5.19.21. Campus Procedures for Handling Identity Theft

(1) Accounts with TC 971 AC 522 require the input of an appropriate source code and secondary date. This will enable the IRS to flag accounts at different stages of processing, from initial identity theft claim to closure, dependent upon case specifics.

(2) Once the function is made aware that the taxpayer is a possible victim of identity theft, they will be responsible for checking to see if there is an open control. If there is, the tax examiner will contact that employee to verify they are working on the identity theft issue. If the case is being worked by the controlling area and it has no impact on your compliance case – work the case as you would normally.

(3) For areas other than ACS, use the following directions when processing identity theft issues:

(4) ACS employees will follow IRM 5.19.21.2.1.2, Identity Theft Guidance for ACS Call-Site Employees, when handling identity theft calls.

(5) If an active levy, IRM 5.19.21.2.2, Addressing Outstanding Levies.

(6) Input appropriate TC 971 AC 5XX. Utilize either IAT REQ77 (mandated) or IAT Compliance Suite (suggested) Tools for this input.

(7) TC 971 AC 522 input contains a miscellaneous field that must be completed consisting of the following:

1. BOD/Function (Business Operating Division/Function), for example, "WI" or "SBSE".

2. Program Name, for example, "ACS" or "CSCO".

3. Tax Administration Source, the only source code that should be utilized by Campus is PNDCLM.

(8) When inputting the required information, the TRANS-DT> - field on the IAT REQ77 (mandated) or IAT Compliance Suite (suggested) Tools input screen will automatically populate with the date of input.

(9) The 971 AC 522 input also contains a secondary date field used to identify the tax year at issue. Complete this field by inputting the year associated with identity theft. Use "MMDDYYYY" format.

(10) Use TC 972 in the event the TC 971 needs to be reversed. The TC 972 contains a miscellaneous field that must be completed, including the reason for the reversal. Select the appropriate reason for the reversal from the following list:

(11) TC 972 AC 522 Source Codes

(1) The following procedures apply for ACS Call Site employees when handling calls in which the taxpayer is claiming or has claimed identity theft. Also, follow IRM 5.19.21.2, Identity Theft - General Information, through IRM 5.19.21.2.1, Identity Theft Claim, for additional guidance on identity theft.

(2) When the taxpayer is disputing the balance owed (original or additional assessment) on an IMF only account based on identity theft and command code (CC) ENMOD does not indicate a TC 971 AC 506, TC 971 AC 504 with tax administration source code EMPL, EMPL-M or ICMCCA or TC 971 AC 501 posted or TC 972 AC 522 with tax administration source code "NOIDT" or "NORPLY" after a TC 971 AC 522:

(3) When the taxpayer is disputing the balance owed (original or additional assessment) on an IMF only account based on identity theft and CC ENMOD indicates a TC 971 AC 501, TC 971 AC 504 with tax administration source code EMPL, EMPL-M or ICMCCA or TC 972 AC 522 with tax administration source code "NOIDT" or "NORPLY" posted after a TC 971 AC 522 or a TC 971 AC 506 (except an AC 506 that was input by WI PRP DDB) is present. DO NOT request the taxpayer to submit/resubmit the claim. The identity claim is valid within three (3) years of the TC 971 AC 501/504/506/522 and ONLY applies to when a taxpayer continues to dispute a resolved identity theft. All other disputes should be worked with the taxpayer on the call.

1. Reassign the SB/SE or W&I case on ACS: "TOO0,01,IDTADJ", and non-ACS Accounts: Input CC STAUP 2209.

2. If a levy is active, follow IRM 5.19.21.2.2, Addressing Outstanding Levies.

3. Document AMS with all actions taken.

4. Advise the taxpayer a referral is being sent to another area for resolution of their case and should receive written or telephone contact within 30 days of receipt.

(4) When the taxpayer is disputing the balance owed (original or additional assessment) and a BMF account is involved based on identity theft, reassign the account on ACS "TOO3,01,BMFIDT". Prepare a Form 14566 , BMF Identity Theft Referral, indicating the taxpayer is claiming identity theft on a BMF account. Forward the referral to the IDTVA BMF IDT liaison in W&I found on SERP, https://serp.enterprise.irs.gov/content/irm-supplements/identity-theft-bmf.html. Do not input any TC 971 AC 522 on BMF accounts. The determination for the TC 971 will be made by the AM BMF IDT Team.

