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Part 21. Customer Account Services

Chapter 5. Account Resolution

Section 8. Credit Transfers

21.5.8  Credit Transfers

Manual Transmittal

September 02, 2011

Purpose

(1) This transmits revised IRM 21.5.8, Account Resolution, Credit Transfers.

Material Changes

(1) Editorial changes were made throughout IRM 21.5.8. The web addresses, IRM and legal resources were checked and corrected, where necessary.

(2) IPU 110504 issued 03-04-2011 IRM 21.5.8.4.6 updated to include offsets when inputting a credit transfer and holding the overpayment.

Effect on Other Documents

IRM 21.5.8, dated 10-01-2010, is superseded.

Audience

All employees performing account work.

Effective Date

(10-01-2011)

Jane E. Looney
Director, Accounts Management
Wage and Investment Division

21.5.8.1  (10-01-2009)
Credit Transfers Overview

  1. This section contains procedures for transferring credits to the proper account/module once payment tracer research has located any missing payments/credits. This section provides instructions for use of the correct credit transfer format, source documents to be used, Computer Paragraph (CP) notices, CP 60 Credit Reversal Adjustment Notice, CP 62 Notice of Credit Transfer,CP 220Audit/DP Tax Adjustment, CP 225Missing Payment Applied,CP 260 Credit Reversal Adjustment, and Transaction Code (TC) 570 and Bypass Indicator (BPI) "1" .

  2. You can transfer a credit if at least one of the tax modules is on the Integrated Data Retrieval System (IDRS). If not, activate account to IDRS using Command Code (CC) MFREQ or create a dummy account using CC ACTON. Inputting a credit transfer with only one side active on IDRS will systemically MFREQ a dummy account on the corresponding (second) side of the credit transfer.

    Caution:

    If inputting an Installment Agreement (I/A) refer to IRM 5.19.1.5.5.5, Installment Agreement Payment Methods and User Fees (UF) Overview, prior to using CC MFREQ.

  3. Credit transfer adjustments should not be input if another employee or organization has an open control base. Contact the person or organization with the open control base. DO NOT reassign or change the control base until this contact is made. Exceptions can be found in IRM 21.5.2.3, Adjustment Guidelines-Research.

  4. Accounts Management (AM) employees who have access to the Integrated Automation Technology (IAT) Credit Transfer tool are required to use the tool when inputting credit transfers. For additional IAT information refer to the IAT website http://idap.web.irs.gov/iat/. This tool provides a list of transferable payments, auto-fills reversal Transaction Codes (TCs), performs unpostable checks, and ensures use of appropriate codes, amounts, and dates to prevent unpostables.

  5. You can transfer a credit with authorization from the taxpayer. Authorization may be granted through oral statement or correspondence received from the taxpayer. If the authorization is through oral statement, the taxpayer must confirm the payment amount or the Internal Revenue Service (IRS) endorsement information on the canceled check, Payment Document Locator Number (DLN) (matching the transfer DLN), tax form for the applicable Master File Tax Code (MFT) , tax period, payment date, and any additional pertinent information the taxpayer may provide.

  6. If a source document is required, refer to IRM 21.5.8.3.1, Determining Source Document Requirement for Credit Transfers, prepare either Form 4442, Inquiry Referral, history sheet, phone documentation sheet, or use the taxpayers correspondence. If a source document is not required, the Remarks Field on the credit transfer must include a brief explanation for the transfer.

  7. For information on credit transfers involving the Individual Retirement Account File (IRAF) refer to IRM 21.6.5.4.11.8, Individual Retirement Account File (IRAF) Credit Transfers, and IRM 21.6.7, Adjusting Individual Tax Accounts.

  8. For credit transfers to Non-Master File (NMF) accounts, refer to IRM 3.17.63.7.6, Credit Transfers.

  9. Effective July 1, 2006, when a credit or payment is moved to the Excess Collection File (XSF) or the Unidentified Remittance File (URF), a Transaction Code (TC) 971 with Action Code (AC) 296 must be input on the module where the credit or payment is posted. This provides an audit trail for the credit/payment and indicates research of the primary and related Taxpayer Identification Numbers (TINs) was completed prior to the transfer to XSF or URF. Related TINs may include a secondary Social Security Number (SSN) or an Employer Identification Number (EIN).

    • Input a cross reference TIN in the X-REF TIN field. If no related TINs are found, input the primary TIN in the X-REF TIN field. If multiple TINs are researched only one cross reference TIN needs to be input. Generally, input the TIN most closely related to the primary TIN

    • Only one TC 971 AC 296 is needed if several payments/credits are being moved off the module at the same time

    • Another TC 971 AC 296 must be input if additional payments/credits post after a previously posted TC 971 AC 296. This will show research was completed on the more recent payments prior to moving them to excess or unidentified


    On cases over $100,000, you must document actions on Form 8758, Excess Collections File Addition, when specific IRM procedures require you to:

    • Get managerial approval, and

    • Attempt to call the taxpayer

21.5.8.2  (10-01-2002)
What Is a Credit Transfer?

