5.19.18. Federal Employee/Retiree Delinquency Initiative (FERDI)

(1) Per the Taxpayer Bill of Rights (TBOR), taxpayers have the right to expect a fair and just tax system which provides taxpayers with the opportunity to have their facts and circumstances considered when it might affect their underlying liabilities, ability to pay, or ability to provide information timely. Taxpayers have the right to receive assistance from TAS if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through normal channels. For additional information on the Taxpayer Bill of Rights, visit http://taxpayeradvocate.irs.gov/About-TAS/Taxpayer-Rights.

(2) Refer taxpayers to TAS when the contact meets TAS criteria (see IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria), or when Form 911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance Order), is attached and steps cannot be taken to resolve the taxpayer's issue the same day.

(3) "Same day" includes cases that can be resolved in 24 hours, as well as cases where steps can be taken within 24 hours to begin resolving the issue. See also IRM 13.1.7.4, Same Day Resolution by Operations, for additional guidance

(4) When making a TAS referral, use Form 911 and forward to TAS in accordance with your local procedures.

(5) Move case TOS7,45,ATAO.

(1) As part of the Identity Theft Program, the Accounts Management (AM) IPSU Team will begin assisting taxpayers whose situations meet TAS criteria 5 -7 AND involve identity theft. Applicable cases will now be considered IPSU criteria. For additional information see IRM 13.1.16.16.3, Criteria 5-7 Identity Theft Cases Eligible for Referral to Identity Protection Specialized Unit (IPSU).

(2) If a case meets IPSU criteria, refer the case to AM IPSU using Form 4442, Referral. The referral can be sent via secure e-mail to ≡ ≡ ≡ ≡ ≡ ≡ when available, or by fax to the ID Theft fax line ≡ ≡ ≡ ≡ ≡ ≡ ≡ by close of business on the day the criteria was identified. The referral MUST contain all taxpayer’s correspondence with any attachments/documentation received with the case. A Letter 86C or other applicable letter to the taxpayer is required.

(1) Cases are systemically reassigned from F2 with history code TOF4 01,NOT FP when FPLP payments are being received but will not full pay the account within the CSED.

(2) If there are any restricted interest/penalty modules on the account, review the AMS comments to determine if the manual levy process has already been completed.

1. If no, do not issue any levies and move the case TOF7,30,RESTINT.

2. If yes, proceed with F4 processing.

(3) Evaluate all non-FPLP levy sources.

(4) Leave FPLP levy in place and issue levies on all non-FPLP non-wage sources such as bank accounts. If the only non-FPLP source is a wage source, issue levy at this time.

(5) Reassign TOF2. Cases will remain in F2 for 90 days to allow levy payments to post. Once 90 days has elapsed, if the account will still not be full paid within the CSED, it will be systemically assigned to F4 again to evaluate levy sources.

(6) On subsequent reassignments to F4, continue FPLP, follow up on previously served levies, and issue levies on remaining non-FPLP sources until all levy sources are exhausted. Once all levy sources have been exhausted, reassign TOF3.

(7) If FPLP is the only levy source and you determine that the Form 668W paper levy will be more productive, take the following actions:

1. Input TC 971 AC 061 on IDRS to block the tax module(s) from FPLP. See IRM 5.19.9.3.5.1.

2. Reassign TOF5,30 for paper levy issuance.

(8) If FPLP is the only levy source and you determine that the FPLP levy will be more productive than the Form 668W paper levy, reassign the case to F3.

(1) Cases are systemically reassigned from F2 or F3 with history code TOF4 01,NO PYMT when two FPLP payments have not been received within the 104 day look-back period. The following conditions will cause payments to stop:

• FPLP was erroneously blocked.

• Taxpayer is no longer employed, deceased, on Leave Without Pay (LWOP).

• FPLP exclusion criteria cause the account to systemically reverse out of FPLP. See IRM 5.19.9-3, FPLP Exclusion Criteria, for a list of entity and module transaction and freeze codes that are excluded from FPLP.

(2) A systemic check has been added to F4 processing to move cases back to F2 when two FPLP payments are received within the look-back period.

(3) If the FPLP was erroneously blocked, input a TC 972 AC 061 on each module to unblock and reassign TOF1. Otherwise, reassign TOF5.

(4) If payments stopped as a result of an additional TC 240 (MFT 55 only), TC 290, or TC 300 assessment, issue an LT11 and reassign TOF1.

