part4-30
- 4.4.3.1
Introduction - 4.4.3.2
Crediting Overpayments to Related Taxpayer - 4.4.3.3
Crediting NMF Overpayments Against MF Deficiency as the account
number. - 4.4.3.4
MF Overpayment Credited Against NMF Deficiency - 4.4.3.5
Overpayment Transfers Between MF Accounts - 4.4.3.6
Refunds to Other Taxpayers - 4.4.3.7
Evidence Requirements Waived - 4.4.3.8
Refund $100 or Less - 4.4.3.9
Recovery of Erroneous Refunds - 4.4.3.10
Reprocessing Returns - Exhibit 4.4.3-1
MF Return Posted to Wrong EIN/SSN
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This chapter contains instructions for processing
miscellaneous adjustments.-
Refunds to anyone other than the taxpayer in whose
name the tax was paidSee IRM 4.4.3.6. -
Erroneous Refunds See IRM
4.4.3.9. -
Reprocessing Returns See
IRM 4.4.3.10.
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-
For related information see IRM 4.4.8, Credit
Transfers and Miscellaneous Adjustments Chapter.
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Examination of related taxpayers by Examination
sometimes results in adjustments increasing tax for one and decreasing tax
for the other. This usually occurs between parent and subsidiary corporations
or between trusts and beneficiaries. Often the taxpayer will agree that the
refund on one (related taxpayer) should be applied to the additional tax of
the other (primary taxpayer). This agreement is documented in the form of
a consent signed by the related taxpayer and made part of the case file. It
is in the interest of IRS to honor this offset. -
The Technical Support Staff function will attach
Form 3198 to the related case file. The
“other”
box at
the bottom of Form 3198 will be checked, and the primary taxpayer’s
name, EIN or SSN, and tax period of additional tax will be shown. The case
file of the primary taxpayer, including the Form 5344 or 5403 reporting additional
tax, will be associated with the related taxpayer’s file. -
Prior to processing either Form 5344 or 5403,
secure a transcript of the module to be adjusted for the related taxpayer.
-
If the module balance is debt, notify the Technical
Support Manager that the consent amount cannot be offset because the related
taxpayer owes money on the account. Request a determination of whether to
return the entire case for a new consent or process the case without making
the offset.
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If the module balance is zero (as it will be in
most cases) or credit, prepare Form 2424 for transfer from MF to MF or from
MF to NMF and Form 3809 with Document Code 58 for those from NMF to MF. Interest
is computed to the schedule date on an overpayment applied to a deficiency
of another taxpayer. If either portion relates to a NMF account, follow the
instructions for combination NMF and MF cases in Text 4.4.3.4 or 4.4.3.5 except,
in this case, the schedule date will be the transaction date. Also, if both
the overpayment and allowable interest are being transferred from MF to NMF,
the debit document will carry both TC 820 and TC 850 with their respective
amounts and the credit copy will carry only the total amount of the two items.
If the transfer is from one MF account to another, follow the instructions
below.
-
Enter the taxpayer’s name, EIN or SSN, MFT
code, tax period and transaction date (schedule date). -
Enter TC 820 as the first transaction and enter
the amount of overpayment credit being applied. Do not include allowable interest. -
Enter TC 570 as the second transaction and
“BLANK”
for the amount if more than
one transfer document is to debit the same tax module. -
Enter TC 850 as the third transaction and the
amount of allowable interest if such interest is also being transferred to
the same tax period.
-
Enter the taxpayer’s name, EIN or SSN, MFT
code, tax period receiving credit, and transaction date (schedule date). -
Enter TC 700 as the first transaction and enter
the amount of overpayment credit being applied (not including allowable interest). -
Enter TC 570 as the second transaction and
“BLANK”
for the amount unless the deficiency has already been
assessed and is outstanding. -
Enter TC 730 as the third transaction with the
amount of allowable interest. This should agree with the amount of TC 850
on the debit portion.
-
If the offset is to be made as described above,
follow these instructions in addition to routine processing.-
Related taxpayer—Use Hold Code 1 to prevent
a refund. Input the document immediately. -
Input Form 2424 or 3809 to post four cycles after
the related or overpaid Form 5344 or 5403. Input Form 5344 or 5403 to the
primary or additional tax module one cycle after Form 2424 or 3809 to assure
that the credit is available at the time of settlement
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-
Prepare Form 1331; enter the overpayment in the
credit column and enter the taxpayer’s EIN or SSN -
Prepare Form 3809 to transfer the credit from
NMF to MF. Hold the MF Form 5344 or 5304 for two cycles.
-
Enter the taxpayer’s name and address, return
form number and tax period with overassessment; check the NMF block, and leave
the account number and transaction code blank. -
Enter the transaction date (due date of overpaid
return, paid date or date of restricted interest overpayment, whichever is
latest). -
Enter the debit amount (total overpayment credit
applied). Prepare a separate Form 3809 if allowable interest is being applied,
using the schedule date as the transaction date.
-
Enter the name control, EIN or SSN, MFT code,
tax period receiving credit, TC 700, the amount of overpayment credit from
NMF (not including interest) and check the MF block. -
Enter the transaction date (due date of return
receiving credit, paid date of overpayment, or restricted interest date, whichever
is latest). -
Enter TC 570 for the second transaction and
“BLANK”
for the amount. Prepare a separate Form 3809 if allowable
interest is being applied (using the schedule date as the transaction date)
-
Code and edit Form 5344 or 5403 for Master File
processing, using Hold Code 1. If allowable interest is due, compute the amount
and enter it with TC 770. If no interest is due, enter TC 770 with a zero
amount. -
Prepare Form 2424 to transfer the credit to the
NMF account. See Text 4.4.3.4.2 below. -
After a DLN is assigned to the deficiency, enter
the DLN and the 23C date in the
“Remarks”
section of Form
2424. -
Release Form 5344 or 5403 (to abate tax from MF).
Release Form 2424 (to dispose of the credit) to NMF.
-
Enter the name and address, SSN or EIN, MFT code,
the tax period with the overpayment credit, and TC 820. -
Enter the transaction date (due date of return
with overpayment, date paid, or restricted interest overpayment date, whichever
is latest). -
Enter the amount of credit being transferred not
including interest. If interest is to be transferred prepare separate Form
2424 with the schedule date or 23C date as the transaction date, ad enter
TC 850 with the interest amount. -
Enter TC 570 as the second transaction with
“BLANK”
entered for the amount if more than one document is
prepared to debit the same tax module.
-
Enter the taxpayer’s name and address, the
TIN to be credited (use suffix
“N”
to indicate Non-Master
File Account), the form number of the deficiency return, tax period, and transaction
date; leave the first, second and third transaction codes and the second and
third credit amounts blank. When an advance payment on deficiency (TC 640)
is used, the credit portion of Form 2424 must include the TC 640. -
Enter the first credit amount without allowable
interest. Prepare a separate Form 2424 if there is allowable interest.
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Credit will be transferred between accounts only
if there is a statement from the taxpayer requesting such application; exception:
credit may be transferred from an individual’s IMF account to the same
individual’s (or his or her partnership’s) excise or employment
tax account without a statement. -
Any interest allowable should be manually computed
and entered with TC 770 on Form 5344 or 5403. For transfers between IMF and
BMF accounts, use Form 2424. If the accounts are for different taxpayers TC
850 and TC 730 may be entered on the same Form 2424 carrying the overpayment.
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These procedures should be followed when a refund
is to be issued to someone other than the taxpayer in whose name the tax was
paid.
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Provide documentary evidence to permit refunds
to be made to, on behalf of, or in care of any of the following:-
Deceased taxpayers. Refunds due on joint returns
when one spouse has died and no executor or administrator has been or will
be appointed may be made payable to the surviving spouse regardless of the
amount. Documentary evidence is not required by the surviving spouse if the
taxpayer was deceased prior to filing the joint return; however, indicate
on Form 3198 manual refund-deceased taxpayer. -
Trustees or estates (both living and deceased taxpayers)
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Guardians, minors, and incompetents
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Dissolved corporations
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Assignment, receivership and bankruptcy cases
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Reorganizations
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Corporate change of name or successorship
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Trusts and certain other cases
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Attach Forms 56, court certificates, affidavits,
letters testamentary or of administration, Forms 1310 and similar documents
to the related return. If more than one return for the same taxpayer is involved,
attach the evidence to the return for the most recent taxable period for which
a refund is scheduled. -
Keep copies of wills, trust instruments or amendments
and other similar documents with the return to which they relate.
-
Make sure that the name entered on the allowance
document is that of the person in whose name the check should be drawn. Refund
checks are drawn by the Disbursing Center directly from the allowance documents.
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The evidence requirements (see Text 4.4.3.6.1)
are waived and no evidence is required when the entire amount allowable is
credited to other taxes due from the same taxpayer, or when a fiduciary signed
the return (or a claim containing a statement that the return was filed by
the same fiduciary) within one year before the refund was made.
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When the amount to be paid is $100 or less (including
allowable interest) it may be paid to the fiduciary who signed the return
(or claim) without regard to the one year period. If the file indicates the
estate has been distributed, evidence will be required even though the amount
is $100 or less and the return was signed by the fiduciary within the year.
In each instance note the allowance document
“Return (or claim)
filed (date) by the fiduciary.”
Initial and date the notation. -
If there is an indication that more than one fiduciary
signed the return (or claim) as co-executors, the refund may be made to the
executor who signed, without evidence as to any other fiduciary.
-
See IRM 21.4.5 for additional information on erroneous
refunds.
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Flag case files involving erroneous refunds with
Form 3198. -
Include following Information on the form:
-
the name, address and TIN of the taxpayer from whom
the erroneous refund is to be recovered, -
the tax period,
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the tax return form number, and
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the amount of refund to recovered.
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This section contains instructions for Case Processing
Support when a request is received to reprocess a return to a correct TIN
or a correct tax year.
-
When it is definitely determined that a return
has posted to a different taxpayer’s account,
See Exhibit 4.4.3-1. to determine what action to take. -
The following instructions are in addition to
those contained in the chart.-
Abate all tax and penalty previously assessed on
the wrong account. Abate interest ONLY if restricted interest was previously
assessed; computer generated interest will be abated automatically. Use Disposal
Code 03 and Hold Code 2. -
On IMF accounts, reduce the net withholding credit
using Reference Number 807 in Item 15 of Form 5344 for the amount of the unrefunded
withholding credit. -
Prepare Form 2424 to transfer each separate cash
payment (including estimated tax payments, Federal tax deposits and payment
with return) to the correct account. Enter a secondary TC 570 to prevent an
improper refund.
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-
When it is necessary to change the tax period
as a result of the Examination determination of because of an error in the
original processing of the return take the following steps:-
Prepare Form 2363 to change the filing requirements;
this will correct future mailing of return packages. -
Process a Form 5344 using TC 301 to reduce the tax
on the established (incorrect) module to zero. Use Hold Code 2 to prevent
any credits from refunding. -
If there are cash credits, ES (estimated tax) payments,
or cash remittance, prepare Form 2424 to transfer the credits from the established
tax period to the corrected tax period. -
Reprocess a copy of front page of the return for
the corrected tax period, using the original DLN. Attach Form 3198, Special
Handling Notice, noted
“Reprocess to correct tax period Expedite-Examination
adjustment pending”
to copy of front page of return and forward to service
center for processing. -
Once the correct tax period has posted to Master
File, input TC 424 to establish the correct period on AIMS. -
When the correct period is established, process
final Form 5344.
Note:
As an alternative, Form 3893,
may be used to reprocess the original return to the correct tax period. Retain
a copy of the return for closing purposes. -
| (Reference: Text 4.4.3.11.1) | ||
| Return Posted to Correct Account (Taxpayer A) |
Return Posted to wrong Account (Taxpayer B) |
Action Sequence |
| Examined, posted first |
Examined, posted second |
1, 5, 4, 6 |
| Examined, posted first |
Not examined, posted second |
1, 5, 7 |
| Not examined, posted first |
Examined, posted second |
1, 8, 4, 6 |
| Examined, posted second |
Examined, posted first |
1, 2, 10, 5, 4, 3, 6 |
| Examined, posted second |
Not examined, posted first |
1, 2, 10, 5, 7, 3 |
| Not examined, posted second |
Examined, posted first | 1, 2, 3, 9, 4, 6 |
| Action Reference Code |
Action |
|---|---|
| 1 | Secure transcripts for both numbers. If necessary, requisition the second taxpayer s return. |
| 2 | Prepare Form 5344 to abate Taxpayer B’s tax and/or penalty and reduce withholding credit if necessary, process using partial agreement procedures through terminal. |
| 3 | Prepare Form 2424 if necessary to transfer any payments made by Taxpayer B. |
| 4 | Reprocess Taxpayer B’s original return to the correct number and retain a copy for processing the adjustment. See Text X.3, #4. |
| 5 | Prepare Form 5344 for Taxpayer A, process the adjustment with the return following normal procedures, and number in the 000 blocking series. |
| 6 | When Taxpayer B’s original return has posted to the Master File, establish the account on the TIF, prepare Form 5344 and process the adjustment using copy of return numbering in the 900 blocking series. |
| 7 | Reprocess Taxpayer B’s original return to the correct number. See Text X.3, #4. |
| 8 | Prepare Form 5351 for Taxpayer A and close through terminal with Disposal Code 32. |
| 9 | Prepare Form 5344 to assess the tax and post any credit appearing on Taxpayer A’s original return. Process with the return using Disposal Code 12 and zero audit results. Number in the 000 blocking series. |
| 10 | Prepare Form 5344 to assess the tax and post any credit appearing on Taxpayer A’s original return, process using partial agreement procedures |
|
NOTE—In all instances where the return of Taxpayer A posted second, prepare and process Form 2363 to correct the name, address, and marital status (if appropriate). |
|
