21.7.9. BMF Duplicate Filing Conditions

(1) Estimated Tax (EST) Penalty - In most cases the estimated tax penalty is computed based on the tax shown on the taxpayer's original return. However, if the taxpayer files a superseding return, the penalty is computed on the tax shown on that superseding return. IRM 20.1.3, Estimated Tax Penalties, provides more detail.

(2) Failure to Deposit (FTD) Penalty – The FTD penalty is computed on the original Record of Federal Tax Liability (ROFTL); however, a superseding return with a Federal Tax Deposit requirement will require a Federal Tax Deposit calculation. IRM 20.1.4, Failure to Deposit Penalty, provides calculation guidance.

(3) Use the applicable Blocking Series (BS) for the type of superseding return you are adjusting:

(4) Use item reference number 871 when necessary. Refer to IRM 20.1.2.2.6.2, Incorrect Tax Shown Recorded, for more information.

(5) Superseding returns are subject to CAT-A identification and procedures. Review Exhibit 21.5.3-2, Examination Criteria (CAT-A) – General, and Exhibit 21.5.3-3, Examination Criteria (CAT-A) – Credits, for Examination referral guidance.

(6) The taxpayer may erroneously file monthly Form 941 tax returns instead of a quarterly tax return.

• Educate the taxpayer regarding the Form 941 quarterly filing and deposit requirements.

• Advise the taxpayer that the additional tax will be assessed, and they must file a quarterly tax return by the due date. The quarterly tax return must contain an explanation for the multiple tax returns filed during the quarter. In addition, the taxpayer will be told that FTD penalties may apply at the time of filing. This is an important step when the taxpayer is making direct payments.

• If contact is made by phone, document the conversation detail on AMS so the CSR working the third return is aware of the instructions given to the taxpayer.

• Assess the additional tax with a TC 290 and consider the application of a FTD penalty. A TC 298 is not appropriate for a superseding tax return.

(7) The Discriminant Information Function (DIF) score is a formula used by the IRS to select returns for review. If the return is not processed as an original, it has bypassed DIF scoring. Returns that bypassed DIF scoring must be forwarded to Examination for classification. Review IRM 21.5.2.4.23.6, Discriminant Function (DIF) SCORE or CLASSIFICATION "Send Return(s) to Examination for Review," for DIF return identification and Examination referral guidance.

(8) Reverse offsets to Individual Master File (IMF), Business Master File (BMF), and Debtor Master File (DMF) accounts when increasing the balance due.

(9) Treasury Offset Program (TOP) – It is acceptable to reverse a TOP offset when satisfying the balance due on a superseding return. See IRM 21.4.6.5.7.1, Allowable TOP Offset Reversals, for more information.

(1) When a return must be reprocessed via Form 13596, Reprocessing Returns, refer to the following:

• Exhibit 21.5.2-2, Preparing Form 13596 - Reprocessing Returns

• IRM 21.5.2.4.23.7(3), Coding and Editing Procedures

• IRM 21.5.2.4.23.1, Reprocessing Electronic Returns

• IRM 21.7.9.4.2, Incorrect Tax Year Form or Check Box Used

(2) When a dummy return is reprocessed in place of an original or duplicate return, use the same received date as the original or duplicate, respectively.

(3) When an original or amended/duplicate return posts to an incorrect taxpayer identification number (TIN)/tax period and is being reprocessed to the correct TIN/tax period, Transaction Code (TC) 971 must be input to identify cross reference data. Using Command Code (CC) REQ 77, input TC 971 using the appropriate Action Code (AC) and transaction date (TRANS-DT).

(4) On the TIN/tax period you are moving the return from, input TC 971 as shown in the table below:

(5) Input TC 971 AC 017 on the TIN/tax period you are reprocessing the return to. Use the actual stamped received date of the return being reprocessed as the transaction date. If the actual stamped received date is before the tax return due date, then use the tax return due date as the transaction date.

