21.6.7. Adjusting Individual Tax Accounts

Releasing a freeze on the account, disallowing a claim or inputting RC 054, RC 097, or RC 098

SC 0 generates.

Adjustment is exactly what the taxpayer requests on a claim or duplicate/amended return

Input SC 1.

Adjustment is the result of a CP 08, CP 09, or CP 27

Input SC 1.

Taxpayer replies to a math error notice and SC 3 or 4 do not apply

Input SC 2.

Adjustment is due to new legislation which changes the law too late to update current tax forms or makes an issue effective retroactively

Input SC 3.

Adjustment is the result of an error by an IRS employee

Input SC 4.

Adjustment is a carryback claim

Do not use a SC; SC 5 generates.

Adjustment reflects a math error made by the taxpayer on a claim or duplicate/amended return

Input SC 6.

Adjustment is an offset reversal, TC 897, or TC 766 with an Offset Trace Number (OTN)

Input SC 7.

Adjustment results from taxpayer contact with the Taxpayer Advocate Service (TAS)

Input SC 8.

Adjustment is made by the Underreporter function

Input SC 9.

For the primary spouse is a copy and the filing status is joint

The original return may be filed under the other spouse's TIN.

Have a different year than the return

Refer to IRM 21.6.7.4.2.7, Tax Period Changes.

Is an original (Copy B of Form W-2)

The amended return may be an original return prepared by taxpayer.

Indicates Injured Spouse or the TRNS29 indicates Debtor Master File Case (DMFC)

Work according to the procedures in IRM 21.4.6, Refund Offset.

Is a tentative return (filed prior to due date and lacking sufficient information to process as an original return)

1. Process as an application for an extension to file.

2. Photocopy the return and correspondence indicating an extension request.

3. Write "photocopy" on the copy.

4. Route the copy to Taxpayer Relations with instructions to process as an extension request.

5. Input TC 971 action code (AC) 002 to release the "E-" freeze. See IRM 21.5.1.4.8, Transaction Code 971.

6. Enter "extension request" in the CC FRM77 remarks area.

7. Send the return back to Files.

The correct period

1. Request the original return using CC ESTAB or use the MeF return.

2. Back out the original return from the incorrect tax period. Follow procedures in IRM 21.6.7.4.2.7, Tax Period Changes.

3. Compare the returns for any adjustments.

4. Correct the posted account to include any changes on the duplicate or amended return.

5. Edit the original return for reprocessing to the correct tax period, prepare Form 3893, Re-Entry Document Control, if needed, and forward for processing.

Note: Refer to IRM 21.5.2.4.23, Reprocessing Returns/Documents, for additional information.

An incorrect period

1. Transfer any misapplied payments to the correct tax period.

2. Adjust the correct tax period to include any changes on the duplicate or amended return.

3. Input TC 971 AC 002 on the incorrect tax year to cross-reference the correct tax period. See IRM 21.5.1.4.8, Transaction Code 971.

CAN be resequenced

Follow the instructions in IRM 21.6.2.4.1, Resequencing Accounts.

CANNOT be resequenced

1. Compare the duplicate or amended return with the posted TC 150.

2. Transfer any misapplied payments to the correct TIN. Follow procedures in IRM 21.5.8, Credit Transfers.

3. Adjust the posted tax module to include any changes on the duplicate or amended return, if necessary.

4. Input TC 971 AC 002 on the incorrect TIN to cross-reference the correct TIN; and release the "E–" freeze. See IRM 21.5.1.4.8, Transaction Code 971.

The return is charged out to another area

Contact the area for the return or a complete copy.

The return is not charged out to another area

Request the return a second time.

A second request does not secure the return

1. If unable to secure the return after the two previous requests, input another request as "Special Search" using Form 2275, Records Request, Charge and Recharge. For information on where to fax Form 2275, refer to Who/Where Tab, then click on the Files Contact Listing (the former IAP) to research the fax number of the file location needed.

2. Send a Letter 418C, Amended/Original Return Unavailable; Copy Requested, to the taxpayer.
   Note: Exhaust all in-house means to secure the return before contacting the taxpayer.

3. Suspend the case for 40 days; 70 days for overseas taxpayers that meet international criteria. Refer to IRM 21.8.1.2.14, International Forms Processing, for additional information.

4. If no reply to the Letter 418C, follow procedures in IRM 21.5.3, General Claims Procedures.

The return is a Form 1040 series

1. Circle out in red, all "G" coded marks and/or notations on the return (e.g., "Duplicate," "Copy," "Amended," etc.).

   Exception: If the return was GUF voided/deleted in error by Integrity and Verification Operation (IVO)/Taxpayer Protection Program (TPP), and the IRP data supports the income/withholding shown on the return or the taxpayer provides substantiation, change the received date to the received date of the deleted return.

2. To determine the DLN to be used on the reprocessed return refer to IRM 21.5.2.4.23.3, DLNs Used for Reprocessing Documents.

3. Enter Computer Condition Code (CCC) "3" on refund returns, when the signature and/or Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer, is missing.

   Reminder: CCC "3" generates a TC 570 and a "-R" freeze on the account when the TC 150 posts. The overpayment will not refund until the freeze is released.

