3.17.80. Working and Monitoring Category D, Erroneous Refund Cases in Accounting Operations

(1) An erroneous refund is defined as, "the receipt of any money from the IRS to which the recipient is not entitled. This definition includes all erroneous refunds regardless of taxpayer intent or whether the error that caused the erroneous refund was made by the IRS, the taxpayer, a systemic issue, or a third-party."

(2) IRM 3.17.80, Accounting and Data Control, Working and Monitoring Category D, Erroneous Refund Cases in Accounting Operations, provides guidelines for reviewing the facts and evaluating the circumstances surrounding a Category-D erroneous refund. and trying to recover the erroneous refund. These procedures contain requirements for obtaining restitution, and/or resolution.

(1) The authority for these policies are:

• Delegation Order 1-6, Certification and Approval of Internal Revenue Collection.

• Delegation Order 1-17, Audit and Settlement of Accountable Officer’s Accounts - Revenue Accounting and Submission Processing.

• Delegation Order 1-18, Settlement of Accounts and Relief of Accountable Officers - Administrative Accounts.

• Delegation Order 1-20, Collections from Employees of the Internal Revenue Service.

• Delegation Order 1-25, Termination of Collection Action against Federal Depositaries.

• Treasury Directive 32-04, Settlement of Accounts and Relief of Accountable Officers.

• Treasury Directive 34-02, Credit Management and Treasury Debt Collection Program.

• The Federal Claims Collection Act of 1966, as amended (Public Law 89-508) (31 USC 3701 et seq.

• The Debt Collection Act of 1982, as amended (Public Law 97-365) (5 USC 5514 and 31 USC 3701 et seq.).

• The Deficit Reduction Act of 1984, as amended (Public Law 98-369) (26 USC 6402 and 31 USC 3720A)

• The Chief Financial Officers Act of 1990, as amended (Public Law 101-576) (31 USC 901 et seq.).

• The Federal Debt Collection Procedures Act of 1990, as amended (Public Law 101-647) (28 USC 3001 et seq.).

• The Debt Collection Improvement Act of 1996, as amended (Public Law 104-134) (5 USC 5514 and 31 USC 3701 et seq.).

• 31 CFR Part 5, "Treasury Debt Collection."

• OMB Circular A-129 (Revised), "Policies for Federal Credit Programs and Non-Tax Receivables."

• Treasury Financial Manual, Volume 1, Part 4, Chapter 4000, Debt Management Services Collection of Delinquent Nontax Debt.

• IRM 1.2.21, Policy Statements for Customer Account Services Activities.

(1) The Submission Processing Headquarters Erroneous Refund Analyst (and back-up) is the individual responsible for the oversight of the Category-D, Erroneous Refund Recovery program.

(2) The Accounts Management Headquarters Erroneous Refund Analyst (and back-up) is the individual responsible for creating the IRM 21.4.5, Refund Inquiries, Erroneous Refunds, for all Business Operating Divisions (BOD’s) to use when an erroneous refund is identified.

(3) The Erroneous Refund HQ Points of Contact are individuals within the various BODs for communications to and about erroneous refunds that happened within the HQ Analyst’s BOD.

(4) An Accountable Officer is any government employee or officer who, by reason of employment, is responsible for or has custody of government funds. Accountable Officers are held accountable for losses occurring within their accounting jurisdictions until restitution is made or relief is granted.

(5) The Federal Accounting Standards Advisory Board (FASAB) establishes accounting concepts and standards. The Federal Financial Management Improvement Act (FFMIA) of 1996 prescribes that agencies implementation and maintenance of financial management systems substantially comply with Federal Financial Management Systems requirements, applicable Federal Accounting Standards and U. S. Government Standard General Ledger at transaction level and audits to report compliance.

(6) The Field Director, Submission Processing, is normally the Accountable Officer for the campus accounting system. The Field Director, Submission Processing, usually delegates the authority for carrying out the accounting function. However, the ultimate responsibility remains with the Field Director, Submission Processing who can be held financially responsible if proper controls are not maintained. The Accountable Officer is responsible for ensuring that the following principles and standards are met in maintaining the accounting system.

(1) See Exhibit 3.17.80-18 for commonly used acronyms and their definitions.

(2) See http://rnet.web.irs.gov/Resources/Acronymdb.aspx for commonly used acronyms and their definitions.

(1) These procedures must be used in conjunction with IRM 3.17.63 Redesign Revenue Accounting Control System (RRACS), IRM 3.17.64 Accounting Control General Ledger Policies and Procedures, IRM 3.17.243 Miscellaneous Accounting, IRM 21.3.3 Incoming and Outgoing Correspondence/Letters, IRM 21.4.5 Erroneous Refunds, IRM 3.0.167 Losses and Shortages, IRM 2.3 IDRS Terminal Responses, IRM 1.11.5 Publishing the Internal Revenue Manual (IRM), IRM 1.11.8 Servicewide Electronic Research Program (SERP), IRM 10.5.1 Privacy Policy, IRM 10.5.1.6.9.4 Faxing, IRM 10.5.1.6.8 E-mail. IRM deviations must be submitted in writing following instructions from IRM 1.11.2.2 Internal Management Documents System - Internal Revenue Manual (IRM) Process, IRM Standards, and elevated through appropriate channels for executive approval.

(2) IRM 1.2.2.2.6, Delegation Order 1-6, Certification and Approval of Internal Revenue Collection

(3) IRM 1.2.2.2.15, Delegation Order 1-17, Audit and Settlement of Accountable Officer’s Accounts - Revenue Accounting and Submission Processing

(4) IRM 1.2.2.2.16, Delegation Order 1-18, Settlement of Accounts and Relief of Accountable Officers - Administrative Accounts

(5) IRM 1.2.2.2.17, Delegation Order 1-20, Collections from Employees of the Internal Revenue Service

(6) IRM 1.2.2.2.22, Delegation Order 1-25, Termination of Collection Action against Federal Depositaries

(7) Treasury Directive 32-04, dated February 16, 2007 http://www.treasury.gov/about/role-of-treasury/orders-directives/Pages/td32-04.aspx

(8) Treasury Directive 34-02, dated February 25, 2016 http://www.treasury.gov/about/role-of-treasury/orders-directives/Pages/td34-02.aspx

(1) Management has the primary responsibility for providing a system of internal controls. Management is held accountable for internal controls. Management is liable for losses where it fails to provide proper internal controls. However, all personnel have a responsibility for understanding and ensuring that internal controls are functioning as intended.

(2) All IRS employees must take care to protect Personally Identifiable Information (PII). Any loss of PII could result in information being compromised to commit identity theft. PII information must be encrypted on computers and e-mail. Sanitize taxpayer PII or use secure messaging. If you suspect or know of a potential information loss, report it to your manager and:

1. Treasury Inspector General for Tax Administration (TIGTA) at 1-800-366-4484.

2. Office of Privacy, Governmental Liaison and Disclosure (PGLD) Incident Management (IM) Office (PGLD/IM) via the PII Breach Reporting Form (https://etrak7.web.irs.gov/etrak-privacy/page.request.do?page=page.final2). Call 267-466-0777 if you have any problems with the online form or have questions about completing the online form.

(3) There are laws requiring the appropriate reporting of records loss.

(1) All applicable laws relating to funds and appropriations must be complied with. Each fund (e.g., General Ledger) or appropriation must be used for the purpose authorized by law. Accounting records must be designed to show compliance with this requirement.

(1) The accounting system must provide financial records consistent with standards set by other agencies and the Department of the Treasury in connection with its central accounting and reporting responsibilities. The financial data must be correct and reported timely to meet the needs of the President and Congress for budget activities.

(1) Each accounting system must maintain complete and reliable records for all funds, property, and other assets, as well as liabilities, obligations, receipts, and revenues. All financial transactions must have documents supporting a summary record and financial report. Procedures implemented in carrying out the operation will be simple, efficient, practical, and must apply all legal and regulatory requirements. The responsibility for each accounting function, such as preparing documents, preparing journals, posting ledgers, reviewing, and balancing must be performed by separate units within the Accounting Operation to provide internal checks and minimize opportunities for fraudulent, unauthorized, or irregular acts.

(1) The organizational structure, operating procedures and administrative practices are adopted throughout management to provide reasonable assurance that programs and administrative activities are effectively carried out.

(1) The highest standards of truthfulness and honesty must be applied in accounting for the receipt, disbursement, and application of public funds. Management and the Congress must be able to rely on the accuracy of all transactions in future planning. To meet these standards competent leadership and qualified technicians are of prime importance.

(1) An erroneous refund is defined as “the receipt of any money from the IRS to which the recipient is not entitled”. This definition includes all erroneous refunds regardless of taxpayer intent or whether the error that caused the erroneous refund was made by the IRS, the taxpayer, or a third party.

(2) Erroneous Refunds are processed according to categories (A1, B, etc.) based upon certain characteristics on the tax module. The categories are defined in IRM 21.4.5, Refund inquiries, Erroneous Refunds, and must be used for processing all erroneous refunds.

(3) For Un-assessable (Category D) erroneous refund cases processed in Accounting Control/Services, Erroneous Refund Unit, it is imperative that technicians use and be familiar with the instructions outlined in IRM 21.4.5, Refund Inquiries, Erroneous Refunds, when processing cases.

(4) Section 3705 (a) of the IRS Restructuring and Reform Act of 1998 (RRA 98) requires employees to include their name, telephone number and Integrated Data Retrieval System (IDRS) number on manually generated and handwritten correspondence.

(5) Refunds issued to an identity thief are Category D erroneous refunds; however, the provisions of this IRM do not apply. Identity Theft (IDT) Erroneous Refunds, refer toIRM 3.17.64.16, Erroneous Refunds, Accounting Control General Ledger Policies and Procedures, IRM 3.0.167.8 Disbursement Losses, Losses and Shortages, and Exhibit 3.17.80-19 Write Off Cover Memorandum for Identity Theft Erroneous Refund Write-Off Procedures.

(6) See Integrated Talent Management (ITM) Course 10824, Researching and Resolving Erroneous Refunds, located at: https://irsgov.sharepoint.com/sites/EmployeeResources/SitePages/ITM.aspx, Integrated Talent Management (sharepoint.com).

(1) Refer taxpayers to the Taxpayer Advocate Service (TAS) (See IRM Part 13, Taxpayer Advocate Service ) when the contact meets TAS criteria (See IRM 13.1.7, Taxpayer Advocate Case Processing, Taxpayer Advocate Service (TAS) Case Criteria and you can’t resolve the taxpayer’s issue the same day. The definition of “same day” is within 24 hours. These “Same day” cases include cases you can completely resolve in 24 hours, as well as cases in which you have taken steps within 24 hours to begin resolving the taxpayer’s issue(s). Do not refer these cases to TAS unless they meet TAS criteria, and the taxpayer asks to be transferred to TAS. Refer to IRM 13.1.7.4, Taxpayer Advocate Case Processing, Taxpayer Advocate Service (TAS) Case Criteria Same Day Resolution by Operations. When referring cases to TAS, use Form 911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance order).

(2) TAS has reached agreements with the commissioners of the Wage and Investment (W&I) Division, Small Business and Self-Employed (SB/SE) Division, Tax Exempt and Government Entities (TE/GE), Criminal Investigation (CI), Appeals and Large Business and International (LB&I), that outline the procedures and responsibilities for the processing of TAS casework when either the statutory or delegated authority to complete case transactions rests outside of TAS. These agreements are known as service level agreements (SLAs).

(3) The SLAs contain basic requirements for handling TAS-referred cases and includes specific actions to take on TAS referrals and specific time frames for completing those actions. Employees in the business operating divisions will acknowledge receipt and provide the name and phone number of the IRS employee assigned to work the case via Form 3210, Document Transmittal, secure messaging E-mail, facsimile, or by telephone within three (3) workday of receipt of the Form 12412, Operations Assistance Request (OAR). If necessary, the assigned employee/manager will contact the TAS employee and negotiate the completion date in resolving the OAR actions.

(4) The SLAs are found at: https://irsgov.sharepoint.com/sites/TAS/SitePages/SLA.aspx, Service Level Agreements (sharepoint.com)

(5) While TAS can/will make requests (e.g., OAR) for taxpayers with hardship situations, under no circumstances will there be a release of credits to the taxpayer with the hardship unless the HQ Submission Processing (HQSP) Erroneous Refund Analyst (or Back-up) has been informed of the need for release of the credits.

(6) If it is necessary to release credits to the taxpayer with the hardship

• Inform the TAS point of contact (usually, the person who sent the OAR) that the taxpayer still has an erroneous refund balance and provide the balance amount to the TAS point of contact.

• Send the taxpayer a final letter (e.g., 510-C) informing the taxpayer they have an erroneous refund balance due, and the taxpayer will receive a Form 1099-C if the balance is not repaid before the erroneous refund statute date (See IRM 3.17.80.1.22, Maintaining Case Files, instructions about the sending of the letter and the Form 1099-C).

(7) Continue monitoring the case for any available credits until the Erroneous Refund Statute Date.

(8) Write-off the account if the balance is not re-paid.

(9) Send the taxpayer a Form 1099-C if the balance is $600.00 or higher and not re-paid (See IRM 3.17.80.1.22,Maintaining Case Files, instructions regarding the sending of the letter and the Form 1099-C).

(1) General Ledger Accounts for Erroneous Refunds:

1. 1530 Account, Court Case Erroneous Refund

2. 1535 Account, Criminal Investigation (CI) Court Ordered Restitution Erroneous Refund

3. 1540 Account, Non-Court case Erroneous Refund

4. 1543 Account, Payment Over Cancellation (POC) Erroneous Refund

5. 1545 Account, Identity Theft (IDT)Erroneous Refunds

6. 1547 Account, Return Preparer Misconduct (RPM) Erroneous Refund

7. 4910 Account, Disbursement Losses

8. 6905 Account, IDT Erroneous Refund Write-off

9. 6907 Account, RPM Erroneous Refund Write-off

10. 6920 Account, Disbursement Write-off

(2) Each case is controlled with a unique document number on Form 3809. This document number allows for the tracking of an individual case from start to completion.

(3) Accounting Operation's role, to attempt recovery or request voluntary repayment of erroneous refunds, does not change. Send error feedback electronically to the respective site servicing areas, Business Operating Division (BOD), Points of Contact listed in Exhibit 3.17.80-15. When the causes are attributable to the actions of a functional area whether the Erroneous Refund was initiated locally or at another site (identify site and BOD). This not only alerts the area of processing errors to initiate corrective actions, but documents that we have informed management to prevent future erroneous refunds. (See table below for examples)

(4) IRS must report disbursement losses per IRM 3.0.167, Losses and Shortages. Areas causing erroneous refunds must provide documentation to support write-off actions if considered uncollectible (ERSED has expired).

1. Documentation consists of the circumstances surrounding the reason actions resulted in an erroneous refund.

2. In addition to working notices, transcripts and quality reviews, establishing a mechanism to provide feedback to the areas causing erroneous refunds to occur demonstrates the IRS proactive approach to reduce errors and suffer fewer disbursement losses.

(5) Feedback electronic file must have but is not limited to:

• Feedback sheet explaining findings and corrective actions taken.

• Full IDRS TXMOD print of account where ERRF occurred.

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• Entity section of ENMOD print for accounts affected.

• Copy of Form 12356 (if provided in the erroneous refund package sent to the Erroneous Refund team).

• Any information identifying the employee or area causing the erroneous refund such as a copy of the manual refund document, Discovery Directory prints, IDRS Unit and USR Database (IUUD) prints, etc.

(6) Erroneous Refund cases must be sent to the respective Submission Processing site Erroneous Refund function documented and accurately prepared, as outlined in IRM 21.4.5, Erroneous Refunds.

1. The Category type of erroneous refund must be identified.

2. Determine the correct Accounting Site for recovery actions. If the Accounting Erroneous Refund team incorrectly receives a case belonging to another site accountable officer, reject the case back to the originator.

3. If an Erroneous Refund team is maintaining a case that belongs to another Accounting site (and Accountable Officer of another site), close the IDRS control base and follow IRM 3.17.80.1.34, Transferring Category D, Unassessable Erroneous Refund Cases, to transfer the erroneous refund case to the site of the Accountable Officer.

4. Where incomplete case files are received, they must be returned to the originator after attempts of contacting the originator has been made by telephone and/or E-mail communication to correct information/documentation on the account.

5. Ensure the erroneous refund statute expiration date (ERSED) is open prior to returning the case to the originators for completion (always use TCIS to determine the actual refund date or use the TC 846 date on IDRS if TCIS is not available or does not identify a date.).

6. If the ERSED is open, and the newly-received case is incomplete, return the case to the originators after 5 work-days of attempting to obtain the missing documentation.

7. Ensure Transaction Code (TC) 971 with Action Code (AC) 663 is input.

(7) History Sheets must be prepared from the point of discovery. Form 12356 must be used by the area discovering the erroneous refund per IRM 21.4.5.6.1, Account Actions for Category D Erroneous Refunds. Accounting Operations must also include documentation of actions taken, pending actions, telephone calls, copies all letters, etc., must be annotated on the History Sheet and be retained in the case file. This assists in substantiating future write-off actions if not recovered in the manual billing process.

(8) The ERSED is 2 years after making the erroneous refund unless the refund was induced by fraud or misrepresentation of a material fact, in which case the ERSED expires 5 years from the date the taxpayer receives the erroneous refund (first use TCIS date if available, then use TC 846 date on IDRS). . If there are causes that do not appear to be covered in this IRM, seek assistance to pursue cases through coordination the Headquarters Erroneous Refund Analyst to obtain Chief Counsel's approval to pursue recovery using the 5 year duration. Refer to IRM 3.17.80.1.17.1, Erroneous Refund Statute Considerations.

(9) Classification depends on the type of error which caused the Erroneous Refund. For additional information, See Exhibit 3.17.80-2 Erroneous Refund Flow Chart. All erroneous refunds will be classified into categories as described in IRM 21.4.5, Erroneous Refunds.

(10) The entire amount of the unpaid erroneous refund must be reversed into the 1530/1535/1540/1543/1545/1547 General Ledger and recovered, within the ERSED, through voluntary repayment, right of offset, or civil suit pursuant to IRC 7405. This process forms the basis for the instructions in this IRM to monitor, recover or write-off as unrecoverable Erroneous Refund cases.

1. References to the erroneous refund accounts (1530, 1535, 1540, 1543, 1545, 1547) are shown in text as "15XX".

2. See IRM 3.17.80.1.29, Write-Off Procedures for Unrecoverable Erroneous Refunds.

3. Accounts 1530, Employee Fraud-Court Case Erroneous Refunds, 1535, Court Case Erroneous Refunds (Kansas City-Only), 1540, Non-Court Case Erroneous Refunds, 1543, Payment Over Cancellation Erroneous Refunds, and 1545, ID-Theft Erroneous Refunds, 1547, Return Preparer Misconduct Erroneous Refunds were established with Redesigned Revenue Accounting Control System (RRACS). These accounts impact the Director's accountability.

4. If it is determined that an erroneous refund is recoverable, one of the 15XX Accounts are debited and used to substantiate use of credit TC 700 posted to the taxpayer's account. This action prevents erroneous Master File (MF) notices from generating while corresponding with the taxpayer requesting repayment for the Erroneous Refund.

5. A credit (false) TC 700 posts to the taxpayer's account, identified by Document Code 58 blocking series 950-999 (850 - 899 if the 1543 is being used) in the document locator number (DLN). "Erroneous Refund (-U Freeze)" ERR-REF-BAL-DUE is displayed on TXMOD for the IMF cases. This informs other employees that the account is being worked and monitored in Accounting.

   Note: Until BMF modifications can be completed, it is necessary for all BMF cases to add IDRS history item(s), “Erroneous Refund Balance Due” on IDRS.

6. See Figure 3.17.80-1 , for a view of the TXMOD screen and Exhibit 3.17.80-3, Erroneous Refund Accounts 1530, 1540, and 1543.

(11) The Customer Account Data Engine (CADE) 2 solution is comprised of several components, to modernize the IRS to a daily processing environment with several transition states.

