an adjustment to the account on IDRS. The review and adjustment results in the removal of all math errors but the taxpayer account will still have a balance due. The original notice must be converted from a math error notice to a non-math error, balance due notice (CP 161/ Spanish CP 861 if applicable).

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

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

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

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

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

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

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

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

(1) Available notice disposition codes in alpha order are:

1. E - Entity-Only Notice Change. The notice is completely correct except for a name or address issue. See IRM 3.14.2.7.10.4 for more information.

2. H - Hold Notice - The notice will not be mailed in the current cycle. This disposition must be approved by Headquarters with the exception of a quality error. See IRM 3.14.2.7.10.7 for more information.

3. L - Label Notice - Informational labels will be added to the top of the notice. Follow IRM 3.14.2.7.10.6 for when to label.

4. P - Print Notice - The notice matches account data and the taxpayer needs the information. See IRM 3.14.2.7.10.2 for more information.

5. R - Retype Notice - When the notice needs to be changed to match current account conditions or multiple actions must be taken such as Entity and Label. See IRM 3.14.2.7.10.5 for retype criteria.

6. V - Void Notice - The taxpayer should not receive a notice. These notices are removed from the print file and will never be received by the taxpayer. See IRM 3.14.2.7.10.3 for voiding notices.

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

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

(2) The OLNR system has programming limitations which can cause notices to "fall out" as a systemic held when the cycle closes out. Manual Intervention notices are also systemically held if not worked. On Mondays, (except Monday holiday weeks then Tuesday) a lead needs to research and resolve the systemically held notice and make sure the notice disposition is marked and any interest and penalties updated.

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

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

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

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

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

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

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

2. Local Control File (LCF) Key 091 should be input by a Notice Review lead or clerk to select the notice for review by DLN (NRP97D). See IRM 3.14.2.5.4.1, NRP97 Input Information.

3. Notice Review Clerical Support will associate the return and Form 3465 with the NRPS batch and release the case to be worked by a tax examiner.

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

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

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

2. Selected Balance Due Notices.

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

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

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

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

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

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

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

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

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

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

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

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

If	Then
YES is present in the CC CFINK NOTICE field	The representative is authorized to receive notices. Use the CAF Status Decision table below to verify the representative should receive a notice. Type the name and address of each representative(s) on the notice tab and send the notice.
NO is present in the CC CFINK NOTICE field.	The representative is not authorized to receive notices. Delete the CAF notice using the Delete CAF/RAF check box on the CAF/RAF entity tab in OLNR.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

(1) Research the CAF Mismatch using IRM 3.14.2.5.3.1.

(2) Research the RAF Mismatch using IRM 3.14.2.5.3.2.

(3) Update all OLNR entity tabs as necessary.

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

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

(3) Once a full address is identified, use the USPS ZIP code look up tool to verify the found address against Postal Service standards.

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

(5) Update the address in IDRS. For more information see IRM 3.14.2.7.5.

(1) IDRS command Code NRP97 is used by Notice Review to add, change and delete records on the Local Control File (LCF). This command code is only used for subsequent cycles. It does not impact the current cycle already loaded for NRPS and OLNR.

(2) Several areas throughout this IRM refer to adding items to the LCF. Data input using NRP97 adds specific types of files or notices to the LCF. NRPS will use the data to select any notices that meet the NRP97 input criteria and include them in subsequent cycles.

1. Notice Review leads, managers, and clerks use NRP97 to add, delete, and change priority review per HQ direction.

2. Notice Review tax examiners use NRP97 to intercept a subsequent cycle notice the taxpayer should not receive that could not be stopped from generating. Once chosen for selection using the LCF the notice will be voided. Follow specific guidelines for when to update the LCF (using CC NRP97) throughout the IRM. These actions are in addition to correct disposition of the current cycle notice in OLNR.

   Caution: If a notice being selected via NRP97 input should not be voided, contact your lead to ensure the correct notice disposition is used in OLNR in the subsequent cycle. This is a rare occurrence.

(3) Input CC NRP97 in the upper let corner and transmit. No other information is needed for NRP97 input.

(4) The NRP97 response screen displays with the heading NRPS LOCAL CONTROL FILE BASIC OPTIONS.

(5) The following identifier choices appear on the BASIC OPTIONS menu screen and can be used to display, add, change, or delete a file in the LCF.

(6) Click directly behind the indicator letter (list above) for the file type being updated and transmit. A new response screen will display. The layout of the new response screen depends on the indicator letter chosen. Tax examiners will generally use indicator option "T" to update the LCF by TIN.

1. When intercepting a subsequent notice using T to update the LCF by TIN, on the response screen, choose "B" for a BMF TIN.

2. In the next field "return charge out wanted", only choose "Y" if the case involves a paper return, the return is currently located in Notice Review and the return will be retained until the subsequent notice is selected by NRPS.

3. The next field is SSN or EIN. Enter SSN or EIN as pertains. Only one entry is permitted at a time. The number input is all that is needed the dashes are pre populated and the number input will fill the fields as necessary.

4. The next field is Substitute NRPS Key. Though this is an optional field HQ prefers input of 90 - EIN Selection, when inputting NRP97T. This allows for leads and clerks to find these notices in the next cycle to make sure OLNR is updated correctly. See IRM 3.14.2.5.4, NRPS Local Control File, for more available NRP97 selection keys.

5. Field MFT is valid only for BMF input and while optional, it is best to complete this field so only the necessary notice module is impacted.

6. Tax period is valid only for BMF input and while optional, it is best to complete this field so only the necessary notice module is impacted.

7. Retention should never be set to "Y" by tax examiners. This requires a manual removal of the TIN from the LCF at a later date.

8. Priority should always be set to "Y" to ensure the capture of notices for the chosen TIN.

9. Print Package "Y "includes the entry in printed NRPS files. Default is allowed unless otherwise directed per local guidelines.

10. Once all the above data has been input, finalize the addition to the LCF by inputting an "X" to the right of the field ADD and transmitting.

(7) The menu completion options at the bottom of each indicator response screen are: DISPLAY, CHANGE, ADD, and DELETE. Completing all necessary data on the response screen will allow you to choose any of these actions.

(8) There are two other menu options provided at the bottom of all identifier input response screens. The OPTION-MENU is used to return to Basic Options. The NRP97 response screen menu. The EXIT TAP option is used to clear the entire screen and continue to input another command code if desired, or to sign off the IDRS terminal. To choose these options input an "X "on the line to the right of the menu option and transmit. No other field input is required to use these two options.

(1) Verify the following items for each selected notice:

• Employer Identification Number

• Document Locator Number

• Name

• Address

• Return Received Date

• Tax period

• Signature(s) for refund returns only

• Taxpayer correspondence (if applicable)

• Payments and credits

• Discovered remittance (if applicable)

• Dishonored payments and bad check penalties

• Offsets

• $100 million refunds

• Pending transactions

• Slipped blocks and mixed data blocks

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

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

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

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

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

(2) Notice disposition when a valid Authorized Representative is not located. Refer to the Invalid Representative Disposition Table below.

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

(1) After completing the General Review procedures located in IRM 3.14.2.6 including all subsections, continue with the following instructions as appropriate:

• Math Error Condition - IRM 3.14.2.6.7

• CP 267 and CP 268 - Q- Freeze - IRM 3.14.2.6.8

• CP 161 or CP 861 Balance Due Notices - Non-Math Error IRM 3.14.2.6.9

• CP 162 Balance Due Notice - Non-Math Error

• Reviewing Notices with Remittance Processing System "RPS" indicators - IRM 3.14.2.6.11

• Refund Transcripts - IRM 3.14.2.6.12

• Required Payment or Refund under Section 7519 - Form 8752 - IRM 3.14.2.6.13

• Adjustment Notices -

• Selection Keys - Additional Review Required for Notices Generated Under Keys 09, 33,52, 54, 55, and 91 - IRM 3.14.2.6.15

• CP 173 - ES Penalty - IRM 3.14.2.6.16

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

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

(2) There are three types of refund offsets:

• Tax offset,

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

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

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

(4) The priority of offsets within TOP are:

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

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

3. Federal Agencies

4. State income tax obligations

5. Unemployment compensation

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

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

(7) Offsets occur when credit is moved between different tax modules and/or taxpayer accounts. Credits can be moved manually, or are computer generated.

(1) An account with an overpayment of $100 million or more requires that a manual refund be issued because a TC 846 will not generate. Assign these cases to a work leader the same day they are received in the unit. See IRM 3.14.2.6.6.25 , Refund X- Freeze for more information.

(2) Use current procedures for resolving over payment prior to initiating a manual refund:

• Verify all unclaimed credits.

• Offset the overpayment as needed to cover any debit balances.

• Abate any interest caused by an overpayment not due the taxpayer.

(3) The account must be satisfied or in debit status before closing the control. If another area has an open control on the case, contact that area, and route all available documents to that area (remember to document this action on IDRS).

(4) If, after any adjustments, the account has a credit balance less than $100 million with a -X freeze:

1. Offset credit to any debit-balance modules.

2. Prepare a manual refund for the excess credit.

3. Initiate a manual refund using the IAT tool.

(5) If, after any adjustments, the account has a credit balance of $100 million or more, Notice Review must initiate the manual refund using the IAT and route to the Accounting Function for issuance. Take the following steps below”

• Prepare Form 3753.

• Send a copy of the original return, transcript, Form 3753, all prints essential to manual refunds, and any other documents about the case to the Accounting function. Refer to IRM 3.14.2.7.2.2, Manual Refunds, for more information.

(6) Close the control base after all account transactions post.

(7) Keep photocopies of the return and the transcript on file for future reference.

(1) NRPS extracts this data from the following sources:

• Generalized Unpostable Framework (GUF) and Unpostable Files

• Taped Edited Program (TEP) File

• Error Resolution System (ERS) File Revenue Receipts

• Unidentified Remittance and Excess Collection File

• Resequencing File (RS)

• Generalized Mainline Framework (GMF) Error, Block Out of Balance (BOB), and Reject Files (RF)

(1) Use CC URINQ to verify the availability of the credit.

1. Complete the Form 8765. (See Figure 3.14.2-6, entitled, Form 8765 and Instructions listed below.) Attach current prints of Command Codes: URINQ, BMFOL, or TXMOD to Part 1 of the form.

   Note: Current, for the purpose described throughout this section (3.14.2.7.3), denotes less than 7 days old before routing cases for payment application.

Note: Remember Form 8765 must be forwarded to the correct Campus based on the DLN of where the money was applied.

2. Input a CC STAUP for 9 cycles on balance due modules. This will prevent the generation of a notice while the transfer is being processed.

(2) After requesting application of payment, treat the notice as if payment(s) will be applied to the module.

(3) If the refund statute has expired, the application to move credits from Excess Collections File (XSF) must not exceed the tax liability, interest, and penalties. There can be no refund or credit elect. Timely payments will abate all but taxpayer-reported assessed penalties. However, timely payments will result in the abatement of taxpayer-reported assessed estimated tax penalties which can be identified with a TC 170 with a DLN that matches the return DLN. If the module contains a TC 170 with a DLN that matches the return DLN, use CC ADJ54 to post TC 170 .00 to prevent abatement of the taxpayer-reported assessed estimated tax penalty.

(4) Follow local procedures if the notice module is a statute year, before routing it to the Excess Collection unit.

(5) The instructions for Form 8765 are as follows:

1. Source of Credit - Select the IDRS Control File where the credit is located. Choices are XSF or URF.

2. Application Type - Use M when the credit is to be applied to a Masterfile account (use N when credit is to be applied to a Non-Masterfile account or use T when the credit is to be applied to a general account rather than to a taxpayer’s account).

3. File Control Number - Must match the number shown on the XSF or URF record. Attach an IDRS print of CC XSINQ or CC URINQ.

4. Notice Indicator- Check only if Letter 2349G is to be sent to the taxpayer. Note: If the "M" or "N" application was not based upon information received from taxpayer, then Letter 2349CG should be sent to the taxpayer

5. Date Return Filed - IRS Received Date of the return. Enter in MM/DD/YY format. If received date is unknown, leave blank.

6. File Name Control- Enter 4-character name control as shown on XSF or URF.

7. Application Name Control- Enter 4-character name control of the module to which the credit is to be applied (if M application).

8. Transaction Code (1) - See IRM 3.17.10-11 for URF or IRM 3.17.220-13 for XSF for a valid list of TCs to be used on M applications.

9. Transaction Code (1) Amount - Amount of the credit to be applied in relation to TC (1).

10. Transaction Code (2) - See IRM 3.17.10-11 for URF or IRM 3.17.220-13 for XSF for a valid list of TCs to be used on M applications.

11. Transaction Code (2) Amount - Amount of the credit to be applied in relation to TC (2).

12. Transaction Code (3) - See IRM 3.17.10-11 for URF or IRM 3.17.220-13 for XSF for a valid list of TCs to be used on M applications.

13. Transaction Code (3) Amount - Amount of the credit to be applied in relation to TC (3).

14. Taxpayer Identification Number- TIN to which credit is to be applied (used on M and N applications only)

15. Tax Period- Enter the tax period to which the M or N application is to be made. Enter in YY/MM format

16. MFT- Enter 2-digit MFT if application is M or N.

17. Remarks - Required Entry on all requests for application.

18. Preparer Name - Required Entry. Enter name of the person preparing Form 8765.

19. Employee Number - Required Entry. Enter the IDRS employee number of the person preparing Form 8765.

20. Stop Number - Required Entry. Enter the Stop Number of the person preparing Form 8765.

21. Phone Number - Required Entry. Enter the phone number of the person preparing the Form 8765

22. Manager’s Signature - Required Entry.

23. Date - Required Entry. Enter the date the Form 8765 was completed.

(1) To request a payment from Excess Collections File (XSF):

1. Use CC XSINQ to verify the credit(s) is available.

   Note: The credit is not available if the remarks section of the XSINQ record indicates CLOS. Do not request transfer of the credit.

   Reminder: Remember Form 8765 must be forwarded to the correct Campus based on the DLN of where the money was applied.

2. Complete Form 8765 to request the Excess Collection Function transfer payment/credit from XSF to the taxpayer's account. (See Figure 3.14.2-6, Form 8765 and Instructions.)

