Employees in the Accounts Management organization follow guidance in IRM 21.7.11 to work potential issues raised in the internal notices and transcripts, in addition to working the responses to related notices.

The Internal Revenue Code (IRC) is the authority for the procedures in this Internal Revenue Manual. Congress often amends the IRC. Revenue procedures, Revenue Rulings, and regulations interpret the IRC. For example: IRC 6654 supplies the rules for determining whether an individual taxpayer or fiduciary owes an estimated tax penalty, and IRC 6655 provides the rules for determining whether a corporation owes an estimated tax penalty.

Treasury regulations (26 CFR), commonly referred to as Federal Tax Regulations, pick up where the IRC leaves off by supplying the official interpretation of the IRC by the U.S. Department of the Treasury.

In addition to taking part in the promulgation of Treasury (Tax) Regulations, the IRS publishes a regular series of other forms of official tax guidance, including revenue rulings, revenue procedures, notices, and announcements. See Understanding IRS Guidance - A Brief Primer for more information about official IRS guidance versus non-precedential rulings or advice. The authoritative instrument for the distribution of all forms of official IRS tax guidance is the Internal Revenue Bulletin (IRB), a weekly collection of these and other items of general interest to the tax professional community.

IRM 1.2.1, Service wide Policies and Authorities, Service wide Policy Statements, has the Policy Statements that relate to Customer Account Services activities:

The Policy and Program Management Section of Accounts Management (AM) has responsibility for the information in this IRM. The IRM is revised annually.

The Director of AM handles the policy related to this IRM.

IRS Source supplies information on the roles of the various components of AM, including:

IRM 21.1.1, Accounts Management and Compliance Services Overview, supplies general information on the duties of assistor’s assigned to the AM organization.

IRM 1.4.16, Accounts Management Guide for Managers, supplies guidance for program management and review of programs assigned to Accounts Management.

Goals, measures and operating guidelines are listed in the annual Program Letter.

Quality data and guidelines for measurement are referenced in IRM 21.10.1, Embedded Quality (EQ) Program for Accounts Management, Campus Compliance, Field Assistance, Tax Exempt/Government Entities, Return Integrity and Compliance Services (RICS) and Electronic Products and Services Support.

The Reference Net Legal and Tax Research Service page provides an Acronym Database.

See Exhibit 21.7.11-1, Acronyms and Abbreviations Used in This IRM, to research acronyms and abbreviations found in IRM 21.7.11.

Below are additional websites, job aids, or electronic tools that are needed to assist in completing work in Accounts Management:

CP 108, Problem with Your Federal Tax Deposit (FTD), generates when the type of tax and/or tax period cannot be figured out on an Electronic Funds Transfer Payment System (EFTPS) payment. This notice advises the taxpayer where the credit was posted and supplies a Form 15108, Correction to Your Federal Tax Deposit (FTD), to return if the payment posted incorrectly. A toll-free number is also supplied if the taxpayer prefers to call rather than write. See IRM 21.7.11.4.1.1, CSR - Electronic Funds Transfer Payment System (EFTPS) CP 108, Problem with Your Federal Tax Deposit (FTD), Inquiries Received by Phone, for more information.

Action needed:

CP 172, SC Notice Requesting Follow-up Action on Entity, and CP 192, Employment Code Exempts FICA/FUTA Filing Forms 940, 941, 943, are internal (campus) notices issued through the Accounts Management System to Exempt Organization Entity for processing.

CP 172 is issued to verify the status of an entity set up as a nonprofit organization exempt from filing Form 940 (Employment Code (EC) "W" ) but needed to file Form 941 or Form 944 (FR 01). For more information, see IRM 3.13.12.20.5, CP 172.

If money has posted to Form 940 and the organization is not liable, Entity or Entity Unpostables prepares a Form 3465, Adjustment Request, or a Form 3244, Payment Posting Voucher, to request a manual refund and forward to Accounts Management (AM) for processing.

CP 192 is issued when:

For a CP 192 involving Form 941, Entity verifies whether the taxpayer entered into a Section 218 agreement electing social security coverage.

For CP 192s involving Form 940, Entity verifies whether the taxpayer is subject to FUTA tax. If the taxpayer is not subject to FUTA tax and Form 940 reflects a taxable wage amount, the case is forwarded to AM on Form 3465. Upon receipt of the Form 3465 or Form 3244, AM:

The following computer paragraph (CP) notices generate and are sent to the taxpayer when a Form 990-T, Form 1041, or Form 1120 series return is input to the BMF without the proper forms or schedule and one or more of the following Missing Schedule Codes (MSC) are assigned to the return. The credit is not allowed.

A CP 180, Missing Schedule on Forms 1120, 1041, 990C, 990T, notice generates when any of the following forms or schedules are missing from the return and the return is assigned a MSC.

A CP 181, Missing Schedule on Forms 1120, 1041, 990C, 990T, notice generates when any of the following forms are missing from the return and the return is assigned an MSC.

A CP 182, Missing Forms 3468 on Forms 1120, 1120F, 1120L, 1120M, 1041, 990C, 990T, notice generates when Form 3468, Investment Credit, is missing from the return and the return is assigned MSC 31.

See the following IRMs for more information on MSC for the forms below:

To resolve a CP 180 notice, CP 181 notice, or a CP 182 notice:

Unified Work Request 375703 obsoleted CP 180, CP 181, and CP 182 effective January 2023.

A CP 185, Frozen Designated Penalty Payment Transcript, is generated when all the following conditions occur:

A freeze from refund and offset are set in the same cycle the CP 185 is generated. The H- freeze is systemically released eight cycles later if other actions which release the freeze do not occur prior to that. See IRM 21.5.6.4.15, H- freeze, for more information. The freeze is released when one of the following conditions occurs:

Resolve the CP 185 by researching the Integrated Data Retrieval System to determine if there is a pending or unpostable penalty transaction. Follow the table below:

After following the above procedures, if the payment was made via EFTPS and research shows the payment was not intended to pay a penalty:

A CP 186, Subsequent Payment Freeze, generates two cycles after a payment or credit creates a credit or zero balance in a module that is restricted from generating interest and/or Failure to Pay (FTP) penalty. A module restricted from computing interest or FTP penalty has one or more of the following conditions present:

Changes to FTP penalty and interest must be manually computed when the module is restricted, and the computer cannot recompute the correct amounts.

Request the source document, if necessary, to figure out the reason for the restriction.

Review the penalty on the original assessment to verify if correct assessments were made.

Verify the interest assessed on the account.

If additional penalty and/or interest is due, input an adjustment to assess the additional amount. Follow the table below:

If no additional interest/penalty is due, transfer the credit to the correct period or input TC 290 $.00 to release the J- freeze. Input Hold Code 0 to allow a CP 210 or CP 220, Examination (Audit) or Data Processing Tax Adjustment - Balance Due, Overpayment, or Even Balance, notice to generate.

These penalties are assessed at master file with a TC 240 and a three-digit reference number that identifies the specific type of penalty. See IRM 20.1.1, Introduction and Penalty Relief, and the following exhibits for specific references numbers, IRC sections, and an explanation of the penalties:

The -X manual refund freeze is created by one of the following conditions:

A CP 195, Unresolved Manual Refund Freeze, generates seven cycles after a TC 840 posts to a module and the TC 150 was not coded with CCC 0 or 20 cycles if the TC 840 was blocked 6XX. These notices indicate the manual refund created a balance due condition and a Taxpayer Delinquent Account (TDA) notice is scheduled to be issued.

Take the initial steps described below:

Review the manual refund document. If the manual refund was input to a balance due module by a Compliance Service Collection Operation employee, input a TC 290 $.00 with HC 3 and Priority Code 8 to release the –X freeze.

After taking the steps in (3) above, use the table below to complete resolution of the CP 195.

CP 234, Potential ES Penalty Transcript on Forms 1120, 1120F, 1120L, 1120M, 1041, 990C, is electronically generated through the Correspondence Image Inventory /Account Management Services with the basic information to identify the account.

A CP 234 generates when the computer computation of the Estimated Tax (ES) penalty differs from the amount computed by the taxpayer (TC 170) by ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

A CP 234 generates when there is no TC 170 posted and the ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and one of the conditions below applies:

In addition to the criteria above, a CP 234 also generates on Form 1041, U.S. Income Tax Return for Estates and Trusts, if the Fiduciary Code is other than 9 and the computer computation of the ES Penalty is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and either of the following applies:

A CP 234 is received with the original return. The computer computation of the ES penalty is shown as "CP 234" in the "Notice History Section" of Command Code TXMODA. The TC 170 is the penalty amount computed by the taxpayer.

See IRM 20.1.3, Estimated Tax Penalties, for information on the penalty computation, exceptions to the penalty, and the application of payments when re-computing the penalty. To determine if the prior year is a short period return, see the following:

If a CP 234 generates on a Form 1041 or Form 1120 account and the adjusted seasonal or annualized income installment method is used and the annualization worksheet is attached to the return, ≡ ≡ ≡ ≡ ≡ ≡ math verify the Form 2210, Underpayment of Estimated Tax by Individuals, Estates and Trusts, Form 2220, or Form 8804 Schedule A, Penalty for Underpayment of Estimated Section 1446 Tax by Partnerships.

If the adjusted seasonal or annualized income installment method is not used, verify the accuracy of the taxpayer's distribution of the tax liability: e.g., did the taxpayer follow Large Corp. rules. If the taxpayer's distribution of the tax liability is correct and the penalty result differs from the Service’s computation, verify whether the credits claimed by the taxpayer match those posted on the account. If they do not match, try to locate any missing payments. Follow the table below:

The IRS has extended the due dates on certain estimated tax payments for business entities due to Statutory Exceptions and Administrative Waiver. Also, see the IRS Disaster Assistance Program website for other payment dates that have been postponed due to various Presidentially declared disasters. Go to the Media & Publications Product Catalog for prior revisions of this IRM and of IRM 20.1.3, Estimated Tax Penalties, when calculating or researching the ES penalty for tax periods not covered in this revision. Choose the revision date following the date of the disaster, Statutory Exception, etc.

