In a criminal case, a court can require a defendant to pay the losses incurred by the government by ordering restitution be paid to the IRS. The amount of the tax loss is calculated from evidence admitted at trial or from information contained in the plea agreement and presented to the court at sentencing. This court ordered restitution is assessed and collected in the same manner as tax.

A RBA may be duplicate wholly or in part to original tax return or civil assessments. Because these debts stem from the same underlying tax liability, the full amount can only be collected once. Therefore, any payments that wholly or in part satisfy the RBA and any associated penalties and interest must also be applied against the underlying tax liability for the same type of tax and tax periods (e.g., duplicate civil and/or co-defendant assessments), provided the RBA and/or penalties and interest relate to the underlying tax liability. Conversely, any payments/credits that wholly or in part satisfy the underlying tax liability and any associated penalties and interest for the same type of tax and tax periods will be applied against the RBA and/or penalties and interest.

Public Law No. 111-237 amended IRC 6201 to provide that the IRS shall assess and collect the amount of restitution ordered in a criminal case for failure to pay any tax imposed by the Internal Revenue Code in the same manner as if such amount were such tax. The law applies to restitution orders entered after August 16, 2010. Whether a criminal restitution order can be assessed as a tax under IRC 6201(a)(4) depends on whether the restitution ordered is traceable to a tax imposed by Title 26. The law also amended IRC 6213(b) to stipulate that a notice of assessment of restitution is not a notice of deficiency and may not be petitioned to Tax Court, and IRC 6501(c) to address the unlimited assessment period for restitution-based assessments (RBAs).

Director, Collection Policy, is responsible for overseeing program coordination for Restitution-Based Assessments policies, strategies, objectives, and procedures. Directs evolving program issues and collaborates with stakeholders to ensure RBA 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 RBA program responsibilities. Provides adequate funding and staffing of Campus personnel to ensure RBA financial reporting requirements meet GAO & CFO standards. Promotes adherence to RBA IRM program processes and procedures to ensure IRS meets the needs of the customers and the Organization.

Director, Campus Operations, has administrative responsibility for Campus management and RBA employees. Maintains adequate RBA staffing and ensures full and efficient utilization of RBA funding allocations. Promotes adherence to RBA IRM program processes and procedures. Certifies the accuracy and timeliness of RBA casework on a quarterly basis.

Campus operations manager oversees RBA department, team and employee actions. Ensures RBA employees are provided with appropriate tools and training to perform their jobs and casework meets RBA IRM accuracy and timeliness requirements. Facilitates efficient usage of RBA funding allocations and performs all necessary actions to maintain proper staffing levels.

Campus department manager oversees RBA team and employees actions. Ensures RBA employees are provided with appropriate tools and training to perform their jobs and casework meets RBA IRM accuracy and timeliness requirements. Reviews all local RBA 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 RBA processing issues. Elevates complex RBA 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 employees are provided with appropriate tools and training to perform their jobs and casework meets RBA IRM accuracy and timeliness requirements. Oversees the preparation of RBA 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 RBA processing issues. Elevates complex RBA program issues to RBA Department Manager.

Campus tax examiners work their assigned cases in accordance with RBA 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 RBA 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 RBA 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. Accounts Management Services (AMS) reports also provide information on 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, as well as periodic snapshots of aged case percentages.

IRS Master File is programmed to generate transcripts when specified activity occurs on RBA and / or related duplicate tax modules. These transcripts are loaded into AMS and then distributed to tax examiners. Taxpayer correspondence and Form 4442 referrals are controlled and assigned to the tax examiners on IDRS. Additionally, *SBSE Ogden RBA is a designated and secured e-mail box that is utilized by other areas (largely Exam TS) to communicate case action requests to the RBA Team. These inventory mechanisms and employee actions are monitored by the Campus Operation, Department, and Team managers, along with Collection Policy HQ Analysts.

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

See Exhibit 5.19.23-1 for a list of acronyms commonly used 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 Accounts Management System (AMS), the Automated Insolvency System (AIS), the Automated Non-Master File (ANMF) system, and use of the Decision Modeling Inc.(DMI) / Automated Computational Tool (ACT) penalty and interest calculation tool.

The RBA 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 Taxpayer Bill of Rights (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 accord with taxpayer rights. See IRC 7803(a)(3), Execution of Duties in Accord with Taxpayer Rights. For additional information about the TBOR, see https://www.irs.gov/taxpayer-bill-of-rights.

A Restitution-Based Assessment (RBA) case is defined as all related accounts that are associated with specific MFT(s) and tax period(s) that have been ordered by the court to pay unpaid taxes and/or restitution resulting from criminal conduct. Payments and/or credits that have posted to the account(s) require manual cross-referencing to ensure the amount owed is collected only once.

The defendant ordered to pay restitution may be one or more of, but is not limited to the following:

Duplicate assessments include the RBA which are generally made on MFT 31 accounts, and civil tax, penalties, and interest assessed and accrued on each respective party's underlying tax account. Two defendants may owe different duplicate assessment amounts for the same period. The duplicate assessment may or may not be equal to the RBA amount. Those accounts include, but are not limited to, the following forms:

RBA MFT 31 accounts are established to separate assessment modules to ensure that collection action is taken individually against joint taxpayers. Each defendant may be liable for different amounts, and each defendant may have different penalty and/or interest assessed. When duplicate assessments have been identified against an individual or defendant, those assessments can only be collected once.

Ogden CSCO Operation is responsible for the RBA program actions pertaining to the cross-referencing of payments and credits that are applied to those accounts on IDRS.

RBA transcript case processing consists of transcripts delivered either by paper, Control-D, or AMS. Any transactions(s) required to be input must be input directly to IDRS.

Generally, a TC 971 AC 102 is input on the underlying tax liability account in order to establish the MFT 31 accounts (for jointly filed accounts, this will be the primary taxpayer).

Campus RBA inventory is initiated by the following computer generated transcripts:

Transcripts will systemically generate when a RBA TC 29X RC 14X posts to an account, and when an unreversed TC 971 AC 18X and/or TC 29X RC 14X is posted to the module and:

Upon receipt of an ORIGINALCR, BMFORGNLCR, or RPPORGNLCR transcript, input a STAUP 22 for 9 Cycles. See SERP Job Aids for CC STAUP input information. Review the account and input a TC 472 if an unreversed TC 470 cc 90/93 is posted.

Upon receipt of any RBA transcript, review the Adjustment Reason Code associated with the RBA to determine the case type, i.e., IMF, BMF or RPP. If MFT 31 has a posted TC 971 AC 184/185 with a cross-reference MFT 30, input TC 290 as indicated below:

Payments and credits must be cross-referenced to all related accounts by the later of;

When processing RBA payments and or credits, take all necessary actions to ensure that posted payments have been cross-referenced to all appropriate accounts. Input a detailed history item on AMS to document all actions taken including the payment allocation (e.g., tax, type of penalty, interest) and method and/or tool used to calculate the interest.

The Integrated Automation Technologies (IAT) provides tools that simplify research, reduce keystrokes, eliminates repetitive typing, and increases 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/IATJobAids/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 http://iat.web.irs.gov/ for how to report/fix problems with IAT tools.

IAT tool users can visit the IAT Website, to become a subscriber to the IAT newsletter. The iNews details all ongoing IAT activity with tool retirements and rollouts.

TC 971 AC 18X action codes are used to define and link Restitution-Based Assessments (RBA) and associated Fraud penalties to duplicate and non-duplicate RBA, Civil, and Fraud penalty assessments and/or to underlying tax liabilities for a specific TIN, MFT, and tax period. The linkages are applied to the accounts in pairs (i.e., TC 971 “points” to a TIN / MFT / tax period and the corresponding TIN / MFT / tax period “points” back). The Memo Money Amount (MMA) field is used to identify the duplicate dollar amount of the common tax issues. See IRM 5.19.23.2.6, Memo Money Amount (MMA), for rules on RBA MMAs.

IMF case types are the result of a tax loss to the government, where the basis for the RBA is an individual income tax return. IMF case types are identified by an Adjustment Reason Code 143 or 145 associated with the RBA TC 290. The following examples demonstrate how TC 971 action codes are applied for IMF RBA cases.

BMF case types are the result of a tax loss to the government, where the basis for the RBA is a business tax return. BMF case types are identified by an Adjustment Reason Code 144 or 146 associated with the RBA TC 29X. Generally, it is a TC 298, but a TC 290 may also be used. RBA modules containing assessments for BMF tax liabilities are classified as BMF case types even if other assessment types have posted. The following examples demonstrate how TC 971 action codes are applied for BMF RBA cases.

RPP case types are the result of a tax loss to the government where the basis for the RBA is generally related to a Return Preparer tax scheme. RPP case types are identified by an Adjustment Reason Code 141 or 142 associated with the RBA TC 290.

Unlike IMF and BMF case types, RPP restitution assessments that are not duplicate to another RBA or Civil assessment are not coded with AC 180/181; only duplicate assessments are coded.

Upon receipt of RPP linkages, immediately review, validate and input to IDRS. If the RBA assessment is not present, open an IDRS control to monitor for posting and immediately work the account, do not wait for account transcript.

IDRS Master File is not able to accept an unlimited number of transactions on any given account module and when the limit is reached, the account is systemically moved to Automated Non Master File (ANMF). Therefore, large RPP cases with 100 or more clients have specialized linkage procedures. See IRM 5.19.23.2.7, Form 3177 Processing, for instructions regarding the input of account linkages.

The Memo Money Amount (MMA) field of the TC 971 AC 18X is used to identify the amount of the Restitution-Based Assessment (RBA) and/or Fraud penalty ordered as part of the restitution that is duplicate. The dollar amount of the MMA is displayed on CC TXMOD, CC BMFOLT, or CC IMFOLT, only when an amount greater than $.00 has been entered.

Review accounts to determine if:

The transactions for the RBA, MMA amount, and associated TC 971 AC 18X’s are initiated by Exam Technical Services (TS) who prepares Form 3870 and /or Form 3177. These forms are input by either Exam Centralized Case Processing (CCP), located in the Memphis Campus or Ogden CSCO.

Document all initial and follow-up actions on AMS MFT 31 history.

Exam TS will forward Form 3177 for TC 971 AC 18X linkage to CCO RBA for input to IDRS. Review the form to validate the following boxes are complete:

Forms 3177 received for RPP case types must be reviewed and perfected in accordance with IRM 5.19.23.2.6, Memo Money Amount (MMA), prior to being input to IDRS. IDRS Master File is not able to accept an unlimited number of transactions on any given account module. After perfecting the forms, if there is 150 or more associated clients or 100 or more associated clients and one or more of those clients has an existing installment agreement:

If there are 350 or more associated clients:

IDRS CC REQ 77 is used to input transaction codes notated on Form 3177. Forms 3177 must be processed within 5 business days of receipt. Incomplete forms and forms received where the tax module is not present on IDRS must be returned to the initiator using the *SBSE TECH Svs Criminal Restitution mailbox with **EXPEDITE** in the subject line and must include a complete explanation of the reason for the rejection.

Forms 3177 may be received that update or change existing TC 971 action codes. See chart below.

Whenever there is an abatement on an RBA account or related account that has established linkages posted, contact Exam Technical Services via e-mail to ask if the linkages need to be updated.

When cross-referencing payments, always consider the following:

If a TC 971 AC 100/101/104 is present on MFT 31 account(s) contact the designated area to communicate that the posting of TC 971 AC 102 has prevented systemic mirroring of payments and accounts will need to be manually monitored. Contact information can be located on SERP Who/Where tabs at http://serp.enterprise.irs.gov/content/who-where/who-where.html.

Always use blocking series 79 when cross-referencing payments/credits with a TC 76X / CRN 337 to MFT 05.

CRN 337 is not valid for MFT 13; therefore, when payments/credits on MFT 31 need to be cross-referenced to MFT 13 take the following steps,

When working cases with an un-reversed TC 780 and payments/credits are available to be cross-referenced to the account with the TC 780, notify the designated RBA OIC SME (located in the campus RBA team) of the case along with a current payment sorter. The SME will contact OIC for determination if any action should be taken (i.e. temporary removal of the TC 780). Once the determination is made that action should be taken (i.e. cross referencing, TC 290 .00 with appropriate reason code) the SME will notify the TE to complete the appropriate actions. The TE will hold the case 5 days and then notify the RBA SME the actions have been completed. The SME will notify OIC to have the TC 780 placed back on the account. Do not attempt to release a freeze on an account with an un-reversed TC 780.

When working RPP Transcript cases, do not validate previous actions on the case unless the current transcript is generated because the Return Preparer or Client module(s) has full paid the duplicate tax; or the module(s) has reached full paid Status 12; or a TC 604 or TC 608 posts to the account. Perform case actions based on the transcript you are working and the AMS histories. Upon Receipt of the RPP transcript:

All actions taken must be documented on AMS with complete and concise information for all affected accounts. Documentation must include, but is not limited to: payment application, payment dates, amounts and types, details of corrections/reversals, details of interest calculation, CSED expiration, etc.

When payment(s) or credit(s) post to an account where a duplicate RBA/Civil or Fraud penalty assessment exists, cross-reference the available amount to the applicable TIN(s), MFT(s), and tax period(s) of the duplicate assessments including modules in Status 53, 72, and 71. A thorough review of the account where the payment or credit posted is necessary to determine the amount available for cross-referencing. Only payment(s) and credit(s) applied to the tax, penalties or interest of the duplicate assessment amount is cross-referenced.

Payments applied to MFT 31 accounts are immediately available as cross-references to pay duplicate tax, penalties, and / or interest. Payments applied to non-MFT 31 accounts must first pay non-duplicate (generally original tax return) assessments before they are applied to the duplicate (generally civil) assessments and are available for cross-referencing to the MFT 31.

If the MMA can’t be matched, subtract available payments/credits applied to the civil assessment that is the basis for the restitution until the MMA is reached. Payments and credits already considered that reduce the amount of restitution assessed are not cross-referenced. Cross-reference any amounts paid towards the duplicate tax, penalty and/or interest to all related accounts.

Payments and credits are cross-referenced using Transaction Code (TC) 290 $.00 and Credit Reference Number (CRN) 337 that may also require a reason code and/or priority code: Hold code 3 is always used.

The X-Ref TIN and dollar amount of the payment/credit being cross-referenced must be input during cross-referencing.

Payments are cross-referenced to related accounts until the duplicate RBA is full paid. Then apply payments to Fraud penalty assessments, fees and collection costs, other assessed penalties and assessed interest, then to accrued penalties and accrued interest.

When a payment on the RBA module or duplicate account is reversed or refunded, debit the amount on the related account(s) using TC 767 CRN 337 with a corresponding amount and date. DO NOT use a Reason Code or Priority Code when reversing previously cross-referenced payments.

Payments must be posted to reflect the originating payment application; for example, payments applied to tax are cross-referenced to tax; payments applied to penalties are cross-referenced to the same type of penalties, etc. See chart and examples below.

If one or more Defendants makes a payment with the same date that does not fully pay the duplicate RBA, cross-reference each payment to all related accounts.

If one or more defendants makes a payment that exceeds the duplicate RBA balance, apply payments in accordance with IRM 5.19.23.6. Caution must be taken to ensure payments are cross-referenced for “like” assessments, i.e., Fraud penalty to Fraud penalty, FTP to FTP, interest to interest, etc.

Always input detailed history items into AMS to document all actions taken and the specifics of the payment application on both the MFT 31 and the civil account. Input the history for the MFT and tax period of the originating payment and the MFT and tax period where the credit is applied.

The following examples describe payment cross-referencing for IMF based Restitution Assessments.

The following examples describe payment cross-referencing for BMF based Restitution Assessments.

BMF case types may include duplicate RBA and/or Civil assessments related to the Defendant’s individual income tax (MFT 30), in addition to multiple BMF tax types (MFT 01, 02, 10, etc.). These assessments will appear as multiple assessments on MFT 31 however, they are not duplicate assessments to each other.

The following examples describe payment cross-referencing for Return Preparer based Restitution Assessments.

RPP case types may include duplicate RBA and/or Civil assessments related to the Defendant’s individual income tax (MFT 30), clients of the return preparer in addition to co-defendants of the return preparer. These assessments will appear as one assessment on MFT 31; however, a TC 971 AC 18X will identify each duplicate assessment and will display the duplicate assessment amount in the associated MMA.

When RBA includes multiple duplicate client Civil assessments, payments and credits posted to the MFT 31 are cross-referenced to the duplicate client Civil assessment with the earliest assessment date. If more than one duplicate Civil assessments have the same date, payments are applied in ascending SSN order.

If a client or clients have multiple credits / payments to cross-reference to the preparer, limit the input of the cross-references to one client per day to ensure only one TC 290 per client displays on IDRS TXMOD (i.e., client 1 payments on Thursday, client 2 payments on Friday, client payments on Saturday and so on). If a client or clients have only one payment / credit each to cross-reference to the preparer, all transactions can be input on the same day.

When cross-referencing available credits and payments on RPP cases that have a potential IDRS overflow condition (i.e., multiple clients, linkages, transactions, etc.):

For restitution cases where a TC 534 is present, refer to AMS History under Internal Transcript for the MFT and Tax Period for information concerning the TC 534 write off. For assistance contact the RBA CSED SME.

Do not cross-reference payments or credits to a module with a posted TC 604 or to accounts that have moved to retention. Payments/credits with dates prior to the CSED must be cross-referenced to related accounts with a duplicate RBA/Civil assessment. The amount of the cross-reference cannot exceed the amount of the write-off. Payments / credits with dates the same as the CSED or after the CSED are not cross-referenced to those accounts. When two defendants owe different duplicate assessment amounts for the same period, cross-reference the payment but do not apply more than the duplicate assessment.

Do not post more credit than the balance of the RBA, Civil, or Fraud penalty assessment including accruals. If a credit balance is created, see IRM 5.19.23.6, Resolving Overpayment Cases, for steps to resolve the credit. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

TC 848 is used to credit a clients account when a portion of the refund has been issued to the preparer without the clients knowledge. When this occurs, the RBA includes the amount of the credit and because it relates to the preparer's misconduct, the amount is excluded from the MMA. The credit is not cross-referenced to the MFT 31 account.

The FTP penalty can’t be imposed on a restitution-based assessment unless it was ordered in the Judgment & Commitment Order. In the very rare circumstances that it was part of the order, it must be assessed as shown in the order and not included with the same transaction code as tax. See IRM 20.1.2.3.8.9, Failure to Pay Penalty for Restitution-Based Assessments, for additional penalty guidance. See also, Klein v. Commissioner, 149 T.C. No. 15 (2017).

When a FTP penalty is assessed as part of the court order it is cross-referenced to pay FTP penalty on the duplicate civil module. Compute FTP penalties for each module and/or account separately. See IRM 20.1.2, Failure to File/Failure to Pay Penalties for information on penalty computations.

In most cases, CC INTST can be used to determine the amount of FTP penalty that can be cross-referenced to the civil module. CC INTST cannot be used when:

The following examples illustrate payment cross-referencing when FTP is included in the restitution order.

Revenue Ruling 99-40 and Credit-Elects. Under Revenue Ruling 99-40, underpayment interest is suspended for the amount of any refund on an overpayment from the due date of the return to the date the refund was issued without interest. Revenue Ruling 99-40 applies when an additional assessment posts to a module where an earlier overpayment was applied to a succeeding tax period as a credit elect (TC 830/836) and /or refunded without credit interest. The interest-free period for credit elects is decided by what quarter the overpayment is needed in the subsequent year. Master File is able to determine and compute the Revenue Ruling 99-40 suspension period for most tax modules, except the interest-free period attributable to credit elects (referred to as May/Sequa - May Department Stores Co. v. U.S., 36 Fed. Cl. 680 (1996) and Sequa Corp. v. United States, 99-1 UST (CCH) 50,379 (1998)). See IRM 20.2.5.7, Revenue Ruling 99-40 (Modifies and Supersedes Revenue Ruling 88-98) Use of Money, and IRM 20.2.11.13.1, Interest Computation on RBA’s, for more information.

Special Rules Applicable to Certain Employment Taxes-IRC 6205 Employment returns may be entitled to an interest-free period on a tax adjustment if the TC 308 indicates an additional tax assessment by Examination or Appeals with Interest Computation Date other than the return due date. See IRM 4.5.3.26.3, Special Rules Applicable to Certain Employment Taxes - IRC 6205 Interest Free Adjustments.

870 Waiver Interest Suspension Periods. This interest suspension period applies if a waiver of appeal rights is signed by a taxpayer when the taxpayer agrees to an Examination assessment. Because this waiver is most often signed on Form 870, it is often referred to as an 870 waiver. Pursuant to IRC 6601(c) , if an assessment is not made and a bill (notice and demand for payment) is not issued within 30 days after a Form 870 waiver is received, interest will not be computed on the deficiency (or on the interest on the deficiency) for the period beginning on the 31st day after the waiver date and ending on the assessment date (23C date). See IRM 20.2.7.9, IRC 6601(c), Suspension of Interest on Deficiencies.

IRC 7508 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 20.2.7.11, IRC 7508, Combat Zone. A CZ account is identified by the following:

IRC 7508A prescribes a period of time to be disregarded when computing interest for individuals who are affected by a presidentially declared disaster area.

Rev. Proc. 94-60 provides rules on calculating underpayment interest when a taxpayer has previously received a refund (overpayment) with credit interest for the same tax year in which a deficiency is later determined. During the period interest was payable on an overpayment, interest will be charged at the same rate on the portion of the underpayment (including accrued interest) that does not exceed the refund or offset principal. Because interest rates were equalized for non-corporate taxpayers for interest periods beginning on or after January 1, 1999, no interest netting adjustment is required to achieve interest rate equalization for non-corporate taxpayers. Currently the back-off is 18 days. Prior to 01-01-2012, the back-off was 13 days.

Large Corporate Underpayment (LCU) - Effective January 1, 1991, the IRC 6621(c) underpayment interest rate increased by two percentage points above the prevailing underpayment rate for “C” Corporations (includes corporate income, employment and excise tax returns). LCU interest is applicable when:

NOL/Carrybacks - when an underpayment in tax for a particular year is reduced or eliminated as a result of a carryback from a later year (e.g., TC 295, 299, 305, 309), the taxpayer remains liable for interest on its underpayment from the time the tax in question was due until the date the tax was satisfied by application of the carryback per IRC 6601 (a).

For additional information on interest calculations, see IRM 20.2.1.5, Interest Computation Tools and Reports, and IRM 20.2.5.2.3, Steps to Compute Interest.

Payments applied towards interest for the RBA amount on the originating account must be cross-referenced to pay duplicate interest on the related account(s).

When cross referencing interest payments to related accounts, do not overpay the account(s) and cause a credit balance. If a credit balance is mistakenly created, refer to IRM 5.19.23.6, Resolving Overpayment Cases, for steps to resolve the credit.

Interest is assessed on the MFT 31 RBA only when included in the court order and is always restricted from accruals. Computations of interest are only necessary when determining how much interest can be cross-referenced to the civil module.

For more information on interest computations on RBA’s see IRM 20.2.11.13.1, Interest Computations on RBA’s.

Always input a history item into AMS to document all actions taken and the specifics of the payment application.

With certain exceptions, as shown below, penalties (including penalties referred to as “additions to tax”) are due on the date of notice and demand [IRC 6601(e)(2)(A)], which is the assessment date or “23C” Date. Therefore, interest assessed on these penalties is computed from their assessment date. See IRM 20.2.5.3, Interest on Penalties and Additions to Tax, for more information on computing interest on penalties.

For the following penalties, interest starts from the later of the return due date or the extended due date and continues until paid.

When computing Interest on Penalties on BMF assessments, refer to IRM 20.2.5.3, Interest on Penalties and Additions to Tax, for exceptions to the computation dates for specific returns.