(6) Do not input a TC 971 AC 017 on a period with a fiscal year month (FYM) that differs from the one on ENMOD.

(7) If a TC 971 is incorrectly input on an account with Action Code 001/002/017, reverse with a TC 972 with the same action code.

(8) If the master file status is 02 or 03, use CC FRM49 to input a TC 599 with Closing Code (CC) 094 (taxable return secured) or 096 (non-taxable return secured).

(1) When a TRNS 193 is received without the duplicate return, attempt to determine if it is a true duplicate (True DUPF) using CC BRTVU or CC TRDBV.

(2) If Files is unable to secure the duplicate return after the two requests, take the following actions:

• Input a Special Search using Form 2275, Records Request, Charge and Recharge.

• Request a copy of the duplicate return from the taxpayer with Letter 418C, Amended/Original Return Unavailable; Copy Requested. Suspend the case for 40 days.

  Reminder: Monitor the account for notice suppression and input a STAUP when necessary. Refer to IRM 21.5.2.4.8.2, Suppressing Balance Due Notices, for additional information.

(3) If the duplicate return is received from Files or a return copy is received from the taxpayer, see IRM 21.7.9.4.1, Resolving Transcript (TRNS) 193 and Amended/Corrected/Supplemental Returns, for processing procedures.

(4) If the return has not been secured, and the suspense period has ended, follow the table below:

(1) A true duplicate condition occurs when the taxpayer files two returns for the same tax period with the same information on both returns and no tax change is required.

(2) Do the following:

1. Analyze account data and both returns (if original was needed to resolve case) to verify they are true duplicates.

2. Input TC 290 $.00 with the applicable blocking series (BS) for the type of return you are adjusting to release the -A freeze. If adjusting without the original return (non-refile DLN), the type of return determines the BS (15 through 17). Use duplicate return for source document if working a "non-CII" case.

Caution: If the module is in zero balance, input hold code "0". If the true duplicate return was received with payment, do not treat as a true duplicate. See IRM 21.7.9.4.1.4, Amended/Supplemental Return-Increase, and treat as a supplemental return.

(3) Staple TRNS 193 to duplicate return when appropriate.

(1) Returns reporting tax increases are sometimes marked as "amended" returns. They can also be marked as "corrected" or "supplemental". Additional tax is usually paid with these returns. Follow (4) below if the return is an amended/corrected/supplemental return.

(2) Taxpayers do not always explain why a second return was submitted. Entities with more than one business location are supposed to be combined and reported on one return. Many times, taxpayers file separate returns for each location. Thoroughly research account on IDRS/CFOL using all available tools to determine whether to assess liability on second return. Consider such items as the following:

1. Do the filing/signature dates, liability periods, credits claimed, or payments made, relate to any other tax period?

2. Is there any change to the entity information which could indicate a different taxpayer?

3. Are there any open modules (for example, no TC 150) for which the second return is intended?

4. Is there an indication the second return is in response to previous Campus correspondence?

(3) If the reason for filing the second return is not clear, more information is needed. Action required:

1. Request TC 150/976 documents, if necessary.

2. Attempt to contact the taxpayer by phone for more information.

3. Document call attempts and any conversation with the taxpayer.

4. Correspond with the taxpayer using Letter 31C, Duplicate Returns Filed; Explanation Requested, if unable to contact by phone.

5. If corresponding, suspend for 40 days.

(4) After complete research and development of a case resolution plan, which may be a "no reply" determination, take the following action:

1. Re-compute tax liability. A tax increase on a supplemental return is increased for the amount reported on the supplemental return. A tax increase on an amended return is increased for the difference between the original and amended returns.

2. If taxpayer filed Form 94X instead of the applicable 94X-X form, follow procedures in IRM 21.7.2.4.6.7.4, "Amended"/"Supplemental" Form 94X with or without Form 941c.

