21.4.2. Refund Trace and Limited Payability

(1) Employees in the Accounts Management organization respond to taxpayer inquiries and phone calls, and process claims, and internal adjustment requests related to Refund Claims. This IRM provides specific guidance for responding to refund inquiries, tracing direct deposit and paper refunds and reissuing refunds that have been cancelled due to limited payability.

(1) The authorities for this IRM include:

• Policy Statements for Customer Account Services Activities, IRM 1.2.1.13

• IRC 6103(m)(1), Disclosure Of Taxpayer Identity Information, Tax Refunds

• IRC 6402, Authority to Make Credits or Refunds

• IRC 6511, Limitations On Credit Or Refund

• Protecting Americans from Tax Hikes Act of 2015 (PATH Act) Section 201(b), which is codified at IRC 6402(m)

• Title 31, Money and Finance

(1) The Taxpayer Services Commissioner oversees all policy related to this IRM, which is published on an annual basis.

(2) The Director of Accounts Management oversees the instructions to the employees contained in the IRM content.

(3) Accounts Management Policy and Procedures IMF (PPI) Tax Analyst(s) oversees the content in this IRM and acts as a point of contact for all Accounts Management sites.

(4) Managers and leads ensure compliance with the guidance and procedures in this IRM for Individual Retirement Accounts case resolution.

(5) Employees resolve Refund Traces and Limited Payability requests following procedures in this IRM.

(1) Program Effectiveness: Program Effectiveness is measured and controlled through:

1. Managerial reviews

2. Quality reviews

3. Quarterly PPI review

4. Program Reports

(1) Program Goals are measured and controlled through:

• Quality data and guidelines for measurement referenced in IRM 21.10.1, Embedded Quality (EQ) Program for Accounts Management, Campus Compliance, Field Assistance, Tax Exempt/Government Entities, Return Integrity, and Compliance Services (RICS), and Electronic Products and Services Support

• Campus Compliance

• Field Assistance

• Tax Exempt/Government Entities

• Return Integrity and Compliance Services (RICS) and Electronic Products and Services Support

• Goals, measures, and operating guidelines listed in the yearly Program Letter.

(1) Common acronyms listed throughout IRM:

(1) Related resources for this IRM include (list is not all inclusive):

• Public Law 100-86, Title 4 of the Competitive Equality Banking Act of 1987

• Bureau of the Fiscal Service - Treasury Check Information System

• Document 6209 (IRS Processing Codes and Information)

• Integrated Automation Technologies (IAT) Tool Instructions

• IDRS Command Code Job Aid

• Refund Inquiry Unit Addresses

• Integrated Automated Technologies (IAT) - Missing Refund (CHKCL) tool

• Integrated Automated Technologies (IAT) - Reissue Refund (CHK64)

• IRM 21.4.1, Refund Research

• IRM 21.4.3, Returned Refunds/Releases

(1) When a refund check is lost, stolen, destroyed, or not received by the taxpayer, a refund trace can be initiated. This section of the IRM provides information and instructions for tracing.

(2) In addition to researching IDRS for prior activity, review Account Management Services (AMS) for prior taxpayer contact.

(3) Command code (CC) CHKCL is used to initiate a refund trace on Integrated Data Retrieval System (IDRS). For CC CHKCL instructions, see Exhibit 21.4.2-1, Command Code (CC) CHKCL Input. To access CC CHKCL, you must be able to access IDRS. See IRM 21.4.3, Returned Refunds/Releases, if there is an S- freeze (Undelivered Refund) on the module. See IRM 21.5.6.4.38, S- Freeze, for additional information on S- freezes.

(4) Refund inquiries are worked in all campuses. Inquiries received in your campus must be worked at your campus, except for the few instances identified in IRM 21.4.2.4, Refund Trace Actions. Do not forward work to another campus unless the campus specifically requests that you forward them the case. The case request must be in writing and signed by the requesting employee's manager. For fax numbers and addresses, see Refund Inquiry Unit Addresses, located on Servicewide Electronic Research Program (SERP) under the Who/Where tab.

(5) The IRS works with other Federal agencies to trace refunds. Bureau of the Fiscal Service (BFS), including its Regional Financial Centers (RFCs), play key roles.

(6) BFS, an agency in the Treasury Department, issues and maintains records relating to United States (U.S.) Treasury checks and Electronic Funds Transfer (EFT) deposits. BFS headquarters are located in Washington, DC.

(7) Pursuant to 31 CFR. §245.5, the IRS is authorized to certify second payments to payees who did not receive their refund checks or whose check was lost, stolen, or destroyed. In case of forgery, BFS certifies second payments, issues a refund check, and notifies the IRS to input transaction code (TC) 971, action code (AC) 078 or AC 079 on Master File.

(8) BFS is responsible for making refund offsets for debts including federal non-tax debts, child support, state tax debts and unemployment insurance. This is referred to as the Treasury Offset Program (TOP). See 26 IRC 6402. Refunds will be offset after the IRS certifies them to BFS for payment but before the refund check or direct deposit is issued/made. See IRM 21.4.6, Refund Offset, for information on the TOP.

(9) The Kansas City Financial Center and the Philadelphia Financial Center print and mail the refund checks for all campuses.

(10) BFS keeps records for Treasury checks for seven years generally which may be retrieved from a RFC and on EFT deposit refunds for six years on the following information:

• Check Number

• Check Symbol

• Social Security Number, Individual Taxpayer Identification Number, or Employer Identification Number

• Amount of refund

• Date refund was issued

• Name and address on check

• Routing transit number and account number

(11) The RFC inserts Notice 54, About Your Refund Check, into Individual Master File (IMF) refund checks if the actual refund amount differs from the amount the taxpayer claimed. RFC inserts Notice 134, About Your Refund Check, into all Business Master File (BMF) refund checks. In addition, BFS will issue a separate notice of offset if the original amount was reduced due to a TOP Offset.

(12) The Financial Processing Division (FPD) in Philadelphia, PA processes check claims received from the IRS.

(13) The Taxpayer Bill of Rights (TBOR) lists rights that already existed in the tax code, putting them in simple language and grouping them into 10 fundamental rights. Employees are responsible for being familiar with and acting in accord with taxpayer rights. See IRC 7803(a)(3), Execution of Duties in Accord with Taxpayer Rights. For additional information about the TBOR, see Taxpayer Bill of Rights. Taxpayers have the right to receive assistance from the Taxpayer Advocate Service (TAS) if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through normal channels.

1. Refer taxpayers to TAS when the contact meets TAS criteria per IRM 13.1.7.3, TAS Case Criteria, and you cannot resolve the taxpayer's issue the same day. Also refer to IRM 13.1.7.4, Exceptions to Taxpayer Advocate Service Criteria. TAS provides help to taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that the IRS has not been able to resolve through normal channels or believe that an IRS system or procedure is not working as it should. See IRM 21.1.3.18, Taxpayer Advocate Service (TAS) Guidelines, for further information.

2. If you can resolve and close the TAS issue on the same day as the taxpayer contact, do not refer the inquiry to TAS. The definition of same day is within 24 hours. There will be times you can completely resolve the TAS issue within 24 hours. There will also be times that, although you cannot completely resolve the issue within 24 hours, you have taken steps within 24 hours to resolve the taxpayer's issue. These cases also meet the definition of same day. Do not refer these cases to TAS unless the taxpayer asks to be transferred to TAS and the case meets TAS criteria. Refer to IRM 13.1.7.5, Same Day Resolution by Operations.

3. When referring cases to TAS, use Form 911/e911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance Order), and forward to TAS in accordance with your local procedures.

(1) The processing steps on tracing a refund check will depend on whether the cutoff date for processing of the "check claim" has passed at the Bureau of the Fiscal Service (BFS). If the cutoff date has passed, the case is referred to as a Limited Payability (LP), see IRM 21.4.2.4.7, Limited Payability (LP) Rules.

(2) The number of days allowed for timely processing of these cases is prescribed in IRM 3.30.123, Processing Timeliness: Cycles, Criteria and Critical Dates. At the campus option:

1. Inquiries may be processed on a first-in, first-out basis.

2. If the check claim involves an issued non-receipt refund check, a first read (correspondence) is acceptable to expedite processing.

(3) Cases (either a "check claim" or "LP Trace") resulting in check tracing actions must be:

1. Controlled within 14 calendar days of receipt by the IRS.

2. Controlled on IDRS within 3 workdays of receipt from another function (include day of receipt).

3. Initiated within 17 workdays of the IRS received date.

Reminder: Control using the earliest IRS received date.

Note: Whenever possible, multiple cases from the same taxpayer will be processed by the same employee. Coordination of these same taxpayer, multi-year cases is necessary to ensure consistent processing. See IRM 21.5.2.3, Adjustment Guidelines – Research.

(1) If you cannot find a refund on the master file, it may have been a Non-Master File (NMF) refund. Use local established procedures to locate refund information. If no information is found using the following research procedures, ask the taxpayer to send copies of any correspondence about the refund. Information received may contain the necessary Document Locator Number (DLN). The Non-Master File DLN is tax class "6" and all refunds from NMF accounts must be manual refunds. Refer to IRM 21.4.4, Manual Refunds. Refund Inquiry employees can also find the required check information on Treasury Check Information System (TCIS).

(2) Most NMF accounts will now be found on the Automated Non Master File (ANMF). Depending on the location of terminals, Refund Inquiry employees may be able to do their own research on the ANMF accounts. Call sites should contact (by phone) their servicing center and request ANMF research. The center should fax the research results back to the call site requesting the information. See IRM 10.5.1.6.9.4, Faxing, for further guidance.

(3) Refund Inquiry employees must obtain a unique "login" through Business Entitlement Access Request System (BEARS) requesting ANMF for research only. Requests must be submitted through local management.

(4) The ANMF allows employees to read any entity or transaction on the file by following the instructions displayed with the "Research NMF" option.

1. With the "Query" command, employees can research for a desired entity by entering the DLN or TIN, MFT, and tax period of the desired record. If only partial information is available, enter the data for any fields shown on the screen page for the record you need.

2. Use the "NMF Transcript" option to request a printed transcript (not a certified transcript) that will be delivered from the NMF unit on the following day. The ANMF system does not provide the "print screen" capability that would allow you to copy what you see on the research screen.

(5) There are other refunds not found on the master file, which may have been an Offer in Compromise (OIC) refund. The OIC program issues refunds from the 4710 Account that will not show up on IDRS, refer to IRM 5.19.7.7, OIC Deposits. An OIC can be identified by a Transaction Code (TC) 48X on IDRS. It takes approximately 4 months to verify the refund has been processed.

(6) Most OIC accounts are on the Automated Offer in Compromise System (AOIC). Refund Inquiry employees will e-Fax the case to the Monitoring Offers In Compromise (MOIC) Deposit Request Information Liaisons based on the state mapping found on SERP Who/Where Offer in Compromise (OIC) Compliance Campus Locations for the Monitoring of Accepted Offers. TEs will close their IDRS control and leave a note to indicate the case was reassigned to MOIC (Brookhaven or Memphis) in the AMS notes.

