5.19.3. Backup Withholding Program

(1) A TIN may be a:

• Social Security Number (SSN)

• Employer Identification Number (EIN)

• Adoption Taxpayer Identification Number (ATIN)

• Individual Taxpayer Identification Number (ITIN)

(2) The IRS considers a TIN missing if it was not provided. Backup withholding should be imposed on all reportable payments if the TIN is missing; no IRS notice is required. Backup withholding should already be imposed on missing TIN's.

(3) A TIN can ONLY have nine (9) numbers. If it has more or less than nine numbers or contains an alpha character, it is obviously incorrect and is a missing TIN.

(1) A payor should send a First "B" Notice, a copy of Form W–9, Request for Taxpayer Identification Number and Certification (or an acceptable substitute), and an optional reply envelope to the payee within 15 business days from the date it receives the CP2100 or CP2100A Notice, defined as the date set forth on the notice or the date of actual receipt , if later”.

(2) A payor should include the return date on the First "B" Notice which is no later than 30 business days after the date of the receipt of the CP2100 or CP2100A notice defined in (1) above.

(3) A payor must clearly mark the outer envelope with "IMPORTANT TAX INFORMATION ENCLOSED" or "IMPORTANT TAX RETURN DOCUMENT ENCLOSED."

(4) A payor must begin backup withholding on payments made to a payee no later than 30 days after receipt of the CP 2100 or CP 2100A notice, unless the payee returns a signed Form W-9.

(5) A payor must stop BWH within 30 calendar days after receiving the Form W–9 from the payee.

(6) A payor should update his or her records with the corrected information received from the payee and include it on any future information returns (Forms 1099) they may file.

(1) A payor should send the Second "B" Notice and an optional reply envelope to the payee within 15 business days from the date of the receipt of the CP2100 or CP2100A Notice, defined as the date set forth on the notice or the date of actual receipt, if later.

(2) A payor must include the return date on the Second "B" Notice which is no later than 30 business days from the date of the receipt of the CP2100 or CP2100A Notice, defined as the date set forth on the Notice or the date of actual receipt, if later.

(3) A payor must clearly mark the outer envelope with "IMPORTANT TAX INFORMATION ENCLOSED" or "IMPORTANT TAX RETURN DOCUMENT ENCLOSED".

(4) The payee may need to contact the Social Security Administration (SSA) to validate an SSN or the IRS to validate an EIN. This validation must be provided to the payor within 30 business days from the date of the Second "B" Notice to avoid BWH.

(5) If TIN is an SSN:

1. The payee must provide the payor with a copy of their Social Security card. The Social Security card must show their correct name/SSN combination that differs from the name and SSN combination appearing on the Second "B" notice or it must show a date of issuance that is no earlier than six months prior to the date on the notice.

2. If the payee does not have a card meeting the requirement in item a, above, they must obtain a new or replacement Social Security card by submitting SSA Form SS-5 to the SSA in person or by mail. That form and further information regarding application for a Social Security card is available at ssa.gov.

3. Once the payee receives their Social Security card, they must make a copy of the card and send the copy directly to the payor with a copy of the Second "B" notice attached.

4. When the payor receives the copy of the social security card, it should update its business records and use the corrected information on any future information returns it files.

(6) If the TIN is an EIN:

1. The payee must write to the service center where they file their tax return, Attn: Entity Section, and ask for IRS Letter 147C, EIN Previously Assigned. They must enclose a copy of the Second "B" Notice with the request.

Note: BWH regulations require that a payee request Letter 147C in writing. Acceptable written requests may be received by IRS personnel via United States Postal Service or by fax. The payee must provide the Letter 147C to the payor.

2. When the payor receives a copy of the Letter 147C, it should update its business records and use the corrected information on any future information returns it files.

(7) If a payor does not receive the required validation (social security card meeting the requirements above) within 30 business days, they must begin BWH on payments made to the payee if they have not already withheld. The payor may begin BWH on payments to the payee during the 30 business day period.

(8) When the payor receives the required validation, they must stop BWH within 30 calendar days.

(1) Receipt of correspondence from taxpayers with or without a CP2100 or CP2100A is considered to be unsolicited or erroneous correspondence. The payor is not to submit any correspondence.

(2) The entire contents of any erroneous correspondence should be held for 30 days and then classified waste (CW).

(1) Research on Undeliverable BWH CP2100/CP2100A will be worked using the GII process.