3. For math verification procedures, see IRM 21.5.1.4.12, Tolerances.

4. Compare information on TRNS 193 with IDRS data. Consider any action which has taken place since TRNS 193 generated, before adjusting account.

5. Increase tax with TC 29X and adjust any appropriate IRNs, abstract numbers etc. If adjusting without the original return (non-refile DLN), the type of return determines the BS (15 through 17). Use appropriate BS (00-–09) if the TC 150 document has been secured. Use BS 18 on superseding returns only if working a "non-CII" case. See IRM 21.5.1.5.3, CII Source Documentation, for CII blocking information.

   Note: When a Form 941-X, Form 943-X, Form 944-X, Form 945-X, or Form CT-1X is used to adjust an account, blocking series 20 must be used with the TC 29X. See IRM 21.7.2.4.6(13), Adjusted Employer’s Federal Tax Return or Claim for Refund, for more details.

6. Adjust penalty and interest if necessary. See IRM 20.1.4.21.3, Amended or Supplemental Return (Tax Decrease or Non-Interest-Free Tax Increase), and IRM 20.1.4.21.5, Adjusted Returns (Forms 941-X, 943-X, 944-X, 945-X, and CT-1X), before adjusting the FTD penalty. In addition, seeIRM 20.2, Interest.

7. If the Form 94X was for a different location, advise the taxpayer only one return is necessary even though multiple locations are involved.

8. Allow adjustment notice (CP 210/220) to generate. If the adjustment is different than what the taxpayer expected, correspond with the appropriate Correspondex letter and explain the changes to the taxpayer.

9. If taxpayer filed separate returns (Form 941/943/944/945/CT-1) for multiple locations, send Letter 673C and advise taxpayer to file only one tax return per tax period (in the future), even though several businesses are involved.

(5) Review the general claim procedures before processing a tax increase or credit decrease. See IRM 21.5.3, General Claims Procedures, for details.

(1) Amended returns filed to decrease tax must have backup information (required forms, schedules, etc.) attached, unless return is correcting a reporting error. Refer to the appropriate section of this IRM for required documentation for each form.

(2) If the TP is attempting to reduce their employment tax to zero, see IRM 21.7.2.5.1, Frivolous Employment Tax Claims, for more information.

(3) If the TP filed a Form 94X Employment Tax return, instead of the applicable 94X-X form, follow the instructions under IRM 21.7.2.4.6.7.4, "Amended"/"Supplemental" Form 94X with or without Form 941c.

(4) For BMF returns take the following action:

1. Compare information on TRNS 193 with IDRS data. Consider any action which has taken place since TRNS 193 generated, before adjusting account.

2. Recompute tax liability.

3. Decrease tax with TC 29X and appropriate IRNs, CRNs, etc., using appropriate BS and HC. If adjusting without the original return (non-refile DLN), the type of return determines the BS (15 through 17). Use appropriate BS (00-09) if the TC 150 document has been secured.

   Note: When a Form 941-X, Form 943-X, Form 944-X, Form 945-X, or Form CT-1X is used to adjust an account, blocking series 20 must be used with the TC 29X. See IRM 21.7.2.4.6(13), Adjusted Employer’s Federal Tax Return or Claim for Refund, for more details.

Note: If the adjustment results in a refund of $10 million or more, follow procedures in IRM 21.5.2.4.11, Assessments or Refunds over $10 Million.

4. If necessary, adjust penalty and interest. See IRM 20.1, Penalty Handbook, and IRM 20.2, Interest, respectively.

   Note: If an employment tax return has a FTD penalty, see IRM 20.1.4.21.3, Amended or Supplemental Return (Tax Decrease or Non-Interest-Free Tax Increase), to reduce the FTD penalty.

(5) Review the general claim procedures before processing a tax decrease or credit increase. See IRM 21.5.3, General Claims Procedures, for details.

(1) Pursuant to IRC 6020(b), a substitute-for-return (SFR) is prepared by the IRS when it is determined a taxpayer is liable to file but failed to do so after notification from the IRS.

