Compute each spouse's separate EITC, with (Y) indicator, based on each individuals earned income, using the same number of qualifying dependents used to compute the EITC on the joint return. Return processable date (RPD) (date return was received in processable form). BPI 9 generates on the first refund (TC 846), issued after the reversal of a TOP offset to a secondary TIN's debt. If the taxpayer inquires as to how we determined the injured spouses share of the refund, provide them with a copy of Form 8379 Injured Spouse Allocation Worksheet. Evidence of the credit condition and documentation must be provided when an OBR manual refund is submitted to the Accounting Branch. Territories of Guam and Puerto Rico are also community property jurisdictions (Worked in Philadelphia International). In instances involving offset bypass refunds, IRS personnel are required to contact Bureau of the Fiscal Service for debt information before issuing a refund. Advise the taxpayer NOT to include a copy of the tax return with the Form 8379 nor to file it with a Form 1040-X unless changes to the tax return need to be made. When issuing a hardship refund for any reason, you must inform the taxpayer that if he/she owes a past-due child support or other TOP debt, his/her refund may be reduced in whole or in part by Bureau of the Fiscal Service and applied to the agency debt through Treasury Offset Program. If the taxpayer sends additional information and the Form 8379, Injured Spouse Allocation, can be allowed, follow normal injured spouse processing procedures. It generates on the first refund, (TC 846) issued after the reversal of a TOP offset to a secondary TIN's debt. If you receive a Form 8379 for both the regular refund on 2018 or 2019 and EIP, work the non-EIP portion on the 2018 or 2019 account and work the EIP portion on the 2020 account. Send the letter to the address on the Form 8379. TC 899, type 1, with negative money amount, is used by Bureau of the Fiscal Service to report a TOP offset reversal. The following actions are necessary to resolve the account when this situation is present: Leave message on UPTIN to post the "valid" TC 898 in 2 cycles to allow the TC 767 with the invalid OTN to post first. A request was previously submitted. See IRM 21.4.6.4.2.1, TOP Offset Bypass Indicator (BPI). If an active combat zone case involves a Federal tax debt. Form 8379 is forwarded to the Accounts Management (AM) Function, A (TC) 971, Action Code (AC) 071, is input when the case is controlled. Individual Income Tax Return, was not timely per IRC 6511(a), or IRS determines there is no overpayment available for credit or refund per 6511(b), then the Form 8379, Injured Spouse Allocation, is not considered as there would be no joint credit or refund to offset and the allocation irrelevant. Individual Income Tax Return, Form 1040A, U.S. For manual refunds of TOP offset reversals, research the tax module where the offset was reversed for an agency refund (TC 899, type 2 or TC 971 AC 599, type 2) and an agency refund reversal (TC 899, type 4 or TC 971 AC 599, type 4) with the same OTN as the offset being reversed. Normal offset rules apply to the Unemployment Compensation Exclusion. For all of the Community Property Shortcut methods listed below, all conditions must be met before the shortcut can be used. If the jointly filed claim on Form 1040, U.S. In some instances, a TC 898 will unpost as UPC 151 RC 0 due to a name control mismatch when Bureau of the Fiscal Service returns the record to IRS. See IRM 21.4.6.5.10.6, Issuing the Injured Spouse Refund. Accept the taxpayer's allocation of income and other items on the Form 8379 and process Form 8379 without regard to community property laws. Bureau of the Fiscal Service maintains these debts and affects the offset through TOP. A TOP offset reversal posts as a TC 766 with an Offset Trace Number (OTN) that is the same as the OTN of the TC 898 TOP offset being reversed. When the overpayment has not offset and there is an IRS obligation, follow the IF/AND/THEN Chart below: The following is a list of conditions when the remaining overpayment will not offset if the secondary taxpayer owes a Federal tax debt. Form 8379 was not filed with the original return. BPI (3) generates on all systemic and manual refunds issued from an individual NMF account, preventing TOP offset. The Taxpayer Bill of Rights (TBOR) lists rights that already existed in the tax code, putting them in simple language and grouping them into 10 fundamental rights. TC 971 AC 599 must be considered when netting the TOP offset amount. Specific account conditions, such as freeze codes, will determine the date by which the OBR must be processed. All letters or documents from an agency and addressed to IRS are sent back to agency headquarters or Bureau of the Fiscal Service if they concern: Removal of the debtor from the Treasury Offset Program. You can tell the taxpayer: IRS no longer maintains child support or other TOP debts. Alaska and Oklahoma are not community property states for the purpose of processing injured spouse allocation cases. If there was an Agency Refund for a partial amount reverse any remaining amount TC 898/TC 971 AC 598 minus any TC 899/TC 971 AC 599. A manual refund is required when Box 12 on Form 8379, Injured Spouse Allocation, is checked and the address on ENMOD is different than the address on the Form 8379. Command Code (CC) TXMOD also contains the debt liability indicator, found directly below the Transaction Code (TC) 846 and is displayed in the form of the number "0" or "1" . EIP is split between spouses and is not allocated between spouses based on income or dependents on the return. Refer taxpayer to TOP Call Center at 8003043107, TDD 800-877-8339. Research CIS for an explanation the previous denial and explain the reason for the denial to the taxpayer. Inform the taxpayer that a note has been added to their account and to allow 30 days to process. Continue to process injured spouse cases as always. The IRS was authorized to use certain information that a taxpayer provided on the taxpayers recently filed tax return to determine a taxpayers eligibility for each EIP, as follows, EIP 1 eligibility determined from TY 2019 return or, if no return was yet filed for TY 2019, from TY 2018, if filed, EIP 2 eligibility determined from TY 2019 return, if filed. If an allocation of QBI cannot be determined and each spouse has QBI, split the allocation of QBID in half (50/50). Form 8379 posted to the incorrect TIN, and the original Form 1040 is behind the Form 8379. See IRM 2.3.17.5.6, Request Codes for CC ESTAB and IRM 2.3.17-1, Input Format, CCESTABDocument Request for information on requesting the entire block. Check any XREF TIN to see if the refund that was offset posted under a different primary TIN. Additionally, the Department is required to offset a taxpayer's refund as partial payment of any debt (s) reported by the following agencies: Ohio Department of Job and Family Services If the Form 8379 is not attached to the joint Form 1040 or Form 1040X, but is instead filed separately, the timeframe for filing Form 8379 for Federal Tax Debts or TOP Debts is the same as the timeframe for filing the claim for refund (generally 3 years from the date the return was filed or 2 years from the date that the tax was paid, whichever is later, but there are numerous exceptions see IRC 6511 . This will allow the reversals to post in one cycle and the overpayment will be systemically refunded in both taxpayers names. The taxpayers divorce. Bypass TOP offset for all primary TIN debts except child support. If CC INOLET does not display a debt indicator, then the IAT Results IS screen displays the "N" . See IRM 21.4.6.5.23.2, UPC 137 or UPC 437. When working a Form 8379 and the debt indicator on CC INOLE is "N" for both taxpayers, do not release the overpayment with a TC 571. And the CARES Act, the federal government's $2.3 trillion coronavirus relief package, later put into law the order to stop collections, wage garnishments, and tax refund offsets from defaulted loans. Do not attempt to re-input the adjustment. Allocate business credits based on each spouses interest in the business. See IRM 20.2.4.7.5.2, 45-Day Rule and All Original Tax Returns, for the dates of systemically generated refunds. BPI (5) or (6) must be used for injured spouse in combat zone, BPI (0) and (4) are not valid when block 9(Injured Spouse) is used. The net of all TC 76X with the same OTN cannot be greater than zero. To prevent an erroneous refund on an OBR, use hold codes or secondary transaction codes to hold the overpayment. The TOP Liaison will confirm the manual reversal process is warranted and provide the Manual Reversal Request to be completed. 