(1) At times taxpayers neglect to provide all necessary information when they return Form 3911, Taxpayer Statement Regarding Refund. Employees may either send the taxpayer the appropriate letter or may request the missing information by using the Form 8599, Request for Missing Information Regarding Refund.

(2) Upon receipt of incomplete Form 3911 (or Form 1310 or FS Form 1133, etc.), action must be taken to return the form(s) to the taxpayer for the missing information. For example, when taxpayers file a joint return, both parties must sign the Form 3911. If only one signature is present, the Refund Inquiry Unit will return the Form 3911 and advise the taxpayer that both parties must sign the document.

(3) Refund Inquiry Unit will update the IDRS Activity Code with the form number, and "TOTP" (e.g., "3911TOTP", "1310TOTP", etc.). If this is the initial contact with the taxpayer and you have not initiated a claim with the Bureau of the Fiscal Service (BFS), "X" out the received date and close the case.

(4) If a claim has been initiated with BFS, the Refund Inquiry Unit will use the appropriate Category Code and keep the case open in "B" status until the final disposition is received. This will provide an audit trail for any subsequent contact by the taxpayer that the IRS returned the form as incomplete.

(5) The Form 8599, is a two-part form. Both parts will be forwarded to the taxpayer along with the incomplete form(s). Always include:

• A PRE-ADDRESSED return envelope.

• Unit Stop Number on the face of the return envelope.

(1) If the contact does not meet oral statement criteria:

1. If the refund time frame prescribed in IRM 21.4.1.4.4, Refund Issued But Lost, Stolen, Destroyed or Not Received, has been met, advise the taxpayer that Form 3911, Taxpayer Statement Regarding Refund, is available through the internet on IRS.gov. See IRM 21.3.6.4.2, Other Methods of Obtaining Forms and Publications. If the taxpayer cannot obtain the form online, advise the taxpayer you can mail or fax them a form. Use of the IAT Missing Refund (CHKCL) tool is mandatory when sending the Form 3911 to the taxpayer. Be sure to verify the taxpayer's mailing address. If taxpayer has moved since filing their return and their current address is not on record (Command Code (CC) ENMOD), advise the taxpayer the form is available on www.irs.gov. DO NOT UPDATE ADDRESS ON CC ENMOD unless the taxpayer meets oral statement criteria. See IRM 21.1.3.20.1, IMF and BMF Oral Statement Address Changes.

   Caution: Refunds cannot be systemically issued to a temporary address. If the address provided is a temporary address, a manual refund is required.

   Caution: Do not initiate a refund trace over the phone if there is open IDT involvement on the account. See IRM 25.23.12.4.1, Telephone Inquiries Regarding Identity Theft Victim Assistance (IDTVA)Tax-Related Cases, for additional information. If the IDT involvement is closed, see paragraph 2 below.

   Reminder: If the refund was issued as a manual refund (TC 840), OSA can’t be accepted.

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Note: Regardless of RIVO involvement, do not reassign a Form 3911 unless the specific criteria mentioned above is met. If the case meets RIVO criteria, follow the appropriate procedures based on case status.

2. When speaking to the taxpayer or their authorized representative, advise the taxpayer they must sign the Form 3911. If joint return, both taxpayers must sign. If surviving spouse, advise the taxpayer to add "Surviving Spouse" on the decedent’s signature line. See IRM 21.6.6.2.21.2 (1), Processing Decedent Account Refunds, for Form 1310 requirements.

   Note: Form 3911 signed by anyone other than the taxpayer or their authorized representative, will be returned as incomplete following procedures in IRM 21.4.2.3.3, Form 8599, Request for Missing Information Regarding Refund.

3. When speaking to the taxpayer or their authorized representative, advise the taxpayer they can either mail or fax their request. Provide the address and fax number of the IRS campus Refund Inquiry function associated to the taxpayer’s state of residency. Advise the taxpayer they will be contacted by the Refund Inquiry Unit within 6 weeks for a paper refund check, or 120 days for a direct deposit refund, from the date the Form 3911 is received. For fax numbers and addresses, see Refund Inquiry Unit Addresses, located on SERP under the Who/Where tab.

4. Using the Integrated Automation Technologies (IAT) Missing Refund (CHKCL) tool or Account Management Services (AMS), input the following history item on the account - "H,39112TP".

5. If forwarding the Form 3911 to another Service Center with an open Refund Inquiry Unit control, create a history item stating "39112XX", using CC ACTON.

Note: XX in the above history item stands for Service Center (SC), the service center abbreviations are as follows:
Andover = AN
Atlanta = AT
Austin = AU
Brookhaven = BR
Cincinnati = CI
Kansas City = KC
Fresno = FR
Memphis = ME
Ogden = OG
Philadelphia = PH

(2) When speaking to the taxpayer or their authorized representative, or if a Form 3911 is received, and an identity theft case is closed or resolved, you may proceed with processing the Form 3911 or refund trace and take appropriate actions to resolve the taxpayer’s refund inquiry. The following transaction(s) on Integrated Data Retrieval System (IDRS) via CC ENMOD and/or CC IMFOLE, identifies if the case is resolved:

• posted TC 971 AC 501

• posted TC 971 AC 504

• posted TC 971 AC 506

• posted TC 972 AC 522

(3) For paper inquiries, a written statement can be accepted for CC CHKCL input provided all oral statement criteria are met and the correspondence is signed by the taxpayer or their authorized representative. If oral statement criteria is not met, or the correspondence is not signed, reply to the correspondence and advise the taxpayer to file Form 3911, Taxpayer Statement Regarding Refund, which is available through the internet on www.irs.gov. Using AMS or Correspondence Imaging Inventory (CII) case note, input the following history item on the account - "Form 3911 needed".