  1. A credit transfer moves a payment or credit from one account to another, or reverses a credit previously applied. This IRM provides guidelines for credit transfers that include:

    • IDRS

    • Correct Credit Transfer Format

    • No Source Documents

    • Source Document

    • CP 62Notice of Credit Transfer, CP 60Credit Reversal Adjustment Notice (IMF)

    • CP 225Missing Payment Applied,CP 260 Credit Reversal Adjustment (BMF)

    • TC 570 and Bypass Indicator (BPI) "1"

    • Avoiding Unpostables

21.5.8.3  (10-01-2002)
Credit Transfer Research

  1. This section contains some general processing and research procedures for credit transfers. For specific processing procedures, refer to IRM 21.5.8.4, Credit Transfer Processing.

21.5.8.3.1  (10-01-2009)
Determining Source Document Requirement for Credit Transfers

  1. A Source Document (SD) is required for:

    • Credit transfers between non-related accounts (Example: due to IRS error a payment is posted to an unrelated taxpayer)

    • Related accounts resulting in a debit balance after the transfer (Example: the taxpayer requests a payment to be moved from a fully satisfied account to another account)

    Note:

    The Correspondence Imaging System (CIS) image is the source document and it remains on CIS for further recall if needed. CIS allows attachment of files to individual cases. This functionality allows documents to be saved to a CIS case for future reference, instead of associating the document with a paper case. Certain subject specific IRMs require attachment of documents to the adjustment. The CIS attachment function may be utilized in lieu of a paper attachment. Refer to IRM 21.5.1.5, Correspondence Imaging System procedures (CIS), for additional information on CIS documentation requirements.

    Reminder:

    Follow procedures in IRM 21.4.5, Erroneous Refunds, if a refund was issued in error.

  2. Use taxpayer correspondence as the Source Document (SD) or in the case of oral statement, prepare e-4442/Form 4442, Inquiry Referral, history sheet, or phone documentation sheet, and use as the SD. The SD documentation must include the following:

    • Taxpayer must confirm the payment amount or the Internal Revenue Service (IRS) endorsement information on the canceled check

    • Payment Document Locator Number (DLN) (matching the transfer DLN)

    • Tax Form for the applicable Master File Tax Code (MFT), tax period, and payment date

    • Any additional pertinent information the taxpayer may provide

  3. No Source Document (NSD) is required on credit transfers within the same TIN or between related accounts if a credit is available. Examples of related accounts include:

    • Parent submits payment for minor child, but payment is applied to parent's account

    • Taxpayer submits a payment intended for business account (sole proprietor), but it is applied to a personal account

    • Corporation with several subsidiaries submits payment which is applied to the wrong Employer Identification Number (EIN)

  4. When changing a payment date, if the payment is $100 or less, a source document and managerial approval are not required. If the payment is over $100, both managerial approval (signature) and a source document are required.

  5. Enter the appropriate information in the "Remarks" section of your credit transfer. Follow procedures in IRM 21.5.2.4.6, Remarks Field, and IRM 21.5.2.4.7, Remarks on Type of Adjustment, for proper use of remarks. Indicate the oral statement or back-up information for your actions. Additional information regarding oral statement remarks can be found in IRM 21.1.3.20.1, Oral Statement Documentation Requirements.

    Note:

    Corporate (more than one proprietor) Business Master File (BMF) accounts are excluded from oral statement authority when transferring between corporate accounts and either to non-corporate (BMF) accounts or any Individual Master File (IMF) accounts. Source documents are required for these credit transfers.

  6. Refer to IRM 21.5.1.4.10, Classified Waste, to determine correspondence and account related research as it relates to credit transfers.

21.5.8.4  (10-01-2002)
Credit Transfer Processing

  1. This section contains specific processing procedures for credit transfers. Refer to IRM 21.5.8.3, Credit Transfer Research, for general processing procedures. Procedures for User Fee payment transfers are located in IRM 5.19.1.5.5.5.3, User Fee Payment Transfer/User Fee Abatements .

21.5.8.4.1  (02-02-2010)
IDRS Guidelines for Credit Transfers

  1. Before inputting any credit transfer, research IDRS to view any recent account activity that may have taken place. Consider the effects of pending transactions, previous actions, freeze codes, module balances and posted penalty and interest adjustments. Also, consider the effects of the transaction being input.