(5) If the taxpayer wants an Installment Agreement (IA) or states they are Currently Not Collectable (CNC), document AMS with the required information (financial statement, IA amount, etc.). Encourage the taxpayer to make voluntary payments to reduce their balance. Do not set up the IA or CNC account. IDTVA-C ACSS will transfer the case to ACS to address any compliance issues when the identity theft issue is resolved.

(6) If the taxpayer indicates the address of record or name is incorrect, document AMS with the information provided by the taxpayer. Do not make any changes to the entity information. The IDTVA-C ACSS team will make the necessary changes, as determined.

(7) When the taxpayer is NOT disputing the balance owed (original or additional assessment) based on identity theft and has a TC 971 AC 501, TC 971 AC 504 with tax administration source code EMPL, EMPL-M or ICMCCA or AC 506 (except an AC 506 input by WI PRP DDB) or TC 972 AC 522 "NOIDT" is present subsequent to a TC 971 AC 522 for the same tax year or tax years:

1. Advise the taxpayer that the identity theft situation has been resolved.

2. A notice or letter will be issued (or may have been already issued).

3. If TC 971 AC 501 was input, then CP 01, Identity Theft Claim Acknowledgement, or Letter 4674-C , Identity Theft Post Adjustment Victim Notification, is issued.

4. If TC 971 AC 506 (except an AC 506 that was input by WI PRP DDB), TC 971 AC 504 with tax administration source code EMPL, EMPL-M or ICMCCA or TC 972 AC 522 "NOIDT" or NORPLY was input, then Letter 4674-C, Identity Theft Post Adjustment Victim Notification, is issued.

5. Do not refer the case to the IDTVA-C ACSS Coordinator or reassign the case to the "O" function.

6. Continue with normal balance due resolution (e.g., IA, CNC, etc.).

(8) If a taxpayer calls back to check on the status of the account and the follow-up date has expired in the "O" function inventory and an open control DOES NOT exist:

1. Check AMS history to see if actions were taken to resolve the issue. If the case has been resolved, explain to the taxpayer and continue with normal balance due resolution (e.g., IA, CNC, etc.), or

2. If there is no information that the issue has been resolved, follow the first three procedures in the If/Then table in paragraph (2) above.

(9) If a taxpayer calls back to check on the status of the account and the follow-up date has expired in the "O" function and an open control DOES exist:

1. Follow the last two procedures in the If/Then table in paragraph (2) above.

2. Input "OADT,01,IDTRFRL".

(10) If a taxpayer calls back to check on the status of their account and states they did file the tax return in question for which the TC 971 AC 522 was input:

1. Follow the procedures in the "If/Then" table in paragraph (2) above with an open IDRS control base assigned to an identity theft employee;

2. If no open control, input the TC 972 AC 522 with tax administration source code "IRSERR" and resolve the balance due. Update the case to the appropriate function based on the actions taken on the account.

   Note: If more than one return is filed, refer the case to IDTVA-C.

(11) If a taxpayer calls back who is in bankruptcy and may be a victim of identity theft, promptly contact Centralized Insolvency Operation (CIO) (same day notification, when possible). Referral information should be faxed to Insolvency using Form 4442, Inquiry Referral, assigned to the case. Telephonic notification may also be used. All actions must be promptly documented by IRS employees. These numbers can be found within http://serp.enterprise.irs.gov/content/who-where/insolvency/insolvency.html.

(12) Refer to the table below for details on where to mail and fax accounts with international ID Theft involvement.

(13) International accounts can be identified by File Location Codes (FLC) 20, 21, 60, 66, 78, and 98. FLC 21, 66, and 78 contain all returns with a U.S. possession or territory address with a 5-digit ZIP Code. Form 1040-PR, Planilla para la Declaración de la Contribución Federal sobre el Trabajo por Cuenta Propia, or Form 1040-SS, U.S. Self-Employment Tax Return, which includes Puerto Rico, American Samoa, Guam, U.S. Virgin Islands and the Commonwealth of the Northern Marianna Islands.

(14) FLC 20, 60, and 98 are used for returns with:

• A foreign address.

• Form 2555, Foreign Earned Income.

• Form 1042-S, Foreign Person’s U.S. Source Income Subject to Withholding, Form SSA-1042S, Social Security Benefit Statement, Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, or Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests.

• Dual Status Notification.

• Form 1040-NR , U.S. Nonresident Alien Income Tax Return, or Form 1040-NR-EZ , U.S. Income Tax Return for Certain Nonresident Aliens With No Dependents.

