3.11.6  Data Processing (DP) Tax Adjustments (Cont. 1)

3.11.6.5  (07-24-2014)
Screening Criteria for Processable Return

  1. Before inputting any changes to a Form 1040X, check for the issue(s), freeze codes, transaction codes, math error condition, tax period, No TC 150, etc. that require routing to another area. (See IRM 3.11.6.12)

  2. If the return is not routed to another area, then check for the following items that may require correspondence or additional action:

    • Primary TIN

    • Tax period

    • Signature

    • Received date

    • Presidential Election Campaign Fund (PECF) boxes checked requiring preparation of a dummy return

    • Missing forms, schedules or other required information

    Note:

    When any Schedule or Form needed to support the change is missing and the refund is ≡ ≡ ≡ ≡ ≡ ≡ ≡ or needed to complete a claim for CAT-A / EXAM., correspond per IRM 3.11.6.9 using Form 8009-A, box 4 or 5.

3.11.6.5.1  (07-24-2014)
TC 150 Research (No TC 150)

  1. All proccessable amended claims require a posted TC 150. A TC 150 represents the total tax from the original return.

  2. Research for a TC 150 for the tax period indicated on the return. If the figures on the return or the data on IDRS support a different tax period for either the Form 1040 or Form 1040X, edit the correct tax period onto the appropriate return.

    Note:

    If the tax period is missing, use these same instructions for determining the appropriate tax period. If unable to determine the correct tax period refer to IRM 3.11.6.2.2 paragraph 3.

  3. See IRM 3.11.6.6.8 (3) for a list of TC 150 responses that require the case be suspended.

  4. If no TC 150 has posted on TXMOD for the same tax period follow the steps below to research for a TC 150.

    1. Look though entire return packet for a different TIN for the primary taxpayer, including taxpayer’s explanation.

    2. If a TC 594 is present, research for the TC 150 using the spouse's TIN.

    3. If a TC 904 is present on the account research the invalid side for a TC 150. If a TC 150 is present on the invalid side route to CIS/AM.

    4. Research TRDBV for tax data. If the tax data is present and/or is pending (must be present on primary taxpayer for FS 3) suspend case for 60 days from the received date and monitor for the TC 150 to post. See paragraph 5 below for instructions on suspending the return.

      Exception:

      Treat any status indicator containing REJECTED, DELETED OR VOIDED on TRDBV as if there is no tax data present (no TC 150).

      Exception:

      If you find Master File information on CC: TRDBV, but there is not information posted on MFT 30 research IMFOLI to see if information has posted to MFT 32 which is where Identify Theft accounts are moved for resolution. Treat as identity theft and route. See IRM 3.11.6.3.7.

    5. If there are dependents present on the return, research for a different TIN for the primary taxpayer using CC DDBKD or CC DUPED. (For the tax period specified on the amended return only.)

    6. Research using CC: NAMEI and NAMES for both the taxpayer and the spouse to verify the taxpayer has not previously filed under a different TIN. It may be necessary to use multiple name combinations in order to locate the TC 150.

      Note:

      Research CC: ERINV to see if the return is in ERS inventory. If present route to ERS per local procedure. There may be a 12C letter attached. If there is no entry this means the return is not currently processing.

  5. If a TC 150 is found under an alternate TIN for the primary or secondary, see IRM 3.11.6.2.1 as this may involve a merging or resequencing of accounts.

  6. When suspending a return for No TC 150:

    1. If a tax module has not been established for the amended return use CC ACTON to establish a dummy module.

      Note:

      CC MFREQD should not be used if the taxpayer has never previously filed a return

    2. If the taxpayer previously had an ITIN or IRSN and is switching to a valid SSN and the return needs to be suspended then suspend the return using the SSN.

  7. If a TC 150 is found, continue processing unless:

    1. It is a Form 1040 with no Form 1040X; see IRM 3.11.6.5.4.

    2. There is a previous posted/pending TC 29X; see IRM 3.11.6.5.5.

  8. If no TC 150 is found after all research has been exhausted:

    1. If no Form 1040 is attached, see IRM 3.11.6.5.2.

    2. If Form 1040 is attached, see IRM 3.11.6.5.3.

  9. Do not route returns to other areas with no TC 150 unless specifically instructed to route without a TC 150.

3.11.6.5.2  (07-24-2014)
Form 1040X with No Form 1040 Attached (No TC 150)

  1. After researching for a TC 150 per IRM 3.11.6.5.1 follow the instructions below.

  2. If no return has been filed suspend case for 60 days from the IRS received date. See IRM 3.11.6.5 (5) for instructions on suspending the return.

    Note:

    If disaster is indicated on Form 1040X and no TC 150 has posted follow local procedures to expedite to CIS/AM. See IRM 3.11.6.3.1.1.

  3. If at the end of 60 days there is still no return on file and/or a pending TC 150:

    1. If there are payments on the account indicating a balance due then route the return to CIS/AM.

    2. If there are no payments on the account, return the claim to the taxpayer. Use Form 8009-A to return claim. For Box 25 fill in: "We have no record of receiving your original return or we are unable to process your original return, therefore we cannot process your amended return. Please complete a new Form 1040 including your amended changes and mail back to us. Do not attach the Form 1040X we are returning with this letter."

  4. If the Form 1040X is returned undeliverable and a TC 150 is still not on the account:

    1. Research for a better address per IRM 3.11.6.9.8. If a better address is found, send the 1040X with Form 8009-A back to the taxpayer.

    2. A better address is not found during research:

    If Then
    Form 1040X Amended U.S. Individual Income Tax Return with payments on the account. Refer to CIS/AM
    Form 1040X Amended U.S. Individual Income Tax Return with no payments on the account. Treat the Form 1040X as classified waste

3.11.6.5.3  (07-24-2014)
Form 1040 Attached to Form 1040X

  1. After researching for a TC 150 per IRM 3.11.6.5.1 , follow the instructions below.

  2. .Sometimes the 1040X Unit will receive Forms 1040 attached to Form 1040X. Determine if the attached Form 1040 and Form 1040X is for the same or different tax period.

  3. If the Form 1040 is for a different tax period than the Form 1040X and:

    1. Form 1040 is being used as "support" for a carryback loss, keep the two returns together and treat as a carryback/carryforward claim.

    2. No TC 150 has posted for the tax period of Form 1040, detach Form 1040. Continue processing Form 1040X.

  4. When processing or suspending a Form 1040 attached to Form 1040X, staple the Form 1040 behind Form 1040X.

    Note:

    If Form 1040X is not signed see IRM 3.11.6.5.7 paragraph 4

  5. If no TC 150 has posted for the same tax period, take the following action based on the chart below.

    Box 1 If No TC 150 and Then
      Form 1040 does not match the Correct Amount column of Form 1040X,

    Note:

    Form 1040 may be notated "As originally filed"

    1. For Form 1040X:
    1. Convert taxpayer's Correct Amount figures to Form 6114 - Form 1040 Conversion Sheet. For current year returns use a blank Form 1040.

    2. "X" Form 1040X and staple Form 1040X behind Form 1040 with any supporting documents.

    3. If Form 1040X is signed, edit a notation the 1040X is signed in the signature area of Form 1040 or Form 6114.

       
    2. Staple the Form 6114 Conversion Sheet to the front of the Form 1040, but below the entity section.
    3. Route to Receipt and Control to be processed as an original return.
    Box 2 Form 1040 does match the Correct Amount column of Form 1040X,

    Note:

    Form 1040 may be notated with "As Amended"

    1. "X" Form 1040X and staple it behind Form 1040 with any supporting documents.
    2. For Form 1040:
    1. Edit "No TC 150" the date and TE Stamp in the upper left margin of Form 1040.

    2. Circle out any indications that Form 1040 is amended.

    3. If Form 1040 is not signed and Form 1040X is signed, edit a notation the 1040X is signed in the signature area of Form 1040.


    3. Route to Receipt and Control to be processed as an original return.
    Box 3 Two Forms 1040 are attached to a Form 1040X.

    -One may be notated "As originally filed" and does not match the correct amount column
    -The second may be notated "As amended" and matches the correct amount column.
    1. "X" both Form 1040X and the Form 1040 "As originally filed" . Staple them behind Form 1040 "As amended" with any supporting documents.
    2. For Form 1040 "As amended"
    1. Edit the date and TE Stamp in the upper left margin of Form 1040.

    2. Circle out any indications that Form 1040 is amended.

    3. If Form 1040 is not signed and Form 1040X is signed, edit a notation the 1040X is signed in the signature area of Form 1040.
      Route to Receipt and Control to be processed as an original return.

    Note:

    If routing a Form 1040 to Receipt and Control that was received after April 22nd or the Form 1040 is a prior year and the Received Date is missing, edit the Received Date from the Form 1040X onto the Form 1040.

3.11.6.5.4  (07-24-2014)
Amended Form 1040 with No Form 1040X Attached / True Duplicates (TRUE DUPES)

  1. A true duplicate condition occurs when the taxpayer files two 1040 series returns for the same tax year. Often the taxpayer will send in a Form 1040/A/EZ with a notation of "Duplicate" , "Copy" , "Substitute" , "Amended " , "Corrected" , "Revised" , "Superseding " , or "Tentative" , "CIS Imaged" , or attaches a copy of a previously filed return.

  2. Research for a TC 150 per IRM 3.11.6.5.1

    1. If no TC 150 has posted, circle out any notation that suggest the return was previously filed. Edit "No TC 150 and the current date" in the upper left margin and send to Receipt and Control to be processed as an original return.

    2. If a TC 150 has posted, determine if the Form 1040 is a copy of the original filed return or is an "amended" return. (See (3) below).

  3. When a TC 150 has posted, research IDRS for any differences between RTVUE and the Form 1040. Taxpayers will sometimes attempt to amend their return using a 1040 as opposed to the Form 1040X. Usually the filing situation can be identified as some of the income, credit, exemption or deduction information will match or not match.

    Caution:

    If a -R Freeze is present research IDRS for taxpayer correspondence. Research what type of letters have been sent. Types of correspondence include the 12C letter which is requesting the taxpayer's signature. These should be returned to the originating area per local procedures. Research CC: ERINV to see if the return is in ERS inventory. If present route to ERS per local procedure.

  4. Other taxpayers will file a paper 1040 because somebody has already filed under their SSN and they have been rejected by electronic filing or they always file by paper and they do not realize at this juncture somebody has filed electronically using their SSN. If the taxpayer has been rejected electronically usually they will provide an explanation as to why they are filing a paper return.

  5. Caution should be used in adjusting an account with the TC 150 already posted. Keep in mind we have identity theft, but we also have taxpayers that transpose SSNs and file paper returns mistakenly under other’s SSNs. These 2 classes of returns definitely need to go through the duplicate filing process in original processing and should not be adjusted as amended returns. Follow the procedures in IRM 3.11.6.3.7 for all of these returns. Indications of possible identity theft could be:

    • Change of address inconsistent with other known information

    • Significant changes in filing history (e.g. historically FS 4 with 2 dependents, now FS 2 with 10 dependents, or filing with different dependents)

    • Different dates of birth

    • Large, unusual or questionable line items (e.g. high withholding, large refundable credits)

    • Historically filing with Social Security benefits and currently filing with none

    • Contradictory IRPTR information (when available)

    • Return items inconsistent with filing history or age (e.g. education credits for elderly taxpayers)

    • Taxpayer or dependents are deceased or in prison

    • Direct Deposit information is completely different (account/routing numbers use CC TRDBV to research)

    • TC 971-134 on account

    • Tax preparer changes

    • Taxpayer identifies they could not file electronically because someone used their SSN

    • TRDBV shows multiple rejected attempts to electronically file

  6. When a TC 150 has posted, research IDRS and review the entire return and all attachments for any differences between RTVUE and the Form 1040. Compare the following items and process accordingly:

    • Entity information (name and address)

    • Filing Status

    • Different 1040 series i.e. 1040 vs. 1040-EZ etc.

    • Exemptions (dependents claimed and money amount)

    • Standard Deduction vs. Itemized Deduction

    • Different Schedules

    • Line -by- line comparisons (income, deductions, credits, other taxes, payments, penalties, etc.)

    • Direct Deposit information (account/routing numbers use CC TRDBV to research) Tax preparer/no tax preparer

    • Form 8948 tax preparer provides explanation why they did not file electronically. This could provide a clue.

    • Typically there will be a handwritten notation on the return such as possible duplicate, copy, amended, etc. The taxpayer when they attempt to change their original return with another Form 1040 usually give us a clue as to what they are trying to accomplish.

      Note:

      If any normal "route out" criteria are present, take appropriate action.

      Note:

      When a True Dupe return has a math error posted, refer to IRM 3.11.6.6.5.1.

  7. If a change has been discovered, follow normal 1040X procedures for routing, corresponding, or adjusting the taxpayer's account.

    Exception:

    If there is a previously posted adjustment and the 1040 series return will revert the module back to the original filing then treat as classified waste per local management.

    Exception:

    Accounts with "SUBST4" on IMFOL or "SFR" on TXMOD should be routed to Collections. (See IRM 3.11.6.3.14(2)

  8. If there are no changes based on the information provided, the return is a True Duplicate return. Research the return packet for any correspondence that would indicate why the taxpayer is submitting a duplicate filing.

    1. If the return is a duplicate and some additional action is being requested, process the return for the additional action.

    2. If the return is a duplicate of the original return and no additional action is required, identify as classified waste by marking the return as determined by local management.

      Note:

      Do not TRUE DUPE international or Combat Zone returns.

    3. If the return is a Duplicate of an amended return and no additional action is required, route to files based on the DLN of the TC 29X for which the return is a duplicate.

  9. If an undeliverable return is received IRM 3.11.6.9.8

3.11.6.5.5  (09-16-2013)
Duplicate Forms 1040X Prior TC 290/291 on Master File

  1. Review the nature of the prior adjustment to determine whether or not the Form 1040X is a duplicate of the posted adjustment or if the taxpayer is requesting an additional action.

  2. Do not treat a Form 1040X as classified waste.

  3. Check posted/pending: TC, RC(s), RN, CRN, etc. to determine what was previously adjusted

  4. Compare the following items:

    1. Entity Information (name and address)

    2. Filing Status

    3. Exemptions

    4. Standard Deduction and Itemized Deductions

    5. Line –by- Line comparison (income, deductions, credits, other taxes, payments, penalties, etc.)

    6. Direct Deposit Information

    7. Attached forms/schedules

      Note:

      If any “route out” criteria are present, take the appropriate action.

  5. If a change has been discovered, input the adjustment following general processing procedures.

    1. Input PC 8 if the transaction code 29X is for an amount greater than $10 and is within $10 of a previously posted 29X for an amount greater than $10.(Example: Posted TC 290 is $50, and adjustment TC 290 is $42.)

    2. Input PC 8 if TC 29X containing a reference number 806, 807 or 766 that is within $10 of a prior posted matching transaction (Example: reference number 806 within $10 of prior posted TC 806, not within $10 of TC 807).

    3. If the prior adjustment has not posted to Master File it may be necessary to input a posting delay code of 1 to avoid unnecessary unpostables. (Example: TC 290 on TXMOD is in PN status.)