  2. Accounts Management employees who have access to the Integrated Automation Technology (IAT) Credit Transfer tool are required to use the tool when inputting credit transfers. For additional IAT information refer to the IAT website http://idap.web.irs.gov/iat/. This tool provides a list of transferable payments, auto-fills reversal Transaction Codes (TCs), performs unpostable checks and ensures use of appropriate codes, amounts and dates to prevent unpostables.

  3. If an open control base is present, contact that employee. You must coordinate actions on modules to prevent erroneous or duplicate adjustments. Exceptions can be found in IRM 21.5.2.3, Adjustment Guidelines - Research.

  4. Do not move payments until they post.

    Exception:

    Pending payments showing IDRS status AP, CU, PN, RS or TP can be moved if a posting delay code is used. Refer to IRM 21.5.8.4.7, Posting Delay Code. The IDRS Pending Status Codes can be found in Document 6209 Section 14.7, Pending Transaction Identification Codes/ IDRS Merge Related Transaction Codes.

    Note:

    When inputting a refund deletion request (CC NOREF). Monitor the account and transfer credit after TC 841 posts.

  5. Each credit transfer affects two modules unless the transfer is for the purpose of changing the payment date only. When using Command Code ADD34 the credit side of the FRM34 transaction will post one cycle after the debit side.

    Reminder:

    Refer to IRM 20.1.4.24.2, Misdated Deposits, to determine when a Federal Tax Deposit (FTD) transaction date can be changed.

  6. Each credit transfer has two sides:

    • Debit Side - Where the credit is moved from

    • Credit Side - Where the credit is moved to

    Note:

    The generated IDRS format for a credit transfer will show the debit side as the upper portion and the credit side as the lower portion.

  7. All actions need to post the same cycle to prevent the issuance of erroneous notices. Use posting delay codes when inputting multiple actions such as:

    • A credit transfer and tax adjustment. If both an adjustment and a transfer of credit into the module is needed, input a posting delay code of one cycle on the adjustment. In three weeks, the taxpayer receives a notice of adjustment with the correct module balance.

    • Multiple credit transfers in and out of the same module.

    Note:

    A "Q-" freeze in a BMF tax module will hold excess credit for 15 cycles and generate a CP 267No Math Error Credit Offset Notice, or CP 268 Math Error Credit Offset Notice, before refunding. Take appropriate action to hold credit for transfer if the refund is imminent. For more information, refer to IRM 21.7.11.4.9, CPs 267/268 - Notice of Excess Credit .

  8. Notices CP 60 Credit Reversal Adjustment Notice, IMF and CP 260Credit Reversal Adjustment, BMF, generate to the taxpayer when a credit transfer places the module into a debit balance over ≡ ≡ ≡ . Follow procedures for misapplied payments in Payment Tracers, IRM 21.5.7.4.6.6, Payment Applied to a Different Taxpayer’s Account/TIN.

  9. Input a TC 570, Bypass Indicator (BPI) "1" , and/or a Posting Delay Code, when necessary to:

    • Suppress notices

    • Hold credits

    • Avoid unpostable conditions

    Refer to IRM 21.5.8.4.6, TC 570 and Bypass ″1″ Indicator, for information on use of a TC 570 and a BPI "1" .

    Note:

    BPI field is always required. If "1" is not applicable, input BPI "0" .

  10. A TC 606 is computer generated to clear net module balances of less than ≡ ≡ ≡ ≡ ≡ .

    If And Then
    TC 670 payment is on the module The TC 670 is equal to or less than the TC 606 amount. No action is required. The computer will reverse the TC 606 with a TC 607.
    TC 670 payment is on the module The TC 670 is more than the TC 606 amount Use ADD24 with a TC 672 for the amount and date the TC 670 posted, and a TC 670 for the amount and date of the TC 606 clearance. This generates a TC 607 and a TC 672 with the date of payment and TC 670 date of TC 606.

    Note:

    Do not transfer more than the TC 606 amount.

    Request for tax decrease is received TC 606 is on the module TC 606 will automatically reverse when the TC 291 is input.
    Request for a penalty abatement of less than ≡ ≡ ≡ is received TC 606 has generated causing a zero balance No adjustment is necessary.

  11. In order to successfully do a transfer, transaction codes must be compatible. Refer to Document 6209 Section 8.2, Transaction Codes, for a list of transaction codes and document codes. Refer to Exhibit 21.5.8-1, Transaction Codes and Reversals.

  12. Request a manual lien release (TC 582, lien indicator) in the following situations

    • The lien will not systemically release

    • The action you are taking will fully satisfy all outstanding liabilities and will not post within 30 days

    • It has been more than 30 days from the time when the account was fully satisfied

    Refer to IRM 5.12.3.2.1(5), Liability is Satisfied, regarding manual lien releases. Employees with access to the Automated Lien System (ALS) should input the lien release. Employees without access to ALS should submit Form 13794,Request for Release, Partial Release, or Withdrawal of Notice of Federal Tax Lien, to the Centralized Lien Unit. The fax numbers can be found by selecting ″Lien Payoff/Release Contact Numbers″ under the Who/Where tab on the Servicewide Electronic Research Program (SERP) Home Page.

21.5.8.4.2  (05-06-2009)
Credit Transfer Input on IDRS

  1. Prior to making a credit transfer, at least one of the tax modules involved must be present on IDRS. To initiate credit transfers, two Command Codes (CC) are used in the following sequence:

    1. SUMRY and/or TXMOD (with definer)

    2. ADDnn or ADCnn (nn = document code 24, 34, or 48)

    Reference IRM 2.4.17, Command Codes ADD24/34/48, ADC24/34/48, FRM34 and DRT24/48, for more information on these command codes.

  2. The tax module accessed with CC TXMOD/SUMRY is the primary account for the credit transfer. Determine whether this tax module should be debited or credited.

    • If account should be debited, use CC AD Dnn

    • If account should be credited, use CC AD Cnn

  3. Input CC ADDnn or ADCnn and overlay the Taxpayer Identification Number (TIN), MFT, tax period, and name control with the information relating to the other portion of the credit transfer (referred to as the secondary account).

    Note:

    The secondary account may or may not reflect the same TIN, MFT, and tax period.

  4. When inputting credit transfers you may need to use a non-IDRS Indicator in the NON-IDRS-IND> field to indicate the Secondary account/module is not on IDRS.

    • Primary − TXMOD you overlay with CCs ADD/ADC 24, 34, or 48

    • Secondary − The other side of the credit transfer

    Non-IDRS indicator values are:

    Indicator value Value explanation
    = The Primary module in the transfer (auto generated)
    Blank Account and specific tax module for the Secondary are both on IDRS
    A Account for the Secondary is not on IDRS
    @ The specific tax module, that credit is being moved in or out of for the Secondary, is not on IDRS.

  5. Use Designated Payment Code (DPC) "00" when transferring a misapplied payment without a DPC, transaction codes 640, 670, 680, 694, 690, and 700.

    Note:

    DPC is not needed for ADD48/ADC48 credit transfers.

    Reminder:

    Refer to IRM 5.19.1.5.5.5.3, User Fee Payment Transfer/User Fee Abatements, for User Fee payment transfer procedures.

21.5.8.4.3  (10-01-2011)
Determining Correct Credit Transfer Format

  1. Use ADD24/ADC24 (refer to IRM 2.4.17, Command Codes ADD24/34/48, ADC24/34/48, FRM34 and DRT24/48, for additional information) to generate a transfer format CC DRT24 when:

    1. Changing a payment date.

      Note:

      When changing a payment date, override code "2" is required.

      If Then
      Payment amount is over $100 Obtain written managerial approval before changing the date and Source Documentation (SD) is required.
      Payment amount is zero on a TC 610 Do not change the date.
      Payment is an Federal Tax Deposit (FTD) Follow instructions in IRM 20.1.4.24.2, Misdated Deposits.

    2. Changing the transaction code of the payment (e.g., TC 610 to TC 670).

      Note:

      Remittance Processing System (RPS) Freeze "R–" generates if a credit balance is created when a TC 610 is transferred to a module already containing a RPS TC 610. If possible, change the payment to a TC 670. Otherwise, input TC 290 for zero to release the "R–" Freeze after transferring the payment as a TC 610.

    3. A secondary TC is needed (e.g., TC 570 or TC 180).

    4. Transferring between masterfiles (e.g., IMF and BMF).

    5. Transferring with a TC 820.

  2. Use ADD34/ADC34 (refer to IRM 2.4.17, Command Codes ADD24/34/48, ADC24/34/48, FRM34 and DRT24/48, for additional information) to generate transfer format CC FRM34 when:

    1. Transferring within the same Master File.

      Note:

      The posting routine of the ADD/ADC34 prevents partial Master File posting of the transfer document (e.g., the credit side posts but the debit side goes Unpostable). For this reason use ADD/ADC34 whenever possible.

    2. A secondary transaction is not necessary.

      Note:

      A credit transfer notice (CP 62 for IMF and CP 225 for BMF) is generated to the taxpayer when the CORRESP–DT field is overlaid with the inquiry date. Multiple credit transfers are combined and the taxpayer receives only one notice.

  3. Use ADD/ADC48 (refer to IRM 2.4.17, Command Codes ADD24/34/48, ADC24/34/48, FRM34 and DRT24/48, for additional information) to generate transfer format CC DRT48 when:

    1. You transfer credits already offset or applied as credit elects.

      If Then
      TC 830 consists of credits dated by the due date plus grace period refer to IRM 21.5.1.4.2.5,Received Date- Grace Periods. Transaction date is the due date of the return without regard to extensions. Use the later of the due date of the return (plus one month for MFT 02) or the transaction date creating the overpayment.
      TC 830 consists of a credit or partial credit dated after due date of the return plus grace period refer to IRM 21.5.1.4.2.5,Received Date- Grace Periods. Transaction dates must be input separately using the appropriate late payment dates.

      Note:

      For additional information on determining the availability dates for overpayments refer to IRM 20.2.4.3, Availability Dates for Overpayments.

    2. When transferring or reversing an overpayment to the next module, the credit must be available before TC 830 can be used to transfer the credit.

      Note:

      Bypass Indicator "0" must be input on ADD48/ADC48/DRT48 credit transfers.

      Exception:

      If multiple actions (such as ADJ54 adjustment and credit transfer) are necessary and correct overpayment is determined, all actions can be input at the same time. Refer to IRM 21.5.8.4.7, Posting Delay Code.

  4. If you input a tax decrease and credit elect at the same time, the computer automatically delays the credit elect for one cycle. You must use either a Hold Code 1 or Hold Code 2 on your adjustment to prevent an erroneous refund. Refer to IRM 21.4.5,Erroneous Refunds, for additional information. When the credit elect posts to the account (TC 830), the -K freeze is released and an adjustment notice is sent to the taxpayer. No additional correspondence is needed. Refer to IRM 21.5.2.4.15, Rules on Hold Codes (HC), for more information on using hold codes.

  5. For general information regarding credit transfer formats, refer to IRM 2.4.17, Command Codes ADD24/34/48, ADC24/34/48, FRM34 and DRT24/48.

  6. Use ADD/ADC34 when transferring an Electronic Federal Tax Payment System (EFTPS) payment. If ADD/ADC24 is used you must input the EFTPS indicator of "1" , to avoid an unpostable condition. Refer to IRM 21.5.8.4.8, Avoiding Credit Transfer Unpostables, for additional information. To assist in identifying EFTPS payments, refer to IRM 3.17.277.4.3, EFT Number, for EFTPS number configuration.

21.5.8.4.4  (10-01-2002)
IMF Notices of Credit Posting/Reversal Adjustment

  1. CP 62 (IMF), Notice of Credit Transfer, generates if the CORRESP–DT field on FRM34 is overlaid. This notice is similar to the Letter 672C. If the credit transfer fully resolves the taxpayers inquiry and no other issues were involved, the CP 62 is an adequate response.

  2. Overlay the CORRESP–DT field with the taxpayer contact date (correspondence date/inquiry date) if known. If contact date is unknown enter the IRS received date. On multiple transfers, a date must be entered in this field for each payment transferred.

  3. CP 62 does NOT generate if another "Notice of Demand" is generated in the same cycle.

  4. A "Notice of Demand" is considered an adjustment notice. This notice cannot be suppressed and generates when:

    1. An adjustment ADJ54 is input, or

    2. Timely payments are credited to a tax module causing recomputation of posted Failure to File (FTF) and/or Estimated Tax (ES) penalties.

  5. When the CP 62 will not be generated, written notification to the taxpayer is necessary.

  6. When inputting IMF credit transfers using DRT24/48 that will place the module into debit balance over ≡ ≡ ≡ ≡ ≡ , CP 60, Credit Reversal Adjustment Notice , will automatically generate to the taxpayer.

21.5.8.4.5  (10-01-2008)
BMF Notices of Credit Posting/Reversal Adjustments

  1. CP 225 (BMF), Missing Payment Applied, generates if the CORRESP–DT field on FRM34 is overlaid. There are two versions of this notice, complete and incomplete.

  2. On multiple credit transfers, enter a date in the CORRESP-DT field for each payment transferred.

  3. The complete CP 225 notice is similar to the Letter 672C.

  4. The incomplete version generates if another "Notice of Demand" is generated in the same cycle. Another CP 210/220"Notice of Demand" is considered an adjustment notice .

    Note:

    An adjustment (ADJ54) input with a transaction code (TC) 290 for zero with or without item reference numbers does not generate a CP 210/220 adjustment notice, unless the TC 290 for zero releases a credit frozen on the module (i.e., Q freeze, A freeze, R freeze, etc.)

  5. Transferring timely credits into a module containing a posted TC 166 (Failure to File penalty), TC 176 (Estimated Tax penalty), TC 186 (Federal Tax Deposit penalty), or TC 276 (Failure to Pay penalty) will cause these penalties to recompute and generate an adjustment notice CP 210/220. Other penalties may also recompute but will not generate an adjustment notice.

