Part 25. Special Topics
Chapter 25. Revenue Protection
Section 4. Integrity & Verification Identity Theft Return Procedures
25.25.4 Integrity & Verification Identity Theft Return Procedures
Manual Transmittal
November 07, 2022
Purpose
(1) This transmits revised IRM 25.25.4, Revenue Protection, Return Integrity Verification Operations Identity Theft Return Procedures.
Material Changes
(1) Editorial changes to correct broken hyperlinks throughout the IRM.
Effect on Other Documents
IRM 25.25.4 dated October 7, 2021, (effective date October 17, 2021) is superseded.
Audience
Campus employees in Return Integrity Verification Operations (RIVO)
Effective Date
(11-21-2022)
Denise D. Davis
Director, Return Integrity Verification Operations
Wage and Investment Division
Program Scope and Objectives
(1) Purpose and Program Goals: This IRM section provides guidance for Return Integrity Verification Operations (RIVO) employees when resolving Individual Master File (IMF) Identity Theft (IDT) returns in the Electronic Fraud Detection System (EFDS) and the Scheme Tracking and Referral System (STARS).
(2) Audience: The intended audience for this IRM is RIVO employees.
(3) Policy Owner: The Return Integrity Verification Program Management (RIVPM) is the policy owner of this program.
(4) Program Owner: RIVPM is the program office responsible for oversight over this program.
(5) Primary Stakeholders: The primary stakeholders are RIVO, and organizations that collaborate with RIVO.
(6) Program Goals: Program goals for the program are in the Operation Guidelines as well as IRM 1.4.10, Return Integrity and Verification Operation Managers Guide.
Background
(1) RIVPM strengthens the integrity of the tax system by:
Protecting the public interest by improving IRS’s ability to detect and prevent improper refunds
Serving the public interest by taking actions fairly and appropriately to identify, evaluate and prevent the issuance of improper refunds
Helping taxpayers understand the refundable tax credits for which they are eligible
Authority
(1) The following references provide authority for RIVO:
IRM 1.2.1.5.10, Policy Statement 4-21
IRM 1.2.2, Servicewide Policies and Authorities, Servicewide Delegations of Authority
IRM 11.3.21.9, Contractual Disclosures for Investigative Purposes
IRM 1.1.13, Wage and Investment
Various Internal Revenue Codes (IRC) including but not limited to:
IRC 6402(a), Authority to make credits or refunds
IRC 6401, Amounts treated as overpayments
IRC 6404, Abatements of tax
IRC 6213, Requirements for a statutory notice, including math error authority
Responsibilities
(1) RIVPM has responsibility for information in this IRM. Information is published in the IRM on a yearly basis.
(2) The Director of RIVPM manages for the policy related to this IRM.
(3) The Chief of the RIVPM Policy & Analysis ensures this IRM is timely submitted to publishing each year.
(4) More information can be found in IRM 1.1.13.5, Return Integrity & Compliance Services.
Program Management and Review
(1) The program has reports, such as RIVO Monthly Performance Comparison Report, to track the inventory, including receipts and closures. Other report guidance is found in IRM 1.4.10, Return Integrity & Verification Operation Managers Guide.
(2) The Embedded Quality (EQ) review program is in place to review all processes to ensure accuracy and effectiveness of the program. Goals, measures, and operating guidelines are listed in the yearly Operation Guidelines and 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.
Program Controls
(1) Revenue Protection, Integrity & Verification, IDT Return area will administer program controls, including but not limited to, overall program administration, income verification, notification to potential IDT victims, reports to track inventory, and a quality control program in place to review all processes, which ensures accuracy and effectiveness. Additionally, access to the program information stored on the SharePoint site, EFDS, STARS is protected by limiting access to those individuals that manage the program and RIVO employees.
(2) The following activities help ensure program success:
Conducting annual policy reviews.
Protecting the public interest by improving IRS’s ability to detect and prevent improper refunds.
Serving the public interest by taking actions fairly and appropriately to identify, evaluate and prevent the issuance of improper refunds.
Helping taxpayers understand the refundable tax credits for which they are eligible.
Maintaining related IRMs.
Supplying IDT training to RIVO employees, as needed.
Acronyms
(1) For a list of Acronyms used throughout RIVO, see IRM 25.25.1.1.6, Acronyms.
Related Resources
(1) The related resources listed below may be utilized for account research and issue resolution. These related resources may be accessed through the IRS Intranet-Servicewide Electronic Research Program (SERP) site.
IRM 25.25, Revenue Protection
IRM 25.23, Identity Protection and Victim Assistance
IRM 25.6, Statute of Limitations
IRM 21, Customer Account Services
IRM 2, Information Technology
IRM 3, Submission Processing
(2) Letters associated with the procedures in this IRM are as follows:
Letter 4310C, IRS Identified ID Theft Post-Adjustment Letter
Letter 4674C, Identity Theft Post-Adjustment Victim Notification Letter
(3) Integrated Data Retrieval System (IDRS) restricted access accounts are accounts where a user must request special permissions to access the account through IDRS. Follow IRM 21.2.1.3.2, Authorized IDRS Access.
(4) 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.
Identity Theft Returns
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(2) An employee may be required to notify the IDT victim, see IRM 25.23.2.6.3, Closing IRS Determined Identity Theft Affecting Tax Administration - TC 971 AC 506. In cases of IDT, if a "confirmed good address" was provided by the Social Security Number (SSN) owner, the Tax Examiner (TE) will issue a Letter 4310C, IRS Identified ID Theft Post-Adjustment Letter or Letter 4674C, Identity Theft Post-Adjustment Victim Notification Letter, as appropriate.
(3) An IDT determination has been made by RIVO when the account contains an unreversed Transaction code (TC) 971 Action code (AC) 506 with one of the following MISC fields:
WI AM TAP Operation Mass Mailing (OMM) -no longer used but may appear on older accounts
WI IVO OMM - no longer used but may appear on older accounts
WI IVO OMMGB - no longer used but may appear on older accounts
WI PRP OTHER1
WI IVO RFND
WI PRP DDB
Reminder: This list is not all inclusive. OMM records may show WI AM TAP OMM
Identity Theft Return Categories
(1) Potential IDT returns are separated in EFDS into categories for the purpose of identifying, referring, or adjusting Master File (MF) accounts for RIVO. The category determines the inventory type in EFDS.
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Category 7 Process - Identity Theft Determination
(1) IDT occurs when a SSN is used by someone who is not the true taxpayer and files a fraudulent return without the SSN owner’s knowledge/consent.
Reminder: Assessment Statute Expiration Date (ASED) Considerations - If it has been determined that the TC 150 was created by an incorrect return posting to an account, a TC 560 may need to be input to correct the ASED. Refer to IRM 25.6.1.5, Basic Guide for Processing Cases with Statute of Limitations Issues.
(2) The following are some ways to determine that a false filing has occurred and the true taxpayer or Taxpayer Identification Number (TIN) owner has/or has not filed:
Special agent information.
A signed Form 14039, Identity Theft Affidavit, or submitted correspondence stating the taxpayer did not file the tax return.
A duplicate filing condition (-A Freeze) occurs when two returns are filed using the same SSN and tax period. Often one return is filed by the true taxpayer and one by someone else using the true taxpayer's SSN.
Identity Theft Category 7 — Single Return/Deceased/X-REF - No Lost Refund Process
(1) An IDT return posted, the refund was stopped, and the true taxpayer did not file a return or filed jointly under a cross-reference (X-REF) TIN. Check IDRS and review the account information to determine if the case involves a single return, deceased taxpayer or X-REF TIN joint filing issue.
Note: When resolving an IDT case manually, include the correct actions to resolve the account if the issues below are present:
If the IDT return filing status is Married Filing Jointly (MFJ) or Married Filing Separate (MFS) and the spousal name listed is not the spouse of the primary taxpayer, correct the filing status and name line on the primary TIN to remove the spousal information. Follow the IDT instructions below as applicable on the spousal TIN to input the IDT marker, correct the address and send the Letter 4674C, as appropriate.
If the IDT return filing status is MFJ or MFS and the spousal name listed is the spouse of the primary taxpayer, follow the instructions below for input to the spousal account to input the IDT marker, correct the address and send the Letter 4674C, IRS Identified ID Theft Post-Adjustment Letter, as appropriate.
Note: For MFJ cases, issue one Letter 4674C to the joint name line.
If in reviewing the account, it is identified that other tax periods with RIVO involvement are affected by IDT, then all affected active tax years must be resolved at the same time.
Note: Active tax years are tax years with an open issue, such as a credit or debit balance.
IF | THEN |
|---|---|
1 |
Exception: If the account contains an unreversed TC 971 AC 527 with MISC field "WI BREACH DSABLD", see IRM 25.23.2.8.6.1.1, Resolving Tax-Related Accounts with TC 971 AC 527 WI BREACH DSABLD, for more guidance. |
2 |
Exception: If there is no current contact with the TIN owner and the year being resolved is an older (prior) year and the account contains non-IDT subsequent or current year filings, do not change the address to the Service Center Address, leave the address as it is on CC ENMOD. Exception: If the account contains an unreversed TC 971 AC 527 with MISC field "WI BREACH DSABLD", see IRM 25.23.2.8.6.1.1, Resolving Tax-Related Accounts with TC 971 AC 527 WI BREACH DSABLD, for more guidance. |
Identity Theft Category 7 — Single Return/Deceased/X-REF - Lost Refund Process
(1) An IDT return posted, the refund was not stopped, and the true taxpayer did not file a return or filed jointly under a X-REF SSN. Check IDRS and review the account information to determine if the case involves a single, deceased or X-REF SSN joint filing issue.
Note: When resolving an IDT case manually, include the proper actions to resolve the account if the issues below are present:
If the IDT return filing status is MFJ or MFS and the spousal name listed is not the spouse of the primary taxpayer, correct the filing status and name line on the primary SSN to remove the spousal information. Follow the IDT instructions below as applicable on the spousal SSN to input the IDT marker, correct the address and send Letter 4674C as appropriate. See IRM 25.23.2.3.7, When to Update the Victim's Address.
If the IDT return filing status is MFJ or MFS and the spousal name listed is the spouse of the primary taxpayer, follow the instructions below for input to the spousal account to input the IDT marker, correct the address and send Letter 4674C, as appropriate.
Note: For MFJ cases, issue one Letter 4674C to the joint name line.
If in reviewing the account, it is identified that other tax periods with RIVO involvement are affected by IDT, then all affected active tax years must be resolved at the same time.
Note: Active tax years are tax years with an open issue, such as a credit or debit balance.
Caution: Check CC TXMODA for a history item or an open control base containing "BKLD", for an indication of RIVO's External Lead Process. This notation could indicate a potential TC 720 or a TC 841 may be posting to the module and require contact with the External Lead Point of Contact (POC). See SERP Job Aids, RIVO, External Lead Points of Contact, for more guidance.
IF | THEN |
|---|---|
1 |
Exception: If the account contains an unreversed TC 971 AC 527 with MISC field "WI BREACH DSABLD", see IRM 25.23.2.8.6.1.1, Resolving Tax-Related Accounts with TC 971 AC 527 WI BREACH DSABLD, for more guidance. |
2 |
Exception: If the account contains an unreversed TC 971 AC 527 with MISC field "WI BREACH DSABLD", see IRM 25.23.2.8.6.1.1, Resolving Tax-Related Accounts with TC 971 AC 527 WI BREACH DSABLD. |
Reversing Identity Theft Lost Refunds
(1) In cases where an IDT return was filed, and the refund was lost, the refund needs to be moved off the good taxpayer's account. This must be done to ensure the account reflects only the good taxpayer's information. CC IDT48 and CC IDT58 must be used to move refunds lost from the account, instead of completing Form 3809, Miscellaneous Adjustment Voucher. These CC’s credit the TIN owner’s account and move the refund to the General Ledger 1545 account. CC IDT48 is used to move an entire refund. CC IDT58 is used to move the unrecoverable portion of a partially recovered refund, see IRM 2.4.61, Command Code IDT48/IDT58/RPM48/RPM58/CSO48/CSO58/ELP45. Use CMODE to direct the request to the correct service center, see IRM 2.4.61.2, Terms/Definitions/Acronyms.
Exception: If the lost refund is the result of an irreversible child support offset use CC CSO48 and CC CSO58, see IRM 2.4.61.9, Command Code CSO48 - Request Formatted Input Screen, and IRM 2.4.61.10, Command Code CSO58 - Request Formatted Input Screen.
(2) In certain circumstances, it may be necessary to reverse previous actions taken that debited the General Ledger 1545 account with the posting of a TC 841 or TC 700 to the tax account. For example, duplicate TC 841’s, actual credit has been returned to the module etc. To reverse a TC 841 or TC 700 posted in error, see IRM 25.23.4.16, Form 3245/3809 Reversals.
Miscellaneous Fields Used When Inputting Transaction Code (TC) 971 Action Code (AC) 506
The chart describes the reasons and values of the miscellaneous fields when a TC 971 AC 506 is input. For more information, see IRM 25.23.2-8, IMF Only TC 971 AC 506 — IRS Determined Tax-Related Identity Theft Case Closure.
Description | TC 971 AC 506 Miscellaneous Field |
|---|---|
1 | WI IVO OMM/ WI AM TAP OMM(These literals may appear on CC ENMOD, but are no longer used when inputting new IDT markers.) |
2 Note: The MISC field "OMMGB" will issue an IP PIN Notice CP 01A to the taxpayer, see IRM 25.23.2.4.1, Tracking and Reporting Identity Theft Cases - Identity Theft Indicators. | WI IVO OMMGB (This literal may appear on CC ENMOD, but is no longer used when inputting new IDT markers.) |
3 | WI IVO RFND |
4 Note: The MISC field "OTHER1" will issue an IP PIN Notice CP 01A to the taxpayer see IRM 25.23.2.4.1, Tracking and Reporting Identity Theft Cases - Identity Theft Indicators. | WI PRP OTHER1 |
5 | WI PRP DDB |
6 | WI AM OTHER |
Miscellaneous Fields Used When Inputting Transaction Code (TC) 972 Action Code (AC) 506
The miscellaneous field displays the reason for the reversal. See the chart below for reasons and values for the miscellaneous field.
Reminder: The Identity Protection (IP) Personal Identification Number (PIN) will generate annually for as long as the indicator remains active. Currently there is no avenue to remove a taxpayer from the IP PIN population, even with the reversal of the AC 506.
Description | TC 972 AC 506 Miscellaneous Field |
|---|---|
1 | WI IVO TPRQ |
2 | WI IVO IRSERR |
3 | WI IVO IRSADM |
4 | WI IVO FALSE |
5 | WI IVO OTHER |