1. If a Form 3911 is received and an identity theft case is open, follow procedures in IRM 21.5.1.4.10, Classified Waste, to destroy the Form 3911. Do not correspond with the taxpayer, IDT will address refunds paid to an invalid taxpayer and allow valid refunds to be issued, when appropriate.

2. If a Form 3911 is scanned into CII, review the form for completeness. Form 3911 should have lines 1,2,3, and 7, as well as appropriate signatures, to be considered complete. If Form 3911 is incomplete, correspond for the missing information. If a joint return, both taxpayers must sign.

3. Update CC ENMOD if an address change is required. If paper refund is less than one year old or refund was direct deposit, follow procedures in IRM 21.4.2.4.2, Input Command Code (CC) CHKCL, to input CC CHKCL.

   Reminder: A control base must remain open pending the trace process, which can take up to 120 days for direct deposits and 6 weeks for paper checks. If closing a CII control, use the control numbers listed in IRM 21.4.2-1 (8), Command Code (CC) CHKCL Input, to open a new control base to ensure proper processing of the case.

4. If paper refund is more than one year old, or taxpayer is requesting a refund trace for a combination of both, send the Form 3911 to your local Refund Inquiry Unit for trace to be completed.

5. If a Form 3911 is received requesting a trace be completed on an account for which either no refund issued or the refund in question is not posted, follow procedures in IRM 21.3.3.3.4, Quality and Timely Responses, to advise taxpayer of the status of their account or that the refund was not issued on the account. Destroy the Form 3911 following procedures in IRM 21.5.1.4.10, Classified Waste.

6. If forwarding the Form 3911 to another Service Center with an open Refund Inquiry Unit control, create a history item stating "39112XX" (XX=SC), using CC ACTON. See note above for a listing of SC abbreviations to be used.

(4) Refund Inquiry Employees: If the taxpayer returns the Form 3911, review the form for completeness. If Form 3911 is incomplete, follow procedures in IRM 21.4.2.3.3, Form 8599, Request for Missing Information Regarding Refund, to request the missing information. If a joint return, both taxpayers must sign. Update CC ENMOD if an address change is required.

(5) If research indicates one or both taxpayers are deceased, and Form 3911 was signed prior to the taxpayers’ death on CC INOLES, follow procedures in IRM 21.4.2.3.3, Form 8599, Request for Missing Information Regarding Refund. Advise that a newly signed Form 3911 and Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer, or court documents are required to trace the missing refund and re-issue the refund if returned.

(6) If a Form 3911 mailed to the taxpayer is returned by the United States Postal Service as undeliverable, the Refund Inquiry Unit will research for a new or corrected address or a phone number to contact the taxpayer. If a corrected address is found, re-mail the Form 3911. If no new address is located, destroy the Form 3911.

(1) CC TXMOD must precede input of CC CHKCL. If CC TXMOD is not available, use CC MFREQC. Input CC CHKCLR to request the CC CHKCL screen format. The following items generate from the preceding CC TXMOD:

• CC CHKCL

• Valid TIN

• MFT

• Tax Period

• Name Control

(2) For the input of the CC CHKCL and time frame guidance, see Exhibit 21.4.2-1, Command Code (CC) CHKCL Input.

(3) Input information on the CC CHKCL format.

(1) When CC CHKCL is input, the request is sent electronically to the RFC. The request is then forwarded to Philadelphia, PA, where Bureau of the Fiscal Service (BFS) determines the status of the check, cashed, or not cashed. Trace requests for direct deposits are processed at RFC. Refer to the table below for resulting action.

(1) The taxpayer may subsequently inquire, either by phone or in correspondence, after initiation of a refund trace on their missing refund check or non-receipt of a direct deposit refund. Determine if the taxpayer expected to receive their refund as a paper check or direct deposit. Use the following table in your attempt to resolve the taxpayer's issues. If no TC 971 AC 011, for the refund in question, is posted after the TC 846 date, see IRM 21.4.2.4, Refund Trace Actions.

(2) Upon receipt of cases from the field where it has been more than three weeks since the CC CHKCL was input and no disposition code received, the Refund Inquiry Unit is to reinput the CC CHKCL and advise the taxpayer of the action. Once the trace is reinput, the refund trace time frames start over again, the TP must allow 6 weeks for paper checks and up to 120 days for direct deposits.

(1) The Refund Inquiry Unit will monitor cases after input of CC CHKCL to ensure proper actions. See Exhibit 21.4.2-2, Disposition Code Chart - Refund Inquiry Employee Actions, and Exhibit 21.4.2-5, Disposition and Status Codes Additional Action Time Frames, to determine if follow-up action(s) is required.

(2) The following actions occur once the refund trace reveals the check has been cashed:

1. The Bureau of the Fiscal Service (BFS) sends a copy of the check with a FS Form 1133 Claim Form directly to the taxpayer.

2. The taxpayer returns the FS Form 1133 directly to BFS, except in case of Limited Payability.

3. The IRS will receive a Disposition Code "11" and Refund Inquiry will send Letter 206C, Refund Inquiry; Copy of Check Requested/Check Being Traced (FS Form 1133), with appropriate paragraph. Provide the check information and close case.

4. Refund Inquiry will forward subsequent claims received to BFS and notify the taxpayer.

5. Depending on BFS's response, the taxpayer may receive either a replacement refund, denial letter, or interim response.

(3) BFS sends a Claims Disposition Notice to the IRS showing the final or interim disposition. In addition, BFS notifies the taxpayer of the status of the claim.