    Note:

    You cannot suppress this type of adjustment notice. You can stop the notice for a manually transferred payment.

  6. An incomplete CP 225 and a CP 210/220 will generate when:

    • A timely payment is transferred into a module AND

    • A recomputation of the Failure to File (FTF), Failure to Pay (FTP), and/or Estimated Tax (ES) penalties occurs AND

    • FRM34 is used to transfer the payment(s) with the CORRESP-DT field completed

    These notices provide an adequate response to the taxpayer; no additional "C" letter is needed.

  7. When adjusting and transferring credit(s) into the same module using CC FRM34 with no CORRESP-DT, input a posting delay code of one cycle on the adjustment (ADJ54). In three weeks, the taxpayer will receive a notice of adjustment with the correct module balance.

  8. When you transfer a misapplied payment you must check the filing requirements on CC ENMOD to determine if the misapplied payment established the filing requirement. If it did, remove the filing requirement using CC BNCHG. If you are unable to determine if the filing requirement should be removed through IDRS research, request the information from the taxpayer either verbally or in writing.

  9. When inputting BMF credit transfers using DRT24/48 that will place the module into debit balance over ≡ ≡ ≡ ≡ ≡ , CP 260, Notice of Credit Reversal Adjustment, will automatically generate to the taxpayer.

21.5.8.4.6  (03-04-2011)
TC 570 and Bypass Indicator "1"

  1. Use a Bypass Indicator (BPI) "1" or transaction code (TC) 570 to override the unpostable condition 305/198. Unpostable condition 305/198 is created when a credit:

    • Attempts to post to a full paid module, or

    • Is greater than the balance due on the account.

  2. The transaction codes affected by the unpostable condition are:

    • IMF - 430, 660, 670, 760

    • BMF - 650, 660, 670, 760

  3. As of January 1, 2003, the BPI field is a mandatory field. Follow the chart below to determine the correct BPI.

    Situation
    (Credit portion of transfer Only)     		Bypass Indicator ″0″ Bypass Indicator ″1″ TC 570
    Credit transfer and the overpayment should not refund or offset

    Exception:

    IMF only TC 760

    		 Yes No

    Yes     		Yes
    Credit transfer and the overpayment should refund No Yes No
    Credit transfer amount is less than the debit module balance Yes No No
    Credit transfer full pays the module Yes No No
    Credit transfer to module with no TC 150

    Exception:

    BMF only


    1. Status 06 and TC 594/599 posted

    2. Status 06 and other TC 59X posted

    		 Yes


    Yes

    No     		No


    No

    Yes     		No


    No

    No
    Credit transfer to correct payment date. Refer to IRM 21.5.8.4.3, Determining Correct Credit Transfer Format, for signature requirements when correcting payment dates.

    Note:

    Refer to IRM 21.5.8.3.1, Determining Source Document Requirement for Credit Transfers.

    		Yes No Yes

    Situation
    (Debit portion of transfer only)     		Bypass Indicator TC 570
    Prevent refund or offset of any remaining credit after transfer N/A Yes
    To suppress CP 260/60 Notice N/A Yes

  4. Do not freeze credit without a valid reason. The tax examiner inputting the TC 570 must ensure the freeze is released.

  5. To reverse a TC 570, input TC 571 on REQ77 with a Posting Delay Code of one cycle. Refer to IRM 2.4.19 , Command Codes REQ77, FRM77 and FRM7A, for more information.

    Exception:

    Do NOT input TC 571 if a TC 29X or 30X will be input at a later date or there is an open "L" Freeze on the module.

    Note:

    Generally, payments should not be removed from an account in debit status, or in zero balance, or if the transfer results in a debit balance.

21.5.8.4.7  (07-07-2006)
Posting Delay Code

  1. Use Posting Delay Code (PDC) on an adjustment or credit transfer when multiple transactions are required to adjust an account and some must post in later cycles.

  2. You can use the PDC with all credit transfer formats.

  3. Input ADD/ADC34 PDC on the debit side only. The credit transaction does not attempt to post until at least one cycle after the debit posts.

  4. On BMF accounts, use PDC to bypass Unpostable 316 when:

    1. Transferring multiple TC 826 with the same payment date and the computer split the corresponding credit into multiple TC 706 causing a money mismatch. Reverse the largest TC 706 first and use posting delay codes on the remaining TC 706.

      Reminder:

      When you are also adjusting an account, use a HC 3 to suppress additional notices to the taxpayer, when using posting delay codes to cycle the remaining TC 706.

    2. Transferring multiple credits or payments with the same payment date and the amounts are equal to, or less than, the posted payment amount. Transfer the largest payment first, then cycle the subsequent payments using posting delay codes.

  5. The PDC extends the IDRS "PN" Status. It does not post with the transaction or appear with the IDRS pending transaction.

21.5.8.4.8  (10-01-2004)
Avoiding Credit Transfer Unpostables

  1. To avoid unpostables, use the correct reversal transaction codes and correct dates as applicable. When using DRT24, the EFTPS-ELEC-DPST-IND "1" must be present when the original payment was received through EFTPS. For non-electronic payments, the EFTPS-ELEC-DPST-IND indicator must be blank.

    Reminder:

    The debit and credit dates are different on some transactions, e.g., TC 792/892.

  2. Input a Bypass Indicator (BPI) "1" or TC 570 when transferring payments to an account in zero or credit balance. Follow procedures in IRM 21.5.8.4.6, TC 570 and Bypass "1" Indicator.

  3. Use ADD/ADC34 to transfer EFTPS payments, unless required to use ADD/ADC24.

    Note:

    Do all preliminary research to locate EFTPS payments using CC EFTPS before performing a credit transfer. Refer to IRM 2.3.70, Command Code EFTPS, for additional information on this command code.

  4. Research IDRS for a generated transfer (TC 667) before reversing the credit elect (TC 712).

  5. Ensure the account is active. Refer to IRM 21.5.2.4.13, Reinstating Retention Register Accounts, for reinstating retention register accounts.

Exhibit 21.5.8-1 
TRANSACTION CODES AND REVERSALS

ADD/ADC34 and ADD/ADC24
Use ADD/ADC34 Whenever Possible

Note:

Use Designated Payment Code (DPC) 00 when transferring a misapplied payment without a DPC, transaction codes 640, 670, 680, 694, 690, and 700.

To Move Posted TC Reverse Credit with TC (Debit) Input Credit with TC – (Credit) ADDxx or ADCxx Explanation of when to use
Previous credit held on account 820 700 24 Transfer lump sum credits to the receiving module when not reversing a previous transfer. Use the date the credit became available.

Note:

Using a date prior to the credit availability date, results in interest charges on the debit module.

If the receiving account has a due date after the date the credit became available, it may be necessary to compute interest on the credit.
Various TCs that created the overpayment 830 710 48 Transfer overpayment to the following period (credit elect). Use the later of the Return Due Date (RDD), without regard to extension (plus one month for MFT 02) or the transaction date creating the overpayment. If all payments or credits are timely, use RDD. For MFT 02 use one month past the due date of the return.

Note:

When adjusting Employment Tax Returns refer to IRM 21.7.2.5, Adjusted Employer's Federal Tax Return or Claim for Refund, to determine the correct transaction date.

Caution:

If credit was not timely, separate TC 830s must be input using the appropriate late payment dates.
430 662 660 24 or 34 Transfer as an estimated tax payment. Use the 430 payment date on 662 and 660.
430 662 670 24 Transfer estimated payment using the payment date of the 430 on the 662 and 670.
610 612 610 24 or 34 Transfer a payment received with a return when the same return is being reprocessed to the receiving module. Use the 610 payment date on 612 and 610.
610 612 670 24 Transfer a payment received with a return when a TC 150 has previously posted to the receiving account. Use the 610 payment date on 612 and 670.
620 622 620 24 or 34 Form 7004, Form 2158, or Form 8736 Transfer the payment received with the extension request when moving the extension to another module. The payment posts as a tentative liability, which is the tax amount, allowed installment payment privilege. Use the 620 payment date on 622 and 620.
620 622 670 24 Transfer the payment as a subsequent payment when it was not meant as an installment payment with an extension. Use the 620 payment date on 622 and 670.
640 642 670 24 Transfer advanced payment as a subsequent payment when it was processed in error or not meant to be an advanced payment of a deficiency. Use the 640 payment date on 642 and 670.
640 642 640 24 or 34 Transfer the advanced payment as a subsequent payment on the receiving module. Use the 640 payment date on 642 and 640.
640 642 660 24 Transfer advanced payment as an estimated payment when it was processed in error or not meant to be an advanced payment of a deficiency. Use the 640 payment date on 642 and 660.
650 652 670 24 Transfer the FTD (650) payment on the BMF account to the IMF account as a subsequent payment if the date of the payment is after the due date of the receiving account. Use the 650 payment date on 652 and 670.
650 652 650 24 or 34 Transfer the FTD (650) payment on BMF account. Use the 650 payment date on 652 and 650.
650 652 660 24 Transfer the FTD (650) payment on the BMF account to the IMF account as an estimated tax payment if the date of the payment is prior to the due date of the receiving return (TC 150). Use the 650 payment date on 652 and 660.
660 662 660 24 or 34 Transfer estimated tax payment received before the due date of the receiving module. Use the 660 payment date on 662 and 660.
660 662 670 24 Transfer estimated tax payments received after the due date of the receiving module. Use the 660 payment date on 662 and 670.
660 662 650 24 Transfer estimated tax payments on Form 941 or Form 1120. Use the 660 payment date on 662 and 650.
670 672 670 24 or 34 Transfer payments as subsequent payments when the due date of the receiving module is before the date of the payment. Use the 670 payment date on 672 and 670.
670 672 660 24 Transfer as estimated tax payments when the received date of the payment is before the due date of the return.
670 672 610 24 Transfer a subsequent payment, which should have posted as a payment with the original return (TC 150). Use the 670 payment date on 672 and 610.
678 679 678 24 Transfer estimated tax paid by treasury bonds. Applies only to State Tax. Use the 678 payment date on 679 and 678.
680 682 680 24 or 34 Transfer the designated payment as a designated payment of interest if the payment was meant to be a payment of interest. Use the 680 payment date on 682 and 680.
680 682 670 24 Transfer the designated payment of interest as a subsequent payment if the payment was not meant to be applied as a designated payment. Use the 680 payment date on 682 and 670.
690 692 690 24 or 34 Transfer the designated penalty payment as a designated penalty payment if the payment was meant to be applied as a designated payment. Use the 690 payment date on 692 and 690.
690 692 670 24 Transfer the designated penalty payment as a subsequent payment per taxpayer request, or if the payment was not meant to be applied as a designated penalty payment. Use the 690 payment date on 692 and 670.
694 695 694 24 Transfer the designated payment of Fees and Collection costs. Will unpost if there is no 360 present on the debited module. Use the 694 payment date on 695 and 694.
694 695 670 24 Transfer the designated penalty payment as a subsequent payment if that is the taxpayers intent. Use the 694 payment date on 695 and 670.
700 702 700 24 Reverse lump sum credits to the receiving module when not reversing a previous transfer. Use the date the credit became available. If a date is used prior to the date the credit became available, interest will be assessed on the debit account. If the receiving account has a due date after the date the credit became available, it may be necessary to compute interest on the credit.
700 702 822 24 Reverse a prior manual transfer of a lump sum credit. Use the same dates that are being reversed (the 702 date must match the 700 date, the 822 date must match the 820 date).
706 701 821 24 Reverse a computer generated over payment credit offset. Posted as TC 826 and TC 706. The dates for TC 826/706 will not be the same on BMF accounts.
706 701 700 24 Transfer a computer generated lump sum credit (offset) when not reversing the computer generated transfer. Use the TC 706 date with the TC 701. The same date should be used on the 700. If the due date of the receiving modules is after the date the credit became available, interest may need to be computed.
706 701 821 24 Reverse a computer generated lump sum credit transfer (offset). Use the date of the 706 on the 701 and use the date of the 826 on the 821.
710 712 832 48 Reverse a manually transferred credit elect. Receiving module must contain a TC 830 or 836. Use date of the 710 on the 712 and the date of 830 on the 832.
710 712 710 48 Transfer manual credit elect to another account (for example, a spouse's account). Use the date of the 710 on the 712 and 710.
716 712 832 48 Reverse computer generated credit elect. The receiving module must contain a TC 830 or 836. The same dates must be used as the posted date. Use date of 716 on the 712 and the date of the 836 on 832.
716 712 710 48 Transfer computer generated credit elect to another account (for example, a spouse’s account.) Use the 716 date on 712 and 710.
730 732 730 24 Transfer a manually transferred interest on accounts. Use the 730 date on 732 and 730.
736 731 730 24 Transfer a computer-generated interest to another account. Use the 736 date on 731 and 730.
736 731 851 24 Transfer computer generated interest back to where it came from. Use the date of the 736 on the 731 and the date of the 856 on the 851.
790 792 892 24 Transfer a manually transferred overpayment from IMF to BMF or IRAF. Use the date of the 790 on the 792 and the date of the 896 on the 892.
796 792 892 24 Transfer a computer-generated overpayment from IMF to BMF or IRAF. Use the date of the 796 on the 792 and date of the 896 on the 892 (input a credit override indicator of "2" on both the credit and the debit side).
800 802 800 48 Transfer manually input credit for withholding taxes. Use the 800 payment date on 802 and 800.
806 802 800 24 Transfer computer posted withholding taxes. Use the 806 payment date on 802 and 800.
821 820 700 24 Transfer a manually transferred credit. Use the 821 payment date on 820 and 700.
976 612 610 24 or 34 Transfer a payment received with a subsequent return when the return is being reprocessed to another account. Use the date of the 976 on the 612 and 610.
976 612 670 24 Transfer a payment received with a subsequent return when the receiving account has a previously posted TC 150. Use the date of the 976 on the 612 and 670.

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