Purpose of Program: This IRM provides instructions to be followed by the Submission Processing Hardcore Payment Tracer Functions (HPTF) for the resolution of taxpayers’ missing or misapplied payments.

Audience: All employees within the Accounting Operation areas at each of the 3 Submission Processing campuses who work Hardcore Payment Tracer cases.

Policy Owner: The Accounting Services Section is part of the Accounting and Tax Payment Branch in Submission Processing under the Taxpayer Services Business Operating Division Customer Account Services.

Program Owner: Taxpayer Services(TS) division, Submission Processing (SP) is responsible for policy for researching hardcore payment tracers.

Primary Stakeholders: The primary stakeholders are Management Officials who rely on accurate data, reports and quality information to ensure there are no gaps in efficiencies.

Program Goals: To identify missing or misapplied payments using specialized Hardcore payment tracer techniques. Preliminary Payment Tracer guidance can be found in IRM 21.5.7, Account Resolution - Payment Tracers.

This section provides procedures for resolving Hardcore Payment Tracer (HCPT) cases. All functions within IRS are required to work the initial phases of a payment tracer case. Cases should be referred to the Hardcore Payment Tracer Function (HPTF) for additional research only after all initial research efforts have been exhausted - See IRM 21.5.7, Payment Tracers for initial research procedures.

It is important to resolve missing payment cases as expeditiously as possible because payments not applied to the proper tax module may result in erroneous notices or erroneous refunds and undue burden for taxpayers.

Taxpayers may initiate steps to resolve missing/misapplied payment issues through the Integrated Customer Communications Environment (ICCE) formerly referred to as Telephone Routing Interactive System (TRIS), written correspondence, telephone contact with a Customer Service Representative (CSR), Taxpayer Resolution Representative (TRR), Taxpayer Advocate Service (TAS), or a Taxpayer Assistance Center (TAC) visit.

All customer service representatives, including Automated Collection System (ACS), Campus Collection Operations, and TAC are responsible for researching and, if possible, resolving payment tracer inquiries. If resolution is still not possible following initial research procedures, the cases will be referred to HPTF.

Always exercise special precautions to protect taxpayers' accounts. Per the Taxpayer Bill of Rights (TBOR), taxpayers have the right to expect that any information they provide to the IRS will not be disclosed unless authorized by the taxpayer or by law. Taxpayers have the right to expect appropriate action will be taken against employees, return preparers, and others who wrongfully use or disclose taxpayer return information and; Taxpayers have the right to expect that any IRS inquiry, examination, or enforcement action will comply with the law and be no more intrusive than necessary, and will respect all due process rights, including search and seizure protections and will provide, where applicable, a collection due process hearing. See Taxpayer Bill of Rights (sharepoint.com) for more information.

Before disclosing any tax information:

If the caller is unable to furnish enough information for you to establish that they are actually the taxpayer, request the caller to find out the information and call back. If the caller states they didn’t have the information and cannot obtain it, advise the caller to provide written documentation.

Do not provide information concerning the taxpayer to third parties without written authorization from the taxpayer, even though the third party requesting the information has possession of a copy of the bill or notice in question.

The CADE 2 program deployed the first transition state towards the goal to implement a single modernized environment to process individual taxpayer accounts.

The components of CADE 2 Transition State 1 include:

Individual taxpayer accounts will be analyzed three times a year to determine whether the account at that point in time meets criteria to be marked as a Daily account.

Command Codes IMFOL and TXMOD will contain an indicator on the screen to identify whether the account is a Daily account or a Weekly account.

Incoming weekly transactions directed to an account that is marked as Daily will result in the account changing from Daily to Weekly when the transaction posts.

Individual Master File (IMF) transaction posting time frames are outlined as follows

Business Master File (BMF) transaction posting time frames are outlined as follows:

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

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

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

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

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

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

A copy of the program review and Corrective Action Plan must be retained as substantive documentation and evidence of mitigation and/or remediation of the noncompliance.

SP HQ Accounting and Deposit will follow-up to ensure corrective actions have been taken and to provide any additional and/or ongoing support, as needed.

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

Hardcore payment tracer research is the process used to locate taxpayers' missing or misapplied payments. A payment tracer case is not resolved until either the missing or misapplied payment is correctly applied to the taxpayer's account or the issue has been resolved (satisfied, e.g., “made whole”) following internal guidelines.