(5) If exclusion criteria apply, determine if the reason prevents manual levy issuance.

1. If exclusion criteria does not prevent manual levy issuance, issue levy on a non-FPLP wage source and all non-wage sources. Reassign TOF6.

   Reminder: The individual SRP amount (MFT 35) owed is not subject to levies or the filing of a Notice of Federal Tax Lien.

2. If exclusion criteria prevent manual levy issuance, leave the case in F4. Follow procedures pertaining to the exclusion issue and initiate Form 4442, if necessary. Enter history code OADT,XX where XX is the appropriate follow-up date. When the follow-up date expires reassign TOF2 if FPLP payments have resumed. Otherwise, take appropriate actions to resolve the exclusion issue.

(1) Cases are systemically reassigned from F3 with history code TOF4 01,NW SRC when FPLP payments are being received and a new levy source, other than the FPLP source, posts to IDRS.

(2) Issue a levy on the new source and reassign TOF2. The aim is to reduce the account balance to an amount that can be full paid within the CSED by FPLP.

(1) Cases are systemically reassigned from F2 and F3 with history code TOF4 01,COLSED when the CSED on one or more modules will expire within 45 days.

(2) Take the following actions:

1. Document the AMS history with the module(s) that will expire.

2. Reassign TOF0,,NC39 for approval of TC 530 CC 39 on the CSED modules.

3. After NC39 has been input, enter history code OADT,21,NC39.

4. If the account is still in F0 after the follow-up date expires, reassign TOF2.

(1) Cases are systemically reassigned from F1, initial processing, with history code TOF4 01,Z CSED when one or more account modules has a missing or "all zeroes" CSED. These cases cannot be systemically monitored.

(2) In most instances the missing CSED results from a Combat Zone case with no TC 500 exit date. Follow procedures in IRM 5.19.10.6 and IRM 5.19.10.7 to resolve the account. The CSED will update when the TC 500 exit date is input.

(3) After inputting the TC 500, input OADT,21 on ACS. If the account is still in F4 after the follow-up date expires, reassign TOF2.

(4) For all other missing CSEDs, refer the case to the AM Statute function for resolution. See IRM 25.6.1.4.1.

(1) For cases receiving FPLP payments, the FPLP was blocked when systemically moved to F5 with history code TOF5 01,NW ASMT. Take the following actions:

1. Issue an LT11 on the new assessment.

2. Input TC 972 AC 061 to unblock.

3. Reassign the case TOF2.

(2) For cases subject to FPLP payments take the following actions:

1. Issue an LT11 on the new assessment.

2. Input TC 972 AC 061 to unblock, if the tax module is not already unblocked.

3. Reassign the case TOF1.

(3) For cases not subject to FPLP, issue an LT11 with a 52 day follow-up. Leave the case in F5.

(1) Cases are systemically assigned to F5 from F1 for manual levy issuance when the taxpayer is a FERDI but we have not received any FPLP payments. Cases may also be manually reassigned to F5 from F4 when:

1. FPLP payments have stopped and/or

2. You need to issue Form 668–W, Notice of Levy on Wages, Salary and Other Income, commonly known as a "paper" levy, instead of FPLP to the federal source.

(2) Before issuing levies, make sure that all Collection Due Process (CDP) notice requirements have been met on all assessments for each module. See IRM 5.19.4.3.4(9).

(3) Review the account to see if FPLP payments were received (TC 670 with DPC 18 or 19) or were pending (TC 971 AC 062 posted), or case was blocked in error.

1. If yes, input TC 972 AC 061 on each module to unblock the FPLP and reassign case TOF1.

2. If no, proceed with F5 processing.

(4) Follow the instructions below to update levy sources on ACS. These instructions apply to FERDI cases only.

1. Delete federal levy sources only if they are duplicates or it has been confirmed with the source that the taxpayer is no longer employed. See IRM 5.19.4.3.6.1 for additional guidance on identifying duplicate levy sources.

2. Delete levy sources for the non-liable spouse.

3. If no levy sources are present on ACS, review command codes IRPTR, TRDBV, and/or LEVYS. Add any federal levy source that is not on ACS.

4. In addition to (c) above, add any non-federal levy source if it appears to be productive. For example, a bank source on the most recent IRPTR that hasn't been used before.

(5) If there are any restricted interest/penalty modules on the account, review the AMS comments to determine if the manual levy process has already been completed.