1. Date Stamp each undelivered notice.

2. Sort and bundle by notice date.

3. Enter SSN, Name into GII tool.

4. Run program to enter received date into IDRS.

5. Classify as waste the CP notices when finished.

(2) Work around when the GII tool is unavailable.

1. Date Stamp each undelivered notice.

2. Sort out all notices with a yellow label indicating “Forward Time Expired.” Count these notices and provide count to manager. This count will need to be included in the CP2100/CP2100A Undeliverables spreadsheet. After counting, resend these notices to the current address, include the original envelope with the yellow sticker notices.

3. Sort out all CP2100/CP2100A notices with a Compact Disc (CD) and bundle in groups of 25 or more by the notice date.

4. Sort the remaining notices and bundle into groups of 25 or more.

5. Process all bundles of CP2100/CP2100A notices with CD’s first, then process remaining bundles of undeliverables notices

6. Access IDRS and utilize the command codes listed below to identify a current address. A current address can be recognized by reviewing cycle date when available within specific command codes, which is after the notice date printed on the CP2100/CP2100A notice. These command codes include:

IRPTRL

IRPTRJ

FINDE

PMFOLD

ENMOD

BMFOLE (IMFOLE for SSN numbers)

INOLE

AMDISA

(3) When finished, place notices in boxes based on the month the notice went undelivered. When the boxes are full, add a cover sheet and store the boxes until ready for shipment to Federal Records Center.

(4) Utilize the SERP IDRS Command Code Job Aid as needed. SERP-IDRS Command Code Job Aid-Job Aids (irs.gov).

(1) Filers may contact Technical Services Operation (TSO) Customer Service Section (CSS), to request recreated copies of CP2100 or CP2100A Notices. A request to recreate a notice may be submitted two weeks after the mailing of each notice. If a call/request comes into the campus requesting a recreated notice, refer that contact to the Technical Services Operation (TSO) Customer Service Section (CSS) at (866) 455-7438 (toll-free) or (304) 263-8700 (not toll-free). TSO will enter the request into the Notice Recreate System (NRS).

(2) For campus paper notices: Bi-weekly

1. When an individual campus has at least one recreated notice, an E-mail will be automatically generated by the system to the Management Support Branch Analyst responsible for BWH Program. .

2. Campus locations are required to print, manually stuff, and mail all recreated notice requests received for paper listings of missing and/or incorrect TINs throughout the calendar year as they are received. Each Management Support Branch analyst must respond to the automatic E-mail confirming the mail out of the recreated notices. The recreated notice must be sent to the customer within 7-10 business days of the automated E-mail date.

(3) For tape notices: Bi-weekly

1. The Technical Services Operation (TSO) will fill all requests received for tape listings of missing and/or incorrect TINs within the four year retention period (i.e., 4 years from original CP2100/ CP2100A Notice Date).

2. Recreated tape requests received by individual campuses must be routed through the Management Support Branch Analyst to the IRP Centralized Call Site.

(1) Payors who receive a CP2100 or CP2100A Notice may be assessed penalties for filing Forms 1099 with incorrect or missing TINs when filing their annual Information Returns.

(2) Prior to filing annual Information Returns with the IRS, payors of reportable payments potentially subject to backup withholding under IRC 3406 (b) may be eligible to match payee name/TIN combinations against IRS records through the TIN Matching program.

(3) Payors of reportable payments reported on Forms 1099 B, 1099-G, 1099-NEC, DIV, INT, K, MISC, OID and PATR, are eligible if they , are listed in the Payor Authorization File (PAF).

(4) The Payor Authorization File contains tax filing records on all payors filing Information Returns.

(1) Use this section to resolve BWH-C inquiries only. Refer to other IRM sections to resolve all other issues prior to referral.

(2) If the Backup Withholding Indicator (BWI) is on the module (TXMOD), refer to IRM 5.19.3.5.2.3, BWH"C" Procedures. If the BWI is shown as "2" and any of the following conditions exist, forward the information via Form 4442 to the appropriate BWH unit for your BOD per the information in paragraphs #3, #4 & #5 below:

• Taxpayer is deceased.

• Account is closed “Not Liable”, “Refund Due”, or “Little or No Tax Due”.

• The return has been previously filed, but posted to another module (e.g. filed joint with spouse, filed on an incorrect TIN, filed with an incorrect name [entity problem]).

Note: Only send the information to the BWH unit to make a determination to close BWH-C or not. You must work all the RD issues.