Note: Computer Condition Codes (CCCs) are entered in the blank area to the right of “Spouse itemizes on a separate return or you were a dual-status alien”. Refer to Exhibit 3.11.3-4, Computer Condition Codes (CCC), for additional information.

Reminder: For tax year 2018 and subsequent years Form 1040A/1040EZ are obsolete.

4. Process the return as original. Refer to IRM 21.5.1.5.5 Processing/Reprocessing CIS Tax Returns.

5. Input TC 971 AC 002 to indicate the duplicate return is being reprocessed as the original (to post as TC 150). Use the posted TC 976 date as the transaction date.

The return is a Form 1040-X, Amended U.S. Individual Income Tax Return

1. Circle out, in red, the word "Amended" and the "X" in the return title.

2. Prepare a blank Form 1040, U.S. Individual Income Tax Return, or conversion Form 6114, Prior Year and Conversion Form 1040 Edit Sheet, with all relevant tax data.

3. Reprocess the return as an original. Refer to IRM 21.5.2.4.23, Reprocessing Returns/Documents.

4. Input TC 971 AC 002 to indicate the amended return is being reprocessed as the original (to post as TC 150) which will release the E– freeze. Use the posted TC 977 date as the transaction date.

5. Enter CCC "U" when forms or schedules, to support the return entries, are missing.

Original return is in processing

Monitor IDRS until the TC 150 posts. Refer to IRM 21.4.1.4.1.2.6, Error Resolution System (ERS) Status Codes, for additional information when considering ERS involvement.

TC 610 is posted and there is no information on CC FFINQ, the return may be a balance due e-filed return that has not posted, or the original return due date has not expired

Push code the return with your IDRS number. Follow procedures in IRM 21.5.1.4.4.2, TC 930 Push Codes, or IRM 21.5.1.5.7, CIS Push Codes.

TC 610 posted, determine if the original return was rejected by researching CC TRDBV

Follow the procedures in (1) above to process the taxpayer's Form 1040-X as the original

None of the above apply and Form 1040-X is for the current year

1. "G" code the Form 1040-X.

2. Send to Numbering for processing.
   Note: This action allows the "E–" freeze to remain on the module awaiting TC 150 posting.

None of the above apply and Form 1040-X is for a prior year

Follow procedures under (1) above.

TC 971 created the TC 977

1. Correspond with the taxpayer using a Letter 418C, Amended/Original Return Unavailable; Copy Requested, to request copies of the original and duplicate amended return.

2. Suspend case for 40 days; 70 days for overseas taxpayers.

TC 971 did not create the TC 977

1. Request TC 976/977 DLN.

2. If unable to secure the return after the two previous requests, input another request as "Special Search" using Form 2275, Records Request, Charge and Recharge

3. Send a Letter 418C, to the taxpayer to request copies of the original and duplicate amended return.

   Note: Do not send Letter 418C if return is charged out to another area. Contact the area for the return or a complete copy.

4. Suspend case for 40 days; 70 days for overseas taxpayers.

No credits posted on the account

1. Prepare a dummy return.

2. Use the DLN of the TC 976 or 977 to post a TC 150 and release the freeze. See IRM 21.5.2.4.23, Reprocessing Returns/Documents, for information on reprocessing returns.

Credits posted on the account

1. Prepare a dummy return, with a tax liability equal to the credits.

2. Use the DLN of the TC 976 or 977. See IRM 21.5.2.4.23, Reprocessing Returns/Documents, for information on reprocessing returns.

TC 971 created the TC 977

1. Prepare a dummy return with a new DLN to post a TC 150 and release the freeze.

2. Input TC 971 AC 002 to release the E- freeze and prevent the issuance of an erroneous "-A" freeze. See IRM 21.5.2.4.23, Reprocessing Returns/Documents, for information on reprocessing returns.

The return is charged out to another area

Contact the area to determine the actions to be taken.

Unable to secure the return after two CC ESTAB requests

1. Input a third request as a "Special Search" using Form 2275, Records Request, Charge and Recharge. For information on where to fax Form 2275, refer to Who/Where Tab, then click on the Files Contact Listing (the former IAP) to research the fax number of the file location needed.

2. Send a Letter 418C, Amended/Original Return Unavailable; Copy Requested, to the taxpayer.

   Note: Exhaust all in-house means to secure the return before contacting the taxpayer.

3. Suspend the case for 40 days; 70 days for overseas taxpayers.

After research you determine the two returns belong to the same taxpayer

1. Verify the income reported on the two returns using CC IRPTR

2. Determine why the duplicate return was filed.

3. Make adjustments to the return if needed.

Taxpayer is responding to a math error or adding additional information to original return

Input a TC 290 for the amount of the adjustment with the appropriate reference numbers and RCs. See Document 6209 Section 8C - Master File Codes, for additional information. If no change to the return, input a TC 290 .00 to release the -A freeze.

You can determine either the duplicate or the original return belongs to another tax period

Follow the procedures in IRM 21.6.7.4.2.7.2, Correct Year Return Posted First, and IRM 21.6.7.4.2.7.3, Incorrect Year Posted First.

After research you determine that the returns do not belong to the same taxpayer and the case meets Mixed Entity criteria

Follow the procedures in IRM 21.6.2.4.2, Mixed Entity Procedures.

After research you determine that the returns do not belong to the same taxpayer and the case meets identity theft criteria as described in IRM 21.3.4.28, Identity Theft Issues

1. Do not request the tax returns, MFTRA U (Numident), or TRPRT prints

2. Notate your research in the Case Notes section of CIS for example: "Researched CC TRDBV, CC IRPTRL and CC IMFOL".

3. Research account for related cases and documents and link to case

4. Use CC REQ77 to input the TC 971 AC 522 on CC ENMOD. For information on the appropriate tax administration Source Code (SC) refer to Exhibit 25.23.2-10, IMF Only TC 971 AC 522 Tax-Related Identity Theft, Case Status (Initial Claim/Suspicion)

5. Update the program number to 710-40011 and mark the case as statute searched

6. Change the category code to either IDT1 (taxpayer identified identity theft) or IDT3 (IRS identified identity theft)

7. Reassign the case to Identity Theft. See AM Site Specialization Temporary Holding Numbers.

The TC 976 Document Locator Number (DLN) is assigned blocking series 920-929, (indicates a Form 8379, Injured Spouse Allocation, has been filed with the return)

1. Reassign the case to Injured Spouse. See AM Site Specialization Temporary Holding Numbers.

2. Use category DMFC.

3. Update the program code to 97140.

4. Refer to IRM 21.4.6.5.2, Injured Spouse Inquiries, for additional information.

Entity does not match

Search for any other TIN or names entered on the return.

Another TIN is found

1. Use CC NAMES, CC INOLE, or CC ATINQ to locate the correct account.

2. Request CC IMFOL for any newly found TIN.

The call is regarding a refund and this is the first contact

1. Do not complete a Form 4442/e-4442, Inquiry Referral.

2. Advise the caller they might be receiving a letter and they have to complete the attached questionnaire and return it to the address on the notice.

45 days have passed since the first contact and a letter has not been issued to the caller

1. Complete a Form 4442 and fax it to the site with the TRNS36F control or attach to the Correspondence Imaging System (CIS) case if you have CIS access. See IRM 21.3.5.4.2.1.1, Preparing an e-4442, for additional information.

2. Advise the caller they should be receiving a letter within 30 days and they must complete the questionnaire and return it to the address on the notice.

If more than 30 days have passed from the Form 4442 referral date and taxpayer has not received a letter

Taxpayer meets TAS Criteria, refer to the procedures in IRM 21.1.3.18, Taxpayer Advocate Service (TAS) Guidelines, to determine if referral to TAS is appropriate.

The caller states they are a victim of identity theft

1. Complete a Form 4442 and fax it to the site with the TRNS36F control or attach to the CIS case if you have CIS access. See IRM 21.3.5.4.2.1.1, Preparing an e-4442, for additional information.

2. Advise the caller to send a Form 14039, IRS Identity Theft Affidavit.

3. Input a TC 971 AC 522 on CC ENMOD with PNDCLM. For additional information on TC 971 IDT indicators, refer to IRM 25.23.2.4.4, Initial Allegation or Suspicion of Tax-Related Identity Theft - IMF Identity Theft Indicators.

The caller states an incorrect SSN was used on the return

Complete a Form 4442 and fax it to the site with the TRNS36F control or if using Correspondence Imaging System (CIS) notate all remarks in the history section. See IRM 21.3.5.4.2.1.1, Preparing an e-4442.

The case has been closed and the R freeze has not been released

1. Do not release the freeze.

2. Prepare a Form 4442and forward to the area that last had the case.

TC 971 AC 151 with a TC 570 on the account and no open control

Refer to IRM 21.6.7.4.5 (16) (16), Multiple Uses of Taxpayer Identification Numbers - TRNS36F (DUPTIN Filing Condition), for additional information.

Reply indicates the common taxpayer filed both returns

The X-Ref return, filing status (FS) 2/6, is the correct filing

1. Refer to IRM 21.6.1.5.3.1, Married Filing Separate, Single, or Head of Household to Married Filing Joint and Both Taxpayers Previously Filed, and IRM 21.6.1.7.2, Command Code DDBCK, for additional information.

2. If all the income from the FS 1/3/4 return is reported on the FS 2/6 return, back out the FS 1/3/4 return on the common taxpayer SSN. If refund was issued on the FS 1/3/4, move the refund to the joint return. Notify the taxpayer of the action taken on the account by using a Letter 673C.

3. If any of the income on the FS 1/3/4 return was not reported on the FS 2/6 return, refer the case to Exam for deficiency procedures, see note above. Do not back out the FS 1/3/4 return.

4. If the difference in net tax liability is below the threshold for referral to Exam for deficiency procedures, back out the FS 1/3/4 return. Use the Letter 673C to notify the taxpayer of the actions taken on the account and inform the taxpayer that a Form 1040-X must be filed if changes are needed to the FS 2/6 return.

Reply indicates the common taxpayer filed both returns

1. The DUPTIN return (FS 1/3/4) is the correct filing and was filed prior to the due date or

2. filed after the due date and the common taxpayer has provided documentation to support the marriage was not legal for federal tax purposes, refer to IRM 21.6.1.5.7, Married Filing Jointly or Married Filing Separately is Invalid or Filed with Incorrect Status, for additional information.

1. Refer the primary taxpayer on the joint return to Exam (CAT-A CP 36F) for deficiency procedures, per note, above.

   Note: If the primary taxpayer on the joint return filed an amended return which was disallowed, reconsider/re-examine the amended return based on the action being taken on the common taxpayer. For example, if a Form 1040-X filed by the primary on the FS 2 return to change from FS 2 to FS 3 was disallowed for not being timely on the election.

2. If the difference in net tax liability is below the threshold for referral to Exam for deficiency procedures, change the filing status on the joint return to married filing separate unless additional information supports another filing status. Remove the name and TIN of the common taxpayer from the account. Do not change any tax or credits on the return.

3. Release the refund on the FS 1/3/4 using a Posting Delay Code (PDC).

4. If the refundable or non-refundable credits on the joint return belong to the common taxpayer, erroneous refund procedures should be researched. Refer to IRM 21.4.5.5, Erroneous Refund Categories and Procedures, for additional information. For a list of refundable and non-refundable credits refer to IRM 21.6.3.4.1, Non-Refundable Credit Procedures, and IRM 21.6.3.4.2, Refundable Credits.

5. Send a letter to the primary taxpayer on the joint return stating the filing status was changed because our records indicate the incorrect filing status was used on the return. Inform the taxpayer a Form 1040-X may need to be filed.

   Caution: In the letter, do not inform the primary taxpayer how the information was received to change the joint return.

Reply indicates the common taxpayer filed both returns

The DUPTIN return (FS 1/3/4) is the correct filing but was filed after the due date

1. Compare return information to verify if all income reported on the DUPTIN return was reported on the joint return.

2. If all income was reported, disallow the claim in full, refer to IRM 21.6.1.5.5, Married Filing Joint to Married Filing Separate, Single, or Head of Household Procedures, and send Letter 105C, Claim Disallowed. Back out the DUPTIN return.

3. If not all income was reported, the joint return must be assessed using deficiency procedures. Refer the case to Exam as a "CAT-A CP 36F", see note above.

4. If the difference in net tax liability is below the threshold for referral to Exam for deficiency procedures, back out the FS 1/3/4 return. If a refund was issued on the FS 1/3/4, move the refund to the joint return. For additional information refer to IRM 21.5.2.4.23.10, Moving Refunds. Notify the taxpayer by using the Letter 105C, the FS 1/3/4 was not accepted.

Reply indicates common taxpayer did not file one of the returns

The FS 2/6 return is not valid

1. Follow procedures in IRM 21.6.1.5.7, Married Filing Jointly or Married Filing Separately is Invalid or Filed with Incorrect Status, (3), if the taxpayer indicates fraud or forgery.

2. If the taxpayer does not indicate fraud or forgery and does not meet the criteria for Exam as stated in note above, release the refund on the FS 1/3/4 return using a PDC.

3. Change the filing status on the joint return to married filing separate unless additional information supports another filing status. Remove the name and TIN of the common taxpayer from the account. Do not change any tax or credits on the return. If the credits on the joint return belong to the secondary taxpayer, erroneous refund procedures may need to be followed. Refer to IRM 21.4.5.5, Erroneous Refund Categories and Procedures, for additional information. For a list of refundable and non-refundable credits refer to IRM 21.6.3.4.1, Non-Refundable Credit Procedures, and IRM 21.6.3.4.2, Refundable Credits.

4. If any of the FS 1/3/4 refund was applied to the joint return due to a balance due return, reverse the offsets.

5. Send a letter to the primary taxpayer on the joint return stating the filing status was changed because our records indicate the incorrect filing status was used on the return. Inform the taxpayer that a Form 1040-X may need to be filed.

   Caution: In the letter, do not inform the primary taxpayer how the information was received to change the joint return.

Reply indicates common taxpayer did not file the FS 1/3/4 but the return matches IRP data

The income on the FS 1/3/4 return matches the information on CC IRPTR.

1. Send a letter advising the taxpayer to file a Form 14039, Identity Theft Affidavit, and return it within 40 days. Leave the control base open.

   • If Form 14039 is received within 40 days indicating identity theft, follow the procedures in IRM 21.6.7.4.4.1, TRNS36 - Control, and route the case to identity theft.

2. If the Form 14039 is not received within 40 days, follow the procedures below:

   • Compare the data on the FS 1/3/4 return to the joint return to verify income/withholding is reported

   • If all income is reported, back out the FS 1/3/4 and notify the taxpayer of all actions taken by using a Letter 673C, Duplicate Returns Filed; Adjustment or Refund Explained.

3. If all income on the FS 1/3/4 return was not reported on the FS 2/6 return, refer the case to Exam for deficiency procedures, see note above. Do not back out the FS 1/3/4 return.

4. If the difference in net tax liability is below the threshold for referral to Exam for deficiency procedures, back out the return. If refund was issued on the FS 1/3/4, move the refund to the joint return. Use the Letter 673C, Duplicate Returns Filed; Adjustment or Refund Explained, to notify the taxpayer of the actions taken on the account and inform the taxpayer that a Form 1040-X must be filed if changes are needed to the FS 2/6 return.

Reply indicates common taxpayer did not file one of the returns

The taxpayer has no knowledge of one of the returns. It appears 2 taxpayers are using the same SSN and may be a victim of ID Theft.

Transfer the case to identity theft by following the procedures in IRM 21.6.7.4.4.1, TRNS36 - Control.

No reply from common taxpayer, or no signature on Letter 31C

Return was timely filed

1. Compare the data on the FS 1/3/4 return to the joint return to verify income/withholding is reported

2. If all income is reported, back out the FS 1/3/4 and notify the taxpayer of the actions taken on the account by sending the Letter 673C, Duplicate Returns Filed; Adjustment or Refund Explained.

3. If any of the income on the FS 1/3/4 return was not reported on the FS 2/6 return, refer the case to Exam for deficiency procedures; see note above. Do not back out the FS 1/3/4 return.

4. If the difference in net tax liability is below the threshold for referral to Exam for deficiency procedures:

   • Change the filing status on the FS 2/6 to FS 1/3/4.

   • Remove the name and TIN of the common taxpayer from the joint return. Do not change any tax or credits on the return.

   • Send a letter to the primary taxpayer stating the filing status has been changed due to information received and a Form 1040-X may need to be filed.

   • Release the refund on the FS 1/3/4 using a PDC.

No reply from common taxpayer, or no signature on Letter 31C

Return was filed after the due date

1. Compare the data on the FS 1/3/4 return to the joint return to verify income/withholding is reported

2. If all the income is reported, back out the FS 1/3/4 and notify the taxpayer of the actions taken on the account by sending the Letter 673C, Duplicate Returns Filed; Adjustment or Refund Explained.

3. If all income was not reported, back out the FS 1/3/4 return completely, and send the Letter 916C, Claim Incomplete for Processing; No Consideration.

Note: If the primary taxpayer on the joint return filed an amended return which was disallowed, reconsider/re-examine the amended return. For example, if a Form 1040-X filed by the primary on the FS 2 return to change from FS 2 to FS 3 was disallowed for not being timely on the election.

Income is reported on the FS 2/6

1. Back out the FS 1/3/4. Refer to IRM 21.6.1.5.3.1, Married Filing Separate, Single, or Head of Household to Married Filing Joint and Both Taxpayers Previously Filed, and IRM 21.6.1.7.2, Command Code DDBCK, for additional information.

2. Send Letter 673C, informing the taxpayer of the actions taken on the account.

Income is not reported on the FS 2/6

1. Thorough research should be completed to determine the taxpayer’s intent.

2. Research tax years prior and after the tax year of the case.

3. If the income on the FS 1/3/4 return was not reported on the FS 2/6 return, refer the case to Exam for deficiency procedures; see note above. Do not back out the FS 1/3/4 return.

4. If the difference in net tax liability is below the threshold for referral to Exam for deficiency procedures, and the taxpayer has made payments on the FS 1/3/4:

   • Change the filing status on the FS 2/6 to FS 1/3/4.

   • Remove the name and TIN of the common taxpayer from the joint return. Do not change any tax or credits on the return.

   • Release the refund on the FS 1/3/4 return using a PDC.

   • Send a letter to the primary taxpayer stating the filing status has been changed due to information received and a Form 1040-X may need to be filed.

   • Do not back out the FS 1/3/4 return.

Reply indicates the common taxpayer filed both returns

FS 2/6 DUPTIN return is the legally valid filing and the statute for filing a joint election has not expired

1. Refer to IRM 21.6.1.5.3.1, Married Filing Separate, Single, or Head of Household to Married Filing Joint and Both Taxpayers Previously Filed, and IRM 21.6.1.7.2, Command Code DDBCK, for additional information.

2. Back out FS 1/3/4 return on the common taxpayer SSN if all the income is reported on the joint return. If the taxpayer received a refund move the refund to the joint return. Refer to IRM 21.5.2.4.23.10, Moving Refunds, for additional information. Notify the taxpayer of the action taken on the account by using a Letter 673C, Duplicate Returns Filed; Adjustment or Refund Explained. Release the refund on the FS2 return using a Posting Delay Code (PDC) if applicable, refer toIRM 21.5.8.4.6, Posting Delay Code.

3. If income on FS 1/3/4 return was not reported on the FS 2/6 return, refer the case to Exam for deficiency procedures per note above. Do not back out the 1/3/4 return.

4. If the difference in net tax liability is below the threshold for referral to Exam for deficiency procedures, back out the FS 1/3/4, and move the refund to the joint return. Notify the taxpayer by using a Letter 673C that a Form 1040-X should be filed if changes are needed to the FS 2/6 return. Release the refund using a PDC if applicable.

Reply indicates common taxpayer filed both returns

The FS 2/6 DUPTIN return is the legally valid filing, but was filed after the statute for filing a joint election expired, and one taxpayer has not previously filed

1. Compare the income on the joint return to the income on the separate return. If there is income on the joint not reported on the FS 1/3/4, verify if it meets 25 percent or more omission and ≡ ≡ ≡ ≡ or more net tax increase/decrease. If it does meet the 25 percent omission and the ≡ ≡ ≡ ≡ ≡ ≡ or more refer to Exam.

2. If the joint return meets the threshold for deficiency procedures per note above, refer to Exam (CAT-A CP36F).

3. If the difference in net tax liability is below the threshold for referral to Exam for deficiency procedures, change the filing status on the joint return to married filing separate, unless additional information supports another filing status. Remove the name and TIN of the common taxpayer from the return. Do not change any tax or credits on the return. Release refund using a PDC.

4. Send the Letter 105C informing the primary taxpayer that the IRS has accepted the return, but has changed the taxpayer’ s filing status from MFJ to MFS because the time to make the joint election has expired. Refer to IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures, for additional information. Inform the taxpayer that a Form 1040-X may need to be filed. The refund should be released on the primary taxpayers account.

Caution: In the letter, do not inform the primary taxpayer how the information was received to change the joint return.

Reply indicates the common taxpayer filed both returns.

The FS 1/3/4 X-Ref return is the legally valid return for the common taxpayer, and the FS 2/6 return is void for the common taxpayer, but a valid tax return for the primary taxpayer(but shows an incorrect filing status)

1. Refer the primary taxpayer to Exam (CAT-A CP36F) for deficiency procedures per note above.

2. If the difference in net tax liability is below the threshold for referral to Exam for deficiency procedures, change the filing status on the joint return to married filing separate unless additional information supports another filing status. Remove the name and TIN of the common taxpayer from the joint return. Do not change any tax or credits on the return. Release the refund on the FS 2 return using a PDC.

3. Send a letter to the primary taxpayer on the joint return notifying the filing status was changed because our records indicate the incorrect filing status was used on the return. Inform the taxpayer that a Form 1040-X may need to be filed. Caution: In the letter, do not inform the primary taxpayer how the information was received to change the joint return.

4. When changing a joint return to a FS 3, research the account to verify if any offsets from the spouse’s returns were made to pay on the balance due. If there are offsets, reverse and place back on the spouse’s account to refund.

Reply indicates the common taxpayer did not file the FS 1/3/4 return

It appears multiple individuals are using the same TIN

Refer to IRM 21.6.2.4.2, Mixed Entity Procedures.

Reply indicates common taxpayer did not file the FS 1/3/4 return

The income on the FS 1/3/4 return matches the information on CC IRPTR

1. Send a letter advising the taxpayer to file a Form 14039, Identity Theft Affidavit, and return it within 40 days. Leave the control base open.

   • If Form 14039 is received within 40 days indicating identity theft, follow the procedures in IRM 21.6.7.4.4.1 (11) (11), TRNS36 - Control, and route the case to identity theft.

2. If the Form 14039 is not received within 40 days, then follow the procedures below:

   • Compare the data on the FS 1/3/4 return to the joint return to verify income/withholding is reported

   • If all income is reported, back out the FS 1/3/4 and move the refund, if present, to the joint return. Notify the taxpayer of the actions taken on the account by using a Letter 673C. Release refund on FS 2 return using a PDC if applicable.

3. If all income on the FS 1/3/4 return was not reported on the FS 2/6 return, refer the case to Exam for deficiency procedures; see note above. Do not back out the FS 1/3/4 return

4. If the difference in net tax liability is below the threshold for referral to Exam for deficiency procedures, back out the FS 1/3/4 and move the refund if present to the joint return. Use the Letter 673C to notify the taxpayer of the actions taken on the account and inform the taxpayer that a Form 1040-X must be filed if changes are needed to the FS 2/6 return. Release the refund on the FS 2 return using a PDC if applicable.

Reply indicates the common taxpayer did not file the DUPTIN FS 2/6 return

The FS 2/6 return is not valid

1. Follow procedures in IRM 21.6.1.5.7, Married Filing Jointly or Married Filing Separately is Invalid or Filed with Incorrect Status, (3), if the taxpayer indicates fraud or forgery.

2. If the taxpayer does not indicate fraud or forgery, and/or the difference in net tax liability is below the threshold for referral to Exam for deficiency procedures, as stated in note above, change the filing status on the joint return to married filing separate unless additional information supports another filing status. Remove the name and TIN from the joint return. Do not change any tax or credits on the return.

3. When changing a joint return to a FS 3, research the account to verify if any offsets from the spouse’s returns were made to pay on the balance due. If there are offsets, reverse and place back on the spouse’s account to refund.

4. Release the refund on the FS 2/6 unless the refund statute has expired using a PDC. If the statute has expired, transfer the refund to excess.

5. Send a letter to the primary taxpayer on the joint return stating the filing status was changed because our records indicate the incorrect filing status on the return. Inform the taxpayer that a Form 1040-X may need to be filed.

   Caution: In the letter, do not inform the primary taxpayer how the information was received to change the joint return.

Reply indicates the common taxpayer did not file the DUPTIN FS 2/6 return

The taxpayer has no knowledge of the FS 2/6 return. It appears 2 taxpayers are using the same SSN and could be a victim of ID Theft.

Transfer the case to identity theft by following the procedures in IRM 21.6.7.4.4.1, TRNS36 - Control.

No reply from common taxpayer or no signature on Letter 31C

The statute has or has not expired

1. Compare the income on the joint return to the income on the separate return.

2. If the common taxpayer’s income on the joint return was not reported on separate return, refer the case to Exam for deficiency procedures per note above.

3. If the difference in net tax liability is below the threshold for referral to Exam for deficiency procedures, change the filing status on the joint return to married filing separate unless additional information supports another filing status. Remove the common taxpayer’s name and TIN from the joint return. Do not change any tax or credits on the return.

4. If the difference in net tax liability is below the threshold for referral to Exam for deficiency procedures, release the refund.

5. Send a letter to the primary taxpayer on the joint return stating the filing status was changed because our records indicate the incorrect filing status was used on the return. Inform the taxpayer that a Form 1040-X may need to be filed.

   Caution: In the letter, do not inform the primary taxpayer how the information was received to change the joint return.

FS on DUPTIN return is 2/6

FS on the X-Ref return is 2/6 and the taxpayers on both returns are the same (e.g., John and Mary Birchtree; Mary and John Birchtree)

1. Compare figures on both returns to verify they are the same.

2. If same, back out DUPTIN return.

3. If figures are not the same, refer to IRM 21.6.7.4.13, Return for Each Form W-2 and/or Form 1099, to adjust the filing that posted first to include any unclaimed income, withholding, etc. shown on the second return.

4. When comparing returns remember to check for additional exemptions. If needed, adjust the exemptions on the account.

5. Input adjustment on account where second return posted to back it out; use Hold Code 4. For additional information on inputting adjustments, refer to IRM 21.6.7.4, Adjusting Individual Tax Accounts Procedures.

6. Notify the taxpayer whose information is changed of the actions taken on the account by sending the Letter 673C, Duplicate Returns Filed; Adjustment or Refund Explained.

FS on DUPTIN return is 2/6

FS on the X-Ref return is 2/6 and common taxpayer on both returns but with different spouses. (e.g., John and Mary Birchtree; Mary Birchtree and Bob Greenleaf)

1. Correspond with the common taxpayer to determine if taxpayer filed both returns. Send Letter 31C.

2. Send Letter 31C to both addresses as shown on the DUPTIN and the X-Ref returns, if different. Address correspondence to the common taxpayer only. Send correspondence under the common taxpayers SSN.

3. If the taxpayer is due a refund, advise the refund is held until the matter is resolved.

4. Suspend the case for 40 days; 70 days for overseas taxpayers.

Reply indicates common taxpayer did not file one of the returns

One of the returns is not valid. The common taxpayer has a different spouse on each return

1. Follow procedures in IRM 21.6.1.5.7, Married Filing Jointly or Married Filing Separately is Invalid or Filed with Incorrect Status, (3), if the taxpayer indicates fraud or forgery.

   Caution: If the additional assessment does not meet the deficiency criteria for fraud or forgery, follow #3 below.

2. If the taxpayer does not indicate fraud or forgery, refer the primary taxpayer on the invalid return to Exam for deficiency procedures per (1) above.

3. If the difference in net tax liability is below the threshold for referral to Exam for deficiency procedures, change the filing status on the joint return to married filing separate, unless the additional information supports another filing status. Remove the name and TIN of the common taxpayer from the return. Do not change any tax or credits on the return. Release the refund using a posting delay code.

4. Send a letter to the primary taxpayer on the joint return that the common taxpayer stated they did not file, notifying them that our records indicate the incorrect filing status was used on the return. Inform the taxpayer that a Form 1040-X may need to be filed.

   Caution: In the letter, do not inform the taxpayer how the information was received to change the joint return.

No reply from common taxpayer or no signature on Letter 31C

Research indicates a mixed entity

Follow procedures in IRM 21.6.2, Adjusting TIN-Related Problems. All cases determined to be Mixed Entity (MXEN) are worked by employees who work duplicate filings.

No reply from common taxpayer or no signature on Letter 31C and IDRS history indicates the correct spouse

Research indicates the common taxpayer on both returns is the same person

Refer both joint returns to Exam. Do not take into consideration the deficiency procedures in (1).

Reply indicates common taxpayer did not file one of the returns

The taxpayer has no knowledge of one of the returns. It appears two taxpayers are using the same SSN and may be a victim of ID Theft.

Follow the procedures in IRM 21.6.7.4.4.1, TRNS36 - Control, to transfer the case to an identity theft specialized site.

Reply indicates the common taxpayer filed both returns

The X-Ref return, FS 2/6, is the correct filing

Take no action on EIP

Reply indicates the common taxpayer filed both returns

The DUPTIN Return (FS 1/3/4) is the correct filing and was filed prior to the due date

Take no action on EIP

Reply indicates the common taxpayer did not file the FS 1/3/4 or common taxpayer did not file FS 2/6 due to multiple individuals using the same TIN

It appears multiple individuals are using the same TIN

Follow IRM 21.6.2.4.7.2, Economic Impact Payment (EIP) - Manual Adjustments - General Information, to balance the account

Reply indicates common taxpayer did not file the FS 2/6 return

The FS 2/6 return should not stand

• Review the TC 971 AC 199/195 amount shown for each TIN on CC IMFOLE. The TC 971 AC 199 is systemically generated when EIP is decreased. The TC 971 AC 195 must be input manually when making a positive adjustment to EIP using HC 4.

• Reverse the entire EIP adjustment on the FS 2/6 return using the applicable reference numbers and reason codes from IRM 21.6.3.4.2.13.1(4), Economic Impact Payments - Account Information. This creates a systemic TC 971 AC 199 in the entity.

• Input a second adjustment under the TIN for the primary on the FS 2/6 return. Make a positive adjustment to EIP with HC 4, using the same reason codes, CRNs, and dollar amounts.

No reply from common taxpayer

Take no action on EIP

Reply indicates the common taxpayer filed both returns

FS 2/6 DUPTIN return is correct

Take no action on EIP

Reply indicates the common taxpayer filed both returns

The FS 1/3/4 X-Ref return is the correct filing and was filed prior to the due date.

Take no action on EIP

Reply indicates the common taxpayer did not file the FS 1/3/4 return or common taxpayer did not file FS 2/6 due to multiple individuals using the same TIN

It appears multiple individuals are using the same TIN

Refer to IRM 21.6.2.4.7.2, Economic Impact Payment (EIP) and Multiple Taxpayers Using the Same TIN-Manual Adjustments- General Information, for information on how to resolve these cases

Reply indicates the common taxpayer did not file the DUPTIN FS 2/6 return

The FS 1/3/4 filing should stand

• Review the TC 971 AC 199/195 amount shown for each TIN on CC IMFOLE. The TC 971 AC 199 is systemically generated when EIP is decreased. The TC 971 AC 195 must be input manually when making a positive adjustment to EIP using HC 4.

• Reverse the entire EIP adjustment on the FS 2/6 return using the reference numbers and reason codes from IRM 21.6.3.4.2.13.1 (4), Economic Impact Payments - Account Information. This creates a systemic TC 971 AC 199 in the entity.

• Input a second adjustment under the TIN for the primary on the FS 2/6 return. Make a positive adjustment to EIP with HC 4, using the same reason codes, CRNs, and dollar amounts.

No reply from common taxpayer

Take no action on EIP

FS on DUPTIN return is 2/6

FS on the X-Ref return is 2/6 and taxpayers on both returns are the same (e.g. John and Mary Cypress; Mary & John Cypress)

Take no action on the EIP

FS on DUPTIN return is 2/6

FS on the X-Ref return is 2/6 and common taxpayers on both returns but with different spouses (e.g. John and Mary Cypress; Mary Cypress & Robert Maple

Follow procedures below based on taxpayer response or lack of response

No reply from common taxpayer

Take no action on EIP

Reply indicates common taxpayer did not file one of the returns

• One of the returns is not valid
  OR

• If taxpayer has no knowledge of one of the returns and it appears 2 taxpayers are using the same SSN

• Review the TC 971 AC 199/195 amount shown for each TIN on CC IMFOLE. The TC 971 AC 199 is systemically generated when EIP is decreased. The TC 971 AC 195 must be input manually when making a positive adjustment to EIP using HC 4.

• If first bullet from “AND” column, then reverse the entire EIP adjustment on the invalid FS 2/6 return using the reference numbers and reason codes from IRM 21.6.3.4.2.13.1(4), Economic Impact Payments - Account Information. This creates a systemic TC 971 AC 199 in the entity.

• Make a positive adjustment to EIP with HC 4, using the same reason codes, CRNs, and dollar amounts.

• If a refund was issued, follow procedures in IRM 21.5.2.4.23.10, Moving Refunds, to transfer the refund information to the correct account.
  OR

• If second bullet from “AND” column then follow Refer to IRM 21.6.2.4.7.2, Economic Impact Payment (EIP) and Multiple Taxpayers Using the Same TIN- Manual Adjustments- General Information, for information on how to resolve the EIP for these cases.

This is a valid additional assessment

Input a TC 290 to release the "-A" freeze.

This is an erroneous assessment

Input a TC 291 to abate the assessment.

The taxpayer files a Sch. D.

1. Start with the AGI from Form 1040/ Form 1040-NR.

2. Subtract the standard/itemized deductions from Form 1040/ 1040-NR.

3. Subtract the “net capital gain”- which is the smaller of Schedule D, line 15 or line 16, unless either line 15 or 16 is blank or a loss, in which case the net capital gain is $0.00.

4. Subtract any qualified dividends from Form 1040/ Form 1040-NR.

5. Multiply the resulting amounts by 20 percent (.20)- this is the taxable income limitation.

The taxpayer does not file a Sch. D.

1. Start with the AGI from Form 1040/Form 1040-NR.

2. Subtract the standard/itemized deduction from Form 1040/ 1040-NR.

3. Subtract the “net capital gain”- which includes any positive amounts reported as capital gain distributions from Form 1040/ Form 1040-NR.

4. Subtract any qualified dividends from Form 1040/ Form 1040-NR.

5. Multiply the resulting amounts by 20 percent (.20)- this is the taxable income limitation.

The taxpayer contacts the Service to correct the math error.

• Review the account to ensure the necessary information (as described above) has been included.

• If you cannot verify the information, request the taxpayer to provide the supporting documentation.

• Once verified, accept the taxpayer’s figures and adjust accordingly.

• For additional information see IRM 21.5.4.5.3, Processing Responses to Math Error Notices.

The taxpayer files a Form 1040X claiming the DPAD deduction.

• Review the account to ensure the necessary information ( as described above) has been included.

• If you cannot verify the information, send the appropriate letter requesting the missing information.

• Once verified, accept the taxpayer’s figures and adjust accordingly.

• For additional information see IRM 21.5.4.5.3, Processing Responses to Math Error Notices.