1. If no, do not issue any levies and reassign the case TOF7,,RESTINT.

2. If yes, proceed with F5 processing.

(6) Issue levies on one wage source and all non-wage sources. To prevent over-collection, use judgement when issuing multiple levies. Document AMS Comments or ACS History as to why a levy source was or was not selected.

(7) If the liability is a result of a joint return and both husband and wife are employed, issue the wage levy on one spouse only. Select the wage source of the spouse receiving the larger income.

(8) Reassign TOF6,XX, where XX is a 120 day follow-up for levies on federal sources (military and civilian) and 47 day follow-up for all non-federal sources. When issuing levies on federal and non-federal sources at the same time, set a 120 day follow-up.

(9) Use Form 668–W to attach non-federal wage sources, military active duty pay and military pensions. Use judgement to determine whether levy on the military pension will be more productive than the FPLP levy.

(10) Use Form 668–W to attach pension income and the Retirement and Disability Survivors Insurance portion of Social Security benefits. Approval authority for these levies is delegated to call site unit managers and GS–9, or above revenue officers.

(11) Levy on retirement income, benefit income, and Social Security income require managerial approval. Reassign TOF0,,LVnn. Document ACS Comments or AMS History identifying which levy needs approval.

(12) Form 668–W has a continuing effect on salary, including the salary of National Guard/Reservists. Defense Finance and Accounting Service offices should not return these levies without remittance when the taxpayer is an active member of the National Guard/Reserves unless the taxpayer’s allowance exemptions from levy equal or exceed their pay.

(13) Do not issue a Form 668-W if there is already a FPLP levy on the same federal payment. If you determine that the paper levy will be more productive than the FPLP follow the instructions in IRM 5.19.18.5.5.2.2.

(1) In addition to F7 procedures, you must perform the research below before reporting the LG$ case as CNC. The goal of the research is to locate the taxpayer and/or assets.

(2) Case documentation must be complete and substantiate all efforts to locate the taxpayer and/or assets.

(3) Make a lien determination upon initial case review. See IRM 5.19.4.5.1 for guidance.

(4) Check CC AMDIS to determine if there is a current examination. If there is an open examination, contact the Revenue Agent or Examiner for any additional ways to locate the taxpayer or address the need to limit the scope based on collectibility. Clearly document this search in the case history. For a list of exam contacts go to AIMS/ERC Contacts.

(5) Use Accurint to conduct neighbor, third-party and asset research. Telephone contact must be made with at least one neighbor. Follow–up on any viable leads.

1. Use the closest address for neighbor phone contact attempts. If telephone contact to neighbor is not possible during non-core hours, document reason on AMS or if attempt was unsuccessful, issue at least two ACS Letter LP64, “Please help Us Locate A Taxpayer”.

2. If contact is made, follow third party contact procedures per IRM. Do not leave messages with neighbors.

3. Identify yourself and ask any pertinent questions.

   Caution: Remember, do not disclose taxpayer information.

4. For each neighbor check done, input the action history literal, "NBORCHK.".

5. Contact other third parties, if possible, including relatives or business interests of the taxpayer found via asset and locator services research. Clearly document the results of these searches in comments, following third party contact procedures.

6. Attempt additional research via available automated and online telephone and other locator services resources.

7. If research indicates that the taxpayer is incarcerated, search Federal Bureau of Prisons Inmate Locator.

(6) After completing all research above without productive results, secure a full credit report, following the guidelines below:

1. Look for mortgages, auto loans, new addresses, levy sources, etc., as appropriate, and follow up on any viable leads.

2. Pursue contact with creditors showing recent taxpayer activity on their accounts by sending letter LP64 to the creditor's address.

3. Fully document asset leads and, if not pursued, why.

4. For every credit report research done, input the action history literal "CRDONE".

5. If the Notice of Federal Tax Lien was not filed before closure in accordance with current IRM procedures, file a lien.

6. If the taxpayer owns real property other than the primary residence (for example, vacation or rental property) request an additional Notice of Federal Tax Lien if the property is located in a county other than that of the primary residence. Refer to IRM 5.19.4.6.2 for the specific procedures.

7. If your research reveals additional avenues of collection, fully document the case with the market value and equity of assets(s) found.

   Note: The market value of property can be determined by looking at recent real estate sales of this or nearby properties on the credit report via a Comparable Sales Search, or online sources such as Zillow.com and Trulia.com. The value of other tangible assets such as luxury vehicles, boats or motorcycles can be found by researching NADA or Kelley Blue Book. Taxpayer data as well as available internet research sites should be used

   .

8. Determine the amount owed against the property via taxpayer and Credit Bureau loan information. Subtract the amount owed from the market value to determine the equity. Document the results on AMS

(7) Follow the appropriate procedures in the chart below:

(8) If your research reveals no assets with equity or additional avenues of collection, close the case as CNC, financial hardship. Move TOF0,,NC12. Cases may be reported CNC even if there were previous contacts with the taxpayer, i.e. the taxpayer promises to call back and fails to do so, subsequent attempts to contacts were all non-productive. Ensure all required actions (enforcement/locator) have been taken and all liens have been filed prior to closure.

(1) If levy was served on DFAS retired pay and there was no response to the LP59, or the case is in F7 for restricted interest computation, see IRM 5.19.18.5.5.2.1 to determine if the military retirement pay was previously subject to FPLP.

(2) If case is in F7 for restricted interest computation on DFAS active duty military, compute the statutory additions using the DMI InterestNet software, prepare the manual levy and mail or fax accordingly. If unable to use the DMI InterestNet software, input OADT,10,DFAS and forward print to Quality.

(3) If levy was served on active duty military pay and there was no response to the LP59, check the Department of Defense Servicemembers Civil Relief Act (SCRA) website to determine if the taxpayer is still in active duty status, has left active duty in the past 367 days, or has been notified of call up to active duty.

• If taxpayer is still on active duty, perfect the levy source address and reissue the levy.

• If taxpayer is not on active duty, continue F7 processing.

• If taxpayer will return to active duty on a future date, input OADT,XX,DFASLVY, where XX is the future active duty date plus 30 days. Reissue levy at that time.

(4) If DFAS response to levy is "Income Below Exempt", see IRM 5.19.18.5.5.2.1 to determine if the military retirement pay was previously subject to the FPLP.

1. If no, input TC 972 AC 061 on each module to unblock the FPLP and reassign case TOF1.

2. If yes, proceed with F7 processing.

(1) A stand-alone SRP occurs when a balance due is created on a module with MFT 35 File Source 1 (SRP 5000A) and there is no other balance due module with a different MFT in Status 22, 24, or 26, or a TDI module in Status 03. If an additional SRP balance due occurs in a subsequent year, but there are no other modules in Status 22, 24 or 26, or a TDI module in Status 03, they are still considered a stand-alone SRP.

(2) Conduct CFOL and Accurint research for potential new taxpayer address and phone number. Make at least one attempt to call the taxpayer at all phone numbers, including any new phone numbers found. Document the contact attempts on AMS.

(3) If the taxpayer contact attempt fails, the manager will input TC 530 CC 35 (ACS action NC35) to manually recess the case.

(1) Stand alone TDIs entering ACS and combo cases where the balance due modules have been closed out of Status 22 are systemically assigned to this inventory. TDIs in F8 for more than 180 days from initial assignment to ACS which have no follow-up, or the follow-up has been expired for more than 60 days, will be systemically reassigned to the Automated Substitute for Return program (ASFR).

(2) Research comments and history codes for recent OADT,xx,ASFR or OADT,xx,EXAM.

• If OADT,xx,ASFR is present, input TFRO,,AOTO8000

  Exception: International accounts are blocked from assignment to ASFR. See IRM 5.19.18.5.8.3 for guidance in working these cases.

• If OADT,xx,EXAM is present, input OADT,180,EXAM.

(3) Check IDRS CC SUMRY for associated balance due modules. If found, follow procedures in the table below:

(4) If there are no associated balance due modules, follow procedures in the table below:

(1) International accounts generally have an overseas address, or Army Post Office (APO) or Fleet Post Office (FPO) military address. They can be identified by Primary Location Code (PLC) 9835 on IDRS.

(2) Effective January 2013, international TDIs were blocked from assignment to ASFR.

(3) APO/FPO addresses generally belong to active duty military personnel. The Department of Defense Servicemembers Civil Relief Act (SCRA) website can tell you if the taxpayer is still in active duty status. If he or she is no longer on active duty, in all likelihood the taxpayer may have a new stateside address. The aim is to contact the taxpayer to secure the delinquent returns and update the address on IDRS, if appropriate.

(4) Take the following actions:

1. Research Accurint to find the most recent phone number and address.

2. If a new phone number and address are found, make and outcall and follow TDI procedures. If the call is unproductive send an OL26 to the new address and input OADT,180,INTL.

3. If no new address is found, send LT26 if not previously sent and input OADT,180,INTL.

(1) Installment agreements with federal employees can be made by direct debit, payroll deduction installment agreement (PDIA), credit card, Electronic Federal Tax Payment System (EFTPS), or by making payments by check or money order. See IRM 5.19.1.6 for additional information on methods of payment.

(2) Encourage salaried taxpayers to use a PDIA when setting up the agreement. See IRM 5.19.1.6.4.14, Form 2159, Payroll Deduction Agreement for PDIA procedures.

1. The U.S. Department of Agriculture National Finance Center (NFC), the U.S. Department of Interior Business Center (IBC), the Defense Finance and Accounting Service (DFAS), the General Services Administration (GSA), and the U.S. Postal Service (USPS) provide payroll services for most federal employees.

Note: DFAS accepts payroll deduction agreements for civilian employees, only.

2. Use Letter 3676C, Payroll Deduction Installment Agreement Letter, for PDIAs with DFAS and USPS. All other will accept either Form 2159, Payroll Deduction Agreement, or Letter 3676C.

3. See IRM 5.19.9-2, FPLP - Federal Employee Salary Paying Agencies - NFC, NBC, GSA, DFAS, to determine which payroll provider services the taxpayer's employing federal agency. The payroll provider’s contact information can be found on the National Levy Source Database

(3) If the financial analysis shows that the monthly payment would equal the monthly FPLP proceeds, leave the FPLP in place and move the case to F3.

(4) Include individual SRP modules (MFT 35) in new or pending installment agreements. See IRM 5.19.1.6.4.22 for additional guidance.

(5) Follow procedures in the chart below when establishing installment agreements:

(6) If the taxpayer meets the criteria for MFT 31 mirror assessment processing, follow procedures in IRM 5.19.1.6.7. After managerial approval, move the case to F9 using ACS history code TOF9,90,MFT31.

(1) If the taxpayer is unable to meet reasonable basic living expenses, report the case Currently Not Collectible (CNC) (hardship). See IRM 5.19.17.2.4.

(2) Include related MFT 35 modules using the appropriate hardship closing code.

(3) If the taxpayer needs to provide additional documentation for the hardship determination and we are receiving FPLP payments, advise him/her that the FPLP will continue until documentation is received. Reassign TOF4,30.

(4) If no additional documentation is needed, take the following actions:

1. If FPLP payments are being received, advise taxpayer that the FPLP will be released and explain how many payments will be received based on the FPLP processing cutoff dates in IRM 5.19.9.3.3.5(1). If the taxpayer’s hardship requires an immediate release of the FPLP, prepare Form 668D and forward to the appropriate FPLP Coordinator.

Note: Do not block the FPLP. The account modules will be excluded from FPLP when the TC 530 with CC 24-32 posts to IDRS.

2. If other levies are outstanding in addition to the FPLP, release all wage levies. Follow the procedures in IRM 5.19.4.4.10 to determine if full or partial release of bank levies is warranted.

3. Reassign the case to F0 for managerial approval.

(5) If the taxpayer meets the criteria for MFT 31 mirror assessment processing, follow procedures in IRM 5.19.1.6.7. After managerial approval, move the case to F9 using ACS history code TOF9,90,MFT31.

(6) If the taxpayer has unfiled returns, give the taxpayer a deadline to file the returns. Open TDI modules may be resolved by closing as little or no tax due (Policy Statement P–5–133), income below filing requirements, or refund due, if warranted by the facts of the case. See IRM 5.19.18.5.10.3 for guidance. If you are unable to close the TDI, reassign TOF8 after input of the TC 530 on the balance due modules.

(1) Resolve all return delinquency issues (correspondence or phone calls) timely and accurately to prevent subsequent notices and/or TDI issuances.

(2) Credit balance must be addressed whenever return delinquencies are closed with a TC 590, 591, or 593. Refer to IRM 5.19.2.6.7, Credit Balance Overview, for guidance.

(3) When talking to the taxpayer, input TC 592 with no closing code for TDI modules closed with a TC 590 CC 027, TC 593, TC 595 (unless the assessment is pending or the case is assigned), TC 597, or TC 598.

(4) Follow procedures in IRM 5.19.2.8.1 for all High Income Non Filers (HINF) cases.

(5) Follow procedures in the IRM sections shown below to resolve return delinquencies. Substitute F0 for any reference to C0.

(6) DO NOT close return delinquency cases as unable to locate. Take the appropriate action per the chart below: