The Excess Collection File (XSF) is a separate file within IDRS containing non-Revenue Receipts which cannot be identified or legally applied.

Each record within the file contains the XS control number, amount of credit, type of credit, received date and other identifying information, if known.

The IDRS XSF reflects contents of Accounts 6800 and Account 9999 less than seven years and more than one year after the IRS-received date except in true statute cases, where it may be under one year.

The file is also a rapid research tool used for payment tracer purposes by all areas of the IRS.

The instructions contained herein are for processing non-revenue receipt credits which, for various reasons, cannot be applied to a taxpayer's account. Unless otherwise specified, the term:

The IRS mission is to provide America’s taxpayers top quality service by helping them understand and meet their tax responsibilities and by applying the tax law with integrity and fairness to all.

Standards for Internal Control in the Federal Government, GAO-14-704G sets the standards for an effective internal control system for federal agencies. Internal control is a process used by management to help achieve its objective. Management officials are responsible for:

Internal Revenue Code IRC 6501, Limitations on assessment and collection.

IRC 6511, Limitations on Credit or Refund.

All employees must be aware of IDRS notice issuance criteria and the input of Command Code (CC) STAUP on a module if closing action cannot be accomplished before the next notice is issued.

The number of cycles must be for a sufficient period to ensure that balance due notices will not be issued prematurely. CC STAUP will be automatically released after nine cycles without an open control base on the tax module. It will be necessary to extend the previously input STAUP if the transfer procedure is lengthy.

This IRM is updated and published annually after review and concurrence by impacted stakeholders according to the clearance process established in IRM 1.11.9, Internal Management Documents, Clearing and Approving Internal Management Documents (IMDs).

Functional areas are responsible for reviewing the information in this IRM annually to ensure accuracy, consistency, and to promote effective program administration.

Program Reviews are mission critical to the health of accounting and deposit programs to ensure integrity of the general ledger accounts and accuracy of the financial statements. It is essential that each function conducts its operations with an emphasis on mitigating risks, identifying best practices, and adhering to IRM requirements. An objective assessment of program compliance, including all applicable procedures and guidelines, is necessary to ensure that adequate internal controls are in place.

Program Effectiveness: The program effectiveness includes conducting reviews and analysis to detect and identify material or significant deficiencies that could adversely impact IRS audits and/or financial statements. These reviews are necessary to ensure Submission Processing is conducting business as prescribed in the governing IRM's and are designed to identify potential internal control deficiencies that may impair the integrity of the general ledger accounts and/or financial reporting.

Program Reviews: A program review ensures actions are in accordance with IRM procedures. SP HQ Accounting and Deposit Section conducts program reviews to verify compliance with IRM requirements, address TIGTA/GAO findings, identify risks to internal controls, address error trends, and training needs, as needed. In addition, the reviews ensure IRM procedures are applicable, adequate, and adhere to Department of the Treasury and/or IRS guidelines.

Corrective Action Plan: The Corrective Action Plan is a plan of action that is developed to resolve the condition that resulted in noncompliance with IRM requirements. In addition, an effective Corrective Action Plan identifies the root cause of problems to minimize or eliminate their recurrence. Corrective actions are developed, implemented, managed, and monitored to promote program improvement.

Vulnerability Assessments: A vulnerability assessment identifies, quantifies, and prioritizes the vulnerabilities of government programs and assets including systems/technology, property, funds, and employees. Vulnerability assessments may be conducted on any business process to assess the risks of business failure and/or weakness caused by internal or external factors.

Valid CC XSADD cases must be added to the XSF within five workdays of receipt in the Excess Collections function of Form 8758, Excess Collections File Addition. This procedure includes any action necessary to remove the credit from its previous location. See IRM 3.17.220.2.4

All status code "OPEN" cases must be thoroughly researched to the same standard outlined for Unidentified Remittance cases in IRM 3.17.10, Dishonored Check File (DCF) and Unidentified Remittance File (URF). Substantial efforts to attain this research standard must be initiated within two workdays of their addition to the XSF. See IRM 3.17.220.2.8.

Valid CC XSAPL cases must be applied from the XSF within one workday of receipt in the Excess Collections function of Form 8765, IDRS Control File Credit Application.

The following manual sections are frequently used in conjunction with this IRM or may be used as resources:

Other manuals which are helpful in program operations will be mentioned throughout the text.

Taxpayer Advocate Service (TAS) has service level agreements (SLAs) with Taxpayer Services(TS), Small Business/Self Employed (SB/SE), Large Business and International (LB&I), Tax Exempt/Government Entities (TE/GE), Criminal Investigation (CI), and Appeals, to ensure that standards are established within the business operating divisions/functions to process TAS casework when the authority to complete transactions rests with the division/function.

The SLAs are located on the TAS intranet homepage under the heading Service Level Agreements.). See also IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria, if additional information is required.

Every taxpayer has a set of fundamental rights known as the Taxpayer Bill of Rights.

The following is a glossary of terms:

As of January 1, 2008, all credits and payments were assigned a Trace ID Number for tracking purposes. The Custodial Detail Data Base (CDDB) was established with the EFTPS payments January 1, 2006. CDDB will track all individual transactions against the Deposit Ticket totals, which have been entered in the Redesign Revenue Accounting Control System (RRACS) General Ledger. The Trace ID Number shows all credits/payments to be identified and added to the CDDB.

The format for a Trace ID Number that is to be included in all Deposit Tickets (14 digits) and on all Payment Transaction records (20 digits) is:

Each payment added to the XSF with CC XSADD, will need the Trace ID associated with the payment on Master File. The Trace ID will be entered in Box 21 of Form 8758.

All Submission Processing Excess Collections (XSF) function employees must complete new hire or annual refresher training as applicable.

The below training course can be accessed in the Integrated Talent Management (ITM) system. ITM Learning replaced IRS’s learning management system, known as ELMS (Enterprise Learning Management System) in October 2019.

All training will be recorded in (ITM).

The originator of Form 8758 will conduct research to determine if the credit can be resolved prior to being added to the XSF file, regardless of the dollar amount of the item. Both large and small cases are to receive equal attention, but large-dollar cases will be worked first.

Statute barred credits will be received from other IRS areas to be transferred to the XSF. The application of the credit will be barred because the taxpayer:

Non-barred credits will come from various IRS areas when those areas cannot identify where the credit will be applied after exhausting all research possibilities.

Research will determine which Status Code to use when adding the credit to the XSF: "FROZ" , "IDEN" , and "OPEN" . See IRM 3.17.220.2.3 for further explanation.

When received for addition to the XSF, the following cases are not researched by XSF for resolution. See IRM 3.17.220.2.8 for further explanation. XSF will review Form 8758 entries, availability of credit, correct entity, Statute Expiration dates and if applicable, attached or notated documentation:

If further information is needed from the taxpayer to resolve the credit, in addition to any letters that may have been issued, a telephone contact with the taxpayer to determine proper disposition of payment or credit must be made or attempted, prior to transferring the credit to XSF.

Internet research will be used by all Business Operating Divisions (BOD) to attempt to locate taxpayers. Several sites (Accurint, Google, SEC, ZABASearch, EDGAR, VIVISIMO and SWITCHBOARD) can be used to locate a phone number or address if one cannot be obtained through IDRS or Directory Assistance.

Whenever a taxpayer contact via telephone or correspondence is unsuccessful, a transaction code (TC) 971 action code (AC) 296 must be added to the module (except on barred credits) to indicate that the account has been thoroughly researched for cross reference (Xref) taxpayer identification number (TIN)] and any other account module) prior to the transfer to the XSF. TC 971 AC 296 is a final audit trail that indicates that all available research sources have been used.

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Credits will be automatically added to the XSF when they drop from the URF.

Figure 3.17.220-2

Pictured is an example of a completed Form 4830, IDRS Multi-Purpose Posting Document. This form is being used to transfer a credit in the URF to XSF. It shows the taxpayer's entity information, tax data and the debit and credit amounts.

Please click here for the text description of the image.

As of January 1, 2000, statute expired (STEX) IMF credits (TC 806, Credit for Withholding Taxes and Excess Federal Insurance Contributions Act (FICA), and/or TC 768, Earned Income Tax Credit, only) are systemically transferred from the Individual Master File to the XSF.

Receive the remaining credits to create the XSF from other functional areas of the campus on request Form 8758, Excess Collections File Addition. See Figure 3.17.220-3.

IRM deviations must be submitted in writing following instructions from IRM 1.11.2.2, IRM Standards, and elevated through appropriate channels for executive approval.

For bankruptcy cases only, a hard copy of the TXMODA or IMFOLT/BMFOLT screen print showing the availability in the Masterfile and Service Center balance and the payment and payment date of the transaction being transferred to the XSF must be attached to Form 8758. The print can be no more than seven days prior to the receipt date in the XSF Unit or the case will be rejected to the originator.

For all Non-Master File cases, an ANMF transcript must be attached to Form 8758.

In all other cases, the date IMFOL or BMFOL was researched must be noted on Form 8758.

Documentation must also be noted on or attached to each Form 8758 indicating the research performed prior to the transfer request.

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If the statute is still open and Integrity & Verification Operations (IVO), past or present involvement on the SSN, IRSN or x-ref SSN (IDRS controls of 065NNNNNNN, or 148NNNNNNN, TC 971 AC 134/199/617, Letter 4464C, Questionable Refund 3rd Party Notification Letter, CP 05/05A letter sent) is on the specific tax module indicated on Form 8758 or on CC ENMOD, return the Form 8758 to its originator immediately.

See Figure 3.17.220-5 for an example of a Form 8758 which will be returned to its originator.

Figure 3.17.220-5

Pictured is an example of a Form 8758 that will be rejected and returned to the originator. The IRS-received date is missing.

Please click here for the text description of the image.

The credit will be added to the XSF with source code "ST" in status "FROZ" regardless of where Form 8758 originated if initial analysis upon receipt of Form 8758 within the XSF function reveals that the credit both:

Before adding the Form 8758 to the file, analysis of expiration dates and the Status Code must be made. If analysis reveals that the credit does not meet the legal criteria for expiration of either statute (RSED or CSED) and this is the reason indicated on Form 8758, return the Form 8758 to the originator.

If the credit meets the legal criteria for expiration of either statute but needs further analysis or research, it will be added to the XSF with source code "ST" in status "OPEN," regardless of where Form 8758 originated.

Credits will be added to IDEN status when:

If further research is needed by XSF function to resolve the credit, add to "OPEN" status in cases where:

Changes made to Form 8758 during initial analysis within the XSF function will be made in red and initialed by the technician making the change determination.

As of April 2000, cases are no longer received from Accounts Management (AM) and Collection when taxpayers do not respond to requests for returns when only a payment/credit is present on the taxpayer's account unless the statute has expired for either assessment or credit/refund. This includes AM-12 and AM-18 transcripts only.

The FTD PATAX system, was decommissioned January 1, 2011. FTD payments are required to be made electronically and processed through EFTPS. Due to the decommissioning of the system, previously submitted FTD remittance may require adjustment procedures due to bank or taxpayer error. Beginning June 13, 2011, overpayment adjustments may require a manual refund from the XSF back to the financial institution making the FTD.

Requests for refunds will be received from the Hardcore Payment Tracer Function (HPTF) who will monitor all actions and notify the taxpayer if necessary. See IRM 3.17.5, Hardcore Payment Tracers. If the payment is over twelve months old, HPTF will prepare Form 8758, with documentation, to move the overpayment to XSF to refund the overpayment to the financial institution.

Verify all documentation is complete. If not, reject back to originator.

Use CC XSREF to issue a manual refund from the XSF to the Financial Institution. See IRM 3.17.220.2.11, Manually Refunding from the XSF.

Do not issue taxpayer an explanatory letter.

Notify the HPTF function of the completed action.

Cases added to the XSF must have an IRS-received date earlier than one calendar year before the current date. The only items allowed on the file with an IRS-received date less than one year old must be document codes 48, 58 or 65 or true statute credits.

After ensuring that credits being transferred to the XSF are still available, add cases received on correctly prepared Form 8758 to the XSF on IDRS entering the appropriate CC XSADD. See Exhibit 3.17.220-6 for CC XSADDM.

Exhibit 3.17.220-6 shows an example of a completed CC XSADD format for the Form 8758 shown in Figure 3.17.220-3. The completed pending transaction will be checked immediately using CC TXMODA. The cross-reference MFT and tax period filled with 9s is no longer used to indicate that the credit went to the XSF (effective 1-1-98). The system will automatically generate and post an Excess Collections Indicator of "1" to the module from which the credit is being moved.

Use CC XSADD "R" to add credits from sources other than IMF and BMF to the XSF. CC XSADDR will generate the CC XSADD format. See Exhibit 3.17.220-7. for CC XSADDR.

A worksheet for recording actions taken on the case must be maintained for each XSF record with a source code other than "UR." If minimal or no further research is required, the bottom of the incoming Form 8758 may suffice. See Figure 3.17.220-6 for an example of Form 8758.

For more extensive research, use Form 8766, Excess Collections File (XSF) Worksheet. See Figure 3.17.220-6. Attach Form 8766 to the back of Form 8758 to create the working case file. For additional notes, use the back of Form 8766 or add blank paper, as needed. Documentation will be specific as to the research conducted and the results so that succeeding employees will know what has been done.

Figure 3.17.220-6

Pictured is an example of a completed Form 8766. Form 8766 is used to record additional history information when all space has been used for recording on Form 8758.

Please click here for the text description of the image.

As soon as a credit, other than from an IMF or BMF account module, is added to the XSF with CC XSADD "R" , the credit must be moved out of the account, other than 6800 (Excess Collection) or 9999 (Revenue Clearance), in which it is located. Failure to do this will result in a duplicate credit and accounting imbalance.

Verify Form 8758 balance against the XSADD "R" listing (URF03–XSF 6800 or 9999 Add Register) prior to sending to the RRACS Function. The RRACS Function will complete all journalization procedures to ensure losing accounts are debited.

Additions to the XSF which have been entered using CC XSADD "M" will have the debit portion of the transaction subject to Unpostable Code (UPC) 189 reason code 4. Any debit exceeding the credit balance of the master file account from which the credit came to the XSF will then be checked against credits posted to the master file account. Any debit which does not exactly match the dollar amount of a credit previously posted to the master file account will remain unpostable and be returned to the XSF function for correction. Such unpostables will be voided from the XSF using CC XSOUT "V" and correctly reinput or rejected to their originator within two workdays of their receipt in the XSF function.

As soon as a record has been added to the XSF, it is available for research at any IDRS terminal serviced by the campus.

Any function which establishes control bases on its cases, and which requests a credit to be added to the XSF may also consult CC XSINQ to determine appropriate closure of its control base.

CC XSINQ researches the XSF by amount of credit, by name control or by DLN. At least one of these data elements must be input. The search is narrowed by using as many of these pieces of information as possible. If the DLN of the credit being searched is not known, using the area office number reduces the volume of matches presented to the researcher from campus-wide to those of the designated area. See Exhibit 3.17.220-8 for examples of CC XSINQ.

To display a particular record, place an asterisk in column 1 next to the chosen record. Transmit after the name control and DLN. When researching by credit amount, other records with the same money amount may be researched without reinputting the entire CC format. A pound sign (#) will appear to the left of the records on which research has been performed.

The IDRS user may go from CC TXMOD to CC XSINQ and back to CC TXMOD without retyping the TIN, tax period and MFT.

Research will be conducted on items by the XSF function if the Status Code is OPEN to determine if the credit can be resolved, regardless of the dollar amount of the item. Both large and small cases are to receive equal attention, but large-dollar cases will be worked first.

As stated in IRM 3.17.220.1.6, all CC XSADD cases must be thoroughly researched to the standard outlined for Unidentified Remittance cases in IRM 3.17.10, Dishonored Check File (DCF) and Unidentified Remittance File (URF). Within two workdays of their addition to the XSF, the XSF function will attain this standard by identifying the source of the credit, any necessary follow up action needed and use any applicable command codes to resolve the case. See IRM 3.17.220.2.1 for exceptions.

The extent of research performed within two workdays on these credits is outlined below.

Review documentation for cases which can be closed without further research. The originator of the Form 8758 may have missed something which would allow immediate application of the credit.

Check for credits that can be identified as payment for agencies other than the IRS. See IRM 3.17.220.2.14 for further instructions.

Research all remaining XSADD credits on IDRS using all available CCs. IDRS is the place to begin your search for the matching debits. CCs which may be helpful are:

While working assigned cases, SP employees may come across some that are blocked on IDRS and can be identified by an IDRS security violation message, "Unauthorized Access to This Account". Forward the case to your manager. Managers will notify the local Planning & Analysis Staff who will scan the case and send encrypted information to the ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ mailbox to request access to the account. Managers will retain the original case in a file awaiting access (can take up to 5 business days). Once notified access has been granted, the case can be processed following applicable procedures.

Mail appropriate correspondex letter or make telephone contact with the taxpayer for additional information within 45 days of its addition to the XSF for "OPEN" status cases when thorough research has not revealed where the credit will be applied. Before sending a letter to the taxpayer, check CC CFINK for Power of Attorney. If present, a letter must also be sent to the representative. See IRM 2.3.31, Command Codes CFINK, RPINK, KAFFQ and KAFTQ for CAF Inquiry.

When available, enclose a copy of the check. Make sure that the person you are sending the copy of the check to is the taxpayer that is authorized to receive this information.

Some of the most commonly used letters are listed below and may be used when corresponding with the taxpayer:

If research indicates that a TC 593 is present on the taxpayer's account and that there has been no update to the taxpayer's address since the TC 593 was input, do not initiate correspondence to the taxpayer.

Re-contacting a taxpayer for information about the credit may be advisable at the manager's discretion in special cases, e.g., as when research indicates that the taxpayer moved and not received the initial communication or if lack of clarity or legibility have been responsible for the failure of the first contact.

When telephone contact is deemed appropriate, avoid unauthorized disclosure of taxpayer information. Be very careful not to make an unauthorized disclosure. Refer to IRM 11.3.1, Introduction to Disclosure and, IRM 11.3.3 Disclosure to Designees and Practitioners. The Internal Revenue Service Restructuring and Reform Act of 1998 (IRS RRA 98), IRC 3705(a), provides identification requirements for all IRS employees working tax related matters. Information provided to communicate with a taxpayer is outlined in IRM 21.1.1.4, Communication Skills.

If research indicates the death of the taxpayer, refer to IRM 3.11.3.10.3, Documentary Evidence, for documentation needed to release the refund. In many cases, the person requesting the refund will have to complete Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer. See Figure 3.17.220-7.

Figure 3.17.220-7

Pictured is an example of a completed Form 1310 Statement of Person Claiming Refund Due a Deceased Taxpayer which is used when another person is claiming the refund due a deceased taxpayer.

Please click here for the text description of the image.

Payments received for the Affordable Care Act (ACA) Individual Shared Responsibility Penalty (SRP) will be applied to MFT 35 or the mirrored injured spouse account, MFT 65. Use the DPC received with the payment. If no DPC was designated, use DPC 36.

Payments received for the ACA Employer Shared Responsibility Payment (ESRP) will be applied to MFT 43 using TC 640, DPC 43 unless another DPC was designated.

Send Letter 407C when the taxpayer has returned a refund with no explanation. Refunds cannot be reissued after 7 years. See IRM 21.4.3.5.6, Resolving Returned Expired Refunds Limited Payability.

Payments received for Section 965 under 14103 of the Tax Cuts and Jobs Act, P.L. 115-97, enacted on December 22, 2017. Valid IMF MFTs are 30, 31, and 82. Valid BMF MFTs are 02, 05, 06, 34 and 83. All section 965 tax payments will be posted to the tax module where the assessment was posted. For example, if the Section 965 tax assessment is posted on the 201712 tax module, all Section 965 tax payments will be posted to the 201712 tax module, regardless of the year in which the payment is made based on the installment percentages in the subsequent years. Section 965 returns have a posted TC 766, credit reference number (CRN) 263. IMF returns are identified with return processing code (RPC) F, BMF with computer condition code (CCC) J. Taxpayers were instructed to send two checks, one for their regular tax and one for Section 965 tax. If taxpayer contact or research shows the payment was for Section 965, apply as a TC 670, secondary TC 570 with DPC 64.

Research or the realization that an error was made when adding a record to the XSF will require changing or debiting the record or voiding it completely from the XSF.

CC XSOUT and CC XSENT are available only to the Excess Collections function. However, any operational area must route such changes with supporting documentation to the Excess Collections function for action.

Use CC XSAPLR to generate CC XSAPL. Then overlay CC XSAPLR with CC XSOUT. See Exhibit 3.17.220-9 for examples of CC XSOUT.

CC XSENT is used to:

CC XSINQ history will contain a record of the data change. See Exhibit 3.17.220-10 for examples of CC XSENT.

Processing of Unpostables involving Excess Collections:

Use CC XSREFR/XSREF to affect a manual refund from the Excess Collections File. This type of application is restricted to the Excess Collections function and is to be used sparingly. The XSF record status must be "OPEN" or "IDEN."

Refunds will also be requested by personnel outside the Excess Collections function on Form 8765, IDRS Control File Credit Application, as described in IRM 3.17.220.2.12. (See Figure 3.17.220-8 for Form 8765.) A refund will be made based on the taxpayer's response. Examples of acceptable reasons for a refund are: payment sent in error; payment intended for another payee or agency; receipt of Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer; etc. When processing Form 1310, refer to IRM 3.17.220.2.9 Requesting Information From the Taxpayer. The reason for a specific refund will be stated in the "Remarks" section of the Form 8765.

If the taxpayer is to receive interest or needs penalties abated, apply the credit to the taxpayer's account rather than manually refunding from the XSF. See IRM 20.2, Interest, for instructions for computing interest on XSF refunds.

Always research thoroughly to be certain the taxpayer has no outstanding balances before manually refunding. Also, research for any freeze codes that limit refunding. Refer to IRM 21.5.6, Freeze Code.

Manual refunds generated from the XSF will be reviewed and the case history sheet signed by the XSF function manager or designee before application.

Before applying the refund from the XSF, use CC XSENT to add audit trail information to the permanent file, including the reason for the manual refund, case number or other pertinent information.

Refund an XSF credit by using CC XSREFR to request the generated CC XSREF format. See Exhibit 3.17.220-11 for CC XSREFR and CC XSREF.

When refunding a payment intended for another agency or payee, send an explanatory letter to the taxpayer containing an appropriate apology for processing the remittance in error. Special IDRS Letter 3064C may be used.

Credits are returned to the campuses for refund checks that have been issued to taxpayers but were not cashed within one year. These credits are referred to as limited payability credits. Limited payability credits for refund checks initiated from CC XSREF will be transferred to the XSF function for resolution.

All manual refund requests will require the use of Form 14031, Manual Refund Signature Form. See IRM 3.17.79.3.5.4, Processing Requirements for Unidentified/Excess Collections/Photocopy Fee Manual Refunds (Submission Processing Only).

Manual refunds will be subject to the Treasury Offset Program (TOP) per IRC 6402. See IRM 21.4.6. Refund Offset. If a taxpayer mistakenly, but intentionally makes a payment to the IRS, any excess payment would be an overpayment. An over-stamped check by the IRS is an example of a payment which is not subject to TOP offset.

A TOP offset bypass indicator (BPI) is assigned to all manual and systemic refunds issued to Bureau of the Fiscal Service (BFS) by the IRS. For XSF manual refunds, the BPI is limited to Yes (allow TOP offset) or No (do not allow the TOP offset).

Do not allow a TOP offset where Combat Zone -C freeze is set.

On the URF 0303 report, notate to the right of each record whether a TOP offset is bypassed. Notate “Y” to allow for TOP offset, “N” for bypass of the TOP offset.

Check IDRS for Debit Indicator F, TOP offset. If present, inform the taxpayer they are still subject to TOP offsets by BFS.

Application of credits from the XSF, using CC XSAPLR and CC XSAPL, cannot be made by persons outside the Excess Collections function. Upon finding the credit through using CC XSINQ, an individual outside the XSF function will submit request Form 8765, IDRS Control File Credit Application, with attached documentation identifying the credit and indicating its proper application. A NOTE will be added to the RTR System when a correction is made to the TIN, plan number, and tax period. See Figure 3.17.220-8.

Figure 3.17.220-8

Pictured is a completed Form 8765, IDRS Control File Credit Application. Line items needed are explained in 1 - 25 below.

Please click here for the text description of the image.

Form 8765 mirrors the CC XSAPL and CC URAPL formats as closely as possible. Form 3809, Miscellaneous Adjustment Voucher, will not be accepted for applying an XSF record. Call the originator of the Form 3809, explaining that Form 8765 must be used to request applications from the XSF. Return all Form 3809 to their originators.

Form 8765 must have documentation attached identifying the credit on the XSF as well as justifying its requested application through correspondence, research performed, etc. Amounts on Form 8765 and back up documentation must match requested application. If Form 8765 is received without this documentation or without the proper completion of all required entries, return it to the requestor immediately. Below is a list of the required documentation to be attached to Form 8765 if applicable.

Certain Forms 8765 must have the originator’s manager’s signature of approval in Box 22. The originator’s managerial review and approval is required if the re-application of the payment/credit from XSF to the tax account will result in a refund.

Certain Form 8765 must be cleared by the Statute function before application of the credits from the XSF. After the Form 8765 has been statute cleared, the credit must be applied 90 days within the statute clearance stamp date to ensure the credit is not barred for refund or transfer. These include credits on which the statute of limitations for credit or refund has expired—two years from the date of payment (IRS received date) or three years from the return-filed date, whichever is later. Forms 8765 prepared by the Statute function are to be considered cleared.

The Excess Collections function will immediately return all Forms 8765 that require statute clearance back to the originator unless the originating function is located outside the receiving campus. Forward to the local Statute function for review unless the Form 8765 was prepared by another campus’ Statute function. A Statute function determination will allow refund or credit in a case in which the statute normally would have tolled.

When applying Statute function approved credits on which the statute of limitations has expired using the two year/three year rule, enter the Statute-approved date in the CC XSAPL format as the return filed date on Line 2. Note the correct return filed date in "Remarks" on Line 9. Form 8765 initiated by the Statute function do not require a clearance stamp, therefore, the date in block 25 will be entered on Line 2.

As a result of the campus realignment, a credit on the XSF of one campus may occasionally require application to an account at another campus.

When closing a case which needed research because the taxpayer failed to provide sufficient identifying information or the information provided was illegible, send Letter 2349 or Letter 2349 (SP), to the taxpayer.

Remittances received with Form W-7;, Application for IRS Individual Taxpayer Identification Number packages will remain in the receiving campus' XSF inventory until an ITIN is assigned. When the ITIN or IRSN information is received from the AUSPC ITIN Unit the remittance will be applied to the taxpayer even if the Account is not established on the MF.

Verify the appropriate application to be made. This data will become part of the XSF record. The corresponding Form 8758 is not required to be pulled and associated with Form 8765.

The XSF record must be in "OPEN" or "IDEN" status. Use CC XSENT to change the status as appropriate. When the entire XSF credit has been applied, the record status will automatically be changed to "CLOS." A partial application will adjust the XSF record balance but leave the status in "OPEN" or "IDEN" .

Verify the debit has posted to Masterfile prior to the reapplication of the credit.

Applications can be made daily by inputting information on IDRS with CC XSAPLR and may only be made by the Excess Collections function. This data will become part of the XSF record.

Use CC XSAPLR to request the CC XSAPL format on IDRS. CC XSAPL cannot be used if the name control on the XSF record is "UNKN;" before application, change the name control with CC XSENT as described in IRM 3.17.220.2.10.

The XSAPL format will be redisplayed after each application with the message "REQUEST COMPLETED" appearing on Line 13.

Use CC XSAPLR to display the generated CC XSAPL format. See Exhibit 3.17.220-12.

Use CC XSAPL "M" to apply credit to Master File accounts. On-line credit posting will be computer-generated to the appropriate tax module.

Use CC XSAPL "N" to make application to NMF and EPMF accounts.

Use CC XSAPL "T" to make a transfer to Deposit or General Fund application.

Form 4830, IDRS Multi-Purpose Posting Document, will be generated for each "N" or "T" application.

If the "M" or "N" application was not based upon information received from taxpayer, send Letter 2349 or Letter 2349 (SP) to the taxpayer. See Figure 3.17.220-9

Figure 3.17.220-9

Pictured is a completed Letter 2349. This letter is sent to the taxpayer to explain that a credit has been applied to their tax account but the information received to make the application did not come from the taxpayer.

Please click here for the text description of the image.

When the outstanding balance of the taxpayer's account is less than the amount of the credit being applied and the application is not based upon information received from the taxpayer, send the taxpayer explanatory correspondence about the refund to be received. Except for TC 700, enter Bypass Indicator "Y" when applying a payment to an account which is in zero balance or debit balance for less than the credit being applied to avoid unpostable conditions 305 and 198. The Bypass Indicator will also be entered when a credit is applied to a full-paid account pending additional liability. Input TC 570 as a secondary transaction to hold the credit on the module and to avoid additional work for Unpostables. Record the pending liability and amount as part of the XSF history so subsequent technicians can know when to input TC 571 to the account in case the credit will ultimately be greater than the liability.

If the record status correctly changes to "FROZ" because of an attempted application after expiration of the statute of limitations for refund, immediately notify the initiator of the Form 8765, forwarding the Form 8765 with accompanying documentation to the Statutes function.

Refer to procedures in IRM 3.17.220.2.12 when applying from records having "ST" source codes.

Annotate each applied Form 8765 with the date of application. Place the document in an appropriately labelled history folder.

To speed processing, an Excess Collections "paper" credit which has either dropped from the XSF or was in Accounts 6800 or 9999 prior to the XSF may be applied through the XSF. For balancing purposes, local management may prefer to restrict action on such cases during the last few days at the end of each month.

Taxpayer response or research may indicate the payment was for other than a tax liability. If applicable, the below descriptions provide specific application details.

Conscience Money: This is a remittance received to ease the taxpayer's conscience and is usually accompanied by an anonymous note so indicating. For example, "Now I'll be able to sleep better." Use CC XSAPL "T" to transfer conscience funds to Account 2360, Conscience Fund (contra account 6400, Miscellaneous Revenue Collections). See Exhibit 3.17.220-12 for an example of CC XSAPL "T."

Photocopy Fee: The processing of requests for photocopies of tax returns or tax return information is handled by the IRS. A taxpayer payment for photocopies can be placed in the URF and eventually transferred to the XSF.

Bulk Forms Fee: Payments received from tax practitioners and other persons for shipment of bulk orders of tax forms will be refunded to the taxpayer using CC FMREF/XSREF. Under no circumstances may these amounts be applied to outstanding tax liabilities. The taxpayer will be sent a note explaining that the Superintendent of Documents (part of the Government Printing Office) is the only government agency authorized to sell printed materials such as federal tax forms. Refer them to the practitioner gate at the toll-free number 1-800-829-3676.

Voluntary Contribution to Reduce the Public Debt: If taxpayer contact reveals that the payment was intended as a contribution to reduce the public debt, transfer the credit to Account 6400, Miscellaneous Revenue Collections, on IDRS using CC XSAPL "T." RRACS technicians will reclassify the money to Account 2350, Public Debt, for reporting purposes. Annotate in the remarks "Public Debt."

Payment other than the partial payments required under TIPRA received with Offer in Compromise: This is a deposit with Form 656, Offer in Compromise other than the application fee or partial payments required under Tax Increase Prevention and Reconciliation Act (TIPRA) and explained in IRM 5.8.2.8.1, Processable Offers-Payment Processing. The payment may be received from a third party on behalf of the taxpayer making the offer. Specialty Collections Offer in Compromise can verify the payment. An Offer In Compromise (OIC) payment may be identified by:

User fees for letter rulings and for determination and opinion letters: Transfer these remittances to Account 6310, Miscellaneous Fees, using CC XSAPL "T" identifying the remittances as user fees. Forward a copy of the XSF 03 Report to the RRACS Function for journalization. Annotate it to show "User Fees."

Wrongful Levy Situations: These are credits received from a bank account other than the taxpayer’s or from sale of property which does not belong to the taxpayer; situation does not involve determination of hardship. The authority to return wrongful levy payments is provided in IRC 6343(b), which limits the claim for return of money to the period within 9 months of the levy issuance on or before March 22, 2017 or two years from the date of the levy after March 22, 2017.

Unclaimed Funds: These are credits returned to the IRS by a state and represent bank drafts and cashier's checks purchased by taxpayers which have never been cashed, but were made payable to "Internal Revenue Service" . Research thoroughly to identify the taxpayer entitled to such a credit. A call to the state agency issuing the credit will identify the bank which forfeited the credit if the documentation attached to the incoming credit does not. Contacting the bank which forfeited the credit to the state often yields additional information since the forfeiture took place recently. However, if the taxpayer who bought the cashier's check or bank draft cannot be identified, the credit will remain in the XSF.

Installment Agreement User Fees (IAUF): Since March 1, 1995, taxpayers are charged a fee for establishing and monitoring Installment Agreements (IA). The Bipartisan Budget Act of 2018 or the BBA was passed included modifications of user fee requirements for IA’s. It also requires the IRS to waive or refund the user fee for TP’s (AGI) income at or below 250% of the FHHSG. Refer to IRM 5.14.1.2 Installment Agreements and Taxpayer Rights and IRM 5.19.1.6.4.6.4 Reimbursement of User Fee for Qualifying Low-Income Taxpayers for an overview of the enacted provisions.

USDA Discrimination Settlement Payments - KCSPC only: The United States Department of Agriculture (USDA) paid cash settlement and granted loan cancellation to a limited number of farmers. The settlement resulted from a discrimination suit brought against the USDA by the farmers. Awards from the settlement are treated as taxable gross income. Poorman-Douglas Bankruptcy Services forwards to the IRS a list of recipients who received USDA settlement payments. Each claimant who received a $50,000 settlement from Poorman-Douglas is also entitled to receive $12,500 from the IRS to pay their taxes on this settlement.

Preparer Taxpayer Identification Number (PTIN) Application Payments: PTIN application payments intended for processing by an outside vendor may be deposited in error by IRS. If the payment has not posted to a taxpayer's account, it may be refunded back to the taxpayer from the XSF using CC XSREF. Prepare Letter 3064C IDRS Special Letter with a statement requesting that the taxpayer send the payment to:
IRS Tax Professional PTIN Processing Center
PO Box 380638
San Antonio, TX 78268

Non-Liable payments: Unapplied payments can be received from Entity Control function, either directly or through Rejects, which represent payments received from filers who are not liable.

Use CC ENMOD to research current entity information. If the address needs to be changed, use CC INCHG (IMF) or CC BNCHG (BMF) to record the updated information. Address changes can be made in the following instances:

The proper sequence of actions is:

Correspondence must be answered within 30 calendar days of the earliest "IRS–received" date; however, every effort will be made to provide quality responses in less time. If it is not possible to respond within this time period, send an appropriate interim response which includes:

When closing a credit from the XSF, take all necessary action to avoid future problems for the taxpayer. For example, quality or managerial case review may indicate that a TC 570 should have been originally input to prevent the account from refunding. CC FRM77 may be used to input specified transactions to any module on IDRS. To use FRM77, the proper sequence of actions is:

First line managers of personnel working XSF cases will conduct periodic reviews (at least quarterly) of cases assigned to all employees to ensure effective operational internal controls. The purpose of the review process is to ensure that employees are properly processing cases in a timely manner. Additional IDRS training, research guidance or counseling may be warranted if deficiencies are noted.

A copy of the managerial reviews will be sent quarterly via e-mail to the headquarters XSF Accounting analyst by the 15th of the month following the quarter.

Managers will review 6800 cases in "OPEN," "FROZ" and "IDEN" status, monthly. Select sample cases from the URF50 (XSF), Control D Report Name "XS Case Assign List," with reference to URF01 (XSF), section Monthly Excess Collection 6800 Analysis Report, as described in Exhibit 3.17.220-1, "Sample Selection for Normal Managerial Review (Table 1)," and Exhibit 3.17.220-2, "Sample Selection for Accelerated Managerial Review (Table 2)."

Determine ending inventory volume or "New XSF Balance" from monthly URF01 (XSF) listing.

See Exhibit 3.17.220-1 (Table 1) for determining the sample selection.

For example:

After the complete sample is selected and the identified case pulled, the manager may begin the review which must be completed before the end of the current month.

Should the review indicate that fewer than 95% of the reviewed cases have been acted upon properly, both Tables 1 and 2 will be used to select samples for the next monthly managerial review.

In addition to the case load reviews, the following output listings shall be sample reviewed to ensure that adequate and proper actions are being taken by all employees:

A monthly listing of all credits in" OPEN" status with a received date of three years or less is generated during the month end processing for inclusion in the URF45. This listing will consist of the Excess Collection number, taxpayer name, TIN, MFT, tax period, balance amount, received date and source code sorted by TIN and tax period. See Figure 3.17.220-18

Credits included on this list must be reviewed every six months for a period of one year.

The total number of "OPEN" status cases will be listed as a starting count of receipts reported to the Work Planning & Control System (WP&C) weekly using program 710-37605. A count of closures will be taken for cases in which the credit was applied, or the correspondence suspense time has expired. Closures will be reported each week with the overall inventory being reduced to zero at the end of the review period.

Research will be conducted on each credit as described in IRM 3.17.220.2.8 and its subsections. Use CC XSINQ to research each record for the last action taken. The original Form 8758 may need to be reviewed if CC XSINQ does not provide enough information to determine the next action.

If a credit cannot be applied, contact the taxpayer to request needed information as described in IRM 3.17.220.2.9. Internet research will be used by all BODs to locate taxpayers. Several sites (Accurint, Google, SEC, ZABASearch, EDGAR, VIVISIMO and SWITCHBOARD) can be used to locate a phone number or address if one cannot be obtained through IDRS or Directory Assistance.

When contacting the taxpayer by letter, suspend the case for 45 days.

A narrative will be added to the record each time research is conducted or an action is taken (i.e., phone call, correspondence) using CC XSENT. This narrative will provide enough information to allow for future follow-up.

A history sheet will be used to document actions taken. The documentation will include such items as taxpayer contact and responses, CCs researched, copies of any documents requested, dates of action taken, etc.

Some cases may need to be suspended while awaiting taxpayer response or requested documents. This suspense system must facilitate timely follow-up actions and may be accomplished by means deemed appropriate.

If research reveals a condition on the taxpayer's account that would not allow for application of the credit, change the status to "IDEN" using CC XSENT and add the count as a closure. See also IRM 3.17.220.2.3 for status code explanations.

Reports are viewed on the IRS electronic depository, "Control D" website. Retention of electronic reports is the same as paper records and is listed in Document 12990.

URF01 (XSF) Excess Collection 6800 Analysis Report

URF01 (XSF) Monthly Excess Collection 6800 Analysis Report

Figure 3.17.220-10

Pictured is an example of the URF01 (XSF) Report, Excess Collections File Analysis. URF01 (XSF) is an inventory report which generates daily. It lists the beginning (prior) balance, adjustments and current ending balance.

Please click here for the text description of the image.

URF03 (XSF)—Transaction Register

Figure 3.17.220-14

Pictured is an example of the URF03 (XSF) Report, Transaction Register, XS Restricted Apply Register. It lists the restricted applications via CC XSOUT applied from the XSF. The last page shows a summary of the type of cases.

Please click here for the text description of the image.

URF05 (XSF)—XSF Applications for IMF and BMF Controls.

Figure 3.17.220-15

Pictured is an example of the URF05 (XSF) Report, XSF Applications of IMF/BMF/IRAF-Controls. This is generated daily and lists all completed applications to the master file via CC XSAPL M. The last page shows a summary total of records input by IMF, BMF and IRAF with the numbers of records input and money amounts applied.

Please click here for the text description of the image.

URF07 (XSF)—Excess Collections File Performance Indicator Analysis

URF45 (XSF) —Accounts Receivable XSF/6800 Report

URF50 (XSF)—Transaction Register

Figure 3.17.220-20

Pictured is an example of URF50 (XSF), XSF Case Assign List. It shows the name control, employee number of the person who added a particular case to the file or the person to whom the case is assigned, entry date, XSF Control Number, balance amount and journal status.

Please click here for the text description of the image.

XSF52—Accounts Closed to 9999, Revenue Clearance Accountability

URF60 (XSF)—Monthly National Excess Collections Analysis

Figure 3.17.220-22

Pictured is an example of URF60 (XSF), Monthly National Excess Collections File Analysis Report. It lists a monthly summary of all actions to the XSF for each campus. It also includes a national total for the campuses.

Please click here for the text description of the image.

Figure 3.17.220-23a

Pictured is an example of the XSF File Source Analysis which is included in the URF60 (XSF), Monthly National Excess Collections File Analysis Report. It lists a monthly summary, by campus, of the count and amount of credits added to the XSF by the organization from where the credit is being transferred. It also includes a national total for the campuses.

Please click here for the text description of the image.

Figure 3.17.220-23b

Pictured is an example of the URF60 (XSF), Monthly National XSF Apply Code Report, which is included in the URF60 (XSF), Monthly National Excess Collection File Analysis Report. It lists a monthly summary, by campus, of the count and amount of credits applied from the XSF by the file source: Master file, NMF, or Transfer . It also includes a national total for the campuses.

Please click here for the text description of the image.

Receipt and production data for the weekly WP&C Managers Report will match the staff hour reporting period ending Friday or Saturday as directed in IRM 3.30.50, Project PCA Production Control Accounting.

"Receipt Volume" for the WP&C will always equal "Actual Production" to achieve zero inventory for the OFP 710–37600. Since, by the nature of the inventory, few XSF cases are closed, actual work performed rather than cases closed is measured to yield a meaningful production rate. Therefore, for planning purposes, managers will use the URF01 (XSF) listings (inventory) in conjunction with the production data from the WP&C.

To derive production data for the period for WP&C, add the following:

Monthly computer-generated excess collections inventory reports for both Accounts 6800 and 9999 (URF01 (XSF)) are to be used as the source data for input to the MISTLE report.

"Receipt Volume" for OFP 710–37605 will be reported to the WP&C during the months of January and July when the OPEN List is received as referenced in IRM 3.17.220.2.17. "Actual Production" will be reported to the WP&C weekly to achieve zero inventory by the end of the six-month period.

An Inventory Report must be submitted to Excess Collection Headquarter Analyst weekly, located on the Excess Collections Share Point site folder for each site. The Weekly Report must be submitted to Headquarters by the 1st. business day after the prior week.