Tax-Refund Offset Coronavirus. If the "wrong" taxpayer was offset, reverse the offset after determining that there has not been an agency refund, TC 899. See IRM 21.4.6.4.2.1, TOP Offset Bypass Indicator (BPI). A TOP offset appears on the module as: TC 898 or TC 971 AC 598 (manual input of TOP offset record) with an Offset Trace Number (OTN), an offset amount, and a debtor-TIN field, if the offset is for a secondary spouse, OTN - Starting with 1 indicates primary taxpayer debt, OTN - Starting with 2 indicates secondary taxpayer debt. Notice is sent as an attachment to paper refund. Manual refunds issued from accounts with a -V or -W Freeze require input of BPI 3. Determine whether the IDRS freeze condition can be released based on the applicable IRM provisions. It is not a DMF offset if there is no AG/SA code present. If the injured spouse is not entitled to any overpayment from tax year 20XX, the allocation should not be considered. Contact the TOP Liaison or EEFax the request . If a credit balance remains on the module after the manual refund posts, release the remaining credit balance on the module by inputting a TC 290.00. To prevent an erroneous refund on an OBR, allow posting of the manual refund to release a freeze instead of manually inputting an action on IDRS to release the freeze. The IAT Tool is designed to research CC INOLET when the invalid indicator is present. Injured spouse refunds of TOP offsets generate systemically with the input of TC 766 with the appropriate Offset Trace Number (OTN). For ID Theft cases with fraudulent returns follow procedures found in, 4) Processing any case other than injured spouse, The posted offset is to Agency Code 01 and is more than 5 months old, 5) Processing any case other than injured spouse, The posted offset is to Agency Code 01 and is 5 months old or less, Reverse the offset(s).For ID Theft cases with fraudulent returns follow procedures found in. Working through OCSE, the offset payment is then sent to the state child support agency to pay toward the past-due support. TC 971 AC 599 with a Type 1,2,3 or 4, represents a manual input of an erroneously deleted TC 899 Type 1,2,3 or 4 transaction. A hardship request to expedite the injured spouse's portion of an overpayment, resulting from Form 8379, Injured Spouse Allocation, filed with an unprocessed original return, may be honored prior to the return posting and a TOP offset. When the injured spouse has none of the income or refundable credits, none of the overpayment is the injured spouse's. A request was previously submitted. 5) Taxpayer claims his/her refund was less than expected, amount disagrees with TC 846/840. When the taxpayer disagrees, or does not understand the injured spouse allocation by the IRS: If you work injured spouse allocations, verify the Form 8379, Allocation Worksheet. See IRM 21.4.6.4.2.4, Child Support Top Offsets. If EITC is not shown on the joint return, do not figure EITC on the allocation. This prevents a TOP offset to any debts owed by the secondary filer. See IRM 21.4.6.4.2.11, Netting TOP Offsets and Reversals. TC 150 is blocked 92 and Taxpayer Protection Program (TPP), issues have been resolved on the account and tax or TOP offset has not occurred. Input a TC 290 for .00 without the corresponding RN 808/809/810/811 to release the overpayment. Add two days to the date of Input to allow for the two-day suspense for review. you must take into consideration all TOP transaction codes with the same OTNs to determine the TOP offset amount available to be reversed. If the account requires the reversal of three or more TC 898s, you must issue a manual refund. Compute an allocation for the original offset and 50 percent for the stimulus payment. See IRM 21.4.6.4.2.11, Netting TOP Offsets and Reversals. The BPI 3 should be used on Form 5792 and Form 3753, when the taxpayer has both tax and TOP debts to be paid before a refund is issued. The presence of this indicator does not guarantee a TOP offset will occur. Close the case. Always attach the INOLES or IAT Results IS screens for both spouses showing the debt indicator at the time the Form 8379, Injured Spouse Allocation, is worked. 11-2016 MeF) and Rev. Check the entity to see if the account was re-sequenced to another TIN. Add to the TC 898 or TC 971 AC 598: all TC 899(s) or TC 971 AC 599(s), type 4, with the same OTN. Use a manual refund to reissue a returned refund check. A tax overpayment must offset to an outstanding Federal tax debt before it offsets against other debts or is applied to a credit elect. 6) Taxpayer claims his/her refund was less than expected, amount disagrees with TC 846/840. The Coronavirus Aid, Relief, and Economic Security Act (CARES Act; P.L. However, in some instances the recovery did not work. See IRM 21.4.6.5.7, Reasons to Reverse TOP Offset. When issuing a hardship refund under any circumstance, inform the taxpayer that if he/she owes a child support or Federal agency debt submitted for tax refund offset, Bureau of the Fiscal Service may apply his/her refund to the debt through TOP. It generates on the first refund, (TC 846) issued after the reversal of a TOP offset to a secondary TIN's debt. Meaning, the TC 706 credits must transfer from one spouse on the originating account either as a single or separate filer or as a joint filer with a new spouse. However, if only one spouse received their EIP refunds and RRC is claimed on the joint return , then the spouse who did not receive their EIP refunds should be allocated the RRC up to the amount of the EIP they did not get. Also, the refund name line may not match the debtor's name in TOP, allowing a refund to be issued despite the presence of a TOP debt. Refer to IRM 5.1.12.11, Child Support Obligation, which provides additional information, including the NMF assessment and collection processes. Cases involving bankruptcy and TOP offsets require that the agency receiving the offset make the refund unless: It can be determined that IRS was aware of the bankruptcy prior to issuing the refund that was offset. Because of the outstanding tax assessment, the $500.00 and $300.00 credits are transferred in April 2013 to the MFJ tax liability for 2011. Offsets that occur during processing year 2016 and beyond will post with the Agency and Sub-Agency Code at the beginning of the Offset Trace Number (OTN). Treasury Offset Program (TOP) These programs collect money from tax refunds or other government payments to satisfy taxpayer debts to us and other government agencies. Use line number 1 or 2 as appropriate. See IRM 21.4.6.4.2.11, Netting TOP Offsets and Reversals. If calls are received regarding an account with a TC 898 with an Agency ID of XX and an Agency Site ID DF or PF, take the following actions: DO NOT provide the currently posted or a recalculated amount. Only the TOP Liaisons are authorized to input the TC 767. Send the taxpayer a copy of the Form 8379, Allocation Worksheet, only if they ask for it. A true scrambled SSN case occurs when the Social Security Administration assigns the same SSN to more than one taxpayer. BPI 8 is a required input on all manual refunds resulting from an injured spouse form submitted by the secondary taxpayer unless combat zone, BPI (5) applies. Evidence of the credit condition and documentation must be provided when an OBR manual refund is submitted to the Accounting Branch. Adjust the account per income documents. See paragraph (4) below. When a taxpayer wants to claim innocent spouse relief, but mistakenly uses Form 8379, Injured Spouse Allocation, return the Form 8379 to the taxpayer. Pre-paid credits are considered paid as of the due date of the return determined without regard to extensions. Process the Form 8379, Injured Spouse Allocation under the correct TIN. See IRM 21.4.6.5.12.1, Input of TOP Offset Reversals Reference Number (RN) 766 with OTN. See IRM 21.4.6.5.1, Taxpayer Inquiries on TOP Offset. This information is intended as a guide to determine when it is acceptable to reverse a Treasury Offset Program offset and when the offset should remain on the account. 11-2016), input a TC 290 for .00 with RN 810, RC 086, SC 7 and the dollar amount of the allocated refund. A TC 766 TOP offset reversal may post to the taxpayer's account and still be denied by Bureau of the Fiscal Service in whole or in part when: The agency issued a refund of the TOP offset and IRS did not have a TC 899, type 2, posted yet. Before reversing child support (Agency Code 1 or 2) offset, see IRM 21.4.6.4.2.4, Child Support TOP Offsets. ECC-MTB searches this file after any applicable tax offsets are determined but before crediting the credit elect amount. Advance payments are not subject to reduction or offset. This server has a login program control. Non-Integrated Data Retrieval System (IDRS) manual refunds issued via Form 3753, Manual Refund Posting Voucher, are subject to TOP offset. Hold until the -Q freeze is released with TC 572 by EXAM or IVO. See paragraphs (9) and (10) below for situations when the OBR can be issued after the 23C date. The TC 76X will always be a negative number or zero. An Injured Spouse allocated and received the entire First-Time Home Buyer Credit in a previous year is liable for repayment of the recapture tax. Community Property Worksheets are located within the Accounts Management (AM) tab. If the IRS offsets the refund claimed on a Form 1040/Form 1040X (in whole or in part) to a Federal tax debt or a TOP debt, the IRS does not issue a Notice of Claim Disallowance, because no claim has been disallowed. Allow the credit to refund if there are no other open issues. Do not forward agency correspondence to IRS Headquarters unless directed to do so by Headquarters. If the account is less than 6 years old and needs to be re-sequenced, you need to reverse the offset. If the tax year has ended, input a credit transfer, TC 830/TC 710, using CC ADD48. See IRM 21.4.6.4.2.1, TOP Offset Bypass Indicator. Send Letter 3179C, Refund Offset to Treasury Offset Program (TOP) and Injured Spouse Inquiries or Letter 285C, Refund/Overpayment Applied to Account, to the taxpayer informing them that we allocated it for them. The following table may assist you in resolving injured spouse cases when an EXAM freeze (-L, -Q, - E), CI freeze (-Z or Z-) or IVO Freeze (-E) is present. Issue a letter to inform the taxpayer of the amount due to them except for the TC 810 currently under review. Injured spouses portion of estimated tax payments. If the timeframes above have passed, and the case has not been worked and the open control base is assigned to a clerical specialized control number or there is an open control base not assigned to a specific CSR, and you have access to CIS, and are trained to work Injured Spouse cases, process the case according to 21.4.6.5.8.3, Processing of Form 8379 Injured Spouse Allocation. The debt indicators are: The (I) indicator is not always set for all Federal tax debts. Enter a Case Note (CN) with the information obtained from the caller if you have access to CIS, or. For 2018 and subsequent; Include Qualified Business Income deduction (QBID) with the standard or itemized deductions. If Combat indicator is "2", then the taxpayer is no longer a combat zone participant. One copy of the CP 36D notice is used as a "charge out" in files; the other is scanned into CIS or forwarded to the Accounts Management Function with the Form 8379, Injured Spouse Allocation. 116-136, enacted March 27, 2020) includes direct payments to individuals in 2020referred to by the Internal Revenue Service (IRS) as "economic impact payments" ($1,200 per adult/$2,400 per couple filing a joint return; $500 for dependent children). See IRM 21.3.5.4.1, When to Prepare a Referral, for instructions. If interest is due on the original overpayment, you will figure the interest on the original overpayment. Otherwise, the computer will automatically offset the credit(s) back to pay the balance due. When working a Form 8379 and the debt indicator on CC INOLE is "N" for both taxpayers, do not release the overpayment with a TC 571. If all the offset is needed, reverse the entire amount. See IRM 21.4.4.5(3), Preparation of Manual Refund Forms. there is a TC 898 or TC 971 AC 598 on the account, Determine if any of the refund amount was issued per. BPI 7 generates on all refunds when no other condition or manual input results in the use of another BPI and the creditor agency has obtained relief from the automatic bankruptcy stay. For additional information, refer to IRM 3.17.79.4.1, Case Review and Command Code REFAP (Refund Approval). See IRM 13.1.7.2.1, TAS Case Criteria 1-4 Economic Burden. Consequently, the refund will offset, resulting in having to reverse the offset to process the Form 8379, Injured Spouse Allocation. Employees may be able to take up to an additional 40 hours as discussed in FAQ 4. However, if injured spouse indicates on Form 8379, line 5b, that his or her marriage was NOT recognized under the laws of the community property states(s) listed on line 5a, allocate items based on the instructions provided in IRM 21.4.6.5.8.4.1, Same-Sex Spouses. If the allocation is correct, advise the taxpayer how the allocation was computed. Satisfy a balance due that resulted from an amended return received after the due date on the module where the offset occurred. This example shows a TOP offset to the primary spouse's debt for $1000. If the taxpayer did not allocate the Charitable contributions split the unallocated Charitable contributions in half (50/50) for each spouse. Refund is requested as a direct deposit or paper check. The remarks section of the Form 5792 must contain the reason for the manual refund. When the CP 36D, Injured Spouse Claims Notice, is received in the AM Function, use Command Code (CC) RTVUE, (CC) TRDBV or Return Request Display (RRD) to view the return on-line and work the Form 8379. These freeze conditions are resolved with the adjustment indicated by account research. However, these are not true TOP offsets. The injured spouse has no payments or refundable credits. A UPC 138, RC 0, will still result if there is a TC 898 TOP offset and the TC 740/TC 841 is less than the related TC 840/TC 846: (TC 899 type 2 or 3) + (TC 899 type 4) (TC 76X), all with the same OTNs as the TC 898. BPI (9) indicates that TOP should bypass offsets to debts owed by the secondary spouse and may offset to debts owed by the primary spouse, and the account module contains an unreversed TC 520 with closing code (cc) 60-67, 81, or 83-89 with transaction date 10/17/2005 and subsequent. Refer to Document 6209, Section 8 - Master File Codes, for additional information. Hardship manual refunds do not require Treasury Offset Program research, to determine the existence of a TOP debt, prior to issuing the refund. This will allow the reversals to post in one cycle and the overpayment will be systemically refunded in both taxpayers names. For all other programs, follow Statute guidelines for your case. It must be noted that for an IRS appeal to prosper, the taxpayer should first receive a bill. If the taxpayer filed their return on or before an approved extension of time to file, use the 04/15/XXXX of the return rather than the posted Return Received Date shown on TXMOD. If an offset occurs after Form 3753 has been issued, a Transaction Code (TC) 898 will not post to the account. An account may have both a tax offset and a TOP offset. BPI 6 is required if a manual refund will be issued to an injured spouse who is primary, from a module with a combat zone C Freeze. Issue a manual refund on Form 5792, Request for IDRS Generated Refund (IGR), for the injured spouse's portion of the refund. All hardship cases transferred to App 35. See IRM 21.4.6.5.23.2, UPC 137 or UPC 437. If you do not have access to CIS to view the Form 8379, Allocation Worksheet, and are unable to make a determination, send a Form 4442 /e4442, Inquiry Referral to the campus that worked the Form 8379 Injured Spouse Allocation. Follow normal IRM procedures to work the case. Contact the IRS only if your original refund amount shown on the BFS offset notice differs from the refund amount shown on your tax return. You will need to do a manual reversal request. IRS previously denied Form 8379, a Letter 105C, Claim Disallowed or Letter 106C, Claim Partially Disallowed, was sent and a TC 290 for .00, blocking series 98/99 (input after receipt of Form 8379). If a hardship exists, refer to IRM 21.4.6.5.5, Hardship Refund Request. See IRM 20.2.4.7.5.2, 45-Day Rule and All Original Tax Returns, for the dates of systemically generated refunds. Research for Outstanding Balance Liabilities (OBLs) for both spouses before completing the allocation. Do not change the address on CC ENMOD. Information indicates taxpayer may have resided in both types of states, or in two or more community property states. See IRM 21.4.6.5.14, TOP Source and Reason Codes. Determine if the refund that was offset posted to a different tax period. BPI (4) indicates that TOP should bypass all debts except child support for both the primary and secondary TIN. Research the CIS archived case files if necessary. Treasury to offsetthat is, reducea taxpayer's tax refund to satisfy certain debts owed to governmental agencies, such as tax debts or unemployment compensation debts. Attempt to telephone taxpayer. The only purpose of this indicator is to provide necessary information for use in IRS automated telephone responses. Bureau of the Fiscal Service If you do not work injured spouse, send a Form 4442, Inquiry Referral, to the campus where the case was originally worked. For Form 8379, Injured Spouse Allocation, input RN 808/RN 810 or RN 809/RN 811 with a PDC for 2 cycles or issue a manual refund if applicable. See IRM 21.4.6.5.7.1, Allowable TOP Offset Reversals. The account must be corrected without regard for the offset. Inform the injured spouse that his or her refund can be offset for any past-due child support or other TOP debts that he or she may owe. For 2018 and subsequent: if the exemption portion is blank or shows zero, allocate the child tax credit, credit for other dependents, additional child tax credit, dependent-related education credits, and any other credits as entered on the Form 8379. When this occurs, you cannot do a TC 766 to reverse the offset systemically. Form 8379, Injured Spouse Allocation, may be filed as an attachment to the original individual tax return or by itself. For all of the Community Property Shortcut methods listed below, all conditions must be met before the shortcut can be used. Refer to IRM 21.5.6.4.31, P Freeze. To refer the taxpayers to TAS, use Form 911, or Form e-911, Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order), if AMS is not available. On manual refunds resulting from a TOP offset reversal, the "FROM" date is based on the refund that was offset. Offsets that occur during processing year 2016 and beyond will post with the Agency and Sub-Agency code. See Document 6209, Section 5, for Office of Child Support Enforcement Agency and Sub-Agency codes. If there is an outstanding IRS obligation for the primary or secondary taxpayer, compute the Injured Spouse refund. Notate NCP SC3. It reversed the prior posted TC 898 with the same OTN and no DEBTOR-TIN. The Recovery Rebate Credit (RRC) is a one-time benefit for people who didn't receive the full Economic Impact Payments (EIPs) in 2020 and whose circumstances may have changed, making them eligible now for some or all the unpaid portion. The most common result codes, with an explanation, are listed below: Due to file errors, some TC 898s posted with "invalid" OTNs and there may be an open unpostable for the "valid" TC 898. See IRM 21.4.6.5.5, Hardship Refund Request, and IRM 21.4.6.5.11.1, Offset Bypass Refund (OBR). Box checked is correct for state taxpayer resides. See IF/AND/THEN Chart in paragraph (5) below. Allow three weeks for the posting of the reversal transactions when calculating the six-year period. DO NOT issue 4442/e4442. Provide a transfer PIN per IRM 21.1.3.2.5, Initial Authentication Transfer Procedures/Transfer PIN. The Transaction Code (TC) 899 is generated by input from Bureau of the Fiscal Service (BFS) and the participating agencies to report an action taken on an offset. If an active combat zone case involves a Federal tax debt. You may see a TC 971 AC 598 or a TC 971 AC 599 which represents the manual input of an erroneously deleted TC 898 or TC 899 transaction. the main home on the applicable disaster date was in a Midwestern disaster area as shown in Table 2 and the taxpayer was displaced from that home because of the severe storms, tornadoes, or flooding. See IRM 21.4.6.4.2.1, TOP Offset Bypass Indicator (BPI). Therefore, if the taxpayer does not respond by the time frame given in the Letter 3064C, IRS will transfer the funds back to the individual tax account where it was originally offset from and enter the appropriate information in the "Remarks" section of the credit transfer. The RSED has expired see IRM 25.6, Statute of Limitations. Program goals: Program goals for this type of work are included in the AM Program Letter as well as IRM 1.4.16, Resource Guide for Accounts Management Managers. Letter 285C, Refund/Overpayment Applied to Account, see IRM 21.4.6.5.10.5, Injured Spouse RefundTax Offset, for the information to include in the letter. Input 290 .00, RN 810 or RN 811, RC 086, SC 7 with the appropriate PDC or issue a manual refund if applicable. When permission is granted for the manual refund before the TC 700 posts to the account, input TC 470 CC 90 to prevent notices from being issued. Determine the married filing separate (MFS) tax for each spouse. See IRM 21.4.6.5.23.2, UPC 137 or UPC 437, for TC 899 UPC 137 or UPC 437 resolution. All Forms 1040 series indicating "Injured Spouse" in the upper left corner are blocked in BS 920929. Input a TC 570 to stop any erroneous refund from occurring prior to the posting of the adjustments. Each spouse must take their own exemption and is entitled to his/her share of the joint RRC/ESP up to $600.00. The taxable amount of Unemployment Compensation shown on the joint return must be used when allocating the separate Adjusted Gross Income (AGI) for each spouse who received the benefit(s) of the exclusion. 19) Taxpayer filed Form 8379 in any manner. Input a TC 290 .00 with a Hold Code 4 to hold the credit when sending a no consideration letter. The use of the shortcut methods is optional, see paragraphs (4), (5) and (6) below.
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