3. Include a complete explanation of the reason for the request in the remarks section of Form 8765.

4. Attach a current print (less than 7 days old) of CC TXMOD or BMFOLT and CC XSINQ to Form 8765.

5. Route Form 8765 with attached research to the Excess Collection Team.

   Caution: If the refund statute has expired, the credit application must not exceed the tax liability, interest and penalties. Follow local procedures if the notice module is a statute year.

(2) After requesting application of the credit, complete notice disposition as if payment(s) will post to the module. Refer to the Notice Disposition Decision Table below.

(3) Input CC STAUP for 9 cycles on balance due accounts to prevent erroneous notices.

(1) The Taxpayer Advocate Service (TAS) is an independent organization within the 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.

(2) While the Internal Revenue Service (IRS) is continually working to serve customers in a quality manner, some taxpayers still have difficulty getting solutions to their problems or getting timely and appropriate responses to their inquiries. Per 7803(c) Congress established the office of the National Taxpayer Advocate (NTA) and its functions within the IRS to assist these taxpayers. TAS has identified criteria that qualify taxpayers for TAS assistance. The Case Advocate will conduct an independent review of actions that have been taken or need to be taken to resolve the problems taxpayers are experiencing. Employees should not view TAS case criteria as a means of excluding taxpayers from TAS, but rather, as a guide to TAS case acceptance. The criteria under which TAS accepts a case should not govern whether a taxpayer is entitled to relief.

(3) Taxpayers meeting TAS criteria will get priority handling. See IRM 13.1.7, Taxpayer Advocate Case Criteria, for additional information.

(1) The IRS is faced with a growing number of individuals who file frivolous tax returns based upon tax avoidance arguments that are not supported by law. A frivolous argument is used for the purpose of expressing dissatisfaction with the substance, form or administration of the tax laws by attempting to illegally avoid or reduce tax liabilities. A list of potential frivolous return arguments can be found in IRM 3.12.38-8.

(2) If it can be determined that a return is a frivolous claim, refer the notice and return to the Return Integrity Verification Operation (RIVO), Frivolous Return Program immediately.

(3) Use the procedures outlined in IRM 21.5.3.4.16.7, Identifying Frivolous Returns/Correspondence and Responding to Frivolous Arguments, when referring frivolous claims and/or correspondence to the Ogden Campus Frivolous Return Program.

(1) "Slipped blocks" and mixed-data blocks occur when data from a document or payment posts to a module related to a different document or payment in the same block of DLNs. The erroneous data on the notice module usually belongs to the taxpayer whose document or payment is immediately before or after the notice document or payment in the DLN block sequence.

(2) Slipped Blocks have the following characteristics:

1. A block (or part of a block) of documents or payments posted to the Master File incorrectly.

2. The incorrect transactions have DLNs from other documents or payments in the same block.

3. The DLN is usually from the document or payment immediately before or after the notice document or payment in the block sequence.

4. A slipped block may result in erroneous refunds, incorrect notices, and/or lost or missing documents, returns, or payments.

(3) Mixed-Data Blocks have the following characteristics:

1. A block (or part of a block) of documents or payments posted to the Master File incorrectly.

2. The data is incorrect due to a transcription error.

3. A mixed-data block may result in erroneous refunds and/or incorrect notices.

(4) Suspect a slipped block or a mixed-data block if any of the following conditions are present:

1. The data on the notice module does not match the data on the document.

2. A posted payment amount does not match the amount listed on the payment voucher.

3. A payment is missing or is misapplied.

(5) Research and inspect the block:

1. Review the Remittance Transaction Research (RTR) system to match checks with name/EIN. Refer to the RTR Decision Table below.

If the Situation Involves	And the Case is a	Then
Two or fewer taxpayers	Slipped or mixed data block	Resolve the case in Notice Review. (See IRM 3.14.2.7.10 , Case Resolution.)
More than two taxpayers	Slipped block	Recharge and route the BMFOL prints and RTR check prints to the Accounts Management Function's Adjustments/Payment Tracer Unit.
More than two taxpayers	Mixed-data block	Recharge and route the BMFOL prints and RTR check prints to the Accounts Management Function (Adjustments).

(6) When routing the case:

1. Input CC STAUP for 9 cycles on any balance due account.

2. Input a TC 570 on any credit balance account.

3. Close the Notice Review control base.

4. Enter appropriate history items.

5. Indicate in the remarks section of Form 3465 that a. through d. above have been completed.

(7) Make every effort to resolve or route slipped and mixed data situations in cycle.

(1) Use CC BMFOLT and/or CC ENMOD to check for FEMA disaster areas and use the date shown to calculate interest and penalties.

(2) Notice Suppression - The Disaster Relief Memorandum identifies the covered disaster area (ZIP codes) and the beginning and ending dates for notice suppression and/or stuffer requirements. If systemic notice suppression is established by an - O Freeze, no further action is required to suppress notices.

(3) Penalty Adjustments - If the -O Freeze is not on the module, notices with ZIP codes in the impacted disaster areas may require penalty adjustments for the period designated in the Disaster Relief Memorandum. Use Local Control to select those notices with ZIP codes in the impacted disaster areas.  
Notice Review will review notices generated for taxpayers who have filed late tax returns, or submitted late payments during the disaster period. Notice Review will only address the Failure to File and Failure to Pay penalties if the following apply:

1. If only the Failure to File penalty (TC 166) is assessed, the original or extended due date is within the disaster period, and the return received date is timely based on the disaster extended due date, abate the TC 166 for each month, or part of a month the penalty was assessed. See Federal Disaster Area IRC 7508A, IRM 20.1.2.2.2.2 .

2. If only the Failure to Pay penalty (TC 276) was assessed and the original due date is within the disaster period, abate the penalty for each month and/or part of the month from the original due date to the extended due date that the tax remained unpaid.

3. If both TC 166 and TC 276 penalties were assessed and the original or extended due date is within the disaster period, abate the part of the FTF penalty from the original or extended due date (if the original due date is within the disaster period). (See IRM 20.1.2.2.2.2, Federal Disaster Area - IRC 7508A, IRM 20.1.1, Introduction to Penalty Relief and IRM 20.1.2, Failure to File/Failure To Pay Penalties, for information and abatement procedures.)

(4) If the taxpayer notates on the front of the return the designated disaster phrase, abate the TC 166 and TC 276 per instructions in (2) above.

(5) If the taxpayer correspondence attached to the return is requesting relief of any penalty because of disaster damage or disruption, take the following actions:

1. Decide if the taxpayer qualifies for TC 166 and/or TC 276 relief based on the disaster criteria. If the taxpayer qualifies, abate the penalty(s).

2. If taxpayer does not qualify for relief based on the disaster criteria but may qualify based on the Reasonable Cause criteria, route the case to Accounts Management. This includes taxpayer requests for FTD Penalty abatement.

(6) FTD and Reasonable Cause - All requests for abatement for FTD penalties received in Notice Review must be routed to Accounts Management for determination and resolution.

(7) Estimated Tax Penalty - If an Estimated Tax Penalty (TC 176) has been assessed, decide if the taxpayer was required to make an estimated tax payment during the disaster period. If the payment was received by the date required by the Disaster Relief Memorandum, abate the part of the estimated tax penalty assessed for the underpayment. Notate on the adjustment document, "Adjustment Due to Disaster". If in doubt, send case to Accounts Management for determination and resolution.

(1) Upon identification, all Balance Due Notices of $100,000.00 or more must be reviewed for accuracy.

1. An in-depth review of the entire account must be performed, because problems with other modules or TINs not directly related to the notice often surface at this time and must be expeditiously resolved to prevent future taxpayer and/or Accounts Receivable impact.

2. Refer the case to the work lead if a questionable situation is identified, and corrective action cannot be determined by the tax examiner.

3. When reviewing Form 1065 with partnership penalties review the prior year to see if the number of partners appears to be in error. Erroneous penalties may have been assessed because various other fields were picked up for the number of partners. If the penalty is in error, recompute and make the necessary adjustment, and retype the notice. For CP 162 instruction refer to IRM 3.14.2.6.10.

4. Form 706 is filed under the decedent’s Social Security Number (SSN). When researching IDRS, input a "V" behind the decedent’s SSN (i.e., 000-00-0000V). The MFT is 52 and the tax period consists of six zeros (000000). Although the return is filed under the decedent’s SSN, research via BMF CC such as BMFOL and BRTVU. Also, input a "W" behind the decedent’s SSN (i.e., 000-00-0000W)to research accounts on the invalid segment.

5. For Forms 706 and 709, use CC IMFOL to research the IMF SSN for possible misapplied payments.

   Note: An SSN beginning with 909-17 or any temporary TIN will not have any Master File information.

6. For Form 709 the missing credit may be posted to the Form 1040 account (for joint returns check both SSNs). If the Form 1040 is overpaid, research CC RTVUE for the amount of credit the taxpayer claimed on the Form 1040 return. If credit is available for Form 709, refer to the Form 709 Decision Table below.

Form 709 Decision Table
Delete the refund on the 1040 account. If the TC 846 has already posted, then print the notice. Do not debit the IMF account if the TC 846 has posted. The IMF refund has already been received by the taxpayer when a TC 846 is present. An IMF refund may only be deleted or intercepted if there is a TC 570 with a DLN blocking series of 55555.
Transfer the credit
Input a CC STAUP for 9 Cycles on the Form 709 account
Transfer the extension if no extension is posted on the Form 709 account

(1) A short period return must be filed by a subsidiary corporation when it becomes affiliated with a consolidated group (parent corporation). This step allows the subsidiary corporation to file an initial consolidated return with the parent corporation. Income not included in the consolidated return by a corporation, because it was not in the group for the complete taxable year, must be reported on a separate return. The due date of the return is decided by using the earlier of the due date of the original tax period of the parent corporation, or the due date of the original tax period of the subsidiary corporation. Do not confuse the original tax period with the short period.