(1) Input of CC CHKCL generates a request of non-receipt claims and stop payment information. This information is transmitted to the RFC for processing. The RFC will:

1. Compare information with their records.

2. Transmit information to the IRS indicating status or disposition of claim.

(2) RFC procedures for processing the request are given in the table below:

(3) The non-receipt claim must:

1. Be processed in five (5) working days.

2. Include date of receipt, releasing stop, and disposition.

3. Determine status of payment or any previous action taken.

(4) Depending on the Status of the refund check one of the following occurs:

(1) Title 4 of the Competitive Equality Banking Act of 1987 (CEBA), Public Law 100-86, (Aug. 10, 1987), commonly referred to as Limited Payability (LP), established rules for cashing government checks:

• Treasury does not have to pay a refund check issued prior to October 1, 1989, that was not negotiated by September 30, 1990. See Section 1002 of CEBA codified at 31 USCA 3328 (a)(1)(B).

• Treasury does not have to pay a refund check issued on or after October 1, 1989, that was not negotiated within 12 months after the issue date of the check. See Section 1002 of CEBA codified at 31 USCA 3328 (a)(1)(A).

• After 12 months Treasury cancels a refund check: and, if the check is still outstanding on the 15th day of the 14th month, the proceeds are "returned" to the IRS for crediting taxpayers' accounts to offset the payment entries. See 31 USCA 3334.

• The law also places a limitation on the time the IRS can recover funds from the banks or financial institutions.

(2) Taxpayers may submit claims for refund checks after the one-year time limit has expired. These claims are subject to Limited Payability provisions. Claims must be submitted to the Bureau of the Fiscal Service (BFS) by the 15th day of the 14th month, by using CC CHKCL with non-receipt Codes N, L, S, D, E, H, or X. See chart in paragraph (3) below.

(3) The chart below provides the refund issue date, the date a check can no longer be negotiated, and the last date an LP claim can be submitted.

(4) The CP 32, We Sent You a Replacement Refund Check to Replace the One That Expired, and CP 237, Notice of Issuance of a Refund Check to Replace an Expired Check (BMF), is sent to the taxpayer when an expired check is reissued. Refer to IRM 21.3.1, Taxpayer Contacts Resulting From Notice Issuance.

(5) All LP claims received after the 15th day of the 14th month must be processed by the IRS. Take the following actions:

• Research the Treasury Check Information System (TCIS) for a copy of the check.

• If check is available on the TCIS system, print a copy of the check.

• Input a TC 971 AC 011 on CC TXMOD using the date you secure the check, the money amount of the check in the FREEZE-RELEASE-AMT field and a 3 in the MISC CODE field.

• Send Letter 206C, Refund Inquiry; Copy of Check Requested or provided/Check Being Traced Form 1133, to provide the taxpayer with a copy of the check. If the taxpayer submitted Form 3911, include paragraph R in your response. Close your case control and treat the document as classified waste. If the taxpayer submitted correspondence, include paragraph Y along with an open paragraph with the following suggested verbiage "If you didn't cash the refund check, provide the information at the end of this letter and return it to the IRS's Refund Inquiry Unit." Also, include the contact information for your Refund Inquiry Unit and paragraph j in your response. Close your case control and treat the document as classified waste.

Note: A written statement can be accepted provided all oral statement criteria are met and the correspondence is signed by the taxpayer or their authorized representative.

(6) If the taxpayer requests a certified copy of a check from within the past seven years:

• Input CC CHKCL with non-receipt code C and BFS will provide a photocopy of the check directly to the taxpayer.

• Input a TC 971 AC 011 on CC TXMOD using the date you secure the check, use the money amount of the check in the FREEZE-RELEASE-AMT field and a 1 in the MISC CODE field.

• Send Letter 206C, Refund Inquiry; Copy of Check Requested or provided/Check Being Traced Form 1133, advise te taxpayer that BFS will mail them the certified copy. You may use the following suggested verbiage: We asked the Bureau of the Fiscal Service (the office that issues refund checks) for a certified copy of your check. They will forward the copy to you within the next 30 days if the check was cashed.

• Close your case.

(7) Any CC CHKCL input after the 15th day of the 14th month with a non-receipt code other than P or C will receive a Disposition Code 18 (if check is cashed) and will NOT create an BFS claim. See Exhibit 21.4.2-2, Disposition Code Chart - Refund Inquiry Employee Actions, for Disposition Code 18.

(8) If BFS records show the refund check is still outstanding on the 15th day of the 14th month, then BFS will cancel the refund and return a credit to the IRS which will post in approximately the third week of the 15th month after issuance. It will post on the tax module as a TC 740 with blocking series 66666. See IRM 21.4.2.4.7.2, Limited Payability Computer Paragraph (CP) 32/237.

(1) Employees other than those at the Refund Inquiry Unit must follow the table below:

(1) The following account actions occur automatically:

(2) LP cancellation credits post to an account as a TC 740. The posted credits have a DLN with a blocking series-serial number "66666".

(3) Credits ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and credits ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ that are frozen for other reasons, including second LP cancellations, will generate complete master file transcripts and CP 32, and CP 237. These CP notices are identical to CP 32A and CP 237A except for the routing instructions.

(1) If taxpayer contacts the IRS by phone, paper, or in person, use the following table to release a refund on a LP response.

(2) Take further action on the account if needed:

1. Contact other functions of the IRS.

2. Contact the taxpayer. See Letter 533C, Refund Check Undelivered or Not Negotiated. Suspend case for 45 days (70 days for overseas taxpayers), allowing time for the taxpayer to respond.

(1) The following directions are for processing claims from taxpayers disputing cashed refund checks that are now Limited Payability (LP). If procedures in IRM 21.4.2.4.7, Limited Payability Rules and Procedures, have been followed to provide the taxpayer with a copy of their cashed refund check, proceed with determination below.