(3) For W&I campuses, send the Form 4442 or correspondence to: Internal Revenue Service Stop 5000 P-4333 W. Pershing Road Kansas City, MO 64108-4302. Fax number - 855-233-8562.

(4) For SB/SE campuses, send the Form 4442 or correspondence to: Internal Revenue Service, Mail Stop 4-N-31.1422970 Market St.Philadelphia, PA 19104 Fax number for BWH "C" Indicator - 855-284-0690.

(5) For International SBSE backup withholding issues, send the Form 4442 or correspondence to: Internal Revenue Service Mail Stop 4-N-31.1432970 Market St. Philadelphia, PA 19104.

(1) When a taxpayer is in a potential BWH-"C" status (BWI–1) and its been determined no underreporting exists or has been corrected (e.g., abatement or TC 59X), check for CC TXMOD/IMFOL to verify the program has updated during monthly analysis from January 1st to December 31st. If not, take the following actions:

1. Verify the input of a manual stop. The BWH-"C" indicator will show a satisfied status (BWI–4) and freeze the notice counter at the last notice issued (BWNC 1, 2, 3, 4). You can further verify the stop by referring to the TC 924 in the IDRS TXMOD display. If you verify that a manual stop was input, no further action is required.

2. If a manual stop has not been input, see IRM 5.19.3.5.2.13, TC 971 AC 190 Input Action for Entry on the BWH-"C" File - CSCO KCSC and PSC use only, and request the manual stop to suspend further BWH-"C" actions and notices. Request a manual stop if a satisfactory response is received from the taxpayer within six weeks after the issuance date of the CP 538 and/or CP 540.

   Note: Critical notice responses will require input action before the weekend update to prevent issuance of subsequent notices.

(2) Master File analysis pre-BWH processing begins during the following cycles (YYYY52, 04, 08, 13, 17, 21, 26, 30, 34, 39, 43, 47, and 52) will be the cycle numbers generated on all unique BWH-"C" notices to payees. TC 924 on CC TXMOD will show the cycles of when the BWH notices were issued.

(3) If the taxpayer is in BWH-"C" subject status (BWI–2), he or she will normally remain subject to BWH-"C" until the following (2nd) January 1 if the condition causing BWH is not resolved on or before October 15th.

(4) Prepare Form 4442, Inquiry Referral, and list the detailed information provided by the taxpayer to indicate no underreporting exists or has been corrected. Forward the Form 4442 to Collection Branch at Kansas City - KCSC or Philadelphia PSC campuses , refer to IRM 5.19.3.5.2.1, BWH-C Addresses and Inquiries , for the KCSC or PSC addresses. Include research prints, as appropriate. Advise the taxpayer the response will be reviewed and will be notified of the decision. KCSC and PSC (BWH employees) are the only functions authorized to make changes or updates to the BWI. The TC 971 AC 190 with appropriate secondary action code may or may not be input depending upon the results of the Inquiry Referral Form 4442, Inquiry Referral.

(1) Payments are generally considered made when they are credited to the taxpayer’s account.

(2) Reportable payments subject to the "C" program are:

• Interest Income — reported on Form 1099–INT, Statement for Recipients of Interest Income

• Dividend Income — reported on Form 1099–DIV, Statement for Recipients of Dividend Distributions

• Patronage Dividends — reported on Form 1099–PATR, Statement for Recipients of Taxable Distributions Received from Cooperatives

• Original Issue Discount — reported on Form 1099–OlD, Statement for Recipients of Original Issue Discount

(1) The (CP 531) BWH-"C" notice and other separate (CP 538/CP 539/CP 540/CP 542/CP 543/CP 544/) BWH-"C" notices include a notification statement, but do not include account or balance due information. Only Balance Due, AUR, and Exam notices with a BWH paragraph explaining the underreported or missing interest/dividend income, will show the balance due information if previously assessed. The Return Delinquency notices (CP 516 and CP 518) will only contain a "pop-up" BWH paragraph explaining the need to file the tax return(s) to report interest/dividend income.

(2) The taxpayer will receive at least two notices from either Return Delinquency, Balance Due, AUR or Exam and two additional BWH notices within a period of at least 120 days to attempt to resolve the underreporter or non-filer issue. A taxpayer who does not resolve the problem is issued a final BWH-"C" Notice (CP 539) with notification that BWH is now in effect. This final (fifth) notice is generated by the BWH-"C" system. It does not contain balance due information, nor does it affect the regular IDRS notice routine.

