When processing an injured spouse form against a Treasury Offset Program offset, all EITC must be allocated on Form 8379 Injured Spouse Allocation Worksheet prior to applying each state's applicable laws to the remaining overpayment. Any amount of a debt provided to you by Bureau of the Fiscal Service or an Agency must not be given to the taxpayer. TOP source and reason codes may not be used in combination with any other IMF source and reason codes. Supplemental Nutrition Assistance Program (SNAP) How does it work? 3) Taxpayer claims his/her refund was less than expected, amount agrees with TC 846/840. Upon the receipt of the listing, IRS Headquarters must review and reconcile the listing with other TOP reports for accuracy prior to sending the listing for resolution. To determine the appropriate campus, use the 8th and 9th position of the RSN. 11-2016 (MeF) and Rev. When working Injured Spouse Allocation Cases involving recapture research 2008/2009 returns to determine how the credit was allocated. Taxpayers who file their tax return late will be subject to a late file penalty of 4.5 percent of the tax required to be shown on the return for each month or fraction of a month the return is late. Return processable date (RPD) (date return was received in processable form). The IRS has no say in this matter. See IRM 21.4.6.5.8.9, Form 8379, No Consideration Procedures for instructions. 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. Send Form 4442 /e4442, Inquiry Referral, to the CSR working the case. A manual reversal is required when you have an IMF/BMF offset which was sent to Bureau of the Fiscal Service in error and cannot be reversed with a TC 766 (IRS reversal) or TC 899 (Bureau of the Fiscal Service reversal). The Director of Accounts Management is responsible for policy related to this IRM. It generates on the first refund, (TC 846) issued after the reversal of a TOP offset to a secondary TIN's debt. Care must be taken to determine which laws apply in each circumstance. Monitor the account until the completion of the Manual Reversal Request (the posting of the TC 700 credit). On September 1, 2013, the IRS partially abates $400.00 of the 2011 tax assessment. Allocate any other credits as the taxpayer has entered on Form 8379. 3) Taxpayer claims debt was discharged in bankruptcy. You must take into consideration all TOP transaction codes with the same OTNs to determine the net TOP offset amount. Notate RRC 50/50 after the appropriate shortcut method used. 4) Taxpayer says Form 8379 was filed with his/her original return and no refund was received. Do not split the qualifying dependents between the spouses. if you get a refund on your 2020 tax return because of the credit, the IRS can take it away to pay any child support, state taxes, or other government debts you owe . Timing must be considered when processing an OBR and releasing an IDRS freeze condition. If the injured spouse is the primary taxpayer and Part II, line 11, box is checked on Form 8379 (Rev. Follow procedures in (2) below, if appropriate. See IRM 21.4.6.4.2.11, Netting TOP Offsets and Reversals. Form 8379, Injured Spouse Allocation, may be filed as an attachment to the original individual tax return or by itself. Issue a letter to the taxpayer informing him/her that the allocation of Form 8379 will be computed after the examination is completed. If the Form 8379 is not attached to the joint Form 1040 or Form 1040X, but is instead filed separately, the timeframe for filing Form 8379 for Federal Tax Debts or TOP Debts is the same as the timeframe for filing the claim for refund (generally 3 years from the date the return was filed or 2 years from the date that the tax was paid, whichever is later, but there are numerous exceptions see IRC 6511 . If the funds are transferred back to the individual income tax account(s), a refund will be generated if there are not any outstanding taxes or State or Federal debts owed by the taxpayer. 3) Taxpayer is unable to resolve problem through contact with office of creditor agency listed on offset notice. Advise the taxpayer to allow 30 days to process. California and New Mexico recognized same-sex marriages starting in mid to late 2013. Subsequent payment/credit made dated on or after the due date (determined without regard to any extension of time for filing). (1) This transmits revised IRM 21.4.6, Refund Inquiries, Refund Offsets procedures. It generates on systemic refunds not eligible for TOP offset. Ensure that there are no unpostable TC 898 or TC 899 transactions on the account. Monitor the account per IRM 21.4.4.6.1, Monitoring Manual Refunds until the module balance is zero to avoid erroneous refunds and credit balances. BPI 8 is a required input on all manual refunds resulting from an injured spouse form submitted by the secondary taxpayer unless combat zone, BPI (5) applies. See criteria listed in IRM 13.1.7.2, TAS Case Criteria, follow procedures outlined in IRM 21.1.3.18, Taxpayer Advocate Service (TAS) Guidelines. Refer taxpayer to TOP Call Center at 8003043107, TDD 800-877-8339. In limited circumstances involving a clerical error by the IRS or TAS that prevented processing of the OBR request, the IRS may reverse an offset that has already occurred and issue the taxpayer a refund. Be sure to include BMF screens when there is a X-REF EIN. Contact the TOP Liaison at , if needed. Please see IRM 21.4.1.4.1.2, Return Found/Not Processed, for the timeframe. Authority for these procedures is found in IRC 6402. The DLN of the TC 846 and the TC 898 will match the DLN of the original return. Combat Zone (CZ) accounts, identified by a -C freeze, indicate a taxpayer who is or was serving in a designated combat zone area. RC 5 results from an attempt to post a TC 899 for an amount greater than the net TOP offset amount. 7) Taxpayer's overpayment is being held by -Q Freeze. Form 8379 filed post-offset would be worked per normal reversal procedures send the taxpayer a letter of explanation regarding the actions taken. (03) Invalid Reversal Amount Amount is not equal to the TOP offset amount. Contact Insolvency at the Centralized Insolvency Operation (CIO) or fax Form 4442, (see (1) above for faxing instructions) to determine if the Injured Spouse's refund can be issued. Employees of the Taxpayer Advocate Service follow procedures in IRM 13.1, Taxpayer Advocate Case Procedures, unless referred to this section for specific instructions. TC 150 is blocked 92 and Taxpayer Protection Program (TPP), issues have been resolved on the account and tax or TOP offset has not occurred. Your exact refund amount. Actions Resources Taxpayer Rights If a TOP debt exists, the IRS has no authority to issue an OBR. See paragraph (4) below for emergency refunds or see IRM 21.4.6.5.11.1, Offset Bypass Refunds (OBR), before any action is taken. The Recovery Rebate Credit (RRC) is a one-time benefit for people who didn't receive the full economic stimulus payment in 2008 and whose circumstances may have changed, making them eligible now for some or all the unpaid portion. See paragraph (10) above. The TC 766 posts with the return due date or return received date, whichever is later. See paragraphs (9) and (10) below for situations when the OBR can be issued after the 23C date. 7) Taxpayer is aware of offset made, but claims the remainder of the refund not received. In the event of a mis-blocked form, the block must be pulled to look for other Form 8379s. For TOP Offset (TC 898) and Agency Reversal (TC 899), UPC 151 RC 0 occurs when the TC 898/TC 899 transaction returned by Bureau of the Fiscal Service has a different name control than the one used by IRS. The "FROM" date is determined via normal interest computation procedures. 8752 allows for allocation of the Earned Income Tax Credit (EITC) shown on the joint return. Injured spouses portion of estimated tax payments. You do not need to complete the Injured Spouse Allocation Worksheet when one of the shortcut methods apply. Form 8379, Injured Spouse Allocation, may post to the Master File as an amended return without an original, creating an E Freeze, when the injured spouse files Form 8379 using his/her own TIN, instead of the primary TIN shown on the original joint return. When inputting a TC 766, you can only input an adjustment to withholding or EITC. You must ensure all unpostables (TC 898 or TC 899 types 1, 2, 3 or 4) are resolved before reversing the TOP offset amount for TOP transactions with the same OTN. If a hardship exists, refer to IRM 21.4.6.5.5, Hardship Refund Request. Any compliance activity such as assessing or collecting tax is prohibited. If you do not have access to CIS to view the Form 8379, Allocation Worksheet, and are unable to make a determination, send a Form 4442 /e4442, Inquiry Referral to the campus that worked the Form 8379 Injured Spouse Allocation. The taxpayer will be responsible for the balance due created on the LLC tax periods when the credits are transferred back to the IMF account. The new regulation does not apply. If, later, they file an amended return and a credit or overpayment is generated from the amended return, he/she could, at that time, file a new Form 8379, Injured Spouse Allocation. TC 971 AC 599 must be considered when netting the TOP offset amount. This will allow the reversals to post in one cycle and the overpayment will be systemically refunded in both taxpayers names. If the interest payment was offset with TC 898, then the FROM date is the DB-CR-INT-TO-DT of the accrued interest (TC 776) that accompanied the interest payment.Example: Once again using the example from 2) above, the accrued interest of $0.66 carries a DB-CR-INT-TO-DT of August 13, 2020 (displayed on TXMOD with the TC 776 posting for the accrued interest). 11-2016), input a TC 290 for .00 with RN 811, RC 086, SC 7 and the dollar amount of the allocated refund. Determine whether the IDRS freeze condition can be released based on the applicable IRM provisions. Employees are responsible for being familiar with and acting in accordance with taxpayer rights. Notice is sent by itself the day check was to be mailed. All refunds will be transferred back to the individual income tax year(s), unless the taxpayer responds in writing or verbally that they want the funds to remain on the LLC tax period(s). If a Letter 105C, Claim Disallowed was previously sent because the return was not timely filed, advise the taxpayer that we cannot consider Form 8379, Injured Spouse Allocation. In addition, a TC 898 or TC 971 AC 598 may not be present when the indicator is set to "1" . Issue a letter to the taxpayer informing them upon completion of their Examination they can resubmit a new Form 8379, Injured Spouse Allocation, if needed for any additional credit that is allowed. 2021 and beyond. If the taxpayer can provide a copy of Form 8379 via fax, attach a copy of the faxed Form 8379 to the Form 4442/e4442. The injured spouse must file Form 8379, Injured Spouse Allocation, to request his/her portion of the joint refund. The amount may be for all or part of the TC 898 or TC 971 AC 598 with the same OTN. TC 766(s) that are rejected in whole or in part by Bureau of the Fiscal Service are output on a weekly Bureau of the Fiscal Service TC 766 Reject Listing and provided to the TOP Liaison Office for resolution. BPI (3) generates on all refunds from MFTs that are ineligible for TOP offset. If an unpostable condition exists, the unpostable condition must be resolved and considered when netting the amount of the TOP offset reversal. Form 8379 is forwarded to the Accounts Management (AM) Function, A (TC) 971, Action Code (AC) 071, is input when the case is controlled. For the State Income Tax Levy Program (SITLP), refer to IRM 21.5.7.4.7.17, State Income Tax Levy Program (SITLP). The Liaison contacts the agency to determine which taxpayer owes the TOP obligation. 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. Explain that IRS has already obtained the offset funds from the agency and that the agency is now owed the money. Inform the taxpayer that a note has been added to their case and they should allow 30 days to process. The Recovery Rebate Credit (RRC) is a one-time benefit for people who didn't receive the full Economic Impact Payments (EIPs) in 2020 and whose circumstances may have changed, making them eligible now for some or all the unpaid portion. A clerical error includes bookkeeping, ministerial, inadvertent, or accidental errors, or even mistakes of fact. Room 556 C is involved, refer to IRM 21.6.7.4.2.7.3 (1)(n), Incorrect Year Posted First. One additional week should be added to cases that will be held and released one week later with TC 810/811. The amount may be for all or part of the TC 898 with the same OTN. A reversal of a TOP offset can be done to: Correct IRS initiated procedural or pipeline processing errors such as math errors, data input errors, or misapplied payments. See IRM 21.4.6.4.2.11, Netting TOP Offsets and Reversals. For ID Theft cases with fraudulent returns follow procedures found in, 4) Processing any case other than injured spouse, The posted offset is to Agency Code 01 and is more than 5 months old, 5) Processing any case other than injured spouse, The posted offset is to Agency Code 01 and is 5 months old or less, Reverse the offset(s).For ID Theft cases with fraudulent returns follow procedures found in. If the taxpayer attached Form 8901, Information on Qualifying Children Who Are Not Dependents, to the tax return, allocate the child tax credit as the taxpayer determines. Do not transfer the call when a Form 4442/e4442 is required. See IRM 25.12.1.12.4, Processing Injured Spouse Allocations for instructions. RC 3 results from an attempt to post a TC 898 when the amount is greater than the TC 840/TC 846 with the same dates. The net of all TC 76X with the same OTN cannot be greater than zero. CSRs on APP35 handle the following types of issues: How we determined the Injured Spouse's share of the refund. The purpose of the Agency/Sub Agency code is for internal use only. The other spouse is entitled to $93 (1,500 x .062). An unposted (UPC) or deleted (DU) TC 898 or TC 899 with an OTN indicates a TOP offset or TOP offset reversal has occurred and must be considered for netting purposes when determining the correct reversal amount. A refund was not issued and the taxpayer may or may not be experiencing a financial hardship. Continue to determine the refund amount depending upon the type of offset that was made. (Holding back money from a payment is call "offsetting the payment" or "administrative offset.") For example, if you have a delinquent . Each TC 898 or TC 971 AC 598 can represent an offset to one or more agencies for the same TIN. For more information and offsets to the Office of Child Support Enforcement (Agency Code 1), see IRM 21.4.6.4.2.4Child Support TOP Offsets. Therefore, this unpostable transaction must NEVER be deleted. The only debt owed is a Federal tax debt owed by the other spouse. 10) Taxpayer says Form 8379 was filed with his/her original return and no refund was received. There may be more than one on the account. Use the following explanations for tax or TOP offset when not considering Form 8379 due to the time limitations per IRM 21.4.6.5.8.10: If the timeframe for submitting Form 8379 is not met for a tax offset or TOP Offset, advise the taxpayer We are sorry, we cannot process your Form 8379, Injured Spouse Allocation. 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. The taxpayer filed a tax return for calendar year 2020 which is assessed on October 15, 2021, showing an overpayment which offset to the outstanding tax liability on October 20, 2021. A HC 2 is not needed when box 11 is checked. Shared Responsibility Payment (SRP) see IRM 4.19.13.10.7 Shared Responsibility Payment (SRP). If the taxpayers filing status is other than Married Filing Joint (MFJ) and filed a zero or $1 return and there is no credit on the account, close your case using Document Type-Internal Transcript, IDRS Cat Code IRRQ, Program Code 40000. Written as a formula, the above steps appear as follows: In some instances, the TC 898 was erroneously deleted which required a manual reversal request to bring back the TOP Offset. The taxpayer may not receive any refund at all if the whole amount is offset. In instances involving offset bypass refunds, IRS personnel are required to contact Bureau of the Fiscal Service for debt information before issuing a refund. See IRM 21.4.6.5.23, TOP Unpostable Conditions. Due to COVID related issues in processing returns, you do not need to request the return from files for 2019 and 2020 or for returns filed on years prior to 2019 and 2020 if the return was received and processed during COVID and the filing status is other than MFJ. On occasion, you may have a TC 898 transaction that was deleted in error and a systemic reversal (TC 766) cannot be done. If the injured spouse indicates on Form 8379, line 5b, that his or her marriage was recognized under the laws of the community property state(s) listed on line 5a, allocate items based on the instructions provided in the table above. A tax refund offset payment is applied according to the source of the refund (federal or state) and the creditor for the past-due amountthe Department of Social Services ( DSS) or the custodial parent. The taxpayer has an overpayment on their return showing $1,000. An error was made when calculating the EIP, and we are working to correct the impacted accounts. If there are no IRS debts, which must be by-passed and the address on ENMOD is not different than the address on the Form 8379, refer to paragraph (1) above to input the adjustment for the injured spouses portion of the overpayment. The IRS can assert its rights as creditor in collecting tax debts through tax offset but may not assert this right on behalf of other Federal agencies in collecting their debts through TOP offsets. Compute the injured spouse share of the joint overpayment by subtracting the injured spouse's share of the joint tax liability, as well as any previous refunds or offsets to other IRS obligations, from the injured spouse's contribution toward the joint liability. Refund Offsets Your tax return may show you're due a refund from the IRS. This occurs when an input of TC 766 reverses a TC 898 with no debtor TIN. Bypass TOP offset for all debts other than child support. Include a blank Form 8379 with instructions. Due date of return (determined without regard to any extension of time for filing). After contacting Bureau of the Fiscal Service, select the option "If you are calling from a federal or state government agency please press 3 then press 6 for IRS employee processing a Form 8379.". Alaska and Oklahoma are not community property states for the purpose of processing injured spouse allocation cases. A manual refund is needed if the taxpayer owes a debt to an agency other than Child Support. $1,586.00 (TC 846) $450.00 (TC 899 type 2) $550.00 (TC 76X) = $586.00. Suggested response: Our records show the Shared Responsibility Payment (SRP) was not allocated on Form 8379. If the account requires the reversal of three or more TC 898s, you must issue a manual., See IRM 21.4.6.5.10.6 (2) e), Issuing the Injured Spouse Refund. See IRM 21.4.6.4.2.1, TOP Offset Bypass Indicator (BPI). Type 3 - IRS Manual Reversal Request or Bureau of the Fiscal Service refund of TOP offset. See IRM 21.4.6.5.10.6, Issuing the Injured Spouse Refund. The following Transaction Codes (TC) are used solely for TOP offsets: TC 898 (TOP offset record generated by Bureau of the Fiscal Service), TC 971 AC 598 (manual input of TOP offset record which is used when the TC 898 record, generated by Bureau of the Fiscal Service, is deleted in error), TC 766 with Offset Trace Number (OTN) (IRS reversal of TOP offset). Only the TOP Liaison is authorized to input a TC 767 with an OTN. Only the TOP Liaison is authorized to work the TC 766 Reject Listing. Research the account for agency refunds (TC 899 or TC 971 AC 599 Type 2) or prior reversals (TC 766 with an Offset Trace Number (OTN)). Scrambled SSN cases with TOP offset (TC 898) must be reversed in whole (TC 766 with OTN), unless any agency refund has been issued. Use the shortcut method and annotate the case 50/50 split for the credit. All manual refunds from IMF accounts require the input of the appropriate BPI, except as noted in paragraph (5) above. ), Criminal Investigation (CI) (Z or Z freeze, TC 914/TC 916/TC 918). Others may file Form 8379 after filing Form 1040 or Form 1040X, see IRM 21.4.6.5.8.10.2, Form 8379 Not Attached to Joint Form 1040/Form 1040X. The Department of the Treasury (Treasury), Bureau of the Fiscal Service (BFS), amended its regulation governing the offset of tax refund payments to collect past-due child support obligations. The Injured Spouse's share of the refund was processed as filed and the taxpayer is now requesting to change their allocation (e.g. If an offset occurs after Form 3753 has been issued, a Transaction Code (TC) 898 will not post to the account. (Example: NCP SC1 PTC 50/50). Form 8379, Injured Spouse Allocation, are not sent to EXAM. These may include: a payment or credit transfer, an audit tax adjustment, a math error correction, and an amended return or claim that is filed and processed. If the tax module shows a Project Code of 0173, 0263, 0390, 0584, 0603 or 0611, these QRP cases are under the control of CI SDC and notice has been sent to the taxpayer. Application 35, an Injured Spouse Allocation (ISA) telephone application, enables CSRs who are fully trained in Injured Spouse Allocation processing to assist taxpayers. If credit interest was allowed on the offset, the credit interest must also be reversed with TC 772. See paragraph (4) below. This occurs when a TOP offset reversal, TC 766 with OTN, was denied by Bureau of the Fiscal Service (subsequent TC 767 in the module with the same OTN). Verify the Form 8379 has been processed in BS 920929. Advise the taxpayer NOT to include a copy of the tax return with the Form 8379 nor to file it with a Form 1040-X unless changes to the tax return need to be made. If the Form 8379 is attached to the joint Form 1040 or Form 1040X and the Form 1040 or Form 1040X is timely under IRC 6511, the Form 8379 is timely for any refund requested on Form 1040 or Form 1040X. There are instances in which one of the above is valid, however if the (I) indicator is not set, see IRM 21.4.6.4, Refund Offset Research, paragraph (2). If the taxpayer replies with the missing information, update the Return Processable Date (RPD), per IRM 21.5.6.4.17(2), I- Freeze, to the date the information is received. See IRM 21.4.6.5.10.5, Injured Spouse Refund - Tax Offset. To determine if there is an outstanding Federal tax debt, you must also research Command Code (CC) IMFOL, CC BMFOL, and/or CC TXMOD as well as CC INOLES even on "N" indicator cases. If research indicates the TC 899 Type 1 is unpostable, contact the TOP Liaisons for guidance. See IRM 21.4.6.5.23, TOP Unpostable Conditions, and IRM 21.5.5.4.2, Resolving Unpostables. 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