5) Taxpayer claims his/her refund was less than expected, amount disagrees with TC 846/840. If the injured spouse is the secondary taxpayer and Part II, line 11, is not checked on Form 8379 (Rev. The injured spouse has no payments or refundable credits. Generally, the IRS indicator (I) is set when the taxpayer has any one of the following conditions present on his/her account: Individual Master File (IMF) primary or spousal tax debt, Non Master File (NMF) tax debt (V freeze, Transaction Code (TC) 130 on entity, Bankruptcy (V or W freeze, TC 520 on account with closing code 60-67, 81 or 83-89 on the account. Certain refunds cannot be issued before February 15, even if there is a hardship. Only allow the TC 766 posting to generate the TC 846 when the injured spouse refund will be issued in both names. The goal is to help Pennsylvania taxpayers and citizens impacted by the pandemic. Inform the Bureau of the Fiscal Service CSR that you are an IRS employee processing a hardship manual refund and give your name, ID number, and the office from which you are calling. This occurs when a TC 766 reverses a TC 898 with a debtor TIN. Research to resolve the discrepancy (processing error, math errors, or other tax offset). This has no effect on injured spouse forms filed against tax offsets since IRS creditor rights permit an offset based on the applicable state law regardless of how EITC may be allocated. RC 1 results from an attempt to post a TC 898 with document code 45 when it does not find a TC 840 with the same DLN after 10 cycles. For all other programs, follow Statute guidelines for your case. When inputting a TC 766, you can only input an adjustment to withholding or EITC. Close you case using Document Type-Internal Transcript, IDRS Cat Code IRRQ, Program Code 40000. Compare the Injured Spouse's refund allocation with the TC 898 on the module and reverse only the net amount needed for the injured spouse's refund. 1. Calculate the credit based on Community Property Laws for that state. A reversal of a TOP offset can be done to: Correct IRS initiated procedural or pipeline processing errors such as math errors, data input errors, or misapplied payments. Injured Spouse's share of the refund offset. If the injured spouse is the primary taxpayer and Part II, line 11, box is checked on Form 8379 (Rev. Any refund generated by the abatement must be paid jointly to both spouses unless one or more TC 706 credits is present and all four of the following items are true: The spouses' names on the account do not both appear on the originating account. A few paper copies should be kept in each area that works Form 8379, Injured Spouse Allocation, to photocopy when there is a problem with one of the electronic worksheets or the computers may be down. 15) Taxpayer says Form 8379 was filed after offset and no refund was received. If you're not quite sure where to start or what to do, consider hiring a CFA to help you with your student loans. If the account requires the reversal of four or more TC 898s, and will be issued in both names input all the required TOP offset reversals (TC 766) using HC 3 with the appropriate blocking series, SC 7, RC 086 and PC 8. The other spouse is entitled to $93 (1,500 x .062). The credit balance on the module must be held so the taxpayer can reply to the no consideration letter with the information needed to make the return processable. It generates on refunds (TC 846) issued after reference number (RN) 809/811 is input to release a refund when an injured spouse is the secondary. Only the TOP Liaison is authorized to input a TC 767 with the OTN. If a manual refund is not issued, the amount of the overpayment in excess of the debts will refund via TC 846. The domicile of a person does not change merely because of entry into the military and being stationed in another jurisdiction. If approval to issue the refund is received, input a Manual Refund using BPI 8 or 9. If there is a balance due module; a freeze release will prompt an offset to that account. You must take into consideration all TOP transaction codes with the same OTNs to determine the TOP offset amount available to be reversed. See IRM 21.4.6.5.8, Form 8379, Injured Spouse Allocation. A systemic recovery was implemented to correct these accounts. If the Refund Statute Expiration Date (RSED) has expired, see IRM 21.4.6.5.12(4), TOP Offset Reversals. Input of the appropriate BPI is required on all refunds. A TC 700 posts to the account for the TOP Offset reversal amount. See, Continue computing the injured spouse's refund based on Tax offset instructions. If a taxpayer believes they have been discriminated against on the basis of sex, race, color, national origin (including limited English proficiency), disability, reprisal, religion, or age, advise the taxpayer that he/she can forward an email to *EDI.Civil.Rights.Division@irs.gov, or send a written complaint to: Internal Revenue Service, Office of Equity, Diversity and Inclusion, CRU , 1111 Constitution, NW, Room 2413, Washington, DC 20224. See IRM 21.6.3.4.2.12, Premium Tax Credit. Bureau of the Fiscal Service sends an offset notice to the taxpayer if this occurs. When married taxpayers file using the "married filing joint" status either taxpayer (or both) may have outstanding obligations that qualify for a TOP offset. See IRM 21.4.6.4.2.10(3), TC 899, Agency Refund of TOP Offset. OBR requests should generally not be referred to the Taxpayer Advocate Service. Therefore, if the taxpayer does not respond by the time frame given in the Letter 3064C, IRS will transfer the funds back to the individual tax account where it was originally offset from and enter the appropriate information in the "Remarks" section of the credit transfer. Update the entity, if necessary, and use CC ACTON to establish a "dummy account" for IDRS generated refunds. Program Controls: Goals, measures and operating guidelines are listed in the yearly Program Letter. Consequently, the name control does not match master file. Add the interest payment and its accrued interest, multiplying the total by the percentage determined in item 1) above. It generates on systemic refunds issued from modules with a combat zone C Freeze in effect. The unpostable codes explained below deal with conditions specifically related to TOP offsets. Interest may be computed from other than the availability date of the overpayment when the original tax return was filed late (IRC 6611(b)(3)), or in unprocessable form (IRC 6611(g)). If the case does not meet TAS criteria and the taxpayer has a hardship, transfer the caller to App 35 using ACD = 92035 or IUP = 1035. It is not a DMF offset if there is no AG/SA code present. TC 150 is blocked 92 and tax or TOP offset has not occurred. If the income data wages/withholding is not verifiable, submit an E4442 to RICS/IVO requesting a determination of the return. BPI (4) indicates that TOP should bypass all debts except child support for both the primary and secondary TIN. When determining the "TO" date, do not consider the 45-day interest-free period that applies to claims for credit or refund. Monitor the account per IRM 21.4.4.6.1, Monitoring Manual Refunds until the module balance is zero to avoid erroneous refunds and credit balances. If the account requires the reversal of three or more TC 898s, you must issue a manual refund. See IRM 13.1.7.2.1, TAS Case Criteria 1-4 Economic Burden. The batching is performed prior to routing to the Manual Refund Function. When the injured spouse files a Form 8379, Injured Spouse Allocation, that results in a reversal and refund of the TOP offset, and the agency also refunds the offset for some reason, the injured spouse often returns the IRS refund. The American Rescue Plan Act of 2021 allows the taxpayer "subject to income limitations," to exclude $10,200 (MFJ - $10,200 per spouse) of Unemployment Compensation from income for tax year 2020. Inquiries regarding offsets may originate from the non-receipt or reduction of a refund, from the receipt of an offset notice, or from other issues on an account that may cause an erroneous offset. If BFS cannot recover the offset, the TOP Liaison Office will contact the initiator of the reversal request within 4-6 weeks of input. Use HC 1, 2, or 4 when reversing an offset and issuing a manual refund. Disregard all signs when adding or subtracting the transaction amounts. Review question 5 on Form 8379 to determine if the taxpayer resides in a community property state. If you do not agree, you must submit a new Form 8379 allocating the payment as you determine. Before reversing any offset to Office of Child Support Enforcement (Agency Codes 1 and/or 2), see IRM 21.4.6.4.2.4, Child support TOP Offsets. The AM Function may receive copies of legal documents regarding support obligations. When working an injured spouse case after offset of the original overpayment and the stimulus payment, you will input two adjustments. These offsets are referred to as TOP offsets. Otherwise use a Hold Code 2 and release the refund using RN 810/811 or issue a manual refund if required. The BPI 3 should be used on Form 5792 and Form 3753, when the taxpayer has both tax and TOP debts to be paid before a refund is issued. If the Form 1040 or Form 1040X has been determined to have no overpayment available for credit or refund then a 916C letter must be sent to advise the taxpayer why the allocation is not being considered. Any amount of the overpayment credit that will offset to another tax obligation, attributable either individually or jointly to the injured spouse, must be subtracted from the injured spouse's share of the joint overpayment. See IRM 21.4.6.5.19, Re-sequence Cases. Levy proceeds that result in offsets are not considered misapplied payments. If you do not have access to CIS, refer to 21.3.5.4.1, When to prepare a referral. The TC 766 posts with the return due date or return received date, whichever is later. Use CC COMPA to compute the injured spouse's portion of the amount of credit interest based on the injured spouses reversal amount. See IRM 21.2.2.4.2.1, IDRS History Items and Account Inquiry. When Insolvency approves the manual refund, you must indicate approval on Form 5792. Ensure there are no freeze codes on the account that would release by the input of a TC 290 other than the -R freeze. If the taxpayer filed their return on or before an approved extension of time to file, use the 04/15/XXXX of the return rather than the posted Return Received Date shown on TXMOD. Send a Letter 3179C, Refund Offset to Treasury Offset Program (TOP) and Injured Spouse Inquiries, with paragraph "o" informing the taxpayer of the delay in processing the Form 8379, Injured Spouse Allocation. Verify that the corrective action is accurate before closing, Close your case using Document Type-Internal Transcript, IDRS Cat Code IRRQ, Program Code 40000. Input a TC 290 for .00 without the corresponding RN 808/809/810/811 to release the overpayment. Even if you owe student loans, you still can get your tax refund due to the Covid-19 pandemic. If research indicates the TC 898 was deleted, see IRM 21.4.6.5.12.2, Manual Reversal of TOP Offset, to initiate procedures for a manual reversal request. Treasury Offset Program offset (effective 01/11/1999). See IRM 21.4.6.5.8.4, Review the Form 8379 for Completeness, and allocate the form per IRM 21.4.6.5.10.1, Allocation of Tax, and IRM 21.4.6.5.10.2, Allocation of EITC. The timeframe for filing Form 8379 for Federal Tax Debts or TOP Debts is the same as the timeframe for filing the claim for refund (generally 3 years from the date the return was filed or 2 years from the date that the tax was paid, whichever is later, but there are numerous exceptions see IRC 6511 . See IRM 21.4.6.5.8.7, Incomplete Form 8379 Signed or Filed with Original Return for instructions and suspend the case for 40 days. Taxpayers, who after completing Form 8962, find they have a repayment requirement, should not file Form 8962 or report the repayment amount as a tax liability. Monitor the account for the posting of the TC 840 and TC 150. Arizona, Idaho, Nevada, and Wisconsin recognized same-sex marriages starting in late 2014. Since BFS does not know the impact COVID-19 will have on its ability to collect debts, it may need to adjust its fees during FY 2022. If the interest payment was offset with TC 898, then the FROM date is the DB-CR-INT-TO-DT of the accrued interest (TC 776) that accompanied the interest payment.Example: Once again using the example from 2) above, the accrued interest of $0.66 carries a DB-CR-INT-TO-DT of August 13, 2020 (displayed on TXMOD with the TC 776 posting for the accrued interest). Notices received from an agency that are addressed to a taxpayer using the IRS Campus address are disposed of as classified waste. This credit is reported on Schedule M of the Form 1040/Form 1040A, U.S. For the X-REF, input the TIN of the person whose name is on the refund. It generates on all CC RFUND manual refunds issued from modules with the combat zone C Freeze in effect. Declaration of any area, as a combat zone or Qualified Hazardous Duty Area (QHDA), affects certain military personnel who are listed as debtors and are participating in combat zone initiatives. There are no separate property items in the allocation, including EITC. NEVER input a TC 767 to reverse a TC 766 with an OTN. TOP matches people and businesses who owe delinquent debts with money that federal agencies are paying (for example, a tax refund). Both offsets must be subtracted from the original refund amount, TC 840/TC 846, to determine how much of the refund the taxpayers received. See IRM 21.1.3.2.5, Initial Authentication Transfer Procedures/Transfer PIN. Research the CIS archived case files if necessary. When the injured spouse has none of the income or refundable credits, none of the overpayment is the injured spouse's. You will need to have your name, social security number the tax year; filing status and either the adjusted gross income or household income for that year. A TC 898 may consist of two or more offsets to different agencies. Send Letter 3179C, Refund Offset to Treasury Offset Program (TOP) and Injured Spouse Inquiries, to the taxpayer informing them: "We received and processed your Form 8379. These shortcuts are applicable to all Community Property States for TOP debt only, and: The only debt involved is a TOP debt owed by the other spouse or no debt is owed. If the taxpayer replies with the missing information, update the Return Processable Date (RPD), per IRM 21.5.6.4.17(2), I- Freeze, to the date the information is received. The taxpayer will be responsible for the balance due created on the LLC tax periods when the credits are transferred back to the IMF account. See IRM 21.4.6.4.2.11, Netting TOP Offsets and Reversals.
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