An erroneous refund is defined as, "the receipt of any money from the IRS to which the recipient is not entitled. This definition includes all erroneous refunds regardless of taxpayer intent or whether the error that caused the erroneous refund was made by the IRS, the taxpayer, a systemic issue, or a third-party."

IRM 3.17.80, Accounting and Data Control, Working and Monitoring Category D, Erroneous Refund Cases in Accounting Operations, provides guidelines for reviewing the facts and evaluating the circumstances surrounding a Category-D erroneous refund. and trying to recover the erroneous refund. These procedures contain requirements for obtaining restitution, and/or resolution.

The authority for these policies are:

The Submission Processing Headquarters Erroneous Refund Analyst (and back-up) is the individual responsible for the oversight of the Category-D, Erroneous Refund Recovery program.

The Accounts Management Headquarters Erroneous Refund Analyst (and back-up) is the individual responsible for creating the IRM 21.4.5, Refund Inquiries, Erroneous Refunds, for all Business Operating Divisions (BOD’s) to use when an erroneous refund is identified.

The Erroneous Refund HQ Points of Contact are individuals within the various BODs for communications to and about erroneous refunds that happened within the HQ Analyst’s BOD.

An Accountable Officer is any government employee or officer who, by reason of employment, is responsible for or has custody of government funds. Accountable Officers are held accountable for losses occurring within their accounting jurisdictions until restitution is made or relief is granted.

The Federal Accounting Standards Advisory Board (FASAB) establishes accounting concepts and standards. The Federal Financial Management Improvement Act (FFMIA) of 1996 prescribes that agencies implementation and maintenance of financial management systems substantially comply with Federal Financial Management Systems requirements, applicable Federal Accounting Standards and U. S. Government Standard General Ledger at transaction level and audits to report compliance.

The Field Director, Submission Processing, is normally the Accountable Officer for the campus accounting system. The Field Director, Submission Processing, usually delegates the authority for carrying out the accounting function. However, the ultimate responsibility remains with the Field Director, Submission Processing who can be held financially responsible if proper controls are not maintained. The Accountable Officer is responsible for ensuring that the following principles and standards are met in maintaining the accounting system.

See Exhibit 3.17.80-18 for commonly used acronyms and their definitions.

See http://rnet.web.irs.gov/Resources/Acronymdb.aspx for commonly used acronyms and their definitions.

These procedures must be used in conjunction with IRM 3.17.63 Redesign Revenue Accounting Control System (RRACS), IRM 3.17.64 Accounting Control General Ledger Policies and Procedures, IRM 3.17.243 Miscellaneous Accounting, IRM 21.3.3 Incoming and Outgoing Correspondence/Letters, IRM 21.4.5 Erroneous Refunds, IRM 3.0.167 Losses and Shortages, IRM 2.3 IDRS Terminal Responses, IRM 1.11.5 Publishing the Internal Revenue Manual (IRM), IRM 1.11.8 Servicewide Electronic Research Program (SERP), IRM 10.5.1 Privacy Policy, IRM 10.5.1.6.9.4 Faxing, IRM 10.5.1.6.8 E-mail. IRM deviations must be submitted in writing following instructions from IRM 1.11.2.2 Internal Management Documents System - Internal Revenue Manual (IRM) Process, IRM Standards, and elevated through appropriate channels for executive approval.

IRM 1.2.2.2.6, Delegation Order 1-6, Certification and Approval of Internal Revenue Collection

IRM 1.2.2.2.15, Delegation Order 1-17, Audit and Settlement of Accountable Officer’s Accounts - Revenue Accounting and Submission Processing

IRM 1.2.2.2.16, Delegation Order 1-18, Settlement of Accounts and Relief of Accountable Officers - Administrative Accounts

IRM 1.2.2.2.17, Delegation Order 1-20, Collections from Employees of the Internal Revenue Service

IRM 1.2.2.2.22, Delegation Order 1-25, Termination of Collection Action against Federal Depositaries

Treasury Directive 32-04, dated February 16, 2007 http://www.treasury.gov/about/role-of-treasury/orders-directives/Pages/td32-04.aspx

Treasury Directive 34-02, dated February 25, 2016 http://www.treasury.gov/about/role-of-treasury/orders-directives/Pages/td34-02.aspx

Management has the primary responsibility for providing a system of internal controls. Management is held accountable for internal controls. Management is liable for losses where it fails to provide proper internal controls. However, all personnel have a responsibility for understanding and ensuring that internal controls are functioning as intended.

All IRS employees must take care to protect Personally Identifiable Information (PII). Any loss of PII could result in information being compromised to commit identity theft. PII information must be encrypted on computers and e-mail. Sanitize taxpayer PII or use secure messaging. If you suspect or know of a potential information loss, report it to your manager and:

There are laws requiring the appropriate reporting of records loss.

All applicable laws relating to funds and appropriations must be complied with. Each fund (e.g., General Ledger) or appropriation must be used for the purpose authorized by law. Accounting records must be designed to show compliance with this requirement.

The accounting system must provide financial records consistent with standards set by other agencies and the Department of the Treasury in connection with its central accounting and reporting responsibilities. The financial data must be correct and reported timely to meet the needs of the President and Congress for budget activities.

Each accounting system must maintain complete and reliable records for all funds, property, and other assets, as well as liabilities, obligations, receipts, and revenues. All financial transactions must have documents supporting a summary record and financial report. Procedures implemented in carrying out the operation will be simple, efficient, practical, and must apply all legal and regulatory requirements. The responsibility for each accounting function, such as preparing documents, preparing journals, posting ledgers, reviewing, and balancing must be performed by separate units within the Accounting Operation to provide internal checks and minimize opportunities for fraudulent, unauthorized, or irregular acts.

The organizational structure, operating procedures and administrative practices are adopted throughout management to provide reasonable assurance that programs and administrative activities are effectively carried out.

The highest standards of truthfulness and honesty must be applied in accounting for the receipt, disbursement, and application of public funds. Management and the Congress must be able to rely on the accuracy of all transactions in future planning. To meet these standards competent leadership and qualified technicians are of prime importance.

An erroneous refund is defined as “the receipt of any money from the IRS to which the recipient is not entitled”. This definition includes all erroneous refunds regardless of taxpayer intent or whether the error that caused the erroneous refund was made by the IRS, the taxpayer, or a third party.

Erroneous Refunds are processed according to categories (A1, B, etc.) based upon certain characteristics on the tax module. The categories are defined in IRM 21.4.5, Refund inquiries, Erroneous Refunds, and must be used for processing all erroneous refunds.

For Un-assessable (Category D) erroneous refund cases processed in Accounting Control/Services, Erroneous Refund Unit, it is imperative that technicians use and be familiar with the instructions outlined in IRM 21.4.5, Refund Inquiries, Erroneous Refunds, when processing cases.

Section 3705 (a) of the IRS Restructuring and Reform Act of 1998 (RRA 98) requires employees to include their name, telephone number and Integrated Data Retrieval System (IDRS) number on manually generated and handwritten correspondence.

Refunds issued to an identity thief are Category D erroneous refunds; however, the provisions of this IRM do not apply. Identity Theft (IDT) Erroneous Refunds, refer toIRM 3.17.64.16, Erroneous Refunds, Accounting Control General Ledger Policies and Procedures, IRM 3.0.167.8 Disbursement Losses, Losses and Shortages, and Exhibit 3.17.80-19 Write Off Cover Memorandum for Identity Theft Erroneous Refund Write-Off Procedures.

See Integrated Talent Management (ITM) Course 10824, Researching and Resolving Erroneous Refunds, located at: https://irsgov.sharepoint.com/sites/EmployeeResources/SitePages/ITM.aspx, Integrated Talent Management (sharepoint.com).

Refer taxpayers to the Taxpayer Advocate Service (TAS) (See IRM Part 13, Taxpayer Advocate Service ) when the contact meets TAS criteria (See IRM 13.1.7, Taxpayer Advocate Case Processing, Taxpayer Advocate Service (TAS) Case Criteria and you can’t resolve the taxpayer’s issue the same day. The definition of “same day” is within 24 hours. These “Same day” cases include cases you can completely resolve in 24 hours, as well as cases in which you have taken steps within 24 hours to begin resolving the taxpayer’s issue(s). Do not refer these cases to TAS unless they meet TAS criteria, and the taxpayer asks to be transferred to TAS. Refer to IRM 13.1.7.4, Taxpayer Advocate Case Processing, Taxpayer Advocate Service (TAS) Case Criteria Same Day Resolution by Operations. When referring cases to TAS, use Form 911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance order).

TAS has reached agreements with the commissioners of the Wage and Investment (W&I) Division, Small Business and Self-Employed (SB/SE) Division, Tax Exempt and Government Entities (TE/GE), Criminal Investigation (CI), Appeals and Large Business and International (LB&I), that outline the procedures and responsibilities for the processing of TAS casework when either the statutory or delegated authority to complete case transactions rests outside of TAS. These agreements are known as service level agreements (SLAs).

The SLAs contain basic requirements for handling TAS-referred cases and includes specific actions to take on TAS referrals and specific time frames for completing those actions. Employees in the business operating divisions will acknowledge receipt and provide the name and phone number of the IRS employee assigned to work the case via Form 3210, Document Transmittal, secure messaging E-mail, facsimile, or by telephone within three (3) workday of receipt of the Form 12412, Operations Assistance Request (OAR). If necessary, the assigned employee/manager will contact the TAS employee and negotiate the completion date in resolving the OAR actions.

The SLAs are found at: https://irsgov.sharepoint.com/sites/TAS/SitePages/SLA.aspx, Service Level Agreements (sharepoint.com)

While TAS can/will make requests (e.g., OAR) for taxpayers with hardship situations, under no circumstances will there be a release of credits to the taxpayer with the hardship unless the HQ Submission Processing (HQSP) Erroneous Refund Analyst (or Back-up) has been informed of the need for release of the credits.

If it is necessary to release credits to the taxpayer with the hardship

Continue monitoring the case for any available credits until the Erroneous Refund Statute Date.

Write-off the account if the balance is not re-paid.

Send the taxpayer a Form 1099-C if the balance is $600.00 or higher and not re-paid (See IRM 3.17.80.1.22,Maintaining Case Files, instructions regarding the sending of the letter and the Form 1099-C).

General Ledger Accounts for Erroneous Refunds:

Each case is controlled with a unique document number on Form 3809. This document number allows for the tracking of an individual case from start to completion.

Accounting Operation's role, to attempt recovery or request voluntary repayment of erroneous refunds, does not change. Send error feedback electronically to the respective site servicing areas, Business Operating Division (BOD), Points of Contact listed in Exhibit 3.17.80-15. When the causes are attributable to the actions of a functional area whether the Erroneous Refund was initiated locally or at another site (identify site and BOD). This not only alerts the area of processing errors to initiate corrective actions, but documents that we have informed management to prevent future erroneous refunds. (See table below for examples)

IRS must report disbursement losses per IRM 3.0.167, Losses and Shortages. Areas causing erroneous refunds must provide documentation to support write-off actions if considered uncollectible (ERSED has expired).

Feedback electronic file must have but is not limited to:

Erroneous Refund cases must be sent to the respective Submission Processing site Erroneous Refund function documented and accurately prepared, as outlined in IRM 21.4.5, Erroneous Refunds.

History Sheets must be prepared from the point of discovery. Form 12356 must be used by the area discovering the erroneous refund per IRM 21.4.5.6.1, Account Actions for Category D Erroneous Refunds. Accounting Operations must also include documentation of actions taken, pending actions, telephone calls, copies all letters, etc., must be annotated on the History Sheet and be retained in the case file. This assists in substantiating future write-off actions if not recovered in the manual billing process.

The ERSED is 2 years after making the erroneous refund unless the refund was induced by fraud or misrepresentation of a material fact, in which case the ERSED expires 5 years from the date the taxpayer receives the erroneous refund (first use TCIS date if available, then use TC 846 date on IDRS). . If there are causes that do not appear to be covered in this IRM, seek assistance to pursue cases through coordination the Headquarters Erroneous Refund Analyst to obtain Chief Counsel's approval to pursue recovery using the 5 year duration. Refer to IRM 3.17.80.1.17.1, Erroneous Refund Statute Considerations.

Classification depends on the type of error which caused the Erroneous Refund. For additional information, See Exhibit 3.17.80-2Erroneous Refund Flow Chart. All erroneous refunds will be classified into categories as described in IRM 21.4.5, Erroneous Refunds.

The entire amount of the unpaid erroneous refund must be reversed into the 1530/1535/1540/1543/1545/1547 General Ledger and recovered, within the ERSED, through voluntary repayment, right of offset, or civil suit pursuant to IRC 7405. This process forms the basis for the instructions in this IRM to monitor, recover or write-off as unrecoverable Erroneous Refund cases.

Figure 3.17.80-1

Shown is a TXMOD Screen which highlights the -U Freeze and ERR-REF-BAL-DUE which is under the Posted Transactions Section to the right of the TC 700.

Please click here for the text description of the image.

The Customer Account Data Engine (CADE) 2 solution is comprised of several components, to modernize the IRS to a daily processing environment with several transition states.

The components of CADE 2 Transition State 1 in January 2015 include:

IMF transactions posting time frames are outlined as follows

CFOL Command Code IMFOL will contain an indicator on the screen to identify whether the account is a Daily account or a Weekly account.

For Notice Review and or Erroneous Refund units, when CC NOREFP is initiated, the following chart explains when the TC 846 and systemic TC 841 will be displayed:

This receivable account is used to record erroneous refund receivables that result in a court case (initiated by Criminal Investigations).

The RRACS procedures for this account are in IRM 3.17.64, Accounting and Data Control, Accounting Control General Ledger Policies and Procedures, procedures for a review of this account are in IRM 3.17.15, Accounting and Data Control, Accounting Reports Analyst Responsibilities and procedures for write off in the IRM 3.0.167, Accounting and Data Control, Losses and Shortages.

1535 Account will be supported by:

For court-ordered restitution (or IRS employee fraud) cases identified by CI, process as follows.

Cases received from the Criminal Investigation (CI) Field are identified with a "CRIMINAL INVESTIGATION RESTITUTION CASE" cover sheet.

CI will:

Update the IDRS Category Code to "ERRF" , reassign the IDRS control base to the CI-SDC unit in Ogden, change the status to "A" with activity code "ERRORREF(CI-RestitutionCase)."

If 45 days after the date of the initial letter (use ENMOD for the initial letter date if there is not a copy of the letter), the Erroneous Refund team will review each case file.

The Erroneous Refund team will follow-up with taxpayer quarterly (balance $600.00 or over) or semi-annual (balance $599.99 or less) correspondence reminding the taxpayer of the current balance.

The Erroneous Refund team will monitor the account for payments/credits to post to the account as they become available using generated TC 844 transcripts (See IRM 3.17.80.1.25, Processing 844 Transcripts (TRANS-844) -U Freeze).

Internal Revenue Code IRC 6404(e) requires that the IRS abate any assessed interest from the date of the refund to the date by which repayment is demanded on any Erroneous Refund of $50,000.00 or less, provided the taxpayer or any related party in no way caused the Erroneous Refund to occur.

Interest assessments are abated when the interest is not legally due, excessive, or barred under IRC 6404(a) . See IRM 20.2.7.3, Excessive or Not Legally Due - IRC 6404(a).

In cases involving requests for abatement of interest on erroneous refunds, the facts must be sufficiently researched (e.g., information provided by a taxpayer, post mark dates on documents, TXMOD, etc.) and the documentation for acceptance or denial attached to the case.

See IRM 20.2.7, Abatement and Suspension of Debit Interest, for further instructions or clarification on abatement of interest.

Interest on the Erroneous Refund is recovered in the same manner as the Erroneous Refund to which the interest relates. Interest (at the applicable rate) is charged on the amount of the Erroneous Refund from the date of issuance until the date of recovery unless waived under IRM 1.2.1.12.1 , Policy Statement 2-10, Abatement of Interest on Erroneous Refunds.

Policy Statement 2-10, Abatement of Interest on Erroneous Refunds, requires that:

Delegation Order 20-1 (Rev.2), paragraphs 14 through 16, IRM 1.2.2.14.1, Abatement of Interest, states that IRS officials have the authority to abate interest on Erroneous Refunds under IRC 6404(e) (2) interest can be abated when the following conditions apply:

Interest considerations are covered in IRM 20.2.7.7, Interest, Abatement and Suspension of Debit Interest, Erroneous Refunds IRC 6404(e) (2).

Assessable erroneous refunds are refunds which the IRS will assess (credit reversals are not assessments) under the IRC. The assessment will be either a TC 290 Reason Code (RC) 51, as in the case of Category B erroneous refunds, or deficiency, as in Category A-1 or A-2 erroneous refunds or other assessable taxes, as in Category C.

Category D erroneous refunds, referred to as "unassessable" erroneous refunds, are refunds not resulting from a tax determination and are not assessable under the IRC.

If the case does not qualify for assessment as described in IRM 21.4.5, Refund Inquires, Erroneous Refunds, the Erroneous Refund can be recovered only by the following:

When Category A-1 or A-2 (Assessable) erroneous refunds are identified, review the case to determine if it meets Examination's criteria. See IRM 21.4.5, Refund Inquires, Erroneous Refunds. Tax decreases made in error must be forwarded to the Examination function.

For the IRS to make an assessment, the taxpayer has to either agree to the assessment or a Notice of Deficiency has to be issued. The Notice of Deficiency gives the taxpayer 90 days to petition the tax court (150 days if the Notice of Deficiency is addressed to a taxpayer outside the United States). If the taxpayer does not petition, then IRS can assess after the 90 day period has expired. Notices of Deficiency must be issued before the ASED expires.

When a taxpayer repays the Erroneous Refund voluntarily:

If the taxpayer repays, prepare Form 3245, Posting Voucher - Refund Cancellation or Repayment and update IDRS to post the credit transactions. (See IRM 3.17.80.1.23, Refund Cancellation, Repayments and Replies to Correspondence)

If no response from the taxpayer:

When the case meets Examination's criteria, process per local Examination Notice of Deficiency procedures. Before routing erroneous refunds to Examination, be sure the case meets Examination's criteria and that the 3 year ASED has not expired.

To determine whether interest is due from the taxpayer, See Exhibit 3.17.80-1, Erroneous Refund Interest Considerations, and IRM 3.17.80.1.16, Interest Considerations, IRM 20.2.1, Interest Introduction, Standards and Guidelines or IRM 21.4.5.8, Erroneous Refunds on Designated and Non-Designated Payments.

Cases forwarded to Accounting/Erroneous Refunds Units must meet Category D criteria as defined in IRM 21.4.5, Erroneous Refunds. The related training material can be found in ELMS Course 10824, Researching and Resolving Erroneous Refunds. In general, within the first 10 work-days of receipt employees must:

If necessary documentation is not received with the case file, update the History Sheet stating the reasons the case is being returned to the originator.

If the applicable ERSED, CSED or ASED has not expired, but is imminent, expedite the processing of the case (See IRM 3.17.80.1.20.1, Working Statute-Imminent Cases). Prepare appropriate Erroneous Refund correspondence and Form 2209Form 2209, Courtesy Investigation (or use Integrated Collection System (ICS) if it is available) if:

Review the case file for interest which will be due from the taxpayer (See IRM 3.17.80.1.16, Interest Considerations and Exhibit 3.17.80-1, Erroneous Refund Interest Considerations).

If the ERSED 2 or 5 year will expire in approximately 3 months, the Erroneous Refund amount is over ≡ ≡ ≡ ≡ ≡ ≡ ≡, issue the appropriate Erroneous Refund letter and issue Form 2209 (or access ICS if available). See IRM 3.17.80.1.20.1, Working Statute-Imminent Cases

Erroneous Refund Unit employees must verify the correct blocking series posted with the TC 700 (58 Document Code, 950-999 blocking series). This unique blocking code produces the displayed literal Erroneous Refund Balance ("-U" Freeze) on the IMF-only accounts. For all BMF accounts it will be necessary to place a history item on IDRS using the same literal, Erroneous Refund Balance.

Submission Processing site Erroneous Refund Coordinators are listed in Exhibit 3.17.80-4.

Ensure that applicable statutes are still open. (See IRM 21.4.5, , Refund Inquiries, Erroneous Refunds)

History Sheets and supporting documentation are necessary to substantiate the Erroneous Refund and any future write-off actions. This applies to cases received from other areas. If pertinent documentation is not received with the case, including Form 12356 , Erroneous Refund Worksheet, update the local History Sheet stating the reasons. Return the case to the originator for correction or request complete documentation.

Combination cases will have both a CSED and ERSED applicable. (See IRM 21.4.5.15.1, Collection Statute Expiration Date for Category D Erroneous Refunds)

When an assessable tax liability plus a unassessable erroneous refund amount exists:

See IRM 3.17.80.1.17, Methods Used to Recover Erroneous Refunds, for cases deemed valid as a 5 year ERSED. See IRM 20.2 , Penalty and Interest, and IRM 3.17.80.1.16 , Interest Considerations, for instructions when interest will be applicable.

The following procedures apply to transferring refunds erroneously posted (TC 840/846) to the incorrect account. The unique TC 840 using the following blocking series will identify these as "dummy refunds," , and not refunds which are going to be issued. This must coincide with input of a TC 971.

Prepare Form 12857, Refund Transfer Posting Voucher, to post a TC 841 to the injured taxpayer's account and a TC 840 to the account of the taxpayer who received the erroneous refund (Refer to IRM 21.5.2.4.23.10, Moving Refunds). The TC 841 date must be the date of the erroneously posted TC 840 or TC 846. (See Figure 3.17.80-19)

Figure 3.17.80-19

Optional Form 12857, Refund Transfer Posting Voucher, per IRM 21.4.5, Refund Inquiries - Erroneous Refunds, has been developed, and will be received by Accounting to accomplish these transfer actions. Form 12857 carries 920 Blocking, with a true Julian Date. Form 12857 must contain cross-reference DLN, tax period, taxpayer and TIN, and file location, to indicate the erroneous original posting. These actions for a dummy refund must not result in a refund being released.

Please click here for the text description of the image.

If using Form 3753 (original only) to post the "dummy refund" (TC 840), include in "Remarks" "Not an Erroneous Refund."

Before being transcribed, these documents must be hand-carried to the appropriate area responsible for processing Form 3753, Form 12857 and Form 3809.

Retain copies of Form 3753, Form 12857 and Form 3809 in the Erroneous Refund case file.

Annotate the History Sheet with all actions taken.

Input TC 971 on both accounts to cross-reference the injured and Erroneous Refund taxpayers.

Additional instructions will be found in IRM 21.5.2.4.23.10, Moving Refunds.

Maintain the established paper cases Prior to July 1, 2023 in one of the following orders:

Organize the case file as follows:

Pull the case every 3 months (if the balance is $600.00 or over) or 6 months (if the balance is $599.99 or under) for review. Cases will be pulled based on the previously-established review date for each case. Continue corresponding with the taxpayers every 3 months or 6 months or until the 2 or 5 year ERSED expires. (See IRM 3.17.80.1.29, Write-Off Procedures for Unrecoverable Erroneous Refunds (for General Ledger 1530, 1535, 1543), for write-off procedures). Perform the following actions when performing the 3 month, quarterly (balance over $599.99),and semi-annual (balance under $599.99), review:

The case History Sheet Must reflect that the 3 month reviews are being performed. Refer to the below chart:

For semi-annual (6 month) reviews, refer to the below chart:

If no correspondence is pending with the taxpayer. File the case if:

Enter on the History Sheet the interest start date (date of demand or date of refund).

Mail the Letter 510-C, Letter 3414-C or Letter 3064-C to the taxpayer with a return envelope. Place a copy of the letter in the case file.

Although it will rarely occur, if there are excess credits on the taxpayers account (e.g., because misapplied payments have posted to the account where there is a full-paid erroneous refund, continue closing the case but input a TC 570 and ensure it posts before inputting the closing TC 845.

If a Letter 510-C is returned as undeliverable, search for a more current address (for example: IDRS, ENMOD, INOLE, IRPTR, or access Accurint with the assistance of Accounting’s Unidentified Team.) and document actions on History Sheet. If a better address is found, include Form 8822 , change of address, with the re-mailing of the letter. Completion of this form by the taxpayer authorizes an address change and re-mail. If a notice is returned as undeliverable again and:

Form 2209 :

Initiate follow-up action using Form 2209-A when Form 2209 was issued over 90 days prior, if appropriate.

When a case indicates the applicable 2 or 5 year ERSED has expired and the Internal Revenue Service no longer has the legal right to recover the Erroneous Refund:

Remove repaid case, move to the "closed" file when TC 845 is input to release the Erroneous Refund Freeze, if appropriate.

Retire the closed Erroneous Refund case file according to the guidelines in Document 12990, Records Control Schedules.

When replies are received from the taxpayer in response to the Letter 510-C, pull case file and research.

If the taxpayer returns the original refund check the category code on TXMOD history will update to 3913. If you receive the returned check forward to Refund Inquiry to be batched and sent to the Regional Financial Center. Monitor account for the TC 841 to post. The cancellation credit will generate a TC 777 for the amount of credit interest in the refund. Update case History Sheet and IDRS control base.

If you receive a payment and the Erroneous Refund is not fully repaid, reply to taxpayers correspondence giving the new balance due, arrangements for a payment plan, etc. (See IRM 3.17.80.1.20.5, Processing Partial Payments)

Prepare Form 3809 for a TC 702 to reverse TC 700:

If the Erroneous Refund is fully repaid and there is additional credit remaining on the tax account, assess interest as follows:

When the Erroneous Refund is fully repaid, if applicable, verify TC 702 has posted:

If the taxpayer claims non-receipt of the check(s), See IRM 21.4.2, Refund Inquiries, Refund Trace and Limited Payability.

When there is no response from the taxpayer within 45 days, and the Erroneous Refund is over ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, within 10 work-days of the 45th day, initiate Form 2209 procedures, if not already completed, include the following when mailing Form 2209:

If the Erroneous Refund is less than ≡ ≡ ≡ ≡ ≡ ≡ follow guidelines in IRM 3.17.80.1.22, IRM 3.17.80.1.22.1 or IRM 3.17.80.1.22.2, Maintaining Case Files.

If photocopy of the check(s) received from Check Claims, with an accompanying BFS Form 1133 and BFS Form 3858 indicate different endorsement(s).

If no response from the taxpayer within 45 days and the interest letter has not already been sent then follow procedures in IRM 3.17.80.1.22, IRM 3.17.80.1.22.1 or IRM 3.17.80.1.22.2 Maintaining Case Files.

When the taxpayer returns completed Form 1133 , follow procedures in IRM 3.17.80.2, Processing Payments Over Cancellation.

If the taxpayer requests to pay by installments, and the ERSED is still open, accept the offer made by the taxpayer and send the taxpayer pre-addressed envelopes to make payments.

If the taxpayer requests to pay by installments, but no offered amount is provided by the taxpayer, determine the status of the 2 or 5 ERSED. Divide the amount of the Erroneous Refund by the number of months it would take the taxpayer to repay before the ERSED expires. The payment plan will not be extended beyond the ERSED.

Figure 3.17.80-20

Shown is an example of a payment schedule calculation.

Please click here for the text description of the image.

Send the taxpayer a Letter 3414-C or Letter 3064-C.

If the taxpayer requests to pay after the ERSED (2 or 5 years from the date of the refund), inform the taxpayer that voluntary payments are accepted. However:

Monitor installment payments. If the taxpayer defaults on an installment, continue to send the quarterly (balance $600 or above) or semi-annual (balance $599.99 or less) reminder letters until the ERSED expires. Then, if necessary, follow the write-off procedures. If the balance due is over $20,000 and it is within six-months of the ERSED, communicate with Collection Field Function via Form 2209 or ICS and inform them there has been a default on the installment payment agreement and request that a Revenue Officer make contact with the defaulting taxpayer. If requested, forward taxpayers original request for installments and brief explanation of case to the Collection or CSCO function. Retain a copy of letter from the taxpayer in the Erroneous Refund case file.

Monitor items where follow-up action is needed.

When the 15XX Account is written off and there is a debit balance due on the taxpayers installment account, assess interest only on the amount of the Erroneous Refund from either:

Send taxpayer a Letter 3414-C stating another area is handling the remaining balance due on their account. Forward taxpayers original request for installments and brief explanation of case to the appropriate Collection Field Function group. Retain a copy of letter from the taxpayer in the Erroneous Refund case file.

If an erroneous refund involving a direct deposit has been returned or refused from a bank but the bank has taken bank fees, there is still an outstanding balance from the original erroneous refund:

Figure 3.17.80-21b

Shown is a IDRS Screen print of CC REQ54 and example of control base information.

Please click here for the text description of the image.

When replies are received from the Collection Field Function, note the information from Form 2209 on History Sheet

If the reply indicates the taxpayer will not repay, note on the History Sheet whether or not civil suit was recommended or an extension was signed. Associate with the case file. Store case file in the "Suspense" file.

Hold the case in the "Suspense" file until a credit becomes available for offset (2 or 5 year). When offset(s) have satisfied the 15XX Account or the 2 or 5 year statute has expired, input TC 845 using CC REQ77, close the IDRS control base and file the case in the closed file. If no offset(s) become available or the 2 or 5 year statute expires, write-off the unrecoverable refund as outlined in IRM 3.17.80.1.29, Write-Off Procedures for Unrecoverable Erroneous Refunds (for General Ledger 1530, 1535, 1543).

If the taxpayer claims non-receipt of the refund check, the Collection Field Function will retain Form 2209 , but will return Form 2209-A, Status Report, and the taxpayer's statement (if practical). Initiate CC CHKCL or SF 1184 for an unavailable check cancellation and attach the taxpayer's statement, if available. Photocopy all information for the case file. When a reply is received from inquiry to CHKCL Form 1184, notify the originator of the status.

If a repayment agreement has been accepted, retain case in the cycle file under a review date for the date payments are expected.

Background: When a TC 844 is input to a taxpayer's module, it Freezes the entire account (-U Freeze) for credits becoming available for offset. No credits are refunded to the taxpayer or offset to another outstanding balance within the account until the (-U Freeze) is released by a TC 845. TC 845 has restricted input by Accounting/Erroneous Refund employees only. TC 845 must be input on the same module where the TC 844 is present.

Verify that the taxpayer's account has an open control base.

Determine if the credit is available for transfer to the 15XX Account. Other liability Freezes will be involved. If the credit is not available for transfer, associate the transcript with the case file. Inform the appropriate function of the available credit.

If a TC 150 is not present on the transcript, the credit is not available for transfer unless the payment is designated for the ERRF repayment (payment was misapplied).

Transfer the available credit for the amount of the Erroneous Refund, plus any interest due, to the period involved. Input CC ADD24 or CC ADC24 with appropriate Transaction Code per IRM 2.4, IDRS Input Instructions . (See Figure 3.17.80-22)

Figure 3.17.80-22

Shown is an IDRS screen print of CC ADD24. The Transaction Code 820, 700 and the remarks section are highlighted. The remarks has verbiage that read: TO TR CR TO 20XX12 ERRF CASE 20XX-17-0714.

Please click here for the text description of the image.

If the -U Freeze (TC 844) has not been released, transfer available credit to the 15XX Account, to the debit balance held in the 15XX Account. (See Figure 3.17.80-23) The remaining credit, is applied to the debit balance including any interest due on the tax module. Notify the taxpayer using the Letter 285-C.

Figure 3.17.80-23

Shown is a Form 3809 which highlights completed fields numbered 1 through 16 as follows: Universal Location CodeName and address - Debit Side (Remember to underline the name control with the appropriate colored pencil on the side that posts to the Master File; address is optional.)X-ref TIN - taxpayer's TINX-ref MFTRoute to - Always check MFX-ref tax periodTransaction date - Date of TC 700, used for 15XX Account1st TC - Always use TC 702 to reverse original TC 700Debit amount (If full payment is received, reverse original TC 700; if partial payment is received, reverse TC 700 by payment amount only.)Always 15XX accountRoute to - Always check NMFTransaction date - Date of original TC 700Credit amount - Must be the same as the Debit amountExplanation of remarks (i.e. To reverse refund received by another taxpayer SSN/EIN: (Fill in), ERRF Case #: (Fill in).Prepared by - Your name and/or employee numberDate prepared

Please click here for the text description of the image.

If the statute for offset (ERSED 2 or 5 years) expired and a TC 700 is on the account, input the TC 845 using CC REQ77 to release the (" -U" Freeze). Do not transfer the credit to the 15XX Account without approval from the taxpayer. If approval is not received, initiate action to write-off the unrecovered amount in the 15XX Account, per IRM 3.17.64.4.10, Accounting Control. Follow write-off procedures outlined in IRM 3.17.80.1.29, Write-Off Procedures for Unrecoverable Erroneous Refunds.

Notate the case History Sheet that a TC 844 transcript was received and what actions were taken.

Release TC 844 Freeze when the 15XX Account is repaid, or when written off and annotate History Sheet with actions taken. Follow procedures for interest in IRM 3.17.80.1.16, Interest Considerations. Close IDRS control base and file in the closed case file.

A TC 130 will be used to legally offset the issuance of the refund to the Erroneous Refund 15XX Account. Although TC 844 is usually sufficient if the ERSED has not passed, the TC 130 is needed to Freeze a refund on an account other than that which had the Erroneous Refund such as:

If a manual refund is prepared for any remaining credit, follow IRM 21.4.4, Refund Inquiries, Manual Refunds, manual refund procedures and you must research for:

Releasing TC 844 (-U Freeze) for offset.

Annotate the case file. Maintain in the closed case file.

Upon notification of a dishonored refund repayment from the Dishonored Check Unit, research file, 15XX Account, etc., to determine if the case is still active.

If the Erroneous Refund case is active, research TXMOD and case file to determine the status of the dishonored check. Verify that:

Determine if a Letter 510-C has been issued to the taxpayer and the status of the 2 or 5 year statute.

If the 5 year statute has not expired and the Letter 510-C has not been issued, monitor case for 45 days, awaiting a reply to Form 2287 (c) notice, Check Not Accepted By Bank (issued by the Dishonored Check Unit). If no repayment is received within 45 days, send taxpayer a second Letter 510-C as outlined in IRM 3.17.80.1.22, IRM 3.17.80.1.22.1 and 3.17.80.1.22.2, Maintaining Case Files.

If the 5 year Statute has not expired and the Letter 510-C has been issued, follow instructions in IRM 3.17.80.1.26(4), Dishonored Check Erroneous Refund Repayments, above, except do not send Letter 510-C. Send Letter 3064-C to taxpayer, using open paragraphs as follows: "The check you submitted for repayment of an Erroneous Refund issued to you has been dishonored. Form 2287 (c) has been issued to you requesting payment. Therefore, your account remains in balance due status, accruing penalties and interest until paid in full." The issuance of a Letter 3064-C is limited to the specifications of the 5 year Statute.

If the 5 year statute has expired, follow write-off procedures as outlined in IRM 3.17.80.1.29, Write-Off Procedures for Unrecoverable Erroneous Refunds (for General Ledger 1530, 1535, 1543).

Notate History Sheet with actions taken and re-file case for follow-up.

When a repayment is received, or when credit has been available, after the 2 or 5 year recovery Statute has expired, follow procedures below:

If the taxpayer repays any/all of the credits will be sent to Excess Collections:

If the taxpayer chooses not to repay the Erroneous Refund after expiration of the ERSED:

If repayments are received after the ERSED has expired and when the taxpayer is making payments, the IRS will continue to issue a Letter 510-C or Letter 3414-C to the taxpayer on a quarterly (balance $600.00 or over) or semi-annual (balance $599.99 or less) basis until the erroneous refund is paid.

If repayments are received after the Form 1099-C was issued, initiate requests and prepare a corrected Form 1099-C via the 1099 software that is made available to the Site Accounting Operations:

"If the taxpayer does not reply:"

The procedures above leave a proper audit trail of repayments.

TOP erroneous refunds can occur before or after the creditor agency reports to IRS that they made a refund to the taxpayer of an IRS offset.

Refer to IRM 21.4.6.5.22.1, Injured Spouse Returned Refunds.

TOP erroneous refunds that occur after BFS reported that they issued a refund of the offset are processed using Erroneous Refund procedures found in IRM 21.4.5, Refund Inquiries, Erroneous Refunds.

Erroneous Refunds occur on TOP offsets when:

These erroneous refunds will occur on TOP offsets when:

Figure 3.17.80-24

Shown is an IDRS screen print of CC TXMODA which highlight TC 899 and TC 766.

Please click here for the text description of the image.

Figure 3.17.80-25

Shown is an IDRS screen print of CC TXMODA highlighting the OFFST-AMT and money amount of TC 766.

Please click here for the text description of the image.

Unrecoverable Erroneous Refund disbursement losses are written off when the 2 or 5 year ERSED expires unless one of the exceptions below is present.

The conditions below must be met to prepare the case for the Accountable Officer.

When reviewing or working an Erroneous Refund case and the 2 or 5 year ERSED has expired, follow the procedures below unless an exception in (1) above is met.

Figure 3.17.80-27

Shown is a completed Form 2209-A which highlights completed fields numbered 1 through 12. See Figure 3.17.80-25 for explanation of completed/numbered fields.Name of taxpayer (Name used on Form 2209)Address as shown on Form 2209New Address, if differentDate of form 2209Date of this reportIdentifying number (taxpayer's TIN)Address of Area Office indicated on Original Form 2209Payment received and date (if applicable)Information or documents necessary for completion (if applicable) Additional information requested as indicated under RemarksRemarks (e.g. for additional follow-up, recalling original Form 2209, etc.)Address of office making report

Please click here for the text description of the image.

If Erroneous Refund repayments are received after write-off actions have taken place (Refer to IRM 3.17.80.1.27, Erroneous Refund Repayments After the 2 year or 5 year Statute Has Expired).

Unrecoverable erroneously paid refunds will be considered income to the recipient. Form 1099-C, Cancellation of Debt, or Form 1099-MISC, Miscellaneous Income, are issued to IMF and BMF taxpayers receiving such refunds instructing them to include these amounts as income on their returns for the year indicated on the 1099s.

In situations where the unassessable erroneous refund is income in the year it is received, a Form 1099-C must not be issued for any year. Instead the IRS must issue a Form 1099-MISC, Miscellaneous Income, with respect to the year the unassessable erroneous refund is received and include the unpaid amount of the erroneous refund under line item entry number 3, "Other Income" .

Erroneous Refunds, whether Assessable or Unassessable, must not be reported on Form 1099–C in the year the Erroneous Refund was received if:

Careful case review is necessary to determine which year to report erroneous refunds of more than $600.00 on Form 1099-C or Form 1099-MISC.

Enterprise Computing Center (ECC) - Martinsburg, Information Returns Program (IRP) publishes annual revisions to the Instructions and Specifications for preparing Form 1099, Form 1098, Form 5498 and Form W2-G Reporting (Publication 1220).

Review case files. Prepare Form 1099-C, Cancellation of Debt, if the outstanding Erroneous Refund balance is $600.00 or more.

When no reply is received from a taxpayer after the second letter is sent and/or if Form 2209 is closed by Technical or Collections without repayment, and/or if the statutory periods have expired (or about to expire).

For cases where it has been determined that a Form 1099-C or Form 1099-MISC, it is considered as additional customer service to send a Letter 3414-C , Letter 510-C or a Letter 3064-C to remind the taxpayer(s) they will receive some type of a Form 1099.

Complete the Form 1099-C or Form 1099-MISC:

Part A of all paper Form 1099 copies must be sent to IRS with Form 1096, Annual Summary and Transmittal of U.S. Information Returns; Part B is furnished to the taxpayer/debtor unless this process has been automated by your site.

A copy of Form 1099 must be kept for, at least, 4 years from the due date of the return, or sufficient information to be able to reconstruct the data (case file) must be retained for, at least, 4 years from the due date of the return.

When the RACS team receives the Whistleblower package there are three items:

For each informant, a Form 1099-MISC. must be completed and sent to the taxpayer no later than the last work-day of the month of January.

For cases where it has been determined that a Form 1099-C or Form 1099-MISC, it is considered as additional customer service to send a Letter 3414-C , Letter 510-C or a Letter 3064-C to remind the taxpayer(s) they will receive some type of a Form 1099.

If the undeliverable letter has received a Return address containing an IRS address, the tax return will involve ID-theft. Make contact with the appropriate point of contact in the IRM 3.17.80.2.6, Resolving Unpostable Identity Theft Cases Where There is Duplicate TC 841, or http://serp.enterprise.irs.gov/databases/who-where.dr/idt-liaison-listing.html, SERP - IDT Liaison Listing - Who/Where (irs.gov) SP Specialized IDT Units and make any address update based on those communications.

Research Undeliverables using CC ENMOD, CC NAMES, CC NAMEI, CC IMFOLE, CC BMFOLE, CC IRPTR, CC TPIIP, or access Accurint with the assistance of Accounting’s Unidentified Team, and RTR (submitted checks often contain a more current address). Check ENMOD, BMFOLE, or IMFOLE for recently-posted or pending address changes some are made by the National Change of Address (NCOA) Program and are indicated by the presence of TC 014 and the unique DLN of xx26399599999Y, with “xx” representing the IRSC of each campus. Update the Form 1099-C using the more current address or the pending change-of-address. Do not change the address on CC ENMOD

If a yellow USPS forwarding label is attached, verify the address on the label using CC ENMOD and CC NAMES.

Perfect any new address by entering into USPS.COM - Zip Code Finder at https://tools.usps.com/go/ZipLookupAction!input.action, ZIP Code™ Lookup | USPS.

If a better address is found, include Form 8822, Change of Address, with the re-mailing of the Form 1099-C. Completion of this form by the taxpayer authorizes an address change.

Use CC ACTON to enter a history item, "8822toTP" if CC TXMOD is present on IDRS. Do not create a dummy module to input a history item.

If no better address is found:

When Form 1081 Treasury Receivable Accounting, and Collection System (TRACS) and Bureau Fiscal Services (BFS) 1133R (Release of Claim Against the United States for Proceeds of a Government Check) are received in Accounting, follow the procedures outlined in IRM 3.17.80.1.29, Write-off Procedures for Unrecoverable Erroneous Refunds.

If the taxpayer's response to Letter 510-C or by telephone inquiry is: they did not cash the refund check, or did not understand when they signed the release Form BFS 1133R (provided by Secret Service), follow the instructions outlined below.

Monitor the case for 60 days. If no reply after 60 days:

If the reply to Form 3864 or 2 way memo indicates the taxpayer benefited from the proceeds of the check:

If the taxpayer did not benefit from the check and BFS indicates that a future Form 1081/TRACS or a Limited Payability credit will be issued to IRS:

Identify Unassessable types of erroneous refunds and determine the correct Accountable Officer for recovery actions. These procedures serve as guidelines for transferring cases due to Director's accountability for Category D, unassessable erroneous refunds.

If Unassessable Category D Erroneous Refund cases must be transferred to another site:

The losing SP site must:

The gaining SP site must:

Cases already in Litigation are exempt from these procedures and will not be transferred.

TC 844 transcripts must be forwarded to the appropriate Submission Processing site.

Before closing cases with TC 845, research account(s) and IDRS to determine whether any other open control bases exist.

Management must report feedback to business or functional areas Points of Contact (See Exhibit 3.17.80-15) when employee actions cause the occurrence of erroneous refunds. This will be the result of lack of actions such as failure to monitor accounts or the originators of manual refunds (TC 840) who inadequately research accounts and fail to stop a system-generated refund (TC 846).

Only the following descriptions of errors will be included when submitting the monthly reports to Headquarters (HQ):

Always forward a copy of this report to the site Submission Processing P&A Chief and the P&A Accounting Analyst with a short explanation about the monthly report and be sure to note that these are not cases that have been written-off.

When feedback is received and there is disagreement on who caused the erroneous refund, and if it is discovered the error feedback must have been sent elsewhere (i.e., a previous month lockbox error was really a taxpayer error), prepare an updated monthly report and send it to the HQ Erroneous Refund Analyst the same time the regularly scheduled monthly report is due.

For lockbox cases that are being written-off, the above described report and copies of the cases must be sent to the HQ Losses and Shortages Analyst.

Uploading Multiple Reports go to the Category D Erroneous Refund SharePoint site at: https://irsgov.sharepoint.com/sites/JKQSGYZD/SitePages/Home.aspx, Category D Erroneous Refunds (sharepoint.com)

Deleting Reports go to the Category D Erroneous Refund SharePoint Site at: https://irsgov.sharepoint.com/sites/JKQSGYZD/SitePages/Home.aspx, Category D Erroneous Refunds (sharepoint.com)

The following procedures apply to the stolen identity theft cases processed as an erroneous refund. The Unpostable TC 720 or TC 740 will be for accounts that have a TC 841, or a TC 700 posted.

The Unpostables function assigns a control on IDRS (CC TXMOD) to the Accounting Erroneous Refund Team’s generic IDRS number for UPC 138-0 which cannot be resolved in Unpostables.

The Erroneous Refund Team will receive a Case Control Activity (CCA) Report showing the unpostable documents. These Unpostables will have the category RTCK (returned check).

If there is an existing open control base by another area, notify the other area of the actions being taken.

The CCA report and any supporting documentation must be maintained for a three (3) month period.

The Erroneous Refund Team will verify TC 841 on taxpayer's account.

The Erroneous Refund Team prepares a Form 3245 for a TC 843 to debit the taxpayer's account. Assign a DLN using Doc code 45 and a 540-549 blocking to the debit portion. Prepare Form 813.

Prepare a Form 3809 for the credit side to the RRACS GL Account, include the taxpayer's TIN, money and transaction date and in explanation field include Doc-ID. Prepare Form 813 and forward to RACS.

Stamp or write the 400/480 journal number on Form 3425, Form 3809 and Form 813.

RACS will hand carry Form 3245 and Form 813 to Batching under cover of Form 3210 so that the Form 3245 can be batched and sent to ISRP for transcription.

RACS will give the Form 3809 credit side to the area maintaining the General Ledger account on the credit side of the document.

The Erroneous Refund Team will monitor weekly, on Friday, to look for the TC 843 posting to the taxpayer's account and ensure TC 470 or STAUP actions are taken to stop an incorrect notice.

Once the TC 843 has posted, notify the Unpostables Team, using CC UPDIS, that they can post the Unpostable TC 720 or TC 740 to process the refund cancellation. Close the control base.

There will be cases where the TC 841 posted by one site and the subsequent input of a TC 720, TC 740 or a TC 841 input by another site is going Unpostable. The following scenario and procedures explain the actions needed to resolve this Unpostable.

The Erroneous Refund Team will verify the TC 700 is posted on the taxpayers' account.

The Erroneous Refund Team prepares a Form 3809, using a Doc Code 58 and blocking series 790-799 to post a TC 702 (debit) to the taxpayers' account and credit the applicable general ledger account. Prepare a Form 813 and forward to RACS.

Stamp or write the 400/480 journal number on Form 3809 and Form 813.

RACS will hand carry Form 3809, Form 813 to Batching under cover of Form 3210 so that the Form 3809 can be batched and sent to ISRP for transcription.

RACS will give the Form 3809 credit side to the area maintaining the General Ledger account on the credit side of the document.

The Erroneous Refund Team will monitor daily for TC 702 posting to taxpayer's account and ensure TC 470 or STAUP actions are taken to stop an incorrect notice.

Once TC 702 has posted, contact the Unpostable Team and tell them to process request to post TC 720 or TC 740, Unpostable (code 138 0) to process refund repayment. Close the control base.

The Unpostables function will assign a control on IDRS (CC TXMOD) to the Accounting Erroneous Refund Team’s generic IDRS number for UPC 138-0 which cannot be resolved in Unpostables.

The Erroneous Refund Team will receive a Case Control Activity (CCA) Report showing the unpostable documents.

If there is an existing open control base by another area, notify the other area of the actions being taken.

The Erroneous Refund Team will verify TC 841/848 and that there is no TC 971 AC 663 present.

The Erroneous Refund Team will review IDRS to locate a TC 971 showing the XREF-TIN.

If present, prepare a Form 12857 to debit (TC 840) the true taxpayers’ account and credit (TC 841) the cross-reference TIN. In most cases, this will be an IRSN.

If the XREF-TIN is not present, prepare Form 2275 to request the original Form 12857 from files, using the DLN of the posted TC 841. This will give you the XREF-TIN.

Ensure TC 470 or STAUP actions are taken to stop issuance of incorrect notices and monitor daily for TC 840 to post to the taxpayers’ account stop an incorrect notice.

Once TC 840 has posted, contact the Unpostable Team and tell them to process the request to post TC 720 or TC 740, Unpostable (code 138-0). Close your control base.

The Unpostable operation will 8 code the duplicate TC 841 to the Rejects operation.

Rejects will immediately work these cases. The Rejects function will perform a Reject 630 (4–0) and prepare a Form 4028 (0–2) for the duplicate TC 841, so that this item can be deleted from SCF. Rejects will route the case and Form 4028 under cover of a Form 3210 Accounting.

The Accounting operation will:

When Non-Accounting Operations identify duplicate posting of a TC 841 or TC 700.

Non-Accounting Operations will:

The Erroneous Refund Team will:

Due to systemic programming, duplicate TC 700 transactions will post to the taxpayers' module and will result in an erroneous refund. If the Accounting operation identifies cases where there is a duplicate TC 700, they will take the following actions.

If the TC 700 has posted on the account and a credit balance remains:

If the TC 700 has posted on the account and a refund has been issued:

Once extracts are received (IRM 3.17.64.16.4.8), Account 6905 ID Theft Erroneous Refund Write-Off(Nominal Account, DR Normal Balance), pull Form 3809 copies for the corresponding cases identified on the extracts.

Verify volume and totals of cases listed on extracts with the Form 3809 copies.

Verify 5 year statute expiration date has expired, which is determined by the transaction date.

Add a column for the Doc ID on each extract.

Update the extract with the Doc ID for each case, ensuring the Doc ID format is input correctly so that cases are grouped correctly.

Sort extract by Doc ID. This sorting process will ensure all Form 3809 copies from the same Doc ID will be captured and grouped together on the spreadsheet.

Prepare and submit the memorandum along with the extract for ID theft cases for approval and signature from the Accounting Operation Manager.

Receive signed memorandum and extracts with corresponding Form 3809 copies. Once the journal actions are completed, RACS will forward a copy of the memorandum, extracts and Form 3809 copies to the function maintaining the documents, if not RACS, for balancing and GAO audit file as a closed case.

When NMF identity theft is identified, prepare a Form 3809 to credit the tax account and debit the GL 1545. The designated team in Accounting will number the Form 3809.

Once the forms are numbered, prepare a Form 813 and forward to the RACS Team for journalization.

RACS will receive identity theft erroneous refund Form 3809 and three Form 813.

Within 24 hours of receipt, the RACS Team prepares a Form 8166 using Doc ID and item count, listing each money amount separately from the Form 3809. The total amount listed on the Form 8166 must equal the Form 813 total. The DOC ID input to RACS will be 15 digits as follows: DOC ID = DLN of Form 813 (without sequence number) plus two-digit year plus total volume on Form 813. e.g., XX000000000XXXX.

The RACS Team will:

After the RACS Team has journalized the Form 3809 copies and forwarded them for processing, the general ledger (GL 1545) side of the Form 3809 is forwarded to the Erroneous Refund Team. The Erroneous Refund Team will:

Once the 5-year erroneous refund statute expiration date (ERSED) has passed, the cases will be identified via an extract listing. When the extract is received, prepare a write off memo.

Forward the write off cover memo to the Accounting Operation manager for signature. An example of the write-off cover memo has been added. See https://irm.web.irs.gov/Part3/Chapter17/Section80/IRM3.17.80.aspx#3.17.80-19,IRM 3.17.80, Accounting and Data Control - Working and Monitoring Category D, Erroneous Refund Cases in Accounting Operations (irs.gov), Exhibit 3.17.80-19.

Forward the signed memo and listing to RACS for journalization, using a 490 window, to credit 1545 and debit 6905 using the same DOC ID as when the case was opened.

On a daily basis, the RACS Team will drop a UPC for the total of Form 3809 copies received that day (receipts). A total of Form 3809 copies are released to Batching that day (production) using OFP 710-01047.

Use the DOC ID and total amount of the Form 813 on the monthly trial balance spreadsheet to balance to Redesign Revenue Accounting Control System (RRACS).

The RRACS report 0155 will not show a true case volume. Therefore, to get the true case volume to report on the Form 3997:

If the TRACS listing provides only the check's "symbol" and "serial" numbers, use CC IMFOLC with the check "symbol" and "serial" number to retrieve the taxpayer information.

Master File will display either the tax period from which the refund issued, or the Refund Research Database record for the check if no tax module exists. The later is common when your case involves the TIN of the secondary taxpayer on a jointly filed tax period where a refund occurred. (See Figure 3.17.80-35)

All processing for TRACS/GOALS transmission and TRACS listings must be completed within 10-workdays from the received date. The TRACS listing which is produced from ECC, provides an individual breakdown of the charges by taxpayer. Included on the listing is (See Figure 3.17.80-36 and Figure 3.17.80-37):

Review each TRACS/GOALS transmission with the TRACS listing, and the TRACS listing with the Payment Over Cancellation () Claims Package when received to ensure the following:

Figure 3.17.80-36

Shown is an SF 1081 (Page 1).

Please click here for the text description of the image.

Figure 3.17.80-37

Shown is an SF 1081 (Page 2).

Please click here for the text description of the image.

Contact Check Claims Group (CCG) by telephone (855) 868-0151, Option 1, Sub-option 1, if any of the following discrepancies are found:

Check Claims Group (CCG) will:

Post either a TC 840 or a TC 843. If necessary, use CC IMFOLC to locate the tax period on which the related TC 846/TC 840 posted and take one of the following actions based on the circumstances described:

TC 840 Procedures - Copy of settlement check present:

Figure 3.17.80-38

Shown is a triplicate copy of a 3245 that includes including the date of the settlement check as the date (03-16-20XX) of the TC 840.

Please click here for the text description of the image.

TC 840 Procedures - No copy of settlement check:

TC 843 Procedures - follow the instructions in IRM 3.17.80.2.2 (6), Resolving Cases with TC 841 Posted, above, for TC 840’s with a check copy except that:

Monitor for posting. Once your TC 840 or TC 843 posts, return the case file to the work leader for reassignment. An examiner will correspond with the taxpayer requesting repayment of the settlement check and include a copy of the original refund check, a copy of the settlement check, and a Form 1133 package for each refund. The return address must be that of the Erroneous Refund team.

In most credit cases, you will only post a TC 841 to the affected tax period. Verify that the proposed credit amount on the SF 1081-TRAC-IPAC matches the refund in question. If they match, take the following actions:

When a Payment Over Cancellation (POC) is processed through “Government On–Line Accounting Link System (GOALS)”, you will receive BFS FForm 3858 and Form 1133 from the BFS. Both transactions 841 and 843 must already be systemically generated on the tax account. The TC 841 will post in Blocking Series 88888. The debit TC 843 moves the account to balance due status by reversing the credit TC 841.

Take the following steps within the first 10 business days of receipt, when working Payment Over Cancellation cases:

The following actions must be taken when SF 1081/TRACS involving two checks are received (See Figure 3.17.80-47):

If debit SF 1081/TRACS processing is done within the Erroneous Refund Unit, the journaling to the 1530/1540 General Ledger Account will be done within this unit.

The Erroneous Refund Unit will follow Erroneous Refund procedures as outlined in IRM 3.17.80, Accounting and Data Control, Working and Monitoring Category D, Erroneous Refund Cases in Accounting Operations.

Figure 3.17.80-47

Shown is a completed SF 1081 with entries on all fields. ACCOUNTING PERIOD ENDING - date transaction will be reportedTRANSACTION DATE - date SF 1081 is preparedDOCUMENT NUMBER - document number of the Billing AgencyAGENCY LOCATION CODE (ALC) - ALC of agency to be chargedCUSTOMER AGENCY VOUCHER NO. - voucher number of the Customer Agency (Schedule SF 1081 number)AGENCY LOCATION CODE (ALC) - ALC of agency that will receive the creditBILLING AGENCY VOUCHER NO. - voucher number of the billing agency (if known)DEPARTMENT, BUREAU, ADDRESS - department, bureau and address of the agency to be chargedDEPARTMENT, BUREAU, ADDRESS - department, bureau and address of the agency to receive the creditAPPROPRIATION, FUND OR RECEIPT SYMBOL - of account to be charged AMOUNT - amount(s) to be chargedTOTAL - total of amount(s) to be chargedAPPROPRIATION, FUND OR RECEIPT SYMBOL - of the account to be charged AMOUNT - amount(s) to be creditedTOTAL - total of amounts to be creditedDETAILS OR REASONS FOR THE BILL - or will indicate supporting documents are attachedBILLING AGENCY CONTACT - preparer's name, approving officer and telephone numberCERTIFICATION OF CUSTOMER OFFICE - signed, dated, by certifying officer, include telephone number

Please click here for the text description of the image.

In some instances, a taxpayer will erroneously repay the amount of the duplicate refund by personal check made out to the Check Claims Group. When the taxpayers are contacted by IRS, they will submit a copy of the cancelled check showing that the funds were deposited into Check Claims' Reclamation Suspense Account. In these cases, the Submission Processing site must prepare SF 1081 to charge the Reclamation Expense Account and credit the applicable IRS appropriation or Fund Account. The SF 1081 must contain a statement of facts surrounding the case. Attach a copy of the front and back of the check.

If a taxpayer sends a payment to IRS and it is erroneously received and cashed by Check Claims, Accounting will write a memorandum to Check Claims Group requesting that the funds be returned to IRS. Provide the pertinent information; Submission Processing site name and address and Agency Location Code . A copy of the cancelled check must be attached to assist Check Claims in locating the funds.

BFS Regional Financial Centers are responsible for adjusting all check issue discrepancies, such as:

When taxpayers send these erroneous checks to the Submission Processing site or tender remittances to cover erroneous payments, check cancellation or deposit action will NOT be taken by the Submission Processing site. Rather, the checks and repayments will be routed to the Director of the Regional Financial Center for credit in his accounts. Returned checks are stamped "Not Negotiable" as outlined in IRM 21.4.3, Refund Inquiries - Returned Refunds/Releases, before they are transmitted to the Regional Financial Center.

If the refund appropriation(s) has been erroneously credited with check cancellations or repayments that should have been credited to the Director, Regional Financial Center accounts, the over-assessment clerk will make the necessary adjustment by processing SF 1166 to charge the refund appropriation and pay the amount to the Director, Regional Financial Center.

The Erroneous Refund team receives Return Preparer Misconduct Erroneous Refund Form 3809 from the functions working these cases daily for journalization.

Each pack will consist of Form 3809 and an IDRS print stapled to the credit side of Form 3809 under cover of Form 3210. The Erroneous Refund teams need to review the Form 3809 and the Form 3210 and acknowledge receipt ensuring date of receipt is annotated.

The Forms 3809 must be numbered and the Form 813 prepared as:

The numbering of the Form 3809 and the acknowledgement must be completed within twenty-four hours.

After the forms have been reviewed and numbered, forward to the RACS unit for the necessary journal action.

Within 24 hours of receipt, the RACS team prepares a Form 8166, using the DOC ID and item count, listing each money amount separately from the Form 3809. The total amount listed on the Form 8166 must equal the Form 813 total.

The DOC ID input to RRACS will be 15 digits as follows: DOC ID = DLN of Form 813 (without sequence number) plus two-digit year plus total volume on Document 813. e.g., 172482619301475

The RACS team will:

After the RACS team has journalized the Form 3809 and forwarded them for processing, the general ledger (GL 1545) side of the Form 3809 is forwarded to the Erroneous Refund Team. The Erroneous Refund team will:

The write off process will be completed on the RPM cases after the items are moved over to the new GL 1547 account.

Daily (by COB everyday) the RACS team will drop a UPC for the total of Form 3809 copies (receipts) that day from Manual Deposit (receipts) and a total of Form 3809 copies released to Batching that day (production) using OFP 710-01047.

Run paper Form 3809 as usual, using the Doc Id and the total money amount on the trial balance.

Run EOD 1622 total for each day on the trial balance for systemically journaled cases.

Balance trial to RRACS Monthly GL 1545 account and RRACS report 0155.