(2) If the check meets Limited Payability criteria and the taxpayer’s correspondence claims the check involves forgery, compare endorsement(s) on the check to available samples of taxpayer signatures, including any other check copies found in TCIS. If you are able to make a determination of the taxpayer’s signature, deny the claim. Proceed to IRM 21.4.2.4.11 (5) below for paragraphs to include in letter.

(3) If you are unable to make a determination, or no signature appears on the check:

1. Send Form 13818, Limited Payability Claim Against the United States for the Proceeds of an Internal Revenue Refund Check. Complete the following fields before sending Form 13818 to the taxpayer:

FIELD	Field Description
Date	Today’s Date
Tax Examiner	IDRS number of TE preparing the form and who will work Form 13818 response, see IRM 3.13.2.2.1, Identification Requirements for IRS Employees, for more information
Payee name and address	Name and address to which check was issued
Check amount	Amount of check
Symbol number	4-digit check symbol number
Check number	8-digit check serial number
Date of check	Issued date of check (i.e., date printed on check)
Tax Year	Tax period from which refund was issued
Form	Form for which refund was issued

2. Provide the taxpayer with a copy of the negotiated refund check secured from TCIS, and a return envelope for your Refund Inquiry function. Also attach copies of both the Form 13818 and refund check secured to your case file.

3. Notate "F13818TOTP" in the activity field of your open control, and place the control in monitor status, do not change the category code on IDRS. Allow 45 days for domestic taxpayers to respond and 70 days for overseas taxpayers.

4. If no response, close case with TC 290 .00 using case file as a source document.

5. If a current address is unavailable or transposition errors not found, update the control base with Activity Code "NONEWADDR" and close the base. Destroy the Form 13818 as classified waste per IRM 21.5.1.4.10, Classified Waste.

(4) When the taxpayer returns the completed and signed Form 13818, the Refund Inquiry tax examiner must:

1. Review the claim form for all required information and signatures.

2. Review the taxpayer's answers to questions on the Form 13818.

3. Determine if the IRS erred in sending the refund check to an incorrect address.

   Reminder: Do not deny the claim based solely on the address. The check could have been intercepted prior to the taxpayer taking possession.

4. Compare endorsement(s) on the check to available samples of taxpayer signatures, including any other check copies found in TCIS. Look for any obvious similarities or differences in the signature that would lead you to support or deny the taxpayer’s claim.

(5) Based on the review of all information supplied by the taxpayer, follow the chart below:

(6) After all information is considered:

(7) If you believe the taxpayer’s claim is valid or no specific reason to deny the claim can be found, allow the claim following the procedures in IRM 21.4.2.4.14, Account 6565 Processing for Refund Inquiry Function.

(8) If an altered limited payability check is identified during your research, take the following actions:

• Refer a PDF copy of the claim package to the TIGTA Complaints Management Team (CMT) at OI.GovReports@tigta.treas.gov with a copy to the IRS CI mailbox at SDCLeads@ci.irs.gov. TIGTA CMT will respond with a reference number for your case file.

  Note: TEs should have a reference number within 14 days. If you have not received a reference number within 21 days, send a follow-up email to the TIGTA CMT mailbox requesting a reference number. DO NOT re-send the information unless instructed to do so by the TIGTA CMT agent.

  Note: A TIGTA Special Agent will contact the financial institution to retrieve the altered check if they are in possession of it.

• Since these mailboxes are not secure, two e-mails must be sent regardless of the order. Documents must be password protected, you must create that password and send separate from the documents.

• Include the following when sending the PDF copy of the claim package:
  1. A complete image of the front and back of the altered check(s).
  2. A screenshot image of the TCIS Payment details screen.
  3. BOFD information for the bank where the check was cashed. Use the link at Financial Institution Routing Numbers to find the BOFD’s information based on the RTN.
  4. A complete copy of the taxpayer’s claim, including any additional information which may have been supplied by the taxpayer.

• Indicate in the body of the e-mail that the Lead Submission Excel spreadsheet pertaining to the specific altered check is not applicable.

• If the TE/CSR/Reviewer has determined the check to be altered then, upon receipt of the reference number from TIGTA CMT, follow the procedures in IRM 21.4.2.4.14, Account 6565 Processing for Refund Inquiry Function, to allow the Limited Payability (LP) claim.

(9) Send the case to the Center for Science and Design (CSD) (formerly National Forensics Laboratory (NFL)) for signature comparison only if you cannot determine if the endorsement on the U. S. Treasury check is a forgery. It may be necessary to request CSD assistance in the following instances:

• The endorsement is written, while the samples are printed. Obtain written samples from the taxpayer before forwarding to CSD.

• The endorsement is printed, while the samples are written. Obtain printed samples from the taxpayer before forwarding to CSD.

• A stylized signature appears on the check and legible writing is used on Form 13818 or Form 3911, Taxpayer Statement Regarding Refund.

• Legible writing is used for the endorsement and stylized signatures are used on the Form 13818 or Form 3911.

(10) When sending the case to CSD take the following actions:

• Review the check copy to make sure the check number, symbol number, payee name and amount are correct.

• Complete Form 13437, IRS Center for Science and Design Request for Services (Rev. 03/2023), and transmit electronically using the Submit by Email button located at the top of the form. The first page of Form 13437, is used to create a case in the laboratory while establishing the chain of custody as evidence is received by laboratory personnel. A copy of the completed Form 13437 must be included with the complete case being sent as evidence.

• Follow the instructions on page 2 of the form under the header Submission of Physical Evidence, for the handling and delivery of the complete case to CSD.