(2) A 6020(b) return is identified on TXMOD by Computer Condition Code (CCC) 4 and the literal "6020b" at the end of the TC 150 assessment DLN. TXMOD may also contain TC 59X and a closing code. Some of the most common closing codes are 08, 09, 38, 39, 63, and 64.

1. Closing codes 08, 38 and 63 indicate a return was prepared by IRS (un-agreed case) using prior quarters. The statutory period begins when the taxpayer files a signed return.

2. Closing codes 09, 39 and 64 indicate taxpayer agreed to proposed assessment. See IRM 25.6.1.9, Assessments, for more information on statute considerations.

(3) When the TC 150 is the taxpayer's return and the TC 976 is the 6020(b) return, no tax adjustment is necessary. Input TC 290 $.00 with the appropriate blocking series (BS) to release the -A freeze.

(4) On Form 940, state wage and contribution certification must be considered prior to adjusting the account. For more information, see IRM 21.7.3.4.3, Manual Certification Required/Not Required. When the IRS receives a requested certification, refer to IRM 21.7.3.4.8, Claims and Requests for Adjustments (Form 940).

(5) When the TC 150 is the 6020(b) return and the TC 976 is the taxpayer's return reflecting a tax decrease, do the following:

1. Review the general claim procedures before processing a tax decrease or credit increase. See IRM 21.5.3, General Claims Procedures, for details.

2. Review IRM 21.5.1.4.12, Tolerances, for details on prepaid credits and tax decrease tolerances.

   Caution: If the taxpayer files a Form 94X, the tax return reflecting the tax decrease is considered the original filing and a Form 94X-X tax return is not required to adjust the tax module.

3. If the taxpayer’s return reported a tax liability over tolerance, the tax liability must be math verified.

4. Input TC 291 using the appropriate item reference numbers (IRN), credit reference numbers (CRN), and blocking series (BS) for the type of tax being adjusted by the taxpayer.

   Note: Only use a refile blocking series (i.e., 00 and 09) when you have the TC 150 document.

5. Manually compute Failure to File (FTF) and Failure to Pay (FTP) penalties if previously restricted (TC 160, 161, 270, 271). See IRM 20.1.2.3, Failure to File a Tax Return or to Pay Tax - IRC 6651, for adjusting penalties. If not previously restricted, IRS's computers will automatically adjust.

6. If payments are on the module and a credit is generated by a tax decrease, we must ensure the credit is refundable. If the credit is not refundable, move the non-refundable credit to excess collections. See IRM 21.5.3, General Claims Procedures, for more information.

(6) When the TC 150 is the 6020(b) return and the TC 976 is the taxpayer's return reflecting a tax increase, do the following:

1. Review the general claim procedures before processing a tax increase or credit decrease. See IRM 21.5.3, General Claims Procedures, for details.

2. Math verify tax liability on taxpayer’s return, if over tolerance.

3. Input TC 290 using the appropriate IRNs, CRNs, and BS for the type of tax being adjusted by the taxpayer. If the tax shown amount does not reflect the taxpayer’s correct tax, update the field with IRN 871.

4. If module penalties were previously restricted (TC 160, 161, 270, 271, etc.), manually compute the penalties. See IRM 20.1.2.3, Failure to File a Tax Return or to Pay Tax - IRC 6651, for adjusting penalties. If not previously restricted, input Priority Code (PC) 2 with TC 290.

   Caution: The FTP back-out procedures (IRM 20.1.2.2.6.3, Wrong Return Posted First) are not required for this type of adjustment. Input of the appropriate PC on a tax increase allows the computer to adjust the FTP penalty from the RDD. The use of IRN 871 to correct the tax shown will not affect the FTP calculation.

(7) Always consider manual computation of an Estimated Tax Penalty and Failure to Deposit Penalty when decreasing or increasing tax. IRM 20.1.3, Estimated Tax Penalties, and IRM 20.1.4, Failure to Deposit Penalty, provide more detail. If the penalty is not restricted (previously manually assessed) on the tax module and the tax liability is being reduced to zero, manual abatement is not necessary because the computer will adjust the penalty. See IRM 20.1.4.21.3, Amended or Supplemental Return (Tax Decrease or Non-Interest-Free Tax Increase), to address a prior FTD penalty when not reducing the tax liability to zero.

(8) If the original return (TC 150) is a Form 1120S or Form 1065 secured under IRC 6020(b) and Schedule K-1s are attached to the TC 976 return, detach the schedules and route to Receipt and Control for processing. If the TC 976 return was scanned into CII, it will be necessary to print the schedules and forward them to Receipt and Control.

(1) When resolving duplicate filing conditions involving returns subject to FTD penalty, compare the Record of Federal Tax Liability (ROFTL) section of return against deposits and payments posted to the tax module. This applies to returns posted to correct modules as well as those being reprocessed to other modules.

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(3) Before closing the case, review IDRS to determine whether a CP 194, Data for Computation of Possible FTD Penalty on Forms 941, CT-1, 720, 940, 943, 944, 945, or CP 207, Proposed Averaged FTD Penalty, Request for Correct ROFTL Information, was issued. If so, see IRM 20.1.4.15, CP 194 Notices (Possible FTD Penalty), and IRM 20.1.4.18, CP 207/207L Notices, for a notice explanation. If there is an open CP 194 or CP 207 IDRS control base, coordinate with the assigned employee to prevent an erroneous FTD penalty assessment. The amended return could be the taxpayer’s response to the CP notice.

(1) If TC 976 return needs to be re-input to the same module, to post as the original (TC 150), the return must be edited and reprocessed using Form 13596, Reprocessing Returns.

(2) Input TC 971 AC 002 to prevent the generation of TRNS 193. Use the posted TC 976 date as the transaction date. If the master file (MF) status is 02 or 03, use Command Code FRM49 to input a TC 599 with Closing Code (CC) 094 (taxable return secured) or 096 (non-taxable return secured).

(3) If the TC 976 is a MEF partnership return (DLN begins with 93/92/88) with 100 partners or more, edit the return with Computer Condition Code (CCC) 6 to ensure the Failure to File Electronically penalty is not assessed. See IRM 21.7.4.4.2.8.1.1, Large Partnership Penalty for Failing to File Electronically, for more information on this penalty.

(4) When reprocessing documents, review the guidance under IRM 21.5.2.4.23, Reprocessing Returns/Documents.

(1) When it is determined TC 976 return was intended for another module which contains the original return, action must be taken on both accounts.

(2) On module which the TC 976 is being moved to:

1. Input TC 29X with appropriate reference numbers to adjust tax to the amount reflected on TC 976 return.

2. If necessary, adjust penalty and interest.

3. Input TC 971 AC 017 using REQ 77.

4. Attach TC 976 return to adjustment document.

Exception: If taxpayer filed Form 94X instead of the applicable Form 94X-X, Adjusted Employer's Return or Claim for Refund, follow procedures in IRM 21.7.9.4.1.4, Amended/Supplemental Return - Increase, for tax increases, or IRM 21.7.9.4.1.5, Amended Return - Decrease, for tax decreases.

Reminder: The tax shown on the return field is an important key for failure to pay calculations and must be accurate. If the wrong return posted first and created a transaction code (TC) 150 (e.g., mixed period or entity, 6020(b), superseding return), review the tax shown on the return field. See IRM 20.1.2.2.6.2, Incorrect Tax Shown Recorded, for “tax shown” computation. If a correction is necessary, use Item Reference Number 871 to update the field. IRM 20.1.2.2.6.3, Wrong Return Posted First, provides the conditions and procedures for the back out adjustment.

(3) On module which TC 976 return is being moved from:

1. Transfer any credits which do not belong on module. See IRM 21.5.8.4, IDRS Guidelines for Credit Transfers. Input TC 570 if necessary.