  6. If there are no changes, or the adjustment is same adjustment previously posted, the return is a duplicate. Research the return packet for any correspondence indicating why the taxpayer is submitting a duplicate 1040X.

    1. If the return is a duplicate but the taxpayer is requesting an additional action be taken, follow general processing procedures

    2. If the return is a Duplicate and no additional action is required, route to files using Form 9856 based on the DLN of the TC 29X for which the return is a duplicate. Follow local procedures.

    Note:

    If the return is a duplicate do not correspond for a missing signature and/or missing forms and schedules.

  7. If the prior posted adjustment and the 1040X reflect a zero change due to the taxpayer having already submitted the adjustment requested on the 1040X then verify that the type of income or credit is not changing. Example: Taxpayer previous filed a 1040X to add a 1099-MISC as other income (RC 021) and is now reporting the income on a Schedule C (RC012) then input a TC 290 for .00 with RC 012 to reflect the change.

3.11.6.5.6  (09-16-2013)
Claims Returned from Other Areas

  1. Occasionally, claims that were routed to another function may be returned for processing.

  2. Determine if the return requires:

    • Routing to the next highest priority

    • Additional research

    • Input (the return has been cleared from the area/function it was routed)

3.11.6.5.7  (07-24-2014)
Signature

  1. All processable claims require a valid signature(s). The signature(s) is required anywhere below the jurat (perjury statement), but not in the paid preparer section on Amended returns and CP Notices.

  2. If the jurat has been altered, treat it as a Frivolous claim. If the jurat is missing, treat it as an unsigned return and correspond for the missing signature(s) using a 324C Letter to obtain the signature. Do not mail the return back to the taxpayer. Process the net balance due per IRM 3.11.6.9.1 (2).

    Exception:

    If page 2 is missing on the new Form 1040X do not treat as missing jurat. Follow procedures for missing signature.

    Note:

    Do not correspond for signature if the case will be worked in another area. Route case to appropriate area.

  3. When the signature present is not clearly determined to be an original signature, correspond per IRM 3.11.6.9. This does not include CIS imaged returns. If there is a question consult your lead or manager.

  4. If Form 1040X is not signed, however a Form 1040 matching the Correct Amount column of Form 1040X is attached and signed, accept the signature and continue processing the return. Edit a notation onto the signature line, if present, on Form 1040X indicating that the Form 1040 is signed. Otherwise edit the notation on the front bottom portion of Form 1040X.

  5. Correspond for the signature of two witnesses when the taxpayer signs with a mark such as an "X" . See IRM 3.11.6.9.

  6. Joint returns require the signature of both taxpayers unless one of the taxpayers falls into one of the categories below:

    1. One spouse is overseas and the signing spouse is authorized by a power of attorney (e.g. Form 2848) or similar signed document which clearly defines the scope of authorization granted to the POA.

    2. One Spouse is in a combat zone/qualified hazardous duty area and the signing spouse attaches a statement.

    3. One spouse is incapacitated. The signing spouse should attach a dated statement explaining the reason the incapacitated taxpayer cannot sign. The signing spouse will sign on his/her signature line as well as the spouse's signature line.

      Caution:

      Incapacitated means the taxpayer is physically unable to sign the return. In the case of a mentally incompetent taxpayer a court appointed representative who can act for the taxpayer must sign the tax return.

    4. Deceased spouse. See IRM 3.11.6.3.21

  7. If the taxpayer is a minor (there must be a clear indication the child is a minor) the return must be signed by one of the following:

    1. The minor child

    2. A parent

    3. A guardian or other fiduciary representative ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    4. A guardian or other fiduciary representative with documentary evidence is attached.

    5. If none of the above applies, correspond for a missing signature. See IRM 3.11.6.9.

      Examples of Fiduciary representatives includes:

      • Administrator (ADM)
      • Conservator (CONS)
      • Custodian (CUST)
      • Executor (EXEC)
      • Guardian (GDN)
      • Personal Representative (PER REP)
      • Trustee (TTEE)
  8. Do not correspond for a missing/incorrect signature(s) if:

    1. Any "Dummy" return that was prepared by the IRS

    2. A fiduciary representative or parent for other than a minor child signs for a refund under $100 or a balance due.

    3. If the signature on the return is not the same as the taxpayer see IRM 3.11.6.5.7

    4. If Form 2848 with Part II completed and is attached to the return.

    5. The return is a true dupe.

    6. Taxpayer files as FS 3 and spouse did not sign the return.

    7. The claim meets route out criteria unless otherwise specified.

      Note:

      Do not confuse attorney with Power of Attorney or Attorney-in-fact.

      Note:

      For decedent returns see IRM 3.11.6.3.21

  9. When corresponding for signature issues see IRM 3.11.6.10

3.11.6.5.8  (07-24-2014)
Centralized Authorization File (CAF) - Form 2848 (POA) and Form 8821 (TIA) and General /Durable POAs

  1. The Centralized Authorization File (CAF) maintains a database of authorized representatives who are permitted to sign for the taxpayer. The CAF unit will assign unique identifiers (CAF numbers) to the representative(s) based on Form 2848, Power of Attorney, (POA) and acceptable General/Durable POAs submitted.

  2. Taxpayers will occasionally submit a tax return that has been signed by their enrolled agent, or some other representative or the taxpayer may attach a Form 2848 to indicate that they want a representative to be able to sign for them These personal representatives of the taxpayer must submit a Form 2848 (Part II completed), or acceptable General/Durable POA or already be on file with the Centralized Authorization File (CAF) in order to sign the taxpayers return.

  3. Taxpayers may also submit a Form 8821, Tax Information Authorization and Declaration of Representative (TIA) as documentary evidence for signing the tax return; however, Form 8821 does not authorize the signing of the return. If Form 8821 is present detach and follow the routing instructions in paragraph 6. Correspond for a Form 2848 if the taxpayer submits a Form 8821 and the return is signed by someone other than the taxpayer. Refer to IRM 3.11.6.9 and use either Form 8009-A, box 2, or a 324C letter, paragraphs A, O, X, 4, a.

  4. When the taxpayer submits a General/Durable POA leave the document attached to the return and continue processing.

  5. Use CC CFINK to research the CAF to verify the personal representative is authorized to sign the return for the tax period indicated or to verify an attached 2848 is not on file for the person listed on Form 2848

    If And Then
    The signature on the return matches a representative listed on CFINK or the 2848 is already on file SIGN: field on CFINK is marked YES Continue processing the return.
    The signature on the return does not match a representative listed on CFINK, or no record is found

    Or SIGN: field on CFINK is marked NO
    Form 2848 is attached
    1. Detach from Form 1040X and route to the nearest CAF unit.
    2. Continue processing the amended return.
    3. Leave an action trail on the amended return and Form 2848.
    Form 2848 is not attached Correspond for Form 2848 per IRM 3.11.6.9 and use either Form 8009-A, box 2, or a 324C letter, paragraphs A, O, X, 4, a.
  6. Use the following addresses when routing a Form 2848 or Form 8821, to a CAF Unit:

    Note:

    If Line 4 of Form 2848 or Form 8821 is checked, do not detach or route to the CAF unit. Continue processing the return.

    CAF Unit Fax Numbers Address
    Memphis
    901-546-4115

    Beginning 1/1/2013:
    855-214-7519

    Internal Revenue Service
    5333 Getwell Rd.
    Stop 8423
    Memphis, TN 38118
    Ogden
    801-620-4249


    855-214-7522

    Internal Revenue Service
    1973 N Rulon White Blvd
    Mail Stop 6737
    Ogden UT 84201
    Philadelphia
    267-941-1017

    Internal Revenue Service
    International CAF MS 3 E17.151
    2970 Market St.
    Philadelphia, PA 19104
    Fax number 267-941-1017
  7. Do not detach any "Worksheets" provided by the military to personnel assigned to a Combat Zone. They are not considered to be a POA in lieu of Form 2848. See IRM 3.11.6.3.20

  8. If correspondence is attached to the return that is unrelated to the amended return, but needs to be detached and routed to the appropriate functional area, attach a photocopy of the POA/TIA to the correspondence. Indicate that the form has been detached and routed to the CAF unit.

3.11.6.5.9  (08-19-2013)
E-file Documents: Form 8453, U.S. Individual Tax Declaration for an IRS e-file Return; Form 8453-OL, U.S. Individual Income Tax Declaration for an IRS e-file Online Return; Form 8879, IRS e-file Signature Authorization Letter 2936/A or Letter 3043 Attached to Form 1040/1040X

  1. There may be cases in which the taxpayer will attach one of the following forms to the Form 1040 or 1040X. If the Form 1040X includes a Form 1040 for back-up information, follow the instructions below for E-file documents attached to Form 1040X if applicable.

    Note:

    The Form 8453-OL is obsolete, but taxpayers continue to attach it for various reasons. .

    IfF And Then
    Form 1040X has Form 8453-OL or Form 8453 attached
    A TC 150 has posted
    1. Detach the Form 8453-OL or Form 8453 and route to Receipt and Control for processing.
    2. Continue to process the Form 1040X.
    Form 1040/1040X has Form 8453-OL or Form 8453 attached 1. The account does not have a TC 150 posted on TXMOD, IMFOL or TRDBV Continue to process the Form 1040/1040X
    Form 1040/1040X has Form 8879 attached   Continue to process the Form 1040/1040X

3.11.6.6  (01-01-2014)
Processing Form 1040X Using IDRS for Input of Adjustment

  1. Manually screen the Form 1040X for CIS/AM, CAT A, Statute, Fraud Detection Center criteria, notices or correspondence that indicate another function is working on the case for "routing out and research IDRS for any Transaction or Freeze Codes that require special attention" .

  2. Once you have determined that there are no "route out" criteria determine if any correspondence issues exist and if the claim is allowable. After exhausting all necessary research input the adjustment through IDRS., See the items covered under IRM 3.11.6.4, Screening Criteria for Processable Return, and corresponding for any missing information per IRM 3.11.6.9, Correspondence Procedures for further explanation.

  3. The following subsections cover:

    • Entity Changes

    • Manual Refund

    • Master File Verification

    • Math Verification

    • Setting A Math Error

    • Transaction Codes and Reference Numbers

    • IMF Processing Codes

    • IDRS Transaction Codes and Freeze Codes

    • Unpostable Conditions

3.11.6.6.1  (08-27-2014)
Entity Changes

  1. When making any Entity changes, input the change on IDRS using CC INCHG .

    Note:

    Input a posting delay code on any adjustment when making any changes to the taxpayer's address or name line information , or if there is a pending change that affects the return you are processing.


    For address changes on multiple year returns from the same taxpayer:

    If Then
    Same address is on both returns Input Address Change and use Cycle Delay on both tax year adjustments.
    Different address on returns Input Address Change using most current year return and use Cycle Delay on both tax year adjustments.

    Caution:

    Do not update the Entity section if an adjustment is not being input or the return is being routed.

    Exception:

    If xClaim inputs a posting delay code and the taxpayer is not changing their address or name line information then remove the posting delay code.

  2. Follow the instructions in the table below when a name change is requested:

    If Then
    Taxpayer files a Form 1040X to indicate a name change only Check INOLE for NEW SSA/NC or SSA:
    1. If the name control on Form 1040X matches NEW SSA/NC or SSA input TC 290 .00 and route to Files. Do not update the name.
    2. If the name control on 1040X does not match NEW SSA/NC or SSA route the return to Entity with a Buck Slip attached, annotate: "Name change request -- do not process 1040X"
    Taxpayer files a Form 1040X to indicate a name change and tax changes are also required: Check INOLE for NEW SSA/NC or SSA:
    1. If name control on 1040X does match NEW SSA/NC or SSA continue to process the return, if no route out criteria is present. Do not update the name.
    2. If the name control on 1040X does not match NEW SSA/NC or SSA route to CIS/AM

    Note:

    Social Security numbers and taxpayer names are based on SSA data. Command Code INOLE contains this data and is updated from SSA. This data contains the taxpayer's first name and last name and middle initial if any. This is their legal name which appears on their social security card. Taxpayers will sometimes use variations of their first name including using initials when filing original (verification is performed by matching the name control to the SSN) and amended returns This is not considered an indication of a name change unless the taxpayer is specifically asking for a name change. If the taxpayer is requesting to change the name the table above would be followed.

    Exception:

    Input name change only if there is a clear indication that the name was transcribed incorrectly (e.g. SMITH transcribed as SMTH).

  3. If the taxpayer requests their refund to be issued in a name or address other than shown on master file, see Manual Refund instructions IRM 3.11.6.6.2

  4. If the address on the 1040X does not match CC: ENMOD or if one of the conditions below apply use CC: INCHG to update the entity.

    • Taxpayer alters the address in the Entity of the Form 1040X or on a CP notice

    • Taxpayer specifically indicates in the Explanation of Changes

    • Taxpayer attaches a separate sheet or Form 8822 requesting the address change

    Exception:

    If any normal route out criteria are present, take the appropriate action.

    Exception:


    Do not update the address if an address change has posted after the Form 1040X received date. Any refund or correspondence will be sent to the new address. Use ENMOD to verify cycle date. If the 1040X is received in the same cycle that an address change has posted then update the address to the address on the 1040X.

    Note:

    If the Form 1040X, Line A contains a "YES" or "NO" box, do not update the Entity if the "No" box is checked and TP alters the address.

  5. A signature (both if MFJ) is required before an address change can be input into IDRS. If signature correspondence is required use the address of record on IDRS.

  6. If both a PO Box and a street address are present on Form 1040X, input the PO Box on the address line and the street address on the continuation of the name line. If the city and zip code differ between the PO Box and the other address listed use the city and zip code of the PO box.

  7. The In-Care-Of "(C/O)" is considered part of the address. If the entity information on IDRS shows an In-Care-Of person, but the amended return does not, update the Entity on IDRS and vice-versa.

  8. If there is question as to the validity of the taxpayer's address use www.USPS.com to verify the address.

  9. If the filer used Form 1040X instead of Form 8822 to inform us of an address change and there is no tax adjustment, input a TC 290.00, Reason Code 099, Source Code 1. Use CC INCHG to update the address and process the return.

  10. When Form 8822 is attached to the Form 1040X but is being routed, detach Form 8822, route to Entity Control and route the 1040X per IRM instructions.

  11. Use the following chart when making a filing status change:

    If the taxpayer changes the filing status on Form 1040X : And Then
    To FS 1 (Single)   Update INCHG to FS 1. Use RC 001.
    To FS 2 (Married Filing Jointly)   Update INCHG to FS 2 from FS 1 or FS 4. Use RC 002.IRM 3.11.6.6.1.1.
    • To/From 3 (Married Filing Separately

    • To/From FS 6 Married filing separate return and spouse is not required to file a return and spouse exemption is claimed.

      Refer to CIS/AM
    • To FS 4 (Head of Household

    • To FS 7 (Head of Household and dependent exemption is not claimed)

    The taxpayer is claiming:
    1. A dependent exemption (name/TIN matches INOLE)
    2. A non-dependent (name and QND are provided or claimed for EIC)
    3. Any of the information in 1 or 2 is missing or does not match
    1. Update INCHG to FS 4. Use RC 004.
    2. Update INCHG to FS 4. Use RC 004.
    3. Correspond per IRM 3.11.6.9 using either Form 8009-A or a 324C letter. For Form 8009-A, use box 9 and the fill-in, "Please provide the name of the person who qualifies you as Head of Household." For a 324C letter, use paragraphs A, F, X. For Form 8009-A, use box 8.
    To FS 5 (Qualifying widow(er))   Update INCHG to FS 5. Use RC 005.

    Note:

    Changes from joint to another status will be routed to CIS/AM. Single to joint or Head of Household to joint will only be adjusted when the other spouse has not filed. SP will not adjust any account that requires backing out tax information or merging the accounts. These will be Routed to CIS/AM.

    Note:

    The taxpayer may sometimes combine their standard deduction with their personal exemption.

  12. If the taxpayer indicates a change in filing status that is not an CIS/AM issue, input the change on IDRS using CC INCHG.

  13. If a Form 1040X is received requesting a filing status change, and a TC 971 AC 137 is present on the module, route to CIS/AM.

3.11.6.6.1.1  (07-24-2014)
Filing Status 2 Changes

  1. Research for a TC 150 on both the primary and secondary taxpayer's account. Use CC NAME to verify the taxpayer has not previously filed under a different TIN for the tax year that you are working. If both taxpayers have a TC 150 posted route to CIS/AM.

    Caution:

    Route all claims citing Defense of Marriage Act “, “DOMA”, “Windsor v. the United States” , or a reference pertaining to “Recent Supreme Court Decision” or similar statement (must be notated on the claims) to CIS/AM.

  2. For the tax year in which you are working, if one spouse did not previously file a return, adjust the established account of the taxpayer that has filed, to reflect the amended joint return.

  3. Refer the following to CIS/AM, if any of the following conditions apply to the account of the taxpayer who did not previously file:

    • If a TC 140 is present.

    • If a E- freeze is present.

    • Any available credit or payments will need to be transferred to the primary account.

  4. Take the following actions on the established (now referred to as the primary) account:

    1. Use blocking series 05 on the adjustment unless another blocking series is required.

    2. Correct the entity on the primary account to reflect the joint filing information

      Caution:

      Failure to update the entity to reflect the joint filing information could result in an erroneous refund.

  5. When entering a name change to update/correct a joint return filer, ensure the joint names are entered correctly.

  6. The correct method to input name changes are shown below: The "italicized print" indicates the primary taxpayers name control.

    Tax Return Input format for joint filers Notice printout at MF
    a. John Doe
    Mary Doe
    John & Mary]Doe John Doe
    Mary Doe
    b. John Doe
    Mary Smith
    John]Doe]& Mary Smith John Doe
    Mary Smith
    c. John Doe
    Mary Smith-Doe
    John]Doe]& Mary Smith-Doe John Doe
    Mary Smith-Doe
    d. John D Doe
    Mary Ann Smith- Doe
    John D]Doe]& Mary Ann Smith-Doe John D Doe
    Mary Ann Smith- Doe
    e. John D Doe III
    MaryAnn L Smith
    John D]Doe]III & MaryAnn L Smith John D Doe III
    MaryAnn L Smith
    f. John D Doe Jr MaryAnn L Doe John D Jr & MaryAnn L]Doe John D Doe Jr MaryAnn L Doe
  7. The entering of TWO brackets around the PRIMARY taxpayers last name is required when the SECONDARY taxpayers last name is different than the primary taxpayers last name (as in examples b. — e. above). This will reduce unnecessary Unpostable conditions.

  8. The examples above will display on CC ENMOD as follows:

    • John & Mary Doe

    • John Doe & Mary Smith

    • John Doe & Mary Smith-Doe

    • John D Doe & Mary Ann Smith-Doe

    • John D Doe III & MaryAnn L Smith

    • John D Doe Jr & MaryAnn L Doe

    Reminder:

    IMPORTANT POINTS TO NOTE. Although the Forms 1040 have two separate lines available for use when taxpayers file jointly, Master File contains only one Primary Name Line. IMF allots 35 characters/spaces for both taxpayer(s) name(s). DO NOT use the second line as a continuation of the taxpayers name line. Do not shorten name data if the complete name supplied by the taxpayer fits in the allotted 35 spaces. IMPORTANT: THE BRACKET "]" IS INTERPRETED AS A SPACE. THEREFORE, DO NOT INPUT ADDITIONAL SPACES IMMEDIATELY BEFORE OR AFTER THE BRACKET WHEN ENTERING TAXPAYER NAMES. The brackets indicate the information after or between the brackets is the controlling surname. The ampersand indicates a break in names (for joint filers) and the information following is the secondary taxpayers full name.

  9. Before shortening taxpayer name(s), all necessary research must be conducted (i.e., CC INOLE, RTVUE, IMFOL, NAMES, NAMEI) under both segments of the Master File.

  10. If the primary and/or secondary name(s) exceed the 35 character/space limit, use the table to correctly reduce the taxpayers name:

    • Substitute the appropriate initial for the secondary taxpayers middle name

    • Delete middle initial of secondary taxpayer

    • Substitute the appropriate initial for the primary taxpayers middle name

    • Delete middle initial of primary taxpayer

    • Substitute the appropriate initial for the secondary taxpayers first name

    • Substitute the appropriate initial for the primary taxpayers first name

    • Substitute the appropriate initials for both the primary and secondary taxpayers' first name(s) if their last name(s) total characters exceed the 35 characters/spaces limit

    • Abbreviate the secondary taxpayers surname. Abbreviate the surname by removing the vowels (begin with the vowels at the end of the secondary taxpayers surname first).

      Example:

      OSullivan becomes OSullivn or OSullvn (if necessary)

    • Abbreviate the primary taxpayers surname as the last step. Abbreviate the surname by removing the vowels (begin with the vowels in the end of the primary taxpayers surname).

      Example:

      Sorrentino becomes Sorrentin or Sorrentn (if necessary)

  11. When taxpayers file jointly and it is necessary to reduce the taxpayers Name Lines/Name Controls, it is important to retain the first four characters of the secondary taxpayers surname.

    Caution:

    Do not intentionally shorten taxpayers names if their name(s) fit within the 35 character/space constraints.

3.11.6.6.2  (01-01-2014)
Manual Refund

  1. Route cases to the Accounts Management Adjustment function for a Manual Refund if:

    1. The taxpayer requests the refund issued in a name other than shown on master file.

    2. The taxpayer requests the refund issued to an address other than shown on master file. Example: Temporary Address or a c/o Address that is different or not shown on master file.

    3. Refund is less than one dollar.

    4. Refund is $10 million or more.

3.11.6.6.3  (08-27-2014)
Master File Verification

  1. Master file verification is required on all amended returns, CPs 08, 09, 27 and any misc. claim adjustment prior to:

    • Inputting an adjustment

    • Initiating correspondence

      Exception:

      Master File Verification is not required when corresponding for a missing tax period or TIN, or when a return has been perfected as stated in IRM 3.11.6.1.2.2

  2. 1040X claims are subject to Master File verification to ensure the taxpayer's starting figures match IRS records. It is extremely important the tax examiner verifies the taxpayer has used the correct Master File information prior to making an adjustment. This ensures the account reflects the correct net balance due or net refund based on the difference between the figures posted on IDRS and the taxpayer's Form 1040X, Correct Amount Column. When determining the correct adjustment use taxpayer's explanation, and attached forms and/or schedules.

  3. Master file verification includes verifying the taxpayer's name, TIN, and tax year. If any part of the taxpayer's name control, TIN, or tax period is missing, but can be determined, edit to the appropriate area on the return. If it can not be determined, follow Correspondence Procedures in IRM 3.11.6.2.1 and IRM 3.11.6.2.2

  4. Master File Verification also requires the comparison of lines 1-14 column A on Form 1040X, with IMFOL or TXMOD. RTVUE and TRDBV are also useful in performing this verification. If any combination of lines in Column A do not match TXMOD and no math error (MTH-ERR) is present or there are Amounts that are blank, illegible, incorrect, or can be determined to be misplaced, then math verification is required. Be sure to consider all previously posted adjustments on the account.

    Note:

    If a math error is present refer to IRM 3.11.6.6.5.1

    Note:

    The 2009 tax year version of Form 1040X does not include Column A amounts for comparison. Column A comparison is not applicable, but master file information must still be reviewed prior to taking any adjustment action. Be sure to consider all adjustments previously made on the account.

  5. Sometimes a taxpayer may file a blank or partially blank (incomplete) return. Treat Form 1040X as an incomplete return when entries on Lines 1-14 contain:

    1. Amounts that are blank, illegible, incorrect, or can be determined to be misplaced.

    2. Blanks where amounts should have been entered.

    Note:

    2009 and prior Revisions of Form 1040X contain lines 1-15.

    Note:

    If a claim is incomplete because it is missing the required information necessary to process the return, correspond following the specific IRM instruction.

    Exception:

    If the claim does not meet SP criteria route to the appropriate area so they can request the correct documents/information. Do NOT refer incomplete claims to EXAM/CAT-A, see IRM 3.11.6.3.5

  6. Use the dollar amount entered on Form 1040X when the amount shown on a supporting form or schedule differs from the amount shown on the Form 1040X, Correct Amount Column, by ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ In all other situations, correspond using a Form 8009-A (box 25) or 324C paragraphs A, U, X. Fill-in: "We are unable to correct your account as requested. The information provided on [insert Form #### or Schedule #] does not support the entry made on your Form 1040X. Please provide clarification and correct any documentation necessary to support your claim."

  7. If the taxpayer does make an error in the calculations, see IRM 3.11.6.6.4 and IRM 3.11.6.6.5

    Note:

    If the error is off by a dollar due to rounding do not math verify or send a 4364C. This includes any credits and payments posted to the account.

3.11.6.6.4  (07-24-2014)
Math Verification

  1. Math verification is required when:

    1. There is the total tax change (positive or negative) of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. If there is a discrepancy between IRS figures and taxpayer figures.

    3. A math error is present. Also see IRM 3.11.6.6.5.1

    4. There are Amounts that are blank, illegible or incorrect.

      Exception:

      Do not math verify or send a 4364C letter when the following conditions exist:
      -The entry is off by a dollar due to rounding
      -The error can be determined to be a misplaced entry which results in no difference between the taxpayer's expected refund/balance due and the overall adjustment being made.

  2. Math verification includes doing the following:

    1. Verifying that the math on the entire Form 1040X, forms, schedules, worksheet that are related specifically to any change.

    2. Verifying that Correct Amount entries are based on the attached forms, schedules, worksheets, taxpayer remarks, and IDRS research.

    3. Verifying the Tax before credits computation in the Correct Amount column on Form 1040X.

    4. Checking all additional taxes on line 9 related specifically to the change to determine the correct increase/decrease tax.

  3. If the adjustment can be determined, perfect any missing/incorrect entries of the Form 1040X based on taxpayer's explanations, attachments, AND IDRS research. If an error is discovered, re-compute the 1040X using the information supplied and IDRS research. After "perfecting" the Total Tax and refundable credits and:

    1. The difference between the taxpayers Lines 10-14 amounts and your recomputed Lines 10-14 amounts is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , adjust the account using the taxpayers figures.

    2. The difference between the taxpayers Lines 10-14 amounts and your recomputed Lines 10-14 amounts is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , adjust the account using your recomputed figures. Set a math error on the account if the change still results in a balance due or reduces refund for the taxpayer. See IRM 3.11.6.6.5

      Note:

      Do not exceed the maximum refundable credit dollar limit for that tax year.

      Note:

      Do not use lines 15-21 on the 1040X to determine taxpayers net adjustment amount.

  4. If you are unable to math verify the return based on information submitted and through IDRS research, including consideration of any previous math errors, correspond requesting clarification:

    If Then
    You are unable to math verify due to the taxpayer's column A original amount not matching IDRS Use either Form 8009-A box 25 or a 324C letter paragraphs A, U, X with fill-in: "We are unable to correct your account with the information you provided on your Form 1040X as it is unclear what adjustment is being requested. The amounts entered in Column A, Original amount do not match our records. Please verify your information."
    You are unable to math verify the return for any other reason. Use either Form 8009-A, boxes 15 and 5, or a 324C letter, paragraphs A, J, U, X. Use Fill-in: "We are unable to correct your account with the information you supplied on your Form 1040X and/or supporting documents as it is unclear what adjustment is being requested. Please correct the columns listed above and supply clarification."

    Exception:

    If the claim does not meet SP criteria route to the appropriate area.

3.11.6.6.5  (07-24-2014)
Inputting a Corrected Adjustment and/or Setting a Math Error

  1. When the IRM states to send a 4364C letter to the taxpayer, set a math error when the corrected adjustment results in either a balance due or reduces the refund to the taxpayer. Exception: See paragraph (2) and (3) below See IRM 21.5.4.2 and IRM 21.5.4.2.1 for an explanation what is and what is not a math error.

  2. Do NOT set a Math Error or send a 4364C letter when:

    • lines 15 - 21 of Form 1040X do not match

    • missing entries do NOT effect the overall adjustment.

    • There are missing/incorrect entries and the adjustment can clearly be determined resulting in no difference between the taxpayer's expected refund/balance due.

    Note:

    Determine the correct adjustment by first completing Master File Verification and then researching the following: taxpayer explanation, a corrected 1040 series return, attachments, and IDRS research.

  3. Do not set math errors for any of the following:

    • A correction to withholding or estimated tax payments.

    • Any tax decrease resulting in a larger refund than the taxpayer expected

    • When the taxpayer has requested an adjustment; however they have left lines 1-14 of Form 1040X and/or supporting documents blank.

    • When taxpayer requests IRS to complete a form, even if tax change is $100 or more.

    1. Send a 4364C letter to explain the changes per IRM 3.11.6.9.4

    2. Input the adjustment:

    • Input TC 29X for recomputed corrected tax.

    • Use Blocking Series 05.

    • Use Source Code 2.

    • Input an amended claims date

  4. When required to set a math error on the module:

    1. Send a 4364 letter to explain the changes per IRM 3.11.6.9.4

    2. Input the adjustment:

    • Input TC 29X for recomputed corrected tax

    • Use Blocking Series 77 and attach an IMFOLR print

    Note:

    If the original return was paper filed use BS 78.

    Note:

    BS 78 will generate a -G freeze and defer action for 12 cycles on MF. This also sets the appeal rights indicator and is used as an indicator to include a stuffer with the math error.

    Note:

    See Document 6209, IRS Processing Codes and Information, Section 4 for the File Location Codes (FLC) b).

    • Use Source Code 6.

    • Use the appropriate Reason Code(s).

    • If other issues are present, continue to process the return.

3.11.6.6.5.1  (07-24-2014)
Math Error Response

  1. If there is a math error(s) on the taxpayer's account then the tax examiner must determine whether or not the 1040X addresses the math error issue. The taxpayer may not specifically address the math error issue in their explanation and/or documentation. There are two types of responses to math errors:

    • Substantiated Protest

    • Unsubstantiated Protest

    Substantiated Protest occurs when a taxpayer provides supporting documentation which proves the Service's math error calculation incorrect. Validate the substantiation by reviewing qualifications needed to allow adjustment.

    Example:

    The taxpayer's account contains math error 605. The taxpayer has now provided a valid TIN which qualifies him/her for the exemption being claimed

    Unsubstantiated Protest occurs when a taxpayer fails to provide supporting documentation to prove the Service's math error calculation is incorrect. Refer as CIS/AM. Example: The taxpayer's account contains math error 605. The taxpayer has provided a new TIN but the new TIN does not validate against IDRS.

    Note:

    If there is more than one math error and any of them are unsubstantiated refer as CIS/AM.

  2. IRC Section 6213(b)(2)(A) allows the taxpayer 60 days from the date of the math error notice (the 23C date) to request abatement of the additional tax specified in the notice. If the request is submitted via U.S. mail, use the postmark date to determine if the response was timely.

    IRC Section 6213(b)(2)(B) allows the taxpayer a stay of collection during the 60 day time period described above during which collection of the assessment shall not be made, begun or prosecuted. If the taxpayer makes a request for an abatement within 60 days, treat the response as a protest.

  3. Amended returns with math errors present:

    If Then
    The taxpayer files an amended return and does not specifically address the math error, or it appears the taxpayer did not receive the math error notice. Adjust the account per the amended return without regard to the math error (do not reverse any numbers changed as a result of the math error that was set). Keep the math error condition in effect and see paragraph 4 for adjustment procedures.
    The taxpayer agrees with the math error. Process as normal without regard to the math error by adjusting the account for any additional issues requested by the taxpayer. Use Source Code 1 on the adjustment to keep the math error condition in effect for the full time period.
    Taxpayer has provided documentation which qualifies them for the claim (Substantiated). Process the adjustment using Source Code 2 and no Amended Claims Date. See paragraph 6 if other changes are being made to the return that are not related to the math error.
    Taxpayer has not provided documentation or an explanation that would qualify them for the claim (Unsubstantiated). This is NOT the same as the taxpayer not addressing the math error. Refer as CIS/AM

    Note:

    Taxpayer's often use their original figures (RTVUE per return column) in column A instead of the IRS corrected figures (RTVUE per computer column) when correcting a math error.

    Example:

    Apparently the taxpayer did not receive the math error notice if the notice was sent to the taxpayer 2-17-20XX and the taxpayer signed the return 2-20-20XX or vice-versa.

  4. If the taxpayer does not address the math error and the account is adjusted a letter of explanation will have to be sent to the taxpayer. Use a 4364 letter with the following fillin: According to our records you were issued a math error notice that changed your original tax figures and calculations. Use paragraphs A,F,Y,0. For the adjustment use SC 1 BS 05.

  5. The amended return would not be considered a reply to a math error notice, if the date of the notice is later than the date the taxpayer signed the amended return.

    Note:

    When a math error is issued a TC 971 with one of the following CP notices is generated:

    • CP 10 - Math error on an overpaid module, which causes a reduction of credit elect.

    • CP 11 - Math error on a module with a balance due of $5 or more.

    • CP 12 - Math error on a module with an overpayment of $1 or more.

    • CP 13 - Math error on a module with an even balance, an overpayment of less than $1, or a balance due of less than $5.

    • CP 16 - Math error on an overpaid module, and part or all of the overpayment is offsetting to satisfy another tax module liability.

  6. A correction of a math error will NOT receive an amended claims date. However, if a taxpayer is responding to a math error and also claiming an additional change to the original return, two adjustments will be necessary if working the claim 45 days or less from the received date of Form 1040X

    • The first adjustment will be input without the amended claims date (for the math error issue). Use Source Code 2 and Hold Code (HC) 4 on the first adjustment (which is the correction to the math error) and No Source Document (NSD).

    • The second adjustment (for the non-math error issues) will be input following normal procedures addressing all other changes. Use Posting Delay Code to delay by 1 cycle more than the first adjustment.

    Note:

    See the IF/THEN chart below for special situations involving math error responses that require additional changes.

    If And Then
    The taxpayer is responding to a math error Also claiming an additional change not related to the math error within 45 days of the received date and a math error condition exists that needs to be set for the additional issue Two adjustments will be necessary.

    1) For correction to the math error. Do not input an amended claims date. Use SC 2 and HC 4 on the adjustment. Input “N” for Source Document

    2) Set the math error for the additional issues per IRM 3.11.6.6.5 and send a 4364C letter. Input a posting delay code.
    The taxpayer is responding to a math error Also claiming an additional change not related to the math error and you are working the claim more than 45 days from the received date. Only one adjustment is necessary. Follow normal adjustment procedures.

    Exception:

    If a specific tridoc instruction addresses a math errors use the specific instruction.

    Note:

    When making two adjustments make sure your source document is clearly marked with separate sequence numbers to indicate to files that two adjustments have been input.

  7. When a math error is issued for an exemption unreliable data may be shown in the exemption field on CC TXMOD, RTVUE, and IMFOL screens. Verify the number of exemptions the taxpayer was allowed during original processing. Divide the total exemption amount shown on RTVUE-PER COMPUTER by the exemption amount for the tax year in question.

    Note:

    Does not apply to phase-out situations.

    Reminder:

    If an adjustment is made for exemptions, only input TC 887 if the new total number of exemptions differ from the number shown in the exemption field on CC TXMOD/IMFOL.

3.11.6.6.6  (01-01-2014)
Transaction Codes and Reference Numbers

  1. The following general instructions apply to transaction codes and reference numbers (RN):

    1. Input cents if filer entered cents for amounts in the Net Change column, when present on Form 1040X.

      Caution:

      If the taxpayer submits a single column Form 1040X it may not be necessary to enter cents due to rounding on IDRS. See IRM 3.11.6.6.9

    2. Do not input the 886 below zero. Adjusting the taxable income below zero will cause the transaction to unpost. See IRM 3.11.6.6.9

3.11.6.6.7  (01-01-2014)
IMF Processing Codes

  1. The following subsection gives an explanation and the purpose for using the following codes:

    • Reason Codes

    • Source Codes

    • Priority Codes

    • Category Codes

3.11.6.6.7.1  (07-24-2014)
Reason Codes (RC)

  1. Reason Code selection designates the end of the statement that will be printed on the taxpayers notice. The RC should describe the area(s) of the return affected by the adjustment action. For audit trail purposes , enter reason codes even when no adjustment is made to the account. You may use up to three reason codes.

    Exception:

    Do not enter a reason code if specific instructions direct you not to enter.

  2. The fourth reason code position on ADJ54 is reserved for penalty reason codes. See IRM 3.11.6.8.10.1

  3. Reason Code Chart, lists the common reason codes used in Submission Processing and the line reference number. The complete list of Reason Codes is contained in Document 6209, IRS Processing Codes and Information.

    Note:

    All of the Reason Codes listed in the Document 6209, IRS Processing Codes and Information or in IRM 21 are not applicable to instructions in this IRM, since not all issues are processed by Submission Processing.

    Figure 3.11.6-1
    This image is too large to be displayed in the current screen. Please click the link to view the image.

    Figure 3.11.6-2
    This image is too large to be displayed in the current screen. Please click the link to view the image.

3.11.6.6.7.2  (08-06-2013)
Source Codes (SC)

  1. Source code selection designates which opening statement will be used on a taxpayer's notice.

  2. Enter a "1" for the source code, except when setting a math error. When setting a math error, use "6" . When setting a non-math error use "2" . The source codes are as follows:

    Source Code Literal
    0 or Blank None - no notice generated
    1

    Note:

    When a TC 290 .00 is input SC 1 will change to SC 0 once the adjustment posts to MF. The SC changes to 0 because a TC 290 .00 with a credit reference number for .00 will not generate an adjustment notice even if a reason code is utilized.

    As you requested, we changed your account for (YYYYXX) to correct your (RC).
    2 We changed your (YYYYXX) account to correct your (RC).

    Note:

    Use source code 2 when correcting math errors.

    6 You made a mistake on your (YYYYXX) account. We corrected the error when we adjusted your (RC).

3.11.6.6.7.3  (07-24-2014)
Priority Codes (PC)

  1. Priority Codes must be used to post adjustments to the Master File when certain conditions exist. Failure to use the priority code when specified will cause the transaction to unpost.

    Priority Code When Required
    1 Making an adjustment to an account with a "-L" Freeze.

    Note:

    The xClaim tool automatically inputs the PC 1 when conditions dictate. There are a few exceptions where the PC 1 with exam involvement is not necessary. However input of the PC 1 in these situations affects nothing and there is no need to remove the PC 1 input by xClaim.

    3 Adjusting CP Notices

    Note:

    Use only priority code 2 if both 1 and 3 are required to adjust the account. (Example: Account with -L freeze and the CP notice would require priority codes 1 and 3; therefore only 2 would be used.)

    8
    • CRN 764 is input with a TC 29X and there is a prior posted TC 29X (except a previously posted TC 290 with priority code 6 or a TC 290 with Julian Date 999.)

    • TC 290X is input for a significant amount greater than $10 and is within $10 of a previously posted TC 29X. (EXAMPLE: $55 adjustment and the previous adjustment is $49 would require a PC: 8 on either TC 290/291 adjustment. See IRM 3.11.6.5.5

    • CRN 80X is input and there is a prior TC 17X on the account and the new TC 176 is to be computer generated.

    • CRN 806, 807, or 766 is input that is within $10 of a prior posted matching transaction (Example: CRN 806 is within $10 of a prior posted CRN 806, not within $10 of CRN 807).

    • When adjusting Fuel Tax Credit, Form 4136.

    Note:

    Use only priority code 1 if both 1 and 8 are required to adjust the account. (Example: Account with -L freeze and the EIC conditions above would require priority codes 1 and 8; therefore only 1 would be used.)

3.11.6.6.7.4  (07-24-2014)
Category Codes

  1. Category Codes are four letter codes to denote the type or source of an adjustment or correspondence case. Unless otherwise specified, Category Code "XRET" is to be used when routing documents to files or when inputting adjustments with IDRS Command Codes ADJ54 for all Forms 1040X.

  2. Category Codes EICX, EICN and EICC are used for updating the DUPOL database using IDRS Command Code DDBCK. See IRM 3.11.6.7.2.

  3. When routing to another area other than files or returning the claim to the taxpayer with correspondence is required, the Category of the case needs to be changed to "MISC" in order to prevent IDRS from recording the case as a closure.

  4. Category codes are listed in Document 6209.

3.11.6.6.8  (07-24-2014)
IDRS Transaction Codes and Freeze Codes

  1. Some IDRS Transaction Codes and/or Freeze codes on the module will require routing to another area or special handling within Submission Processing. For definitions of various Freeze Codes or Transaction Codes, refer to Document 6209, IRS Processing Codes and Information, or IRM 21.5.6.

  2. If TC 846 is present with a subsequent TC 670 and TC 570 on TXMOD/IMFOLT, process Form 1040X, if no other routing criteria is present.
    If TC 846 is present on TXMOD/IMFOLT and TC 670 without TC 570 is present, for a current year, refer to Lead to determine if the refund should be stopped.

  3. The tables below lists the common transaction codes and freeze codes used in Submission Processing. The complete list of these codes is contained in Document 6209, IRS Processing Codes and Information.

    Transaction Codes Action
    No TC 150 (with no Form 1040 attached) See IRM 3.11.6.5.2
    No TC 150 (with Form 1040 attached) See IRM 3.11.6.5.3
    No TC 150 (with/without Form 1040 attached) IF TC 594 is on primary TIN, research secondary TIN for TC 150
    No TC 150 Disaster Return See IRM 3.11.6.3.17.4(1)b
    No TC 150 Statute Imminent Convert to a Form 1040 & ACTON History Item to "X21502STAT"
    RJ 150 Rejected Transaction Monitor IMFOLT for TC 150 to post
    Unnn150 Unpostable Monitor IMFOLT for TC 150 to post
    CU150 Corrected Unpostable Monitor IMFOLT for TC 150 to post
    DJ150 Deleted Transaction Monitor IMFOLT for TC 150 to post
    PN150 Pending Transaction Monitor IMFOLT for TC 150 to post
    UP150 Unpostable Monitor IMFOLT for TC 150 to post
    DQ150 Deleted Transaction Workable
    TC 160/161/162 Route to CIS/AM
    Indication of change:
    TC 170 change to tax or withholding; with Form 2210 only
    An account with a TC 170/176 is workable. The estimated tax penalty is based on the original return and the penalty cannot be changed. See IRM 3.11.6.8.10.1
    Prior TC 29X .00 Workable
    TC 300-361 (TC 300 is most commonly used) CIS/AM

    Exception:

    If an -L freeze or TC 420 is present, refer to IRM 3.11.6.3.4

    TC 420 and no 421 See IRM 3.11.6.3.4
    TC 420 & 421 and no TC 300 Workable
    TC 424 & 425 and no TC 300 Workable
    TC 424 (with no TC 425) See IRM 3.11.6.3.5
    TC 480 & 780 (with Freeze -Y) See IRM 3.11.6.3.14(6)
    TC 520 (with no TC 521 or 522) CIS/AM
    TC 520 with 521 or 522 Workable
    TC 576 CIS/AM
    TC 582 Workable - the TC 582 is a lien indicator. Process as normal.
    TC 594 See IRM 3.11.6.5.3 paragraph (3) (c)
    TC 670 & 846 with no TC 570 to hold refund See IRM 3.11.6.6.8 paragraph (2)
    TC 841 without subsequent 846 CIS/AM
    TC 885 CIS/AM
    TC 904 See IRM 3.11.6.5.2
    TC 914, 916 or 918 without subsequent 915, 917 and 919 CI SDC - Scheme Development Center IRM 3.11.6.3.4
    TC 922 Check Underreporter Process Code IRM 3.11.6.3.6
    TC 971, AC 137 with filing status change CIS/AM
    971, AC 134 = ID Theft See IRM 3.11.6.5.4 and IRM 3.11.6.3.7
    TC 976 or 977 workable
    Freeze Code Description Action
    -A Duplicate Return Refer to CIS/AM if there is an open control base of DUPF; otherwise, continue to process the return.
    -C Combat Zone See IRM 3.11.6.3.19
    - D RSED Expired Statute Unit
    E- Amended Return Follow TC No 150 instructions
    F- Frivolous Return Received Route FRP see IRM 3.11.6.3.10
    -G Original Return which contains a math error code See IRM 3.11.6.6.5.1
    G- Restricted Failure To Pay Penalty CIS/AM
    -I/I- Restricted Credit/Debit Interest CIS/AM
    -J Unsubstantiated ME Tax Protest CIS/AM
    J- Excess Estimated Tax Credit Freeze CIS/AM
    -K Refund/offset is being held as the result of hold code 1, 2 or 4 CIS/AM
    -L AIMS Indicator See IRM 3.11.6.3.4 and 3.11.6.3.4(3)
    M- TC 370/400 MFT 31/No-Merge CIS/AM
    -O/-S Disaster Claim See IRM 3.11.6.3.17
    P- Refund Cancellation CIS/AM
    -Q Unallowable Refund CIS/AM
    -R   Process normally except in the instance of a credit amount unrelated to the 1040X. The adjustment should be made using a hold code 1. The HC will hold the money, but allow the notice to generate. See IRM 3.11.6.3.7
    S- Undelivered Refund Check CIS/AM
    T- TDA Status See IRM 3.11.6.3.16 paragraph (4)
    -U Erroneous Refund CIS/AM
    -V Bankruptcy Freeze CIS/AM
    -W Litigation Pending Freeze CIS/AM

    Note:

    A -W freeze which is set by a TC 520 will take priority over other freeze codes.