(3) Simultaneously with the final notification to the taxpayer, the payors are sent a BWH-"C" Notice (CP 543) advising them to begin backup withholding within 30 business days on all reportable payments made to the taxpayer. No further action needs to be taken on taxpayers that are no longer on the payor's files. See Pub 1335, Underreporter Backup Withholding Questions and Answers, for this information.

(4) A listing of the supplemental BWH-"C" notices can be found in Document 6209, Section 9, IDRS Notices and Notice Codes. Also listed in Document 6209 is CP 546, Special Backup Withholding Listing. CP 546 is generated when a payor requests a listing of all payees under their TIN that should be on BWH. This generally happens when one payor takes over another.

(1) The list below provides module conditions that caused a taxpayer to become potentially liable for BWH-"C" or "subject" to BWH. This list also provides the literal BWH status indicators that will appear on IDRS.

1. The literal indicator BWI–1 will be displayed when either a TC 300 with a Reference Number 890 exists in the module or a TC 140 or a TC 922 with an income field meeting the criteria. SeeIRM 5.19.3.5.2.3, Reportable Payment Subject to BWH-"C" .

2. The literal BWI–2 will be displayed after a minimum of four notices have been issued to the taxpayer over a period of at least 120 days that indicate the underreporting condition has not been satisfied or suspended. A final BWH "Start" notice will be issued to the payor to begin BWH.

3. The literal BWI–4 will be displayed when the taxpayer resolves the BWH condition prior to receipt of a final notice (in potential status) or when the BWH is previously imposed and a manual stop is input.

(2) If the BWH indicator is in subject status (BWI-2), the BWH status indicator will change to "blank" when the conditions below indicate that BWH has been satisfied and is removed from BWH during the annual MCC cleanup analysis after October 15th. If the module was in potential status, (BWI-1), the BWH indicator will change to satisfied (BWI-4).

1. The collection statute for the balance due module has expired per IRC 6502, See IRM 25.6.1.12, Collection Statue Expiration Date (CSED).

2. Module goes into Status 12 for a reason other than the posting of a tax return (e.g., full payment, abatement, etc.).

3. Full paid return posts causing the module to go into Status 12 and the interest/dividend income is equal to or greater than the IRP data.

4. TC 590, TC 591, or TC 596 posts.

5. Unreversed TC 540 for a deceased taxpayer posts.

6. TC 922 with process codes for TY 198812 and subsequent periods are 69, 70, 71, 73, 74, 89, 91, and 93, posts.

7. Manual stop (Action Codes 1, 2, 3, or 7) posts from the input of a TC 971 AC 190, refer to IRM 5.19.3.5.2.13, TC 971 AC 190 Input Action for Entry on the BWH-"C" File - CSCO KCSC and PSC only.

8. TC 290 or TC 300 for zero posts to a module containing a dummy TC 150.

(3) The literal BWI–8 suspends BWH until further action is taken. These transactions below will suspend the module until the account is resolved. The BWI-8 will only occur if the taxpayer was previously in a potential BWH-"C" status (BWI = 1). These transactions will have no effect on the case where the taxpayer has already been subject to BWH-"C" (BWI = 2).

1. Unreversed or unexpired TC 460 posts.

2. TC 520 (cc 81 or 85–89) is present in any module.

3. TC 610, TC 594, or TC 599 (exception closing code 88 or 89 for Automated Substitute for Return.

4. Unreversed TC 910, TC 914, TC 916, or TC 918 posts.

5. Unreversed TC 470 posts.

6. Return posts, the module goes into Status 12, and the interest/dividend income is less than the IRP data.

7. Return posts (other than a substitute for return), causing the module to go into a Status 21 and the interest/dividend income is zero.

8. Dummy TC 150 posts.

9. Unreversed TC 494 posts.

(1) Once BWH-C process is imposed, it will remain in effect until January 1 if the condition for withholding is resolved during the 12 month period ending October 15th. If it is not resolved by October 15th, BWH will continue another year. BWH may also be resolved by a “manual stop”, generally in one of the following circumstances:”

• Module is in Potential BWI-1 and the taxpayer satisfied the underreporter or unfiled return condition

• A hardship request

• Expired CSEDs,

• The tax year is over 6 years old (Non-filers only)

(2) If there is more than one module in subject status (BWI-2) and only one module is resolved during response processing, the BWI indicator will not update from current subject status. You need to contact the taxpayer to advise that all BWI-2 modules must be satisfied before the BWH can be stopped.

(3) An Installment Agreement (IA) or Currently Not Collectible (CNC) does not affect BWH.

1. The tax, penalty, and interest must be full paid for all subject status tax modules before the taxpayer can be released from BWH.

2. When granting an IA or CNC, advise the taxpayer that BWH will continue, using Letter 681C, Letter 1962C, or Letter 2273C, with the appropriate selective paragraphs.

(4) No action is required when the payer states this is not their payee on Notice 543, Notice or 544 . See Pub 1335, Underreporter Backup Withholding Questions and Answers, for additional information. If the payer requests to be contacted, inform them that no further action is required.

(5) Disaster - O freeze modules will be systemically suspended from BWH and will re-start BWH that is unsatisfied after the -O freeze is no longer on the module. Disaster -S freeze modules will continue with BWH, however, it allows IRS flexibility to grant filing and payment relief without suppressing Compliance activities. Affected taxpayers located outside the covered disaster areas should be advised to call the toll free number, 866-562-5227, to self identify for disaster relief. See IRM 25.16.1.6.2, -O Freeze, and IRM 25.16.1.6.1, -S Freeze, for additional information.

(6) BWH is suspended on Combat Zone (-C freeze), until six months after the payee leaves the designated combat zone. Payers will be notified to stop BWH. BWH resumes after the six month period See IRM 5.19.3.5.2.15, TC 971 AC 190 Action on the C BWH File - CSCO KCSC and PSC use only, if module is not in suspense status.

(1) If any BWH-"C" Notice is returned as undeliverable and there is a yellow label which shows a forwarding address from the U.S. Postal Service (USPS), then compare the yellow label entity to the name on the Undelivered Mail and CC ENMOD or IMFOL with an "E" definer (IMFOLE) to verify that it is the same taxpayer. For example, if the yellow label shows John S. Smith, and ENMOD/IMFOLE shows John Smith, then conclude that it is the same taxpayer. Update the forwarding address from the yellow label using CC ENREQ with the appropriate location code. Rev. Proc. 2010-16 Sections 4.05 and 4.06 allows the Service to change the address when the taxpayer notifies the USPS facility. After updating the new address on ENREQ, destroy the notice. If you determine the information on the yellow label shows a name change or you are not sure it is the same taxpayer, or does not contain a better address, then follow the procedures below:

1. CP 539 - See IRM 5.19.3.5.2.13, TC 971 AC 190 Input Action for Entry on the BWH"C" File - CSCO KCSC and PSC use only. If the subject status has changed or a stop was requested, no TC 971 is required, destroy the notice.

Note: Research using INOLE on "single" entities will often show joint filing. For example, if the CP 539 is for the spouse on a jointly filed account, the TC 971 will be input on the joint module.

2. CP 543 - See IRM 5.19.3.5.2.13, TC 190 Input Action for Entry on the BWH-"C" File - CSCO KCSC and PSC use only.

3. CP 531, CP 538, CP 540, CP 542, CP 543, or CP544, - Destroy UD mail after extracting any useful information (i.e., taxpayer does not live here, incarcerated, deceased, (see paragraph 2 below), etc.) and input AMS Comments.

(2) If the UD mail indicates that the taxpayer is deceased, input TC 540 for the year the taxpayer died, if known, otherwise, use the current year. This will stop BWH-"C" systemically if the taxpayer is in potential status. If the taxpayer is in subject status, input a TC 971 AC 190 with the appropriate secondary action code for the manual stop, see IRM 5.19.3.5.2.13, TC 190 Input Action for Entry on the BWH-"C" File - CSCO KCSC and PSC use only.

(1) When the taxpayer responds to a notice status account and indicates BWH will be resolved, initiate action to prevent the issuance of subsequent IDRS notices.

1. Input CC STAUP for balance due accounts where you determined the next notice will be issued prior to completion of the action. Allow sufficient time (six – eight weeks) for the action to process. The next notice should be specified as the subsequent IDRS status. The input of a STAUP will not stop unique BWH notices, only Balance Due notices.

2. Input a "Delay" for return delinquency (RD) modules that are in SC-02 status to prevent it going into TDI SC-03, see IRM 5.19.2.5.1.1, Accelerate and/or Delay To TDI Status 03, for further information on how to delay the RD module.

(2) Input transaction codes that will satisfy the BWH-"C" condition.

1. Input a TC 590 with appropriate closing code (cc) if the taxpayer verifies he or she is not required to file a return, see IRM 5.19.2.6.4.5, IMF - Determining Liability.

2. Input a TC 540 and 591 if the taxpayer with the income was deceased in the year in question, and the surviving spouse filed a joint return, reporting all income.

3. Input a TC 291 if the taxpayer can provide sufficient information for an adjustment within tolerance amounts. See IRM 21.5.1.4.12, Tolerances. For example: A taxpayer is assessed additional tax because of no response to a CP2000 for underreporting interest/dividends.

4. Other examples are IDRS Actions for BWH-C Notices:

(1) Once BWH-"C" is imposed, it normally will remain in effect until January 1st of the following year if the condition causing BWH-"C" is resolved on or before October 15th. Martinsburg Computing Center (MCC) will analyze for satisfied modules after October 15th of each year. Any taxpayer subject to BWH-"C" who has not resolved the condition on or before October 15th will continue under BWH-"C" the following year.

(2) If all BWH modules are satisfied on or before October 15th, BWH will systemically stop on January 1st.

(3) If the taxpayer is in BWH subject status (BWI-2) and the account is resolved during October 16th to January 1st, their module will remain in subject status for at least an additional 12 months, until the second January 1st. For example, if BWH issue is resolved on November 1, 2015, the BWH will be not be released until January 1, 2017.

(1) If the taxpayer is in potential status and meets one of the two conditions below, BWH analysis will suspend or satisfy the current status automatically during MCC analysis based upon normal processing.

1. No underreporting existed (e.g., abatement of the CP2000 assessment or taxpayer is not liable (TC 590/591).

2. The underreporting condition has been corrected, including full payment of all tax, penalty and interest due.

(2) If the taxpayer is in potential status or subject status and requests BWH not be started or be discontinued based on one or more conditions listed below, refer the case to the BWH tax examiners in KCSC or PSC, See in IRM 5.19.3.5.2.1, BWH-"C" Addresses and Inquiries.

1. No underreporting existed (e.g., abatement of the CP2000 assessment or taxpayer is not liable (TC 590/591).

2. The underreporting condition has been corrected, including full payment of all tax, penalty, and interest due.

3. The taxpayer disputes that any underreporting has occurred (Examination Referral Criteria).

4. BWH will, or is, causing a hardship (as defined in IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria) and it appears unlikely that the taxpayer will underreport again. If appropriate, prepare Form 911 and refer to the Taxpayer Advocate, not to the BWH tax examiners. See IRM 5.19.3.4.2, Taxpayer Advocate Program Criteria for referral criteria.

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

(1) When a taxpayer is in potential BWH-"C" status (BWH–1) and its been determined that one of the following satisfying transactions has posted, do not input a TC 971 AC 190 (unless 4 notices have already been issued. Then you must input a TC 971 AC 190 with the appropriate secondary action code for the manual stop, see IRM 5.19.3.5.2.13, TC 971 AC 190 Input Action for Entry on the BWH-"C" File - CSCO KCSC and PSC use only.

1. A full paid tax return, TC 150, posted to a return delinquency module (except a dummy TC 150) and the interest and dividend income reported on the return is equal to, or greater than, the Information Return Program (IRP) data (the module status will be 12).

2. A balance due module satisfied by full payment, abatement, or credit transfer (Status 12).

3. An unreversed TC 590, 591, 596 (unless input closing is a Substitute for Return (SFR) case), See Document 6209, Chapter 11, TDI Closing Codes.

4. An indication that the taxpayer is deceased (TC 540).

5. Expiration of Collection Statute Expiration date (CSED).

6. TC 922 with process codes for TY 198812 and subsequent periods are 69, 70, 71, 73, 74, 89, 91, and 93.

7. A dummy TC 150 and a posted TC 290 or TC 300 for zero in the same module.

(2) The following are satisfying transactions for taxpayers in potential or subject status (BWI–1/BWI–2):

1. A manual stop has posted.

2. A TC 590 or 591 posts and updates the status to 06.

3. A TC 291 or 301 posts and updates to Status 12.

4. A TC 594 cc 84 posts which indicates that the taxpayer filed jointly with the spouse under the spouse's SSN

5. A TC 540 posts to the year of death. This will satisfy BWH for all modules for the deceased taxpayer (not just the module for the year of death).

(1) The following are suspending transactions for taxpayers in potential BWH-"C" status (BWI–1):

1. TC 594, 599 (unless input on a SFR case), a TC 610, or an unreversed/unexpired TC 460 (Status 04) posts to a return delinquency module.

2. An unreversed TC 910 or 918 posts to the entity.

3. An unreversed TC 914 or 916 posts to the module.

4. A 47 Status hold (unreversed TC 470) on a balance due module.

5. An unreversed TC 520 with a Closing Code 81, 85, 86, 87, 88, or 94 in any module.

6. An Other Than Full Paid (OTFP) tax return (TC 150) and the return reflects no interest or dividend income.

7. An unreversed TC 494 posted indicating a statutory notice is in process which suspends BWH.

(1) The Command Code REQ/FRM77 with Transaction Code (TC) 971/972 AC 190 has replaced the manual paper process using Form 8408. The TC 971 AC 190 will cause changes to the BWH status codes (just like the paper process from Form 8408). TC 971/972 AC 190 will be used to stop BWH, restart BWH, or indicate that an undeliverable notice was returned. Document all actions on AMS.

(2) The TC 971 AC 190 must contain a secondary action code (1,2,3,4,5,6 or 7) to be input in the MISC-Field of CC FRM/REQ77. The secondary action code will indicate the type of change to the BWH status code as defined by paragraph 3 below. In the MISC-FIELD, the first space will contain secondary action codes 1 - 7. For secondary action codes 2, 3, and 6, the XREF-TIN field will always contain the Spouse's SSN for codes 2 or 3 or the payer (TIN or SSN) for code 6. For secondary code 6 only, the second space in the MISC-FIELD will always contain the Payer Code either E (for BMF - EIN number) or S (for IMF - SSN) number.

(3) Definitions of the secondary Action Codes to be used in CC REQ/FRM77 MISC-FIELD are as follows:

• 1 = Stop BWH on Primary Social Security Number (SSN).

• 2 = Stop BWH on Secondary SSN. In addition, the secondary SSN must be entered on the XREF-TIN field.

• 3 = Stop BWH on both SSNs. In addition, the secondary SSN must be entered on the XREF-TIN field.

• 4 = Restart BWH on primary SSN.

• 5 = Undeliverable taxpayer notice (only on CP 539 ).

• 6 = Undeliverable payer notice (only on CP 543). The Payer "E" code for BMF and "S" code for IMF will be entered on the MISC-FIELD next to Action Code 6. The Payer's TIN (EIN or SSN) will be entered on the XREF-TIN field.

  Note: The Payor Notice may have more than one payee ( taxpayer) listed. If so, you must input a separate CC REQ/FRM77 for each payee (taxpayer) listed on the notice.

• 7 = Stop BWH on primary SSN (potential status).

(4) After the TC 971 AC 190 with the appropriate secondary action code is input as stated in paragraph 3 above, a TC 924 with a 3 digit reference number (refer to TC 924 definitions in paragraph 5 below) will post indicating a BWI change. Secondary action code 4 (restart) and 7 (stop in potential status) goes through the next monthly analysis and may take up to six weeks to post a change to update the BWI indicator. All other action codes bypass the BWH monthly analysis to expedite changing/updating the BWI indicator and may post within six weeks.

(5) When the TC 971 AC 190 posts on IDRS, the tax module will display a posted TC 924 with the appropriate 3 digit reference number showing the change to the BWH status. The TC 924 will post on IDRS as follows:

• TC 924 reference number 140 will post if the module contains a TC 971 AC 190 with a secondary action code of 1, 2, or 3. This will change the BWI from 2 to 4 indicating "Account Satisfied".

• TC 924 reference number 160 will post if the module contains a TC 971 AC 190 with a secondary action code of 4. This will re-start BWH on the primary SSN.

• TC 924 reference number 190 will post if the module contains a TC 971 AC 190 with a secondary action code of 7. This will change the BWI from 1 to "Blank" indicating No BWH Consideration.

  Note: TC 971 AC 190 with secondary action codes 5 and 6 will not have a TC 924 transaction code.

  Note: Make sure that when working with a spouse or dependent’s BWH issue that the TC 971 AC 190 is input on the spouse or dependent’s SSN. For example, if the spouse’s (or dependent’s) module shows BWI-2 and the joint (or parent’s) account shows no BWH activity, then verify that the interest/dividend income was reported on the joint (or parent’s) return. If reported, then input a TC 971 AC 190 with secondary Action Code of "1" on the spouse’s (or dependent’s) account to remove the BWH.

(1) Normally, an unpostable condition will be identified at the time the TC 971 AC 190 is trying to post. However, there may be other error conditions identified through BWH analysis An Error List (Report # 406-61) will be produced monthly on Control-D and provided to KCSC or PSC for analysis. Review and complete each item on the error list monthly. If the taxpayer's account needs to be corrected, then input a corrected TC 971 AC 190 with appropriate secondary action code. The following action codes listed will assist you in resolving the errors:

(2) Count each item on the register for reporting purposes.