2. Input TC 971 AC 002 to release E- freeze.

(1) If TC 976 return was intended for another module which does not contain an original return, action must be taken on both accounts.

(2) On module which TC 976 return is being moved to:

1. Use Form 13596, Reprocessing Returns, to reprocess return to correct TIN/tax period. See IRM 21.5.2.4.23, Reprocessing Returns/Documents, for reprocessing instructions.

2. If the master file (MF) status is 02 or 03, use Command Code FRM49 to input a TC 599 with Closing Code (CC) 094 (taxable return secured) or 096 (non-taxable return secured).

3. Input TC 971 AC 017. See IRM 21.7.9.4.1.1, Transcript (TRNS) 193 Involving Reprocessing Returns, for proper input.

(3) On module which TC 976 return is being moved from:

1. Transfer any credits which do not belong on module. See IRM 21.5.8.4, IDRS Guidelines for Credit Transfers. Input TC 570, if necessary.

2. Input TC 971 AC 002 to release E- freeze. See IRM 21.7.9.4.1.1, Transcript (TRNS) 193 Involving Reprocessing Returns, for proper input.

(1) When TC 976 return posts to correct module, but original return intended for that module incorrectly posts to another module, the original return on the incorrect module must be secured.

(2) On module containing the incorrect original return:

1. Abate tax assessed on incorrect module using appropriate HC. (Also abate penalty and interest if restricted.)

2. Transfer credits to correct module. See IRM 21.5.8.4, IDRS Guidelines for Credit Transfers. Input TC 570, if necessary.

3. Input TC 971 AC 001. See IRM 21.7.9.4.1.1, Transcript (TRNS) 193 Involving Reprocessing Returns, for proper input.

4. Reprocess the TC 150 document to the correct period. However, if the return belongs on the module where the TRNS 190 generated, and the TC 976 amended return on that period is reporting the correct amount of tax, reprocess the TC 976 as the original. Edit an "X" on the TC 150 document and attach it behind the TC 976 return. Edit, on the return: "Do Not Detach." Also, edit the earliest received date from either document onto the document you are sending to be reprocessed.

(3) On module where the TRNS 190 generated which contains the TC 976 return:

1. Reprocess either the original or amended return as the TC 150. (Follow (2)(d) directly above if reprocessing the TC 976.)

2. If the TC 150 from the incorrect module contains the most current tax reporting information, reprocess it as the original to the module. Only reprocess the TC 150 if it contains more current information than the TC 976, otherwise reprocess the TC 976. Edit an "X" on the TC 976 document and attach it behind the TC 150. Edit, on the return: "Do Not Detach." Also, edit the earliest received date from either document onto the document you are sending to be reprocessed.

3. Input TC 971 AC 002 to prevent generation of TRNS 193.

(1) When a TRNS 190 is received without the TC 976 return, follow procedures below:

1. Request the duplicate return with CC ESTAB (second request). The generation of the TRNS 190 is considered the first request for the missing tax return.

2. If Files is unable to secure the duplicate return after the two requests, contact the taxpayer by phone to secure a copy of the missing tax return.

   Exception: If the TC 976 is a Modernized e-File (MeF) return, do not contact the taxpayer. See IRM 21.7.9.4.1.2.2, Modernized e-file (MeF) Amended Returns, for more information.

3. If there is no response after two call attempts, input a Special Search using Form 2275, Records Request, Charge and Recharge, and request a copy of the duplicate return from the taxpayer with Letter 418C, Amended/Original Return Unavailable; Copy Requested. Suspend the case for 40 days.

   Reminder: Monitor the account for notice suppression and input a STAUP when necessary. Refer to IRM 21.5.2.4.8.2, Suppressing Balance Due Notices, for additional information.

(2) If the taxpayer does not reply and TC 976 return still cannot be located, follow the chart below: