Therefore, the subsequent overpayment can be issued in a manual refund for those taxpayers eligible for an OBR. Therefore, discrepancies may arise from one cycle to the next and IRS may not be aware of a TOP debt. Most of the offset requests had been suspended under government order through July 15, 2020, including offsets of: California income tax refunds to state and local agencies However, an EXAM freeze on an account which also has a -R freeze, may affect the timing when the injured spouse allocation is worked. The agency refunded the remainder of the TOP offset originating from the TC 846 dated 03/06/2012 to the taxpayer. If the taxpayer filed their return on or before an approved extension of time to file, use the 04/15/XXXX of the return rather than the posted Return Received Date shown on TXMOD. Reverse the offset(s). The CP 36D notices for paper returns continue to print in Files for association with the original return and are shipped to AM to be scanned through the Correspondence Imaging System (CIS). If Insolvency does not provide a specific name and number for the injured spouse to contact, include the Philadelphia CIO telephone number 800-973-0424 in the Letter 3179C. If you work at a remote call site and you don't have access to CIS to view the Form 8379 Allocation Worksheet or do not work injured spouse allocations, transfer the call to Application 35 using ACD = 92035 or IUP = 1035 DO NOT transfer the call if the taxpayer is simply asking about the status of their claim. If the amount of the taxpayer's overpayment exceeds the total of the Federal tax liability and the TOP debt, a manual refund may be issued with a BPI (3) for the amount by which the refund exceeds both debts. If you are an employee assigned to Application 21 and you do not have access to CIS to view the Form 8379, Allocation Worksheet, or do not work injured spouse allocations: Check the Spanish box in Line 21, if applicable. Cases approved for TOP offset reversal may be referred to Accounts Management (AM) by Insolvency. After January 15, 2021, EIP 2 could no longer be issued and had to be claimed on a 2020 return as RRC. In general, most EIP offsets were reversed in one of the recoveries or a separate Injured Spouse Allocation, Form 8379 was filed. This rule limits the time during which Treasury may recover certain tax refund offset collections from States, when the States have already forwarded such funds to custodial parents as required or as authorized by applicable laws. For the State Income Tax Levy Program (SITLP), refer to IRM 21.5.7.4.7.17, State Income Tax Levy Program (SITLP). This causes an UPC 134 RC 03. Inquiries regarding offsets may originate from the non-receipt or reduction of a refund, from the receipt of an offset notice, or from other issues on an account that may cause an erroneous offset. Process the Form 8379 using non-community property rules if the taxpayer marks "No" for question 5b on Form 8379 because his or her marriage was NOT recognized under the laws of the community property state(s) listed on Form 8379. A TOP offset appears on the module as: TC 898 or TC 971 AC 598 (manual input of TOP offset record) with an Offset Trace Number (OTN), an offset amount, and a debtor-TIN field, if the offset is for a secondary spouse, OTN - Starting with 1 indicates primary taxpayer debt, OTN - Starting with 2 indicates secondary taxpayer debt. When a manual reversal request is submitted (identified as PNDMRR in the IDRS control base activity), you must wait for the TC 700 credit to post to the account when a TC 899 Type 3 is present, see IRM 21.4.6.4.2.10, Reversal or Agency Refund of TOP Offset. A TC 971 AC 598 will appear on TXMOD with the OTN shown as MISC field and the offset amount will be shown as MEMO-MONEY-AMT. If the return was an ELF return, do not forward a referral. Information indicates taxpayer may have resided in both types of states, or in two or more community property states. An adjustment resulting in a net credit to the tax module must be input after the offset reversal. The debt indicator on CC INOLE is updated daily. It generates on refunds (TC 846) issued after reference number (RN) 809/811 is input to release a refund when an injured spouse is the secondary. 15) Taxpayer says Form 8379 was filed after offset and no refund was received. See IRM 21.4.6.5.12.1, Input of TOP Offset Reversals TC 766 with OTN. Contact the TOP Liaison at , to obtain the TOP/DMF Manual Reversal Request Form. Review the account to determine if the account was corrected during the recovery process. Send a Letter 3179C, Refund Offset to Treasury Offset Program (TOP) and Injured Spouse Inquiries, with paragraph "o" informing the taxpayer of the delay in processing the Form 8379, Injured Spouse Allocation. Enter a Case Note (CN) with the information obtained from the caller if you have access to CIS, or. Normal Interest rules apply when considering credit interest if all or part of the credit is subsequently refunded. The transaction date is the received date of the Form 8379. The batching is performed prior to routing to the Manual Refund Function. A TC 898 or TC 971 AC 598 (manual input of TOP offset record) may be present on the tax module even though the indicator is set to "0" . Meaning, the TC 706 credits must transfer from one spouse on the originating account either as a single or separate filer or as a joint filer with a new spouse. Premium Tax Credit (PTC) is a tax credit for those who enroll, or whose family member(s) enrolls, in a qualified health plan offered through a Marketplace. Return received date (used when the return is filed after the return due date, determined without regard to any extension of time for filing the return). When a taxpayer wants to claim innocent spouse relief, but mistakenly uses Form 8379, Injured Spouse Allocation, return the Form 8379 to the taxpayer. (09) Valid Request Bureau of the Fiscal Service considers the TC 766 request as valid but for a lesser amount. Use the name line of the year the EIP was determined. Contact the TOP Liaison , for a manual reversal. Increase or decrease tax and credits to reflect the correct figures. This is commonly referred to as the "Full Collection" program. Information regarding the input for the new command code can be found in IRM 2.4.61.10, Command Code CSO58 - Request Formatted Input Screen. As of March 18, 2021, the 2020 RRC amount will no longer be applied to past due federal income tax debts. AALs can also be viewed by accessing Control Data Analysis, and Project PCD, which are on the Control-D/Web Access server. See IRM 21.4.6.5.1, Taxpayer Inquiries on TOP Offset. This includes refunds resulting from disaster claims or levy proceeds. Request via telephone or letter that the taxpayer send a signed copy of the form via fax or mail and provide any other missing information. Form 8379 is forwarded to the Accounts Management (AM) Function, A (TC) 971, Action Code (AC) 071, is input when the case is controlled. You should verify the computation is correct, before sending the Form 8379 Injured Spouse Allocation Worksheet to the taxpayer. The return due date (determined without regard to any extension of time for filing), the date of the overpayment (as determined in the preceding table), or the return processable date (if the RPD is after the extension date). The 2020 RRC can be reduced to pay TOP debts owed to other Federal government agencies as well as to state agencies. This change limits the time in which Treasury may reverse a tax refund offset to collect a delinquent child support debt to six months. Research to resolve the discrepancy (processing error, math errors, or other tax offset). When working Form 8379, Injured Spouse Allocation, ALWAYS reverse the Injured Spouse's share of the refund, if the Injured Spouse is not responsible for any part of the debt which offset. Contact the TOP Liaison at , if needed. For community property states, you should follow the community property laws for each state. 2) Taxpayer claims he/she didn't receive a refund of overpayment. Do not split the qualifying dependents between the spouses. Contact the TOP Liaison at , to obtain the TOP/DMF Manual Reversal Request Form. See IRM 21.4.6.5.8.4, Review the Form 8379 for Completeness, and allocate the form per IRM 21.4.6.5.10.1, Allocation of Tax, and IRM 21.4.6.5.10.2, Allocation of EITC. It reversed the prior posted TC 898 with the same OTN and no DEBTOR-TIN. See IRM 21.4.6.4.2.1, Top Offset Bypass Indicator (BPI). When the wrong spouse is identified as the injured spouse on Form 8379, Injured Spouse Allocation, and the form is filed with an original signed Form 1040, Form 1040X, or a duplicate filed return, process the form without contacting the taxpayer if either the following apply: You can determine, without doubt, who the injured spouse is. A TC 899 Type 3 is also used to correct an account due to a BFS or IRS processing error. See IRM 21.4.6.5.7.1, Allowable TOP Offset Reversals. Refer the taxpayers to the TOP Call Center at Bureau of the Fiscal Service at 800-304-3107, Telecommunication Devices for the Deaf (TDD) 8008778339 for information. If the Form 8379, Injured Spouse Allocation, is filed with the original return and the account is in zero or debit balance with no math error, do not consider the Form 8379. Also, check for any OBL that may have occurred with a prior year-spouse. Input the reversal with the correct OTN or on the correct tax period, MFT, etc. If an agency refund has occurred, do not reverse the TC 898 or TC 971 AC 598 (manual input of TOP offset record) for any amount refunded by the agency. The taxpayer must have specified that the payment is a cash bond. Online Tax Help. If there is a return attached to Form 8379 and research indicates that there is no TC 150 on the account, see IRM 21.6.7.4.2.5, TC 150 Not Located Duplicate or Amended Return Obtained, to process the return. To prevent an erroneous refund on an OBR, use hold codes or secondary transaction codes to hold the overpayment. Specific account conditions, such as freeze codes, will determine the date by which the OBR must be processed. Advise taxpayer to wait 45 days from transaction date (TC 971 posting date) for a response. No other payments or credits are made to the 2011 MFJ account. The Bureau of the Fiscal Service generates a notice on the day they process the payment. If the TAC or designee agrees with the OBR, he/she must initial in the remarks section of the manual refund form and forward the OBR to the Accounting Function. If Combat indicator is "2", then the taxpayer is no longer a combat zone participant. Refer to Document 6209, Section 8 - Master File Codes, for additional information. Normal Interest rules apply when considering credit interest if all or part of the credit is subsequently refunded. Review procedures in IRM 10.5.1.6.7.2 , Answering Machine or Voice Mail, before leaving a message on a taxpayer's or authorized representative's answering machine or voice mail. Have the manual refund document signed by the authorized approving official. How does a federal tax refund offset work? | The Administration for Refund offsets to child support, TOP debts, State income tax obligations, and Unemployment Compensation debts are handled by the Treasury's Bureau of the Fiscal Service, (BFS) formerly Financial Management Service (FMS), through the Treasury Offset Program. An official website of the United States Government. The above results in generating 2 refunds (TC 846) and the appropriate Bypass Indicator (BPI) will automatically be set with the input of the RN 808/RN 810 or RN 809/RN 811. See IRM 21.3.5.4.1, When to Prepare a Referral, for instructions. When inputting a TC 766, you can only input an adjustment to withholding or EITC. For all shortcut methods, if the RRC is claimed and the injured spouse is entitled to half of the RRC. Yes, the 2021 Recovery Rebate Credit can be reduced to pay debts owed to other Federal government agencies (separate from federal income tax debt) as well as to state agencies. Take necessary action if refund was not received and follow refund trace procedures. This change limits the time during which Treasury may require States to return the offset funds to six months from the date of such collection. IRS sent Letter 916C Claim Incomplete for Processing; No Consideration. Interest may be computed from other than the availability date of the overpayment when the original tax return was filed late (IRC 6611(b)(3)), or in unprocessable form (IRC 6611(g)). Cases involving bankruptcy and TOP offsets require that the agency receiving the offset make the refund unless: It can be determined that IRS was aware of the bankruptcy prior to issuing the refund that was offset. Keep in mind that the credit is part of your tax refund and your tax refund is subject to any offset. A manual refund is required on a current tax year return with CCC "9" (spouse is deceased) and the second name line is not present. Bureau of the Fiscal Service cannot regenerate another TC 898 or TC 899 transaction when it has been erroneously deleted. Certain refunds cannot be issued before February 15, even if there is a hardship. When issuing a manual refund, use the applicable BPI to assign ownership of the refund to the injured spouse. Take the following actions: Research IDRS, if a deleted unpostable (DU) 898 or a TC 971 AC 598 is on the account, contact the TOP Liaison for the paperwork to begin the manual reversal process. A review of their account shows a prior year tax liability of $500. A TOP offset appears on Command Code (CC) TXMOD as a Transaction Code (TC) 898 with an Offset Trace Number (OTN), the offset amount is shown as OFFST-AMT. The BPI is posted/displayed along with the TC 840/TC 846 on all output screens such as CC TXMOD, CC IMFOL, CC BMFOL, and on CC MFTRA transcripts. If there is a TC 150 on the correct year, adjust and work the return/form for the correct tax period. When Treasury's Bureau of the Fiscal Service processes a tax refund, it matches the noncustodial parent's debt and intercepts part or all of the tax refund, depending on how much is owed. Notate on CIS that Insolvency did not give approval for a refund and that the injured spouse has been instructed to contact Insolvency. The general timeframe for filing a claim for refund is 3 years from the date the return was filed or 2 years from the date the tax was paid, whichever expires later. RC 1 results from an attempt to post a TC 898 with document code 45 when it does not find a TC 840 with the same DLN after 10 cycles. See paragraphs (9) and (10) below for additional details. The account may contain a credit balance due to the undeliverable or cancelled check TC 740/TC 841), see IRM 21.4.6.5.22, Returned Refund Check. This occurs when an input TC 766 reverses a TC 898 with no debtor TIN. See IRM 21.4.6.5.10.6, Issuing the Injured Spouse Refund. If the "wrong" taxpayer was offset, the offset must be reversed after determining that there has not been an agency refund (TC 899 or TC 971 AC 599). Do not advise the taxpayer they meet hardship criteria. If the TC 706 credit(s) is/are present and all four of the above items are true, move the applicable TC 706 credit(s) back to the modules where it/they originated. BPI (5) or (6) must be used for injured spouse in combat zone, BPI (0) and (4) are not valid when block 9(Injured Spouse) is used. blocking series 00 if the original return is attached to the allocation or blocking series 05 if the original return is not attached), see IRM 21.5.3.4.6.3, No Consideration Procedures. The injured spouse's refund could be equal to or less than the amount that offset to the debt. Program Reports: The program reports provided in this IRM are for identification purposes for the AM Customer Service Representatives (CSRs) and Tax Examiners (TEs). A TC 520, with closing code 60-67, 81, or 83- 89 on the account with a transaction date prior to 10/17/2005, generates a BPI 3 on refunds that are issued systemically. Form 8379 Allocation worksheets are located on SERP under Local/Sites/Other. See IRM 21.6.3.4.2.12, Premium Tax Credit. Advise the taxpayer to allow up to 8 weeks from the time they re-file the Form 8379. Use a TC 570 on the credit side of the ADC 24 to hold the credit. A letter is not needed for Community Property allocations when joint credits are involved. Inform the Bureau of the Fiscal Service CSR that you are an IRS employee processing a hardship manual refund and give your name, ID number, and the office from which you are calling. Advise the taxpayer to allow 30 days to process. Can I track my offset refund? Split the credit 50/50. Thus, the injured spouses portion of the joint return overpayment, calculated as a percentage, is .44210 ($4,200 $9,500). See paragraph (4) below. BPI (5) indicates that TOP should bypass all debts for the primary TIN and all debts except child support for the secondary spouse. It generates on the first refund, (TC 846) issued after the reversal of a TOP offset to a secondary TIN's debt. See IRM 3.17.795, Refund Schedule Number Format, for additional information. Use hold codes 1, 2 or 4 when creating an overpayment on an IDRS adjustment that changes the tax, credits, or payments to hold an overpayment from offsetting. Under these rights taxpayers have the right to receive prompt, courteous, and professional assistance in their dealings with the IRS, to be spoken to in a way they can easily understand, to receive clear and easily understandable communications from the IRS, and to speak to a supervisor about inadequate service. When the overpayment consists of Premium Tax Credit (PTC) only or other various audit combinations (i.e.