All functions work the initial phases of a payment tracer case (See IRM 21.5.7, Payment Tracers for initial research procedures).

To avoid rejects/delays, all areas must follow procedures in IRM 3.17.5.8, Referrals to Hardcore Payment Tracer Function (HCPT) for the correct way to prepare and submit referrals to the HPTF.

Before conducting research to locate the payment, determine if it has been at least 3 days (if payment sent electronically) or 2 weeks, since the taxpayer mailed their payment. If not, ask the taxpayer to call back at that time. If it has been at least 3 days (if payment sent electronically) or 2 weeks, obtain the following information as applicable:

Phone or fax the taxpayer for information needed to resolve the case. If unable to reach the taxpayer via telephone or fax (at least two attempts), use the appropriate "C" letter.

Information and research will vary depending on the type of payment being researched.

If other functions within IRS cannot locate the missing payment after researching online IDRS or reviewing information from the taxpayer/bank per IRM 21.5.7, Payment Tracers, they will prepare Form 4446, Payment Tracer Research Record documenting all research efforts and refer the case to the HPTF at the SP site that processed the payment or to the SP site that processed the most recent payments (if unable to determine for sure which SP site(s) processed the missing payment).

HPTF may also transfer cases to other SP site HPTF, if applicable.

Due to the various service center consolidations, the following exceptions to (1) above apply.

HPTF is usually located in the Accounting Services/Control Operation and is responsible for working complex payment tracer cases after all preliminary research has been exhausted per IRM 21.5.7, Payment Tracers.

Preliminary research will expedite the resolution process. Preliminary research prior to referral to HPTF includes:

Other functions referring a case to HPTF should indicate on Form 4446, Payment Tracer Research Record:

HPTF will review Form 4446 to ensure that necessary research and documentation was adhered to before accepting the payment tracer case. See revised FTD preliminary research procedures in IRM 3.17.5.22, Federal Tax Deposits (FTD).

HPTF will return any incomplete case through the HPTF unit manager with a detailed explanation of the corrective action required. HPTF will also notate on the reject sheet the stop number and/or team number (if available) of the person they are sending the case back to ensure that it gets back to the right person.

HPTF cases usually involve complex conditions such as:

If a refund should be issued, HPTF will apply the tentative substantiated credit, including received date and amount indicated on the proof of payment, within 10 workdays of receipt in HPTF.

HPTF is responsible for all subsequent communication with the taxpayer after accepting the case.

The following subsections identify complex payment tracer cases and actions to locate the missing or misapplied payments.

The following section provides procedures for creating a substantiated credit in cases where documentation is not available for normal processing. This allows for case resolution even if HPTF determines that necessary documentation has been lost or destroyed.

HPTF will continue searching for the payment until it is determined documentation needed to locate the missing payment was destroyed or cannot be located. If a careful determination has been made that the documentation was destroyed or cannot be located, use the following key elements to create a substantiated credit:

A substantiated credit MUST be allowed if the missing payment is not located within 120 calendar days of receipt by HPTF. Cases accepted in HPTF will be controlled in "M" status on IDRS until the case is resolved.

If the missing or misapplied payment is located after the substantiated credit was allowed, return the funds to Account 6570 via Form 3809, Miscellaneous Adjustment Voucher.

Absolute proof of payment is conclusive evidence that IRS received a payment and this includes:

National Cash Register (NCR) receipts must identify the register number, time, date, office location, and type and amount of tax paid.

Absolute proof that a Federal Tax Deposit (FTD) was made is the verification or acknowledgment of a payment submitted to a commercial or Federal Reserve Bank. This proof can be:

Cases prepared for substantiation must be reviewed and Form 3809 initialed by the Team Lead and Manager before submitting to the Operations Manager. They must verify the substantiation package includes:

The Accounting Control/Services Operations Manager must review and approve substantiated payment credits after all research has been exhausted and the payment cannot be located.

Case will remain in controlled “M” status on IDRS until the TC 760 post.

Consider all research to have been exhausted seven (7) years from the receipt date by HPTF.

The following systems/methods are used for submitting or processing payments:

ISRP and the RRPS convert paper tax, information documents and remittances received by IRS into perfected electronic records of taxpayer data. When IRS receives a tax document, it is opened and sorted by form type (e.g., Form 1040, Form 1120, etc.). Remittances with their accompanying documentation are pre-sorted into groups called batches. Each batch is uniquely identified by a 12-digit RPSID number. This number always begins with "00" , followed by 6 digits, followed by "0000." This system will capture, store, retrieve, archive (vouchers and check images) and route source data to downstream processing activities which subsequently post to taxpayers' accounts on Master File.

Information stored in the archive system includes the following:

When the remittances (checks, money orders, etc.) are processed through RRPS:

To resolve missing payments, you may need to research the ISRP Archival Retrieval System or RTR. Fax Form 11357, Integrated Submission and Remittance Processing Image Retrieval Request to the SP site(s) that processed the payment. See the ISRP Archive Contact List, located on SERP under the Who/Where tab, for a list of contacts for each SP site(s) (SERP - ISRP Archive Contacts - Who/Where).

This process will scan "scannable" vouchers and checks and assign a DLN. Returns with payments will no longer have a Document Locator Number (DLN) that matches the payment DLN. The inflated Julian date associated with the deposit item previously processed through RPS will no longer appear on taxpayers' accounts.

The ISRP/RRPS audit trail is different from the RPS audit trail. It will reflect the following:

The following is a comparison of the RPS/ISRP DLN:

Functions that cannot locate the payment should follow Payment Tracer procedures outlined in IRM 21.5.7, Payment Tracers for ISRP payments prior to initiating the following actions:

The Field Office Payment Processing Program involves processing paper remittances received in field offices and the issuance, tracking, and processing of Form 809, Receipt for Payment of Taxes. Form 809 processing includes field offices and SP site(s). IRS requires strict control of official receipts, taxpayer information and payments to ensure the highest integrity and public trust.

Form 809 must be handled with the same care and precision as cash. Field offices are required to use overnight traceable services or other traceable approved methods for transshipping remittances and tax receipts to their designated Submission Processing SP site(s) (See IRM 3.8.47.5.1, Receiving Field Office Receipts for additional information). Cash remittances must be converted to a check or money order before sending for processing.

Field office employees issue taxpayers a Form 809, Receipt for Payment of Taxes when they receive cash as payment, and a receipt when the payment is by check, money order, etc.

When field office employees issue Form 809, Receipt for Payment of Taxes, it becomes a posting document.

The case will be transferred or reassigned to the HPTF SP site(s) that processed the remittance via Form 4446, Payment Tracer Research Record if the payment cannot be located after all appropriate preliminary research has been completed.

Field office employees will send Form 3210, Document Transmittal with documents in a separate envelope sealed by the originator within the required overnight mail package.

HPTF will acknowledge receipt of Form 3210, Document Transmittal and its contents via overnight traceable services. Include pertinent data such as: the taxpayer's TIN, name control, and date of the form.

The Lockbox operation involves the processing of tax payments by commercial banks. This method of processing payments accelerates the handling and depositing of funds received. The payments are forwarded to the Department of Treasury.

Lockbox banks process payments for the following Individual Master File (IMF) products:

Lockbox banks process payments for the following Business Master File (BMF) products:

Taxpayers mail remittances to the IRS at designated post office boxes for each form type. These addresses can be found on the forms listed in (2) and (3) above.

The bank encodes and endorses the checks. The DLN, TIN, name control, received date, and tax period are printed on the back of the check.

The Lockbox system generates an Optical Character Recognition (OCR) Remittance Register, similar to the 813 Remittance Register.

The DLN consists of a File Location Code (FLC) which are the first two digits in the DLN. This is unique to Lockbox processing. Use this number with the bank endorsement to determine the correct SP site(s) to research.

All Lockbox banks image checks, money orders, and vouchers can be viewed via RTR.

These receipts result from court actions and IRS referrals to the Department of Justice (DOJ) for collection. The Kansas City Submission Processing site receives Standard Form 1081, Voucher and Schedule of Withdrawals and Credits, as notification of tax revenue secured by the DOJ.

If a taxpayer's cancelled check shows a DOJ endorsement:

Prepare Form 3210, Document Transmittal to include:

Internal Revenue Service, Attn: P-6 Mail Stop 6250, HCPT, 333 W. Pershing Rd., Kansas City, MO 64108

Also include:

HPTF will coordinate the resolution with Accounting personnel in accordance with IRM 3.17.10, Dishonored Check File (DCF) and Unidentified Remittance File (URF).

Field/Area Offices issue Form 809 or a cash register receipt to taxpayers for cash payments.

The tax return is validated at the time of receipt showing the amount and type of tax paid.

The Field/Area Office prepares Form 783, Remittance Register, or Form 795, Daily Report of Collection Activity, to list the payments. These forms are sent to the Submission Processing site. HPTF should contact their Service Center Teller Unit to get a copy of Form 795, Daily Report of Collection Activity by giving them the Form 809, Receipt for Payment of Taxes number provided by the taxpayer.

Research IDRS, including URINQ, XSINQ and RTR if available for these remittances.

If other functions are unable to locate the payment per IRM 21.5.7, Payment Tracers, they will prepare Form 4446, Payment Tracer Research Record to transfer the case to the HPTF at the SP site that processed the payment.

HPTF will verify Form 813, Document Register for the payment. HPTF will contact internal security before allowing a substantiated credit from Account 6570 based on Form 809, Receipt for Payment of Taxes as proof of payment.

All international or possession returns with remittances are deposited where received.

As of July 1, 2007, due to SP site Consolidations:

Remittances drawn on foreign banks payable in U.S. dollars through U.S. banks must have the U.S. bank’s routing symbol printed in the lower left corner of the check and have a nine (9) digit routing number. These are processed as regular deposits.

Any foreign remittance including remittances that are payable in U. S. dollars, drawn on foreign banks, and received with tax returns or documents, that fail to meet any portion of (1) above will be processed using manual deposit guidelines. The deposits are then mailed to Citibank in Wilmington, Delaware and numbered and processed as a foreign remittance.

Receipt and Control will process source documents with remittances that are payable in foreign currency and drawn on foreign banks as manual deposits. The deposits are mailed to Citibank for a money conversion report.

When foreign currency is received, Receipt and Control will contact Bank of America to convert foreign currency to U. S. dollars. The tax return or document will be processed using manual deposit guidelines.

Each SP site has specific deposit processing procedures. See IRM 3.8.45.27, Specific Campuses Processing for additional information.

For additional information on foreign remittances, see IRM 3.8.45.16, Foreign Check Remittances.

The tax due on Form 706, U.S. Estate Tax Return can be paid with redeemed Treasury Bonds (TC 678). The Bureau of Public Debt (BPD) or a Federal Reserve Bank (FRB) deposits the proceeds of the bonds to the credit of the Submission Processing SP site(s) designated on Form PD 1782, Application for Redemption at Par of United States Treasury Bonds Eligible for Payment of Federal Estate Tax.

Daily, the BPD will request the Philadelphia Regional Financial Office to issue U. S. Treasury checks payable to the "Director of the Internal Revenue Service for the Benefit of Estate" to the SP site responsible for the estate. Form PD 1782 is faxed to each SP site approximately seven (7) days before the Treasury check arrives.

The faxed copy of the PD 1782 is used by Receipt and Control as a source document. TC 678 is input and the check is processed through RRPS.

Form PD 1782 will contain the name of the decedent, decedent’s TIN, date of decedent’s death, tax due date, redemption date, and amounts.

To locate the payment, research the following:

If other functions are unable to locate the payment after following IRM 21.5.7, Payment Tracers, they will prepare Form 4446, Payment Tracer Research Record, and forward the case to the HPTF function at the SP site that processed the bond. HPTF function will continue to search for the payment. HPTF may need to research the file of Forms PD 1782 held in Accounting.

If the taxpayer's cancelled check is stamped "FI" , this is an indication that the bank is holding credits belonging to the taxpayer. These credits are referred to as "Free Items."

If the case involves "Free Items" , before referring the case to the HPTF that processed the payment, the function unable to locate the payment should obtain a current transcript of the account.

Upon receipt of Form 4446, Payment Tracer Research Record HPTF will initiate action to obtain the credit from the bank.

As of January 1, 2011, businesses that have a deposit requirement (such as employment tax, excise tax, and corporate income tax) were required to submit their deposits electronically. They will no longer be permitted to use Form 8109, Federal Tax Deposit Coupon and Form 8109-B, FTD Deposit Form (Over The Counter Version).

Treasury Tax and Loan (TT&L), the former system used to process FTD payments, was replaced with PATAX (Paper Tax). The PATAX system consolidated FTDs into one Federal Reserve Bank (FRB). However, PATAX was decommissioned in 2011 and manual procedures are necessary for making subsequent adjustments when FTD errors occur. IRM 3.17.5.22.1, FTD Referrals to HPTF, IRM 3.17.5.22.2, FTD Discrepancies and How to Correct Them, and IRM 3.17.5.22.3, FTD Discrepancies and How to Correct Them for Remaining FTD Paper Coupons contain processing procedures due to the decommissioning of PATAX.

As of January 1, 2011, duties formerly performed by the Interagency Coordinator (IAC) are being performed by the FTD Point of Contact (POC). There is an FTD POC located at the following Submission Processing SP site(s): Austin, Kansas City, and Ogden.

Payments processed through EFTPS can be identified through the EFT number shown on IDRS. After taxpayer enters the information, EFTPS supplies an acknowledgment number to the taxpayer. Taxpayers should write down this number and keep it for future reference. If there is any problem with the payment, this number allows IRS to trace the payment quickly. Customer Service Representatives can construct the EFT number from taxpayer provided acknowledgment number using the following elements for payments made prior to January 1, 2004. Payments made after January 1, 2004, should be constructed using the chart in IRM 3.17.277.5.3, EFT Number.

All Bulk Providers are under Bank of America (BOA) effective 7/1/2005.

IDRS Command Code EFTPS is a research tool developed primarily for payment tracer purposes. The Command Code allows for research of the EFTPS data base for payment data and audit history.

Direct Debit Installment Agreements (DDIA) is a Collection program. Taxpayers make arrangements to repay tax liabilities in installments via Electronic Funds Transfers.

These payments post to Master File as TC 670, Document Code 18, Blocking Series 800-899.

If other functions are unable to locate the payment, they will prepare Form 4446 and route the case to HPTF.

HPTF will research the following computer runs that are maintained in Accounting:

These automated levy programs run a match of delinquent accounts on the Master File database who are eligible to be levied against:

Each program is required to send the taxpayer correspondence advising of the levy and refer any inquiries to the ACS toll-free telephone number.

If other functions are unable to locate the payment after all preliminary research has been exhausted, they will prepare Form 4446, Payment Tracer Research Record and route the case to HPTF.

HPTF will research TDA56, Payment Detail Report, which is maintained in Accounting. The listing is in TIN order and contains the transaction date and amount of the state refund used to offset the Federal tax liability.

Missing payments related to Tax Exempt Bonds that are received with Form 8038–T, Arbitrage Rebate and Penalty in Lieu of Arbitrage Rebate are worked at the Ogden Accounts Management SP site(s) (OAMC) by the Exempt Organization Accounts Team.

Form 8038-T, Arbitrage Rebate and Penalty in Lieu of Arbitrage Rebate is the only Tax-Exempt Bond that is received with a remittance (with the exception of closing agreements). The remittance is identified as green-rockered money and processed as a TC 610 to the Master File.

Any SP site(s) receiving Form 8038-T, Arbitrage Rebate and Penalty in Lieu of Arbitrage Rebate payment tracer cases should transship the case to OAMC, Exempt Organization Accounts Team using Form 3210, Document Transmittal. The Exempt Organization Accounts Team will follow procedures in IRM 21.7.7.7.4.3, TEB Payment Tracer Procedures to resolve the case.

IRM 3.8.45.11.8, STAUP for Foreign Remittances requires Command Code (CC) STAUP to suspend collection activity on the taxpayer’s account during the conversion to U.S. Dollars.

Per GAO 13-420R IRS Management Report dated May 13, 2013, input of CC STAUP must be a separate duty from payment processing and Remittance Perfection Technician's IDRS profiles restrict them from inputting CC STAUP.

In order to process Foreign Remittances in a timely manner and for Receipt and Control (RCO) Branch employees to carry out their duties without jeopardizing taxpayer accounts, Accounting's Hard Core Payment Tracer (HCPT) team will perform the input of the STAUP using the procedures found in IRM 3.8.45.11.8, STAUP for Foreign Remittances (See IPU 14U1589 dated 11/13/2014).