(1) If the taxpayer states that information we previously requested was provided to the campus but has not been acted upon, the taxpayer may qualify for Taxpayer Advocate priority handling, see IRM 13.1.7.2, TAS Case Criteria.

(2) Certain unusual situations require special handling:

• Taxpayers may demand immediate release of BWH-"C" , based on the fact it was inappropriately imposed due to IRS error;

• MFT 31 (mirrored accounts) of both spouses and the BWH programming will not allow update from BWI 2 to BWI 4.

1. Research the account to ensure there are no other modules for which the taxpayer is subject to BWH-"C" (review CC IMFOL, as well as SUMRY, TXMOD, etc.).

2. If the taxpayer is unwilling to wait for the normal release to take effect (six – eight weeks) and has satisfactory evidence (e.g., copy of returned/canceled check showing a payment was made to full pay the module before the BWH Start Notice was issued), or your research shows an IRS error, including failure to update to BWI 4 for satisfied modules, then issue Letter 1979C, Backup Withholding; Granting of Appeal Letter (use open paragraph(s) if needed), to payor(s) currently taking BWH from dividend and interest payments. Check CC IRPTR to identify payer on the interest and dividend income. The letter authorizes the payor(s) to stop withholding within 30 days.

3. Regulation 31.3406(c) -1(e)(2)(i)(A) requires a 30-day "Quick Release" under the above circumstances. Payor is authorized to stop even sooner but no later than 30 days. The same rule applies to cases of undue hardship.

4. Statute requires the IRS to provide a notice to stop BWH within 45 days. See Section 3406 (c) (3) (C) (ii).

(3) When disputes arise, the taxpayer must provide documentation for claims of hardship in writing as verbal telephone contact is insufficient.

(4) Review and verify the request or claim for determination as stated in paragraph (2) (a) above.

1. If the taxpayer/payee are not subject to BWH-"C" for this or any other year, send Letter 1979C, BWH Granting of Appeal, to the taxpayer/payee. Follow procedures for the issuance of a manual stop refer to See IRM 5.19.3.5.2.13, TC 971 AC 190 Action on the BWH-"C" File - CSCO KCSC and PSC Use only.

2. If its determined the taxpayer is subject to BWH"C", deny the request and send Letter 1978C, Backup Withholding Denial of Appeal.

(5) Where the taxpayer states the Service has agreed to stop BWH-"C", but indicates all or some payers did not receive the proper notification:

1. Research IDRS to verify whether the taxpayer is subject to BWH-"C". If not subject to BWH-"C", advise the taxpayer to give a copy of Letter 1979C, Backup Withholding; Granting of Appeal, to the payor(s).

2. If the taxpayer does not have a copy of the letter, secure from the taxpayer their payor(s) name, address, account number, etc., and issue Letter 1979C, Backup Withholding; Granting of Appeal, to the payor(s).

(1) When a payor is taken over by another payor, the records of the predecessor are not always available. On these occasions, the current payor should request a listing of all payees subject to BWH under their Taxpayer Identification Numbers (TINs).

(2) Ensure the closed payor does not have open filing requirements. Use CC ENMOD, CC IMFOL, or CC BMFOL to verify filing requirements have been closed out and verify the new payor has been established.

(3) To request a current listing of payees subject to BWH, you must secure the following information below and forward a Form 4442, Inquiry Referral, to the Lead BWH Tax Examiner, PSC. See IRM 5.19.3.5.2.1, BWH-C Addresses and Inquiries.

1. Name, address and TIN of the requesting payor or individual;

2. Telephone number and name of the person making the request;

3. Name, address and TIN of the closed payor;

4. Include your name, telephone number, and branch location with the request.

(4) The Lead TE at PSC will track the request and transmit via secure E-mail to MITS. The E-mail address is "&MITS ACIOAD-CP-Backup Withholding Project".

(5) When requests are processed, MITS will forward a tape to the Centralized Print Sites (CPS) requesting issuance of the CP 546. The listing will be printed on CP 546. MITS will notify both the lead at PSC and the SBSE analyst that the task has been completed.

(6) Remind the originator of the request that the payee’s identity and account listed in the notice is only for their use in complying with BWH regulations; unauthorized disclosures may subject them to civil damages under IRC 7431 ).