5.19.10. Collection Operations Transcript Processing

(1) If the cross reference balance due module is a Limited Liability Company (LLC), do not automatically offset the credit until you have completed research of AMS per IRM 5.19.10.3.13.2, Transfer of Credits and TFRP. If the Trust Fund Recovery Penalty history is present in AMS, follow the research steps in that section to determine if TC 131 is appropriate.

(2) See IRM 5.1.12.21.1.4.1, Limited Liability Company Offset, for more information on offsets.

(3) See IRM 5.1.21, Collecting from Limited Liability Companies, for general information on LLCs.

(4) A limited liability company (LLC) is an entity created under state law that has characteristics of both a partnership and a corporation. It is similar to a:

• Corporation in that the owners have limited personal liability for negligent acts and LLC debts

• Partnership in that it provides management flexibility and may provide the benefit of pass-through taxation of income

(5) An LLC with one owner is a single member entity. An LLC with more than one owner is a multi-member entity. The treatment of an LLC for tax purposes may depend in part on whether the LLC is a single member entity or a multi-member entity.

(6) TC 130 is not input on any member of a multi-member LLC that is classified as a partnership, or an association taxable as a corporation.

(7) Domestic and Foreign LLCs may elect classifications by filing Form 8832, Entity Classification Election,

• A multi-member LLC may elect to be classified as a partnership, or an association taxable as a corporation.

• A single member LLC may elect to be classified as an association taxable as a corporation, or an entity disregarded as separate from its owner.

(8) An association taxable as a corporation may further elect to be classified as an S corporation by filing Form 2553, Election by a Small Business Corporation.

(9) If an LLC does not file an election on Form 8832, then it is classified by default.

• A domestic multi-member LLC is classified by default as a partnership for federal tax purposes.

• A domestic single member LLC is classified by default as disregarded as an entity separate from its owner

• A foreign entity is classified by default and its classification depends on the number of members and the liability of each member involved. See IRM 5.1.21.10.1, Default Classification of Entities Not Filing an Election.

(10) The single member/owner (SMO), not the LLC, is the taxpayer when the LLC is a disregarded entity, except the entity is treated as a corporation for certain excise taxes that accrued on or after January 1, 2008 and for employment taxes on wages paid on or after January 1, 2009. See Treas. Reg. 301.7701–2(c)(2)(v) for the special rule for certain excise taxes, and Treas. Reg. 301.7701-2(c)(2)(iv) for special rule for employment taxes.

(11) For employment taxes on wages paid on or after January 1, 2009, and certain excise taxes that accrued on or after January 1, 2008 by a domestic single member LLC .

(12) For employment taxes on wages paid before January 1, 2009 and certain excise taxes that accrued before January 1, 2008 by a domestic single member LLC that elected to be, or that was classified by default as an entity disregarded as separate from its owner:

(13) To determine an individual or business taxpayer's liability and how an LLC is classified for income tax purposes, see the following:

• IRM 5.1.21.5.1, Internal Sources, for TC 076 and TC 090 indicators shown on CC BMFOLE and a general discussion on locating the liable taxpayer.

• IRM 5.1.21.14.3, Identity of the Taxpayer on Integrated Data Retrieval System (IDRS) regarding TC 971 AC 364, TC 971 AC 365, and TC 971 AC 366 that, if present, will identify the liable taxpayer.

• IRM 5.1.21-2, Income Taxation for LLCs and IRM 5.1.21-3 Employment Taxation for LLCs, in IRM 5.1.21, Collecting from Limited Liability Companies for an explanation of how LLCs are taxed and whether the individual or the entity is the liable taxpayer.

(1) If the X-REF TIN associated with the TC 130 is an EIN and/or "21" is present in the 9th and 10th position of the TC 130 DLN, research AMS history on the TC 130 SSN and spouse SSN for a history regarding TFRP.

(2) Follow instructions in the table below:

(1) Secure a transcript from ANMF. See IRM 3.17.46.14.2, NMF Account Transcript Request for requesting a transcript.

(2) Complete Form 2424, Account Adjustment Voucher, to transfer the credit. See IRM 3.17.21.4.3, Form 2424 (DRT24).

(3) Form 2424, Account Adjustment Voucher, must be prepared to transfer a credit to a NMF account:

1. Manually compute and assess the allowable interest on the credit transfer amount (TC 770), if applicable. See IRM 20.2.4.6.1, Interest on Offsets, for instruction.

2. Monitor until the TC 770 posts.

3. Complete a separate Form 2424, to transfer the TC 770 amount.

(4) Route Form 2424 and the NMF transcript , to KCSC SP Accounting Control Services NMF at e-fax 888-981-6483 or secure email at *W&I KCSPC Non-Master File Team.

(1) When a taxpayer files an innocent spouse claim on a joint module, a TC 971 AC 065 is input. TC 971 AC 065 with no XREF-TIN> on CC TXMOD indicates the primary taxpayer filed the claim. If the secondary taxpayer filed the claim, the secondary taxpayer SSN will show in the XREF-TIN> field.

(2) TC 971 AC 065 generates an L− freeze and a TC 130 with DLN code 17 posts to the non-requesting spouse (NRS). This is to prevent any erroneous refund.

(3) Research the innocent spouse module to determine which taxpayer filed the claim.

(4) Follow table below:

(1) Refer to IRM 21.5.6.4.35, −R Freeze, for more information on −R freeze credits. Resolve per below:

(1) The following information discusses CSED conditions identified in CSED work. In some cases, these conditions have caused an incorrect CSED on the module. For more information, refer to IRM 20.2.5.2.4, Statutory Period for Assessment, Collection and Refund of Interest.

(2) Because of the diversity of issues regarding CSEDs, these procedures cannot address every situation encountered when working a module with a CSED problem. The tax module must be analyzed and the appropriate IRM research done in order to determine the cause of the CSED error. In some cases, logic and judgment must be used to resolve the issue.

(3) If a new problem (not addressed in these procedures) is encountered on a module that is causing an incorrect CSED and you are using your judgment to make a determination, confer with another CSED Specialist and obtain their concurrence before making a correction. Document AMS with the concurrence.

(4) MFT 31: See IRM 5.19.10.4.4.2, MFT 31 Issues.

(5) Failure to File penalty, Estimated Tax penalty or Federal Tax Deposit penalty: On some modules where a TC 166, TC 176 or TC 186 posted with its own ten-year CSED (the penalty posted alone and not in conjunction with a tax assessment), analyze the module to make sure the TC 166, TC 176 or TC 186 was not assessed by the computer in error. Some of these may be invalid due to a processing or systemic error. These penalties must be assessed within the established ASED. If you determine the penalty was assessed after the ASED:

1. Abate the penalty with TC 161, TC 171 or TC 181.

2. See IRM 5.19.10.4.5, Resolving a Module with CSED Problems, to correct the CSED.

(6) TC 550: See IRM 5.19.10.4.4.3, TC 550 and Form 900 Waiver Issues.

(7) TC 971/972 AC 043/063/163: See IRM 5.19.10.4.4.4, TC 971/972 AC 043/063/163 Issues.

(8) TC 500 Combat Zone:

• When computing a CSED on modules affected by Combat Zone (CZ) entry and exit dates, ONLY compute the number of days between the entry and exit dates and include the 180-day period(s).

• If the taxpayer entered and/or exited a CZ during the filing season do not add days for the filing season to your CSED computation. The period that occurred during the filing season is only added to the Return Due Date (RDD).

• Determine the correct TC 550 CSED Code to use by researching the applicable TC 500s on CC IMFOLE.

• See IRM 5.19.10.6.4, Combat Zone Computation of Suspense Period.

(9) TC 520/521 cc 82, Civil Penalty with Appeal Rights: If there is a TC 470 cc 95 followed by TC 472 and no intervening TC 550, contact Advisory on SERP Who/Where to re-compute the CSED for the TC 550 to resume collection activity. Input TC 550 as advised.

(1) MFT 31 is an IMF Master File Tax (MFT) account code and used for assessments against an individual taxpayer on a joint module. For additional information, see IRM 21.6.8.4, What is MFT 31 / 65.

(2) When CSED code "S" or "P" indicates only one spouse filed a bankruptcy, CDP, OIC, innocent spouse, only one spouse agreeing, Tax Court, criminal restitution, or other, Master File cannot accurately compute the CSED on the MFT 30 tax module. Compare the transactions on the MFT 30 module to the transactions posted under each spouse on the MFT 31 module. Ensure each CSED is computed properly based on what suspension transactions are attributable to each spouse.

(3) For TC 480 and TC 520s mirrored to MFT 31, be aware of the following:

(4) For some MFT 31 accounts created prior to January 1, 2005, interest from the MFT 30 module was assessed on the MFT 31 module using TC 340 doc code 51 in the 4th and 5th position of the DLN. This caused a new ten-year CSED based on the TC 340 date instead of the date of the associated tax assessment.

1. When addressing a balance due on MFT 31 modules for tax periods ending December 31, 2004 and prior, analyze the module using CC IMFOLT to determine if there are TC 340s present with doc code 51.

2. If present, compute the module CSED excluding the TC 340 doc code 51 dates.

3. Verify the results with the CSED dates on page one of CC IMFOLT.

4. If the CSED dates on CC IMFOLT are incorrect, input TC 550 to correct them.

(5) An erroneous failure to file penalty (TC 166) may be systemically assessed on the MFT 31 module thus causing an invalid ten-year CSED:

(1) When a TC 550 is present, accept the CSED date that was entered as valid. See the exception below for TC 550 definer code (dc) 10.

(2) For TC 550 definer code 01, do not add 90 days to your CSED computation. This is to be consistent with Master File programming.

1. Verify the CSED and make corrections if the module has other issues affecting the CSED.

2. See IRM 5.19.10.2, Taxpayer Advocate Service (TAS), to determine if case meets TAS criteria.

(3) Due to RRA98, the CSEDs on some modules with TC 550 dc 01 were reset. A systemic program searched the Master File for modules where TC 550 dc 01 was present along with either a TC 971 AC 063 or a ST 60 within 120 days of the TC 550 transaction date. If the TC 971 AC 063 or ST 60 criteria was not met, then,

• A new TC 550 was generated for a CSED date of December 31, 2002 or the normal ten-year collection statute date whichever is later.

• These transactions will have a unique DLN DO277-999-99999-2.

• The transaction date of the TC 550 will be the date of the systemic run.

(4) Verify the CSED on modules where the CSED was extended or corrected with a TC 550 and transaction codes follow that suspend the CSED further (TC 520, TC 480, etc.). In some cases, the system may not be computing the CSED correctly. In the instance where this has occurred, correct the CSED with TC 550.

(5) TC 550 dc 10 is used to correct an existing CSED and for CDP corrections. Before changing a CSED with TC 550 and a TC 550 dc 10 is already present, research the account and AMS history to ensure your CSED correction is appropriate.

(6) Multiple TC 550s input incorrectly: When an account has a TC 550 present and additional TC 550s are input, they must be input with DLN-CD 99 (see the 9th and 10th position of the TC 550 DLN). If input without DLN-CD 99, these will post but will not change the existing CSED from the previous TC 550.

1. Compute the CSED on the module using the last TC 550 CSED present.

2. Input TC 550 and DLN-CD 99 to update the CSED on the module, if needed.

(1) Verify the validity of these transaction codes through research of AMS and IDRS.

(1) When it is determined the current CSED on the tax module needs to be corrected, a TC 550 must be input. Use TC 550 DEFINER-CD "10".

(2) Before input of TC 550, refer to IRM 5.19.10.4.5, Resolving a Module with CSED Problems for additional information.

(3) For complete instructions for using CC FRM77 refer to Exhibit in IRM 2.4.19-5, Command Code FRM77 Input.

(4) Use CC REQ77 to input the TC 550 using the following fields:

1. Transaction Code – always use TC 550.

2. Extension date - recomputed CSED date.

3. Transaction date – leave blank unless all CSED dates have expired. If all are expired, transaction date must be prior to the expired CSED date.

4. DLN Code – leave blank.

5. CSED Code – use appropriate code (P, B, or S).

6. TC 550 Definer Code – use definer code 10, unless directed otherwise. Refer to IRM 5.1.19.2.3, TC 550 Waiver Extension Definer Codes.

7. Remarks – must detail why CSED is being corrected.

(1) When it has been determined that the current TC 550 on the tax module is incorrect, an additional TC 550 must be input. Use TC 550 DEFINER-CD "10" unless otherwise directed.

(2) Before input of TC 550, refer to IRM 5.19.10.4.5, Resolving a Module with CSED Problems for additional information.

(3) For complete instructions for using CC FRM77 refer to Exhibit in IRM 2.4.19-5, Command Code FRM77 Input.

(4) Use CC REQ77/FRM77 to correct the TC 550. Input the following fields:

1. Transaction Code – always use TC 550.

2. Extension date - recomputed CSED date.

3. Transaction date – leave blank unless all CSED dates have expired. If all are expired, transaction date must be prior to the expired CSED date.

4. DLN Code – always use 99.

5. CSED Code – use appropriate code (P, B, or S).

6. TC 550 Definer Code – use definer code 10 unless directed otherwise. Refer to IRM 5.19.10.4.2, Transaction Codes and Case Actions that Suspend or Extend the CSED.

7. Remarks – must detail why CSED is being corrected.

(1) The TC 971 AC 687 with 20 miscellaneous codes was established for CSED purposes effective January 2007. When inputting a TC 971 AC 687, a miscellaneous code must be input at the same time. The miscellaneous code serves as an audit trail, defines what type of levy was served, and identifies other various actions taken on the account.

(2) The following chart will provide an explanation for each miscellaneous code. SB/SE should identify the "fixed and determined" from this point forward. Any module that does not have a code will be verified through the RO or CCP.

(1) Accounts are selected for the MULTICSED transcript or listing by the following criteria:

• Tax module balance, with accruals, is over ≡ ≡ ≡ ≡ for IMF or ≡ ≡ ≡ ≡ for BMF

• MFTs 30, 31 and 55 for IMF and MFTs 01, 06, 10 and 11 for BMF

• More than one CSED present and the earliest open CSED expired in the current cycle

• A transcript will not issue if the CSEDs are suspended by a TC 520, TC 480 or other

• A transcript will not issue if the next CSED expires within 90 days of the CSED that has just expired

  Example: The MFT 30 200212 tax module has three CSEDs, dated 05-21-2013, 07-27-2013 and 03-31-2015. No transcript will issue for the 05-21-2013 date because the next CSED, 07-27-2013, will expire in 67 days.

• If the CSED that expires is for a TC 150 that was settled at posting (ST 12) a transcript will not issue

• A transcript will not issue for the last CSED on the module. TC 608 will generate to zero out the remaining balance

(2) If module is in ST 12, ST 71(or -Y Freeze or OIC on the INDICATORS line on CC IMFOLT), ST 72 or ST 91 (or -Z Freeze) close with no action. Work all others including ST 22, ST 26 and ST 53.

(3) If CSED fields are blank, research the module to determine if that is correct.

1. If no problem is identified, then close case no action.

2. If problems are identified and the CSED field should not be blank, review IRM 5.19.10.4.4, Determining the Correct CSED, and IRM 5.19.10.4.5, Resolving a Module with CSED Problems.

(4) Transcripts are controlled in "A" status with Category Code MCSD.

(5) When working transcripts, do a manual calculation to verify the accuracy of the CSEDs present. The CCalc and CSED Helper - Julian Lookup tools may be used to assist with CSED calculations. This is to monitor our systems more closely, to ensure our CSEDs are accurate, and to identify trends and issues.

1. Make a correction, if needed, per instructions in IRM 5.19.10.4, Collection Statute Expiration Date (CSED) Verification and Correction.

2. Report the correction on the "Monthly Recalculated CSED Report".

3. CSED verification is not required on modules where there are no transactions that extend or suspend the CSED.

   Exception: Check for invalid TC 166/176/186 that should be abated. Follow IRM 5.19.10.4.4.1, CSED Considerations.

4. Document CSED verification in AMS by indicating manual CSED calculations match IDRS CSEDs, or indicating 10 year IDRS CSEDs where there are no transactions that extend or suspend the CSED, as appropriate.

5. When correcting CSEDs, follow the AMS requirements under IRM 5.19.10.4.4 (15). If the correction results in a LAST CSED that is expired, close the case with no action. The TC 608 will write off the remaining balances.

(6) If the manual calculation for the CSED that issued the transcript is truly expired:

• Proceed with write-off

• Document AMS

(7) If there is a previous CSED expired less than 90 days earlier, and there is another expired (second) CSED after the first expired:

• Determine if a separate write-off is required for the currently expired CSED and the previously expired CSED

• Input a separate TC 534 for each expired CSED using a PDC to separate each input

• Document AMS

(8) If the LAST CSED on the module is within 90 days from the currently expired CSED which generated the transcript or the LAST CSED on the module is due to expire in less than 90 days from the current date, verify the CSED and close the case with no action. The TC 608 will write off the remaining balances.

(9) Follow procedures in the table below to write off the expired balance.

(10) If not previously specified, enter an AMS history of the module reviewed and actions taken. Include CSED verification determination and expired assessment ACT/DMI calculations, or a no action determination, as appropriate to the case.

(11) Once a TC 534 is input, all subsequent interest and FTP penalty updates must be manually computed.

(1) After CSED has expired, the taxpayer has no obligation to make any payment even though the assessed amount has not been satisfied. A payment received after the CSED is treated as an overpayment of tax.IRC 6401(a). See IRM 5.19.10.5.2.2, Processing Overpayments From a Module Time-Barred From Collection. Under IRC 6511, the taxpayer has two years from the date the payment was made or three years from the date the return was filed, whichever is later, in order to file a claim for refund.

(2) Payments under an installment agreement (IA) are controlled by the terms of the agreement. An IA payment that was misapplied can be transferred without taxpayer approval.

(3) Research AMS history and the tax account before making a decision regarding the credit.

(4) Follow the table below to resolve the credit issue:

(5) Input the appropriate history item on AMS for the audit trail. Input history item(s) that reflect each action taken to advise the taxpayer of rights concerning the overpayment caused by taxpayer's payment of the tax after the expiration of IRC 6502, Collection After Assessment.

(1) Other than the exception discussed below in (2), a statute-barred credit may not be applied to offset the debit modules on an account.

(2) A credit may appear to be statute barred on one account module, but if there is more than one module used to process the taxpayer’s filing for the tax period, the credit may be applied to a debit module.

(3) If the barred credit cannot be applied, transfer it to the Excess Collection File.

(4) To the extent that modules can be identified where a statute barred credit was applied in error, those credits are considered void and should therefore be reversed.

(1) These transaction codes may generate a freeze condition, an assessment, an offset or other types of payments. This table provides procedures for processing transaction codes and payments other than TC 670.

(1) The following table provides procedures for processing refund responses and no responses.

(1) See Document 6209 Section 11.8, TC 470 Closing Code Chart for information on how TC 470 is released. The table below is a partial list from Document 6209 indicating how TC 470 no closing code, cc 90, cc 93 and cc 95 are released.

(2) A W− freeze may also be created when a duplicate return is created with the posting of TC 976, module is a debit balance and Status is 22, 24 or 26. A W− hold will be released with TC 29X or when the module becomes a zero or credit balance.

(3) The following table provides procedures for resolving AM06W conditions. Research IDRS for the latest information, then continue below.

(4) If TC 470 is not resolved and the module/account contains a freeze code, review the module to see if it is still necessary. Follow procedures in the table that provides procedures for modules containing a combination of a TC 470 and a freeze code.

(1) Take no action on transcripts with the following criteria:

(2) Review CC IMFOLT/BMFOLT to identify the expired assessment that generated the transcript.

(3) Follow the procedures in IRM 5.19.10.4.7.1, table, MULTICSED Transcripts and Listings.

(4) Enter AMS history with the TC 534 amount and the Transaction Codes with their amounts that are included in the TC 534. After the amount of the write-off has been computed using ACT/DMI, access Sort/Show on ACT/DMI, save it as Excel and cut and paste the information to AMS. Indicate total interest and total FTP amounts that were included.

(5) Due to the overpayment that must be released with TC 534, the 90 day rules under MULTICSED Transcript procedures, paragraph 7, do not apply to these transcripts. If the last CSED is under 90 days, take no action, close case.

(6) Beginning in cycle 04 of 2013, CC ADJ54 has a new required field (CSED) to input the expired CSED that is associated with the TC 534. If the CSED date does not match an existing date on the tax module, TC 534 will unpost with UPC 193. This date will appear next to the posted TC 534 on the module.

(7) The credit causing the A− freeze may not be applied to the CSED balance that has just expired, regardless of the date or posting cycle of the credit. It can only be applied to the balance that has not yet expired.

(8) When a module has more than one assessment, it is required to have a TC 534 input on the module with a zero or a significant amount representing the assessment with the expired CSED. Beginning cycle 201304, it is no longer required to reverse the existing TC 534. Multiple TC 534s must now be input, for each expired CSED. Prior to cycle 04, there should be only one TC 534 on the module to cover all previously expired CSEDs.

(9) If an incorrect amount is input with TC 534, reverse it with a TC 535. Re-enter TC 534 with the correct amount. Use CC REQ54/ADJ54 to reverse a previous write-off. Input the following fields:

1. Blocking Series – 19

2. INTCMP-DT - Enter the posting date of the TC 534 that is being reversed

3. Transaction Code – TC 535

4. Amount – Amount of previous TC 534 (do not use a minus sign)

5. Source Code – 0

6. Reason Code – 99

7. Hold Code – 3

(10) Use CC REQ54/ADJ54 to write-off the expired amount. Input the following fields:

1. Blocking Series – 19

2. CSED - CSED date associated with the TC 534

3. Transaction Code – TC 534

4. Amount – Balance to be written off with a minus sign or a zero amount

5. Source Code – 0

6. Reason Code – 099

7. Hold Code – 3

(1) Analyze the module and re-compute the interest and/or penalty using CC COMPA or COMPAF per IRM 20.2, Interest, and IRM 20.1, Penalty Handbook, and follow appropriate procedures. Determine what TC restricted the module. Request return and source documents if necessary.

(2) If an unreversed TC 480 or TC 780 is present on the module, document AMS and close the control. If the TC 780 was reversed with a TC 781 refer to (5) below. If the offer was withdrawn (TC 482), rejected (TC 481) or erroneously posted (TC 483) refer to (4) below.

(3) If an unreversed TC 520 is on the account, refile any returns associated with notices and close the control. If the TC 520 was reversed with a TC 521, refer to (4) below.

(4) Anytime debit interest is manually computed, it is necessary to recompute the entire tax module to ensure an accurate computation is made. See IRM 20.2.5.6.2, Manual Computations.

(5) If additional interest or penalty is due, input an adjustment transaction to assess the additional amount using CC REQ54. Use a non-restricting TC 340 whenever possible , see IRM 20.2.5.6.3, Non-Restricting Transaction Code (TC) 340. Caution should be taken when there is a 120% interest charge on the account.

Note: The 120% interest, also known as Tax Motivated Transaction (TMT) interest, was repealed for returns due after 1989. See IRM 20.2.5.9, Tax Motivated Transaction (TMT) Interest, for more information.

1. If the account was previously in ST 60, refer to IRM 5.19.10.10.2.1, Full Paid Restricted Interest and Penalty Accounts, for processing. Provide necessary feedback to the IAAL Operation.

2. If the account has a TC 270 or TC 271 on the module, it is a restricted account. Verify the percentage of the FTP penalty. If the FTP penalty maximum percentage has been assessed, input a TC 971 AC 262. Refer to IRM 21.3.1.6.49, CP 86 Restricted Interest/Penalty Conditions. To remove the prior restriction and allow automatic generation of the FTP Penalty by Master File, refer to IRM 20.1.2.2.5, Manual Penalty Adjustments.

3. When adjusting penalty/interest, use blocking series 05 for CP 86 and 15 for CP 186. The penalty and interest computation should be used as the source document. Refer to IRM 20.2.1.4.2.1, Manual Calculation of Interest - Documentation.

(6) If there is a credit on the account and no additional interest or penalty is due, input TC 290 for a zero amount with blocking series 05 for IMF accounts, 15 for BMF accounts and Hold Code (HC) 3 using CC REQ54, as a NSD. A source document is needed when you have the original return, use blocking series 00.

(7) If the account has a prior CNC, input under twelve months, a new liability or liabilities may generally be closed without further investigation for an amount up to (total of all modules)≡ ≡ ≡ ≡ ≡ ≡, including previous CNC modules.

(1) Review the transcript module and resolve according to the following table. Update AMS history with the action taken, include the amount and date of the credit that caused the transcript to issue and the specific reason for the action that was taken. When closing the transcript, close the generic control base.

(2) If payment is in the process of refunding and does not belong to the taxpayer, use CC NOREF to stop the refund. See IRM 21.4.1.5.10, Refund Intercept CC NOREF with Definer "P".

(3) If the payment refunded to the wrong taxpayer, follow erroneous refund procedures in IRM 21.4.5, Erroneous Refunds.

(4) If none of the criteria above is met, research RTR for the payment(s) to verify that the credit belongs to the taxpayer. RTR can also be researched for electronic payments, with the exception of credit card payments. For credit card payment procedures, see IRM 5.19.10.5.10.2, Credit Card Payments .

(1) Analyze IDRS to identify the credit that generated the transcript. Update AMS with closing actions.

(2) Identify credit card payments by the number "6" in fourth position of the Electronic Fund Transfer (EFT). Follow procedures in IRM 5.19.10.5.10.2, Credit Card Payments.

(3) Update AMS with closing actions.

(4) Refer to chart below:

(1) The IRS accepts electronic credit card payments for both IMF and BMF accounts. You can identify these payments by either:

• The number "6" in the 4th position of the Electronic Funds Transfer (EFT) number

• A Document Code 19

• TC 610, TC 660, TC 670

(2) To research and resolve a credit card payment:

1. Fax to the Electronic Federal Tax Payment System (EFTPS) technicians at ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ the page of TXMOD that contains the payment to be researched.

2. The technician will contact the credit card company for the information and fax it back.

3. Monitor the case for two weeks, if no response from technician, fax a second request and monitor an additional two weeks. .

4. See IRM 3.12.179.21, Electronic Federal Tax Payment System (EFTPS) and Credit Card and Electronic Funds Withdrawal Payments, for more information.

(3) Upon receipt of documentation from the technician, research NAMEI or Accurint to identify the originator of the credit card payment.

1. If the taxpayer truly authorized the credit card payment(s), take any necessary action to apply the payment and release the -R freeze, if appropriate.

2. If the response from the credit card processor has a name and SSN that match your taxpayer, send Letter 1687-C, Unidentified Payment/Credit, to determine how to resolve the credit if there is no current or recent balance due.

3. If the credit card processor could not provide any information within 30 days or was unable to provide enough information to identify the originator of the credit card payment, transfer the credit to the XSF or URF per IRM 5.19.10.5.1, General Procedures for All Transcripts.

(4) If the payment belongs to another taxpayer, transfer the credit to the appropriate account. Refer to IRM 21.2.4.3.10, Applying Unresolved Credits for AMRH, for more information.

(1) Control the case on IDRS to category NMRG.

(2) Cases involving multiple taxpayers using the same Taxpayer Identification Number (TIN) are classified generally as mixed entity, Scrambled SSN cases, or True Scrambled SSN.

(3) Refer to IRM 21.6.2, Adjusting TIN-Related Problems, for detailed information.

(4) Reassign the control base to a specialized control number per IRM 21.5.2.3, Adjustment Guidelines – Research.

(5) Analyze the account to determine which IRS operation or function should be contacted to advise them of the no merge issue (ACS, RO).

(6) If the valid and invalid TINs are different numbers, use CC IMFOLE to research both the valid and invalid TINs. Determine which has the MOST CURRENT address and location code information. See IRM 3.13.5, Individual Master File (IMF) Account Numbers.

(7) The following changes can be made with one input using CC ENREQ, with the exception of BOD code changes. BOD code changes should be done last. Document your actions and contacts on AMS for both TINs.

(8) The account addresses must match on both the invalid and valid TIN. Correct the address to match the MOST CURRENT account.

(9) Location codes must match. Verify the location codes on each account and make corrections, if needed.

(10) The name control must be valid per CC INOLES. If the name control on the invalid segment does not match the valid SSA name controls, you may need to validate the name to merge the accounts. Refer to Document 7071, Name Control Job Aid for Individual Master File (IMF) Taxpayers.

• Only change the name for the most recent return filed.

• Hyphenate the valid name with the invalid name.

• Put a bracket before the last name.

• Use the year of the return and the proper filing status (FS) from CC TXMOD or IMFOLT. This will generate a TC 013 on ENMOD.

(11) If the TIN requires correction, follow these procedures. If the invalid TIN is a different number than the valid TIN process as follows:

1. Use CC INCHG on the invalid TIN to input the correct TIN.

2. The above action will generate TC 011 on CC ENMOD. The name controls must match.

(12) If the four digit location code still does not match after CC ENREQ has posted, follow the procedures below. Change the CLC to match the MOST CURRENT account.

1. Only the last two digits of the location code can be changed. Use CC ENREQ. If necessary, refer to the Universal Location Code (ULC) and Area Office (AO) in the Job Aid Book on SERP. Use CC ENREQ and Doc Code 50.

(13) In order to merge two related accounts, their BOD Codes must match. Make the necessary changes to the BOD Code on the MOST CURRENT account.

1. Use CC REQ77 (overlaid on CC ENMOD). Input TC 971 AC 050.

2. Use the CURRENT date as the transaction date and input the appropriate BOD Code.

(14) If the invalid TIN and valid TIN are the same number and none of the above conditions apply, input TC 041 via CC ENREQ.

(15) On the "FROM" account, the message is "MERGE IN PROGRESS-LOSING ACCOUNT". On the "TO" account, the message is "MERGE IN PROGRESS-GAINING ACCOUNT". It can take several weeks before the merge is complete. Monitor the module until the merge is complete.

(16) After the merge or resequencing transaction is input,

1. If the account was in ST 22 or 26 prior to the merge, input CC STAUP 22 00 to return the account to it’s original status.

2. If the account was in ST 60 prior to the merge, re-input the IA. Do not charge a reinstatement fee.

3. Close your IDRS control base.

4. On accounts dealing with ITINs, follow IRM 3.21.263.7.1.33, Merges Involving ITIN, to have the ITIN revoked.

(1) This section is obsolete. Refer to IRM 5.19.10.5.11.1.

(1) Military personnel having problems with Form W-2 must contact their employer. The IRS does not correct Form W–2, Wage and Tax Statement, information.

(2) Taxpayers must provide corrected Form W-2 with an amended return before a balance due account can be adjusted.

(3) Individual taxpayers who have served in a combat zone are excepted from the interest-free periods of IRC 6611(e), as long as their tax return is timely filed (determined by taking into account the combat zone suspension period≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡).

(1) Civilian taxpayers working with U.S. Armed Forces in combat zones should contact the IRS about their work status to receive special tax benefits. Benefits include:

• Extensions of time to file tax returns, pay taxes, and claim refunds

• Suspension of audits and collection activities

• Suppression of notices

(2) Taxpayers, their spouses, or authorized representatives can notify the IRS by:

• E-mail to combatzone@irs.gov

  Note: No social security numbers (SSN) should be used in an e-mail.

• Telephone: (800) 829-1040 (within the U. S.)

• Regular mail to the address where the taxpayer files federal tax returns , marking the top of tax returns and IRS notices in red with "Combat Zone."

  Note: Annotate "Combat Zone" on the envelope used to provide the IRS with notice.

(3) The notification should include the following:

• Name

• Stateside address

• Date of birth

• Date of deployment to the CZ

(4) To obtain benefits, taxpayers should notify IRS when they are deployed to a CZ and when they are no longer serving in a CZ. The IRS suspends account activity for the period of time the taxpayer is working in the CZ and for 180 days thereafter.

(5) Beginning in 2012, military orders or other documentation are required for entry dates of 2010 and later. If the taxpayer is notifying the IRS by telephone of a 2010 entry date, follow IRM 5.19.10.6.2, Combat Zone Qualified Individuals and Areas.

(6) Deadline extensions apply to income, estate or gift taxes, employment tax, and excise tax returns of individuals, generally Schedule C filers. Extensions do not apply to corporate income taxes, employment taxes, or excise taxes of an entity, such as an "S" corporation or limited liability company (LLC), where the owner or main person is in the CZ. Extensions do not apply to information returns, such as Form W-2. See IRM 5.19.10.6.5.2, Combat Zone BMF Procedures, for more information on the administrative relief that the IRS may be provide in special situations.

(7) Taxpayers working in combat zones also have additional time to:

• File petitions with the Tax Court

• Contribute to an IRA

• Allow a tax credit or refund by the IRS

(8) Civilian taxpayers do not qualify for exclusion of income earned while working in a CZ. CZ military pay exclusion applies only to members of the U.S. Armed Forces. However, civilians, who are not federal employees, may qualify for the foreign earned income and foreign housing exclusion and the foreign housing deduction on Form 2555, Foreign Earned Income.

(9) Refer civilian taxpayers in support of the CZ to the following IRS publications for further information:

• Publication 54, Tax Guide for U.S. Citizens and Resident Aliens Abroad

• Publication 15-B, Employer's Tax Guide to Fringe Benefits

• IRS Web Site

(1) A taxpayer serving in a CZ or CO can choose to file their return before the end of their extension period. They must file their return in accordance with instructions provided by the Armed Forces.

(2) If there is someone acting on behalf of the person in a CZ or CO and they do not have a power of attorney from the person specifying they can handle federal tax matters, one of the following can be attached to the tax return:

• A general power of attorney (POA) or other statement signed by the deployed person authorizing them to act on their behalf

• The non-deployed spouse may act as POA for their deployed spouse by submitting Form 2848, Power of Attorney and Declaration of Representative. The non-deployed spouse must sign their name, their spouse's name and also sign as representative in Part II.

(3) If it is not possible for the spouse of someone serving in a CZ or CO operation to obtain the person's signature on a joint return, power of attorney form, or other signed authorization to act on their behalf, the IRS accepts a written statement explaining their spouse is serving in a CZ or CO. The statement must be signed by the spouse filing the tax return and attached to the return.

(1) Tax relief can be administratively given to military personnel serving in other areas of the world not designated as a CZ or where we have troops participating in a U.N. operation. Guidance is provided on a case by case basis when relief is granted.

(2) Taxpayers are not subject to the failure-to-file penalty during the period of an extension of time to file. Taxpayers are also not subject to the failure-to-pay penalty during the period of an extension of time to pay; however, interest continues to accrue.

(3) These accounts are identified by the MOP/UN Indicator on CC ENMOD:

1. Input "1" in the "MOP/UN" field on CC INCHG to turn on this indicator.

2. Input "9" in the "MOP/UN" field on CC INCHG to turn off this indicator.

(1) For CSCO:

• If a response is received for a Letter 2761-C, Request for Combat Zone Service Dates sent by an AMRH function in AM or by another CSCO site, forward the response to the area that sent the letter.

• Forward responses to CP 04, Request for Proof of Military Status or Eligibility for Tax Relief Provisions Under Combat Zone, to CSCO in Kansas City.

• Send Letter 86-C, Referring Taxpayer Inquiry/Forms to Another Office, if routing outside your campus.

• Otherwise, follow the appropriate procedures under IRM 5.19.10.6, Combat Zone Accounts and IRM 5.19.10.7, Combat Zone Transcripts to resolve your case.

(2) For all others, follow the procedures below.

(3) When responding to a caller who has received a Letter 2761-C , Request for Combat Zone Service Dates or CP 04, Request for Proof of Military Status or Eligibility for Tax Relief Provisions Under Combat Zone:

1. Obtain the CZ entry and exit dates from the taxpayer and the combat area in which they served. Enter this information on AMS.

2. Advise the taxpayer to mail or fax the entry and exit dates, CZ area and any supporting documentation, if it is requested in the letter or notice, to the address/fax number provided in the letter. See IRM 5.19.10.6.2(12), Combat Zone Qualified Individuals and Areas, for a list of types of documentation that the taxpayer may provide.

3. Do not input TC 500 to IDRS.

4. If the account has an open control base with one of the following category codes, CP 04, AMCZ or COCZ, do not take control of or close the open control base.

(4) When a response to Letter 2761-C , Request for Combat Zone Service Dates or CP 04, Request for Proof of Military Status or Eligibility for Tax Relief Provisions Under Combat Zone is received in correspondence:

1. Forward the response to the area that issued the letter. Forward responses to CP 04 to SBSE CSCO in Kansas City.

2. Send Letter 86-C , Referring Taxpayer Inquiry/Forms to Another Office, if routing outside your campus.

(5) When responding to a taxpayer who is notifying the IRS that they will be or are serving in a CZ and the entry date of the CZ is 2010 or later:

(6) When responding to a caller or correspondence and the taxpayer provides a CZ entry date that is prior to 2010, research the Combat indicator on CC: IMFOLE (Line 11).

(7) For other combat issues follow below:

(1) The IRS administratively provides tax relief to military members serving in a combat zone/qualified hazardous duty area on certain qualified business liabilities. The specific conditions are:

• The business had to cease operations from the time the taxpayer entered the CZ and

• The business is a sole proprietorship, a partnership where the key individual is/was in the CZ, or a personal services corporation where the key individual is/was in the combat zone

  Example: Doctor, dentist, CPA, etc.

(2) The suspension of collection activity continues for 180 days after the exit date of the key individual from the CZ and applies to BMF liabilities. The CSED is not suspended.

(3) If an inquiry (correspondence or phone) is received, accelerate all balance due notice modules to Status 26. To accelerate follow the procedures below:

(4) Follow the procedures below to notate and route the inquiry:

(5) Inform the taxpayer the case is being referred to another office for consideration. For correspondence, send Letter 86-C, Referring Taxpayer Inquiry/Forms to Another Office.

(6) For more information see IRM 5.19.22.5.3.3, BMF Special Handling Responses.

(1) Process BMF ACS taxpayers (including cases residing in R4 or in ST 24) who qualify for combat zone provisions as follows:

1. Write "COMBAT ZONE" in comments.

2. If there are no documents to associate with the case, input "TFRO, DOAO6501".

3. If there are documents to associate, input "TFRO, DOAO6566".

4. Write "COMBAT ZONE" on any documents associated with the case.

(1) Taxpayers, their spouses, or authorized representatives can notify the IRS of their CZ status by e-mail to combatzone@irs.gov. E-mails from taxpayers regarding combat zone are worked in AM.

(2) Take initial action on Combat Zone e-mail in two business days. E-mail cases take priority over Combat Zone transcripts.

(3) If the Combat Zone e-mail contains a future deployment date, open a control base to monitor the account until the TC 500 date can be input.

(4) If it is necessary to control the account, use case Category Code, "CZ01".

(5) Forward e-mail responses to Letter 2761C , Request for Combat Zone Service Dates, to the contacts listed on SERP Who/Where under Combat Zone E-mail Addresses. If there is an open control base, contact the employee to notify them of the taxpayers response. Ensure there is enough information in the e-mail for the recipient to locate the taxpayer’s SSN. Fax e-mail responses to CP 04, Request for Proof of Military Status or Eligibility for Tax Relief Provisions Under Combat Zone/Contingency Operation Criteria, to Kansas City Collection Operation, (CSCO), at 855-233-8562. Respond to taxpayer’s e-mail stating the information was forwarded to CSCO.

(6) If a SSN for the taxpayer can not be identified, notify the taxpayer and ask for the missing information needed to locate the SSN.

(7) For CZ entry dates for 2010 and later, refer to IRM 5.19.10.6.2(7), Combat Zone Qualified Individuals and Areas. Documentation is not required for dates provided by the DoD.

(8) When the taxpayer provides documentation such as military orders, discharge from active duty or other:

1. If taxpayer dates are within 60 days of documentation dates, use the taxpayer dates. If taxpayer dates disagree with documentation dates by more than 60 days, use the documentation dates. If an entry date is already present on IDRS, correct it using the criteria above. This includes an entry date from DoD.

2. Only resolve the open TC 500s. If taxpayer provides documentation for dates that are already closed, input the documentation dates on AMS. do not change TC 500 dates that are already closed.

3. If taxpayer provides new entry/exit dates that are not on IDRS, input the dates via CC REQ77.

(9) See IRM 5.19.10.7.2.3(5), Resolving Combat Zone Accounts, for input instructions.

(10) For CZ entry dates prior to 2010 follow below.

(11) When the e-mail provides the name, address, date of birth (DOB) and date of CZ entry, research CC IMFOLE for the Combat indicator. See IRM 5.19.10.7.2.2, Combat Zone Research and IRM 5.19.10.7.2.3, Resolving Combat Zone Accounts, for more information.

1. If Combat indicator is "1" and there is an unreversed TC 500 from the DoD and the date from the taxpayer is within 60 days of the DoD date, do not input the new date. Enter the date provided by the taxpayer in AMS history.

2. Otherwise, update the account with TC 500 with the correct closing code, to establish the CZ freeze.

(12) For questions regarding CZ, research Publication 3, Armed Forces' Tax Guide, before responding by e-mail.

(13) Tax law questions should be forwarded to Pittsburgh AM via e-mail, to the contacts listed under Combat Zone E-mail Addresses located on SERP Who/Where page.

(14) For Collection issues outside of AM scope, fax taxpayer’s issue using Form 4442 to the appropriate DDIA Liaison, located on SERP Who/Where page. Only collection issues addressed by the taxpayer should be referred.

(15) Use the following format on e-mail responses. See IRM 21.3.11.6.1, Responding to the Customer. E-mail messages to taxpayers, their representatives, or any other person, should not include sensitive but unclassified data (SBU) such as tax return information, nor include or request financial or other personal information. A response should be given to the taxpayer within 30 days.

1. Use the system default font on blank stationery for all replies.

2. The canned paragraphs used must match the default font.

3. Greeting: Use a statement such as "Thank you for your inquiry".

4. Paraphrase the customer's question

5. Address each question asked by the taxpayer.

6. If the answer depends on facts or circumstances that are not specifically addressed in the question, state your assumptions. Cite the sources such as forms, publications and other tax sources. See IRM 21.3.11.6.1, Responding to the Customer.

7. Close. Be sure to include a closing paragraph. Per the Restructuring and Reform Act of 1998, the signature must include the name and Identification Number from your identification card. The e-mail address serves as the phone number for purposes of the requirement to provide a contact phone number.

8. Before you release the e-mail, ensure the response is accurate and answers the question that is asked. Check for spelling and grammatical errors and appropriate tone.

(16) Report time spent under OFP 710-82361.

(1) When the taxpayer marks a tax return "Combat Zone" and no valid DoD dates appear on their account, a CP 04, Request for Proof of Military Status or Eligibility for Tax Relief Provisions Under Combat Zone/Contingency Operation Criteria, will issue. Form 15109, Request for Tax Deferment is also sent. The form requests entry and exit dates for the qualified area and a copy of their military orders or a Letter of Authorization (LOA), for civilians.

(2) Computer Condition Code (CCC) "Z" or "K" is coded for CZ tax returns. The code generates TC 500 to CC IMFOLE and sends CP 04. If a response to CP 04 is not received in 70 days, the TC 500, TC 340, TC 270, and TC 160 will be systemically reversed.

(3) CP 04 telephone, paper, and Document Upload Tool (DUT) responses are worked in Kansas City Collection Operation (CSCO).

(4) Taxpayers responding to CP 04 may call the toll-free number: 800-908-0368 or fax their information to 855-233-8562.

(5) Check IRM 13.1.6.2.1, Tips for Oral Communication.

(6) Ensure the taxpayer is responding to CP 04. If the taxpayer has a different issue, see (24).

(7) If the taxpayer states "I never served in a combat zone" or "I did not serve in a combat zone in YYYY" (YYYY = the year of the tax return that was marked) "combat zone", input AMS history with no other action. Allow the system to remove the incorrect TC 500.

(8) Verify authentication per IRM 21.1.3.2.3, Required Taxpayer Authentication.

(9) The purpose of the contact is to restate and clarify any questions you have regarding the taxpayer’s time served in a CZ. Attempt to resolve the case during the phone call.

(10) Update IDRS and AMS with all entry and exit dates provided. Also, update AMS with CZ area, type of service and name and telephone number of organization, if provided.

(11) Get the following information:

(12) For written and DUT responses, if information about the type of service or organization is missing, attempt to determine the missing information through research of CC IRPTR. See IRM 5.19.18.2(3), Identifying FERDI Cases, for help in identifying federal employees. Enter your results on AMS.

(13) To determine if more information is needed, follow below:

(14) For phone responses, follow procedures below. If taxpayer requests confirmation, send Letter 2761C or other appropriate letter.

(15) Additional telephone call responses:

(16) For written and DUT responses, research AMS history for information that may have been provided previously by phone. Send Letter 2761-C, Request for Combat Zone Service Dates, or other appropriate letter when closing your case. Follow the procedures below.

(17) Control the account in "S" status using activity code "CP04mmddyy" with the appropriate follow-up date and Category Code "CP04".

(18) Use the following timeframes for deadlines and follow-up dates.

1. If the taxpayer states they will fax the information, give a deadline of 10 days from date of telephone call.

2. If the taxpayer states they will mail in the information, give a deadline 15 days from date of telephone call.

3. If the taxpayer must provide documentation from the organization, allow 15 days to fax information to CSCO and 30 days to mail it back.

4. If sending Letter 2761-C, allow the taxpayer 30 days from date of input.

5. When determining the follow-up date for the action history code, add an additional 180 days to the deadline given.

(19) If all necessary information has been received and the taxpayer does not qualify for the CZ tax provisions per review of IRM 5.19.10.6.2(11) and (12), Combat Zone Qualified Individuals and Areas:

1. Allow automatic reversal of the TC 500.

2. Follow procedures in IRM 5.19.10.6.2(13), Combat Zone Qualified Individuals and Areas, to inform the taxpayer of disqualification.

(20) Based on taxpayer response and qualifications, update the account using the procedures below. If the taxpayer has a balance due and an IA or CC STAUP will be input, follow IRM 5.19.10.6.5.6, CP 04 - Resolving a Balance Due.

(21) For instructions on input corrections, see IRM 5.19.10.7.2.3(5), Resolving Combat Zone Accounts.

(22) After corrections are input to a CZ account, the –C freeze will release in three cycles. If there is a balance due, the account will then go to ST 46 for two cycles before balance due notices resume.

(23) If an IA or CC STAUP will be input, monitor the account until the balance goes to ST 46. If input corrections have posted, but it is still in ST 43, refer the case to the Lead Tax Examiner for resolution.

(24) Follow procedures in IRM 5.19.10.6.5.6, CP 04 - Resolving a Balance Due, for balance due accounts.

(25) Follow below for other issues:

(1) When a CP 04 response is received, the taxpayer has a balance due and research indicates the taxpayer had an IA prior to their CZ, see IRM 5.19.10.6.5.8(4) through (11), Combat Zone Installment Agreement and Short Term Payment Plan.

(2) When a CP 04 response is received, there is a balance due and the taxpayer did not have an IA prior to their CZ service, follow procedures in IRM 5.19.1, Balance Due, and the references listed below.

(3) Follow the procedures below:

(4) If talking to the taxpayer, provide the taxpayer with the following additional information.

• It will take approximately 5 - 6 weeks to release the freeze on their account. They may receive a notice requesting payment but that notice can be disregarded. However, if they choose to full pay when they receive the notice, they must call and request a current balance. The balance must be computed to exclude the interest and penalty charges that accrued during their time in the CZ.

• Please allow 30 days

• Provide the taxpayer with the customer service toll-free number for requesting a balance and for additional questions.

• Provide the taxpayer with the requirements for submitting payments per IRM 5.19.1.2.7.1, Taxpayer Responsibilities - When Submitting Payments by Check or Money Order.

(1) For AM Toll-free ONLY, follow IRM 20.2.1.6, Interest Computation Tools and Reports: Systemically Calculated Interest, if the taxpayer is requesting a balance.

(2) For all others, follow the procedures below.

(3) Beginning in 2012, military orders or other documentation are required for entry dates of 2010 and later. Documentation is not required for dates provided by the DoD. If entry date is 2010 or later, follow IRM 5.19.10.6.2, Combat Zone Qualified Individuals and Areas.

(4) When the taxpayer provides documentation such as military orders, discharge from active duty or other:

1. Refer to IRM 5.19.10.7.2.4(2), Taxpayer Responds to Letter 2761C, for additional information regarding what dates to use.

2. If there is a posted TC 500 date for which the taxpayer is responding and it is incorrect, remove it with TC 502 and input the correct dates.

(5) For accounts with Combat indicator "1", ensure the CZ status is correct before figuring a current balance. Follow IRM 5.19.10.7.2.2, Combat Zone Research, and IRM 5.19.10.7.2.3, Resolving Combat Zone Accounts.

(6) On active CZ participants only (Combat indicator "1"), compute the payoff balance due (including accruals) to the date of the TC 500 Closing Code 52, 54, or 56 (CZ entry date).

• CC INTST will provide the correct amount if the taxpayer is still in the combat zone.

• If the balance due posts while the taxpayer is in the CZ, the assessed balance is the total amount owed, if full paid before the suspense period ends.

• See IRM 5.19.10.6.4, Combat Zone Computation of Suspense Period.

(7) For inactive CZ participants, compute the payoff amount to the entry date, then resume after the suspense period.

1. For FTP Penalty (with or without a G– freeze), determine the total amount of FTP already assessed.

2. If it is at least 25% of the unpaid tax (minus prepaid credits) that was due by the return due date, no additional FTP is due.

3. Otherwise, FTP must be manually calculated. See IRM 20.1.2, Failure To File/Failure To Pay Penalties.

(8) Interest will systemically resume on Master File (CC IMFOLT) once the CZ suspense period ends if:

• An unreversed TC 500 will restrict interest computation.

• The module has no other restricted interest freeze. See Document 6209, Section 8A.4, Master File Freeze Codes and IDRS Status 48, for a list.

• There are no overlapping CZ tours of duty. Tours of duty are considered overlapping when the taxpayer exits a CZ and then returns to the CZ within 180 days of the exit date and

• There are no payments with an earlier date that posted after a TC 340 date that contains a computed interest amount. On the example below, Master File is unable to compute interest.

(9) If you are providing a payoff amount to the taxpayer, CC INTST will provide a correct balance. However, if interest is still restricted, you must manually compute the interest and FTP accruals. See IRM 20.2.7.11.1, Time Disregarded by Reason of Combat Zone Service and IRM 20.2.7.11.2, Combat Zone Interest Suspension. CC INTST will not compute the accruals. For computing FTP penalty, see IRM 20.1.2.2.2.1, Combat Zone - IRC 7508.

(10) For inactive CZ participants (Combat indicator "2"), refer to IRM 5.19.1.6.2, Can Full Pay Balance Due Now (Payoff), or IRM 5.19.1.6.3, Short Term payment Plan Within 180 Days .

(11) Update AMS history with information about the payoff request, balance due and CZ dates.

(1) For AM Toll-free obtain the entry and exit dates from the taxpayer and enter the information on AMS. Take the following actions:

(2) For all others, follow the procedures below.

(3) For accounts with Combat indicator "1", ensure the CZ status is correct. To resolve, follow IRM 5.19.10.7.2.2, Combat Zone Research, and IRM 5.19.10.7.2.3, Resolving Combat Zone Accounts. If the open CZ status can be resolved, input the corrections and monitor the account until the Combat indicator updates to "2" or "0". Then follow (7) through (11) below.

(4) If the CZ suspense period is still open, research SC Status History, on CC TXMOD.

1. If ST 6X is present followed by ST 43, the taxpayer had an IA before entering a CZ.

When the CZ suspense period expires, the following occurs:
Accrued FTP Penalty and interest is manually assessed.
The IA is reinstated.
The reinstatement/ restructuring IA User Fee is waived, unless the taxpayer owed a fee prior to entry into the CZ.
A letter is sent to the taxpayer, providing a current balance due and the terms of the agreement.

2. See IRM 5.19.10.10.14.3, IAAL Military Combat - Reinstatement of Installment Agreements, for more information.

(5) If the taxpayer did not have an IA, once the CZ suspense period expires, balance due notices to the taxpayer will resume.

(6) For accounts with Combat indicator "1", take the following actions:

(7) When the CZ suspense period expires, the balance due module goes to ST 46 for two cycles and then balance due notices resume (Notice Status). When the module is in ST 46, installment agreements or CC STAUP can be input.

(8) For accounts with Combat indicator "2" (balance due is in ST 46, Notice or TDA Status), follow procedures in IRM 5.19.1, Balance Due.

(9) If interest and penalty is restricted on a ST 60 IA module, the account will go to the Installment Agreement Accounts Listing (IAAL) when the assessed balance is full paid. Interest and penalty accruals will then be assessed and the IA reinstated. When setting up an IA on a CZ account, computation of interest and penalty is not required unless the taxpayer requests a balance.

(10) See IRM 5.19.10.10.2.1, Full Paid Restricted Interest and Penalty Accounts for more information.

(11) Update AMS history with information about the IA request and CZ dates.

(1) Combat Zone transcripts are systemically controlled upon issuance. If a case is not systemically controlled, control the case on the CC TXMOD period of the earliest unreversed TC 500.

(2) Research IDRS/AMS to determine whether the case can be closed or if a letter should be sent. See IRM 5.19.10.7.2.2, Combat Zone Research, and IRM 5.19.10.7.2.3, Resolving Combat Zone Accounts.

1. If contact with the taxpayer is needed to obtain the correct entry and exit dates, send Letter 2761-C, Request for Combat Zone Service Dates.

2. Suspend the account for 60 days. In the letter, give the taxpayer 45 days to respond.

3. Follow IRM 5.19.10.7.2.5, Taxpayer Does Not Respond to Letter 2761C, if no response is received.

(3) Document each action taken on the case in AMS history. Include any dates provided by the taxpayer, the dates of any Letter 2761-C, Request for Combat Zone Service Dates, that were sent or any calls that were made. If a subsequent transcript issues the next year, the history may assist the employee in resolving the CZ condition without contacting the taxpayer.

(1) The Combat indicator and controlling TC 500s can be found on CC IMFOLE. The Combat indicators are:

• "0" or blank = Not a CZ participant

• "1"= Active

• "2"= Inactive

• "3"= Combat Zone Hospitalization

(2) If working transcripts and Combat indicator is "0" or "2". Close the case with no further action.

(3) If Combat indicator "1" has been open for less than two years (i.e., the most recent open TC 500 entry date on CC IMFOLE is less than two years) from the transcript date, do the following:

1. Correct any other open TC 500s that are present if they can be resolved without taxpayer contact.

2. Enter AMS history and close the case.

(4) The following chart lists TC 500 closing codes for entry date, closing codes for exit date and identifies the designated CZ:

(5) The new TC 500 CC 58 will be used when a combat zone veteran has been hospitalized due to injuries sustained in a combat zone. Upon input of the TC 500 CC 58 an indicator 3 will systemically update to IMFOLE signifying that the taxpayer is hospitalized. Upon their exit from the hospital a new TC 500 CC 59 will be input, and IMFOLE will systemically update to an indicator 2 ( no longer in a combat zone). The TC 500 CC 58 will mirror the existing functionality of the TC 500 CC 52/54/56 by extending the ASED, suspending interest and penalties, and preventing collection, however, it will not prevent the extension of the CSED for the duration of hospitalization. The new TC 500 CC 59 will mirror the existing functionality of the 53/55/57 and allow for the re-entry into active collection 180 days from posting.

(6) The source of the TC 500 on CC IMFOLE can be identified by the DLN.

(7) Locate all open TC 500s on the account. Research the following: