Purpose - This section provides general guidelines and report writing procedures for Excise Tax Program managers, examiners, and personnel at the Cincinnati and Ogden campuses who process claims for credit or refund.

Audience - The audience of this section includes the Director, Examination - Specialty Tax, Chief, Estate & Gift/Excise Tax Exam, Excise Tax territory managers, group managers (managers), revenue agents (RAs), fuel compliance agents (FCAs) (collectively and hereinafter referred to as "examiners" throughout this section), personnel at the Cincinnati and Ogden campuses who process excise tax returns (returns), excise tax refunds (refunds) and excise tax claims (claims).

Policy Owner - Director, Examination - Specialty Policy, is responsible for the administration, procedures and updates related to the technical guidance, information processing steps, and methods specific to claims.

Program Owner - Director, Examination - Specialty Tax, owns Excise Tax Examination.

Primary Stakeholders - Independent Office of Appeals (Appeals), Counsel, Excise Tax Examination, Field and Specialty Examination Quality (FSEQ), Large Business and International (LB&I) and Tax Exempt/Government Entities are the primary stakeholders for this section.

This section provides general guidelines and procedures for claims.

A claim may either be a "formal" or an "informal" request.

Claims include:

Protective claims are formal claims or amended returns for credit or refund normally based on expected changes in a:

Protective claims are filed to protect the claimant's right to recover tax paid to the Treasury before the expiration of the statute of limitations (SOL). A claim identifying a pending court case or decision should be considered a protective claim. Refer to IRM 21.5.3.4.7.3, Protective Claims, for additional information.

Examiners must conduct an analysis of all claims and Form 720 IRS Nos. reported for the primary period under examination. Examiners must also conduct a comparative analysis of prior and subsequent tax periods to help identify large, unusual, and questionable (LUQ) items, patterns of noncompliance, or inconsistencies between tax periods. Examiners must follow IRM 4.24.25.5.8, B200-1 - Required Filing Checks Prior/Subsequent Period Returns, Related Excise Tax Returns, Filing Verification, to document evidence of taxpayer compliance.

Refer to IRM 4.24.6.2.14, Excise Examinations of Indian Tribal Government (ITG) Cases, for contact procedures to follow if the claim is filed by an ITG.

This section does not contain information for every possible claim for credit or refund situation. Examiners should exercise care and conduct necessary research specific to the examination.

Examiners should refer to procedures found in IRM 4.24.6.13, Requesting Excise Subject Matter Expert (SME) Assistance, to request the assistance or advice of a SME.

Form 720-X is used to make adjustments (increases or decreases) to the tax liability previously reported on Form 720. Form 720-X is also used to make changes to claims made on Form 720, Schedule C, for the IRC 4051(d) tire credit and IRC 6426 credits.

Adjustments reported on Form 720-X are made as follows:

Form 8849 is used to claim a refund of excise taxes. The following schedules are associated with Form 8849:

Form 720, Schedule C, is used to claim a credit against liabilities reported on Form 720, Part I or Part II.

Form 4136, Credit for Federal Tax Paid on Fuels, is used to claim an income tax credit rather than an excise tax credit on Form 720, or payment on Form 8849. Form 4136 is attached to the claimant’s annual income tax return and is used to claim a credit for the following:

Form 6478, Biofuel Producer Credit, along with Form 3800, General Business Credit, is used to claim a nonrefundable income tax credit for qualified second generation biofuel production under IRC 40.

Form 8864, Biodiesel, Renewable Diesel, or Sustainable Aviation Fuels Credit, along with Form 3800, is used to claim a nonrefundable income tax credit for biodiesel or renewable diesel under IRC 40A or sustainable aviation fuel under IRC 40B. The credit is claimed for certain sales and uses of biodiesel, renewable diesel, or sustainable aviation fuels that have not been claimed, or that cannot be claimed, on Form 720, Schedule C, Form 4136, or Form 8849.

Form 843, Claim for Refund and Request for Abatement, is used to claim a refund or request an abatement of certain taxes, interest, penalties, fees and additions to tax. Refer to Form 843 instructions for additional information. Refer to IRM 4.24.16.4, Claim for Refund of Fuel Compliance Penalties, for additional information about claim procedures relating to fuel compliance penalties.

Form 730, Monthly Tax Return for Wagers, Line 5, is used to claim a credit for tax paid under two circumstances:

Form 2290, Heavy Highway Vehicle Use Tax Return, Line 5, is used to claim a credit for tax paid on a vehicle that was:

In addition to the classified claim issue, the scope of a claim examination should include other significant issues identified during the examination.

Examiners must verify that duplicate claims were not filed by the claimant on other returns or by related entities.

Examiners should consider a taxpayer’s entire business activity and other potential excise tax liabilities to determine if the examination should be expanded beyond the claim for refund. For example:

When conducting a review of a biodiesel mixture claim, it is necessary to follow the fuel to determine the point of taxation. Due to the excluded liquid provisions, biodiesel claimants often times are not the party liable for the tax. The examiner must review sales of B99.9 - B70 to determine if the party that purchased the product reported tax to the IRS. If the examiner is unable to verify that tax has been reported to the IRS by the customer, then Form 5346, Examination Information Report, must be completed for the sales to these customers. If Form 5346 was not submitted, the examiner must document reasons on Form 9984, Examining Officer's Activity Record. Refer to IRM 4.24.25.5.8.1, Form 5346, Examination Information Report, for guidance on completing and submitting Form 5346.

Whenever possible, the examiner should consult with their manager when raising new issues. The examiner must document reasons for expanding the examination or when limiting the scope to only the original claim for refund. This must be documented on Form 9984.

The examiner determines and protects the SOL for all examinations. Refer to IRM 25.6.23, Examination Process - Assessment Statute of Limitations Controls, for general information about SOL protective actions.

IRC 6206 provides that any portion of a claim made under IRC 6416(a)(4), IRC 6420, IRC 6421, or IRC 6427, which constitutes an excessive amount (as defined under IRC 6675(b)), and any civil penalty provided under IRC 6675 may be assessed and collected as if it were a tax imposed by IRC 4081 (with respect to refunds under IRC 6416(a)(4) and payments under IRC 6420 and IRC 6421), or IRC 4041 or 4081 (with respect to payments under IRC 6427) and as if the person who made the claim were liable for such tax. The period for assessing any such portion, and for assessing any such penalty, shall be three years from the last day prescribed for filing such claim. The SOL to make an assessment cannot be extended.

Any portion of an IRC 6426 claim, which constitutes an excessive amount must be assessed within three years from the time the return was filed or two years from the time the tax was paid, whichever period expires later, or if no return was filed by the taxpayer, within two years from the time the tax was paid. IRC 6511(c) authorizes the SOL to be extended by mutual agreement. Refer to IRM 25.6.22, Statute of Limitations, Extension of Assessment Statute of Limitations by Consent, for additional guidance on the processes and procedures used to solicit, secure, and record extensions of the assessment statute of limitations.

A biodiesel or renewable diesel mixture claim, sustainable aviation fuel claim, or alternative fuel claim filed on Form 720, Schedule C, may include both IRC 6426 and IRC 6427 claims. The IRC 6427 portion of a paid claim may not be extended. If the IRC 6426 portion of a paid claim is extended, then the claims must be closed separately.

Paid claims, unpaid claims, and amended returns are classified at the Cincinnati Campus by CSTO. Interest-bearing fuel claims, such as those filed on Form 8849, Schedules 2, 3 and 8 are generally selected only as paid claims. Refer to IRM 4.24.22, Campus Procedures for Excise Taxes, for additional information on classification procedures for claims. Claims related to an original return assigned to a field group are not classified by CSTO but are forwarded to the field group for association with the original return.

Paid claims that meet specific criteria are also classified by Workload Selection and Delivery (WSD).

Claims can be differentiated as:

First party claims are normally filed on Form 720, Schedule C, or on an amended return by the taxpayer who filed the original return, which changes or reduces the original taxes reported and paid against the IRS No.

Third party claims are filed by a person other than the person who paid the tax to the government. These are almost always filed using the CRN. Examples include:

There are four categories of refunds each with unique processing requirements:

Unpaid claims selected for examination are controlled with AIMS Source Code 30, if research shows the original return has never been examined and the return, if applicable, does not otherwise warrant examination.

Source Code 30 requires a claim amount be present on AIMS and ERCS.

The examiner must verify the AMDISA claim amount matches the claim amount per the return. If the AMDISA claim amount does not match the claim amount per the return, the examiner must complete Form 5348 to update the AMDISA claim amount.

The examiner must determine the claim received date or the date the claim became processable (e.g., Notice 2022-39 provided that the 180-day claim period for making a 2022 one-time alternative fuel claim began on October 13, 2022. Claims that were filed before October 13, 2022, were not processable until October 13, 2022).

The examiner must begin working unpaid claims within 30 days of assignment. If the IRS does not act on a claim for refund within six months from the filing date of the claim, the taxpayer is permitted to file a refund suit. Therefore, claims are considered priority work.

Claims for refund, request for abatements and audit reconsiderations require Disposal Codes (DCs) that depend on the underlying situation. DCs indicate the disposition of an examination. Examiners should refer to IRM Exhibit 4.10.11-7, Disposal Codes - Claims for Refund, Requests for Abatement, and Audit Reconsiderations, for the appropriate DCs to use when closing unpaid claims, requests for abatement, and audit reconsiderations.

Additional examination DCs are identified in Document 6209, IRS Processing Codes and Information, Section 12, and Document 6036, Examination Division Reporting Codes Booklet.

Special rules apply to interest on overpayments of Chapter 33 Excise Taxes. See IRM 20.2.10.4.2, Underpayment of Collected Excise Taxes.

Activity Code 615 is used for examination survey time.

Unpaid claims selected for examination must be assigned to an examiner. If after review, the examiner determines that a claim should be allowed in full and the related return (if applicable) does not warrant examination, the claim may be "Surveyed After Assignment."

Claims previously closed by Appeals cannot be surveyed. Refer to IRM 4.24.8.21 for additional information.

The examiner must complete the following for unpaid claims surveyed after assignment:

The examiner will prepare Form 2503 in IMS and briefly explain why the claim is being surveyed. A copy of Form 2503 must be signed and approved by the manager and then uploaded into the IMS case file for record.

The claim must be stamped "Survey After Assignment," signed and dated by both the examiner and manager.

The examiner must prepare Letter 570-X. Refer to Exhibit 4.24.8-2 for guidance on the preparation and issuance of unpaid claim letters.

Refer to IRM 4.10.2.5, Decision to Survey a Return, for additional survey procedures.

Generally, report writing and case processing procedures involving claims are similar to those for other excise examination cases. Refer to IRM 4.10.8.10, Claims for Refund and Overassessments, for additional information. This section provides case closing and general report writing procedures specifically for unpaid claims related to:

There are four possible results when an unpaid claim is examined. The claim may be:

When an unpaid claim examination involves more than one period and has different examination results (e.g., one period closed allowed in full and one period closed fully or partially disallowed), follow report writing procedures specific to each type of closure for each period.

Before preparing an examination report on a case involving a claim, examiners must have a current transcript (e.g., TXMODA, BMFOLA, etc.) for the taxpayer’s account.

Prior to closing an examination, examiners must check AMDISA to identify claims that are in transit from CSTO.

The assertion or non-assertion of the excessive claims penalty under IRC 6675 must be addressed in the case file if an unpaid fuel claim examination results in a full or partial disallowance. Refer to IRM 20.1.11.5, IRC 6675 Excessive Claims with Respect to the Use of Certain Fuels, and IRM 4.24.8.17 for appropriate guidance.

The following forms are used in conjunction with Form 5384, Excise Tax Examination Changes and Consent to Assessment & Collection, or Form 5385, Excise Tax Examination Changes, for unpaid claims that are disallowed in full or in part:

Form 3363 is used to secure an agreement when an unpaid claim is disallowed in full or partially allowed and no penalties or other adjustments to the tax liability are necessary. Form 3363 does not waive the taxpayer’s right to file suit on the disallowance.

In an agreed case where an unpaid claim is being disallowed in full or partially allowed and the excessive claims penalty is proposed, Form 5384 must be secured to indicate agreement.

In an agreed case where an unpaid claim is being disallowed in full or partially allowed with additional adjustments to the tax liability, both Form 3363 and Form 2504-E, Agreement to Assessment and Collection of Additional Tax and Acceptance of Overassessment, must be secured to indicate agreement.

Form 2297 is signed when the taxpayer waives the requirement for the IRS to issue a certified notice of claim disallowance (Letter 905, Final Partial Claim Disallowance Letter, or Letter 906, Final Full Claim Disallowance Letter). A signed Form 2297 starts the two-year period for the taxpayer to file suit as allowed in IRC 6532.

If Form 2297 is not secured, and the case is not being closed to Appeals, the case is closed to Tech Services for issuance of Letter 905 or 906.

Form 3363 and Form 2297 are not required if the unpaid claim is surveyed or allowed in full.

A case involving an unpaid claim is considered agreed, if the claim is allowed in full, or if agreement is secured on Form 3363.

Complete Form 5384 or Form 5385 by following regular report writing procedures in IRM Exhibit 4.24.20-1, Instructions for Completing Form 5384 and Form 5385, for the items listed below:

The subsections below cover report writing procedures specific to unpaid claims.

Generally, report writing procedures for excepted agreed cases involving claims are similar to excepted cases not involving claims.

In an excepted agreed case, the taxpayer agrees to proposed adjustments, but the examination results are subject to review, additional processing, or some other condition communicated to the taxpayer. Refer to IRM 4.10.8.5, Excepted Agreed Cases, for additional information on cases requiring excepted agreed reports.

A partially agreed case is an excepted agreed case that contains at least one agreed issue and one unagreed issue.

In partially agreed cases, partial overassessments may only be allowed if the case meets the criteria in IRM 4.10.8.6.1, Partial Overassessments.

If the case meets the criteria in IRM 4.10.8.6.1 and the group manager approves of the partial overassessment, the examiner must prepare two sets of examination reports to issue to the taxpayer.

The first set must contain a Form 5385 and Form 3363 that reflects all unagreed issues.

The second set must contain a Form 5385 and Form 3363 that reflects all issues that the taxpayer has indicated agreement.

Complete Form 5385 using the procedures found in IRM 4.24.8.10.1 for unpaid claims disallowed in full or in part.

The examiner will issue Letter 569-X for partially agreed cases. Refer to Exhibit 4.24.8-2 for guidance on the preparation and issuance of unpaid claim letters. The 30-day letter package for partially agreed cases must include the following:

If applicable, secure agreement on Form 2504-E for non-claim issues to which the taxpayer agrees.

If a partial agreement is not secured, continue with unagreed procedures for all proposed adjustments. Refer to IRM 4.24.8.12.

If partial agreement is secured, the agreed examination report must first be processed using partial overassessment procedures.

Fax the partial overassessment package to CCP for assessment. The subject line of the EFax must state "Partial Overassessment Request." The package must consist of the following:

Form 3198 must be completed with following information:

Form 5344 must be completed for each period. The following procedures apply to the Form 5344 completion:

CCP will:

When the case is ready for final closure, examiners must follow closing procedures for partially agreed cases in IRM 4.24.8.11.1 and IRM 4.24.8.11.2.

Generally, report writing procedures for unagreed cases involving claims are similar to unagreed cases not involving claims.

IRM 4.24.10, Appeals Referral Procedures, provides specific guidance and case routing procedures for unagreed excise cases referred to Appeals.

In an unagreed case, the examiner will issue Letter 569-X. Refer to Exhibit 4.24.8-2 for guidance on the preparation and issuance of unpaid claim letters. The following are issued with the 30-day letter package:

Complete Form 5385 by following the procedures for unpaid claims disallowed in full or partially allowed in IRM 4.24.8.10.1.

Form 3363 is issued in conjunction with Form 5385. This form is signed by the taxpayer upon agreement of an unpaid claim after the 30-day package is issued.

If a taxpayer requests an Appeals conference, the examiner must determine if the case meets the requirements for an Appeals referral in IRM 4.24.10.2, Prerequisites for an Appeals Referral.

If the excessive claims penalty is proposed on an unagreed unpaid claim and less than 365 days, but more than 60 days, are remaining on the penalty SOL when the case is expected to be received in Appeals, the penalty must be processed using partial assessment procedures. If the penalty SOL has 60 days or less remaining on the SOL, the penalty must be processed using quick assessment procedures. Refer to IRM 4.24.21.5.7, Partial Assessments and Quick Assessments, for guidance on processing partial and quick assessments.

If the unagreed case is eligible for Appeals consideration, then closing procedures in IRM 4.24.10.7, Case Routing Procedures for Unagreed Excise Tax Examination Cases to Appeals, and IRM 4.24.10.8, Transferring an Excise Tax Examination Case to Appeals, must be followed.

If the unagreed case is not eligible for Appeals consideration, then the case is closed to CCP.

Paid claims selected for field examination are controlled with AIMS Source Code 31. Paid claims follow regular examination procedures found in IRM 4.24.21, Case Closings, with the exceptions addressed in each of the sections below.

Examinations are normally established on MFT 03 with the tax period that corresponds to the claim period or by using substitute for return procedures. Refer to IRM 4.24.8.6.1, Master File Control Procedures for Form 8849 Claims, for the control procedures.

Paid claims may be processed under various tax modules. Examiners may need to review all tax modules to locate the claim.

Examination adjustments for paid claims under IRC 6416(a)(4), IRC 6420, IRC 6421, or IRC 6427 are assessed under IRC 6206 and collected as tax imposed by IRC 4041 or IRC 4081. The period for assessing any such portion, and for assessing any such penalty, shall be three years from the last day prescribed for filing the claim under IRC 6416(a)(4), IRC 6420, IRC 6421, or IRC 6427.

The examiner cannot recover an erroneously paid claim filed under IRC 4081(e), IRC 6402, IRC 6415, or IRC 6416, except for gasoline ultimate vendor claims on sales after December 31, 2005, under IRC 6416(a)(4). The recovery of an erroneous claim must be made by a civil action in the name of the United States under IRC 7405 and IRC 6532(b). The suit must begin within two years after the making of such refund. If the refund was induced by fraud or misrepresentation of a material fact, the suit must be brought within five years of the claim. Refer to IRM 4.24.8.22, Erroneous Refunds - Suits to Recover, for additional guidance.

For paid claims that are surveyed after assignment follow the regular closing procedures for surveyed returns in IRM 4.24.21.5.1, Closing Procedures for Surveyed Returns, and IRM 4.24.21.4.1, Paper Closing/Electronic Issue Management System (IMS) Closing. In addition to the regular closing procedures, the procedures in this section must also be followed when surveying a paid claim.

Activity code 615 is used for examination survey time.

On Form 3198, in the "Special Features" section, check the "Other Instructions" box and include the statement "Survey After Assignment - Paid Claim."

Form 5344 is not used when closing paid claims that are surveyed after assignment.

Examiners must check INOLES to determine if the filing requirement indicator is turned on. If the filing indicator is turned on and the taxpayer is not liable for excise tax for the period selected for examination and will not be liable for any subsequent period for the MFT selected for examination, the examiner must prepare Form 3177, Notice of Action for Entry on Master File, to turn filing requirement indicator off. The examiner must enter "591" in the TRC column and "Closing Code 75" in the "Other" space provided. The examiner must fax Form 3177 to CCP at (855) 386-5123.

Additional survey procedures are found at IRM 4.10.2.5, Decision to Survey a Return.

Examinations of paid claims result in one of the following dispositions:

When unpaid claim examination involves more than one period and has different examination results (e.g., one period closed allowed in full and one period closed fully or partially disallowed), follow report writing procedures specific to each type of closure for each period.

The assertion or non-assertion of the excessive claims penalty under IRC 6675, must be addressed in the case file if a paid fuel claim examination results in an adjustment. Refer to IRM 20.1.11.5, IRC 6675 Excessive Claims with Respect to the Use of Certain Fuels, and IRM 4.24.8.17 for additional guidance.

Generally, paid fuel claims filed on Form 720, Schedule C, or Form 8849 fall under the one-claim rule where an increase at the examination level is barred by statute. However, there are certain instances where a paid claim may be increased and processed at the examination level. Refer to IRM 4.24.8.16 for situations where a previously paid claim may be increased during an examination.

Annual Form 8849 claims may be filed by the United States, state and local governments, and certain organizations exempt from income tax under IRC 501(a), (other than organizations that are required to file Form 990-T, Exempt Organization Business Income Tax Return, for the taxable year). For these claimants, the annual claim must be filed within three years of the claimant’s taxable year end. Refer to IRM 4.24.8.16 for guidance for report writing and case processing procedures for these types of claims.

Prior to closing an examination, examiners must check AMDISA to identify claims that are in transit from CSTO.

Complete Form 5384 or Form 5385 by following regular report writing procedures in IRM Exhibit 4.24.20-1, Instructions for Completing Form 5384 and Form 5385, for the items listed below:

The subsections below address report writing procedures specific to paid claims.

Generally, a previously paid claim cannot be increased because in most cases the time for filing the claim has passed. Examples include requests for refunds under IRC 6416(a) or payments under IRC 6421 or IRC 6427. Despite this, there are situations where a previously paid claim may be increased for claims under IRC 6426, IRC 4051(d), and annual claims for persons not required to file an income tax return.

This subsection provides report writing procedures when the examination results in an increase to a previously paid claim.

Complete Form 5348, to add the claim amount and update the Source Code to 30 in AIMS/ERCS.

In addition to any criminal penalty provided by law, IRC 6675 imposes a penalty if a claim is made for an excessive amount under the following IRC sections:

The term excessive amount means the amount in which the amount claimed under IRC 6416(a)(4), IRC 6420, IRC 6421, or IRC 6427 for any period exceeds the amount allowable.

The penalty is two times the excessive amount or $10, whichever is greater.

Under IRC 6206, the excessive amount, including any civil penalty imposed by IRC 6675, may be assessed and collected as if it were a tax imposed by IRC 4081 or IRC 4041.

The period for assessing the excessive amount and penalty shall be three years from the last day prescribed for filing the claim. The period for this assessment cannot be extended.

The excessive claims penalty applies to paid and unpaid claims under the code sections listed above. It does not apply to excessive claims filed on an income tax return, e.g., Form 4136, Form 8864, or Form 6478. See Rev. Rul. 79-298.

The excessive claims penalty, under IRC 6675, must be considered and commented on in every excise tax claim case file in which a portion of the claim is deemed excessive. The penalty should be assessed unless the claimant can show that the excessive claim amount was due to reasonable cause.

IRC 4081(e) claims relate to taxable fuel as defined under IRC 4083, on which tax was imposed twice on the same fuel under IRC 4081. This does not apply where the taxpayer erroneously paid fuel tax where no second tax is imposed.

The claimant must provide, for each claim, a copy of the First Taxpayer’s Report that relates to the fuel. If the fuel was bought from someone other than the first taxpayer, a copy of the Statement of Subsequent Seller that the claimant received with respect to the fuel must also be provided. Refer to the instructions for Form 8849, Schedule 5, Section 4081(e) Claims, IRC 4081(e), and Treas. Reg. 48.4081-7, for more information.

Claims received, which do not include the attachments required by the regulations will be given "no consideration" and returned to the taxpayer for perfection by CSTO.

Claims selected for examination will be assigned to the appropriate Excise Tax Examination group.

Claims approved by the Excise Tax Examination group are to be annotated "Accepted" and returned to CCP via Form 3210.

Paid IRC 4081(e) claims cannot be assessed under IRC 6206. Erroneous IRC 4081(e) claims must be recovered by a civil action brought in the name of the United States under IRC 7405. Refer to IRM 21.4.5.5.5, Overview of Category D Erroneous Refunds, for more information.

Unpaid IRC 4081(e) claims are generally controlled on MFT 03. Follow the unpaid claims report writing and case processing procedures as discussed in IRM 4.24.8.10.

Unpaid IRC 4081(e) claims are non-interest bearing and require additional documentation on Form 3198. Refer to IRM 4.24.8.25 for guidance on completing Form 3198 to restrict interest on IRC 4081(e) claims.

If Form 720 for that tax period is being examined concurrently, any adjustments as a result of that examination will be reflected on the Form 5384 and Form 5385, in addition to the unpaid IRC 4081(e) claim examination results.

Generally, taxpayers will be required to pay an assessment before a claim for abatement may be filed. According to IRM 1.2.1.5.31, Policy Statement 4-103, Abatement claims considered only in exceptional circumstances, claims for abatement will be considered only where the taxpayer can establish a valid reason warranting consideration of such a claim. If it is determined that a claim for abatement merits consideration, the taxpayer will be afforded the same opportunities for Appeals Office consideration as they would for a claim for refund.

If a jeopardy assessment is involved, a taxpayer's written request for administrative review of the decision will be considered immediately. The Appeals Office will provide administrative review. Action to abate all or a part of the tax assessed will be initiated by the function responsible for the final determination, in accordance with IRM 1.2.1.5.27 Policy Statement 4-88, Jeopardy assessments to be used sparingly and assessment to be reasonable in amount.

Claims for abatement, which do not merit examination will be issued a Letter 924, No Consideration Letter on Abatement Claim - Excise and Employment Taxes. The letter provides an explanation to the taxpayer as to the reason the abatement request was not considered. There are no appeal rights to these requests; however, a claim for refund may be filed after payment of the assessed tax.

Letter 916-C, Claim Incomplete for Processing; No Consideration, is used for no consideration or rejected claims. Generally, Letter 916-C, is issued by CSTO. Examples of situations for which a Letter 916-C should be issued include when the claim was:

If a claim is one of the types listed above, CSTO personnel will generally advise the taxpayer that no consideration can be given to the claim.

If a claimant requests the withdrawal of a claim, a certified notice of a claim disallowance will be issued. Other actions may also need to be taken (i.e., document action, update Master File).

All claims on cases previously closed by Appeals on Form 2504 or Form 2504-AD will be processed as provided below. If there is a question about the action to be taken, the Appeals office that previously considered the case should be consulted.

If the Appeals officer settled and closed the case using Form 2504-AD, agreement form, do not reopen the case. s.

If the Appeals officer closed the case using a Form 2504 or Form 2504-E agreement and the claim does not relate to an issue considered during the appeals process, the claim may be processed as though Appeals had not previously acted on the case. However, if the claim relates to an issue considered during the appeals process, retrieve the administrative file and Appeals’ closing documents. If the case file does not contain the Appeals Case Memo or Case Activity Record, contact the Appeals Account Resolution (AARS) Team to determine if the missing documents were retained on Appeals Centralized Database System. For more information visit Independent Office of Appeals AARS.

Refer to IRM 21.4.5, Erroneous Refunds, for instructions about the recovery of erroneous refunds.

Written advice should be requested from local Counsel before action is taken to recover an erroneous refund.

The issuance of a statutory notice of claim disallowance, or the receipt of a signed Form 2297, Waiver of Statutory Notification of Claim Disallowance, starts the two-year period in which the taxpayer can file suit in court for payment of the disallowed claim. IRC 6532 allows for the two-year period.

Under IRC 6532(a)(2), the period of limitations for filing suit on a disallowed claim may be extended. Carefully consider the need to extend the time for filing suit. The following are examples of satisfactory reasons for extending the time for filing suit under IRC 6532:

The taxpayer and the IRS may extend the time for filing suit by executing Form 907 as long as the parties execute Form 907 before the two-year period expires. The requested new expiration date should not be a date more than two years from the expiration of the statute.

Additional Form 907s may be executed by the IRS and the taxpayer to extend the period to file a refund suit under IRC 6532(a)(2) as long as each extension is executed before the tax period previously agreed upon has expired.

Two original Form 907s must be signed by the taxpayer or by an attorney, agent, trustee or other fiduciary acting on the taxpayer's behalf pursuant to Form 2848, Power of Attorney.

The examiner must forward the taxpayer’s signed Form 907s to the manager. The manager will contact their servicing Tech Services group for assistance in the execution of Form 907.

After both agreements are signed, Letter 929-A, Transmittal for Signed Form 907, is used to transmit an original signed copy of Form 907 to the taxpayer. Refer to IRM 25.6.22.5.12, Examiner's Responsibility after Receipt of Consent, for additional guidance.

Reconsideration of a claim previously disallowed in full or in part may be granted upon submission of additional information. The request must be received prior to the expiration of the SOL for bringing suit and the information submitted must warrant consideration. If the additional facts submitted warrant reopening of the claim, the claim will be reopened, and appropriate adjustments will be made.

An agreement to extend the SOL under IRC 6532(a)(2) should be considered for reconsideration requests forwarded to a field group. Refer to IRM 4.24.8.23 for more information.

IRM 1.2.1.5.22, Policy Statement 4-76, Disallowed claims may be reconsidered on the merits, states that claims previously disallowed by Examination may be reconsidered in appropriate cases upon application of the claimant, unless insufficient time remains within the statutory period for filing suit to permit reconsideration. If it is determined that a reconsideration should be disallowed, in full or in part, the claimant will be granted the same opportunities for consideration by Appeals as would be appropriate in the case of an original claim being initially considered.

A reconsideration must be completed within the two-year period for bringing suit (including extensions). IRC 6514(a) states that a refund of any portion of any internal revenue tax (or any interest, additional amount, addition to the tax, or assessable penalty) shall be considered erroneous and a credit of any such portion shall be considered void if the refund or credit was made after the time for filing suit has expired (unless the taxpayer has timely filed suit). See IRM 4.10.11.2.16.1.1, IRC 6532 Two-Year Period to File Refund Suit – Consideration and Examiner’s Responsibilities, for additional information on the IRC 6532 two-year period to file refund suit.

Letter 917, Reply to Taxpayers Request for Reconsideration of Claim, (with applicable box checked) will be issued to notify the taxpayer that no action can be taken on their request for claim reconsideration if:

When a Letter 917 is issued, a copy will be placed in the case file and the case closed to CCP with no changes to the previous determination. This letter is not considered a certified notice of claim disallowance.

There is no provision in the IRC or Regulations requiring the issuance of a certified notice of denial or claim disallowance of a request for reconsideration. Therefore, requests for reconsideration of a disallowed claim will not be treated as an original claim.

Examiner responses or reports on requests for reconsideration of disallowed claims must not contain any language that could lead the claimant to believe the claimant will be issued a certified notice of claim disallowance.

If the request for reconsideration concerns a claim previously considered and disallowed in full or in part by Appeals, the claim will be associated with the original case file and forwarded promptly to Appeals as long as there is at least six months on the SOL for instituting suit. If the SOL for instituting suit on the disallowed claim will expire in less than six months, the case will not be referred to Appeals unless that office agrees to accept jurisdiction or a Form 907 is secured. Refer to IRM 4.24.8.23 for more detailed guidance.

If it is determined that a request for reconsideration should be disallowed, in full or in part, the claimant will have the same Appeal rights as a disallowed claim, but only with respect to the additional information provided.

If a request for reconsideration is based on a claim that was originally issued a "no consideration," Letter 917 (with applicable box checked) should be issued to the claimant denying the request and referring to the previous "no consideration" letter. In this situation, the claimant will not have the right of appeal.

If disposition of a reconsideration request is contingent upon a pending court decision, IRC 6532(a)(2) provides the taxpayer the opportunity to extend the time to bring suit by signing Form 907. Refer to IRM 4.24.8.23 for additional information.

Interest is paid on an overassessment or overpayment under IRC 6611 for the time the government has the taxpayer’s money. In most instances, the period of time for which interest is paid to the taxpayer begins on the due date of the return. Interest may be limited to specific time periods or rates, or it may be statutorily prohibited, which gives rise to the term "restricted interest." Restricted interest is subject to the same variables (time, rate, amount) as normal interest calculated by the IRS.

The primary difference between normal and restricted interest is the IRS computer systems may NOT be able to identify all the conditions involved in a restricted interest situation. When IRS computer systems are incapable of calculating interest, it must be manually computed and input.

The IRC contains provisions by which interest is either restricted or prohibited. Refer to IRM Exhibit 20.2.1-1, Provisions Restricting Interest, for a list of provisions restricting and prohibiting interest on excise taxes.

Claims by registered ultimate vendors or registered credit card issuers of undyed diesel fuel, undyed kerosene, gasoline, aviation gasoline, and kerosene used in aviation are paid with interest if the refund is not issued within 45 days of receipt (20 days for electronic claims). Master File does not recognize the special interest rules that apply when electronic claims are processed between 20 and 45 days of receipt. Therefore, a manual computation of interest is required.

Claims for the biodiesel mixture credit, renewable diesel mixture credit, sustainable aviation fuel credit, and the alternative fuel credit are paid with interest, if the refund is not issued within 45 days of receipt (20 days for electronic claims).

Examiners must ensure case processing documents are completed correctly to ensure interest is not paid, or it is paid only for specific time periods. If the claim is non-interest bearing, or if interest is restricted, Form 3198 must be completed as follows:

If the unpaid claim is being examined on MFT 40 and it is non-interest bearing, or if interest is restricted, additional documentation is required on Form 5344 for claims that are partially allowed or allowed in full. The applicable reason code below must be entered in Item 51:

Additional interest rules applicable to excise taxes can be found in IRM 20.2.10.4, Excise Taxes.

There are events that occur after the tax has been paid that are deemed to be overpayments by the taxpayer; that is, the person that paid the tax to the government.

There are also events that occur after tax has been paid that are deemed to be overpayments by someone other than the person that paid the tax to the government.

This subsection discusses certain claims for refund that are overpayments of tax by the taxpayer and overpayments of tax by someone other than the person that paid the tax to the government.