1. Research of the parent corporation accounts may be required to decide the due date.

(2) Review any short period Form 1120 to make sure the return was processed with the correct period information.

(3) Change in Accounting Period.

1. An approved accounting period change for a Form 1120 can be identified on ENMOD by a TC 053 or a TC 054.

2. For tax years beginning January 2016 through December 2025, the Form 1120 due date is the 15th day of the 4th month after the end of the tax year. See Exhibit 3.14.2-24 , Form 1120 Due Dates for more information.

3. For tax periods beginning prior to 2016 the Form 1120 return due date is the 15th day of the 3rd month after the end of the tax period. Example: A tax period ending December 31, 2015 is due March 15, 2016.

(4) Tax entities not in existence the entire year may file a short period return. Requirements for filing the return and figuring the tax are generally the same as if the return was for a full tax year that ended on the last day of the short tax year.

(5) Watch for any reprocessable returns.

(1) Research ENMOD, NAMEE or FINDED for PN and AP address changes. Use the new address, if present.

(2) Use the address on the yellow Post Office Forwarding Label if it is different from the notice address.

(3) Use the address on the 3 x 5 card from the Files Function if a more current address was not found and the notice has an original DLN.

(4) Use the following procedures if a more current address is NOT FOUND:

1. Use local procedures to send the notice to the Files function to be attached to the return.

2. Input CC STAUP 51 for no cycles to issue a Taxpayer Delinquent Account (TDA) to the Collection function and suspend all Collection procedures.

(1) Taxpayers who file Form 944, Employer’s ANNUAL Federal Tax Return, due on January 31st, should have total taxes of $1,000 or less. If the total of all taxes are over that amount, then a taxpayer can receive 3 notices for this condition depending on when the return is processed. All three notices give the taxpayer instructions on what form to file. The notices are:

1. CP 250A - You Are No Longer Eligible to File Form 944

2. CP 250B - You Are No Longer Eligible to File Form 944

3. CP 250C - You Are No Longer Eligible to File Form 944

(2) CP 250A is issued to taxpayers who file Form 944 and have a total tax liability on line 7 of Form 944 of more than $1,000, but the returns met the PCD (Program Completion Date), posting in or before cycle 09. This notice instructs the taxpayer that they are no longer eligible to file Form 944 and they must file quarterly using Form 941 for the current year.

(3) CP 250B is issued to taxpayers who file Form 944 and have a total tax liability on line 7 of Form 944 of more than $1,000, but the return did not meet the PCD of cycle 09. This notice is for the returns processed between cycles 10 - 49. This notice instructs the taxpayer they will remain a Form 944 filer for the current year and to make the appropriate FTD payments as required by the lookback analysis. These taxpayers will be allowed to remain Form 944 filers for the year because there is not a sufficient amount of time to notify them to file quarterly. Taxpayers that receive CP 250B will also receive CP 250C later in the year informing them that they will be changed to a Form 941 filer beginning in January the subsequent year.

(4) CP 250C is issued to Form 944 filers who received CP 250B earlier in the year, or File Form 944 after cycle 49 of the current calendar year. These taxpayers will not receive CP 250B, only CP 250C. This notice informs the taxpayer that because they exceeded the threshold for the Form 944 participation, they must file Form 941 for the upcoming year. This notice is generated in cycle 52.

(1) This information is for the Issuers of Qualified Bonds related to Form 8038-CP (MFT 46). The tax class is 3 and the document code is 61. For a fixed rate bond, the due date is the fifteenth day of the second calendar month after the close of the calendar quarter in which the bond was issued. Research payments and account actions for these cases. For variable rate bonds, the issuer must aggregate all credit payments on a quarterly basis and file Form 8038-CP for reimbursement in arrears no later than 45 days after the last interest payment date within the quarterly period for which reimbursement is being requested. See Form8038-CP instructions for more information.

(2) Disposition of these cases in Online Notice Review (OLNR) is limited. Follow the guidelines below:

a) The following disposition codes are the only ones allowed to be used for CP 116s, CP 138s, CP 210s, CP 220s for Form 8038-CP (MFT 46) when utilizing OLNR :

• E (Entity): Use this disposition to make entity information changes or updates.

• V (Void) : Use this disposition to void the notice completely because of inaccurate information.

• VI (Void/Intercept): Use this disposition to void the notice and to intercept any refund on the module. It will only be applicable to CP 210s or CP 220s.

• P (Print): Use this disposition to mail the notice to the taxpayer.

• PI (Print/Intercept): Use this disposition to mail the notice and intercept the refund on the module. It will only be applicable to CP 210s or CP 220s.

Note: Generally, these notices will not carry any penalties. However, CP 116, CP 210 and CP 220 may include Failure to File 8038-CP electronically or Failure to Pay penalty if a previously claimed credit was disallowed after a refund was issued.

b) The following disposition codes are the only ones allowed to be used for Transcripts (CP 380s, CP 384s and CP 388s) generating for Form 8038-CP (MFT 46) when utilizing the OLNR application:

• T (Transcript): Use this disposition to mark the account as a transcript and no other updates are needed.

• TI (Transcript/Intercept): Use this disposition to just mark the account as a transcript and intercept the refund

Note: A CP 386 will never generate for a Form 8038-CP (MFT 46).

(1) This section of the IRM provides guidance on applying recently enacted legislation and administrative tax relief applicable to employment taxes.

(2) COVID-19 legislation includes:

• Sections 7001, 7003 and 7005 of P.L. 116-127, Families First Coronavirus Response Act (FFCRA) established new refundable employment tax credits for employers that provide qualified sick & family leave wages. Originally these credits were applicable to the period of leave employees took beginning April 1, 2020 through December 31, 2020. Sections 286 and 288 of the COVID-related Tax Relief Act of 2020 (P.L. 116-260) modified employment tax credits for qualified sick and family leave wages and extended these credits for leave taken through March 31, 2021. For more information see, IRM 21.7.2.7.1, Credit for Qualified Sick and Family Leave Wages.

  Note: The qualified leave wages under FFCRA (as amended by the COVID-related Tax Relief Act of 2020) are not subject to the employer’s share of social security tax (or the equivalent portion of the Railroad Retirement Tax Act Tier 1 tax). However, qualified leave wages under the American Rescue Plan Act of 2021 (ARP) are subject to the employer’s share of social security tax but the available credit is increased by such amount.
  The American Rescue Plan of 2021 (ARP) under IRC 3131 and 3132 amended and codified similar credits to include qualified leave wages and certain other wage-related expenses (such as health plan expenses and certain collectively bargained benefits) paid for leave taken after March 31, 2021 and before October 1, 2021. The paid leave credits under ARP are tax credits against the employer's share of Medicare tax (or the equivalent portion of the Railroad Retirement Tax Act Tier 1 tax).

• Section 2301 of P.L. 116-136, Coronavirus Aid, Relief and Economic Security (CARES) Act established a new refundable Employee Retention Credit applicable to qualified wages paid after March 12, 2020 and before January 1, 2021.

  Note: Section 206 of the Taxpayer Certainty and Disaster Tax Relief Act of 2020 (P.L. 116-260) modified the Employee Retention Credit for qualified wages paid after March 12, 2020 and before January 1, 2021. Section 207 of the Taxpayer Certainty and Disaster Relief Act of 2020 (P.L. 116-260) modified the Employee Retention Credit and extended it through June 30, 2021 and Section 9651(a) of ARP, amended and codified this credit under IRC 3134 to include wages paid after June 30, 2021 and before January 1, 2022. For more information see, IRM 21.7.2.7.2.3, Employee Retention Credit (ERC) - The American Rescue Plan Act of 2021 (ARP) Provisions.
  Section 80604 of the Infrastructure Act amended IRC 3134 to limit the availability of the Employee Retention Credit (ERC) in the fourth quarter of 2021 to employers that are recovery startup businesses. See IRM 21.7.2.7.2.4, Employee Retention Credit (ERC)- Infrastructure Investment and Jobs Act (Infrastructure Act) Provisions.

• Section 3606 of P.L. 116-136, Coronavirus Aid, Relief and Economic Security (CARES) Act authorized the IRS to provide advance payment of the FFCRA credits to employers prior to the filing of their employment tax return. Form 7200, Advance Payment of Employer Credits Due to COVID-19, was created for that purpose. For more information see, IRM 21.7.2.7.5, Form 7200, Advance Payment of Employer Credits Due to COVID-19.

  Note: Section 3606 of P.L. 116-136, Coronavirus Aid, Relief, and Economic Security (CARES) Act, authorized advance payments of the Credit for Qualified Sick and Family Leave Wages. Advance payments of the these credits associated with wages paid after March 31, 2021 and before October 1, 2021.
  Section 2301(l) of the CARES Act authorized advance payments of the Employee Retention Credit. Advance payments of the ERC associated with wages paid after June 30, 2021 and before January 1, 2022.
  IRC 6432, added by Section 9501(b) of P.L. 117-2, The American Rescue Plan Act of 2021 ( ARP), includes a provision authorizing advance payments of the COBRA premium assistance credit. See, IRM 21.7.2.7.3, COBRA Premium Assistance Credit — The American Rescue Plan Act of 2021 ( ARP), for more information about that credit.

• Section 2302 of P.L. 116-136, Coronavirus Aid, Relief and Economic Security (CARES) Act defers the required payment due date for the employer’s share of social security taxes for wages paid between March 27, 2020 through December 31, 2020, as well as deposits and payments due after December 31, 2020 that are required for wages paid during the quarter ending on December 31, 2020. See IRM 21.7.2.7.8, Deferred Payment of Social Security Taxes for 2020, for more information.

• Notice 2020-22 states that employers that reduced deposits will not be subject to FTD penalties, so long as they paid qualified wages prior to the time such deposit was due and the amount not deposited was less than or equal to the anticipated amount of the associated credits for the calendar quarter as of when the deposit was due and the employer did not request an advanced payment of credits on Form 7200 in addition to reducing deposits.

• Notice 2020-23 extended the due date for filing a claim for credit or refund due on or after April 1, 2020, and before July 15, 2020 for eligible persons (including individuals, trusts, estates, corporations, and any type of unincorporated business entities) to July 15, 2020.

  Note: The relief outlined in Notice 2020-23 applies to: filing returns or other documents, making payments, time-sensitive acts, such as filing a petition with the United States Tax Court, filing a claim for credit or refund of any tax, bringing suit upon a claim for credit or refund of any tax and all acts listed in Rev. Proc. 2018-58, 2018-50 IRB 990.

• Notice 2020-35 extended the timeframe for making interest-free adjustments to correct employment tax reporting errors.

• Notice 2020-65 allows for the deferment of the employee share of social security tax or the equivalent portion of Tier 1 railroad retirement taxes (RRTA) for wages paid during the period beginning on September 30, 2020 and ending on December 31, 2020, if an employee’s wages are less than $4,000 in any bi-weekly pay period (or the equivalent threshold amount for other pay period intervals). The due date for withholding and payment of the employee’s share of social security or the equivalent portion of Tier 1 railroad retirement taxes (RRTA) on applicable wages is postponed until the period beginning on January 1, 2021 and ending on April 30, 2021.

  Note: Section 274 of the COVID-related Tax Relief Act of 2020 (P.L. 116-260) extended the due date for payment of employee social security taxes deferred per guidance in Notice 2020-65 to December 31, 2021.

• Notice 2021-11 modifies Notice 2020-65, 2020-38 I.R.B. 567 (September 14, 2020), by extending the time period during which employers must withhold and pay applicable taxes (as defined in Notice 2020-65). This notice provides that the end date of the period during which employers must withhold and pay applicable taxes is postponed from April 30, 2021, to December 31, 2021, and associated interest, penalties, and additions to tax for late payment with respect to any unpaid applicable taxes will begin to accrue on January 1, 2022, rather than on May 1, 2021. See Notice 2021-11, for more information.

(3) The American Rescue Plan Act (ARPA) of 2021 (P.L. 117-2), was enacted on March 11, 2021. It altered and/or extended COVID-19 related relief for employment tax, including:

• Section 9641 of ARP added new sections 3131, 3132, 3133 to the Internal Revenue Code to allow eligible employers to claim refundable tax credits that reimburse them for the cost of providing qualified sick and family leave wages with respect to qualifying leave taken by employees beginning on April 1, 2021 through September 30, 2021.

• Section 9651 of ARP added new Section 3134 to the Internal Revenue Code, which extended the Employee Retention Credit to include qualified wages paid after June 30, 2021 and before January 1, 2022 and amended certain provisions.

  Note: The Infrastructure Investment and Jobs Act retroactively terminated the ERC for the fourth quarter of 2021 for all but a "recovery startup business". The ERC under section 3134 of the Code, as amended by the Infrastructure Investment and Jobs Act, was limited to wages paid after June 30, 2021, and before October 1, 2021, unless the employer was a recovery startup business. An employer that was a recovery startup business could claim the employee retention credit for wages paid after September 30, 2021, and before January 1, 2022. See Notice 2021-65, for more information.

• Section 9501 of ARP added new Section 6432 to the Internal Revenue Code, provides a temporary reduction in the premium that individuals would have to pay when they elect COBRA continuation health coverage following a reduction in hours or an involuntary termination of employment. The new law provides a corresponding tax credit for eligible employers. COBRA premium assistance is available for periods of coverage beginning on or after April 1, 2021 through periods of coverage beginning on or before September 30, 2021. This provision allows a credit (COBRA Premium Assistance Credit) against the employer share of Medicare tax in an amount equal to the premiums not paid by assistance eligible individuals for COBRA continuation coverage. The COBRA Premium Assistance Credit may be claimed on employment tax returns for the second, third and fourth quarters of 2021 depending on when the employer (or other entity that maintains the health plan) becomes eligible for the credit.

(4) There have been several revisions to Form 941 to administer the COVID relief specified above, beginning with the 2nd quarter of 2020. Annual employment tax forms (Form 943, Form 944, and Form CT-1) were also revised for tax year 2020.

(1) The IRA of 2022, Pub. L. No. 117-169, is a law that includes tax and climate provisions. It enacted various clean energy provisions, a corporate alternative minimum tax on adjusted financial statement income and an excise tax on stock repurchases by publicly traded corporations. These changes apply to tax years that begin January 1, 2023 and after.