    -Y Offer in Compromise Collection, see IRM 3.11.6.3.14(6)
    Y- Audit Adjustment CIS/AM
    -Z/Z- Refund Scheme SDC

3.11.6.6.9  (01-01-2014)
Unpostable Conditions

  1. An unpostable condition is created when a transaction cannot post (update) to Master File due to an unprocessable condition. A transaction which fails to post to an account is returned to the Campus for corrective action.

  2. See, Document 6209, IRS Processing Codes and Information, or IRM 3.12.179 for a more detailed explanation.

3.11.6.6.9.1  (08-06-2013)
Unpostable Resolution (Use Local Procedures As Applicable)

  1. Transaction which cannot post to Master File create an open unpostable case on IDRS. The open control base will be in "A" status with category NLUN which will represent the unpostable and will be assigned to the tax examiner who input the unpostable condition. Do not do an ACTON History Follow-up on your open unpostable case.

    Note:

    If there are multiple open cases there will not be an open "A" case as stated above, however the open "A" case can be found in the "History Section" of TXMOD.

  2. When an unpostable condition occurs, a Charge-Out sheet (Form 4251) is generated and the case is returned to the responsible employee or appropriate function. If the case is routed to the incorrect function, return the case to the employee shown on the Charge-Out sheet.

  3. Form 4251 will contain an Unpostable Code (UPC) which will identify the condition that caused the transaction to unpost.

    Note:

    If the Charge-Out sheet shows the ASED indicating an imminent statute date (within 90 days) route the case to the Statute Unit for quick assessment.

  4. Determine the reason for the unpostable based on the "UPC" and/or "TC-S" code on the Charge-Out sheet, IDRS, and/or the return itself. Perform Masterfile Verification to determine if there are any other reasons the return may not be processable. The following website can be used to help in determining the unpostable reason: See The code lookup Input the unpostable code and unpostable reason code in the search field.

    Example:

    UPC 158 RC 1 would be entered as 1581.

    Note:

    Some of the common errors: Line 5 editing, reducing/removing an amount greater than what is posted, reducing/removing a credit that was not previously claimed (TC 807, 765, etc.), or making an adjustment when no TC 150 has posted. See IRM

    Reminder:

    If you have an unpostable on an account with a -L freeze verify that it was not the result DDBCK Selected case. If it was the result of a DDBCK Selected case it needs to be routed as a DDBCK Selected case. See IRM 3.11.6.7.1

  5. Review CC ENMOD for unpostable conditions as this may have caused the adjustment on TXMOD to unpost.

    Note:

    If an unpostable condition exists in ENMOD close the open case when correcting the account.

  6. If there is a previous TC 160/161 (late filing penalty) on the account route to CIS/AM.

  7. Cross out the DLN found on the CF 5147.

  8. Use the following tables to take the appropriate corrective action. Be sure to adjust the correct amount and tax period

    1. With Form 1040X Attached

      If IDRS Transaction Then
      The return meets CIS/AM criteria
      ACTON
      C02,CISAMTOADJ,C
      Route to CIS/AM.
      The return meets route out criteria other than CIS/AM
      ACTON
      C02,TO_____,C
      (indicate destination)
      Route accordingly.
      The error can be corrected
      ACTON
      C02, UNPCORR,C

      1. Line through the input sequence number originally edited at the top of the Form 1040X return.
      2. Input the correct adjustment.
      3. Staple the CF 5147 to the back of the return.
      4. Turn in charge out sheet to manager.
      The return was posted to the wrong SSN
      1. Pull up TXMOD using the wrong SSN.
      2, ACTON C02,WRONGSSN,C
      3. ACTON C02,xxx-xx-xxxx,C (x's equal the correct SSN)
      Input the correct adjustment using the correct SSN.
    2. With Form 1040X not Attached

      If Then
      If unable to determine the appropriate corrective action, Have the workleader request the document from files using CC ESTAB. In remarks enter: "Expedite Second Request" .
      If able to determine the corrective action & the adjustment can be re-input
      1. Take appropriate corrective action(s) and enter "SD4251" on remarks line.
      2. Attach any other research documentation you may have gathered.
      3. Place in brown folder with other source documents.
    3. With or Without 1040X Attached:

      If someone else has changed your control base (case status "A" to "B" or "A" to "C" )
      1. Close your unpostable case (if not already closed).
      2. Route the 1040X and/or charge-outs to the person who took action on your unpostable case. Use routing slip Form 12305 & notate: "Action was taken on my open control base - please take any required corrective action. "

      Exception:

      If the corrective adjustment has already been completed route the return to files per IRM 3.11.6.5.5

    .

  9. Turn in the Charge-Out sheet to the manager after you have completed the appropriate corrective action, or follow local procedures for the disposition of the charge out sheet.

    Exception:

    If no Form 1040X was attached and adjustment was re-input.

3.11.6.7  (07-24-2014)
Updating the DUPOL Database Using Command Code DDBCK and DUPED

  1. Submission Processing is responsible for updating the DUPOL database for all processing years using CC DUPED or CC DDBCK. These command codes should be used for TIN validation and when you are editing (adding, replacing, changing, and/or deleting) records in the DUPOL database.

    Exception:

    Do not use DDBCK when EITC is being added for a child with an ITIN. Follow procedures in IRM 3.11.6.8.11.1 paragraph (2) to disallow EITC on the claim due to the dependent not being eligible because of the ITIN. See IRM 3.11.6.9.3 for disallowance procedures.

  2. If instructed to use CC DUPED update for current year only. If it is a prior year do not update the DUPOL database, continue processing the return.

  3. When adding a credit or exemption requiring TIN validation always use CC INOLE or DDBKD to verify the TIN/ NAME/DOB prior to updating the DUPOL database

3.11.6.7.1  (09-23-2014)
Command Code DDBCK

  1. CC DDBCK must be used when updating the DUPOL database for adding, changing, or deleting an exemption and/or credit requiring TIN validation

    Reminder:

    If the dependent previously had an ITIN and now has a valid SSN, DDBCK must be used to update the exemption's SSN for current year claims as well as prior year claims. DDBCK can be updated for the current tax year and two years prior.

  2. Always use CC INOLE or DDBKD to verify the TIN/NAME/DOB before using CC DDBCK. Even though CC DDBCK will validate age and TIN/Name information when the taxpayer is claiming additional dependents and/or credits requiring TIN validation, it will provide an error message when there is an incorrect name control and then only if ME 653 is present or the taxpayer is claiming EIC for the first time.

    Note:

    If the taxpayer is claiming EIC for a qualifying child and the TIN/NAME/DOB does not match correspond using Form 8009-A, use Box 9 if dependent is claimed as exemption, box 22 if non-dependent claimed for EIC.

  3. If there is a NON-TIN related math error it needs to be updated in DUPED instead of DDBCK.

  4. Route the following to CIS/AM:

    • Math error code 653 is posted on IDRS.

    • The child failed validation (other than an invalid TIN/Name issue)

  5. Use the following chart for determining when to update the DUPOL database:

    If taxpayer is adding or removing: Then

    • Exemption
    • Earned Income Credit (for dependents)
    • EIC increase due to changes in income other than Form W-2.


    • Child Care Credit
    • Education Credit
    • Child Tax Credit
    •Additional Child Tax Credit when the qualifying dependent is eligible for CTC, but cannot be claimed on Line 7.
    • credit reduced to zero
    • EIC TIN-related Math Errors
    • TIN related Math Errors
    • ITIN to SSN for Dependents
    • CP 08 Responses
    Update using CC DDBCK then continue processing the return. Use caution if DDBCK RESPONSE SCREEN is
    If the response is SELECTED or SEND AS CAT A See paragraph 7

    If the response is FOLLOW IRM see paragraph 8
    If Then

    • CP 27 Responses
    •Amended return where the taxpayer is claiming EIC for self/spouse only
    • Requesting filing status change which does not effect exemption/credit allowance
    • EIC increase due to Form W-2
    • EIC NON-TIN related Math Errors
    Continue processing the return.

    Note:

    Do not update DUPOL database


    • Taxpayer is a fiscal year filer
    • TIN has been merged or resequenced
    • Change to Primary or Secondary TIN
    • Tentative Carryback (TENTs)
    • Mixed Entity cases
    • Scrambled SSN cases
    Route to CIS/AM

    • DDBCK Input screen is full (6 dependents were previously claimed)
    • CP 09 responses
    • Child Care Credit and the qualifying dependent is over age of 12 but disabled or turns age 13 in the year being claimed
    • NON-TIN related Math Errors
    • Employee does not have access to CC DDBCK
    Update using CC DUPED instead of CC DDBCK (Current year only)

    Note:

    When unable to determine the exemption that is being added, changed or deleted, follow IRM 3.11.6.8.3.1(4) procedures.

  6. Take the following action when the DDBCK response displays the following literal:

    If Then
    OK to input ADJ54 if eligibility met Input the adjustment following the appropriate procedures
    OK to input ADJ54 if eligibility met, enter reason code 103 Route to CIS/AM. (RC 103 indicates that taxpayer is part of the EIC certification program)
    RECERT IND Route to CIS/AM
    Date Older Than 18 Month DDBCK will not allow an entry 18 months or later. Overlay the pre-populated date with the received date of the return.
    Date Cannot be a Future Date This occurs when dealing with a current year that is timely filed prior to 4-15. The computer will show the IRS Received Date as 4-15-XXXX and if working the case in Jan, Feb, Mar of the current year the programming considers the 4-15-XXXX as a future date. In this instance use the current date for the input.
  7. CC DDBCK does not update the DUPOL database on cases when the response includes; "Selected " or "Send As a CAT A" . If any of these responses are displayed on either the initial DDBCK screen or on the validation results screen after updating DDBCK take the following action:

    1. Make a print of the DDBCK Summary Screen and attach to the front of the Form 1040X

    2. Attach cover sheet indicating the response received (1040X -- DDBCK -- Selected; 1040X -- DDBCK -- Sent to CAT A).

    3. Indicate on cover sheet (per local procedures): Expedite scanning; Scan directly to IDRS #xxxxxxxxx, route to CIS/AM.

      Note:

      When working EITC TIN-Related Math Error responses overlay the YYYYMMDD on DDBCK's Return Summary Screen, under Change Dates, with the received date of the Form 1040X.

      Note:

      IDRS # will be provided by your campus AM department.

      Note:

      On "Selected" , and" Send as CAT A" cases input the adjusted tax increase/credit decrease as requested if no other route out criteria is present. . Enter "N" in the source field.

      Reminder:

      On Selected cases TC 424 is generated automatically in IDRS and places a -L freeze on the account. If DDBCK is updated in error the input needs to be deleted to prevent an erroneous case from opening in exam.

  8. On "Follow IRM" cases follow IRM means to follow IRM 3.11.6. If following the IRM results in:

    1. the return being routed to exam then input the TAX INCREASE or CREDIT DECREASE see IRM 3.11.6.3.5 as requested. Enter N in the source field.

    2. the adjustment being processed as requested then update the Dupol database using CC DUPED instead of CC DDBCK. (Current year only)

    3. the return being routed to an area other than Exam do NOT input an adjustment on the account.

  9. When required to update DDBCK, use the following chart.

    fF And Then / Use
    EIC is decreasing or is not involved
    • Exemption changed, added or deleted

    CATEGORY: EICN
    CLAIM AMOUNT: 0

    SCHED C:“N”

    AGI INC/DEC: Skip

    EITC INC/DEC: Skip
    EIC is increasing and does NOT involve an EIC Math Error
    • Schedule C is NOT changing

    • Schedule C is being removed

    CATEGORY: EICX
    CLAIM AMOUNT: Net refund/balance due of the amended return (dollars only)
    SCHED C: “N”
    AGI INC/DEC: xClaim, Line 1b (add leading negative sign if amount is decreasing)
    EITC INC/DEC: xClaim, Line 13B
    EIC is increasing and does NOT involve an EIC Math Error
    • Schedule C IS changing; or

    • Schedule C is being added; or

    • Claiming additional income (except Schedule F, Schedule E, Schedule K-1 or minister income) that is subject to SE Tax

    Example:

    Form 1040X shows SE Tax due to non-employee compensation from a Form 1099-MISC. Typically this will be other income reported on line 21 of the Form 1040. The Schedule C indicator would be "Y" The non-employee compensation income shown on the Form 1099-MISC would be the amount of the "Gross Receipts" and the "Net Profit" on the DDBCK Return Update Screen-Schedule C.

    CATEGORY: EICX
    CLAIM AMOUNT: Net refund/balance due of the amended return (dollars only)
    SCHED C: “Y”
    AGI INC/DEC: xClaim, Line 1b (add leading negative sign if amount is decreasing)
    EITC INC/DEC: Line 13B
    GROSS RCPT: Sum of all Schedules C line 1
    COST GOOD SOLD: Sum of all Schedules C line 4
    HOME OFFICE EXPENSE: Sum of all Schedules C line 30
    NET PROFIT: Sum of all Schedules C line 31 or Schedules C-EZ line 3
    WAGES: Amount of wages being amended (if any) (add leading negative sign if amount is decreasing)
    EIC is increasing and does involve an EIC TIN related Math Error.

    Note:

    EITC TIN related math errors include ME 604 / 605 / 610// 701 / 702 / 741 / 743 / 745 / 748.

    • Schedule C is NOT changing or

    • No Schedule C claimed on original return

    • or is being removed

    CATEGORY: EICC
    CLAIM AMOUNT: Net refund/balance due of the amended return (dollars only)
    SCHED C: "N"
    AGI INC/DEC: 1040X line 1B (add leading negative sign if the amount is decreasing)
    EITC INC/DEC: 1040X line 13B
    EIC is increasing and does involve an EIC TIN related Math Error.

    Note:

    EITC TIN related math errors include ME 604 / 605 / 610// 701 / 702 / 741 / 743 / 745 / 748.

    • Schedule C IS changing; or

    • Schedule C is being added; or

    • Claiming additional income (except Schedule F, Schedule E, Schedule K-1 or minister income) that is subject to SE Tax

    Example:

    Form 1040X shows SE Tax due to non-employee compensation from a Form 1099-MISC. Typically this will be other income reported on line 21 of the Form 1040. The Schedule C indicator would be "Y" The non-employee compensation income shown on the Form 1099-MISC would be the amount of the "Gross Receipts" and the "Net Profit" on the DDBCK Return Update Screen-Schedule C.

    CATEGORY: EICC
    CLAIM AMOUNT: Net refund/balance

    CLAIM AMOUNT: due of the amended return (dollars only)
    SCHED C: "Y"
    AGI INC/DEC: 1040X line 1B (add leading negative sign if amount is decreasing)
    GROSS RCPT: Sum of all Schedules C line 1
    COST GOOD SOLD: Sum of all Schedules C line 4
    HOME OFFICE EXPENSE: Sum of all Schedules C Line 30

    NET PROFIT: Sum of all Schedules C line 31 or Schedule C-EZ line 3
    WAGES: Amount of wages being amended, if any (add leading negative sign if amount is decreasing)
  10. The following link will take you to an aid for updating CC DDBCK; CC DDBCK Decision Tree CC DDBCK Decision Tree

3.11.6.7.2  (01-01-2014)
Command Code DUPED

  1. Command Code DUPED is an extension to the DUPOL database used for TIN validation. Command Code DUPED allows a user to EDIT (Add, Change and Delete) records on the DUPOL database for current tax year only.

  2. When an exemption, EIC or a credit requiring TIN validation for allowance is being added/deleted, use Command Code DUPED to update the TIN database (DUPOL). DUPED is only used when changing the TIN's record (either add, change or delete). If the amount of a particular "TIN related" credit amount is changed because of an income change and there is not change to the TIN, you would not use DUPED. See (3) for additional conditions.

  3. Do not update DUPED if the only reason for the update/change is:

    1. claiming EIC for self/spouse only, or

    2. a filing status change, which does not affect exemption(s) credit allowance.

  4. If the taxpayer does not provide the TIN of the dependent to be removed, research RTVUE. If found, update the DUPOL database.

  5. The display screen allows user to find the exact record they want to modify. A record number is shown for each record that can be edited. DUPED procedures apply only to the current tax year return.

  6. On line 2 of the command code request, a user can enter P=xxxxxxxxx where xxxxxxxxx is the primary TIN. This will display only records for that TIN which also matches the input primary TIN.

  7. The TIN SOURCE CD field on the edit screen has been expanded to 3 positions to allow adding and changing of multiple records. To change multiple records for the same TIN from a single return, bring up the change screen for the record. You can then enter 2 additional TIN SOURCE codes and all 3 will be changed at the same time.

  8. Command Code DUPED does not replace Master File account action. Appropriate account transactions are still required.

  9. Do not disclose DUPED data. Taxpayers are not entitled to know who has claimed the dependent exemption or EITC credit. If the message "Duplicate use of SSN" occurs, continue processing the return.

  10. If the taxpayer clearly indicates who will be claiming the exemption, do not update the other account based on this information.

3.11.6.7.2.1  (08-06-2013)
Add a Record

  1. Use these instructions when adding a dependent exemption or to add a new Form 2441 credit, Form 8863 and/or Schedule EIC.

    Exception:

    If a Primary Taxpayer is trying to claim their own personal exemption, use the" Change a Record" instructions.

  2. To add the record, type DUPEDA and the TIN of the person being added (DUPEDANNN-NN-NNNN).

  3. When the edit screen is displayed, enter the record information on the edit screen and then transmit.

    • Name Control (NC) -- Enter the name control of the dependent/exemption being added.

    • Primary TIN on return -- Enter the Primary TIN from Form 1040X.

    • Service Center Code -- Enter the two-digit File Location Code from the TC 150 DLN for the Processing Center where the taxpayer originally filed. The Edit Screen provides Processing Codes for ELF (Electronic Filing System). Use ELF codes only if appropriate. (Refer to Doc 6209, IRS Processing Codes and Information, Section 4.4 for a list of valid File Location Codes).

    • Filing Status -- Enter the "On this return" filing status from Form 1040X.

    • Dependent Status -- Enter "0" to indicate the exemption cannot be claimed on another return.

    • TIN Source -- Enter how the TIN is being applied during this action. This is a required entry.
      P=Primary
      S=Secondary
      D=Dependent
      B=Form 2441, Child and Dependent Care Expenses
      C=Form 8863, Education Credit
      E=EIC, Earned Income Tax Credit

  4. When the information is transmitted, the DUPED response screen is displayed to show the updated information.

3.11.6.7.2.2  (07-24-2014)
Change a Record

  1. Use these instructions to remove a Primary taxpayer’s exemption.

  2. To change a record, use command code DUPED, without a definer, and the TIN of the person being claimed to display all the records for that TIN.

    Exception:

    Do not update the DUPOL database on invalid Primary or Secondary TINs. Route to CIS/AM.

  3. Enter a "C" in the request type field and the record number in the record number field and then transmit. This is equivalent to entering a DUPED with the definer "C" and the record number in line "1" of the command code.

  4. When the edit screen is displayed, enter the appropriate corrected information and then transmit.

    • Name Control (N/C) -- Enter the name control of the dependent/exemption being changed.

    • Filing Status -- If the filing status is changing, enter the appropriate code.

    • Dependent Status -- Enter "1" to indicate the exemption will be claimed on another return or enter a "0" to indicate the Primary Taxpayer is claiming his/her own personal exemption.

  5. If you delete a record the response will be shown with a dash under REC NUM and the julian date in the REV DATE column. If we "Change a record" , the response will still show a Record Number (REC NUM) and under column "DEPD STAT IND" will show the change.

    Note:

    Multiple taxpayers may have claimed the same exemption and/or credit. Only change the record/records that relate to the account you are working.

3.11.6.7.2.3  (07-24-2014)
Delete a Record

  1. Use these instructions to delete (reverse):

    • EITC, Form 2441 or Form 8863 record

    • Credit for that exemption is reduced to zero

    • Dependent’s exemption

  2. When reversing a record, use command code DUPED with the TIN of the exemption for which the action is being taken to delete the record.

  3. Delete records that you created in error.

  4. Enter a "D" in the request type and the record number in the record number field and then transmit. This is equivalent to entering a DUPED with the definer "D" and the record number in line "1" of the command code.

  5. The edit screen is displayed along with a delete confirmation message. Enter "Y" to delete the record, and then transmit. When the information is transmitted the display screen is displayed with the corrected information.

3.11.6.8  (07-24-2014)
Specific IMF Adjustments

  1. The following subsections contain procedures for processing the Form 1040X:

    • Line 1, Adjusted Gross Income

    • Line 2, Itemized/Standard Deductions

    • Line 4, Exemptions

    • Line 5, Taxable Income

    • Line 7, Credits - Non-Refundable

    • Line 9, Form 5329/1099R and Self Employment (SE) Tax

    • Line 10, Total Tax

    • Line 11, Federal Income Tax Withheld and Excess Social Security and Tier 1 RRTA Tax Withheld

    • Line 12, Estimated Tax Payments

    • Line 13, Earned Income Credit

    • Line 14, Credits - Refundable

    • Line 22, Credit Elect

  2. If inputting adjustments and there are more RN/CRNs than fields available, input the adjustment as follows:

    Input changes from lines 10 - 14.

    • Appropriate reason codes

    • Appropriate blocking series

    • Appropriate source code

    • Any necessary hold codes or priority codes

      Note:

      If xClaim is used allow xClaim to input the two adjustments.

    2nd Adjustment:

    • TC 290 .00

    • Appropriate blocking series

    • Input RNs for lines 1 - 9.

    • RC 099

    • Input a posting delay code of 1.

    • Any necessary hold codes or priority codes

    • no source document.

      Note:

      If there is a change to the name line information or taxpayer's address the first adjustment will require a posting delay code of 1 and the second will require a posting delay code of 2.

  3. Input cents if filer entered cents for amounts in the Net Change column, when present on Form 1040X.

3.11.6.8.1  (07-24-2014)
Adjusted Gross Income (Line 1)

  1. Any adjustments to income or deductions to income are reported on Line 1 of Form 1040X. This includes any entry on the front page of a Form 1040.

  2. If taxpayer files a claim to reduce unemployment compensation amount see IRM 3.11.6.6.5. Use Form 1099-G to verify taxpayer's claim.

    Note:

    Any repayment of unemployment compensation or deductions for contributions to a governmental unemployment compensation program should be referred to CIS/AM.

  3. Use Reference Number (RN) 888 for any positive or negative change to AGI.

    Note:

    The AGI can be a negative number or be reduced below zero.

  4. If taxpayer receives wages from ministerial duties, some of the income reported on Form 1040, line 7, may also be shown on Schedule SE, line 2. Refer to CIS/AM.

3.11.6.8.1.1  (08-27-2014)
Employer Provided Education Assistance (IRC 127) (Line 1)

  1. Internal Revenue Code Section 127 allows employers to exclude educational expenses from the employee's taxable income. The maximum annual exclusion is $5,250.

    If And Then
    An amended return is filed claiming an exclusion of $5,250 or less 1. Form W-2/W-2C attached and reflecting the change
    2. Form W-2/W-2C missing or does not reflect the exclusion
    1. Adjust the account and use Reason Code 007 and Source Code 1.
    2. Return Form 1040X to taxpayer using Form 8009-A. See IRM 3.11.6.8.1.1(2)
    An amended return is filed claiming an exclusion of more than $5,250.   See table below
    Employer provided assistance is the only issue If other issues are involved
    Send a 4364C letter disallowing the exceeded amount. For the fill in use: "If your employer pays more than $5,250 for educational benefits for you during the year, you must generally pay tax on the amount over $5,250. Your employer should include in wages the amount that you must include in income. " Send a 4364C letter disallowing the exceeded amount with the fill in "If your employer pays more than $5,250 for educational benefits for you during the year, you must generally pay tax on the amount over $5,250. Your employer should include in wages the amount that you must include in income." amount in question. Continue to process the return for other issues.
  2. When corresponding, refer to IRM 3.11.6.9 and send either Form 8009-A or a 324C letter. For Form 8009-A, box 25 and for a 324C letter, use paragraphs A, U, X, with the fill-in: "Please provide a copy of your Form W-2 to substantiate your claim for a reduction of wages due to employer provided educational assistance benefits. We will accept a duplicate from your employer or a photocopy."

3.11.6.8.1.2  (01-01-2014)
Military Family Relief Act (Line 1)

  1. On November 11, 2003, President Bush signed into law the Military Family Tax Relief Act of 2003. Taxpayers have been instructed to write "Military Family Tax Relief Act" in red in the top margin to identify the cases. See corresponding TCD

  2. One provision of the Act allows the filer to exclude the gain on the Sale of a Personal Residence for a home sale after May 6, 1997. Route claims for this exclusion marked "Military Family Tax Relief Act" to AM. Any claim received after November 10, 2004 for tax periods 1997 through 2001 are to be disallowed. Do not send these prior year claims to Statute. Route Tax Year 1997 and subsequent to AM for processing.

  3. Beginning in Tax Year 2003, Reservists who stayed overnight more than 100 miles from home for a drill or meeting may deduct unreimbursed travel expenses. For Tax Year 2006 and subsequent, it is claimed on the Form 2106 and reported on Line 24 of Form 1040. Process using RC 030 .

3.11.6.8.1.3  (07-24-2014)
Form 8606, Nondeductible IRA Contribution (Line 1)

  1. Nondeductible IRA contribution are those contributions made to a traditional IRA which are within the contribution limit but do not qualify as deductible.

  2. Form 8606 must be attached if taxpayer is reporting or has indicated a change to a Nondeductible IRA Contribution in the explanation part of the Form 1040X. If Form 8606 is attached reporting or indicating a change to IRA deduction, process using RC 016. If Form 8606 is not attached, correspond per IRM 3.11.6.9 and use either Form 8009-A, box 4 or 5; or a 324C letter, paragraphs A, U, X, . Use the fill-in: Please complete Form 8606 to support the changes you have made.

  3. If taxpayer has a Form 8606 and is removing a deductible IRA route to CIS/AM.

  4. If the taxpayer is making a change to parts II, III, or IV route to CIS/ AM.

3.11.6.8.1.3.1  (08-06-2013)
Processing Loose Form 8606

  1. Follow instructions below for processing loose Form 8606. Check first to see if a return has posted. Follow local procedures as necessary.

    If Then
    A paper return was filed Route the Form 8606 to your local files based on the DLN of the TC 150.
    A electronic return was filed a. Input the following:
    - TC 290 .00
    - BS 05
    - RC 016
    b. Attach IMFOLR print.
    No return was filed Route the Form 8606 to Files to be filed in the Alpha File.
    Taxpayer submits $50 penalty payment 1. Refund payment to taxpayer and send 474C letter with the following paragraphs A, U and 6 and the following verbiage: We are returning your payment of $50.00 submitted with the Form 8606, Nondeductible IRA Contributions, because the penalty is currently not being assessed.
    2. Input TC 290 .00 BS 05 RC 016.
  2. If parts II, III, or IV are completed route to CIS/AM.

3.11.6.8.1.4  (08-27-2014)
Form 8917, Tuition and Fees Deduction (Line 1)

  1. Taxpayers who paid tuition and fees expenses to an accredited educational institution (college, university or vocational school) for an eligible student may be eligible up to $4,000.

  2. Taxpayers can claim Tuition and Fees deduction if they meet the following conditions:

    • They paid qualified tuition and fees for themselves, their spouses or dependents

    • Their filing status is not married filing separately (FS 3 or 6)

    • They must be claimed as an exemption on the primary taxpayer's tax return

    • $4,000 deductions if their modified adjusted gross income (MAGI) is $65,000, or less if filing Single or Head of Household or Qualified Widow(er); $130,000 or less if filing Married Filing Joint

    • $2,000 deductions if their MAGI is between $65,001 and $80,000 for filing Single or Head of Household or Qualified Widow(er); between $130,001 and $160,000 if filing Married Filing Joint

      Note:

      When MAGI exceed the upper limit for all filing statuses the deduction is zero (0)

    • They are not claiming Education Credits for the same student.

  3. If the taxpayer claims both the Education Credit and the Tuition and Fees Deduction and the Form 8917 indicates that the credits were for the same student, disallow Tuition and Fees per paragraph (4) below. Also disallow for:

    • Deductions for qualified expenses already deducted under any other provision of the law, for examples, as a business expense.

    • Deduction for a student if the taxpayer or anyone else has claimed the American opportunity credit for that student

    • Deductions for qualified expenses that have been used to figure the tax-free portion of a distribution from a qualified tuition program *Deduction for qualified education expenses that have been paid with tax-free interest on U.S. savings bonds

  4. Send a 105C/106C letter disallowing the claim and input the adjustment per IRM 3.11.6.9.3(1). Use the following for the fill-in:

    "We disallowed your claim on Form 8917, Tuition and Fees Deduction. You may not claim the deduction for Form 8917, Tuition and Fees Deduction and Form 8863, Education Credits for the same student."

  5. Form 8917 must be attached if taxpayer is claiming the Tuition and Fees Deduction. If not attached correspond per IRM 3.11.6.9 using either Form 8009-A, box 4 or 5; or a 324C letter, paragraphs A, U, X. Use the fill-in: Please complete Form XXXX to support the changes you have made.

  6. If Form 1098-T is being used to support the Tuition and Fees deductions on Line 1 of Form 1040X, correspond for Form 8917 per IRM 3.11.6.9 using either Form 8009-A, box 4 or 5; or a 324C letter, paragraphs A, U, X. Use the fill-in: Please complete Form XXXX to support the changes you have made.

  7. If present, process using RC 030.

  8. If the taxpayer removes their exemption and doesn't remove the Tuition and Fees deductions remove the deduction and send a 4364C per IRM 3.11.6.6.5

3.11.6.8.1.5  (07-24-2014)
Student Loan Interest Deduction

  1. Student loan interest is interest paid during the year on a qualified student loan. It includes both required and voluntary payments. Taxpayers are provided Form 1098-E which lists the interest paid on the student loan.

  2. The maximum deduction is $2,500.00. The $2,500.00 amount is phased out if the modified adjusted gross income (MAGI) is between $60,000 and $75,000 ($120,000.00 and $150,000.00 if you file a joint return) for tax years 2010 and 2011. The only phase out and elimination change for tax years 2012 and 2013 is ($125,000 and $155,000 if you file a joint return).

  3. For processable claims, use RC 030.

3.11.6.8.2  (01-01-2015)
Standard and Itemized Deductions (Line 2)

  1. Any changes to a standard deduction or itemized deductions (Schedule A/Schedule 1) are reported on Line 2 of Form 1040X.

  2. When the taxpayer changes from a standard deduction to itemized deductions, Schedule A must be attached. If missing, correspond for Schedule A per IRM 3.11.6.9 using either Form 8009-A, box 25, or a 324C letter, paragraphs A, U, X. For the fill-in use: "Please complete a Schedule A to support the changes you have made including completing Form 2106 if necessary."

  3. If the taxpayer is claiming Form 2106 Employee Expenses on a Schedule A and:

    1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

      Note:

      Form 2106 is required for unexplained new increases of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . If Line 21 of Schedule A has an entry and there is an indication it is from travel, transportation, meal, or entertainment expenses Form 2106 is required

    Note:

    Correspond for Form 2106 per IRM 3.11.6.9 using either Form 8009-A, box 4 or 5; or a 324C letter, paragraphs A, U, X, with fill-in: "Please complete Form 2106 to support the changes you have made."

  4. If itemized deductions change due to a result of an AGI change (ripple effect), do not correspond if the Schedule A is missing even if the tax change in total tax is ≡ ≡ ≡ ≡ ≡ or more.

  5. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Exception:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Note:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Note:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    ≡ ≡

  6. All CAT A criteria is to be expedited daily to CIS/AM and needs to be in a special sort with the issue identified as Cat A so it can be scanned into the exam inventory. Each case should have the Cat A summary sheet attached with the corresponding box checked.

  7. Gambling losses can only be deducted against gambling winnings. The losses can only reduce the winnings lower or to zero, but never below zero as an outright loss. If the losses claimed exceed winnings see IRM 3.11.6.6.5.

  8. Do not correspond for a revised Schedule A when the taxpayer explains the type of deduction being claimed for a previously filed Schedule A, even if the refund is over ≡ ≡ ≡ ≡

  9. The standard deduction may change when the taxpayer changes filing status, is age 65 or older, and/or blind. If the taxpayer does not claim his personal exemption then the standard deduction allowed is $350 for 2013 and $300 for 2012 through 2009 more than his earned income. The minimum standard deduction for 2013 is $1000 and the minimum standard deduction for 2012 through 2009 is $950, 2008 is $900.

    Note:

    The taxpayer may sometimes combine their standard deduction with their personal exemption.

    Note:

    Change filing status as appropriate on the other filing status cases.

    FILING STATUS for # of Boxes Checked The Standard Deduction for 2014 is The Standard Deduction for 2013 is The Standard Deduction for 2012 is The Standard Deduction for 2011 is
    SINGLE 0 6,200 6,100 5,950 5,800
    1 7,750 7,600 7,400 7,250
    2 9,300 9,100 8,850 8,700
    MARRIED FILING JOINTLY 0 12,400 12,200 11,900 11,600
    1 13,600 13,400 13,050 12,750
    2 14,800 14,600 14,200 13,900
    3 16,000 15,800 15,350 15,050
    4 17,200 17,000 16,500 16,200
    MARRIED FILING SEPARATE 0 6,200 6,100 5,950 5,800
    1 7,400 7,300 7,100 6,950
    2 8,600 8,500 8,250 8,100
    3 9,800 9,700 9,400 9,250
    4 11,000 10,900 10,550 10,400
    HEAD OF HOUSEHOLD 0 9,100 8,950 8,700 8,500
    1 10,650 10,450 10,150 9,950
    2 12,200 11,950 11,600 11,400
  10. Seller Paid Points: Taxpayer's may claim seller paid points when purchasing a principal residence. The deduction is claimed on Schedule A, Itemized Deductions. Appraisal, inspection, title, and attorney fees are NOT deductible. Property taxes paid are not deductible as points even if designated as points. Reject the claim and set the math error per IRM 3.11.6.6.6 if proof of the claim is not provided. For the fill in provide: "Please submit: Form HUD-1, Settlement Statement or other settlement statements. Form HUD-1 or other settlement statement must explicitly mention Loan Origination Fees."

  11. For Tax Year 2014, taxpayers are subject to the limit on certain itemized deductions if their adjusted gross income (AGI) is more than $305,050 if married filing jointly or qualifying widow(er), $279,650 if head of household, $254,200 if single, or $152,525 if married filing separately.

    Note:

    For Tax Years 2010 through 2012 there were no limitations for itemized deductions.

  12. Use the following reason codes for line 2 adjustments:

    1. Reason Code 076:
      • Changes to itemized deduction
      • When the taxpayer changes from a standard deduction to itemized deductions (Schedule A)
      • Taxpayer may elect to deduct Foreign income tax as an itemized deduction on Line 8 of Schedule A

    2. Reason Code 092:
      • Changes to standard deduction
      • When the taxpayer changes from itemized deduction to standard deduction and claims personal exemption on Line 2.

3.11.6.8.3  (03-03-2014)
Exemptions (Line 4)

  1. Taxpayers use Line 4 and Page 2 of Form 1040X to indicate a change to the number of exemptions on their return. When changing exemptions use CRN 887 for the change in number of exemptions using a two-digit decimal format (+/-) and Reason Code 006. See below for exemption amounts:

    Year Amount
    2010 3,650
    2011 3,700
    2012 3,800
    2013 3,900
    2014 3,950
  2. When the taxpayer's AGI reaches a certain limit, their standard exemption amount starts to phase out for the number of exemptions claimed. The exemption amount is reduced by 2% for each $2,500 or part of $2,500 that the AGI exceeds the AGI phase out limit based on the filing status. (See the chart below)

    Filing Status 2013 2014
    1 $250,000 $254,200
    2 $300,000 $305,050
    3 $150,000 $152,525
    4 $275,000 $279,650
    5 $300,000 $305,050

    Note:

    For TY 2010 through 2012, the exemption amount is not subject to a phase-out.

  3. Update the DUPOL database using CC DDBCK when the taxpayer is adding or removing exemptions. When CC DDBCK is not available use CC DUPED for current year returns, and do not update CC DUPED for prior year returns (See IRM 3.11.6.7).

  4. If the dependent previously had an ITIN and now has a valid SSN, DDBCK must be used to update the exemption to the SSN.

    Reminder:

    Send a Form 4442 to the Austin ITIN Unit to have the ITIN revoked. Annotate both TINs on the Form 4442 referral and specify which TIN should be revoked. The reason for revoking the ITIN is the dependent now has a valid SSN per IRM reference 3.11.6.8.3(4)

  5. If the taxpayer changes the number of exemptions, their filing status may also change.

    Note:

    If taxpayer is filing status 4, HOH and removes all dependent exemptions, correspond for QND if taxpayer does not change filing status to FS1.

  6. Refer as CIS/AM if the taxpayer has a notation or attachment that states conscience based objection to providing TINs for exemption (i.e. religious objection or some other similar type of statement).

  7. If a Form W-7, Application for IRS Individual Taxpayer Identification Number is attached to the Form 1040X, or the taxpayer requests additional information in order to complete processing Forms W-7, route to the following address:
    Austin Submission Processing Campus
    ITIN Operation Stop: AUSC 6090 P.O. Box 149342
    Austin, TX 78714-9342

  8. If a Form W-7 A, Application for Taxpayer Identification Number for Pending U.S. Adoptions (ATIN) is attached to a Form 1040X, route to the following address:
    Austin Submission Processing Campus
    ATIN Unit P.O. Box 934 -- Stop 6182
    Austin, TX 78767

3.11.6.8.3.1  (08-27-2014)
Changes to Exemptions

  1. When the taxpayer adds or deletes an exemption, review Form 1040X and any related attachments for the exemption's name and TIN. Without a valid TIN, the taxpayer must provide documentation to add an exemption, (i.e. birth or death certificate, doctor/midwife statement) on letterhead with business address and telephone number, or copies of hospital medical records. For exemptions without a valid TIN, continue to process, and do not update the DUPOL database if the taxpayer has provided the information specified above.

    Exception:

    There is an indication of Amish, Mennonite, or Form 4029, Application for Exemption from Social Security and Medicare Taxes and Waiver of Benefits, or the dependent was born then died in the same tax year, route to CIS/AM.

  2. When adding an exemption, verify the exemptions name and TIN using Command Code INOLE or CC DDBKD. If a TIN is obviously inappropriate, for example (111-11-1111) or (123-45-6789) or a similar TIN configuration, correspond for the correct TIN per IRM 3.11.6.9 using either Form 8009-A or a 324C letter. For Form 8009-A, use box 9. For a 324C letter, use paragraphs A, S, X.

    Note:

    Perform the above verification prior to inputting DDBCK/DUPED data base.

    If Then
    The exemption's TIN and name matches any of the INOLE information or DDBKD Allow the exemption , adjust the account, and update DDBCK for current year claims as well as prior year claims
    The additional exemption's name and TIN do not match any of the INOLE information or DDBKD 1. Research CC NAMES in IDRS for the correct name and/or TIN.
    2. If unable to determine, correspond per IRM 3.11.6.9 using either Form 8009-A or a 324C letter. For Form 8009-A, use box 9. For a 324C letter, use paragraphs A, S, X.
    If the taxpayer
    • states "religious or conscience based objection" to providing the TIN for the additional exemption

    • makes changes to the primary or secondary. taxpayer's TIN

    • or the Primary or Secondary TIN is invalid.

    Forward to CIS/AM.
  3. When adding or removing exemptions, verify the total number of exemptions amount claimed on Line 4, of Form 1040X corresponds to the number of exemptions on the "NUM-EXEMPT>" field on TXMOD or TOT Exemptions: field on IMFOL. If a Math Error is present due to an dependent/exemption related issue the NUM-EXEMPT or TOT Exemptions fields may not reflect the correct information. Refer to IRM 3.11.6.6.4,IRM 3.11.6.6.5.1IRM 3.11.6.6.5

  4. If the taxpayer attempts to add a dependent born in a future year or died in a prior year. see IRM 3.11.6.6.5 Use fill-in: "We did not add your dependent as requested based on the dependent's date of birth or date of death."

  5. If taxpayer is adding, changing or deleting an exemption and you cannot determine the correct exemption or it is unclear, correspond per IRM 3.11.6.9 using either Form 8009-A or a 324C letter. For Form 8009-A, use box 9. For a 324C letter, use paragraphs A, S, X.

    Exception:

    In a situation where the dependent(s) being added has a rejected ITIN and therefore will not have an SSN, see the instructions per IRM 3.11.6.6.5. If a math error already exists for the dependent exemption, refer as CIS/AM.

3.11.6.8.3.1.1  (09-02-2014)
Exam Soft Notices CP 85 A, CP85 B CP85 C and CP 87 A, CP87 B, CP87 C, and CP87 D

  1. Exam currently has two Soft Notices; CP 85 based on rules concerning the Earned Income Tax Credit (EITC) and CP 87 based on rules that apply when two or more taxpayers claim the same individual for the EITC or an exemption under Section 151 of the Internal Revenue Code.

  2. CP 85A, CP 85B, CP 85C, CP 87A, CP 87B, CP 87C, & CP 87D (Exam Soft Notices). Each letter informs the taxpayer that he/she claimed one of the various tax benefits for a qualifying child, exemption, and filing status. The letters are sent for the following scenarios:

    1. CP 85A, Please Help Us Confirm Your Filing Status. Taxpayer claimed Head of Household filing status and may be married.

    2. CP 85B, Please Help Us To Confirm Your Qualifying Child. Taxpayer claimed a qualifying child for EITC that may not be correct.

    3. CP 85C, Please Help Us Confirm Income You Reported on Schedule C That Qualified You for the Earned Income Credit (EIC). Taxpayer filed a Schedule C with little or no expenses and may not have a business.

    4. CP 87A, You Need To Make Sure Someone Is Your Dependent. Taxpayer claimed an exemption and/or qualifying child for EITC that was duplicated on another return.

    5. CP 87B, You Need To Make Sure You Are Not Someone's Dependent. Taxpayer claimed an exemption for them self and another taxpayer also claimed the exemption.

    6. CP 87C, You Need To Make Sure Someone Qualifies As Your Dependent. Taxpayer claimed an exemption that was claimed on another return. The exemption claimed is over the age of 23 and filed a tax return reporting more than the exemption amount in gross income.

    7. CP 87D, You Need To Make Sure Someone Is Your Dependent. Taxpayer claimed an exemption for self and was also claimed on a joint return.

    Note:

    Master File will contain a TC 971, Action Code (AC) 138 when one of the Exam soft notices listed above is generated.

  3. Both the CP 85 and CP 87 are sent for information only. No adjustments will be made to the return unless the taxpayer initiates an adjustment. Undelivered CP 85 and CP 87 should be destroyed as classified waste.

    Note:

    SP will process this adjustment if requested by the taxpayer with either a 1040X/ amended return or with a loose CP notice (CP 85 A, B, & C or CP 87 A, B, C & D)

  4. Each taxpayer is asked to check his/her tax return (for the tax year indicated on the notice) and ensure the information is correct. If the taxpayer is:

    1. Entitled - no action is required.

    2. Not entitled to the exemption, Qualifying Child, Filing Status, or Schedule C income, he/she is advised to file Form 1040X, Amended U.S. Individual Income Tax Return for tax year referenced in the CP Notice and not to make the same error on his/her next tax return.

3.11.6.8.3.2  (08-27-2014)
Form 8332, Release of Claim to Exemption for Child of Divorced or Separated Parents or Form 2120, Multiple Support Declaration

  1. A taxpayer who is claiming an exemption for a child who did not live with him/her under the rules for children of divorced or separated parents will indicate this by:

    • entering an amount on Part I, Line 25

    • indicates on Line 31 or notates in the explanation area of the Form 1040X.


    They must attach either Form 8332, or Form 2120, or a copy of the divorce decree. If one of the forms or the divorce decree is not attached, correspond.

    Note:

    Correspond per IRM 3.11.6.9 using either Form 8009-A, box 14, or a 324C letter, paragraph A, U, X.

  2. If Form 8332 or Form 2120 is attached, continue processing, using RC 006.

    Note:

    Update the DUPOL database using CC DDBCK. When CC DDBCK is not available, use CC DUPED for current year returns, and do NOT update CC DUPED for prior year returns. (See IRM 3.11.6.7).

3.11.6.8.4  (08-06-2013)
Taxable Income (Line 5)

  1. Taxpayers use Line 5 to indicate how much taxable income they are reporting. Their initial tax will be based on taxable income. When adjusting Line 5, use RN 886.

    Note:

    If the adjustment affects the AGI on line 1, column B, by either a positive or negative amount and there is no change to the taxable income on Line 5, Column B, then use RN 886 with .00 as the amount of change for Column B.

  2. Do not adjust taxable income below zero.

    Note:

    If the taxpayer attempts to adjust an amount on line 5 below zero, only make the adjustment to zero.

3.11.6.8.5  (09-16-2013)
Calculation of Tax liability Methods (Line 6)

  1. Line 6 – Calculation of tax on the taxable income shown on Line 5. Generally the tax table should be used or other method that was used to figure the tax on the original return. However a different method may have to be employed if the amendment changes the character of the income such as capital gains or qualified dividends. See table below for the various methods of tax calculations

    If the tax was calculated using: Then the taxpayer will enter in the box on Line 6 the following method:
    Tax Table Table
    Tax Computation Worksheet TCW
    Schedule D worksheet Sch D
    Schedule J (Form 1040) Schedule J

    Note:

    Schedule J more than ≡ ≡ ≡ ≡ ≡ ≡ route to CIS/AM

    Qualified Dividends and Capital Gain Tax Worksheet QDCGTW
    Foreign Earned Income Tax Worksheet FEITW
    Form 8615 Route to CIS/AM
  2. Use the AMS worksheets to verify the tax on line 6 when the taxpayer has not used the tax tables and math verification is required.

  3. Schedule D reason codes: When adding Investment Gain (Or loss) use Reason Code 13 to identify the change to income.Use RC 043 when there is a change to the Schedule D tax worksheet or the QDCGTW.

3.11.6.8.5.1  (09-23-2013)
Alternative Minimum Tax

  1. The purpose of the Alternative Minimum Tax (AMT) is to ensure that taxpayers who benefit from certain deductions, exemptions, credits and/or tax preference items with incomes that exceed exemption base amount pay a minimum amount of tax. AMT is assessed in addition to the tax on taxable income.

  2. Form 6251 may involve CB/CF issues. See IRM 3.11.6.3.2

  3. AMT is reported on Form 6251 and line 45 of Form 1040. If a change is discovered math verify the taxpayer's figures ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .by completing the appropriate AMS worksheets.

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Reminder:

    Form 6251 or Form 1040 does NOT have to be attached to determine if a change has occurred to AMT.

  4. Use reason code 045 when inputting an adjustment that involves a change to AMT.

3.11.6.8.6  (08-27-2014)
Credits - Non Refundable (Line 7)

  1. Taxpayers use Line 7 to reduce their tax by claiming non-refundable credits by an amount not to exceed the tax before credits on Line 6. Unless otherwise specified, use RC 036 for all workable credits.

  2. If the taxpayer claims a credit(s) greater than the tax before credits (line 6) and the full amount of the credit(s) is used to reduce the corrected Total Tax, set math error and send taxpayer 4364C letter explaining correction.

  3. If Form 1116 is being amended route to CIS/AM.

  4. If the taxpayer makes an initial claim ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ on Line 7 that cannot be substantiated, correspond for an explanation and/or supporting documents. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Note:

    Correspond for an explanation per IRM 3.11.6.9 using either Form 8009-A, boxes 5 and 15, or a 324C letter, paragraphs A, J, U, X. Fill-in: "We are unable to correct your account with the information you supplied on your Form 1040X. There is not a sufficient explanation to determine what changes are being requested. Please correct the appropriate column(s) and/or supply an explanation and tell us what changes you made to your income, deductions, credits and the amount and reason for each change. "

    Note:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  5. If the taxpayer is not eligible for all or part of non-refundable credit see IRM 3.11.6.6.5.

3.11.6.8.6.1  (08-27-2014)
Child Tax Credit (CTC) (Line 7)

  1. Child Tax Credit (CTC) is a non-refundable credit which is used to reduce the taxpayers tax liability.

  2. To qualify for the credit, the taxpayer must have qualifying child that is the taxpayer's:

    1. Son, daughter, stepchild, brother, sister, stepbrother, stepsister, or a descendent of any of them, and

    2. Was under age 17 at the end of the calendar year, and

    3. Did not provide over half of his or her own support for the taxable year, and

    4. Lived with the taxpayer for more than half of the taxable year, and

    5. Was a U.S. citizen, U.S. national, or a resident of the United States

      Note:

      Taxpayer's child includes a legally adopted child, a child who is lawfully placed for adoption with the taxpayer, or a child who is placed with the taxpayer by an authorized placement agency or by judgment decree, or the order of any court of competent jurisdiction.

      Note:

      If the child is 17 or older at the end of the calendar year disallow the claim per IRM 3.11.6.9.3 using the following fill-in: "We have disallowed your claim on Form 1040X because in order to qualify for the Child Tax Credit, your dependent must be under the age of seventeen at the end of the calendar year"

  3. If a taxpayer claims the child tax credit for a dependent with an ITIN, Schedule 8812 must be attached for TY 2012 and subsequent years. If Schedule 8812 is missing correspond using either Form 8009-A boxes 4 or 5 or 324C letter, paragraphs A, U, X with fill in, "Complete Schedule 8812 to support the changes you made with your amended return."

  4. If the taxpayer indicates a religious or conscience based objection to obtaining a TIN, route to CIS/AM

    Exception:

    IRS will allow the credit if the taxpayer identifies as either "Amish" , "Mennonite" or "Exempt 4029" , even if the individual does not have a valid TIN. If the credit was improperly NOT allowed during original processing, adjust the account and/or process the claim.

  5. The maximum allowable amount per child is $1,000.

  6. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  7. The child credit is reduced (phase out) by $50 for each $1,000 that AGI exceeds:

    Filing Status Correct Amount AGI thresh
    Married Filing Jointly (FS 2) $110,000
    Single, Head of Household, or Qualifying Widow(er) (FS 1, 4, or 5) $75, 000
    Married Filing Separately (FS 3) $55,000
  8. The taxpayer must furnish a valid Taxpayer Identification Number (TIN) for each qualifying child. This number may be:

    1. A Social Security Number (SSN) issued by the Social Security Administration

    2. An Individual Taxpayer Identification Number (ITIN) issued by the IRS if the taxpayer is not eligible for an SSN

    3. An Adoption Taxpayer Identification Number (ATIN) issued by the IRS for a child while an adoption is pending.

    4. IRS will allow the credit if the taxpayer identifies as either "Amish" , "Mennonite" or "Exempt 4029" , even if the individual does not have a valid TIN. If the credit was improperly NOT allowed during original processing, adjust the account and/or process the claim.

    Note:

    If the taxpayer has answered the question in Part 1 of Schedule 8812 with "no" , the issue is not allowable based on law or regulation. Disallow the claim. Send the taxpayer a disallowance letter for fully disallowed or partially disallowed claims:



    Letter 105C is used for fully disallowed claims. Actions for inputting the adjustment on fully disallowed claims:

    • Input TC 290 for .00 with applicable reason code,

    • Use blocking series 98 if the original paper return is not with the claim,

    • Use blocking series 99 if the original return is with the claim.


    Letter 106C is used for partially disallowed claims. Actions for inputting the adjustment on partially disallowed claims:

    • Input TC 29X for appropriate tax change, along with applicable reason code,

    • Use blocking series 00 if the original return is with the claim,

    • Use blocking series 18 if the original return is not with the claim.

  9. Math verify the taxpayer's figures by completing the appropriate worksheet in the instructions booklets, publication, or electronic web-based worksheets on AMS.

  10. Update the DUPOL database using CC DDBCK prior to inputting adjustment.

  11. Adjust the child tax credit with TC 291 to increase the credit (decreases the tax) and TC 290 to decrease a previously allowed credit (increases the tax) with RC 036.

  12. Any portion of this credit that was not used to reduce the income tax to zero may be eligible to be used as a refundable credit (Additional Child Tax Credit).

3.11.6.8.6.2  (08-27-2014)
Form 2441, Child and Dependent Care Credit (Line 7)

  1. If the Child and Dependent Care Credit is claimed on Line 7B, and Form 2441 is attached . the following items must be completed.

    Note:

    Correspond for Form 2441 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ IRM 3.11.6.9 using either Form 8009-A, box 4 or 5 ; or a 324C letter, paragraphs A, U, X using fill-in: "Please complete Form 2441 to support the changes requested on Form 1040X" . If attached, continue processing using RC 036

    1. Line 1(a), Provider’s Name must be present

    2. Line 1(c), Provider’s TIN must be present, unless the provider is an exempt organization, such as, but not limited to the following:

      • Churches, synagogues, mosques, or temples
      • Schools-both public and private
      • YMCA/YWCA or YMHA/YWHA
      • Other nonprofit organizations
      • The provider was a foreign citizen with no U.S. address and the child care was provided in a foreign country

    Note:

    Do not correspond for the missing TIN when more than one provider name is entered on Line 1, and at least one provider's TIN is present.

  2. The provider's TIN is not required when the taxpayer has exercised "due diligence" in his/her attempt to comply with the requirement. Due diligence applies only to notations that indicate:

    1. the provider has moved and the taxpayer is unable to find the provider to get the TIN, or

    2. the provider has refused to give the TIN to the taxpayer.

      Note:

      Notations that indicate the taxpayer is "unable" to get the TIN, that the TIN is "not available" , that it is "unknown" , "pending" , "applied for" or any notation other than those listed above are not acceptable due diligence statements.

  3. Line 2(a), Qualifying Person(s) name can be the taxpayers dependent child, or disabled spouse or dependent claimed unable to care for himself or herself. If the TIN is missing and the taxpayer is not claiming an additional exemption who appears to be the same child for which the credit is claimed correspond using Form 8009-A box 6 and 19. For a 324C letter use paragraphs A, U, X.

    Fill-in: "Please provide the taxpayer identification number of the person who qualifies you for the Child and Dependent Care Credit, Form 2441"

  4. Line 2(b), Qualifying Person(s) TIN must be furnished. It can be a Social Security Number (SSN), Individual Taxpayer Identification Number (ITIN), or an Adoption Taxpayer Identification Number (ATIN). If blank and the filer is claiming an additional exemption who appears to be the same child claimed for this credit, do not correspond.

    Note:

    For taxpayers indicating a religious group (e.g. Amish/Mennonite), "Exempt-Form 4029" , allow the credit without a TIN. Do not allow the credit for taxpayers with notations of "religious or conscience based objection" who object to obtaining a TIN. Refer as CIS/AM.

  5. A qualifying person has to be under the age of 13 years and may be claimed as a dependent. If the child turns 13 during the year the child is a qualifying person for part of the year they were under 13. Expenses incurred during that time period can be claimed. Update using CC DUPED for current year only.

    1. A qualifying person can also be a disabled spouse who was not physically or mentally able to care for themselves. They must self identify on the change of explanation or a notation on the case as to the qualifying condition.

    2. A qualifying person can also be any disabled person who was not physically or mentally able to care for themselves and who can be claimed as a dependent (or who the taxpayer could claim as a dependent except that the person had gross income of $3,500 or more or filed a joint return.)

    3. A qualifying person can also be any disabled person who was not physically or mentally able to care for themselves and who can be claimed as a dependent except that the taxpayer or spouse if filing jointly could be claimed as dependent on another taxpayer's 2010 return.

      Note:

      In a, b and c above the taxpayer has to self identify the qualifying condition and if they do not and they do not meet the age criteria the claim will have to be disallowed per IRM 3.11.6.9.3 using the following fill-in: "We have disallowed your claim on Form 2441, Child and Dependent Care Credit. In order to qualify for this credit, the qualifying person must be under the age of 13 for the months when the expenses were claimed or the dependent you are claiming was not physically or mentally able to care for himself or herself"

  6. Line 3 cannot exceed $3,000 for one dependent or $6,000 for more than one dependent. If blank, see Line 2(c) of Form 2441 for an amount paid.

  7. Lines 4 and 5 (Your Earned Income and Spouse’s Earned Income) must be complete in order to claim this credit

      If And Then
    1 Filing Status 1, 3, or 4 Line 4 is blank Research RTVUE and IRPTR to verify if the primary taxpayer has earned income.

    If unable to determine send Form 8009-A with box 20 or 324C paragraphs A, U, X with fill-in: "Please provide your Earned Income amount on Line 4, Part II. This line must be completed."
    2 Filing Status 1, 3, or 4 Line 5 is blank Continue processing
    3 Filing Status 2 Line 4 is blank Research RTVUE and IRPTR to verify if the primary taxpayer has earned income.

    If unable to determine send Form 8009-A with box 20 or 324C paragraphs A, U, X with fill-in: "Please provide your Earned Income amount on Line 4, Part II. This line must be completed."
    4 Filing Status 2 Line 5 is blank Research RTVUE and IRPTR to verify if the secondary taxpayer has earned income.

    If unable to determine send Form 8009-A with box 21 or 324C paragraphs A,U, X with fill-in: "Please provide the spouse’s Earned Income amount on Line 5, Part II. This line must be completed when married filing a joint return."

    Note:

    Both spouses must have earned income if filing jointly to take the credit. See page 3 of the Form 2441 instructions Spouse Who Was a Student or Disabled for exceptions. If both spouses do not have earned income and do not meet the exceptions specified then disallow the claim per IRM 3.11.6.9.3 Fill-in: "We have disallowed your claim for Form 2441, Child and Dependent Care Credit, because both spouses on a joint return must have earned income."

  8. Correspond for Lines 1(c) and 2(b) if missing and cannot be determined from NAMEI, NAMEB, NAMES, NAMEE, etc. See "NOTE" above for Line 1(c) on Form 2441.

    Note:

    Before corresponding for the care provider’s name, see IRM 3.11.6.8.6.2(1) and (2). When corresponding for the care provider, follow instructions per IRM 3.11.6.9 and send either Form 8009-A or a 324C letter. For Form 8009-A, use box 18. For a 324C letter use paragraphs A, K, X.

  9. Update the DUPOL database using CC DDBCK if a TIN is being added, or deleted. (See IRM 3.11.6.7).

    Exception:

    CC DUPED must be used if the qualifying person was over the age of 12 but disabled

3.11.6.8.6.3  (08-27-2014)
Form 5695, Residential Energy Credits (Line 7)

  1. The Energy Policy Act of 2005 provides for Residential Energy Efficient Property Credit and Non-business Energy Property Credit to qualified taxpayers who made energy efficient purchases.

  2. Residential Energy Efficient Property Credit provides taxpayer a credit for adding qualified solar panels, solar water heating equipment, or a fuel cell power plant to their homes in United States. The credit applies to property placed in service after December 31, 2005 and before January 1, 2014.

    Note:

    The taxpayer can claim 30% of the total cost, including installation, as the credit for the following: qualified solar, small wind energy, & geothermal heat pump property costs.

  3. Non-business Energy Property Credit provides taxpayers a credit for improving the energy efficiency of an existing home and for costs relating to residential energy property expenses. The credit is available for items such as high efficiency heating and cooling systems, water heaters, windows, doors and insulation. . The credit was not available in 2008. For 2009 & 2010 the credit is limited to $1,500 over both tax years. For TY 2012, the credit is limited to $500 and reduced by any amounts received in 2006, 2007, 2009, 2010, & 2011.

    Note:

    If the total of any non-business energy property credits you have taken in previous years (after 2005) is $500 or more you generally cannot take the credit in 2013.

  4. If the taxpayer is claiming more than the maximum allowed for either credit, set the math error per IRM 3.11.6.6.5 Use the following verbiage for the fill-in: "You claimed more than the maximum amount allowed on Form 5695, Residential Energy Credit and/or Residential Energy Efficient Property Credit." Continue to process the return for other issues.

  5. If form 5695 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ correspond per IRM 3.11.6.9 using either Form 8009-A, box 4 or 5; or a 324C letter, paragraphs A, U, X, Use fill-in: "Please complete Form XXXX to support the changes you have made." If present continue processing using RC 036.


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