• In addition to a completed Form 13437, a complete case will include a photocopy of the check (front and back), a completed Form 13818, and/or any taxpayer correspondence received. If available, photocopies of prior checks signed by the taxpayer found on TCIS during your research and photocopies of three tax returns should also be included.

Note: CSD policy does not allow for evidence to be sent via email as an attachment. Therefore, shipments sent to the laboratory should be made via United Parcel Service (UPS). Shipping via Fed Ex or U.S. Postal Service (registered mail using proper return receipt) is acceptable, but UPS is the preferred carrier.

(11) Requests for lab assistance are usually completed in less than 60 days from the time the lab receives the complete case. If you have not received a response and it is more than 60 days, you may contact ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. Tell them you are calling to follow up on a Limited Payability Trace. Provide the taxpayer’s last name and Taxpayer Identification Number.

(12) When the response is received from the CSD, the entire case file will be returned with a cover sheet entitled "Report of Laboratory Examination, IRS Claim Resolution (LP Trace)."

(13) If claim on a Limited Payability trace is denied for any reason, send Letter 2218C. Keep a copy of the letter and a copy of the check with your case. Close case TC 290 .00 and file document.

(14) If taxpayer disputes denial, reopen case and reconsider decision based on the information provided by the taxpayer.

(1) When a regular CC CHKCL trace finds the refund check has been negotiated, the Bureau of the Fiscal Service (BFS) will send a copy of the check with a FS Form 1133 Claim Form directly to the taxpayer. FS Form 1133 is used by the taxpayer to file a claim for replacement of a refund check that has been negotiated by someone other than the taxpayer and the taxpayer or BFS may send the forms to the IRS. FS Form 1133 on BFS claims received in the Refund Inquiry Unit should be processed as indicated below:

(2) If the taxpayer calls to check on the status of FS Form 1133 after it has been returned to the BFS Check Claims Branch, advise them they must personally contact the Branch at the toll-free number 855-868-0151 (press option 1, then option 1) (English and Spanish speaking assistance is available at this number). Provide the taxpayer with the check symbol and number. Use IMFOL# to find the check symbol and number.

(1) Once it is determined a refund check has been cashed and BFS decides whether to honor the payee’s check claim, the disposition information is sent to the Refund Inquiry function on an BFS CDN. As of March 30, 1998, BFS issues replacement settlement checks directly to the taxpayer on refunds determined to be forged or when appropriate, issues denial letters.

(2) Using the Payee Identification or check information on the CDN, research CC SUMRY, CC IMFOLT, or CC IMFOLC to locate the refund in question. If using IMFOLC the correct tax module will appear.

(3) If "Settlement Denied" or "Forgery Established" is noted on the CDN, input CC MFREQ(C) if the module is not up on IDRS.

(4) If the explanation says, "Forgery Established", use CC REQ77 to input TC 971 AC 078 on CC TXMOD. Input the date of the CDN as the transaction date. Close case with TC 290, with appropriate non-refile blocking series, using the CDN received as your source document.

(5) BFS may send more than one CDN on the same refund claim. The first CDN is to advise the IRS they are settling with the taxpayer and another CDN with the settlement check information. If there is a previous TC 971 AC 078 on the module, associate the CDN with the previous one in the file or destroy it. Do not input more than one TC 971 AC 078 for the same refund.

(6) If the CDN indicates the "agency will be credited" or similar wording, monitor for the posting of the credit and take appropriate action. If forgery is determined, BFS will pay the taxpayer out of the Check Forgery Insurance Fund (CFIF). See IRM 21.4.2.4.15.3, Secret Service and Check Forgery Insurance Fund (CFIF).

(7) If the explanation says, "Settlement Denied", "Settlement Not Authorized", or "Settlement Not Recommended and Case is Closed", BFS has disallowed the claim and advised the taxpayer. Input a TC 971 AC 079 and file the CDN with TC 290 as instructed in (4) above. Do not input more than one TC 971 AC 079 for the same refund.

1. If there is a previous TC 971 AC 078 for the same refund, BFS has done further investigation and has disallowed the claim after previously allowing it. Input TC 971 AC 079 and associate with the previous CDN.

2. If claimant never lived at the check address (FS Form 1133 question 9 is "No"), research the return. If the check address was incorrect due to an IRS error, research for another taxpayer with the same name at the address shown on the check. If found, process as erroneous refund. If not found, send the case back to BFS with a note: "Please Adjudicate IRS error". The BFS adjudication process could extend the time frame for final resolution by 2 - 6 months. Advise the taxpayer they will be contacted by BFS if additional information is required. If the address on the check is the same as that on the return, send the form back to the taxpayer with Letter 206C, Refund Inquiry; Copy of Check Requested/Check Being Traced (FS Form 1133), using appropriate paragraphs. If the case is a mixed entity, further research may be required to determine if the claimant is entitled to the check. Correct the account if necessary.

3. If "Settlement not recommended pending refund from bank, incomplete FS Form 1133 Claim Form, or further investigation" or similar wording, file the CDN. Input TC 290 with blocking series 05.

   Caution: If BFS advises the IRS a settlement check has been issued to the taxpayer, do not issue a manual refund. This action will cause an erroneous refund. Anyone causing an erroneous refund must document the action and the employee must refer to IRM 21.4.5, Erroneous Refunds, and follow applicable actions.

(8) The CDN may have an unusual response and include copies of the FS Form 1133, check copies, or other forms. If it is not clear what BFS wants, contact BFS Customer Engagement Center via phone at 855-868-0151 and ask what action they intended for the taxpayer or the IRS.

(9) If the CDN notes that "The payee has released their claim", close the control base with activity "TPRECCK".

(10) See IRM 21.4.2.4.15.3.3, Check Forgery Insurance Fund (CFIF) Impact on the Agencies, for additional information regarding CDNs related to forgery claims.

(11) Any CDN that is informational only should be destroyed as classified waste without taking a case count. The following list of examples is not all inclusive.

• Alleged forgery being investigated. More information to follow.

• Settlement is not recommended at this time. A request has been made to the payee for additional examples of their signature.

• Appeal received. Further review is necessary to determine what action should be taken.

• Settlement is not recommended at this time, pending further review by the United States Secret Service.

(1) If a decision is made to allow the Limited Payability (LP) claim by the TE/CSR/Reviewer, the "Account 6565" is debited and a refund is issued to the taxpayer. Prepare Form 3809, Miscellaneous Adjustment Voucher, to debit "Account 6565" and post TC 841 to the taxpayer’s account. Be sure to use the TC 840 or TC 846 date of the applicable refund. Annotate "CAT 1" in the upper left of Form 3809. See Exhibit 3.17.80-11, Form 3809 Miscellaneous Adjustment Voucher, for information on completing the form.

(2) To determine the appropriate campus for routing the Form 3809 to Accounting, use the 8th and 9th position of the Refund Schedule Number (RSN). See Exhibit 3.17.79-4, Refund Schedule Number Format.

(3) When forwarding to Accounting include the following:

• Completed Form 3809.

• History sheet.

• Complete transcript of account.

• Copy of Form 3911, Taxpayer Statement Regarding Refund, or taxpayer correspondence.

• Form 13818, Limited Payability Claim Against the United States for the Proceeds of an Internal Revenue Refund Check, response if one was sent to the taxpayer.

• Photocopy (front and back) of the cancelled check. If photocopy not available, an explanation is required on Form 3809.

• If case was sent to Center for Science and Design (CSD) (formerly National Forensics Laboratory (NFL)), include their response. Annotate on Form 3809 that this response is attached.

(4) Monitor the account for posting of the TC 841. The TC 841 DLN will carry a Document Code "48" and Block Series "89XXX". Input TC 290 for .00 to release refund to the taxpayer. Limit interest to the amount on the original refund by including a TC 770 for .00 or the original credit interest amount along with the original CR-INT-TO-DATE of the original TC 776/770.

(1) The following information covers miscellaneous refund trace issues. It also contains information on the Check Forgery Insurance Fund (CFIF), listings for monitoring cases, and the Bureau of the Fiscal Service (BFS) Reports.

(1) Taxpayers can initiate a refund trace through the automated telephone application or on the internet at www.irs.gov"Where's My Refund" (IRFOF). Generally, these automated systems will only trace the first refund issued during the current processing year. These systems do not allow a taxpayer to start their own refund trace if they filed Married Filing Joint or received their refund via direct deposit. Since taxpayers who file Married Filing Joint returns cannot initiate a trace using automation, the applications will offer them a Form 3911, Taxpayer Statement Regarding Refund, to get the process started.

(2) The caller first goes through the refund inquiry application that provides information regarding the status of their refund (including the mail date and math error information) and decides whether their refund is eligible to be traced in automation. If the caller has selected the option indicating the refund check was lost, stolen, or destroyed, or the mail date was at least 28 days prior to the date of the call, the refund inquiry application will transfer eligible callers to the refund trace application. The following chart highlights the actions taken when an inquiry is initiated through ICCE (formerly Telephone Routing Interactive System - TRIS):

(3) The IRFOF (Where's My Refund) web site allows the taxpayer to walk through a series of on-line screens. A refund trace cannot be input on any refund check until 28 days after it was issued. If 28 days has passed and the taxpayer indicates they have not received their check, they can initiate an on-line refund trace (except Married Filing Joint taxpayers and direct deposit recipients). Taxpayers whose refund checks were returned undelivered by the U.S. Postal Service will be provided a contact number to provide a new address. CSRs will follow procedures in IRM 21.4.3.5.3, Undeliverable Refund Checks. If the taxpayer has trouble in initiating a refund trace, they will be advised to call a customer service representative for assistance.

(4) If refund trace criteria are met, IRFOF will automatically input CC CHKCL and control the case to a predetermined Refund Inquiry Unit through IDRS. The case is controlled to an employee number beginning with 099.

(5) Both automated system traces proceed through the normal check trace dispositions, "3911TORDCC" and "01" and will end as a Disposition 11 (cashed check) or 32 (outstanding). Treat all other disposition codes like any other case.

(6) On joint returns, CC CHKCL is not input on either system. ICCE automatically mails a Letter 129C, Refund Inquiry; Form 3911 Required, and Form 3911 to the taxpayer. IRFOF allows the taxpayer to print the Form 3911 on-line. IRFOF provides the mailing address and fax number of the predetermined Accounts Management campus to mail the Form 3911. Married Filing Joint taxpayers must complete and jointly sign the Form 3911 and return it to the IRS before a refund trace can be initiated by the Refund Inquiry examiner.

(1) The system was developed by the Bureau of the Fiscal Service (BFS) to enhance the check-claim process. The system provides on-line access to the status of both electronic funds transfer and check payments and access to digital images of cashed checks. TCIS provides information on Treasury checks for 7 years after the date of issue and six years for EFT deposits. At most campuses, access to the TCIS system is limited to the Refund Inquiry Units, the Taxpayer Advocate Service, and Criminal Investigation.

(2) TCIS will allow the capability of initiating a request for a copy of a check within 7 years of issuance, or a refund claim no later than the 15th day of the 14th month from the refund date, if you have the appropriate access.

(3) TCIS will house FS Form 150.1 information or allow you to initiate a claim on a direct deposit refund issued within 6 years.