(1) When the taxpayer claims to be a victim of identity theft and the Form 14039 , Identity Theft Affidavit, and/or police report has not been received, a levy release is not warranted unless there is an economic hardship situation. On ACS, ensure the account is in the "O" function inventory.

(2) When the taxpayer claims to be a victim of identity theft and the Form 14039 and/or police report has been received, the levy should be released only for the tax modules affected by the identity theft.

(3) Follow IRM 5.19.4.4.10, Levy Release: General Information, for full and partial levy release procedures.

(4) For employees without access to ACS, if a levy release is warranted, fax Form 14394, Identity Theft Collection Alert, to the appropriate IDTVA-C ACSS Coordinator. Be sure to provide identity theft support documentation, including documenting the tax module(s) affected by the identity theft. See http://serp.enterprise.irs.gov/databases/who-where.dr/idt-liaison-listing.html.

(1) A thorough review of the account must be conducted to ensure that all tax years affected by tax-related identity theft are blocked from the FPLP program.

(2) When a TC 971 AC 501, AC 504, AC 506 or TC 972 AC 522 "NOIDT" has not been posted to the entity for tax administrative identity theft, employees must take steps to block outstanding FPLP levies.

1. When a module has been selected for Federal Payment Levy Program (FPLP) (unreversed TC 971 AC 060), it may be necessary to input a manual block. Refer to IRM 5.19.9.4.7, FPLP Levy Release: General.

2. When an FPLP account is matched with a Federal payment or FPLP account (unreversed TC 971 AC 062) and the disbursement of the Federal payment is imminent, an immediate FPLP release through the FPLP coordinator may be necessary, see IRM 5.19.9.4.7.1, Immediate Release Through the FPLP Coordinator.

(3) When a TC 971 AC 501, AC 504, AC 506 or TC 972 AC 522 "NOIDT" is posted, FPLP will automatically block the tax modules entered into the secondary date field. However, depending on when the TC 971 AC 501, AC 504, AC 506 or TC 972 AC 522 "NOIDT" was input, there may be a need for an immediate release where the disbursement of the Federal payment is imminent. Follow the procedures in IRM 5.19.9.4.7.1, Immediate Release Through the FPLP Coordinator.

(4) If a tax year affected by identity theft is included in the FPLP program, keep in mind that the return of levy proceeds requires special handling in accordance with IRC 6343(d), Authority to Release Levy And Return Property, and IRM 5.11.2.4, Returning Levied Property to the Taxpayer - Erroneous Levies. FPLP levy payments can only be returned if the payment date is within two (2) years preceding the request for the return of funds. FPLP levy payment dates should be verified before returning the payment.

(1) There may be situations involving SITLP, MTLP, AKPFD affected by identity theft issues. In those cases, the employee will be required to follow the procedures outlined in the chart below:

(2) To stop systemic levy action while the identity theft case is being resolved, manual exclusion is necessary. This is achieved by the input of the TC 470 with no closing code. Once the case is resolved the TC 470 must be reversed to allow inclusion in the applicable ALP program.

(1) These procedures address cases where the owner of the SSN claims the IRS levied on property they have an interest in to satisfy the tax liability that does not belong to them.

(2) When the SSN owner is claiming a refund of levy proceeds because the levy was based on the assessment of liability not belonging to the taxpayer, consideration for returning the payments falls under normal payment Refund Statute Expiration Date (RSED) procedures and time frames (generally two years from the payment date). See IRM 25.6.1.10.2.7, Claims for Credit or Refund - General Time Period for Submitting a Claim.

(3) If the conditions in paragraph (2) are satisfied, the levy proceeds should be returned to the SSN owner:

1. An identity thief (non-owner of the SSN) has filed a return in the taxpayer’s name.

2. The SSN owner (taxpayer) did not have a filing obligation or at least didn’t file a return, which delayed the discovery of the identity theft.

3. The identity theft return either was audited or reviewed, and there is an assessed balance on the victim (SSN owner) account that the IRS is attempting to collect (defaulted deficiency or summary assessment of overstated withholding).

4. The IRS has used its levy authority to collect against the assessment.

5. The IRS determines it should abate the assessments created as a result of the return filed by the non-owner of the SSN. The taxpayer’s account will have zero liability and a credit balance equal to the amount of levy proceeds.

   Example: The taxpayer was a victim of identity theft. The identity thief uses the taxpayer’s SSN to work and not report or pay tax. This employment fraud caused an AUR assessment to be made, based on wage income reported to the IRS that was not included on their tax return. The taxpayer was unaware that he was a victim of identity theft until he received a bank levy notice in the mail. The taxpayer comes forward to dispute the events and informs the IRS of the identity theft. Upon learning that the unreported wage income was not that of the taxpayer, we will remove (back out) the invalid assessment.

   Caution: Because the assessment and levy were for the taxpayer/victim rather than an assessment for a taxpayer and a levy on a third-party, the two (2) year wrongful levy statute does not apply. However, because the assessment is invalid, the levy is considered to be erroneous and the levy proceeds may be returned to the victim under IRC 6343(d) if requested by the taxpayer within two years after the date of the levy.

(1) The non-owner of the Taxpayer Identification Number (TIN) may file a wrongful levy claim for return of levy proceeds (from the assets of the non-owner of the TIN) already received and processed by the IRS. See IRM 5.19.21.2.3(2)a, Identity Theft and Disposition of Levy Proceeds, for the definition of "wrongful" levy.

(2) A "wrongful" levy claim may be appropriate when:

1. The assessment is based solely on the SSN owner's income, since the levy improperly attaches to property belonging to a third party (the non-owner(s) of the TIN).

2. The assessment is based on the combined income of the non-owner(s) of the TIN and the owner's, since the levy may have improperly attached to property belonging to a third party (the non-owner of the TIN).

3. The assessment is based on the combined income of multiple non-owners, since the levy may have improperly attached to property belonging to the third-parties.

(3) When speaking with the caller, secure information to determine that the individual requesting the return of levy proceeds is the non-owner of the SSN and not the owner of the original SSN. Verify the following:

1. Name, address, and SSN/ITIN.

2. The levy issued was to a source belonging to the non-owner of the SSN based on the taxes assessed under the SSN of the rightful owner or assessed in the name of the victim based on the earnings of the non-owner of the SSN.

   Example: The non-owner produces proof of the SSN via pay stubs or any other substantiating document and has rent/utility receipts where current name/address is the name/address on CC IRPTR print out and pay stubs show use of that SSN.

3. The non-owner must provide substantiation to show ownership of the levy payments.

4. Taxes were assessed on the account of the rightful owner of the SSN or assessed based on the earnings of the non-owner of the SSN.

5. The true owner’s account (SSN) is being used by the owner and the non-owner (not merely by the non-owner to work).

6. Contact from non-owner must be within two (2) years of the date of the levy. However, if the date of the levy was on or before March 22, 2017, then the non-owner must contact the IRS to request return of levy proceeds within 9 months of the date of levy.

   Note: If the IRS is contacted more than two (2) years after the date of the levy, we have no authority to return the wrongful levy payments.

(4) See IRM 5.11.2.3.2.1, Wrongful Levy, for appropriate action. Contact the IRS Collection Advisory group for the area where the wrongful levy claim was made to determine if the non-owner of the TIN would qualify for the wrongful levy claim consideration. Advise the caller to carefully read Pub 4235, Collection Advisory Offices Contact Information, which lists the addresses of Advisory Group offices to send wrongful levy claims under IRC 6343(b).

1. Collection Advisory will evaluate a properly filed claim. If the claim is disallowed, Collection Advisory should notify the third party in writing of the reason for disallowing the claim and of the right to bring suit against the government. If the claim is disallowed because it was not made timely within two (2) years from the date of the levy, Collection Advisory should send Letter 3973, Wrongful Levy Claim Rejection - Untimely Claim, via certified mail.

2. If the claim is disallowed for another reason, Collection Advisory should send the claimant Letter 3974, Wrongful Levy Claim Rejection Letter, via certified mail.

   Note: Disallowance of the claim may be appealed through the Collection Appeals Program (CAP) if the claim is rejected.

(5) If a levy is served where the IRS:

• Assessed the liability in the name of the non-owner of the SSN

• Issued all pre-levy notices properly to non-owner of the SSN

• The assessment is made under the SSN

• The assessment is based solely on the income of the non-owner

• There are no credits (e.g., payment, offset, etc.) attributable to the SSN owner for the assessment listed on the levy.

(6) The levy may remain in effect unless there is an independent basis for releasing it. See IRM 5.11.2.3.1, Legal Basis for Releasing Levies. The assessment is not invalid for the sole reason it was made under the victim’s TIN/SSN.