4.4.22. Non-Master File (NMF) Processing

(1) This chapter contains procedures on Non-Master File account processing.

(1) IRM 2.8.1, Introduction to AIMS Realtime Processing. This IRM provides the requirement request for a new information management system for Examination.

(1) Users of AIMS have the responsibilities of maintaining the data fields, on the AIMS record by, updating field values and correctly reporting closing actions taken on the taxpayers account, as determined during the audit process.

(1) AIMS program reports can be found in IRM 4.4.27, Reports.

(2) AIMS program reports are available to Headquarters Office and field personnel.

(3) AIMS program reports provide timely and reliable information to monitor the current year’s Examination Plan, as well as specific programs Reports and statistical tables.

(1) AIMS is accessed through IDRS.

(2) A Business Entitlement Access Request System (BEARS) request must be submitted for IDRS access.

(3) A background investigation and managerial approval is required for IDRS access.

(4) A Personal Identity Verification (PIV) Smart Card and Personal Identification Number (PIN) is used to sign on to IDRS.

(1) The following is a list of terms and definitions used throughout this IRM Section:

(1) See IRM 3.17.46, Automated Non-Master File Accounting.

(2) See IRM 3.17.46.13.3, Non-Master File Research on the Automated Non-Master File System.

(1) NMF accounts can be viewed using the ANMF system. See IRM 3.17.46.13.3, Non-Master File Research on the Automated Non-Master File System for information on the ANMF system.

(1) Determine the appropriate dates and compute the interest on a deficiency requiring NMF assessment.

(2) Interest amounts of less than $1.00 will not be shown on Form 5344, Examination Closing Record unless the amount has been paid.

(1) A transcript of account is required in the following instances.

1. If the return was not full-paid or overpaid.

2. If there is a record of an additional assessment having been made without a record of payment.

   Exception: No transcript is needed if there is a verified advance payment which completely paid the additional assessment.

(2) A check for outstanding accounts, both MF and NMF, is required if the overpayment would result in a refund of $1,000 or more, including allowable interest.

(3) Form 1331, Notice of Adjustment or Form 1331-B, Notice of Adjustment must be prepared with entries in Section 1 of the form.

1. Refund-only Form 1331, Notice of Adjustment and strictly credit and abatement Form 1331 should be blocked separately. If there is a combination refund, credit or abatement on the Form 1331, Notice of Adjustment this is blocked separately from either of the above. Form 1331 should be completely filled out, with the exception of the schedule number and date certified, down to and including the "Total abated and credited" line. The name and address and refund amount should be typed in and all other information should be either typed or written with a pen. They should be neatly prepared without corrections or deletions. The first name line on Estate Tax cases must show the name of the person to receive the check. A transcript of the account may be used for the record of assessment.

2. Compute the interest allowable on refunds, using the applicable space on the back of Form 1331, Notice of Adjustment. Enter in the "date" column the date to which interest is computed on the overpayment. Allowable interest is computed from the paid date or the due date, whichever is later, to the schedule date if a refund is involved, or the due date of the other account if a credit is involved.

3. If the account is not paid, the overpayment is entered as an abatement on the Form 1331, Notice of Adjustment. A copy of the ULC or a certified transcript of account is to be stapled to the reverse side of Form 1331, Notice of Adjustment for the account to be abated and to the posting copy. If the account is in "Notice" status, the list week is to be shown.

4. If the account is paid but there are other outstanding accounts for the same taxpayer, the overpayment is entered as a credit on Form 1331, Notice of Adjustment. This will normally result in an accrual of interest or an abatement of interest on the account receiving the credit. If the account receiving the credit is another NMF account and there is enough credit to apply to accrued interest, the interest can be accrued on Form 1331, Notice of Adjustment by entering it in the credit column, circling the amount in red on the posting copy, and entering code "Al" adjacent to the interest figures. When overpayments are credited to written off accounts, use code "TA" adjacent to the figure in the credit column and circle in red the amount on the posting copy of Form 1331, Notice of Adjustment. For credits applied to outstanding liabilities, enter on separate lines in the "Amount Credited" column that part of the unpaid liability, tax, penalty, and interest which are to be satisfied from the current overpayment. The status of the NMF account must be entered on the posting copy of Form 1331, Notice of Adjustment. If an abatement of interest is involved, it is necessary to prepare a Form 1331-B, Notice of Adjustment to decrease the interest on the other account.

5. If the overassessment is on an account that is paid in full, and there are no other outstanding accounts for the taxpayer, the overpayment is scheduled for refund.

6. If interest was assessed on the account that has an overpayment, interest should be decreased proportionately unless a restricted condition prohibits it. An exception is encountered when an Estate Tax Form 706, U.S. Estate Tax Return assessment is paid by treasury bonds. In these situations send a copy of page 1, of Form 706 to the service center Accounting Branch with a memorandum giving all pertinent information. Interest will not be computed on these cases.

(4) Show the decrease in tax and/or penalty. After computing interest on the correct tax liability, compare it with the interest previously assessed and enter the overassessment of assessed interest, if any. Do not enter interest allowable on any overpayment. Make no entry for the schedule number.

(1) When both assessments and overassessments are involved in the same case, the earliest overpayments are applied to the earliest assessments on the Form 1331 by completing the credit portion on the bottom and entering the DLN or account number of the assessment that is being credited. The record of assessments and payments is to be completed (back of file copy of Form 1331) showing the account being credited and the status of the account. If it is an account being assessed at this time, the new DLN and 23C date of the account will be entered by the Accounting Branch. If a transcript of an old account was requested and it does not show the status, request Examination at the service center to identify the unit to be contacted to obtain the current status.

1. Assessment: Interest is computed on the assessment from the due date of the deficiency to the date the overpayment was available. Any amount not covered by credit will have interest computed in the normal manner. If the available date of the overpayment is before the due date of the assessment, no interest is due on the assessment.

2. Overpayment: Allowable interest is computed on the overpayment from the paid date or the due date of the return, whichever is later, to the due date of the deficiency. If the deficiency is due before the available date of the overpayment, no interest is allowed on the overpayment unless the overpayment is greater than the assessment(s). Then, interest is allowed on the balance in the normal manner. Interest is allowed on the overpayment applied to interest assessed on a deficiency for another period to the date the interest is assessed, except no interest can be allowed past the schedule date.

   Exception: These instructions are not applicable where one taxpayer agrees to the application of credit to a deficiency for another taxpayer. In this case, interest is computed on the deficiency without regard to the overpayment and interest is allowed on the overpayment to the schedule date. The tax and allowable interest are then credited to the deficiency through entries in the credit column on the Form 1331.

(2) When an overpayment is to be applied to an assessment that has not been made, it is necessary to keep the file together until the deficiency is numbered so that the assessment number can be entered on the Form 1331 with the 23C date of the assessment; the assessment and overassessment must have the same 23C date. The posting copy is not acceptable without this information.