TFRP is a penalty provided for by Internal Revenue Code (IRC) 6672 against any person required to collect, account for, and pay over taxes held in trust who willfully fails to perform any of these activities, or willfully attempts to evade or defeat any such tax or its payment. TFRP is a “pecuniary” penalty, meaning the government has suffered an actual monetary loss for unpaid trust fund taxes. The penalty is equal to the total amount of tax evaded, not collected, or not accounted for and paid over.

IRC 6672, Trust Fund Recovery Penalty, applies to individuals or entities (representatives of a business with authority and responsibility) that did not pay the government:

The responsible person may be one or more of, but not limited to, the following:

Though TFRP may be assessed against several individuals, the total liability is collected (ultimately retained) only once from either:

Assessments of the TFRP may be based on liabilities for the following tax forms with related Masterfile Tax (MFT) codes:

When more than one individual is assessed the penalty Transaction Code (TC) 240 with Reference Number (RN) 618, the amount collected is equal to the unpaid trust fund taxes owed by the business entity, plus interest and fees owed on the trust fund portion of the business, plus accruals for each quarter involved.

The amount assessed for each responsible individual from a corporation may be different if all responsible persons were not liable for the same tax periods or the same parts of the tax period (e.g., if a responsible person joins or leaves a business mid-period). The amounts can also differ when Appeals reaches different settlements with the various responsible persons. In the following example where taxpayer B is the only person responsible for all the business tax periods at issue, the Service would seek to collect a total of $20,000 plus accruals.

The authority to assert the TFRP is Internal Revenue Code (IRC) Section 6672, which states, "Any person required to collect, truthfully account for, and pay over any tax imposed by this title who willfully fails to collect such tax, or truthfully account for and pay over such tax, or willfully attempts in any manner to evade or defeat any such tax or the payment thereof, shall, in addition to other penalties provided by law, be liable to a penalty equal to the total amount of the tax evaded, or not collected, or not accounted for and paid over." Though the TFRP may be assessed against several individuals, the total liability is collected only once from the business and/or one or more responsible individuals.

Director, Collection Policy, is responsible for overseeing program coordination for Trust Fund Recovery Penalty (TFRP) policies, strategies, objectives, and procedures. Directs evolving program issues and collaborates with stakeholders to ensure TFRP financial reporting requirements meet GAO & CFO standards. Clarifies tax code issues within this IRM.

Director, Campus Collection, has administrative responsibility for all Campus managerial and TFRP program responsibilities.

Director, Campus Operations, has administrative responsibility for Campus management and TFRP employees. Promotes adherence to TFRP IRM program processes and procedures. Certifies the accuracy and timeliness of TFRP casework on a quarterly basis.

Campus operations manager oversees TFRP department, team, and employee actions, and ensures casework meets TFRP IRM accuracy and timeliness requirements.

Campus department manager oversees TFRP team and employees actions, and ensures casework meets TFRP IRM accuracy and timeliness requirements. Reviews all local TFRP program inventory and quality review reports to confirm accuracy. Initiates and monitors actions to identify and resolve case errors and error trends. Resolves internal campus TFRP processing issues. Elevates complex TFRP program questions to Collection Policy Headquarter (HQ) Analysts.

Campus team manager is responsible to manage employees and programs in their team. Oversees employee actions and assigns inventory. Ensures casework meets TFRP IRM accuracy and timeliness requirements. Oversees the preparation of TFRP team quality review and inventory reports and checks them for accuracy. Suggests actionable items to identify and resolve errors and error trends. Resolves routine internal campus TFRP processing issues. Elevates complex TFRP program issues to TFRP Department Manager.

Campus tax examiners work their assigned cases in accordance with TFRP IRM accuracy and timeliness requirements. Their responsibilities include, but are not limited to, the cross-referencing of all payments and credits to related duplicate assessments, establishing account linkages on IDRS, adjusting existing TFRP assessments, responding directly to taxpayers and/or their representatives on inquiries regarding these accounts, performing quality reviews, preparing inventory and quality review reports, and varied interactions with other TFRP program functions within the organization.

Program Reports: Local campus reports are submitted via the Batch/Block Tracking System (BBTS) to the Work Planning & Control (WP&C) reports. The WP&C is used to monitor rates, receipts, and closures to determine if cases are being received and subsequently closed. WP&C reports are located on the Business Objects platform. The Automated Trust Fund Recovery (ATFR) system reports detail the cases assigned to each campus operation, team, or employee. Accounts Management Services (AMS) reports provide information on non-ATFR inventory and inventory age. Integrated Data Retrieval System (IDRS) Case Control Activity System (CCA) reports detail the cases assigned to an operation, department, team or employee; they are located on Control D.

Program Effectiveness: The program goals and results are housed on the Collection Program and Campus Reports SharePoint site in the Monthly Monitoring Report (MMR).The MMR captures monthly and cumulative data on inventory and rates. Operational and program reviews are conducted to ensure case actions are timely and in accordance with the procedures in this IRM.

IRS Master File is programmed to generate transcripts when specified activity occurs on TFRP and / or related duplicate tax modules. These transcripts are loaded into ATFR and / or AMS then distributed to tax examiners. Taxpayer correspondence and Form 3870 requests for adjustment are controlled and assigned to the tax examiners on IDRS. Additionally, *SBSE Ogden TFRP is a designated and secured email box that is utilized by other areas to communicate case action requests to the TFRP department. These inventory mechanisms and employee actions are monitored by the Campus Operation, Department, and Team managers, along with Collection Policy HQ Analysts.

ATFR is comprised of the following:

Revenue officers use ATFR-AO to:

Control Point Monitoring in the CEASO Groups use ATFR-AO to:

Compliance Campus uses ATFR-CC to:

The following is a list of commonly used acronyms in this IRM.

This program may require research specific to the program including access and input to the Integrated Data Retrieval System (IDRS) with and without Integrated Automation Tools (IAT), the Automated Trust Fund Recovery System (ATFR),the Accounts Management System (AMS), the Automated Non-Master File (ANMF) system, and use of the Decision Modeling Inc.(DMI) interest calculation tool.

The TFRP program involves both paper and telephone contact with internal and external customers, and follows additional guidelines set forth in the Taxpayer Advocate Program and other relevant IRMs referenced in this document.

The IRS adopted the Taxpayer Bill of Rights (TBOR) in June 2014. The TBOR lists rights that already existed in the tax code, putting them in simple language and grouping them into 10 fundamental rights. Employees are responsible for being familiar with and acting in accordance with taxpayer rights. See IRC 7803(a)(3), Execution of Duties in Accord with Taxpayer Rights. For additional information about TBOR, see https://www.irs.gov/taxpayer-bill-of-rights.

The majority of Forms 2749 are generated through the ATFR-AO system. The Form 2749, Request for Trust Fund Recovery Penalty Assessment(s), is processed through the ATFR-CC application. Assessment data is maintained on the system electronically for future reference. On rare occasions a Form 2749 is manually processed, independent of the ATFR system. The adjustment is input to IDRS CC ADJ54. See IRM 5.19.14.2.6, Inputting the Form 2749 Manually - Not Through ATFR-CC, for IDRS input instructions. TFRP assessments for the following forms must be processed manually:

For manual assessments, the RO completes a paper Form 2749, Request for Trust Fund Recovery Penalty Assessment(s), which has five parts. They are:

Form 2749, Request for Trust Fund Recovery Penalty Assessment(s), must be processed within 2 business days of receipt in CCO.

Forms 2749 that have been submitted to ATFR-CC from Control Point Monitoring (CPM) are automatically delivered to Ogden campus inventory on a daily basis. ATFR-CC systemically submits all of the Form 2749, Request for Trust Fund Recovery Penalty Assessment(s), transactions to IDRS. Those cases that cannot be systemically processed are added to the ATFR-CC campus inventory for employee processing.

When a Form 2749, Request for Trust Fund Recovery Penalty Assessment(s), is received on ATFR-CC, the system will ensure the most current IDRS information (payments/credits/debits) is reflected on the ATFR-CC Form 2749. The ATFR-AO Form 2749 will always appear as it was originally sent to the Compliance Campus.

The general rule is that an assessment of tax must be made within three years from the date a return is filed or the due date of the return, whichever is later.

The following chart explains how the ASED is determined for trust fund taxes:

The statutory period for assessing trust fund taxes, collecting taxes, and refunding credits may be extended for TFRP cases by the following:

The Collection Statute Expiration Date (CSED) is normally ten (10) years from the date of assessment. Refer to IRM 5.1.19, Collection Statute Expiration.

A Form 2749, Request for Trust Fund Recovery Penalty Assessment(s), that cannot be processed through ATFR-CC are reviewed for the following information prior to manual input to IDRS:

Review the BMF Assessment Statute Expiration Date (ASED) for Form 2749, Request for Trust Fund Recovery Penalty Assessment(s), processed manually as well as those processed through ATFR as follows:

When the ATFR-AO Form 2749, Request for Trust Fund Recovery Penalty Assessment(s), and IDRS prompt assessments do not match, verify the assessment amount. See IRM 5.19.14.3.2, Trust Fund Calculation. If unable to resolve a discrepancy between what is assessed on IDRS and the Form 2749, reject the Form 2749 back to the revenue officer. Notify the RO via email that Form 2749 was rejected and the reason why.

Use CC ENREQ with TC 000, filing status, year prior to penalty assessment and complete name and address to establish an account if the penalty is being assessed against a taxpayer with no account on Master File under the taxpayers own SSN. Input the transactions in the following order; CC ENMOD; ENREQ. Refer to IRM 2.3.15, Command Code ENMOD and IRM 2.4.9 , Command Code ENREQ.

Once the TC 000 has been established, process Form 2749, Request for Trust Fund Recovery Penalty Assessment(s). When manually inputting a Form 2749, input the transactions using CC MFREQ and REQ54. In order to avoid an unpostable condition or delay processing, do not create a dummy account prior to the input of the TC 000. Input the transactions to the IDRS command codes in the following order CC ENMOD, ENREQ, MFREQ and REQ54. Taking the above steps in the designated order will allow the TC 000 and the TC 240 to post at the same time.

The following examples illustrate circumstances that require an account to be established:

Form 2749, Request for Trust Fund Recovery Penalty Assessment(s), input through ATFR-CC that can be worked systemically are processed upon receipt and those that require user intervention are added to the system inventory. Using the “Next Case” menu option, cases in the system inventory are retrieved and processed by employees.

Review the BMF ASED. See IRM 5.19.14.2.2 , Trust Fund Recovery Penalty Statute of Limitations.

Review the “RP History” menu option to determine the case condition(s) that require user intervention. In the table below are a few examples.

Reject Form 2749, Request for Trust Fund Recovery Penalty Assessment(s), via ATFR-CC if information is incomplete or incorrect on ATFR. Input a history on ATFR-AO with the reason for rejecting the Form 2749.

When the Form 2749, Request for Trust Fund Recovery Penalty Assessment(s), is processed and all transactions post to IDRS, the case will update to a posted status.

Trust Fund Recovery Penalty Assessments are input on the Individual Master File (IMF) under the responsible party(s) SSN. The assessment is input onto IDRS under MFT 55, using a TC 290 $.00 with RN 618, for the amount of the Trust Fund Penalty.

Use CC REQ54 to input the assessment amount to the TFRP account(s) as listed below. From this, a TC 240 with a RN 618 and a CP 15B, Civil Penalty Notice, with a cross-reference EIN will generate.

Always input CC ASEDR with review indicator "1" to the BMF tax period unless the box on the Form 2749, Request for Trust Fund Recovery Penalty Assessment(s), is checked "no" .

Use CC REQ77 to cross-reference all related TFRP accounts.

When processing a paper Form 2749, Request for Trust Fund Recovery Penalty Assessment(s), hold the case until the DLN is available then write the DLN and the assessment date on the Form 2749. If multiple tax periods, write the DLN for each assessment on the Form 2749.

Route copies of Form 2749, Request for Trust Fund Recovery Penalty Assessment(s), as follows:

The TFRP file (commonly referred to as UNLCE) contains a record of the amount of the TFRP assessments, the business entity, and the responsible person(s). The file is established and researched on IDRS, using CC UNLCE, which is the IDRS screen display of Form 2749, Request for Trust Fund Recovery Penalty Assessment(s).

The majority of CC UNLCE files are initially populated by a systemic process. Reject listings of cases that could not be loaded into CC UNLCE are provided to the Campus via an email delivery system. For those cases, correct the account information as indicated on the reject (error) listing, and use the information from the source document, Form 2749, Request for Trust Fund Recovery Penalty Assessment(s), to establish the TFRP file on IDRS. Update the TFRP (UNLCE) file within 5 business days from the UNLCE Error Report date. See IRM 2.4.41 , Command Code UNLCE, for input information.

A history item field is available on the TFRP (UNLCE) file for the business entity and related responsible party(s) records. When in the research mode, the date, employee ID and history item will display. The input screen to enter history is a 56 character field. A maximum of 75 history items for each business entity and related responsible party(s) can be entered. Once the 75 history entries have been reached, the oldest entries will be systemically deleted.

In the “If and Then” table below, use CC UNLCER to research the TIN to determine:

When inputting information onto CC UNLCE:

BMF penalty assessments cannot be input to the TFRP file using the EIN format. Input BMF penalty assessments to the TFRP file using the SSN format. Indicate in the history item field that the assessment is a NMF EIN using the phrase: "SSN XXX-XX-XXXX represents BMF XX-XXXXXXXN NMF account" .

Input a history item to indicate the type of assessment.

Do not delete full paid accounts from the TFRP file.

Ogden and Brookhaven CCO Operations are responsible for the Trust Fund Recovery Penalty program and all necessary actions (e.g., payment cross referencing, TC 971 linkages, and Form 3870, Request for Adjustment, adjustment requests).

TFRP transcript case processing consists of ATFR and Non-ATFR (manual) transcripts. ATFR transcripts are processed systemically with and without user intervention. ATFR cases that are processed by a user are completed by inserting and/or deleting transactions, then submitting the transactions. "Submit Transactions" must be selected to close the case, even if no transactions are required. When closing a case without transactions, an ATFR history item is required stating case conditions (e.g. no transactions submitted because "all modules are current, or BMF CSED expired" , or "paying non-trust" , or "payment applied via associated multi-corp case," etc.). An ATFR case cannot be re-opened once "Submit Transactions " has been selected. As a result, any transaction(s) required to be input subsequent to submission of the case must be input directly to IDRS.

Campus TFRP inventory is generated by the following computer generated transcripts:

Case actions on TFRP related transcripts must be completed within 43 days of the date of the transcript. Perform all necessary case actions to make the account current. Cross-reference all payments that have posted.

You are required to review all tax periods and entities included in a TFRP case that has been assessed using the current single assessment method. Generally, the tax periods and entities included in your case are identified by the ATFR case creation date. ATFR Tax Period Status Code 0 exceptions are as follows:

It is not necessary to work the entire transcript on combined assessments until the account reaches Status 12, a TC 604, or TC 608 is posted. If the trust fund module (MFT 55) is Status 12, it is not necessary to review the entire account when a TC 604 or TC 608 posts to a BMF tax period associated with the combined assessment.

Integrated Automation Technologies (IAT) provides tools that simplify research, reduce keystrokes, eliminate repetitive typing, and increase the accuracy of regular work processes. The use of IAT is mandatory and limited to the certain IAT Tools listed below. Additional IAT tools will be added to the list when one is deemed beneficial and seen as adding quality to Campus Collection work processes. For User Guides, see the IAT web site at https://organization.ds.irsnet.gov/sites/WiMttIat/home/default.aspx.

If an IAT tool is not available, or an employee has a problem with the IAT Task Manager, the case should be processed through IDRS, following established procedures. See the IAT Website at https://organization.ds.irsnet.gov/sites/WiMttIat/home/default.aspx for how to report/fix problems with IAT tools. IAT users may also visit this site to become a subscriber to the IAT newsletter. The iNews details all ongoing IAT activity with tool retirements and rollouts.

An ATFR case is defined as "all tax periods and all RRPs associated with the business entity case established with the same case creation date" .

ATFR Transcript cases are automatically delivered to the system on a weekly basis, generally Tuesday through Friday or until the cycle upload is complete. ATFR systemically generates and submits transactions to IDRS. Transcript cases that require user intervention are added to the system inventory. Using the “Next Case” menu option, cases in the system inventory are retrieved and processed by employees.

Employment tax is comprised of trust fund and non-trust fund taxes. The trust fund portion of these taxes is the amount of Social Security and Medicare (FICA), and income tax the employer is responsible to withhold and remit to the government on behalf of the employee. The non-trust fund portion of these taxes is the amount of Social Security and Medicare taxes the employer is responsible, in most instances, to match and pay to the government.

Generally, the non-trust fund tax is determined by dividing the FICA tax of the related BMF module in half (see exceptions below). Trust fund tax is then calculated by adding one-half (1/2) the FICA and all of the income tax withheld for the period. The non-trust fund tax amount is always the same for the corporation. It does not change from related responsible party (RRP) to RRP when they are assessed different amounts.

The table below outlines the calculation of the TFRP assessment amount.

The Hiring Incentives to Restore Employment (HIRE) Act was enacted March 18, 2010. It is a tax benefit that is available to employers who hire certain previously unemployed workers, or “qualified employees,” in their trade or business. This is a tax exemption that reduces the employer’s 6.2 percent share of social security (FICA) tax on wages paid to qualified employees during the second, third and forth quarters of 2010 (201006, 201009 and 201012). Since this is an adjustment to the employer’s share of FICA, it affects only the non-trust fund portion of the tax. There is no change to the tax withheld or the employee’s share of FICA tax. When calculating the Non-Trust Fund portion of tax for 201006, 201009 and 201012 the amount is calculated as demonstrated in the HIRE examples 1 - 3 below.

When a subsequent tax assessment (TC 29X,30X) has not been considered in the Trust Fund assessment, calculate the non-trust fund portion of the original BMF tax (TC 150) using the adjustment reference codes for FICA/Medicare tax and withholding or research ATFR-AO for Form 4183, Recommendation re: Trust Fund Recovery Penalty Assessment, calculations. If the subsequent tax assessment is not considered in the Trust Fund assessment, BMF payments with received dates after the TC 290 posted are applied first to the non-trust portion of tax before cross-referencing to the MFT 55 accounts. Payments with received dates prior to the TC 290 posting may be applied to the trust fund portion of tax if the non-trust fund was fully satisfied prior to the additional assessment.

If the original Form 941, Employer’s Quarterly Federal Tax Return, tax, including penalty and interest, was paid prior to an additional assessment (e.g., TC 290, TC 300, TC 308, TC 294, TC 298), any payments made towards the previously satisfied amount may not be reapplied to the additional tax assessment for calculation of the TFRP.

TC 766 Action Code (AC) 299 is a Consolidated Omnibus Budget Reconciliation Act (COBRA) credit that is treated as a TC 650 for the purpose of TFRP calculation. However, it is not cross-referenced to RRPs.

When a payment or credit posts to the TFRP account, cross-reference the amount to all RRPs and the related BMF module(s), including modules in Status 53, 72 and 71, and update the MMA.

Research the BMF modules for payments and credits not considered in the trust fund calculation, cross-reference to all RRPs and update the MMA.

If TC 91X and “Z” freeze is present on the account, contact CI/Fraud Detection Center and proceed per their instructions. For ATFR cases, input a history item on ATFR and monitor the case weekly. For Non-ATFR cases, input a history on AMS, open a Monitor control on IDRS and monitor the case weekly. If transactions are not posted within 30 days contact CI/Fraud Detection Center and input history item for the follow-up contact. Continue to monitor weekly and contact the CI/Fraud Detection Center every 30 days until transactions post. All follow-up actions must be documented in ATFR or AMS (non-ATFR).

Contact Area Office (AO) CPM when case(s) cannot be resolved. Form 2209, Courtesy Investigation, may be required if unable to contact by phone. The case will be referred on ICS to the CEASO Manager where the corporation account is located. Control on IDRS and monitor for 45 days. If unresolved, prepare Form 5942, Advisory Reviewers Report , and forward to CEASO Manager. Input a history item to AMS or ATFR (if applicable) when the Form 2209 or Form 5942 is sent. Some examples are:

When payments/credits/debits are received on accounts, update the memo money amount field to reflect the unpaid balance of the trust fund tax. This includes the account where the payment was received and all related accounts.

The MMA field on CC TXMOD reflects the remaining unpaid trust fund balance on all IMF and BMF related modules. The MMA is input as a TC 971 with action codes 093 and 097. The MMA must be input when a trust fund assessment is made. Update the MMA each time any single transaction (e.g., credit or debit) occurs on the account, after the last transaction when multiple transactions post, or when updating an incorrect MMA.

When a new TC 971 posts, it will overlay the money amount in the original TC 971. There will be only one TC 971 for each cross-referenced transaction. The cycle of the original TC 971 updates to a current posting cycle, but the original TC 971 date remains. The updated TC 971 will display as a “DJ” transaction in the Pending Transactions section of IDRS showing the date of the payment/credit.

IMF and BMF MMA:

The MMA is input in dollars and cents format for both IMF and BMF accounts using the CC REQ77 screen field called FREEZE-RELEASE-AMT. There are ten spaces available in this field.

When the trust fund has been paid in full, reduce the MMA to .00. Never input a TC 971 AC 094/096 to reverse a previous TC 971 unless it is to correct erroneous information. If erroneous information exists, it may be necessary to input a new TC 971 AC 093/097.

Use the current date when inputting a missing or incorrectly reversed TC 971.

Payments, credit offsets, and debits are cross-referenced to the related IMF and BMF account module using either the ATFR or IAT applications. Payments are cross-referenced using TC 241 RN 697 from BMF to IMF, TC 241 RN 699 from IMF to IMF, and TC 538 from IMF to BMF.

Payments must be posted to reflect the originating payment application. For example trust fund to trust fund, and interest to interest. When a single payment is split between trust and interest, cross-reference to trust and interest on the related accounts using a separate TC 241 RN 699/697 and/or TC 538.

BMF payments must be applied to the non-trust fund portion of tax before cross-referencing to the MFT 55 account(s). Once the non-trust fund amount is paid, cross-reference payments to the MFT 55 account(s) until the trust fund portion is paid. If an additional tax assessment (TC 290) was not considered in the Trust Fund assessment, payments with received dates after the TC 290 posted are applied to the non-trust fund portion of tax before cross-referencing to the MFT 55 account(s). Payments received prior to the TC 290 posting may be applied to the trust fund portion of tax if the non-trust fund tax was fully satisfied prior to the additional assessment. See IRM 5.19.14.3.2 , Trust Fund Calculation.

IMF payments are cross-referenced to the BMF and all RRPs until the trust fund amount is full paid. Then apply payments to assessed fees and collection costs, then to interest. Amounts applied to fees and collection costs are not cross-referenced.

When Applying Fee Payments to a TFRP account:

When a payment on the TFRP account is reversed or refunded:

After applying credits to TFRP accounts and BMF modules, review the Payment Sorter to validate credit dates/amounts for each payment.

Payments other than those listed below are applied using the normal payment application method. See IRM 5.19.14.3.3 , Payment Application:

If the TFRP was assessed under Old Calculation methodology, BMF payments posted prior to 01/01/03 are applied as follows:

The following are examples of Old Calculation cases:

On single period assessments, cross-reference in payment date order as follows:

If one entity makes multiple same date payments that full pays the trust and starts to pay interest, apply payments in the order listed in above paragraph.

If one or more RRPs make a payment on the same day that does not full pay the trust, cross-reference each payment to all related accounts.

If more than one RRP makes a payment on the same day that full pays the TFRP assessment but does not full pay the interest, divide the balance of the TFRP assessment by the number of RRPs that made a payment on that day. Cross-reference that portion of each payment to full pay the TFRP assessment. Cross-reference the remaining amount toward the interest due.

If more than one RRP makes a payment on the same day that full pays the TFRP assessment including interest, divide the balance of the TFRP assessment and interest by the number of RRPs that made a payment on that day. Cross-reference that portion of each payment to full pay the TFRP assessment plus interest and refund the difference if there are no outstanding tax liabilities.

If the trust fund tax is full paid and more than one RRP makes a payment on the same day that pays the interest, and the interest amounts owed for each officer is not the same, divide the smallest balance of interest due by the number of RRPs that made a payment on that day and cross-reference that portion to all related party(s). Once the interest on the account with the smallest balance is full paid, continue cross-referencing to the remaining RRPs in the same manner. See chart and example below:

If a payment is received from an RRP against whom the TFRP has been assessed, apply it to the underlying BMF tax periods in earliest assessment order.

Do not apply payments to a portion of any period for which a responsible person is not liable. For example, in the table illustrated below, if Taxpayer B makes a payment, his payment would not be applied to 01/199603. The application of his funds would begin with 01/199606.

Payments received from the RRP should be cross-referenced to trust fund tax for all tax periods on the underlying BMF and related responsible party(s) accounts prior to cross-referencing any amount to interest. However, BMF payments can be applied to interest for the tax period where they posted after the trust fund tax for that tax period has been satisfied.

A separate TC 538, one for trust and one for interest, for each BMF tax period is required when applying trust and interest to the business account. When cross-referencing to other RRP accounts with combined assessments, the full amount of the trust fund tax payment can be cross-referenced, even if it is cross-referenced to multiple tax periods on the business account. A separate TC 241/699 is required to be input for interest and can be the combined amount when cross-referenced to other RRP accounts with combined assessments.

For Non-ATFR cases, input a history item on AMS for each TC 241 RN 697 indicating the tax period, date and amount that was applied to trust fund tax and/or interest. Input the history item on ATFR for ATFR cases.

The following combined new calculation examples illustrate the guidelines which should be followed when cross referencing payments/credits/debits which are posted to the BMF trust fund module(s).

Underpayment interest is generally computed from the date of the TFRP assessment to the date of the payment if full paid; otherwise, it is the 23c date. See IRM 20.2.5.3, Interest on Penalties and Additions to Tax. Interest continues on the remaining balance until full paid. When calculating interest, the following grace period(s) must be considered:

Input TC 340 $.00 to restrict any calculated, yet unassessed interest on an account where the calculated interest is attributable to the IRS computer not recognizing a payment that is received within the grace period and full pays the account . If the erroneous interest has already been assessed, abate it with a TC 341. See IRM 20.2.1, Introduction, Standards and Guidelines for more information.

IRC 7508, Time for Performing Certain Acts Postponed by Reason of Service in Combat Zone or Contingency Operation, prescribes a period of time to be disregarded when computing interest for individuals who serve in a Combat Zone (CZ). The period of time disregarded because of service in a CZ starts when an individual enters the CZ and ends 180 days after release from the CZ. See IRM 20.2.7.9, IRC 7508, Combat Zone. A CZ account is identified by the following:

The transaction date of the TC 500 with a Closing Code of 52, 54, or 56 identifies the date the taxpayer enters a CZ, and the transaction date of the TC 500 with a Closing Code of 53, 55, or 57 identifies the date the taxpayer exits a CZ. The Master File and IDRS programs can correctly compute and suspend interest (and penalties) on combat zone (CZ) accounts if there is one CZ period, or in the case of multiple CZ periods, if the second CZ entry date is more than 6 months from the previous CZ exit date. For example:

Payments that are applied towards trust fund interest on the originating account must be cross-referenced to trust fund interest on the related responsible party(s) accounts.

If an IMF RRP is paying interest on fees and the BMF is full paid, do not apply that interest to the BMF. Apply interest to the other RRP accounts only if the account is not full paid. Do not overpay the account(s) and cause a credit balance. If a credit balance is created, see IRM 5.19.14.3.8, Resolving TFRP Overpayment Cases, to resolve the credit.

On combined assessments, payments made by the IMF are not applied towards interest until the trust fund tax for all quarters is full paid.

On single period assessments, when interest payments post on the IMF account, use the posted TC 196 amount to begin applying the payment to the BMF account. Using CC INTST, CC COMPA or DMI, compute interest to the payment date on the other RRP accounts to determine the amount to be cross-referenced.

On single period assessments, when interest payments post on the BMF account, compute interest to the date of the BMF payment or credit. Do not overpay the account and cause a credit balance. If a credit balance is created, see IRM 5.19.14.3.8, Resolving TFRP Overpayment Cases.

On combined assessments where BMF payments have full paid the trust fund tax and are beginning to pay interest, compute interest for the quarter that is full paid using that quarter's trust fund tax assessment amount from UNLCE. Use CC COMPA or DMI to compute the interest from the assessment date of the TC 240 for each related responsible party to the payment date.

On combined assessments where IMF payments have full paid the trust fund tax and are beginning to pay interest, use CC COMPA or DMI to compute the interest from the assessment date of the TC 240 to the payment date. Compute interest on the trust fund assessment amount from UNLCE for each quarter separately.

Compute interest for each assessment separately when assessments are posted on the same period for more than one corporation. Use IDRS CC COMPA or DMI to compute interest and post to IDRS using TC 340 if it is necessary to restrict interest. Caution should be used when manually computing or restricting interest. Do not unnecessarily restrict accounts; ensure that TC's 340/341 are used appropriately. Master File programming can accurately compute interest in some situations. Some examples include:

Verify that IDRS is computing interest correctly using DMI or CC COMPA. Generally, but not limited to, the only time that you will restrict the interest on an account will be after all accurate cross-references have taken place to fully pay the account, but the account is in a credit balance for $1.00 or more or a debit balance of $5.00 or more due to systemic calculation of interest. Input a TC 340 for $0.00 to correct the account balance. Use CC REQ54 to input TC 340. See IRM 20.2.1.5.2, Manual Calculation of Interest.

When interest is cross-referenced on Non ATFR cases, input a history entry to AMS. Include the following information:

When the amount collected exceeds the TFRP assessment including accruals, the taxpayer whose payment created the excess may receive a refund of the overpayment.

When a payment or credit posts to account or the cross-referencing of payment results in a credit balance, verify all payment and/or credits are accurate.

Determine if the credit amount can be offset to another balance due tax module, refunded to the taxpayer, or moved to the Excess Collection file.

Research IDRS for other outstanding liabilities including NMF on that TIN.

If there is no additional liability and the credit can be refunded (potential exceptions listed in paragraphs below), monitor the account until the TC 241 posts and release TC 570 with TC 571. Continue to monitor the account and if a systemic refund does not generate within 14 days, initiate a manual refund. If more than one payment with the same date is cross-referenced to a single module, TC 570 will not be released systemically. Initiate a manual refund after the cross-referenced transactions have posted. See IRM 21.4.4 Manual Refunds, for instructions on completing a manual refund.

If the overpayment involves a case identified as a bankruptcy (freeze code -V, -W, and TC 520 with closing code 60 - 67, 81 - 89), review the Automated Insolvency System (AIS) to obtain the Case Number and Court Key. Forward this information, along with the TIN, tax period and TC 520 closing code to your Campus TFRP Bankruptcy Coordinator. The coordinator will submit a listing to TFRP HQ Collection Policy on a weekly basis, who will coordinate with Insolvency Specialists for case resolution. Control the case on IDRS with a 120-day follow-up date. Centralized Insolvency Operation (CIO) will contact the employee control if there is any update to the Proof of Claim, and if the credit can be moved to another balance due module or refunded. If all MFT 55 TFRP liabilities are fully satisfied research MFT 30 for balance due. If credit is moved to another balance due module or refunded, close the case. If not, continue to monitor the case and review AIS history for current closing activity. If there is no resolution after 120 days, elevate the case to your Campus TFRP Bankruptcy Coordinator for follow-up with Headquarters. Follow up every 120 days until the credit balance is resolved or until AIS history indicates current closing activity. If action is in process, document AMS with the AIS history information and close the case. Always input a history Item on AMS that the case was elevated to HQ and notate any instructions and/or information provided.

If the overpayment involves a case with a freeze code -W and a TC 520 with closing code 76 or 77, provide the TIN, MFT, tax period, freeze code and TC 520 closing code to your Campus TFRP Bankruptcy Coordinator, who will submit the information to Headquarters. TFRP analysts will coordinate with Collection Due Process (CDP) analysts for resolution. Control the case and monitor. Contact Headquarters every 120 days until the case is resolved.

If the overpayment involves a case with a freeze code -V or -W that is other than TC 520 with closing code 60 - 67, 76, 77, 81 - 89, control the case and monitor it every 120 days until the TC 520 is reversed. Once the TC 520 is reversed, resolve any remaining credit balance as instructed in IRM 5.19.14.3.8 (1) through (3), Resolving TFRP Overpayment Cases, above.

If the overpayment involves a case identified as an accepted OIC (TC 780), resolve the credit balance as instructed in IRM 5.19.14.3.8 (1) through (4), Resolving TFRP Overpayment Cases, above. After exhausting all resources to resolve the credit, if a credit balance remains, inform the appropriate MOIC Liaison located on the SERP Who/Where tab http://serp.enterprise.irs.gov/databases/who-where.dr/oic-backend.html of the credit and close your case. Use the first two digits of the DLN to determine the appropriate office and email, via secure messaging, Brookhaven or Memphis MOIC. See IRM 5.19.7, Campus Collection Programs, for information about OIC.

MFT 55 accounts with a V- freeze present on CC TXMOD must be researched for a posted TC 130 with the corporate EIN that matches the Form 2749, Request for Trust Fund Recovery Penalty Assessment(s). If present, release with a TC 131 after the TC 240 has posted whenever the only reason for input is for TFRP (refer to CP 44 in IRM 5.19.10.3.12, Generation of CP 44 and CP 188. . If the TFRP is assessed only against the secondary SSN, the TC 130 should remain on the joint entity.

There are several different types of TFRP accounts that are assessed on Non-Master File (NMF):

NMF accounts will not have a TC 971 AC 093/097 . NMF accounts are identified as NMF on CC UNLCE and/or AMS history. ATFR cases including an NMF tax module will generally generate to Status Code 113.

NMF transcripts generate when a transaction or payment posts to a NMF account. These transcripts generate in the CSC NMF Unit and are forwarded to CCO TFRP in Brookhaven and Ogden to be worked.

When a payment or credit posts to the NMF TFRP account, cross-reference the amount to all related TFRP modules and the underlying BMF module(s), including Status 53, Status 72, and Status 71. Follow the procedures in IRM 5.19.14.3.5, Payment/Credit Cross-Referencing - Single Assessments, and IRM 5.19.14.3.6, Payment/Credit Cross-Referencing - Combination Assessments.

Payments and credits cannot be cross-referenced to the NMF accounts. Once the TFRP is full paid, any remaining penalty on the NMF account is abated. Complete Form 1331-B, Notice of Adjustment, and forward to CSC NMF Accounting to request abatement of the remaining TFRP. A separate Form 1331-B is not necessary to abate penalty or interest assessments; however, it must be notated on the Form 1331-B to abate any penalty and interest, including accruals.

Determine if a TC 130 Entity freeze (V- freeze) is on the Master File account for the RRP that is on NMF. Reverse the TC 130 when the account is full paid or the CSED has expired.

A Payment Expired CSED (PMTEXPCSED) transcript will generate when a payment is applied to a module after the CSED has expired.

If a taxpayer makes a payment on an account barred by statute, send a 672C Letter informing them that the payment is not required and ask if they wish to apply the payment to that account, have it applied to another outstanding liability (if applicable), or have it refunded to them. Inform the taxpayer that if they do not respond within 30 days, the payment(s) will be applied to another tax liability. If there is no other tax liability, the payment(s) will be refunded.

The following table provides procedures for processing refund responses and no responses.

If more than one TFRP assessment (TC 240 ref 618) is posted to the TFRP account for the same business entity, and the dollar amounts are the same, review the DLN for a determination if the additional assessment(s) is a “true duplicate.” A duplicate assessment may be indicated by the Document Code of the DLN of the TC 240. The Document Code is the 4th & 5th digits in the DLN. A Document Code 51 indicates the assessment was a quick or prompt assessment. A manually submitted TFRP assessment will contain a Document Code 54. If the assessment(s) is determined to be a “true duplicate,” abate the assessment with the most current date. If review of the DLN(s) indicates the duplicate assessments(s) resulted from incorrect ATFR processing, see IRM 5.19.14.3.3(4), Payment Application.

When RRPs have multiple business assessments with the same assessment date, apply payments to the corporation assessed first by the RRP that made the payment. Cross- reference payment(s) to all RRPs to correspond with the assessment of the same corporation regardless of the order in which they appear on the tax module. See IRM 5.19.14.3.5(7), Payment/Credit Cross-Referencing - Single Assessment. Update the MMA accordingly. See the various examples in the table below:

When RRPs have multiple business assessments with different assessment dates, apply the payment, credit or debit beginning with the earliest TFRP assessment date. Cross-reference payment(s) to all RRPs to correspond with the assessment of the same corporation regardless of the order in which they appear on the tax module. See IRM 5.19.14.3.5(7), Payment/Credit Cross-Referencing - Single Assessment Update the MMA accordingly.

When multiple MFTs with different (BMF) assessment dates are assessed on one RRP or as a combined assessment, apply payments to the MFT with the earliest BMF assessment date. If BMF assessment dates are the same, apply from MFT number, lowest to highest.

When an Offer in Compromise (OIC) is accepted, a TC 780 is placed on the tax periods included in the offer. When the terms of the OIC are properly completed, a TC 788 is placed on the tax periods, and the OIC account is treated as full paid, see IRM 5.19.7.2.22, Closing an OIC.

When an OIC is accepted (TC 780) continue to cross-reference the payment or credit to that account until the TC 971 AC 032 is pending. Ensure that the TC 971 AC 097 for the corporation that filed the OIC is updated with the unpaid trust fund amount, or the TC 971 AC 093 for the RRP that filed the OIC is updated with the unpaid trust fund amount.

In the following chart, Taxpayers A and B have TFRP assessments for $10,000 individually from unpaid trust fund taxes from XXYY Corporation for the same tax periods. Taxpayer B has an accepted offer for $2000 and the Service will seek to collect the remaining balance including accruals from Taxpayer A and/or Corporation XXYY. Taxpayer B is now considered full paid.

The following chart illustrates an example of a corporation with an accepted offer. The payment of $6000 received with the offer paid the non trust fund portion of $4000. $2000 is then applied towards the trust fund portion and cross-referenced to the trust fund assessment for Taxpayer A and Taxpayer B. The RRP’s are responsible for the balance of the TFRP assessment not paid by the OIC.

When working any TFRP case, you must check the BMF tax module to see if there is an associated RBA assessment. Indicators of this would include:

If any of the conditions above are present, you must take the following actions:

When a bankruptcy freeze (-V or –W) appears on the MFT 55 module, process the case. See IRM 5.19.14.3.8(4), Resolving TFRP Overpayment Cases, for cases involving overpayment.

When the TFRP is assessed, IDRS issues a first notice. The CP 15B, Civil Penalty Notice, informs the taxpayer of the tax periods (up to 25) included in the TFRP assessment. Three weeks later, IDRS issues Notice 504, Final Balance Due Notice. Six weeks after the issuance of Notice 504, the account is assigned to Status 22 (ACS) or Status 26 (RO). The CP 15B provides the taxpayer guidelines on requesting suspension of collection as provided by IRC 6672(c), Trust Fund Recovery Penalty. The taxpayer may respond to these notices in writing or by telephone. The Form 4442, Inquiry Referral, is used when a taxpayers inquiry cannot be resolved during initial contact with the IRS. The initial contact may be received in person, or by telephone. Control Forms 4442 as taxpayer correspondence.

Written requests received in CCO must be controlled within 14 days from the IRS received date or 3 business days from the operation receive date. When a final response cannot be initiated within 30 days, an interim response will be initiated by the 30th calendar day from the IRS received date. Sites using Accounts Management System (AMS) for controlling and monitoring inventory follow AMS guidelines for case control and acknowledgment of taxpayer correspondence. If correspondence is received from a previous area after the 30 days expires and no interim letter was issued, you must send an interim letter within five business days of receipt in your area. Subsequent interims may be required if you are unable to respond as promised, see IRM 21.3.3.4.2.2, Interim Responses. Follow all other IDRS control procedures in IRM 21.3.3.4.2.2, Interim Responses.

If correspondence is received stating the taxpayer does not understand or is questioning the TFRP assessment, send Letter 2282C, Penalty Abatement Trust Fund Recovery Disallowed, and explain the determination for assessment.

If the correspondence states the taxpayer is not liable for the TFRP; or the taxpayer is requesting an abatement of the TFRP, research IDRS to verify that the withheld tax of one employee for each quarter of liability has been paid. If payment has been received, forward the correspondence to the CEASO office where the claimant resides. Send Letter 2282C, Penalty Abatement Trust Fund Recovery Disallowed, to the taxpayer advising him/her of the referral to CEASO. If payment for the withheld tax of one employee for one quarter of liability has not been paid, send Letter 2282C with Form 843, Claim for Refund and Request for Abatement, to the taxpayer.

If the taxpayer requests a refund of taxes paid, send Letter 2282C, Penalty Abatement Trust Fund Recovery Disallowed, with Form 843, Claim for Refund and Request for Abatement, to the taxpayer.

If the taxpayer states payments have not been applied or have been applied incorrectly, research IDRS and apply or correct any missing and/or misapplied payments. If payments are applied or corrected, send Letter 2282C, Penalty Abatement Trust Fund Recovery Disallowed, to inform the taxpayer.

Correspondence received that includes a request to make payments, states he/she is currently on an installment agreement, states he/she is in bankruptcy, incarcerated, deceased, or is entitled to military deferment, forward the inquiry to Balance Due Accounts. Notate "TFRP issue resolved " on the correspondence prior to routing.

Identity theft occurs when business or individual taxpayer identifying information is created, used, or attempted to be used, without authority, to obtain tax benefits. If the taxpayer claims Identity Theft, forward the correspondence to the CEASO office where the claimant resides. Send Letter 2282C, Penalty Abatement Trust Fund Recovery Disallowed, to the taxpayer advising him/her of the referral to CEASO. Refer to IRM 25.23, Identity Protection and Victim Assistance, for servicewide guidance and information.

Correspondence received for all other issues are routed to the appropriate functional area. Use the Campus Mail Routing Guide in SERP http://serp.enterprise.irs.gov/databases/local-sites-other.dr/local/mrg/mrg-all-campus.html for the determination where to route.

If Form 2848, Power of Attorney (POA) and Declaration of Representative, or Form 8821, Tax Information Authorization (TIA), is attached to the notice or correspondence, use CC CFINK to research the Centralized Authorization File (CAF) to verify if the POA is authorized for the period(s) in question. If the account is not on CAF the Form 2848 must contain the following:

A POA or TIA must contain the essential elements listed in IRM 21.3.7, Processing Third Party Authorizations onto the Centralized Authorization File (CAF), to be valid. Those essential elements include:

Specific use Powers of Attorney (e.g., civil penalties and Forms 843) are entered onto the CAF. This eliminates the need for the taxpayer to resubmit authorization requests each time a third party corresponds on a specific issue. When a valid authorization is received in an office which does not process authorizations to the CAF, FAX the authorization to one of the centralized CAF campuses for processing.

If a valid POA or TIA is received, send responses to correspondence to the taxpayer and to the authorized representative. Replies from a valid POA are treated as if the taxpayer(s) was responding.

If an unauthorized third party requests information concerning the penalty assessment, send Letter 135C, Power of Attorney Needed to Furnish Information. Do not send or discuss tax information with an unauthorized third party. Correspond directly with the taxpayer.

If during a taxpayer contact or correspondence, it appears a taxpayer may be experiencing a hardship or otherwise meets TAS case criteria, determine if you are able to resolve and close the TAS issue on the same day as the taxpayer contact. If so, do not refer the inquiry to TAS. If you cannot resolve in the same day, complete a Form 911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance Order), refer the taxpayer to TAS, and document the referral on AMS.

Document case actions in AMS.

Refund Claims are written requests for TFRP adjustment(s) submitted by the taxpayer which must be approved by CEASO. A Form 843 , Claim for Refund and Request for Abatement, can be submitted for any payment made by the individual by submitting the claim within two years of the date of the payment.

A taxpayer may also submit an Informal Claim for Refund/Abatement. A taxpayer who is not asking for a refund does not need to use Form 843 to receive consideration of the claim. See IRM 5.19.14.4.1, Processing TFRP Correspondence and Form 4442 Inquiry Referrals.

If a taxpayer submits a Form 843, Claim for Refund and Request for Abatement, claim stating they are not liable for the Trust Fund assessment, after verifying the taxpayer meets the requirements below, send the claim to the CEASO office where the claimant resides. See SERP for the correct CEASO office to send the claim, based on the claimant's zip code.

To obtain a suspension of collection while a refund claim is pending under IRC 6672 (c), Trust Fund Recovery Penalty, the taxpayer must take the following actions within 30 days after the date of notice and demand:

A Form 843, Claim for Refund and Request for Abatement, must be filed for each quarter (separate assessments).

A payment must be made for each quarter (separate assessments).

Only one Form 843, Claim for Refund and Request for Abatement, and one payment are required on combined assessments.

Forms 843 will be perfected where they are received.

Upon receipt of Form(s) 843, research IDRS for the payment(s) described above. If the payment is posted to IDRS:

When researching IDRS, if the payment is not present:

Form 3870, Request for Adjustment, relating to TFRP assessments are worked in the Ogden and Brookhaven CCO Campuses. Brookhaven generally works Forms 3870 for accounts where the business entity state is AL, AR, CT, DC, DE, FL, GA, KY, LA, MA, MD, ME, MS, NC, NH, NJ, NY, OH, PA, RI, SC, TN, VA, VT, or WV. Ogden generally works all other TFRP Forms 3870. However, the Campus is not prohibited from working cases outside the general state mapping perimeters.

TFRP related Form(s) 3870 must be processed within 30 days of the campus received date.

CCO will receive Form 3870, Request for Adjustment, for abatement of the TFRP liability for any of the following circumstances:

Only CEASO is authorized to request abatements/adjustments on cases outlined in (3) (b) and (c) above.

When Form 3870, Request for Adjustment, requests abatement for the following conditions, apply the applicable payment(s). Do not abate the TFRP assessment:

Forms 3870 received from CEASO requesting full or partial adjustment and/or abatement of TFRP liabilities:

If Form 3870, Request for Abatement, is unprocessable i.e., unclear or incomplete, contact CEASO or the originator for additional information. If unable to contact, reject Form 3870 and return it to the originator via Form 3210, Document Transmittal. Include a thorough explanation of the reason for the reject.

If Form 3870, Request for Adjustment, is received based on litigation or bankruptcy and no TC 521 or TC 604 has posted, contact CEASO to verify that the litigation or bankruptcy has been completed. If not, reject the Form 3870 back to the originator via Form 3210, Document Transmittal. Include a thorough explanation of the reason for the reject.

When a responsible person(s) is determined to be not liable and Form 3870, Request for Adjustment, is received requesting full abatement of the TFRP:

When a responsible person(s) is determined to be partially liable and Form 3870, Request for Adjustment, is received requesting partial abatement of the TFRP:

If the BMF tax liability has been reduced (TC 291) on the associated BMF account, perform necessary actions to ensure accurate and up-to-date payment application. See IRM 5.19.14.3.2 , Trust Fund Calculation, and IRM 5.19.14.4.3, Processing TFRP Adjustments.

Reason Code (RC) 065 and Penalty Reason Code (PRC) 013 are generally used when adjusting TFRP (MFT 55) amounts. However, the PRC may be different when adjusting TFRP amounts resulting from an Appeals decision. Refer to Document 6209 for applicable Appeals PRC.

When multiple TC 240 assessments appear on the module, input the assessment date of the TC 240 being adjusted as the "Return Processable Date" on CC ADJ54.

If refund is related to a Department of Justice directed reversal, CEASO prepares a Form 3870, Request for Adjustment, and/or a Memorandum of Authority directing CCO to adjust the account. If a Memorandum of Authority is not included, the Form 3870 must be notated with the justification for adjustment to the account. Prepare and issue a manual refund of any overpayment when requested. Return Forms 3870 to CEASO that do not include either the notated justification or Memorandum of Authority.

Document AMS with the reason for adjusting the account, i.e., Form 3870, Request for Adjustment; BMF tax decrease etc. and the original amount of the TFRP assessment for that period.

Complete the adjustment action and maintain Form 3870, Request for Adjustment, as a source document in the employee adjustment folder.

The following Manager Reports were developed to monitor and manage Form 2749, Request for Trust Fund Recovery Penalty Assessment(s), and TFRP transcript inventories. When TFRP Assessment or Transcript inventory is assigned or completed by any individual in a team, review of these reports is mandatory and should be performed by the Department Manager. It may be delegated no lower than the Team Leader level. The report must contain the date it was run. Electronic documentation of these reviews must be maintained for a period of 6 months. Review and retention of any report is not necessary if there were no cases worked or assigned during the review period.

The following ATFR System Inventory and Transcript Reports were developed to monitor and manage Form 2749, Request for Trust Fund Recovery Penalty Assessment(s), and TFRP transcript inventories that are in the ATFR system, not yet assigned to individual employees. System reports are available only to those with a System Manager profile. A System Manager can view information for all teams as well as the System Inventory. Review of these reports is mandatory and should be performed by the Department Manager. It may be delegated no lower than the Team Leader level. The ASED Report may not be delegated below the Department Manager level. Electronic documentation of these reviews must be maintained for a period of 6 months.