Per Notice 2018-26, no underpayment (estimated tax) penalty will be imposed under IRC 6654 or IRC 6655, with respect to a taxpayer’s net tax liability under IRC 965. If the tax module contains an IRC 965 transaction code (TC) 971 with AC 114 or TC 766/767 with Credit Reference Number 263, refer to IRM 21.5.13, IRC 965 Transition Tax Procedures - Accounts Management, for guidance.

Notice 2019-25 provided special relief from the estimated tax penalty under section 6654 for tax year 2018. Under this notice, the section 6654 penalty is waived for any taxpayer whose total withholding and estimated tax payments made on or before January 15, 2019, equal or exceed eighty percent of the tax shown on that taxpayer’s 2018 return. See IRM 20.1.3.2.7.2.3, Notice 2019-11 and Notice 2019-25, Relief from Addition to Tax for Underpayment of Estimated Income Tax by an Individual, for more information.

Notice 2020-23 postponed to July 15, 2020, all estimated income tax payments due on or after April 1, 2020, and before July 15, 2020. As a result, first quarter 2020 estimated income tax payments due April 15, 2020, and second quarter 2020 estimated income tax payments due June 15, 2020, were both postponed to July 15, 2020. Taxpayers were instructed to make a single payment in an amount sufficient to cover both the first and second quarter estimated tax payments on or before July 15, 2020.

Under Section 2302(b)(2) of the Coronavirus Aid, Relief and Economic Security (CARES) Act, half of the IRC 1401(a) self-employment tax imposed on net earnings from self-employment attributable to the period from March 27, 2020, through December 31, 2020, is disregarded in calculating the section 6654 estimated tax penalty. Because Schedule H household employment taxes are generally treated as self-employment taxes of the employer for purposes of the section 6654 estimated tax penalty, the employer’s portion of social security tax imposed on wages paid from March 27, 2020 through December 31, 2020 and reportable on Schedule H is excludible from the ES tax base for the taxable year qualifying for the deferral. A Form 1041 (MFT 05) that includes tax from Schedule H for household employees may be affected by this provision and impact the CP 234. See IRM 20.1.3.2.7.2.5, CARES Act Section 2302, Delay of Payment of Employer Payroll Taxes, for additional details.

Notice 2023-42 provides penalty relief from the addition to tax under IRC 6655 for a corporation’s failure to pay estimated income tax in connection with the application of the new Corporate Alternative Minimum Tax (CAMT) for taxable years beginning after December 31, 2022, and before January 1, 2024. See IRM 20.1.3.4.2.2, Relief from Certain Additions to Tax for Corporation’s Underpayment of Estimated Income Tax under Section 6655, for additional details.

A programming problem was identified with the CP 234, Potential ES Penalty Transcript on Forms 1120, 1120F, 1120L, 1120M, 1041, 990C, for tax periods that began in 2016. Until the programming was corrected for periods beginning in 2017, the CP 234 notices did not compute the ES Penalty correctly on corporate income tax returns. Programming used the incorrect return due date (RDD) when calculating the ES Penalty. For more details about this issue, refer to prior revisions of this IRM.

When a module has more credits than claimed by the taxpayer, a Q- freeze is established and a CP 267, No Math Error - Credit Offset Notice, or a CP 268, Math Error Credit Offset Notice, is generated.

These notices list up to 39 credits and request that the taxpayer explain if the credits are to be applied to other accounts or refunded. A 15-cycle freeze releases when any of the conditions below is met:

These notices must be worked on an expedited basis. Make every effort to correct other issues involving the taxpayer's account rather than resolving only the notice tax period.

If not previously controlled on lDRS, control using "LETERCP267" or "LETERCP268" as the activity code.

If less than three weeks remain before the freeze expires, do not input any credit transfers. See table below:

If three or more weeks remain before the freeze expires, follow the table below:

If the taxpayer states that the excess payment/credit does not belong to them, determine if the payment was made via the Electronic Funds Transfer Payment System (EFTPS).

See IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria, if the case meets TAS criteria.

A CP 270, Audit/DP Adjustment Transcript, generates when both the criteria below are met:

To resolve the CP 270:

Input a TC 290 $.00 to release the freeze if all the following conditions are met:

Prevent a status update if the balance due is not correct by inputting the proper transactions to eliminate the balance due amount.

A CP 270 containing a TC 30X with HC 2 or HC 4 does not require a TC 290. Notices are generated at their normal cycle.

POSSDELPEN transcripts are used to verify the correct penalty amounts and generate when:

Use the table below to resolve these transcripts: