Correct as needed. The American Rescue Plan Act (ARPA) waived the repayment requirement for tax year 2020. For either situation (f) or (g) above, advise the taxpayer that the Form 8379 cannot be processed when there is a balance due or no overpayment exists on the account. The above results in generating 2 refunds (TC 846) and the appropriate Bypass Indicator (BPI) will automatically be set with the input of the RN 808/RN 810 or RN 809/RN 811. The Treasury Offset Program (TOP) collects past-due (delinquent) debts (for example, child support payments) that people owe to state and federal agencies. Adjust the account to put the account in debit balance when processing a full back-out or adjust to the good return if one is present on the account, use HC 4. See IRM 21.4.6.5.12.2, Manual Reversal of TOP Offset. After December 31, 2020, EIP 1 could no longer be issued and had to be claimed on a 2020 tax return as RRC. If the Premium Tax Credit (PTC) is claimed and the PTC is split 50/50 you do not need to complete the Injured Spouse Allocation Worksheet. If the allocation using the above formula results in no EITC for both spouses due to a loss claimed on the joint return, the EITC is allocated to the spouse claiming the loss, since it is that loss that qualified the joint account for the EITC. Eligible for TOP offset for child support only. Using the total reversal amount, the FROM date will be the posted TC 776 credit interest to date DB-CR-INT-TO-DT> found on TXMOD. Be sure to use the correct OTN for each adjustment. If OTN does not match, input a TC 767 with the invalid OTN, and a TC 766 with the correct OTN. If there is a TC 150 on the correct year, adjust and work the return/form for the correct tax period. Be sure to include BMF screens when there is a X-REF EIN. You do not need to complete the Injured Spouse Allocation Worksheet when one of the shortcut methods apply. The taxpayer may not receive any refund at all if the whole amount is offset. Legislative & Public Affairs Office Taxpayers divorce. Input a TC 971, AC 036, via CC REQ77, on the credit module to identify that an offset liability was bypassed prior to the TC 840 manual refund. TOP offsets must be reversed for condition 2 scrambled SSN cases. Injured spouses MFS tax Both spouses' MFS tax. For offsets involving child support, see IRM 21.4.6.4.2.4, Child Support TOP Offsets. Add two days to the date of Input to allow for the two-day suspense for review. Inform the taxpayer that a note has been added to their account and to allow 30 days to process. If the injured spouse explains that the agency issued a refund and the TC 841 satisfies a debit balance in the module, no further action is necessary. If you think you qualify, determine which agency withheld your tax return. The general timeframe for filing a claim for refund is 3 years from the date the return was filed or 2 years from the date the tax was paid, whichever expires later. See IRM 21.4.6.5.23.2, UPC 137 or UPC 437. Step 4: Apply For the Tax Refund Offset Reversal. This is needed on Form 5792, Request for IDRS Generated Refund (IGR), and Form 3753, Manual Refund Posting Voucher. A manual refund is necessary when the injured spouse's portion of the joint overpayment will offset to a Federal tax debt for which he/she is not liable. Therefore, discrepancies may arise from one cycle to the next and IRS may not be aware of a TOP debt. Thus, the injured spouses portion of the joint return overpayment, calculated as a percentage, is .44210 ($4,200 $9,500). Withholding credits must be verified and allocated to the spouse to whom they belong. When a manual refund is required, Form 5792 must be processed no later than the 42nd day when the 43rd day is a work-day. Only change your control base to DMFT when the primary and secondary debt indicators are N/I, I/N or I/I unless it meets the exception above. Request the original return from Files, if it was not received with Form 8379 and the TC 150 is blocked 92. Consider all unpostable conditions before reversing TOP offsets. Process the case regardless of the AIMS status. Levy proceeds which do not create an overpayment and are within two years of making the levy, must meet the criteria in IRC 6343(d). Form 8379 Allocation worksheets are located on SERP under Local/Sites/Other. If your unit or office processes several of these refunds daily, the work leader will contact Bureau of the Fiscal Service to research each of the cases at the same time, thereby reducing the time spent encountering busy signals or waiting for the next available CSR. If the taxpayers filing status is other than MFJ and filed a zero or $1 return, there is a credit on the account release the credit. When a taxpayer wants to claim innocent spouse relief, but mistakenly uses Form 8379, Injured Spouse Allocation, return the Form 8379 to the taxpayer. We cannot properly calculate their entitlement to injured spouse allocations (for federal tax purposes) without knowing whether the state community property laws apply. Follow the procedures below to reverse a tax offset when a clear determination is made that a portion of the injured spouse's refund has been applied to a tax liability for which he/she is not responsible. Refund amount claimed on your 2022 California tax return: 540 2EZ, line 32; 540, line 99; 540NR, line 103; Obtaining taxpayer account information is the privilege of individual taxpayers or their authorized representatives. This includes manual refunds from joint accounts issued in one name only. A TOP offset appears on the module as: TC 898 or TC 971 AC 598 (manual input of TOP offset record) with an Offset Trace Number (OTN), an offset amount, and a debtor-TIN field, if the offset is for a secondary spouse, OTN - Starting with 1 indicates primary taxpayer debt, OTN - Starting with 2 indicates secondary taxpayer debt. Typically, a mixed entity case involves the filing of returns by both the owner of the TIN and the non-owner. Once the stimulus payment offsets to pay a Federal tax debt or TOP debt, it loses its identity as a stimulus payment. If the tax year has ended, input a credit transfer, TC 830/TC 710, using CC ADD48. If the TAC or designee agrees with the OBR, he/she must initial in the remarks section of the manual refund form and forward the OBR to the Accounting Function. For ID Theft cases with fraudulent returns follow procedures found in, 4) Processing any case other than injured spouse, The posted offset is to Agency Code 01 and is more than 5 months old, 5) Processing any case other than injured spouse, The posted offset is to Agency Code 01 and is 5 months old or less, Reverse the offset(s).For ID Theft cases with fraudulent returns follow procedures found in. (W) Failed Banks/Litigations Freeze: Complete thorough research of the account and modules to identify the -W (Litigations) freeze status. TC 971 AC 126 (Agency Code 1 or 2 for 2012-2015). IRS determined that Earned Income Tax Credit (EITC) must be allocated without regard for community property laws. Use activity code IS-PN-ERS. Bureau of the Fiscal Service, which administers the Treasury Offset Program, controls the offset of debts under IRC 6402(c)-(f). Send Form 4442 /e4442, Inquiry Referral, to the CSR working the case. When a taxpayer wants a Form 8379, Injured Spouse Allocation, but mistakenly uses Form 8857, Request for Innocent Spouse Relief, return the Form 8857 to the taxpayer, advising him/her of the mistake. TOP offsets on condition 1 scrambled SSN cases are reversed only if the wrong taxpayers money offset to the debt. If you don't get a notice, you'll need to call: Bureau of Fiscal Services at 800-304-3107. TC 971 AC 599 with a Type 1,2,3 or 4, represents a manual input of an erroneously deleted TC 899 Type 1,2,3 or 4 transaction. TC 898 ($1,500.00) TC 899 types 2 ($45.00) +TC 899 type 4 ($45.00), TC 899 type 1 ($1,500.00)= 0, TC 898 or TC 971 AC 598 TC 899 or TC 971 AC 599 types 1, 2, or 3 TC 766s + TC 899 or TC 971 AC 599 type 4 + TC 767s = Net TOP Offset Amount, Processing Form 8379, Injured Spouse Allocation, for Agency Code 1 or 2, The posted offset(s) is more than 5 months old for Agency Code 2, The posted offset(s) is 5 months old or less for Agency Code 2, The posted offset is more than 5 months old for Agency Code 1, The posted offset is 5 months old or less for Agency Code 1. If AM accepts the resubmitted allocation it is unnecessary to forward the case to Appeals. The loan guarantee: Can cover up to 95% of the loan if there is a default for up to 7 years. Do not input TC 767 with OTN to correct a TC 766. BPI (3) generates on all systemic and manual refunds issued from an individual NMF account, preventing TOP offset. The amount of any refund that will be issued which may be subject to offset for TOP debts he/she owes. 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. Non-Community Property Allocation Shortcuts: When the injured spouse earned all the income and allocates all the credits to themselves. Also, the refund name line may not match the debtor's name in TOP, allowing a refund to be issued despite the presence of a TOP debt. See IRM 21.4.6.5.5, Hardship Refund Request, and IRM 21.4.6.5.11.1, Offset Bypass Refund (OBR). If the taxpayer qualifies to use their 2007 earned income, you will determine the EITC allocation based on the 2007 income not the 2008 income. If the return was an ELF return, do not forward a referral. Before reversing child support (Agency Code 1 or 2) offset, see IRM 21.4.6.4.2.4, Child Support TOP Offsets. $586.00 dated 03/06/2012 (TC 846 $1,586.00 TC 898 $1,000.00), $550.00 to the injured spouse dated 04/19/2012, $450.00 from the agency that received the offset. See IRM 21.4.6.4.2.11, Netting TOP Offsets and Reversals. When working Injured Spouse Allocation Cases involving math errors with First-Time Homebuyer Credit, follow procedures in IRM 21.4.6.5.8.3(17)(c), Processing of Form 8379 Injured Spouse Allocation, and IRM 21.5.4.5.7, Math Error with Injured Spouse. The availability date of the overpayment is determined by the payment(s) and/or credit(s) of which it is comprised. Review procedures in IRM 11.3.1, Introduction to Disclosure, for official disclosure information. See IRM 21.4.6.5.15, Bankruptcy Cases Involving Tax Offset, for instructions. Your Lead Tax Examiner must contact Bureau of the Fiscal Service at 8003043107, TTD 8662970517 Monday through Friday from 7:30 AM to 5:00 PM CST, to determine if a TOP liability exists for the primary TIN or the secondary TIN, if it is a joint return. Contact the TOP Liaison at , if needed. Remarks must also reflect which tax module the TC 520 is on and No TC 521 is pending. Audience: The primary users of the IRM are all IRS employees in Business Operating Divisions (BODs) who are in contact with taxpayers by telephone, correspondence, or in person. Handle each OBR on a case by-case basis. To reverse TOP offsets for mixed entity cases: Research to determine which taxpayer's refund was offset. Advise the taxpayer they can either fax or mail the missing information. In these instances, you will need to manually transfer the credit to the secondary taxpayer's tax debt. For telephone inquiries, see IRM 21.4.6.5.1 Taxpayer Inquiries on TOP Offsets. After all adjustments have posted, attempt to merge the accounts again. Advise the taxpayer to allow 30 days to process. The Recovery Rebate Credit (RRC) is a one-time benefit for people who didn't receive the full economic stimulus payment in 2008 and whose circumstances may have changed, making them eligible now for some or all the unpaid portion. All TOP reversals must be input to the TIN from which the offset occurred, so that the correct debtors account can be updated with the agency. Therefore, do not disclose this information to the taxpayer. The presence of a -Y freeze on one or more of the balance due accounts (unreversed TC 480 pending offer in compromise with no TC 780 in collection status 71) does not preclude an OBR even if some of the overpayment would otherwise be applied to this module. See IRM 21.4.6.5.23.2, UPC 137 or UPC 437, for TC 899 UPC 137 or UPC 437 resolution. Remind taxpayer to write (Injured Spouse) in the upper left-hand corner of their Form 1040. Add to the TC 898 all TC 767(s) with the same OTN. Contact the TOP Liaison at , to obtain the TOP/DMF Manual Reversal Request Form. If Combat indicator is "2", then the taxpayer is no longer a combat zone participant. 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. There may be more than one on the account. A manual refund is required on a current tax year return with CCC "9" (spouse is deceased) and the second name line is not present. Refer to Document 6209, Section 8A, Master File Codes. Some entity or module freeze may need to be resolved before the Form 8379, Injured Spouse Allocation, can be processed. If box 11 of Form 8379 is checked issue the refund in both names. See IRM 21.4.6.4.2.1, Top Offset Bypass Indicator (BPI). 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. Research to resolve the discrepancy (processing error, math errors, or other tax offset). You do not need to complete the Injured Spouse Allocation Worksheet when one of the shortcut methods apply. A returned refund check resulting from a Form 8379, Injured Spouse Allocation, has posted to the account (P Freeze). See IRM 21.4.6.5.10, Allocation of Injured Spouse Form 8379. See IRM 21.4.6.5.11.1(11) below for conditions that will allow an OBR. 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. Compare the injured spouses refund allocation with the TC 898 on TXMOD and reverse only the portion needed. Three or more TC 766s will require a manual refund. See IRM 20.2.4, Overpayment Interest. The account must be corrected without regard for the offset. Do not make an entry in the Amended Claims Date (AMD-CLMS-DT) field. When the injured spouse has none of the income or refundable credits, none of the overpayment is the injured spouse's. When this condition has been identified, a Manual Reversal Request (MRR) is needed to resolve the account. If necessary, treat the offset as an erroneous refund. However, if the taxpayer allocates any of these deductions differently, accept the taxpayers allocation as entered on Form 8379. (R with Julian date 999) TDI Refund Freeze: Contact TDI to determine if the freeze will be released or whether the injured spouse may have his/her portion of the overpayment by issuing a manual refund. The account does not have a XREF EIN/TIN. On all Forms 8379, issue the Injured Spouse's portion of the refund in "one name only" unless the revised Form 8379 (Rev. The IRS issued three EIP payments: EIP 1 and EIP 2 (advance payments of the RRC for TY 2020), and EIP 3 (advance payment of the RRC for TY 2021). Include taxpayer contact information and any details that the taxpayer gives that may help resolve the case. The Middle Class Tax Refund (MCTR) is a one-time payment to provide relief to Californians. Research CIS to ensure the taxpayer can provide all the needed information to complete the Injured Spouse Allocation, Form 8379. Be sure to check Box 23, Bankruptcy Code Case. When working an injured spouse allocation for 2009 and 2010, each spouse is entitled to his/her share of the credit. Rul. If a manual account transfer (TC 370/TC 400) is necessary, input the TOP offset reversal and transfer the credit to excess collections before moving the account. If a credit balance remains on the module after the manual refund posts, release the remaining credit balance on the module by inputting a TC 290.00. 5) Taxpayer says Form 8379 was filed with his/her original return and no refund was received. See IRM 21.4.6.5.23, TOP Unpostable Conditions, for instructions. TOP source and reason codes may not be used in combination with any other IMF source and reason codes. If the Form 8379 is attached to the joint Form 1040 or Form 1040X and the Form 1040 or Form 1040X is timely under IRC 6511, the Form 8379 is timely for any refund requested on Form 1040 or Form 1040X. Refer to IRM 21.1.3.2, General Disclosure Guidelines, for more information. See IRM 5.19.10.6.3, Combat Zone Freeze Code, for additional information. Take no further action on the account until the manual reversal request has completed. . You can contact the Treasury Offset Program at 800-304-3107 for more information. For the X-REF, input the TIN of the person whose name is on the refund. If the Form 8379 is for another year, update the CIS case to the correct year and input the TC 971, AC 071 on the appropriate year. See IRM 21.3.5.4.1, When to Prepare a Referral, for instructions. Congressional inquiries about an injured spouse claim for a specific taxpayer are referred to the appropriate Local Taxpayer Advocate Office (LTA) for control and assignment. It generates on all CC RFUND manual refunds issued from modules with the combat zone C Freeze in effect. This will allow the reversals to post in one cycle and the overpayment will be systemically refunded in both taxpayers names. If you decide to honor the hardship request for $600, you must treat $100 of the refund as an OBR. If the interest payment was not offset with TC 898, then the FROM date for the additional interest (TC 770) is the 23C date of the accrued interest (TC 776) that accompanied the interest payment.Example: Finishing with the example from 2) above, if the interest payment of $47.49 had not been offset with TC 898, meaning the TC 766 amount is $4,200, then the FROM date to calculate additional interest for the TC 766 of $4,200 is the 23C date of the accrued interest of $0.66 (August 31, 2020). Also see The Source for Telephone Numbers on SERP for the hours of operation. The "B" indicator is set when both IRS and TOP debt indicators are present. There is now no remaining TOP offset and the taxpayers received the following refunds totaling $1,586.00. When you have an unusual situation and the figures cannot be plugged in the SERP Accounts Management Services (AMS) electronic worksheets, use the paper version to determine the injured spouse share of the refund. Advise taxpayer to allow up to 8 weeks processing time from the time we receive the Form 8379. All manual refunds issued on Form 5792, Request for IDRS Generated Refund (IGR), are subject to offset through TOP unless a specific BPI is assigned either systemically or through manual input. 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 . "O" code the return for processing to prevent an erroneous refund. Sending the payment. All Form 8379 revisions prior to 11-2014, issue the Injured Spouse's portion of the refund in "one name only" even if line 11, one name only box is not checked. 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. Form 8379 filed post-offset would be worked per normal reversal procedures send the taxpayer a letter of explanation regarding the actions taken. The additional interest owed the injured spouse on the TC 766 amount of $4,220.99 is therefore computed FROM August 13, 2020. Forward to the Non-Master File unit. For all other programs, resolve the credit as appropriate for your case (e.g. A TC 898 or TC 971 AC 598 must be netted against the refund it came from to determine the actual refund amount that Bureau of the Fiscal Service sends or deposits for the taxpayer. This information is intended as a guide to determine when it is acceptable to reverse a Treasury Offset Program offset and when the offset should remain on the account. 13) Taxpayer says Form 8379 was filed after offset and no refund was received. .For both federal tax debts and TOP debts, if the IRS receives the Form 8379 from the non-debtor spouse and it wasnt filed within the applicable IRC 6511 period for the claim for refund, send a 916C letter and advise the taxpayer that the IRS cannot process the allocation because Form 8379 was not submitted timely. Type 1 - Bureau of the Fiscal Service TOP offset reversal. The additional PTC is reported on: Taxpayers may allocate the Premium Tax Credit any way they choose. When working Form 8379, Injured Spouse Allocation, ALWAYS reverse the Injured Spouse's share of the refund, if the Injured Spouse is not responsible for any part of the debt which offset. 7) Taxpayer says Form 8379 was filed with his/her original return and no refund was received. Please allow up to 180 days for the manual reversal to post. Use BPI 3 unless the Injured Spouse owes Child Support. See IRM 21.4.6.4.2.1, TOP Offset Bypass Indicator (BPI). There is a TC 898 for $1,500.00 on the account. You must ensure all unpostables (TC 898 or TC 899 types 1, 2, 3 or 4) are resolved before reversing the TOP offset amount for TOP transactions with the same OTN. If one of the shortcuts methods was used, send the taxpayer an explanation of how the refund was allocated. When the resolution of the IDRS freeze condition results in an overpayment, the overpayment can be issued in a manual refund after the 23C date, so long as: The function receives the OBR request before the posting date of the freeze release, The approving official approves the OBR before the posting date of the freeze release, and.

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