(12) The components of CADE 2 Transition State 1 in January 2015 include:

1. Daily Processing – IMF processing with the new cycle definition outlined in (2) a), but processing daily (daily transactions to daily accounts) with weekly processing occurring on Thursday.

   Note: Business Master File (BMF) and Employee Plans Master File (EPMF) will continue to process all transactions on a weekly basis. Master File processing will occur on Thursdays

2. IMF will identify unpostable criteria daily, but the files will not be processed by Generalized Unpostable Framework (GUF) until the weekly cycle. This will result in subsequent transactions posting in the same cycle resolving the unpostable criteria for the earlier transaction marked as unpostable.

3. CADE 2 database – Establishment of a taxpayer account database that will house all individual taxpayer accounts. IMF will process all transactions and settle accounts and will provide data to the CADE 2 database. IMF will remain the system of record for Transition State 1. Key programs IDRS and Integrated Production Model (IPM) will receive data from the CADE 2 database.

(13) IMF transactions posting time frames are outlined as follows

1. Daily transactions directed to a daily account are expected to post daily with daily processing. Transactions will be displayed using Corporate File On-line (CFOL) command codes (IMFOL) the second day after campus input. Transactions will be displayed on IDRS command codes (i.e., TXMOD, ENMOD) the third day after campus input.

2. Weekly transactions directed to a daily account are expected to post with the master file weekly processing on Thursday and will result in the account type changing to weekly.

3. Daily and weekly transactions directed to a weekly account are expected to post with the weekly processing on Thursday.

   Note: For items b) and c) above, transactions will be displayed using CFOL command codes (IMFOL/BMFOL) on the Saturday following the Thursday master file processing. Transactions will be displayed on IDRS command codes (i.e., TXMOD, ENMOD) Monday following the Thursday master file processing.

4. Use of the posting delay code on transactions will result in the transaction being held until the weekly processing on Thursday. When the transaction is processed on Thursday and the posting delay code contains a value other than zero, the transaction will continue to resequence for the number of cycles equal to the value.
   EXAMPLE: A transaction input with a posting delay code of 1 will be processed on Thursday, and will resequence until the following weekly processing day (the following Thursday).
   CAUTION: Be aware that the use of the posting delay code by IRS personnel, on a daily account with daily transactions, will result in delaying the posting of the transactions that would resolve the account.

(14) CFOL Command Code IMFOL will contain an indicator on the screen to identify whether the account is a Daily account or a Weekly account.

• “J” – IMF Tax Module Balance History

• “K” – IMF Entity Freeze History

• “L” – IMF Tax Module Freeze History

(15) For Notice Review and or Erroneous Refund units, when CC NOREFP is initiated, the following chart explains when the TC 846 and systemic TC 841 will be displayed:

(1) This receivable account is used to record erroneous refund receivables that result in a court case (initiated by Criminal Investigations).

(2) The RRACS procedures for this account are in IRM 3.17.64, Accounting and Data Control, Accounting Control General Ledger Policies and Procedures, procedures for a review of this account are in IRM 3.17.15, Accounting and Data Control, Accounting Reports Analyst Responsibilities and procedures for write off in the IRM 3.0.167, Accounting and Data Control, Losses and Shortages.

(3) 1535 Account will be supported by:

• Form 3809 documents

• Backup documentation such as IDRS print reflecting erroneous refund

(4) For court-ordered restitution (or IRS employee fraud) cases identified by CI, process as follows.

(5) Cases received from the Criminal Investigation (CI) Field are identified with a "CRIMINAL INVESTIGATION RESTITUTION CASE" cover sheet.

(6) CI will:

1. Reverse all erroneous credits.

2. Input TC 130.

3. Prepare Form 3809, Miscellaneous Adjustment Voucher, Form 3753, Manual Refund Posting Voucher or Form 12857, Refund Transfer Posting Voucher as appropriate. (See Figure 3.17.80-4, Figure 3.17.80-23, Figure 3.17.80-46, and Exhibit 3.17.80-11 for examples of completed Form 3809).

4. Prepare any necessary manual refunds to the injured taxpayer, following IRM 21.4.4, Refund Inquiries, Manual Refunds, manual refund procedures.

5. Send a letter to the taxpayer requesting repayment (this letter is in lieu of the Letter 510-C letter). A copy of the correspondence becomes part of the case file documentation.

(7) Update the IDRS Category Code to "ERRF", reassign the IDRS control base to the CI-SDC unit in Ogden, change the status to "A" with activity code "ERRORREF(CI-RestitutionCase)."

(8) If 45 days after the date of the initial letter (use ENMOD for the initial letter date if there is not a copy of the letter), the Erroneous Refund team will review each case file.

(9) The Erroneous Refund team will follow-up with taxpayer quarterly (balance $600.00 or over) or semi-annual (balance $599.99 or less) correspondence reminding the taxpayer of the current balance.

(10) The Erroneous Refund team will monitor the account for payments/credits to post to the account as they become available using generated TC 844 transcripts (See IRM 3.17.80.1.25, Processing 844 Transcripts (TRANS-844) -U Freeze).

(1) Internal Revenue Code IRC 6404(e) requires that the IRS abate any assessed interest from the date of the refund to the date by which repayment is demanded on any Erroneous Refund of $50,000.00 or less, provided the taxpayer or any related party in no way caused the Erroneous Refund to occur.

(2) Interest assessments are abated when the interest is not legally due, excessive, or barred under IRC 6404(a) . See IRM 20.2.7.3, Excessive or Not Legally Due - IRC 6404(a).

(3) In cases involving requests for abatement of interest on erroneous refunds, the facts must be sufficiently researched (e.g., information provided by a taxpayer, post mark dates on documents, TXMOD, etc.) and the documentation for acceptance or denial attached to the case.

(4) See IRM 20.2.7, Abatement and Suspension of Debit Interest, for further instructions or clarification on abatement of interest.

(5) Interest on the Erroneous Refund is recovered in the same manner as the Erroneous Refund to which the interest relates. Interest (at the applicable rate) is charged on the amount of the Erroneous Refund from the date of issuance until the date of recovery unless waived under IRM 1.2.1.12.1 , Policy Statement 2-10, Abatement of Interest on Erroneous Refunds.

(6) Policy Statement 2-10, Abatement of Interest on Erroneous Refunds, requires that:

1. Taxpayers not be held liable for interest on erroneous refunds until the taxpayer is asked to repay the refund.

2. The IRS must clearly be at fault in issuing the refund, and the refund must not exceed $50,000.00. Questions on cases of erroneous refunds in excess of $50,000.00 must be referred to your Team Leader, Work Leader, or local Counsel.

(7) Delegation Order 20-1 (Rev.2), paragraphs 14 through 16, IRM 1.2.2.14.1, Abatement of Interest, states that IRS officials have the authority to abate interest on Erroneous Refunds under IRC 6404(e) (2) interest can be abated when the following conditions apply:

1. Documentation is present which leaves no doubt a IRS error caused the Erroneous Refund to be issued.

2. Documentation is present which substantiates repayment of the refund has been received in full.

3. The official is satisfied after considering the relative size of the Erroneous Refund, the amount of interest involved, the circumstances surrounding any delay in the repayment of the Erroneous Refund and the handling and correction costs which would be entailed, a waiver would be fair and equitable to the Government and the taxpayer.

4. The authority delegated herein will not be re-delegated.

(8) Interest considerations are covered in IRM 20.2.7.7, Interest, Abatement and Suspension of Debit Interest, Erroneous Refunds IRC 6404(e) (2).

1. IRM 20.2,, Penalty and Interest, Interest is available on Servicewide Electronic Research Program (SERP). The Office of Servicewide Interest Administration and IRM 20.2, Penalty and Interest, provides oversight on computing interest.

2. IRM 20.2,, Penalty and Interest recommends that interest specialists work the complicated restricted interest cases.

(1) Assessable erroneous refunds are refunds which the IRS will assess (credit reversals are not assessments) under the IRC. The assessment will be either a TC 290 Reason Code (RC) 51, as in the case of Category B erroneous refunds, or deficiency, as in Category A-1 or A-2 erroneous refunds or other assessable taxes, as in Category C.

1. These refunds are referred to as assessable erroneous refunds.

2. The IRS' authority to assess assessable erroneous refunds is not limited to the amount of "total tax. "

3. Provided that the applicable period for the assessment of the tax to which the refund relates is still open, the IRS will assess the full amount refunded.

4. Once the refund is assessed, it can be collected in the same manner as a tax within the collection statute expiration date (CSED).

5. See IRM 21.4.5, Refund Inquires, Erroneous Refunds, for variety of the types, categories and processing procedures.

(2) Category D erroneous refunds, referred to as "unassessable" erroneous refunds, are refunds not resulting from a tax determination and are not assessable under the IRC.

1. Erroneous Refunds carry a 2 or 5 year ERSED date and can only be recovered by following proper erroneous refunds procedures.

2. See IRM 21.4.5, Refund Inquires, Erroneous Refunds, for types, categories and processing procedures on identified erroneous refunds and what is supposed to have been completed prior to the receipt of the case in the Erroneous Refund Team.

(3) If the case does not qualify for assessment as described in IRM 21.4.5, Refund Inquires, Erroneous Refunds, the Erroneous Refund can be recovered only by the following:

1. Civil suit under IRC 7405 is within 2 or 5 years from the time the refund is received by the taxpayer (when the check clears the bank). (See IRC 6532(b))

2. The Erroneous Refund will be offset against any refund otherwise due the taxpayer for the same year and with respect to the same type of tax to which the refund is related. There is no time limitation on this right of offset until the ERSED.

3. To the extent the refund is an unassessable erroneous refund, the refund will be offset against any refund otherwise due to the taxpayer with respect to any year or any type of tax. This right to offset is limited to the ERSED.

4. The taxpayer can voluntary repay the erroneous refund.

(1) When Category A-1 or A-2 (Assessable) erroneous refunds are identified, review the case to determine if it meets Examination's criteria. See IRM 21.4.5, Refund Inquires, Erroneous Refunds. Tax decreases made in error must be forwarded to the Examination function.

1. If assessment or abatement actions were previously input, the case does not meet Examination's criteria.

(2) For the IRS to make an assessment, the taxpayer has to either agree to the assessment or a Notice of Deficiency has to be issued. The Notice of Deficiency gives the taxpayer 90 days to petition the tax court (150 days if the Notice of Deficiency is addressed to a taxpayer outside the United States). If the taxpayer does not petition, then IRS can assess after the 90 day period has expired. Notices of Deficiency must be issued before the ASED expires.

1. Research the Centralized Authorization File (CAF) using command code (CC) CFINK (See Figure 3.17.80-2). A CAF representative will be entitled to the same information you are providing to the taxpayer.



2. Cases received in Accounting must be returned to originators for resolution unless an adjustment was made in error. This would be worked in Accounting as a Category D Unassessable Erroneous Refund. If the case is not a Unassessable Category D type, then return cases to the originator for resolution.

Note: Letter 510-C without appeal rights is inappropriate here. The only cases worked in Accounting are those where the ASED has expired and the ERSED is open. There would be no assessments made on these cases and voluntary repayment would be applied to Excess Collections (or Unidentified Remittance File, URF).

(3) When a taxpayer repays the Erroneous Refund voluntarily:

1. If ASED has expired but the ERSED is open, apply repayment to Excess Collections (or Unidentified Remittance File, URF).

2. If the ASED is open and the ERSED is open, adjust the account.

(4) If the taxpayer repays, prepare Form 3245, Posting Voucher - Refund Cancellation or Repayment and update IDRS to post the credit transactions. (See IRM 3.17.80.1.23, Refund Cancellation, Repayments and Replies to Correspondence)

1. Transfer to Excess Collections (or Unidentified Remittance File, URF) not to be refunded or reapplied if ASED is expired, but ERSED is open.

2. If ASED is open ERSED is open, adjust account.

(5) If no response from the taxpayer:

1. If ERSED is still open (See IRM 3.17.80.1.22, IRM 3.17.80.1.22.1 and IRM 3.17.80.1.22.2, Maintaining Case Files).

2. If the ERSED is closed:
   close the case on IDRS: C#,NOPAYMENT,C,ERRF
   notate actions taken on the case History Sheet
   file in the closed case file

(6) When the case meets Examination's criteria, process per local Examination Notice of Deficiency procedures. Before routing erroneous refunds to Examination, be sure the case meets Examination's criteria and that the 3 year ASED has not expired.

(7) To determine whether interest is due from the taxpayer, See Exhibit 3.17.80-1, Erroneous Refund Interest Considerations, and IRM 3.17.80.1.16, Interest Considerations, IRM 20.2.1, Interest Introduction, Standards and Guidelines or IRM 21.4.5.8, Erroneous Refunds on Designated and Non-Designated Payments.

3.17.80.1.18.1 (12-06-2017)

Processing Categories A, B or C Erroneous Refunds

(1) Category A, B or C erroneous refunds received in Accounting are not considered unassessable type erroneous refund, upon receipt.

Note: Do not follow these procedures if the adjustment did not result from a tax determination. Instead, process as a Category D unassessable erroneous refund.

1. Immediately contact the Submission Processing site Planning and Analysis staff analyst to contact the area causing adjustments in error.

2. Errors impact the Submission Processing Director's accountability over disbursement losses.

(2) Return cases to the originator for resolution (See IRM 21.4.5, Refund Inquires, Erroneous Refunds).

(3) Direct deposit refunds made in error or refunds determined to be sent to "unknown" or "unable to locate" recipients will eventually be written off. Case files citing these circumstances must provide sufficient explanation to support write-off actions. (See Figure 3.17.80-5).

Note: For more information on direct deposits refer to IRM 21.4.5.11.1, IRS Error Direct Deposit.

(1) Cases forwarded to Accounting/Erroneous Refunds Units must meet Category D criteria as defined in IRM 21.4.5, Erroneous Refunds. The related training material can be found in ELMS Course 10824, Researching and Resolving Erroneous Refunds. In general, within the first 10 work-days of receipt employees must:

1. See IRM 21.4.5.7, Adjustments and Credit Transfers on Category D Accounts, for necessary actions and how to assemble and submit packages for processing by Accounting/Erroneous Refund Units.

2. Review the case to ensure that the Letter 510-C (See Figure 3.17.80-4) was issued and that TC 844, TC 470 with Closing Code (CC) 93, and TC 971 AC 663 were input. Form 12356, Erroneous Refund Worksheet must also be included. Ensure that all applicable Statutes are open. Follow site direction and IRM 3.17.80.1.17.1, Erroneous Refund Statute Considerations, to refer case types deemed meeting the 5 year ERSED to local Counsel, as appropriate.

   Note: Ogden Only - For 8038-CP cases, release any -U freeze that will be on the account. No contact is necessary. Do not prepare Form 3809 to credit the taxpayer’s account until the ERSED has expired, to avoid any repayments from refunding. Input TC 470 CC93 to avoid notices being issued to the taxpayer if this has not already been accomplished.

3. If IDRS actions were not input and/or documentation is not attached or incomplete, contact the originator by E-mail or telephone for resolution. If there is no response within 5 work days reject the case back to the originator informing them IRM 21.4.5 , Refund Inquiries, Erroneous Refunds, was not followed for preliminary preparation of the Category D erroneous refund case.

   Note: Do Not reject if the erroneous refund date is a future date and the TC 844 is not input, Form 12356 will state that a TC 844 be input by the Accounting Function upon receipt of the case.

   Note: Occasionally Field Offices without IDRS access will forward a case to Accounting Operations without completing the necessary requirements - Do Not reject these cases. Send a 510-C, input Transaction Codes (TC’s) 844, 470 with Closing Code 93, and 971 with Action Code 663. (See IRM 21.4.5.13, Field Offices Without IDRS)

4. If the case is complete and the taxpayer has not responded to the first notification within 45 days, follow-up within 10 work-days, with a 2nd letter, including interest due, and prepare Form 3809 to credit the taxpayer's account and debit the appropriate 15XX General Ledger account. Number Form 3809 and post the TC 700 with Document Code 58 in blocking Series 950 through 999 (850 - 899 for the 1543 General Ledger) to display the literal Refund Balance Due notification on IMFOL and TXMOD. If reversing, post the TC 702 with Document Code 58 in Blocking Series 900 through 949 (800 - 849 for the 1543 General Ledger).

   Note: To calculate 45 days, use the CC ENMOD date of the first letter to the date of input on the second letter. The input date must be notated within the case history file.

5. Credit the taxpayer's account (TC 700) for the amount of the Erroneous Refund only.

6. Annotate actions taken on the History Sheet.

7. If the case is complete, and the 45 day response time has not yet passed, monitor the account for recent transactions posting, for statute expiration dates, and to determine the date for the interest letter (2nd or later 510-C or 3414-C letter).

8. Maintain case file and documentation.

9. Suspense case file and monitor for subsequent follow-up actions (See IRM 3.17.80.1.22, IRM 3.17.80.1.22.1 and IRM 3.17.80.1.22.2, Maintaining Case Files).

(2) If necessary documentation is not received with the case file, update the History Sheet stating the reasons the case is being returned to the originator.

(3) If the applicable ERSED, CSED or ASED has not expired, but is imminent, expedite the processing of the case (See IRM 3.17.80.1.20.1, Working Statute-Imminent Cases). Prepare appropriate Erroneous Refund correspondence and Form 2209Form 2209, Courtesy Investigation (or use Integrated Collection System (ICS) if it is available) if:

1. The amount of the Erroneous Refund exceeds≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

2. The 2 or 5 year ERSED is open, but imminent.

(4) Review the case file for interest which will be due from the taxpayer (See IRM 3.17.80.1.16, Interest Considerations and Exhibit 3.17.80-1, Erroneous Refund Interest Considerations).

(5) If the ERSED 2 or 5 year will expire in approximately 3 months, the Erroneous Refund amount is over ≡ ≡ ≡ ≡ ≡ ≡ ≡, issue the appropriate Erroneous Refund letter and issue Form 2209 (or access ICS if available). See IRM 3.17.80.1.20.1, Working Statute-Imminent Cases

(6) Erroneous Refund Unit employees must verify the correct blocking series posted with the TC 700 (58 Document Code, 950-999 blocking series). This unique blocking code produces the displayed literal Erroneous Refund Balance ("-U" Freeze) on the IMF-only accounts. For all BMF accounts it will be necessary to place a history item on IDRS using the same literal, Erroneous Refund Balance.

(7) Submission Processing site Erroneous Refund Coordinators are listed in Exhibit 3.17.80-4.

(1) Ensure that applicable statutes are still open. (See IRM 21.4.5, , Refund Inquiries, Erroneous Refunds)

(2) History Sheets and supporting documentation are necessary to substantiate the Erroneous Refund and any future write-off actions. This applies to cases received from other areas. If pertinent documentation is not received with the case, including Form 12356 , Erroneous Refund Worksheet, update the local History Sheet stating the reasons. Return the case to the originator for correction or request complete documentation.

(3) Combination cases will have both a CSED and ERSED applicable. (SeeIRM 21.4.5.15.1, Collection Statute Expiration Date for Category D Erroneous Refunds)

(4) When an assessable tax liability plus a unassessable erroneous refund amount exists:

1. See IRM 21.4.5.15.1, Collection Statute Expiration Date for Category D Erroneous Refunds, for further instructions.

2. Research the CAF CC CFINK for power of attorney (POA) indicators. The indicator requires the IRS to issue notices or correspondence to the taxpayer's representative or POA.

3. If the taxpayer does not respond to the first letter within 45 days, take the following steps:

1. Within 10 work-days issue IDRS Letter 510-C or Letter 3414-C to notify the taxpayer of the erroneous refund amount and interest due.

   Note: For the Letter 510-C use paragraph 9.

2. Prepare Form 3809 to post a TC 700, blocking series 950-999, Document Code 58, for the amount of the erroneous refund.

   Note: Input a TC 470 CC 93 (Input TC 470 CC 93 only if prior TC 470 CC 93 has expired or was not previously input. See above IRM 3.17.80.1.19(1) , General Overview - Category D, Unassessable Erroneous Refunds, ) prior to preparing the false credit (TC 700) to prevent balance due notices from generating to the taxpayer for the erroneous refund amount.

4. Cycle the input of all transactions, as appropriate.

5. If applicable, reverse interest and penalty.

6. Research modules for TC 470, STAUP’s and TC 844. If a TC 470, Closing Code (CC) 93, is not present on the Erroneous Refund tax module, input TC 470 using IDRS CC REQ77. This prevents erroneous MF notices from generating.

7. Monitor the account for the above transactions to post to Master File. This posting action could take up to six (6) weeks.

8. Once the TC 700 posts to the account, input reversal TC 472. This reverses the TC 470, CC 93, and allows normal notices to generate for tax liability balances due to IRS.

9. See IRM 3.17.80.1.20.4, Taxpayer Repays in Full through IRM 3.17.80.1.20.5, Processing Partial Repayments for case monitoring and recovery actions.

10. Update History Sheet case file when taking follow-up and monitoring actions and update IDRS history as appropriate.

(5) See IRM 3.17.80.1.17, Methods Used to Recover Erroneous Refunds, for cases deemed valid as a 5 year ERSED. See IRM 20.2 , Penalty and Interest, and IRM 3.17.80.1.16 , Interest Considerations, for instructions when interest will be applicable.

3.17.80.1.20.2 (01-01-2019)

IDRS and Case Controls - ERRF

(1) If taxpayer fully repays or returns the original refund check:

1. Assess additional interest, if appropriate.

2. Prepare Form 3245 upon receipt of the Erroneous Refund payment. (See Figure 3.17.80-6)

3. Update IDRS to post credit transactions.

4. Monitor account for actions to post. Release TC 844 and TC 470 CC 93, as necessary.

5. Check for penalty accruals. Input CC INTST. Check for penalty accruals. If accruals are incorrect input TC 270 (.00) using REQ54 to restrict the module and remove any accruals.

   Note: Always wait for the TC 700 credit to post before inputting the TC 270.

(2) See subsection IRM 3.17.80.1.23, Refund Cancellation, Repayments and Replies to Correspondence.

(3) If the ERSED has expired, process as outlined in IRM 3.17.80.1.20.6, Statute Barred Refunds.

(4) Establish control on IDRS in category "ERRF" and status "A." Enter the ERRF control number on Form 3809 to transfer amounts to the 15XX Account, and in the history section on IDRS. Record the Statute expiration date for write-off.

(5) Verify that the TC 844, TC 470 CC 93, and TC 971 AC 663 were input correctly to the taxpayer's account that received the Erroneous Refund. Make other account adjustments where needed. The ERSED and TC 844 Date of Demand must be recorded on the History Sheet. When appropriate, TC 844 must be input as follows:

1. If the taxpayer (or a related party) has in no way caused the erroneous refund to occur and the Erroneous Refund amount is $50,000.00 or less, the IRS will: input TC 844, CC REQ77. (See Figure 3.17.80-7) The date on Letter 510-C is the date by which repayment is demanded (EXTENSIONDT) which is 7 work days NOT including the day of input, weekends and holidays. When using CC ENMOD to determine the date of demand, it is 6 working-days from the posting date NOT including the day of input, weekends and holidays.

   Note: If the refund is greater than $50,000.00 and an interest abatement is requested, See IRM 20.2.7.7, Interest, Abatement and Suspension of Debit Interest, Erroneous Refunds IRC 6404(e)(2). If the refund amount is $100,000.00 or more interest is assessed from the date of the refund to the date of the demand letter, then taxpayers have 10 work-days ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ to repay the amount in order to avoid additional interest.

2. Use the date of the related TC 846 or TC 840 as the TC 844 transaction date (TRANSDT).

3. Input the amount of the erroneous portion of the refund in the (Freeze RELEASEAMT) field.



4. If the taxpayer (or related party) has in any way contributed to the cause of the refund, deliberate or not, or the refund is greater than $50,000.00 (regardless of fault): input TC 844, CC REQ77 (See Figure 3.17.80-8) using the date of the related TC 846/840 as the (TRANSDT).

5. Do not input a date of demand or a freeze release amount.

(6) Review for and reverse erroneous portion of credit interest refunded.

1. Reverse only the erroneous portion of the credit interest if computer generated (TC 777) interest has not occurred.

2. Input a TC 772 using CC REQ54 to reverse all or part of the allowable interest given. (See Figure 3.17.80-9)

(7) Prepare Form 3809 to debit the 15XX Account for the amount of the Erroneous Refund. Maintain the debit portion of Form 3809 in alpha sequence to debit the appropriate 15XX Account. Assign a case control number to the case and on the Form 3809, using the following guidelines:

Note: If the ASED is still open and the refund is Category A-1, A-2, B, or C, forward to the appropriate function for assessment and do not debit 15XX Account.

1. Calendar year, current Enterprise Computing Center (ECC) processing cycle and consecutive serial number (e.g., 2004-29-299).

2. Each new year, start with serial number series beginning with 1.

Example: Cases from October 12, 2012 through October 18, 2012, (EMartinsburg (ECC-MTB), posting cycle 43) have the control number prefixed by 201243.

(8) Prepare 2nd Letter 510-C or Letter 3404-C.

1. Input TC 700 within the first 45 days (plus 10 work-days for internal review of case and letter) after sending the first letter, use Document Code 58, 950-999 blocking series .

2. Input a TC 270 (.00) to restrict Failure to Pay (FTP) if the erroneous refund is the only amount due on tax module.

(9) Determine whether the taxpayer owes interest when issuing IDRS Letter 510-Cr. Interest on any unpaid amount is charged from the date of the refund to the date of repayment if either:

1. The erroneous refund is more than $50,000, (See IRM 20.2.7.7, Interest, Abatement and Suspension of Debit Interest, Erroneous Refunds-IRC 6404(e)(2)) or

2. The taxpayer caused the erroneous refund

If	Then
The taxpayer caused the error, deliberate or not, regardless of the amount of the erroneous refund	Interest is assessed from the refund date (TC 846/TC 840). The Letter 510C will provide a balance due which includes interest calculated to the notice date. Taxpayers have 21 days ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ to pay the balance due or interest will continue to accrue. Note: If the erroneous refund amount is $100,000 or more, taxpayers have 10 business days ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ to pay the balance due or interest will continue to accrue.
The IRS caused the error and the amount of the refund is $50,000 or less	Interest is assessed from the notice of demand date (date of the Letter 510C). The taxpayer has 21 days ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ to pay the balance due stated in the notice of demand or interest will accrue starting on the notice and demand date.
The IRS caused the error and the amount of the erroneous refund is more than $50,000 but less than $100,000	Interest is assessed from the refund date (TC 846/TC 840). The taxpayers have 21 days ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ to repay the amount in order to avoid additional interest.
The IRS caused the error and the amount of erroneous refund is $100,000 or more	Interest is assessed from the refund date (TC 846/TC 840). Taxpayers have 10 business days ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ to repay the amount in order to avoid additional interest.

Note: Interest is not charged when a treasury check is returned (the check was not cashed).

Note: Refer to IRM 20.2.7.6, Erroneous Refunds IRC 6404(e)(2), for case by case discretionary authority to abate interest on erroneous refunds that exceed $50,000.

(10) If debit interest is restricted (e.g., TC 34X on module) Master File will be unable to calculate interest as described in the previous If/Then table. Interest must be manually computed and input. Likewise, if the repayment did not post with a TC 720, interest must be manually computed and input. A payment received within 21 calendar (or 10 business) days from the erroneous refund demand date must post with a TC 720 in order for Master File to correctly suspend interest from the date of demand to the repayment date.

(11) If credit interest did not reverse or is incorrect, enter TC 772 to correct the amount. If debit interest is not correct, assess or abate as directed in IRM 20.2.7, Abatement and Suspension of Debit Interest.

(12) Interest abatement is not required if the refund is greater than $50,000, but will be allowed on a case by case basis, See IRM 20.2.7.7, Interest, Abatement and Suspension of Debit Interest Erroneous Refunds IRC 6404(e)(2). Refer questions on interest abatement for erroneous refunds in excess of $50,000 to local interest specialists, or through managerial channels to local counsel. Also, make contact with the SP HQ Erroneous Refund Analyst about the interest abatement issue to determine if the case will go directly to Chief Counsel.

(13) Recovering multiple unassessable Category D erroneous refunds issued to the same taxpayer by different Submission Processing sites on the same tax year will be combined as one case and worked by the site according to subsection d below to prevent multiple bills from being sent to the same taxpayer.

Note: Erroneous refunds issued to the same taxpayer by different sites on different tax years will be worked as separate cases and transferred to the site issuing the erroneous refund.

1. Combining these amounts will prevent the appearance of harassment, taxpayer burden and multiple billings and will ensure consistency nationwide.

2. Combining these amounts will ensure the taxpayer's account is handled efficiently.

3. Multiple refunds will be discovered during a variety of case and account management actions or reviews.

4. Use the earliest IDRS assigned date to determine which site jurisdiction will manage the recovery. If dates are identical, then look for the largest dollar amount. If unable to make this determination, forward the issue to the respective Planning and Analysis staff analyst for a decision.

5. Combine the liability amount, correspond with the taxpayer, freeze the account as appropriate and indicate the attributes of the refunds on the combined History Sheets as separate checks for maintaining the issuing site's identity. Use Bureau Fiscal Service's (BFS) Check Symbol and Serial Number information if possible to differentiate the checks.

6. For example, annotate the documentation or History Sheet as follows:

1. Check A: in the amount of $, issued (XX/XX/XXXX) by SPCampus (XX);

2. Check B: in the amount of $, issued (XX/XX/XXXX) by SPCampus (XX);

3. Total Dollar Liability Check A + B = $.

(14) Maintaining multiple Erroneous Refund check issue cases by one site will benefit the IRS by offering equitable treatment of taxpayers and improved customer service.

(15) If Erroneous Refund amounts are not recovered at the expiration of the ERSED, return the appropriate portion of the amount and case to the issuing site Agency Location Code (ALC).

1. Describe the attempts by the IRS to recover the Erroneous Refund amount. Provide a copy of the History Sheet when returning the portion of the case to the originating site.

2. Both sites require supporting documentation that attempts were made to recover the funds for an eventual report. Follow instructions in IRM 3.0.167.8.4, Relief Request Procedures, for write-off to Accounts 4910/6920.

3. Retain a copy of the case in the closed case file.

3.17.80.1.20.3 (12-07-2020)

Tax Refund Issued In Error

(1) These procedures are applicable when Letter 510-C were not previously sent, incomplete, or issued incorrectly.

1. The Letter 510-C must explain the refund they received was incorrect and reason for being erroneously issued. If the refund was not caused by the taxpayer and $50,000.00 or less, advise them that if the Erroneous Refund is repaid within 21 calendar days from the date of the letter, interest will not be charged. Request the refund check be returned, if not cashed. (See Figure 3.17.80-10)

• The first Letter 510-C will be considered a first notice or first bill.

• Accounts Management must have communicated with the taxpayer to return or repay the erroneous refund. Verify CC ENMOD and/or the case history information Accounts Management (AM) sends with the case to determine whether AM did tell the taxpayer to repay the erroneous refund. If AM did tell the taxpayer, that communication will be considered a first notice and the issuance of a first Letter 510-C will not be necessary.

• If a replacement Letter 510-C is issued due to a correction, acknowledge the letter is a change from the original letter.

Note: A Form 12356, Erroneous Refund Worksheet must have some indication that there was a communication of first notice.

(2) If there is no response from the taxpayer, no later than 10 work-days after the 45th day (60th day if International correspondence is being performed) of the initial Letter 510-C or correspondence, issue a second Letter 510-C (or Letter 3414-C or Letter 285-C) letter and include interest that will be assessed. (See IRM 21.4.5.6.1, Account Actions for Category D Erroneous Refunds)

Note: Issue the 2nd letter no later than 10 work-days after the 45 days (by the 55th day and 75th day if International correspondence is being performed) of the first letter Accounting issues.

(3) Prepare related case file, Form 3809 and assign case controls.

(4) Check for penalty accruals. Input CC INTST. Check for penalty accruals. If accruals are incorrect input TC 270 (.00) using REQ54 to restrict the module and remove any accruals.

Note: Always wait for the TC 700 credit to post before inputting the TC 270. Input only if no other TC 270 for zero amount is on the tax module

(5) See IRM 3.17.80.1.16 , Interest Considerations, IRM 20.2, Interest, and Exhibit 3.17.80-1, Erroneous Refund Interest Considerations.

Note: When using Letter 510-C (or Letter 3414-C, or Letter 285-C), include debit interest. The debit interest is figured using COMPAD. (See Figure 3.17.80-11 and Figure 3.17.80-12)

Note: Management may choose to review a sampling of the letters before being mailed to the taxpayer. However, it is not mandatory since Quality Review also takes a sampling of the letters.

(6) Annotate on the case History Sheet and Case Label, the date the ERSED expires. (The Statute expires 2 or 5 years from the date of the refund check (IRC 6532(b)).

Note: For Servicewide consistency, use TCIS for the date of the cashed refund. If TCIS is not available or does not provide a date, use the TC 846 date found on IDRS.

(7) Photocopy correspondence or Letter 510-C for the case file and send a Letter 510-C to the taxpayer (allow 45 days for a reply or repayment).

1. Update the IDRS control base.

2. Update case History Sheet with the actions taken.

3. Annotate the first Letter 510-C date as the date of demand (if applicable).

(8) For those cases not meeting collections referral criteria, under IRM 3.17.80.1.22 (3) b and IRM 3.17.80.1.22.1 (4) b, Maintaining Case Files, suspense and review each case every 3 or 6 months and re-issue a Letter 510-C , Letter 3414-C, or Letter 285-C including updated Interest, until the ERSED expires. (See IRM 3.17.80.1.22, and IRM 3.17.80.1.22.1, Maintaining Case Files)

3.17.80.1.20.4 (07-02-2018)

Taxpayer Repays in Full

(1) If the taxpayer responds with full repayment of the Erroneous Refund amount, follow procedures below. Repayments must be processed through Receipt and Control.

(2) Determine if the taxpayer responded, with payment and within the specified time frame on Letter 510-C .

(3) If repayment ($50,000 or less) is within the specified time frame ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, and if the 15XX account was used to credit the erroneous refund in the taxpayer's account, prepare Form 3809 (TC 702, Document Code 58, blocking series 900-949) to reverse the debit in the appropriate 15XX Account (Use the date of the TC 700).

Note: If the erroneous refund is $100,000.00 or more, the taxpayer has 10 business days ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ to repay, per IRC 6601(e)(3). If repayment in full is made within this period, no interest will accrue from the date of demand (TC 844) up to repayment date (TC 720). If the erroneous refund is less than $100,000.00, taxpayer has 21 days ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ to repay. If repayment in full is made within this period, no interest will accrue from the date of demand (TC 844) up to repayment date (TC 720). If taxpayer error, interest is charged from the date of the refund to repayment date.

(4) If repayment is not within the specified time frame, compute interest due before case is closed. (See IRM 3.17.80.1.20.2, IDRS and Case Controls - ERRF)

(5) In both situations above, also:

1. Update IDRS control base to reflect current actions.

2. Update case History Sheet.

3. Place case in file and monitor for actions to post.

(6) Once TC 720 and TC 702 post:

Note: Full repayment on Category D unassessable erroneous refunds must "NEVER" post as a TC 670 to avoid erroneous interest and penalty accruals.

1. Compute interest manually, using the correct "to" and "from" dates. Interest is assessed up to the amount of the payment. If interest owed is ≡ ≡ ≡ ≡ ≡ ≡ or less, input a TC 340 (.00) and close control base. Before closing the Erroneous Refund case, verify interest. If interest is $5.00 or less, input TC 290 for $0.00 with Priority Code 5 and Hold Code 3.

2. Input CC INTST. Check for interest/penalty accruals. (See Figure 3.17.80-13) If accruals are incorrect and the taxpayer(s) were timely with full repayment of the Erroneous Refund, input a TC 340 and or TC 270 (.00) using CC REQ54 to restrict the module and remove any accruals (See Figure 3.17.80-14).

(7) After the Erroneous Refund is paid in full, interest must be computed and assessed "ONLY" if the credit is available to cover the amount of the interest. Any payments or credits received before the ERSED expires can be applied to the interest owed.

Note: If remaining interest owed exceeds ≡ ≡ ≡ ≡, you must keep case open, continue to send quarterly (balance $600.00 or over) or semi-annual (balance $599.99 or under) letters, and monitor for additional credit until ERSED expires.

(8) To input a TC 340 for interest use date of last payment as your DB-INT-TO-DT. (See Figure 3.17.80-15)

(9) Interest must be assessed ONLY on the Erroneous Refund amount if the taxpayer(s) made payments or credit is available to cover the interest due. However, after the 15XX Account has been reimbursed, any payment received before the ERSED expires can be offset against interest.

Note: If the TP repays an erroneous refund and additional tax is due, do not input a TC 340. The TC 340 is restricting the manual calculations of interest. If a TC 340 was input a TC 342 is needed to unrestrict the account and allow the accruals on the tax to continue.

(10) Accounting will input TC 845 using CC REQ77 to release the ("-U" Freeze). Close the IDRS control base and record information on the case History Sheet. File case in the "Closed File" . (See Figure 3.17.80-16)

(11) For cases where additional interest is due and the 2 or 5 year ERSED has not expired, DO NOT release the TC 844 (-U Freeze). File case in the "Suspense," file, pending additional payments or potential offsets.

Note: Research modules before closing an Erroneous Refund case where accruals are in error.

(12) Notate on the case History Sheet, the amount used to compute interest and the date to when interest was computed.

(13) If/when interest applies on an IRS-caused erroneous refund, the "from" date is the date of demand; the "to" date, the date of the second (or subsequent) Letter 510-C (or other letters previously mentioned).

(1) The following procedures apply to transferring refunds erroneously posted (TC 840/846) to the incorrect account. The unique TC 840 using the following blocking series will identify these as "dummy refunds,", and not refunds which are going to be issued. This must coincide with input of a TC 971.

(2) Prepare Form 12857, Refund Transfer Posting Voucher, to post a TC 841 to the injured taxpayer's account and a TC 840 to the account of the taxpayer who received the erroneous refund (Refer to IRM 21.5.2.4.23.10, Moving Refunds). The TC 841 date must be the date of the erroneously posted TC 840 or TC 846. (See Figure 3.17.80-19)

(3) If using Form 3753 (original only) to post the "dummy refund" (TC 840), include in "Remarks" "Not an Erroneous Refund."

1. Enter in Section 1, Block 10, "MAKE CHECK PAYABLE TO" block print the phrase "DO NOT ISSUE CHECK."

2. Assign Document Code 45 (TC 840) with a unique Blocking Series, starting with 920. This Blocking Series will identify "dummy refunds."

3. Cross-reference the Form 3753to its related Form 3809 and to the DLN of the original, erroneously posted refund. This transaction reverses the erroneous posting of the refund.

4. Input TC 971 (use Action Code 030) via CC FRM77. (See IRM 2.4.19, IDRS Terminal Input - CCs REQ77, FRM77 and FRM7A)

(4) Before being transcribed, these documents must be hand-carried to the appropriate area responsible for processing Form 3753, Form 12857 and Form 3809.

(5) Retain copies of Form 3753, Form 12857 and Form 3809 in the Erroneous Refund case file.

(6) Annotate the History Sheet with all actions taken.

(7) Input TC 971 on both accounts to cross-reference the injured and Erroneous Refund taxpayers.

(8) Additional instructions will be found in IRM 21.5.2.4.23.10, Moving Refunds.

(1) Maintain the established paper cases Prior to July 1, 2023 in one of the following orders:

• DOC-ID

• TIN

• Alphabetical

(2) Organize the case file as follows:

1. Completed case History Sheet.

   Note: All actions must be dated and recorded in detail on the History Sheet, they must be legible. GAO has requested that the case history sheet must have documented narratives that read as if they are reading a book. However, Communications & Liaison has developed guidelines to enable the IRS to use abbreviations following guidelines found here: https://irssource.web.irs.gov/CL/Lists/IRS%20Style%20Guide/DispItemForm.aspx?ID=6. Therefore, abbreviations will be used only when following these guidelines.

2. If received, an original, full TXMOD print must be maintained in the case folder. If there is no new activity in the posted or pending transaction sections, do not reprint the TXMOD. Annotate the history sheet, “No Activity on TXMOD.” If there is new activity in the posted or pending transactions, print only the TXMOD pages showing the new activity in the posted or pending transaction sections. Replace only the pages showing the new activity and maintain directly under the History Sheet. showing any new activity on the account must be maintained in the case folder. See IRM 3.17.80.1.22 (3) and IRM 3.17.80.1.22.1 (4), Maintaining Case Files, (discard old TXMOD prints except for the original. (See Note below)

   Note: The "ORIGINAL" TXMOD must always be kept in case file under the History Sheet. This print will show the original account activity prior to being worked by the Erroneous Refund function.

3. Place the original Erroneous Refund case on the bottom of the right hand side of the case file (Information from the identifying area, copy of Letter 510-C, TXMOD print, supporting documents, etc.) stack of information (oldest documents must be at the back end of the case file).

Note: If a Manual Refund (TC 840) caused the erroneous refund, yellow highlight the approver and refund issuer of the TC 840 on TXMOD and attach the TXMOD.

4. Each time an action is taken on the account place all prints and/or copies associated with the actions on the right side of the folder. "Exception:" Do not include Form 3809 (See IRM 3.17.80.1.22 (2) f and IRM 3.17.80.1.22.1 (3) g, Maintaining Case Files). Keep the most current on top.

5. A balance sheet showing the remaining balance on the Erroneous Refund must be stapled to the left side of the case folder and updated with each transaction.

6. Form 3809 (copies or original forms) must be stapled to the left side of the folder, the most current on top with a journal number clearly printed on each form.

(3) Pull the case every 3 months (if the balance is $600.00 or over) or 6 months (if the balance is $599.99 or under) for review. Cases will be pulled based on the previously-established review date for each case. Continue corresponding with the taxpayers every 3 months or 6 months or until the 2 or 5 year ERSED expires. (See IRM 3.17.80.1.29, Write-Off Procedures for Unrecoverable Erroneous Refunds (for General Ledger 1530, 1535, 1543), for write-off procedures). Perform the following actions when performing the 3 month, quarterly (balance over $599.99),and semi-annual (balance under $599.99), review:

1. Follow-up reviews (primarily for credits that are available to be applied to the tax module) and issuance of follow-up taxpayer correspondence (generally, a Letter 510-C or Letter 3414-C Letter) must be done within 3 months or 6 months and 10 work-days of the previous correspondence action.

2. Review the case every 3 or 6 months as identified above.

3. When reviewing the case and it is noticed that there are ID-theft indicators on the tax account, verify if another TC 700, false credit has attempted to post to the account and causing a credit balance on the account. Complete the following actions under this situation:

(4) The case History Sheet Must reflect that the 3 month reviews are being performed. Refer to the below chart:

(5) For semi-annual (6 month) reviews, refer to the below chart:

(6) If no correspondence is pending with the taxpayer. File the case if:

1. No reply is received 45 days after the second or any additional notification or correspondence is sent to the taxpayer, and no Form 2209 was sent to the Technical/Collection function.

2. Form 2209 is closed by Technical/Collection without securing repayment, a signed waiver or a recommendation for Civil Suit.

(7) Enter on the History Sheet the interest start date (date of demand or date of refund).

(8) Mail the Letter 510-C, Letter 3414-C or Letter 3064-C to the taxpayer with a return envelope. Place a copy of the letter in the case file.

1. Determine when the ERSED expires, and annotate the ERSED date on the outside of the case file folder and on the History Sheet in the box labeled ERSED.

2. If the erroneous refund balance is $600.00 or more notify the taxpayer, before the end of the calendar year in which the ERSED expires, that a Form 1099-C will be issued, if not repaid. Include the below verbiage but revise it for the correct dates: The statute for collection on your erroneous refund will/has expired on Month DD, YYYY. We will continue to accept voluntary repayment. However, if we do not receive repayment by Dec. 31, YYYY, we will issue a Form 1099-C, Cancellation of Debt. You will be required to report the amount you owe to the IRS on your federal income tax return.

Note: The 1099-C notification is required but it is also a courtesy to the taxpayer, and must be sent in the same year the statute expires. Do not include this notification on the interest letter.

3. See IRM 3.17.80.1.30, Forms 1099 - Unrecoverable unassessable erroneous refunds, for Form 1099-C procedures.

4. Annotate the History Sheet with all action taken.

5. Notate the case file for the next follow-up.

(9) Although it will rarely occur, if there are excess credits on the taxpayers account (e.g., because misapplied payments have posted to the account where there is a full-paid erroneous refund, continue closing the case but input a TC 570 and ensure it posts before inputting the closing TC 845.

(10) If a Letter 510-C is returned as undeliverable, search for a more current address (for example: IDRS, ENMOD, INOLE, IRPTR, or access Accurint with the assistance of Accounting’s Unidentified Team.) and document actions on History Sheet. If a better address is found, include Form 8822 , change of address, with the re-mailing of the letter. Completion of this form by the taxpayer authorizes an address change and re-mail. If a notice is returned as undeliverable again and:

1. Total Erroneous Refund is less than ≡ ≡ ≡ ≡ ≡ ≡ continue to review the case on a quarterly (balance $600.00 or over) or semi-annual (balance $599.99 or less) basis for offset of credits which will become available. When all applicable Statutes have expired, refer to IRM 3.17.80.1.29, Write-Off Procedures for Unrecoverable Erroneous Refunds.

2. If Erroneous Refund is ≡ ≡ ≡ ≡ ≡ ≡ ≡ or more, prepare Form 2209 as required in IRM 3.17.80.1.22(11) and IRM 3.17.80.1.22.1 (12), Maintaining Case Files, below.

3. Notate the History Sheet and file.

(11) Form 2209 :

1. If the Statute expiration period is less than 3 months and the amount is less than≡ ≡ ≡ ≡ ≡ ≡, annotate History Sheet, "No Form 2209 Issued," and file (after letter(s) has or have been mailed) pending possible offset or write-off.

2. If the Statute expiration period is 3 months and the amount is ≡ ≡ ≡ ≡ ≡ ≡ or more, route copies to the Collection function with Form 2209. Annotate Form 2209 as Erroneous Refund Case. Specify ERSED statute expiration date under remarks: Civil Suit Statute Expires (Month, DD, YYYY), Unassessable Take No Enforcement Action. Be sure to use TCIS cashed date and if not available, use TC 846/840 date on IDRS for 2 year ERSED on Form 2209. Watch for accelerated cycles. Refer to IRM 21.4, Refund Inquiries, for cycle and check dates.

3. Annotate History Sheet with actions taken.

4. Note the case file with the next review date (90 days).

(12) Initiate follow-up action using Form 2209-A when Form 2209 was issued over 90 days prior, if appropriate.

(13) When a case indicates the applicable 2 or 5 year ERSED has expired and the Internal Revenue Service no longer has the legal right to recover the Erroneous Refund:

1. Refer to IRM 3.17.80.1.29, Write-Off Procedures for Unrecoverable Erroneous Refunds.

2. Annotate on case History Sheet: ERSED expired, no letter sent to taxpayer.

Exception: If the Erroneous Refund is $600.00 or more and the ERSED expired in the current calender year, issue a voluntary repayment letter.

(14) Remove repaid case, move to the "closed" file when TC 845 is input to release the Erroneous Refund Freeze, if appropriate.

(15) Retire the closed Erroneous Refund case file according to the guidelines in Document 12990, Records Control Schedules.

(1) When replies are received from the taxpayer in response to the Letter 510-C, pull case file and research.

(2) If the taxpayer returns the original refund check the category code on TXMOD history will update to 3913. If you receive the returned check forward to Refund Inquiry to be batched and sent to the Regional Financial Center. Monitor account for the TC 841 to post. The cancellation credit will generate a TC 777 for the amount of credit interest in the refund. Update case History Sheet and IDRS control base.

(3) If you receive a payment and the Erroneous Refund is not fully repaid, reply to taxpayers correspondence giving the new balance due, arrangements for a payment plan, etc. (See IRM 3.17.80.1.20.5, Processing Partial Payments)

1. When payments post to the Master File prepare the Form 3809 for the TC 702 as appropriate.

2. If it is determined that the taxpayer must be assessed debit interest, verify that a TC 777 posted for the correct amount. If the credit interest is incorrect input a TC 772.

(4) Prepare Form 3809 for a TC 702 to reverse TC 700:

• TC 700, 58 Document Code, 950-999 Blocking Series (or 850 - 899 if using the 1543 General Ledger).

• TC 702, 58 Document Code, 900-949 Blocking Series (or 800 - 849 if using the 1543 General Ledger).

(5) If the Erroneous Refund is fully repaid and there is additional credit remaining on the tax account, assess interest as follows:

1. If the available credit exceeds the interest due, assess the full amount of interest and allow the remaining credit to refund.

2. If the interest due exceeds the available credit by less than $25.00, assess interest only for the amount of available credit and close the case.

3. If the interest due exceeds the available credit by $25.00 or more, assess interest for the amount of available credit and use Letter 285-C, Letter 3414-C, Letter 672-C or Letter 3064-C to notify the taxpayer of the amount of interest still due

(6) When the Erroneous Refund is fully repaid, if applicable, verify TC 702 has posted:

1. Input TC 845 using CC REQ77 and close control base.

2. Release TC 470 when other balances are due.

3. If the account is overpaid, release any applicable Freezes (Refer to Document 6209).

4. Annotate History Sheet with payments and other actions and close case.

Note: If a TC 777 generates to reverse credit interest that has already been manually reversed via TC 772, correct the account by using TC 770 prior to closing case.

(7) If the taxpayer claims non-receipt of the check(s), See IRM 21.4.2, Refund Inquiries, Refund Trace and Limited Payability.

1. After inputting CC CHKCL, a photocopy of the check(s) is subsequently received from Bureau of Fiscal Services (BFS, formerly known as Financial Management Service (FMS)) Check Claims with an BFS Form 1133, BFS Form 3858, indicating proper endorsement by the taxpayer. Send the taxpayer a photocopy of the negotiated check(s) and BFS Form 1133.

(8) When there is no response from the taxpayer within 45 days, and the Erroneous Refund is over ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, within 10 work-days of the 45th day, initiate Form 2209 procedures, if not already completed, include the following when mailing Form 2209:

1. The taxpayer's initial correspondence;

2. The photocopy of the check; and

3. History Sheet.

Note: Accessing Integrated Access System (ICS) is an optional method to contact Field Collections instead of issuing Form 2209.

(9) If the Erroneous Refund is less than ≡ ≡ ≡ ≡ ≡ ≡ follow guidelines in IRM 3.17.80.1.22, IRM 3.17.80.1.22.1 or IRM 3.17.80.1.22.2, Maintaining Case Files.

(10) If photocopy of the check(s) received from Check Claims, with an accompanying BFS Form 1133 and BFS Form 3858 indicate different endorsement(s).

1. Send the taxpayer a photocopy of the negotiated check(s), BFS Form 1133, and a Letter 206-C or Letter 3414-C as appropriate.

2. Explain per the taxpayer's request, a copy of the refund check(s) is attached and BFS Form 1133 for each check.

3. Taxpayers must complete the Form 1133 for each check and send back to the Erroneous Refund function, in the self-addressed envelope provided.

(11) If no response from the taxpayer within 45 days and the interest letter has not already been sent then follow procedures in IRM 3.17.80.1.22, IRM 3.17.80.1.22.1 or IRM 3.17.80.1.22.2 Maintaining Case Files.

(12) When the taxpayer returns completed Form 1133 , follow procedures in IRM 3.17.80.2, Processing Payments Over Cancellation.

(13) If the taxpayer requests to pay by installments, and the ERSED is still open, accept the offer made by the taxpayer and send the taxpayer pre-addressed envelopes to make payments.

(14) If the taxpayer requests to pay by installments, but no offered amount is provided by the taxpayer, determine the status of the 2 or 5 ERSED. Divide the amount of the Erroneous Refund by the number of months it would take the taxpayer to repay before the ERSED expires. The payment plan will not be extended beyond the ERSED.

1. A suggested payment schedule is shown in Figure 3.17.80-20.

(15) Send the taxpayer a Letter 3414-C or Letter 3064-C.

(16) If the taxpayer requests to pay after the ERSED (2 or 5 years from the date of the refund), inform the taxpayer that voluntary payments are accepted. However:

1. Inform the taxpayer that they are not legally obligated to repay.

2. Inform the taxpayer if the amount is not repaid and the amount is $600.00 or more, the IRS will consider the amount as income and the IRS will issue Form 1099-C, Cancellation of Debt.

3. Process as outlined in IRM 3.17.80.1.27, Repayments after ERSED Expires.

(17) Monitor installment payments. If the taxpayer defaults on an installment, continue to send the quarterly (balance $600 or above) or semi-annual (balance $599.99 or less) reminder letters until the ERSED expires. Then, if necessary, follow the write-off procedures. If the balance due is over $20,000 and it is within six-months of the ERSED, communicate with Collection Field Function via Form 2209 or ICS and inform them there has been a default on the installment payment agreement and request that a Revenue Officer make contact with the defaulting taxpayer. If requested, forward taxpayers original request for installments and brief explanation of case to the Collection or CSCO function. Retain a copy of letter from the taxpayer in the Erroneous Refund case file.

(18) Monitor items where follow-up action is needed.

(19) When the 15XX Account is written off and there is a debit balance due on the taxpayers installment account, assess interest only on the amount of the Erroneous Refund from either:

• the date of demand

• or the date of refund (TC 840 or TC 846 Transaction Code date)

(20) Send taxpayer a Letter 3414-C stating another area is handling the remaining balance due on their account. Forward taxpayers original request for installments and brief explanation of case to the appropriate Collection Field Function group. Retain a copy of letter from the taxpayer in the Erroneous Refund case file.

(21) If an erroneous refund involving a direct deposit has been returned or refused from a bank but the bank has taken bank fees, there is still an outstanding balance from the original erroneous refund:

1. Look at the tax module to determine if the case involved ID-theft or suspected ID-theft because the taxpayer has an address belonging to an IRS Processing Center.

2. See instructions in Figure 3.17.80-21a and Figure 3.17.80-21b below:

(1) When replies are received from the Collection Field Function, note the information from Form 2209 on History Sheet

(2) If the reply indicates the taxpayer will not repay, note on the History Sheet whether or not civil suit was recommended or an extension was signed. Associate with the case file. Store case file in the "Suspense" file.

(3) Hold the case in the "Suspense" file until a credit becomes available for offset (2 or 5 year). When offset(s) have satisfied the 15XX Account or the 2 or 5 year statute has expired, input TC 845 using CC REQ77, close the IDRS control base and file the case in the closed file. If no offset(s) become available or the 2 or 5 year statute expires, write-off the unrecoverable refund as outlined in IRM 3.17.80.1.29, Write-Off Procedures for Unrecoverable Erroneous Refunds (for General Ledger 1530, 1535, 1543).

(4) If the taxpayer claims non-receipt of the refund check, the Collection Field Function will retain Form 2209 , but will return Form 2209-A, Status Report, and the taxpayer's statement (if practical). Initiate CC CHKCL or SF 1184 for an unavailable check cancellation and attach the taxpayer's statement, if available. Photocopy all information for the case file. When a reply is received from inquiry to CHKCL Form 1184, notify the originator of the status.

1. If the reply to SF 1184 indicates the cancellation or that Treasury will take further action, prepare Form 2209-A to recall the original Form 2209. Retain the case in the file.

2. If the photocopy of the check indicates a proper endorsement, forward the photocopy to the originator of the Form 2209-A.

3. Annotate the History Sheet of the Letter 510-C, photocopy the document and retain the case in the file.

(5) If a repayment agreement has been accepted, retain case in the cycle file under a review date for the date payments are expected.

1. As payments are received, process as outlined in IRM 3.17.80.1.22, IRM 3.17.80.1.22.1 or IRM 3.17.80.1.22.2, Maintaining Case Fiels, and re-file under the new anticipated payment date.

2. When full payment is achieved, input TC 845 using CC REQ77, close the IDRS control base, annotate History Sheet, and place the case in the closed case file.

3. If there has been payment default for 2 or more months, communicate with the Collection Field Function via Form 2209 F and inform Collection Field Function there has been a payment default. Collection Field Function will return Form 2209-A providing an update.

(1) Background: When a TC 844 is input to a taxpayer's module, it Freezes the entire account (-U Freeze) for credits becoming available for offset. No credits are refunded to the taxpayer or offset to another outstanding balance within the account until the (-U Freeze) is released by a TC 845. TC 845 has restricted input by Accounting/Erroneous Refund employees only. TC 845 must be input on the same module where the TC 844 is present.

1. See IRM 3.17.80.1.19 (1) c Note, General Overview - Category D, Unassessable Erroneous Refunds, for TC 844 actions.

2. TC 844, Erroneous Refund Freeze (-U Freeze) transcripts (Trans-844) electronically generated via Control-D for Accounting/Erroneous Refund function, when credits become available on the frozen account.

3. If no case file, research account to determine area responsible for identifying the Erroneous Refund or for other Freeze conditions or status codes.

4. If case is a Category D, Unassessable Erroneous Refund, and has not been sent to the Erroneous Refund Unit, contact the responsible area by phone/E-mail and request case documentation history unless there is enough credit to full pay the Erroneous Refund then process accordingly. If only partial credit is available then offset and request documentation. Maintain TC 844 transcript as a case file. Update IDRS and history sheet.

5. If case is NOT a Category D erroneous refund, forward transcript to appropriate area. Update IDRS with actions taken and the area it was forwarded to.

(2) Verify that the taxpayer's account has an open control base.

1. If another site has an open control base and the case was not transferred to your site, notify them of the available credit by faxing the Transcript. (See Exhibit 3.17.80-4, Erroneous Refund Coordinators)

2. If no 15XX Account or case reference is found, input TC 845 to release the Freeze.

(3) Determine if the credit is available for transfer to the 15XX Account. Other liability Freezes will be involved. If the credit is not available for transfer, associate the transcript with the case file. Inform the appropriate function of the available credit.

(4) If a TC 150 is not present on the transcript, the credit is not available for transfer unless the payment is designated for the ERRF repayment (payment was misapplied).

(5) Transfer the available credit for the amount of the Erroneous Refund, plus any interest due, to the period involved. Input CC ADD24 or CC ADC24 with appropriate Transaction Code per IRM 2.4, IDRS Input Instructions . (See Figure 3.17.80-22)

(6) If the -U Freeze (TC 844) has not been released, transfer available credit to the 15XX Account, to the debit balance held in the 15XX Account. (See Figure 3.17.80-23) The remaining credit, is applied to the debit balance including any interest due on the tax module. Notify the taxpayer using the Letter 285-C.

(7) If the statute for offset (ERSED 2 or 5 years) expired and a TC 700 is on the account, input the TC 845 using CC REQ77 to release the (" -U" Freeze). Do not transfer the credit to the 15XX Account without approval from the taxpayer. If approval is not received, initiate action to write-off the unrecovered amount in the 15XX Account, per IRM 3.17.64.4.10, Accounting Control. Follow write-off procedures outlined in IRM 3.17.80.1.29, Write-Off Procedures for Unrecoverable Erroneous Refunds.

(8) Notate the case History Sheet that a TC 844 transcript was received and what actions were taken.

(9) Release TC 844 Freeze when the 15XX Account is repaid, or when written off and annotate History Sheet with actions taken. Follow procedures for interest in IRM 3.17.80.1.16, Interest Considerations. Close IDRS control base and file in the closed case file.

(10) A TC 130 will be used to legally offset the issuance of the refund to the Erroneous Refund 15XX Account. Although TC 844 is usually sufficient if the ERSED has not passed, the TC 130 is needed to Freeze a refund on an account other than that which had the Erroneous Refund such as:

1. Cases where a joint account received an Erroneous Refund and taxpayers are now filing separate returns or filing under a different Social Security Number.

2. If a judgment or waiver has been secured without any limitation to time (for example: for Court-Ordered Restitution Cases, there is no expiration of the 10 year Collection statute).

(11) If a manual refund is prepared for any remaining credit, follow IRM 21.4.4, Refund Inquiries, Manual Refunds, manual refund procedures and you must research for:

1. Any outstanding balances (OBL’s).

2. Balance due or open control bases or a "V" Freeze on the account.

3. Centralized Authorization File (CFINQ)" If the refund must be issued to the representative?"

(12) Releasing TC 844 (-U Freeze) for offset.

1. TC 845 is restricted to Accounting/Erroneous Refund IDRS organization codes.

2. Other areas desiring to release an Erroneous Refund Freeze must request (-U Freeze) release in writing or by a phone call.

3. State actions requiring release of (-U Freeze) if the Erroneous Refund was not repaid nor credit was offset.

4. Copy of completed History Sheet with closing actions taken.

5. Current TXMODA showing all posted actions.

6. IDRS Employee number and area requesting input of TC 845.

7. IDRS Employee number of employee inputting TC 845.

8. Update IDRS History Item on TXMODA with requestor of TC 845 and reason.

9. Update History Sheet in Case file and retain if future questions arise pending expiration of statutes or write-off actions.

(13) Annotate the case file. Maintain in the closed case file.

(1) Upon notification of a dishonored refund repayment from the Dishonored Check Unit, research file, 15XX Account, etc., to determine if the case is still active.

(2) If the Erroneous Refund case is active, research TXMOD and case file to determine the status of the dishonored check. Verify that:

1. The dishonored check has been reversed;

2. The debit has been applied to the 15XX Account; and

3. TC 844 is on the module, re-input if necessary.

(3) Determine if a Letter 510-C has been issued to the taxpayer and the status of the 2 or 5 year statute.

(4) If the 5 year statute has not expired and the Letter 510-C has not been issued, monitor case for 45 days, awaiting a reply to Form 2287 (c) notice, Check Not Accepted By Bank (issued by the Dishonored Check Unit). If no repayment is received within 45 days, send taxpayer a second Letter 510-C as outlined in IRM 3.17.80.1.22, IRM 3.17.80.1.22.1 and 3.17.80.1.22.2, Maintaining Case Files.

(5) If the 5 year Statute has not expired and the Letter 510-C has been issued, follow instructions in IRM 3.17.80.1.26(4), Dishonored Check Erroneous Refund Repayments, above, except do not send Letter 510-C. Send Letter 3064-C to taxpayer, using open paragraphs as follows: "The check you submitted for repayment of an Erroneous Refund issued to you has been dishonored. Form 2287 (c) has been issued to you requesting payment. Therefore, your account remains in balance due status, accruing penalties and interest until paid in full." The issuance of a Letter 3064-C is limited to the specifications of the 5 year Statute.

(6) If the 5 year statute has expired, follow write-off procedures as outlined in IRM 3.17.80.1.29, Write-Off Procedures for Unrecoverable Erroneous Refunds (for General Ledger 1530, 1535, 1543).

(7) Notate History Sheet with actions taken and re-file case for follow-up.

(1) When a repayment is received, or when credit has been available, after the 2 or 5 year recovery Statute has expired, follow procedures below:

1. Notify the taxpayer that the IRS no longer has a legal right to recover the Erroneous Refund (e.g., Letter 3414-C).

2. However, the taxpayer will choose to apply the money to the Erroneous Refund liability or

3. The taxpayer will designate the payment be applied to an outstanding tax liability or refunded.

4. The taxpayer will also insist on repayment of the erroneous refund itself.

(2) If the taxpayer repays any/all of the credits will be sent to Excess Collections:

1. Reopen case file and establish IDRS control base.

2. Post repayment to taxpayer's account as a TC 720. Reverse TC 700 on the account with a TC 702 to the 15XX/6920 Account.

3. Update case file with actions taken. Transfer any/all of the credits to Excess Collections per IRM 21.2.4.3.10, Applying Unresolved Credits for AMRH.

4. Monitor case for transactions and repayments from the taxpayer to post.

5. When all transactions post, re-close control and re-file in closed case file.

(3) If the taxpayer chooses not to repay the Erroneous Refund after expiration of the ERSED:

• Review the case file and ensure that the taxpayer was advised that if they fail to repay the Erroneous Refund, the ERSED has expired and the Erroneous Refund balance is $600.00 or more, the IRS will consider the amount income and issue Form 1099-C, Cancellation of Debt. If documentation exists that the taxpayer was adequately advised (the same year the ERSED expired in) , forward to area to issue IRM 1099-C for the Erroneous Refund amount (Follow write-off procedures at IRM 3.17.80.1.29, Write-Off Procedures for Unrecoverable Erroneous Refunds (for General Ledger 1530, 1535, 1543)).

  Note: Even if the taxpayer was not adequately advised, Form 1099-C must be issued for any balance $600.00 or higher.

(4) If repayments are received after the ERSED has expired and when the taxpayer is making payments, the IRS will continue to issue a Letter 510-C or Letter 3414-C to the taxpayer on a quarterly (balance $600.00 or over) or semi-annual (balance $599.99 or less) basis until the erroneous refund is paid.

(5) If repayments are received after the Form 1099-C was issued, initiate requests and prepare a corrected Form 1099-C via the 1099 software that is made available to the Site Accounting Operations:

1. Adjust the 15XX/4910/6920 Accounts as appropriate.

2. Monitor case for posting actions. Reverse the 15XX/4910/6920 Accounts accordingly as payment or posting documents are received (reverse TC 700 with 702, as necessary).

3. Post repayments as TC 720. Once transactions post, close case and re-file.

(6) "If the taxpayer does not reply:"

1. After monitoring account for 45 days, update IDRS and History Sheet.

2. Reverse the TC 700 for the amount of the credit.

3. Follow write-off procedures as outlined in IRM 3.17.80.1.29, Write-Off Procedures for Unrecoverable Erroneous Refunds (for General Ledger 1530, 1535, 1543), for any remaining Erroneous Refund balance due.

(7) The procedures above leave a proper audit trail of repayments.

(1) TOP erroneous refunds can occur before or after the creditor agency reports to IRS that they made a refund to the taxpayer of an IRS offset.

1. Errors will result from the reversal of a Debtor Master File (DMF) offset.

2. See IRM 21.4.6, Refund Inquiries - Refund Offset, for instructions.

(2) Refer to IRM 21.4.6.5.22.1, Injured Spouse Returned Refunds.

(3) TOP erroneous refunds that occur after BFS reported that they issued a refund of the offset are processed using Erroneous Refund procedures found in IRM 21.4.5, Refund Inquiries, Erroneous Refunds.

(4) Erroneous Refunds occur on TOP offsets when:

1. a manual refund was issued, that also required reversal of an offset made in error.

2. the creditor agency reports a refund of the offset that posts as a TC 131 on ENMOD with the year of offset the same as the offset being reversed.

3. the offset reversal, TC 897, attempts to post after the cycle of the TC 131 and the amount is greater than the offset available for reversal (TC 896 TC 131).

4. an Unpostable Code (UPC) 142 results.

(5) These erroneous refunds will occur on TOP offsets when:

1. a manual or systemic refund was issued that required reversal of a TOP offset

2. the creditor agency or BFS made a refund of the offset (TC 899, type 2 or 3) or BFS has already initiated an offset reversal as a result of a Check Claim, undelivered refund, etc.

3. the offset reversal, TC 766 with OTN, Offset Trace Number, attempts to post after the TC 899 posts, the amount is greater than the offset available for reversal and a manual refund was issued; or, the TC 766 posts and BFS rejects the reversal because an agency refund or Check Claim is being processed.

4. TC 766 will cause a UPC 189 if the amount is greater than the offset available for reversal. If the TC 766 is rejected in whole or in part by BFS, it will appear on the BFS TC 766 Reject Listing. Refer to IRM 21.4.6, Refund Inquiries, Refund Offsets procedures, subsection, entitled Tax Refund Offset.

Note: See Figure 3.17.80-24 and Figure 3.17.80-25.

(1) Unrecoverable Erroneous Refund disbursement losses are written off when the 2 or 5 year ERSED expires unless one of the exceptions below is present.

• A judgment or extension has been secured on the erroneous refund

• The taxpayer is on a payment plan for the erroneous refund and indicates payments will continue

• A signed waiver by the taxpayer has been obtained

(2) The conditions below must be met to prepare the case for the Accountable Officer.

1. History Sheets must be current.

2. IRM 3.0.167, Losses and Shortages, provides specific instructions for requesting relief of the Accountable Officers.

3. Expired Statute or uncollectible cases must be transferred from the 1530, 1540, or 1543 Account to the 4910 Account when relief is requested.

   Note: For Statute Barred Refunds described in IRM 3.17.80.1.19(6), General Overview - Category D, Unassessable Erroneous Refunds, no credit was taken from Account 1540 so, no transfer will take place to the 4910 or 6920 Account. It will only be necessary to be sure to include these losses within the report described in the IRM 3.0.167,Losses and Shortages.

4. Once relief is granted, transfer from the 4910 Account to the 6920 Account.

5. See Exhibit 3.17.80-3, Erroneous Refund Accounts 1530, 1540, and 1543.

(3) When reviewing or working an Erroneous Refund case and the 2 or 5 year ERSED has expired, follow the procedures below unless an exception in (1) above is met.

1. Prepare and process Form 3809 to debit and credit the appropriate accounts. (See Figure 3.17.80-26)



Note: The amount on Form 3809 is the amount in the 15XX Account.

2. If the ERSED has expired in the current calendar year, send the taxpayer a Letter 510-C, Letter 3414-C, or Letter 3064-C via IDRS.

3. Also explain that the taxpayer is no longer legally obligated to repay the Erroneous Refund amount, however, if the ERSED expired in the current calendar year and erroneous amount is $600.00 or more the IRS considers the amount income and will issue Form 1099-C, Cancellation of Debt if it is not repaid by December 31st. (See IRM 3.17.80.1.22 (8) b or IRM 3.17.80.1.22.1 (9) b, Maintaining Case FIles, for suggested wording)

   Note: Management may choose to review a sampling of the letters before being mailed to the taxpayer. However, it is not mandatory since Quality Review also takes a sampling of the letters.

4. Before closing case, review for possible accruals of Interest. If accruals are present and in error, input TC 340 (.00). Attach back-up documentation.

5. Monitor the case file until the 15XX Account amount posts.

6. Input a TC 845 using CC REQ77 if a TC 844 (-U Freeze) is still on the module.

7. Update the IDRS control base for write-off.

8. Ensure the case is marked as a "Write-Off" on the outside of the folder in black marker.

9. Update case History Sheet.

10. Send a Form 2209-A to recall Form 2209, if there is still one outstanding. (See Figure 3.17.80-27)

    Note: It is optional to use Integrated Collection system (ICS) instead of issuing/recalling Form 2209.

(4) If Erroneous Refund repayments are received after write-off actions have taken place (Refer to IRM 3.17.80.1.27, Erroneous Refund Repayments After the 2 year or 5 year Statute Has Expired).

(1) Unrecoverable erroneously paid refunds will be considered income to the recipient. Form 1099-C, Cancellation of Debt, or Form 1099-MISC, Miscellaneous Income, are issued to IMF and BMF taxpayers receiving such refunds instructing them to include these amounts as income on their returns for the year indicated on the 1099s.

(2) In situations where the unassessable erroneous refund is income in the year it is received, a Form 1099-C must not be issued for any year. Instead the IRS must issue a Form 1099-MISC, Miscellaneous Income, with respect to the year the unassessable erroneous refund is received and include the unpaid amount of the erroneous refund under line item entry number 3, "Other Income".

1. A taxpayer does not have income if the taxpayer returns the check to the government within the same tax year.

2. If a taxpayer cashes the unassessable erroneous refund check, but repays the amount within the same tax year received, it is not income.

3. Most unassessable erroneous refunds are not income in the year they are received.

(3) Erroneous Refunds, whether Assessable or Unassessable, must not be reported on Form 1099–C in the year the Erroneous Refund was received if:

1. the IRS intends to recover these amounts,

2. various periods for collection (CSED and ERSED) have not yet expired,

3. and collection activity, including offsets, will continue.

(4) Careful case review is necessary to determine which year to report erroneous refunds of more than $600.00 on Form 1099-C or Form 1099-MISC.

(5) Enterprise Computing Center (ECC) - Martinsburg, Information Returns Program (IRP) publishes annual revisions to the Instructions and Specifications for preparing Form 1099, Form 1098, Form 5498 and Form W2-G Reporting (Publication 1220).

1. The Headquarters Erroneous Refund Analyst will transmit information to IRS, ECC, as described in the instructions using the appropriate transmittal, Form 1096, Annual Summary and Transmittal of U.S. Information Returns, for fewer than 250 items reported. The due date for filing information returns is generally by February 28, annually.

2. The Site Accounting Operations will retain copies of Form 1099-C and Form 1099-MISC for 4 years.

3. The Site Accounting Operations will ensure that Form 1099-C and Form 1099-MISC are issued by January 31 annually.

(6) Review case files. Prepare Form 1099-C, Cancellation of Debt, if the outstanding Erroneous Refund balance is $600.00 or more.

1. Report the amount of the discharged debt in Box 2 of Form 1099-C.

2. Enter the date of the discharge in Box 1.

3. Review the case file to ascertain that the taxpayer was notified in the year of the Statute expiration that this amount would be considered income and reported to IRS if not repaid.

4. The Restructuring and Reform Act of 1998 (RRA 98), Section 3705(a) requires a contact name, and telephone number in the event the taxpayer has questions about the document. Include the appropriate site Unit's telephone number in the Form 1099-C and Form 1099-MISC box entitled" Creditor's name, address ". If this is not a toll-free telephone number, indicate not toll-free. This will ensure that the taxpayer will reach the appropriate area to pose questions.

(7) When no reply is received from a taxpayer after the second letter is sent and/or if Form 2209 is closed by Technical or Collections without repayment, and/or if the statutory periods have expired (or about to expire).

1. Review cases to determine the year in which the Erroneous Refund would be considered income to the taxpayer.

2. If correspondence or notification of the IRSs intent to issue Form 1099-C or Form 1099-MISC was sent to the taxpayer in the year the ERSED expired a Form 1099-Cor Form 1099-MISC will be issued.

3. If correspondence or notification of the IRS's intent to issue Form 1099-C or Form 1099-MISC cannot be determined, review by manager is required.

(8) For cases where it has been determined that a Form 1099-C or Form 1099-MISC, it is considered as additional customer service to send a Letter 3414-C , Letter 510-C or a Letter 3064-C to remind the taxpayer(s) they will receive some type of a Form 1099.

1. Determine whether a Form 1099-INT for interest paid was or will be issued.

2. If Form 1099-INT has already been or will be issued for the interest amount but the Erroneous Refund principal has not been recovered, photocopy the 1099-C notification letter. Note the copy for issuance of the Form 1099-C, principal amount only, and forward to the appropriate area.

3. If Form 1099-INT have not or will not be issued, follow the instructions in IRM 3.17.80.1.19 (4), above to issue Form 1099-C or Form 1099-MISC for the Erroneous Refund Principal and Interest. Add the following statement in Box 5, Debt Description - Erroneous Refund dated 06/21/20XX for $1,100.00 Notice Dated 07/15/20XX. (See Figure 3.17.80-28)

(9) Complete the Form 1099-C or Form 1099-MISC:

1. Always use "Detroit Computing Center" in first name line.

2. Always use "Internal Revenue Service" in the second name line.

   Note: Important: Include the contact title, last name and telephone number of the unit "not a toll-free number" in name line. This is required by RRA 98, Section 3705.

3. Always use Submission Processing site Address (Where the Form 1099-C originates) as the Filer's address.

4. Creditor's Federal Identification Number will always be: "≡ ≡ ≡ ≡ ≡ ≡ ≡"

5. Debtor's name and identification number: taxpayer name, SSN or EIN

6. Box 1: Enter the date the debt was cancelled. Use format MMDDYY.

7. Box 2: Enter amount of the cancelled debt.

8. Box 3: Enter Interest amount which is included in the cancelled debt (Box 2), if appropriate. Use for Form 1099-MISC.

9. Box 4: Enter erroneous refund date and amount as a description of the origin of the debt.

10. Box 5: Enter X, since the debtor was personally liable for the repayment of the debt.

11. Box 6: Enter "C" or other applicable identifiable event code.

(10) Part A of all paper Form 1099 copies must be sent to IRS with Form 1096, Annual Summary and Transmittal of U.S. Information Returns; Part B is furnished to the taxpayer/debtor unless this process has been automated by your site.

(11) A copy of Form 1099 must be kept for, at least, 4 years from the due date of the return, or sufficient information to be able to reconstruct the data (case file) must be retained for, at least, 4 years from the due date of the return.

(1) When the RACS team receives the Whistleblower package there are three items:

• Memo signed by the Submission Processing Director for the award payment and one for funds transfer to special funds receipt. The second one releases money from the whistleblower account to the 4625 informant account.

• Memo for funds transfer to special funds receipt, releasing money from the Whistleblower account to the 4625 Informant account.

• Manual refund form which is processed by the Manual Refund team.

(2) For each informant, a Form 1099-MISC. must be completed and sent to the taxpayer no later than the last work-day of the month of January.

(3) For cases where it has been determined that a Form 1099-C or Form 1099-MISC, it is considered as additional customer service to send a Letter 3414-C , Letter 510-C or a Letter 3064-C to remind the taxpayer(s) they will receive some type of a Form 1099.

(1) If the undeliverable letter has received a Return address containing an IRS address, the tax return will involve ID-theft. Make contact with the appropriate point of contact in the IRM 3.17.80.2.6, Resolving Unpostable Identity Theft Cases Where There is Duplicate TC 841, or http://serp.enterprise.irs.gov/databases/who-where.dr/idt-liaison-listing.html, SERP - IDT Liaison Listing - Who/Where (irs.gov) SP Specialized IDT Units and make any address update based on those communications.

(2) Research Undeliverables using CC ENMOD, CC NAMES, CC NAMEI, CC IMFOLE, CC BMFOLE, CC IRPTR, CC TPIIP, or access Accurint with the assistance of Accounting’s Unidentified Team, and RTR (submitted checks often contain a more current address). Check ENMOD, BMFOLE, or IMFOLE for recently-posted or pending address changes some are made by the National Change of Address (NCOA) Program and are indicated by the presence of TC 014 and the unique DLN of xx26399599999Y, with “xx” representing the IRSC of each campus. Update the Form 1099-C using the more current address or the pending change-of-address. Do not change the address on CC ENMOD

(3) If a yellow USPS forwarding label is attached, verify the address on the label using CC ENMOD and CC NAMES.

(4) Perfect any new address by entering into USPS.COM - Zip Code Finder at https://tools.usps.com/go/ZipLookupAction!input.action, ZIP Code™ Lookup | USPS.

(5) If a better address is found, include Form 8822, Change of Address, with the re-mailing of the Form 1099-C. Completion of this form by the taxpayer authorizes an address change.

(6) Use CC ACTON to enter a history item, "8822toTP"if CC TXMOD is present on IDRS. Do not create a dummy module to input a history item.

(7) If no better address is found:

1. E-filed tax returns involving the erroneous refund: void (“X” through) the Form 1099-C.

2. After a second undelivered Form 1099-C has been returned and a paper tax return is involved with the erroneous refund: attach Form 9856, Attachment Alert, to send the Form Form 1099-C (along with envelope and any stuffer’s) to Files to be associated with the return.

3. Each time (no more than 2) a Form 1099-C is returned undelivered, use CC ACTON to enter a history item, "UNDL1099C"if CC TXMOD is present on IDRS. Do not create a dummy module to input a history item

(1) When Form 1081 Treasury Receivable Accounting, and Collection System (TRACS) and Bureau Fiscal Services (BFS) 1133R (Release of Claim Against the United States for Proceeds of a Government Check) are received in Accounting, follow the procedures outlined in IRM 3.17.80.1.29, Write-off Procedures for Unrecoverable Erroneous Refunds.

(2) If the taxpayer's response to Letter 510-C or by telephone inquiry is: they did not cash the refund check, or did not understand when they signed the release Form BFS 1133R (provided by Secret Service), follow the instructions outlined below.

1. Inform the taxpayer to submit a signed letter to the IRS stating that they did not understand the claim form they signed or did not cash the check in question.

2. Upon receipt of the taxpayer's correspondence, prepare and send a 2 way memo or Form 3864 (See Figure 3.17.80-29) explaining the situation to BFS. Attach the following information:

Note: Attach the Letter from the taxpayer, attach copy of the Check in questions and attach Release Claim Form secured by the Secret Service.



3. Send the taxpayer an interim letter stating their correspondence has been received and was forwarded to BFS for further investigation.

4. Update the IDRS control base.

(3) Monitor the case for 60 days. If no reply after 60 days:

1. Follow-up with BFS on Form 3864 or 2 way memo allowing 30 days for a reply.

2. If no reply from BFS to the follow-up, call the BFS Check Information telephone answering unit at (855) 868-0151. Have the following information available: check number, check symbol, check date, payee's name, and the dates the initial follow-up information was sent to BFS.

Note: This information can be obtained from IDRS using CC IMFOL#.

(4) If the reply to Form 3864 or 2 way memo indicates the taxpayer benefited from the proceeds of the check:

1. Resume the manual billing process and send a Letter 2218-C informing the taxpayer of Bureau Fiscal Services' decision that they benefited from the proceeds of the check and they must repay the amount.

2. Inform the taxpayer that their only recourse is through civil suit action through the courts system.

(5) If the taxpayer did not benefit from the check and BFS indicates that a future Form 1081/TRACS or a Limited Payability credit will be issued to IRS:

1. Inform the taxpayer that their account is being settled.

2. Monitor for the credit to be sent from BFS. Close the case file and IDRS control base once the credit has been reversed.

   Note: If the situation in IRM 3.17.80.1.33(5), Release Claim Form Secured by Secret Service, above occurs and the debit is in the 15XX Account, reverse the appropriate debit back to the taxpayer's account before posting TC 841.

(1) Identify Unassessable types of erroneous refunds and determine the correct Accountable Officer for recovery actions. These procedures serve as guidelines for transferring cases due to Director's accountability for Category D, unassessable erroneous refunds.

1. Manual refunds (TC 840) are usually considered the Erroneous Refund when there are duplicate generated system refunds (TC 846) or duplicate manual refunds. Erroneous Refunds are generally caused due to improper monitoring of accounts and failure to intercept duplicate generated refunds. When the TC 846 went to the incorrect individual or is part of the Refund Intercept Program the TC 846 is considered the Erroneous Refund.

2. If a duplicate TC 846 (due to a duplicate or reprocessed return), use the latest TC 846 date.

3. Submission Processing site codes in the Refund Schedule Number (RSN) for TC 846 and TC 840 determine the site with recovery responsibilities for the Erroneous Refund. The former use of the Document Locator Number (DLN) or the File Location Code (FLC) will be overruled by the sort by Refund Schedule Number.

4. Amounts will be required to be reported as a disbursement loss if not repaid or recovered, and will also require issuance of Form 1099-C, Cancellation of Debt. (See IRM 3.17.80.1.30, Forms 1099 - Unrecoverable unassessable erroneous refunds)

5. However, if it is determined that the Erroneous Refund was caused by another location due to improper monitoring and actions, the DLN area of the transaction causing the Erroneous Refund will be held responsible for documenting the circumstances for the loss.

6. Review cases for completeness and be on the lookout for cases identified as misapplied credit or estimated payments. Ensure appropriate actions have been taken to properly allocate payments on the appropriate accounts.

(2) If Unassessable Category D Erroneous Refund cases must be transferred to another site:

1. Contact the gaining site Erroneous Refund Coordinator by fax or phone,

2. Prepare accurate transfer documentation,

3. Update IDRS with actions taken to maintain control of the case.

4. Send the taxpayer a letter (e.g. Letter 86-C) stating that the case is being transferred. Provide the name, telephone number and address of the gaining site Erroneous Refund Coordinator. (See Exhibit 3.17.80-4, Erroneous Refund Coordinators)

5. Do not transfer original returns or original posting vouchers.

6. Retain complete copy of file (including pertinent check copies) in the closed case file for 2 years.

(3) The losing SP site must:

1. Contact the gaining site Erroneous Refund Coordinators. (See Exhibit 3.17.80-4)

2. Update IDRS, CC TXMOD, showing the transfer, e.g., TRSFTO63.

3. Ensure/Update status to "A." Do not close control base.

4. Do not input TC 845 or TC 700.

5. Take actions to prevent erroneous or duplicate notices to taxpayer.

6. Prepare Form 3210, Document Transmittal and maintain record of cases transferred to and received from other sites.

Note: Issue transfer letter to the taxpayer, attach TXMOD print, attach all taxpayer correspondence or Form 4442 (if applicable), attach updated History Sheet, and attach all other pertinent information.

7. Update status only after the receiving site updates existing control base on IDRS and acknowledges receipt of Form 3210.

8. Provide documentation related to the case (History Sheet from the point the Erroneous Refund was discovered, Letter 510-C, Form 2209, Form 3809, correspondence, transcripts, etc.).

9. Monitor the gaining site CC TXMOD via IDRS (IMFOL, C, Refund Research Screen) until the case is updated.

Note: Follow-up must be made for transfer requests not acknowledged by the gaining site within 30 days from the Release Date on Form 3210 (Refer to IRM 3.17.243, Miscellaneous Accounting).

10. Transfer cases to the site of the Accountable Office as soon as possible no matter the date of the first Letter 510-C.

(4) The gaining SP site must:

1. Update existing IDRS control base within 30 days.

2. Acknowledge (sign) receipt of Form 3210 and return copies to originator within 30 days from the Release Date on Form 3210.

Note: If case(s) are forwarded to an incorrect site for processing, reject the cases to the originator and include feedback that the case(s) belong(s) to another site and Accountable Officer.

3. Input a NEW TC 844. This allows the TRANS-844 transcript to generate to the Submission Processing site maintaining the account.

4. Do not return cases. Communicate with the originator to secure necessary documentation.

5. Input TC 700 and TC 844.

6. Determine if a Letter 510-C has been issued. If a second Letter 510-C is due, issue the second Letter 510-C.

(5) Cases already in Litigation are exempt from these procedures and will not be transferred.

(6) TC 844 transcripts must be forwarded to the appropriate Submission Processing site.

(7) Before closing cases with TC 845, research account(s) and IDRS to determine whether any other open control bases exist.

(1) Management must report feedback to business or functional areas Points of Contact (See Exhibit 3.17.80-15) when employee actions cause the occurrence of erroneous refunds. This will be the result of lack of actions such as failure to monitor accounts or the originators of manual refunds (TC 840) who inadequately research accounts and fail to stop a system-generated refund (TC 846).

1. Management's interest in the causes of erroneous refunds became elevated as a result of the 1998 TIGTA erroneous refunds audit report.

2. It is suggested reports be centralized at the Operation level or Director's level.

3. Reports at the sites will support documentation that we have provided notification to the areas causing the errors for corrective actions. Similar reviews have been performed by the Government Accountability Office (GAO), TIGTA, the Annual Assurance process and Filing Season Readiness process.

Note: Identity-theft erroneous refunds will not be included within these reports.

4. The calendar-year, monthly Erroneous Refund report is due to Headquarters 10 business days after the last business day of the month (i.e., January report due in February , February report due in March , June report due in July , etc.).

5. A copy of every monthly Erroneous Refund report will be shared with the Accounting Operation Chief, the Accounting P&A Analyst(s), and the P&A Chief (for sharing with the other Site Operation Chiefs).

(2) Only the following descriptions of errors will be included when submitting the monthly reports to Headquarters (HQ):

• Bankruptcy

• Credit Card Charge-back

• Dishonored Check/Stopped Payment/Insufficient Funds

• Duplicate Filed Return

• Duplicate Refund (TC 840 and TC 846-TC 840 in error)

• Duplicate Refund (TC 840 and TC 846-TC 846 in error)

• Duplicate Refund (Two TC 840’s)

• Duplicate Refund Systemic

• Encoding Error

• Fraudulent Return (TC 840/841)

• Health Coverage Tax Credit (HCTC)

• Failure to code or input Computer Condition Code (CCC)"O"

  Note: If a Submission Processing Site has failed to code or input the CCC, always send error feedback to the Site’s SP P&A Chief in addition to the appropriate area causing the error. Refer to this instruction when doing so.

• Fraudulent Returns (TC 840/841)

• Health Coverage Tax Credit (HCTC)

• Identity Theft- Thief Benefitted

• Identity Theft - Taxpayer Benefitted include a specific reason (i.e., Child Support or Offset to an Agency) that needs to be included within the description

• Incorrect Adjustment

• Incorrect Hold Code

• Incorrect Credit Interest

• Incorrect Credit Transfer

• Incorrect Manual Refund (TC 840)

• Incorrect Withholding

• Internet Tax Scheme

• Misapplied Payment — Account #

• Misapplied Payment — Master File Tax (MFT)

• Misapplied Payment — Routing #

• Misapplied Payment — Tax Year

• Misapplied Payment — TIN

• Misapplied Payment Lockbox — Account #

• Misapplied Payment Lockbox — MFT

• Misapplied Payment Lockbox — Routing #

• Misapplied Payment Lockbox — Tax Year

• Misapplied Payment Lockbox — TIN

• Mixed Entity

• Omitted/Improper Monitoring

• Other-Field Error (describe in detail)

• Other-Service Center Error (describe in detail with above or below causes)

• Payment Over Cancellation (POC)

• Return Preparer Misconduct (RPM) - Taxpayer Benefitted)

• Refund Before Assessment

• Refund Intercept Processing Error

• Re-sequencing - not systemic

• Statute Expired Credit Release

Note: Always use TCIS to research the actual refund date. If TCIS has no information, use the TC 846 date on IDRS.

• Systemic causes (describe in detail)

• TAS-claimed Taxpayer Hardship The actual cause of the erroneous refund must be listed after the, "TAS-claimed Taxpayer Hardship verbiage."

  Note: This will be used when credit was available but released because of the hardship, and any remaining credits did not pay off the ERRF

  (.)

(3) Always forward a copy of this report to the site Submission Processing P&A Chief and the P&A Accounting Analyst with a short explanation about the monthly report and be sure to note that these are not cases that have been written-off.

(4) When feedback is received and there is disagreement on who caused the erroneous refund, and if it is discovered the error feedback must have been sent elsewhere (i.e., a previous month lockbox error was really a taxpayer error), prepare an updated monthly report and send it to the HQ Erroneous Refund Analyst the same time the regularly scheduled monthly report is due.

(5) For lockbox cases that are being written-off, the above described report and copies of the cases must be sent to the HQ Losses and Shortages Analyst.

(6) Uploading Multiple Reports go to the Category D Erroneous Refund SharePoint site at: https://irsgov.sharepoint.com/sites/JKQSGYZD/SitePages/Home.aspx, Category D Erroneous Refunds (sharepoint.com)

1. From the Category D Erroneous Refund SharePoint Site home page click on the Erroneous Refund Reports link at the top of the screen.

2. Select (click on) the appropriate Report folder.

3. Select (click on) the appropriate Site for loading your report.

4. Select (click on) the appropriate Site for loading your report.

5. Select (click on) the appropriate month of your report.

6. On the top of the screen under the Erroneous Refund Tab, select Upload Document and from the drop‐down list select Upload Document.

7. Select the monthly erroneous refund report/file that you want to upload and select OK.

8. Select Yes on the pop-up box and your file will be uploaded and be viewable within the Category D Erroneous Refund SharePoint Site.

(7) Deleting Reports go to the Category D Erroneous Refund SharePoint Site at: https://irsgov.sharepoint.com/sites/JKQSGYZD/SitePages/Home.aspx, Category D Erroneous Refunds (sharepoint.com)

1. From the Category D Erroneous Refund SharePoint Site home page click on the Erroneous Refund Reports link at the top of the screen .

2. Select (click on) the appropriate Report folder.

3. Select (click on) the appropriate Site for loading your report.

4. Select (click on) the appropriate Site for loading your report.

5. Select (click on) the appropriate month of your report.

6. Select the report that is to be deleted.

7. Move your pointer over the item you want to delete and a box will appear around the item.

8. To the right of the item there will be 3 small dots, click on the 3 dots and a drop-down menu will appear.

9. Select Delete from the list, and then click on OK.

3.17.80.1.35.1 (01-06-2023)

Monthly Reporting and Error Feedback for Duplicate, Manual, Erroneous Refunds (DMER)

(1) TIGTA, GAO, and other management internal control reviews cited a high incidence of duplicate refunds. Because of this, the Wage and Investment Commissioner has asked for additional focus on duplicate, manual, erroneous refunds.

(2) Refer to IRM 21.4.5.5.6, Duplicate, Manual, Erroneous Refund (DMER), for identifying and initial actions that anyone must take if/when a DMER is identified.

1. Accounting Erroneous Refund team employees must be able to identify DMER cases!

2. A Duplicate Manual Erroneous Refund (DMER) is created anytime a manual refund (TC 840) and a computer generated refund (TC 846) or two manual refunds are issued for the same overpayment, one of which the taxpayer is not entitled to receive. This definition applies regardless of taxpayer intent or whether the error that caused the DMER was made by the IRS, the taxpayer, or a third party.

3. Because of the seriousness of this kind of erroneous refund it is imperative for you to know the IRM 21.4.5.5.6, Duplicate, Manual, Erroneous Refund (DMER), information.

(3) Form 14165, Erroneous TC 840/TC 846 Report, will be included with all duplicate, manual, erroneous refund (DMER) cases forwarded to the Erroneous Refund Teams. (See IRM 21.4.5.5.6.1, Duplicate Manual Erroneous Refunds (DMER) Report, and Figure 3.17.80-2) Lines 1 through 10 of the Form 14165 must be completed by the organization that forwards the case to the Erroneous Refund Teams.

Note: If the Form 14165 (boxes 1-9) are not fully completed, complete the entries for the area if possible. If completion of the entries is not possible, contact the generating area for the information and complete the Form 14165. If the information is not supplied to the erroneous refund team/employee within 5 business days of contacting the area, do not reject the form or case. Instead, proceed to report the case(s) to the HQ Submission Processing Erroneous Refund Analyst who will make contact with the appropriate Business Operating Division point of contact to ask the appropriate forms/documentation be sent to the appropriate Erroneous Refund team. Generally, the forms will be completed properly as outlined in IRM 21.4.5.5.6.1, Duplicate Manual Erroneous Refunds (DMER) Report, Form 14165, Erroneous TC 840/TC 846.

(4) The Erroneous Refund Teams will complete lines 11 through 13 of the Form 14165 that must be included with each DMER case.

1. Box 11 must be entered and include the manual refund Approver's SEID.

2. Box 12 must be entered and include the manual refund preparer's name and phone number.

3. Box 13 must be entered and include the Manual Refund request date of approval.

(5) Any complete DMER case received during the month will be reported to SP Headquarters in the same month when the case was received by the site (e.g. a case received on May 15th will be reported within the May report, a case received on June 29th will be reported on the June report, etc.)

(6) By the 1st of each month, the Business Operating Division (BOD) Points of Contact (See Exhibit 3.17.80-15) will receive a copy of newly-identified DMER cases from HQ AM who researches Masterfile for erroneous refunds.

(7) The BOD Points of Contact (POC’s) have until the 18th day of the month (unless the 18th day falls on the weekend, then it will be the Friday before the 18th day e.g. if the 18th day falls on a Sunday then the POC’s will have until the 16th day of the month) to:

1. Review and provide feedback to the DMER HQ AM Analyst, if the BOD POC does not agree with the DMER list. If no feedback is received from the BOD POC, all DMER cases shown on the list will be loaded to the DMER SharePoint site for inclusion in the Duplicate Refund Report (DRR) that is completed by Submission Processing HQ Erroneous Refund Analyst.

2. Forward all cases to the DMER originator(s)/preparer with instructions for them to: 1)Take the necessary corrective actions – including the instructions from the DMER AM HQ Analyst (basically, follow IRM 21.4.5, Refund Inquiries, Erroneous Refunds, instructions). 2) Scan complete case(s) to the BOD POC (send the BOD POC’s a complete copy of the DMER case with appropriate Forms).

3. Create each DMER case file name using the following naming convention: The Refund Schedule Number (RSN) and the last four digits of TIN are provided in the DMER log from AM HQ Analyst (See below example where the file name is 2014094175W_6081 ).

RSN provided by HQ AM Analyst	Last 4-digits of TIN provided by AM HQ Analyst
2014094175W	6081

(8) After the DMER originator/preparer e-mail’s the completed, scanned file(s) back to the BOD POC’s, the POC’s will upload the file onto the New Category D Erroneous Refund SharePoint in the appropriate Report, Fiscal Year and monthly folder (i.e., February, if the due date is February 15th )

Note: Access is very limited to BOD POC’s, SP Erroneous Refund Work Leaders, and HQ Analysts involved with DMER reports. The Category D SharePoint is located at: https://irsgov.sharepoint.com/sites/JKQSGYZD/SitePages/Home.aspx, Category D Erroneous Refunds (sharepoint.com)

(9) AM HQ Analyst will send a reminder to the BOD POC’s 5 days before the due date to ensure timely submission of cases to the Category D Erroneous Refund SharePoint.

(10) Daily, using the 8th and 9th digits of the Refund Schedule Number (RSN), all SP Erroneous Refund Work Leaders will identify their site’s DMER cases in the Category D Erroneous Refund SharePoint. Below is the listing of Submission Processing Center aligning with 8th and 9th digit of the RSN:

8th and 9th digits of RSN:	Site:
18	Austin
07, 08, 09, 89	Kansas City
17, 19, 28, 29, 49	Ogden

(11) Erroneous Refund Work Leaders or designated individuals need to follow Step 10 daily until the 18th day of each month (from the 1st through 17th, excluding weekends). After the 18th of each month, review the Category D Erroneous Refund SharePoint weekly to determine if there are additional cases for your Site.

(12) Begin the process of reviewing every DMER case for completeness. Then, rename the uploaded files:

1. Move your pointer over the item you want to rename.

2. To the right of the item there will be 3 small dots, click on the 3 dots and a drop-down menu will appear.

3. Select Rename from the list, and add “- completed” or -incomplete to the end of the name (See example below) and then click on OK.

Original Name File	Re-Named File
2014093081_6081	2014093081_6081_Completed
2014093081_6081	2014093081_6081_Incomplete

(13) If the case is complete, add the DMER case file(s) information to the DMER Monthly Report Log on the Category D Erroneous Refund SharePoint Report folder located at: https://irsgov.sharepoint.com/sites/JKQSGYZD/SitePages/Home.aspx, Category D Erroneous Refunds (sharepoint.com)

1. Select the appropriate month (e.g., If you’ve just completed the March report then next month you’ll be working on the April report, you’d select the month of April).

2. Download case(s) marked completed and assign for processing.

3. Move your pointer over the item you want to download.

4. To the right of the item there will be 3 small dots, click on the 3 dots and a drop-down menu will appear.

5. Select download copy.

(14) Repeat step 13 for all complete cases.

Note: This process including the below instructions needs to begin, daily, by the 7th day of each new month (or the Friday before the 7th day if the 7th day falls on a weekend) and continue through the 18th day of each month (or the Friday before the 18th (or the Friday before the 18th if the 18th falls on a weekend). Be sure to check if there are new cases every 3 days after the 18th day (or the following Monday if the 18th falls on a weekend day.

(15) Click on the Reports tab, DMER Monthly Log folder located in the Category D Erroneous Refund SharePointsite at:https://irsgov.sharepoint.com/sites/JKQSGYZD/SitePages/Home.aspx, Category D Erroneous Refunds (sharepoint.com)) .

(16) Select the tab for your site, select the current month (e.g. If you’ve just completed the March report then the next month you’ll be working with is the April report, select “April”).

(17) Update DMER log notating the critical documents received for AM HQ-Identified DMER’s

(18) Add/upload Self-Identified DMER’s (an example of a self-identified DMER would be a case where Accounting has identified they are the cause of the DMER and they have to follow IRM 21.4.5.5.6, Duplicate Manual Erroneous Refunds (DMER), to start the erroneous refund process for DMER’s) and critical documents received to DMER log (these are true DMER cases that belong to your site but were not identified by the AM HQ Analyst and communicated out to the BOD POC’s).

(19) For cases with "Incomplete" documentation.

1. Move your pointer over the case(s) you want to rename.

2. To the right of the item there will be 3 small dots, click on the 3 dots and a drop-down menu will appear.

3. Click on rename and add -incomplete to the end of the name (See example below).

Original named document:	Revised named incomplete document:
2014093081_6081	2014093081_6081_Incomplete

(20) Click on the Reports tab, DMER Monthly Log folder located in the Category D Erroneous Refund SharePoint site located at https://irsgov.sharepoint.com/sites/JKQSGYZD/SitePages/Home.aspx, Category D Erroneous Refunds (sharepoint.com).

(21) Select the tab for your site, select the current month (e.g., If you’ve just completed the March report then the next month you’ll be working with is the April report, select “April”).

(22) Update DMER log notating the missing critical documents (e.g. Form 14165, Form 12356, IDRS transcript, etc.).

(23) Contact (e-mail) the appropriate Business Operating Division (BOD) Point of Contact (See Exhibit 3.17.80-15) for any DMER cases where it is believed their Division employees did not follow IRM 21.4.5.5.6, Duplicate Manual Erroneous Refunds (DMER), in determining whether the case is/is not a a true DMER case. When contacting the BOD Point of Contact, be sure to send a copy of the case in question. Carbon Copy the Submission Processing HQ Erroneous Refund Analyst with all questionable cases.

1. Unless instructed by the Submission Processing HQ Erroneous Refund Analyst, always report it as a DMER erroneous refund following the below instructions.

(24) For any “Self-identified” DMER, the Erroneous Refund Teams will notate on every case's Form 14165 whether the taxpayer repaid the erroneous refund within the 21 day demand date time frame.

(25) Use ONLY Form 14165-A, Duplicate Manual Erroneous Refund Feedback, when preparing error feedback for this type of erroneous refund. Do not issue any additional error feedback (locally-developed) other than Form 14165-A which is found in Publishing's web site at this location: http://publish.no.irs.gov/cat12.cgi?request=CAT1&catnum=59099, Product Catalogue Information for Form 14165-A.

1. Complete boxes 1–9 on Form 14165-A

2. Using the Point of Contact information in Exhibit 3.17.80-15 , send the Form 14165-A (with boxes 1-9 completed) and a copy of the completed Form 14165 to the appropriate Business Operating Division (BOD) point of contact via secure encrypted E-mail correspondence.

3. The Form 14165-A must be completed and submitted no later than 10 business-days after receipt of the DMER case within the Erroneous Refund team.

(1) The following procedures apply to the stolen identity theft cases processed as an erroneous refund. The Unpostable TC 720 or TC 740 will be for accounts that have a TC 841, or a TC 700 posted.

(2) The Unpostables function assigns a control on IDRS (CC TXMOD) to the Accounting Erroneous Refund Team’s generic IDRS number for UPC 138-0 which cannot be resolved in Unpostables.

(3) The Erroneous Refund Team will receive a Case Control Activity (CCA) Report showing the unpostable documents. These Unpostables will have the category RTCK (returned check).

(4) If there is an existing open control base by another area, notify the other area of the actions being taken.

(5) The CCA report and any supporting documentation must be maintained for a three (3) month period.

(1) The Erroneous Refund Team will verify TC 841 on taxpayer's account.

(2) The Erroneous Refund Team prepares a Form 3245 for a TC 843 to debit the taxpayer's account. Assign a DLN using Doc code 45 and a 540-549 blocking to the debit portion. Prepare Form 813.

(3) Prepare a Form 3809 for the credit side to the RRACS GL Account, include the taxpayer's TIN, money and transaction date and in explanation field include Doc-ID. Prepare Form 813 and forward to RACS.

• Debit the taxpayer (4120/4220) account using from Form 3245.

• Credit either the 9998, 6905, or 1545 accounts using the Form 3809.

• RACS will journal using a 400 window for the 9998 or 6905 accounts and a 480 window for the 1545 account.

(4) Stamp or write the 400/480 journal number on Form 3425, Form 3809 and Form 813.

(5) RACS will hand carry Form 3245 and Form 813 to Batching under cover of Form 3210 so that the Form 3245 can be batched and sent to ISRP for transcription.

(6) RACS will give the Form 3809 credit side to the area maintaining the General Ledger account on the credit side of the document.

(7) The Erroneous Refund Team will monitor weekly, on Friday, to look for the TC 843 posting to the taxpayer's account and ensure TC 470 or STAUP actions are taken to stop an incorrect notice.

(8) Once the TC 843 has posted, notify the Unpostables Team, using CC UPDIS, that they can post the Unpostable TC 720 or TC 740 to process the refund cancellation. Close the control base.

(1) There will be cases where the TC 841 posted by one site and the subsequent input of a TC 720, TC 740 or a TC 841 input by another site is going Unpostable. The following scenario and procedures explain the actions needed to resolve this Unpostable.

• Site A had a TC 841 input and journaled to their 1545 Account.

  Note: Research to determine which GL account the TC 841 money is journaled to (1545, 6905, 9998) as it will have been moved from the GL 1545.

• Site B has input a transaction (TC 720, TC 740 or TC 841) as the money has been returned from the bank or BFS. The input transaction goes Unpostable.

• The Unpostable is assigned to Site B's Accounting function.

• Site B will advise Site A that the original action must be reversed. Site B must call or email the appropriate contact in Site A. If a phone call is made, supporting documentation must be faxed following the phone call.

• Site A will need to immediately prepare the necessary documentation to input a TC 843 to reverse the TC 841 and also need to reverse the journal action in their 1545 account.

Note: Input a History item on IDRS when the form to post the TC 843 has been released for transcription.

Note: These items must be worked expeditiously. All sites need to prepare and release the TC 843 documentation to ensure posting within two (2) weeks.

• Site B will monitor the account for posting of the TC 843 and Site B will advise the Unpostable Team to go ahead and post the transaction.

(1) The Erroneous Refund Team will verify the TC 700 is posted on the taxpayers' account.

(2) The Erroneous Refund Team prepares a Form 3809, using a Doc Code 58 and blocking series 790-799 to post a TC 702 (debit) to the taxpayers' account and credit the applicable general ledger account. Prepare a Form 813 and forward to RACS.

• Debit the taxpayer (4120/4220) account using from Form 3809.

• Credit either the 9998, 6905, or 1545 accounts using the Form 3809.

• RACS will journal using a 400 window for the 9998 or 6905 accounts and a 480 window for the 1545 account.

(3) Stamp or write the 400/480 journal number on Form 3809 and Form 813.

(4) RACS will hand carry Form 3809, Form 813 to Batching under cover of Form 3210 so that the Form 3809 can be batched and sent to ISRP for transcription.

(5) RACS will give the Form 3809 credit side to the area maintaining the General Ledger account on the credit side of the document.

(6) The Erroneous Refund Team will monitor daily for TC 702 posting to taxpayer's account and ensure TC 470 or STAUP actions are taken to stop an incorrect notice.

(7) Once TC 702 has posted, contact the Unpostable Team and tell them to process request to post TC 720 or TC 740, Unpostable (code 138 0) to process refund repayment. Close the control base.

(1) The Unpostables function will assign a control on IDRS (CC TXMOD) to the Accounting Erroneous Refund Team’s generic IDRS number for UPC 138-0 which cannot be resolved in Unpostables.

(2) The Erroneous Refund Team will receive a Case Control Activity (CCA) Report showing the unpostable documents.

(3) If there is an existing open control base by another area, notify the other area of the actions being taken.

(4) The Erroneous Refund Team will verify TC 841/848 and that there is no TC 971 AC 663 present.

(5) The Erroneous Refund Team will review IDRS to locate a TC 971 showing the XREF-TIN.

(6) If present, prepare a Form 12857 to debit (TC 840) the true taxpayers’ account and credit (TC 841) the cross-reference TIN. In most cases, this will be an IRSN.

• Assign a DLN, Prepare Form 813 and forward to the RACS Team for journal action. Journal using RRACS Window 400.

• RACS will hand carry both sides of Form 12857 to Batching.

(7) If the XREF-TIN is not present, prepare Form 2275 to request the original Form 12857 from files, using the DLN of the posted TC 841. This will give you the XREF-TIN.

(8) Ensure TC 470 or STAUP actions are taken to stop issuance of incorrect notices and monitor daily for TC 840 to post to the taxpayers’ account stop an incorrect notice.

(9) Once TC 840 has posted, contact the Unpostable Team and tell them to process the request to post TC 720 or TC 740, Unpostable (code 138-0). Close your control base.

(1) The Unpostable operation will 8 code the duplicate TC 841 to the Rejects operation.

(2) Rejects will immediately work these cases. The Rejects function will perform a Reject 630 (4–0) and prepare a Form 4028 (0–2) for the duplicate TC 841, so that this item can be deleted from SCF. Rejects will route the case and Form 4028 under cover of a Form 3210 Accounting.

(3) The Accounting operation will:

• Data Control will input the SCF adjustment to delete the item from SCF.

• For cases where the TC 841 posted using the manual process, you will pull both copies of the Form 3809 out the packs of work. This will include the copy that is in the Erroneous Refund Team and in the team that is/was performing the balancing.

  Note: Void the Form 3809 to ensure it is not reprocessed.

  
  

• The Form 813 will be modified to show the case(s) that were pulled. The item count and the money amounts must be adjusted on the Form 813. The campus has the option of using an alternative method, such as a spreadsheet, to document the adjustments that are made to the money and item count for each block. If an alternative method is used in lieu of documenting the Form 813, you must ensure that all pertinent information is maintained and attached to the Form 813.

• The RACS Team will reverse the original journal action. Journal the total amount of each unpostable document using a 480 window to debit either 4120 (BMF) or 4220 (IMF) and credit the 1545 account. The same document number used in the original 480 journal to open the case MUST be used to reverse the unpostable items.

• A copy of the journal must be given to the team that is performing the balancing for association with the original package.

• The rejected (reversed) items will be listed on a transmittal that is sent back to the originating employee, for all functions except AM or RICS/IVO (AMTAP).

• All items that have been reversed for AM or RICS/IVO because of the duplicate TC 841, must be listed on a transmittal that is to be sent to the point of contact listed below for each site.

(1) When Non-Accounting Operations identify duplicate posting of a TC 841 or TC 700.

(2) Non-Accounting Operations will:

• For duplicate TC 841:

• Prepare a Form 3245 with a TC 843 as a debit.

• Also, prepare a Form 3809 credit to RRACS General Ledger (GL) account with taxpayer's TIN, money, transaction date and Doc ID in the explanation field.
  

• For duplicate TC 700:

• Prepare a Form 3809 debit with a TC 702 to the taxpayer's account with the duplicate TC 700. Credit the RRACS GL account with taxpayer's TIN, money, transaction date and the Doc Id in the explanation field.

Note: Research to determine which GL account the TC 841 or TC 700 money is journaled to (1545, 6905, 9998).

Note: A copy of the TXMOD with the duplicate transaction must accompany the Form 3809 and Form 3245, if not these items will be rejected back to the preparer.

Note: The Form 3245 with a TC 843 will have a blocking series 540–549 with Doc. code 45.

Note: The Form 3809 with a TC 702 will have a blocking series 790–799 with a Doc. code 58.

(3) The Erroneous Refund Team will:

• Review documents for required information.

• Verify copy of TXMOD with duplicate transaction is attached to corrective Form 3809.

• Assign ID theft DLN’s to the Form 3809 and Form 3245 for pipeline processing and RRACS journals.

(1) Due to systemic programming, duplicate TC 700 transactions will post to the taxpayers' module and will result in an erroneous refund. If the Accounting operation identifies cases where there is a duplicate TC 700, they will take the following actions.

(2) If the TC 700 has posted on the account and a credit balance remains:

• Input a TC 570 to freeze the account.

• Pull the Form 3809 for the second transaction from the suspense file.

• Contact the originator and advise them that the transaction appears to be a duplicate. Request that the originator submit the necessary documents, which are stated above, to reverse this transaction.

• Once the documents are received, assign the DLN(s), have the necessary RRACS journal actions completed, and submit the form for pipeline processing.

(3) If the TC 700 has posted on the account and a refund has been issued:

• Pull the Form 3809 for the second TC 700.

• Contact the originator to advise them that there appears to be an erroneous refund on the tax module.

• Advise the originator that the duplicate Form 3809 will be returned and inform them that they must initiate erroneous refund procedures.

• All duplicates that are being returned to the originators must be returned under cover of a Form 3210.

(1) Once extracts are received (IRM 3.17.64.16.4.8), Account 6905 ID Theft Erroneous Refund Write-Off(Nominal Account, DR Normal Balance), pull Form 3809 copies for the corresponding cases identified on the extracts.

(2) Verify volume and totals of cases listed on extracts with the Form 3809 copies.

(3) Verify 5 year statute expiration date has expired, which is determined by the transaction date.

(4) Add a column for the Doc ID on each extract.

(5) Update the extract with the Doc ID for each case, ensuring the Doc ID format is input correctly so that cases are grouped correctly.

(6) Sort extract by Doc ID. This sorting process will ensure all Form 3809 copies from the same Doc ID will be captured and grouped together on the spreadsheet.

(7) Prepare and submit the memorandum along with the extract for ID theft cases for approval and signature from the Accounting Operation Manager.

• Accounting Operation Manager will sign the memorandum only and return to ERRF.

• The ERRF Team will forward the signed memorandum, extracts and Form 3809 copies to the RACS Team for journaling.

(1) Receive signed memorandum and extracts with corresponding Form 3809 copies. Once the journal actions are completed, RACS will forward a copy of the memorandum, extracts and Form 3809 copies to the function maintaining the documents, if not RACS, for balancing and GAO audit file as a closed case.

(1) When NMF identity theft is identified, prepare a Form 3809 to credit the tax account and debit the GL 1545. The designated team in Accounting will number the Form 3809.

1. The Form 3809 with a TC 841 will have a blocking series 945-949 with Doc Code 48. The tax class is “6”.

2. The Form 3809 with a TC 700 will have a blocking series 745-749 with Doc Code 58. The tax class is “6”.

(2) Once the forms are numbered, prepare a Form 813 and forward to the RACS Team for journalization.

(3) RACS will receive identity theft erroneous refund Form 3809 and three Form 813.

(4) Within 24 hours of receipt, the RACS Team prepares a Form 8166 using Doc ID and item count, listing each money amount separately from the Form 3809. The total amount listed on the Form 8166 must equal the Form 813 total. The DOC ID input to RACS will be 15 digits as follows: DOC ID = DLN of Form 813 (without sequence number) plus two-digit year plus total volume on Form 813. e.g., XX000000000XXXX.

(5) The RACS Team will:

1. Journal the TOTAL amount of the Form 813 listed on the Form 8166, using the 480 window to debit 1545 account and credit non-master file 4420 account. For the prepare date on RRACS, use the date of the journal.

2. Stamp or write the 480-journal number on Form 3809 and /or Form 813.

3. Send the Debit copy of Form 3809 and copy of Form 813 to the area that maintains the 1545 account. Form 3809 will be maintained until the five- year statute period has expired.

4. Input the Form 813 information for the credit side into ANMF using the Form 813 Block Control screen and route to the NMF function for input to the ANMF system. A copy of Form 813 is provided to Data Control to establish the credit on SCCF.

(1) After the RACS Team has journalized the Form 3809 copies and forwarded them for processing, the general ledger (GL 1545) side of the Form 3809 is forwarded to the Erroneous Refund Team. The Erroneous Refund Team will:

• Maintain the Form 3809 in a suspense file by month and statute date.

(2) Once the 5-year erroneous refund statute expiration date (ERSED) has passed, the cases will be identified via an extract listing. When the extract is received, prepare a write off memo.

(3) Forward the write off cover memo to the Accounting Operation manager for signature. An example of the write-off cover memo has been added. See https://irm.web.irs.gov/Part3/Chapter17/Section80/IRM3.17.80.aspx#3.17.80-19,IRM 3.17.80, Accounting and Data Control - Working and Monitoring Category D, Erroneous Refund Cases in Accounting Operations (irs.gov) , Exhibit 3.17.80-19.

(4) Forward the signed memo and listing to RACS for journalization, using a 490 window, to credit 1545 and debit 6905 using the same DOC ID as when the case was opened.

(1) On a daily basis, the RACS Team will drop a UPC for the total of Form 3809 copies received that day (receipts). A total of Form 3809 copies are released to Batching that day (production) using OFP 710-01047.

(1) Use the DOC ID and total amount of the Form 813 on the monthly trial balance spreadsheet to balance to Redesign Revenue Accounting Control System (RRACS).

(2) The RRACS report 0155 will not show a true case volume. Therefore, to get the true case volume to report on the Form 3997:

1. Add the number of DOC ID’s previously input to 1545 account (e.g., ITER2012090014).

2. For the manual case ID numbers- e.g., XX000000000XX75, take the last two digits of the DOC ID and add them all together. In this example, the volume would be 75.

3. For systemic, use the EOD 1622 total volume for each day.

4. Add the totals from a and b, and c above to get the grand total.

(1) If the TRACS listing provides only the check's "symbol" and "serial" numbers, use CC IMFOLC with the check "symbol" and "serial" number to retrieve the taxpayer information.

(2) Master File will display either the tax period from which the refund issued, or the Refund Research Database record for the check if no tax module exists. The later is common when your case involves the TIN of the secondary taxpayer on a jointly filed tax period where a refund occurred. (See Figure 3.17.80-35)

(1) All processing for TRACS/GOALS transmission and TRACS listings must be completed within 10-workdays from the received date. The TRACS listing which is produced from ECC, provides an individual breakdown of the charges by taxpayer. Included on the listing is (See Figure 3.17.80-36 and Figure 3.17.80-37):

1. SF 1081/TRACS Schedule number

2. Date prepared

3. Agency Location Code

4. Budget Clearing Account being charged

5. Agency Reference Information

6. Check symbol

7. Check number

8. Check date

9. Payee's name and TIN

10. Applicable status code

11. Amount being charged

12. SF 215 number and date

(2) Review each TRACS/GOALS transmission with the TRACS listing, and the TRACS listing with the Payment Over Cancellation () Claims Package when received to ensure the following:

1. Submission Processing site Agency Location Code (ALC) is correct.

2. Taxpayer's TIN is provided.

3. BFS Form 3858 with taxpayer's name and address are provided.

4. Photocopies of the front and back of the check(s) are attached.

5. The charge is intended for the correct Submission Processing site ALC.

6. The total amount on the TRACS listing is the same as the amount of GOALS transmission.

7. Account number is present.

(3) Contact Check Claims Group (CCG) by telephone (855) 868-0151, Option 1, Sub-option 1, if any of the following discrepancies are found:

1. Agency Location Code is incorrect.

2. Account cannot be identified.

3. Charge belongs to another agency or Submission Processing site.

4. Charges are not for tax refunds.

5. Taxpayer identifying information (SSN, EIN, name or address) is missing or incorrect.

6. Amount of the TRACS/GOALS transmission does not equal the total amount of the detail on the TRACS listing.

7. Photocopies of the check(s) are not provided.

(4) Check Claims Group (CCG) will:

1. Provide the missing date.

2. Reverse the charge via SF 1081/TRACS and, if appropriate, issue a corrected SF 1081/TRACS.

3. Take the necessary action to correct any differences when the amount shown on the SF 1081/TRACS Listing and SF 1081/TRACS Schedule differ.

(5) Post either a TC 840 or a TC 843. If necessary, use CC IMFOLC to locate the tax period on which the related TC 846/TC 840 posted and take one of the following actions based on the circumstances described:

1. Post TC 840 when the BFS issues a settlement (replacement) check, but later concludes that the taxpayer did, in fact, cash both checks. The IRS accounts for the duplicate refunds by posting the second refund as a TC 840 (Manual Refund) and IRS pursues recovery of the duplicated refund as a Category D Erroneous Refund with a 5 year Erroneous Refund Statute Expiration Date (ERSED).

2. Post a TC 843 when a TC 841 was posted based on an earlier non-receipt claim on which, at the time, the first check had not been cashed, and the IRS issued a second refund. The BFS has now concluded that both checks have been cashed. The TC 843 moves the tax account into balance due status and the duplicated refund is pursued as a Category D Erroneous refund with a 5 year ERSED.

(6) TC 840 Procedures - Copy of settlement check present:

1. Prepare Form 3245 in triplicate to input TC 840 on the taxpayer's account. Use the date of the settlement check as the date of the TC 840 (Schedule date). (See Figure 3.17.80-38)

2. Attach to both "Copy 1" and "Copy 2" of Form 3245, photocopies of the settlement check, the BFS form or listing, a CC TXMOD printout, and all other documentation.

3. Use CC ACTON to update and close your control base, then deliver the package to the team that does the numbering.

4. Retain and file your "Copy 3" of Form 3245 and back-up items according to local procedures.

5. Once numbered, copy and retain one numbered set with your case file.

6. Input a TC 470 CC 93 (Input TC 470 CC 93 only if prior TC470 CC 93 has expired or was not previously input) to hold balance due notices, then deliver the numbered sets to Data Control.

(7) TC 840 Procedures - No copy of settlement check:

1. Check CC TXMOD for a TC 971 with Action Code 078 or 079. If present, the Refund Inquiry Function has included a copy of the original refund check with their TC 290 for $.00

2. Use the "Symbol" and "Serial" numbers from the original refund check (See Figure 3.17.80-39) to search the TCIS database for an image of the cross-referenced replacement check (settlement check). Erroneous Refunds Job Aid 2493-701 contains precise TCIS navigation instructions for this task.

3. If still unable to locate an image of the settlement check, contact (call) BFS for obtaining a copy from the BFS.

(8) TC 843 Procedures - follow the instructions in IRM 3.17.80.2.2 (6), Resolving Cases with TC 841 Posted, above, for TC 840’s with a check copy except that:

1. Use Form 3245 to post a TC 843. (See Figure 3.17.80-38)

2. Form 3245 remarks will carry a different explanation.

3. There will be no settlement check copy.

(9) Monitor for posting. Once your TC 840 or TC 843 posts, return the case file to the work leader for reassignment. An examiner will correspond with the taxpayer requesting repayment of the settlement check and include a copy of the original refund check, a copy of the settlement check, and a Form 1133 package for each refund. The return address must be that of the Erroneous Refund team.

(1) In most credit cases, you will only post a TC 841 to the affected tax period. Verify that the proposed credit amount on the SF 1081-TRAC-IPAC matches the refund in question. If they match, take the following actions:

1. Complete the triplicate Form 3245 Posting Voucher.

2. Attach copies of the SF 1081 or TRACS listing and a CC TXMOD printout to both copy 1 and copy 2 of Form 3245.

3. Use CC ACTON to update and close the IDRS control base.

4. Deliver the package to Accounting Operation's Numbering team.

5. Retain and file the third copy of Form 3245 and back-up items according to local filing procedures.

6. Once numbered, copy and retain one numbered set of Form 3245 with your case file and deliver the numbered sets to Data Control.

3.17.80.4.3.1 (05-31-2018)

Corrected SF 1081

(1) A corrected SF 1081 can be identified by Schedule Number "B700. . .". These items must also contain sufficient information to describe the initial GOALS transmission Schedule Number being reversed or corrected.

(2) BFS Accounts Branch attempts to maintain accurate end-of-month records of paper SF 1081 issued. Each ALC receives a listing of the paper SF 1081 for the prior accounting period. If SP sites do not receive this document to verify transmittals by the 15th of the month following the accounting period, contact the BFS Treasury Support at (877)440-9476.

(3) Within 10 workdays of receipt of the SF 1081, using the SF 1081 listing, prepare a Form 3245, Posting Voucher-Refund Cancellation or Repayment, for each taxpayer listed. This will input a TC 843 to the tax module reversing the corresponding TC 841. (See Figure 3.17.80-42)

(4) Not all required information to complete Form 3245 appears on the SF 1081. The DO or ULC code and Schedule date need to be researched on IDRS, IMFOL or specific MFTRA.

Note: IMFOL must be used instead of MFTRA whenever possible.

(5) Control on IDRS. Include a History item showing the Schedule Number.

ACTON	ACTON
C#, 1081/843, A, MISC	H, (SF1081 Number)
*, (SF1081 Received Date)

(6) After research is complete and Form 3245 is prepared, close the IDRS control base.

ACTON
C#, 843TOPOST, C

(7) Verify amounts of Form 3245 listed with the SF 1081 listing for balancing. Maintain a log of Form 3245 by DLN and date.

(8) Photocopy (1 copy) of Form 3245, the SF 1081 listing and any back-up provided (copies of checks, 1133 claims forms, etc.). Make 2 copies of the SF 1081 Schedule.

(9) Prepare Form 813, Document Register, listing all Form 3245 containing the same DO or ULC and tax class codes. Verify amounts for balancing. (See Figure 3.17.80-40)

(10) Prepare Document Transmittal (to debit Master File). Attach the original SF 1081 Schedule, copy two of the Form 813 and a tape verifying the money amounts to the Document Transmittal. Route to the Redesign Revenue Accounting Control System (RRACS) Unit for journal action.

(11) Hold all other documents until the RRACS Unit returns the Document Transmittal with the journal number. Then:

1. Route the original Form 813 with Form 3245 to Batching and Numbering for processing.

2. Route a photocopy of the SF 1081, listing and back-up to the Refund Inquiry Unit. Note that a TC 843 will be input to the tax module to reverse the TC 841.

3. Maintain a photocopy in Accounting of the SF 1081 Schedule, the original SF 1081 listing, any back-up, and a photocopy of all Form 3245.

(12) Occasionally, an SF 1081 is received stating that the taxpayer received and cashed both an original and recertified (substitute) check.

1. DO NOT order IMFOL/MFTRA.

2. Make two copies of the SF 1081 if additional copies are not already available.

3. Prepare Document Transmittal (FForm 3210). Route the Document Transmittal, the original plus a photocopy of SF 1081 to the RRACS Unit for journal action to the 4970 Account. Request that the duplicate SF 1081 be routed with the journal number indicated to the Erroneous Refund Unit.

4. Maintain one photocopy of the SF 1081 in Accounting.

(1) When a Payment Over Cancellation (POC) is processed through “Government On–Line Accounting Link System (GOALS)”, you will receive BFS FForm 3858 and Form 1133 from the BFS. Both transactions 841 and 843 must already be systemically generated on the tax account. The TC 841 will post in Blocking Series 88888. The debit TC 843 moves the account to balance due status by reversing the credit TC 841.

(2) Take the following steps within the first 10 business days of receipt, when working Payment Over Cancellation cases:

1. When researching the case’s RSN and discovering the case has an RSN that indicates the case belongs to another site’s Erroneous Refund team (need to transfer the case to another site), follow IRM 21.4.5.6.3, Routing Category D Erroneous Refund Packages.

2. Notate all actions taken on the Form 5706 Case History Sheet and maintain/retain supporting documentation. Ensure an up-to date Control Base on IDRS - including being in IDRS A status..

3. Review the taxpayer’s account to determine if the TC 841 (Blocking 88888) and the TC 843 are posted.

4. Determine whether the taxpayer repaid or returned either refund check, or if the BFS sent a “Recertified” credit (TC 841 Blocking 88888) to full pay the account because forgery was established. A “returned” refund check will post with TC 841 in block and series 99999.

5. If the account is in credit status and no freeze condition is present, research for any pending transactions or open control bases. If either is found, consult your Lead Examiner. If not, open a control base and input a TC 570 to prevent refunding until the TC 843 posts or the account moves to debit status.

6. Use CC INTST to look for penalty and interest accruals. If present, and the accrual amounts are incorrect, input both Transaction Codes 270 and 340 for zero or 341 for credit (if posted on TXMOD) to remove and restrict the accruals.

7. If the BFS sent the credit back, your IDRS control base will automatically close with category code “ST32” and the posting of a TC 841 in block and series 88888.

8. While the posting of a TC 706 (automatic offset credit applied) will fully pay the account, it does not resolve the POC conditions. You will continue with standard POC processing. It will be necessary to reverse the offset at the conclusion of POC processing.

9. Input a TC 470 CC 93 (Input TC 470 CC 93 only if prior TC470 CC 93 has expired or was not previously input) to prevent the issuance of balance due notices for 26 cycles.

10. Use CC CHKCL to notify the BFS of the taxpayer’s non-receipt claim, the refund(s) involved, and to request a Form 3858 and Form 1133 package from the BFS for inclusion in your taxpayer correspondence. Take the following steps.

1. Use CC IMFOL# to determine the issue date of each check. (See Figure 3.17.80-42)



2. If the issue dates are in different calendar months, use CC CHKCL. (See Figure 3.17.80-43)



3. If the issue dates are in the same calendar month, use CC CHKCL with the “serial” number and issue month of the check requested. Do not enter the check "symbol" number. (See Figure 3.17.80-44)



4. If for some reason you need to cancel your CC CHKCL input, use CC TERUPC with the TIN, MFT, Tax Period, and Sequence Number to void your CC CHKCL transaction by close of business the same day. If necessary, Quality Review can reject the transaction the next day. After that, there is no way to prevent an “OOPS” update to your control base.

11. If a TC 971 with Action Code 078 or 079 is present, check for a TC 290 .00 in blocking series 18 (for paper returns) or 05 (for electronic returns). That is the Refund Inquiry Unit’s method of retaining, in files, source documents pertaining to a taxpayer’s refund inquiry. Use CC ESTAB through the "Integrated Automated Technologies (IAT)" application to order that transaction. You will find check copies in the source documents.

12. If you do not receive the Form 3858 and Form 1133 package within 60-days of its request, contact the BFS Check Claims Branch ( or contact BFS Treasury Support 877-440-9476) to request the claims package.

13. Issue correspondence requesting the taxpayer to either repay the duplicate refund, or complete and return the forms provided to claim non-receipt of the refund check.

14. Update your Control Base to: C#,1133TOTP,A,MISC and file your case in the suspense files pending the taxpayer’s reply.

3.17.80.4.4.2 (02-22-2018)

Undeliverable or No Taxpayer Reply

(1) If the POC erroneous refund amount is ≡ ≡ ≡ ≡ ≡ or less, follow IRM 3.17.80.1.22.1, Maintaining Case Files (Cases # $50.00 # or Less Only).

(2) Otherwise, if the taxpayer does not reply within 45-days (60 for foreign addresses), process as a POC Erroneous Refund.

1. Complete Form 12356, Erroneous Refund Worksheet (See Figure 3.17.80-45)

2. Issue lLetter 510C

3. Input TC’s 844, TC 971 AC 663, and 470 CC 93 (Input TC 470 CC 93 only if prior TC470 CC 93 has expired or was not previously input).

4. Refer to IRM 21.4.5.6.3, Routing Category D Erroneous Refund Packages, if the erroneous refund was issued from a site other than yours.

5. If the case was issued from your site, monitor the case for payments and/or credits for 45-days after the first demand letter.

6. If fully repaid, follow procedures in IRM 3.17.80.1.20.4, Taxpayer Repays In Full.

7. If no reply or partial payment is received then follow Erroneous Refund procedures in IRM 3.17.80.1.20.5, Processing Partial Repayments.

Note: If the refund amount is $5.00 or less the system will reverse the amount with a TC 606. If there are other outstanding balances follow normal write-off procedures.

(3) If your correspondence returns undeliverable:

1. Research IDRS and Master File for a corrected or more recent address.

2. If a more current address is located or if the address can be corrected, re-mail the BFS Form 1133 claims package to the taxpayer.

3. If a more current address is found, retain a photocopy of the address information and route the original envelope/mailing information with the new address to Submission Processing, Entity. Entity can update IDRS with the new address per IRM 3.13.2.4, BMF Addresses, IRM 3.13.5.65, Researching Addresses Using United States Postal Service (USPS) Web Page, and IRM 3.13.12.21, Undeliverable Mail.

4. Update the IDRS control base using activity code "Re-mail 1133".

5. If a more current address is not available, input TC 844, TC 971 AC 663, and TC 470 CC 93 (Input TC 470 CC 93 only if prior TC470 CC 93 has expired or was not previously input), and treat the case as an erroneous refund.

6. Complete Form 12356, Erroneous Refund Worksheet. (See Figure 3.17.80-45)

7. Refer the case to the responsible site immediately after performing initial ERRF procedures.

3.17.80.4.4.4 (05-31-2018)

Bureau Fiscal Services (BFS) Determinations

(1) If BFS determines the taxpayer did not receive two refund checks, they will issue a credit, TC 841. Once posted, reverse any offset credits applied (TC 706/700) and allow them to refund from their original tax period.

(2) If a Claim Disposition Notice (CDN) is received from BFS stating "FORGERY ESTABLISHED", input a TC 971 with Action Code 078.

(3) If BFS determines the taxpayer did receive two refund checks, process as an Erroneous Refund case. Complete Form 12356, Erroneous Refund Worksheet, and send the taxpayer a Letter 2218-C. Wait for 45 days and then route to the appropriate site.

(4) If BFS or NFL determines that the endorsement on one or more refunds was forged, complete Form 3809 to post the TC 841 credit transaction. (See Figure 3.17.80-46)

(5) Attach the following to the 6565 Account Cover sheet.

1. Form 3809

2. History Sheet

3. CC TXMOD printout

4. Copy of Form 3911, Taxpayer Statement Regarding Refund,

5. All taxpayer correspondence

6. Form 13818, Claim Against the United States for the proceeds of an Internal Revenue Refund Check.

7. Photocopy of front and back of the check(s)

8. The BFS/NFL response

(6) Monitor for the posting of the TC 841. The DLN will carry Document Code "48" with block and series "88999".

(7) Limit the refund interest to the amount of the original TC 770/776.

(8) If BFS does not respond within 90 days, follow up with BFS Claims Processing by contacting BFS Treasury Support at (877) 440-9476.

(1) The following actions must be taken when SF 1081/TRACS involving two checks are received (See Figure 3.17.80-47):

1. Do not order MFTRA.

2. Prepare Document Transmittal. Route Document Transmittal, the original or TRACS print and a duplicate SF 1081/TRACS to the RRACS Unit for journaling to the 1530 Account. Request the duplicate or copy of SF 1081/TRACS be routed "with journal number" to the Erroneous Refund Unit.

3. Maintain a copy of the SF 1081 in Accounting.

(2) If debit SF 1081/TRACS processing is done within the Erroneous Refund Unit, the journaling to the 1530/1540 General Ledger Account will be done within this unit.

(3) The Erroneous Refund Unit will follow Erroneous Refund procedures as outlined in IRM 3.17.80, Accounting and Data Control, Working and Monitoring Category D, Erroneous Refund Cases in Accounting Operations.

(1) In some instances, a taxpayer will erroneously repay the amount of the duplicate refund by personal check made out to the Check Claims Group. When the taxpayers are contacted by IRS, they will submit a copy of the cancelled check showing that the funds were deposited into Check Claims' Reclamation Suspense Account. In these cases, the Submission Processing site must prepare SF 1081 to charge the Reclamation Expense Account and credit the applicable IRS appropriation or Fund Account. The SF 1081 must contain a statement of facts surrounding the case. Attach a copy of the front and back of the check.

(2) If a taxpayer sends a payment to IRS and it is erroneously received and cashed by Check Claims, Accounting will write a memorandum to Check Claims Group requesting that the funds be returned to IRS. Provide the pertinent information; Submission Processing site name and address and Agency Location Code . A copy of the cancelled check must be attached to assist Check Claims in locating the funds.

(1) BFS Regional Financial Centers are responsible for adjusting all check issue discrepancies, such as:

1. Checks issued for less than, or in excess of, amounts shown by the certified refund schedules (SF 1166 or SPS).

2. Checks printed in different amounts, thus causing the payees to be underpaid or overpaid.

3. Two checks issued to one payee and no check issued to a rightful payee.

(2) When taxpayers send these erroneous checks to the Submission Processing site or tender remittances to cover erroneous payments, check cancellation or deposit action will NOT be taken by the Submission Processing site. Rather, the checks and repayments will be routed to the Director of the Regional Financial Center for credit in his accounts. Returned checks are stamped "Not Negotiable" as outlined in IRM 21.4.3, Refund Inquiries - Returned Refunds/Releases, before they are transmitted to the Regional Financial Center.

(3) If the refund appropriation(s) has been erroneously credited with check cancellations or repayments that should have been credited to the Director, Regional Financial Center accounts, the over-assessment clerk will make the necessary adjustment by processing SF 1166 to charge the refund appropriation and pay the amount to the Director, Regional Financial Center.

(1) The Erroneous Refund team receives Return Preparer Misconduct Erroneous Refund Form 3809 from the functions working these cases daily for journalization.

(2) Each pack will consist of Form 3809 and an IDRS print stapled to the credit side of Form 3809 under cover of Form 3210. The Erroneous Refund teams need to review the Form 3809 and the Form 3210 and acknowledge receipt ensuring date of receipt is annotated.

(3) The Forms 3809 must be numbered and the Form 813 prepared as:

• TC 841, use Doc Code 48 and blocking 930-939.

• TC 700, use Doc Code 58 and blocking 930-939.

  Note: There will be no more than 75 items per Form 813.

(4) The numbering of the Form 3809 and the acknowledgement must be completed within twenty-four hours.

(5) After the forms have been reviewed and numbered, forward to the RACS unit for the necessary journal action.

(6) Within 24 hours of receipt, the RACS team prepares a Form 8166, using the DOC ID and item count, listing each money amount separately from the Form 3809. The total amount listed on the Form 8166 must equal the Form 813 total.

(7) The DOC ID input to RRACS will be 15 digits as follows: DOC ID = DLN of Form 813 (without sequence number) plus two-digit year plus total volume on Document 813. e.g., 172482619301475

(8) The RACS team will:

• Journal the TOTAL amount of each Form 813 listed on the Form 8166, using a 480 window to debit the 1545 account and credit master file (4120/4220). For the prepare date on RRACS, use the date of the journal.

• Stamp or write the 480 journal number on Form 3809 and/or Form 813

• Send the debit side of Form 3809 and copy of Form 813 to the Erroneous Refund technician to monitor the TC 841 posting.

• Maintain third copy of Form 3809 and Form 813 in 1545 account file for use in balancing.

• Hand carry, under cover of a document transmittal, a copy of Form 813 to Data Conversion so that the DLN can be set up on SCCF. To prevent SCF, Block Out of Balance (BOB) items, release the Form 813 to Data Conversion the day prior to releasing the work to Batching.

• Hand carry, the credit side of Form 3809 and one copy of Form 813 to Batching, under cover of Form 3210 so that the Form 3809 can be batched and sent to ISRP for transcription.

(1) After the RACS team has journalized the Form 3809 and forwarded them for processing, the general ledger (GL 1545) side of the Form 3809 is forwarded to the Erroneous Refund Team. The Erroneous Refund team will:

• Maintain the Form 3809 in a suspense file by Form 813 DLN.

Note: While this money is being journalized to GL 1545, the RPM Form 3809 needs to be kept in a separate file.

(2) The write off process will be completed on the RPM cases after the items are moved over to the new GL 1547 account.

(1) Daily (by COB everyday) the RACS team will drop a UPC for the total of Form 3809 copies (receipts) that day from Manual Deposit (receipts) and a total of Form 3809 copies released to Batching that day (production) using OFP 710-01047.

(1) Run paper Form 3809 as usual, using the Doc Id and the total money amount on the trial balance.

(2) Run EOD 1622 total for each day on the trial balance for systemically journaled cases.

(3) Balance trial to RRACS Monthly GL 1545 account and RRACS report 0155.