IRM 4.19.3 — IMF Automated Underreporter Program

# Part 4. Examining Process

Chapter 19. Liability Determination Section 3. IMF Automated Underreporter Program 4.19.3 IMF Automated Underreporter Program Manual Transmittal October 10, 2025 Purpose (1) This transmits revised IRM 4.19.3, Liability Determination, IMF Automated Underreporter Program. Material Changes (1) IRM 4.19.3.2(12) - added paragraph to explain the CP 2000 series and renumbered remaining subsection (2) IRM 4.19.3.2.2(1) - added note for employees to be aware of suspense inventory (3) IRM 4.19.3.2.3(2) - revised in table TAS to Operational Guidelines Overview and added 10.5.1, Privacy Policy (4) IRM 4.19.3.2.5(6) - removed caution as it no longer applies (5) IRM 4.19.3.2.8 - removed Coronavirus Aid, Relief, and Economic Security Act and Coronavirus Response and Relief Supplemental Appropriations Act of 2021 section due to expired legislation (6) IRM 4.19.3.2.9 - removed Families First Coronavirus Response Act section due to expired legislation (7) IRM 4.19.3.2.10 - removed The American Rescue Plan Act of 2021 section due to expired legislation (8) IRM 4.19.3.3.1(2) - revised step 5) for clarity and added new step 6 for text chat field (9) IRM 4.19.3.3.2 - removed Lost Case section due to digitization of cases and renumbered subsections (10) IRM 4.19.3.3.3(1) - revised instructions for clarity and removed the step list (11) IRM 4.19.3.4.1(5) - revised paragraph for clarity and removed alpha list (12) IRM 4.19.3.4.3(6) and (7)- revised (6) and (7) to include system display message; added new (8) with information on victims of domestic violence; renumbered subsection (13) IRM 4.19.3.4.3.2(8) and (12)- revised to clarify the instruction relates to I- freeze code and what IPCs are impacted,(12) added note to refer to Document 12990 (14) IRM 4.19.3.4.3.3(5) and (7) - removed step c) as it relates to TY 20 and relettered step list; (7) removed step d) as legislation has expired and relettered step list (15) IRM 4.19.3.4.3.4(17) - added literal BOTH to table (16) IRM 4.19.3.4.3.5(3) and (5) - added to step 6) to review history sections, added note to step 6 to see IRM 4.19.3.4.3.3, revised step 8) to leave a case note and mark virtual CORR box; added note to (5) step 8) to see IRM 4.19.3.4.3.3, revised step 9) to leave a case note and mark virtual CORR box (17) IRM 4.19.3.5(11) - revised paragraph to read digital assets and removed note containing virtual currency (18) IRM 4.19.3.5.4(2) and (4) - removed paragraph and added note to (4) for the Respect for Marriage Act of TY 2022 and renumbered the remaining subsection (19) IRM 4.19.3.5.8(5) - removed last sentence in paragraph (20) IRM 4.19.3.5.8.3(3)and (4) - removed step 2) in first row and renumbered step list; removed step 2) in 2nd row in table and renumbered step list and revised 2nd row in table IPC 0F, 3F, 6F, and 8F is for TY23 and prior and F2 is for TY24 and subsequent; BT 94 is for TY23 and prior and BT 89002 is for TY24 and subsequent; removed (4) note in step 6) as it's no longer necessary to recharge the document (21) IRM 4.19.3.5.10(1) - revised to remove expired legislation, added table with thresholds amts, and changed paragraph number from 202 to 274 (22) IRM 4.19.3.5.11(1) - revised for clarity and added to send paragraph 275 (23) IRM 4.19.3.5.12(1) - removed step 4) as the instructions are in IRM 4.19.3.22.1.10.2 (24) IRM 4.19.3.5.13.1.1(2) - removed note in step 1) and revised step 2) to refer to IRM 21.4.5-1 (25) IRM 4.19.3.5.13.1.2(2) - removed note in step 1) (26) IRM 4.19.3.5.13.1.4(5) - revised step 5) to save copies of letters and send to clerical to upload into the AUR system (27) IRM 4.19.3.6(2) - removed last sentence of paragraph (28) IRM 4.19.3.7(1) - remove step b) and exception and revised step c) to issue a CP 2000; relettered step list (29) IRM 4.19.3.8.1.1(2) - revised step a) to line 1d and note for nontaxable medicaid waiver payments; added new step b) for line 4b and relettered alpha list (30) 4.19.3.8.1.1(15) - added new paragraph, caution and step list to explain Restricted Stock Units and renumbered remaining subsection (31) IRM 4.19.3.8.2.1(1) - revised paragraph and removed note due to expired legislation (32) IRM 4.19.3.8.2.2(10) - revised instructions for clarity (33) IRM 4.19.3.8.4(1) - revised to see exhibit 4.19.3-12, Titles of Forms and Schedules (34) IRM 4.19.3.8.4.2(10) - revised step 1) and 2) for clarity (35) IRM 4.19.3.8.6.1(7) - revised to refer to IRM 4.19.3.8.1.4 and removed alpha list (36) IRM 4.19.3.8.7.1(3) - added new step b) for entry space about part 1 in Schedule 1 and new step c) for Schedule 1, Part 1, line 8v and revised 2nd note with instructions for nontaxable medicaid waiver payments and relettered alphalist (37) IRM 4.19.3.8.10.2(3) - added note to step d) for PSO indicator is located on Dotted/Attach tab in TRDB; added note to (4) step i) for QCD indicator is located on Dotted/Attach tab in TRDB and step j) for HFD indicator is located on Dotted/Attach tab in TRDB (38) IRM 4.19.3.8.10.3.1(1) and (3) - (1) added SECURE act of 2022, (3) removed note under table as it no longer applies (39) IRM 4.19.3.8.10.6(6) - added reminder for PSO indicator is located on Dotted/Attach tab in TRDB (40) IRM 4.19.3.8.10.7(5) and (6) - added reminder for QCD indicator is located on Dotted/Attach tab in TRDB and revised step a) reminder to research the Tax Account screen; added reminder to (6) for HFD indicator is located on Dotted/Attach tab in TRDB and revised step c) to send paragraph 82 (41) IRM 4.19.3.8.10.8(3), (5), (6), (11-14) - revised (3) for clarity; added new (5) with instructions for screening lump sum tax; revised (6) step 3 for clarity; revised (11) for clarity; revised (12) for clarity; revised (13) with instructions for special tax treatment and added step list, removed alphalist; removed (14) as the instructions are included in (13) (42) IRM 4.19.3.8.12(3) - added note to Sec 179 and removed note from GPAY (43) IRM 4.19.3.8.12.1(12) - revised step a) to review the IR (44) IRM 4.19.3.8.16.1(3) and (6) - revised for clarity (45) IRM 4.19.3.8.16.2(1) - removed note as it no longer applies (46) IRM 4.19.3.8.17.2(2) - added note to see 4.19.3.8.31, Foreign Source Income (47) IRM 4.19.3.8.18.1(3) and (7) - revised (3) note in step b) for nontaxable medicaid waiver payments; removed alphalist from (7) and referred to IRM 4.19.3.8.1.4, Fellowships, Grants, and Stipends (48) IRM 4.19.3.8.19.1(1) and (2) - removed table in (1) and added new step a) and b) and relettered list; revised (2) to use Schedule D window (49) IRM 4.19.3.8.20.1(10) - removed due to expired legislation (50) IRM 4.19.3.8.23.1(4) - revised paragraph to a bullet list and note for clarity; added new (22) with restricted stock units and new (23) to send paragraph 138 (51) IRM 4.19.3.8.23.5.17(3) - revised (e) to include restricted stock (52) IRM 4.19.3.8.25(3) - revised to include surviving spouse (53) IRM 4.19.3.8.27.1(8) - revised for clarity (54) IRM 4.19.3.8.31(3) - added new paragraph and caution with instructions for Form 8833 (55) IRM 4.19.3.8.32.1(10) and (12) - revised (10) step b) note to clarify scanned paper cases will be entered manually in the AGI window and removed note from (12) concerning refundable Child and Dependent Care Credit (56) IRM 4.19.3.8.32.2(7) and (8) - revised Schedule J to Additional Taxes window in both paragraphs (57) IRM 4.19.3.9.1(1) - removed note relating to coronavirus (58) IRM 4.19.3.9.4.1(1) - revised step c) to send paragraph 259 and removed step d to send a letter (59) IRM 4.19.3.9.5.1(7) - revised to consider each IR element (60) IRM 4.19.3.9.6.1(1), (2) and (18) - revised (1) to create a table and two notes for clarity, revised (2) for clarity and removed the bullet list and added note to (18) step 3) to screen case in proper window order and removed step 4 and note for DPAD (61) IRM 4.19.3.9.6.3(4) -rewritten for clarity (62) IRM 4.19.3.9.7.1(3) - removed the note as it no longer applies (63) IRM 4.19.3.9.8 - removed Charitable Contribution subsection and renumbered remaining subsection (64) IRM 4.19.3.9.9(3) - revised paragraph for clarity (65) IRM 4.19.3.11.1(2) - Added reminder qualified disaster losses (66) IRM 4.19.3.11.3 - removed Mortgage Insurance Premiums subsection as it no longer applies (67) IRM 4.19.3.11.3.1 - removed MIP Responses subsection as it no longer applies (68) IRM 4.19.3.12(5) and (6) - removed (5) as it no longer applies; removed bullet list from (6) and both notes and renumbered step list (69) IRM 4.19.3.12.1(4) - revised to clarify the system calculates the deduction in the recomputed total QBID field (70) IRM 4.19.3.13(5) - revised step e) and f) for clarification (71) IRM 4.19.3.14.1(4) and (6) - revised instruction for clarity and removed EUP instruction in step 3); removed (6) and alpha list as the instructions are a duplication (72) IRM 4.19.3.14.2(2),(3),(4) - revised title to Schedule D Window and removed instructions in (2), (3), (4) as it is now in the Additional Taxes Window and renumbered subsection (73) IRM 4.19.3.14.3 - added new subsection for Additional Taxes Window (TY 2022 and Prior) and renumbered subsections (74) IRM 4.19.3.14.4(3) and (5) - added new paragraph with instructions for box 8814 and box 3; revised (5) for clarity; renumbered subsection (75) IRM 4.19.3.14.5 - added new subsection Additional Tax From Lump-Sum Distributions (Form 4972) and renumbered remaining subsection (76) IRM 4.19.3.15 - added new Section Schedule 2 Additional Taxes and renumbered subsequent subsections (77) IRM 4.19.3.15.1 - added Excess Advanced Premium Tax Credit here for proper system sequence (78) IRM 4.19.3.15.2 -added Alt Minimum Tax (AMT) section here for proper system sequence (79) IRM 4.19.3.15.3 - added new subsection Additions to Tax (80) IRM 4.19.3.16.2(4) - removed steps 1) and 9); revised step 2) for clarity and renumbered steplist (81) IRM 4.19.3.16.4(1), (2), (3), (4), (6), (7), (17), (18), and (19) - revised (1) sentence for clarity and removed bullet list, (7) step a to include half brother and sister, (17) revised entries in table due to expired legislation; removed (2), (3), (4), (6), (18), and (19) as they no longer apply; removed note in (12); renumbered subsections (82) IRM 4.19.3.16.4.1(4) - removed table and added bullet list; revised (5) step a) and b) example for clarity; revised (7) for clarity (83) IRM 4.19.3.16.5(3) - removed table and put information into a bullet list; removed (4) as it's duplicate information; removed (5) step c) table and added new (6) containing information form the table; renumbered subsection (84) IRM 4.19.3.16.8(2) - row 8 and row 9 added MAGI limits and system will automatically generate paragraph (85) IRM 4.19.3.17 - revised title to Schedule 2 Changes to Other Taxes (86) IRM 4.19.3.7.1(17) added new paragraph 17 and renumbered remaining (87) IRM 4.19.3.17.3(9) - removed 2nd note as it no longer applies and added to table new exception codes 22 and 23 (88) IRM 4.19.3.17.6 - removed Alternative Minimum Tax and moved to 4.19.3.15.3 and renumbered subsequent subsections (89) IRM 4.19.3.17.8(5) - revised table to include Form 4797 (90) IRM 4.19.3.17.10 - removed Excess Advanced Premium Tax Credit and moved to 4.19.3.15.1 and renumbered subsequent subsections (91) IRM 4.19.3.17.11(2), (3), and (4) - removed paragraphs as the information has moved to other parts of the IRM and renumbered remaining subsection (92) IRM 4.19.3.18.1.1(3) - revised paragraph to include instruction for nontaxable Medicaid waiver payments (93) IRM 4.19.3.18.3(5), (6), (9), (12), (13) and (17) - removed (5) and (6) relating to prior year earned income; removed note in (9) step b) containing nontaxable combat pay; renumbered subsection, added new paragraph (12), (13) and (17) and renumbered remaining (94) IRM 4.19.3.18.4(9) and (14) - removed reminder as it no longer applies; revised (14) for clarity (95) IRM 4.19.3.18.5 - removed Refundable Child Tax Credit as it no longer applies; renumbered subsequent subsections (96) IRM 4.19.3.18.6 - revised title to American Opportunity Tax Credit (AOTC) (97) IRM 4.19.3.18.7 - removed Refundable Child and Dependent Care Credit as it no longer applies; renumbered subsequent subsections (98) IRM 4.19.3.18.8(5) - in table removed TY21 reference and put window fields in a bullet list for clarity (99) IRM 4.19.3.19.1(1) and (5) - removed note relating to TY 2021; revised penalty dollar amount in (5) (100) IRM 4.19.3.19.2(6) - removed Health Care Tax Credit from bullet list (101) IRM 4.19.3.19.5(12) - revised the paragraph for clarity and added note and reminder and removed alpha list and notes (102) IRM 4.19.3.19.7(8) - revised the paragraph for clarity and added note and reminder and removed alpha list and notes (103) IRM 4.19.3.19.10(1) - added reminder that MI cases during screening are built into BT 61; removed (2) because it was duplicate information and renumbered remaining subsection (104) IRM 4.19.3.21.1(2) - removed Publication 1 information and renumbered remaining subsection (105) IRM 4.19.3.21.2(2) - revised the notice indicators from numeric characters to alpha characters (106) IRM 4.19.3.21.3(2) - revised the notice indicators from numeric characters to alpha characters in step a-g) and removed caution in step e) relating to notice indicator 8 (107) IRM 4.19.3.21.4(7) - removed as it's no longer valid and renumbered remaining subsection (108) IRM 4.19.3.21.5 - retitled subsection to Notice History Screen (109) IRM 4.19.3.22.1(5), (13), (15), and (16) - removed (5) step e note because the information is in the paragraph; revised (13) step 1) to print and step 3) to prepare Form 3210; revised (15) step 3) caution for when there are no scanned documents; revised (16) step 8) caution for when there are no scanned documents (110) IRM 4.19.3.22.9.4(3) - removed 2nd note (111) IRM 4.19.3.23(3) - removed paragraph and renumbered remaining subsection (112) IRM 4.19.3.23.1(1), (4), (5), (6), (8), (9), (14), (15), and (18) - removed note as it no longer applies; revised (4) to include information from (5) and added bullet for subject line of coversheet; removed (5); remove the table from (6) and added to the paragraph; removed (8); revised (9) to remove note and caution; removed (14) removed as it no longer applies; (15) revised step 1) for clarity and removed step 2) and 3), revised step 4) for clarity and created a new step 5) to leave a case note and renumbered step list; removed (18) as it no longer applies; renumbered subsection (113) IRM 4.19.3.23.1.1(1) - revised paragraph for clarity and removed note with lost case instructions (114) IRM 4.19.3.23.1.1.1(1)-(5) - removed paragraphs (1) and (2); revised (3) with new instructions and added step list; added new (4) with instructions for extra responses; removed (5) and renumbered subsection (115) IRM 4.19.3.23.1.1.2 - removed Lost Responses subsection as it no longer applies and renumbered subsequent subsections (116) IRM 4.19.3.23.1.1.3(1) - revised paragraph and removed caution as it doesn't apply (117) IRM 4.19.3.23.1.2(4) - revised paragraph for clarity (118) IRM 4.19.3.23.1.3(4) - removed step a) with folder and Form 4251 information and revised step c for clarity; relettered alpha list (119) IRM 4.19.3.23.1.4(6) - added new (6) and renumbered remaining paragraphs (120) IRM 4.19.3.23.1.5(1) - revised reminder for clarity (121) IRM 4.19.3.23.1.8.1(1) step 1) added CML (Certified Mail Listing (122) 4.19.3.23.1.8.1.1(5) step 3),(6) and (17) - (5) step 3) revised instruction and deleted table, (6) added new paragraph and renumbered remaining, (17) removed step list (123) IRM 4.19.3.23.1.10(3) - removed paragraph as it's no longer needed (124) IRM 4.19.3.23.1.10.1(3) - removed the note in (3) as there is no need to print (125) IRM 4.19.3.23.1.10.2(11) and (14) - added example to (11) for clarity and revised (14) step a) to contact manger or lead (126) IRM 4.19.3.23.1.11(1) and (2) - removed (1) note due to expired legislation and revised (2) for clarity (127) IRM 4.19.3.23.1.14.1(2) - revised (e) to include SERP Who/Where tab for KITA/KIA Coordinator and fax numbers (128) IRM 4.19.3.23.1.16(5) - removed caution as it no longer applies (129) IRM 4.19.3.23.1.17 - removed Discovered Remittance and Voided Checks and renumbered subsequent subsections (130) IRM 4.19.3.23.1.18.1(2) and (3)- revised table first row step 9) with changes to the batch type, 10) revised report name, in second row step 2) is revised to send paragraph 273 and revised step 4) to request case through UWC, 5) revised report name to MFT 31 Inventory Report, revised table forth row step 6) with changes to the batch type, 7) revised name of report to MFT 31 Inventory Report, (3) step 3) revised with changes to batch type (131) IRM 4.19.3.23.1.19(3), (5), and (9) - removed paragraph (3); revised (5) to see IRM 4.19.3.23.12.1; revised (9) for clarity and renumbered remaining subsections (132) IRM 4.19.3.23.1.21(2) (3), (4), and (5) -revised case note in step 2), added new (3) and (4) with instructions for new IA box and case note; revised (5) step a) and b) with IA box instruction and renumbered remaining subsection (133) IRM 4.19.3.23.1.22(7), (11), and (13) - revised to use most current version of Form 56; revised (11) to add Form 8821 to the table and removed row with duplicate information; revised (13) to route to CAF via fax (134) IRM 4.19.3.23.1.23(4) - revised to include MERCH (135) IRM 4.19.3.23.1.26.1(1) and (2) - revised (1) step 3) and (2) to use ENMOD (136) IRM 4.19.3.23.1.26.2(2), (3), (5), and (6) - revised (2) to research ENMOD, added exception to 3rd row step 5) to concerning statute imminent cases, and step 1) under the table to research ENMOD; revised (3) to research ENMOD, added exception to 2nd row step 4) to concerning statute imminent cases, and 3rd row was revised to include IPC T3 for TY24 and subsequent; added new (5) to refer taxpayer to IDTVA when case is closed PC26; added new (6) for cases in RECON phase (137) IRM 4.19.3.26.1.26.3(2), (5), (6), (7), and (8) - revised (2) to research ENMOD; revised (5) step 2) in table to select paragraph H, step 4) in table to notify the liaison; revised (6) to use the AUR system to determine pend claim or no IDT indicators; revised (7) for clarity and added an exception to research ENMOD on closed cases; revised (8) step 3) to use AUR system to determine pend claim or no IDT indicators and SBSE AUR to pend claim (138) IRM 4.19.3.23.1.26.4(4), (5), (7) and 9) - revised instructions to remove IPC SI and replace with IPC T3 through out section; revised (7) last row of table to remove reminder for TDC indicator (139) IRM 4.19.3.23.2(5) step 2), (7), and (9) - revised for clarity (140) IRM 4.19.3.23.2.1(5) - added reference to external IRM (141) IRM 4.19.3.23.2.2(4) - added note to 3rd bullet to research ENMOD on a closed case (142) IRM 4.19.3.23.2.4(5), (6), (9), (10), (12), (14), (15) - removed paragraphs (5) and (6); revised (9), (10)step 1), (12) step 3), (14) Exception to include both signatures on married filing joint; (15) step a) added note to check both taxpayers on credit transfers; renumbered subsection (143) IRM 4.19.3.23.2.4.1(3), (4), (8) - added new (3) and (4) on leaving a message; revised (8) to continue normal processing; renumbered subsection (144) IRM 4.19.3.23.2.5(1), (4), (6), (9), (12) - revised (1) for clarity; added caution to (4) when assigning universally and revised step 4) for clarity; revised (6) to include information from the table and removed the table; revised (9) step 1) for clarity and revised the step 3) note under the table to not grant multiple extensions; (12) removed step 4) as no longer applicable and revised step 6) for clarity and renumbered step list (145) IRM 4.19.3.23.3(2) and (3) - revised (2) for clarity; added new (3) for quick responses and KBAs and renumbered remaining subsection (146) IRM 4.19.3.23.4.1(5) - revised 1st bullet to mark the Virtual Corr box (147) IRM 4.19.3.23.4.5(2) - removed step 10) exception as it no longer applies (148) IRM 4.19.3.23.4.6 (3) and (4) - revised (3) that digitized responses outside of eGain can be worked universally at any Campus and removed table; added (4) new step 1 to 2nd row to review responses and renumbered step list; removed 3rd row and column as it's not longer needed (149) IRM 4.19.3.23.5.1(3) - revised 3rd bullet for clarity (150) IRM 4.19.3.23.5.2(1) - revised step a) for clarity (151) IRM 4.19.3.23.5.11(2) - revised for clarity (152) IRM 4.19.3.23.5.13(4) - revised to include TY23 and prior in the instruction in first row of table (153) IRM 4.19.3.23.5.18(4) - revised to include surviving spouse (154) IRM 4.19.3.23.5.21(2) - revised exception in 1st bullet to refer to IRM 4.19.3.8.31 for further information (155) IRM 4.19.3.23.5.23(3) - revised step 1) to print to PDF and send to clerical (156) IRM 4.19.3.23.5.24(3) and (4)- removed (3) and revised (4) for clarity and renumbered remaining subsection (157) IRM 4.19.3.23.5.25(2) - revised step 2) Caution for when there are no scanned documents (158) IRM 4.19.3.23.6(1) and (4) - added new note to (1) to run through the R.V Screen when closing case no change and removed (4) note as it's no longer necessary (159) IRM 4.19.3.23.7(10) - revised to transfer and notify the ARDI SME and leave a case note (160) IRM 4.19.3.23.7.1(4) and (7)- revised (4) instructions in 1st row step 6) removed batch types, 2nd row step 3) and 3rd row step 2) to send paragraph 182 and revised (7) row one step 6) added IPC S6 and row one step 7) revised report name (161) IRM 4.19.3.23.8(6),(7),(8),(9),(10) - revised tables to consolidate and for clarity (162) IRM 4.19.3.23.8.1(2) and (3) - revised (2) note to replace 8 with N; revised (3) notice number indicators with alpha characters in table and step b); revised instruction in last row for non-refundable credits only and added exception if adjusting base tax to match the taxpayer's figures (163) IRM 4.19.3.23.9(1) - revised last bullet to include written IA request (164) IRM 4.19.3.23.9.1(1), (8), (19) - revised (1) for clarity; revised (8) to print scanned document; revised (19) step 1) for responses to letter (165) IRM 4.19.3.23.9.2(4) - revised to include payments by check (166) IRM 4.19.3.23.9.4(1), (3), (5), (8), and (9) - revised (1) to print; removed 2nd note in (3) under the table; revised (5) table first row, step 1) to print to PDF and send to clerical; added to (8) table consolidating bullet list information in paragraph (8) and (9); removed (9) (167) IRM 4.19.3.23.9.5(6) - revised 3rd bullet for clarity (168) IRM 4.19.3.23.9.6(5) - revised 5th row in table step 2) to send letter 2626-C to explain payer verification (169) IRM 4.19.3.23.10(1) and (7) - revised (1) for clarity; removed step b) in (7) and revised note in step d) to refer to IRM 4.19.3.23.1.21 Installment Agreements (170) IRM 4.19.3.23.11(2) and (4) - revised (2) with efax instructions and added step list; revised (4) for clarity (171) IRM 4.19.3.23.12(10) - revised for clarity (172) IRM 4.19.3.23.12.1(17) and (42) - revised to include F key instructions (173) IRM 4.19.3.23.13(1) - removed step d) as it's no longer needed, (18)b inserted SERP link (174) IRM 4.19.3.24(3) and (6) - added note to (3) that only asterisk items need to be screened; revised (6) reminder that only the Notice Review Coordinator updates the tracker (175) IRM 4.19.3.25.2 (4),(6), (9), and (17) - revised (4) to use AMDISA and removed step 3) instruction; revised (6) note for clarity and removed alpha list; revised (9) step a) for clarity; revised (17) to use AMA tool (176) IRM 4.19.3.25.2.1(2) - revised step 3) to use AMDISA (177) IRM 4.19.3.26.1(2) - revised to include BT 26 (178) IRM 4.19.3.26.5(1) - revised to print to PDF (179) IRM 4.19.3.26.5.1(1) - revised for clarity to include new IPCs for TY 2024 (180) IRM 4.19.3.26.5.2(1)_ - revised to print to PDF (181) IRM 4.19.3.26.5.5(1) and (2) - revised both paragraphs to include new IPCs for TY 2024 and removed (2) second note as it no longer applies (182) IRM 4.19.3.26.14.2(1) - removed 1st bullet and revised 3rd bullet (183) IRM 4.19.3.26.14.3(1) - revised 2nd bullet (184) IRM 4.19.3.26.14.4(1) - revised to review daily (185) IRM 4.19.3.27.3.1(2), (3), and (4) - revised (2) for clarity; revised (3) to include IPC 9C; revised (4) table for definition for 9I and revised 9P note for clarity (186) IRM 4.19.3.27.3.2(3) - added new (3) and note to explain BT 96 cases universally assigned are moved to BT 82 and renumbered step list (187) IRM 4.19.3.27.4(6) - Removed reference to classified waste and revised note for clarity (188) IRM 4.19.3.27.6(13) 2) - added link for routing digitally (189) IRM 4.19.3.27.6.1(1) - removed steps 3) and 4) as they no longer apply, added new step 6) to leave a case note and renumbered step list (190) IRM 4.19.3.27.6.2(1) - removed steps 4) and 5) as they no longer apply, revised note in step 6) to print to PDF and renumbered the step list (191) IRM 4.19.3.27.6.3(1) - revised step 4) to print to PDF (192) IRM 4.19.3.27.9(4) - removed as it no longer applies (193) IRM 4.19.3.27.10(3) 1) - added new step 1 include instruction to Efax and renumbered remaining steps and revised step 2 case note. (194) IRM 4.19.3.27.11(2) - removed as it no longer applies and renumbered subsection (195) IRM 4.19.3.27.11.1(1) - removed note in step 1) as it's no longer needed (196) IRM 4.19.3.28(1) - revised for clarity (197) IRM 4.19.3.28.1(4) - removed paragraph due to digital processing and renumbered subsection (198) Exhibit 4.19.3-1 - added American Opportunity Credit, Category of Distribution, Erroneous Refund, In Home Support Services, and Revenue Accounting Control System to table (199) Exhibit 4.19.3-2 - revised Batch and Universal Work Case definition and removed Lost Case and Lost Response (200) Exhibit 4.19.3-3 - added new suspense IPCs for special projects, F2 for fraud referrals, T3 for IDT referrals and removed lost case, manual case, deleted disaster, stolen identity IPCs, and set XP IPCs to reserve (201) Exhibit 4.19.3-7 - revised 82 to include health savings account fund distributions, revised 125 to include adjusted gross income, revised 136 to include line numbers and Publication 969. revised 155 to see Publication 525, revised 180 to included web address; removed paragraphs 213, 214, and 215 for MIP and 227 for unemployment as they no longer apply; added new paragraphs 255-276 (202) Exhibit 4.19.3-8 - added code II for medicare waiver payments (203) Exhibit 4.19.3-12 - added Form 1098, Form 1098-T, Form 1120, Form 1120-S, Form 5498-ESA, Form 5498-SA, Form 8915-D and 8915-F; removed Form 8915-A and Form 8915-B (204) Exhibit 4.19.3-18 - revised excess collections instruction (205) Changes were made through out the IRM as follows: Updated forms, form lines, and dates to include TY 2024 and remove TY 2021 dates Updated money amounts to include TY 2023 amounts and removed TY 2021 amounts Updated form line/column numbers in tables to include TY 2023 and removed TY 2021 Removed tables that no longer applied and added information to a paragraph Editorial changes have been made to notice/form/schedule citations Editorial changes to remove the term virtual currency Editorial changes to include scanned paper instead of paper only Effect on Other Documents This material supersedes IRM 4.19.3, effective 10/02/2024, for Tax Years 2024, 2023, and 2022. The following IRM Procedural Updates are incorporated: IPU 24U1084 (dated 10-29-2024), IPU 24U1226 (dated 12-16-2024), IPU 25U0080 (dated 01-21-2025), IPU 25U0195 (dated 02-07-2025), IPU 25U3210 (dated 04-25-2025). Audience AUR tax examiners at Small Business/Self-Employed sites Effective Date (10-10-2025) Richard Tierney Director, Examination Small Business Self-Employed

# Program Scope and Objectives

4.19.3.1 (10-02-2024) Program Scope and Objectives Purpose - This IRM section describes technical procedures for the Small Business/Self Employed (SB/SE), Individual Master File (IMF) Automated Underreporter Program (AUR). Specifically, IRM 4.19.3: Includes procedures for analysis and comparison of tax returns to third-party information return documents. Outlines instructions for issuing AUR notices. Provides guidance for processing taxpayer written and telephone responses. Includes processes for AUR assessments. Provides instructions for reconsideration of AUR assessments. Audience - These procedures apply to all tax examiners who work in SB/SE IMF AUR. Policy Owner - The IMF AUR Program is under Small Business/Self-Employed Operations, Examination, Field and Campus Policy. Program Owner - IMF AUR Policy, which is under Examination, Field and Campus Policy, is responsible for providing guidance and procedures to work the IMF AUR Program, for the content of this IRM, and for oversight of the AUR system. Primary Stakeholders - The primary stakeholders are those in the IMF AUR Program.

# Background

4.19.3.1.1 (08-22-2017) Background Potential AUR cases are systemically identified through computer matching of tax returns with corresponding Information Returns Master File (IRMF) payer information documents. Cases are selected for inventory in a manner determined to provide overall compliance coverage. Selected cases undergo an in-depth review by a tax examiner to identify underreported and/or over-deducted issues which require further explanation to resolve the discrepancy.

# Authority

4.19.3.1.2 (12-14-2020) Authority Chapter 61 of the Internal Revenue Code (Information and Returns), Subchapter A (Records and Returns), Part III (Information Returns), sections 6031 – 6059, contain the requirements for the filing of information returns for income reporting purposes. Rev. Proc. 2005-32 provides authority to treat taxpayer contacts to verify a discrepancy between the taxpayer's tax return and an information return, or between a tax return and information otherwise in the IRS's possession as taxpayer contacts and other actions not considered an examination, inspection or reopening.

# Roles and Responsibilities

4.19.3.1.3 (10-02-2024) Roles and Responsibilities The Director, Exam Field and Campus Policy, Small Business/Self Employed, is the executive responsible for the IMF AUR Program. The AUR Program Manager, Headquarters Exam Operations, Field and Campus Policy, IMF AUR Policy is responsible for IMF AUR policy and for providing guidance for the AUR Program.

# Program Management and Review

4.19.3.1.4 (10-02-2024) Program Management and Review AUR inventory is monitored and managed using a series of specific, detailed reports accessed through the AUR system. IDRS reports applicable to AUR cases are accessed and monitored through the use of the Control-D reporting system. Process improvement procedures are in place to mitigate system and IRM inefficiencies.

# Program Controls

4.19.3.1.5 (10-02-2024) Program Controls SBSE AUR Policy analyzes case data available through the AUR system to determine quality and efficiency. System access is granted via permissions through Business Entitlement Access Request System (BEARS) and AUR Coordinators. AUR Policy performs quarterly reviews to verify the accuracy of system permissions. Program effectiveness is measured through periodic program reviews.

# Terms

4.19.3.1.6 (08-22-2017) Terms Terms used in this IRM are listed and defined in Exhibit 4.19.3-2, Glossary.

# Acronyms

4.19.3.1.7 (08-22-2017) Acronyms Acronyms used in this IRM are listed and defined in Exhibit 4.19.3-1, Abbreviations.

# Related Resources

4.19.3.1.8 (09-30-2018) Related Resources Internal Revenue Manuals and publications which may be helpful if in-depth research is needed to resolve unusual technical issues not covered in AUR instructions are listed in IRM 4.19.3.2.3, Related IRMs and Publications.

# Overview of IMF Automated Underreporter

4.19.3.2 (10-10-2025) Overview of IMF Automated Underreporter This manual provides instructions for Automated Underreporter (AUR), the automated analysis and processing of potential underreported (U/R) and/or over-deducted (O/D) issues identified through information return (IR) matching. AVOID "AUDITING" RETURNS. All returns in the AUR inventory were previously screened for unallowable items and audit potential. They were not selected for action in either event. See IRM 4.19.3.23.1, Taxpayer Responses - Overview. Underreporter cases are built from two primary sources: The Individual Master File (IMF) which contains information reported to IRS by taxpayers The Information Returns Master File (IRMF) The IMF file contains information reported on: Form 1040, U.S. Individual Income Tax Return Form 1040-SR, U.S. Tax Return for Seniors The IRMF information is matched with the IMF information to verify the taxpayer reported all income as required. An AUR case results when computer analysis detects a discrepancy between the two data sources. Information in the IRMF file includes, but isn't limited to: Form W-2, Wage and Tax Statement Form 1099-INT, Interest Income Form 1099-DIV, Dividends and Distributions The information documents in the Form W-2 series and Form 1099 series, if tax was withheld, should be attached to the tax return when it is filed. Taxpayers need not attach information documents in the Form 1099 (unless tax was withheld as noted above), Schedule K-1, Form 1098, or Form 5498 series to the return when it is filed. Discrepant cases are then categorized by type (for example, wage, dividend, interest discrepancy) and underreported range (for example, $200-499.99 tax change). These categories provide a logical system of criteria to select cases from the available inventory. After cases are selected from the inventory, they are worked according to procedures in this IRM. AUR Operations at seven campuses compile and control selected cases. Enterprise Computing Center at Martinsburg (ECC-MTB) sends tape information from the IRMF, Return Transaction File (RTF), Taxpayer Information File (TIF), and Payer Agent file. See IRM 4.19.3.6, Payer Agent/Fraud Information, for additional information on the Payer Agent file. This information downloads to the AUR system. Note: Data from the TIF and Payer Agent file is updated weekly. A computer tape containing Form 4251, Return Charge-Out, data prints on a Campus printer. Each Form 4251 contains a social security number (SSN), tax year, and other case identification information, represented in a bar code and numeric format. Federal Records Center (FRC) pulls and forwards paper returns to the Campus Files function for routing to Underreporter. Returns are controlled into the AUR system by scanning the bar code. Note: Electronically Filed Returns/Form 1040/ Form 1040-SR (ELF) are considered virtual cases and are systemically built into screening batches. Tax examiners perform an in-depth analysis of each case and determine if the discrepant income or deduction(s) in question are satisfactorily identified or addressed on the tax return. If so, they close the case. If reasonable doubt remains, they send the taxpayer either: An AUR Notice, CP 2000 or An Initial Contact Letter, CP 2501 Note: The system auto generates CP 2501/ CP 2000 Notices for select income categories. The CP 2000 notice can be a series of CP 2000 Notices (A-E). See IRM 4.19.3.21.2, CP 2000, for further information. Note: When the CP 2000 Notice is mentioned in the IRM, it can refer to any one in the notice series. At times HQ issues specialized case processing procedures and/or direct a hold in case processing. These directives supersede normal AUR case processing procedures and all case processing time frames are suspended and don't apply. Note: Form 872-A, Special Consent to Extend the Time to Assess Tax, must have HQ Policy approval prior to issuance. AUR is a self-contained system that displays all necessary information to process a case without accessing other systems. IDRS use will be limited to instances when this IRM directs such research. Process codes (PC) are used to provide an audit trail for AUR case processing. Integrated Data Retrieval System (IDRS) reflects PCs as pending actions until they post to the Master File. PC 0X (except 09) is computer generated to designate how and by which organization the case has been selected. PC 09 establishes an IDRS control base and reflects CP 2000 interest as pending. PC 20 adjusts Withholding (W/H), Excess Social Security/Railroad Retirement Tax (SSTAX) and Additional Medicare Tax withheld (MCTXW) only. A Letter 2893-C is sent to advise the taxpayer, as outlined in IRM 4.19.3.18.1.2, Withholding - Miscellaneous, IRM 4.19.3.18.2, Social Security Tax/Tier 1 Railroad Retirement Tax, and IRM 4.19.3.18.1.4, Additional Medicare Tax (Withholding Reconciliation). PC 30 establishes an IDRS control base whenever a CP 2501 is generated. PC 55 updates an IDRS control base when a CP 2000 is generated. An amended CP 2000 Notice also updates the existing IDRS control base. PC 75 and 77 updates the IDRS control base when a Statutory Notice of Deficiency (A CP 3219A and Form 5564, Notice of Deficiency - Waiver) is issued/generated. Other PCs are input during AUR processing. Select pc looKup in the Analysis Menu from the Case Analysis Screen. See AUR System Guide, - Process Codes (PC). Internal process codes (IPC) are codes used in AUR processing and don't post to IDRS. See Exhibit 4.19.3-3, AUR Internal Process Codes. See Exhibit 4.19.3-1, Abbreviations and Exhibit 4.19.3-2, Glossary, for a list of abbreviations and definitions used in AUR processing. See Exhibit 4.19.3-12, Titles of Forms and Schedules, for a complete list of Forms and their titles.

# Taxpayer Advocate Service (TAS)

4.19.3.2.1 (10-02-2024) Taxpayer Advocate Service (TAS) The Taxpayer Advocate Service (TAS) is an independent organization within the Internal Revenue Service (IRS), led by the National Taxpayer Advocate. Its job is to protect taxpayer's rights by striving to ensure that every taxpayer is treated fairly and knows and understands their rights under the Taxpayer Bill of Rights (TBOR). TAS offers free help to taxpayers, including when taxpayers face financial difficulties due to an IRS problem, when they are unable to resolve tax problems, they haven't been able to resolve on their own, or when they need assistance to address an IRS system, process, or procedure that isn't functioning as it should. TAS has at least one taxpayer advocate office located in every state, the District of Columbia, and Puerto Rico. The TBOR lists rights that already existed in the tax code, putting them in simple language and grouping them into 10 fundamental rights. Employees are responsible for being familiar with and acting in accord with taxpayer rights. See IRC 7803(a)(3), Execution of Duties in Accord with Taxpayer Rights. See Taxpayer Bill of Rights, for further information. TAS and Small Business Self-Employed (SBSE) have a Service Level Agreement (SLA) between them that outlines the procedures and responsibilities for the processing of TAS cases whenever the statutory or delegated authority to complete case transactions rests outside of TAS. The SBSE SLA covers the AUR operation. An Addendum to the SLA lists contacts from various Operations in the Ogden Service Center. Visit the SLA at Taxpayer Advocate Service SLA, for further information. The Operations Assistance Request (OAR) may include Form 907, Agreement to Extend the Time to Bring Suit. Taxpayers have two years to appeal Letter 105C/ 106C. If Form 907 is filed in response to Letter 105-C/ 106-C issued by AUR, it must be signed by the Operations manager or approved delegate. See IRM 4.19.13.11.6.3, Replies Received on Closed Claims, Including to Letter 105-C/ Letter 106-C, for further information. Refer taxpayers to the Taxpayer Advocate Service (TAS) (see IRM Part 13, Taxpayer Advocate Service) when the contact meets TAS criteria (see IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria) and you can't resolve the taxpayer's issue the same day. The definition of "same day" is within 24 hours. "Same day" cases include cases you can completely resolve within 24 hours, as well as cases in which you have taken steps within 24 hours to begin resolving the taxpayer's issues. Do not refer these cases to TAS unless they meet TAS criteria and the taxpayer asks to be transferred to TAS. Refer to IRM 13.1.7.5, Same Day Resolution by Operations. When referring cases to TAS, use Form 911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance Order), and forward to TAS. In addition, provide the taxpayer with the number for the National Taxpayer Advocate (NTA) toll-free line, 877-777-4778 or TDY/TDD 800-829-4059 and advise the taxpayer TAS is available if they are not satisfied with the service they received. Note: It is important all IRS employees handle cases with the taxpayer's best interest in mind.

# Taxpayer Rights Background and Importance of the Statutory Notice of Deficiency

4.19.3.2.1.1 (10-02-2024) Taxpayer Rights Background and Importance of the Statutory Notice of Deficiency Taxpayers have the right to appeal IRS decisions in an independent forum. Taxpayers have the right to be informed and generally have the right to take their cases to court. That is, they are entitled to clear explanations. The right to petition the U.S. Tax Court is a critical entitlement for taxpayers. It is important employees understand and educate taxpayers about the foundation and impact of this right on taxpayers and the IRS. A CP 3219A, Statutory Notice of Deficiency (SNOD), also called a Statutory Notice of Deficiency (Stat), SNOD or "90-Day Letter" , is the legal notice in which the Commissioner determines the taxpayer's tax deficiency. IRC 6212, IRC 6213, IRC 6214, and IRC 6215 require the IRS issue a CP 3219A before assessing additional income tax, estate tax, gift tax, and certain excise taxes unless the taxpayer agrees to the additional assessment. The CP 3219A is a legal determination and consists of the following: A letter explaining the purpose of the notice, the amount of the deficiency, and the taxpayer's options. A waiver to allow the taxpayer to agree to the additional tax liability. A statement showing how the deficiency was computed. An explanation of the adjustments. The purpose of the CP 3219A is to: Ensure the taxpayer is formally notified of the IRS' intention to assess a tax deficiency. Inform the taxpayer of the opportunity and right to petition the U.S. Tax Court to dispute the proposed adjustments. IRC 6212 requires the IRS issue this notice to the taxpayer's last known address by certified or registered mail. Once the IRS issues this notice, the taxpayer has 90 days (150 days if the Stat is addressed to a person outside the United States) from the date the CP 3219A is mailed to file a petition in the U.S. Tax court. This 90-day (or 150 day) period is statutory and IRS employees can't extend it. If the taxpayer doesn't petition the U.S. Tax Court within the 90 days (or 150 days), the IRS is permitted to assess the deficiency, after the 90 days (or 150 days) have passed. Although the IRS does permit reconsideration of examination assessments in some situations, the taxpayer loses significant administrative and judicial avenues to dispute the IRS' decision if they don't file a petition. Therefore, it is critical that IRS employees understand the importance of the CP 3219A and be able to explain its ramifications to taxpayers. The U.S. Tax Court website (U.S.Tax Court) provides substantial information on the petition process. If the taxpayer does petition the U.S. Tax Court within the 90 days (or 150 days), the IRS is prohibited from making the assessment until after the court enters a decision. Once the taxpayer petitions, the IRS will usually send the case to Appeals to try to settle the case prior to the U.S. Tax Court hearing date unless the taxpayer has already been through the IRS' administrative appeal process.

# Statute Awareness Program

4.19.3.2.2 (10-10-2025) Statute Awareness Program The Statute Awareness Program was created to minimize barred assessments and erroneous abatements. Due to the time involved in the processing of AUR issues, AUR employees must be particularly watchful for conditions that may indicate statute imminent cases. Note: AUR employees must be aware of suspense inventory and work cases timely. If the case is Statute imminent take the appropriate actions to prevent a barred assessment. If the case is identified during a phone call and the case belongs to another site, notify the site immediately of the imminent statute (in other words, phone call, email, fax statute referral, etc.). Although the system generates the Statute Listing on a weekly basis to alert management to statutes in danger of expiring, employees must be personally knowledgeable of the rules that govern the assessment statute expiration date (ASED). These rules are outlined in IRM 25.6, Statute of Limitations. Note: The ASED can be found in the STATUTE EXP DATE field on the Tax Account screen, but the date must be verified. Each functional area must ensure an adequate number of "Statute Specialists" are assigned.

# Related IRMs and Publications

4.19.3.2.3 (10-10-2025) Related IRMs and Publications Before disclosing any tax information, you must be sure you are speaking with or faxing information to the taxpayer or authorized representative. See the Taxpayer Authentication guidelines in IRM 4.19.3.23.2.2, Disclosure, for further information. See IRM 4.19.3.23.2.4, Case Specific Inquires, for proper disclosure protocols before leaving messages on a taxpayer's answering machine or faxing confidential information. See IRM 10.8.1, Information Technology (IT) Security, Security Policy Guidance for proper disclosure protocols before faxing confidential information to the taxpayer from a Facsimile (FAX), Electronic Facsimile (EFAX), and IRS Internal Enterprise Electronic Facsimile (EFAX) Transmission of Tax Information. The following additional IRMs and publications/documents are listed as a convenience when AUR determines in-depth research is required to resolve unusual technical issues not covered in AUR instructions, Form 1040 instructions and various publications. When reference to one of the related IRMs is required for AUR processing, the complete IRM reference is stated in this IRM. Note: Technical issues that occur frequently should be brought to the attention of the IRM 4.19.3, Liability Determination - IMF Automated Underreporter Program author for consideration for inclusion in this IRM. IRM Number Title 1.4.19 Automated Underreporter Technical and Clerical Managers and Coordinators Guide 2.3 IDRS Terminal Response 2.4 IDRS Terminal Input 4.13.1 Examination Audit Reconsideration Process 4.19.2 IMF Automated Underreporter (AUR) Control 4.19.13 General Case Development and Resolution 10.5 Privacy and Information Protection 10.5.1 Privacy Policy 10.5.4 Incident Management Program 10.5.7 Use of Pseudonyms by IRS Employees 11.3 Disclosure of Official Information 11.3.1 Introduction to Disclosure 13.1.7 Taxpayer Advocate Service (TAS) Case Criteria 20.1 Penalty Handbook 20.2 Interest 21.1.1 Accounts Management and Compliance Services Overview 21.1.3 Operational Guidelines Overview 21.2.1 Systems 21.4.4 Manual Refunds 21.4.5 Erroneous Refunds 21.5.3 General Claims Procedures 21.8.1 IMF International Adjustments 25.6.1 Statute of Limitations Process and Procedures Publication 17 Your Federal Income Tax (For Individuals) Document 6209 IRS Processing Codes and Information

# AUR Security

4.19.3.2.4 (09-01-2003) AUR Security The AUR system design protects both taxpayer data and the individual AUR users. ALL users are responsible for protecting taxpayer information. Users should access ONLY the data needed to perform their duties, and not divulge taxpayer information to any employee who doesn't have an official "need to know" . Users will report infractions to their managers immediately.

# Electronic Filing System

4.19.3.2.5 (10-10-2025) Electronic Filing System Returns are filed electronically by electronic transmitters or from a home computer through a third-party vendor (Online Filing). Individual electronic returns are transmitted to Andover (ANSC), Austin (AUSC), Fresno (FSC), Kansas City (KCSC), Philadelphia (PSC) and Memphis (ECC-MEM). All electronically transmitted returns are identified by a unique document locator number (DLN). The file location codes (FLC) shown below are for the electronic filing of individual income tax returns. The second number listed is the rollover FLC used when a site exhausts the regular FLC for a given processing date. ANSC - 16; 14 AUSC - 76; 75; 21 for U.S. Possessions; 20 for International returns FSC - 80; 90 KCSC - 70; 79 PSC - 30; 32 ECC-MEM - 72; 64 Note: The system won't allow a user to order a transaction code (TC) 150 document with the above FLC codes. Information such as loose forms, schedules, and correspondence CANNOT be attached to an Electronic Filed (ELF) return. Do not use an attachment or association form. TRDB has a Tab option: "Dotted…" . Dotted line literals are only available on tax returns filed via Modernized e-File (MeF). MeF returns can be identified by a DLN Julian Date greater than 400. A TRDB screen, "Dotted…" tab display, with no entries, indicates either: The return was not filed via MeF (DLN Julian Date less than 400) or The MeF filed return included no dotted line literals. TRDB has a Tab option: "Attach" . When the user accesses the "Attach" tab, each statement/attachment the taxpayer electronically filed will be listed. There is no standard list of names/titles for the taxpayer to use so the statement/attachment will be listed by the file name the taxpayer used. No change PCs 15, 17, 26, 47, 48, 51, 52, 70, 71, 72, 73, 91, 92 and 93 automatically generate a TC 290-0 for electronically filed returns with a "Y" in the SOURCE DOCUMENT ATTACHED? field in the Assessment window.

# Integrated Automation Technologies (IAT)

4.19.3.2.6 (09-21-2020) Integrated Automation Technologies (IAT) Automated Underreporter employees are mandated to use certain Integrated Automation Technologies (IAT) tools. When an action must be taken on IDRS (unable to complete the action within the AUR system) and an IAT tool is available, AUR employees with access to IAT tools are required to complete the action using the IAT tool. The IAT tools assist the tax examiner with IDRS research and input. See Exhibit 4.19.3-18, Mandated IAT Tools, for a list of mandated IAT tools. Note: See Exhibit 4.19.3-19, Additional IAT Tools Available (Use Not Mandated), for additional IAT tools. If an IAT tool isn't functioning properly, the case will be worked using IDRS. For more information on each tool see IAT Website.

# Tax Cuts and Jobs Act (TCJA) enacted December 2017

4.19.3.2.7 (10-02-2024) Tax Cuts and Jobs Act (TCJA) enacted December 2017 The Tax Cuts and Jobs Act (TCJA) enacted December 2017 resulted in major tax reform legislation. TCJA delivered tax relief by reducing the tax rates and increasing the standard deduction. As a result, taxpayers now use only the newly redesigned Form 1040, U.S. Individual Income Tax Return / Form 1040-SR, U.S. Tax Return for Seniors and accompanying Schedules. One or more of these schedules may be used depending on the taxpayer's income, credits, taxes or payments. The schedules are: Schedule 1, Additional Income and Adjustments to Income Schedule 2, Additional Taxes Schedule 3, Additional Credits and Payments The deduction for personal exemptions for taxpayers, their spouse, or dependents was suspended for TY 2018 to 2025. To offset this change, the standard deduction amounts were increased. See IRM 4.19.3.13, Standard Deduction, for additional information. Note: The standard deduction is based on filing status and if the taxpayer is IRM 4.19.3.125 years or older or blind, and if they can be claimed as a dependent on another return. See IRM 4.19.3.13, Standard Deduction, for additional information. TCJA legislation included, but not limited to: Changes to the itemized deductions claimed on Schedule A. See IRM 4.19.3.11, Changes to Itemized Deductions, for further information. A non-refundable credit for dependents who don't qualify for the Child Tax Credit (CTC). See IRM 4.19.3.16.4.1, Other Dependent Credit. Investors may elect to defer tax on eligible gains by investing the gains in a Qualified Opportunity Fund (QOF). See IRM 4.19.3.23.5.17, Securities Sales. Student loans discharged due to death or disability are not included in income on loans discharged after December 31, 2017, and before January 1, 2026. See IRM 4.19.3.8.20.1, Cancellation of Debt (DBTCN) Analysis and IRM 4.19.3.23.5.16, Cancellation of Debt (DBTCN), for additional information. Service members serving in the Sinai Peninsula can claim combat zone benefits retroactive to June 2015. See IRM 4.19.3.23.1.11, Combat Zone, for additional information. Qualified Business Income deduction (QBID), also referred to as an IRC 199A deduction. IRM 4.19.3.12, Qualified Business Income Deduction (QBID) for additional information, A conversion of a traditional IRA to a ROTH IRA, and a rollover from any other eligible retirement plan to a ROTH IRA, can't be recharacterized as having been made to a traditional IRA. See IRM 4.19.3.8.10.7, IRA Distributions, for additional information. Losses from a trade or business of noncorporate taxpayers are limited when the net losses from all trade or business income is more than an inflation-adjusted threshold amount for tax years after 2017 and before 2026.

# Controlling Work

4.19.3.3 (09-01-2009) Controlling Work Underreporter cases to be analyzed by AUR tax examiners are assembled into batches, which are then divided into work units. See Exhibit 4.19.3-5, Batch Types. See AUR System Guide, for the following windows used to control cases: Assign Work Unit window Release Work Unit window Transfer Work Unit window Accept Transfer window Assign Case window Release Batch window Transfer Case window Request Case window Universal Work window

# Viewing Cases

4.19.3.3.1 (10-10-2025) Viewing Cases Each user may have clearance to view any case on the system. This function is necessary for any user answering taxpayer phone inquiries. To view any case, take the following actions: Select the appropriate Tax Year from the AUR Year menu. Select Review from the AUR Main menu. Select View case from the Review menu. Input the SSN to be viewed. Click on the PHONE CONTACT field if viewing the case due to a taxpayer phone call. This will leave an action trail in Case History. Click on the TEXT CHAT field if viewing the case due to a live chat with a taxpayer. The only entries that can be updated on the cases are: Telephone number and contact hours on the Tax Account screen Case notes on the Case Note window Update address Update third-party contact Update power of attorney (POA) Action Required (Universal case) box TDC UPLOADED box Note: Any other changes won't be saved to the database. The Print menu option may be accessed when the user selects View Case from the Review menu.

# Wrong Pulls in Screening (WP)

4.19.3.3.2 (10-10-2025) Wrong Pulls in Screening (WP) If the original tax return DLN and the Form 4251 DLN don't match input IPC WP. If the DLNs match, but the taxpayer's name is different, close the case with PC 29. If the tax return is for the incorrect tax year (the DLNs match, but the TY is different), close the case with PC 29 and route the return to be processed to the correct tax year.

# Case History

4.19.3.3.3 (09-01-2009) Case History The Case History screen is used to determine the location or status of a particular case. See AUR System Guide, Viewing Cases. If the case is: Assigned to your unit, select the Unit Case History window from the Case Analysis menu. Assigned anywhere on the AUR system, select the Case History window (Analysis) using the Review option on the Main menu.

# Archived Cases

4.19.3.3.4 (10-06-2022) Archived Cases For TY 2015 and subsequent years, access the case data using View Case in the appropriate tax year on the system. For TY 2014 and prior, if information on the case is needed, the case must be ordered from files.

# Case Information

4.19.3.4 (09-01-2003) Case Information Each AUR case contains information for one tax account.

# Underreporter Cases

4.19.3.4.1 (10-10-2025) Underreporter Cases A case where a paper Form 1040/Form 1040-SR was filed should have the tax return present in the case file. If the Form 4251 is batched without an original tax return, order the TC 150 return on the Tax Account screen. Note: Paper returns are scanned into the AUR system. Some cases may have an amended return, Form 1040-X, Amended U.S. Individual Income Tax Return, attached to the original individual tax return. If the amended return was not processed, include it in the resolution of the case. Leave the amended return attached to the original return when the case is closed. If the amended return was processed, consider it in the AUR case resolution and refile separately when the case is closed. All cases have online data which displays in a series of screens. See AUR System Guide, for more information. An action trail MUST be made part of the case data whenever significant actions are taken. For example, when a case is closed in screening because the discrepant income has been determined to be reported somewhere other than where income would be normally reported, or an oral statement is accepted to revise a notice or close a case no change, use either the IR Note window or the Case Note window to document actions or leave an appropriate action trail. See AUR System Guide, Case Notes and Information Return Notes. Exception: At times HQ directs closure of a case or cases with one of the HQ Identified Program Problem closing process codes. Case notes are not required on these cases. Caution: Do not include personally identifiable information (PII) in IR notes or case notes. See IRM 10.5.1.2.3.1, Examples and Categories of PII, for further information. Note: IR Notes and Case Notes are part of the official case file and may be viewed by the taxpayer. Form 4251 is attached to a return when it is scanned and will be visible in the return image.

# Case Analysis Screen

4.19.3.4.2 (10-02-2024) Case Analysis Screen The Case Analysis screen is the main screen used by tax examiners for the analysis of AUR cases. See AUR System Guide, Case Analysis Overview. A digitized tax return can be viewed using the ORIGINAL RETURN button in the Case Analysis screen. Certain Transaction Codes, Freeze Codes, or Indicators may require research, referral, or other specific actions. When these conditions are present, the Message window displays on the Case Analysis screen when the SSN of the case is entered. If this message window is displayed, review the information on the Tax Account screen to determine the appropriate action to take. Within the Case Analysis screen various windows are displayed, depending upon the issues involved on an individual case. You must work certain windows in the proper order if two or more of them are present. The eleven windows and their proper sequence are: Misc Adjust/Sch C Exp FICA Tax SST on Tips SE Tax SEP/SIMPLE Note: HSA/AMSA Contribution/Deduction. Although there is no HSA/AMSA window, this income type must be worked in the proper order. See IRM 4.19.3.9.2, Health Savings Account (HSA) or Archer Medical Savings Account (AMSA) Deduction. SSA/RRB IRA (CONTR) Savings Bond Exclusion EPAB Student Loan Interest Deduction (SLID) 5329 Premature Distribution Tax window Example: The SE Tax window has been worked. Subsequently, the SST on Tips window is worked. The system displays a warning message describing the proper sequence. You must access the SE Tax window again to complete the proper sequence before going to the Return Value screen.

# Tax Account Screen

4.19.3.4.3 (10-10-2025) Tax Account Screen The Tax Account screen displays posted information from the taxpayer's Master File account. It contains the name and address, Date of Birth (DOB) for both primary and secondary taxpayers, return amounts, transactions, and other current data including Reason Codes (RC). The data is downloaded to the AUR system from ECC-MTB. The taxpayer's phone number and hours of contact can be entered. This screen is used to order a return if the related adjustment has posted to the account. See AUR System Guide, Tax Account Screen. Compare the Adjusted Gross Income (AGI) and Taxable Income (TXI) on the return with the AGI/TXI on the Tax Account screen. A mismatch could be due to a taxpayer and/or processing error. The AUR Function is responsible for issuing a CP 2000 to correct these types of errors. Note: If the processing error resulted in an erroneous refund, see IRM 4.19.3.5.13, Erroneous Refunds, for further information. If the AGI on the return and the AGI on the Tax Account screen don't match, the taxpayer/processing error may be found on page 1 of the return. The system displays the AGI as determined from the Master File. Verify the AGI on the Tax Account screen. If appropriate, use the MISC ADJUSTMENT/SCHEDULE C EXPENSE window to account for the discrepancy. See IRM 4.19.3.5.9, Miscellaneous. Exception: If the taxpayer's AGI/TXI return amounts were correct, a processing error changed the AGI/TXI, and the taxpayer did not receive a Math Error Notice because the change was below tolerance, correct the AGI (by entering the taxpayer's original amount in the AGI window). Leave a case note explaining the action taken. If the Tax Account screen displays an asterisk in the NEW TRANS field, a new TC has been added since the case was last analyzed. When an asterisk displays: Review the TC to determine if any action is required. Click on the asterisk and press ENTER to indicate the TC has been considered while working the case. Note: The system automatically totals TC 640 payments and displays a prompt: "Should amount be entered in Return Value Screen?" . If the Tax Account screen displays the Indicator KITA (Killed in Terrorist Action) or HSTG (Hostage in Terrorist Action) in the KITA IND field, or if the system displays the message "KITA/HSTG indicator present. See IRM 4.19.3" , use PC 18 to close the case. Note: Because taxpayer contact has not been made, no further actions are needed. If the Tax Account screen displays the indicator PDT (Potentially Dangerous Taxpayer) and the system displays the message "POTENTIALLY DANGEROUS TAXPAYER (PDT). See IRM 4.19.3" , follow normal procedures and exercise caution when speaking to the taxpayer. When warranted, promptly report any assaults, threats, harassment, or forcible interference incurred during, or related to, the performance of official AUR duties to management and the local Treasury Inspector General for Tax Administration (TIGTA) office. If the Tax Account screen displays the indicator CAU (Caution Upon Contact) and the system displays the message "Warning CAUTION UPON CONTACT (CAU). See IRM 4.19.3" , the taxpayer has previously threatened physical harm, threatened suicide; filed or threatened to file a frivolous lien or a frivolous civil or criminal legal action against an IRS employee, a former employee, a contractor, or an immediate family member of an IRS employee, a former employee, or contractor. Follow normal procedures and exercise caution when speaking to the taxpayer. Tax Account screen displays TC 971 AC 198 when there is a victim of domestic violence. The system displays the message "Possible victim of domestic violence, exercise caution when disclosing information other than what's needed for verifying callers ID." When warranted, promptly report any new instances, see (7) above, using Form 13090, Caution Indicator Referral Report, and provide a copy of the completed form to management. Ensure the form contains: The facts necessary to explain the incident, describing the exact words, and if applicable, body language or gestures made by the taxpayer, The Taxpayer's Social Security Number or Employer Identification Number, and A minimal amount of tax information and only what is necessary to establish a nexus to tax administration. Note: See IRS Source, Emergency & Safety, or Office of Employee Protection (OEP), for additional information.

# Power of Attorney (POA)

4.19.3.4.3.1 (10-02-2024) Power of Attorney (POA) A POA is on file when an indicator is displayed in the Centralized Authorization File (CAF) Indicator field. The indicator is either alpha or numeric. See Document 6209, IRS Processing Codes and Information, for the applicable POA indicators. A TC may also be present. TC 960 is a CAF Indicator (POA on file) TC 961 reverses the CAF Indicator (POA revoked) Prior to the issuance of a CP2000/ CP2501 or Recomputation Notice, the CAF is automatically researched for the valid POA's name and address. If issuing a notice, and there is a valid POA on file: A copy of the notice is automatically created for the POA. (If there are multiple POAs, the notice is only created for the first two POAs authorized to receive notices per the CAF.) PARAGRAPH 178 automatically generates on the CP 2000/ CP 2501 and Recomputation Notice to inform the taxpayer a copy is being sent to the POA. See Exhibit 4.19.3-7, CP PARAGRAPHS. If an original POA is found attached to the tax return (not detached during processing), see IRM 4.19.3.23.1.21, Letters From a Third-Party and Authorization From a Valid Power of Attorney (POA), and IRM 21.3.7, Processing Third-Party Authorizations onto Centralized Authorization File (CAF), for instructions on determining validity. Disregard invalid POAs. See IRM 4.19.3.23.1.21, Letters From a Third-Party and Authorization From a Valid Power of Attorney (POA). If a POA is "valid" : Note: CAF will only accept the Form 2848 with a revision date of October 2011 or later. Forward the original to the CAF Unit for processing. Input the POA information on the Update Address window (POA). See AUR System Guide, Updating Address Information. Note: A foreign address requires a period ("." ) in the first position of the State field.

# Freeze Codes

4.19.3.4.3.2 (10-10-2025) Freeze Codes If certain freeze codes are present on the tax module, a message window displays on the Case Analysis screen when the SSN of the case is entered. Access the Tax Account screen to determine the proper action. A Freeze Code "-A" , indicates a duplicate return was filed. These cases are worked by AUR. See IRM 4.19.3.4.3.3, Transaction Codes Reflecting Tax Liability, for further instructions. A Freeze Code "-C" on the account indicates the taxpayer was involved in a military operation in a designated combat zone and may be entitled to special tax treatment. The -C freeze remains on the taxpayer's account even after the taxpayer is no longer in the combat zone. If a case has a -C freeze present additional research is necessary to determine the taxpayer's combat zone status. During screening if you receive the message: "12/31/9999 date is present, possible combat zone - See IRM 4.19.3" , close the case using PC 15. Research IDRS CC IMFOLE for the Combat Indicator. If the Combat Indicator is Then 1 The taxpayer is still serving in a combat zone. Close the case using PC 15. 2 The taxpayer is no longer serving in a combat zone. Manual Interest computation may be required for the notice to generate. During screening, continue processing. Note: During screening, if the case requires manual interest, it will reject and be built to batch type 61. Case will be closed PC 27, only if the case is in BT 61. Freeze Code"-E" (TC 810 - code "4" ) indicates the case is currently being reviewed by the Frivolous Return Program (FRP). Refer the case to the FRP coordinator who will provide instructions to either continue processing or to transfer case. If FRP wants the case transferred, use PC 13. Leave a detailed case note of determination. Freeze code"F-" (TC 971 - action code (AC) 089) freezes the entire account and most adjustments will unpost. Refer the case to the FRP coordinator who will provide instructions to either continue processing or to transfer case. If FRP wants the case transferred, use PC 13. Caution: Identity theft cases with a F- freeze will be referred after the taxpayer has provided the Form 14039 and/or police or law enforcement incident report for identity theft. Freeze Code "G-" indicates there is a TC 270/271, TC 500 or TC 780 on the account. The system alerts the tax examiner when Freeze Code "G-" is present, see the table below for the appropriate action to take. If And Then The Freeze Code "G-" is due to TC 270/271 The case is in screening phase Continue processing. Note: If the case requires manual interest, it will reject and be built to batch type 61. Case will be closed PC 27, only if the case is in BT 61. The Freeze Code "G-" is due to TC 270/271 The case is in CP 2501 or CP 2000 phase Continue processing. The Freeze Code "G-" is due to TC 270/271 The case is in Stat phase Continue processing. The Freeze Code "G-" is due to TC 500 The case is in screening phase Research IDRS CC IMFOLE for the Combat Indicator. If the Combat Indicator is 1, close the case with PC 15. If the Combat Indicator is 2, continue processing. Note: If the case requires manual interest, it will reject and be built to batch type 61. Case will be closed PC 27, only if the case is in BT 61. The Freeze Code "G-" is due to TC 500 The case is in response phase Research IDRS CC IMFOLE for the Combat Indicator. Close all Combat Indicator 1 cases with a proposed tax increase with PC 15 and issue Letter 1802-C. If the Combat Indicator is 2, continue processing. The Freeze Code "G-" is due to TC 780 The case is in screening through Stat phase See IRM 4.19.3.4.3.4, Other Transaction Codes and Math Error Codes. If a Freeze Code "-I" is present on Tax Account screen, see the table below: If case is in And Then Screening phase "-I" is present Continue processing. CP 2501 phase ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Close case with PC 51. CP 2000/CP 2501 phase ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Continue processing. CP 2000/CP 3219A phase ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Continue processing, see (8) below. IRM 4.19.3.22.1IRM 4.19.3.22.1 CP 2000/CP 3219A phase ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Close case with PC 73, see (8) below. IRM 4.19.3.22.1IRM 4.19.3.22.1 Stat phase "-I" is present Continue processing. Stat phase ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Continue Processing. IRM 4.19.3.22.1IRM 4.19.3.22.1 Stat Phase ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Close case with PC 93.IRM 4.19.3.22.1IRM 4.19.3.22.1 If there is a Freeze code" I-" a Manual Interest computation is required, and when the tax examiner attempts to input Process Code (PC) 55, 57, 59, or 95 or Internal Process Code (IPC) CR, RN, SR, or DR the system alerts the tax examiner that IPC MI is required. See IRM 4.19.3.19.10, Manually Computed Interest for the CP 2000, for additional information. A Freeze Code "L-" identifies an Innocent Spouse claim, Form 8857, Request for Innocent Spouse Relief, has been filed and is set by input of TC 971 AC 065. During the Response phase, refer to IRM 4.19.3.23.1.19, Innocent Spouse Relief Cases, for more information. Freeze Code "-L" (Audit Indicators TC 420 or 424, not reversed by TC 421) indicates the return is currently being requested or audited by Exam. During case analysis (screening phase), research IDRS CC TXMODA for a pending TC 421 that will reverse the "-L" freeze. If there is a reversal, continue normal processing. If there is No reversal, research IDRS CC AMDISA for the CURRENT-STATUS-CD/DATE field. The CURRENT-STATUS-CD/DATE field determines case action as follows: If the AMDISA CURRENT-STATUS-CD/DATE field is "33" or "34" the case is controlled by the Tax Equity and Fiscal Responsibility Act (TEFRA) function. Continue normal processing. Do not use the Exam transfer PCs to close TEFRA cases. If the AMDISA CURRENT-STATUS-CD/DATE field is "06" or "08" AWAITING CLASSIFICATION, the cases have not yet been screened for possible selection for examination. Do not use the Exam transfer PC's to close the case, continue normal processing. If the AMDISA CURRENT-STATUS-CD/DATE field is "10" , use the primary business code (PBC), secondary business code (SBC) and employee group code (EGC) to locate the correct Exam contact by accessing the EXAM Employee Group Code (EGC) Contacts, under the Who/Where Tab on SERP, then select Employee Group Code (EGC) Listing Contacts. If Exam wants the case, use either PC 11 or 12 as appropriate to transfer the case to Exam. If Exam doesn't want the case, continue with normal processing. Note: To determine if the case is a Field or Campus audit see SERP 6209 IRM Supplements. If the conditions in a-c above are not met, input PC 13 (Case Analysis phase) to transfer the case to Exam. If the Freeze Code "-L" open TC 420/424 is present after an AUR notice has been issued, take the following actions: Research IDRS CC AMDISA to determine the primary business code (PBC), secondary business code (SBC) and employee group code (EGC). Use the PBC, SBC and EGC information from AMDISA to locate the correct Exam contact by accessing: PBC is 301-309, access Exam Contact List or PBC is other than 301-309, access EXAM Employee Group Code (EGC) Contacts, under the Who/Where Tab on SERP. If the case is in CP 2501 or CP 2000 phase and Exam wants the case, input PC 38 (CP 2501) or PC 64 (CP 2000). Prepare and send Form 3210, which should include appropriate Exam contact information and in the remarks notate AUR TC 922 closed, open TC 420/424. Note: Refer to Document 12990, IRS Records Control Schedules (RCS) 23, Item 36 for the National Archives and Records Administration (NARA) approved Form 3210, Document Transmittal retention and disposition requirement. If the case is in Statutory Notice phase and Exam wants the case, see (13) below. If Exam doesn't want the case, leave a case note and continue normal processing. If an assessment is needed see IRM 4.19.3.23.12, Assessments. If Exam wants the case, take the following actions: Allow the statutory period to expire. Access the Assessment window and enter an "N" in the SOURCE DOCUMENT ATTACHED field, hold code 1, and the appropriate priority code. Commit the Assessment window. Prepare Form 3210, including the appropriate Exam contact information, and leave it with the case. Input PC 94 and release the case. A Freeze Code "-O" on the Tax Account screen, is a Disaster Indicator set by TC 971 AC 086 or 087. See IRM 4.19.3.5.6, Declared Disaster Areas, for more information. Freeze Code "P-" indicates the case may be assigned in the FRP or Integrity and Verification Operation (IVO) held the refund. Research IDRS for the following: If And Then TC 599 AC 17 or 89 is present FRP has an open control (will show AUDT in control base) Refer the case to the FRP coordinator who will provide instructions to either continue processing or to transfer case. If FRP wants the case transferred, use PC 13. TC 720 TC 971 with either AC 052, 123, 129, 134, 617 is present During screening close the case no change using PC 28. If a notice was issued and there is a credit on the account, take the following actions to close the case: Access the MFT 30 Assessment window. Enter/verify TC 290 .00. Input Hold Code 4. Remove all other transaction/reference codes. Input "N" in the SOURCE DOCUMENT ATTACHED field. Input remarks: No change. Change the AUTO/MANUAL IND field to "M" . Commit the Assessment window. Input PC 52 (CP 2501), PC 71 (CP 2000) or PC 92 (CP 3219A), as appropriate. Using the IAT "xMend" or "REQ54" tool, input a TC 290.00 and include Hold Code 4. If a notice was issued and there is no credit, close the case no change using PC 52, 71, or 92 as appropriate. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ A Freeze Code "-R" on Tax Account screen may reflect Return Integrity Verification Operation (RIVO) or Taxpayer Protection program (TPP) involvement when TC 971 AC 052, AC 134, AC 617 and TC 570 with TC 971 AC 199 is present which indicates a frozen refund. RIVO uses the TC 971 AC 199 to place a hard freeze on a module when the return has been deemed questionable or false. Research IDRS CC TXMODA for a TC 971 AC 199 having a literal in the Miscellaneous (MISC) field indicating the inventory type for proper case referral and resolution. Refer to the "If and Then " table below for case processing instructions. MISC field literal Definition 1 AMWEX60033 OMMEFDS Return was previously determined to meet OMM criteria. 2 AMWEX60033 REFEFDS Return has been determined to be fraud. 3 AMWEX60033 GATT EFDS TP has been identified as a "full year" prisoner and the return is claiming refundable credits that the TP may not be qualified for. 4 AMWEX60033JDDB73EFDS Return is being reviewed by RIVO and additional time is needed to complete the review. 5 AMWEX60033 Return has been determined to be fraud. 6 AMWEX60033 IRP EFDS Return is being reviewed for suspicious IRP and may be claiming false income and/or withholding from a potential fabricated entity or an abused EIN. Take the following actions below when there is RIVO or TPP involvement AND the case contains one of the literals in the table above to close the case. Otherwise, continue processing the case. If Then During screening Close the case no change with PC 28. A notice was issued and there is a credit on the account Access the MFT 30 Assessment window. Enter/verify TC 290 .00. Input Hold Code 4. Remove all other transaction/reference codes. Input "N" in the SOURCE DOCUMENT ATTACHED field. Input remarks: No change. Change the AUTO/MANUAL IND field to "M" . Commit the Assessment window. Input PC 52 (CP 2501), PC 71 (CP 2000) or PC 92 (CP 3219A), as appropriate. Using the IAT "xMend" or "REQ54" tool, input a TC 290.00 and include Hold Code 4. A notice was issued and there is no credit on the account Close the case no change using PC 52, 71 or 92, as appropriate. A Freeze Code "-S" replaces the assignment of computer condition codes to identify tax returns filed within a declared disaster area and is set with a TC 971 AC 688. The -S freeze doesn't suppress notices. Continue normal case processing. See IRM 4.19.3.5.6, Declared Disaster Areas, for more information. If a Freeze Code "-T" is present on Tax Account screen, there is a ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ entity freeze on the account, used for monitoring purposes only. Continue normal case processing. If there is a Freeze Code "-U" , see IRM 4.19.3.5.13, Erroneous Refunds, for further information. Freeze Code "-U" indicates the Erroneous Refund area is monitoring a case for available credits and a closure may release needed credits. If there is a Freeze Code "-V" and/or TC 520, a Bankruptcy condition is present. If identified on the Tax Account screen; During Case Analysis (screening), close the case using PC 27. Note: If TC 520 is reversed by TC 521 or 522, continue normal processing. During Response phase (after the taxpayer has been issued an AUR Notice), see IRM 4.19.3.23.1.10, Bankruptcy Procedures - Responses. If there is a Freeze Code "-W" with closing code (cc) 81, or cc 84 and/or a TC 520 (not reversed by TC 521 or 522), a Bankruptcy condition is present. If identified on the Tax Account screen; During Case Analysis (screening), close the case using PC 27. Note: If TC 520 is reversed by TC 521 or 522, continue normal processing. During Response phase (after the taxpayer has been issued an AUR Notice), see IRM 4.19.3.23.1.10, Bankruptcy Procedures - Responses. A Freeze Code "-Y" on the account indicates the taxpayer filed an Offer-in-Compromise with the IRS. See IRM 4.19.3.4.3.4, Other Transaction Codes and Math Error Codes, for additional information. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If a Freeze Code other than those explained in (2) through (23) above, are indicated on the Tax Account screen, refer to Document 6209, IRS Processing Codes and Information.

# Transaction Codes Reflecting Tax Liability

4.19.3.4.3.3 (10-10-2025) Transaction Codes Reflecting Tax Liability A TC 150 indicates a return was filed and posted to the Master File. The TC 150 amount is the tax assessed when the original return was filed. TCs 290 and 300 indicate additional tax was assessed after the original return was filed. The system adds these amounts to the TC 150 amount to determine the total tax per return. If the TC 290/300 source document is present, determine if the adjustment source document (Form 5147, Form 5344, Examination Closing Record, Form 4700, Examination Work papers, amended or duplicate return) resolves the U/R issue(s). A TC 300-0 with a corresponding TC 764, TC 768, or TC 765 indicates Exam adjusted EIC with no change to AGI or TXI. See IRM 4.19.3.18.3, Earned Income Credit, for further instructions on EIC. Certain modules where an overstatement of estimated tax payments or W/H credits resulted in a refund, offset, or a credit elect may show as assessed using TC 290, RC 051, for the amount of the overstatement. These accounts will generally not contain a TC 807. TCs 291 and 301 indicate a portion or all of a previously assessed tax was abated after the original return was filed. The system subtracts these amounts from the TC 150 amount to determine the total tax per return. If the TC 291/301 source document is present, determine if the adjustment source document (Form 5147, Form 5344, Examination Closing Record, amended or duplicate return) resolves the U/R issue(s). If the AGI/TXI on the Tax Account screen: Differs from the tax return, order the TC 291/301 document without screening for income discrepancies. Matches the tax return, screen for income discrepancies and see (5) below. Order the missing TC 290/291 or TC 300/301 adjustment source document Before issuance of a notice or Prior to taking a PC 20 action. Don't order the missing TC 290/291 or TC 300/301 source document for the following situations: The difference between the AGI/TXI on the return and the AGI/TXI shown on the Tax Account screen matches the total discrepant amount within ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. Consider the amount in question reported and close the case if there are no other related issues (for example, Self-employment tax (SE tax), 10 percent tax). Note: To calculate reported self-employment income, divide the amount shown in the SE INCOME fields on the Tax Account screen by .9235 (92.35 percent). The adjustment changes the amount(s) or item(s) back to the original figures on the return (changes may have resulted from a math error code or unallowable code). The AGI, TXI and Tax (TC 150 minus TC 291) should equal the amounts on the original tax return. W/H, excess SSTAX, or additional MCTXW is the only issue (PC 20 criteria) and the adjustment doesn't have a TC 806/807 or TC 766/767 with credit reference number (CRN) 252 present. A TC 806/807 or a TC 766/767 with CRN 252 is the only change (there is no change to the AGI or TXI) and W/H or excess SSTAX isn't an issue. Caution: Certain modules where an overstatement of estimated tax payments or W/H credits resulted in a refund, offset, or a credit elect may show as assessed using TC 290, RC 051, for the amount of the overstatement. These accounts will generally not contain a TC 807. Send PARAGRAPH 235, see Exhibit 4.19.3-7, CP PARAGRAPHS. The adjustment is a TC 291/301 when the AGI, TXI and the tax has been reduced to zero. Close case with PC 28 (these are generally filing status changes or incorrect SSN). Order the TC 290-0 adjustment source documents when one of the following corresponding TCs is present: TC 976/977 TC 971 AC 010, 012 through 016 or 120 TC 806/807 with the TC 290-0 TC 764/765/768 Exception: Don't order the TC 290-0 adjustment source document for changes to EIC and there is no change to AGI or TXI. TC 766/767 with CRN 336 TC 766/767 with CRN 252 TC 766/767 with CRN 260 TC 766/767 with CRN 262 ELF return and the blocking series of the TC 290-0 is "05" - "07" or "15" - "17" Don't order TC 290-0 adjustment source documents for the following: TC 290-0 adjustment source document is for changes to EIC (TC 764/765/768) and there is no change to AGI or TXI. The TC 290-0 has a corresponding TC 971 AC 071. These are injured spouse claims for which the refund was released. The TC 290-0, the TC 150 and the TC 846 have the same DLN with blocking series 92X (example: 18221-046-92337-5). These are also injured spouse claims for which the refund was released. The TC 290-0 has a corresponding TC 971 AC 270. These are cases where the amended return was sent back to the taxpayer. The TC 290-0 is in the 98 blocking series (adjustment made without the original return) and there is a RC 062 or 065. These are penalty abatement request disallowances and have no impact on our AUR case. The TC 290-0 has a corresponding TC 271 which fully reverses the previous TC 270 amount. The TC 290-0 has a corresponding TC 971 AC 142. This is a true duplicate return. The Tax Account screen indicates if the adjustment source document is a Correspondence Imaging Inventory (CII) document. If it is determined the adjustment is: A CII document, view document on Account Management System (AMS). Not a CII document, follow the instructions in (9) below. Request an amended return to resolve the case, if necessary. To request an amended return, enter an "X" in the ORDER RTN field for the applicable DLN on the Tax Account screen. Input the appropriate IPC XA. See Exhibit 4.19.3-3, AUR Internal Process Codes for further information. Exception: The system won't accept an "X" for any DLN where the DLN indicates the return is Virtual or a CII document. If the DLN of the amended return is the control DLN on the Tax Account screen, attach the original return behind the amended return and refile together under the control DLN. Otherwise, refile them separately. Review all adjustment documents to determine if the U/R amount has already been taken into consideration. If so, close the case using PC 21. If a document has been requested, refile it separately when the case is closed. Consider all previous changes to income, deductions, refundable/non-refundable credits, taxes, and penalties when a CP 2000 is to be issued. When a TC 300/301 is present on the Tax Account screen with a TC 421 and no -L freeze, a disposal code displays on the Tax Account screen. If pursuing U/R income, determine the disposal code. The disposal code is located under the column titled "DIS CD" in the transaction section of the Tax Account screen. If the disposal code is 01 - 13, review the attached audit papers to determine if the U/R amount has been addressed. If there is still a U/R amount after review, issue a notice. Consider all changes made by Exam per the TC 300/301. If the disposal code is 20 - 99, no audit was performed. Continue processing the case. If a TC 300/301 and a TC 577 with Julian Date 999 is displayed on the Tax Account screen (no -L Freeze present), the U/R income has not been addressed by the Examination Function. Review the papers to determine what changes were made and take those changes into consideration when calculating U/R income adjustments. When a TC 896 with the literal "OFF to IRA" is present, the taxpayer has paid additional tax on excess contributions on Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts. This tax is posted to the taxpayer's Master File Tax (MFT) 29 account and isn't included in the TC 150 amount. The system adds this amount to the TC 150 amount to arrive at total tax per return. Note: TC 892 offsets a TC 896. If a duplicate/amended return is filed (TC 976/977 or TC 971 AC 010, 012 through 016 or 120), a CP 2000, CP 2501 or PC 20 is to be issued, a TC 290/291 is present, and the duplicate or amended return isn't in the case file, research Account Management System (AMS) and Employee User Portal (EUP) for the duplicate/amended return. If after performing AMS/EUP research the amended/duplicate return isn't located: Order the duplicate/amended return by requesting the TC 290/291 DLN unless the conditions in (7) above apply. Close the case using PC 29 if the duplicate/amended return isn't available. If a duplicate/amended return is posted (TC 976/977 or TC 971 AC 010, 012 through 016 or 120), within 45 days, a CP 2000, CP 2501 or PC 20 is to be issued, and a TC 290/291 is NOT present, take the following action: Transfer the case to the Unit Suspense batch. Monitor the case for 45 days from the TC 976/977 or the TC 971 date for the pending/posting of the TC 290/291. If the TC 290/291 posts, research AMS/EUP for the return information, if not available on AMS/EUP, order the adjustment document. If the TC 290/291 doesn't post, continue processing. Note: Underreporter functions that work their own Accounts Maintenance Research (AMRH) Transcripts should forward these cases to the appropriate unit after the batch has been disassembled. TC 295 indicates a tentative allowance from Form 1045, Application for Tentative Refund, was input on the taxpayer's account by Taxpayer Services. TC 299 indicates an abatement of the original tax. If there is a TC 295 or 299 unreversed, or only partially reversed by TC 294 or 298, and there is U/R income, issue a notice. TC 305 indicates a tentative allowance from Form 1045 was input on the taxpayer's account by Exam. TC 309 indicates an abatement of the original tax. If there is a TC 305 or 309 unreversed, or only partially reversed by TC 304 or 308, and there is U/R income, issue a notice. If TC 599, TC 720 and/or TC 570 are present, see IRM 4.19.3.4.3.2, Freeze Codes, for instructions on how to process.

# Other Transaction Codes and Math Error Codes

4.19.3.4.3.4 (10-10-2025) Other Transaction Codes and Math Error Codes Other TCs shown on the Tax Account screen may require additional action. TC 160 or 166 indicates a Delinquency/Failure to File Penalty was assessed. TC 161 or 167 means a portion or all of the penalty has been abated. When a U/R issue exists, the system computes or recomputes the Delinquency/Failure to File Penalty when required. See IRM 4.19.3.19.1, Failure to File (FTF) Penalty, for additional information. TC 170 or 176 indicates an Estimated Tax (ES) Penalty was assessed. TC 171 or 177 means a portion or all of the penalty has been abated. When a U/R issue exists, a recomputation of the ES penalty may be required. See IRM 4.19.3.19.3, Estimated Tax (ES) Penalty, for additional information. TC 270 or 276 indicates a Failure to Pay Penalty (FTP) was assessed. TC 271 or 277 means a portion or all of the penalty is abated. See IRM 4.19.3.19.2, Failure to Pay Penalty (FTP), for additional information. TC 460 indicates a request for extension of time to file was approved. The extension date appears in the Remarks column. TC 480 (not reversed by TC 481 or 482) indicates the taxpayer has filed an "Offer in Compromise" (OIC) with the IRS. Continue normal AUR processing. A TC 29X may be input on these types of cases. Send copies of the case data to Collection OIC function upon their request. TC 540 indicates the taxpayer is deceased. See IRM 4.19.3.5.5, Deceased Taxpayers, for further instructions. TC 604 indicates either bankruptcy has been discharged/revoked or close-out of the MFT 30 module in preparation of mirroring to MFT 31. During screening, close the case using PC 27. During responses (AFTER the taxpayer has been issued an AUR notice), see IRM 4.19.3.23.1.19, Innocent Spouse Relief Cases, (when TC 971 AC 065 is present) or the Bankruptcy Coordinator (all others). TC 764 or 768 indicates earned income credit (EIC) was allowed. TC 765 indicates the credit was fully or partially reversed. If TC 764, 765, or 768 is present, EIC may need to be computed or recomputed. See IRM 4.19.3.18.3, Earned Income Credit, for instructions. TC 766 with: Credit Reference Number (CRN) Indicates CRN 336 Additional Child Tax Credit was allowed. TC 767 (with CRN 336) indicates the credit was fully or partially reversed. If TC 766/767 (with CRN 336) is present, Additional Child Tax Credit may need to be computed or recomputed. See IRM 4.19.3.18.4, Additional Child Tax Credit (ACTC), for instructions. CRN 252 Excess SSTAX has been adjusted. TC 767 (with CRN 252 indicates the credit was fully or partially reversed. If TC 766/767 (with CRN 252) is present, excess SSTAX may need to be computed or recomputed. CRN 260 Previously allowed American Opportunity Credit (AOC). CRN 261 Previously allowed Refundable Adoption Credit. CRN 262 Previously allowed Premium Tax Credit (PTC). If a TC 780 has been fully reversed by a TC 781 or 782, continue normal AUR processing. If an unreversed TC 780 is present on the Tax Account screen, a warning message displays to close the case. Take the following action: Close case using the appropriate PC (28, 52, 71, or 96). Leave a case note stating this is an OIC closure. Issue a Letter 1802-C, if closing the case with PC 52, 71 or 96. TC 806/800 credits the tax module for the amount of W/H claimed on a tax return. TC 807/802 reverses the TC 806/800 credit in whole or in part. W/H may need to be adjusted because of AUR processing. Before proposing a change to W/H, be certain the adjustment has not been previously allowed. See IRM 4.19.3.18.1, Withholding - General, for instructions. Note: Certain modules where an overstatement of estimated tax payments or W/H credits resulted in a refund, offset, or a credit elect will show as assessed using TC 290, RC 051, for the amount of the overstatement. These accounts will generally not contain a TC 807. TC 971AC 151 indicates duplicate filing by secondary taxpayer, close the case using PC 10. If a TC other than those explained in IRM 4.19.3.4.3.3, Transaction Codes Reflecting Tax Liability, or IRM 4.19.3.4.3.4, Other Transaction Codes and Math Error Codes, are indicated on the Tax Account screen, refer to Document 6209, IRS Processing Codes and Information. Note: If the transaction code doesn't impact the case, continue normal processing. For cases in Subfile P, AUR will disregard the TC 971 ID Theft indicators(s) and continue normal AUR processing. If issuing a notice, Paragraph 45 will automatically generate. See Exhibit 4.19.3-7, CP Paragraphs. TC 971 with certain Action Codes (AC), indicate the taxpayer may be a victim of identity theft. During response phase, see IRM 4.19.3.23.1.25, Identity Theft (IDT) Claims - Overview, and IRM 4.19.3.23.1.25.3, IDT Claims - Responses, for additional information. During screening phase close the case PC 23 if it's NOT in Subfile P and: If there is a TC 971 AC Literal 501 ICMCCA, CI OT, CI RF, DECD, EC029, INCMUL, INCOME, OTHER, REFCCA, SB AU, TPRQ, WI AMT, WI AU, WI IVO 504 ACCT, ACCT-M, BOTH, CI OT, CI RF, EC029, EMPL, EMPL-M, ICMCCA, RPMX, SB AU, TPRQ, WI AMT, WI AU, WI IVO 522 PNDCLM, UNWORK, IRSID 506 CI OT, CI RF, DECD, EC029, INCMUL, INCOME, OMM, OTHER1, RFND, SB AU, TPRQ, UPC147, UPCMUL, WI AMT, WI AU, WI IVO 524 Follow IRM 4.19.3.5.5, Deceased Taxpayers, and IRM 4.19.3.23.1.14, Decedents. Note: For a list of AC meanings see, Exhibit 4.19.3-16, Identity Theft Action Codes. Note: If the AC and literal isn't present in the table above continue normal processing. If the taxpayers address on AUR or IDRS CC ENMOD/IMFOLE is a Service Center/Campus Address, there is no confirmed good address for the taxpayer, and the taxpayer is a victim of ID Theft, close the case PC 23. See IRM 4.19.3.5, Analysis Procedures, for additional information. If the tax return in question meets the criteria outlined in the Refund Scheme Listing, IRP data, see IRM 25.23.4-1, IRPTR/IDRS Data Decision Tree, (i.e., the only UR income is social security benefits that don't indicate a filing requirement.), it may be an indication that the return is bad (not filed by the SSN owner) and the address on the module may not be that of the actual taxpayer. It may be necessary to research the taxpayer's address against prior year returns or IDRS CC ENMOD and reissue the notice/letter accordingly. If the income is clearly not the taxpayer's, close the case PC 23. TC 972 with a corresponding Action Code (AC) indicates identity theft has been reversed, continue normal AUR processing. If there is a math error code on a case, the math error code number displays in the MATH ERROR CODE field of the Tax Account screen. If there are multiple math error codes, they display up to a maximum of five (5) codes in this field. Note: The math error code verbiage displayed on the Tax Account screen is abbreviated and paraphrased from the actual verbiage in Document 6209, IRS Processing Codes and Information. If a math error was made during original processing, take the math error into consideration, enter/verify the appropriate amounts in the applicable system window. See AUR System Guide.

# Correspondence Imaging Inventory (CII)

4.19.3.4.3.5 (10-10-2025) Correspondence Imaging Inventory (CII) CII is used to manage scanned images of amended Individual Master File (IMF) returns, documents and electronic case files. When there is a duplicate/amended return on Tax Account (TC 976/977 or TC 971 AC 010, 012 through 016 or 120 or a posted TC 290/291) an indicator "1" is displayed in the Tax Account screen in the CII column when a CII document is available. Exception: If the CII document isn't found on AMS, research will need to be conducted on the Employee User Portal (EUP). To research Account Management System (AMS) for a CII document, take the following actions: Access IDRS. Access AMS. From the AMS Message Center Screen, enter the" SSN" in the TIN field box and press <Enter> on the keyboard. The account summary screen appears. In the Alert section, click on the "View CII Images" link. If not found, see (5) below. Select the tax year to review from the CII image list and click on "Open Image" . Review history section in the account summary screen for any case history, actions taken, etc. Compare the amended return to the U/R issues to determine if any or all issues are addressed. Continue normal processing. Note: During screening, see IRM 4.19.3.4.3.3, Transaction Codes Reflecting Tax Liability. After processing changes, leave a case note and select Control, Case, REVD to input the IRS Received Date on AUR and mark the VIRTUAL CORR box located on the amended return. To exit AMS: Click on the "Exit Account" link in the upper right-hand corner. In the Message Center Screen, click on the "Logout" link to exit the system. If a CII document is indicated and not found in AMS, take the following actions: Access EUP. Select "MeF IMF Tax Return & Ack PRD" under Applications. Select the SSN tab. Enter the SSN in the SSN field. Enter the Tax Period Year and Tax Period Month in the fields. Click the "Find" button. Scroll down and click on the matching DLN entry to open the amended return. Compare the amended return to the underreported (U/R) issues to determine if any or all issues are addressed. Continue normal processing. Note: During screening, see IRM 4.19.3.4.3.3, Transaction Codes Reflecting Tax Liability. Note: Review history section in the account summary screen for any case history actions taken. After processing changes, leave a case note and select Control, Case, REVD Date to input the IRS Received Date on AUR and mark the VIRTUAL CORR box located on the amended return.

# Modernized e-file (MeF) Overview

4.19.3.4.3.6 (11-23-2022) Modernized e-file (MeF) Overview Modernized e-file is a web-based system which allows electronic filing of returns through the internet. MeF accepts electronic returns for the current tax year and two prior years. Taxpayers will still have the option to submit a paper version of Form 1040-X. Users can access MeF through the Employee User Portal (EUP). AUR users can access Accounts Management System (AMS) and Employee User Portal (EUP) when there is instruction to research Tax Account for TC 971/120, TC 971/010, and/or an -A freeze is present, and the taxpayer's response isn't in the case file, or it hasn't been routed. The following Individual Tax Forms can be e-filed through the MeF platform: Form 1040/1040-SR Form 1040-X Form 9465 Note: The Individual Tax forms above are used by the AUR program. The list isn't all inclusive.

# Information Return Window

4.19.3.4.4 (09-01-2003) Information Return Window The Information Return window displays the complete IR. See AUR System Guide, Information Return window. Payer address information, as shown on the Information Return window, displays on the CP 2000/ CP 2501.

# Income Comparison Screen

4.19.3.4.5 (04-25-2025) Income Comparison Screen The Income Comparison screen displays a comparison of amounts reported by payers on IRs and the amount the taxpayer reported on their tax return. Access this window when it is necessary to view RETURN and IRP amounts or to determine the discrepant income type. See AUR System Guide, Income Comparison Screen. Caution: Do not create an IR for income types identified as discrepant in the Income Comparison screen for which there is no IR. Follow IRM procedures based on the discrepant item. The OFFSET field displays codes describing how matched return and IRP amounts were offset for identification of potential discrepancies. When attempting to offset income, make sure the income to which it is being offset has not already been used. However, if you can determine that offsets were applied incorrectly, analyze that issue as well.

# Analysis Procedures

4.19.3.5 (10-10-2025) Analysis Procedures The following instructions are for use by AUR tax examiners. They are to be used in conjunction with training materials and the AUR System Guide. An UNDERREPORTED (U/R) condition exists when income shown on the IR(s) was not reported by the taxpayer on Form 1040, Form 1040-SR. Proposed tax adjustments are based on these U/R amounts, as well as on reported income amounts for which the taxpayer failed to include the required additional taxes (for example, SE tax). An OVER-DEDUCTED (O/D) condition exists when the taxpayer claims more of a deduction than is substantiated by IR(s) and/or allowed by law (for example, Mortgage Interest Deduction or Individual Retirement Account (IRA) Deduction). An UNDERCLAIMED (U/C) condition exists when the taxpayer fails to claim all the payments to which they are entitled (such as, W/H). An OVERCLAIMED (O/C) condition exists when the taxpayer reduces their tax liability by an amount that either exceeds the amount shown on the IR(s), and/or the amount can't otherwise be substantiated (for example, Education Credits). If Exam issues are discovered during AUR processing, consult with the team leader. Then, if necessary, consult with an Exam representative to decide the appropriate action(s) to take. The system message, Street address is IRS, SEE IRM 4.19.3, will display when the taxpayer's address contains; Internal Revenue Service, IRS, or Department of Treasury. If condition exist, close case PC 16 or PC 23 if the case has been identified as IDT, see IRM 4.19.3.4.3.4, Other Transaction Codes and Math Error Codes. Computer identified income/deduction discrepancies of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ are displayed in the LIST OF DISCREPANCIES field on the Tax Account screen. If the category is a combination type, all appropriate discrepancies are displayed. The IR(s) contributing to the discrepancies are listed first on the Case Analysis screen, and the specific income type is identified with an asterisk. The AUR system alerts the user when a discrepancy exists where there are no IR(s) to mark. If the Case Analysis screen doesn't contain any asterisked items, go to the Income Comparison screen and/or Tax Account screen to determine the discrepancy and screen the case accordingly. Note: O/D and O/C deduction(s) in question won't have a system generated IR. You may need to create an IR based on system identified discrepancies. Cases involving U/R income and EIC are identified in Subfile E. An EIC discrepancy can occur when there is unreported interest, dividends, capital gain net income (including securities), rents, royalties or income from certain passive activities and the taxpayer claims investment income less than the amounts shown in the table below. If the taxpayer's total investment income exceeds the amount listed in the table below (regardless of overall AGI), the EIC is disallowed. TY 2022 TY 2023 TY 2024 $10,300 $11,000 $11,600 Due to the investment income limitation for EIC, cases have been created with small amounts of apparent U/R investment income. These investment income discrepancies are not asterisked (in either Case Analysis or the Income Comparison screens) to alert the tax examiner of where the discrepancy lies. When accessing cases in Subfile E, screen ALL IRs. If there is any U/R income (regardless of amount), complete the Return Value screen. Discrepant income types are identified with an asterisk on the Income Comparison screen and Information Return window. Note: Due to computerized offsets, some APPARENT W/H discrepancies are not asterisked. Follow procedures in IRM 4.19.3.18.1, Withholding - General, for these cases. The Case Analysis screen may contain IRs that HAVE NOT been identified as discrepant. These IRs were added after the case creation and must be analyzed. These IRs are listed along with the discrepant IRs and are identified with an indicator in the AMENDED INDICATOR field. IRs containing the same income types, MUST BE screened and an applicable IR Code assigned to each element of the IR. The indicators are shown as follows: N - New AN - Amended New RN - Replace New DN - Duplicate New XN - Delete New Analyze the asterisked elements on the IR(s) related to the computer identified discrepancies. Also analyze other issues related to the income on the discrepant IR. Example: Consider adjustments to: Child Care Credit when the DCB element is asterisked; consider SE tax when NEC, MERCH, MED, FISH, etc., elements are asterisked (or when the system identifies a potential SE tax issue); consider the 10 percent tax when Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., element is asterisked and the IR contains a Category of Distribution (COD), "J" , "L" , "M" , "1" , or "5" . Note: The AUR system identifies potential SE tax discrepancies on reported income from 1040/1040-SR, Schedule 1, lines 3, 6 or 8 where no SE tax was paid. The system alerts the user a discrepancy exists when there are no IRs to mark. An asterisk displays in the SELF EMPLOYMENT TAX field on the Income Comparison window. Follow IRM procedures for specific income types and see IRM 4.19.3.17.1, Self-Employment Tax, and Exhibit 4.19.3-20, Examples of Self-Employment Income, to determine when SE tax needs to be considered. If the asterisked IR is discrepant and it contains W/H, always screen the W/H element(s). If there are no asterisked elements for cases in Subfile E, see (7) above. If the asterisked element(s) is/are fully reported on the line(s) designated for that income on the tax return (for example, discrepant wages are fully reported on Form 1040/Form 1040-SR, line 1a, then check the INCOME COMPARISON screen for a possible misplaced data entry. Screen the income type related to the misplaced data entry. If the asterisked element is identified as being included in another type of income, analyze all related IRs, (for example, Pensions are identified as discrepant but are found reported on the wage line - analyze both pensions and wages). If the asterisked element results in above tolerance U/R, screen the remaining non-asterisked items. Note: It isn't necessary to mark non-asterisked IR(s) to access the Return Value screen. Digital assets may be used to pay for rent, royalties, or any type of goods or services and is to be treated as ordinary income by the recipient if received as part of operating a trade or business. An employer may use it as payment for wages, salaries and compensation. If the taxpayer engaged in certain transactions involving digital assets, the digital assets check box at the top of Form 1040/1040-SR will be checked "Yes" . Follow appropriate analysis procedures, based on the document type the payer used to report the income. Caution: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the discrepant IR(s) element(s) is/are reported and/or the system identified discrepancy is resolved, close the case using PC 21. When there is U/R income or if related tax/credit adjustment issues are involved, proceed to Return Value. AUR multiplies the CHANGE TO AGI field amount by the highest tax rate for the tax year. If this calculation doesn't result in either ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: Ignore the Case Analysis screen system prompt to close the case if any of the following is an issue - Schedule A Mortgage Interest, MIP, SE tax, Federal Insurance Contributions Act (FICA), W/H, excess SSTAX, Dependent Care Benefit (DCB), Child Care Credit, Employer Provided Adoption Benefits (EPAB), Education Credits, EIC, and/or Premature Distribution Tax on retirement income. Complete the Return Value screen before closing the case. Complete all applicable windows. If the dollar tolerance for issuing a notice isn't met, the system displays a message to close the case. Use PC 22 to close below tolerance cases. Proposed adjustments on the CP 2000/ CP 2501 require an explanation to the taxpayer. There is a single set of explanation paragraphs for both the CP 2000/ CP 2501. Paragraphs are either manually selected or automatically generated based on the case condition. All applicable paragraphs display in the SELECTED PARAGRAPH field(s) on the Notice Summary screen. All automatic paragraphs are automatic toggle. Non-automatic paragraphs may be viewed, selected, deleted, and/or added. There is a single Notice Summary screen. This is to facilitate automatically generating a CP 2000 from a CP 2501 no-response. The programming that automatically selects paragraphs occurs in different screens (Case Analysis, Return Value or Notice Summary) depending on the conditions needed to set the paragraph. To reduce the instances of paragraphs resetting, the tax examiner will only"toggle off" or "toggle on" paragraphs from the Select Notice Paragraph window accessed in the Notice Summary screen. CP 2000/ CP 2501 automatic and non-automatic paragraphs are notated in this IRM as "PARAGRAPH XX" . Twelve different income types can be marked as underreported. If there are more than twelve U/R income types, an error message displays. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ When issuing a notice for underreported issues, send the applicable element(s) of the IR. The entire IR won't be sent unless all elements (income types) on an IR are marked with a "S" . This includes modified and created IRs. When an IR is marked with a "U" , the system automatically enters the Send Indicator. If it is determined the IR should not be sent, remove the Send Indicator. Note: The Send Indicator must be manually entered on any created or modified IR the tax examiner wants to include on the Notice. In order for a created IR to be considered valid for inclusion on the notice, it must contain: a payer name, payer EIN, and an income amount greater than zero (in addition to other required entries). Exception: The system may determine an element of an IR will automatically be included on the notice. In this situation when a user marks an element of an IR to send, the system displays the message; "ELEMENT DOES NOT NEED TO BE SENT" . Consider the element as a valid inclusion on the notice.

# Information Returns - Review

4.19.3.5.1 (02-07-2025) Information Returns - Review The initial review of IRs is accomplished from the Case Analysis screen. See AUR System Guide, Case Analysis Overview. All IR(s) with the same document type are sorted in payer Employer Identification Number (EIN) sequence. Be aware of Payer Agent/Fraud information. Delete EIN IRs as invalid if any of the following apply: The payer EIN or name on another Form W-2 or Form 1099 matches the payee EIN or name on the IR in question. Schedule E contains a Partnership or Small Business Corporation with the same EIN or name as the payee EIN or name on the IR(s) in question, UNLESS the payer on the IR is the partnership or small business corporation shown on Schedule E. Delete the EIN IR when the payee name line(s) is obviously not the taxpayer. For example, the name line(s) contains any of the following groups: Government agencies - federal, state, or local School - private, public, colleges, universities, etc. Charitable and tax-exempt organizations - hospitals, churches, medical centers, etc. Pension Profit Sharing Plan name line(s) with the words "trustee for" , "trustee" , etc. Consider the EIN IR valid (as belonging to the taxpayer) when ANY of the following conditions are present: Primary or secondary taxpayer's name is the only payee name on the IR. Primary or secondary taxpayer's name appear in the first or the second name lines on the IR. The payee address on the EIN IR is the same address as shown on the tax return, Form W-2 or Form 1099 attached to the tax return, or other SSN IRs. The payee name on the IR implies a sole proprietorship type business, or the taxpayer's occupation as shown on Form 1040, or Schedule C or F is typically operated as a sole proprietorship or small business. The payee EIN on the IR matches the EIN on the Schedule C or F. Exception: If it appears the EIN listed on the Schedule C or F doesn't belong to the taxpayer (for example, the listed EIN matches a payer EIN on another IR), use IDRS CC INOLES to determine the validity of the EIN. Compare all valid EIN IRs to amounts on the tax return and related schedules. Use the instructions for the particular type of income involved. Assert SE tax, as appropriate, only on the issues that are normally subject to SE tax. See IRM 4.19.3.17.1, Self-Employment Tax, for further instructions and Exhibit 4.19.3-20, Examples of Self-Employment Income. EIN IRs don't display with an Income Identify Code in the INC CD field. When applicable enter the appropriate Income Identify Code, for example, interest, securities, or SE income. If it can't be determined which Income Identify Code to enter, see Exhibit 4.19.3-9, Income Identify Codes, and enter the value from the "Displayed Codes" column. If the IR has a status code of "U" , it is necessary to remove the "U" before an Income Identify Code can be entered. Delete IRs when: Payer Agent Indicator "Y" is present and the Payer Agent window contains instructions to delete the IR. See IRM 4.19.3.6, Payer Agent. Note: If all U/R income is from identified Payer Agents and the Payer Agent window contains instructions to accept or delete the IR, close the case with PC 24. The payee entity contains the words "Estate of" . The taxpayer's name is preceded by the word "by" . The payee(s) name is obviously different from the Tax Account names and doesn't contain obvious business words, even though the SSN matches. EIN 99-9999999, foreign income, is present and another EIN is present for the same payer. IR dollar amounts may vary due to currency exchange rates. Note: Delete the 99-9999999 IR ONLY when both are present. Foreign Source IRs are treated the same as domestic source IRs. The literal is "DELET" . The filing status is "3" or "6" and the SSN on the IR is for the spouse. The IR contains non-select term(s) and you determine the payee is NOT the taxpayer. See Exhibit 4.19.3-10, Non-Select Table. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ When the message window displays "Possible Fraudulent IR per SSA. See IRM 4.19.3" and the IR SSA FRAUD IND box contains a "Y" . Consider IRs with the following conditions valid and pursue any U/R amounts: The payer's name is garbled, missing, or incomplete. See IRM 4.19.3.5.2, Comparison of IRP Information Returns With Return Information. The payee's first and last name are in a different order on the IR. The payee name is a foreign version of an English name (such as, Peter listed as Pedro or Pierre). The payee name line includes the taxpayer's title (for example, MD, DDS, CPA). Only a name control is showing as the payee name and it matches the taxpayer's name. The payee second name line includes "c/o" (or a variation) followed by the taxpayer's name. The payee name line contains obvious business words and you determine the payee is the taxpayer. The literal is "AMEND" and the document doesn't match the original documents. See (11) below for further instructions. The payee name is followed by "and" or "or" without other names. The IR payee name is a maiden name. If the payee's first name or initial on the IR are the same as the Tax Account name, pursue the IR. The word "rollover" is present on either the payee or payer side on a 1099R IR. See IRM 4.19.3.8.10.4, Rollovers, for further information. The payee entity name line of the IR may contain terms or variations of terms. See Exhibit 4.19.3-10, Non-Select Table. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ for that document type unless you determine the payee is the taxpayer. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ present of the same document type NOT containing a non-select term. Amended IRs are identified on the Case Analysis screen by Indicator "A" , "R" , "D" or "X" in the AMD IND field. Amended IRs are identified on the Information Return window by the literal "AMEND" , "REPLC" , "DUPLE" , or "DELET" . If the computer has pre-identified amended IRs that are used to replace the original IR, the amended IRs have the literal "REPLC" and the literal on the original is "DELET" . PARAGRAPH 47 automatically generates when Amended IRs are included on the notice. See Exhibit 4.19.3-7, CP PARAGRAPHS. Delete original IRs if amended IRs match an original. The amended and original IR must have: The same payer name and/or EIN. The same account number (if present). The same type of income if the money amount changes or different income types when the money amount stays the same (for example, amending a Form 1099-MISC, Miscellaneous Income, from NEC to OTINC). Amended IRs with Indicator A, R, D may display PRVWG. This amount represents what the payer has identified as the previously reported wage amount, which could be an original submission or a prior amended IR. It can be used to help identify which prior Form W-2 submission from the payer is correct. If it still can't be determined which prior Form W-2 the payer is correcting, see (13) below. Note: The PRVWG element might be a combination of one or more previously reported wage IRs. Pursue all IRs if the amended IR(s) doesn't match an original, or if the amended IR matches more than one of the other IRs. Amended IRs may reflect incomplete information; neither amount literals nor $0 (zero) amounts are displayed. If such an IR is present, assume the payer/employer attempted to zero out an incorrect income amount previously reported. A blank in the amount field of an amended IR represents $0 (zero). Amended IRs with $0 (zero) amounts appear on the Case Analysis screen only if there is another IR with at least one money amount or the IR is for a Form W-2. When there are two identical IRs (SSN/EIN, name, amount, account number, income type, etc.) take the following actions: If Then The source matches Delete one of the IRs. Exception: For Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, see IRM 4.19.3.8.23.1, Securities Sales - Analysis, and for Form 1099-S, Proceeds From Real Estate Transactions, see IRM 4.19.3.8.25.1, Real Estate Transactions - Analysis. The source is different Delete the paper source IR. Exception: For Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, see IRM 4.19.3.8.23.1, Securities Sales - Analysis, and for Form 1099-S, Proceeds From Real Estate Transactions, see IRM 4.19.3.8.25.1, Real Estate Transactions - Analysis. One doesn't contain an account number ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The account numbers of both IRs contain the same sequence of numbers or characters. Example: Account number 0003013826 and account number 3013826 are account numbers which contain the same sequence of numbers. Delete one of the IRs Do not consider IRs as duplicates when the account numbers are obviously different, even though all other elements are identical. If a 99NEC, 99MIS, PTK-1 or TRK-1 IR are present for the same taxpayer, from the same payer AND for an identical money amount, see IRM 4.19.3.8.12.1, Conduit Income - Analysis, for further information.

# Comparison of IRP Information Returns With Return Information

4.19.3.5.2 (02-23-2024) Comparison of IRP Information Returns With Return Information Different income types may be combined on one information document, (for example, Form W-2 may include ordinary wages, allocated tips, W/H). On the Case Analysis screen, each income type is displayed separately and can be assigned a status code. Note: If an IR with multiple income elements is U/R, input status code "U" ONLY for the income element that is actually U/R. If necessary, enter status code "R" or "N" for any remaining income elements that are not U/R. The information return will display a check box for IRA/SEP/SIMPLE IND on Form 1099-R, box 7 and PROP/SERVICES on Form 1099-S, box 4. When checked, refer to the table below for additional information: Document Box number Description 1099-R 7 Taxpayer received a traditional IRA/SEP/SIMPLE distribution 1099-S 4 Transfer or received or will receive property or services as part of the consideration for the property transferred. The value of any services or property (other than cash or notes) isn't included in the gross proceeds. An Income Identify Code in the INC CD field of the Case Analysis screen and the Information Return window identifies certain income types to the system so that U/R income is included in related calculations (such as, earned income qualifying for earned income credit (EIC), income subject to SE tax). See Exhibit 4.19.3-9, Income Identify Codes. The tax examiner may change or delete this code if information on the taxpayer's return indicates the displayed code for U/R income types is inaccurate. The following general rules apply to the analysis of all types of IRs: Accept what the taxpayer reports if, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . Consider an IR reported if the taxpayer reports the same amount of income but under a different payer name. Allow a tolerance of $1 (rounding) for each IR. In those processes which do automatic calculations and grouping (for example, SS/RR, IRA Deduction), the system considers the (rounding) tolerance. Note: The system doesn't consider a rounding tolerance during automatic calculations that apply to W/H, SE Tax, excess SSTAX, additional MCTXW, or the 10 percent tax. Follow the taxpayer's intent as to rounding, dropping cents, when working these issues. Consider Payer Agent criteria when evaluating IRs. See IRM 4.19.3.6, Payer Agent, for further instructions regarding Payer Agent data. When it can clearly be determined due to a dollar match that a system deleted ("X" ) IR is reported, DO NOT allow credit for the reported amount(s) against other IRs. Misplaced entries on the tax return are frequent causes of U/R discrepancies. Taxpayers report income on their returns in a variety of places. It is important to thoroughly review the ENTIRE return before identifying income as being underreported. If there is unearned income (for example, UNEMP, TX/A) reported as wages, complete the Return Value screen adjusting the TOTAL EARNED INCOME field of the EIC window if necessary. Be sure income identified on an attachment is carried forward and included in the adjusted gross income. When comparing IRs with entries on any line not specifically identified for that income type, the amount must match within $1 or be clearly identified as the income type in question. If the amount matches within $1, consider the IR reported. If the amount doesn't match within $1, but the income type has been clearly identified, consider the IR(s) reported if the entry is a larger amount, or consider the IR partially U/R if the entry is a lesser amount. When payer documents are attached (Form W-2, Form-MISC, etc.) to a scanned paper return, consider them more accurate than the IR UNLESS: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ continue processing and consider the IR the most accurate. There is an amended IR that corresponds with the payer document. Consider the amended IR the most accurate. They appear to be for an incorrect tax year. Taxpayers recreate payer information (such as, but not limited to Form W-2, Form 1099-R.) to include with their ELF return, increasing the potential for input errors of the payer information, such as transposed money amounts or missing information (for example, pension plan box on Form W-2, COD on Form 1099-R). Review ELF payer documents displayed in the TRDB window as follows: When the ELF payer document ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Caution: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ When the ELF payer document ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ When the taxpayer includes an ELF payer document(s) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Caution: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Exception: If the information appears to be fraudulent or scanned paper documents appear to be altered, see IRM 4.19.3.5.8.1, Identifying and Developing Fraud in AUR, for additional information. For ELF returns, consider the IR more accurate than the ELF payer document when the ELF payer document shows less income than the IR. All elements of the IR are considered more accurate than the ELF payer document elements. If the return is missing supporting forms or schedules, research IDRS. If the information isn't available, take the following action(s): Allow credit against IRs for wages, W/H, interest, and dividends reported on the return unless there is an indication the return amounts are not from the same payer(s) on the IR(s). For all other types of income, don't allow credit against IRs unless the return amount matches an IR within $1. Do not make any changes in the calculation windows (for example, Child Care Credit, Schedule A, Alternative Minimum Tax), but allow the system to compute if the necessary supporting schedule or form is missing. The Create Information Return window is used to create a new IR. See AUR System Guide, Creating Information Returns. Create an IR if: The taxpayer reports income/deductions for which there is no corresponding IR, and the reported amount is needed by the system to perform related calculations. (The corresponding information document may or may not be attached to the return.) There is an attached information document with no corresponding IR, and the income isn't reported. Send PARAGRAPH 139, see Exhibit 4.19.3-7, CP PARAGRAPHS. The payer's name is garbled, missing or incomplete. Use the EIN to research IDRS CC INOLES for the proper payer name. If the income is U/R, recreate the IR as shown on the Case Analysis screen, including the correct payer name. Include the created IR on the notice. Caution: In order for a created IR to be considered valid for inclusion on the notice, it must contain: a payer name, payer EIN, and an income amount greater than zero (in addition to other required entries). The Send Indicator must be manually entered on the IR by clicking in the SEND INDICATOR field on the Case Analysis screen. The tax examiner determines other conditions exist that require creation of an IR. The Modify Information Return window modifies an existing IR. See AUR System Guide, Modifying Information Returns. Modify an IR if: The COD Indicator is incorrect. The Payee Indicator is incorrect. One or more IR(s) belongs to both taxpayers and the income/deduction amount needs to be allocated (for example, the taxpayers divided nonemployee compensation from one IR between two Schedules C, and SE tax is an issue). One or more IR(s) is reported on more than one schedule or form (for example, mortgage interest on Schedule A and Schedule E), and the income must be allocated in order to reflect the correct Income Identify Code. It is determined other conditions require modification of an IR. Reminder: After an IR is modified the system marks the original amount with an "X" . To include the modified IR on the notice, click the SEND INDICATOR field next to the original amount. Use the SEARCH option to view only those IRs that fit specific criteria (for example, payer name, income type). See AUR System Guide, Search Function. Use the SCROLL IR option to view multiple IRs on the Information Return window, without returning to the Case Analysis screen. See AUR System Guide, CA Tools Menu. Use the GROUP option when a breakdown isn't provided and it is necessary to compare a total money amount for related IRs with a single line entry on the return. See AUR System Guide, Grouping Information Returns. Note: The Group function is a tool to assist the TEs in computing the correct U/R amount. The Mixed IR Group menu has a drop-down menu to select an income type or combination of income types. It may not be necessary to use the Group function if the correct U/R can be determined without it. If the group total amount is larger than the single line entry on the return, assign status code "U" to the group. If the group total amount is smaller than the single line entry on the return, assign status code "R" to the group. Note: All IRs of the same income type are grouped together, regardless of the Income Identify Codes. After grouping, it may be necessary to remove an IR(s) from the group because of the Income Identify Code. If a 99MIS IR has two elements with identical money amounts (for example, RENT is $500 and MED is $500) and the taxpayer reports one of the amounts, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ A photocopy of a prior year CP 2000 response may be attached to the return. Consider the information in the previous year's response. This information may result in resolving the U/R issue(s). When a U/R issue for the same type of income from the same payer was resolved per a copy of a Letter 2625-C response from a prior year attached to the return, delete any current year IR. Note: If a prior year AUR closure letter (such as, CP 2005, Letter 1802-C) is attached to the return, research the prior year to see if the resolved issue(s) corresponds to the current AUR year discrepancy. If so, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If all IRs are matched exactly, but there is still a U/R amount: Add the amounts reported on the return. (There has probably been a math error.) Pursue the U/R issue. Send an appropriate paragraph to advise the taxpayer of the error. If the discrepancy is resolved, close the case using PC 2X. Foreign source income IRs are identified by: A payer TIN of "99-9999999" . An unusual payer name (Bundesent fer Finazen, Banque de Quebec) or a payer name indicating a foreign country (French Dividends, German Securities, United Kingdom Royalties). Foreign country abbreviation in the State field. Account Code Type "T" . Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

# Service Center Recognition/Image Processing System (SCRIPS)

4.19.3.5.2.1 (09-01-2012) Service Center Recognition/Image Processing System (SCRIPS) The following procedures apply to the analysis of Service Center Recognition/Image Processing System (SCRIPS) IRs. The system displays a warning message when STATUS CODE "U" is assigned to a SCRIPS IR(s). When this message is received, the tax examiner must screen the related IR with EXTREME care. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Example: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Example: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If a SCRIPS IR is asterisked and is deleted due to one of the conditions in (3) above and the other asterisked item(s) are reported or below tolerance, close the case. If the other asterisked item(s) are U/R, continue processing. If a SCRIPS IR is U/R and none of the conditions in (3) above are present, consider the IR correct and pursue the issue using normal procedures. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Do not send SCRIPS IRs with erroneous information. Create an IR to reflect the correct information and include it on the notice. Do not send information regarding erroneous SCRIPS IRs to the AUR Payer Agent Coordinator, unless some other payer agent (P/A) condition exists.

# Jointly Owned Income

4.19.3.5.3 (09-30-2014) Jointly Owned Income Joint ownership is indicated when there are two or more names on the IR, or one payee name is on the IR followed by "and" or "or" . This situation occurs primarily when working with interest, dividend and/or securities income. When the taxpayer reports the appropriate percentage of ownership from a jointly owned IR, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the taxpayer resides in a Community Property state, see IRM 4.19.3.5.4, Community Property States, for further instructions. If the filing status is 3 (Married Filing Separately), the spouse's name appears on the IR, the taxpayer doesn't report ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ of the income in question or doesn't include a statement that ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, research IDRS using CC INOLE, RTVUE, ENMOD, etc. for the spouse's return. Note: If the IR is solely for the spouse, delete the IR. If the spouse did not file a return, issue a CP 2000. If the spouse filed a return, it may be possible to determine if the spouse reported the jointly owned income. If the difference between the spouse's IRPTR data and their reported per return amount (from CC RTVUE, or IMFOLR) for the related income type equals the U/R amount (within tolerance) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. If not, issue a notice for the full U/R amount to the AUR taxpayer. If the filing status is 6 (taxpayer claiming an exemption for spouse not filing), issue a notice as appropriate to the primary taxpayer for the U/R issue. Reminder: If the filing status is 6 and the IR is for the spouse, delete the IR.

# Community Property States

4.19.3.5.4 (10-10-2025) Community Property States Taxpayers who reside in a community property state and who are subject to the state's community property laws must follow the state community property laws to report their community/separate income on a federal tax return. Refer to Pub 555, Community Property for applicable states. Married taxpayers can elect to file either a joint return or separate returns (to get a greater tax advantage). If the taxpayers meet certain conditions, they may be eligible to file a non-joint return using either FS 1 (single) or FS 4 (head of household), as opposed to FS 3 (married filing separate). Note: The Respect for Marriage Act of TY 2022 replaces provisions that define, for purposes of federal law, marriage as between a man and a woman and spouse as a person of the opposite sex with provisions that recognize any marriage between two individuals that is valid under state law. Registered Domestic Partners (RDPs) are not married for federal tax purposes. They can use only the single filing status, or if they qualify, the head of household filing status. RDPs treat income as jointly owned. An RDP must report half of all community income and all of their separate income on their tax return. Taxpayers attach Form 8958, Allocation of Tax Amounts Between Certain Individuals in Community Property States, (or similar statement) to show how the income has been allocated. Community income is generally income from: Community property (such as, a jointly owned savings account) Salaries, wages or pay for services that either spouse performed during their marriage Real estate that is treated as community property under the laws of the state where the property is located Separate income is generally income from separate property. Separate income belongs to the taxpayer who owns the property. Note: Contribution limits on IRAs are applied without regard to community property interests. When married taxpayers choose to file separate tax returns, they should use Form 8958 (or similar statement), to list their income, deductions and W/H. Each taxpayer is instructed to attach the Form 8958 (or similar statement) or a photocopy of the other spouse's payer documents (Form 8958, etc.) to each of their individual tax returns. On the Form 8958 (or similar statement), community income is generally equally divided between both taxpayers and each taxpayer would report their separate income. Earned income (for example, wages, nonemployee compensation) is generally considered community income and the taxpayers would divide their combined income equally between them. Note: The amount of W/H would also be combined and divided between both taxpayers. Jointly held savings accounts are treated as community property. Individual savings accounts that earn either interest or dividends are generally considered separate property. Exception: The Community Property laws for those taxpayers who reside in Idaho, Louisiana, Texas or Wisconsin stipulates that income from separate property is generally treated as community income. For example, interest earned on an individual savings account would be considered community income. On an individually filed tax return, if there is partially reported income/deductions and the taxpayer resides in a community property state as listed in (3) above, determine if the AUR condition is the result of the income allocation. Consider the information return fully reported if attached statements/worksheets or Form 8958 identifies the income was allocated between both spouses (including RDPs). If the discrepant information return isn't addressed in the attached statement/worksheet or Form 8958, pursue the full amount of the income.

# Deceased Taxpayers

4.19.3.5.5 (09-21-2020) Deceased Taxpayers On married filing joint (FS 2) returns if there is an indication the primary or secondary taxpayer is deceased, but the Tax Account screen (Entity section) doesn't reflect this, research IDRS CC INOLES to determine which taxpayer is deceased. Follow the procedures listed below to screen the case: Note: When one of the taxpayers is deceased, see IRM 4.19.3.8.17.1, SS/RR - Analysis, for procedures to resolve SS/RR discrepancies on jointly filed returns. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Caution: If the decedent's income is reported on the return, consider the IR reported and enter status code "R" . This allows the system to correctly calculate any changes. Exception: If the surviving spouse's U/R income causes a change in the taxable portion of a decedent's reported SS/RR, Student Loan Interest Deduction, and/or IRA Contributions, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡Send PARAGRAPH 129, see Exhibit 4.19.3-7, CP PARAGRAPHS. Issue a notice if the U/R IR(s) show ownership for the surviving spouse. If issuing a notice, input the current information in the Update Address window. See IRM 4.19.3.23.1.6, Address Updates, for further information. Update the first name line. For joint returns, enter DECD after the given name of the deceased taxpayer. For other than joint returns, enter DECD after the taxpayer's last name, including suffix. Note: The first name line is limited to 35 characters. If DECD won't fit on this, input the deceased taxpayer's name and DECD on the second name line. Enter the second name line, if present. Enter "D" in the Split Code field.

# Declared Disaster Areas

4.19.3.5.6 (01-21-2025) Declared Disaster Areas AUR HQ inputs zip codes for specific declared disaster area situations, as necessary, based on IRS Disaster Relief Memos. Follow system prompts to ensure proper handling of declared disaster area cases. Disaster types with case impact: Note: Use of IPC 0D, 3D, 6D or 8D and Batch Type 35, 43, 63 and 73 to process disaster cases will occur ONLY when the taxpayer self-identifies or as directed by AUR HQ and ONLY for impacted sites/cases. Type 3 - Freeze code -S displays on the case. Continue normal AUR processing. Type 4 - Freeze code -O displays on the case. The system suppresses CP 2000/ CP 2501 and Statutory Notices AND prevents all enforcement actions. Note: IRS Disaster Relief Memos provide guidance on how enforcement actions are impacted; for example, suspension of notice issuance and/or prevention of cases from defaulting. No change or adjustments resulting in a refund are permitted. See IRM 4.19.3.23.1.16, Disaster Cases, for additional information. In screening phase, for disaster type 4, do not screen the case. Use IPC 0D to suspend the case in BT35 until the disaster expires.

# Frivolous Return Program (FRP)

4.19.3.5.7 (10-02-2024) Frivolous Return Program (FRP) A frivolous return is defined as noncompliance with filing and/or paying tax based on unfounded legal or constitutional arguments. Frivolous returns often contain the following: Arguments about the obligation to file or pay tax on the face of the tax return or on attachments to the tax return. Altered forms or jurats containing frivolous arguments. Verbiage that attempts to impede or circumvent the administrative processing of the tax return. Irregular entries such as the taxpayer name or other fields in all lower-case letters or addresses with "Territory of" instead of the state. Note: For a full list of recognized frivolous arguments, see The Truth About Frivolous Tax Arguments for further information. If in doubt about whether the return is frivolous, consult with your lead or manager. If it is determined during screening the return is frivolous, close the case with PC 13, and send to "FRP" in Ogden, see IRM 4.19.3.23.11, Disagreed Responses, for further information. If the return is determined NOT to be frivolous, continue normal processing. If FRP requests an AUR case after taxpayer contact, close the case with the appropriate PC (38, 64 or 85), prepare Form 3210 and send to "FRP" in Ogden, see IRM 4.19.3.23.11, Disagreed Responses, for further information.

# Fraud Referral Program

4.19.3.5.8 (10-02-2024) Fraud Referral Program The primary objective of the fraud program is to foster voluntary compliance through the recommendation of a criminal investigation/prosecution and/or civil penalties against taxpayers who evade the assessment and/or payment of taxes known to be due and owing. Tax fraud is often defined as an intentional wrongdoing on the part of a taxpayer, with the specific purpose of evading a tax known or believed to be owing. Tax fraud requires both: A tax due and owing; and Fraudulent intent The objective of the Campus Fraud Referral Program is to: Identify cases with potential fraud. Develop fraud guidance from the Campus Fraud Referral Specialist (FRS). Refer potential fraud cases to Field Exam for further development. Fraud Technical Advisor (FTA) - The FTA assists with the development of fraud in the Campus Examination environment. Functional Fraud Coordinator (FFC) - The FFC is a fraud liaison assigned to a specific function or operation within the Campus. The FFC is responsible for reviewing the Form 13549, Campus Fraud Lead Sheet, and conducting research used to establish a pattern of non-compliance. Campus Fraud Coordinator (CFC) - The CFC is a fraud liaison assigned to each SB/SE Campus. The CFC is the main point of contact with the FTA assigned to that campus. Exam Fraud Coordinator (EFC) - The EFC is a fraud liaison assigned to each Taxpayer Service (TS) Exam function. The EFC is the main point of contact with the FTA assigned to that campus.

# Identifying and Developing Fraud in AUR

4.19.3.5.8.1 (11-23-2022) Identifying and Developing Fraud in AUR During the course of AUR case work, situations may be encountered involving potential fraud, referred to as indicators of fraud. Although only a small percentage of cases are fraudulent, it is essential to detect and report any potential fraudulent activities. The following list has been developed for AUR and identifies examples of indicators of fraud that are most likely to be found in a campus environment (this list isn't all inclusive and may involve a promoter/return preparer): Examples of Indicators of Fraud Altered Documents False deductions/adjustments to income False/overstated Form W-2 for EIC purposes (may be preparer/promoter) False Schedule C for EIC purposes Identity theft (sale or purchase) False basis in assets False transaction date for asset disposition False statements made by taxpayer False exemptions Use of decedent's SSN False business, rental, or farm expenses False or overstated refundable credits False/overstated Form 1099-MISC Amended returns with any of the above Fraud is developed by trained Fraud caseworkers until it is determined affirmative acts (deceit, subterfuge, camouflage, concealment or some attempt to color or obscure events or to make things seem other than they are) exist. The IRS must prove the taxpayer acted deliberately and knowingly with the specific intent to violate the law. Once a suspicion or indicator of fraud is found, it is essential the case be transferred to the designated AUR Functional Fraud Coordinator (FFC) for further development.

# Online Fraud and Other Scams (PHISHING)

4.19.3.5.8.1.1 (11-23-2022) Online Fraud and Other Scams (PHISHING) Cases where the taxpayer indicates receipt of an AUR notice/letter but there is no record on the AUR system of any notice/letter issuance for the tax year in question; in other words, a fake CP 2000, require special handling. Ask the taxpayer if the notice/letter was received vial mail or email; see the table below to determine the proper actions to take: If the taxpayer received the notice Then Via mail Advise the taxpayer to report the incident by accessing the information on Report phishing and Online Scams and following the directions. Note: If the taxpayer doesn't have internet access, refer to (2), below. Request the taxpayer provide a copy of the notice/letter, including all enclosures and the packaging envelope, if available. Inform the taxpayer the AUR department has no compliance issue and no further action is necessary. Caution: It may be necessary to research the taxpayer's account(s) to validate there are no other IRS issues; for example, balance due. If the taxpayer's identity is compromised (their SSN is on the notice/letter), inform the taxpayer they may be a victim of ID Theft and advise them to complete Form 14039, Identity Theft Affidavit. See IRM 4.19.3.23.1.25.1, IDT - General for additional information. Refer the matter to the AUR Coordinator and advise the Coordinator the notice/letter was received by mail. Provide a copy of the notice/letter, including enclosures and the packaging envelope, if available. Inform the Coordinator if no enclosures or packaging was provided, when requested from the taxpayer. Via email Inform the taxpayer not to reply to the email, open any attachments as they may contain malicious code, or click on any links. Advise the taxpayer to report the incident by accessing the information on Report phishing and online scams and follow the directions. Note: If the taxpayer doesn't have internet access, refer to (2), below. Request the taxpayer provide a copy of the email/fax, if available. Inform the taxpayer the AUR department has no compliance issue and no further action is necessary. Caution: It may be necessary to research the taxpayer's account(s) to validate there are no other IRS issues; such as, balance due. If the taxpayer's identity is compromised (their SSN is on the notice/letter), inform the taxpayer they may be a victim of ID Theft and advise them to complete Form 14039, Identity Theft Affidavit. See IRM 4.19.3.23.1.25.1, IDT - General. for additional information. Refer the matter to the AUR Coordinator and advise the Coordinator the notice/letter was received via email. Provide a copy of the email, if available. If the taxpayer doesn't have internet access advise them to contact TIGTA. TIGTA can be reached at 800-366-4484. Non-emergencies can be accessed through the online web at Report a Crime or IRS Employee Misconduct - U.S. Treasury Inspector General for Tax Administration (TIGTA).

# AUR Tax Examiners Fraud Responsibilities

4.19.3.5.8.2 (10-02-2024) AUR Tax Examiners Fraud Responsibilities Identify indications of fraud that are uncovered through regular case processing. Prior to researching for fraud indicators, use the IAT "Xmend" tool, research portion, to determine Scrambled SSN or Mixed Entity. If yes, prepare Form 4442 for referral to TS. If no, refer to the following: Fraud Refund Scheme listing found in the Job Aids section on SERP: Fraud Refund Scheme Listing. IRM 4.19.3.5.8.1, Identifying and Developing Fraud in AUR. IRP data versus the filed return; for example, the only UR income is social security benefits that don't indicate a filing requirement. The posted return appears to have fraudulent income reported, such as Schedule C and wage income that can't be verified on IRPTR. Discuss the indicators of fraud with the group manager or lead. If the group manager or lead concurs: Complete Sections I, II, III, and, Part IV and Part V of Form 13549, Campus Fraud Lead Sheet (information and indicators of fraud). Secure the group managers initials and date. Forward Form 13549 and transfer case to the AUR Functional Fraud Coordinator (FFC) for consideration. Documentation is critical in the development of fraud. Maintain complete and accurate case notes that include each of the following: All case actions. All documents received. All contacts must be adequately documented (for example, changes to entity information were recognized/updated). All conversations with the taxpayer, representative, return preparer, and third parties must be recorded (what was discussed and the responses). If Fraud refuses the case it will be returned to the tax examiner per IRM 4.19.3.5.8.3, AUR Functional Fraud Coordinator Responsibilities. See the table below for the appropriate action to take. If Then The case is in the screening phase Close the case PC 28, if instructed by the FFC to do so. The taxpayer's response indicates they did not file a tax return (regardless of agreement to the U/R income) Research ENMOD. If there is an indication of identity theft see IRM 4.19.3.23.1.25.3, IDT Claims - Responses. If not, issue a Letter 2626-C, and advise the taxpayer to submit a completed return including the required signatures or a signed statement that they did not have a filing requirement with a copy of our notice. Request Form 14039 or a police/law enforcement incident report. Leave a detailed case note outlining the taxpayer response and actions (such as, "TP resp didn't file. 2626-C for rtn or signed stmt" ).

# AUR Functional Fraud Coordinator Responsibilities

4.19.3.5.8.3 (10-10-2025) AUR Functional Fraud Coordinator Responsibilities The AUR Functional Fraud Coordinator (FFC) is responsible for monitoring and managing the Fraud Program within the AUR Operation: Conduct preliminary screening of potential fraud case(s) referred from the AUR Operation. Note: If W/H is the only issue and the W/H matches the payer document on file (IRPTR) don't forward to the CFC as a fraud referral unless directed by AUR HQ Policy. Perform thorough research and review of the potential fraud cases for a pattern of non-compliance and/or fraud scheme characteristics within the AUR Program. Input and maintain case action on the AUR HQ Policy Fraud SharePoint. Leave a case note detailing actions taken (for example, forwarded to AUR HQ Policy for Fraud, doesn't meet fraud criteria). Track all AUR fraud leads, including those declined/returned to AUR and those accepted for further fraud development using AUR HQ Policy SharePoint. Submit information on fraud referral/accepted/declined cases to Exam Headquarters by Completing the Campus Fraud Monitoring report by the fifth day of each month. Maintain a copy of each Form 13549, Campus Fraud Lead Sheet for 3 years. AUR will use a combination of the IPC listing and Form 13549, Campus Fraud Lead Sheet, to track fraud referrals. The AUR FFC is responsible for maintaining fraud referrals using AUR HQ Policy SharePoint by: Complete AUR HQ Policy Fraud SharePoint template for all potential fraud cases. Review and determine if referral from the AUR Operation meets fraud criteria: If Then Case(s) potentially meets criteria but is incomplete from initiator. Update AUR HQ Policy Fraud SharePoint with appropriate actions to return the case to the initiator. Case(s) doesn't meet fraud criteria. Update AUR HQ Policy Fraud SharePoint with the appropriate actions to decline the referral. Leave a detailed case note of the declination on the AUR System. Complete Form 13549, Campus Fraud Lead Sheet, Section VI with explanation of declination. Return copy of completed Form 13549, Campus Fraud Lead Sheet, to the initiator through their manager/lead within 5 business days. Reassign case to the initiators AUR User Identification Number (SEID). FFC has determined the case(s) is deemed valid for potential fraud. Update AUR HQ Policy Fraud SharePoint with the appropriate actions to accept the referral. AUR HQ Policy Fraud will provide the FFC with determination of necessary steps. Reminder: ALL potential fraud cases need to be documented on the AUR HQ Policy Fraud SharePoint. AUR HQ Policy Fraud will provide determination of next steps for potential fraud case(s): If Then AUR HQ Policy Fraud determines the referral is accepted. Leave a detailed case note on the AUR System. Complete Form 13549, Campus Fraud Lead Sheet, Section VI with explanation of acceptance. Return copy of completed Form 13549, Campus Fraud Lead Sheet, to the initiator through their manager/lead. Follow guidance provided from AUR HQ Policy Fraud. AUR HQ Policy Fraud determines the case needs to be sent to Campus Fraud Coordinator (CFC). Update AUR HQ Policy Fraud SharePoint with the appropriate actions to refer case to Campus Fraud Coordinator (CFC). Complete Form 13549, Campus Fraud Lead Sheet, and send all case contents to the CFC for final determination. Input the appropriate fraud IPC (0F, 3F, 6F, 8F (TY 2023 and prior) or F2 (TY 2024 and subsequent)), this will suspend case in BT 94 (TY 2023 and prior) or BT 89002 (TY 2024 and subsequent). Monitor case for determination from CFC. Note: CFC is required to provide a determination to accept or decline fraud lead within 21 business days of receipt. Note: The Specialized Suspense Batch Report contains the listing of cases in BT 89002. If there is no response after 21 days, contact AUR HQ Policy Fraud. Caution: The normal Assessment Statute Expiration Date (ASED) expires three (3) years from the due date of the return or three years from the received date of the original return; whichever is later. There must be at least 13 months remaining on the ASED, from the date the case is referred to the CFC. If less than 13 months remain and the case has good fraud potential, the FFC can contact the CFC who can consider accepting the case on a case by case basis. If the CFC accepts the fraud lead for further development, they will request the case be reassigned and ensure the case is established on AIMS. The AUR FFC will: Leave a detailed case note on the AUR System. Update AUR HQ Policy Fraud SharePoint stating the case has been accepted by CFC. Close the case using Fraud Closing PC 14, 44, 72 or 84, as appropriate. Annotate the Form 13549, Campus Fraud Lead Sheet, and keep a copy for the AUR records. Send a copy of the Form 13549, Campus Fraud Lead Sheet to the initiator through the initiator's manager. Ensure the entire case contents are forwarded to CFC. If the CFC declines the fraud lead, they will return the Form 13549 with a written explanation to AUR. The AUR FFC will: Leave a detailed case note on the AUR System. Update AUR HQ Policy Fraud SharePoint stating the case has been declined by CFC. Return the Form 13549 to the initiator through the initiator's manager. Reassign the case to initiating tax examiner's SEID.

# Miscellaneous

4.19.3.5.9 (10-02-2024) Miscellaneous Initial processing errors, or additions to the AGI are corrected by entering the appropriate amount(s) in the MISCELLANEOUS ADJUSTMENT fields on the MISC ADJUSTMENT/SCHEDULE C EXPENSE window. The amount computed in the changed amount field is included in the AGI by the system and is considered in all calculations. This amount is included in the U/R Amount on the Return Value screen and displays on the Notice Summary as Miscellaneous Adjustment. Caution: Do not use this window for situations where a specific income/deduction type has its own window for the required adjustment. Also, the entry for the return field can be a negative or a positive amount, depending on the line entry being changed. The MISC ADJUSTMENT/SCHEDULE C EXPENSE window has two sections. The miscellaneous adjustment section is used to correct initial processing errors or changes to the AGI that can't be corrected using specific windows for income types. The Schedule C expense section is used to adjust expenses claimed on Schedule C. When making a miscellaneous adjustment take the following actions: Enter the original amounts, as shown on the return or as adjusted during original processing, in the MISC ADJUSTMENT PER RETURN field. Enter the new, corrected amount, in the MISC ADJUSTMENT NOW field. The MISC ADJUSTMENT CHANGE field displays the computer generated adjustment to correct the AGI. Note: The MISC ADJUSTMENT CHANGE field automatically carries to the TOTAL AGI CHANGE field on the CASE ANALYSIS screen. When EIC isn't an issue, take the following action: Enter the total expenses amount from Schedule C in the PRIMARY/SECONDARY SCH C EXPENSE PER RETURN field. This field appears in the lower left corner of the CASE ANALYSIS screen when this window has been used. Enter the correct amount, including "0" (zero), in the PRIMARY/SECONDARY SCH C EXPENSE NOW field. This field displays the computer generated adjustment. Note: The PRIMARY/SECONDARY SCH C EXPENSE CHANGE field automatically carries to the SELF-EMPLOYMENT TAX window. Note: Rework any windows affected by the MISC ADJ/SCH C EXP window. If Form 6781, Gains and Losses from IRC 1256 Contracts and Straddles, is attached to the return, or if Form 1040, Schedule 2, line 17z, indicates the tax is from Form 6781, continue normal processing. This is reported on Schedule D. A net operating loss (NOL) is identified by a negative entry on Form 1040/1040-SR, Schedule 1, line 10 caused by negative amounts on Schedule 1, line 8a (other than Schedule E Part 1, line 18). Verify the correct amount is displayed in the NET OPERATING LOSS AMT field of the Return Value screen. If a NOL is caused by negative entries on Form 1040/ Form 1040-SR, Schedule 1, lines 4 or 8a, an amount doesn't display on the Return Value screen. Input the amount of the NOL in the NET OPERATING LOSS AMT field. The NET OPERATING LOSS AMT field displays an amount that is just a negative figure, not an actual NOL. If a displayed amount isn't a NOL, delete the incorrect amount. If Form 1040/1040-SR Schedule 1, shows a net operating loss, continue normal processing. If the taxpayer is deceased and IRC 6501(d), Request for Prompt Assessment, is noted on the tax return, or the response requests a prompt assessment, AND there is a U/R amount, the case MUST BE WORKED EXPEDITIOUSLY. Prompt Assessment cases have an 18-month statutory period for the assessment of additional tax. Refer to the table below for the proper action to take: If Then ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Enter "Y" in the IRC 6501(d) field on the Tax Account screen. Enter the irregular statute of limitation date in the IRREG DATE field on the Tax Account screen. Control the case and continue processing. If an attachment indicates the income in question is nontaxable and the taxpayer cites an IRC section, determine the validity of the taxpayer's statement by researching the IRC. If the IRC submitted by the taxpayer isn't valid, don't allow. Erroneous refunds caused by IRS error require special processing, see IRM 4.19.3.5.13, Erroneous Refunds, for further information.

# Limitation on Business Losses

4.19.3.5.10 (10-10-2025) Limitation on Business Losses For tax years 2017 and before 2026, section 461(l) of the Internal Revenue Code disallows excess business losses of the noncorporate taxpayers if the amount of the loss is more than the amount shown in the table below. The threshold amounts for the disallowance will be adjusted for inflation in future years. Tax Year Single Married Filing Joint 2022 $270,000 $540,000 2023 $289,000 $578,000 2024 $305,000 $610,000 The taxpayer may need to adjust the business loss when there are changes to income reported and the loss is more than the limitation on any of the following: Schedule C Schedule D/Form 8949 Schedule E Schedule F Form 4835 Form 4797 Taxpayers are instructed to report the excess business loss amount on Form 1040/ Form 1040-SR, Schedule 1, 8p. Note: DO NOT assess SE tax on the excess business loss amount reported on Form 1040/1040-SR, Schedule 1, line 8p. If Form 461, Limitation on Business Losses, send PARAGRAPH 274, see Exhibit 4.19.3-7, CP PARAGRAPHS.

# Limitation on Business Losses Responses

4.19.3.5.11 (10-10-2025) Limitation on Business Losses Responses Taxpayers may submit Form 461, Limitation on Business Losses, with their response. If the taxpayer provides a new or revised Form 461, input the increase to the line 16 amount in the MISC ADJUSTMENT window as a positive amount. Send PARAGRAPH 275, see Exhibit 4.19.3-7, CP PARAGRAPHS.

# AUR Bankruptcy Coordinator Procedures - Contact by Insolvency

4.19.3.5.12 (10-10-2025) AUR Bankruptcy Coordinator Procedures - Contact by Insolvency When contacted by an Insolvency Specialist on a case in AUR inventory that has not yet been screened: Inform the Insolvency Specialist there won't be an AUR issue for the year in question. Leave a detailed case note documenting the contact with the Insolvency Specialist. Take the following action to close the case with PC 27: If Then The case is currently in a batch (AB, AU, or BF status) Have the case assigned to yourself and input closing PC 27. The case isn't currently in a batch (for example, the case is in a future run control) On a weekly basis, provide the clerical function with a listing of SSNs and request that they assign PC 27. Note: Follow the above procedures regardless of whether or not Bankruptcy indicators are present on the AUR system. When contacted by an Insolvency Specialist on a case that has been screened but the notice has not yet been issued: Inform the Insolvency Specialist there won't be an AUR issue for the year in question. Leave a detailed case note documenting the contact with the Insolvency Specialist. Stop the notice and input PC 27. See IRM 4.19.3.20.3, Stop Notice Functionality, for additional information on stopping notices. Note: Follow the above procedures regardless of whether or not Bankruptcy indicators are present on the AUR system and/or regardless of the proposed U/R amounts.

# Erroneous Refunds

4.19.3.5.13 (08-26-2016) Erroneous Refunds An erroneous refund is any receipt of money from the IRS to which the recipient isn't entitled. It includes all erroneous payments to the taxpayer, even if the erroneous refund involves returning the taxpayer's own money. An erroneous refund may occur when: The statute of limitations has expired and a refund is issued. There are misapplied payments. The AUR adjustment erroneously releases a credit hold (for example, IVO involvement TC 971 AC 134 is present). The AUR payment is posted with TC 670 or TC 610. When an erroneous refund is identified and the TC 846 has not posted, use the IAT "Stop Refund" tool to stop the refund. The action to stop the refund must be input by 10:00 a.m. on the Wednesday preceding the date of the refund. Caution: Do not stop a direct deposit refund, which is identified by the number "10" in the DDRC field on IDRS CC IMFOLT. When an erroneous refund is identified and is the only issue, assign PC 28, 53, 68, or 88. If the Erroneous Refund Statute Expiration Date (ERSED) has expired, close the case with PC 28, 52, 71, or 96. Take appropriate actions to resolve the erroneous refund issue. See IRM 4.19.3.5.13.1, Recovering Erroneous Refunds, for additional information.

# Recovering Erroneous Refunds

4.19.3.5.13.1 (08-26-2016) Recovering Erroneous Refunds There are four categories of erroneous refunds that AUR will work; Category A1, A2, B and D. Each category has a specific method that must be used to recover the erroneous refund and different statutes of limitation apply. See IRM 21.4.5.5, Erroneous Refund Categories and Procedures. The Statute of Limitation used when recovering erroneous refunds are: ASED (assessment statute expiration date) which is generally three years from the date the return was filed, CSED (collection statute expiration date) which is generally ten years from the date of assessment, and ERSED (erroneous refund statute expiration date) which is generally two years from the date of the erroneous refund check or direct deposit. A five year statute applies when the IRS can show the erroneous refund was induced by fraud or a misrepresentation of a material fact. ERSED is used to recover Category D erroneous refunds. When a case is determined to be an erroneous refund, there are two steps to follow for recovering the erroneous refund: Identify the appropriate erroneous refund category. Complete the required actions within the applicable statutes to correct the error that caused the erroneous refund. Category IRM Reference A1 See IRM 4.19.3.5.13.1.1 A2 See IRM 4.19.3.5.13.1.2 B See IRM 4.19.3.5.13.1.3 D See IRM 4.19.3.5.13.1.4

# Recovering Erroneous Refunds - Category A1

4.19.3.5.13.1.1 (10-10-2025) Recovering Erroneous Refunds - Category A1 Category A1 Erroneous Refunds occur when the tax liability has been understated due to an error by the IRS on either a tax assessment or on an adjustment to the tax liability and the error results in a refund. Example: The IRS lowered the tax when processing the original return or an incorrect adjustment on an amended return was made. The Category A1 Erroneous Refund is generally recovered with a deficiency assessment by the Examination function. The notice of deficiency must be issued by the ASED. Prepare Form 4442, Inquiry Referral, and include any information pertinent to the erroneous refund. Forward the Form 4442 to the Examination function for the issuance of a deficiency notice. Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Use the IAT "REQ77" tool to input TC 971 AC 663 regardless of erroneous refund amount. See IRM 21.4.5-1, TC 971 AC 633 - Identifying Erroneous Refunds, for further information. Leave a case note and assign appropriate PC/IPC. Note: The Letter 510-C isn't issued on Category A1 Erroneous Refunds. Do not input a TC 470 or a TC 844 on these accounts.

# Recovering Erroneous Refunds - Category A2

4.19.3.5.13.1.2 (10-10-2025) Recovering Erroneous Refunds - Category A2 Category A2 Erroneous Refunds involve errors on non-refundable and/or refundable credits that are subject to deficiency procedures. Examples of refundable credits subject to deficiency procedures include Additional Child Tax Credit and Earned Income Tax Credit. Category A2 Erroneous Refunds are generally recovered with a deficiency assessment by the Examination function. The notice of deficiency must be issued by the ASED. Prepare Form 4442 and include any information pertinent to the erroneous refund. Forward to the Examination function for the issuance of a deficiency notice. Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Use the IAT "REQ77" tool to input TC 971 AC 663 regardless of erroneous refund amount. See IRM 21.4.5-1, TC 971 AC 633 - Identifying Erroneous Refunds, for further information. Leave a case note and assign appropriate PC/IPC. Note: The Letter 510-C isn't issued on Category A2 Erroneous Refunds. Do not input a TC 470 or a TC 844 on these accounts.

# Recovering Erroneous Refunds - Category B

4.19.3.5.13.1.3 (08-26-2016) Recovering Erroneous Refunds - Category B Category B Erroneous Refunds occur when the taxpayer overstates their W/H, additional MCTXW, excess SST, or estimated income tax payments on a return or a claim for refund. Note: If the IRS caused the overstatement of W/H, additional MCTXW, excess SST, or estimated tax payments, the erroneous refund becomes a Category D Erroneous Refund and can only be recovered through the Category D Erroneous Refund procedures. See IRM 4.19.3.5.13.1.4, Recovering Erroneous Refunds - Category D, for further information. Category B assessments are not subject to the deficiency procedures; however, the assessments must be made by the ASED. The Letter 510-C isn't issued on Category B Erroneous Refunds. Do not input a TC 470 or a TC 844 on these accounts. Do not use Hold Codes on the adjustment that will prevent the notice from being generated.

# Recovering Erroneous Refunds - Category D

4.19.3.5.13.1.4 (10-10-2025) Recovering Erroneous Refunds - Category D Category D Erroneous Refunds include any erroneous refund not included in any other erroneous refund category. The Category D Erroneous Refunds can also include any other Category of Erroneous Refunds if the ASED has expired but the ERSED is still open. The Erroneous Refund Unit in Accounting inputs a false credit (TC 700) on Category D Erroneous Refunds to remove the erroneous refund amount from the Masterfile and reestablish the account in Accounting. This action prevents notices and administrative collection action (liens or levies) from occurring on the erroneous refund liability. The TC 700 credit can be identified by a Document Code 58 and a blocking series 950-999 in the DLN. These accounts will have a -U Freeze (generated by a TC 844) and it informs other employees the account is being worked and monitored in Accounting. Do not release the TC 700 credit. The IAT "Erroneous Refund" tool MUST be used in the processing of Category D erroneous refunds. When a Category D Erroneous Refund is identified within the ERSED statute: Issue Letter 510-C using the IAT "Letters" tool. The date of the letter is considered to be the Date of Demand. Two copies of the letter are needed; one to attach to Form 12356, Erroneous Refund Worksheet, and one for the AUR case file. Note: Input the last suspense batch number in the "AUR control number" field of the letter. Exception: Do not send Letter 510-C when the ERSED is expired. Refer to (15) below. Input the adjustment using the IAT "REQ54" tool for the TC 807 (W/H) and/or TC 252 (EXSST) using blocking series 55 and Hold Code (HC) 3. Use source document "Y" if including the original return with the adjustment. Note: Failure to Pay Penalty (FTP) under IRC 6651(a)(2) and (a)(3), doesn't apply to Category D erroneous refunds. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Input any necessary credit transfers using the IAT "Credit Transfer" tool. Use TC 570 on the debit side to suppress the CP 60 Notice. The IAT "Credit Transfer" tool contains a box for Debit Freeze and Credit Freeze and will input the TC 570 when checked. Input TC 470 using the IAT "REQ77" tool. If the ERSED has expired, don't input TC 470. Input TC 971 AC 663 using the IAT "REQ77" tool. See IRM 21.4.5-1, TC 971 AC 633 - Identifying Erroneous Refunds, for further information. Input a TC 844 using the IAT "REQ77" tool for taxpayer error or refunds of more than $50,000. If the ERSED has expired, don't input TC 844. Enter the date of the erroneous refund in the "TRANS-DT" field. Note: The TC 844 generates a "-U" freeze on the account and the TC 470 will stop all systemic notices and collection processes. Input a TC 844 using the IAT "REQ77" tool for IRS error and refunds of $50,000 or less. If the ERSED has expired, don't input TC 844. Enter the Date of Demand in the "EXTENSION-DT" field, the date of the erroneous refund in the "TRANS-DT" field and the erroneous refund amount in the "FREEZE-RELEASE-AMT" field. Note: The TC 844 generates a "-U" freeze on the account and the TC 470 will stop all systemic notices and collection processes. Once the adjustment posts on IDRS: Create a new IDRS control with Category ERRF. Assign the IDRS control base to the Erroneous Refund Unit in Accounting (A/ER). Refer to (6) below. Change the status to "M" with activity code "ERRORREF" . Prepare Form 12356, Erroneous Refund Worksheet, and include a copy of all pertinent information (such as, but not limited to Form 3465, Adjustment Request, case history sheet, case notes.), including a copy of the Letter 510-C which was sent. Refer the case to the A/ER. See IRM 3.17.80-4, Erroneous Refund Coordinators, for a list of A/ER functions and their corresponding Erroneous Refund Coordinators. Save copies of each letter, form and case contents to PDF and send a copy of Form 12356 and Letter 510-C to clerical to upload into the AUR system. Close the case by assigning PC 28, 53, 68, or 88, as appropriate, or appropriate IPC on Recon cases. Note: When assigning PC 53, 68, or 88, complete the assessment window and enter an "M" in the AUTO/MANUAL IND field to indicate a manual assessment, as the adjustment was input on IDRS. The first five digits of the Erroneous Refund Units IDRS numbers are as follows: Site IDRS Austin 06113 Cincinnati 04117 Fresno 09118 Kansas City 09118 Ogden 04117 If the case involves a combination of Erroneous Refund (Cat D- W/H, additional MCTXW, and/or excess SSTAX) and other AUR issues, take the following actions: Use the IAT "REQ54" tool to input the adjustment using blocking series 05 and "N" source document since the original will be kept to work other AUR issues. Monitor for the adjustment to post on both IDRS and AUR Tax Account. After the adjustment for W/H, additional MCTXW, and/or excess SSTAX posts, issue a CP 2000 for the remaining AUR issues, following normal AUR processing procedures. Note: Do not create a new IDRS control with Category ERRF. If before a Statutory Notice of Deficiency was issued, a Category D erroneous refund was due to the AUR payment refunding in error when the account was paid in full, take the following actions: Send Letter 510-C using the IAT "Letters" Tool. Two copies of the letter are needed; one to attach to Form 12356 and one for the AUR case file. Note: Input the last suspense batch number in the "AUR control number" field of the letter. Exception: If the erroneous refund is discovered during phone contact with the taxpayer, a case history can be input on IDRS instead of issuing a Letter 510-C. Advise the taxpayer to void and return the check if it has not been cashed. Enter history "PHTPERRF" on IDRS using IDRS CC ACTON or IAT "ACTON" tool. The date you request repayment on the phone is the Date of Demand. Leave a detailed case note on AUR. Use the IAT "REQ77" tool to input TC 844 and TC 470. Work the case as an AUR agreed response, assigning PC 53, 67, or 87. If partial payment see (11) below. Once the adjustment posts on IDRS: Use the IAT "REQ77" tool to input TC 971 AC 663. See IRM 21.4.5-1, TC 971 AC 633 - Identifying Erroneous Refunds, for further information. See (5) steps 1 - 3 above, to create a new IDRS control. Prepare Form 12356 and include a copy of all pertinent information (such as, but not limited to Form 3465, case history sheet, case notes.), including a copy of the Letter 510-C which was sent. Leave a detailed case note. If after a Statutory Notice of Deficiency has been issued, a Category D erroneous refund was due to the AUR payment refunding when the account was paid in full, take the following actions: Send Letter 510-C using the IAT "Letters" Tool. Two copies of the letter are needed; one to attach to Form 12356 and one for the AUR case file. Note: Input the last suspense batch number in the "AUR control number" field of the letter. Exception: If the erroneous refund is discovered during phone contact with the taxpayer, a case history can be input on IDRS instead of issuing a Letter 510-C. Advise the taxpayer to void and return the check if it has not been cashed. Enter history "PHTPERRF" on IDRS using IDRS CC ACTON or IAT "ACTON" tool. The date you request repayment on the phone is the Date of Demand. Leave a detailed case note on AUR. Exception: If the case is controlled at a different site, check the action required box for the controlling site to complete the erroneous refund procedures. Use the IAT "REQ77" tool to input TC 844 and TC 470 Request the case and hold in unit suspense until the taxpayer responds or the suspense period has expired. If no response is received, default the case using the appropriate PC. Once the adjustment posts on IDRS: Use the IAT "REQ77" tool to input TC 971 AC 663. See IRM 21.4.5-1, TC 971 AC 633 - Identifying Erroneous Refunds, for further information. See (5) steps 1 - 3 above, to create a new IDRS control. Prepare Form 12356 and include a copy of all pertinent information (such as, but not limited to Form 3465, Adjustment Request, case history sheet, case notes.), including a copy of the Letter 510-C which was sent. Leave a detailed case note. If the Category D erroneous refund was due to the AUR payment refunding in error, when a partial payment was received, take the following actions: Send Letter 510-C using the IAT "Letters" Tool. Two copies of the letter are needed; one to attach to Form 12356 and one for the AUR case file. Note: Input the last suspense batch number in the "AUR control number" field of the letter. Exception: If the erroneous refund is discovered during phone contact with the taxpayer, a case history can be input on IDRS instead of issuing a Letter 510-C. Advise the taxpayer to void and return the check if it has not been cashed. Enter history "PHTPERRF" on IDRS using IDRS CC ACTON or the IAT "ACTON" tool. The date you request repayment on the phone is the Date of Demand. Leave a detailed case note on AUR. Exception: If the case is controlled at a different site, check the action required box for the controlling site to complete the erroneous refund procedures. Use the IAT "REQ77" tool to input TC 844 and TC 470. Assign PC 75 and release the case. Monitor the case for the PC 75 to post. After a Stat has been issued: Request the case and hold in unit suspense until the taxpayer responds or the suspense period has expired. If no response is received, default the case using the appropriate PC. Monitor IDRS for the adjustment to post. Once the adjustment posts on IDRS: Use the IAT "REQ77" tool to input TC 971 AC 663. See IRM 21.4.5-1, TC 971 AC 633 - Identifying Erroneous Refunds, for further information. See (5) steps 1 - 3 above, to create a new IDRS control. Prepare Form 12356 and include a copy of all pertinent information (such as, but not limited to Form 3465, case history sheet, case notes.), including a copy of the Letter 510-C which was sent. Leave a detailed case note on AUR. If the case is in Reconsideration phase: Send Letter 510-C using the IAT "Letters" Tool. Two copies of the letter are needed; one to attach to Form 12356 and one for the AUR case file. Note: Input the last suspense batch number in the "AUR control number" field of the letter. Exception: If the erroneous refund is discovered during phone contact with the taxpayer, a case history can be input on IDRS instead of issuing a Letter 510-C. Advise the taxpayer to void and return the check if it has not been cashed. Enter history "PHTPERRF" on IDRS using IDRS CC ACTON or IAT "ACTON" tool. The date you request repayment on the phone is the Date of Demand. Leave a detailed case note on AUR. Use the IAT "REQ77" tool to input TC 844 and TC 470. Once the adjustment posts on IDRS: Use the IAT "REQ77" tool to input TC 971 AC 663. See IRM 21.4.5-1, TC 971 AC 633 - Identifying Erroneous Refunds, for further information. See (5) steps 1 - 3 above, to create a new IDRS control. Prepare Form 12356 and include a copy of all pertinent information (such as, but not limited to Form 3465, case history sheet, case notes.), including a copy of the Letter 510-C which was sent. Leave a detailed case note. When the ERSED is expired, complete the following: Notate "ERSED Statute Expired" on the folder/Form 4251/ Campus cover sheet. Complete Form 12356 and include a copy of all pertinent information. Use Form 12634, Correspondence Transmittal, or Form 3499, Informational Transmittal, to route case documentation to the appropriate Erroneous Refund Unit. See table in (5), step 2, above for routing information. Do not input TC 844 or TC 470. Do not send Letter 510-C. Use the IAT "REQ77" tool to input a TC 971 AC 663. See IRM 21.4.5-1, TC 971 AC 633 - Identifying Erroneous Refunds, for further information. Leave a case note on AUR. Close case with PC 28, 52, 71, or 96, as appropriate.

# Repaid Erroneous Refunds

4.19.3.5.13.2 (12-19-2023) Repaid Erroneous Refunds Erroneous refunds which have been repaid may be discovered during AUR processing. Per IRC 6404(e)(2), a taxpayer won't be charged interest from the date of the erroneous refund to the date repayment is demanded, if they did not cause the erroneous refund and the refund amount is $50,000 or less. Even though the refund was repaid, it is necessary to follow Category D erroneous refund procedures to protect the taxpayer from interest charges. Note: Interest isn't charged when a treasury check is returned (not cashed). Note: Interest is charged from the date of the refund if the erroneous refund amount is over $50,000. If the erroneous refund has been repaid take the following actions: Exception: If the taxpayer returned the erroneous refund check (TC 841 on the account with "99999" in the DLN) see (4) below. Use the IAT "REQ77" tool to input TC 844, using the current date as the date of demand. This will reverse any systemically assessed interest. Complete Form 12356, Erroneous Refund Worksheet. In the details section include the following information, using the verbiage provided as an example: "Full paid erroneous refund. No Letter 510-C sent. Please input TC 845 to reverse TC 844." Use the following table to determine the appropriate action: If Then The original payment was full payment received before a Stat was issued Work the case as an AUR agreed response, assigning PC 53, 67, or 87. The original payment was partial payment received before a Stat was issued Assign PC 75 and release the case. Monitor the case for the PC 75 to post and the Stat to be mailed. After the Stat has been issued, request the case and hold in unit suspense until the taxpayer responds or the suspense period has expired. If no response is received, default the case using the appropriate PC. Payment was received after a Stat was issued Request the case and hold in unit suspense until the taxpayer responds or the suspense period has expired. If no response is received, default the case using the appropriate PC. The case is in Reconsideration phase Use the IAT "xMend" or "REQ54" tool to post the appropriate adjustment. Once the adjustment posts: See IRM 4.19.3.5.13.1.4 to create a new IDRS control. Use the IAT "REQ77" tool to input a TC 971 AC 663. See IRM 21.4.5-1, TC 971 AC 633 - Identifying Erroneous Refunds, for further information. Refer the case to the A/ER using Form 3210, Document Transmittal. See IRM 3.17.80-4, Erroneous Refund Coordinators, for a list of A/ER functions and their corresponding Erroneous Refund Coordinators. Leave a detailed case note on AUR. If the taxpayer returned the erroneous refund check (TC 841 on the account with "99999" in the DLN) take the following actions: Use the IAT "REQ77" tool to input a TC 971 AC 663. Complete Form 12356. In the details section include the following information, using the verbiage provided as an example: "Check returned; TC 844 not needed. No Letter 510-C sent." Use the following table to determine the appropriate action: If Then The original payment was full payment received before a Stat was issued Work the case as an AUR agreed response, assigning PC 53, 67, or 87. The original payment was partial payment received before a Stat was issued Assign PC 75 and release the case. Monitor the case for the PC 75 to post and the Stat to be mailed. After the Stat has been issued, request the case and hold in unit suspense until the taxpayer responds or the suspense period has expired. If no response is received, default the case using the appropriate PC. Payment was received after a Stat was issued Request the case and hold in unit suspense until the taxpayer responds or the suspense period has expired. If no response is received, default the case using the appropriate PC. The case is in Reconsideration phase Use the IAT "xMend" or "REQ54" tool to post the appropriate adjustment. Once the adjustment posts: Refer the case to the A/ER using Form 3210, Document Transmittal. See IRM 3.17.80-4, Erroneous Refund Coordinators, for a list of A/ER functions and their corresponding Erroneous Refund Coordinators. Leave a detailed case note on AUR.

# Payer Agent

4.19.3.6 (10-10-2025) Payer Agent The Payer Agent file is a compilation of Employer/Payer Information Return documents (such as, Form W-2, Form 1099, Form 1098) which have been verified as erroneously filed or processed or determined potentially fraudulent. The AUR Payer Agent file is tax year specific. The PA field of the Case Analysis screen indicates the type of Payer Agent file data for the IR in question. One of the following will be present: Indicator "Y" indicates Payer Agent. Indicator "F" indicates Fraud. Indicator "B" indicates both Payer Agent and Fraud indicators are present. Taxpayers, Employers, or Payers may notify AUR that a discrepancy with documents or the filing of IRs for a tax year has occurred. Tax examiners are encouraged to forward the information to the site AUR Payer Agent/Fraud Coordinator. The AUR FFC will refer potential fraud information to the AUR Payer Agent/Fraud Coordinator for consideration.

# Tax Examiner - Instructions

4.19.3.6.1 (02-23-2024) Tax Examiner - Instructions Access the Payer Agent window for all IRs showing Payer Agent Indicator "Y" or "B" . The Payer Agent window lists the payer's name, EIN, document type, source, and a synopsis of the reporting problem. See AUR System Guide, Viewing Payer Agent Information. Note: If all U/R income is from identified Payer/Agents and the Payer Agent window contains instructions to accept or delete the IR, close the case with PC 24. If U/R issues remain, continue normal processing (the P/A closing PC would NOT apply). During the screening phase, the tax examiner may identify questionable IRs, which appear to be erroneous but are not marked with a Payer Agent code "Y" . When IRs appear to be questionable and the tax examiner determines the IRs should be investigated, take the following steps: Leave a detailed case note. Notify the site AUR Payer Agent Coordinator. Continue normal processing. During the response phase, the tax examiner may receive information from the payer or the taxpayer indicating the proposed U/R is the result of a payer reporting error, or a payroll processing mistake. Take the following action to forward the information to the site Payer Agent Coordinator: Leave a detailed case note. Notify the site AUR Payer Agent Coordinator. Continue normal processing. Click Indicator "F" or "B" in the PA field of the Case Analysis screen to access the Potential Fraud window. It may list the payer's name, EIN, document type, source and money amount; however, because some fraudulently filed information returns are submitted using different payer names and EINs, a fraud indicator may be applied using money amounts only. Follow the specific instructions in the Fraud Description Notes section of the window to determine the proper action to take on the IR. During the screening phase, the tax examiner may identify questionable IRs, which appear to be fraudulent but are not marked with a Payer Agent code "F" . When IRs appear to be potentially fraudulent see IRM 4.19.3.5.8.2, AUR Tax Examiners Fraud Responsibilities, for additional information. During the response phase, the examiner may receive information from the taxpayer which appears to involve potential fraud. When response information appears to indicate fraud, see IRM 4.19.3.5.8.2, AUR Tax Examiners Fraud Responsibilities, for additional information.

# AUR Site Payer Agent/Fraud Coordinator - Instructions

4.19.3.6.2 (11-20-2017) AUR Site Payer Agent/Fraud Coordinator - Instructions The AUR Site Payer Agent/Fraud Coordinator will perform the following tasks: Take action on all IRs referred by tax examiners or the AUR FFC as questionable/suspicious Payer Agent or Fraud data. Sort and review the cases received from tax examiners or the AUR FFC deemed questionable/suspicious. Begin research when four or more cases with the same EIN are identified. The Site P/A Coordinator will attempt to make a determination about the discrepant IRs. If payer contact is necessary to determine the impact, check IDRS for a telephone number or call XXX-555-1212 (XXX represents the area code of the city/state being called). Note: Revised Third-Party procedures allow for the administrative action of verifying information received from Employers/Payers. This verification isn't considered a third-party contact if the purpose of the contact is to process information received from the source and/or to ensure its validity/correctness. Create a Payer Agent record when a Payer Agent record doesn't currently exist, and the information available leads to a determination the Payer Agent will be added to the Payer Agent File. Update payer name and text lines, when required. There may be more than one type of income or source code for each Payer Agent EIN entered. Verify by scrolling both type and source fields; P=Paper and T=Tape (magnetic media). Input the EIN to search/query the Payer Agent File. View and/or print Payer Agent reports from the Payer Agent Coordinator menu. Note: A Payer Agent can't be created if a Payer Agent record already exists for the EIN, document type, source code or tax year. If this condition exists, the system displays a message. If the referral is from the AUR FFC, create a Fraud record when a Fraud record doesn't currently exist and the information from the AUR FFC indicates a Fraud message will be added to the Fraud File: Note: If no IR is present, create an IR for zero prior to creating a fraud record. Mark the IR with status code "N" . Search/query the existing Fraud records in the Potential Fraud window by inputting the EIN in the search field. If an EIN isn't available, search using the Doc Type, Income Type or Money Amount. If no record exists, update input fields; for example, EIN, payer name, income type, money amount and Fraud Description Notes to add a record. Note: The EIN field may be left blank when one isn't available. If a record exists, only the Fraud Description Notes can be modified. Modify the Notes by highlighting the EIN and pressing "enter" ; after revising the Notes press "save." At the end of the AUR program for the tax year, print a copy of the Payer Agent/Fraud Listing report and retain them for three years.

# National Designated AUR Payer Agent/Fraud Coordinator - Instructions

4.19.3.6.3 (11-20-2017) National Designated AUR Payer Agent/Fraud Coordinator - Instructions Employer/Payer identified IR filing discrepancies are submitted through the Enterprise Computing Center at Martinsburg (ECC-MTB) Management and Technology Information Returns Division. Documentation received from Employers/Payers is reviewed at ECC-MTB and copies are provided to the HQ (national) designated AUR Payer Agent/Fraud Coordinator (currently located in Ogden). The HQ (national) designated AUR Payer Agent/Fraud Coordinator has access to the national AUR Payer Agent File and Fraud File and is responsible for the input of all Employer/Agent Information Return documents received from ECC-MTB or the AUR FFC. Note: IR documents are identified as tape source or a combination paper/tape source. Query the Payer Agent File/Fraud File to determine if the Payer information received will be established or needs to be updated. Note: If the EIN isn't available, query the Fraud records by using the Doc Type, Income Type or Money Amount. A Payer Agent can't be created if a Payer Agent record already exists for the EIN, document type, source code or tax year. If this condition exists, the system displays a message. To Update/Create a Payer Agent record: Enter the EIN of the identified Payer Agent. Select the appropriate document type from the list displayed. Enter the appropriate Source Code: "P" for Paper or "T" for Tape (magnetic media). Enter the payer name. Select or enter new instructions for the tax examiners. The AUR Payer Agent Program is automatically invoked during the weekly run process. The program updates the Payer Agent File for all sites during the weekly process with the new and updated records. Revised Third-Party procedures allow for the administrative action of verifying information received from Employers/Payers. This verification isn't considered a third-party contact if the purpose of the contact is to process information received from the source and/or to ensure its validity/correctness.

# Determination of CP 2501 Issuance

4.19.3.7 (10-10-2025) Determination of CP 2501 Issuance Issuance of a CP 2501 (assignment of PC 30) is required for the conditions listed below. In certain other situations, issuance of a CP 2501 may provide better customer service since it is an inquiry instead of a proposal of assessment. If in doubt, consult your lead or manager for guidance. Exception: The system parameters are set by HQ to stop issuing CP 2501 at a certain point in the AUR processing year. The U/R income is $100,000 or more. Cases involving questionable underclaimed W/H and/or additional MCTXW that result in an overall refund. See IRM 4.19.3.18.1.2, Withholding - Miscellaneous, and IRM 4.19.3.18.1.4, Additional Medicare Tax (Withholding Reconciliation), for further information. Exception: If the refund is due to U/C W/H from a Form 1099-SSA, and the income is reported correctly, issue a CP 2000. Cases resulting in an overall refund due to underreported income. Cases involving U/C excess SSTAX on ELF returns - see IRM 4.19.3.18.2, Social Security Tax/Tier I Railroad Retirement Tax. Cases involving Form 8615, Tax for Certain Children Who Have Unearned Income, and the parent or child used the Qualified Dividends and Capital Gains Worksheet, Schedule D or Schedule J tax methods. See IRM 4.19.3.14.1, 8615 Window. Cases where the On File Date is the same for multiple IRs and none of the IRs are reported. See IRM 4.19.3.8.12.1, Conduit Income - Analysis. Cases in Category 30 and EARN is being pursued. Note: If Earn is being pursued as a secondary issue (in category other than Category 30), issue a CP 2000.

# Analysis of Each Income Type

4.19.3.8 (08-26-2016) Analysis of Each Income Type These instructions are used to process the various U/R income amounts by each income type and must be used in conjunction with the general instructions in IRM 4.19.3.5, Analysis Procedures.

# Wages - General

4.19.3.8.1 (10-07-2019) Wages - General Wages are amounts received for performing services as an employee of an employer and are generally not subject to SE tax. Wages are identified on the Case Analysis screen by the literal W-2 in the DOC TYPE field and the literal "WAGES" in the INCOME TYPE field.

# Wages - Analysis

4.19.3.8.1.1 (10-10-2025) Wages - Analysis Compare WAGES amount with entries on Form 1040/ Form 1040-SR, line 1a. Note: If wages are U/R and the taxpayer enters "SNE" (Special Needs Exclusion) on the dotted line portion of wage line, compare the U/R amount with Form 8839, Qualified Adoption Expenses, line 29. If the amount on Form 8839, line 29 matches the U/R amount within $1, accept wages as reported. If the amount isn't equal to the U/R wages, consider the difference U/R. Wage comparisons for the following entries must match within $1 or be CLEARLY IDENTIFIED as wages: Form 1040/1040-SR, line 1d. Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 1040/1040-SR, line 4b. Schedule C or Schedule F - If wages are reported here, see IRM 4.19.3.8.1.3, Wages Paid to Statutory Employees, for instructions regarding Statutory Employees. Attachments to the return. Form 2106, Employee Business Expenses, Part 1, line 7 - Give credit for these amounts if the payer name on the IR is related to the occupation box on Form 2106. If the occupation box on Form 2106 is blank, consider the IR(s) fully U/R unless amounts match within $1. If line 7 is greater than line 6, in column A of Form 2106, the excess reimbursements must be included as income on Form 1040. When comparing reported wages to IRs, don't allow partial credit for unidentified amounts UNLESS the return is missing supporting Form(s) W-2. Returns that were processed through Optical Character Recognition (OCR) or ELF may not have Form(s) W-2 attached. DO NOT request the Form(s) W-2 from FRC. Allow the credit for amounts reported on lines shown in (1) above. Issue a CP 2000 for discrepancies. If the taxpayer reports the same amount of Form W-2 income as shown in the IR, but under a different payer name, consider the IR reported. Consider any two WAGE IRs, for the same taxpayer, that contain identical income information, as duplicates even if the payer names and EINs are different. Take the following action: If the taxpayer failed to report either WAGE IR, consider only one of the IRs U/R (mark all elements of the other IR with status code "D" or "N" ), and send both of the IRs on the notice. If the taxpayer reported one of the IRs, delete the IR the taxpayer did not report (mark all elements of the IR with status code "D" or "N" ). If there are no other U/R issues, enter PC 24. If there are two WAGE IRs for the same taxpayer, from the same payer (payer name and EIN match) take the following action: If the taxpayer fully reports one of the IRs, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ (mark all elements of the IR with status code "D" or "N" ). Exception: If the payer is IHSS (In Home Support Services) don't apply the 25 percent rule, continue normal processing. If the taxpayer doesn't fully report one of the WAGE IRs, group them together and consider the difference U/R. Allow taxpayers (such as, police offers or firefighters.) who have sustained "IOD" (Injury on Duty) or "LODI" (Line of Duty Injury) injuries to reduce Form W-2, box 1 Wages, by amounts indicated as line of duty injury payments when ALL of the following conditions are present: The taxpayer is under age 65. The payer statement is attached indicating the taxpayer was injured while on duty and provides a specific amount of excludable income. If the attached payer letter doesn't provide a specific amount, allow the exclusion if the taxpayer includes a worksheet providing a breakdown of excludable income. The amount has not been excluded from box 1 Wages as shown on the attached Form W-2. Note: If the taxpayer has double excluded the amount (Social Security Wages are more than the Wages shown on Form W-2 box 1), send PARAGRAPH 46. See Exhibit 4.19.3-7, CP PARAGRAPHS. Retired/non-active status members of the military employed as Junior ROTC (Reserve Officers Training Corps) instructors receive allowances for uniforms, housing, subsistence. However, unlike active-duty military personnel, these taxpayers CANNOT exclude these allowances. Disallow any excluded amounts and send PARAGRAPH 154. See Exhibit 4.19.3-7, CP PARAGRAPHS. When wages or Social Security wages are U/R, and the taxpayer paid SE tax, or is now subject to SE tax, enter/verify the appropriate entries in the SE Tax window. Use status code "R" in the SSWAG and SSTIP literal when screening valid Wage IRs. Do not use status code "N" or "D" . Status code "N" or "D" may result in an incorrect excess SSTAX calculation. The system automatically enters status code "R" on MCWGE. The status code can be changed to "D" if necessary. Note: The system no longer marks the MCTXW element with a status code "R" , this amount is used in the calculation of the Additional Medicare Tax withheld, see IRM 4.19.3.18.1.4, Additional Medicare Tax (Withholding Reconciliation). If there are two or more fully U/R WAGE IRs with an out-of-state payee address beyond the reasonable commuting area of the taxpayer (for example, taxpayer lives in Pennsylvania and U/R IRs are for Georgia), send PARAGRAPH 167. See Exhibit 4.19.3-7, CP PARAGRAPHS. Note: Many WAGE IRs involving the potential illegal use of SSNs are from agricultural, farming, food processing, or wholesale/retail employers. When taxpayers exercise statutory (qualified) employee stock options, the amount is generally excluded from ordinary income and the gain may be reported as a capital gain on Schedule D when the shares acquired upon exercise are sold. Taxpayers may reduce Form W-2, box 1, Wages by the amount shown in box 14 (identified as: stock, incentive stock options (ISOs), employee stock purchase plan (ESPP), etc.) and report the difference as a gain on Schedule D/ Form 8949, column (h). Note: If the stock received upon exercise was not held for a minimum of 2 years from the date the option was granted or 1 year from the date the option was exercised, the employer may not identify the exercised amount on the Form W-2, box 14. If the balance of the WAGE IR is found on Schedule D/Form 8949, column (h), consider the issue resolved. Review Form 1040/1040-SR, line 1a and Schedule D before determining any U/R WAGE amount. If the taxpayer did not report the full WAGE amount, send PARAGRAPH 164. See Exhibit 4.19.3-7, CP PARAGRAPHS. Note: When the option is exercised, Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, may also be issued to show the value of the stock. Since the STOCK IR relates to the exercise of the statutory employee stock option, allow credit for amounts reported on Schedule D/Form 8949, column (d) against STOCK IRs. When taxpayers exercise non-statutory (non-qualified) employee stock options, the gain upon exercise is reported as ordinary income. Employers include the exercised amount on Form W-2, box 1 and identify the stock option amount in box 12 using code "V" . The WAGE IRs displays with the literal VCODE. Caution: Taxpayers may reduce Form W-2, box 1, wages by the amount shown in box 12 (Code "V" ) and report the difference as a gain on Schedule D/Form 8949, Part 1, column (h). Review Form 1040/Form 1040-SR, line 1a and Schedule D, Part 1 before determining any U/R WAGE amount. Caution: If the taxpayer reports the non-statutory option gain as a long-term capital gain (Schedule D/Part II) AND a notice is being sent for other U/R issues, remove the non-statutory option gain from the LONG-TERM GAIN(LOSS) field in the Sch D window. Send PARAGRAPH 165, see Exhibit 4.19.3-7, CP PARAGRAPHS. If the taxpayer did not report the full WAGE amount, send PARAGRAPH 164. See Exhibit 4.19.3-7, CP PARAGRAPHS. Note: When the option is exercised, Form 1099-B may also be issued to show the value of the stock. Since the STOCK IR relates to the exercise of the non-statutory employee stock option, allow credit for amounts reported on Schedule D/Form 8949, column (d) against STOCK IRs. When taxpayers receive Restricted Stock Units (RSU), the value is reported on Form W-2, box 1 as wages. The value may appear in box 14 with "RSU" , depending on the software used by the taxpayer or their preparer. A literal for RSU will not display in Case Analysis. Caution: Taxpayers may reduce Form W-2, box 1, wages by the amount shown in box 14 (RSU) and report the difference as a gain on Schedule D/Form 8949, Part 1, column (h). Review Form 1040/1040-SR, line 1a and Schedule D, Part 1 before determining any U/R WAGE amount. Caution: If the taxpayer reports the restricted stock as long-term capital gain (Schedule D/Part II) AND a notice is being sent for other U/R issues, remove the amount from the LONG-TERM GAIN (LOSS) field in the SCH D window. When the restricted stock is sold, Form 1099-B may also be issued to show the value of the stock. Since the STOCK IR relates to the restricted stock sale, allow credit for the amounts reported on Schedule D/ Form 8949, column (d) against STOCK IRs. Whenever wages are U/R, compute W/H or consider W/H. If there is an U/R WAGE IR with no W/H amount, there are no other IRs with W/H, and there is a TC 806, 807, or TC 290 with Reason Code 51 and/or Reason Code 136 on the Tax Account screen, complete the Withholding window. See IRM 4.19.3.18.1.1, Withholding - Analysis, for additional information. Reason Code 136 is present when Additional Medicare Tax from Form 8959 was adjusted. If there is an U/R WAGE IR with no W/H amount, and there are no other IRs with W/H, the system automatically generates a W/H amount of zero (0) on the Summary screen. For a list of the codes found in box 12 of Form W-2, see Exhibit 4.19.3-8, Form W-2 - box 12 Codes.

# Attached Forms W-2 - Analysis

4.19.3.8.1.2 (10-02-2024) Attached Forms W-2 - Analysis Consider wages U/R if wage amounts from attached Form W-2 are: Omitted Added incorrectly when there are multiple Form W-2 involved Transposed Taken from the wrong box(es) on Form(s) W-2. Send PARAGRAPH 2, see Exhibit 4.19.3-7, CP PARAGRAPHS. If it appears the taxpayer reduced Form W-2 box 1 Wages by the amount in box 11 (Nonqualified Plans), pursue the difference as U/R wages and send PARAGRAPH 50, see Exhibit 4.19.3-7, CP PARAGRAPHS. Note: Before considering the amount U/R, check to see if the taxpayer reported the amount as pension income. An O/R situation exists if the taxpayer's entry on Form 1040/Form 1040-SR, line 1a is greater than the total WAGE IR(s). Consider wage income O/R if you determine the taxpayer: Made a double entry (math error) Transposed figures Used Social Security Wages from Form W-2, box 3. Send PARAGRAPH 2, see Exhibit 4.19.3-7, CP PARAGRAPHS. The taxpayer may exclude certain types of income. Wages reported on Form W-2, box 1 are generally reduced by the amount of excluded income. Some of these exclusions are: Tax favored amounts. Elective deferrals to certain retirement plans, such as 401(K) or 403(B). These are generally tax-deferred annuities for teachers and employees of 501(c)(3) organizations and/or plans. See Exhibit 4.19.3-8, Form W-2 - box 12 Codes, for a complete list of the elective deferral codes found in box 12 of Form W-2. Dependent Care Assistance Benefits (DCB). See IRM 4.19.3.8.2.1, Dependent Care Benefits (DCB), for limitation of excludable income. "IOD" (Injury on Duty) or "LODI" (Line of Duty Injury) payments. See IRM 4.19.3.8.1.1, Wages - Analysis, for further information. Survivor annuity received by the spouse, former spouse, or child of a public safety officer killed in the line of duty or a chaplain killed in the line of duty after September 10, 2001 while responding to a fire, rescue, or emergency as a member or employee of a fire or police department will generally be excluded from the recipient's income regardless of the date of the officer's death. Cost of living allowances paid to federal employees working abroad. Ministers Housing Allowances Ensure excluded minister housing allowance is subjected to SE tax, unless: the taxpayer notates "Exempt " Form 4361, "Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners" or Form 4029, "Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits " on Form 1040 (see table below IRM 4.19.3.8.1.5, Wages Miscellaneous for line numbers) or the housing allowance is for a retired minister. This amount may be the difference between net Schedule C income and income subject to SE tax on Schedule SE, see IRM 4.19.3.8.1.5(4), Wages Miscellaneous. Exercised statutory Employee Stock Options. See IRM 4.19.3.8.1.1, Wages - Analysis, for further instructions. Exception: Back pay settlements or awards under the ADEA (Age Discrimination in Employment Act) can't be excluded from income and will be pursued as U/R if excluded. Liquidated damages recovered under the ADEA don't constitute wages and should be reflected as other income on Form 1099-MISC. Since the amount reported on Form W-2, box 1 will reflect these exclusions from income, the taxpayer should not subtract the above items from the amount reported as wages. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The Form W-2 attached to the return appears to be altered, AND There is a W/H discrepancy, AND ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: Use the IR as the most correct information if the case doesn't meet referral criteria or if the referral is returned. If wages are U/R, check the attached Form W-2 and/or any attachments to determine if the taxpayer excluded the amount as sick pay. Accept the exclusion if there is an indication the taxpayer paid the premiums (an amount present on Form W-2, box 12, with code "J" that matches the excluded amount) and per attached paystubs or other documentation, the payer incorrectly included employee paid sick pay on Form W-2, box 1. Form W-2, box 1 matches box 3, SSWAG, or attached payer documentation. If there is no clear indication per a. above, consider the amount U/R and issue CP 2000. Send PARAGRAPH 25, see Exhibit 4.19.3-7, CP PARAGRAPHS. Note: Payers are instructed to indicate the amount of sick pay not included in income (and not shown in boxes 1, 3, and 5) in box 12 of Form W-2 with Code "J" when the employee contributed to the sick pay plan. If the taxpayer attaches a substitute Form W-2 and reports a lesser amount than shown on the IR from the same payer, consider the difference U/R. Consider W-2 IRs fully reported when Wage or W/H amounts on the IRs are ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: This also applies to Virtual cases. If the taxpayer participates in a nonqualified deferred compensation plan that doesn't meet all requirements as specified in IRC 409A, the employer must report the deferred compensation as income and the amount is subject to an additional tax. The employer identifies income under IRC 409A on Form W-2 in box 12 with Code Z. Note: The amount in Form W-2 box 12, Code Z is already included in box 1 (WAGES). If WAGES are U/R and the difference corresponds to the NQDC amount, pursue the discrepancy as WAGES. Send PARAGRAPH 248, see Exhibit 4.19.3-7, CP PARAGRAPHS. Income recognized under IRC 409A is identified on the Case Analysis screen by the literal Form W-2 in the DOC TYPE field and the literal "NQDC" in the INCOME TYPE field. Note: Enter status code "R" on the "NQDC" element(s). The "NQDC" amount is subject to an additional tax. See IRM 4.19.3.17.6, Additional Taxes on Income from Nonqualified Deferred Compensation Plan (IRC 409A), for further instructions. Reminder: Mark the NQDC IR element(s) with Send Indicator "S" when adjusting the additional tax.

# Wages Paid to Statutory Employees

4.19.3.8.1.3 (09-21-2020) Wages Paid to Statutory Employees Statutory employees are independent contractors, for purposes of reporting income and expenses on their tax returns, who are treated as employees for FICA tax purposes. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and consider them a statutory employee if their occupation is listed in IRM 4.19.3.23.5.1.1, Statutory Wages. Do not make any adjustments to the Schedule C, and/or SE tax. Statutory employees should receive a Form W-2 with the statutory employee box checked in box 13. If the Statutory Employee box was checked, the SEI literal has a value of "1" displayed on the IR. If it was not checked, the SEI literal has a value of "0" (zero). Statutory employees report their Form W-2 Wages on Schedule C, line 1, along with business expenses on line 28 of Schedule C. This income is NOT subject to SE tax and business expenses are not subject to the 2 percent limitation for miscellaneous itemized deductions. This income is subject to social security and Medicare taxes that should be withheld at the source by the payer and shown on Form W-2 as SS/Medicare Tax Withheld, SS Wages, and Medicare Wages and Tips. Note: Follow the taxpayer's intent, don't refund SE tax computed on wages paid to statutory employees. Performing artists are not statutory employees, but they may report Form W-2 income on Schedule C (instead of Form 2106), if during the tax year ALL of the following conditions apply: They perform services in the performing arts for at least two employers, They receive at least $200 each from any two of these employers, Their related performing arts expenses are more than 10 percent of their gross income from the performance of those services, AND Their adjusted gross income (AGI) isn't more than $16,000 before deducting these business expenses. Cases involving wages of statutory employees are created when: Wages received by an individual other than a statutory employee were reported on the Schedule C, and the individual incorrectly deducts expenses on Schedule C. Note: Only statutory employees may deduct expenses on Schedule C. The statutory employee did not report the wages on Schedule C, line 1, or as wages on Form 1040/Form 1040-SR. There is a discrepancy if there is a difference between the total of all wages (but not allocated tips) on all Form W-2 when the statutory employee indicator in box 13 of Form W-2 is checked and the wages per return, Schedule C, line 1. Input Income Identify Code"SW" in all U/R wages from Statutory Employee IRs if wages are U/R. Consider wages from Statutory Employees U/R and send PARAGRAPH 115, (see Exhibit 4.19.3-7, CP PARAGRAPHS) if the Wage amounts from attached Form(s) W-2 are: Omitted Added incorrectly when there are multiple Form(s) W-2 involved Transposed Taken from the wrong box(es) on Form(s) W-2, send PARAGRAPH 2. See Exhibit 4.19.3-7, CP PARAGRAPHS. If the taxpayer combines non-statutory wages with statutory wages or self-employment income (for example, NEC, MERCH, OTINC, MED) on the same Schedule C, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the taxpayer includes only non-statutory wages on Schedule C, disallow the expenses from Schedule C, line 28, and the amounts on Schedule C, lines 2, 4, and/or 30. Input the amount of disallowed expenses in the PRIM/SEC SCH C EXPENSE PER RETURN field(s). Enter a zero (0) in the PRIM/SEC SCH C EXPENSE NOW field(s) on the MISC ADJUSTMENT/SCHEDULE C EXPENSE window. Note: These amounts display on the CP 2000 Summary as a changed item (changes to the Primary and/or Secondary Schedule C expenses displays as a single item on the Summary screen). Send PARAGRAPH 116, see Exhibit 4.19.3-7, CP PARAGRAPHS. Note: When disallowing expenses on Schedule C due to the conditions above, don't adjust any SE tax claimed. Manually access the SETAX window to suppress the change. See IRM 4.19.3.17.1, Self-Employment Tax.

# Fellowships, Grants, and Stipends

4.19.3.8.1.4 (10-29-2024) Fellowships, Grants, and Stipends If an explanation attached to the return indicates the fellowship, grant, or stipend was used for tuition, fees, books, supplies, and equipment required for the course, AND: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: The taxpayer can't deduct or exclude expenses that exceed the IR. (for example, enters a negative amount). ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The taxpayer excludes expenses not shown above, then pursue the unallowable expenses. Send PARAGRAPH 124, see Exhibit 4.19.3-7, CP PARAGRAPHS. If an explanation attached to the return indicates the ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ consider the income reported. Accept as fully reported when the scholarship and/or fellowship grant isn't reported on Form W-2 and the taxpayer enters an amount on Form 1040/Form 1040-SR, Schedule 1, line 8r. If no explanation is attached and the IR isn't fully reported, pursue the amount not reported. Send PARAGRAPH 124, see Exhibit 4.19.3-7, CP PARAGRAPHS.

# Wages Miscellaneous

4.19.3.8.1.5 (09-21-2020) Wages Miscellaneous If wages are U/R and the taxpayer has Form W-2 wages, determine if the taxpayer makes any reference to repayment of supplemental unemployment benefits. If the taxpayer correctly reported net wages after repayment of supplemental unemployment benefits, consider the wages reported. If wages are U/R and the taxpayer is claimed as a dependent on another person's return, see IRM 4.19.3.13(4), Standard Deduction, for further instructions. If wages are U/R, the system requires that you analyze W/H. See IRM 4.19.3.18.1, Withholding - General, for further instructions. If the taxpayer is a minister and has reported Form W-2 wages on a Schedule C: If the Form W-2 and/or WAGE IR shows SSTAX has NOT been withheld, allow the expenses. The net income is subject to SE tax UNLESS the taxpayer has a Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners, or Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits, exemption annotated on Form 1040/Form 1040-SR, Schedule 2, line 4. If the Form W-2 and/or WAGE IR shows SSTAX has been withheld, disallow the expenses. Do not adjust any SE tax claimed. Manually access the SETAX window to suppress the change. See IRM 4.19.3.17.1, Self-Employment Tax. Ensure excluded minister housing allowance is subjected to SE tax, unless the taxpayer notates "Exempt Form 4361" or "Form 4029" on Form 1040/1040-SR, Schedule 2, line 4 or the housing allowance is for a retired minister. If the taxpayer computes Social Security Tax on Tips on Form 4137, Social Security and Medicare Tax on Unreported Tip Income, but did not include the tip income in the AGI, consider the tip income U/R. If necessary, create a W-2 IR with an A-TIP element for the amount of allocated tips for which Social Security Tip Tax was reported but was not included in income. See IRM 4.19.3.17.2, Social Security Tax on Tip Income Unreported to the Payer. The system computes a 50 percent Social Security Tip Tax Penalty when the taxpayer uses Form 4137, PARAGRAPH 15 automatically generates. See Exhibit 4.19.3-7, CP PARAGRAPHS. If wages are U/R, enter the return amount in the RETURN field on the Summary screen.

# Other W-2 Income

4.19.3.8.2 (09-01-2003) Other W-2 Income In addition to wage income, Form W-2 can contain information relating to Dependent Care Benefits (DCB), Employer Provided Adoption Benefits (EPAB).

# Dependent Care Benefits (DCB)

4.19.3.8.2.1 (10-10-2025) Dependent Care Benefits (DCB) An employer can exclude (within certain limits) earnings from taxable wages designated to pay for childcare and/or care for a dependent(s) who is unable to care for themselves. The excluded amount is limited to the smaller of the taxpayer's earned income, the spouse's earned income, or $5,000 ($2,500 if MFS). Note: For each month, or part of a month, a spouse was a full-time student or was unable to care for themselves, they are considered to have worked and earned income. Their income for each month is at least $250 ($500 if more than one qualifying person was cared for). The Case Analysis screen displays this benefit with the literal "W-2" in the DOC TYPE field and the literal "DCB" in the INCOME TYPE field. Note: Screen ONLY system identified discrepant DCB amounts (those marked with an asterisk). If the case is open because of other income discrepancies, mark any non-asterisked DCB amounts on the WAGE IRs with status code "N" or "D" . Exception: If the system displays "Warning: Excluded Benefits, Verify DCB" enter/verify the appropriate entries on the Dependent Care Benefits window. See (6) below. The gross benefit amount shows separately on Form W-2, box 10. The wage amount on Form W-2, Box 1 SHOULD NOT INCLUDE the DCB for the tax year. Note: The employer includes any DCB over $5,000 in the taxpayer's wages as shown on Form W-2, box 1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Taxpayers MUST complete Form 2441, Child and Dependent Care Expenses, Parts I, II, and III in order to compute the correct amount of Child Care Credit and excludable DCB. Form 2441, line 15, contains the TOTAL BENEFIT AMOUNT less the amount forfeited. Form 2441, line 26 contains the TAXABLE BENEFIT AMOUNT. Taxpayers will include this taxable benefit amount on Form 1040/Form 1040-SR, line 1e. See IRM 4.19.3.16.2, Credit for Child and Dependent Care Expenses, for further instructions regarding Child Care Credit. The system computes the correct taxable amount of DCB and auto populates window fields on ELF returns. For scanned paper returns, enter/verify the appropriate entries on the Dependent Care Benefits window whenever necessary to compute or recompute DCB by taking the following actions: Enter/Verify the DCB amount from Form 2441 line 15, Child and Dependent Care Expenses, in the REPORTED DEP CARE BENEFITS field. Enter/Verify the total amount of DCB as reported by the payer(s) on the IR(s) minus the amount forfeited benefits from Form 2441 line 14, in the DEPENDENT CARE BENEFITS field. Enter/Verify the qualified expenses amount from Form 2441 in the QUALIFIED EXPENSES field. Enter/Verify the primary taxpayer's original earned income in the PRIMARY EARNED INCOME field. If negative, enter "0" (zero). Caution: When earned income is from self-employment, enter the amount shown on Schedule SE, line 3. Enter/Verify the secondary taxpayer's original earned income in the SECONDARY EARNED INCOME field. If negative, enter "0" (zero). Enter/Verify the amount of DCB reported by the taxpayer on the Form 1040 wage line in the REPORTED TAXABLE BENEFITS field. Enter/Verify the manually computed DCB amount, if applicable in the MANUAL COMPUTED BENEFITS FIELD. Note: An amount in this field will override the system calculation. If there is an indication the taxpayer participated in one of the following Cafeteria Plans: flex plan, flex credits, or flex dollars (pre-tax deduction) for Dependent Care Benefits and the taxpayer IS NOT claiming Child Care Credit, consider the DCB reported. If the taxpayer did not file Form 2441 and did not report DCB, the taxable portion is the DCB IR amount up to ≡ ≡ ≡ ≡ ≡ per payer and per taxpayer. Take the following action to determine if DCB is U/R: Select the Dependent Care Benefits window. Enter zero (0) in the REPORTED DEP CARE BENEFITS field. Enter the total of all DCB reported by payer(s), but no more than ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, on the IR(s). Enter/Verify all other fields per the AUR System Guide, Dependent Care Benefits. PARAGRAPH 156 automatically generates when DCB is U/R. If the taxpayer filed a paper return or if a change was made during original processing and Form 2441, Part III is blank or incorrectly completed, take the following action: Review the taxpayer's entries in Part III, lines 12 through 26 and prepare a mock Form 2441 to correct any errors and/or complete any omitted entries. Use the total expenses shown in Part II, line 2, column (d) to determine the line 16 (qualifying expenses) amount. Access the DCB window and use the information from the mock Form 2441 to input all appropriate entries. Note: If Form 2441, box 1a is checked, the taxpayer is considered to be unmarried and Filing Status 1 must be entered when completing the mock Form 2441. Update the earned income fields accordingly. Send PARAGRAPH 66, see Exhibit 4.19.3-7, CP PARAGRAPHS. Toggle off PARAGRAPH 156 when sending PARAGRAPH 66. Taxpayers who receive DCB generally don't qualify for Child Care Credit. If Child Care Credit is claimed, take the following action: If the DCB IR(s) is reported, click on the Send Indicator to show these IRs on the notice. Complete screening of ALL remaining IRs in the Case Analysis screen, following normal procedures. Access the Return Value screen. Ignore any system prompt to close the case below tolerance. See IRM 4.19.3.16.2, Credit for Child and Dependent Care Expenses, to determine the correct entry in the QUALIFYING EXPENSES field in the Child Care Credit window. If the taxpayer reduced their wages by the DCB IR amount, pursue the issue as an U/R WAGES issue.

# Employer-Provided Adoption Benefits (EPAB)

4.19.3.8.2.2 (10-10-2025) Employer-Provided Adoption Benefits (EPAB) Employer-provided adoption benefits (EPAB) are available for taxpayers who adopt a child(ren) who is a U.S. citizen or resident or who adopt a foreign child(ren) if the adoption becomes final in the AUR tax year. Taxpayers may be eligible to exclude qualified adoption expenses paid for or reimbursed by their employers under a qualified written EPAB, up to the amounts listed in the table below. The exclusion may be available for each child, whether the child is a foreign child, a child who is a U.S. citizen or resident, or a child with special needs. If the adopted child is a U.S. child with special needs, the taxpayer may be able to exclude up to the maximum dollar limit for the year, even if the taxpayer or employer did not pay any qualified expenses, provided the employer has a written qualified adoption assistance plan. TY Amount 2022 $14,890 2023 $15,950 2024 $16,810 Employer-provided adoption assistance payments are shown on Form W-2, box 12 and are identified with a code "T" . The wage amount on Form(s) W-2, box 1 doesn't include the EPAB payments for the tax year. Taxpayers must complete Form 8839, Qualified Adoption Expenses, Part I, II and III in order to compute the correct amount of taxable or excludable EPAB, Form 8839, line 28. If no Form 8839 is filed, consider the EPAB fully U/R. Taxpayers should include this taxable benefit amount on Form, 1040/Form 1040-SR line 1f. The Case Analysis screen displays this benefit with the literal "W-2" in the DOC TYPE field and the literal "EPAB" in the INCOME TYPE field. Whenever it is necessary to compute or recompute EPAB, take the following actions: Enter/verify the total number of adopted children Form 8839, Part III. If Form 8839 isn't attached, enter "0" (zero). Enter/verify the total amount from Form 8839, line 22 (all three columns) in the FORM 8839, LINE 22 PER RETURN field. If Form 8839 isn't attached, enter "0" (zero). Enter/verify the amount from Form 8839, line 28, as filed or previously adjusted, in the EXCLUDED BENEFITS field. If Form 8839 isn't attached, enter "0" (zero). Enter/verify the amount from Form 8839, line 29 as filed or previously adjusted, in the TAXABLE BENEFITS PER RETURN field. If Form 8839 isn't attached, enter "0" (zero). If the amount from the Taxable Benefits line 29 of Form 8839, isn't reported on Form1040/Form 1040-SR, line 1f, create a WAGE IR for that amount. Send PARAGRAPH 191, see Exhibit 4.19.3-7, CP PARAGRAPHS. Access the EPAB window by entering a "U" in the IR CODE field. Note: Screen EPAB IR(s) after analyzing all other potentially discrepant income types. After any subsequent analysis that changes the TOTAL AGI CHANGE field, reselect the EPAB window. Recompute all changes to adjustments to income before selecting this window. Exception: Compute taxable EPAB amount BEFORE Student Loan Interest Deduction (SLID). See IRM 4.19.3.4.2, Case Analysis Screen, for the proper sequence when these issues are present on the same case. Enter/verify the appropriate entries on the EPAB window. See AUR System Guide, Employer-Provided Adoption Benefits. If it can be determined the taxpayer reduced their wages by the EPAB payment, pursue the issue as U/R wages. Also pursue EPAB as a separate issue. Send PARAGRAPH 195, see Exhibit 4.19.3-7, CP PARAGRAPHS. Reminder: If "SNE" isn't on Form 1040/Form 1040-SR, line 1, see IRM 4.19.3.8.1.1(1) Note, Wages - Analysis. PARAGRAPH 190 automatically generates when EPAB is U/R. See Exhibit 4.19.3-7, CP PARAGRAPHS.

# Interest - General

4.19.3.8.3 (03-03-2021) Interest - General Interest is reported by payers on Form 1099-INT, Form 1099-OID, Form 1099-B and on Schedules K-1 from Form 1065, Form 1040, and Form 1120-S. See Exhibit 4.19.3-12, Titles of Forms and Schedules, for further information. Interest income is identified on the Case Analysis screen by the literal "99INT" in the DOC TYPE field and the literal "INT" , in the INCOME TYPE field and "99INT" in the DOC TYPE field and the literal "MKTDS" in the INCOME TYPE field.

# Interest - Analysis

4.19.3.8.3.1 (03-03-2021) Interest - Analysis ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Municipal Bonds Tax Sheltered Annuities (403(b)) accounts Simplified Employee Pensions (SEP) or Individual Retirement Accounts (IRA) A Pension Plan or Profit Sharing Plan (including a 401(k) plan) A Capital Construction Fund (CCF) account Note: If W/H is claimed, allow; ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. Compare INT amounts with entries on Form 1040/Form 1040-SR, line 2a or 2b, Schedule B, Interest and Ordinary Dividends, Part I, line 1. Note: Form 1040/1040-SR, line 2a, is used to report tax-exempt interest. If the amount on line 2a matches the interest amount(s) on a 99INT IR, consider the 99INT IR U/R unless the payer is a state or political subdivision of a state, the District of Columbia, or a U.S. possession. Interest comparisons for the following entries must match within $1 or be CLEARLY IDENTIFIED as interest: Form 1040/1040-SR, Schedule 1, line 8z Schedule C, line 6 Schedule E, Parts II, III, or IV Schedule F, lines 8 or 43 If Schedule B (or an attachment in lieu of Schedule B) is attached, compare IRs with individual items. If you can't match individual IRs: Group all INT amounts from the same payer. Compare to the total interest reported for that payer. If the group total amount is smaller, assign status code "R" to the group. If the group total is larger, assign status code "U" to the group. If a breakdown of interest by payer isn't shown on the return or on an attachment and there is only one IR: Compare the amount reported on Form 1040/Form 1040-SR, line 2b. If the taxpayer reports a larger amount, consider the IR fully reported. If the taxpayer reports a lesser amount, allow credit for the amount reported. If a breakdown of interest by payer isn't shown on the return or on an attachment and there is more than one IR: Group by income type INT. Note: The Group function is a tool to assist the TEs in computing the correct U/R amount. It may not be necessary to use the Group function if the correct U/R can be determined without it. Note: If BOND, MKTDS and/or AMD IRs are present it may be necessary to add BOND, MKTDS and/or AMD IRs to the group. Compare the group total amount to the total interest amount reported on the return. If the group total amount is smaller, assign status code "R" to the group. If the group total amount is larger, consider the difference U/R and assign status code "U" to the group. If interest amounts are U/R, send PARAGRAPH 64. See Exhibit 4.19.3-7, CP PARAGRAPHS. Exception: If the specific U/R amount matches an IR - PARAGRAPH 64 may not be appropriate. Taxpayers often interchange interest and dividend income. Check any dividend income areas when comparing INT amounts. Offset interest income against dividend income ONLY if one of the following applies: The same amount (within $1) AND the same payer are reported; OR An unidentified amount matches the U/R interest amount within $1. If interest income is listed on Schedule B but isn't added into the AGI: Consider the interest income U/R. If necessary, create an IR for any income the taxpayer included on Schedule B for which we don't have a corresponding IR. If interest and/or dividend amounts are U/R, send PARAGRAPH 57. See Exhibit 4.19.3-7, CP PARAGRAPHS. If you notice a math error on Schedule B: Create an IR for any reported interest amount(s) for which we don't have a corresponding IR. Group by income type INT. Compare the group total amount to the total interest reported. If the group total is larger, assign status code "U" . Send PARAGRAPH 79, see Exhibit 4.19.3-7, CP PARAGRAPHS. If the group total amount is smaller, assign status code "R" to the group.

# Original Issue Discount (OID)

4.19.3.8.3.2 (09-24-2021) Original Issue Discount (OID) A 99OID IR reflects the original issue discount allocable to the tax year and may show the qualified stated interest paid or credited on the obligation during the tax year. Caution: If there is an IR where the OID amount and the W/H amount are identical, refer these cases to the Fraud Referral Program (FRP). See IRM 4.19.3.23.11, Disagreed Responses. Original issue discount is identified on the Case Analysis screen by the literals "99OID" in the DOC TYPE field and the following literal(s) in the INCOME TYPE field: "S-INT" is the qualified stated interest paid or credited on the obligation during the tax year "OID" is the original issue discount allocable to the tax year, and/or "OIDTO" is the original issue discount on Treasury Obligations. "MKTDS" is the market discount if the taxpayer made the election under section 1278(b) to include in income as it accrues. Note: OID on Treasury Inflation-Indexed Securities is reported in box 8 on Form 1099-OID. Original issue discount, which is treated as interest income, is the difference between the issue price and stated redemption price of a debt instrument (bond). ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ issued by a brokerage firm or by financial institutions (banks, credit unions, and savings and loans). Original issue discount (other than original issue discount on an obligation with a term of 1 year or less) is reported on Form 1099-OID. If the taxpayer reports a partial amount or no amount from a 99OID IR, consider whether the taxpayer has made an adjustment for acquisition premium, or some other offset. Original issue discount may be reduced by these offsets provided the taxpayer first included the gross amount of original issue discount on Form 1040, Schedule B, line 1. The line 2 amount should then reflect the taxable amount of original issue discount as adjusted for these offsets. Note: Pursue the OID issue if the taxpayer reports an incorrect amount of taxable original issue discount due to an improper offset of the gross amount of OID. If the taxpayer reports a partial amount or no amount from a 99OID IR and the Schedule B doesn't reflect any adjustments, consider the OID, S-INT and OIDTO amounts in determining the U/R amount. If 99OID and 99INT IR(s) are present from the same payer, and you can't determine which amount is reported: Group the OID, S-INT, OIDTO and INT amounts by PAYER EIN. Compare the group total amount to the total amount reported by the taxpayer for that payer. If the group total amount is smaller, assign status code "R" to the group. If the group total amount is larger, consider the difference U/R and assign status code "U" to the group.

# Savings Bonds, Treasury Bills, Treasury Bonds, and Treasury Notes

4.19.3.8.3.3 (10-06-2022) Savings Bonds, Treasury Bills, Treasury Bonds, and Treasury Notes Interest from U.S. Savings Bonds, Treasury Bills, Treasury Bonds, and Treasury Notes appear on 99INT IRs with the literal "BOND" . OID on Treasury Inflation-Indexed Securities is reported in box 8 on Form 1099-OID. Bond interest is identified on the Case Analysis screen by the literal "99INT" in the DOC TYPE field and the literals "BOND" or "TEBND" (Tax-Exempt Bond) in the INCOME TYPE field. TEBND amounts are system deleted. If the taxpayer reports an amount of savings bond interest equal to or greater than the IR(s) amount, consider the IR(s) reported unless the return amount is identified as being from a different payer. Accept bond interest if the taxpayer indicates the following: The bond interest is reported each year as it accrues. Accept only if the taxpayer reports an interest amount. Interest on inherited savings bonds was reported on the decedent's final individual income tax return. If the taxpayer included Bond income as Capital Gains on Schedule D, Part II, consider the Bond reported. Subtract the Bond Income from the LONG-TERM GAIN/(LOSS) field in the Schedule D Tax window and send the IR(s). Send PARAGRAPH 229, see Exhibit 4.19.3-7, CP PARAGRAPHS. If a breakdown of bond interest by payer isn't shown on the return or on an attachment and there is only one IR: Compare the amount reported on Form 1040/Form 1040-SR, line 2b. If the taxpayer reports a larger amount, consider the IR fully reported. If the taxpayer reports a lesser amount, allow credit for the amount reported. If the taxpayer reports bond interest but doesn't identify the payer and there is more than one BOND IR: Group by income type BOND. Note: If INT IRs are present, it may be necessary to add INT IRs to the group. Compare the group total to the amount of reported bond interest. If the group total amount is smaller, assign status code "R" to the group. If the group total amount is larger, consider the difference U/R and assign status code "U" to the group. If bond amounts are U/R, send PARAGRAPH 64. See Exhibit 4.19.3-7, CP PARAGRAPHS. Exception: If the specific U/R amount matches an IR - PARAGRAPH 64 may not be appropriate. If the taxpayer reports an amount as savings bond, T-Bill bond, or note interest, and the 99INT IR shows only regular interest, consider the IR reported if the amounts match within $1 ONLY if the taxpayer has not excluded interest on Schedule B, line 3, for college tuition. PARAGRAPH 108 automatically generates when the exclusion is fully disallowed. 99INT IRs will not show EWPEN amounts if only bond interest is present. Treat such IRs as potential Payer Agent data or questionable.

# Savings Bond Exclusion

4.19.3.8.3.4 (10-10-2025) Savings Bond Exclusion Form 8815, Exclusion of Interest from Series EE and I U.S. Savings Bonds Issued After 1989, is allowed on Schedule B, line 3. Bond Interest must be reported on the return before being claimed as a Savings Bond Exclusion on Form 1040/Form 1040-SR. When the taxpayer excludes a savings bond interest amount and the AGI is changed, the Adjusted Gross Income and Savings Bond Exclusion windows may display when the Return Value window is selected. If the windows don't display, they must be accessed before continuing to the Return Value screen. The AUR system computes the new excludable savings bond interest amount based on the entries in the Adjusted Gross Income and Savings Bond windows and displays it in the RECOMPUTED SAVINGS BOND EXCLUSION field. If the Adjusted Gross Income (AGI) window appears take the following actions: Enter/verify the amounts in the ADJUSTED GROSS INCOME field, including the Schedule B, line 3 amount in the EXCLUDED SAVINGS BOND field. If the taxpayer placed their total interest on the wrong line or the total interest amount was included in the AGI total, a correction must be made to the ADJUSTED GROSS INCOME window to eliminate the savings bond exclusion window from displaying. Note: Once the AGI window is verified and committed, the SAVINGS BOND EXCLUSION window will appear. Use the SAVINGS BOND EXCLUSION window to compute/recompute the savings bond exclusion when there is a change to the AGI. Enter/verify the amount from Form 8815, line 8 in the MODIFIED SAVINGS BOND INTEREST field. The recomputed savings bond exclusion amount appears in the RECOMPUTED SAVINGS BOND EXCLUSION field. Note: Only change the amount in the RECOMPUTED SAVINGS BOND EXCLUSION field if overriding the system computed exclusion, due to rounding. If the amount entered is outside the system computed tolerance range, the entry is disallowed and a message displays, showing the allowable tolerance range. A warning message Change below tolerance. Recomputed exclusion is set equal to original exclusion may appear. Click on <OK> or press <Enter> to acknowledge the message. The savings bond exclusion claimed on Schedule B, line 3 is disallowed when: The taxpayer is married filing a separate return The new Modified Adjusted Gross Income (MAGI) is: Filing Status TY 2022 TY 2023 TY 2024 Single, Head of Household and Qualifying Surviving Spouse $100,000 or more $106,850 or more $111,800 or more Married Filing Joint $158,650 $167,800 $175,200 Note: The new MAGI is the amount claimed on Form 8815, line 9, plus U/R income. The savings bond exclusion claimed on Schedule B, line 3 is adjusted when the new MAGI is greater than: Filing Status TY 2022 TY 2023 TY 2024 Single, Head of Household and Qualifying Surviving Spouse $85,800 $91,850 $96,800 Married Filing Joint $128,650 $137,800 $145,200 If the system determines the exclusion claimed should be disallowed in whole or part, an IR is created by the system for the amount of the disallowance and coded with status code "U" . PARAGRAPH 105 automatically generates when the exclusion is adjusted or eliminated. PARAGRAPH 107 automatically generates when the exclusion is eliminated based on the filing status. If you adjust the Savings Bond Exclusion, enter the amount from Schedule B in the RETURN field of the Summary screen.

# Accrued Market Discount (AMD)

4.19.3.8.3.5 (10-06-2022) Accrued Market Discount (AMD) Accrued Market Discount is identified on the Case Analysis screen with the literal Form 1099-B in the DOC TYPE field and the literal "AMD" in the INCOME TYPE field. Accrued Market Discount is reported on Form 1099-B, box 1f. ONLY screen AMD IRs in Category 31, 39, 61 and 79.≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Compare AMD amounts with entries on Form 1040/Form 1040-SR, line 2b and/or Schedule B, Part 1, line 1. Accrued Market Discount comparisons for the following entries must match within $1 or be CLEARLY IDENTIFIED as AMD: Form 8949 Part I or II, column (g). Schedule D, Part I, line 1b, column (g) or Part II, line 8B, column (g). If Schedule B (or an attachment in lieu of Schedule B) is attached, compare AMD IR(s) with individual items. If you can't match individual IRs: Group all INT and AMD amounts from the same payer in the same group. Compare group total to the total amount reported on the return from that payer. If the group total is smaller, assign status code "R" to the group. If the group total is larger, assign status code "U" to the group. Note: If BOND IRs are present, it may be necessary to add BOND IRs to the group. Caution: When grouping AMD and INT together the summary screen will show the income type as interest income. If interest amounts are U/R, send PARAGRAPH 64. See Exhibit 4.19.3-7, CP PARAGRAPHS. Exception: If the specific U/R amount matches an IR - PARAGRAPH 64 may not be appropriate.

# Interest Miscellaneous

4.19.3.8.3.6 (09-21-2020) Interest Miscellaneous Interest income may be reduced by any of the following, provided the taxpayer first included this income on Schedule B, line 1. The line 2 amount will then reflect the taxable amount of interest minus these adjustments: Nominee Distributions - Interest received by the taxpayer that belongs to another person, such as a child. Accrued Interest - Interest on securities transferred between interest payment dates. Tax-Exempt Interest - (for example, Municipal Bonds). Note: When SS/RR is also present, see IRM 4.19.3.8.17.1, SS/RR - Analysis. Amortizable Bond Premium - Premium offsets interest on taxable bonds acquired after December 31, 1987. Frozen Deposits - An account from which the taxpayer is unable to withdraw funds because the financial institution or others in the area are bankrupt, insolvent, or in receivership. Pursue the issue if it appears the taxpayer reports an incorrect taxable interest due to improper deduction of these amounts. PARAGRAPH 85 automatically generates to inform the taxpayer they may be subject to Backup Withholding (BWH) when the total of U/R interest, dividends, and patronage dividends is greater than $500. 99INT and 99OID IRs may reflect an Early Withdrawal Penalty (EWPEN). See IRM 4.19.3.9.5, Early Withdrawal Penalty (EWPEN) - General, for further instructions. Caution: Taxpayers may net the EWPEN against the interest. See IRM 4.19.3.9.5.1, Early Withdrawal Penalty (EWPEN) - Analysis. If a 99INT IR, from the U.S. Treasury, with EIN 38-1798424 is shown on the Case Analysis screen, it is credit interest paid to the taxpayer by IRS for refund cases and is fully taxable. 99INT IRs may reflect W/H. If there is an indication the interest account is jointly owned with someone other than the taxpayer's spouse or the filing status is 3: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Send PARAGRAPH 6, see Exhibit 4.19.3-7, CP PARAGRAPHS. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: See IRM 4.19.3.5.3, Jointly Owned Income, for additional instructions on jointly owned income. See IRM 4.19.3.18.1, Withholding - General, for further instructions on W/H. A fully U/R 99INT IR with a payee EIN is considered self-employment income. Enter an Income Identify Code to assess SE tax. See IRM 4.19.3.17.1, Self-Employment Tax and Exhibit 4.19.3-9, Income Identify Codes. If interest is U/R, enter the amount from Form 1040/Form 1040-SR, line 2b in the RETURN field on the Summary screen.

# Dividends and Capital Gain Distributions

4.19.3.8.4 (10-10-2025) Dividends and Capital Gain Distributions Dividends are distributions paid by corporations, partnerships, and/or estates and trusts. They are reported on Form 1099-DIV and on Schedules K-1 from Form 1065, U.S. Return of Partnership Income, Form 1041, U.S. Income Tax Return for Estates and Trusts, and Form 1120-S, U.S. Income Tax Return for an S Corporation. See Exhibit 4.19.3-12, Titles of Forms and Schedules, for further information. Capital gain distributions are normally paid by regulated investment companies, mutual funds, and real estate investment trusts from their net long-term capital gains.

# Dividends - General

4.19.3.8.4.1 (09-21-2020) Dividends - General The types of dividends compared are: Ordinary Dividends - Entire amount is taxable Capital Gain Distributions - Are considered taxable Dividends are identified on the Case Analysis screen by the literal "99DIV" in the DOC TYPE field and one of the following literals in the INCOME TYPE field: "ORDIV" - Ordinary dividends "QDIV" - Qualified Dividends may be eligible for the Capital Gains tax rate "NDDIS" - Non-Dividend distributions (non-taxable) "INEXP" - Investment Expenses (information only/system deleted) The AUR system considers each of the following amounts separately: Ordinary Dividends Capital Gain Distributions (including 28 percent rate, 5 year gain, 1250 gain and 1202 gain) If a 99DIV IR with multiple income types is U/R, and the tolerance for issuing a notice is met, screen all elements of the IR.

# Dividends - Analysis

4.19.3.8.4.2 (10-10-2025) Dividends - Analysis ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ 403(b) accounts SEP or IRA accounts Municipal Bond funds Pension Plan or Profit Sharing Plan (including a 401(k) plan) Capital Construction Fund (CCF) account Note: If W/H is reported, allow; if not reported ≡ ≡ ≡ ≡ Compare ORDIV amounts with entries on Form 1040/Form 1040-SR, line 3b. Note: Qualified dividends reported on line 3a must be included in total dividends reported on line 3b. If the taxpayer reduces the dividends amount by the qualified dividend amount, the difference is U/R. Send PARAGRAPH 65, see Exhibit 4.19.3-7, CP PARAGRAPHS. Schedule B, Part II. Schedule E, Parts II, III, and/or IV. The amounts must match within $1 or be clearly identified as Dividend Income. Compare IR(s) on the Case Analysis screen with individual items listed on Schedule B, if attached. The taxpayer may use an attachment in lieu of Schedule B. Dividend IRs display Ordinary Dividends (ORDIV), Qualified Dividends (QDIV), Capital Gain Distributions (CG), and non-dividend distributions (non-taxable) as separate amounts. The QDIV are included in the ORDIV. If the sum of the ORDIV and the CG amounts matches the sum of dividends reported on Schedule B, line 5, consider the IR(s) fully reported. If individual IR(s) don't match the amount claimed on the return: Group ordinary dividend amounts from the same payer. Compare the group total amount to the total ordinary dividends reported for that payer. If the group total amount is smaller, assign status code "R" to the group. If the group total amount is larger, assign status code "U" to the group. If a breakdown of dividends by payer isn't shown on the return or on an attachment and there is only one IR: Compare the amount reported on Form 1040/Form 1040-SR, line 3b. If the taxpayer reports a larger amount, consider the IR fully reported. If the taxpayer reports a lesser amount, allow credit for the amount reported. If a breakdown of dividends by payer isn't shown on the return and there is more than one dividend IR: Group all ORDIV together. Note: The Group function is a tool to assist the TEs in computing the correct U/R amount. It may not be necessary to use the Group function if the correct U/R can be determined without it. Compare the group total amount to the total reported dividends. If the group total amount is smaller, assign status code "R" to the group. If the group total amount is larger, consider the difference U/R and assign status code "U" to the group. If dividend amounts are U/R send PARAGRAPH 64. See Exhibit 4.19.3-7, CP PARAGRAPHS. Exception: If the specific U/R amount matches an IR - PARAGRAPH 64 may not be appropriate. Dividends and interest income are often interchanged by the taxpayer. Check any interest income areas when comparing IRs (for example, credit union dividends). Check any dividend income areas when comparing INT amounts. Offset dividend income against interest income ONLY if one of the following applies: The same amount (within $1) AND the same payer are reported; OR An unidentified amount matches the U/R dividend amount within $1. If dividend income is listed on Schedule B but isn't added into the AGI: Consider the income U/R. Create an IR for any income the taxpayer reported on Schedule B for which we don't have a corresponding IR. If interest and/or dividend amounts are U/R, send PARAGRAPH 57. See Exhibit 4.19.3-7, CP PARAGRAPHS. If the taxpayer reports ordinary dividends on Schedule D/Form 8949, lines 1a, 1b, 2, or 3 column (d) or lines 8a, 8b, 9 or 10 column (d): Amounts claimed as cost or other basis and adjustments in columns (e) and (g) are U/R. Enter the column (h) amount in the REPORTED AMOUNT field Caution: Delete the dividend income from the LONG-TERM GAIN (LOSS) field in the Schedule D Tax window. Send PARAGRAPH 52, see Exhibit 4.19.3-7, CP PARAGRAPHS. If you notice a math error on Schedule B: Create an IR for any reported dividend amount(s) for which we don't have a corresponding IR. Group by income type ORDIV. Compare the group total amount to the total dividends reported. If the group total is smaller, consider reported and assign status code "R" to the group. If the group total is larger, consider the difference U/R and assign status code "U" to the group. Send PARAGRAPH 79, see Exhibit 4.19.3-7, CP PARAGRAPHS. During Case Analysis, if the ORDIV is fully or partially UR, screen the QDIV element of the IR. Enter status code "U" on the QDIV IR with the reported amount as zero for fully U/R, or the amount from Form 1040/Form 1040-SR, line 3a for partially U/R. This will ensure that the appropriate Schedule D tax rate is determined. The QDIV element(s) is systemically included on the notice when the ORDIV element is marked with a "U" . Send Indicator "S" won't be reflected on the QDIV element of the IR on the Case Analysis screen and QDIV(s) won't be displayed on the Summary screen: however, QDIV(s) will be included on the notice. PARAGRAPH 4 automatically generates. Note: Any changes to reported QDIV are used in determining the proper Schedule D tax rate and won't impact the AGI.

# Dividends Miscellaneous

4.19.3.8.4.3 (09-01-2012) Dividends Miscellaneous The taxpayer may report a net dividend amount based on the payer's estimated percentage of taxability (especially utility companies). ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Dividends from money market funds may be reported under a different name. If a dividend amount on a 99DIV IR matches an amount on Schedule B, consider the IR reported unless there is an IR(s) for that individual payer. Restricted stock transferred to an employee as compensation for services may accrue dividends. Even though these dividends are reported on Form 1099-DIV, they will be treated as wages. Consider the income reported if the amount was included with wages. Reinvestment dividends are not allowable as an exclusion. 99DIV IRs may reflect W/H. If there is an indication the dividend account is jointly owned with someone other than the taxpayer's spouse or the filing status is 3: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡Send PARAGRAPH 6, see Exhibit 4.19.3-7, CP PARAGRAPHS. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: See IRM 4.19.3.5.3, Jointly Owned Income, for further instructions on joint ownership. See IRM 4.19.3.18.1, Withholding - General, for further instructions on W/H. A fully U/R 99DIV IR with a payee EIN is considered self-employment income. Enter an Income Identify Code to assess SE tax. See IRM 4.19.3.17.1, Self-Employment Tax and Exhibit 4.19.3-9, Income Identify Codes. Nominee dividends may be deducted provided the taxpayer first included this income on Schedule B, line 5. PARAGRAPH 85 automatically generates to inform the taxpayer they may be subject to BWH when the total of U/R interest, dividends, and patronage dividends is greater than $500. If dividends are U/R, enter the return amount in the RETURN field on the Summary screen.

# Capital Gain Distributions - General

4.19.3.8.4.4 (12-22-2014) Capital Gain Distributions - General Capital Gain Distributions are identified in the Case Analysis screen by the literal "99DIV" in the DOC TYPE field and "CG" - Capital Gain Distributions - Income Identify Code "SD" displays for Capital Gain Distributions in the INCOME TYPE field. The AUR system considers Capital Gain Distributions separately from Ordinary Dividends. If Capital Gains are U/R and the tolerance for issuing a notice is met, screen all elements of the IR.

# Capital Gain Distributions - Analysis

4.19.3.8.4.5 (02-23-2024) Capital Gain Distributions - Analysis Compare capital gain distributions amounts with entries on: Form 1040/Form 1040-SR, line 7 or, Schedule D, line 13, column (h) or, Form 8949, Part II, line 1, column (h). Note: The taxpayer may use an attachment in lieu of Form 8949. Verify the taxpayer has reported capital gain distributions on Schedule D, line 13, and the proper amount was carried over to Form 1040/1040-SR, line 7. If no Schedule D is present verify the taxpayer reported the capital gain distributions directly on Form 1040/1040-SR, line 7. When the taxpayer reports Capital Gain Distributions directly on Form 1040/1040-SR, line 7 the Schedule D window in Return Value MUST be accessed manually. See IRM 4.19.3.14.2, Schedule D Tax Window. If the taxpayer provides a breakdown of capital gains (for example on an attachment), be sure the amount was properly transferred to either Schedule D, line 13, column (h) or Form 1040/1040-SR, line 7 before considering them reported. If not, then consider the amount U/R and send PARAGRAPH 3. See Exhibit 4.19.3-7, CP PARAGRAPHS. If a breakdown of capital gain distributions isn't shown on the return and there is more than one capital gain distribution IR: Group by income type CG. Note: The Group function is a tool to assist the TEs in computing the correct U/R amount. It may not be necessary to use the Group function if the correct U/R can be determined without it. Compare the group total amount to the amount reported on Schedule D, line 13, column (h) or if Schedule D isn't attached, Form 1040/1040-SR, line 7. If the group total amount is smaller, assign status code "R" to the group. If the group total amount is larger than the amount reported, consider the difference U/R and assign status code "U" to the group. Note: If the reported dividend amount matches the sum of the ORDIV and CG on the IR(s), consider the capital gain distributions fully reported. If capital gains amount are U/R, send PARAGRAPH 64. See Exhibit 4.19.3-7, CP PARAGRAPHS. Exception: If the specific U/R amount matches an IR - PARAGRAPH 64 may not be appropriate. Capital Gain Dividends reported on Form 1099-DIV with a "S" or "P" in the taxpayer field on the Case Analysis screen default with an Income Identify Code of "SD" for long-term capital gain/loss belonging on Schedule D, Part II. If the taxpayer field contains an "E" for EIN, the user MUST ENTER an Income Identify Code of "SD" . Change the Income Identify Code on partially U/R CG elements when you can determine from the taxpayer's reported amount that: The CG distributions don't belong on Schedule D. Enter the appropriate Income Identify Code (for example, "PB" for the income to be treated as primary business subject to SE tax). See Exhibit 4.19.3-9, Income Identify Codes. Note: Capital gain distributions which have an Income Identify Code of "PB" , "PF" , "SB" , "SF" , or "CG" IRs with a payee EIN display on the Summary screen as Nonemployee Compensation. Send PARAGRAPH 245, see Exhibit 4.19.3-7, CP PARAGRAPHS. The Capital Gain distributions are determined to be a short-term capital gain/loss belonging on Schedule D, Part I. Input an Income Identify Code of "ST" . Capital Gain IRs with Income Identify Codes of "SD" or "ST" are screened using the following procedures: Enter a status code of "U" on the CG element containing Income Identify Code of "SD" or "ST" . The Adjusted Gross Income window displays. Enter/verify the fields. The COMPUTE SCHEDULE D LOSS window displays. Note: If there are U/R CG and the taxpayer reports a capital loss on Form 1040/Form 1040-SR, line 7 enter a zero (0) in both fields on the COMPUTE SCHEDULE D LOSS window. It may be necessary to blank out both fields first. This will prevent the system from using losses in excess of $3,000 ($1,500 if MFS) to offset U/R Schedule D income. The cursor returns to the IR CD field of the IR where it was before the windows displayed. The field is blank. Note: The AGI and COMPUTE SCHEDULE D LOSS windows only display automatically when a status code of "U" is initially entered. It isn't necessary to access these windows again unless the field entries need to be changed. Enter a status code ("U" , "R" , or "N" ) and the reported amount, if applicable, for the CG elements containing Income Identify Code of "SD" or "ST" . The system uses the information on the COMPUTE SCHEDULE D LOSS window to determine the correct U/R amount of Schedule D income. The total U/R Schedule D income amount is included in the TOTAL AGI CHANGE field on the Case Analysis screen. PARAGRAPH 24 automatically generates when CG are treated as ordinary income due to loss limitations. If the loss per return is less than $3,000 ($1,500 if MFS) toggle off PARAGRAPH 24 from the Summary screen. If Capital Gain Distributions are U/R, enter the return amount from Schedule D, line 13. If there is no Schedule D, enter the return amount from Form 1040/Form 1040-SR, line 7 in the RETURN field of the Summary screen.

# State and Local Income Tax Refunds (SITR) - General

4.19.3.8.5 (09-01-2003) State and Local Income Tax Refunds (SITR) - General State and local income tax refunds (SITR) are taxable in the year received if the taxpayer itemized deductions in the previous year and claimed a deduction for state and/or local income taxes that resulted in a tax benefit. The prior year filing status code is used in figuring the AUR year taxable SITR amount. SITR payments are reported on Form 1099-G, Certain Government Payments. State income tax refunds are identified on the Case Analysis screen by the literal "1099G" in the DOC TYPE field and the literal "SITR" in the INCOME TYPE field.

# SITR - Analysis

4.19.3.8.5.1 (12-19-2023) SITR - Analysis Taxpayers that pay Alternative Minimum Tax don't derive a benefit from SITR. The AUR program now identifies taxpayers who paid ALT MIN Tax in the prior year before considering SITR unreported. Therefore, only pursue system identified (asterisked) SITR discrepant IRs. If the case is open for other issues, mark the non-asterisked SITR IR(s) with status code "D" , "N" or "R" . State and local income tax refunds (SITR) are potentially U/R if there is no SITR amount reported or when there are multiple SITR IRs and not all are reported. Compare SITR IRs to Form 1040/Form 1040-SR, Schedule 1, line 1. Taxpayers from certain states are not required to report their payments received for the promotion of the general welfare or as a disaster relief payment. For example, payments received related to the outgoing pandemic, may be excludable from income for federal tax purposes under the General Welfare Doctrine or as a Qualified Disaster Relief Payment. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Enter/Verify the required amounts on the SITR window by taking the following actions: Note: An entry in the STATE/LOCAL W/H field is required only when the taxpayer has netted. See (12) below for additional information. Enter the amount of state and local tax refund from Form 1040, Schedule 1, line 1, in the REPORTED SITR field Enter the amount of state and local income taxes claimed on current year Schedule A, line 5a, in the STATE/LOCAL TAX DED field. Note: Leave this field blank when there is no current year deduction. DO NOT enter "0" (zero). Enter the total number of age and/or blind exemptions for the taxpayer and spouse as reported on the return in the AGE/BLIND COUNT field. Enter "Y" if the taxpayer has been claimed as a dependent on someone else's return in the CLAIMED ON ANOTHER'S RETURN field. Enter "Y" if the Married Filing Separate and Spouse Itemized Deduction/Dual Status box on the return is checked in the FS3/ ITEMIZED OR ALIEN field. Note: The prior year SITR information displays in the PRIOR YEAR section of the window. Only change if the displayed value is incorrect. 1099G IRs with reported SITR amounts for other than the prior tax year are deleted by the system. The literal "X" displays in the IR CODE field of the Case Analysis screen. When any of the following conditions are present, mark all SITR IRs (including those system identified as discrepant) with status code "D" , "N" , or "R" : SITR worksheets are attached to the return. The taxpayer indicates there is no tax benefit due to Alternative Minimum Tax. The AUR system will compute the U/R SITR amount if Form 1040/Form 1040-SR, Schedule 1, line 1, doesn't equal the total of the SITR IRs. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The taxpayer claimed itemized deductions for the prior AUR tax year, AND The prior year total itemized deductions are greater than their standard deduction, AND The prior year state/local tax deduction is less than (including zero) the SITR IR(s). Form 1040/1040-SR, Schedule 1, line 1 doesn't equal the SITR IR(s). Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the system computed a SITR refund, the current year filing status code has changed from the prior year, and the PRIOR YEAR TOTAL ITEMIZED DED field on the SITR window is less than or equal to 0 (zero), the system displays the following message: "Warning: SITR refund. Prior Yr Sch A info needed, access RTVUE on IDRS." If And Then The current year filing status is "1" , "3" , or "4" and, the prior year filing status was equal to "2" or "5" It can be determined the taxpayer's SSN in the prior year was a secondary SSN Research the Primary and Secondary SSNs using IDRS CC RTVUE. The current year filing status is "2" or "5" The prior year filing status is "1" , "3" , or "4" Access IDRS CC RTVUE for each spouse that has a SITR IR. Mark the applicable SITR IR with status code "N" or "D" if the spouse did not claim state/local taxes on the prior year Schedule A. If the spouse reported SITR on the current year return and the prior year filing status was 1, 3, or 4 and the spouse did not itemize, enter the amount of SITR reported as a miscellaneous deduction in the SCH C EXP/MISC Adjustment window, to refund the amount. Send PARAGRAPH 249, see Exhibit 4.19.3-7, CP PARAGRAPHS. Verify the PRIOR YEAR fields on the SITR window match RTVUE and correct if necessary. Caution: If taxpayer chose to itemize (even when it is less than the standard deduction) and the taxpayer claimed state/local tax deduction on the previous year's Schedule A, don't allow the SITR refund. Mark the SITR IR with status code "N" or "D" . If the system computed a SITR refund and the current year filing status code has not changed from the prior year, the system displays the following message: "Warning: SITR refund." Access IDRS CC RTVUE. Verify the PRIOR YEAR fields on the SITR window match RTVUE and correct if necessary. Caution: If taxpayer chose to itemize (even when it is less than the standard deduction) and the taxpayer claimed state/local tax deduction on the previous year's Schedule A, don't allow the SITR refund. Mark the SITR IR with status code "N" or "D" . The system won't compute an U/R SITR amount if the Prior Year Taxable Income is zero or negative. If the difference between the sum of state and local income tax withheld and the SITR IR(s) is equal to or greater than the taxpayer's current AUR tax year Schedule A, line 5a amount, this indicates the taxpayer netted. The system considers the SITR reported. If the taxpayer netted SITR, the system alerts the tax examiner to send an appropriate paragraph. If a notice is sent for any other issue, send PARAGRAPH 141. See Exhibit 4.19.3-7, CP PARAGRAPHS. Do not refund apparent O/R SITR for taxpayers who are minors or who are claimed as a dependent on someone else's return. Delete the SITR IRs for minors and dependents claimed on someone else's return. If the taxpayer filed "married filing jointly" in the prior year, and filed "married filing separately" in the current AUR tax year and reported one-half of the SITR amount, consider the SITR fully reported. PARAGRAPH 69 automatically generates when SITR is U/R. PARAGRAPH 16 automatically generates when SITR is O/R because the taxpayer did not claim itemized deductions for the prior AUR tax year. If SITR is U/R, enter the return amount in the RETURN field of the Summary screen.

# Nonemployee Compensation (NEC) - General

4.19.3.8.6 (09-24-2021) Nonemployee Compensation (NEC) - General Nonemployee compensation is fees, commissions, or any other compensation paid by a business to an individual who isn't an employee. Nonemployee compensation is reported on Form 1099-NEC, Nonemployee Compensation. Nonemployee compensation is identified on the Case Analysis screen by the literal "99NEC" in the DOC TYPE field and the literal "NEC" in the INCOME TYPE field.

# NEC - Analysis

4.19.3.8.6.1 (10-10-2025) NEC - Analysis Compare NEC amounts with entries on: Schedule C, Part I. Schedule E, Part II - see (3) below. Schedule F, Part I or III. Form 4835, Farm Rental Income and Expenses, Part I. Note: Consider NEC reported if it is included in a larger total for the applicable taxpayer on Schedule C, F or Form 4835, unless the IR is obviously not the same type of income. When comparing NEC IRs with entries on any line not specifically identified for NEC, the amount must match within $1 or be CLEARLY IDENTIFIED by payer name, activity or as NEC income: Form 1040/Form 1040-SR, line 1. Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Schedule D, Part I, lines 1a, 1b, 2, or 3 column (d) or Part II, lines 8a, 8b, 9 or 10, column (d). Caution: Digital Assets may be reported or partially reported on Schedule D. This income may be identified by payer name or may be referred to as bitcoin or similar language on the system IR. If the income is partially reported and the taxpayer includes an explanation they reported the fair market value of the digital asset, as of the date it was received, consider the income reported. Form 8949- Part I, line 1 column (d) or Part II, line 1, column (d). Caution: Digital Assets may be reported or partially reported on Form 8949. This income may be identified by payer name or may be referred to as bitcoin or similar digital asset terminology. If the income is partially reported and the taxpayer includes an explanation they reported the fair market value of the digital assets, as of the date it was received, consider the income reported. If pursuing digital assets send Paragraph 226, see Exhibit 4.19.3-7, CP PARAGRAPHS, for further information. Form 2106, Employee Business Expenses, line 7 - Give credit when the NEC IR is related to the occupation (or activity) shown on Form 2106. See (4) below. Schedule E, Part I. Form 4797, Sales of Business Property, Parts I, II, or III. Form 6252, Installment Sale Income, line 5 or line 21. Form 3903, Moving Expenses, line 4. Note: Only Members of the Armed Forces who meet certain requirements can deduct moving expenses. Note: The taxpayer may report the sale of timber, coal, easements, right-of-way (ROW), land damages, etc. on the designated lines for Schedule D, Form 8949 or Form 4797. Consider the NEC reported if the sales price matches the IR within $1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ An amount on the return matches within $1. Also give credit for reported amounts identified as being from the same payer. The taxpayer is incorporated (payer name must include CORP, INC, LC, LLC, PA, SC, or PC) and pays wages to themselves (the name and/or address of the payer is similar to or matches the name and/or address of the taxpayer). ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The taxpayer appears to be a partner or shareholder as shown on Schedule E, Part II. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The taxpayer is in the medical profession and has reported wages from a medical professional corporation (payer name must include CORP, INC, LC, LLC, PA, SC, PC, clinic or group) but not a hospital or medical center. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The taxpayer is an employee of an institution and has ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The taxpayer is in the medical profession and there is an indication ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The taxpayer nets the amount for reimbursed expenses reported on Form 1099-NEC, and ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 3115, Application for Change in Accounting Method, is attached and the taxpayer is an insurance agent, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The combined NEC for both taxpayers equals the Schedule C within $1 or there is a statement indicating the amounts are included in a larger total. If Form 2106, column A, line 7 is greater than line 6, the taxpayer ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The U/R amount can't exceed the amount on Form 2106, column A, line 8. To arrive at the amount to input in the RETURN field, subtract the amount that should have been included in income (Form 2106, column A, line 8) from the IR amount. Note: For tax years 2018-2025, only Armed Forces Reservists, qualified performing artists, fee basis state or local government officials and employees with impairment-related work expenses can use Form 2106. Form 2106 expenses are reported on Form 1040/ Form 1040-SR, Schedule 1, line 12. If the payer is an oil, gas, or petroleum company: Consider the IR(s) reported if it is included (identified by payer or activity) in a larger total on Schedule C, or Schedule E, Part I. Depletion should NOT be deducted on Schedule C, Part II, or Schedule E, Part I, unless the business activity is related to a natural resource (for example, oil, gas, mineral, timber). Consider the depletion amount U/R if that depletion was deducted from income that is clearly NEC (Schedule C, line 12, or Schedule E, line 20). To arrive at the amount to enter in the SHOWN ON RETURN field, subtract the depletion amount from the IR amount(s). Consider the IR fully U/R if the depletion amount can't be determined. Nonemployee Compensation may represent crop insurance proceeds, which are reported on Schedule F, line 6a or 6b, or Form 4835, line 5a or 5b. The taxpayer may elect to postpone the crop insurance proceeds to the year following the damage. If the NEC amount(s) appears to be this type of income, consider the amount reported if: The box on Schedule F, line 6c, or Form 4835, line 5c, is checked AND The reported amount is equal to or greater than the NEC IR amount(s). If an explanation is attached to the return indicating the fellowship, grant, or stipend was used for tuition, fees, books, supplies, and equipment required for the course, see IRM 4.19.3.8.1.4, Fellowships, Grants, and Stipends, for further information. If the NEC IR is identifiable as fellowship/grant/stipend income, no explanation of tuition expenses is attached, and the IR isn't fully reported, pursue the amount not reported. Send PARAGRAPH 124, see Exhibit 4.19.3-7, CP PARAGRAPHS. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ DO NOT ASSESS SE tax on scholarship/stipend income. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the taxpayer reports NEC income on Form 1040/Form 1040-SR, line 1g and attaches a Form 8919, to assess the employee share of FICA, the taxpayer is indicating that they are NOT LIABLE for SE tax on NEC because they're an employee. Unless an employment status determination has been rendered by the SS-8 group to identify if the taxpayer is an independent contractor or employee, SE tax must be assessed. To ensure that credit is given for the tax paid on Form 8919: Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Do not change the Income Identify Code. Remove any amount from the ADDITIONAL FICA TAX window that is subject to SE Tax in the PRIMARY/SECONDARY INCOME SUBJECT TO FICA field. Access the SE Tax window and enter the Primary/Secondary Form 8919 tax in the PRI/SEC TAX FROM FORM 8919 INCOME field. Enter the amount of reported NEC in the PRIM/SEC 8919 INCOME SUBJECT TO SE TAX field. Note: DO NOT enter this amount in the "Reported SE Income not on Sch SE" field of the SE Tax window. If necessary, adjust the PRI/SEC SS/RR WAGES/TIPS field so it doesn't include the NEC amount from Form 8919. Send PARAGRAPH 12, see Exhibit 4.19.3-7, CP PARAGRAPHS. See IRM 4.19.3.23.5.23, Self-Employment Tax (SE Tax) vs. Employee Share of FICA. If Form 4137, Social Security and Medicare Tax on Unreported Tip Income, is attached to the return: Do not change the Income Identify Code. Access the SST on TIPS window and correct the entries in the PRI/SEC ALLOCATED TIPS, UNREPORTED SS TIPS and/or MEDICARE-ONLY TIPS fields to reflect the actual amount of tip income received (use zero (0) or blank if no tip income was received). Reminder: Do not adjust the PRI/SEC UNREPORTED TIP TAX field. Access the SE Tax window and input the reported NEC amount in the PRI/SEC REPRTED SE INC NOT ON SCH SE field. If necessary, adjust the PRI/SEC SS/RR WAGES/TIPS field so it doesn't include the NEC amount from Form 4137. Reminder: Do not assess a tip tax penalty. Send PARAGRAPH 12, see Exhibit 4.19.3-7, CP PARAGRAPHS. See IRM 4.19.3.23.5.23, Self-Employment Tax (SE Tax) vs. Employee Share of FICA. If taxpayers who are members of federally recognized Native American Tribes report Form 1099-NEC tribal-related income on Form 1040/1040-SR, Schedule 1, line 8z don't assess SE tax if any of the following literals are provided: Federally Recognized Native American Tribes INDIAN GAMING INDIAN GAMING PROCEEDS IGP INDIAN TRIBAL DISTRIB INDIAN TRIBAL INCOME INDIAN TRIBAL FUND INDIAN TRIBAL EARNINGS NATIVE AMERICAN NATIVE AMERICAN DISTRIB IGE ITI ALASKA PERMANENT FUND ALASKA PERMANENT FUND DIV APF APFD If the taxpayer reports NEC on Form 1040/Form 1040-SR, Schedule 1, line 8z and ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

# NEC - Miscellaneous

4.19.3.8.6.2 (11-29-2023) NEC - Miscellaneous If a NEC amount on a 99NEC IR is U/R, verify the Income Identify Code so the system computes SE tax correctly. See Exhibit 4.19.3-9, Income Identify Codes. Underreported NEC is considered self-employment income (Income Identify Code is "PB" , "PF" , "SB" , or "SF" , as applicable) even if there is Form W-2 wage income from the same payer, unless the following applies: The NEC is partially or fully reported on Form 2106, Form 3903, Form 4835, Form 6252, Form, 4797, Schedule D, Form 8949 or Schedule E, Part I. NEC reported on these forms isn't subject to SE tax or considered earned income (Income Identify Code is blank). Note: Excess reimbursements on Form 2106 must be reported on Form 1040/Form 1040-SR, line 1a and is considered earned income. Enter Income Identify Code "PE" or "SE" . Note: Only employees in the following categories qualify to use Form 2106: Armed Forces Reservists, qualified performing artists, fee basis state or local government officials and employees with impairment-related work expenses. The taxpayer is a newspaper carrier or magazine seller and is under the age of 18, DO NOT assess SE tax. The taxpayer is exempt from SE tax on the net earnings covered by an approved Form 4361, Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners or Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits. If the taxpayer writes "Exempt Form 4361" or "Form 4029" on Form 1040/1040-SR, Schedule 2, line 4, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: Although taxpayers may exclude Ministers Housing Allowance from NEC, it generally is subject to self-employment (SE) tax. Thus, there may be a difference between net Schedule C income and income subject to SE tax due to the Ministers Housing Allowance. If the taxpayer indicates that an NEC amount is compensation for a "non-compete" agreement or they are a member of a federally recognized Native American Tribe, the NEC amount isn't subject to SE tax. Leave the INCOME IDENTIFY CODE field blank. If the taxpayer indicates the compensation is for court awards/settlements. See IRM 4.19.3.8.18.2, Other Income Miscellaneous, for further information. If there is reported NEC on which the taxpayer should have paid SE tax but did not, SE tax must be computed or recomputed if NEC is asterisked or a CP 2000 is sent for another issue(s). Enter the reported NEC amount in the PRIM REPRTD SE INC NOT ON SE and/or SEC REPRTD SE INC NOT ON SE field(s) on the SE Tax window. See IRM 4.19.3.17.1, Self-Employment Tax or Exhibit 4.19.3-20, Examples of Self-Employment Income. Send reported NEC IR elements on the notice when adjusting SE tax. If the NEC amount is entered in the PRIMARY and/or SECONDARY REPORTED SE INCOME field in the SE Tax window in error, an unpostable condition will occur. If the taxpayer reports NEC income, but indicates they worked as an employeeand Paid the employee 7.65 percent of FICA, follow the instructions in IRM 4.19.3.8.6.1, NEC - Analysis. Did not pay the employee 7.65 percent of FICA, charge the appropriate amount of SE tax. The NEC IR is partially reported on Form 4137 or Form 8919 and SS/Medicare tax is paid on the reported amount instead of SE tax, unless the condition in IRM 4.19.3.8.6.1 is met, treat the U/R NEC from the partially reported IR as subject to SE tax and follow the instructions in IRM 4.19.3.8.6.1, NEC - Analysis. Send PARAGRAPH 12, see Exhibit 4.19.3-7, CP PARAGRAPHS. If the taxpayer reports NEC income AND attaches a Form 4137, follow the instructions in IRM 4.19.3.8.6.1, NEC - Analysis. If the taxpayer reports NEC income AND attaches a Form 8919, follow the instructions in IRM 4.19.3.8.6.1(9) or (10) as appropriate, NEC - Analysis. 99NEC IRs may reflect W/H. See IRM 4.19.3.18.1, Withholding - General, for further instructions. If there are two or more fully U/R NEC IRs with an out-of-state payee address beyond the reasonable commuting area for the taxpayer (for example, taxpayer lives in Pennsylvania and U/R IRs are for Georgia), send PARAGRAPH 167. See Exhibit 4.19.3-7, CP PARAGRAPHS. If the taxpayer participates in a nonqualified deferred compensation plan that doesn't meet all requirements as specified in IRC 409A, (appears with the literal 409AI on the IR) the payer must report the deferred compensation as income and the amount is subject to an additional tax. The payer identifies income under IRC 409A on, Form 1099-MISC, box 12. Income subject to IRC 409A regulations is identified on the Case Analysis screen by the literal "99MIS" in the DOC TYPE field and the literal "409AI" in the INCOME TYPE field. Enter status code "R" on the "409AI" element(s). The 409AI amount is subject to an additional tax. See IRM 4.19.3.17.6, Additional Taxes on Income from Nonqualified Deferred Compensation Plan (IRC 409A), for further instructions. Reminder: Mark the 409AI IR element(s) with Send Indicator "S" when adjusting the additional tax. If NEC is U/R, enter the GROSS return amount in the RETURN field on the Summary screen.

# Merchant Card and Third-Party Network Payments (MERCH) - General

4.19.3.8.7 (10-04-2016) Merchant Card and Third-Party Network Payments (MERCH) - General Merchant Card and Third-Party Network Payments are payments the taxpayer accepted from merchant cards (credit and debit cards), or received through a third-party network (PayPal, Google checkout, etc). Merchant Card and Third-Party Network Payments are reported on Form 1099-K, Payment Card and Third-Party Network Transactions. Merchant Card and Third-Party Network Payments are identified on the Case Analysis screen by the literal "1099K" in the DOC TYPE field and the literal "MERCH" in the INCOME TYPE field. Note: The IR may reflect the informational literal "NOCRD" , which is system deleted ("X" ). Do not pursue NOCRD amounts.

# MERCH - Analysis

4.19.3.8.7.1 (10-10-2025) MERCH - Analysis Compare MERCH amounts with entries on: Schedule C, Part I. Schedule E, Part II - see (5) below. Schedule F, Part I or III. Consider MERCH reported if it is included in a larger total for the applicable taxpayer on Schedule C, or F, unless the IR is obviously not the same type of income. When comparing MERCH IRs with entries on any line not specifically identified for MERCH, the amount must match within $1 or be CLEARLY IDENTIFIED by payer name, activity or as MERCH income: Form 1040/1040-SR, line 1a. Schedule 1, in the entry space for Form 1099-K above Part I. Taxpayers are instructed to input payments received in error (for example, money for gift, reimbursements, items sold at a loss, etc) in this space (TY 2024 and subsequent). Schedule 1, Part 1, line 8v Schedule 1, Part I, line 8z (TY 2023 and prior). Note: If the taxpayer is selling a personal item at a loss or reporting an error on the Form 1099-K the gross receipts will be reported on line 8z-Other Income using the description "Form 1099-K Personal Item Sold at a Loss or Form 1099-K received in Error " with an offsetting amount reported on Part II - Line 24z Other adjustments. Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Schedule D, Part I, lines 1a, 1b, 2, or 3 column (d) or Part II, lines 8a, 8b, 9 or 10, column (d). Form 8949, Sales and Other Dispositions of Assets, Part I, line 1 column (d) or Part II, line 1, column (d). Caution: Digital assets may be reported or partially reported on Form 8949. This income may be identified by payer name or may be referred to as bitcoin or similar digital asset terminology. If the income is partially reported and the taxpayer includes an explanation they reported the fair market value of the digital assets, as of the date it was received, consider the income reported. If pursuing digital assets send Paragraph 226, see Exhibit 4.19.3-7, CP PARAGRAPHS, for further information. Schedule E, Part I. Form 4797, Sales of Business Property, Parts I, II, or III. The taxpayer may report the sale of timber, coal, easements, right-of-way (ROW), land damages, etc., on the designated lines for Schedule D, Form 8949 or Form 4797. Consider the MERCH reported if the sales price matches the IR within $1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The taxpayer is incorporated (payer name must include CORP, INC, LC, LLC, PA, SC, or PC) and pays wages to themselves (the name and address of the payer is similar to or matches the name and/or address of the taxpayer). ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The taxpayer appears to be a partner or shareholder as shown on Schedule E, Part II. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The taxpayer is in the medical profession and has reported wages from a medical professional corporation (payer name must include CORP, INC, LC, LLC, PA, SC, PC, clinic or group) but not a hospital or medical center. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The MERCH IR is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the MERCH IR can be clearly identified as being a reimbursement of expenses ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

# MERCH - Miscellaneous

4.19.3.8.7.2 (12-13-2018) MERCH - Miscellaneous If MERCH is U/R, verify the Income Identify Code so the system computes SE tax correctly. See Exhibit 4.19.3-9, Income Identify Codes. Underreported MERCH can be considered self-employment income (Income Identify Code is "PB" , "PF" , "SB" , or "SF" , as applicable) even if there is Form W-2 wage income from the same payer. If MERCH isn't subject to SE tax (for example, MERCH reported on Schedule E, Part I, or Schedule D/Form 8949) remove the income identify code and leave the field blank. If there is reported MERCH on which the taxpayer should have paid SE tax but did not, SE tax must be computed or recomputed if MERCH is asterisked or a CP 2000 is sent for another issue(s). Include the reported MERCH amount in the PRIM REPRTD SE INC NOT ON SE and/or SEC REPRTD SE INC NOT ON SE field(s) on the SE Tax window. See IRM 4.19.3.17.1, Self-Employment Tax and Exhibit 4.19.3-20, Examples of Self-Employment Income. Send reported MERCH IR elements on the notice when adjusting SE tax. If the MERCH amount is entered in the PRIMARY and/or SECONDARY REPORTED SE INCOME field in the SE Tax window in error, an unpostable condition will occur. PARAGRAPH 109 automatically generates when the MERCH IR is identified as U/R or used to create a group. If MERCH isn't used to create a group, send PARAGRAPH 109,Exhibit 4.19.3-7, CP PARAGRAPHS. If MERCH is U/R, enter the GROSS return amount in the RETURN field on the Summary screen.

# Medical Payments - General

4.19.3.8.8 (09-01-2003) Medical Payments - General Medical payments are compensation paid to doctors, dentists, and others in the medical profession (for example, Nurse Practitioner, Midwife, Chiropractor, Doctor of Osteopathy, Veterinarian, Podiatrist). Medical payments are reported on Form 1099-MISC, Miscellaneous Information. Medical payments are identified on the Case Analysis screen by the literal "99MIS" in the DOC TYPE field and the literal "MED" in the INCOME TYPE field.

# Medical Payments - Analysis

4.19.3.8.8.1 (09-21-2020) Medical Payments - Analysis Compare MED amounts with entries on: Schedule C, Part I, if it appears to be for a medical practice. Schedule E, Part II, if it appears to be related to the medical profession. MED comparisons for the following entries must match within $1 or be CLEARLY IDENTIFIED as MED payments on Form 1040/Form 1040-SR, line 7 or Form 1040/1040-SR, Schedule 1, line 8z. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Reported wages from a medical professional corporation (payer name must include CORP, INC, LC, LLC, PA, SC, PC, clinic, or group), but not a hospital or medical center or Is incorporated (payer name must include CORP, INC, LC, LLC, PA, SC or PC) and pays wages to themselves (the name and/or address of the payer is similar to or matches the name and/or address of the taxpayer). Note: If there are no WAGES IRs displayed on the Case Analysis screen, review the Form W-2 attached to the return. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

# Medical Payments Miscellaneous

4.19.3.8.8.2 (09-01-2013) Medical Payments Miscellaneous If MED payments are U/R and the taxpayer's occupation and/or the payer name on the MED IR(s) is NOT related to the medical field, the income may be sick pay or disability payments. Form 1099-MISC are sometimes incorrectly used to report sick pay or disability payments. Do not consider the U/R MED amount(s) as self-employment income. Delete the Income Identify Code(s). If MED payments are U/R and the taxpayer is in the medical profession, treat U/R MED payments as self-employment income. See IRM 4.19.3.17.1, Self-Employment Tax. If there is reported MED on which the taxpayer should have paid SE tax but did not, SE tax must be computed or recomputed, if MED or SE tax is asterisked or a CP 2000 is sent for another issue(s). Include the reported MED amount in the PRIM REPRTD SE INC NOT ON SE and/or SEC REPRTD SE INC NOT ON SE field(s) on the SE Tax window. See IRM 4.19.3.17.1, Self-Employment Tax, and Exhibit 4.19.3-20, Examples of Self-Employment Income. Send reported MED IR elements on the notice when adjusting SE tax. If the MED amount is entered in the PRIMARY and/or SECONDARY REPORTED SE INCOME field in the SE Tax window in error, an unpostable condition will occur. IRs with MED amounts may reflect W/H. See IRM 4.19.3.18.1, Withholding - General, for further instructions. If MED payments are U/R, enter the GROSS return amount in the RETURN field on the Summary screen.

# Fishing Income - General

4.19.3.8.9 (10-06-2022) Fishing Income - General Fishing income is earned by fishing boat crew members, or the cash amounts paid for the purchase of fish for resale from any person engaged in the trade or business of catching fish. Fishing income is reported on Form 1099-MISC, Miscellaneous Information. Fishing income is identified on the Case Analysis screen by the literal "99MIS" in the DOC TYPE field and the literal "FISH" in the INCOME TYPE field or "99MIS" in the DOC TYPE field and the literal FRSAL in the INCOME TYPE field.

# Fishing Income - Analysis

4.19.3.8.9.1 (10-06-2022) Fishing Income - Analysis When comparing FISH or FRSAL amounts with the following entries, the amount must match within $1 or be CLEARLY identified by payer name, activity or as fish income: Schedule C, Part I. Schedule E, Part I. Schedule E, Part II. Form 1040/1040-SR, Schedule 1, line 8z.

# Fishing Income Miscellaneous

4.19.3.8.9.2 (10-06-2022) Fishing Income Miscellaneous If a FISH or FRSAL amount on a 99MIS IR is U/R, verify the Income Identify Code so the system computes SE tax correctly. Valid Income Identify Codes are "PB" , "PF" , "SB" , or "SF" , as applicable. See Exhibit 4.19.3-9, Income Identify Codes. If there is fishing income reported on which the taxpayer should have paid SE tax but did not, SE tax must be computed or recomputed if FISH, FRSAL, or SE tax is asterisked or a CP 2000 is sent for another issue(s). Include the reported FISH amount in the PRIM REPRTD SE INC NOT ON SE and/or SEC REPRTD SE INC NOT ON SE field(s) on the SE Tax window. See IRM 4.19.3.17.1, Self-Employment Tax, and Exhibit 4.19.3-20, Examples of Self-Employment Income. Send reported FISH or FRSAL IR elements on the notice when adjusting SE tax. If the FISH amount is entered in the PRIMARY and/or SECONDARY REPORTED SE INCOME field in the SE Tax window in error, an unpostable condition will occur. 99MIS IRs with FISH or FRSAL amounts may reflect W/H. See IRM 4.19.3.18.1, Withholding - General, for further instructions. If fishing income is U/R, enter the GROSS return amount in the RETURN field on the Summary screen.

# Retirement Plans

4.19.3.8.10 (09-21-2020) Retirement Plans Form 1099-R, Distributions from Pensions, Annuities, Retirement, or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., is used to report distributions from retirement plans. Retirement plans include pensions and annuities, profit-sharing and stock bonus plans, individual retirement accounts (IRAs), employee savings plans. Distributions from retirement plans are not always fully taxable. Other pension and annuity payments (including non-IRA distributions that are periodic payments or lump-sum distributions not entitled to special tax treatment on Form 4972, Tax on Lump-Sum Distributions) are reported on Form 1040/1040-SR line 4a and/or 4b or line 5a and/or line 5b for pensions. When distributions from Traditional or Roth IRAs, 401(k), 403(b), governmental 457, 501(c)(18)(D), SEP or SIMPLE plans, or qualified retirement plans as defined in section 4974(c) (including Federal Thrift Savings Plan) are determined to be U/R, check for Form 8880, Credit for Qualified Retirement Savings Contributions, and adjust as appropriate. See IRM 4.19.3.16.6, Qualified Retirement Savings Contributions Credit, (QRSC), for more information.

# Form 1099-R Information Returns

4.19.3.8.10.1 (09-24-2021) Form 1099-R Information Returns Form 1099-Rs may display the following literals: "GR/A" - Gross amount "TX/A" - Taxable amount "ECG" - Eligible Capital Gains Note: Payers must include the capital gain distribution amount in the gross and taxable distribution amount boxes on Form 1099-R. "UNRAP" - Unrealized Appreciation "EMCON" - Employee Contributions from box 5 of Form 1099-R Note: "UNRAP" and "EMCON" amounts are system deleted. A Category of Distribution (COD) code displays in the IND field on the Case Analysis screen and on the Information Return window for 1099R IR(s). The COD contains up to two indicators. For the meaning of each individual indicator, see Exhibit 4.19.3-6, Category of Distribution (COD) Chart - Form 1099-R. Note: There should be one indicator present in the COD field; however, two indicators may display. Generally, two indicators display as an alpha/numeric combination. Consider each indicator individually. Example: COD "7A" is read as COD 7 (normal distribution) and COD A (qualifies for 10-year tax option on Form 4972). Zero (0) has no meaning and is considered a blank space. The only valid numeric/numeric COD combinations are: 8 and 1, 8 and 2, or 8 and 4. If the 1099R IR contains any other numeric/numeric combination (for example, 14) disregard the second indicator. Consider the indicators on any attached Form 1099-R, box 7 the most accurate information available. If attached documents indicate that the displayed COD is incorrect and the COD code is "J" , "L" , "M" , "S" , "1" , or "5" , modify the IR to show the correct COD code. Use COD codes to compare 1099R IR amounts with the proper placement on the tax return. The following information displays on all 1099R IRs: TOTAL DIST IND TAX AMT NOT DET Note: A "1" indicates the applicable box(es) was checked on the IR. A "blank" indicates the applicable box was not checked. Payers report lump-sum credit distributions to Civil Service annuitants on Form, 1099-R. The gross credit amount is included with the total of any periodic payments made. The taxpayer must compute and report the taxable credit amount on Form 1040/1040-SR line 5b. The taxpayer may erroneously treat Form 1099-R income as Social Security/Railroad Retirement Benefits, reporting the amount on Form 1040/1040-SR, lines 6a and 6b. See IRM 4.19.3.8.10.5, Railroad Retirement Board (RRB) IRs, for more information. Taxpayers make donations of cash and/or other assets (generally stocks) to nonprofit organizations and receive an annuity from the nonprofit organizations from their donations. These annuities are partly capital gains from the taxpayer's donated assets as well as annuities. Nonprofit organizations report these capital gains and annuities on Form 1099-R; COD "F" in box 7 indicates charitable gift annuities and may contain ECG amounts. See IRM 4.19.3.8.10.8, Lump-Sum Distributions, for further instructions.

# Identifying Retirement Types

4.19.3.8.10.2 (10-10-2025) Identifying Retirement Types The following references are for specific retirement types and MUST be used in conjunction with the general instructions in IRM 4.19.3.8.10.3, Retirement-Analysis, and IRM 4.19.3.8.10.4, Rollovers. See IRM 4.19.3.8.10.5, Railroad Retirement Board (RRB) IRs, when: Form 1099-R is attached, or the IR indicates the payment is from the Railroad Retirement Board. Form 1099-R shows Taxable Contributory Amount, Taxable Vested Dual Benefit, and/or Taxable Supplemental Annuity. See IRM 4.19.3.8.10.6, Pensions and Annuities, when: Form 1099-R is attached and indicates pension/annuity or The taxpayer attached a written statement which identifies the income as pension or annuity or The taxpayer reported the distribution on Form 1040/1040-SR, line 5a and/or 5b or The taxpayer indicates PSO next to Form 1040/ Form 1040-SR, line 5a/b, Note: The PSO indicator is located on the Dotted/Attach tab in TRDB. See IRM 4.19.3.8.10.7, IRA Distributions, when: Form 1099-R is attached and an IRA/SEP distribution is indicated in box 7. Form, 1099-R or the IR shows "IRA" in the payer or payee name lines. The taxpayer attached a written statement identifying the income as an IRA distribution. COD Indicator of "1" is displayed. The GR/A and TX/A amounts are the same and the payer indicates the taxable amount has not been determined. COD J is present or The IRA/SEP/Simple box is checked on the IR. The taxpayer reported the distribution on Form 1040/1040-SR, line 4a and/or 4b. The taxpayer indicates QCD next to Form 1040/1040-SR, line 4a and/or 4b. Note: The QCD indicator is located on the Dotted/Attach line tab in TRDB. The taxpayer indicates HFD next to Form 1040/1040-SR, line 4a and/or 4b. Note: The HFD indicator is located on the Dotted/Attach line tab in TRDB. See IRM 4.19.3.8.10.8, Lump-Sum Distributions, when: Form 1099-R or IR shows COD code "A" . The IR contains ECG amounts.

# Retirement - Analysis

4.19.3.8.10.3 (10-02-2024) Retirement - Analysis These are general instructions and MUST be used in conjunction with the instructions for specific retirement types. Compare retirement plan IRs with entries on: Caution: If Form 8606 is attached, see IRM 4.19.3.8.10.7, IRA Distributions, before determining the U/R amount. Form 1040/1040-SR line 1, 4a, 4b, 5a, 5b or Form 1040/1040-SR Schedule 1, line 8z. Form 4972 (if the taxpayer was a teacher, see IRM 4.19.3.8.10.8, Lump-Sum Distributions Schedule D, see (4) below. Attachments to Form 1040. Schedule B - If reported here, also analyze INT or DIV, as applicable. Note: If there is an indication the distribution is a life insurance policy surrendered for cash, see IRM 4.19.3.23.5.6, Retirement Distributions - Form 1099-R. For IRM 4.19.3.8.10.3 through IRM 4.19.3.8.10.9 when reference is made to gross pensions and annuities, refer to Form 1040/1040-SR, line 4a and/or 5a or taxable pensions and annuities, refer to Form 1040/1040-SR, line 4b and/or 5b. If the taxpayer included ordinary retirement income as Capital Gains on Schedule D, compare the amount reported, if identified as the same payer, with the IR and take the following action: If the amount reported, column (h), is equal or greater than the IR amount, consider the income reported. If the amount reported, column (h), is less than the IR amount, consider the difference U/R. Exception: If after removing retirement income from Schedule D, the Schedule D remains a loss, consider retirement income fully U/R. If reported on Schedule D, Part II, subtract the retirement income from the LONG-TERM GAIN/(LOSS) field in the Schedule D Tax window and send PARAGRAPH 134. See Exhibit 4.19.3-7, CP PARAGRAPHS. If the taxpayer included ordinary retirement income as Capital Gains on Schedule D and claimed a loss, consider the retirement income fully U/R and consider the loss as overclaimed up to $3,000 ($1,500 if MFS). Only recapture the losses related to the retirement income. If income is reported on Schedule D, Part II, see (4)c above. Note: If there is U/R retirement reported on Schedule D and the taxpayer reports a capital loss on Form 1040/1040-SR, line 7 enter a zero (0) in both fields on the COMPUTE SCHEDULE D LOSS window. It may be necessary to blank out both fields first. This will prevent the system from using losses in excess of $3,000 ($1,500 if MFS) to offset U/R Schedule D income. Accurate analysis of retirement plan IRs depends on whether the payer of reported Form 1099-R income is identifiable. The payer is identified if the taxpayer has: Attached Form 1099-R Written a statement Annotated the return Claimed the W/H on a 1099R IR Reported an amount within $1 Do not pursue 1099R IRs with COD codes of: Note: The system will delete (mark with "X" ) all elements of the 1099R IR. 6 G H N P Q R T W When a 5498 ROLVR IR matches the amount on a deleted 1099R IR ≡ ≡ ≡ ≡ ≡ ≡, don't use that ROLVR amount for any other IR. See IRM 4.19.3.8.10.4, Rollovers. Delete 1099R IRs with COD code of "F" . The Office of Personnel Management (OPM) is the payer of a Civil Service Annuity. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, unless the taxable pensions and annuities line of the return is zero or blank. If the taxable pensions and annuities line of the return is blank or zero, pursue the GR/A. Note: If the case is an ELF, the zero literal may not appear. If there is an indication the Form 1099-R income is a military retirement distribution, see IRM 4.19.3.8.10.6.1, Military Pensions. If there is an indication that a pension from a 1099R IR is a disability pension, input an Income Identify Code of "PE" or "SE" , as applicable. Disability pensions (COD "3" ) are considered earned income. Exception: Disability payments for injuries incurred as a result of a terrorist attack directed against the United States or its allies are not taxable and should not be included in income. See IRM 4.19.3.23.1.26, Victims of Terrorist Attacks, for acceptable indications. If there is an indication that the distribution is a Qualified Charitable Distribution (QCD), see IRM 4.19.3.8.10.7, IRA Distributions. When both "GR/A" and "TX/A" amounts are present on the same 1099R IR, the system automatically assigns status code "X" to the "GR/A" amount. If the COD on the IR or Form 1099-R attached is other than one listed in (7) above and displays only the "GR/A" literal, pursue the GROSS distribution amount when the taxpayer doesn't include the distribution on the return. Exception: If COD J is present, see IRM 4.19.3.8.10.7, IRA Distributions. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ if the taxpayer discloses an amount, including zero (0) or reports a lesser amount as calculated on Form 8606, Nondeductible IRAs, or similar worksheet. Note: If the taxpayer reports an amount less than "GR/A" amount and the distribution code indicates the 10 percent premature distribution tax will be assessed, use the 5329 window to calculate the correct amount of the additional tax. See IRM 4.19.3.17.3, 10 Percent Tax on Early Distributions from Qualified Retirement Plans/25 Percent Tax on Early Distributions from SIMPLE IRAs, for additional information. If COD J is present, see IRM 4.19.3.8.10.7, IRA Distributions. If the payer is OPM, see IRM 4.19.3.8.10.3, Retirement - Analysis. If payer is Railroad Retirement Board, see IRM 4.19.3.8.10.5, Railroad Retirement Board (RRB) IRs. If the IR or Form 1099-R attached displays only the "TX/A" literal, pursue the TAXABLE distribution amount. If a "TX/A" amount is present and the payer indicates the "taxable amount has not been determined" , accept what the taxpayer reports if the taxpayer reports a lesser taxable amount, as calculated on an attached Form 8606 or similar worksheet. Note: If the IR contains both taxable amount not determined and total distribution or the taxpayer writes "rollover" or provides another statement that the distribution was rolled over, see IRM 4.19.3.8.10.4, Rollovers. If there are multiple 1099R IRs from the same payer, compare the total gross IR amount to the total amount reported by the taxpayer. If the gross amount isn't present, use the taxable amount. Compare the IR amount(s) to the return amount Form 1040/1040-SR, lines 4a and 4b, or 5a and 5b: If the return amount is Then Equal or greater than the IR amount(s) Consider the income reported unless identified as a different payer. Less than the IR amount(s) Note: If the taxpayer indicates that the simplified method or general rule was used, consider the IR(s) reported. Consider the difference U/R if the reported income is identified as the same payer. Less than the IR amount(s) AND the reported income is unidentified or identified as a different payer Note: See IRM 4.19.3.8.10.2, Identifying Retirement Types, for additional information regarding identification of retirement plan IRs. Consider the income fully U/R. Reminder: When it can clearly be determined due to a dollar match that a system deleted ("X" ) IR is reported, DO NOT allow credit for the reported amount(s) against other IRs. Consider 1099R IRs reported when the return indicates that the U/R amount is due to employee contributions AND: Form 1099-R or similar documentation is attached, and the box 5 amount matches the U/R amount within $1 or The 1099R IR contains INCOME TYPE "EMCON" and the amount matches the U/R amount within $1.

# Qualified Disaster Retirement Plan Distributions and Repayments

4.19.3.8.10.3.1 (10-10-2025) Qualified Disaster Retirement Plan Distributions and Repayments The Disaster Tax Relief and Airport and Airway Extension Act of 2017, the Tax Cuts and Jobs Act, the Bipartisan Budget Act of 2018, and the Taxpayer Certainty and Disaster Tax Relief Act of 2019, Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Taxpayer Certainty and Disaster Tax Relief Act of 2020 and SECURE act of 2022 provided special rules apply for using distributions from IRAs and employer retirement plans by victims of 2017 California Wildfires, Hurricanes Harvey, Irma and Maria, the Coronavirus, and major disasters occurring in 2019 and 2020. The legislative provisions provide for: Disaster distributions of up to $22,000 from IRAs and certain employer retirement plans for taxpayers who suffered an economic loss because of the disaster. Exemption for disaster distributions from the 10 percent tax (or 25 percent tax for distributions from SIMPLE IRAs) on early withdrawals. Inclusion of disaster distributions in taxpayer's income over three years. Recontribution of all or part of a disaster distribution within three years of receipt. Recontribution of distributions taken to purchase or construct a home in a disaster area if the home was not purchased or constructed because of the disaster (doesn't apply to coronavirus disaster or qualified 2016 disasters); and Increasing the amount and postponing repayments of loans from qualified plans for victims of a disaster (doesn't apply to qualified 2016 disasters). Taxpayers adversely affected by the Coronavirus have special qualifying rules. Note: The $22,000, limit applies for each disaster. This limit applies for each taxpayer on a married filing joint return. Taxpayers may include amounts from other retirement distributions not qualified to be included with Qualified Disaster Retirement Plans and Repayments, see IRM 4.19.3.8.10.3, Retirement – Analysis, for additional information. Compare amounts reported on Form 1040/1040-SR; line 4b or 5b with the applicable lines below: Form Definition Tax Year / Reporting lines 8915-C, Qualified 2018 Disaster Retirement Plan Distributions and Repayments A qualified 2018 disaster distribution from an eligible retirement plan, was made in 2019 or before June 17, 2020. A qualified distribution in 2019 for the purchase or construction of a main home in 2018 disaster areas is repaid, in whole or in part, no later than June 17, 2020. A qualified 2018 disaster distribution in 2019 is included in income in equal amounts over 3 years. A qualified 2018 disaster distribution repayment made in 2019, 2020, and 2021. 2022, lines 7 and 14 8915-D, Qualified 2019 Disaster Retirement Plan Distributions and Repayments A qualified 2019 disaster distribution from an eligible retirement plan, and the distribution was made in 2019 or 2020. A qualified distribution in 2019 for the purchase or construction of a main home in 2018 disaster areas is repaid, in whole or in part, no later than June 17, 2020. A qualified 2019 disaster distribution received in 2019 or 2020 is included in income in equal amounts over 3 years. A qualified 2019 disaster distribution for the Puerto Rico Earthquake's disaster (DR-4473-PR) from an eligible retirement plan was received in 2021. A qualified 2019 disaster distribution repayment in 2020 or 2021. 2022, lines 9 and 18 8915-F, Qualified Disaster Retirement Plan Distributions and Repayments A qualified disaster distribution was made from an eligible retirement plan. A qualified distribution was received. A qualified disaster distribution was received in a prior year and is being including in income in equal amounts over 3 years and the 3-year period has not yet lapsed. A repayment of a qualified disaster distribution was made. 2022 and subsequent, lines 7, 15, 26 and 32 Compare Form 8915-F, amounts reported on the return with the applicable lines below: Form 8915-F Definition If Then Part 1 Used to figure the distribution amount of all retirement plans that qualify for disaster treatment for 2021 and later. Lines 2, 3, or 4 column (a) for total distributions. Lines 2, 3, or 4 column (b), for qualified disaster distributions made in 2021 and subsequent. Consider the IR reported when the line 7 amount is included in the reported amount on Form 1040/Form 1040-SR, line 4b or 5b. Part II Used to figure the taxable amount from retirement plans (other than IRA's) The IR is included in Part II, line 10 Consider the IR reported when the line 15 amount is reported on Form 1040/1040-SR, line 5b. Part III Used to figure the taxable amount from Traditional, SEP or SIMPLE, and Roth IRA distributions The IR is included in Part III, line 21 Consider the IR reported when the line 26 amount is reported on Form 1040/ 1040-SR, line 4b. Part IV Used to figure the taxable amount of qualified distributions for the purchase or construction of a main home in Qualified 2020 Disaster Areas (non-Covid related) The IR is included on line 28 Consider the IR reported when the line 32 amount is reported on Form 1040/ 1040-SR, line 4b or 5b. Retirement income in excess of $22,000 is reported on Form 8915-F, Part I, lines 2a, 3a, or 4a. Consider the IR reported if Part I, line 7 and lines 15, 26, and/or 32 match what is reported on Form 1040/1040-SR, lines 4b or 5b. If the amount reported on Form 1040/1040-SR, lines 4b or 5b is less than amounts shown on Form 8915-F, Part I, line 7 and/or lines 15, 26, or 32, pursue the difference. Note: IRS provided alternatives for this form to be included with an e-filed return. Some software providers allow the forms to be attached as a PDF file and others as a statement attached to the return. Accept attached statements and/or taxpayer note in lieu of Form 8915-F if they include reporting information similar to the actual form. Caution: If a taxpayer received a qualified 2021 disaster distribution and dies, the distribution may no longer be spread over 3 years. The remainder of the distribution must be reported on the return of the deceased taxpayer. If the difference between Forms 8915-C, 8915-D, and 8915-F and the amounts reported on the return match the Form 1099-R IR(s), consider the IR(s) reported. If you can't determine whether the Form 1099-R IR is reported on page 1 of the return, see IRM 4.19.3.8.10.3, Retirement – Analysis, for additional information. Qualified disaster distributions are not subject to the 10 percent or 25 percent tax; see IRM 4.19.3.17.3, 10 Percent Tax on Early Distributions from Qualified Retirement Plans/25 Percent Tax on Early Distributions from SIMPLE IRAs. Note: Distributions in excess of the $22,000 qualified disaster distribution limit may be subject to the additional tax on early distributions.

# Rollovers

4.19.3.8.10.4 (10-07-2019) Rollovers The Payee/Payer name line on a 1099R IR may contain the word "rollover" with the date the taxpayer transferred funds into the new plan. Consider the 1099R IR valid and pursue any U/R income. Inherited distributions (usually COD "4" ) may be rolled over by a non-spouse beneficiary, in a direct trustee to trustee transfer to an account that was set up to receive the distribution. Qualified plan loan offset distributions (COD "M" ) are excepted from the 60-day rollover period. The rollover timeframe is extended until the due date, including extensions, for filing the federal income tax return for the taxable year in which the offset occurred. Do not pursue the loan offset distribution amount when Form 5498 or similar documentation indicating the rollover was made by the due date, including extensions, of the return is present. Note: Only the qualified loan offset distribution amount qualifies for the excepted 60-day rollover timeframe. The remaining distribution, if any, isn't excepted from the 60-day rollover timeframe. A 1099R IR with COD "3" , "5" , "8" , "E" "L" or "U" can't be rolled over. If a 5498 IR with either ROLV or FMV is present that matches the 1099R IR ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ with COD "3" , "5" , "8" , "E" , "L" or "U" , consider the IR reported (payer used the incorrect code) and allow the rollover. When pursuing the issue, PARAGRAPH 34 generates for COD "L" . Payers may erroneously report rollover contributions in box 5 (FMV) of Form 5498 instead of box 2 (ROLVR). Note: The instructions in the table below don't apply when the IR containing the FMV amount also contains an RCONV amount. If Then A Form 5498 IR is present with the literal ROLVR ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Consider the income to be rolled over. A Form 5498 IR is present with the literal FMV ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ AND FMV is the only element on the IR, Consider the income to be rolled over. A Form 5498 IR is present with the literal FMV ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ AND the IR contains other elements, Consider the 1099-R distribution U/R. No Form 5498 IR is present with the literals ROLVR or FMV ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Consider the 1099-R distribution U/R. A Form 5498 IR is present with the literal RCONV ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ See IRM 4.19.3.8.10.7, IRA Distributions. Note: It isn't necessary to verify Form(s) 5498 attached to the return. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ When a distribution contains a TX/A amount and W/H, the taxpayer receives a net amount (GR/A minus W/H). In order for a distribution to be considered fully rolled over (tax-free), the taxpayer MUST rollover the entire TX/A amount by supplementing the amount withheld with additional monies from another source. If And Then The net amount (GR/A minus W/H) is greater than or equal to the TX/A amount on the IR There is an indication of a rollover (per (5) above) Consider the issue resolved. The GR/A and the TX/A amount on the IR are the same The GR/A is reported on the gross pension line of the return (see IRM 4.19.3.8.10, and the difference between the IR and the Form 5498 equals the W/H amount and there is no indication that the taxpayer supplemented the rollover amount to account for the W/H and the amount reported on the taxable pension and annuities line of the return (see IRM 4.19.3.8.10), doesn't match the W/H on the IR Consider the difference between the W/H on the IR and the TX/A amount reported as U/R. Send PARAGRAPH 49, (see Exhibit 4.19.3-7, CP PARAGRAPHS) when pursuing the W/H as U/R TX/A from the same IR. The GR/A and the TX/A amount on the IR are the same The GR/A is reported gross pension and annuities line of the return and the difference between the IR and the Form 5498 doesn't equal the W/H amount Consider IR fully U/R. The GR/A and the TX/A amount on the IR are different The GR/A is reported gross pension and annuities line of the return and the amount on taxable pension and annuities line of the return doesn't equal the Form 5498 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Consider IR fully U/R. It may be necessary to modify or use the 5329 Premature Distribution Tax window for partially rolled over IRs. See IRM 4.19.3.17.3, 10 Percent Tax on Early Distributions from Qualified Retirement Plans/25 Percent Tax on Early Distributions from SIMPLE IRAs, for additional instruction. Taxpayers may partially rollover retirement plans reported on Form 1099-R. Consider a distribution to be partially rolled over when all the following apply: The taxpayer enters the "GR/A" amount on the gross return lines, A lesser amount on the corresponding taxable line, A 5498 IR is present with the literal "ROLVR" or "FMV" in the INCOME TYPE field AND Has an amount that ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If a 5498 IR with either "ROLVR" or "FMV" isn't present to substantiate the rollover (see (6) above), consider the Form 1099-R distribution partially U/R when the taxpayer enters the GR/A amount on the gross return lines, reports a lesser amount on the corresponding taxable return lines.

# Railroad Retirement Board (RRB) IRs

4.19.3.8.10.5 (09-21-2020) Railroad Retirement Board (RRB) IRs Pensions and annuities are reported from the RRB on Form RRB-1099-R. The RRB files a separate Form RRB-1099-R for each of the following amounts and each of these amounts displays as separate IRs for each taxpayer: Employee Contributions (box 3) Contributory Amount Paid (box 4) Vested Dual Benefit (box 5) Supplemental Annuity (box 6) Total Gross Paid (box 7) Prior Year Repayments (box 8) The following list contains the symbols and definitions for CODs, positions 1 and 2, for RRB-1099-R documents: "V" - RRB-Vested Dual Benefit - box 5 - Windfall, fully taxable "X" - RRB-Tier 1 "Z" - RRB-Supplemental - box 6 - Gross amount of supplemental benefits paid "Y" - RRB-Tier 2 Railroad Retirement Board pension income is reported as GR/A on a separate Form RRB-1099-R IR showing COD "X" , "V" , "Z" or "Y" . Group these RRB-1099-R IRs together to determine the total taxable amount. Unless the taxpayer indicates that the simplified method or general rule was used, the GR/A is considered fully taxable. Compare the total to the amount reported on Form 1040/1040-SR, line 5b. If it is less than the IR amount then consider the difference U/R. Note: If the taxpayer indicates that the simplified method or general rule was used to reduce the "GR/A" amount(s), consider the IR(s) reported. If the taxpayer erroneously treats the RRB-1099-R income as Social Security/Railroad Retirement Benefits, consider the IR(s) fully underreported. To determine this, compare the RRB-1099-R IR to the following lines Form 1040/1040-SR, lines 6a and 6b: Note: The SSA/RRB window needs to be recalculated, see (6) below. To calculate the new/correct taxable SS/RR amount take the following actions: Reduce the gross benefits reported on the return by the RRB-1099-R amount (create an SS/RR IR for zero, if appropriate). Enter the amount indicated on the taxable line of the return in the TAXABLE BENEFITS field. This results in a recalculation of taxable SS/RR (often resulting in an overall decrease). Send PARAGRAPH 131, see Exhibit 4.19.3-7, CP PARAGRAPHS.

# Pensions and Annuities

4.19.3.8.10.6 (10-10-2025) Pensions and Annuities A pension is generally a series of payments made after retirement for past services with an employer. An annuity is a series of payments under a contract purchased by the taxpayer alone or with the help of an employer. Annuity payments are made regularly for more than one full year. Total distributions are indicated on either the IR, Form 1099-R with the appropriate box checked, or an attachment to the return. If the 1099R IR or an attachment shows the income is for support of a minor child: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ when the attached Form 1099-R doesn't provide a breakdown. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ when the attached Form 1099-R provides a breakdown and the taxpayer reports their designated portion. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ when the attached Form 1099-R provides a breakdown and the taxpayer reports none of the income or less than their portion. If a U/R 1099R IR shows a city, county, or state as the payer and the taxpayer indicated "disabled Firefighter" or "disabled Public Service/Law Enforcement Officer" on the return ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ if the taxpayer is under age 65. Note: If the taxpayer attaches a copy of a Private Letter Ruling from the IRS to a pension plan administrator indicating that the payments are non-taxable for life, accept the statement and don't pursue regardless of age. Generally taxpayers must include as income amounts received from personal injury or sickness through an accident or health plan that is paid for by the employer. Pursue any 1099R IRs unless the taxpayer provides a statement and/or documentation that the income is excludable. The taxpayer may provide any of the following (this list isn't all inclusive): Statement that the distribution is excludable under IRC 104 (line of duty injury). The disability pension was never converted to a normal pension based on age or length of service. A Private Letter Ruling from the IRS to a pension plan administrator that the payments are non-taxable for life. Statement/Documentation from the payer that the income is nontaxable. Distribution is payment(s) for disability due to injuries received from a terrorist attack, see IRM 4.19.3.23.1.26, Victims of Terrorist Attacks, or military action, see IRM 4.19.3.8.10.6.1, Military Pensions, for further information. Eligible retired public safety officers (PSO) can elect to exclude a maximum of $3,000 from distributions made directly from a governmental retirement plan to providers of accidental, health, or long-term care insurance. See (6) below. An eligible retired public safety officer, such as, safety/law enforcement officer, firefighter, chaplain or member of a rescue squad or ambulance crew, can elect to exclude a maximum of $3,000 from income distributions made from an eligible governmental retirement plan that are used to pay the premiums for accident, health or long-term care insurance. Allow the exclusion if PSO is next to line 5b, of Form 1040/1040-SR, or reporting the disability pension on line 1 of Form 1040/1040-SR. If subject to an additional 10 percent or 25 percent tax, the IR must be modified to remove the non-taxable exclusion amount to compute the correct tax in the 5329 window. See IRM 4.19.3.17.3, 10 Percent Tax on Early Distributions from Qualified Retirement Plans/25 Percent Tax on Early Distributions from SIMPLE IRAs, for further information. Note: If it can be determined that the taxpayer is a retired public safety officer who has taken this exclusion, but the literal "PSO" is missing, allow the exclusion up to a maximum of $3,000. Reminder: The PSO indicator is located on the Dotted/Attach tab in TRDB. Retired ministers are allowed to reduce taxable pension amounts by their housing allowance. Accept the amount reported by the taxpayer if there is an indication that part of the pension is a housing allowance.

# Military Pensions

4.19.3.8.10.6.1 (10-02-2024) Military Pensions Military retirement is funded solely by the United States Government and is administrated by the Defense Finance and Accounting Service Center (DFAS). Form 1099-R distributions from the DFAS are generally fully taxable. DFAS retiree payments are distributed on a periodic (monthly) basis and therefore can't be rolled over. If the taxpayer reports less than the TX/A amount, pursue the difference and send PARAGRAPH 155. See Exhibit 4.19.3-7, CP PARAGRAPHS. Exception: If the taxpayer reports a lesser amount and provides a statement from the Veteran's Administration (VA) awarding disability compensation, confirm that the taxpayer took the correct reduction. Pursue any inconsistencies. Taxpayers who receive favorable disability determinations from the Veteran's Administration (VA) may be able to reduce the TX/A amount by the amount withheld as determined by the VA. The VA notifies the taxpayer of the percentage awarded and provides a breakdown, including: Total amount awarded Amount withheld Monthly entitlement and Payment start date(s) When a military member has a combat-related disability (e.g., Agent Orange presumptive), they may qualify for Combat Related Special Compensation (CRSC). According to Defense Finance and Accounting Services (DFAS), many Vietnam veterans have been issued retroactive CRSC awards based on the Veteran Affairs (VA) determination. Each Branch of the military will make a determination and issue the veteran an award letter. The veteran will also have documentation from VA regarding their disability. If the taxpayer indicates they are a disabled veteran and the VA benefits are non-taxable, qualifies for a reduction of the taxable amount, or reported the correct reduced taxable amount, see the procedures below: If the taxpayer indicates the income is: And Then Nontaxable due to IRC 1.122-1 or Nontaxable Pursuant to 26 CFR N/A Send the appropriate letter/notice and disallow the explanation. Note: These two provisions are part of the Family Protection (FPA) Act of 1966 and are not applicable to VA disability income. Non-disability severance pay N/A Send appropriate letter/notice explaining the income is fully taxable in the year it is received. Paid under the Department of Veterans Affairs (VA) Compensated Work Therapy (CWT) program (Revenue Ruling 2007- 69) N/A ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ VA benefits and not fully taxable A copy of an official VA Determination letter granting the retroactive benefit, with the table showing amount withheld and effective date, is provided. Math verify to determine the allowable reduction. See (4) below for additional information. Determine if the correct amount is reported. If yes ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡If no, follow step 3 below. Issue appropriate letter/notice to explain why the explanation isn't acceptable and continue normal processing. Combat Related Special Compensation (CRSC) or Concurrent Receipt of Disability Pay (CRDP) and non-taxable A copy of the DFAS Letter indicating the type of payment is provided. Note: The taxpayer could be eligible for Combat Related Special Compensation (CRSC) and (Concurrent Receipt of Disability Pay (CRDP) payments but only one payment is prohibited by law. The taxpayer will elect which payment they want. If the income is CRSC, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the income is CRDP, follow step 2 below. Issue appropriate letter/notice to explain CRDP is fully taxable and continue normal processing. Individual Unemployability (IU) payment award A copy of documentation from the VA to substantiate the amount reported is provided. Note: The VA Determination Letter for these claims will NOT have a table for the Amount Withheld. The letter will provide the effective date of the award and tax reduction amounts. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ if the reduced amount is fully reported. If the reduced amount isn't fully reported, follow step 2 below. Issue recomputed notice, as applicable, and continue normal processing. Rolled over N/A Send appropriate letter/notice explaining Military distributions can't be rolled over and continue normal processing. In order to determine the allowable reduction in the Form 1099-R DFAS retirement distribution (based on the VA disability determination), apply the following formula: multiply the "amount withheld" by the number of months from the "payment start date" to the next "payment start date" . Note: You must add one month to the date listed under the heading of "Payment Start Date" or "Effective Date" because the amount isn't actually withheld until the following month. Example: The year shown in the payment start date column "202X" should be the AUR year of the case you are working. Payment start date of April 1, 202X (March 1, 202X plus one month) to next payment start date of December 1, 202X (November 1, 202X plus one month) is 8 months x $450 (amount withheld) = $3,600. The taxpayer would be allowed to reduce the Form 1099-R TX/A amount by $3,600. Total Award Amount Amount Withheld Monthly Entitlement Amount Payment Start Date $1,000 $450 $550 March 1, 202X $1,000 $0 $1,000 Nov. 1, 202X Note: Occasionally, the amount withheld and monthly award changes over a period of months. When a retroactive award crosses over from a previous year, only consider the AUR tax year in the calculation. Example: The year shown in the payment start date column "202X" should be the AUR year of the case you are working, unless otherwise indicated. Since the first payment start date is in a prior year, use January 1, 202X as the first payment start date. Payment start date of February 1, 202X (January 1, 202X plus one month) to next payment start date of May 1, 202X (April 1, 202X plus one month) is 4 months x $250 (amount withheld) = $1,000. From the June 1, 202X (May 1, 202X plus one month) payment start date to the next payment start date of November 1, 202X (October 1, 202X plus one month) is 6 months x $260 = $1,560. The taxpayer would be allowed to reduce the Form 1099-R TX/A amount by $2,560 ($1,000 + $1,560). Total Award Amount Amount Withheld Monthly Entitlement Amount Payment Start Date $800 $250 $550 Sept. 1, 202X (prior year) $840 $260 $580 Apr. 1, 202X $840 $0 $840 Oct. 1, 202X

# IRA Distributions

4.19.3.8.10.7 (10-10-2025) IRA Distributions Traditional Individual Retirement Arrangements (IRA), Simplified Employee Pensions (SEP), Roth IRAs, and SIMPLE IRAs are tax-favored means of saving for retirement. The following literals may display: RCONV (Roth Conversions) RCONT (Roth IRA contribution). If this amount matches the IRA deduction on the return, pursue the issue since Roth IRA contributions are not deductible. PARAGRAPH 30 automatically generates when the UR IRA deduction amount is equal to the RCONT, RCONV or ESA element amount. Information returns will display a check box if the payer checked Form 1099-R, box 7, to indicate an IRA/SEP/SIMPLE. If a Form 5498 IR is present with literal RCONV ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Certain taxpayers can make a nontaxable qualified charitable distribution (QCD) from their IRA (traditional or ROTH). Taxpayers indicate that a distribution is a Qualified Charitable Distribution by entering "QCD" on the dotted portion next to Form 1040/1040-SR, line 4a/4b. Consider the 1099R IR(s) resolved when "QCD" is shown next to the appropriate lines AND: Reminder: The QCD indicator is located on the Dotted/Attach tab in TRDB. The taxpayer's age, as shown on the AUR system, is at least 71. Note: If the AUR system displays an age younger than 71, research the Tax Account screen to verify the taxpayer's age. If research shows that the taxpayer did not meet the minimum age of 70 1/2, the distribution is taxable. Pursue any underreported amounts (based on the TX/A element) and send PARAGRAPH 225, see Exhibit 4.19.3-7, CP PARAGRAPHS. The excluded amount of QCD doesn't exceed $105,000. On a jointly filed return (MFJ), each spouse is allowed to exclude up to a $105,000 of QCD if the minimum age requirement is met. Pursue any apparent underreporting of taxable distribution in excess of $105,000 (per spouse) and send PARAGRAPH 230, see Exhibit 4.19.3-7, CP PARAGRAPHS. Taxpayers, who are eligible, can elect to exclude a non-taxable health savings account funding distribution (HFD) amount once in their lifetime. The exclusion can't exceed the full amount of the distribution(s) or the limit on the HSA contribution. Taxpayers indicate that a distribution was transferred to their health savings account funding distribution by entering "HFD" next to the IRA distribution line of the return. See IRM 4.19.3.8.10. Reminder: The HFD indicator is located on the Dotted/Attach tab in TRDB. If the taxpayer has reported the full amount of the distribution(s) on Form 8889, Health Savings Accounts, Part I, line 10, consider the 1099R IR(s) resolved. If the taxpayer has reported the full amount of the distribution(s) on Form 8889, Part III, line 20, this is taxable. Taxpayers are instructed to report the taxable portion on 1040/1040-SR, Schedule 1, line 8f. Note: The 10 percent premature distribution tax may apply. See IRM 4.19.3.17.4, 20 Percent Tax on Archer Medical Savings Account (AMSA) and Health Savings Account (HSA) Distributions, for further information. Reminder: Send reported 1099R IR elements when the 10 percent tax is adjusted. If the taxpayer indicates the distribution is an HFD and did not complete a Form 8889 consider the distribution fully taxable. Send PARAGRAPH 82, see Exhibit 4.19.3-7, CP PARAGRAPHS. Form 8606 is used to figure the taxable portion of: Distributions from Traditional (including inherited), SEP and SIMPLE IRAs (Part I). Conversions from Traditional, SEP and SIMPLE IRAs to Roth IRAs (Part II). Distributions from Roth IRAs (Part III). Form 8606, Part I, is used to figure the taxable portion of nondeductible contributions to Traditional IRAs as well as figure the taxable portion of distributions from Traditional, SEP and SIMPLE IRAs, that have received nondeductible contributions. The total amount is reported on Form 1040/1040-SR, line 4a and the taxable amount from Form 8606, is reported on line 4b. If the total of the Traditional, SEP or SIMPLE IRA distribution IR(s) matches the Form 8606, line 7 amount, subtract the Form 8606, line 12 amount from the Form 8606, line 7 amount. Caution: If the taxpayer listed on Form 8606, has 5498 IRs that reflect a FMV, they may need to be included on Form 8606, line 6. If the result matches the amount on Form 1040/1040-SR, line 4b, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the result doesn't match line 4b, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the FMV amounts are not included on Form 8606, line 6, Note: If there is an indication that the 5498 IR is from a Roth account (for example, contains the literals RCONV or RCONT) the FMV should not be included on Form 8606, line 6. Do not accept the Form 8606, consider the IR(s) partially or fully U/R. Send PARAGRAPH 54, see Exhibit 4.19.3-7, CP PARAGRAPHS. Send 5498 IRs that contain the FMV element for the taxpayer listed on Form 8606. Note: Do not include 5498 IRs when it can be clearly determined that the IR is for a ROTH account. Form 8606, Part II, is used to figure the taxable portion of conversions from Traditional, SEP, or SIMPLE IRAs to Roth IRAs. The total amount is reported on Form 1040/1040-SR, line 4a and the taxable amount from Form 8606, line 18 is included on line 4b: Consider the 1099R IR reported when the taxpayer reports the total amount of the distribution on Form 8606, line 8 or 16 and the taxable amount from Form 8606, line 18, Part II on the taxable pensions and annuities line of the return. Note: If line 18 is zero or blank, only consider the IR reported if the amount on line 17 is equal to the IR amount. The 10 percent premature distribution tax may also apply. see IRM 4.19.3.17.3, 10 Percent Tax on Early Distributions from Qualified Retirement Plans/25 Percent Tax on Early Distributions from SIMPLE IRAs, for further information. A 1099R IR with COD "N" or COD "R" represent recharacterizations. These are corrections of amounts converted from Traditional, SEP or SIMPLE IRAs to Roth IRAs. Delete any 1099R IRs containing COD "N" or COD "R" . Note: A conversion of a traditional IRA to a ROTH IRA, and a rollover from any other eligible retirement plan to a ROTH IRA can't be recharacterized as having been made to a traditional IRA. Form 8606, Part III, is used to figure the taxable portion of non-qualified distributions (COD "J" ) from Roth IRAs. The total amount is reported on Form 1040/1040-SR, line 4a and the taxable amount from Form 8606, line 25c is included on line 4b: Consider the 1099R IR reported when the taxpayer completes Form 8606, Part III and reports the amount from Form 8606, line 25c on Form 1040/1040-SR, line 4b (whether or not a matching Form 5498 RCONT is present) OR Consider the Roth distribution on a 1099R IR to be a return of regular contributions from a Roth IRA when the amount of the distribution matches the Form 5498 RCONT amount or a statement is attached identifying the amount as a return of regular contribution. If the taxpayer doesn't complete Form 8606, Part III, and/or there is no corresponding 5498 RCONT IR, consider the Form 1099-R distribution amount fully taxable. PARAGRAPH 83 automatically generates. Note: If there is no indication that the distribution is a qualified Roth IRA distribution (Form 1099-R COD "Q" or "T" ) or a return of regular contributions from a Roth IRA, pursue the U/R taxable amount. The 10 percent premature distribution tax penalty may also apply. See IRM 4.19.3.17.3, 10 Percent Tax on Early Distributions from Qualified Retirement Plans/25 Percent Tax on Early Distributions from SIMPLE IRAs, for further information. If the taxpayer reports a lesser taxable amount and Form 8606 isn't completed, pursue the difference. Send PARAGRAPH 83 unless the IR contains a COD "J" . An IR with COD "J" automatically generates PARAGRAPH 83, see Exhibit 4.19.3-7, CP PARAGRAPHS. A return of regular contributions from a Roth IRA or qualified distributions from a Roth IRA are considered non-taxable. To be considered a qualified Roth IRA distribution, the Roth IRA must have been maintained for a minimum of 5 years and meet one of the following conditions: Caution: Roth IRA distributions made within the 5-taxable-year period are not a qualified distribution. Payers may identify Roth distributions within the first 5 years with COD "J" . Was made on or after the date the taxpayer reaches age 59 1/2, Was made because the taxpayer was disabled, Was made to a beneficiary or to the taxpayer's estate after their death, or The distribution (up to $10,000) was used for a qualified first-time home purchase. Note: Qualified distributions from a Roth IRA may be identified by COD "Q" or "T" . Do not pursue 1099R IRs with COD "Q" or "T" . See IRM 4.19.3.8.10.3, Retirement - Analysis and IRM 4.19.3.17.3,10 Percent Tax on Early Distributions from Qualified Retirement for further instructions. Distributions from a traditional IRA under a SIMPLE (Savings Incentive Match Plan for Employees) plan are fully taxable as ordinary income. Distribution from a Roth IRA that are not qualified distributions are subject to tax on earnings. Premature distributions from either a traditional IRA or a Roth IRA (e.g., before the employee turns 59 1/2 or without any permitted exception) under a SIMPLE plan may be subject to the additional tax on early distributions. Distributions from either a traditional IRA or Roth IRA under a SIMPLE plan made within the first 2 years are subject to a 25 percent tax on early distributions and are identified by a COD "S" . See IRM 4.19.3.17.3, 10 Percent Tax on Early Distributions from Qualified Retirement Plans/25 Percent Tax on Early Distributions from SIMPLE IRAs, for further information. During the 2-year period, to qualify for a tax-free rollover/transfer, amounts in a SIMPLE IRA must be rolled over/transferred into another SIMPLE IRA. After the 2-year period, amounts in a SIMPLE IRA can be rolled over/transferred tax-free to either another SIMPLE IRA plan or any qualified IRA/deferred compensation plan. IRA distributions don't qualify for special tax treatment on Form 4972, Tax on Lump Sum Distributions. See IRM 4.19.3.8.10.8, Lump-Sum Distributions. Send PARAGRAPH 152, see Exhibit 4.19.3-7, CP PARAGRAPHS. COD 5 is used for prohibited transactions such as borrowing from an IRA or using an IRA as security on a loan. If either of these transactions occur, treat the entire value of the account as a distribution to the taxpayer. These distributions are subject to the 10 percent tax on early distributions from qualified plans and can't be rolled over. See IRM 4.19.3.17.3, 10 Percent Tax on Early Distributions from Qualified Retirement Plans/25 Percent Tax on Early Distributions from SIMPLE IRAs.

# Lump-Sum Distributions

4.19.3.8.10.8 (10-10-2025) Lump-Sum Distributions A lump sum distribution is the distribution or payment in one tax year of a plan participant's entire balance from all of the employer's qualified plans of one kind (for example, pension, profit-sharing, stock ownership plan (ESOP), qualified annuity plan, stock bonus plans). A lump sum distribution may qualify for special tax treatment on Form 4972, Tax on Lump Sum Distributions. When the taxpayer reports their lump sum distributions on Form 4972, determine if they reported the total amount. Note: AUR doesn't math verify or screen Form 4972 qualification errors. Compare Form 1099R IRs with COD A to the amount reported on Form 4972, Part 3, line 8. If the taxpayer reports the total amount of the lump sum distribution on Form 4972, consider the income reported. Select Lump Sum Average in the CA Tax COMP menu from the Case Analysis screen. Enter/verify the lump sum tax from Form 4972, line 30 in the 4972 TAX PER RETURN field in the LUMP SUM TAX window. No other entries are required. When computing the Lump Sum Tax on Form 4972, allow up to a $10 rounding tolerance due on the system computed Lump Sum Tax figure. Adjust the PRIMARY/SECONDARY LUMP SUM TAX field(s) as appropriate to account for rounding. If the taxpayer reports retirement income that doesn't qualify for the lump sum election, the lump sum tax must be recomputed. Select Lump Sum Average in the CA Tax COMP menu from the Case Analysis screen. DO NOT make an entry in the PRIMARY and/or SECONDARY LUMP SUM TAX fields (must be blank, not zero) in the LUMP SUM TAX window. Address all other fields in the PRIMARY and/or SECONDARY sections, as a applicable: Enter the averaging method: 2 for Part II only, 3 if Part III was used. Enter capital gain from Form 4972, Part II or the amount that qualifies from Form(s) 1099-R. Enter ordinary income from Form 4972, Part III or the amount that qualifies from Form(s) 1099-R. Enter the death benefit exclusion from Form 4972, Part III. Do not make an entry if the death benefit exclusion has already been deducted from the amount entered in the ORDINARY INCOME field. Enter the current actuarial value from Form 4972, Part III, line 11. Enter the Federal Estate Tax from Form 4972, Part III, line 18. Enter the Form 4972, line 30 amount in the 4972 TAX field. Press <F12> to commit and exit the window. Note: To view the system computed primary or secondary lump sum tax, access the LUMP SUM TAX window again. If Form 4972 was used to report the lump sum income AND there are U/R issues other than Lump Sum: Select the Lump Sum window. Enter the amount from Form 4972, line 30, in the 4972 TAX PER RETURN field, as applicable. In Return Value verify the amount in the ADDITIONAL TAXES field (TY 2022 and prior) in the ADDITIONAL TAXES window or the F4972 field in the F1040, LN16 - SUPPLEMENTAL TAXES window (TY 2023 and subsequent). If there is only one 1099R IR present, and it is only partially reported (for example, the taxpayer claimed W/H from a 1099R IR): Select the Lump Sum Tax window. Enter the entire TX/A amount in the ORDINARY INCOME field(s) for the primary and/or secondary taxpayer, as applicable. (Use GR/A amount if the TX/A isn't present.) If an ECG amount is shown on the 1099R IR, the taxpayer may elect not to receive capital gains treatment. The taxpayer will then report the taxable amount of the distribution. Consider the IR (with ECG amounts) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ if any one of the following situations apply: The gross or taxable amounts are on Form 4972, Part III, line 10 AND the taxpayer includes the lump sum tax on Form 1040 OR An amount on the return matches the gross or taxable amount from the 1099R IR within $1 OR The gross amount is on Form 1040/1040-SR, line 5a. The taxable amount is on line 5b. The TX/A amount less the ECG amount in on Form 1040/1040-SR, and the ECG amount is reported on, Schedule D, Part II, column (h) lines 8a, 8b, 9, 10 or 13, or Form 8949, Part II, line 1, column (h). The taxpayer may elect to receive capital gains treatment and report the ordinary income and capital gains separately on Form 4972. The entire distribution must be included on the Form 4972 and can't be allocated between different forms. Example: The taxpayer can't report ordinary income from the distribution on Form 4972, line 10, and the ECG income from that particular IR on Schedule D/Form 8949. Capital gains from a lump sum distribution should not be reported on Schedule D if the taxpayer has elected to report the lump sum income on Form 4972. If the taxpayer has erroneously included a Lump Sum CG on Schedule D, exclude the CG from the Schedule D and include the CG amount in the CAPITAL GAIN field in the LUMP SUM TAX window. Note: Make appropriate changes to the COMPUTE SCHEDULE D LOSS window and the Schedule D Tax window on Return Value when necessary. The taxpayer may elect to treat the entire distribution (ECG and Ordinary Income) as ordinary income on Form 4972. If the taxpayer did not complete Part II of the Form 4972, enter the Taxable Amount from box 2a of Form 1099-R in the ORDINARY INCOME field in the LUMP SUM TAX window. Lump sum distributions don't qualify for the special tax treatment on Form 4972 when the distribution is a partial rollover, an IRA, tax-sheltered annuity plan (a 403(b) plan, such as, Teachers Retirement) or Civil Service annuity. If the amount Form 4972, line 8 matches either the gross or taxable amount on the Form 1099-R, consider the taxable amount U/R. Take the following action: Select the Lump Sum Tax window. If the entire amount shown on Form 4972 is considered U/R, input a zero (0) in the PRIMARY/SECONDARY LUMP SUM TAX field, as applicable. If there is income other than the U/R amount that qualifies for special tax treatment on Form 4972, enter the qualifying amount ONLY in the ORDINARY INCOME field(s) for the primary and/or secondary taxpayers, as applicable, and leave the PRIMARY/SECONDARY LUMP SUM TAX field blank. Send PARAGRAPH 63, see Exhibit 4.19.3-7, CP PARAGRAPHS. Enter/verify the ADDITIONAL TAXES PER RETURN field (TY 2022 and prior) in the ADDITIONAL TAXES window or the F4972 PER RETURN field in the F1040, LN16 - SUPPLEMENTAL TAXES window (TY 2023 and subsequent). Lump sum distributions don't qualify for the special tax treatment on Form 4972 when a portion of the lump sum distribution is from U.S. Retirement Bonds. Disallow the special tax treatment for the bond portion ONLY. Select the Lump Sum Tax window. Enter the qualifying amount of the lump sum distribution in the ORDINARY INCOME or CAPITAL GAIN field for the primary or secondary taxpayer, as applicable. Consider Lump sum distributions reported ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

# Employee Savings Plans

4.19.3.8.10.9 (04-27-2021) Employee Savings Plans Distributions from employee savings plans are reported on Form 1099-R. Consider employee savings plan IRs reported if: There is an unidentified income amount on Form 1040 or any of its schedules that matches the IR within $1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The taxpayer reports the gross amount on Form 1040/1040-SR, line 4a and has reported ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡on line 4b. The taxpayer identifies the taxable portion on Form 1040/1040-SR, Schedule 1, line 8z or on an attachment. The taxpayer reports a taxable amount identified as being from a savings plan (must be the same payer as the IR), ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If a taxpayer is younger than 55, the 10 percent tax on early distributions from qualified plans is assessed by the system if the COD is "L" , "1" , or "5" . If the taxpayer is between 55 and 59 years old and the distribution is paid by an employee savings plan, change the COD indicator to blank so the system doesn't assert the 10 percent tax. If the taxpayer reported the 10 percent tax on their employee savings plan, don't modify the employee savings plan IR. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ See IRM 4.19.3.17.3, 10 Percent Tax on Early Distributions from Qualified Retirement Plans/25 Percent Tax on Early Distributions from SIMPLE IRAs, for further information regarding the 10 percent premature distribution tax. Mark the 1099R IR element(s) with Send Indicator "S" when adjusting the 10 percent tax.

# Retirement Miscellaneous

4.19.3.8.10.10 (09-01-2008) Retirement Miscellaneous 1099R IRs may be subject to an additional 10 percent or 25 percent tax. See IRM 4.19.3.17.3, 10 Percent Tax on Early Distributions from Qualified Retirement Plans/25 Percent Tax on Early Distributions from SIMPLE IRAs, for further information. If it appears the taxpayer has completed Form 5329 but failed to include the taxable distribution on page 1 of the Form 1040/1040-SR, send PARAGRAPH 51. See Exhibit 4.19.3-7, CP PARAGRAPHS. 1099R IRs may reflect W/H. Follow instructions in IRM 4.19.3.18.1, Withholding - General. PARAGRAPH 34 automatically generates when the U/R retirement distribution has COD "L" . PARAGRAPH 11 automatically generates to inform the taxpayer whenever the proposed tax increase shown on the CP 2000 includes the additional 10 percent tax on early distributions from qualified plans. See IRM 4.19.3.17.3, 10 Percent Tax on Early Distributions from Qualified Retirement Plans/25 Percent Tax on Early Distributions from SIMPLE IRAs. PARAGRAPH 96 automatically generates when retirement income is U/R regardless of Income Identify Code. When 1099R IRs are U/R, enter the return amount in the RETURN field on the Summary screen.

# Rents and Royalties - General

4.19.3.8.11 (09-24-2021) Rents and Royalties - General Rent and royalty income is compensation for the use of property or rights by someone other than the owner. Rents and royalties are reported on Form 1099-MISC or PTK-1 and SBK-1. Rents and royalties are identified on the Case Analysis screen by the literal "99MIS" or "PTK-1" , or "SBK-1" in the DOC TYPE field and the literal "RENT" , "ROYAL" , or "OTREN" in the INCOME TYPE field.

# Rents and Royalties - Analysis

4.19.3.8.11.1 (09-21-2020) Rents and Royalties - Analysis Compare RENT or ROYAL amounts with entries on: Schedule E, Part I, lines 3, 4, 23a and 23b. If payer names are listed, match specific amounts. If payer names are not listed, group by income type RENT or ROYALTY, as applicable and compare the group total amount to the total reported rents or royalties. Note: The Group function is a tool to assist the TEs in computing the correct U/R amount. It may not be necessary to use the Group function if the correct U/R can be determined without it. Schedule E, Part II. Amounts must match within $1 or be identified as rents and royalties. Schedule C, Part 1, line 1. If the taxpayer is in the business of rental property, or it can be determined from the payer name or business activity that the income is from the same source, compare the group total to the amount on line 1. Note: When screening for Rents/Royalties income on Schedule C, also consider any additional IR(s) for NEC, MERCH, MED and/or FISH income to determine the U/R amount. Schedule C, Part 1, line 6 (if specifically identified as rent/royalty income). ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Schedule F, Part I or Part III. Do not pursue IRs when the amount matches Schedule F, lines 8, or 43 within $1, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and is identified as rent or royalty. Form 4835, Farm Rental Income and Expenses. Consider the IRs ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ are accounted for first. Otherwise, issue a CP 2000 for the full amount of the IR(s). Form 2106, line 7, columns A and/or B. The amount must match within $1 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ See IRM 4.19.3.8.6.1, Nonemployee Compensation (NEC) - Analysis. Note: Employees only in the following categories qualify to use Form 2106: Armed Forces Reservists, qualified performing artists, fee basis state or local government officials and employees with impairment-related work expenses. Schedule D, or Form 8949 if income is identified as Coal and Timber royalties, patents, rights of way or easements. Form 1040/Form 1040-SRSchedule 1, line 8z. The amount must match within $1 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Is a member of a federally recognized Native American tribe and there is an indication that the rental income was directly derived from land allotted to the taxpayer that is held in trust by the U.S. government. The taxpayer may cite the court decision Squire v. Capoeman (351 US 1), or the following Revenue Rulings: 67-284 1967-2 CB 55, 62-16 1962-1 CB 7, or 74-13 1974-1 CB 14, 94-65 1994-2 CB 14. Note: Only income derived from the direct exploitation of the land is considered tax-exempt. Examples include: sale of crops and/or livestock raised on the land, sales of natural resources, and rental of land for grazing purposes. Income derived from capital improvements made to the land (for example, the establishment of a Gambling Casino) isn't directly derived from the land and is fully taxable. Identifies the rental amount and cites it's excludable under IRC 280(A) or indicates that the rental was for less than fifteen (15) days.

# Rents and Royalties Miscellaneous

4.19.3.8.11.2 (10-07-2019) Rents and Royalties Miscellaneous When the rent or royalty income is partially reported as self-employment income by the taxpayer, identify the RENT or ROYAL amount as Self-Employment income by entering the appropriate Income Identify Code in the INC CD field on the Case Analysis screen. See Exhibit 4.19.3-9, Income Identify Codes. If there is reported rent or royalty income reported on which the taxpayer should have paid SE tax but did not, SE tax must be computed or recomputed if the Rent/Royalty or SE tax is asterisked or a CP 2000 is sent for another issue(s). Include the reported rent or royalty amount in the PRIM REPRTD SE INC NOT ON SE and/or SEC REPRTD SE INC NOT ON SE field(s) on the SE Tax window. See IRM 4.19.3.17.1, Self-Employment Tax. Send reported rent or royalty IR elements on the notice when adjusting SE tax. If the rent or royalty amount is entered in the PRIMARY and/or SECONDARY REPORTED SE INCOME field in the SE Tax window in error, an unpostable condition will occur. If U/R rent or royalty can be identified as coal/timber royalties, patents, rights of way or easements, it should be reported on Schedule D/Form 8949: Input Income Identify Code "SD" if the U/R RENT or ROYAL amount(s) is a long-term capital gain/loss (Schedule D/Form 8949, Part II). Input Income Identify Code "ST" if the U/R RENT or ROYAL amount(s) is a short-term capital gain/loss (Schedule D/Form 8949, Part I). Note: Income Identify Code "SD" and "ST" allow the system to compute the Schedule D tax if applicable. See IRM 4.19.3.14.2, Schedule D Tax Window, for further instructions. See IRM 4.19.3.8.4.5, Capital Gain Distributions - Analysis, to access the Schedule D window. If there is U/R Schedule D, RENT, or ROYAL and the taxpayer reported a capital loss on Form 1040/ Form 1040-SR, line 7. See IRM 4.19.3.8.4.5, Capital Gain Distributions - Analysis, to access the Schedule D window. 99MIS IR(s) may reflect W/H. See IRM 4.19.3.18.1, Withholding - General, for further instructions. When rent or royalty income is U/R, enter the gross reported amount in the RETURN field of the Summary screen.

# Conduit Income - General

4.19.3.8.12 (10-10-2025) Conduit Income - General Conduit income is the taxpayer's allocable share from a partnership (Form 1065), Small Business Corporation (Form 1120-S), or Estates and Trusts (Form 1041). Conduit income is reported on Schedules K-1 filed with Form 1065, Form 1120-S, and Form 1041. Conduit income is identified on the Case Analysis screen by the literal "SBK-1" , "PTK-1" , or "TRK-1" in the DOC TYPE field and one or more of the following literals in the INCOME TYPE field: DOC TYPE INCOME TYPE ORINC Ordinary Income REAL Real Estate Note: If REAL is system deleted with a status code X, remove the status code and work the REAL issue. OTREN Other Rental ROYAL Royalties INT Interest Income DIV Dividend Income BNINC Ordinary Business Income OTPOR Other Portfolio Income STCG Short-Term Capital Gains LTCG Long-Term Capital Gains 179EX Section 179 Expense amounts Note: The literal 179EX (Section 179 Expense amount) is shown for information only. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ G-PAY Guaranteed Payment Amounts

# Conduit Income - Analysis

4.19.3.8.12.1 (10-10-2025) Conduit Income - Analysis Delete K-1 IRs if the payee or payer area identifies the income as being from: 403(b) accounts SEP or IRA accounts Pension Plan or Profit Sharing Plan, including 401(k) plan Municipal Bond funds When screening conduit IRs, keep the positive and negative amounts separate, but be aware that the taxpayer may have netted the negative IRs against positive IRs and/or the totals on the tax return. Review all forms, schedules and attached explanations to identify gross income amounts. Note: Ensure that any amounts reported on attachments are properly included on Schedule E and in the AGI on the tax return. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The taxpayer may combine negative share amounts with Section 179 Expenses and report the total loss on Schedule E, Part II, column (i). If the taxpayer did not claim the Section 179 Expense on Schedule E, Part II, column (j), consider the issue resolved. See (18) below if the taxpayer also claimed the 179EX on column (j). Schedules K-1 are not required to be attached to the return. If attached, use them as part of the screening process. Schedules K-1 should not include W/H. Only backup withholding (BWH) can be reported on a Schedule K-1. W/H amounts shown on a PTK-1 (Form 1065), SBK-1 (Form 1120-S) or TRK-1 (Form 1041) IRs may be the result of erroneously identified/transcribed Schedule K-1 data. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ See IRM 4.19.3.18.1.1, Withholding - Analysis, for further instructions. Do not pursue elements of system deleted TRK-1 IRs (marked with X), even if asterisked. Only screen TRK-1 IRs which are not system deleted, following normal procedures. Exception: If REAL is system deleted with the status code "X" , remove the status code and work the REAL issue. Conduit income may be found elsewhere on the return and/or attachments. Thoroughly review the entire return, schedules and attachments before pursuing discrepant K-1 amounts. Consider conduit income reported if a $1 match is found on the return, schedules or attachments, unless it is specifically identified as a different payer. Consider each element of a K-1 IR separately. For example, if the taxpayer only reports the INT/DIV portion of the IR on Schedule B but fails to report the remaining K-1 income types included on the IR (such as, but not limited to ORINC or G-PAY), pursue the remaining income types based on the applicable IRM procedures. Use the Income Comparison screen to assist in determining if the discrepant K-1 income amount is included in a larger total on the return. Accept conduit income as reported if the amounts match ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Example: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If a 99NEC, 99MIS, PTK-1, SBK-1 or TRK-1 IR is present for the same taxpayer, from the same payer AND for an identical money amount, take the following action: If one of the IRs is considered fully reported ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. If either IR is only partially reported or both are fully underreported, pursue both issues. If multiple conduit IRs are present from the same payer for the same taxpayer take the following action: Review each IR to determine the On File Date. Consider the IR with the latest On File Date as valid ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. If the On File Date is the same for multiple IRs and one is reported, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. If the On File Date is the same for multiple IRs and none of the IRs are reported, issue a CP 2501 to pursue all IRs. INT is included on Schedule B, Part I, line 1. Pursue any U/R amounts. See IRM 4.19.3.8.3.1, Interest - Analysis, for further instructions. Note: When reporting INT income from TRK-1 (Trusts) IRs, the payer name on the IR may not match the payer name on the return. Use the dollar match criteria to determine if the income is properly reported. DIV is included on Schedule B, Part II, line 5. Pursue any U/R amounts. See IRM 4.19.3.8.4.2, Dividends - Analysis, for further instructions. Note: On DIV income from TRK-1 (Trusts) IRs, the payer name on the IR may not match the payer name on the return. Use the dollar match criteria to determine if the income is properly reported. STCG is reported on Schedule D, line 5, column (h). Pursue any U/R amounts including O/D losses. See IRM 4.19.3.8.4.5, Capital Gain Distributions - Analysis, for further instructions. Note: If there is U/R STCG and the taxpayer reports a capital loss on Form 1040/1040-SR, Schedule 1, line 7, enter a zero (0) in both fields on the COMPUTE SCHEDULE D LOSS window. It may be necessary to blank out both fields first. This prevents the system from using losses in excess of $3,000 ($1,500 if MFS) to offset U/R Schedule D income. Example: If STCG IR(s) is a negative (-) $500 and Schedule D line 5 is negative (-) $750, pursue $250 as U/R (O/D). LTCG is reported on Schedule D, line 12, column (h). Pursue any U/R amounts including O/D losses. See IRM 4.19.3.8.4.5, Capital Gain Distributions - Analysis, for further instructions. Note: If there is U/R LTCG and the taxpayer reports a capital loss on Form 1040/1040-SR, line 7 enter a zero (0) in both fields on the COMPUTE SCHEDULE D LOSS window. It may be necessary to blank out both fields first. This prevents the system from using losses in excess of $3,000 ($1,500 if MFS) to offset U/R Schedule D income. Note: If the taxpayer did not file a Schedule D, determine if the LTCG is reported directly on Form 1040/1040-SR, line 7. ROYAL is reported on Schedule E, Part I, line 4. Section 179 Expenses are generally reported on Schedule E, Part II, column (j). Taxpayers may reduce the ORINC, REAL, OTREN or G-PAY amount by the 179EX and report the net income on column (k). If the ORINC, REAL, OTREN or G-PAY U/R amount matches the 179EX amount on the SBK-1 or PTK-1 IR AND column (j) is blank, consider the IR reported. If the taxpayer also included the 179EX on column (j) this represents a double deduction. Disallow the double deduction and send PARAGRAPH 142. See Exhibit 4.19.3-7, CP PARAGRAPHS. ORINC, G-PAY and REAL/OTREN (from PTK-1 or SBK-1 IRs) are reported on Schedule E, Part II, columns (h) and (k). Note: If REAL is system deleted with a status code "X" , remove the status code and work the REAL issue. If the taxpayer reports passive income on column (h) or passive loss on column (g) AND attaches Form 8582, Passive Activity Loss Limitations, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the taxpayer doesn't report the payer name/EIN on the Schedule E (or Schedule E isn't completed/present) AND attaches Form 8582, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. If the taxpayer attaches a completed Form 6198, At Risk Limitation, that matches the payer name and/or EIN, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. See (18) above when the PTK-1 and/or SBK-1 IR(s) contain Section 179 Expenses (179EX). BNINC, OTPOR and REAL/OTREN (from TRK-1 IRs) are reported on Schedule E, Part III, column (d) and/or (f), Note: If REAL is system deleted with a status code "X" , remove the status code and work the REAL issue. If the taxpayer reports passive income on column (d) or passive loss on column (c) AND attaches Form 8582, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the taxpayer doesn't report the payer name/EIN on the Schedule E (or Schedule E isn't completed/present) AND attaches Form 8582, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. If the taxpayer attaches a completed Form 6198 that matches the payer name and/or EIN ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Pursue all fully U/R SBK-1, PTK-1 and TRK-1 IRs and/or their elements, regardless of the income type or dollar amount. Always attempt to match ORINC, REAL, OTREN, G-PAY, BNINC and/or OTPOR income element(s) to the amounts reported on the return. The taxpayer must disclose an amount (including zero) in order to consider the income element(s) partially reported. When the return amount, per payer, doesn't correspond to a specific income element(s), group the element(s) and give credit for reported amounts. PARAGRAPH 24 automatically generates when STCG and/or LTCG is treated as ordinary income due to loss limitations. If the loss per return is less than $3,000 ($1,500 if MFS), toggle off PARAGRAPH 24 from the Summary screen.

# Conduit Income Miscellaneous

4.19.3.8.12.2 (10-07-2019) Conduit Income Miscellaneous Conduit amounts (ORINC, REAL, G-PAY, and OTREN) from PTK-1 IRs may be subject to SE tax. If any of the following conditions apply, enter Income Identify Code "PB" , "PF" , "SB" , or "SF" as applicable. Note: When determining income subject to SE tax and the taxpayer did not complete Schedule SE, don't include any PTK-1 losses reported on Schedule E from a different partnership name. The PTK-1 IR is fully U/R and the payer name/EIN isn't reported on the tax return. Exception: Do not assess SE tax on ORINC, REAL, and OTREN if the payer is a LTD, LLC, LC, LLP, or LP. See IRM 4.19.3.17.1, Self-Employment Tax, for further instructions and see Exhibit 4.19.3-9, Income Identify Codes, for applicable Income Identify Codes. The PTK-1 IR is partially reported as self-employment income by the taxpayer. If pursuing the issue because taxpayer reports a loss and the income element is a gain, don't pursue SE tax unless the loss amount was considered on an existing Schedule SE. When conduit income is U/R, enter the appropriate return amount in the RETURN field on the Summary screen. For conduit income types reportable on Schedule E Part II and Part III, use the sum of Schedule E, lines 32 and 37 as the "per return" amount. If the resulting "per return" amount is negative, enter the actual loss amount in the RETURN field. If STCG Distributions are U/R or O/D, enter the return amount from Schedule D, line 5, in the RETURN field of the Summary screen. If LTCG Distributions are U/R or O/D, enter the return amount from Schedule D, line 12 (Form 1040, line 7 if no Schedule D is attached), in the RETURN field of the Summary screen. If STCG and LTCG distributions are U/R or O/D, enter the return amount from Schedule D, lines 5 and 12 combined in the RETURN field of the Summary Screen.

# Agricultural Subsidies/Market Gain on CCC Loans/Commodity Credit Corporation (CCC) Loans Forfeited

4.19.3.8.13 (09-01-2010) Agricultural Subsidies/Market Gain on CCC Loans/Commodity Credit Corporation (CCC) Loans Forfeited Agricultural subsidies are government payments to farmers or businesses to assist in a policy deemed advantageous to the public. There are many types of Agricultural subsidy payments, including Conservation Reserve Program (CRP) payments, counter-cyclical payments, and market gain. Agricultural subsidies may be a payment in cash or a payment in kind (PIK), including Commodity Credit Corporation (CCC) certificates. Note: The taxpayer may refer to Agricultural Subsidy payments (Ag Sub) as CRP. All government payments reported to the IRS must be included in income in the year they are actually or constructively received. Income is constructively received when it is credited to the taxpayer's account or set apart in any way that makes it available to the taxpayer. It isn't necessary that the taxpayer have physical possession of it. See IRM 4.19.3.8.13.3, Commodity Credit Corporation (CCC) Loans Forfeited, with regard to a farmer's election for reporting CCC loan proceeds as income in the year of the loan rather than reporting income when the commodity is sold.

# Agricultural Subsidies/Market Gain on CCC Loans - General

4.19.3.8.13.1 (09-01-2010) Agricultural Subsidies/Market Gain on CCC Loans - General Agricultural subsidies (including CCC certificates) are reported to the IRS on Form 1099-G. Agricultural subsidies (including CCC certificates) are identified on the Case Analysis screen by the literal "1099G" in the DOC TYPE field and the literal "AGSUB" in the INCOME TYPE field. Market gains on CCC Loans are reported to the IRS on Form 1099-G and are identified on the Case Analysis screen by the literal "1099G" in the DOC TYPE field and the literal "MRKGN" in the INCOME TYPE field.

# Agricultural Subsidies/Market Gain on CCC Loans - Analysis

4.19.3.8.13.2 (09-21-2020) Agricultural Subsidies/Market Gain on CCC Loans - Analysis Compare the total of AGSUB and MRKGN amounts with entries on: Schedule F, lines 4a, 4b, 39a, or 39b. If the AGSUB IR(s) is less than or equal to the amount reported on any of these lines, consider the IR(s) reported. Note: If the total of AGSUB and MRKGN IR(s) is greater than line 4a or 39a, use the line 4b or 39b amount to determine any U/R. Schedule E, Part II. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form 4835, Farm Rental Income and Expenses, lines 3a or 3b. If the total of AGSUB and MRKGN IR(s) is less than or equal to the amounts reported on either line, consider the IR(s) reported. Note: If the total of AGSUB and MRKGN IR(s) is greater than line 3a, use the line 3b amount to determine any U/R. AGSUB and MRKGN comparisons for the following entries must match within $1 or be CLEARLY IDENTIFIED as AGSUB and/or MRKGN: Schedule F, lines 8 or 43. Schedule F, lines 2 or 37 (agricultural subsidies reported as commodities). Schedule E, Part I. Check property names on Schedule E, line 1 to clearly identify farm rental. Form 4835, line 6. Form 1040/1040-SR, Schedule 1, line 8z. Consider AGSUB and MRKGN amounts ≡ ≡ ≡ ≡ ≡ ≡ if a Form W-2 or a WAGE IR shows that the taxpayer is incorporated (payer name must include CORP, INC, LC, LLC, PA, PC, or SC) in a farming business and paid wages to themselves (the payer name and/or address is similar to or matches the taxpayer name and/or address). Do not consider AGSUB or MRKGN reported if the W-2 and 1099-G IR are from the same payer. Agricultural subsidy payments made to members of federally recognized Native American Tribes under programs administered by the Department of Agricultures Stabilization and Conservation Service are exempt from federal income taxes when the subsidy is received as a result of activity occurring on the individual's allotted land. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Underreported AGSUBs and MRKGNs are considered self-employment income unless the conditions defined below apply. Delete the Income Identify Code if: The agricultural subsidy is fully or partially reported on Form 4835, Form 4797, Form 6252, Schedule D, or Schedule E, Part I. The agricultural subsidy is fully U/R and the only farm income on the return is on Form 4835 or Schedule E, Part I. The system computes SE tax when Income Identify Code "PF" or "SF" , is entered for AGSUB and/or MRKGN income. If there are reported AGSUB and/or MRKGN on which the taxpayer should have paid SE tax but did not, the SE tax must be computed or recomputed if the AGSUB and/or MRKGN is asterisked or a notice is sent for other issue(s). Include the reported AGSUB and/or MRKGN amount in the PRIM REPRTD SE INC NOT ON SCH SE and/or SEC REPRTD SE INC NOT ON SCH SE field(s) on the SE Tax window. See IRM 4.19.3.17.1, Self-Employment Tax. Send reported AGSUB and/or MRKGN IR elements on the notice when adjusting SE tax. If the AGSUB and/or MRKGN amount is entered in the PRIMARY and/or SECONDARY REPORTED SE INCOME field in the SE Tax window in error, an unpostable condition will occur. 1099-G IRs may reflect W/H. See IRM 4.19.3.18.1, Withholding - General, for further instructions. PARAGRAPH 104 automatically generates when MRKGN is U/R, see Exhibit 4.19.3-7, CP PARAGRAPHS. If AGSUB and/or MRKGN is U/R, enter the return amount in the RETURN field on the Summary screen.

# Commodity Credit Corporation (CCC) Loans Forfeited

4.19.3.8.13.3 (03-28-2011) Commodity Credit Corporation (CCC) Loans Forfeited Generally, CCC loan proceeds are not reported as income. However, if a taxpayer pledges part or all of their production to secure a CCC loan, they may elect to report the CCC loan proceeds as income in the year the proceeds are received, instead of the year the crop is sold. Taxpayers may make the election to report CCC loans on Schedule F, lines 5a, 40a or Form 4835, line 4a. CCC loans forfeited are reported on Form 1099-A, Acquisition or Abandonment of Secured Property. Commodity Credit Certificates received under some government programs are sold or used to pay the CCC loans. These certificates are includable as income and are reported on Form 1099-G. Compare 1099-G IR(s) to amounts identified on the return by the terms "CCC" , "PIK" , or "Storage" . If income reported under these categories matches the IR(s) within $1, consider the IR(s) reported. If no amount is reported, consider the IR(s) fully U/R. A farmer may pledge grain or other commodities to secure a loan from the CCC. They may also include the proceeds of the loan as income in the year actually received. If, however, they use the commodity credit certificates to repay the loan, for an amount less than the original amount of the loan, that market gain is reported on Schedule F, lines 5b, 5c, 40b, or 40c or Form 4835, lines 4b or 4c. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ CCC loans forfeited are identified on the Case Analysis screen by the literal "1099A" in the DOC TYPE field and one of the following literals in the INCOME TYPE field: "DEBTS" - Debt satisfied. "FMV" - Fair market value. Disregard the literal "FMV" and the amount on a 1099A IR. (The system automatically assigns status code "X" to FMV amounts.) "AV" - Appraisal value. Disregard the literal "AV" and the amount on a 1099A IR. (The system automatically assigns status code "X" to AV amounts.) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ A Form W-2 or WAGE IR shows that the taxpayer is incorporated (payer name must include CORP, INC, LC, LLC, PA, PC or SC) in a farming business and paid wages to themselves (the payer name and/or address is similar to or matches the taxpayer's name and/or address). Do not consider CCC reported if the W-2 and 1099A IR are from the same payer. Income from a farming business is reported on Schedule E, Part II. Compare DEBTS (debt satisfied amounts on 1099A IRs) with entries on Schedule F or Form 4835. Consider CCC loans fully reported when the amount(s) reported on Schedule F, lines 5b, 40b, or Form 4835, line 4b, equals or exceeds the CCC (DEBTS) IR(s). If there are amounts reported on Schedule F, lines 5c or 40c, or Form 4835, line 4c ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Consider CCC loans partially U/R when there is an amount reported on Schedule F, lines 5b or 40b, or Form 4835, line 4b that is less than the DEBTS IR(s). Consider CCC loans fully U/R when Schedule F, lines 5b or 40b, or Form 4835, line 4b is zero or blank AND there are no entries on Schedule F, lines 5c or 40c, or Form 4835, line 4c. If a DEBTS amount is U/R, verify the Income Identify Code so the system computes SE tax correctly. The Income Identify Code will be "PF" or "SF" , as applicable. See Exhibit 4.19.3-9, Income Identify Codes. Delete the Income Identify Code for U/R DEBTS amounts if the: CCC loan forfeited is fully or partially reported on Form 4835 or Schedule E, Part I, or CCC loan forfeited is fully U/R and the only farm income on the return is on Form 4835 or Schedule E, Part I. PARAGRAPH 102 automatically generates. If CCC income is U/R, enter the return amount in the RETURN field on the Summary screen.

# Patronage Dividends - General

4.19.3.8.14 (10-06-2022) Patronage Dividends - General Patronage dividends (PTDIV) are paid by cooperatives. They are considered income unless they are attributable to personal or family items, capital assets, or depreciable assets used in the taxpayer's business. PTDIVs are reported to the IRS on Form 1099-PATR, Taxable Distributions Received From Cooperatives. Section 199A(g) provides a domestic production activity deduction for only specified agricultural or horticultural cooperatives. Patrons of specified agricultural or horticultural cooperatives report any section 199A(g) DPAD that is passed through from a specified agricultural or horticultural cooperative on Form 8995-A, Qualified Business Income Deduction, Part IV, line 38. Patronage dividends are identified on the Case Analysis screen by the literal "99PAT" in DOC TYPE field and one of the following literals in the INCOME TYPE field. "PTDIV" - Patronage Dividends "NPAT" - Non-Patronage Distributions "PURA" - Per Unit Retain Allocations "REDEM" - Redemption "DPAD" - Domestic Production Activities Deduction. Reported on the appropriate of Form 8995-A, Qualified Business Income Deduction.

# PTDIV - Analysis

4.19.3.8.14.1 (09-21-2020) PTDIV - Analysis Group the 99PAT income elements (PTDIV, NPAT, REDEM and PURA) from all 99PAT IRs and compare the group total with entries on: Schedule F, lines 3a, 3b, 38a or 38b. If the 99PAT group amount is less than or equal to the amount reported on any of these lines, consider the IRs reported and mark the group with status code "R" . Note: If the 99PAT group amount is greater than line 3a or 38a, mark the group with status code "U" and use the amount on line 3b or 38b to determine the U/R. Form 4835, line 2a or 2b. If the 99PAT group amount is less than or equal to the amount reported on either line, consider the IRs reported and mark the group with status code "R" . Note: If the 99PAT group amount is greater than line 2a, mark the group with status code "U" and use the amount on line 2b to determine the U/R. Schedule E, Part I. If an amount is identified as farm rental AND matches within $1, consider the 99PAT IRs reported and mark the group with status code "R" . Note: Check property names on Schedule E, line 1a and 1b. If the income reported on this line matches the IR group amount(s) within $1, consider the 99PAT IRs reported and mark the group with status code "R" . Schedule E, Part II. If the income is from a farming business,≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡" ≡ ≡ ≡ Note: If it can't be determined from Schedule E, Part II that the ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Schedule B, Part II. The amount must match within $1 or be identified by payer name. Schedule C, line 6, if the business activity is fishing related or the distribution received is from a cooperative. The amount must match within $1, must be clearly identified as patronage dividends, or must be identified by payer name. If Form 8995-A is present, see IRM 4.19.3.9.8, Domestic Production Activity Deduction. Consider PTDIVs ≡ ≡ ≡ ≡ ≡ ≡ ≡ if there is a Form W-2 or WAGE IR present that shows the taxpayer is incorporated (payer name must include CORP, INC, LC, LLC, PA, PC or SC) in a farming business, and paid wages to themselves (payer name and/or address is similar to or matches the taxpayer's name and/or address). Do not consider PTDIV reported if W-2 and 99PAT IR are from the same payer.

# PTDIV - Miscellaneous

4.19.3.8.14.2 (09-30-2014) PTDIV - Miscellaneous If a 99PAT IR amount is U/R, verify the Income Identify Code, so the system computes SE tax correctly (Income Identify Code "PF" , "SF" , "PB" , or "SB" as applicable). See Exhibit 4.19.3-9, Income Identify Codes. Delete the Income Identify Code if: The PTDIV is fully or partially reported on Form 4835, Schedule B, or Schedule E, Part I, or The PTDIV is fully U/R AND the only farm income on the return is on Form 4835 or Schedule E, Part I. If there are reported PTDIVs on which the taxpayer should pay SE tax but did not, SE tax must be computed or recomputed if the 99PAT is asterisked or a notice is sent for another issue(s). See IRM 4.19.3.17.1, Self-Employment Tax. PARAGRAPH 85 automatically generates when the total of U/R interest, dividends, and patronage dividends is greater than $500. If PTDIV income element(s) is U/R, enter the return amount in the RETURN field on the Summary screen.

# Crop Insurance - General

4.19.3.8.15 (09-01-2003) Crop Insurance - General Crop insurance proceeds are amounts received by farmers as a result of destruction or damage to crops. Crop insurance proceeds are reported on Form 1099-MISC, box 9. Crop insurance proceeds are identified on the Case Analysis screen by the literal "99MIS" in the DOC TYPE field and the literal "CROP" in the INCOME TYPE field.

# Crop Insurance - Analysis

4.19.3.8.15.1 (09-21-2020) Crop Insurance - Analysis Compare CROP amounts with entries on: Schedule F, line 6a, 6b, or 41. If the CROP IR(s) is equal to or less than the amounts reported on any of these lines, consider the IR(s) reported. Form 4835, line 5a or 5b. If the CROP IR(s) is equal to or less than the amounts reported on either of these lines, consider the IR(s) reported. Note: If the CROP IR(s) is greater than line 5a and the box on line 5c is blank, use the amount on line 5b to determine the U/R. Schedule F, line 8 or Form 4835, line 6. The amount must match within $1. Form 1040/Form 1040-SR,Schedule 1, line 8z, the amount must match within $1 or be clearly identified as CROP income. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Form W-2 or WAGE IR shows the taxpayer is incorporated (payer name must include CORP, INC, LC, LLC, PA, PC or SC) in a farming business, and paid wages to themselves (payer name and/or address is similar to or matches the taxpayer's name and/or address). Do not consider CROP reported if Form W-2 and Form 1099-MISC are from the same payer. Income from a farming business is reported on Schedule E, Part II. Note: If it can't be determined from Schedule E, Part II ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The taxpayer elects to postpone CROP income to the next year by checking the box on Schedule F, line 6c, or Form 4835, line 5c, and attaches a statement. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

# Crop Insurance Miscellaneous

4.19.3.8.15.2 (09-01-2013) Crop Insurance Miscellaneous If a CROP amount is U/R, verify the Income Identify Code so the system computes SE tax correctly (Income Identify Codes are "PF" or "SF" , as applicable). See Exhibit 4.19.3-9, Income Identify Codes. Delete the Income Identify Code if the crop insurance proceeds are: Fully or partially reported on Form 4835 or Schedule E, Part I, or Fully U/R and the only farm income on the return is on Form 4835 or Schedule E, Part 1. If there is reported CROP on which the taxpayer should have paid SE tax but did not, the SE tax must be computed or recomputed if CROP is asterisked or a notice is sent for another issue(s). Include the reported CROP amount in the PRIM REPRTD SE INC NOT ON SCH SE and/or SEC REPRTD SE INC NOT ON SCH SE field(s) on the SE Tax window. See IRM 4.19.3.17.1, Self-Employment Tax. Send reported CROP IR elements on the notice when adjusting SE tax. If the CROP amount is entered in the PRIMARY and/or SECONDARY REPORTED SE INCOME field in the SE Tax window in error, an unpostable condition will occur. PARAGRAPH 103 automatically generates when CROP is U/R. If CROP is U/R, enter the return amount in the RETURN field on the Summary screen.

# Unemployment Compensation - General

4.19.3.8.16 (08-16-2011) Unemployment Compensation - General Unemployment compensation is a benefit paid to qualified individuals during periods of unemployment. Unemployment compensation is reported on Form 1099-G. Unemployment compensation displays on the Case Analysis screen by the literal "1099G" in the DOC TYPE field and the literal "UNEMP" in the INCOME TYPE field.

# Unemployment Compensation - Analysis

4.19.3.8.16.1 (10-10-2025) Unemployment Compensation - Analysis Compare UNEMP amounts with entries on Form 1040/1040-SR, Schedule 1, line 7. UNEMP comparisons for the following entries must match within $1 or be CLEARLY IDENTIFIED as UNEMP payments Form 1040/Form 1040-SR, line 1a or Schedule 1, line 8z. Caution: If taxpayer includes UNEMP as wages on Form 1040/1040-SR, line 1a, see IRM 4.19.3.18.3, Earned Income Credit, for further information. If the taxpayer states the income was Paid Family and Medical Leave (PFML) and isn't taxable, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the tax return indicates the UNEMP income was repaid and includes an amount, accept as reported. The repaid amount plus reported amount must equal the IR, otherwise pursue the difference. Caution: If the taxpayer indicated a portion of the UNEMP was repaid in a year other than the current AUR tax year, don't consider that repayment amount. Send PARAGRAPH 238, see Exhibit 4.19.3-7, CP PARAGRAPHS. If the EIN begins with "66" and the payer information is in Spanish, this income isn't subject to U.S. income tax, delete the IR(s). Supplemental Unemployment Benefits (SUB) serve as an alternative to severance pay or a source of income to someone who has lost their job, usually as the result of workplace injury, illness, or training accident. If SUB is received from a company financed fund, and the taxpayer did not contribute to the fund, the benefits are not considered UNEMP. They are reported on Form W-2 and are fully taxable wages, subject to W/H, and should be reported on the wage lines. See IRM 4.19.3.8.1, Wages - General, for further instructions.

# UNEMP - Miscellaneous

4.19.3.8.16.2 (10-10-2025) UNEMP - Miscellaneous UNEMP (Form 1099-G) may reflect W/H. See IRM 4.19.3.18.1, Withholding - General, for further instructions. PARAGRAPH 67 automatically generates when UNEMP is U/R. If UNEMP is U/R, enter the return amount in the RETURN field on the Summary screen.

# Social Security/Railroad Retirement Benefits (SS/RR) - General

4.19.3.8.17 (09-21-2020) Social Security/Railroad Retirement Benefits (SS/RR) - General Social Security and Railroad Retirement Benefits may be partially taxable (by up to 85 percent) if the modified AGI plus fifty percent of the benefits is greater than the following adjusted base amounts: $25,000 for FS 1, 4 or 5 $32,000 for FS 2 $25,000 for FS 3 or 6 (and the taxpayer did NOT live with spouse any time during the AUR year) $0 for FS 3 or 6 (and the taxpayer lived with the spouse during the AUR year) These payments are reported by payers on either Form SSA-1099 (benefits received under Title II of the Social Security Act), or Form RRB-1099 (Tier 1 railroad retirement benefits treated as social security). Note: See IRM 4.19.3.8.10.5, Railroad Retirement Board (RRB) IRs, for information regarding the amounts reported by the Railroad Retirement Board on Form RRB-1099-R. Social Security and Railroad Retirement Benefits display on the Case Analysis screen by the literal "SS/RR" in the DOC TYPE field and one of the following literals in the INCOME TYPE field. "SS/RR" - taxable Social Security and Railroad Retirement Benefits. "WCOMP" - Workers' Compensation. Disregard WCOMP amounts. (The system automatically assigns status code "X" to WCOMP amounts.) "REPAY" - benefits that the taxpayer repaid in the current AUR tax year. The system uses this amount to reduce the recomputed SS/RR amount as appropriate. 24PAY - portion of SS/RR received in the AUR year for 2024 (for information only). "23PAY" - portion of SS/RR received in the AUR year for 2023 (for information only). "22PAY" - portion of SS/RR received in the AUR year for 2022 (for information only). "21PAY" - portion of SS/RR received in the AUR year for 2021 (for information only). Workers' Compensation payments made in place of Social Security and Railroad Retirement Benefits are considered as SS/RR when computing taxable benefits. If it appears that the taxpayer reduced the gross SSA benefits (SS/RR element) by the amount of the WCOMP element: Pursue the discrepancy. Mark the WCOMP element with Send Indicator "S" . PARAGRAPH 100 automatically generates.

# SS/RR - Analysis

4.19.3.8.17.1 (10-29-2024) SS/RR - Analysis When screening SS/RR IRs, check the name line area of the IR(s) to ensure that the benefits are properly credited to the appropriate taxpayer. Delete SS/RR amounts if the payee name line(s) indicates they are payments to a former spouse or dependent children, unless there is an indication the taxpayer in question is one of the actual recipients. Compare the total of SS/RR amounts with entries on: Form 1040/Form 1040-SR, line 6a (total benefits) and line 6b (taxable benefits). Form 1040/Form 1040-SR, Schedule 1, line 8z. The amount must match the taxable SS/RR payments within $1 or be identified as Social Security/Railroad Retirement payments. When the taxpayer is married filing separately (FS 3 or 6) and lived apart from their spouse for the entire year, they are instructed to enter a "D" on the dotted line next to Form 1040/1040-SR, line 6a. If a "D" is present (or a "Y" on an ELF return), enter an "N" in the taxpayer LIVED WITH SPOUSE? field in the SSA RRB Changes window. If a "D" isn't present: Assume the taxpayer lived with their spouse and zero is the applicable base amount for FS 3 or 6. Ensure that the taxpayer LIVED WITH SPOUSE? field is blank. PARAGRAPH 162 automatically generates. Note: If there are no SS/RR IR(s) present on the Case Analysis screen, and it appears that the taxpayer did not report the proper taxable amount, because the "D" isn't present, and there are no other U/R issues, close the case. On jointly filed returns, when one of the taxpayers is deceased, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡" when Form 1040/1040-SR, line 6a or 6b is zero or blank, or line 6a is equal to or less than the surviving spouse's SS/RR IR amount(s). Caution: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡" ≡ The taxable amount of SS/RR payments is computed by the system based on the appropriate entries on the Adjusted Gross Income window and the SSA/RRB window. If the taxpayer files a Schedule R, Credit for the Elderly or Disabled, the system requires you to access the SSA/RRB window. Screen SS/RR IR(s) after you analyze all other potentially discrepant income types. After any subsequent analysis that changes the TOTAL AGI CHANGE field, reselect the SSA/RRB window. (After computing the IRA deduction the system automatically recomputes SS/RR). Recompute all changes to adjustments to income before selecting this window, see IRM 4.19.3.4.2, Case Analysis Screen, for the proper sequence when these issues are present on the same case. Be alert for changes made during or after original processing when entering/verifying information in the SSA/RRB window. Send PARAGRAPH 97, (see Exhibit 4.19.3-7, CP PARAGRAPHS), for erroneous changes made during original processing. If Form 1040/1040-SR, line 6a is greater than the IR amount(s) and an adjustment to SS/RR is necessary, don't send the SS/RR IR(s) to the taxpayer. Note: After computing the SS/RR, the GROUP TOTAL field on the Case Analysis screen displays the total SS/RR IR amount. Compare this amount to the amount on the appropriate line of Form 1040/1040-SR. Whenever it is necessary to compute or recompute SSA/RRB take the following actions: Enter/Verify the amount from Form 1040/1040-SR, line 6a in the GROSS SSA/RRB BENEFITS field. Enter/Verify the amount from Form 1040/1040-SR, line 6b in the TAXABLE SSA/RRB BENEFITS field Enter/Verify that the amount in the TAX-EXEMPT INTEREST from Form 1040/1040-SR, line 2a field of the SSA/RRB window is correct. See IRM 4.19.3.8.3.6, Interest Miscellaneous, if the taxpayer improperly excluded tax-exempt interest on Schedule B. If filing status 3 or 6, enter "N" in TP LIVED WITH SPOUSE? field, if the taxpayer did NOT live with spouse during the tax year. For all other filing statuses OR if there is no indication the taxpayer did not live with spouse, leave this field blank (not zero). Note: A "D" (or a "Y" on an ELF return) annotated to the left of the SSA/RRB benefit line is an indication the taxpayer didn't live with their spouse during the tax year. If the repayment amounts exceed the SS/RR amounts, and the taxpayer reports a taxable SS/RR amount, but fails to subtract any or all of their payments from the SS/RR amount the system reduces the recomputed SS/RR amount as appropriate. This results in either a refund to the taxpayer or a reduction to their tax. If there are no SS/RR IRs on the Case Analysis screen, the taxpayer reports a gross amount on Form 1040/ Form 1040-SR, line 6a and the amount on Form 1040/ Form 1040-SR, line 6b is blank, zero or less than 85 percent of the gross amount, and there are other U/R issue(s): Create an IR for the gross amount reported on Form 1040/1040-SR, line 6a. Access the SSA/RRB window and enter/verify the fields. If the taxpayer reported SS/RR (larger than the IR amount(s)), and the IR shows a REPAY amount, the REPAY IR must be coded with IR Code "D" . Otherwise, the system uses 85 percent of the REPAY amount as an offset and recomputes the tax. When the system computes taxable SS/RR, it uses the amount the taxpayer reported as benefits or the total of the IRs (less any REPAY amounts), whichever is greater. If the taxpayer attached documentation stating the SS/RR amounts were repaid in the current AUR tax year and no corresponding IR is present showing the REPAY amount, you must create an IR so the system correctly computes the taxable portion. Caution: If the taxpayer attached documentation stating the SS/RR amounts were repaid in a year other than the current AUR tax year, send PARAGRAPH 252. See Exhibit 4.19.3-7, CP PARAGRAPHS, for further information. Do not pursue SS/RR amounts if the taxpayer provides a statement and/or documentation that the income is excludable because the payments are for disability due to injuries received from a terrorist attack or military action.

# SS/RR Miscellaneous

4.19.3.8.17.2 (10-10-2025) SS/RR Miscellaneous Taxpayers can compute taxable SS/RR benefits following the Lump-Sum Election (LSE) method. Form 1040/1040-SR line 6c box is checked or the box next to LSE ind is checked on the TRDB window, or an LSE worksheet is attached. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The SS/RR IR amount(s) is reported on Form 1040/1040-SR, line 6a AND The SS/RR IR displays one or more of the following; 24PAY, 23PAY, 22PAY, or 21PAY. Note: If either of the conditions above are not met, pursue discrepant SS/RR. Send PARAGRAPH 71, see Exhibit 4.19.3-7, CP PARAGRAPHS. Do not pursue potential U/R SS/RR benefits if there is an indication the taxpayer is a resident of one of the following countries: Canada Egypt Germany Ireland Israel Italy Japan Romania The United Kingdom Note: If the taxpayer is a resident of a country not on this list, see IRM 4.19.3.8.31, Foreign Source Income, for further information. Form SSA-1099 or Form RRB-1099 may reflect W/H. See IRM 4.19.3.18.1, Withholding - General, and/or see IRM 4.19.3.18.1.2, Withholding, SSTAX and Additional Medicare Tax Withheld - Miscellaneous, for further instructions. PARAGRAPH 99 automatically generates when a change to modified AGI impacts the taxable amount of SS/RR. If SS/RR is adjusted, enter the taxable return amount in the RETURN field on the Summary screen.

# Other Income (OTINC)- General

4.19.3.8.18 (07-11-2022) Other Income (OTINC)- General Other income is reported on Form 1099-MISC. Other income is identified on the Case Analysis screen by the literal "99MIS" in the DOC TYPE field and the literal "OTINC" in the INCOME TYPE field.

# OTINC - Analysis

4.19.3.8.18.1 (10-10-2025) OTINC - Analysis Compare OTINC amounts with entries on: Schedule C, line 6. Schedule F, lines 8 or 43. Form 4835, line 6. If it can be determined from the payer name or business activity that it is the same income, consider OTINC reported if it is included in larger total for the applicable taxpayer on the following Schedules: Schedule C Schedule F, lines 1a or 2 Note: When determining the U/R amount consider NEC IR(s) as well as OTINC IR(s). Comparisons for the following entries must match within $1 or be CLEARLY IDENTIFIED as OTINC: Form 1040/1040-SR, line 1. Form 1040/1040-SR, Schedule 1, line 8z. The taxpayer must provide enough information or an attachment to isolate the amount they are reporting from the payer in question. Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Schedule D, Part I, 1a, 1b, 2, or 3, column (d), Part II, line 8a, 8b, 9 or 10, column (d), Part I, column (d) or Part II, line 1, column (d). The taxpayer may report the sale of timber, coal, easements, right-of-way (ROW), land damages on these lines. Consider the OTINC reported if the sales price matches the IR within $1. Form 8949, see table above for line numbers. Caution: Digital assets may be reported or partially reported on Form 8949. This income may be identified by payer name or may be referred to as bitcoin or other digital asset terminology. If the income is partially reported and the taxpayer includes an explanation they reported the fair market value of the digital assets, as of the date it was received, consider the income reported. Schedule E, Part I. Form 2106, line 7. Note: Only employees in the following categories qualify to use Form 2106: Armed Forces Reservists, qualified performing artists, fee basis state or local government officials and employees with impairment-related work expenses The OTINC amount on a 99MIS IR represents the full value of Other Income. If the taxpayer reports a lesser amount, consider the difference U/R, unless documentation is attached to the return. Accept OTINC as reported if: The taxpayer is incorporated (payer name must include CORP, INC, LC, LLC, PA, SC or PC) and pays wages to themselves (the name and/or address of the payer is similar to or matches the name and/or address of the taxpayer). Exception: Do not consider OTINC reported if Form W-2 and 99MIS IR are from the same payer, the income is from the Alaska Permanent Fund Dividend, or is identified as National Mortgage Settlement (NMS) and/or Independent Foreclosure Review (IFR). The taxpayer appears to be a partner or shareholder as shown on Schedule E, Part II. Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ or the income is from the Alaska Permanent Fund Dividend, or identified as National Mortgage Settlement (NMS) and/or Independent Foreclosure Review (IFR). The taxpayer has identified the payments as disaster or FEMA mitigation, made under any of the following: the Hazard Mitigation Grant Program (HMGP), the pre-Disaster Mitigation Program (PDM) or the Flood Mitigation Assistance Program (FMA). The taxpayer nets the amount for reimbursed expenses reported on Form 1099-MISC and ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ For TY 2022 and TY 2023, payments for affected taxpayers from the Red Hill Fuel Spill are excludable from gross income to the extent of the cost reimbursement compensated by insurance or otherwise.≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: For TY 2022, the Alaska Permanent Fund Dividend amount is $3,284. The taxable amount of Alaska Permanent Fund Dividend is $2,622 and the energy relief portion of $662 isn't taxable. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the income is fully U/R, modify the IR and only pursue the Alaska Permanent Fund Dividend amount. The value of medals and/or prizes and awards paid by the U.S Olympic Committee (USOC) to competitors are tax-exempt when the taxpayer's AGI is $1 million or less ($500,000 for married filing separately). Taxpayers are instructed to include these amounts on Form 1040/1040-SR Schedule 1, line 8m and subtract the amount on the dotted line portion of Form 1040/1040-SR, Schedule 1, line 24c. If the IR isn't reported and it can be determined the taxpayer is an Olympian/ Paralympian who meets the exclusion criteria, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. If an explanation is attached to the return indicating the fellowship, grant, or stipend was used for tuition, fees, books, supplies, and equipment required for the course, see IRM 4.19.3.8.1.4, Fellowships, Grants, and Stipends, for further information. If the OTINC IR is identifiable as fellowship, grant, stipend income, no explanation of tuition expenses is attached, and the IR isn't fully reported, pursue the amount not reported. Send PARAGRAPH 124, see Exhibit 4.19.3-7, CP PARAGRAPHS. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ DO NOT ASSESS SE tax on scholarship/stipend income.

# OTINC - Miscellaneous

4.19.3.8.18.2 (06-01-2023) OTINC - Miscellaneous The OTINC amount may represent a court award/settlement amount, as indicated on the taxpayer's attachment. The full amount is to be reported on Form 1040/ Form 1040-SR, Schedule 1, line 8z. The following items are to be included as Ordinary Income: Interest on any award. Compensation for lost wages or lost profits unless awarded due to personal physical injury or sickness. Punitive damages. It doesn't matter if they relate to a physical injury or physical sickness. Amounts received in settlement of pension rights (if the taxpayer did not contribute to the plan). Damages for patent or copyright infringement, breach of contract or interference with business operations that replace ordinary income. Damages for emotional distress received to satisfy a claim under antidiscrimination statutes, for example, Title VII of the Civil Rights Act of 1964, and comparable state statutes. Damages received for emotional distress due to a personal injury that is unrelated to a physical injury or sickness (for example, employment discrimination or injury to reputation) but doesn't include damages not in excess of amount paid for medical care to treat emotional distress. The Judgment Fund Branch of the United States Department of Agriculture (USDA) paid cash settlements and granted loan cancellations as a result of a 1999 class action discrimination suit filed by farmers. See IRM 21.6.4.4.9.3, USDA Discrimination Settlement Payments, for additional information. The National Mortgage Settlement (NMS) and/or Independent Foreclosure Review (IFR) paid cash settlements to certain borrowers whose principal residence was involved in the foreclosure process. Consider the IR reported if the taxpayer reports the payment(s) on the return AND indicates any of the following: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Example: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: Beneficiaries of National Mortgage Settlement and Independent Foreclosure Review payments may treat the distribution(s) in the same manner as the decedent would have had the decedent lived and received the income. Gains from reimbursements for damages, casualty and theft, etc., are reported on Form 4684 and Form 4797. Any legal expenses, up to the settlement included in gross income, from: an unlawful discrimination suit, a claim against the U.S. Government or a claim made under section 1862(b)(3)(A) of the Social Security Act, may be deducted as an adjustment to income on Schedule 1, line 24h on Form 1040/1040-SR. Consider any deducted amount over the reported settlement as U/R income. Taxpayers are only allowed to deduct legal expenses incurred in attempting to produce or collect taxable income. For business related legal expenses, Schedules C, E, part I, and/or F may be used. If the taxpayer nets the amount for legal fees, pursue the deducted amount as U/R. Exception: If the settlement involves: unlawful discrimination as defined in IRC 62(e), a claim against the U.S. Government or a claim made under section 1862(b)(3)(A) of the Social Security Act. OTINC paid by an auto manufacturer to a motor vehicle salesperson isn't subject to SE tax and CANNOT be reported on Schedule C. If it is the only income reported on Schedule C: Disallow the expenses. Adjust SE tax as appropriate. Send PARAGRAPH 205, see Exhibit 4.19.3-7, CP PARAGRAPHS If OTINC is partially reported on Schedule C or F, treat as self-employment income. Enter Income Identify Code "PB" , "PF" , "SB" , or "SF" as applicable in the INC CD field on the Case Analysis screen. See Exhibit 4.19.3-9, Income Identify Codes. If OTINC is reported on Schedule C or F and the taxpayer should have paid SE tax but did not, the SE tax must be computed or recomputed if OTINC is asterisked or a notice is sent for another issue(s). Include the reported OTINC amount in the PRIM REPRTD SE INC NOT ON SE and/or SEC REPRTD SE INC NOT ON SE field(s) on the SE Tax window. See IRM 4.19.3.17.1, Self-Employment Tax. Send reported OTINC IR elements on the notice when adjusting SE tax. If the OTINC amount is entered in the PRIMARY and/or SECONDARY REPORTED SE INCOME field in the SE Tax window in error, an unpostable condition will occur. 99MIS IRs with OTINC amounts may reflect W/H. See IRM 4.19.3.18.1, Withholding - General, for further instructions. If Other Income is U/R, enter the return amount in the RETURN field on the Summary screen.

# Gambling Income - General

4.19.3.8.19 (09-30-2018) Gambling Income - General Gambling income represents reportable winnings from a gambling activity. Gambling income is reported on Form W-2 G, Certain Gambling Winnings. Gambling income is identified on the Case Analysis screen by the literal "W-2G" in the DOC TYPE field and the literal "GAMBL" in the INCOME TYPE field.

# Gambling Income - Analysis

4.19.3.8.19.1 (10-10-2025) Gambling Income - Analysis Comparisons for the following must match within $1 or be CLEARLY IDENTIFIED as GAMBL: Form 1040/Form 1040-SR, line 1a Form 1040/Form 1040-SR, Schedule 1, line 8b Schedule C, Part I, lines 1 or 6, if payer or business activity indicates that it is the same income. See IRM 4.19.3.8.19.2, Gambling Losses, for additional information. Schedule F, lines 8 or 43. If the taxpayer reports gambling income on Schedule D, Part II, compare the amount reported with the IR and take the following action: If the amount reported on column (h), is equal to or greater than the IR amount, consider the income reported. If the amount reported on column (h), is less than the IR amount, consider the difference U/R. Note: If reported on Schedule D, Part II, subtract the gambling income from the LONG-TERM GAIN(LOSS) field in the SCHEDULE D window in the Return Value screen and send PARAGRAPH 231, see Exhibit 4.19.3-7, CP PARAGRAPHS. Gambling income may erroneously display as discrepant if an amount is present on Form W-2G, box 7 (winnings from identical wagers). This amount displays on the IR by the literal "IDWAG" . Disregard IDWAG amounts. The system automatically assigns status code "X" to IDWAG amounts. Consider gambling income reported if the amount the taxpayer reports matches the GAMBL IR within $1. If neither gambling income nor gambling losses are reported, consider the entire IR(s) U/R. If the taxpayer did not itemize their deductions, send PARAGRAPH 42 if not automatically generated.

# Gambling Losses

4.19.3.8.19.2 (10-02-2024) Gambling Losses If the taxpayer itemizes deductions on Schedule A, they may deduct gambling losses equal to gambling winnings. If the taxpayer deducts gambling losses on Schedule A but reports no winnings, disallow gambling losses on Schedule A. Exception: If there are U/R Gambling IRs, pursue the Gambling IRs and allow the reported Gambling Losses up to the amount of the U/R Gambling IRs. If the taxpayer did not file Schedule A, they may deduct gambling losses in excess of the applicable standard deduction amount for their filing status. Send PARAGRAPH 42 if not automatically generated, see Exhibit 4.19.3-7, CP PARAGRAPHS. The taxpayer is eligible to itemize deductions when deductions on Schedule A exceed the applicable standard deduction amounts for their filing status. See IRM 4.19.3.13, Standard Deduction, for further information. Gambling losses are O/D if: They exceed gambling winnings. They are deducted twice. (The taxpayer reports net gambling winnings and also deducts gambling losses on Schedule A.) They are directly deducted from gambling winnings, and the taxpayer isn't eligible to itemize deductions. (Gambling losses offset against gambling winnings are less than the standard deduction amount.) Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ don't consider the gambling losses O/D. See (7) below. When the taxpayer is claiming gambling losses on Schedule A and, isn't claiming any gambling winnings on Form 1040/1040-SR, Schedule 1, line 8b, AND there are no GAMBL IR(s): Select the Schedule A window and disallow the amount of losses the taxpayer claimed by entering zero (0) in the GAMBLING LOSS OF OTHER MISC RECOMPUTED field. DO NOT adjust the GAMBLING LOSS OF OTHER MISC PER RETURN, TOTAL DEDUCTIONS fields. Send PARAGRAPH 144, see Exhibit 4.19.3-7, CP PARAGRAPHS. When the taxpayer claims more losses on Schedule A than winnings on Form 1040/1040-SR, Schedule 1, line 8b take the following action: Select the Schedule A window and enter the allowable reported losses (up to the reported winnings PLUS any U/R gambling) in the GAMBLING LOSS OF OTHER MISC RECOMPUTED field. DO NOT adjust the GAMBLING LOSS OF OTHER MISC PER RETURN, TOTAL DEDUCTIONS fields. Send PARAGRAPH 42 if not automatically generated, see Exhibit 4.19.3-7, CP PARAGRAPHS. When the taxpayer nets gambling losses against gambling winnings and either filed or did not file a Schedule A (or an attached Schedule A was not used because it was less than the standard deduction): Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ consider the IR reported. Mark the GAMBL IR(s) U/R for the amount of loss claimed. Select the Schedule A window. If no Schedule A was filed and the allowable gambling losses now exceed the standard deduction amount, enter a zero (0) in the GAMBLING LOSS OF OTHER MISC PER RETURN, TOTAL ITEMIZED DEDUCTIONS fields. Include the gambling losses (up to the gambling winnings amount) in the GAMBLING LOSS OF OTHER MISC RECOMPUTED field. If appropriate, update any other fields in the Schedule A window. If Schedule A was filed, DO NOT adjust the GAMBLING LOSS OF OTHER MISC PER RETURN, TOTAL ITEMIZED DEDUCTIONS fields. Update the GAMBLING LOSS OF OTHER MISC RECOMPUTED field with the amount of the allowable losses. Send PARAGRAPH 42 if not automatically generated, see Exhibit 4.19.3-7, CP PARAGRAPHS. Caution: If the filing status is 3 and/or the taxpayer checks the box on Schedule A, line 18 or writes "IE" (Itemized Elected) on the left dotted portion of Form 1040/1040-SR, line 12, DO NOT adjust the Schedule A window. Consider the gambling U/R and send PARAGRAPH 42 if not automatically generated. If the taxpayer filed a Schedule A, verify the GAMBLING LOSS OF OTHER MISC PER RETURN and GAMBLING LOSS OF OTHER MISC RECOMPUTED fields contain the correct amounts. Verify the TOTAL DEDUCTIONS fields include the allowable amount of gambling losses. See IRM 4.19.3.11.1, Schedule A Window for further information. If the taxpayer did not file a Schedule A and gambling losses are less than the standard deduction amount, no entry is necessary on the Schedule A window. PARAGRAPH 42 is automatically generated. Only taxpayers who conduct gambling as a business (in other words, "professional gamblers" ) are permitted to report gambling income and losses on a Schedule C. The taxpayer may claim gambling losses only up to the amount of gambling income. If the taxpayer claims gambling losses in excess of gambling income, disallow the portion of gambling losses in excess of income. Enter the total gambling losses claimed in the PRIM/SEC SCH C EXPENSE PER RETURN field of the MISC ADJUSTMENT/SCHEDULE C EXPENSE window. Enter the allowable gambling losses in the PRIM/SEC SCH C EXPENSE NOW field of the MISC ADJUSTMENT/SCHEDULE C EXPENSE window. Adjust SE tax as appropriate. Send PARAGRAPH 14, see Exhibit 4.19.3-7, CP PARAGRAPHS. If it appears that gambling isn't the primary source of income for the taxpayer (example: the taxpayer lists their occupation as other than "professional gambler" and/or reports significant earned income from non-gambling sources), use the MISC ADJUSTMENT/SCHEDULE C EXPENSE window to disallow the expenses and income claimed on Schedule C. Take the following action: Enter a zero (0) in the MISC ADJUSTMENT PER RETURN field. Enter the gambling income reported on Schedule C in the MISC ADJUSTMENT NOW field. Enter the disallowed expenses amount as a positive amount in the PRIM/SEC SCH C EXPENSE PER RETURN field. Note: Expenses include total expenses and cost of goods sold. Enter the gambling income reported on Schedule C in the PRIM/SEC SCH C EXPENSE NOW field. Recalculate the SET window. Send PARAGRAPH 14, see Exhibit 4.19.3-7, CP PARAGRAPHS. Send PARAGRAPH 243, see Exhibit 4.19.3-7, CP PARAGRAPHS. GAMBL IRs may reflect W/H. See IRM 4.19.3.18.1.1, Withholding - Analysis, for further instructions. If gambling winnings are U/R, enter the return amount in the RETURN field on the Summary screen.

# Cancellation of Debt (DBTCN) - General

4.19.3.8.20 (09-30-2014) Cancellation of Debt (DBTCN) - General Cancellation of Debt is generally considered income to the taxpayer if a debt owed to the Federal Government, financial institution, credit union or other creditor was discharged and isn't otherwise excluded from gross income. Cancellation of Debt is reported on Form 1099-C, Cancellation of Debt. Cancellation of Debt is identified on the Case Analysis screen by the literal "1099C" in the DOC TYPE field and the literal "DBTCN" , "INTFG" , or "FMV" in the INCOME TYPE field. Only pursue DBTCN amounts.

# Cancellation of Debt (DBTCN) - Analysis

4.19.3.8.20.1 (10-10-2025) Cancellation of Debt (DBTCN) - Analysis ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡Send PARAGRAPH 160, see Exhibit 4.19.3-7, CP PARAGRAPHS. An IR with a literal of DBTCN may also have an identifiable event code "A" , indicating Bankruptcy or "D" , indicating foreclosure in the IND field under the PAYER section of the IR. These IRs are system deleted. Caution: If the IRs are not system deleted mark with Status Code "D" or "N" . If a DBTCN IR is system deleted ("X" ) and you can determine based on a dollar match or as identified by payer that the IR is reported, DO NOT allow credit for the reported amount(s) against other DBTCN IRs. Comparisons for the following entries must match within $1 or be CLEARLY IDENTIFIED as DBTCN: Form 1040/1040-SR, Schedule 1, line 8c. Schedule C, Part I, line 6. Schedule E, Part I, lines 3 and 4. Schedule F, Part I, lines 3a, 4a, 5b, 6a, and 8; or, Part III, lines 39a - 43. Give credit for amounts computed or explained on an attachment that are identified as being from the same payer. Exception: If the taxpayer reports the full amount of the IR and then zeroes it out, request the taxpayer either get a corrected statement from the payer or submit a completed Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (And Section 1082 Basis Adjustment). Exception: If Form 982 is attached with an entry on line 2, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If there are two DBTCN IRs with identical payer names and money amounts and one IR is for the primary taxpayer and the other is for the spouse, delete one IR. If the taxpayer reduces the reported DBTCN amount by the INTFG (interest forgiven) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the taxpayer indicates the DBTCN isn't taxable under "≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ delete the issue. Consider the DBTCN reported when DBTCN is from a Student Loan and the taxpayer has indicated: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The Federal Emergency Management Agency (FEMA), operating as a division of the U. S. Department of Homeland Security, has a national program to forgive amounts paid to taxpayers (incorrectly or due to fraud) who are unable to repay these amounts. These IRs are valid. Pursue any U/R amounts. If the taxpayer has received DBTCN from a Foreclosure or Repossession and the taxpayer is personally liable (recourse debt), the amount by which the canceled debt exceeds the FMV of the property must generally be reported as ordinary income on Form 1040/1040-SR, Schedule 1, line 8c. If the taxpayer has received DBTCN from a Foreclosure or Repossession and the taxpayer isn't personally liable (non-recourse debt), the gain or loss is computed by comparing the balance of the loan amount with the adjusted basis. Losses are non-deductible, unless the property was used in trade or business or held for investment. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. Losses in excess of gains from sales of property used in trade or business are deductible as ordinary losses. Losses in excess of gains from sales of capital assets held for investment are deductible up to $3,000 ($1,500 if married filing separately). If the taxpayer indicates that the income isn't taxable because they're insolvent, (for example, Form 982, box 1b, is checked or on an attached statement), the taxpayer MUST provide a statement showing the amount of their insolvency. If the taxpayer doesn't provide a breakdown of their assets and liabilities, DO NOT consider them to be insolvent. If no statement is attached send PARAGRAPH 223, see Exhibit 4.19.3-7, CP PARAGRAPHS. Reminder: If sending PARAGRAPH 223 because the taxpayer indicates income isn't taxable because they're insolvent, but doesn't provide a breakdown of their assets and liabilities, "toggle off" PARAGRAPH 72. The taxpayer is considered insolvent if the net liability amount(s) shown on the attached statement is GREATER than the total fair market value of assets immediately prior to the debt cancellation. If the DBTCN IR amount(s) is less than or equal to the insolvency amount, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. If the DBTCN IR amount(s) is more than the insolvency amount, the amount of the taxpayer's insolvency must be considered. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Example: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the taxpayer indicates they did not report the DBTCN income because they filed for Chapter 7 or 11 Bankruptcy, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the taxpayer states that they filed for either Chapter 12 or 13 of the Bankruptcy Code or doesn't indicate the Chapter, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the taxpayer indicates that the cancellation or discharge of debt was due to ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

# DBTCN - Miscellaneous

4.19.3.8.20.2 (09-30-2014) DBTCN - Miscellaneous PARAGRAPH 72 automatically generates when DBTCN is U/R. If DBTCN is U/R, enter the return amount in the RETURN field on the Summary screen.

# Taxable Grants - General

4.19.3.8.21 (11-20-2013) Taxable Grants - General A grant is subsidized financing paid by federal, state, or local programs for energy conservation or production projects, and is income to the recipient. Exception: If there is an indication ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Taxable grants are reported on Form 1099-G, Certain Government Payments. Taxable grants are identified in the Case Analysis screen by the literal "1099G" in the DOC TYPE field and the literal "GRANT" in the INCOME TYPE field.

# Taxable Grants - Analysis

4.19.3.8.21.1 (09-21-2020) Taxable Grants - Analysis Compare GRANT amounts with entries on Form 1040/1040-SR, Schedule 1, line 8z, or an attachment to the return. The amount must match within $1, or Must be identified as grant income If there is an indication ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the payer is the US Department of Agriculture (USDA), compare grant amount(s) with entries on: Schedule F, lines 4a, 4b, 39a, or 39b. Schedule F, lines 8 or 43. The amount must match within $1 or be clearly identified as grants. Note: If a GRANT amount is partially reported on Schedule F, treat as self-employment income. Enter Income Identify Code "PF" or "SF" as applicable in the INC CD field on the Case Analysis screen. Form 4835, lines 3a or 3b.

# Taxable Grants Miscellaneous

4.19.3.8.21.2 (09-01-2004) Taxable Grants Miscellaneous 1099G IR(s) with GRANT amounts may reflect W/H. See IRM 4.19.3.18.1, Withholding - General, for further instructions. Send PARAGRAPH 124, (see Exhibit 4.19.3-7, CP PARAGRAPHS), only if the GRANT is related to education. When taxable grants are U/R, enter the return amount in the RETURN field of the Summary screen.

# Substitute Payments in Lieu of Dividends or Tax-Exempt Interest (PLDIV)

4.19.3.8.22 (09-21-2020) Substitute Payments in Lieu of Dividends or Tax-Exempt Interest (PLDIV) Substitute payments in lieu of dividends or tax-exempt interest are made by a broker who transfers a taxpayer's securities for use in a short sale and receives certain substitute dividend or tax-exempt interest payments on the taxpayer's behalf while the short sale is open. Substitute payments in lieu of dividends or tax-exempt interest are reported on Form 1099-MISC, Miscellaneous Information and are identified on the Case Analysis screen by the literal "99MIS" in the DOC TYPE field and the literal "PLDIV" in the INCOME TYPE field. Compare PLDIV amounts with entries on Form 1040/1040-SR, Schedule 1, line 8z. The amount must match within $1, or Must be clearly identified as substitute payments in lieu of dividends income Send PARAGRAPH 41 when PLDIV are reported as interest or dividends. See Exhibit 4.19.3-7, CP PARAGRAPHS. If PLDIV are U/R, enter the return amount in the RETURN field on the Summary screen.

# Securities Sales - General

4.19.3.8.23 (03-03-2021) Securities Sales - General Securities sales are the proceeds from transactions involving stocks, bonds, options, other debt obligations, commodities, securities future contracts or forward contracts. Securities sales income is reported on Form 1099-B and taxpayers are instructed to include these amounts on Schedule D/Form 8949, Sales and Other Dispositions of Capital Assets. Securities sales is identified on the Case Analysis screen by: DOC TYPE field literal INCOME TYPE field literal Reference "1099B" "STOCK" NA "1099B" "BASIS" IRM 4.19.3.8.23.1.1, Cost Basis - Analysis for additional information. "1099B" "AMD" IRM 4.19.3.8.3.5, Accrued Market Discount (AMD). There are four Category Codes for STOCK: Category 31 contains 100 or fewer IRs with Schedule D filed. Category 39 contains more than 100 IRs with Schedule D filed. Category 61 contains 100 or fewer IRs with no Schedule D filed. Category 79 contains more than 100 IRs with no Schedule D filed.

# Securities Sales - Analysis

4.19.3.8.23.1 (10-10-2025) Securities Sales - Analysis ONLY screen STOCK IRs and other elements of the IR in Category 31, 39, 61 and 79. If the securities are asterisked in categories other than 31, 39, 61 and 79, the system marks the IRs with status code "X" . If appropriate, close the case with PC 2X. Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡" ≡ ≡ ≡ ≡"≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the case is open in any other category, don't screen STOCK IRs. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ A CP 2501 must be the first notice sent if the net U/R from STOCK and BASIS IRs is $100,000 or more; otherwise, issue a CP 2000 Notice. Do not pursue negative STOCK amounts on 1099B IR(s). Generally, 1099B STOCK IRs contain a CUSIP (Committee on Uniform Security Identification Procedures) number. This number is nine characters long, consisting of alpha and/or numeric characters with definition as follows: The first six digits of the CUSIP represent the issuer number and the 4th and 5th and/or 6th positions may contain alpha character(s). The CUSIP number identifies the issuer of the security and the type of security. Alpha characters in the 7th and/or 8th position(s) of the CUSIP number denote fixed income obligation securities. Note: Do not pursue unreported STOCK IRs that contain alpha characters in the 7th and/or 8th positions of the CUSIP number AND the STOCK IR amount is divisible by 50 (for example, the last two digits of the STOCK transaction amount ends in either 00 or 50). When the taxpayer has reported these amounts, the IRs must be taken into consideration when determining the U/R amount. Note: Pursue the IR when it contains all alpha characters in the CUSIP NUM field. Pursue STOCK IRs whose entity includes nontaxable Municipal Bond, tax-free exchange or tax-free unless the CUSIP number meets the conditions provided in (1) above. Some securities sales IR(s) appear to be duplicates because the account numbers, the amounts, AND the source (paper or tape) are identical. DO NOT consider these IR(s) as duplicates if the transaction (sales) dates, CUSIP number or item description shown on the IR(s) are different. Digital assets for example, bitcoin, may be used to pay for goods and/or services and can be held for investment. Digital assets are treated as property for federal income tax purposes. While the treatment of digital assets may share some similarities to traditional securities such as equities and debt instruments, digital assets are not included in the definition of securities in many parts of the Internal Revenue Code. It can be reported by the payer on Form 1099-MISC, Form 1099-NEC, Form W-2, Form 1099-B, or Form 1099-K. Digital Assets received as payment for goods or services when operating a trade or business is generally treated as ordinary income and is generally subject to SE tax. See IRM 4.19.3.23.5.13, NEC and MERCH, for further instructions. Digital Assets held for the investment is generally treated as a capital asset and may result in a gain or loss upon the sale or exchange, similar to stocks, bonds and other investment property. Note: If the taxpayer engaged in any transactions involving digital assets, the digital asset check box at the top of Form 1040/1040-SR will be checked "Yes" . If the U/R is from the sale of digital assets held for the investment, Form 1099-B, and the income isn't reported on the return, send Paragraph 224, see Exhibit 4.19.3-7, CP PARAGRAPHS to advise the taxpayer the income is considered a capital asset. The sale or trade should be reported on Schedule D as a capital gain or loss. Digital assets may be reported or partially reported on: Schedule D, Part I, lines 1a, 1b, 2, or 3 column (d) or Schedule D, Part II, lines 8a, 8b, 9 or 10 Form 8949, Part I, line 1 column (d) or Form 8949, Part II, line 1, column (d) The Tax Cuts and Jobs Acts of 2017 (TCJA) enacted December 2017, allows taxpayers to elect to defer capital gains invested in a Qualified Opportunity Fund (QO Fund). Depending on how long the investment is held, in addition to temporary deferral, taxpayers may exclude some of the capital gain as follows: Temporary Deferral - Generally investors may elect to defer the recognition of capital gains invested into a QO Fund within 180 days of the date of the sale or exchange. An investor must include the remaining deferred gain on the earlier of an inclusion event or by December 31, 2026. Basis Increase - The investors basis is zero at the time of the investment into the QO Fund. If the investor holds the QO Fund for at least 5 years, then the basis of the investment increased by 10 percent of the amount of the deferred gain. If the investor holds the QO Fund for at least 7 years, then the basis of the investment is increased by an additional 5 percent of the amount of the deferred gain. Permanent Exclusion - If the QO Fund investment is a qualifying investment (an investment to which a proper deferral election was made) and the investor held the qualifying investment for at least 10 years, then the investor may adjust the basis in the investment to its fair market value on the date of the QO Fund investment is sold or exchanged. Thus, the appreciation on the investments in the QO Fund won't be subject to tax. Note: The sale or exchange of an investment in a QO Fund is reported on Form 8949 or Schedule D. Compare STOCK (Short-Term) amounts with entries on: Schedule D, Part I, lines 1a, 1b, 2 or 3, column (d). Form 8949, Part I, column (d). Compare STOCK (Long-Term) amounts with entries on: Schedule D, Part II, lines 8a, 8b, 9 or 10, column (d). Form 8949, Part II, line 1, column (d). Comparisons with the following entries must match within $1 or be CLEARLY IDENTIFIED as STOCK: Form 4797, Part II, line 10 and the taxpayer has made a mark-to-market election. Schedule C, Part I, line 1 and the taxpayer made a mark-to-market election. Send PARAGRAPH 117, see Exhibit 4.19.3-7, CP PARAGRAPHS. Form 6252, Part I, line 5. If the taxpayer reported STOCK on either Schedule C or Form 4797 and there is no indication that a mark-to-market election was made, see IRM 4.19.3.8.23.1.2, Day Trader Securities - Analysis. If Form 8949 (or a similar statement) is attached, use the following items when comparing the IRs to the return: Sales date Money amount Item description (brokerage name or actual stock name) Income identify code Accrued Market Discount (AMD) comparisons for the following entries must match within a $1 or be CLEARLY IDENTIFIED as AMD, see IRM 4.19.3.8.3.5, Accrued Market Discount (AMD) for additional information: Schedule B, Part I, line 1. Form 8949, Part I or II, column (g). Schedule D, Part I, line 1b, column (g) or Part II, line 8b, column (g). Individual STOCK IR(s) are screened using the following procedures: Mark the STOCK element with status code "U" . The Adjusted Gross Income window displays. Enter/verify the fields. The COMPUTE SCHEDULE D LOSS window displays. See AUR System Guide, SCHEDULE D LOSS, to determine the correct field entries. Note: If there is U/R STOCK and the taxpayer reports a capital loss on Form 1040/1040-SR, line 7 enter a zero (0) in both fields on the COMPUTE SCHEDULE D LOSS window. It may be necessary to blank out both fields first. This prevents the system from using losses in excess of $3,000 ($1,500 if MFS) to offset U/R Schedule D income. The cursor returns to the IR CD field of the IR where it was before the windows displayed. This field is blank. Note: The Adjusted Gross Income and COMPUTE SCHEDULE D LOSS windows automatically display when a status code "U" is entered the first time. It isn't necessary to subsequently access these windows unless the field entries need to be changed. Enter status code "U" , "R" , or "N" and the reported amount, if applicable, for the STOCK elements. The system uses the information on the COMPUTE SCHEDULE D LOSS window to determine the correct amount of Schedule D income. The total U/R Schedule D income amount is included in the TOTAL AGI CHANGE field on the Case Analysis screen. If you can't match the individual IRs, take the following action: Group the IRs by payer and compare the total to the gross amounts reported by payer on Form 8949, Part 1, line 1, column (d) for Short-Term or Part II, line 1, column (d) for Long-Term. Compare the group total to the total stock reported for that payer. Reminder: Use both short and long-term stock sales amounts when making the comparison. If the group total amount is smaller, consider the stock reported. If the group total amount is larger, consider the difference underreported. If a breakdown of stock isn't shown on the return or an attachment and there is more than one STOCK IR, take the following action: Group by income type or income identify code. Compare the total to the gross amounts reported on Schedule D, refer to table in 5) below Note: The Group function is a tool to assist the TEs in computing the correct U/R amount. It may not be necessary to use the Group function if the correct U/R can be determined without it. Compare the group total to the total stock amount reported. Reminder: Use both short and long-term stock sales amounts when making the comparison. If the group total amount is smaller, consider the stock reported. If the group total amount is larger, consider the difference underreported. Income Identify Code Line Numbers ST Part I, lines 1a, 1b, 2 or 3, column (d) (Short-Term) SD Part II, lines 8a, 8b, 9 or 10, column (d) (Long-Term) If Stock Option/Restricted Stock Statements are included with the return consider them during the screening process. When taxpayers exercise non-statutory (nonqualifying) employee stock options, the gain is reported as ordinary income. Employers include the exercised amount on Form W-2, box 1 and identify the stock option amount in box 12 using code "V" . The "V" Code displays on WAGES IRs with the literal VCODE. Delete fully U/R STOCK IR(s) when: There are 1-4 STOCK IR(s) (per taxpayer) containing the payer name/item description that corresponds with the payer name on a WAGES IR AND Form W-2 box 12 contains an amount with code "V" that is less than or equal to the total of STOCK IR amount(s). Note: See IRM 4.19.3.8.1.1, Wages - Analysis, for additional information regarding exercising of employee stock options. When taxpayers receive restricted stock units (RSU), the value of stock received is reported as ordinary income. Employers include the exercised amount on Form W-2, box 1 and may identify the RSU amount in box 14 with "RSU" , Delete fully U/R STOCK IR(s) when there are STOCK IR(s) containing the payer name/item description that corresponds with the payer name on a WAGE IR. Note: See IRM 4.19.3.8.1.1, Wages - Analysis, for additional information regarding reporting of restricted stock. When it appears the taxpayer sold or exchanged stocks through their employer and you are unable to determine if the stock transactions were exercised as a qualified or nonqualifying stock option send PARAGRAPH 138. See Exhibit 4.19.3-7, CP PARAGRAPHS, for further information. PARAGRAPH 24 automatically generates when STOCK is treated as ordinary income due to loss limitations. If the loss per return is less than $3,000 ($1,500 if MFS), toggle off PARAGRAPH 24 from the Summary screen.

# Cost Basis - Analysis

4.19.3.8.23.1.1 (11-23-2022) Cost Basis - Analysis ONLY screen BASIS IRs in Category 31, 39, 61 and 79. If the cost basis element is asterisked in categories other than 31, 39, 61 and 79, the system marks the IRs with status code "X" . If appropriate, close the case with PC 2X. If the case is open in any other category, don't screen BASIS IRs. The BASIS element displays income identify code of "SC" for Short-term cost basis or "LC" for Long-term cost basis. A CP 2501 must be the first notice sent if the net U/R from STOCK and BASIS IR(s) is $100,000 or more; otherwise, issue a CP 2000 Notice. If the STOCK element on an IR containing BASIS is fully U/R, use the BASIS amount as the reported amount for STOCK and enter status code "N" or "D" on the BASIS element. If the STOCK element on an IR containing BASIS ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡"≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If issuing a notice for STOCK and the BASIS amount was considered in determining the U/R amount, the BASIS element(s) is systemically included on the notice when the STOCK element is marked with a U. Send Indicator S won't be reflected on the BASIS element of the IR on the Case Analysis screen and BASIS won't be displayed on the Summary screen: however, BASIS will be included on the notice.

# Day Trader Securities - Analysis

4.19.3.8.23.1.2 (09-01-2012) Day Trader Securities - Analysis Transactions from trading activities are reported on Form 8949 (when the taxpayer has NOT made a mark-to-market election per IRC 475) or on Form 4797 (when the taxpayer has made a mark-to-market election). The gain or loss from the trading of securities isn't subject to SE tax. Taxpayers who engage in the business of buying and selling securities (such as, a trader or day trader) are allowed to claim business related expenses on Schedule C. Transactions from day trading activities are subject to the $3,000 ($1,500 if married filing separately) limit on capital losses UNLESS the taxpayer made a mark-to-market election (IRC 475). If there is no indication that a mark-to-market election was made and the taxpayer reports securities gains on Schedule C (Part I, line 7 is positive) or Form 4797 (Part II, line 10 is positive) and the securities are equal to or greater than the STOCK IR(s), consider the STOCK reported, otherwise the difference is U/R. If there is no indication that a mark-to-market election was made and the taxpayer reports securities losses on Schedule C (Part I, line 7 is negative) or Form 4797 (Part II, line 10 is negative), take the following actions: If securities reported are equal to or greater than the STOCK IR(s), consider the STOCK reported, otherwise the difference is U/R. Disallow any losses in excess of $3,000 ($1,500 if married filing separately). Ensure that any capital losses reported on Schedule D are accounted for in determining the overall disallowed losses amount. Do not make any adjustments to expenses claimed on Schedule C, Part II, line 28. Do not make any adjustments to SE tax paid. Send PARAGRAPH 118, see Exhibit 4.19.3-7, CP PARAGRAPHS. Issue a CP 2501 if the U/R amount is $100,000 or more, otherwise issue a CP 2000.

# Securities Sales Miscellaneous

4.19.3.8.23.2 (09-21-2020) Securities Sales Miscellaneous STOCK amounts may be taxed on Schedule D at the applicable capital gain tax rate. See IRM 4.19.3.14.2, Schedule D Tax Window, for further instructions. In order for the system to compute the correct tax, the U/R STOCK amount(s) must contain an Income Identify Code. The Income Identify Code for STOCK IRs is defaulted to the appropriate Income Identify Code. The IR displays either a "ST" (Short-Term Gain/Loss) or "SD" (Long-Term Gain/Loss). Do not change the Income Identify Code during screening. See Exhibit 4.19.3-9, Income Identify Codes. 1099B IR(s) with STOCK amounts may reflect W/H. If there is an indication that the securities account is jointly owned with someone other than the taxpayer's spouse or the filing status is 3: Note: See IRM 4.19.3.5.3, Jointly Owned Income, for additional instructions on jointly owned income. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ PARAGRAPH 166 automatically generates when STOCK is U/R. If STOCKs are U/R enter the sum of Schedule D, Part 1, lines 1a, 1b, 2 and 3, column (d) and Part II, lines 8a, 8b, 9 and 10 column (d) in the RETURN field of the Summary Screen.

# Bartering - General

4.19.3.8.24 (09-01-2004) Bartering - General Bartering is an exchange of one taxpayer's property or services for another taxpayer's property or services. The fair market value of property or services received through barter is taxable income. Example: If a doctor agrees to give an accountant a medical exam in exchange for tax return preparation, the fair market value of the medical exam is taxable to the accountant, and the fair market value of the tax return preparation is taxable to the doctor. If these exchanges occurred through a barter exchange, they are reported to IRS on Form 1099-B. Form 1099-B shows the value of cash, property, services, credits, or scrip received by the taxpayer. Bartering is identified on the Case Analysis screen by the literal "1099B" in the DOC TYPE field and the literal "BARTR" in the INCOME TYPE field. Bartering is reflected in the Gross Receipts amount on the Income Comparison screen.

# Bartering - Analysis

4.19.3.8.24.1 (09-21-2020) Bartering - Analysis Bartering income is reported on: Schedule C, lines 1 or 6. Schedule F, lines 1a, 2, 3a, 3b, 7, 8, 9, 37, 42, 43, or 44. (Consider bartering reported here only if you can determine from the payer name or business activity that it is farm related income.) Comparisons for the following entries must match within $1 or be CLEARLY IDENTIFIED as BARTR: Form 1040/1040-SR, Schedule 1, line 8z. Schedule D. Note: Payers may erroneously report securities transactions as bartering since both income types are reported on Form 1099-B. Form 8949. Schedule E, Part I, lines 3 or 4. Form 4835, lines 2a or 2b, 6 or 7. BARTR is generally considered self-employment income. If there is reported BARTR on which the taxpayer should have paid SE tax but did not, SE tax must be computed or recomputed if BARTR is asterisked or a notice is sent for another issue(s). Include the reported BARTR amount in the PRIM/SEC REPORTED SE INC NOT ON SE field(s) on the SE Tax window. See IRM 4.19.3.17.1, Self-Employment Tax. Send reported BARTR IR elements on the notice when adjusting SE tax. If the BARTR amount is entered in the PRIMARY and/or SECONDARY REPORTED SE INCOME field in the SE Tax window in error, an unpostable condition will occur. Do not assess SE tax when BARTR is fully or partially reported on Form 4835, Schedule D, Form 8949, or Schedule E, Part I. Change the Income Identify Code on U/R BARTR IR(s) to "PF" , "SF" , "PB" , or "SB" as applicable. PARAGRAPH 126 automatically generates when BARTR is U/R. If BARTR is U/R, enter the return amount in the RETURN field on the Summary screen.

# Real Estate Transactions - General

4.19.3.8.25 (10-10-2025) Real Estate Transactions - General Real estate transactions are the proceeds from the transfer (sale or exchange) of real estate. Real estate transactions are reported on Form 1099-S, Proceeds From Real Estate Transactions. Taxpayers can exclude up to $250,000 ($500,000 if married filing jointly or qualifying surviving spouse) on the sale of their main home. Any gain in excess of the exclusion amount is reportable income. Real estate transactions are identified on the Case Analysis screen by the literal "1099S" in the DOC TYPE field and the literal "REAL" in the INCOME TYPE field.

# Real Estate Transactions - Analysis

4.19.3.8.25.1 (10-02-2024) Real Estate Transactions - Analysis ONLY screen REAL IR(s) in Category 65. If REAL is asterisked in categories other than 65, the system marks the IRs with status code "X" . If appropriate, close the case with PC 2X. If the case is open because of other income discrepancies, don't screen the non-asterisked REAL IRs. Reminder: Issue a CP 2501 if the U/R amount is $100,000 or more. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Information returns will display a check box labeled PROP/SERVICES if the payer checked Form 1099-S, box 4, to indicate a transferrer received or will receive property or services as part of the consideration. The Tax Cuts and Jobs Acts of 2017 (TCJA) enacted December 2017, allows taxpayers to elect to defer capital gains invested in a Qualified Opportunity Fund (QO Fund). Depending on how long the investment is held, they may be able to permanently defer tax on the eligible capital gain as follows: Temporary Deferral - Generally, investors may elect to defer the recognition of capital gains invested into a QO Fund within 180 days of the date of the sale or exchange. An investor must include the remaining deferred gain on the earlier of an inclusion event or by December 31, 2026. Basis Increase - The investors basis is zero at the time of the investment into the QO Fund. If the investor holds the QO Fund investment for at least 5 years, then the basis of the investment is increased by 10 percent of the deferred gain. If the investor holds the QO Fund investment for at least 7 years, then the basis of the investment is increased by an additional 5 percent of the deferred gain. Permanent Exclusion - If the QO Fund investment is a qualifying investment (an investment to which a proper deferral election was made) and the investor held the qualifying investment for at least 10 years, then the investor may adjust the basis in the investment to its fair market value on the date the QO Fund investment is sold or exchanged. Thus, the appreciation on the investments in the QO Fund won't be subject to tax. Compare REAL amounts with entries on: Form 4797, Sale of Business Property, lines 1a, 1b, 1c, 2(d), 10(d), 20 or attachments. Form 6252, Installment Sale Income, lines 5 or 21. Form 8824, Like-Kind Exchanges, lines 15 or 16. Schedule D, see table below for line numbers, or attachments. The REAL transaction invested in a QO Fund is reported on Form 8949 or Schedule D, refer to table in g) below for line numbers. An attachment to the return that includes purchase and sales price. Form/Schedule Line Numbers Schedule D Part I lines 1a, 1b, 2, or 3, column (d), sales price, or line 4, column (h), gain Schedule D Part II lines 8a, 8b, 9,10 (column (d), sales price, or line 11, column (h), gain Form 8949 Part I or Part II, line 1, column (d) If the amount reported per (6) above is equal to or greater than the REAL IR(s) amounts and is properly carried forward to Form 1040/ Form 1040-SR, Schedule 1, consider the issue resolved. If the amount reported is less, or isn't properly carried forward to Form 1040/ Form 1040-SR, consider the difference U/R. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If unable to identify REAL per (6) above, pursue the entire U/R real estate amount(s). Do not apply any exclusion amount.

# Real Estate Transactions Miscellaneous

4.19.3.8.25.2 (01-28-2022) Real Estate Transactions Miscellaneous If there is a Schedule C attached to the return and the principal business is listed as real estate broker, real estate sales, building, construction, or remodeling; or the principal business activity code indicates related business (for example, but not limited to 233200, 238160, 238900, 531210) consider REAL amount(s) fully reported when: Gross Receipts on Schedule C are larger than the REAL amount(s), The taxpayer reports the exact amount of the IR(s) on Schedule C, line 6, or The taxpayer includes the REAL on an attachment. If U/R REAL should be reported on Schedule D: Enter Income Identify Code "SD" if the U/R REAL amount(s) is determined to be a long-term capital gain/loss, (Schedule D, Part II) or, Enter Income Identify Code "ST" if the U/R REAL amount(s) is determined to be a short-term capital gain/loss, (Schedule D, Part I) or, Note: Income Identify Code "SD" and "ST" allow the system to compute the Schedule D tax if applicable. See IRM 4.19.3.14.2, Schedule D Tax Window, for further instructions. PARAGRAPH 24 automatically generates. If the loss per return is less than $3,000 ($1,500 if MFS), toggle off PARAGRAPH 24 from the Summary See IRM 4.19.3.8.4.5, Capital Gain Distributions - Analysis, for procedures to access the Schedule D window and U/R the capital gain income. If there is U/R Schedule D REAL income and the taxpayer reports a capital loss on Form 1040/1040-SR, line 7: See IRM 4.19.3.8.4.5, Capital Gain Distributions - Analysis, for procedures to access the Schedule D window and underreporting all Schedule D income. Enter a zero (0) in both fields on the COMPUTE SCHEDULE D LOSS window. This prevents the system from using losses in excess of $3,000 ($1,500 if MFS). PARAGRAPH 5 automatically generates when REAL is U/R. If REAL is U/R, enter the return amount in the RETURN field on the Summary screen.

# Refund of Overpaid Mortgage Interest (ROMID) - General

4.19.3.8.26 (09-21-2020) Refund of Overpaid Mortgage Interest (ROMID) - General Refund of Overpaid Mortgage Interest Deduction (ROMID) is a refund of interest the taxpayer paid to a lending institution. If the taxpayer receives a refund in the same year they paid it, they must either: Reduce the mortgage interest deduction claimed on Schedules A, C, E, F, Form 4835, Form 8829, or Claim the refund amount on Form 1040/1040-SR, Schedule 1, line 8z. ROMID amounts are reported to the IRS on Form(s) 1098, box 4 and are displayed on the Information Return window and the Case Analysis screen with the DOC TYPE of "1098" and the INCOME TYPE of "ROMID" .

# ROMID - Analysis

4.19.3.8.26.1 (09-21-2020) ROMID - Analysis Compare ROMID amount(s) with entries on: Form 1040/1040-SR, Schedule 1, line 8z. The amount must match within $1 or must be clearly identified as ROMID. Schedules A, C, E, F, Form 4835, or Form 8829 where it appears the taxpayer netted (subtracted ROMID amount) the mortgage interest amount reported. Note: Use MORT IR amounts for reference even if they are system deleted. If the taxpayer did not itemize deductions in the prior year, the ROMID may still be taxable if the taxpayer claimed a mortgage interest deduction on Schedule(s) C, E, F or Form 4835 or Form 8829. Research may be done on IDRS using CC RTVUE to determine if these Schedules or Forms were filed by the taxpayer and if a mortgage interest deduction was claimed. If the taxpayer did not claim the mortgage deduction on their prior year return, don't pursue the ROMID issue. Consider the difference U/R if the ROMID can't be identified, see (1) above. See IRM 4.19.3.11.2, Mortgage Interest Deduction and Points Paid, for instructions on screening mortgage interest (MORT) amounts. PARAGRAPH 123 automatically generates. If ROMID is U/R, enter the return amount in the RETURN field on the Summary screen.

# Qualified Education Program Payments - General

4.19.3.8.27 (10-03-2017) Qualified Education Program Payments - General Qualified Education Program Payments consist of Qualified Tuition Program (QTP) or Coverdell Education Savings Accounts (CESA) and are reported to IRS on Form 1099-Q, Payments From Qualified Education Programs (Under Section 529 and 530). Amount indicators on the Form 1099-Q reflect Gross Distribution (box 1); Earnings (box 2); and QTB (Basis box 3). Contributions to a CESA are identified by a Form 5498-ESA, Coverdell ESA Contribution Information, and are non-deductible. If the taxpayer claims an IRA deduction and the amount matches a Form 5498-ESA contribution, disallow the deduction. PARAGRAPH 30 automatically generates when the U/R IRA deduction amount is equal to the RCONT, RCONV or ESA element amount. Qualified Education Program Payments are identified on the Case Analysis screen by the literal "1099Q" in the DOC TYPE field and the literals: GRDIS - Gross Distribution EARN - Gross Earnings QTB - Qualified Tuition Basis Only EARN is pursued as U/R. GRDIS and QTB is for information only and is system deleted. Underreported EARN is treated as ordinary income and NOT as earned income for purposes of computing EIC, Child Care Credit, etc.

# Qualified Education Program Payments - Analysis

4.19.3.8.27.1 (10-10-2025) Qualified Education Program Payments - Analysis If there is an indication of a Trustee-to-Trustee transfer (Form 1099-Q, box 4 is checked), the distribution is nontaxable. Do not pursue the issue. If a 5498E IR is present with the literal "EROLV" in the INCOME TYPE field, and has an amount that matches Form 1099-Q GRDIS IR ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ consider the distribution rolled over. If case is in Category 30 and EARN is being pursued, issue a CP 2501. If EARN is being pursued as a secondary issue (in category other than Category 30), issue a CP 2000. Only pursue net positive EARN amounts. When there are multiple 1099Q IR(s), combine positive EARN amounts with any negative EARN amounts. If the combined net EARN is negative, don't pursue the EARN issue. Enter income status code "N" or "D" . 1099-Q IRs display a Distribution Type Indicator on the Case Analysis screen based on the information in Form 1099-Q box 5: IND "1" - Qualified Tuition Program (QTP) from a private educational institution IND "2" - QTP from a State (or state agent/instrumentality) IND "3" - Coverdell ESA Note: If the indicator is blank, the payer did not specify the type of distribution. Consider the IR valid and continue processing. Generally, QTP or CESA distributions are non-taxable if they are less than the designated beneficiary's qualified education expenses. The taxable amount is reported on Form 1040/ Form 1040-SR, Schedule 1, line 8z. Consider the Form 1099-Q distribution(s) reported when: The taxpayer indicates the designated beneficiary's qualified education expenses ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: The taxpayer may complete and attach a Qualified Education Program Distribution and Basis Calculation (QEPD) worksheet to determine the taxable amount of the EARN. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: A 10 percent additional tax may also apply. See IRM 4.19.3.17.5, 10 Percent Tax on Qualified Education Program Payments, for further instructions. If an EARN IR is marked U/R, the GRDIS element(s) is systemically included on the notice. The gross distribution amount is used by the taxpayer to calculate the taxable portion of the earnings. The distribution isn't taxable if the paid expenses minus the expenses claimed for credits exceeds the gross distribution amount. Note: The Send Indicator "S" won't be reflected on the GRDIS element of the IR on the Case Analysis screen and won't be displayed on the Summary screen.

# Qualified Education Program Payments - Miscellaneous

4.19.3.8.27.2 (09-30-2014) Qualified Education Program Payments - Miscellaneous PARAGRAPH 31 automatically generates when EARN is U/R. If EARN is U/R, enter the return amount in the RETURN field on the Summary screen. The CP 2000 displays the discrepancy as "Education Program Payments" .

# Health Saving Accounts (HSA), Archer Medical Savings Account (AMSA) and Medicare Advantage MSA (MAMSA) Distributions - General

4.19.3.8.28 (03-14-2018) Health Saving Accounts (HSA), Archer Medical Savings Account (AMSA) and Medicare Advantage MSA (MAMSA) Distributions - General Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA, is used to report the following distributions: Health Savings Account (HSA). Archer Medical Savings Accounts (AMSA). Medicare Advantage Medical Savings Account (MAMSA). HSA, AMSA and MAMSA distributions are identified on the Case Analysis screen by the literal "99-SA" in the DOC TYPE field and the following literals in the INCOME TYPE field: "SAGD" - Gross distribution "SAEEC" - Earnings on excess contributions Note: The amount of SAEEC is already included in the SAGD amount. Do not pursue the SAEEC amount. Taxpayers must complete Form 8853, Archer MSAs and Long-Term Care Insurance Contracts, Section A to compute the correct amount of taxable "AMSA" distributions and Section B to compute the correct amount of taxable "MAMSA" distributions. Note: Taxpayers are required to file Form 8853 when they receive an "AMSA" or "MAMSA" distribution, even if they have no other filing requirement. Taxpayers must complete Form 8889, Health Savings Accounts, Part II, to compute the correct amount of "HSA" taxable distribution. Note: Taxpayers are required to file Form 8889 when they receive an "HSA" distribution, even if they have no other filing requirement.

# HSA, AMSA and MAMSA Distributions - Analysis

4.19.3.8.28.1 (10-29-2024) HSA, AMSA and MAMSA Distributions - Analysis 99-SA IRs display an Account Type Indicator on the Case Analysis screen based on the information in Form 1099-SA, box 5. This indicator displays in the IND field on the Case Analysis screen and Information Return window(s): IND "1" - Health Savings Account (HSA) IND "2" - Archer Medical Savings Account (AMSA) IND "3" - Medicare Advantage MSA (MAMSA) If a 5498S (HSA, AMSA, or MAMSA) IR is present with either the literal SARLV or SAFMV only in the Income Type field, and it has an amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, consider the distribution to be rolled over. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The system displays the Form 1099-SA distribution code at the bottom of the Case Analysis screen as DISTRIBUTION CD and in the DIST CD field of the Information Return window. Compare 99-SA SAGD amounts with: Indicator With entry on "1" (HSA) Form 8889, line 14a "2" (AMSA) Form 8853, line 6a "3" (MAMSA) Form 8853, line 10 If the amount is less than the IR, pursue the difference. If the amount matches within $1 or is greater, consider the IR reported and see (9) and (10) below. Do not allow credit for amounts identified as HSA, AMSA or MAMSA on Schedule 1, line 8e or 8f, if there are no entries on Form 8889, line 14a or Form 8853 lines 6a or 10 or there is no Form 8889 or Form 8853 attached. Taxable HSA or AMSA distributions received prior to age 65, with a distribution code of 1 or 5 from Form 1099-SA are subject to an additional 20 percent tax. See IRM 4.19.3.17.4, 20 Percent Tax on Archer Medical Savings Account (AMSA) and Health Savings Account (HSA) Distributions, for more information regarding the additional tax. If the distribution code on the IR is "0" , delete the IR and create an IR with either 1 for HSA or 2 for AMSA in the COD IND field (TY 2022) or PGR IND field (TY 2023 and subsequent) and enter DISTRIBUTION CD "1" to propose the additional 20 percent tax for AMSA or HSA. Exception: Do not pursue the additional 20 percent tax on HSA when the box on Form 8889, line 17a is checked, or on AMSA when the box on Form 8853, line 9a is checked, or 50 percent tax on MAMSA when the box on Form 8853, line 13a, is checked. See IRM 4.19.3.17.4, 20 Percent Tax on Archer Medical Savings Account (AMSA) Health Savings Account (HSA) Distributions. Taxable MAMSA distributions from Form 1099-SA are subject to an additional 50 percent tax. If the distribution code on the IR is 0, delete the IR and create an IR with 3 in the r COD IND field (TY 2022) or PGR IND field (TY 2023 and subsequent) and enter DISTRIBUTION CD 1 to propose the additional 50 percent tax for MAMSA. Note: If the taxpayer did not address the additional 50 percent tax on MAMSA, manually determine the additional 50 percent tax and enter the amounts in the OTHER MISCELLANEOUS TAXES field of the Total Other Taxes window. Send PARAGRAPH 212, see Exhibit 4.19.3-7, CP PARAGRAPHS. The taxpayer includes the additional taxes on Schedule 2, line 17c, 17d, 17e, or 17f. See IRM 4.19.3.17.9, Miscellaneous Other Taxes, for further information. If the taxable HSA distributions are listed on Form 8889, line 16, but are not added to the taxpayer's AGI, consider the Form 8889, line 16, amount as U/R and send PARAGRAPH 80. See Exhibit 4.19.3-7, CP PARAGRAPHS. Note: If necessary, create an IR for the taxable HSA distribution amount. If the taxable AMSA or MAMSA distributions are listed on Form 8853, line 8 or line 12, but are not added to the taxpayer's AGI, consider the Form 8853, line 8 or line 12, amount as U/R and send PARAGRAPH 197. See Exhibit 4.19.3-7, CP PARAGRAPHS. If necessary, create an IR for the taxable MSA distribution amount. See (7) above when pursuing taxable MAMSA and/or the additional 50 percent tax. If the taxpayer reduces their gross medical expenses on Schedule A by the amount of the 99-SA IR instead of using Form 8853 or Form 8889, consider the 99-SA IR reported. PARAGRAPH 82 automatically generates when HSA is U/R and Form 8889 isn't attached to the tax return. PARAGRAPH 55 automatically generates when AMSA or MAMSA is U/R and a Form 8853 isn't attached to the tax return. PARAGRAPH 186 automatically generates when AMSA and/or MAMSA distributions are adjusted. PARAGRAPH 136 automatically generates when HSA distributions are adjusted.

# Long-Term Care Benefits (LTC) - General

4.19.3.8.29 (09-21-2020) Long-Term Care Benefits (LTC) - General Long Term Care Benefits are reported on Form 1099-LTC, Long-Term Care and Accelerated Death Benefits. LTC is identified on the Case Analysis screen by the literal "99LTC" and the literal "LTCGB" (long term care gross benefits) or "LTCAB" (accelerated death benefits) in the INCOME TYPE field. Taxpayers must complete Form 8853, Archer MSAs Section C to compute the correct amount for LTC, reported on Schedule 1, line 8e to identify the income.

# Long-Term Care Benefits (LTC) - Analysis

4.19.3.8.29.1 (10-06-2022) Long-Term Care Benefits (LTC) - Analysis Form 1099-LTC contains the following information: Box 1 - Gross long-term care benefits paid Box 2 - Accelerated death benefits paid Box 3 - Payment Type Box 4 - Qualified Contract Box 5 - Illness Type 99LTC IRs display a Payment Type indicator on the Case Analysis screen, based on the information from Form 1099-LTC, box 3: "0" if the Per Diem and Reimbursement boxes are blank "1" if the Per Diem box is checked "2" if the Reimbursement box is checked "3" if both boxes are checked 99LTC IRs display an Illness Type indicator on the Case Analysis screen, based on the information from Form 1099-LTC, box 5: "0" if the Chronically Ill and Terminally Ill boxes are blank "1" if the Chronically Ill box is checked "2" if the Terminally Ill box is checked "3" if both boxes are checked 99LTC IRs displays the Payment Type and Illness Type as a two digit indicator: The 1st digit indicator represents the Payment Type The 2nd digit indicator represents the Illness Type Example: The 99LTC IR contains an indicator "21" . The "2" in the first position represents a Payment Type of "Reimbursement" and the "1" in the second position represents an Illness Type of "Chronically" . Taxpayers use Form 8853 to determine the taxable portion of either LTCGB or LTCAB paid on a per diem basis. Note: Taxpayers are instructed not to include per diem accelerated death benefits paid because the insured was terminally ill. Do not pursue unreported LTCGB or LTCAB when the payment indicator is "2" (reimbursement). Do not pursue unreported LTCAB when the illness indicator is "2" (terminally ill). Compare the LTCGB amount with the entry on Form 8853, line 17 and the LTCAB amount with the entry on Form 8853, line 19. If the amount is less than the IR, pursue the difference. If the amount matches within $1, consider the LTC IR reported. If LTCGB or LTCAB are listed on Form 8853, line 26, but are not added into the taxpayer's AGI: Consider the Form 8853, line 26 amount U/R. Note: If necessary, create an IR for the taxable LTCGB or LTCAB amount. Send PARAGRAPH 197 to explain the adjustment to the taxpayer. See Exhibit 4.19.3-7, CP PARAGRAPHS. If the taxpayer reduces their gross medical expenses on Schedule A by the amount of the LTCGB or LTCAB IR element(s) instead of using Form 8853, consider the LTCGB or LTCAB reported. PARAGRAPH 55 automatically generates when LTCGB is U/R and Form 8853 isn't attached to the tax return. See Exhibit 4.19.3-7, CP PARAGRAPHS. PARAGRAPH 187 automatically generates when LTCGB or LTCAB are U/R. See Exhibit 4.19.3-7, CP PARAGRAPHS.

# Reemployment Trade Adjustment Assistance (RTAA) Payments - General

4.19.3.8.30 (09-30-2014) Reemployment Trade Adjustment Assistance (RTAA) Payments - General RTAA are payments received from a state agency under the Demonstration Project for Reemployment Trade Adjustments Assistance for older workers and must be included as income. RTAA payments are reported on Form 1099-G. RTAA payments are identified on the Case Analysis screen by the literal "1099G" in the DOC TYPE field and the literal "RTAA" in the INCOME TYPE field.

# Reemployment Trade Adjustment Assistance (RTAA) Payments - Analysis

4.19.3.8.30.1 (09-21-2020) Reemployment Trade Adjustment Assistance (RTAA) Payments - Analysis Compare RTAA amounts with entries on Schedule 1, line 8z or an attachment to the return. The amount must match within $1, or Must be identified as RTAA payments PARAGRAPH 132 automatically generates when RTAA is U/R. See Exhibit 4.19.3-7, CP PARAGRAPHS.

# Foreign Source Income

4.19.3.8.31 (10-10-2025) Foreign Source Income Foreign source income is income derived from sources outside of the United States. Foreign source IRs are worked in AUR. U.S. taxpayers must report income from all sources, including those sources outside (foreign source) the U.S., unless the income is exempt from U.S. tax. This is true whether or not the taxpayer received a Form(s) W-2 or a Form(s) 1099 from the foreign payer(s). This applies to earned income (such as, wages and tips) and unearned income (such as, interest, dividends, capital gains, pensions, rents, royalties). Under certain tax treaties, foreign governments supply the IRS with information regarding income U.S. taxpayers received from sources in their countries. This information is converted into applicable IRs (Form W-2 and Form 1099) depending on the type(s) of income. If the taxpayer attaches Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b) to their return, review box 3 which lists payer information and box 6 listing income exempt from U.S. Tax. If IRs (Form W-2, Form 1099, etc) match the income on Form 8833, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Caution: The taxpayer MUST include this when they initially filed their return in order for the claim to be valid. If the taxpayer includes Form 8833 as a response, issue a Letter 2626-C to advise the taxpayer Form 8833 can only be accepted during original processing.

# U.S. Citizens Living Abroad - General

4.19.3.8.32 (10-06-2022) U.S. Citizens Living Abroad - General A U.S. citizen or resident alien's worldwide income is generally subject to U.S. income tax, regardless of where the taxpayer is living. U.S. citizens and resident aliens living outside of the United States are generally allowed the same exemptions, deductions, and credits as those living in the United States. However, if the taxpayer chooses to exclude their foreign earned income and/or housing cost amounts, no deduction, exclusion, or credit is allowed for any exclusion, deduction, or credit that is associated with the amounts excluded. If the taxpayer excludes their foreign earned income, the taxpayer can't claim the additional child tax credit. If the taxpayer excludes their income on Form 2555, Foreign Earned Income, they can't take a foreign tax credit (Form 1116, Foreign Tax Credit) for the foreign taxes paid on the same excluded income.

# U. S. Citizens Living Abroad - Analysis

4.19.3.8.32.1 (10-10-2025) U. S. Citizens Living Abroad - Analysis When there is an apparent wage discrepancy, compare the amount on Form 2555, line 19 with the entry for wages on Form 1040/1040-SR. See IRM 4.19.3.8.1.1, Wages - Analysis. If the reported wages shown on Form 1040/1040-SR is equal to or larger than the amount shown on Form 2555, line 19, consider the wages reported. If the reported wages shown on Form 1040/1040-SR is less than the amount shown on Form 2555, line 19, consider the difference U/R. Send PARAGRAPH 244, see Exhibit 4.19.3-7, CP PARAGRAPHS. Caution: Taxpayers may receive non-cash income in addition to awards, bonuses, commissions, as allowances or reimbursements to cover expenses; all of these are considered earned income. This includes the fair market value of property or facilities provided for lodging, meals, use of car, cost of living, overseas differential. These items are reported on lines 21 a - d and lines 22 a - g of Form 2555. Any amounts shown here may account for the U/R income. Wages received by employees of the United States government, or any of its agencies, don't qualify for the foreign earned income exclusion under Section 911. If the taxpayer doesn't report their earned income or only reports their income partially, pursue the issue. These employees include: Military personnel - including military personnel assigned to NATO or any other international organization State Department employees IRS employees DEA employees, etc. Amounts paid by the U.S. government or its agencies to persons who are not their employees may qualify for foreign earned income exclusion or deduction. If unsure, correspond with the taxpayer for a clarification. When there is an apparent NEC discrepancy, compare the amount on lines 20a, 20b, and/or 23 of Form 2555 with the entry for NEC on the Form 1040/1040-SR. See IRM 4.19.3.8.6.1, NEC - Analysis. If the amount of NEC reported on Form 1040/1040-SR is equal to or larger than the amount(s) shown on lines 20a, 20b, and/or 23 of Form 2555, consider NEC reported. If the amount of NEC reported on Form 1040/1040-SR is less than the amount(s) shown on lines 20a, 20b and/or 23 of Form 2555, consider the difference U/R. Caution: If the taxpayer has received reimbursement for housing expenses compare any apparent U/R amount with the entry on line 34 of Form 2555. The amount shown here may account for the discrepancy. Taking the foreign earned income exclusion doesn't eliminate the requirement to pay SE tax on NEC type income. See IRM 4.19.3.17.1, Self-Employment Tax, for further instructions. As a general rule, self-employed persons who are subject to dual taxation will only be covered by the social security system of the country where they reside. The United States has entered into bilateral Social Security agreements with certain foreign countries to eliminate dual coverage and dual contributions to the social security system for the same work. A bilateral Social Security agreement generally makes sure that SS taxes (including SE tax) are only paid to one country. For a list of countries, see IRM 3.22.3.163.3, Correction Procedures - EC 209, Form 1040/1040-NR. To establish exemption from U.S. SE tax, the taxpayer must obtain a statement from the authorized official or agency of the foreign country containing the following information: Name and address of taxpayer Taxpayer identification number The fact that the self-employment earnings (or employment earnings in the case of employed clergymen) are covered by an agreement between that country and the United States and are subject to the taxes or contributions of that country's social security system and The effective date of the agreement The taxpayer must attach a copy of the statement to the tax return for each year exemption from SE tax is claimed. The taxpayer must also enter Exempt, see attached statement on the line for SE tax on the return. ONLY foreign earned income may be excluded under Section 911. If the taxpayer has not reported all non-earned income (such as, interest, dividends, pensions), ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ In addition to the foreign earned income exclusion, taxpayers may take a foreign housing exclusion or foreign housing deduction. They can't take both the foreign housing exclusion and foreign housing deduction unless they are self-employed. If the housing cost exclusion is claimed, the amount from Form 2555, line 36, is added to the foreign earned income exclusion claimed on Form 2555, line 42. When the housing cost deduction is claimed, the taxpayer will enter the amount from Form 2555, line 50, to Schedule 1, line 24j and Form 4563, line 15. This amount should be used when entering an amount in the AGI window. Note: Scanned paper cases will be entered manually in the AGI window. If the taxpayer has claimed the foreign earned income exclusion, the foreign housing cost exclusion, and the foreign housing deduction, disallow the housing deduction amount if the taxpayer isn't self-employed. See IRM 4.19.3.5.9, Miscellaneous, for further instructions on how to disallow the deduction. When both the foreign earned income exclusion and foreign housing exclusion are present, the amount claimed on Schedule 1, line 8d and 24j may not exceed the amounts shown in the table below. Any amount identified on Schedule 1, line 8d and 24j as coming from Form 2555 MUST be considered when calculating the MAGI and base tax. TY 2022 TY 2023 TY 2024 $112,000 ($224,000 if married filing jointly) $120,000 ($240,000 if married filing jointly) $126,500 ($253,000 if married filing jointly) Income excluded can't be taken into account when figuring non-refundable credits. When entering earned income on Form 2441, Child and Dependent Care Expenses, taxpayers should be entering total earned income minus the foreign earned income exclusion amount. If all earned income is excluded on Form 2555, then the credit can't be taken. See IRM 4.19.3.16.2, Credit for Child and Dependent Care Expenses. Taxpayers can take a credit for taxes paid to a foreign government on foreign income by filing a Form 1116, Foreign Tax Credit. However, they can't take this credit on income that is excluded from tax under the foreign earned income exclusion, the foreign housing cost exclusion, or the possession exclusion, discussed later. If the taxpayer has paid tax on both earned and certain unearned income, a separate Form 1116 must be filed for each category of income. Also, if the taxpayer is filing a Form 6251, Alternative Minimum Tax - Individuals, a separate Form 1116 must be filed notating "Alt Min" . To compute the foreign tax credit, the taxpayer will complete the top portion to indicate the category of income. If the tax was paid to only one country, then lines 1 - 6 in column A contains entries as appropriate. If tax was paid to more than one country, then lines 1 - 6 in Columns B and C should be completed as appropriate. The taxpayer is instructed to include gross foreign source income on line 1a of the Form 1116. Taxpayers SHOULD NOT include any excluded amounts here (Form 2555 amounts). If the taxpayer has entered gross income minus excluded income on line 1a and has computed the rest of the form, allow the credit as shown on Form 1116, line 32. If the taxpayer has entered gross income plus the excluded income on line 1a and has computed the rest of the form, disallow the excluded income amount and manually recompute the rest of the form. Enter the recomputed Schedule 3, line 1, amount in the recomputed side of the Form 1116 field on the Non-Refundable Credits window. Refer to AUR System Guide, Non-Refundable Credits, for further instructions.

# Foreign Earned Income Exclusion

4.19.3.8.32.2 (10-10-2025) Foreign Earned Income Exclusion Taxpayers claiming the foreign earned income exclusion can't claim the earned income credit. See IRM 4.19.3.18.3, Earned Income Credit, for further instructions. The foreign earned income exclusion allows taxpayers to exclude all of their earned income for personal services performed in a foreign country or countries, up to the amounts listed in the table below, during a period in which their "tax home" is in a foreign country and they meet other requirements (either the bona fide residence test or the physical presence test). This exclusion is provided under section 911 of the Internal Revenue Code (IRC). TY 2022 TY 2023 TY 2024 $112,000, ($224,000 if married filing jointly) $120,000 ($240,000 if married filing jointly) $126,500 ($253,000 if married filing jointly) For this purpose, foreign earned income is compensation for personal services performed in a foreign country, such as: Salaries and wages Commissions Bonuses Professional fees Tips Foreign unearned income that can't be excluded is: Dividends Interest Capital Gains Gambling Winnings Alimony Social Security Benefits Pensions and annuities Variable income that may or may not be excluded is: Business profits Royalties Rents Taxpayers who excluded foreign earned income on Form 2555, must calculate their base tax at the same tax rate as if they did not exclude income. Enter/Verify the FOREIGN EARNED INCOME/HOUSING field, from Form 2555, line 45 and/or 50, in the AGI WINDOW. PARAGRAPH 84 automatically generates if the case is virtual. Manually select if the tax return is paper. Toggle off PARAGRAPH 84 in the Summary Screen if not applicable. See Exhibit 4.19.3-7, CP PARAGRAPHS. If the taxpayer excludes income on Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa, you must manually calculate the new base tax. Bona fide residents of American Samoa are not subject to the higher tax rate for excluding earned income. Enter the manually derived new base tax in the MANUAL SCHEDULE D TAX field in the Schedule D Tax window (if the taxpayer used the Schedule D tax method) or the MANUAL SCH J TAX field in the ADDITIONAL TAXES window. When the taxpayer's response includes the Foreign Earned Income Tax worksheet, it may be necessary to manually override the system derived base tax. If applicable, enter the manually derived new base tax in the: MANUAL SCHEDULE D TAX field in the Schedule D Tax window (if the taxpayer used the Schedule D tax method) or MANUAL SCH J TAX field in the ADDITIONAL TAXES window.

# Resident/Non-Resident Aliens (R/NR)/(Dual Status)

4.19.3.8.33 (10-07-2019) Resident/Non-Resident Aliens (R/NR)/(Dual Status) Under U.S. tax laws, resident aliens are generally taxed in the same manner as U.S. citizens. Accordingly, a resident alien's income is taxed from all sources, both within and outside the United States. Non-resident aliens, however, are generally taxed only on their income from sources within the United States. Special rules apply to the taxation of a nonresident alien's income. A nonresident alien's income that is effectively connected with a U.S. trade or business (which generally includes personal services income) is taxed on a net basis at graduated rates. A nonresident alien's income that isn't effectively connected with the U.S. trade or business (such as passive investment income) is taxed on a gross basis at a flat rate of 30 percent unless a lower treaty rate applies. Under U.S. tax laws, lawful permanent residents (green card holders) are considered resident aliens until that status under the immigration laws is either taken away or is administratively or judicially determined to have been abandoned. Social security benefits paid to a lawful permanent resident/green card holder are not subject to the gross basis tax applicable to nonresident aliens, unless the taxpayer claims benefits for the tax year under an income tax treaty as a nonresident alien. The Social Security Administration (SSA) may erroneously withhold tax from the Social Security benefits paid to green card holders because they have a foreign address. The withholding is refundable by the SSA or IRS. The SSA will refund erroneously withheld taxes if the refund can be processed during the same calendar year that the taxes were withheld. Cases for which the SSA was unable to issue a timely refund or cases that were not identified during initial processing could surface in AUR. If the return includes all of the following, don't pursue apparent O/C W/H discrepancies: A copy of the Form SSA-1042S, Social Security Benefit Statement. A copy of the "green card" . A signed statement that indicates the taxpayer is a U.S. lawful permanent resident/green card holder, the SSA taxes were withheld erroneously, their green card status has not been revoked nor administratively or judicially determined to have been abandoned; and they did not claim benefits for the tax year as a non-resident alien under an existing income tax treaty. Note: A U.S. lawful permanent resident who is also a resident of a treaty country (in other words, a dual resident) can claim to be treated as a resident of the treaty country under the "tie-breaker rules" of a treaty and claim treaty benefits as a nonresident alien of the United States. If such individuals elect to claim treaty benefits, they will be treated as nonresident aliens for purposes of computing their U.S. tax liability and for purposes of withholding. Nonresident aliens are subject to withholding on their social security benefits, unless they are exempt from tax under a treaty. See Pub 915, Social Security Benefits and Equivalent Railroad Retirement Benefits. Exception: The copy of the green card and signed statement requirements in (b) and (c) above don't apply to bona fide residents of American Samoa. Note: If the taxpayer filed a complete return, the W/H will have been allowed during initial processing.

# Adjustments to Income

4.19.3.9 (10-02-2024) Adjustments to Income The following sections contain instructions for recalculating adjustment action(s) taken on the taxpayer's individual tax return. Screen adjustment(s) that are worked through a computation window after analyzing all other potentially discrepant income types. When subsequent analysis changes the total AGI field, reselect the windows. Do not pursue underclaimed adjustments to income. Exception: If screening EWPEN, see IRM 4.19.3.9.5.1, EWPEN - Analysis, for further information.

# Educator Expenses

4.19.3.9.1 (10-10-2025) Educator Expenses Educators who work at least 900 hours during a school year as a teacher, instructor, counselor, principal, or aide, may deduct qualified out-of-pocket expenses for books and classroom supplies. If married filing jointly, and both were eligible educators, they can each claim the deduction. However, neither spouse can deduct more than their qualified expenses. The allowable qualified expenses is $300 with a maximum deduction of $600 for married filing jointly returns. The deduction is reported on Schedule 1, line 11. The deduction is available for those in public or private elementary or secondary schools (including kindergarten). Educators must reduce qualifying expenses by any non taxable earnings received from Coverdell ESAs, Qualified Tuition Programs or education savings bonds.

# Health Savings Account (HSA) or Archer Medical Savings Account (AMSA) Deduction

4.19.3.9.2 (10-02-2024) Health Savings Account (HSA) or Archer Medical Savings Account (AMSA) Deduction Generally contributions made to an Archer Medical Savings Account (AMSA) or Health Savings Account (HSA) are deductible if they are made by the taxpayer. AMSA and HSA contributions are reported on Form 5498-SA. AMSA and HSA contributions are identified on the Case Analysis screen by the literal "5498S" in the DOC TYPE field and one of the following literals in the INCOME TYPE field: "SACON" - Contribution "SACC" - Current Contribution "SAFC" - Future Contribution "SARLV" - Rollover (system deleted) "SAFMV" - Fair Market Value (system deleted) The 5498S IRs display a Type Indicator on the Case Analysis screen based on the information in Form 5498-SA box 6: IND "1" - Health Savings Account (HSA) IND "2" - Archer Medical Savings Account (AMSA) IND "3" - Medicare Advantage MSA (MAMSA) The taxpayer claims the allowable AMSA deduction on the dotted portion of Schedule 1, line 23. The taxpayer must complete Form 8853, Medical Savings Accounts and Long-term Care Insurance Contracts, Part I to calculate the amount entered on Schedule 1, line 23. If Schedule 1 isn't attached, refer to Form 8853, line 2. The taxpayer claims the allowable HSA contribution/deduction on Schedule 1, line 13. The taxpayer must complete Form 8889, Health Savings Accounts (HSAs), Part I to calculate the amount entered on Schedule 1, line 13. AMSA deductions must be substantiated. Substantiation is a 5498S IR with an AMSA amount (SACON, SACC and/or SAFC) or an attachment to the tax return (for example, Form 5498-SA or a bank statement). Note: The taxpayer can't deduct employer contributions to an AMSA, which are reflected as an "R" coded amount in box 12 of Form W-2. If no AMSA IR(s) is present, create an AMSA IR with a dollar amount of zero (0) and enter "2" in the COD IND field (TY 2022) or PGR IND field (TY 2023 and subsequent) of the Create Information Return window. PARAGRAPH 185 automatically generates when the AMSA amount is reduced/disallowed because the amount of AMSA doesn't match the amount claimed by the taxpayer or due to no substantiation. See Exhibit 4.19.3-7, CP PARAGRAPHS. HSA deductions on Schedule 1, line 13, must be substantiated. Substantiation is a 5498S IR with an HSA amount (SACON, SACC and/or SAFC) or an attachment to the tax return (for example, Form 5498-SA or a bank statement). If no HSA IR(s) is present, create an HSA IR with a dollar amount of zero (0) and enter "1" in the COD IND field (TY 2022) or PGR IND field (TY 2023 or subsequent) of the Create Information Return window. The taxpayer can't deduct employer contributions to an HSA, which are reflected as a "W" coded amount in box 12 of Form W-2. If the Form W-2 box 12 amount matches Form 8889 line 2, disallow the deduction. PARAGRAPH 135 automatically generates when the HSA amount is reduced/disallowed because the amount of HSA doesn't match the amount claimed by the taxpayer or due to no substantiation. See Exhibit 4.19.3-7, CP PARAGRAPHS. Note: Toggle off PARAGRAPH 135 when the taxpayer deducted employer contributions to an HSA "W" coded amount in box 12 of Form W-2 and send PARAGRAPH 246, see Exhibit 4.19.3-7, CP PARAGRAPHS. A CP 2000 is issued for the deduction only if the taxpayer claims a larger deduction than they're entitled to take. Do not allow any additional deduction if the HSA/AMSA contribution was not fully claimed. If HSA/AMSA contribution/deduction and SS/RR are issues on the same case, compute the SS/RR after screening the HSA/AMSA issue. If the HSA/AMSA is U/R, enter the return amount in the RETURN field on the Summary screen.

# Simplified Employee Pension (SEP)/SIMPLE - General

4.19.3.9.3 (09-21-2020) Simplified Employee Pension (SEP)/SIMPLE - General SEP/SIMPLE (Savings Incentive Match Plan for Employees) contributions are reported to IRS on Form 5498. SEP/SIMPLE contributions are identified on the Case Analysis screen by the literal "5498" in the DOC TYPE field and one of the following literals in the INCOME TYPE field. "SEP" - the amount the taxpayer contributed to their SEP account. "SIMPL" - the amount the taxpayer contributed to their SIMPLE account. "FMV" - the fair market value of a SEP account. Disregard the FMV literal and amount. The system automatically assigns status code "X" to FMV amounts on 5498 IRs. "ROLVR" - rollover. This amount can't be claimed as a deduction by the taxpayer. "LFINS" - life insurance. This amount can't be claimed as a deduction by the taxpayer. Life insurance isn't included in the CONTR amount on 5498 IRs. The system automatically assigns status code "X" to life insurance amounts on 5498 IRs. Sole Proprietors deduct SIMPLE contributions they make for common-law employees on Form 1040, Schedule C and Schedule F. Partnerships deduct them on Form 1065 and Corporations deduct them on Form 1120, U.S. Corporation Income Tax Return, or Form 1120-S, U.S. Income Tax Return for an S Corporation. Sole Proprietors and partners deduct SIMPLE contributions for themselves on Schedule 1, line 16. A SIMPLE is a tax-favored retirement plan that certain small employers (including self-employed individuals) can set up for the benefit of their employees. ALL contributions under a SIMPLE IRA plan MUST be made to SIMPLE or SIMPLE ROTH IRAs, not to any other type of IRA. Compensation for the purpose of a SIMPLE IRA generally includes: Wages, tips, and other pay from their employer that is subject to W/H. Deferred amounts elected under any 401(k) plans, 403(b) plans, government (section 457(b)) plans, SEP plans, and SIMPLE plans.

# SEP/SIMPLE - Analysis

4.19.3.9.3.1 (10-25-2023) SEP/SIMPLE - Analysis SEP/SIMPLE plans allow sole-proprietors and small business owners to make contributions to a retirement plan for both themselves, and their employees. Taxpayers deduct SEP/SIMPLE contributions for their employees as an expense on Schedule C or F. Taxpayers deduct SEP/SIMPLE contributions for themselves on Schedule 1, line 16. Only pursue SEP/SIMPLE U/R issues when contributions are paid to themselves and the taxpayer deducts an amount on Schedule 1, line 16 and the taxpayer doesn't report net earnings subject to SE tax (for example, Schedule C, F or SE isn't present), or wages, tips and other pay from their employers, which is subject to W/H, or deferred amounts elected under 401(k) plans, 403(b) plans, government (section 457(b)) plans, SEP plans and SIMPLE plans: Note: Taxpayers who report partnership income from Form 1065, Schedule K-1 are entitled to deduct SEP contributions provided that the partnership income is included on Schedule SE and/or the applicable SE tax has been reported. Manually select the SEP Adjustment window. Enter/Verify the original Schedule C line 31, Schedule F line 34, and/or Schedule SE Part I, line 3 amount(s) in the PRIMARY/SECONDARY SE INCOME field. Enter/Verify the Primary/Secondary portion of the original Form 1040 Schedule 1, line 16 amount in the PRIMARY/SECONDARY SEP/KEOUGH DED field. If necessary, create a 5498 SEP IR for zero (0) in order to gain access to the window. The system computes the allowable SEP/SIMPLE deduction based on the entries in the SEP Adjustment window. See AUR System Guide, SEP Adjustment window. Reminder: When pursuing SEP deduction, the SEP Adjustment window must be selected in the proper case analysis sequence as described in IRM 4.19.3.4.2, Case Analysis Screen. If the SEP Adjustment window is selected out of order, a message displays describing the proper sequence. Note: If the SEP/SIMPLE deduction isn't fully disallowed, ungroup the IR(s) and mark them with status code "N" or "D" . If the taxpayer doesn't report self-employment income AND the SEP/SIMPLE deduction corresponds to a 5498 CONTR IR(s), consider that the taxpayer reported their IRA deduction on the wrong line. Payers identify only SEP and SIMPLE contributions on Form 5498. If 5498 IR isn't present and the taxpayer is self-employed (Schedule C, F or SE is present), ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the filing status is 2 and only one spouse reports self-employment income, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If, after reviewing the return and any supporting documentation, the SEP deduction appears large, unusual or questionable, consult with the team leader. If necessary, consult with an Exam representative to decide the appropriate action(s) to take (such as, continue processing, refer to Exam). If Exam selects the case, follow normal Exam referral procedures. PARAGRAPH 146 automatically generates when SEP/SIMPLE deductions are disallowed (the SEP per return is reduced to zero). See Exhibit 4.19.3-7, CP PARAGRAPHS. If SEP/SIMPLE is U/R enter the return amount in the RETURN field on the Summary screen. For Responses, see IRM 4.19.3.9.6.3, Traditional IRA, or SEP Deduction - Responses.

# Self-Employed Health Insurance Deduction (SEHID)

4.19.3.9.4 (09-21-2020) Self-Employed Health Insurance Deduction (SEHID) A taxpayer may be able to deduct up to 100 percent of the amount paid for health insurance on Schedule 1, line 17. PARAGRAPH 147 automatically generates when there is an amount on Schedule 1, line 17, and due to U/R processing there is a change to self-employment income or SE tax. See Exhibit 4.19.3-7, CP PARAGRAPHS.

# SEHID - Responses

4.19.3.9.4.1 (10-10-2025) SEHID - Responses If the taxpayer responds that the SEHID needs to be adjusted AND provides the total amount they paid for health insurance coverage, take the following action: Compare the amount the taxpayer paid for their health insurance coverage with the revised business profit and any other earned income (including wages from S Corporation), minus deductions claimed on Schedule 1, line 16 and 17, as filed or adjusted due to U/R processing. Note: The taxpayer may respond with Form 7206, Self-Employed Health Insurance Deduction, which is used to determine their self-employed health insurance deduction as reported on Schedule 1, line 17. The smaller of the two amounts is the new SEHID. Compare the new SEHID to the amount originally claimed. If the SEHID changed, use the Misc Adjust/Sch C Exp window to reflect the difference and send PARAGRAPH 259. See Exhibit 4.19.3-7, CP PARAGRAPHS. If the taxpayer doesn't provide the amount they paid for self-employed health insurance coverage, correspond for this information.

# Early Withdrawal Penalty (EWPEN) - General

4.19.3.9.5 (09-30-2018) Early Withdrawal Penalty (EWPEN) - General Early withdrawal penalty is a reduction of interest income due to premature withdrawal of capital on a time savings account. This penalty can exceed the amount of interest paid. Early withdrawal penalty is reported on Form 1099-INT and Form 1099-OID. Early withdrawal penalty is identified on the Case Analysis screen by the literal "99INT" in the DOC TYPE field and the literal "EWPEN" in the INCOME TYPE field.

# EWPEN - Analysis

4.19.3.9.5.1 (10-10-2025) EWPEN - Analysis Delete 99INT IRs when: There is an EWPEN amount but no INT amount, or There are EWPEN and W/H amounts, but no INT amount. Group all EWPEN amounts and compare the total with entries on: Schedule 1, line 18. Schedule A, as an interest expense deduction. Schedule C, Part II, line 16b if a deposit arrangement is entered into as part of a trade or business. Schedule B, Part I. The taxpayer may reduce the interest reported on Schedule B by the EWPEN amount and report the difference. The taxpayer might also reduce the interest income by the amount of EWPEN and report the net amount on Form 1040/1040-SR, line 2a. Consider the EWPEN fully claimed. If the interest reported on the return matches the 99INT IR(s) and the taxpayer claims more early withdrawal penalty than EWPEN amounts shown on the 99INT IR(s), Note: If none of the 99INT IR(s) contain EWPEN, create a 99INT IR for zero (0) amount of EWPEN. Disallow the O/D amount. Mark the reported 99INT IR(s) with "S" . If the taxpayer claims a deduction for EWPEN and there is no IR to substantiate the EWPEN claimed, disallow the deduction. Create a 99INT IR for zero (0) amount of EWPEN. If the taxpayer has not claimed the full amount of early withdrawal penalty, based on the EWPEN amounts shown on the 99INT IR(s), allow the balance unless: It can be clearly determined that the taxpayer netted the EWPEN, see (3) above. The IR(s) show the income is jointly owned with someone other than the spouse or the filing status is 3, mark the EWPEN with status code "N" , send the IR elements and send PARAGRAPH 74. See Exhibit 4.19.3-7, CP PARAGRAPHS. If a 99INT IR contains both INT and EWPEN, consider each IR element separately. If the taxpayer incorrectly claims the 10 percent early distribution tax as EWPEN, disallow that portion of the deduction. Send PARAGRAPH 168, see Exhibit 4.19.3-7, CP PARAGRAPHS. If the taxpayer reports EWPEN on Schedule 1, line 18, or on Schedule B and also subtracted the EWPEN from interest reported on the return, this is a duplicate deduction. Consider the amount of EWPEN O/D. To arrive at the amount to enter in the REPORTED AMOUNT field, subtract the double excluded amount from the IR amount. Send PARAGRAPH 122, see Exhibit 4.19.3-7, CP PARAGRAPHS. Enter the return amount in the RETURN field on the Summary screen. PARAGRAPH 8 automatically generates when EWPEN is U/C. See Exhibit 4.19.3-7, CP PARAGRAPHS. PARAGRAPH 75 automatically generates when EWPEN is O/D. See Exhibit 4.19.3-7, CP PARAGRAPHS.

# Traditional IRA and Coverdell ESA - General

4.19.3.9.6 (10-03-2017) Traditional IRA and Coverdell ESA - General IRA contributions are reported to the IRS on Form 5498 and are identified on the Case Analysis screen by the literal "5498" in the DOC TYPE field and one of the following literals in the INCOME TYPE field. "CONTR" - the amount the taxpayer contributed to their IRA account. "FMV" - the fair market value of an IRA account. Disregard the FMV literal and amount. The system automatically assigns status code "X" to FMV amounts on 5498 IRs. "ROLVR" - rollover. This amount can't be claimed as a deduction by the taxpayer. "LFINS" - life insurance. This amount can't be claimed as a deduction by the taxpayer. Life insurance isn't included in the CONTR amount on 5498 IRs. The system automatically assigns status code "X" to life insurance amounts on 5498 IRs. "RCONT" - Roth IRA Contribution. This amount can't be claimed as a deduction by the taxpayer. "RCONV" - Roth IRA conversions from a Traditional IRA. This amount can't be claimed as a deduction by the taxpayer. Note: Contributions to a Roth IRA (RCONT) or Roth IRA Conversions from a Traditional IRA (RCONV) can't be claimed as a deduction on the return. Pursue the discrepancy. Mark the RCONT or RCONV element with Send Indicator "S" . Contributions to a Coverdell ESA (CESA) are reported on Form 5498-ESA and are identified on the Case Analysis screen by the literal "5498" in the DOC TYPE field and one of the following literals in the INCOME TYPE field: "ESA" - The amount contributed to the CESA. "EROLV" - Rollover amount. The system automatically assigns status code "X" to this income type. Note: Contributions to a CESA can't be claimed as a deduction on the return. Pursue the discrepancy. Mark the ESA element with Send Indicator "S" . PARAGRAPH 30 automatically generates when the U/R IRA deduction amount is equal to the RCONT, RCONV or ESA element amount. See Exhibit 4.19.3-7, CP PARAGRAPHS.

# IRA Deduction - Analysis

4.19.3.9.6.1 (10-10-2025) IRA Deduction - Analysis Taxpayers may claim the allowable IRA deduction on Schedule 1, line 20. The maximum allowable IRA deduction is the lesser before phaseout limit of (taxable compensation including non-taxable combat pay): Filing Status TY 2022 TY 2023 TY 2024 1,4, or 3 $6,000 ($7,000 if 50 or older) $6,500 ($7,500 if 50 or older) $7,000 ($8,000 if 50 or older) 2 or 5 $12,000 ($13,000 if only one is 50 or older or $14,000 if both are 50 or older) $13,000 ($14,000 if only one is 50 or older or $15,000 if both are 50 or older) $14,000 ($15,000 if only one is 50 or older or $16,000 if both are 50 or older) Note: If a CONTR IR is present for more than $6,000 ( TY 2022), $6,500 (TY 2023), or $7,000 (TY 2024), check the PRIMARY/SECONDARY AGE fields on the Case Analysis screen. If the fields are blank, research the affected taxpayer's age and update the field(s) accordingly. Note: When a spousal IRA is present, the IRA contributions are divided between the taxpayers, any way they choose, as long as the contributions don't exceed the dollar amounts as shown in the table above for any one spouse. Taxable compensation for purposes of establishing an IRA include: wages, salaries, tips, professional fees, bonuses and other amounts received from providing personal services, taxable non-tuition fellowship and stipend payments, and NET earnings profit from self-employment income, minus the self-employment tax deduction. Taxable compensation for IRA purposes also includes any taxable alimony and separate maintenance payments received under a decree of divorce or separate maintenance but only with respect to divorce or separation instruments executed on or before December 31, 2018, that have not been modified to exclude such amounts. Military personnel have the option of including nontaxable combat pay, along with any taxable compensation, when calculating the allowable IRA deduction. An IRA contribution can be made ONLY if the taxpayer has taxable compensation (as defined in 2 above). When the taxpayer is covered by a qualified pension plan, the IRA deduction begins to decrease (phaseout) when the Modified AGI (MAGI) exceeds the lower limit and is eliminated (disallowed) when the MAGI exceeds the upper limit in the table below: Filing status TY 2022 TY 2023 TY 2024 1 or 4 $68,000 - $78,000 $73,000 - $83,000 $77,000 - $87,000 2 or 5 $109,000 - $129,000 $116,000 - $136,000 $123,000 - $143,000 3 or 6 $0 - $10,000 $0 - $10,000 $0 - $10,000 When the taxpayer is NOT covered by a qualified pension plan, but the spouse IS covered, the IRA deduction begins to decrease (phaseout) when the MAGI exceeds the lower limit and is eliminated (disallowed) when the MAGI exceeds the upper limit. For filing status 3 or 6: $0 - $10,000, if the taxpayer did not live with their spouse (D is entered next to Form 1040/1040-SR, Schedule 1, line 20), the taxpayer is treated as filing status 1 (no spouse). Filing status 2 or 5 as shown in the table below: Filing status TY 2022 TY 2023 TY 2024 2 or 5 $204,000 - $214,000 $218,000 - $228,000 $230,000 - $240,000 Consider the taxpayer covered by a qualified pension plan if: Reminder: Consider the IR more accurate than the ELF payer document. The Form W-2 is attached and the retirement plan box is checked, or Form W-2, box 12 has a code "D" , "E" ," F" , or "S" with a corresponding contribution amount. See Exhibit 4.19.3-8, Form W-2 - box 12 Codes, or The taxpayer reports an unidentified wage amount (no Form W-2 is attached, nor corresponding WAGE IR) or, The IND field on the WAGE IR is other than blank and/or contains the literal "DC" , or An attached Form W-2 or WAGE IR is from a federal, state or local government, including any political subdivision. Reservist wages are NOT covered by a pension plan. The taxpayer is FS 3 or 6 and there is no indication that the taxpayer lived apart from the spouse (also enter a "Y" in the LIVED WITH SPOUSE field on the IRA window if either spouse is covered by a pension plan). The taxpayer takes a deduction for a SIMPLE Plan or SEP on Schedule 1, line 16. Exception: Section 457 Plans are NOT considered as coverage for calculations of IRA contributions. If only the Deferred Compensation box is checked and only code "G" appears in box 12 of the Form W-2, or there are other indications that the taxpayer has only Deferred Compensation in a Section 457 Plan, DO NOT consider the taxpayer covered by a pension plan. An "H" code in box 12 of Form W-2 identifies 501(c)(18)(D) Pension Plans. The taxpayer is instructed to report their allowable deduction on the dotted portion of Schedule 1, line 25. However, the entry is often misplaced and entered on Schedule 1, line 24f. If there is an indication that the taxpayer has a 501(c)(18)(D) pension plan, allow the deduction. The taxpayer is a postal worker. The U.S. Postal Service has a Thrift Savings Plan. IRA deductions must be substantiated. Substantiation is a 5498 IR with a CONTR amount or an attachment to the tax return (for example, a Form 5498 or a bank statement). If no CONTR IR(s) is present, create a CONTR IR with a dollar amount of zero (0). See IRM 4.19.3.16.6, Qualified Retirement Savings Contributions Credit (QRSC), for additional information. If there is no substantiating IR(s), but a Form 5498 or statement for the same amount is attached to the return, create IR(s) for the attached Form 5498/ statement amount(s) for the applicable taxpayer. PARAGRAPH 70 automatically generates when the CONTR U/R is due to the taxpayer claiming a deduction that is larger than the 5498 IR(s). See Exhibit 4.19.3-7, CP PARAGRAPHS. If the taxpayer deducts an amount equal to the Deferred Compensation shown on Form W-2, (for example, the amount is included on Form 1040/ Form 1040-SR, line 1 or Schedule 1, line 8z. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. If the Deferred Compensation was not included as income, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. Send PARAGRAPH 157, see Exhibit 4.19.3-7, CP PARAGRAPHS. When a CONTR IR contains the element "LFINS" (Life Insurance Costs), taxpayers must subtract this amount from the allowable IRA contribution included in box 1 to compute the IRA deduction. If the taxpayer takes the full contribution amount, modify the IR to subtract out the LFINS element. Send PARAGRAPH 254, see Exhibit 4.19.3-7, CP PARAGRAPHS. If the taxpayer reports Self-Employment income and the IRA deduction corresponds to a 5498 SEP/SIMPL IR(s), consider that the taxpayer reported the SEP/SIMPLE on the wrong line. The taxpayer may make contributions to an IRA during the AUR tax year or by the due date of the return (not including extensions). Note: There is no age restriction. Taxpayers can claim a deduction for their IRA regardless of their age. Screen IRA IR(s) after all other potentially discrepant income types are analyzed. Any subsequent analysis that changes the TOTAL AGI CHANGE field must always be followed by reselecting the IRA window. See (17) below when SS/RR, SLID, are also issues on the same case. The system computes the allowable IRA deduction based on the appropriate entries in the Adjusted Gross Income window and the IRA window. To compute or recompute the IRA window take the following actions: Access the IRA window. Enter "P" for primary taxpayer, "S" for spouse, or "B" for both in the PENSION PLAN field. Leave the field blank if unable to determine. See (7) above for when to consider taxpayer covered. Filing Status 3 or 6 only: Enter "Y" or "N" to indicate if the taxpayer lived with spouse in the LIVED WITH SPOUSE field. If no indication, enter "Y" . For any other filing status, leave blank. Enter the total reported amount of the primary and/or secondary taxpayer's taxable compensation in the PRIMARY and/or SECONDARY COMPENSATION field. Include taxable alimony, separate maintenance payments, and net earnings/profit from SE income. If a loss exists on Schedule C or F, see (16) below. Enter the primary and/or secondary taxpayer's IRA deduction amount from From 1040 in the IRA ADJUSTMENT PER RETURN field. Caution: Be alert to changes made during or after original processing when entering/verifying information in this window. If the taxpayer has taken a SEP/Keogh deduction, the SEP/Keogh deduction amount from Form 1040 will display in the PRIMARY/SECONDARY SEP/KEOGH field of the IRA window. If the filing status is 2, and it can be determined both taxpayers contributed to a Keogh or SEP retirement plan, take the following actions: Enter the amount contributed by the primary taxpayer in the PRIMARY SEP/KEOGH field. Enter the amount contributed by the secondary taxpayer In the SECONDARY SEP/KEOGH field. Note: Enter the total SEP/Keogh deduction amount reported on Form 1040, in the PRIMARY SEP/KEOGH field, when unable to determine a breakdown of the amount. The REQUEST FOR ADDL DEDUCTION field is used only during the Response phase. Enter "Y" if the taxpayer submits a response requesting additional IRA deduction amounts not originally taken. Note: An IR must be created for the verified additional IRA deduction amount. A net loss from self-employment income can't be subtracted from salaries, wages, etc., when figuring total compensation. If U/R self-employment income (Income Identify Codes of "PB" , "PF" , "SB" , and "SF" ) Is not present on the Case Analysis screen don't consider any net loss from self-employment income when determining the amount to enter in the PRIMARY and/or SECONDARY COMPENSATION field(s) in the IRA window. Is present on the Case Analysis screen and a net loss from self-employment income is reported on the return, enter/verify the PRIMARY/SECONDARY REPORTED SE INCOME field(s) in the SE Tax window. If IRA contributions, SS/RR, SLID, are issues on the same case, then: Compute the SS/RR by selecting the SSA/RRB window. Compute the IRA contribution by selecting the IRA window. Note: After the IRA is computed, the system automatically recomputes the SSA/RRB window. Recompute the SLID. Note: See IRM 4.19.3.4.2, Case Analysis Screen, for the proper window sequence when these issues are present on the same case.

# IRA Deduction Miscellaneous

4.19.3.9.6.2 (10-29-2024) IRA Deduction Miscellaneous An IRA AUR issue exists when: The taxpayer claims a larger IRA deduction amount than is substantiated. The taxpayer claims an IRA deduction amount larger than the allowable amount. When the taxpayer is claiming more deduction than allowed based on age/filing status or taxable compensation (including non-taxable combat pay). PARAGRAPH 53 automatically generates. See Exhibit 4.19.3-7, CP PARAGRAPHS. See IRM 4.19.3.9.6.1, IRA Deduction - Analysis, for additional information regarding taxable compensation. The taxpayer is covered by a pension plan and changes to AGI cause a change to the allowable IRA deduction amount (decreased or reduced to zero). PARAGRAPH 95 automatically generates. See Exhibit 4.19.3-7, CP PARAGRAPHS. Toggle off PARAGRAPH 95 for any other situation. Exception: Send PARAGRAPH 95 when the IRA deduction is disallowed and there is no change to the AGI, but the taxpayer is covered by a pension plan. Note: If a 5498 ROLVR IR is asterisked as a part of the computer identified discrepancy, the IRA deduction the taxpayer claimed MUST be screened before closing the case PC 2X. When there is an asterisked 5498 ROLVR IR, it indicates an IRA contribution discrepancy and the system won't give the message to check the Income Comparison screen. There may be a rollover amount present on the IRA IR(s). This amount can't be claimed as a deduction by the taxpayer. PARAGRAPH 81 automatically generates when the U/R amount equals the IR(s) rollover amount(s). See Exhibit 4.19.3-7, CP PARAGRAPHS. A CP 2000 is issued for the deduction only if the taxpayer claims a larger deduction than entitled to take. Do not allow any additional deduction if the IRA/SEP contribution was not fully claimed. When the IRA deduction is an issue, check for Form 8880, Credit for Qualified Retirement Savings Contributions, and adjust as appropriate. If there is U/R income above tolerance, the IRA deduction needs to be recomputed if the following conditions apply: The taxpayer takes an IRA deduction on Schedule 1, line 20, and The taxpayer is covered by a qualified pension plan. See IRM 4.19.3.9.6.1, IRA Deduction - Analysis, for further instructions. If the IRA is O/D, enter the return amount in the RETURN field on the Summary screen.

# Traditional IRA or SEP Deduction - Responses

4.19.3.9.6.3 (10-10-2025) Traditional IRA or SEP Deduction - Responses If an Adjusted Contribution Rate OTHER THAN 25 percent applies, enter this rate in the PRIMARY AND SECONDARY CONTRIBUTION RATE field in the SEP Adjustment window. The system computes the allowable deduction based on this entry. If the taxpayer responded with information about an additional IRA deduction amount(s) that was not taken originally, use the IRA window to compute the allowable IRA deduction amount(s). If the taxpayer responded with information about an additional SEP deduction amount(s) that was not taken originally, enter a "Y" in the REQUEST FOR ADDITIONAL DEDUCTION field. Note: The REQUEST FOR ADDITIONAL DEDUCTION field only displays after a notice as been issued. Enter the primary/secondary adjusted contribution rate, if other than the maximum, in the PRIMARY/SECONDARY CONTRIBUTION RATE field(s) Taxpayer's can claim a deduction for their IRA contributions regardless of age. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ an employer's pension plan (even though the "pension plan" box is checked on the Form W-2), UNLESS: The attached Form W-2 shows the taxpayer contributed to a pension plan (for example, box 1 Wages are less than SSWAG by the box 12 amount and code D, E or F is present) OR The WAGES IR shows the taxpayer contributed to a pension plan (for example, WAGES are less than SSWAG and the WAGES IR contains literal "DC" ). Section 457 plans (Code G) and 501(c)(18) plans (Code H) are not considered pension plans for determining allowable IRA contributions. See IRM 4.19.3.9.6.1, IRA Deduction - Analysis, for further information. Members of Reserve Components of the Armed Services are not active participants unless they serve on active duty over 90 days. Refer to Notice 87-16, 1987-1 C. B. 446. If accepting the explanation for IRA deduction, check the Retirement Saving Credit window to ensure entries are correct per the response. Accept the response when documentation provided supports the contribution was intended for the AUR tax year in question and was made on or before April 15th or the postponed filing deadline of the subsequent year. The response indicates the contribution was based on a rollover. Do not accept the explanation and advise the taxpayer that rollover(s) can't be used as a deduction and refer to Pub 590-A, Contributions to Individual Retirement Arrangements (IRAs), for additional information. Taxpayers who contribute to a Roth IRA may recharacterize those contributions to a traditional IRA before the due date, including extensions, of the tax return. Those contributions are treated as having been made to the second IRA. If the taxpayer indicates overclaimed IRA deduction was due to Roth IRA contributions that were recharacterized: Create a CONTR IR for the amount of the recharacterized contribution (whether or not there is a matching Form 5498 RCONT). Verify the appropriate entries in the IRA window.

# Student Loan Interest Deduction (SLID) - General

4.19.3.9.7 (09-01-2003) Student Loan Interest Deduction (SLID) - General Student Loan Interest Deduction (SLID) is reported to the IRS on Form 1098-E, Student Loan Interest Statement. SLID is identified on the Case Analysis screen by the literal "1098E" in the DOC TYPE field and "SLID" in the INCOME TYPE field.

# SLID - Analysis

4.19.3.9.7.1 (10-10-2025) SLID - Analysis The amount of SLID the taxpayer may claim can't exceed $2,500, and begins to decrease (phase-out) when the MAGI exceeds the lower limit and is eliminated (disallowed) when the MAGI exceeds the upper limit in the table below: Exception: SLID can't be claimed if the taxpayer can be claimed as a dependent on someone else's tax return. Filing Status TY 2022 TY 2023 TY 2024 1, 4 or 5 $70,000 - $85,000 $75,000 - $90,000 $80,000 - $95,000 2 $145,000 - $175,000 $155,000 - $185,000 $165,000 - $195,000 3 or 6 Taxpayer can't claim a SLID deduction Taxpayer can't claim a SLID deduction Taxpayer can't claim a SLID deduction Reminder: Always disallow claimed SLID amounts for filing status 3 or 6. If necessary, create an IR for zero (0). SLID amounts reported on the return are substantiated when 1098E IRs (or similar payer statement attached to the return) amounts are equal to or exceed the deduction claimed. Payers are not required to file Form 1098-E if they received less than ≡ ≡ ≡ from an individual during a tax year. SLID amounts of ≡ ≡ ≡ ≡ or more must be substantiated with either a: 1098E IR with a SLID amount, or Similar payer statement attached to the return Use the following chart to determine O/D SLID amounts: If the total of all 1098E IR(s) (or attached payer statements are): And Then Equal to or greater than the amount of SLID claimed on Form 1040/1040-SR Schedule 1, line 21 . SLID was claimed on the tax return ALWAYS mark the SLID IR(s) with status code "U" and use the AUR system to compute the allowable SLID based on the appropriate entries in the Adjusted Gross Income (AGI) window and the Student Loan Interest Deduction window. Note: Be alert to changes made during or after original processing when entering/verifying information in this window. Less than the amount of SLID claimed on Form 1040/1040-SR Schedule 1, line 21. The SLID claimed on the tax return is less than $600 Allow the deduction. Mark the IR(s) with "R" , "N" , or "D" . Do not create an IR. Exception: If, due to additional U/R income, the proposed new MAGI is equal to or greater than the upper limit amounts listed in (1) above, disallow the deduction. If no SLID IRs are present, create an IR for zero (0), mark the SLID IR with status code "U" and use the AUR system to compute the allowable SLID based on the appropriate entries in the Adjusted Gross Income (AGI) window and the Student Loan Interest Deduction window. Less than the amount of SLID claimed on the tax return The SLID claimed on the tax return is $600 or more ALWAYS mark the SLID IR(s) with status code "U" and use the AUR system to compute the allowable SLID based on the appropriate entries in the Adjusted Gross Income (AGI) window and the Student Loan Interest Deduction window. If no SLID IRs are present, create a SLID IR for zero (0). Exception: If the O/D SLID amount is less than ≡ ≡ ≡ ≡ AND the new proposed MAGI (including other U/R income) is less than the upper limit amounts listed in (1) above, don't pursue the issue.

# SLID Miscellaneous

4.19.3.9.7.2 (11-20-2017) SLID Miscellaneous A SLID AUR issue exists when the taxpayer claims a larger SLID amount than is substantiated. Send PARAGRAPH 22, see Exhibit 4.19.3-7, CP PARAGRAPHS. A CP 2000 is issued for the discrepant SLID only if the taxpayer claims a larger deduction than they are entitled to take. Do not allow any additional deduction if SLID was not fully claimed. PARAGRAPH 23 automatically generates when an increase to the MAGI causes a decrease in the allowable SLID amount and/or when SLID is disallowed because the taxpayer is filing status 3 or 6, or can be claimed as a dependent on someone else's return. See Exhibit 4.19.3-7, CP PARAGRAPHS. If decreasing SLID due to lack of substantiation, toggle off PARAGRAPH 23 in the Summary Screen. If SLID is O/D, enter the return amount in the RETURN field on the Summary screen.

# SLID - Responses

4.19.3.9.7.3 (10-25-2023) SLID - Responses The taxpayer explanation is acceptable when they provide Form 1098-E or similar payer statement, for the amount claimed on the return. If Form 1098-E, or similar payer statement, is for somebody other than the primary or secondary taxpayer, accept the explanation when the response states the student was enrolled at least half-time in a degree program and all of the following apply: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the taxpayer requests an additional deduction amount and provides acceptable documentation meeting the requirements, allow the deduction. Enter "Y" in the REQUEST FOR ADDITIONAL DEDUCTION field in the SLID window.

# Domestic Production Activity Deduction (DPAD)

4.19.3.9.8 (04-25-2025) Domestic Production Activity Deduction (DPAD) Taxpayers figure Domestic Production Activities Deduction (DPAD) on Form 8995-A, Qualified Business Income Deduction. Payments received from a specified agricultural or horticultural cooperative, may be deductible. The DPAD is claimed on Form 8995-A, Qualified Business Income Deduction, Part IV, line 38. If the taxpayer claimed a deduction for DPAD on Form 8995-A, line 38, take the following action: If there are no IRs containing the DPAD element, create a 99PAT IR with a 199AD element for zero (0) and enter status code N or D. In Return Value, access the TXI ADJUSTMENT window and enter/verify the "0" (zero) in the RECOMPUTED DPAD SECTION 199A field. The amount on Form 8995-A, line 38 is greater than the IR amounts, enter status code N or D. Access the TXI ADJUSTMENTS window. The RECOMPUTED DPAD SECTION 199AD field can't be more than Form 8995-A, line 33 minus Form 8995-A, line 37. Do not enter more than this amount into the RECOMPUTED DPAD SECTION 199A field. Once the limitation amount is determined, enter the lesser of the IR amount or the limitation amount in the DPAD SECTION 199A field. To determine the limitation amount, refer to e) below and take the following action: If the amount on Form 8995-A, line 38 is less than the IR amount, don't pursue the underclaimed 199A (DPAD) deduction. Enter status code N or D. In Return Value, access the TXI ADJUSTMENTS window and enter/verify the amount from Form 8995-A, line 38 in the RECOMPUTED DPAD SECTION 199A field. Consider the IR(s) reported when the total IR amount is equal to or greater than Form 8995-A, line 38. In Return Value, access the TXI ADJUSTMENTS window and enter/verify the amount from Form 8995-A, line 38 in the RECOMPUTED DPAD SECTION 199A field. Line Action Line 33 In Return Value, add amount in TOTAL U/R AMT field plus attached Form 8995-A, line 33 amount. Line 37 In Return Value TXI ADJUSTMENTS window, delete amount in RECOMPUTED DPAD SECTION field. The amount shown in the RECOMPUTED TOTAL QBID field is the new line 37 amount. If Form 8995-A isn't present, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the DPAD element is on the notice, make sure to mark the 199AD element with a send indicator. Send PARAGRAPH 233, see Exhibit 4.19.3-7, CP PARAGRAPHS.

# Return Value Screen

4.19.3.10 (10-02-2024) Return Value Screen The Return Value screen is used to verify and enter the amounts from the tax return. It also performs calculations necessary to determine the correct tax increase or decrease. The AUR system is updated with the amounts from the originally processed tax return. Any subsequent adjustments to the taxpayer's return must be considered when verifying and entering amounts on the Return Value screen and windows. Note: An AGI and/or TXI mismatch could be due to a taxpayer and/or processing error. AUR is responsible for issuing a notice (CP 2000/CP 2501) to correct these types of errors. Using the information from the original return, and amounts computed in Case Analysis, the system displays the appropriate windows and performs the necessary calculations. See AUR System Guide, Return Value Screen. Note: Each window in Case Analysis MUST be accessed in the appropriate sequence before the Return Value screen is selected and calculations are completed. Enter/Verify the filing status per return. Be sure to consider any changes to filing status. If the filing status (FS) displayed doesn't match the FS shown on the return or the information provided by the taxpayer, enter the correct FS prior to performing calculations. Note: It may be necessary to update the filing status prior to performing Case Analysis functions such as: CREATE IR and MODIFY IR. Enter/Verify the AGI PER RET field. This must be the amount reported on the original return, as adjusted by Error Resolution function, or a subsequent adjustment. Note: The Misc Adjust/Sch C Exp window may be used to adjust the AGI when the taxpayer adjusts their Schedule C, E, F and/or any other allowable schedule or form during the response phase. If the taxpayer writes "CCF" (Capital Construction Fund) on the dotted portion of Form 1040/ Form 1040-SR, line 15 and deducts an amount from the taxable income, include the amount in both the MISC TXI ADJ PER RETURN and the MISC TXI ADJ NOW fields. Note: If the taxpayer responds to the CP 2000/ CP 2501 with either a new CCF amount or a change to the previously claimed CCF amount, enter the revised CCF amount in the MISC TXI ADJ NOW field. Send PARAGRAPH 232, see Exhibit 4.19.3-7, CP PARAGRAPHS. If the AGI per return and AGI on Return Value match, but the TXI per return doesn't match the TXI PER RET field, the taxpayer/processing error may involve the Standard Deduction, Schedule A, and/or exemptions. Verify the Filing Status, Number of Exemptions, and Schedule A window fields. Be sure these fields account for any initial processing error or adjustments due to a subsequent filing of a Form 1040-X by the taxpayer. When the TXI per return doesn't match the TXI COMPUTED PER RET field, the message "TXI differs from original return. Send appropriate paragraph." displays. This situation can be caused by: The standard deduction for taxpayers that can be claimed as a dependent on someone else's return changes the TXI per return due to U/R earned income. See IRM 4.19.3.13, Standard Deduction, for further instructions. The TXI PER RETURN shows zero (0) and the TXI RECOMPUTED PER RETURN is negative. PARAGRAPH 94 automatically generates when the new or original TXI is negative. See Exhibit 4.19.3-7, CP PARAGRAPHS. Note: If these conditions don't apply, verify that the Schedule A window entries are accurate. Enter/Verify the BASE TAX PER RET field from Form 1040, line 16. The base tax is the amount of tax assessed prior to credits and other taxes. This amount may need to reflect any changes, math errors, subsequent adjustments (for example, TC 290, 291, 300, 301). The base tax per return plus or minus the credits and other taxes per return MUST equal the tax assessed ≡ ≡ ≡ ≡ ≡ ≡ ≡. Caution: Ensure that the entry in the BASE TAX PER RET field doesn't include Form 4972 tax, nor any O/C W/H adjusted as a TC 290 RC 051. If the total TAX PER RET field on Return Value doesn't match the total tax on the return but there is both an AGI match and a TXI match (between the return and Return Value), the processing error may involve credits or other taxes. Access, verify, and correct window entries in Case Analysis and/or Return Value as appropriate. If necessary, perform IDRS research (such as, CC RTVUE) to complete the Return Value screen. When amounts per return on the CP 2000 are different from those shown on the original return because of a processing change (Math Error Code present), amended return, or other adjustment, and: The taxpayer is aware of the adjustment, send PARAGRAPH 158. See Exhibit 4.19.3-7, CP PARAGRAPHS. The tax change was ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and the taxpayer was not notified, send PARAGRAPH 125. See Exhibit 4.19.3-7, CP PARAGRAPHS. By using the <F12> key, the windows display in a sequence determined by the system. If a necessary window doesn't display, it may be selected from the menu and information enter in the appropriate fields. If a window is selected from the menu, it displays by using the <F12> key only AFTER Return Value is committed and exited. Example: If forms/schedules are not attached to the original return (they are filed with a Form 1040-X) or are not transcribed, the applicable windows must be manually selected. The Return Value screen must be committed before a CP 2000/ CP 2501 Notice is issued. It is necessary that each window is accessed in the appropriate sequence before all calculations are completed. When Return Value is committed, the system verifies that the base tax per return plus or minus the credits and other taxes per return equals the tax assessed. If there is a discrepancy ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, an error message displays. "TAX PER RETURN NOT EQUAL TO TAX ASSESSED. REWORK CASE." If this message appears, take the appropriate following action(s). If no changes were made to the original return, verify the amounts displayed in the PER RET fields of the Credits and Other Taxes windows. In the BASE TAX PER RET field enter the amount from: Form 1040/1040-SR, line 16. If SE TAX, TIP TAX, or Lump Sum is applicable, it may be necessary to return to Case Analysis to verify these per return amounts. Note: If Form 8919 is attached see IRM 4.19.3.8.6.1, NEC - Analysis. If a subsequent adjustment has been made to the tax return, use the following manual calculation to determine the base tax per return: Use the amount from the TOTAL TAX PER RET field of the Return Value screen. Subtract other taxes per return and any subsequent adjustments. See (10) above. Add credits per return and any subsequent adjustments. See (10) above. Enter the result in the BASE TAX PER RET field. If SE TAX, TIP TAX, or Lump Sum is applicable, it may be necessary to return to Case Analysis to verify these per return amounts. If changes were made due to a math error and an error correction notice was issued, determine the reason for the issuance of the notice. Also verify the amounts displayed in the PER RETURN fields of the Credits and Other Taxes windows. Include any applicable changes made by Error Resolution function. Use the following manual calculation to determine the base tax per return: Use the amount from the TOTAL TAX PER RET field of the Return Value screen. Subtract the other taxes per return or as corrected. Add the credits per return or as corrected. Enter the result in the BASE TAX PER RET field. If SE TAX, TIP TAX, or Lump Sum is applicable, it may be necessary to return to Case Analysis to verify these per return amounts. If changes have been made due to a math error and an error correction notice was NOT issued use the following manual calculation to determine the base tax per return. Also verify the per return amounts in the credits and other taxes window. Use the amount from the TOTAL TAX PER RET field of the Return Value screen. Subtract the other taxes per return using the taxpayer's figures. Add the credits per return using the taxpayer's figures. Enter the result in the BASE TAX PER RET field. If SE TAX, TIP TAX, or Lump Sum, is applicable, it may be necessary to return to Case Analysis to verify these per return amounts. Determine the correct tax based on the taxpayer's filing status and taxable income per return. The taxable income per return must include changes made by error resolution and any subsequent adjustments. Certain conditions may require a manual interest computation. See IRM 4.19.3.4.3.2, Freeze Codes, IRM 4.19.3.19.10, Manually Computed Interest for the CP 2000. Reminder: During screening, cases requiring manual interest are closed with PC 27, ONLY if they are built in BT 61. If Freeze Code "G-" , with TC 500 and Combat Indicator 1 is present, close the case with PC 15; see IRM 4.19.3.4.3.2, Freeze Codes, for additional information. Enter/verify the manual interest, when applicable, in the MANUAL INT field. Note: If the Return Value screen reflects a refund, and there is no "I-" freeze code present continue processing. Do not enter IPC "MI" . If there is a "I-" freeze on the account see IRM 4.19.3.4.3.2, Freeze Codes, for additional information. On the Notice Summary screen, all RETURN fields must be updated, and all non-automatic paragraphs must be accounted for. The Notice Summary screen must be committed. Enter IPC "MI" ONLY if a previous IPC "MI" is present, otherwise continue processing. Cases rejected during the interest run process will be batched in BT 61 (Manual Interest batch) for manual interest computation. If the case is in BT 61 (Manual Interest batch) follow the instructions in IRM 4.19.3.19.10, Manually Computed Interest for the CP 2000, otherwise, leave the MANUAL INT field blank. Enter the amount of payments received (RESPONSE PHASE ONLY) in the AMT PREV PAID field. Enter/verify the correct Net Operating Loss (NOL). See IRM 4.19.3.5.9, Miscellaneous.

# Changes to Itemized Deductions

4.19.3.11 (09-21-2020) Changes to Itemized Deductions These instructions are for changes to Form 1040, Schedule A caused by AUR processing. The Tax Cuts and Jobs Act (TCJA) enacted in December 2017, eliminated and/or established new limitations on itemized deductions. In addition, taxpayers who don't itemize deductions can claim a larger standard deduction if they have a qualified disaster loss on Form 4684, line 15. If the taxpayer has a qualified disaster loss on Form 4684, line 15 an increased deduction will be claimed. Taxpayers will list the amount from Form 4684, line 15, on the dotted line next to Schedule A, line 16 as Net Qualified Disaster Loss and the standard deduction amount on the dotted line next to Schedule A, line 16 as Standard Deduction claimed with Qualified Disaster Loss. Taxpayers will combine the two amounts on Schedule A, line 16 and enter the total.

# Schedule A Window

4.19.3.11.1 (10-10-2025) Schedule A Window When there are changes to AGI, the system computes the change to Medical and Dental Expenses, Casualty and Theft Losses, as applicable. Enter/Verify the appropriate per return and recomputed amounts in the Schedule A window of the Return Value screen. Note: If the taxpayer chose to itemize deductions even though the amount was less than the standard deduction, enter "Y" in the FS 3 ITEMIZED/DUAL STATUS ALIEN/IE box in the Standard Deduction window, prior to enter/verification of Schedule A window fields. When a Schedule A is present, the amounts must be entered/verified from Schedule A: Line Number Field Line 1 GROSS MEDICAL EXPENSE PER RETURN Line 5d TOTAL STATE AND LOCAL TAXES PER RETURN Line 6 OTHER TAXES PER RETURN Line 7 TOTAL TAXES PAID PER RETURN Line 8a MORTGAGE INTEREST PER RETURN Line 9 INVESTMENT INTEREST DED PER RETURN Line 10 TOTAL INTEREST DED PER RETURN Note: The RECOMPUTED field for TOTAL INTEREST DED doesn't require an entry. Line 14 GIFTS TO CHARITY PER RETURN Form 4684, Line 18 GROSS CASUALTY AND THEFT LOSS PER RETURN Line 16 GAMBLING LOSS OF OTHER MISC PER RETURN Line 16 Reminder: Taxpayers may input Net Qualified Disaster Losses on the dotted line next to line 16. This amount comes from Form 4684, line 15. OTHER MISC DEDUCTIONS PER RETURN (Non-Gambling) Line 17 TOTAL ITEMIZED DEDUCTIONS PER RETURN N/A The STANDARD DEDUCTION field is auto populated based on the taxpayers filing status and is for information purposes only. Note: All RECOMPUTED fields in the Scheduled A window are enterable fields and can be adjusted as needed. When taxpayers use dollars and cents on Schedule A, rounding errors can occur because the system records only dollar amounts. Ensure that any rounding errors are not added to the corrected TXI. Make the appropriate changes in the Schedule A window. The Schedule A change displays on the Summary screen in the MEDICAL DEDUCTION, MORTGAGE INTEREST DEDUCTION, CASUALTY LOSS DEDUCTION, and MISCELLANEOUS DEDUCTION INCREASE or DECREASE field(s) as appropriate. The TOTAL INCREASE/DECREASE field includes only the actual change to the Schedule A. If the taxpayer's Schedule A charitable contributions, line 14 were limited to 60 percent of the AGI, during original processing and the AGI is increased due to U/R processing, send PARAGRAPH 148. See Exhibit 4.19.3-7, CP PARAGRAPHS. See IRM 4.19.3.8.19.2, Gambling Losses, for information on Gambling Losses. PARAGRAPH 10 automatically generates when Medical and Dental Expenses are adjusted. See Exhibit 4.19.3-7, CP PARAGRAPHS. PARAGRAPH 21 automatically generates when Casualty and Theft Losses are adjusted. See Exhibit 4.19.3-7, CP PARAGRAPHS. PARAGRAPH 9 automatically generates when the standard deduction exceeds the itemized deductions. The system also alerts the tax examiner with a message indicating the Schedule A changes have been limited to the standard deduction. See Exhibit 4.19.3-7, CP PARAGRAPHS. PARAGRAPH 33 automatically generates if there is an indication that the taxpayer claimed the General Sales Tax on Schedule A, line 5. See Exhibit 4.19.3-7, CP PARAGRAPHS.

# Schedule A - Responses

4.19.3.11.1.1 (10-02-2024) Schedule A - Responses If the taxpayer's response indicates a NEW Schedule A (the taxpayer used the Standard Deduction during original filing) or a revision to an existing Schedule A (for example, a notice was issued for unreported gambling income and the taxpayer responds with additional gambling losses on Schedule A, line 16), select the Schedule A window. For a NEW Schedule A, follow the system prompts and enter all appropriate fields in the Schedule A window. Enter a zero (0) in the TOTAL ITEMIZED DEDUCTION fields. For a revision to an existing Schedule A, enter the updated amount(s) in the appropriate field(s) in the Schedule A window. DO NOT update the TOTAL ITEMIZED DEDUCTION field. Compare the recomputed Total Itemized Deductions amount to Schedule A, line 17. If these amounts differ, recheck entries in the window for accuracy. The changes due to revising Schedule A reflect in the INCREASE/DECREASE field of the Summary screen. Since there is no field in the Summary screen that displays an "overall change to Schedule A" , send PARAGRAPH 114. See Exhibit 4.19.3-7, CP PARAGRAPHS.

# Mortgage Interest Deduction and Points Paid

4.19.3.11.2 (09-30-2014) Mortgage Interest Deduction and Points Paid Screen Mortgage Interest (MORT) ONLY in Categories 01, 36, or 67. If MORT is asterisked in categories other than "01" , "36" , or "67" mark the IR(s) with status code "D" or "N" (unless they have been system deleted with status code "X" ). If appropriate, close the case with PC 2X. If the case is open for any other category, don't screen MORT. Deductible MORT and/or points paid (PTSPD), for purposes of the AUR Program, is interest paid to a lender for a loan obligation secured by a qualified residence. This includes up to two personal residences, which could include a house, condominium, motor/mobile home, houseboat, or house trailer that contains a sleeping space, toilet and cooking facilities. Deductible MORT may be paid on an acquisition or home equity loan. Mortgage interest payments are reported on Form 1098, Mortgage Interest Statement. Mortgage interest and/or Points Paid are identified on the Case Analysis screen by the literal "1098" in the DOC TYPE field and the literal "MORT" and "PTSPD" in the INCOME TYPE field. Income Identity Code "MA" displays.

# MORT - Analysis

4.19.3.11.2.1 (09-21-2020) MORT - Analysis Mortgage Interest is a deduction used to reduce AGI and/or TXI and becomes an AUR issue when the taxpayer deducts more mortgage interest than is shown on the MORT IR(s). Mortgage interest of $600 or more must be substantiated with either: Form 1098 with a MORT and/or PTSPD amount, or A similar payer statement attached to the return Lenders/Payers are not required to file a Form 1098 for amounts less than $600. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Example: The MORT IR is for $7,000 and the taxpayer reports $8,000 mortgage interest on Schedule A, line 8a and ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Taxpayers who own shares in a cooperative (co-op) may not receive individual Form 1098 statements. The Form 1098 is issued to the cooperative and then each taxpayer is allocated mortgage interest based on the number of shares owned. Whenever there is an indication that the mortgage interest claimed is derived from a co-op (for example, attachments list the name of the property and include such terms as "shares" or "SHS" , etc. or may indicate a percentage of total shares), ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ Compare MORT and/or PTSPD amounts with mortgage interest amount(s) claimed by the taxpayer on the following schedules or forms. If mortgage interest is claimed on schedules/forms other than Schedule A, modify the IR(s) in question to show the applicable Income Identity Code. Schedule A, line 8a (Income Identify Code "MA" ). Do not use Schedule A, line 8c when determining O/D MORT. Schedule C, line 16a (Income Identify Code "PB" or "SB" ). Schedule E, line 12 (Income Identify Code "ME" ). Note: Taxpayers with more than three rental properties file as many Schedules E as are needed to report all rental income, but are instructed to complete lines 23a - 26 on only one Schedule E. If multiple Schedules E were filed it may be necessary to compare MORT and/or PTSPD amounts to the total on Schedule E, line 23c. Schedule F, line 21a (Income Identify Code "PF" or "SF" ). Form 4835, line 19a (Income Identify Code "ME" ). Form 8829, line 10 (Income Identify Code "PB" or "SB" ). If mortgage interest is claimed on the return and there are no MORT IRs present, create an IR for zero (0) and pursue the reported amount. If MORT is marked with a status code "U" , the Income Identify Code is MA, and the system determines a Schedule A was not filed, a warning message displays, "Verify Schedule A was used" . Determine if a Schedule A was filed. If a Schedule A is attached and line 17 amount is greater than the standard deduction, verify the fields in the Schedule A window. If Schedule A is attached and was not used line 17 amount is less than the standard deduction, either mark the MORT IR(s) as reported or change the Income Identify Code as applicable. If Schedule A was not filed or line 17 amount is less than the standard deduction and the Income Identify Code remains MA you must access the Schedule A window in Return Value. IF THE SCHEDULE A WINDOW IS NOT ACCESSED AN INCORRECT NOTICE MAY BE SENT TO THE TAXPAYER. MORT and/or PTSPD is O/D when the sum of mortgage interest and points paid (Form 1098, boxes 1 and 6) is less than the sum of mortgage interest and/or points paid on the return. If the taxpayer attaches a breakdown of Schedule A, line 8a, and includes closing and/or settlement statement (for example, but not limited to "Discount Points" , "Loan Discount" , or "Points" .), allow the deduction. Do not allow the taxpayer to deduct fees paid for appraisal, inspection, title or attorneys. Consider MORT O/D when the taxpayer has claimed the full MORT IR(s) on Schedule A and has also claimed a credit identified as Form 8396, Mortgage Interest Credit, on Schedule 3, line 6g. When taxpayers rent a portion of their own residence, they may deduct only a portion of the expenses on Schedule E. They may indicate a percentage of personal use. Taxpayers generally report the entire mortgage interest amount on Schedule E, line 12, then reduce the overall expenses by the percentage of personal use. The balance of the mortgage interest is then claimed on Schedule A, line 8a. Math verify the rental income on Schedule E, minus all the expenses and depreciation to determine whether the overall income/loss claimed is reduced. If the overall expenses were reduced and the balance of the mortgage interest is claimed on Schedule A, consider the MORT discrepancy resolved. Example: The MORT IR is for $10,000. The taxpayer claims $10,000 on Schedule E, line 12 and $5,000 on Schedule A, line 8a. Verifying the Schedule E expenses shows that the overall expenses (including mortgage interest) claimed were reduced by 50 percent. The taxpayer allocated the entire $10,000 mortgage interest between Schedule E and Schedule A ($5,000 on each schedule). The system identified MORT discrepancy is resolved. The taxpayer may not indicate a percentage of personal use but may still reduce the net profit/loss. Always math verify the rental income less all the expenses and depreciation to determine whether the taxpayer is claiming the full MORT amount before determining the U/R amount. Note: The taxpayer's rental losses may be limited. When the overall loss is other than the math verified amount, determine if the taxpayer filed Form 8582, Passive Activity Loss Limitations. If the loss was limited, the mortgage interest claimed on Schedule E, line 12 for that property is the amount that is applied against the MORT IR. When the mortgage account is jointly owned, the lender issues a single Form 1098 to the primary holder of the loan. Since any mortgage interest claimed by the secondary holder of the loan isn't substantiated by a MORT IR, the system considers the MORT claimed potentially O/D. If the taxpayer reports mortgage interest for which there is no corresponding MORT IR and indicates joint ownership, consider the MORT discrepancy resolved when: Form 1098 or other payer statement is attached, showing the mortgage interest claimed is from a jointly held account, or The taxpayer provides the name and SSN or the name and address of the co-owner of the loan. Note: If the taxpayer is the primary and deducts a portion of the MORT IR, don't apply the balance of the MORT against mortgage interest claimed on any other schedule/form. Caution: If there is an indication of a percentage of ownership, determine the correct amount of mortgage interest deducted. When comparing MORT IR(s) to amounts claimed on the return, always try to associate specific MORT IR amounts to specific Schedules/Forms (in the case of Schedule E, to specific properties). If unable to determine the specific schedule on which the mortgage interest was O/D (for example, the O/D amount doesn't match any schedule/forms mortgage interest, or the name or address on the IR doesn't offer an indication as to which schedule/form), group all MORT IRs and compare the total and offset it against the mortgage interest amount reported on the following schedules in the order shown. Schedule C. Schedule E. Schedule F. Form 4835. Form, 8829. If the taxpayer files Schedule C and is deducting expenses for business use of a home, all deductible mortgage interest should be reported on Form 8829, Expenses for Business Use of Your Home, line 10. The taxpayer will show, on line 7 of Form 8829, the percentage of their home used for business. To determine the allowable business part of the mortgage interest (and how mortgage interest will be allocated between Schedule A and Schedule C), multiply the percentage used for business by the amount on line 10 of Form 8829. The remainder is deductible on Schedule A, lines 8a and 8b. No portion of the business part is an allowable deduction on Schedule A. If the amount of interest deducted on Schedule A is limited, any excess will be entered on Form 8829, line 16. Note: Mortgage interest on Schedule A and Form 8829 should equal Form 1098. However, taxpayers often take the allowable percentage deduction on Form 8829 and the full deduction on Schedule A. Follow the allocation procedures above to determine the O/D MORT and send PARAGRAPH 169. See Exhibit 4.19.3-7, CP PARAGRAPHS. Schedule A limit the O/D amount to line 8a amount. Example: IR total is $25,000. The taxpayer claims mortgage interest on Schedule C of $10,000, Schedule E of $10,000, and Schedule A of $9,000. The O/D MORT is $4,000, with Income Identity Code of "MA" . Changes to these schedules/forms may also result in changes to other forms (for example, Form 2441), schedules, and computations (for example, SE tax). See the appropriate sections of the IRM. When allocating MORT, send PARAGRAPH 121. See Exhibit 4.19.3-7, CP PARAGRAPHS. DO NOT pursue MORT IR(s) that are not fully claimed. Do not pursue MORT/PTSPD when the system assigns a status code "X" . ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Points Paid deductions claimed on Schedule A, line 8c. Issue a notice if the total MORT ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡

# MORT - Miscellaneous

4.19.3.11.2.2 (10-07-2019) MORT - Miscellaneous If there is an O/D Schedule A mortgage interest, ALWAYS verify the mortgage interest amount from Schedule A, line 8a in the MORTGAGE INTEREST PER RETURN field in the Schedule A window on the Return Value screen. When pursuing O/D mortgage interest from Schedule(s) C, E, F, and/or Form 4835, enter the total mortgage interest amount from these schedule(s) or form(s) in the REPORTED field on the Summary screen. If there are mortgage interest amounts for both taxpayers on a joint return and it isn't possible to allocate the MORT IR(s) between schedules, refer to the lead. When a change to mortgage interest claimed on Schedule C and/or F results in a change to SE tax send PARAGRAPH 161. See Exhibit 4.19.3-7, CP PARAGRAPHS. See IRM 4.19.3.8.26, Refund of Overpaid Mortgage Interest Deduction (ROMID) - General, for instructions when there is ROMID on the IR. PARAGRAPH 40 automatically generates when MORT is O/D. Include all valid MORT IR elements (both reported and discrepant) on the notice. See Exhibit 4.19.3-7, CP PARAGRAPHS.

# Qualified Business Income Deduction (QBID)

4.19.3.12 (10-10-2025) Qualified Business Income Deduction (QBID) Individuals, estates and certain trusts (but not corporations) are allowed a deduction up to 20 percent of net qualified business income (QBI) plus 20 percent of qualified real estate investment trust (REIT) dividends and qualified publicly traded partnership (PTP) income. Note: The total QBI deduction is limited to 20 percent of taxable income, calculated before QBI deduction, less net capital gain. Note: The deduction can be taken in addition to the standard or itemized deduction. QBI includes items of income, gain, deduction, and loss from qualified trades or businesses within the United States. This includes income from partnerships (other than PTPs), S corporations, sole proprietorships, and certain trusts and estates that are included or allowed in determining taxable income for the year. Trades or businesses by C corporations and the performances of services as an employee are never qualified trades or businesses. Generally, certain specified services trades or businesses (SSTBs) are not qualified trades or businesses, but all or portion of the SSTBs may be qualified trade or business if the taxpayer's taxable income is below a threshold or within a phase-in range. Eligible taxpayers claim the QBI deduction on Form 1040/1040-SR, line 13. Taxpayers are required to attach Form 8995, Qualified Business Income Deduction, Simplified Computation or Form 8995-A, Qualified Business Income Deduction to their return. Depending on the type of trade or business, the amount of wages paid by the trade or business, the unadjusted basis immediately after acquisition of qualified property held by the trade or business, and the taxable income, the QBI deduction may be limited: Filing Status TY 2022 TY 2023 TY 2024 1 or 4 $170,050 $182,100 $191,950 3 $170,050 $182,100 $191,950 2 $340,100 $364,200 $383,900 The AUR system adjusts the QBI deduction when there is a change to the TXI. Enter/verify the QBID amount from Form 8995, line 10 or Form 8995-A, line 32 in the QBID PER RETURN field of the TXI ADJUSTMENTS window. Caution: The MANUAL QBID field doesn't take into consideration income limitations as shown in (3) above. Prepare a mock Form 8995-A to verify if the taxpayer correctly applied the 20 present income limitation. Enter/verify the DPAD under section 199A(g) amount from Form 8995-A, line 38 in the PER RETURN DPAD SECTION 199A field of the TXI ADJUSTMENTS window. Reminder: DPAD deductions must be substantiated. Substantiation is a 99PAT IR with a 199AD amount. See IRM 4.19.3.9.8, Domestic Production Activity Deduction (DPAD), for further information. Enter/verify total qualified business income deduction from Form 8995, line 15 or Form 8995-A, line 39 in the PER RETURN TOTAL QBID field of the TXI ADJUSTMENTS window. Enter the MANUAL QBID amount when appropriate. Note: The MANUAL TOTAL QBID amount should include Form 1040, line 13 and Form 8995-A, line 38. If issuing a notice and QBID is present on the return, Paragraph 200 automatically generates. Exhibit 4.19.3-7, CP PARAGRAPHS. Caution: If Form 8995/8995-A is attached to the return and QBID has been recalculated, toggle off Paragraph 200.

# QBID Responses

4.19.3.12.1 (10-10-2025) QBID Responses If the taxpayer responds they qualify for QBID or indicate the QBID needs to be adjusted and they don't provide Form 8995 or Form 8995-A, correspond with the taxpayer to request a completed form. Enter the amount from Form 8995, line 10 or Form 8995-A, line 32, in the RECOMPUTED QBID field of the TXI ADJUSTMENTS window. Enter/verify the DPAD under section 199A(g) amount from the amended Form 8995-A, line 38 in the RECOMPUTED DPAD SECTION 199A field of the TXI ADJUSTMENTS window. Caution: In order to enter an amount for DPAD, it must be substantiated. Substantiation is a 99PAT IR with a 199AD amount. Be mindful of limitation amounts. See IRM 4.19.3.9.8, Domestic Production Activity Deduction (DPAD), for further information. If the amount entered is greater than 20 percent of the recomputed TXI, the deduction will be systemically limited. The system calculates the maximum deduction and will display the amount in the RECOMPUTED TOTAL QBID field. This field can't be changed. Note: If the taxpayer doesn't provide an adjusted QBID amount with Form 8995 or Form 8995-A, continue normal AUR case processing. Caution: The allowable amount can't be more than the threshold for the applicable Filing Status. See IRM 4.19.3.12, Qualified Business Income Deduction (QBID). When a revised QBID amount is used, isn't limited, and a recomputed notice is being issued, send Paragraph 201. Toggle off Paragraph 200 in the Summary screen. Exhibit 4.19.3-7, CP PARAGRAPHS. When the QBID worksheet amount is limited to 20 percent of the recomputed TXI, Paragraph 202 automatically generates. Toggle off Paragraph 200 in the Summary screen. Exhibit 4.19.3-7, CP PARAGRAPHS.

# Standard Deduction

4.19.3.13 (10-10-2025) Standard Deduction The standard deduction is for taxpayers who don't itemize deductions on Form 1040, Schedule A. The amount of the standard deduction depends on filing status and whether the taxpayer is 65 years old or older or blind. The following are the basic standard deduction amounts: Filing Status TY 2022 TY 2023 TY 2024 1, 3, or 6 $12,950 $13,850 $14,600 2 or 5 $25,900 $27,700 $29,200 4 $19,400 $20,800 $21,900 If any of the age/blindness or the Spouse was born before January 2, 1960 boxes in the standard deduction or entity section of the return are checked, enter/verify the appropriate entries in the AGE/BLIND COUNT field. The system auto populates the window field when the filing status is 3 and the taxpayer has itemized deduction, the box on Schedule A, line 18 is checked, or the Spouse itemizes on a separate return or you were a dual-status alien box in the entity portion of the return is checked. For scanned paper returns, enter a "Y" in the FS3 ITEMIZED/DUAL STATUS ALIEN/IE field when any of those conditions apply. Note: Manually access the Schedule A window, enter/verify the entries. Note: If the Spouse itemizes on a separate return or you were a dual-status alien box in the entity portion of the return is checked, the taxpayer's standard deduction is zero. If the taxpayer is claimed as a dependent on another person's tax return, the standard deduction is limited to the greater of $1,300 OR the individual's earned income for the year plus $450. The standard deduction and TXI per return for this type of individual may change due to U/R issues. The system computes the changed TXI per return, if applicable. Enter/Verify "Y" in the taxpayer CLAIMED ON ANOTHER'S RETURN? field of the Return Value screen. Enter the earned income in the PRIMARY and/or SECONDARY EARNED INCOME field(s) as applicable. Note: Earned income includes wages, salaries, tips, professional fees, and other compensation received for personal services performed. It also includes any amount received as a scholarship that must be included in income. Generally earned income is the total of wages, Schedule C gain/loss, and Schedule F gain/loss. The system automatically subtracts Schedule 1, line 15 from the amount in b above and adds any U/R earned income to compute the correct standard deduction. Note: Be sure that all nontaxable earned income is included in the calculations as is appropriate. If the taxpayer's itemized deductions or earned income is larger than the appropriate standard deduction amount for their filing status, the TXI per return doesn't change. If the taxpayer's itemized deductions or earned income is less than $1,300 and remains less than $450, the TXI per return doesn't change. If the taxpayer's itemized deductions or recomputed earned income plus $450 is equal to or greater than the amount listed in (4) above, but less than the standard deduction amount for their filing status, and there is no U/R unearned income, the system alerts you that the case is below tolerance. Close the case using PC 22. Enter/verify the manually computed standard deduction amount, if applicable in the MANUAL STANDARD DEDUCTION AMT field.

# Recomputation of Tax

4.19.3.14 (09-21-2020) Recomputation of Tax There are several tax rates for ordinary income. The tax rate percentages are 10, 12, 22, 24, 32, 35 and 37. Capital gains may be taxed at different rates, but no higher than 28 percent, even though the taxpayer may have other income taxed at the higher rates. See IRM 4.19.3.8.4.5, Capital Gain Distributions - Analysis. The system automatically computes the tax if the taxpayer uses the tax tables and/or, the tax rate schedules. If the taxpayer uses the Schedule D computation, Schedule J computation, Form 8615, Tax for Certain Children Who Have Unearned Income or Form 8814, Parents' Election To Report Child's Interest and Dividends, the system computes the tax after the necessary information is entered in the applicable windows. See IRM 4.19.3.14.1, 8615 Window, IRM 4.19.3.14.2, Schedule D Tax Window, and/or IRM 4.19.3.14.6, Schedule J (Farm Income Averaging), for further information. If there is no Schedule D and capital gains are listed on line 7, see IRM 4.19.3.14.2, Schedule D Tax Window, for further instruction.

# 8615 Window

4.19.3.14.1 (10-10-2025) 8615 Window A part of some children's investment income may be subject to tax at their parent's rate. This tax is computed on Form 8615, Tax for Certain Children Who Have Unearned Income. If data is present in the 8615 Tax window, it displays in Return Value. A child with investment income over $2,300 (TY 2022), $2,500 (TY 2023), or $2,600 (TY 2024) may use the Form 8615 to compute their tax. Investment income includes any income other than earned income. The system uses the U/R income which doesn't have an Income Identify Code of "PE" , "SE" , "PF" , "SF" , "PB" , "SB" , or "MA" , to compute the investment income. (Be sure to enter ONLY the investment income reported on the return in the CHILD'S INVESTMENT INCOME field on the Form 8615 Tax window.) When Form 8615 is attached to the return or a recomputed Form 8615 is received during the response phase and is used to figure both the child's and the parent's tax, enter/verify the appropriate entries in the 8615 TAX window. Enter/Verify the unearned amount from Form 8615, Line 1 in the UNEARNED INCOME field. Enter/Verify the deduction amount from Form 8615, line 2 in the DEDUCTION AMOUNT field. Enter/Verify parents filing status using Form 8615, line C. Enter "1" for Single, "2" for MFJ, "3" for MFS, "4" for HOH, or "5" for qualifying surviving spouse in the PARENTS FILING STATUS field (TY 2022). Enter/Verify the taxable income amount from Form 8615, line 6 in the PARENT'S TAXABLE INCOME field. Enter/Verify Form 8615, line 7 amount in the TOTAL FROM ALL 8615 FORMS field. Enter/Verify Form 8615, line 10 amount in the PARENT'S TAX field. Enter/Verify Form 8615, line 18 amount in the 8615 tax field. Enter/Verify the MANUAL 8615 TAX. In Case Analysis, leave field blank. In Responses enter the amount from the recomputed Form 8615, line 18 in the MANUAL 8615 TAX field. If there is an indication that the child or the parents used the Qualified Dividend and Capital Gain worksheet, Schedule D or Schedule J (Farm Income Averaging) tax method to figure their tax, enter/verify the appropriate entries in the 8615 Tax window. Issue a CP 2501 Notice and send PARAGRAPH 59. See Exhibit 4.19.3-7, CP PARAGRAPHS. The computed 8615 tax displays in the CORRECTED TAX field of the Return Value screen.

# Schedule D Window

4.19.3.14.2 (10-10-2025) Schedule D Window If there is no Schedule D and qualifying dividends are listed on Form 1040/1040-SR, line 3a: Access the Schedule D window. Enter/verify the qualifying dividends from Form 1040/ Form 1040-SR, line 3a in the QUALIFIED DIVIDENDS field, even if there is no corresponding IR(s) showing the amount of QDIV. Enter/verify the short-term gain or loss amount from Schedule D, line 7 in the SHORT-TERM GAIN (LOSS) field. Enter/verify the net long term gain loss amount from Schedule D, Part II, line 15 in the LONG-TERM GAIN (LOSS) field. If there is no Schedule D, the system populates the amount from Form 1040/1040-SR, line 7 in the LONG-TERM GAIN(LOSS) field. Exception: For scanned paper tax returns, the amount from Form 1040/1040-SR line 7 must be manually entered into the LONG-TERM GAIN(LOSS) field. Enter/verify the 28 percent rate gain from Schedule D, Part III, line 18 in the 28 percent GAIN (LOSS) field Enter/verify the unrecaptured 1250 gain amount from Schedule D, Part III, line 19, in the UNRECAPTURED 1250 GAIN field. Enter/verify the smaller of Form 4952, Investment Interest Expense Deduction, line 4e or the amount entered on the dotted line next to 4e in the FORM 4952 LINE 4e field. Enter/verify the investment interest expense amount from Form 4952, line 4g, in the FORM 4952 LINE 4g field. Enter/verify the manual Schedule D tax in the MANUAL SCHEDULE D TAX field, in applicable. The system computes the tax using the Schedule D computation only if applicable. PARAGRAPH 150 automatically generates when the recomputed tax is based on the Schedule D tax computation. See Exhibit 4.19.3-7, CP PARAGRAPHS.

# Additional Taxes (TY 2022 and Prior)

4.19.3.14.3 (10-10-2025) Additional Taxes (TY 2022 and Prior) The ADDITIONAL TAXES window is used to enter any additional taxes included (from one or more of the check boxes) in the tax line. Enter/verify the additional taxes amount from Form 1040, line 16 in the ADDITIONAL TAXES PER RETURN field. If the taxpayer indicates Form 8814 or ECR, or other box 3 write in amounts on the dotted portion of Form 1040/1040-SR, line 16, enter/verify the amounts in the FORM 8814 TAX/ECR field of the ADDITIONAL TAXES window in Return Value. Enter/verify the Schedule J tax in the MANUAL SCH J TAX RECOMPUTED field if applicable. Note: These cases require special handling, refer to the lead.

# Supplemental Taxes (TY 2023 and Subsequent)

4.19.3.14.4 (10-10-2025) Supplemental Taxes (TY 2023 and Subsequent) The SUPPLEMENTAL TAXES window is used to enter additional taxes from Form 1040/Form 1040-SR, line 16 identified as Form(s) 8814, 4972, or other taxes (box 3). When using box 3, taxpayers are instructed to enter the amount of liability and the form number used in determining the tax in the space next to the box. Enter/verify the per return lump sum tax amount in the F4972 PER RETURN field. Enter/verify the Form 1040/Form 1040-SR, line 16, 8814 box or box 3 amount in the F8814/BOX 3 field. Enter/verify the Schedule J tax in the MANUAL BASE TAX field if applicable. Note: These cases require special handling, refer to the lead. If unable to match the taxpayer's recomputed figures, enter the taxpayer's base tax figure ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ in the MANUAL BASE TAX field. See IRM 4.19.3.23.8, Partially Agreed Responses, for further information.

# Additional Tax From Lump-Sum Distributions (Form 4972)

4.19.3.14.5 (10-10-2025) Additional Tax From Lump-Sum Distributions (Form 4972) Form 4972, Tax on Lump-Sum Distributions is used to figure the tax on a qualified lump-sum distribution (for example, pension, profit sharing, or stock bonus plans) using the capital gain election, the 10-year tax option or both. The tax is paid only once in the year the distribution was received. The tax is included on Form 1040/Form 1040-SR, line 16 when box 2 is checked. Enter/verify the per return amount in the ADDITIONAL TAX PER RETURN field in the ADDITIONAL TAXES window (TY 2022 and prior) or the F4972 PER RETURN field in the F1040, LN16 - SUPPLEMENTAL TAXES window (TY 2023 and subsequent) in the Return Value screen. Reminder: Lump-sum tax is recomputed in the LUMP SUM TAX window in the Case Analysis screen and the amount carries forward to the RECOMPUTED FIELD in Return Value.

# Schedule J (Farm Income Averaging TY 2022 and Prior)

4.19.3.14.6 (10-02-2024) Schedule J (Farm Income Averaging TY 2022 and Prior) Taxpayers who receive income from farming may choose to figure their base tax using Schedule J, Income Averaging for Farmers and Fisherman. These cases require special handling, refer to the lead. Enter/verify the Schedule J tax in the MANUAL SCHEDULE J TAX field in the ADDITIONAL TAXES window if applicable.

# Net Tax Increase/No Net Tax Increase/Tax Decrease Notices

4.19.3.14.7 (09-04-2015) Net Tax Increase/No Net Tax Increase/Tax Decrease Notices The Technical and Miscellaneous Revenue Act of 1988 (TAMRA) changed the definition of net tax deficiency to include a decrease to EIC. A notice must be issued if there is a proposed EIC decrease and the case meets balance due tolerance. The Community Renewal Tax Relief Act of 2000 (CRTRA) changed the definition of net tax deficiency to include a decrease to Additional Child Tax Credit (ACTC). A notice must be issued if there is a proposed decrease to ACTC and the case meets balance due tolerance. AUR defines the net tax change as basic income tax change, minus change to non-refundable credits, plus change to other taxes, plus or minus changes to EIC, Additional Child Tax Credit (ACTC), American Opportunity Credit (AOC), and/or Premium Tax Credit (PTC). Net tax increase is defined as a net tax change greater than zero (0). A majority of AUR cases have a net tax increase. No tax increase is defined as a net tax change of zero (0). Note: The taxpayer's TXI remains negative even after the addition of U/R income. Net tax decrease is defined as a net tax change less than zero (0).

# Schedule 2 Additional Taxes

4.19.3.15 (10-10-2025) Schedule 2 Additional Taxes Schedule 2 is used when the taxpayer has additional taxes that can't be entered directly on Form 1040/Form 1040-SR. Schedule 2, Part 1 is used to report additions to tax which is included on Form 1040/Form 1040-SR, line 17. Schedule 2, Part II is used to report other taxes. See IRM 4.19.3.17, Schedule 2 Changes to Other Taxes, for further information.

# Excess Advance Premium Tax Credit (EAPTC)

4.19.3.15.1 (10-10-2025) Excess Advance Premium Tax Credit (EAPTC) Health Insurance Marketplaces report advance payments of the Premium Tax Credit (PTC), Advanced Premium Tax Credit (APTC), to the IRS on Form 1095-A, Health Insurance Marketplace Statement. Eligible taxpayers can choose to receive the benefit of APTC, which helps to cover the cost of insurance premiums. Taxpayers who receive the benefit of APTC must reconcile the APTC paid on their behalf with the amount of the PTC they are allowed. The computation of the PTC and the reconciliation of PTC and APTC are done using Form 8962, Premium Tax Credit (PTC). Taxpayers whose PTC exceeds their APTC have a net premium tax credit. Net premium tax credit reduces a TP's tax liability and, if more than the tax liability, results in a refundable credit. Refer to IRM 4.19.3.18.6, Net Premium Tax Credit (PTC), for additional information. Taxpayers whose APTC is more than their PTC have Excess Advanced Premium Tax Credit (EAPTC). Taxpayers report EAPTC on Schedule 2, line 2 (TY 2022 and TY 2023) or Schedule 2, line 1a (TY 2024). When AMS is utilized to compute the net premium tax credit and there is an amount of calculated EAPTC, enter/verify the amounts in the Per Return and AMS Amounts fields of the PTC window in Return Value: Note: Print to PDF a copy of the calculation, and send to clerical to upload into the AUR system. If Then The Excess APTC (EATPC) Repay amount is the same in the PER RETURN and AMS AMOUNT field Continue processing. The AMS AMOUNT field is greater or less than the PER RETURN Include the new EAPTC figure in the AMS AMOUNT field and continue processing. The EATPC Repay amount is zero in the PER RETURN and AMS AMOUNT field Continue processing. Note: The system identified the IRS reimbursed the taxpayer for EAPTC. Note: Tax Account Screen will show a TC 290-0 or TC 291 with the Reason Code (RC)152 for the amount reimbursed. Caution: Ensure all other tax account changes are reflected in Return Value. PARAGRAPH 153 automatically generates when the EAPTC repayment is adjusted due to a change to the modified adjusted gross income. Exhibit 4.19.3-7, CP PARAGRAPHS. During the response phase, if the taxpayer requests an adjustment to EAPTC, advise the taxpayer the request must be submitted on Form 1040-X. Send a letter and include a Special Paragraph using following verbiage as an example: "Your response included a request for reimbursement of Excess Advanced Premium Tax credit. To claim the credit, you need to file Form 1040-X, Amended U.S. Individual Tax Return. Send the amended return to the processing center for your state. The information is located on IRS.gov/filing/-where-to-file-paper-tax-returns-with-or-without-a-payment. If your response included Form 1040-X, we will forward the Form 1040-X to the processing center once the issues on this notice has been resolved." If the taxpayer's response includes a Form 1040-X and is requesting an adjustment to EAPTC, work all AUR issues included on Form 1040-X and then forward the Form 1040-X to TS to process the EAPTC. See IRM 4.19.3.23.9.4, Referrals. Include a statement informing TS the AUR issues have been addressed.

# Alternative Minimum Tax (AMT)

4.19.3.15.2 (10-10-2025) Alternative Minimum Tax (AMT) Enter/Verify the entries in the Alt Min Tax (Form 6251) window. If the taxpayer paid AMT on Schedule 2, line 1 (TY 2022 and TY 2023) or Schedule 2, line 2 (TY 2024) enter/verify the entries the entries in the Alt Min Tax (Form 6251) window. Alternative Minimum Tax may also apply due to U/R income and displays the following message: "Alt Min Tax is included in the Total Tax for this case." If the taxpayer is under age 24, manually compute the Form 6251 and enter the result in the MANUAL ALT MIN TAX field. If the Manual Accuracy Penalty applies, see IRM 4.19.3.19.5, Accuracy-Related Penalty Due to Substantial Understatement of Tax, and IRM 4.19.3.19.6, Accuracy-Related Penalty Due to Negligence or Disregard of Rules or Regulations (Negligence Disregard Penalty). To compute/recompute the Alternative Minimum Tax, enter/verify the following fields: Line Number Field Line 2a, Total Taxes You Paid amount from Schedule A SCH A TOTAL TAXES Note: If the taxpayer did not file a Schedule A, the taxpayer's standard deduction will automatically populate. Line 2b, or Schedule 1, line 1 or line 8z, Tax Refund REFUND OF TAXES Note: Enter as a positive amount. Line 2c, Investment Interest Expense INVESTMENT INT EXP Line 2d, Depletion DEPLETION Line 2e, Net Operating Loss deduction Note: Should be a positive amount. NOL (F6251 LN 10) Note: Enter as a positive amount. Line 2f, Alternative tax net operating loss deduction Note: Should be a positive amount. ALT TAX NOL DEDUCTION Line 2g, Specified Private Activity Bonds Exemption TAX-EXEMPT BOND INT Line 2h, Qualified Small Business Stock QUALIFIED SMALL BUSINESS STOCK Line 2i, Exercise of Incentive Stock Options INCENTIVE STOCKS Line 2j, Estates and Trust ESTATES/TRUSTS Line 2k, Disposition of Property DISP OF PROPERTY Line 2l, Depreciation of Assets DEPRECIATION Line 2m, Passive Activities PASSIVE ACTIVITIES Line 2n, Loss Limitations LOSS LIMITATIONS Line 2o, Circulation Costs CIRCULATION COSTS Line 2p, Long-Term Contracts LONG-TERM CONTRACTS Line 2q, Mining Costs MINING COSTS Line 2r, Research and Experimental Costs RESEARCH/EXPERIMENTAL Line 2s, Income from Certain Installment Sales INSTALLMENT SALES Note: Enter as a positive amount. Line 2t, Intangible Drilling Costs INTANGIBLE DRILLING COSTS Line 3, Other Adjustments OTHER ADJUSTMENTS Line 8, Alternative Minimum Tax Foreign Tax Credit ALTERNATIVE MINIMUM TAX Line 11, Alternative Minimum Tax ALTERNATIVE MINIMUM TAX If the taxpayer is under age 24, enter a "Y" TAXPAYER UNDER AGE 24 Note: This information can be found on Form 8814. Manual Alternative Minimum Tax, if applicable MANAUL ALT MIN TAX If the taxpayer was not originally subject to AMT but due to U/R income AMT is being proposed, send PARAGRAPH 220, see Exhibit 4.19.3-7, CP PARAGRAPHS. PARAGRAPH 76 automatically generates when there is a change to Form 6251. See Exhibit 4.19.3-7, CP PARAGRAPHS.

# Additions to Tax

4.19.3.15.3 (10-10-2025) Additions to Tax The Schedule 2, Additions to Tax window is used to capture the following credits: Tax Line Excess advanced premium tax credit repayment (Form 8962) Part 1, line 1a - this amount will auto populate based on entries in the PTC window. Schedule 2, Additions to Tax, Part I Enter/Verify the PER RETURN amount on line 1z which is the total of lines 1b-1y. Alternative Minimum Tax (Form 6251). Line 11 of Form 6251, this amount will auto populate based on entries in the Alternative Minimum Tax window. Schedule 2, Additions to Tax, Part II Enter/Verify the PER RETURN amount on line 3 of Schedule 2. Note: The amounts in the table are reported Schedule 2, line 3 and carried forward to Form 1040/Form 1040-SR, line 17.

# Nonrefundable Credits

4.19.3.16 (10-07-2019) Nonrefundable Credits The AUR program won't verify the eligibility/qualification issues relating to Nonrefundable Credits claimed on the tax return. As a general rule, Nonrefundable Credits allowed during original processing and/or after review by another program (for example, Exam, CI) are considered valid. When the taxpayer doesn't claim a Nonrefundable Credit, AUR will: Include the credit(s) as part of the processing of the case when eligibility/qualification issues are already included on the tax return AND U/R income now entitles the taxpayer to the credit(s). ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ AUR is responsible for adjusting the Nonrefundable Credits that are AGI dependent based on U/R income.

# Changes to Credits

4.19.3.16.1 (09-21-2020) Changes to Credits When a CP 2000 is issued and there are credits on Schedule 3, lines 1-6z enter/verify the amount(s) in the Non-refundable Credit window of the Return Value screen. See AUR System Guide, Non-refundable Credits. ALWAYS check the tax return for the presence of non-refundable credits when verifying entries on the Nonrefundable Credit window, WHETHER OR NOT THEY ARE BEING ADJUSTED DUE TO U/R PROCESSING. If the nonrefundable credits are not entered, the taxpayer will receive an incorrect CP 2000.

# Credit for Child and Dependent Care Expenses

4.19.3.16.2 (10-10-2025) Credit for Child and Dependent Care Expenses Form 2441, Credit for Child and Dependent Care Expenses, may be recomputed when: The original AGI is less than $43,000, or The earned income changes, or Note: Earned income is defined as wages, salaries, tips, other employee compensation and net earnings from self-employment. Earned income also includes the amount on Schedule SE, line 3 minus any deduction on Schedule 1, line 15. A net self-employment loss reduces earned income. Statutory employee earned income (may be indicated by Form W-2, box 13 being checked) is the amount shown on Schedule C, line 31. The spouse is also considered to have earned income, if the spouse is a full-time student or is disabled. Their earned income for each month or part of a month is at least $250 ($500 if more than one qualifying person is cared for). The AGI changes, and/or The Dependent Care Benefits (DCB) change. See IRM 4.19.3.8.2.1, Dependent Care Benefits (DCB), for further instructions on DCB. The taxpayer may claim qualifying person(s) for the credit for child and dependent care expenses if any of the following is met: A qualifying child under the age of 13 whom the taxpayer can claim as a dependent. A disabled person whom the taxpayer can claim as a dependent. You (or your spouse, if MFJ) could be claimed as a dependent on another taxpayers return. If the original AGI is less than $43,000, the credit may decrease if the AGI percentage changes. The credit remains the same as filed or previously adjusted if the original AGI is $43,000, or more, or if addition of the U/R amount doesn't cause the AGI percentage to change. The system computes the correct amount of credit for child and dependent care expenses. Whenever necessary to compute or recompute Child Care Credit, access the window in the Return Value screen and take the following actions to enter/verify: Caution: When Math Error Codes are present that indicate the number of exemptions was changed, additional research may be necessary to verify the number of qualifying children. Enter/verify the original credit for child and dependent care expenses amount from Schedule 3, line 2 in the CHILD CARE CREDIT field. Number of qualifying dependents from Form 2441, line 2 in the QUALIFYING DEPENDENTS field. Qualifying expenses amount from Form 2441, line 3 in the QUALIFYING EXPENSES field. Excluded benefits amount from Form 2441, line 25 in the EXCLUDED BENEFITS field. Amount of Prior Year Expenses reported on the Form 2441, line 9b identified as CPYE in the PRIOR YEAR EXPENSES field. Primary taxpayer's original earned income as reported on Form 2441, line 4 in the PRIMARY EARNED INCOME field. Caution: When earned income is from self-employment, enter the amount shown on Schedule SE, line 3. Secondary taxpayer's earned income as reported on Form 2441, line 5 in the SECONDARY EARNED INCOME field. Enter the manually computed non refundable credit in the MANUAL NON REFUNDABLE CHILD CARE CREDIT field as applicable. Taxpayers sometimes enter an incorrect amount on Form 2441, line 3. This most frequently occurs when DCB is an issue and Part III of the Child Care Credit was incorrectly calculated or was incomplete. When entering QUALIFYING EXPENSES in the Child Care Credit window, use the following procedures to determine the correct entry: Review the taxpayer's entries in Part III, lines 12 through 31 of Form 2441. Prepare a mock Form 2441 to correct any errors and/or complete any omitted entries. Carry the line 31 amount to line 3, Part II of Form 2441. This amount is also entered in the QUALIFYING EXPENSES field in the Child Care Credit window. Send PARAGRAPH 66 when Child Care Credit is adjusted due to DCB impact on the Qualifying Expenses. See Exhibit 4.19.3-7, CP PARAGRAPHS. PARAGRAPH 48 automatically generates when an adjustment is made that impacts Child Care Credit. If the change to Child Care Credit is due to DCB, "toggle off" Paragraph 48 in the Summary screen. See Exhibit 4.19.3-7, CP PARAGRAPHS.

# Credit for the Elderly or Disabled

4.19.3.16.3 (10-25-2023) Credit for the Elderly or Disabled Manually access the Credit for the Elderly or the Disabled window and recompute Schedule R, Credit for the Elderly or the Disabled when: The AGI increases, and/or The nontaxable portion of SS/RR benefits or pension/annuity/disability benefits either changes or was not originally reported on Schedule R, line 13a and/or 13b. Note: Do not adjust the nontaxable pension amount on Schedule R, line 13b unless the taxpayer provides a new line 13b amount. The system computes the correct amount of credit for the elderly. Enter/Verify the appropriate entries in the Credit for the Elderly or Disabled window of the Return Value screen: Original Credit for the Elderly from Schedule 3, line 6d in the ORIGINAL CREDIT FOR ELDERLY field. Number of the box checked on Schedule R, Credit for the Elderly or the Disabled, Part I in the FILING STATUS AGE INDICATOR field. Note: The cursor doesn't leave this field until a valid number is entered, valid entries are single digits "1" through "9" . The taxable disability income amount from Schedule R, line 11 in the TAXABLE DISABILITY INCOME field. Amount computed by the system. Only enter the non-taxable part of Social Security benefits amount from Schedule R, line 13a in the NON-TAXABLE SSA/RRB/AMOUNT field, if needed. Non-taxable veterans' pensions and other pension and annuity amount from Schedule R, line 13b in the OTHER NON-TAXABLE P/A AMOUNT field. PARAGRAPH 13 automatically generates when an adjustment is made to the credit for the elderly. See Exhibit 4.19.3-7, CP PARAGRAPHS.

# Child Tax Credit

4.19.3.16.4 (10-10-2025) Child Tax Credit The Child Tax Credit may be claimed by taxpayers who have a qualifying child. The credit for each qualifying child may be as much as $2,000. Taxpayers who claim a qualifying child may be eligible to claim an Additional Child Tax Credit. See IRM 4.19.3.18.4, Additional Child Tax Credit (ACTC), for further information. To claim the Child Tax Credit, the taxpayer must have a base tax larger than zero (0), have a qualifying child, and complete Schedule 8812, Credits for Qualifying Children and Other Dependents. Taxpayers who qualify for the Refundable Child Tax Credit don't need a base tax larger than zero. A qualifying child, for purposes of claiming the Child Tax Credit, is a child who: Is the taxpayer's son, daughter, stepchild, eligible foster child, brother, sister, stepbrother, stepsister, half brother, half sister, or a descendant of any of them (for example: grandchild, niece, or nephew) AND Is under age 17 at the end of the current AUR tax year; AND Did not provide over one-half of their own support for the current AUR tax year, AND Had the same principal place of abode as the taxpayer for more than half of the year AND Does not file a joint return for the year or files it only to claim a refund of W/H or estimated tax paid AND Is a United States citizen, U.S. national or resident alien. Note: For each qualifying child, the taxpayer must place a "check mark" in the box on column (4) of the Dependents section of their return. The maximum amount of allowable Child Tax Credit begins to decrease when the taxpayer's modified AGI exceeds: $200,000 for filing status - Single, Married Filing Separately, and Surviving Spouse $200,000 for filing status - Head of Household $400,000 for filing status - Married Filing Jointly When the CTC recertification indicator (ACTC-RECERT-CD) field on the Tax Account screen is 2, 3, or 4 and CTC was disallowed during processing, the warning message "WARNING: EIC/CTC/ACTC/AOTC BAN" appears in the MESSAGE window. The AUR system won't allow a CTC calculation in this situation. Note: DO NOT correspond for Form 8862, Information to Claim Certain Credits After Disallowance. The system computes the correct amount of Child Tax Credit. Enter/Verify the appropriate amounts in the CREDITS FOR QUALIFYING CHILDREN AND OTHER DEPENDENTS window. Note: The Child Tax Credit may be limited because other credits have already reduced the taxpayer's tax liability. Due to U/R income, taxpayers who were previously ineligible to claim Child Tax Credit, may now qualify for the credit. When the taxpayer doesn't claim a Child Tax Credit, AUR will: INCLUDE the credit as part of the processing of the case when eligibility/qualification issues are already included on the tax return AND U/R income now entitles the taxpayer to the credit. Example: A box in column (4) of the Dependents section of the return was checked to indicate a dependent claimed is a qualifying child for Child Tax Credit. The base tax per return was zero and Child Tax Credit was not claimed. The issue of Child Tax Credit and/or Additional Child Tax is addressed as part of the Case Analysis processing. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Example: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ When the BASE TAX PER RETURN is zero (0) and the NUMBER OF EXEMPTIONS is more than 1 (for filing status 1, 3, 4 or 5) or more than 2 (for filing status 2), the system displays a message that the taxpayer may qualify for Child Tax Credit. When the taxpayer has previously claimed Child Tax Credit, the CREDITS FOR QUALIFYING CHILDREN AND OTHER DEPENDENTS window automatically displays on the Return Value screen. Caution: If the taxpayer did not claim the Child Tax Credit, it may be necessary to access the window when certain conditions exist, see (15) below. If the CREDITS FOR QUALIFYING CHILDREN AND OTHER DEPENDENTS window doesn't automatically display, manually access the window when either of the following situations occur: The BASE TAX NOW on the Return Value screen is greater than zero (0) and the taxpayer checks a box on column (4) of the Dependents section of the return to indicate that a dependent claimed is a qualifying child for the Child Tax Credit AND The taxpayer is claiming Additional Child Tax Credit. The CREDITS FOR QUALIFYING CHILDREN AND OTHER DEPENDENTS window will populate when a completed Schedule 8812, Credits for Qualifying Children and Other Dependents is attached. If Schedule 8812 isn't attached and there are qualifying dependents on the return, allow the credit unless the address is foreign then don't allow the credit. Correspond for a completed Schedule 8812. For entries in the CREDITS FOR QUALIFYING CHILDREN AND OTHER DEPENDENTS window take the following action: Note: Credit appears on the Tax Account screen as a TC 766 (with Reference Code 272). Enter/Verify Field Child Tax Credit amount from Form 1040/1040-SR, line 19 RETURN AMT The number of qualifying children (enter 0 if no qualifying children) indicated on Form 1040/1040-SR QUALIFYING CHILDREN Note: This is a required field. The number of qualifying other dependents indicated on Form 1040/1040-SR OTHER DEPENDENTS Resident selection Note: Schedule 8812, line 20 "no" box should be checked when the taxpayer is a resident of Puerto Rico, they have less than three children and there is an amount on line 21. PUERTO RICO RESIDENT INDICATOR Additional child tax credit amount appears on the Tax Account screen as a TC 766 (with Reference Code 336) See IRM 4.19.3.17.4, Additional Child Tax Credit, and IRM 4.19.3.17.5, Refundable Child Tax Credit, for more information. ADD'L CHILD TAX CREDIT AMT SST and Medicare Tax withheld, including any amounts withheld from U/R wage IRs, from Schedule 8812, Child Tax Credit, Part II, line 21 SS/MED TAXES WITHHELD Total SET Deduction and Tip Tax amount(s) from Form 1040, Schedule 1, line 14 and Schedule 2, line 5 plus amount from Schedule 1, line 15, Schedule 2, line 7 and 13 identified as UT plus any amount identified as uncollected taxes 1/2 SE DED/TIP TAX CTC Ban in effect, override - the box populates in the window when the system identifies a ban is present on the account. ONLY check the box if the previously disallowed credit was reversed during or after original processing. Note: Verify the tax account screen for adjustments relating to the Child Tax Credit. CTC BAN Manually computed non-refundable credit MANUAL NON-REFUNDABLE CHILD TAX CREDIT Manually computed additional child tax credit MANUAL ADD'L/REFUNDABLE CHILD TAX CREDIT PARAGRAPH 120 automatically generates when the Child Tax Credit is adjusted. See Exhibit 4.19.3-7, CP PARAGRAPHS.

# Other Dependent Credit (ODC)

4.19.3.16.4.1 (10-10-2025) Other Dependent Credit (ODC) The TCJA created a new nonrefundable credit that allows taxpayers to claim a credit for other dependents. The maximum credit is $500 for each dependent who doesn't qualify for the Child Tax Credit. The Other Dependent Credit is calculated using the Credits for Qualifying Children and Other Dependents, and is claimed on Form 1040/ Form 1040-SR, line 19. To claim the Other Dependent Credit the taxpayer must have a base tax larger than zero (0) and have a qualifying dependent. A qualifying dependent, for purposes of claiming the Other Dependent Credit must meet all of the following conditions: Have an SSN, ITIN or ATIN issued on or before the due date of the return (including extensions) AND Be claimed as a dependent on the return AND Can't be used to claim CTC, ACTC, AND Be a U.S citizen, U.S. national, U.S. resident alien. The amount of allowable Other Dependent Credit begins to decrease when the taxpayer's modified AGI exceeds: $200,000 for filing status - Single, Married Filing Separately, Head of Household, and Qualifying Surviving Spouse $400,000 for filing status - Married Filing Jointly When the taxpayer doesn't claim the Other Dependent Credit, AUR will: INCLUDE the credit as part of the processing of the case when eligibility/qualification issues are already included on the tax return AND U/R income now entitles the taxpayer to the credit. Example: The "Credit for other dependents" box in column (4) of the Dependents section of the return was checked to indicate a dependent claimed is a qualifying dependent for Other Dependent Credit. The base tax per return was zero and Other Dependent Credit was not claimed. The issue of Other Dependent Credit is addressed as part of the Case Analysis processing. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Example: ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ When the taxpayer has previously claimed Other Dependent Credit, CREDITS FOR QUALIFYING CHILDREN AND OTHER DEPENDENTS window automatically displays on the Return Value screen. Caution: If the taxpayer did not claim the Other Dependent Credit, it's necessary to access the window when certain conditions exist, see (7) below. See AUR System Guide. If the CREDITS FOR QUALIFYING CHILDREN AND OTHER DEPENDENTS window doesn't automatically display, manually access the window when the BASE TAX NOW on the Return Value screen is greater than zero (0) and the taxpayer checks a Credit for other dependents box in column (4) of the Dependents section of the return to indicate that a dependent claimed is a qualifying dependent for the Other Dependent Credit.

# Education Credits

4.19.3.16.5 (10-10-2025) Education Credits Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits), is recomputed when U/R income causes a change to the modified AGI or there is no Form 1098-T, Tuition Statement, to substantiate the deduction. Taxpayers CANNOT claim Education Credits when: The taxpayer is claimed as a dependent on someone else's tax return. The taxpayer's filing status is Married Filing Separately (FS 3 or FS 6). The taxpayer is a nonresident alien. Lifetime Learning Credits and American Opportunity Education Credit begins to decrease (phase out) when the modified AGI exceeds the lower limit and is eliminated (disallowed) when the MAGI exceeds the upper limit of: $80,000 - $90,000 for filing status - Single, Head of Household, or Qualifying Surviving Spouse $160,000 - $180,000 for filing status - Married Filing Joint Note: Add excluded foreign earned income/housing cost amount to the AGI per return to determine MAGI. Form 8863 is used to determine education credits: Form 8863, Part I is used to determine the refundable portion of the American Opportunity Credit. Form 8863, Part II is used to determine the nonrefundable Education Credits. Form 8863, Part III is Student and Educational Institution Information. A separate Part III must be completed for each student. To access the student information click in the "Student Count" box and use the arrow up/down keys to view each student's information. Note: The student may qualify for the following higher education tax benefits: American Opportunity Credit, Lifetime Learning Credit, or tax-free withdrawal from a Coverdell ESA. For each student, the taxpayer can elect for any tax year only one of the credits. The taxpayer can claim either the American Opportunity or Lifetime Learning Credit even if the student excluded a distribution from a Coverdell ESA, as long as the same expenses are not used for both benefits. Note: If the taxpayer erroneously claims both the American Opportunity Credit and the Lifetime Learning Credit for the same student, allow the taxpayer to claim the greater of the two credits if the taxpayer is otherwise eligible for both credits for the student. If Form 8863, Part III, lines 23-26 are not completed, disallow the related credits. Send PARAGRAPH 128, see Exhibit 4.19.3-7, CP Paragraphs. If the dependent is claimed for EIC purposes, verify the child's year of birth to determine if the child is eligible (old enough to be attending a post secondary education institute) before disallowing the credit. If it can be determined that the dependent does NOT qualify for the Education Credits (for example, has been claimed for Child Care Credit, Child Tax Credit, EIC and/or Additional Child Tax Credit) see (9) below. Use the table below to determine who qualifies for Education Credit: If the Education Credit Then Claimed on Form 8863, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and there is no 1098T IR present For each student listed on Form 8863 Part III: Enter/verify the return amount in both the RETURN AMT (Form 8863, line 19 or Schedule 3, line 3) and RFNDBLE (TY 2022) OR REFUNDABLE (TY 2023 and subsequent) CREDIT RETURN AMT (Form 8863, line 8) fields in the EDUCATION CREDIT window. Enter a zero (0) in the MANUAL RFNDBLE EDU CREDIT field. Enter a zero (0) in the MANUAL EDUCATION CREDIT field. Note: PARAGRAPH 98 is automatic when there is no Form 1098-T and the credit is fully disallowed. Send PARAGRAPH 98, as appropriate; see Exhibit 4.19.3-7, CP PARAGRAPHS. Claimed on Form 8863 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, and the 1098T IR is less than the amount claimed on Form 8863, lines 27 or 31 For each student listed on Form 8863 Part III: Enter/verify the return amount in both the RETURN AMT (Form 8863, line 19 or Schedule 3, line 3) and RFNDBLE (TY 2022) OR REFUNDABLE (TY 2023 and subsequent) CREDIT RETURN (Form 8863, line 8) AMT fields in the EDUCATION CREDIT window. Caution: Lifetime Learning credit is limited to a maximum of $10,000 education expenses. If IR(s) are present for the taxpayer that equal or exceed the maximum allowable amount a Mock may not be necessary. Prepare a mock Form 8863 using the 1098T IR amount on Form 8863, lines 27 or 31. Use the BASE TAX NOW plus revised ALT MIN TAX (if any) and revised Child Care Credit, Foreign Tax Credit and/or Credit for the Elderly to complete Form 8863, line 19. Use the AGI PER RET plus the TOTAL U/R AMT to complete the Form 8863, line 3 and 14. Enter new line 8 amount from the mock Form 8863 in the MANUAL RFNDBLE (TY 2022) OR REFUNDABLE (TY 2023 and subsequent) EDU CREDIT field. Enter new line 19 amount from the mock Form 8863 in the MANUAL EDUCATION CREDIT field. Send the 1098T IR. Send PARAGRAPH 98, see Exhibit 4.19.3-7, CP PARAGRAPHS. Claimed on Form 8863, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and NO 1098T is present. For each student listed on Form 8863,Part III: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Enter/verify the return amount in both the RETURN AMT (Form 8863, line 19 or Schedule 3, line 3) and RFNDBLE (TY 2022) OR REFUNDABLE (TY 2023 and subsequent) CREDIT RETURN AMT (Form 8863, line 8) fields in the EDUCATION CREDIT window. Caution: Lifetime Learning credit is limited to a maximum of $10,000 education expenses. If IR(s) are present for the taxpayer that equal or exceed the maximum allowable amount a Mock may not be necessary. Prepare a mock Form 8863 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ on Form 8863, lines 27 or 31. Use the BASE TAX NOW plus revised ALT MIN TAX (if any) and revised Child Care Credit, Foreign Tax Credit and/or Credit for the Elderly to complete Form 8863, line 19. Use the AGI PER RET plus the TOTAL U/R AMT to complete the Form 8863, line 3 and 14. Enter new line 8 amount from the mock Form 8863 in the MANUAL RFNDBLE EDU CREDIT field. Enter new line 19 amount from the mock Form 8863 in the MANUAL EDUCATION CREDIT field. Note: PARAGRAPH 98 is automatic when there is no Form 1098-T and the credit is fully disallowed. Send PARAGRAPH 98, as appropriate; see Exhibit 4.19.3-7, CP PARAGRAPHS. Claimed on Form 8863 is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, and 1098T IR is present For each student listed on Form 8863, Part III: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Enter/verify the return amount in both the RETURN AMT (Form 8863, line 19 or Schedule 3, line 3) and RFNDBLE (TY 2022) OR REFUNDABLE (TY 2023 and subsequent) CREDIT RETURN AMT (Form 8863, line 8) fields in the EDUCATION CREDIT window. Prepare a mock Form 8863 using the 1098T IR amount≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ on Form 8863, lines 27 or 31. Use the BASE TAX NOW plus revised ALT MIN TAX (if any) and revised Child Care Credit, Foreign Tax Credit and/or Credit for the Elderly to complete Form 8863, line 19. Use the AGI PER RET plus the TOTAL U/R AMT to complete the Form 8863, line 3 and 14. Enter new line 8 amount from the mock Form 8863 in the MANUAL RFNDBLE (TY 2022) OR REFUNDABLE (TY 2023 and subsequent) EDU CREDIT field. Enter new line 19 amount from the mock Form 8863 in the MANUAL EDUCATION CREDIT field. Send the 1098T IR. Send PARAGRAPH 98, see Exhibit 4.19.3-7, CP PARAGRAPHS. Claimed on the Form 8863 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: PARAGRAPH 98 is automatic when there is no Form 1098-T and the credit is fully disallowed. Send PARAGRAPH 98, when appropriate; see Exhibit 4.19.3-7, CP PARAGRAPHS. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If it has been determined that the dependent DOES NOT qualify for education credits (for example, claimed for EIC or ACTC purposes), disallow the dependent's education credit amount. If the Education Credit Then Claimed on Form 8863, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and NO 1098-T is present. Enter/verify the return amount in both the RETURN AMT (Form 8863, line 19 or Schedule 3, line 3) and RFNDBLE (TY 2022) OR REFUNDABLE (TY 2023 and subsequent) CREDIT RETURN AMT (Form 8863, line 8) fields in the EDUCATION CREDIT window. Enter a zero (0) in the MANUAL RFNDBLE (TY 2022) OR REFUNDABLE (TY 2023 and subsequent) EDU CREDIT field. Enter a zero (0) in the MANUAL EDUCATION CREDIT field. Send PARAGRAPH 175, see Exhibit 4.19.3-7, CP PARAGRAPHS Note: PARAGRAPH 98 is automatic when there is no Form 1098-T and the credit is fully disallowed. Send PARAGRAPH 98, when appropriate; see Exhibit 4.19.3-7, CP PARAGRAPHS. Claimed on Form 8863 is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, and 1098T IR is present Enter/verify the return amount in both the RETURN AMT(Form 8863, line 19 or Schedule 3, line 3) and RFNDBLE (TY 2022) OR REFUNDABLE (TY 2023 and subsequent) CREDIT RETURN AMT (Form 8863, line 8) fields in the EDUCATION CREDIT window. Prepare a mock Form 8863 using the 1098T IR amount on Form 8863, lines 27 or 31. Use the BASE TAX NOW plus revised ALT MIN TAX (if any) and revised Child Care Credit, Foreign Tax Credit and/or Credit for the Elderly to complete Form 8863, line 19. Use the AGI PER RET plus the TOTAL U/R AMT to complete the Form 8863, line 3 and 14. Enter new line 8 amount from the mock Form 8863 in the MANUAL RFNDBLE (TY 2022) OR REFUNDABLE (TY 2023 and subsequent) EDU CREDIT field. Enter new line 19 amount from the mock Form 8863 in the MANUAL EDUCATION CREDIT field. Send the 1098T IR. Send PARAGRAPH 98, see Exhibit 4.19.3-7, CP PARAGRAPHS. Send PARAGRAPH 175, see Exhibit 4.19.3-7, CP PARAGRAPHS Claimed on Form 8863, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Enter/verify the return amount in both the RETURN AMT (Form 8863, line 19 or Schedule 3, line 3) and RFNDBLE (TY 2022) OR REFUNDABLE (TY 2023 and subsequent) CREDIT RETURN AMT (Form 8863, line 8) fields in the EDUCATION CREDIT window. Enter a zero (0) in the MANUAL RFNDBLE (TY 2022) OR REFUNDABLE (TY 2023 and subsequent) EDU CREDIT field. Enter a zero (0) in the MANUAL EDUCATION CREDIT field. Send PARAGRAPH 175, see Exhibit 4.19.3-7, CP PARAGRAPHS Note: PARAGRAPH 98 is automatic when there is no Form 1098-T and the credit is fully disallowed. Send PARAGRAPH 98, when appropriate; see Exhibit 4.19.3-7, CP PARAGRAPHS. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Enter/Verify the appropriate entries in the Education Credits window, which includes entries for the following fields: AOC QUAL EXPENSES (TY 2022) or AOC QUALIFIED EXPENSE (TY 2023 and subsequent) - Form 8863, line 1 LIFETIME QUAL EXPENSE (TY 2022) or LIFETIME QUALIFIED EXPENSE (2023 and subsequent) - Form 8863, line 10 NOT ELIGIBLE FOR EDU CR REFUND - Enter "Y" if box on Form 8863, line 7 is checked. The amount of allowable Education Credits is determined after the Base Tax has been reduced by any Child Care Credit and/or Credit for the Elderly or Disabled claimed. The Education Credits window MUST be accessed after the Child Care Credit and/or the Credit for the Elderly or Disabled window(s). Selecting the windows out of sequence may result in calculating an incorrect change to the Education Credits. PARAGRAPH 58 automatically generates when Education Credits are adjusted, unless there is an amount enter in the MANUAL EDUCATION CREDIT field in the Education Credit window. See Exhibit 4.19.3-7, CP PARAGRAPHS. PARAGRAPH 98 automatically generates when there is no Form 1098-T and the credit is fully disallowed. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

# Education Credits - Responses

4.19.3.16.5.1 (10-02-2024) Education Credits - Responses If ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ disallow the credit, even if the response includes Form 1098-T and/or a list of expenses, and correspond with the taxpayer. Send PARAGRAPH 216, see Exhibit 4.19.3-7, CP PARAGRAPHS. Example: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Caution: The Form 1098-T isn't accurate when determining if the student is enrolled at least half time or is a graduate student. If the taxpayer provides a copy of Form 1098-T with the amount in box 1 or similar documentation, or a written explanation of the amounts paid equal or greater to the amount claimed. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. If the taxpayer provides a copy of Form 1098-T with a lesser amount in box 1 and/or provides a written explanation of amounts paid which is less than originally claimed, take the following actions: Enter/verify the return amount in both the RETURN AMT (Form 8863, line 19 or Schedule 3, line 3) and RFNDBLE (TY 2022) OR REFUNDABLE (TY 2023 and subsequent) CREDIT RETURN AMT (Form 8863, line 8) fields in the EDUCATION CREDIT window. Prepare a mock Form 8863, using the taxpayer's information to complete Form 8863, lines 27 or 31. Use the BASE TAX NOW plus revised ALT MIN TAX (if any), Excess Advance PTC Repayment (if any), and revised Child Care Credit, Foreign Tax Credit and/or Credit for the Elderly to complete Form 8863, line 19. Use the AGI PER RET plus the TOTAL U/R AMT to complete the Form 8863, line 3 and 14. Enter new line 8 amount from the mock Form 8863 in the MANUAL RFNDBLE (TY 2022) OR REFUNDABLE (TY 2023 and subsequent) EDU CREDIT field. Enter new line 19 amount from the mock Form 8863 in the MANUAL EDUCATION CREDIT field. Send PARAGRAPH 234, see Exhibit 4.19.3-7 CP PARAGRAPHS. If the taxpayer responds with a completed Form 8863 claiming Education Credits (American Opportunity and Lifetime Learning Credits) for the first time (the credit was not claimed originally), take the following action: If Then The taxpayer isn't eligible to claim the credit because: The taxpayer is claimed as a dependent on someone else's tax return The taxpayer's filing status is Married Filing Separately (FS 3 or FS 6) The taxpayer is a nonresident alien Do not allow the credit. Send PARAGRAPH 217, see Exhibit 4.19.3-7, CP PARAGRAPHS. Based on the taxpayer's entries, Form 8863, Part III, lines 23 - 26 are not completed appropriately Disallow the related credits. Send PARAGRAPH 218, see Exhibit 4.19.3-7, CP PARAGRAPHS. Note: Attempt to call the taxpayer for the requested documentation. See IRM 4.19.3.23.2.4.1, Out Calls - Calling the Taxpayer, for additional information on Out Calls. Form 8863, lines 23 - 26 indicate the student isn't eligible Do not allow their portion of the credit. Send PARAGRAPH 217, see Exhibit 4.19.3-7, CP PARAGRAPHS. 1098T IR is present Allow the credit. Caution: The amount of qualified expenses can't exceed the 1098T IR amount, unless the taxpayer has attached an explanation of the additional expenses. The taxpayer provides a copy of Form 1098-T or similar documentation Caution: The amount of qualified expenses can't exceed the amount in box 1 of Form 1098-T, unless the taxpayer has attached an explanation of the additional expenses. Allow the credit. 1098T IR is NOT present or the taxpayer doesn't provide a copy of Form 1098-T, similar documentation, or a written explanation of amounts paid. Do not allow the credit. Correspond with the taxpayer for a copy of the Form 1098-T or an explanation of amounts paid. Send Paragraph 98 if issuing a CP 2000. Attempt to call the taxpayer for the requested documentation. See IRM 4.19.3.23.2.4.1, Out Calls - Calling the Taxpayer, for additional information on Out Calls. Request verification for the amount claimed on Form 8863 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

# Qualified Retirement Savings Contributions Credit (QRSC)

4.19.3.16.6 (11-29-2023) Qualified Retirement Savings Contributions Credit (QRSC) Form 8880, Credit for Qualified Retirement Savings Contributions (QRSC), is recomputed when: U/R income causes a change to the AGI Distributions are increased due to U/R Contributions are disallowed Taxpayers CANNOT claim the QRSC credit when: They are younger than 18 years old. They are claimed as a dependent on someone's tax return. They are a full-time student. The QRSC begins to phase-out when the taxpayer's AGI exceeds the lower limit and is eliminated (disallowed) when the AGI exceeds the upper limit in the table below: Filing Status TY 2022 TY 2023 TY 2024 1, 3, 5 or 6 $20,500 - $34,000 $21,750 - $36,500 $23,000 - $38,250 4 $30,750 - $51,000 $32,625 - $54,750 $34,500 - $57,375 2 $41,000 - $68,000 $43,500- $73,000 $46,000 - $76,500 Enter/Verify the appropriate entries in the Retirement Savings Credit window if Form 8880 is attached to the return. Enter/Verify the RETURN AMT amount from Schedule 3, line 4 or Form 8880, line 12. TOTAL IRA CONTR/ELECTIVE DEFERRALS - Adjust ONLY when there is unsubstantiated traditional IRA contributions (no 5498 IR). Correct the amount claimed on Form 8880, line 1a and/or 1b and add to the taxpayer entries from Form 8880, line 2a and/or 2b. If not adjusting the contributions deduction, use the sum of the taxpayer entries from Form 8880, lines 1a and /or 1b and 2a and/or 2b. Note: Taxpayers are entitled to claim contributions to Roth IRAs on Form 8880, line 1a and/or 1b. TOTAL DISTRIBUTIONS - Adjust ONLY when there are U/R retirement distributions. If the taxpayer entry on Form 8880, line 4a and/or 4b, equals the total retirement distribution amount, use the taxpayers entry in the window; if not, enter the sum of Form 8880, line 4, plus the U/R distribution amount in both the TAXPAYER and SPOUSE fields for filing status 2; for all others enter only in the taxpayer field. If not adjusting retirement distributions use the taxpayer entries from Form 8880, line 4a and/or 4b. Exception: Do not include distributions identified with COD "G" , "H" , "L" , "M" , "N" , "R" , "8" , "P" , "U" , or military retirement distributions (DFAS) in the amount on line 4a and/or 4b, Form 8880. MANUAL RSC CREDIT - Enter/Verify the new manually computed retirement savings account when applicable. The amount of allowable QRSC credits is determined after the Base Tax has been reduced by any: Foreign Tax Credit, Child Care Credit, Credit for the Elderly and/or Education Credits claimed. Caution: The Retirement Savings Credit window MUST be accessed after the Child Care Credit, Credit for the Elderly and/or Education Credit window(s). Selecting the windows out of sequence may result in calculating an incorrect change to the QRSC credit. PARAGRAPH 56 automatically generates when the QRSC credit is adjusted. See Exhibit 4.19.3-7, CP PARAGRAPHS.

# Qualified Adoption Expenses Credit

4.19.3.16.7 (10-02-2024) Qualified Adoption Expenses Credit Form 8839, Qualified Adoption Expenses is recomputed when the taxpayer's modified AGI changes. A credit of up to the amounts listed in the table below may be claimed for qualifying expenses to adopt an eligible child. TY 2022 TY 2023 TY 2024 $14,890 $15,950 $16,810 The Credit for Qualified Adoption Expenses begins to phase-out when the taxpayer's MAGI exceeds the lower limit and is eliminated (disallowed) when the MAGI exceeds the upper limit in the table below: TY 2022 TY 2023 TY 2024 $223,410 - $263,410 $239,230 - $279,230 $252,150 - $292,150 Exception: If the taxpayer claimed a carryforward credit from a prior year the MAGI limitation doesn't apply. If due to U/R income, the taxpayer's MAGI is between the amounts listed in (2) above, PARAGRAPH 188 automatically generates when there is a decrease to the adoption credit. Note: Toggle off PARAGRAPH 188 when the adoption credit increases. If due to U/R income, the taxpayer's AGI exceeds the amounts in (2), PARAGRAPH 189 automatically generates when the adoption credit is disallowed. See Exhibit 4.19.3-7, CP PARAGRAPHS. Note: If the adoption credit is being allowed due to the prior year carryforward credit, toggle off PARAGRAPH 189. The system computes the correct amount of credit for qualified adoption expenses. Enter/Verify the appropriate amounts in the ADOPTION CREDIT window: Total number of adopted children from Form 8839, Part I in the TOTAL NUMBER OF ADOPTED CHILDREN FROM FORM 8839, PART I. Enter the amount of qualified adoption expenses from Form 8839, line 6 as filed or previously adjusted, in the QUALIFYING ADOPTION EXPENSES field. Total amount of prior year carryforward credit from Form 8839, line 13 in the PRIOR YEAR CARRYFORWARD CREDIT field. Enter the adoption credit amount from Form 1040/1040-SR Schedule 3, line 6c or as adjusted in the ADOPTION CREDIT PER RETURN field. Enter the manually computed adoption credit amount, if applicable, in the MANUAL ADOPTION CREDIT field.

# Non-Refundable Carryback/Carryforward Credits

4.19.3.16.8 (10-10-2025) Non-Refundable Carryback/Carryforward Credits If the remaining non-refundable credits are in excess of the tax liability, they may be carried forward or back to another year to offset tax. The Non-Refundable Credits window is used to capture the following credits: Form Line Foreign Tax Credit (Form 1116) Enter/Verify the amount of Foreign Tax Credit reported on Schedule 3, line 1, and line 35, from Form 1116. Residential Energy Credits (Form 5695) Enter/Verify the amount of Residential Energy Credit included on Schedule 3, line 5, from Form 5695, line 15. Energy Efficient Home Improvement Credit (Form 5695) Enter/verify the amount of Energy Efficient Home Improvement credit included on Schedule 3, Line 5, from Form 5695, line 30 (TY 2022) or Schedule 3, Line 5b, from Form 5695, line 32 (TY 2023 and subsequent) General Business Credit (Form 3800) Enter/Verify the amount of General Business Credit included on Schedule 3, line 6a, from Form 3800, line 38. Credit for PYM Tax (Form 8801) Enter/Verify the amount of Prior Year Minimum Tax included on Schedule 3, line 6b, from Form 8801, line 25. Alt Motor Veh Credit (Form 8910) For TY 2022, enter/verify the amount of Alternative Motor Vehicle Credit included on Schedule 3, line 6e, from Form 8910, line 15. Qualified Plug In Motor Veh (Form 8936) For TY 2022, enter/verify the amount of Qualified Plug In Motor Vehicle included on Schedule 3, line 6f, from Form 8936, line 23. Clean Veh Credit (Form 8936) For TY 2023 and subsequent, enter/verify the amount of Clean Vehicle Credit included on Schedule 3, line 6f, from Form 8936, line 13. Note: Paragraph 276 will automatically generate when the credit is reduced to zero due to MAGI changes. Exhibit 4.19.3-7, CP PARAGRAPHS Credit for Prev Owned Clean Veh (Form 8936) For TY 2023 and subsequent, enter/verify the amount of Credit for Previously Owned Clean Vehicles included on Schedule 3, line 6m, from Form 8936, line 18. Note: If the credit is reduced to zero due to MAGI changes send PARAGRAPH 276, Exhibit 4.19.3-7, CP PARAGRAPHS Mortgage Interest Credit (Form 8396) Enter/verify the amount of Mortgage Interest credit included on Schedule 3, line 6g from Form 8396, line 9 Unidentified Credit For TY 2022, these amounts are credit amounts from Schedule 3, Line 6h-6z. If there is a field in the Non-Refundable Credit window that corresponds, input the credit to the correct field (per return and recomputed) and zero out in the Unidentified Credit window. DC First Time Homebuyer Credit (Form 8859) Enter/Verify the amount of DC First Time Homebuyer Credit amounts from Schedule 3, line 6h from Form 8859, line 3. Qualified Electric Veh Credit (Form 8834) Enter/Verify the amount of Qualified Electric Vehicle Credit included on Schedule 3, line 6i from Form 8834, line 7. Alt Fuel Veh Refueling Property Credit (Form 8911) Enter/Verify the amount of Alternative Fuel Vehicle Refueling Property Credit included on Schedule 3, line 6j from Form 8911, line 10. Credit to Holders of Tax Credit Bonds (Form 8912) Enter/Verify the amount of Credit to Holders of Tax Credit Bonds included on Schedule 3, line 6k from Form 8912, line 12. Partner's Additional Reporting Year Tax (Form 8978) Enter the amount of Form 8978, line 14 included on Schedule 3, line 6l. Other Nonrefundable Credits Enter/Verify the amount of other nonrefundable credit(s) included on Schedule 3, line 7 minus credits reported on line 6c and 6d. Note: Although the Non-Refundable Credit window appears last in the sequence of credits windows, the AUR system applies the Foreign Tax credit first against the base tax. Note: All RECOMPUTED fields in the window are enterable fields and can be adjusted as needed. If it is determined there's unused non-refundable credits (even if the unused credits would offset the additional tax), issue a notice as appropriate. PARAGRAPH 20 automatically generates when any entries (other than zero or the Foreign Tax Credit) are in the NON-REFUNDABLE CREDITS window. See Exhibit 4.19.3-7, CP PARAGRAPHS. Ensure that the carryback/carryforward guidelines are followed if the taxpayer responds requesting change(s) to the amount of previously reported credits(s). For window entries in the Other Credit window for the SICK and FAMILY LEAVE CREDIT, shown as a refundable credit, enter as follows: Enter the amount on Form 1040/Form 1040-SR, Schedule 3, line 13b (for leave taken before April 1, 2021) or 13h (for leave taken after March 31, 2021) ( TY 2022). For TY 2023, taxpayers are instructed to enter Tax on the dotted line of Schedule 3, line 13z for qualified sick and family leave from Schedule H, line 8e or line 8f. For TY 2022, taxpayers can claim a refundable credit for qualified sick and family leave for wages paid in TY 2022. Enter/verify the appropriate amounts from Form 1040/1040-SR, Schedule 3, line 13b ( TY 2022) or Schedule 3, line 13z (TY 2023) in the REFUNDABLE CREDITS portion of the Other Credit window. Note: IRS provided alternatives for this form to be included with an e-filed return. Some software providers allow the forms to be attached as a PDF file and others as a statement attached to the return. Accept attached statements in lieu of Form 7202 if they include reporting information similar to the actual form. AUR won't initiate any changes to the Sick and Family Leave credit, however, taxpayers may request a change by submitting a new or revised Schedule H. Some cases may require a manual assessment, see IRM 4.19.3.23.12, Assessments, for further information. During the response phase if the taxpayer requests an increase to the Sick and Family Leave credit, send a letter to the taxpayer informing them to submit Form 1040-X, Amended U.S. Individual Tax Return. If the response includes a Form 1040-X with an increase to the Sick and Family Leave credit, work the AUR issues and then forward to Taxpayer Services (TS) to process the credit. Leave a case note and send a letter to inform the taxpayer their Form 1040-X has been sent to the appropriate department for processing the Sick and Family Leave credit. Note: Include a statement in the referral informing TS that the AUR issues have been addressed.

# Schedule 2 Changes to Other Taxes

4.19.3.17 (10-10-2025) Schedule 2 Changes to Other Taxes The following instructions pertain to changes to certain other taxes claimed. These other taxes may include: Other Taxes Self Employment Tax Social Security tax on tip income unreported to the employer 10 percent tax on early distributions from qualified retirement plans 10 percent additional tax on Qualified Education Program Payments (QTPs and CESAs) 25 percent tax on early distributions from SIMPLE IRAs 20 percent tax on medical savings account distributions 20 percent Additional Tax for Health Saving Accounts 50 percent Additional Tax for Medicare Advantage MSA distributions Additional taxes on income received due to participation in a nonqualified deferred compensation plan that doesn't meet the requirements under IRC 409A Net Investment Income Tax Additional Medicare Tax Miscellaneous other taxes

# Self-Employment Tax

4.19.3.17.1 (12-16-2024) Self-Employment Tax The taxpayer must pay SE tax, which is a combination of social security tax and Medicare tax for individuals who work for themselves. Self-employed individuals must pay SE tax on the entire amount of their net earnings from self-employment of $434 or more ($108.28 or more of church employee income). SE tax is computed on Schedule SE and entered on Schedule 2, line 4. Schedule SE represents information for only one taxpayer (a maximum of two, one for each spouse, may be attached to a return). Underreported self-employment income must be associated with the appropriate taxpayer. Verify that the correct Income Identify Code is displayed for U/R income that is subject to SE tax. "PB" - business self-employment income for the primary taxpayer "PF" - farm self-employment income for the primary taxpayer "SB" - business self-employment income for the secondary taxpayer "SF" - farm self-employment income for the secondary taxpayer Note: Payee EIN IRs won't have an Income Identify code. An Income Identify code must be entered in order for the system to assess the SE tax. Exception: For TY 2023, the state of Connecticut issued "Hero Payments" , reported on Form 1099-NEC with the Income Identity Code systemically removed. Do not pursue SET when the IR is from the state of Connecticut and the Income Identity Code has been removed. SE tax must be computed/recomputed or evaluated (considered) when the following conditions apply: There is U/R self-employment income Note: A fully U/R Interest and/or Dividend IR with a payee EIN is considered self-employment income. There is reported self-employment income that isn't included on Schedule SE, see Exhibit 4.19.3-20, Examples of Self-Employment Income. If self-employment income and/or SELF EMPLOYMENT TAX field on Income Comparison is asterisked Note: Unidentified income of $400 or more reported Schedule 1, line 8z is subject to SE tax. Send PARAGRAPH 39 if applicable, see Exhibit 4.19.3-7, CP PARAGRAPHS. Note: If the amount reported on Schedule 1, line 8z is identified as Gulf Oil Spill (GOS) or Gulf Coast Claims Facility (GCCF) payments, or Excess Business Losses (ELA), DO NOT assess SE tax. There is an increase to social security wages, Medicare wages, allocated tips, or tips from Form W-2 There is a change to Form 4137, line 10 (as filed or as adjusted during U/R processing) There is a change to Form 8919, line 10 (as filed or adjusted during U/R processing). There is a change to self-employment income using the Misc Adjust/Schedule C Expense window, see IRM 4.19.3.5.9, Miscellaneous, for further information. Be sure to follow Schedule SE line-by-line when computing or recomputing SE tax as certain limitations apply. When SE tax is computed or recomputed, enter/verify the appropriate entries in the SE Tax window of the Case Analysis screen. Caution: If the SE Tax window computes a $1 change, verify the amount from Schedule 2, line 4, or the SE tax amount on the Tax Account screen (consider dollars and cents), then adjust the SE Tax window accordingly. Reminder: Enter the information for each taxpayer (primary and/or secondary), in the appropriate fields. Enter/Verify all fields, DO NOT just "Enter" through the fields: If taxpayer computed SE tax using the Then recompute SE tax by taking the following actions: Regular method Enter/verify the amount(s) from Schedule SE, Self-Employment Tax, for the PRIMARY and/or SECONDARY SE TAX PER RETURN field(s). Note: To allow the system to recompute the self-employment tax, the PRIMARY and/or SECONDARY SE TAX NOW field(s) must be blank. If an amount is entered, the system uses the amount entered. During responses, a zero must be entered in the primary and/or secondary SE TAX NOW field(s), as applicable, when computing FICA tax in lieu of self-employment tax. Enter/verify the amount(s) of total self-employment income from Schedule SE in the PRIMARY and/or SECONDARY REPORTED SE INCOME field(s). Note: This amount must be verified, even if the optional method is used. Negative amounts are entered in the PRIMARY and/or SECONDARY REPORTED SE INCOME fields(s) in the SELF EMPLOYMENT TAX window. This amount should include (but is not limited to) the net totals of Schedule C and Schedule F, Profit or Loss From Farming. Note: The amount(s), shown in the PRIMARY and/or SECONDARY SCHEDULE C EXPENSE CHANGE fields of the MISC ADJUSTMENT/SCHEDULE C EXPENSE window, automatically carry over to the PRIMARY and/or SECONDARY SCH C EXPENSE CHANGE fields of the SELF-EMPLOYMENT TAX WINDOW. Enter/verify the amount(s) from Schedule SE as reported or corrected, in the PRIMARY and/or SECONDARY SS/RR WAGES/TIPS field(s) including U/R Social Security/Railroad Retirement wages. Note: Do not include any U/R Social Security/Railroad Retirement (SS/RR) allocated tips, any unreported tips from Form 4137, Social Security and Medicare Tax on Unreported Tip Income, or SE income identified in responses as being subject to FICA tax; the system adds these amounts automatically. Enter/verify the amount(s) from Schedule SE in the PRIMARY and/or SECONDARY CHURCH WAGES field(s). Enter self-employment income reported elsewhere on the return, on which self-employment tax has not been paid and isn't included in the other fields, in the PRIM and/or SEC REPRTD SE INC NOT ON SCH SE field. Note: Include amounts from Schedule C or F (net profit) that were not previously subject to SE Tax since the total was less than $400. Do not enter a negative amount. After entering/verifying the appropriated entries, click on "COMPUTE" (to view the changes before committing). Optional method Enter "Y" in the OPTIONAL METHOD INDICATOR field(s). Enter the total reported net farm income from Schedule F and/or Schedule K-1 in the PRIMARY and/or SECONDARY NET FARM P/L field(s). Enter the total reported gross farm income from Schedule F and/or Schedule K-1 in the PRIMARY and/or SECONDARY GROSS FARM INCOME field(s). Enter the total reported net nonfarm income from Schedule C, and/or Schedule K-1 in the PRIMARY and/or SECONDARY NET NONFARM P/L field(s). Enter the total reported gross nonfarm income from Schedule C, and/or Schedule K-1 in the PRIMARY and/or SECONDARY GROSS NONFARM INCOME field(s). Note: Verify PRIMARY and/or SECONDARY REPORTED SE INCOME field(s) with amounts from Schedule SE. Click on "COMPUTE" (to view the changes before committing). Optional method BUT no longer qualifies If present, clear the amount(s) in the applicable PRIMARY and/or SECONDARY SE TAX NOW field(s). Enter the reported net self-employment income in the applicable PRIMARY and/or SECONDARY SE INC NOT ON SCH SE field(s). If present, remove the "Y" from the PRIMARY and/or SECONDARY OPTIONAL METHOD IND field(s), leaving the field(s) blank. If present, remove any amount(s) from the PRIMARY and/or SECONDARY NET FARM P/L field(s), leaving field(s) blank. If present, remove any amount(s) from the PRIMARY and/or SECONDARY GROSS FARM INCOME field(s), leaving field(s) blank. Click "COMPUTE" (to view the changes before committing). The system computes the correct amount of SE tax for each taxpayer. If there is U/R SE income or SE tax on the original return and the RETURN VALUE option is selected, the SE Tax window displays. The SE Tax window may also be selected from the menu. Incorrect entries in the SE Tax window cause unpostable conditions. The SE Tax window must be selected in the proper case analysis sequence as described in IRM 4.19.3.4.2, Case Analysis Screen. If SE Tax window is selected out of order, a message displays describing the proper sequence. To allow the system to recompute the SE tax, the PRIMARY and/or SECONDARY SE TAX NOW field(s) must be blank. Negative amounts must be entered in the PRIMARY and/or SECONDARY REPORTED SE INCOME field(s) in the SE Tax window. This amount should include (but isn't limited to) the totals from Schedule C, line 31 and Schedule F, line 34. Changes made to the PRIM/SEC SCH C EXPENSES in the MISC ADJUSTMENT/SCHEDULE C EXPENSE window displays on the SETAX window. Verify the taxpayer has reported the correct amount of social security wages and tips and railroad retirement (Tier 1) compensation, on the Schedule SE, Part 1, line 8a. Enter the verified line 8a amount plus U/R SS/RR wages in the PRIMARY/SECONDARY SS WAGES/TIPS/RR field. If Schedule SE isn't present, enter the total REPORTED amount from self-employment income in the PRIM REPRTD SE INC NOT ON SE field and/or the SEC REPRTD SE INC NOT ON SE field. Do not enter negative amounts. Do not include in the PRIMARY/SECONDARY SS WAGES/TIPS/RR field any U/R SS/RR, allocated tips, any changes to Form 8919 or U/R tips on Form 4137, or SE income identified as being subject to FICA tax; the system adds these amounts automatically. Note: If the original SE tax from Schedule SE, Part 1, line 12 is over $.50, round to the nearest dollar when entering the amount in the SE Tax window. If the taxpayer reports NEC income on the wage line of Form 1040/1040-SR and attaches a Form 8919, Uncollected Social Security and Medicare Tax on Wages, to assess the employee share of FICA, the taxpayer is indicating they are NOT LIABLE for SET on NEC because they are an employee. Unless an employment status determination has been rendered by the SS-8 group to identify the taxpayer as an independent contractor or employee, SE Tax must be assessed. To ensure credit is given for the tax paid on Form 8919: Do not change the Income Identify Code. Access the SE Tax window and enter the Primary/Secondary Form 8919 tax in the PRI/SEC 8919 INCOME SUBJECT TO SE TAX field. Enter the amount of reported NEC in the PRIM/SEC 8919 INCOME SUBJECT TO SE TAX field. Note: DO NOT enter this amount in the "Reported SE Income not on Sch SE" field of the SE Tax window. If necessary, adjust the PRI/SEC SS/RR WAGES/TIPS field so it doesn't include the NEC amount from Form 8919. Remove any amount from the ADDITIONAL FICA TAX window that is subject to SE Tax in the PRIMARY/SECONDARY INCOME SUBJECT TO FICA field. The negligence and reasonable cause columns display ONLY if the Accuracy Penalty Indicator shows a penalty computation is required. If it is determined there is NO CHANGE to the currently assessed SE tax, enter the amount from the PRIMARY and/or SECONDARY SE TAX NOW field(s). When SE tax is the only issue and the negligence penalty applies, enter the amount from the PRIMARY and/or SECONDARY SE TAX PER RETURN field. Leave the PRIMARY and/or SECONDARY SE TAX NOW field(s) blank to allow the system to compute the reasonable cause portion of the SE tax by taking the following actions: Enter/verify the amount from the PRIMARY and/or SECONDARY REPORTED SE INCOME field(s), less reported SE income included in this field on which SET has not been paid and reasonable cause has not been established. Enter/verify the amount from the PRIMARY and/or SECONDARY SS/RR WAGES/TIPS field(s), less the portion of U/R SS/RR wages included in this field on which reasonable cause has not been established. SE tax isn't assessed for the following conditions: The payer name indicates that the PTK-1 income is from a limited partnership (for example, Smith and Jones, LTD, LLC, LLP, LC, or LP). Exception: G-PAY income elements on a fully U/R PTK-1 from a limited partnership are subject to SE tax. Partially reported PTK-1 IR(s) that the taxpayer did not treat as self-employment income. The payer name indicates that the taxpayer works for their spouse or is under age 18 and works for their parents The taxpayer writes "Exempt Form 4361" or "Exempt Form 4029" on Schedule 2, line 4, or there is some indication that they are exempt from SE tax. Caution: If the taxpayer claims Exempt Form 4361 or Form 4029 on an ELF return, the applicable indicator is checked on the TRDB screen. The taxpayer writes Exempt-Notary on Schedule 2, line 4. Caution: Only the income attributable to Notary Public is exempt from SE tax. The taxpayer is a Statutory employee (box 13 on Form W-2 is checked or IR indicates SEI). The taxpayer is a motor vehicle sales-person and is paid OTINC by an auto manufacturer The taxpayer is a member of a federally recognized tribe and received income from tribal per capita distributions or from Indian gaming proceeds. See IRM 4.19.3.8.6.1, Nonemployee Compensation (NEC) - Analysis The taxpayer is a newspaper carrier or magazine seller under the age of 18. Scholarship/stipend or fellowship income. Non-compete income. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: To suppress the SE tax computation, the Income Identify Code for the U/R income should be blank. See Exhibit 4.19.3-9, Income Identify Codes. When Schedule C expenses are disallowed for a Non-Statutory Employee, don't adjust any SE tax claimed. To suppress a change to SE tax: Manually access the SE Tax window. Enter the SE tax per return in the PRIMARY and/or SECONDARY SE TAX NOW field(s). The taxpayer no longer qualifies for the optional method if the taxpayer originally computed SE tax using the farm or non-farm optional method, but because of AUR processing, now has: TY New gross farm income greater than And new net farm profits equal to or greater than 2022 $9,060 $6,540 2023 $9,840 $7,103 2024 $10,380 $7,493 OR new net non-farm profits equal to or greater than the amounts listed in the table below or 72.189 percent of farm income TY 2022 TY 2023 TY 2024 $6,540 $7,103 $7,493 Send applicable IR elements when the SE tax is adjusted. PARAGRAPH 17 automatically generates when SE tax is adjusted because of U/R self-employment income and/or reported income on which the taxpayer should have paid SE tax but did not. Toggle off Paragraph 17 when not applicable. See Exhibit 4.19.3-7, CP PARAGRAPHS. PARAGRAPH 18 automatically generates when SE tax is adjusted because there is an increase to social security wages or tips from Form W-2. See Exhibit 4.19.3-7, CP PARAGRAPHS. PARAGRAPH 29 automatically generates when SE tax is adjusted because the taxpayer no longer qualifies for the optional method. See Exhibit 4.19.3-7, CP PARAGRAPHS. Taxpayers can claim the deductible part of SE tax on Schedule 1, line 15. Whenever there is a change to SE tax, the system automatically recomputes the SE tax deduction. This deduction must be figured separately when a joint return is filed. When there is a change to SE tax, the TOTAL AGI CHANGE field on the Case Analysis screen will include the adjustment to the SE tax deduction.

# Social Security Tax on Tip Income Unreported to the Employer

4.19.3.17.2 (02-23-2024) Social Security Tax on Tip Income Unreported to the Employer If the taxpayer received tips of $20 or more in any calendar month (working for one employer) but did not report all of them to their employer, social security tax must be figured on the tips not reported regardless of the category or the amount. This tax is computed on Form 4137, Social Security and Medicare Tax on Unreported Tip Income, and carried forward to Schedule 2, line 5. The income may or may not be reported on the return. The SST on TIPS window displays upon selection of Return Value when Social Security tax on U/R income is present on the return. Take the following action when SST on unreported tip income is included on the return: Enter/verify the original primary/secondary unreported total tip tax amount from Form 4137 in the PRIMARY/SECONDARY UNREPORTED TIP TAX field(s). Enter/verify the original primary/secondary unreported tips subject to Medicare tax from Form 4137, line 6, amount in the PRIMARY/SECONDARY ALLOCATED TIPS field(s). Note: If the Form 4137, line 4 amount is less than the amount of tips reported on Form 1040, line 1c, recompute the Form 4137, line 6 amount using the amount of tips actually reported on Form 1040 instead of Form 4137, line 4 amount. Use this recomputed Form 4137, line 6, amount in the above field. Enter/verify the primary/secondary reported wages and tips having Social Security/Railroad Retirement (Tier 1) tax withheld from Form W-2 or Form 4137, line 8, plus any U/R SS/RR wages in the PRIMARY/SECONDARY SS/RR WAGES/TIPS field(s). Note: If Form 4137 was NOT used, this amount can be taken from Form 1040, line 1c. Correct this amount if necessary. Add to this amount, any U/R SS/RR wages. Do not include unreported tips from Form 4137 or SE income identified in responses as being subject to FICA tax. (The system includes these amounts.) Enter/verify the original primary/secondary Form 4137, line 10 amount in the PRIMARY/SECONDARY UNREPORTED SS TIPS field(s). If the Form 4137, line 6 amount has been recomputed for the PRIMARY/SECONDARY ALLOCATED TIPS field(s), use this recomputed line 6 amount in recomputing the line 10 amount. Use the recomputed line 10 amount in this field. Enter/verify the amount from Form 4137, dotted portion of line 10 identified as "1.45 percent tips" in the PRIMARY/SECONDARY MEDICARE-ONLY TIPS field(s). If the Form 4137, line 6 amount has been recomputed, use the recomputed line 6 amount. When the taxpayer completes Form 4137, paying the TIP TAX, but doesn't report the Allocated Tips (ATIPS) on Form 1040/1040-SR, line 1c take the following action: Enter a zero (0) in the PRIM/SEC A-TIP field(s). Enter a zero (0) in the PRIM/SEC UNREPORTED SSTIPS field(s). See IRM 4.19.3.8.1.5, Wages Miscellaneous, for further instructions. The system automatically computes the correct social security tax on unreported tip income based on the entries in the SST on TIPS window. The SST on TIPS window must be selected in the proper case analysis sequence as described in IRM 4.19.3.4.2, Case Analysis Screen. If the SST on TIPS window is selected out of order, a message displays describing the proper sequence. The REASONABLE CAUSE field(s) only displays when the Accuracy Related Penalty Due to Negligence applies. Send PARAGRAPH 68 when an increase in social security wages causes a change to Form 4137. See IRM 4.19.3-7, CP PARAGRAPHS. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Close with PC 28.

# 10 Percent Tax on Early Distributions from Qualified Retirement Plans/25 Percent Tax on Early Distributions from SIMPLE IRAs

4.19.3.17.3 (10-10-2025) 10 Percent Tax on Early Distributions from Qualified Retirement Plans/25 Percent Tax on Early Distributions from SIMPLE IRAs The taxable portion of early distributions from qualified retirement plans may be subject to an additional tax equal to 10 percent. Taxpayers are required to include Form 5329 if they are claiming an exception of early distributions to qualified plans. SIMPLE IRA - for early distributions from a SIMPLE IRA within the first two years, the additional tax is increased to 25 percent, (but is reduced to 10 percent for years thereafter). Roth distributions that are a return of conversion contributions or rollover contributions from a qualified retirement plan may be subject to the additional 10 percent tax on early distributions from qualified retirement plans if taken within the 5-year period (early distribution) and an exception doesn't apply. This is true even if the distribution isn't considered taxable income. If an early withdrawal from a deferred annuity is otherwise subject to the 10 percent additional tax, a 5 percent rate may apply instead. A 5 percent early distribution tax could apply to distributions under a written election providing a specific schedule for the distribution of the taxpayer's interest in the contract if, as of March 1, 1986, the taxpayer began receiving payments under the election. The taxpayer will multiply the taxable portion of the eligible distribution by 5 percent (instead of 10 percent). The taxpayer must attach an explanation to the tax return. If the distribution is identified as being only subject to a 5 percent additional tax, see (15)d below for further instructions. Distributions issued before the taxpayer reaches age 59 1/2 are subject to the additional 10 percent tax or additional 25 percent tax for SIMPLE IRAs unless the distribution is subject to certain exceptions to the additional tax. Qualified retirement plans include: Section 401(k) plan Section 403(a) annuity Section 403(b) plan Qualified employee retirement plans Qualified annuity plans Tax-sheltered annuity plans for employees of public schools or tax-exempt organizations IRAs (traditional, Roth, SEP or SIMPLE) Information returns display a check box if the payer checked Form 1099-R, box 7, for IRA/SEP/SIMPLE. Caution: Form 1099-R, box 7 may not be checked to indicate the distribution is from and IRA account with COD J. The system computes the 10 percent tax on early distributions from qualified retirement plans (including IRAs) or the 25 percent tax on early distributions from SIMPLE IRA Plans when the taxpayer's age is less than 59 and: For the 10 percent tax on early distributions, the IND field on the Case Analysis screen has a Distribution Code of "J" , "L" , "M" , "1" , or "5" . For the 25 percent tax on early distributions from SIMPLE IRA Plans, the IND field on the Case Analysis screen has a Distribution Code of "S" . Note: When an IR contains both GR/A and TX/A amounts, the IR Code of the GR/A amount must be "X" (system assigned), "D" or "N" to ensure the 10 percent or 25 percent tax isn't assessed on the Gross Distribution amount. Suppress the system computed 10 percent tax on early distributions from qualified retirement plans (including IRAs) using the 5329 window before entering Return Value. Note: DO NOT use Income Identify Code "RO" for the 10 percent early distribution tax. You must access the 5329 window and follow the system prompts to verify/enter figures. Caution: Verify the ADDITIONAL TAX AMOUNT FIELD of the 5329 window when both taxpayers are subject to the early distribution tax. Math verification MUST BE done to ensure the appropriate early distribution tax amount is charged, take the $1 rounding into consideration. Use the MANUAL TAX NOW AMOUNT field to enter the math verified amount. To suppress the system computed 5 percent or 25 percent on early distributions from qualified plans (including IRAs), see (15) below. DO NOT assert the 10 percent tax on an early distribution from qualified retirement plans (including IRAs), or the 25 percent tax on an early distribution from SIMPLE IRA Plans when there is an indication the taxpayer is age 59 1/2 or older or one of the following exceptions apply: Exception: If it can be clearly determined the Form 5329 exception code or explanation isn't consistent with the distribution type (example: There is a clear indication the Form 1099-R distribution is an IRA distribution and the taxpayer uses Form 5329 exception code 01 which isn't applicable to an IRA.), pursue the early distribution tax issue. Send PARAGRAPH 26 explaining the reason for the disallowance. See Exhibit 4.19.3-7, CP PARAGRAPHS. Note: For exceptions to the 10 percent additional tax on Qualified Education Program distributions (QTP, EARN, and CESA), see IRM 4.19.3.17.5, 10 Percent Tax on Qualified Education Program Payments. Exception Code Exception Description 01 Exception only applies to Non-IRA's The distribution was from a qualified retirement plan other than an IRA (for example, a 401(k) or a 403(b) plan) and was made to an employee who separated from their employer in or after the year in which they reached age 55 (age 50 for qualified Public Safety Officers including federal law enforcement officers, customs and border protection officers, federal firefighters, and air traffic controllers). 02 The distribution is part of a series of substantially equal periodic payments over the owner's/taxpayer's life (an annuity). 03 The distribution was due to total and permanent disability. The taxpayer may indicate this by attaching a Schedule R to their return containing a Statement of Permanent and Total Disability, or there is an indication that a statement was filed previously. 04 The distribution is a death benefit. 05 The distribution was used to pay medical expenses in excess 7.5 percent of the AGI. 06 Exception only applies to Non-IRA's The distribution was from a qualified retirement plan other than an IRA and was paid to an alternate person under a qualified domestic relations order (divorce decree). 07 Exception only applies to IRA's The distribution from an IRA was used by certain unemployed taxpayers to pay health insurance premiums. 08 Exception only applies to IRA's The distribution from an IRA was used to pay for qualified higher education expenses. 09 Exception only applies to IRA's The distribution (up to $10,000 from each spouse's account) from a traditional, Simple or Roth IRA was used to buy, build or rebuild a first home. 10 The distribution is due to an IRS levy of a qualified plan. 11 The taxpayer indicates they are an active duty reservist. The Pension Protection Act of 2006 exempts active duty reservists from the early distribution tax that normally applies to retirement distributions received before age 59 1/2. 12 Distributions incorrectly indicated as early distributions by code 1, J, or S in box 7 of Form 1099-R. Include on line 2 the amount received when age 59 1/2 or older. 13 Exception only applies to Non-IRA's Distributions from a section 457 plan, which aren't from a rollover from a qualified retirement plan. 14 Exception only applies to Non-IRA's Distributions from a plan maintained by an employer if: Distributions from a plan maintained by an employer if: The taxpayer separated from service by March 1, 1986, your entire interest was in pay status under a written election that provides a specific schedule for the distribution of your entire interest; and The distribution is actually being made under the written election. 15 Exception only applies to Non-IRA's Distributions that are dividends paid with respect to stock described in section 404(k). 16 Exception only applies to Non-IRA's Distributions from annuity contracts to the extent that the distributions are allocable to the investment in the contract before August 14, 1982. For additional exceptions that apply to annuities, see Tax on Early Distributions under Special Additional Taxes in Pub. 575. 17 Exception only applies to Non-IRA's Distributions that are phased retirement annuity payments made to federal employees. See Pub. 721 for more information on the phased retirement program. 18 Permissible withdrawals under section 414(w). 19 Qualified birth or adoption distributions. Attach a statement that provides the name, age, and TIN of the child or eligible adoptee. 20 Distributions for terminal illness. 21 Corrective distributions made on or after December 29, 2022, for excess contributions distributed before the due date of the tax return. 22 Eligible distributions to a domestic abuse victim (up to $10,000). 23 Emergency personal expense distributions (up to $1,000 from each spouse's account). 99 More than one exception applies. If the taxpayer filed Form 8915-C, Form 8915-D, or Form 8915-F, which are not subject to the 10 percent or 25 percent early distribution tax, see IRM 4.19.3.8.10.3.1, Qualified Disaster Retirement Plan Distributions and Repayments for further information. If Form 5329 is attached with Part I completed, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ as to the amount of the distribution(s) subject to the 10 percent or 25 percent tax on early distributions from IRAs, qualified retirement plans (including IRAs). The 5329 window must be accessed to verify/enter the correct amounts in the 5329 window fields to allow the system to compute the correct 10 percent tax on early distributions by: Enter/verify the age(s) for the PRIMARY/SECONDARY taxpayer in the TAXPAYER AGE field(s). Enter/verify the non-IRA distribution amount for the PRIMARY/SECONDARY taxpayer in the NON-IRA DISTRIBUTION TOTAL field(s). Enter/verify the IRA distribution amount for the PRIMARY/SECONDARY taxpayer in the IRA DISTRIBUTION TOTAL field(s). Note: Enter/verify Roth IRA distributions with code "J" in the PRIMARY/SECONDARY taxpayer in the IRA DISTRIBUTION TOTAL field(s). Enter/verify the rollover/Form 8606 amount for the PRIMARY/SECONDARY taxpayer in the TOTAL ROLLOVER/8606 NON-TAXABLE AMOUNT field(s). Enter/verify the exception code from Form 5329 for the PRIMARY/SECONDARY taxpayer in the 5329 EXCEPTION CODE field(s). Enter/verify the exception amount from Form 5329 for the PRIMARY/SECONDARY taxpayer in the 5329 EXCEPTION AMOUNT field(s). Enter "Y" for the PRIMARY/SECONDARY taxpayer in the PUBLIC SAFETY EMPLOYEE field when it can be determined if the taxpayer(s) is a retired public safety officer. Otherwise, leave blank. Note: The AMOUNT SUBJECT TO ADDITIONAL TAX and ADDITIONAL TAX NOW AMOUNT fields are system calculated. Enter the manual computed additional tax, if applicable, in the MANUAL TAX AMOUNT field. Caution: Due to rounding, the amount of early distribution tax reported on the tax return may be $1 more than the AUR system calculation. Use the MANUAL TAX AMOUNT field of the 5329 window to account for the $1 difference per IR. Verify the amounts in the PREMATURE DIST TAX (IRA) fields in the Total Other Tax window of the Return Value screen for 5 percent and 25 percent tax on early distributions. If the amount is incorrect, mark or modify the IR(s) on the Case Analysis screen, as needed, to allow the system to compute the correct tax on the early distribution. Create an IR if: The taxpayer paid the 5 percent, 10 percent or 25 percent tax on a distribution for which there is no IR present on the Case Analysis screen. The Form 5329 or Form 1099-R are attached, use to determine the amount for the created IR. The taxpayer has a Form 1099-R attached which is subject to the 5 percent, 10 percent or 25 percent tax, the taxpayer did not pay the 5 percent, 10 percent or 25 percent tax on it, and there is no IR present on the Case Analysis screen. Modify an IR if: The conditions in (6) above apply but the IR isn't subject to the tax on early distributions. The IR is subject to tax on early distributions, but the Distribution Code isn't "J" , "L" , "M" , "1" , "5" or "S" . Enter the appropriate Distribution Code in the IND field. The IR was partially rolled over and only the taxable portion is subject to the tax on early distributions. Distribution Code "J" , "L" , "M" , "1" , "5" or "S" will be used only for the portion which was not rolled over. A Form 1099-R distribution is identified as being only subject to a 5 percent early distribution tax (as identified by the taxpayer's explanation), change the Income Identify Code to "5P" . Enter/Verify Form 1040/1040-SR, Schedule 2, line 8. See (2) above for further information. See AUR System Guide, Modifying Information Returns, for additional information. To avoid the additional 25 percent tax on an early distribution from a SIMPLE IRA Plan, the distribution must be rolled over/transferred into another SIMPLE IRA Plan. PARAGRAPH 11 automatically generates when the additional 10 percent tax is assessed. See Exhibit 4.19.3-7, CP PARAGRAPHS. PARAGRAPH 194 automatically generates when the additional 25 percent tax is assessed. See Exhibit 4.19.3-7, CP PARAGRAPHS. Send reported 1099R IR elements when the additional 10 percent or 25 percent tax is adjusted.

# 20 Percent Tax on Archer Medical Savings Account (AMSA) and Health Savings Account (HSA) Distributions

4.19.3.17.4 (09-30-2014) 20 Percent Tax on Archer Medical Savings Account (AMSA) and Health Savings Account (HSA) Distributions Archer Medical Savings Account (AMSA) and Health Savings Account (HSA) distributions may be subject to an additional tax equal to 20 percent of the taxable portion of the distribution. The system computes the 20 percent additional tax on the distribution when: The taxpayer's age is less than 65, and The DIST CD field on the Case Analysis screen has a Distribution Code of 1 or 5 DO NOT assert the 20 percent additional tax if there is an indication: The taxpayer is age 65 or older The taxpayer attached a Schedule R containing a Statement of Permanent and Total Disability, or there is an indication that a statement was filed previously The distributions were used to pay qualified medical expenses The taxpayer rolled over the distributions The distribution was received after the death of the owner/taxpayer Enter Income Identify Code "RO" to suppress the system computed 20 percent additional tax on distributions. If Form 8853 is attached with Part II completed correctly, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ as to the amount of distribution(s) subject to the 20 percent additional tax on MSA distributions. Do not pursue the 20 percent additional tax if the box on Form 8853, Part II line 9a is checked. If Form 8889 is attached with Part II completed correctly, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ as to the amount of distribution(s) subject to the 20 percent additional tax on HSA distributions. Do not pursue the 20 percent additional tax if the box on Form 8889, Part II line 17a is checked. Enter/Verify the amount in the ARCHER MSA/HSA field in the Other Taxes window of the Return Value screen. Because the system only computes the 20 percent additional tax when all the conditions in (2) above apply, an IR will need to be created or modified. See AUR System Guide, Modifying Information Returns, for additional information. If the conditions in (2) above apply but the IR isn't subject to the 20 percent additional tax (see (3) above to determine when the 20 percent additional tax doesn't apply), enter Income Identify Code "RO" to suppress the 20 percent additional tax. Create an IR if: The taxpayer paid the 20 percent additional tax on a distribution for which there is no IR present on the Case Analysis screen. Use the Form 8853, Form 8889 or Form 1099-SA if attached, to determine the amount for the created IR. The taxpayer has a Form 1099-SA attached which is subject to the 20 percent additional tax, the taxpayer did not pay the 20 percent additional tax on it, and there is no IR present on the Case Analysis screen. The IR is subject to the 20 percent additional tax but the Distribution Code isn't "1" or "5" . enter Distribution Code "1" in the DIST CD field. The IR was partially rolled over and only the taxable portion is subject to the 20 percent additional tax. Distribution Code 1 or 5 should be used only for the portion which isn't rolled over. Reminder: Mark the 99-SA IR element(s) with Send Indicator "S" when adjusting the 20 percent additional tax. PARAGRAPH 196 automatically generates when the 20 percent additional tax on AMSA applies. See Exhibit 4.19.3-7, CP PARAGRAPHS. PARAGRAPH 140 automatically generates when the 20 percent additional tax on HSA applies. See Exhibit 4.19.3-7, CP PARAGRAPHS.

# 10 Percent Tax on Qualified Education Program Payments

4.19.3.17.5 (09-24-2021) 10 Percent Tax on Qualified Education Program Payments Taxable EARN is subject to a 10 percent additional tax on the amount included as income. Taxpayers report the distribution subject to the 10 percent tax on Form 5329, Part II, line 7. The system will compute the 10 percent additional tax and enter the amount in the RECOMPUTED PREMATURE DIST TAX (EDU) field in the Total Other Taxes window. Include any reported 10 percent additional tax from Form 5329, Part II, line 8, in the PER RETURN PREMATURE DIST TAX (EDU) field. It may be necessary to create or modify an IR to allow the system to compute the correct amount of additional tax. Mark the 1099Q IR element(s) with Send Indicator "S" when adjusting the 10 percent additional tax. If the EARN is reported and the taxpayer should have paid the 10 percent additional tax but did not, send PARAGRAPH 219, see Exhibit 4.19.3-7, CP PARAGRAPHS. Do not charge the 10 percent additional tax if there is an indication that the QTP/CESA distribution was paid to a beneficiary (or the estate of the designated beneficiary) on or after the death of the designated beneficiary. Do not charge the 10 percent additional tax if there is an indication that the QTP/CESA distribution was made because the designated beneficiary: Note: When applicable, Income Identify Code "RO" must be entered to suppress the 10 percent additional tax. Is disabled. Received a qualified scholarship, Veterans educational assistance, employer-provided educational assistance or any other nontaxable payments received for educational expenses. Included in income because of attendance at a U.S. military academy (such as West Point). Included in income only because the qualified education expenses were taken into account in determining the American Opportunity or Lifetime Learning Credit. The CESA distribution was a return of excess contributions.

# Additional Taxes on Income from Nonqualified Deferred Compensation Plan (IRC 409A)

4.19.3.17.6 (10-29-2024) Additional Taxes on Income from Nonqualified Deferred Compensation Plan (IRC 409A) Income received due to participation in a nonqualified deferred compensation plan that doesn't meet the requirements under IRC 409A is identified as "NQDC" in the INCOME TYPE field on Form W-2, box 12, code Z and "NDCOM" on Form 1099-MISC, box 15. Note: IRC 409A(a)(1)(B)(i) imposes additional taxes that consist of two parts: One part consists of 20 percent of the deferred compensation required to be included as income (the "NQDC" or "NDCOM" amount) and the other is an interest calculation based on when the underpayment would have occurred had the deferred compensation been includible in gross income for the tax year in which it was first deferred or, if later, isn't subject to a substantial risk of forfeiture. The interest is an additional 1 percent above the current rate for that year. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Enter status code "R" on the "NQDC" or "NDCOM" element(s). The system computes the additional tax based on the "NQDC" or "NDCOM" amount. Verify the amounts in the NQDC fields in the Total Other Taxes window of the Return Value screen. See AUR System Guide, Other Taxes. If the taxpayer reports additional taxes identified as "NQDC" on Form 1040/1040-SR, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ It may be necessary to mark the "NQDC" or "NDCOM" IR(s) with status code "N" or "D" and update the OTHER MISCELLANEOUS TAXES PER RETURN (update with the new per return field information) and RECOMPUTED fields to show the amount the taxpayer reported. DO NOT change the amounts in the NQDC fields in the Total Other Taxes window. PARAGRAPH 174 automatically generates when the additional tax is assessed. See Exhibit 4.19.3-7, CP PARAGRAPHS. Mark "NQDC" or "NDCOM" elements with Send Indicator "S" when the additional tax is being adjusted.

# Net Investment Income Tax (NIIT) - Form 8960

4.19.3.17.7 (10-10-2025) Net Investment Income Tax (NIIT) - Form 8960 The Net Investment Income Tax (NIIT) applies at a rate of 3.8 percent to certain net investment income of individuals, estates, and trusts. In general, net investment income means interest, dividends, annuities, royalties, rents, net gain from the disposition of property derived in the ordinary course of a trade or business that isn't a passive activity, other gross income from a trade or business that is a passive activity and of trading in financial instruments or commodities, and over allowable deductions allocable to such gross income or net gain. Taxpayers file Form 8960, Net Investment Income Tax - Individual, Estates, and Trusts, to report the NIIT. The NIIT is computed/recomputed when the taxpayer has net investment income and their modified adjusted gross income (MAGI) exceeds the following: $200,000 for single or head of household $250,000 for married filing jointly or surviving spouse $125,000 for married filing separately If Form 8960 was filed with the return, enter/verify the following entries in the Net Investment Income Tax window: Line Number Field Line 17 NET INVEST TAX PER RETURN Line 8 Note: The AUR system populates the "TOTAL INVEST INCOME PER RETURN" field. When entering/verifying Form 8960, line 8, don't include net non-passive income (Schedule E Part II columns i, j and k and Part III, columns e and f). If the taxpayer includes non-passive income on Form 8960, line 8, follow the taxpayer's intent. Note: Taxpayers may not correctly include their annuities from a nonqualified plan on Form 8960. If the taxpayer reports a 1099R IR that contains a COD "D" in box 7 but doesn't include the amount on Form 8960, line 3, ensure the amount is included in the TOTAL INVEST INCOME PER RETURN field of the Net Investment Income Tax window. TOTAL INVEST INCOME PER RETURN Line 11, ensure this amount includes EWPEN claimed on Schedule 1, line 18. Note: If the taxpayer responds with a new or revised Form 8960, enter/verify revised amounts. Per return amounts must be manually adjusted when necessary, to exclude reported investment income on which the taxpayer paid SE tax. TOTAL DEDUCTIONS If Form 8960 was not filed with the return, enter/verify the following entries in the Net Investment Tax window: Line Numbers Field Schedule 2, line 12 NET INVEST TAX PER RETURN 1040/1040-SR, 2b, 3b and 7 Schedule 1, line 4 Schedule 1, line 5 Note: Do not include net non-passive income from Schedule E Part II columns i, j, k and Part III columns e and f. Form 1041, line 8 Form 1041-QFT, lines 4 and 9 Form 8814, line 12 Form 4797, line 7 or 9 when greater than 0 (zero). Any gain reported on Form 4797 must be subtracted from the Schedule D total Note: Taxpayers may not correctly include their annuities from a nonqualified plan on Form 8960. If the taxpayer reports a 1099R IR that contains a COD "D" in box 7 but doesn't include the amount on Form 8960, line 3, ensure the amount is included in the TOTAL INVEST INCOME PER RETURN field of the Net Investment Income Tax window. TOTAL INVEST INCOME PER RETURN If a manual computation of the NIIT is required, enter the manually computed NIIT in the MANUAL NET INVEST INCOME TAX field (Form 8960, line 17). PARAGRAPH 173 automatically generates when there is a change to the NIIT.

# Additional Medicare Tax (AdMT)

4.19.3.17.8 (10-25-2023) Additional Medicare Tax (AdMT) Taxpayers are subject to an additional 0.9 percent Medicare Tax when the total of an individual's Medicare wages, Railroad Retirement Tax Act compensation and self-employment income exceeds the following: $250,000 for married taxpayers who file jointly $125,000 for married taxpayers who file separately $200,000 for taxpayers who file single, head of household, or qualifying surviving spouse Additional Medicare Tax is calculated by completing Form 8959, Additional Medicare Tax. The additional tax is computed using Form 8959 Parts I, II, III and IV and is reported on Schedule 2, line 7. If the employer withheld too much Medicare Tax, the overpayment is claimed as a prepayment credit, see IRM 4.19.3.18.1.4, Additional Medicare Tax (Withholding Reconciliation), for additional information. Additional Medicare Tax needs to be computed/recomputed if Medicare wages, Railroad Retirement Tax Act compensation and self-employment income are U/R. The Additional Medicare Tax window automatically displays when there is a Form 8959 attached to the return or when no Form 8959 is present and the total of an individual's Medicare wages, Railroad Retirement Tax Act compensation and self-employment income exceeds the amounts in (1) above. Note: If the Additional Medicare Tax window doesn't automatically display, manually access the window when either of the conditions in (5) are present. Create an IR(s) for the AdMT calculation when: There is a Form W-2 attached, for which there is no IR. Create all elements (income types and EIN field) of the Form W-2. There is an amount(s) on a Form W-2 in box 12, coded "B" for Uncollected Medicare tax on tips, or coded "N" for Uncollected Medicare tax on the taxable cost of group-term life insurance over $50,000. An attached payer document reflects more MCWGE than the IR, create a MCWGE IR for the difference, (for example, the IR shows MCWGE of $29,000 and the attached payer document reflects $32,000 a MCWGE must be created for $3,000). Enter status code "R" to allow the system to accurately compute the AdMT. Reminder: Entry in the EIN field is required to calculate AdMT correctly. Enter/Verify the following entries on the Additional Medicare Tax window. Ensure the taxpayer's intent is followed when AdMT is computed/recomputed as to rounding, dropping cents, or using dollars and cents. Always verify that the system computes the correct excess AdMT in accordance with the taxpayer's intent. MEDICARE WAGES AND TIPS - Form 8959, line 1 Caution: If the taxpayer includes amounts from Form W-2, box 12 on Form 8959, line 19, see (6) above. Note: The system populates the MEDICARE WAGES AND TIPS field and can't be changed. UNREPORTED TIPS FORM 4137 - Form 4137, line 6 WAGES FROM 8919 - Form 8919, line 6 ADD'L TAX ON WAGES - Form 8959, line 7 SELF EMPLOYMENT INCOME – This field is populated by the system and can't be changed ADD'L TAX ON SE INCOME – Form 8959, line 13 RRTA COMPENSATION & TIPS - Form 8959, line 14 plus any amounts from Form W-2, box 14 identified as RRTA ADD'L TAX ON RRTA – Form 8959, line 17 Although Additional Medicare Tax is figured separately for each type of income, the threshold amount for self-employment income in Part II is reduced by the total wages in Part I (but not below zero), which results in the total wage and self-employment income being subject to the 0.9 percent AdMT. However, the threshold for railroad retirement compensation isn't reduced by other income, which can result in total earnings that are over the threshold but not subject to the 0.9 percent tax. If the AdMT window computes a $1 change (following taxpayer's intent), create a MCWGE IR so the total MCWGE IR amounts match the Medicare Wage amount on Form 8959, line 1. PARAGRAPH 172 automatically generates when there is a change to Additional Medicare Tax. See Exhibit 4.19.3-7, CP PARAGRAPHS, for further information. When the change to Additional Medicare Tax is due to an incorrectly completed Form 8959 send PARAGRAPH 143 See Exhibit 4.19.3-7, CP PARAGRAPHS, for further information.

# Other Taxes

4.19.3.17.9 (10-10-2025) Other Taxes The Total Other Taxes window is used to capture the following additional taxes: Premature Distribution Taxes (for example, IRAs, MSAs, HSAs). See IRM 4.19.3.17.3, 10 Percent Tax on Early Distributions from Qualified Retirement Plans/25 Percent Tax on Early Distributions from SIMPLE IRAs, for premature distribution taxes from Qualified Retirement Plans. See IRM 4.19.3.17.4, 20 Percent Tax on Archer Medical Savings Account (AMSA) and Health Savings Account (HSA) Distributions, for additional taxes from Archer Medical Savings Accounts or Health Savings Accounts. Premature Distribution Taxes on Qualified Education Program Payments (EDU). See IRM 4.19.3.17.5, 10 Percent Tax on Qualified Education Program Payments. Five percent tax on qualified retirement distribution (COD 5P) included on the original return. See IRM 4.19.3.17.3, 10 Percent Tax on Early Distribution from Qualified Retirement Plans/25 Percent Tax on Early Distributions from SIMPLE IRAs. Additional taxes on income received due to participation in a nonqualified deferred compensation plan that doesn't meet the requirements under IRC 409A. See IRM 4.19.3.17.6, Additional Taxes on Income from Nonqualified Deferred Compensation Plan (IRC 409A), for additional information. Excess Contributions Taxes (Form 5329, Parts III through VIII). Household Employment Tax. (See 7 below) First Time Homebuyer Repay AMT (See 7 below). Additional Medicare Tax. See IRM 4.19.3.17.8, Additional Medicare Tax (AdMT) for additional information. Other Miscellaneous Taxes (See 8 below). Uncollected SS/Med Tax on Wages. Delete the amount in the ADDITIONAL TAX RECOMPUTED field (Do not enter zero (0); leave field blank). When the Total Other Tax is computed, the NEW recomputed additional tax displays in the ADDITIONAL TAX RECOMPUTED field. Excess Contributions/Accumulation Tax (Form 5329, Parts III - IX) - Enter/Verify the sum of Form 5329, Part III, line 17; Part IV, line 25; Part V, line 33; Part VI, line 41; Part VII, line 49, Part VIII, line 51, Part IX, line 55, included on Schedule 2, line 8. Note: These additional taxes on excess contributions are posted to the MFT 29 account and correspond to the TC 896 with the literal "OFF to IRA" shown on the Tax Account screen. During case analysis phase, ensure that the PER RETURN and RECOMPUTED fields reflect the same amount. See (9) below if a change to the RECOMPUTED field is needed. Enter/Verify the amount of the Household Employment Tax (Schedule H) reported on Form 1040, Schedule 2, line 9 and the First Time Home Buyer Credit Repayment (Form 5405) reported Form 1040, Schedule 2, line 10. Other Miscellaneous Taxes - Use this field to capture any additional taxes included on the dotted line portion of Form, 1040/Form 1040-SR, Schedule 2, line 17z, not already accounted for with its own field in the Total Other Taxes window. Enter/Verify the PER RETURN and RECOMPUTED amounts in the appropriate fields. It may be necessary to enter an amount in the RECOMPUTED field that differs from the PER RETURN amount. This may be due to: An original processing error, A taxpayer error that is discovered during Analysis, and/or The taxpayer provides information during response phase that changes the tax. Caution: Changes were made in the Total Other Taxes window to add PER RETURN fields for SIMPLE, ARCHER MSA, HSA, 5 percent, and NQDC. The AUR system is unable to determine what type of miscellaneous tax was reported, in order to correctly display amounts in the appropriate PER RETURN and/or RECOMPUTED fields for SIMPLE, ARCHER MSA, HSA, 5 percent, and/or NQDC. If an amount was reported for any of these taxes, delete that amount from the OTHER MISCELLANEOUS TAXES field and move it to the appropriate PER RETURN and/or RECOMPUTED field(s). If the system computes a negative amount for Total Other Taxes, an error message displays: "Computation resulted in a negative amount for Total Other Taxes. Return to Case Analysis and rework the case." Take the following action to correct the case: Verify the amounts in the Total Other Taxes window. Verify the IR(s) that are subject to the tax on early distributions have been correctly screened. See IRM 4.19.3.17.3, 10 Percent Tax on Early Distributions from Qualified Retirement Plans or 25 Percent Tax on Early Distributions from SIMPLE IRAs, and/or IRM 4.19.3.8.28.1, HSA, AMSA and MAMSA Distributions - Analysis, for further instructions.

# Changes to Payments

4.19.3.18 (09-21-2020) Changes to Payments Payments are refundable credits that are applied against the tax liability and are reported by the taxpayer on Form 1040 and line numbers on Schedule 3, lines 9-13z. Payments which may require adjusting in AUR processing are: Federal Income Tax withheld - commonly referred to as Withholding (W/H). This amount is withheld from a taxpayer's wages, pensions and annuities, gambling winnings, etc., and is deposited with IRS by the payer to ensure payment of the taxpayer's income tax liability. Excess Social Security Tax or Tier 1 Railroad Retirement Tax withheld (SSTAX) - These taxes are withheld from a taxpayer's wages and are deposited directly by the employer. The taxpayer may, if certain conditions are met, claim a credit for amounts withheld in excess of the amounts, for TY22 $9,114, TY23 $9,932, and TY24 $10,453. Additional Medicare Tax withheld (Form 8959) - This amount may be claimed if the employer withheld too much Medicare Tax. Earned income credit (EIC) - there are specific conditions that must be met to qualify. Depending on the number of children and if specified conditions are met, the taxpayer may claim up to a maximum of the amounts listed in g) below. Additional Child Tax Credit (Schedule 8812) - the taxpayer may be able to claim this credit if they have qualifying children and certain conditions are met. American Opportunity Credit (Form 8863) - the credit is claimed when the taxpayer has qualified education expenses. Number of children TY 2022 TY 2023 TY 2024 3 or more $6,935 $7,430 $7,830 2 $6,164 $6,604 $6,960 1 $3,733 $3,995 $4,213 0 $560 $600 $632

# Withholding - General

4.19.3.18.1 (11-29-2023) Withholding - General Withholding may be reported by payers on Form W-2 and Form 1099 series and appear on these IRs with the literal "W/H" in the INCOME TYPE field. W/H appears as TC 806 on the Tax Account screen. Caution: Changes to W/H can also post as TC 807, TC 802 and as TC 290 with RC 051. If the change to W/H posts as TC 290 with RC 051 send PARAGRAPH 235, see Exhibit 4.19.3-7, CP PARAGRAPHS. W/H payments are claimed on Form 1040/1040-SR, line 25d. Caution: Additional Medicare Tax as computed on Form 8959 may be included with the W/H amount on Form 1040/1040-SR. 99INT, 99DIV, 1099MISC, 1099NEC or 1099B IRs may reflect W/H. If there is an indication that the amount is jointly owned with someone other than the taxpayer's spouse or the filing status is "3" : ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Send PARAGRAPH 6, see Exhibit 4.19.3-7, CP PARAGRAPHS. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ When payer documents are attached (for example, Form W-2, Form 1099-MISC) to a scanned paper return, consider them more accurate than the IR UNLESS: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: Use the IR as the most accurate information even if the case doesn't meet referral criteria or if the referral is returned. An amended indicator is displayed in the AMD IND field on the Case Analysis screen. Consider an amended IR the most accurate information. For ELF returns, the income amounts on ELF payer documents displayed in the TRDB window ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ When there is a system identified W/H discrepancy, math verify W/H from all Form W-2 and Form 1099 documents attached to the return, making sure that each information document is used only once. Caution: Be alert for erroneous refunds. See IRM 4.19.3.5.13.1.3, Recovering Erroneous Refunds - Category B, for additional information. If the total W/H discrepancy is less than $1, drop the W/H issue. This instruction applies even if there are other unresolved issues that will result in either ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ when math verifying, for example, determine whether they have rounded, dropped cents, or used dollars and cents.

# Withholding - Analysis

4.19.3.18.1.1 (10-10-2025) Withholding - Analysis ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ unless: Another IR from the same payer is present showing income, or The W/H amount in question is shown on an information document attached to the return. Do not allow any W/H changes that result from the taxpayer not claiming W/H from a Conduit (SBK-1, TRK-1 or PTK-1) IRs. See IRM 4.19.3.8.12.1, Conduit Income - Analysis, for further information. If, after accessing the Withholding window, the system is allowing additional underclaimed W/H from ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, take the following action: Ungroup the W/H. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡" ≡ ≡ ≡ ≡ ≡"≡ ≡" ≡ Access the Withholding window. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Schedules K-1 may contain Backup Withholding (BWH). If the taxpayer attaches a Form 1041 - Schedule K-1 showing BWH identified on line 13 with a code "B" or a Form 1065 - Schedule K-1 and an amount on line 15 with a code "O" OR a Form 1120-S - Schedule K-1 and an amount on line 13 with code "O" consider the Schedule K-1 as documentation to support the additional W/H amount claimed on the return. If the taxpayer attaches Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding, Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of US Real Property Interests, and/or Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax, ensure that the system accounts for any federal income tax withheld from these sources, when determining any overall changes to W/H. 1042S IRs are systemically marked with status code "X" . If, after going through the W/H window, any O/C W/H matches the W/H element(s) from Form 1042-S (within tolerance) remove the status code "X" from the corresponding W/H element(s) and re-access the W/H window. Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ When the taxpayer is claiming additional W/H and/or excess FICA and attaching a Stock Option Transaction statement to support the additional amount(s) claimed, take the following action: The W/H and/or FICA shown on these documents are already included in the Form W-2 and can't be claimed again. DO NOT accept any Stock Option Transaction Statements as documentation to account for the W/H and/or excess FICA discrepancy. When disallowing the additional amounts claimed, send PARAGRAPH 221, see Exhibit 4.19.3-7, CP PARAGRAPHS. If the taxpayer ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Caution: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ See IRM 4.19.3.5.8.1, Identifying and Developing Fraud in AUR, for additional information. If the W/H amounts exceeds 50 percent of the income shown on the same IR or the related income on another IR or other payer document for which there is no IR, complete the Form 13549, Campus Fraud Lead Sheet, to be forwarded to the Campus Fraud Coordinator (CFC) to determine the validity of the payer information. If there are no IRs with W/H, wages are U/R, and there is a TC 806/807 present on the Tax Account screen, the Withholding window must be completed. Create an IR for zero (0) to access the Withholding window. Ensure that the taxpayer's intent is followed when W/H is computed as to rounding, dropped cents, used dollars and cents. Always verify that the system has computed the correct W/H in accordance with the taxpayer's intent. Example: The system shows U/C W/H amount as $997, due to rounding, and the IR amount is $1,000. Add the $1,000 to the W/H per return and enter the sum in the VERIFIED WITHHOLDING field. The net change to W/H is computed by the system and is displayed in the W/H SST ADJ field on the Case Analysis screen: Note: The Withholding window must be accessed when an IR with U/R income reflects W/H or the conditions in (4) through (6) above exist. Access the WITHHOLDING window. The WITHHOLDING window displays with the cursor in the EXCESS SST/RRT field. Enter/verify the amount of excess Social Security Tax/Railroad Retirement Tax (SST/RRT) claimed by the taxpayer in the EXCESS SST/RRT field. Enter/verify the amount of Medicare tax withheld claimed by the taxpayer in the MEDICARE TAX WITHHELD field and press <Enter>. The cursor moves to the W/H VERIFIED INDICATOR field. Enter a "Y" in the W/H VERIFIED INDICATOR field to override a system computed change to W/H and allow an entry in the VERIFIED WITHHOLDING field. This field is used when the verified W/H amount differs from the W/H per return amount such as, additional W-2s, rounding.). If the W/H per return is correct, leave these fields blank. Note: When there is a change to the additional Medicare tax withheld, see AUR System Guide, Additional Medicare Tax Withheld, for additional information. Enter/verify the correct amount of allowable W/H. Press <F12> to commit and exit the window. If the system doesn't compute W/H correctly: Caution: If O/C W/H was adjusted using a TC 290 RC 051, the system can't calculate the W/H change correctly. Enter a "Y" in the W/H VERIFIED INDICATOR field. Enter the total amount of W/H to allow in the VERIFIED WITHHOLDING field. Note: If there is no change to W/H, the WITHHOLDING PER RETURN and VERIFIED WITHHOLDING fields must be the same. See AUR System Guide, Withholding. If W/H per return differs from W/H on the Tax Account screen and there are equal numbers of IRs on the Case Analysis screen and information documents attached to the return, and the payers and the income type are the same, use the W/H window to determine the change. Reasons contributing to this condition are: A math error, transposition of figures, illegible information document(s), displaced decimal point, and/or transcription error, etc. The taxpayer may have claimed an amount from the Social Security Tax Withheld box of the information documents instead of the Federal Income Tax Withheld box on Form W-2. The taxpayer may have claimed an amount from the Form 8959, line 24. The payer(s) may have been identified as having submitted erroneous information and are included in Payer Agent data. The taxpayer may have received a corrected information document that isn't identified as amended on the Case Analysis screen. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Therefore, there are instances when information documents attached to the return don't appear as IRs on the Case Analysis screen. If income and/or W/H shown on the information documents attached to the return isn't reported, pursue the issue(s). Send PARAGRAPH 139, see Exhibit 4.19.3-7, CP PARAGRAPHS. Do not adjust W/H when the taxpayer claims it correctly, but indicates on the return that the income isn't reported because it was not received until the subsequent year. W/H is deductible when reported to IRS by the payer, while income is taxable when received by the taxpayer.

# Withholding - Miscellaneous

4.19.3.18.1.2 (01-21-2025) Withholding - Miscellaneous If the system computes a tax change above tolerance and W/H is an issue, a notice MUST BE issued. If W/H is the only issue and the W/H change is confirmed and appropriate, an adjustment must be made without issuing a notice. W/H changes due to the following conditions are considered confirmed and appropriate: Caution: If the system computes a tax change ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ See (4) below for further instructions. Note: If the IR contains unemployment compensation, see IRM 4.19.3.8.16.1, Unemployment Compensation - Analysis for additional information. Reminder: For ELF returns, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, for additional information. Paper Form(s) W-2, and/or 1099, attached to the tax return, verify the correct W/H amounts. W/H is verified ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Based on attached documents, the taxpayer claimed an amount from the wrong box. Based on attached statements, the taxpayer clearly made a math error in determining the total amount of allowable W/H. There is U/C W/H on an SSA IR and the taxpayer correctly reported the gross benefits amount on Form 1040/1040-SR, line 6a. Overclaimed W/H is due to the TC 806 amount equaling the amount of Estimated Payments (TC 660) shown on the Tax Account screen and the taxpayer reported the ES payment amount on the line designated for W/H. Note: If the discrepancy is due to IRS Data Transcription error, see IRM 4.19.3.5.13, Erroneous Refunds, for further information. W/H was disallowed during Original Processing because Form(s) W-2 and/or 1099 were not attached to the return AND the W/H on the IRs, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ matches ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ the amount previously disallowed. If the change to W/H isn't confirmed and appropriate, as a general rule, issue: A CP 2501 (PC 30) for cases with questionable U/C W/H and an overall refund. A CP 2000 (PC 55) for any other situation. In order to adjust confirmed and appropriate changes to W/H, without issuing a notice (PC 20) take the following actions: Steps to take ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Complete and commit the Return Value screen. Enter the appropriate entries on the Assessment window (steps below). See AUR System Guide, Assessments - Case Analysis/Responses. Note: Penalties (for example, Failure to File (FTF), Failure to Pay (FTP) based on adjustments to withholding are not subject to deficiency procedures because the adjustments themselves are not included on the Statutory Notice. Enter Blocking Series 5X. Leave the IRS RECD DATE field blank. Note: Do not enter a CREDIT INTEREST DATE on W/H adjustments with a TC 290-.00 (zero). Delete if present. Enter TC 290-.00. Enter Source Code 2. Enter Reason Code 051 for W/H. Enter Priority Code 3 must be entered when making refund adjustments. Enter Reference Code 806 (amount) for U/C W/H or Reference Code 807 (amount) for O/C W/H. Enter Source document attached - Y or N, as appropriate. See IRM 4.19.3.23.12.1, The Assessment Window, for additional information. Enter three characters or more in the REMARKS field. Commit the Assessment window after all fields are verified as correct. After committing and exiting the Assessment window, issue a Letter 2893-C (using dollars only) including appropriate paragraphs to inform the taxpayer of the adjustment. Close the case using PC 20. Reminder: If a subsequent review of the case determines that a notice must be issued (for example, the PC 20 action was incorrect), the user MUST manually delete the Letter 2893-C. If the taxpayer partially reports income and/or W/H, based on attached payer documents, send PARAGRAPH 139. However, if the IR is fully U/R for both income and W/H, PARAGRAPH 139 isn't needed. See Exhibit 4.19.3-7, CP PARAGRAPHS. When it appears the taxpayer claimed a W/H amount from the wrong box on Form W-2, send PARAGRAPH 106. See Exhibit 4.19.3-7, CP PARAGRAPHS. PARAGRAPH 43 automatically generates when the net result of changes to W/H, excess SSTAX, MCTXW, EIC and Additional Child Tax Credit is a NEGATIVE amount. See Exhibit 4.19.3-7, CP PARAGRAPHS. PARAGRAPH 28 automatically generates when allowing additional U/C W/H. See Exhibit 4.19.3-7, CP PARAGRAPHS. PARAGRAPH 27 automatically generates when disallowing O/C W/H. See Exhibit 4.19.3-7, CP PARAGRAPHS. If W/H from Social Security benefits is an issue and there is an indication that the taxpayer is a resident alien, see IRM 4.19.3.8.33, Resident/Non-Resident Aliens (R/NR)/(Dual Status), for additional instructions.

# Withholding and ITIN Filers

4.19.3.18.1.3 (02-11-2014) Withholding and ITIN Filers A taxpayer not eligible for an SSN must use an individual taxpayer identification number (ITIN) when filing their return. The taxpayer provides an SSN to the employer in order to obtain employment. Thus, the employer withholds income tax on the taxpayer's wages under the SSN the taxpayer provided, and any Form W-2 (and possibly Form 1099) filed with the IRS will contain the SSN. Note: These cases will NOT be sent to either the IDTVA (the SSN will have been updated with a TC 971 AC 525 during processing) or Fraud, as the Internal Revenue Code recognizes these as legal tax returns. When the taxpayer files their return and claims credit for income tax withheld, the taxpayer will need to demonstrate they truly earned wages for which the W/H is being claimed before the IRS can allow the credit, see (2) below for what documentation to accept. When the name on the return doesn't match the name on the W-2, allow the W-2 if the wages can be verified. If the wages can't be verified, continue normal processing. When the W-2 or other information return doesn't contain an SSN; such as all zero's or "applied for" is reflected, allow the W/H if the name on the return matches the name on the Form W-2 and the wage income is reported. When the taxpayer used an SSN that is invalid and the W/H for the taxpayer has been reported under the invalid SSN, research IDRS CC IRPTR, both validation codes 1 and 2, and IDRS CC IRPTRI (use TIN type 4 and Doc code 21) to determine if the wages and W/H are reported. If you are able to verify the wages and W/H have been reported, allow the W/H. If the wages and W/H can't be verified, continue normal processing. Note: IDRS CC IRPTRI allows you to query a case by payer TIN (EIN) and displays all the information returns the payer filed. Currently IRPTRI displays Form W-2, Form 1099-R and Form 1099-MISC. The taxpayer can document the W/H by providing the following: Form W-2, Wage and Tax Statement, or Form W-2G, Certain Gambling Winnings, or Form 1099-R, Distribution from Pensions, Annuities, Retirement, or Profit Sharing Plans, IRAs, Insurance Contracts, etc, or Similar documentation (such as, year ending pay stub). If the W/H amount appears to be altered, see IRM 4.19.3.5.8.1, Identifying and Developing Fraud in AUR. Examine all documents and related information before making adjustments or answering inquiries. If allowing the W/H on the ITIN holders return, prepare Form 9409, IRS/SSA Wage Worksheet, (for the SSN) to remove the information from the true SSN owners account. See IRM 4.19.3.23.9.4, Referrals to prepare a Form 9409.

# Additional Medicare Tax (Withholding Reconciliation)

4.19.3.18.1.4 (10-02-2024) Additional Medicare Tax (Withholding Reconciliation) The Affordable Care Act requires employers to withhold an Additional Medicare Tax of 0.9 percent in the pay period in which an employee's wages or compensation for the year exceeded $250,000 for married filing joint, $125,000 for married filing separate or $200,000 in any other filing. The Additional Medicare Tax applies to wages, compensation, and self-employment income above a threshold amount. Medicare Tax is reported by payers on Form W-2 and appears with the literal "MCTXW" in the INCOME TYPE field on the IR. Income Identify Code "MT" displays on the Case Analysis screen for Medicare Tax amounts. If the employer withheld too much Medicare Tax, the taxpayer may claim the overpayment by completing Form 8959, Part V, and including the amount with the W/H amount on Form 1040/1040-SR, line 25c. Additional Medicare Tax withheld needs to be computed when MCTXW is a discrepant item. The net change to excess MCTXW is computed by the system and is displayed in the W/H SST ADJ field of the Case Analysis screen. Caution: Do not use status code "N" or "D" in the SSWAG, MCWGE or SSTIP literal when screening valid Wage IRs. Use of status code "N" or "D" may result in an incorrect Additional Medicare Tax withheld calculation. Create an IR(s) for all elements (income types and EIN field) when there is MCTXW on an attached Form W-2 but there is no IR present. Entry in the EIN field is required to calculate the Additional Medicare Tax Withheld window correctly. If the taxpayer includes an ELF payer document for which there is no IR, create an IR if necessary. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. See IRM 4.19.3.17.8, Additional Medicare Tax (AdMT), for further information. Enter a status code of "U" on the MCTXW element. The Additional Medicare Tax Withheld window displays. Enter/Verify the following entries in the Additional Medicare Tax Withheld window. MEDICARE TAX WITHHELD WAGES - Form 8959, line 19 ADD'L MEDICARE TAX WITHHELD RRTA - Form 8959, line 23 ADD'L MEDICARE TAX WITHHELD PER RETURN - Form 8959, line 24 VERIFIED ADD'L MEDICARE TAX WITHHOLDING Note: VERIFIED ADD'L MEDICARE TAX WITHHOLDING field can only be accessed if the VERIFIED INDICATOR is set to "Y" . During the screening phase,≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡"≡" ≡ Ensure that the taxpayer's intent is followed when Additional Medicare Tax withheld is computed/recomputed as to rounding, dropping cents, or using dollars and cents. Always verify that the system computes the correct Additional Medicare Tax withheld in accordance with the taxpayer's intent. If the system isn't computing Additional Medicare Tax withheld and a change needs to be allowed, do the following: Enter a "Y" in the VERIFIED INDICATOR field of the Additional Medicare Tax Withheld window. Enter the total amount of Additional Medicare Tax withheld to allow in the VERIFIED MEDICARE TAX WITHHOLDING field. If the system computes an excess change when no change should be made, enter a "Y" in the VERIFIED INDICATOR field and verify that the MEDICARE TAX WITHHELD PER RETURN field and VERIFIED MEDICARE TAX WITHHOLDING fields are the same. If the system computes a tax change and ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, a notice MUST BE issued. If an Additional Medicare Tax withheld increase/decrease is the only issue ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ on a scanned paper return, PC 20 will be used. Return Value must be completed before accessing the Assessment window for the system to allow input of PC 20. For additional instructions on inputting PC 20, see (15) below. Reminder: During screening, don't adjust ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡; see (8) above. When Additional Medicare Tax withheld is the only issue and the taxpayer files an ELF return, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ for additional information. Take the following action: O/C Additional Medicare Tax withheld: Follow the procedures for scanned paper in (13) above, if it can be clearly determined the taxpayer O/C Additional Medicare Tax withheld. If not, issue a CP 2000. U/C Additional Medicare Tax withheld: Issue a CP 2501. In order to adjust MCTXW without issuing a notice (PC 20) take the following actions: Steps to take ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Complete and commit the Return Value screen. Enter the appropriate entries on the Assessment window (steps below). See AUR System Guide, Assessments - Case Analysis/Responses. Enter Blocking Series 5X. Leave the IRS RECD DATE field blank. Note: Do not enter a CREDIT INTEREST DATE on MCTXW adjustments with a TC 290-.00 (zero). Delete if present. Enter TC 290-.00. Enter Source Code 2. Enter Reason Code 136 for Additional Medicare Tax from Form 8959. Enter Priority Code 3 must be entered when making refund adjustments. Enter Reference Code 806 (amount) for U/C MCTXW or Reference Code 807 (amount) for O/C MCTXW. Enter Source document attached - Y or N, as appropriate. See IRM 4.19.3.23.12.1, The Assessment Window, for additional information. Enter three characters or more in the REMARKS field. Commit the Assessment window after all fields are verified as correct. After committing and exiting the Assessment window, issue a Letter 2893-C (using dollars only) including appropriate paragraphs to inform the taxpayer of the adjustment. Close the case using PC 20. Reminder: If a subsequent review of the case determines that a notice must be issued (for example, the PC 20 action was incorrect), the user MUST manually delete the Letter 2893-C. When there is a change to Additional Medicare Tax withheld and a notice is issued, PARAGRAPH 27 automatically generates. See Exhibit 4.19.3-7, CP PARAGRAPHS.

# Social Security Tax/Tier 1 Railroad Retirement Tax

4.19.3.18.2 (10-29-2024) Social Security Tax/Tier 1 Railroad Retirement Tax Social Security Tax/Tier 1 Railroad Retirement Tax are reported by payers on Form W-2 and is identified on the Case Analysis screen by the literal "W-2" in the DOC TYPE field and appear on the W-2 IR with the literal "SSTAX" in the INCOME TYPE field. Income Identify Code "FT" displays on the Case Analysis screen for SSTAX amounts. If it is determined that the amount is for (Tier 2) railroad retirement tax, change the Income Identify Code to "RT" . Note: Excess Tier 2 Railroad Retirement tax can't be claimed as a credit on the return. The taxpayer must use Form 843, Claim For Refund and Request for Abatement. Excess SSTAX amounts appear as TC 766 with CRN 252 on the Tax Account screen. Taxpayers claim excess SSTAX withheld on Form 1040, Schedule 3, line 11. Excess SSTAX may be claimed as a prepayment credit if ALL of the following conditions are met (joint filers must be considered separately). The taxpayer worked for two or more employers. The taxpayer received Social Security wages or Railroad wages in the amount that exceeds TY22 $147,000, TY23 $160,200, or TY24 $168,000, (the maximum wage base for both social security and RRT). If the SSWAG is less than the maximum social security wage base amount, the system displays the following message: "An Employer may have withheld social security tax at an incorrect rate. Do not refund excess SST to the taxpayer" . The taxpayer has SST and/or RRT Tier 1 withholding plus any uncollected SSTAX on Tips or Group-Term Life insurance in excess of TY22 $9,114, TY23 $9,932 or TY24 $10,453. Note: The taxpayer must include any Uncollected SSTAX on Tips (Form W-2, box 12 Code A) or Uncollected SSTAX on Group-Term Insurance (Form W-2, box 12 Code "M" ) in the total tax on Form 1040/1040-SR, (identified on the dotted line portion with "UT" , Schedule 2, line 13 before this amount can be considered in determining any excess SSTAX. Note: Any SSTAX withheld in excess of the above amounts from the same employer doesn't qualify as excess SSTAX. However, if there is an indication that the employer used "Reporting Agent" , see (13) below for further instructions. Caution: Form 1040, Schedule 2, line 13 may also contain uncollected Medicare Tax, Tax on Tips, taxable cost of term life insurance and Form W-2, box 12 Code(s) B and N. Ensure ONLY the Form W-2, box 12 Code(s) A and M are included in the PRIMARY TIER 1/SS TIP TAX and/or SECONDARY TIER 1/SS TIP TAX fields of the Excess SST window. SSTAX needs to be computed if the conditions in (4) above are present or if SSTAX is a discrepant item. The net change to excess SSTAX is computed by the system and is displayed in the W/H SST ADJ field of the Case Analysis screen. Caution: Do not use status code "N" or "D" in the SSWAG, MCWGE or SSTIP literal when screening valid WAGES IRs. Use of status code "N" or "D" may result in an incorrect excess SSTAX calculation. Create an IR(s) for all elements (income types and EIN field) when there is SSTAX on an attached Form W-2 but there is no IR present. Enter/Verify the appropriate entries on the Excess SST window as follows: Enter/Verify Excess SST/RRT amount from Schedule 3, line 11 in the EXCESS SST/RRT FIELD. Enter a "Y" in the VERIFIED INDICATOR field to override a system computed change to the excess SST/RRT amount if a change needs to be allowed. Enter/verify the uncollected tax included on Schedule 2, line 13 and identified on Form W-2(s) in the PRIMARY/SECONDARY TIER 1/SS TIP TAX field(s). Enter/Verify the amounts in the VERIFIED EXCESS SST/RRT field when the override indicator was used. Caution: If the taxpayer claimed UT tax on the dotted portion for Form 1040, Schedule 2, line 13, ensure ONLY the Form W-2, box 12 Code(s) A and M are included in the PRIMARY TIER 1/SS TIP TAX and/or SECONDARY TIER 1/SS TIP TAX fields of the Excess SST window. Ensure that the taxpayer's intent is followed when excess SSTAX is computed/recomputed as to rounding, dropping cents, or using dollars and cents. Always verify that the system computes the correct excess SSTAX in accordance with the taxpayer's intent. If excess SSTAX is an issue and a Form W-2 is attached to the return from a Railroad, create an IR for the Tier 1 RRT (use Income Identify Code "FT" ) amount in box 14, Form W-2, so the system can correctly compute the excess amount. If the system isn't computing an excess SSTAX and a change needs to be allowed, do the following: Enter a "Y" in the EXCESS SST/RRT VERIFIED INDICATOR field. Enter the total amount of excess SSTAX to allow in the VERIFIED EXCESS field. If the system computes an excess change when no change should be made, enter a "Y" in the EXCESS SST/RRT VERIFIED field and verify that the EXCESS SST/RRT field and VERIFIED EXCESS SST/RRT fields are the same. If the taxpayer is claiming additional excess SSTAX and attaching a Stock Option Transaction statement to support the additional amount(s) claimed, disallow the deduction. See IRM 4.19.3.18.1.1, Withholding - Analysis, for further instructions. When it appears that a Parent Company and one or more of its subsidiaries are responsible for the excess amount of SSTAX, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ when determining if an adjustment is necessary. A Parent Company or a subsidiary can generally be identified by: Two or more WAGES IRs with similar payer names AND different TINs OR An indication that the payer utilized different/multiple payroll/reporting agents. This information is often included along with the payer name on the Form W-2. The payer name and TIN could be identical. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Make the appropriate entries in the EXCESS SST window so that the taxpayer's intent is followed. If the system computes a tax change and ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, a notice MUST BE issued. If an excess SSTAX increase/decrease is the only issue ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡and the SSTAX change is confirmed and appropriate, an adjustment must be made without issuing a notice. See (17) below for additional instructions for entering PC 20. SSTAX changes due to the following conditions are considered confirmed and appropriate: Note: Be aware of tax preparation software problems that may lead to reporting inconsistencies on ELF returns. For example, ELF Form W-2, box 12 shows Code "A" amount, but the occupation isn't TIPS related or the ELF Form W-2, box 12 Code "A" or "M" amount matches another item (such as deferred compensation). The taxpayer did not claim excess SSTAX AND meets the eligibility requirements in (4) above AND scanned paper Forms W-2 attached to the return OR ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ verify an excess SSTAX amount. The taxpayer claimed excess SSTAX and meets the eligibility requirements in (4) above however, Form W-2 attached to the return don't verify the excess SSTAX amount claimed. The taxpayer claimed excess SSTAX but doesn't meet the eligibility requirements in (4) above. Reminder: When it appears a Parent Company and one or more of its subsidiaries are responsible for the excess amount of SSTAX, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ when determining if an adjustment is necessary; see (13) above. The taxpayer did not claim excess SSTAX and the ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the change to SSTAX doesn't meet one of the conditions above, as a general rule, issue: A CP 2501 (PC 30) for cases with questionable U/C excess SSTAX and an overall refund. A CP 2000 (PC 55) for any other situation. Send PARAGRAPH 236, see Exhibit 4.19.3-7, CP PARAGRAPHS. In order to adjust excess SSTAX without issuing a notice (PC 20) take the following actions: Steps to take Delete any UR issue(s) causing a below tolerance tax change. If necessary, adjust the MISC CREDITS field in the Non-Refundable Credit window or the OTHER MISC TAX field in the Other Taxes window, so the tax change is zero. Complete and commit the Return Value screen. Enter the appropriate entries on the Assessment window (steps below). See AUR System Guide, Assessments - Case Analysis/Responses. Note: Any adjustments to penalties (for example, Failure to File (FTF), Failure to Pay (FTP) would not be subject to deficiency procedures since adjustments to SSTAX are not included on the Statutory Notice. Enter Blocking Series 5X. Leave the IRS RECD DATE field blank. Note: Do not enter a CREDIT INTEREST DATE on SSTAX adjustments with a TC 290-.00 (zero). Delete if present. Enter TC 290-.00. Enter Source Code 2. Enter Reason Code 055 for excess SSTAX. Enter Priority Code 3 must be entered when making refund adjustments. Enter CRN 252 as a positive money amount for U/C excess SSTAX or a negative money amount for O/C SSTAX. Enter Source document attached Y. If it is an ELF return and the only issue is excess SSTAX enter N. Enter three characters or more in the REMARKS field. Commit the Assessment window after all fields are verified as correct. After committing and exiting the Assessment window, issue a Letter 2893-C (using dollars only) including appropriate paragraphs to inform the taxpayer of the adjustment. Close the case using PC 20. Reminder: If a subsequent review of the case determines that a notice must be issued (for example, the PC 20 action was incorrect), the user MUST manually delete the Letter 2893-C. When there is a change to excess SSTAX and a notice is issued: PARAGRAPH 151 automatically generates. See Exhibit 4.19.3-7, CP PARAGRAPHS. If disallowing excess SSTAX withheld from a single employer, send PARAGRAPH 137. See Exhibit 4.19.3-7, CP PARAGRAPHS. PARAGRAPH 43 automatically generates when the net result of changes to W/H, excess SSTAX, EIC and Additional Child Tax Credit is a NEGATIVE amount. See Exhibit 4.19.3-7, CP PARAGRAPHS.

# Earned Income Credit (EIC)

4.19.3.18.3 (10-10-2025) Earned Income Credit (EIC) EIC enables certain eligible taxpayers to offset tax liability or to get a refund even if no tax was withheld from their pay. Previously allowed EIC appears on the Tax Account screen as TC 764 or TC 768. Note: If the credit was partially or fully reversed, the reversed amount appears with TC 765. Exam has a Revenue Protection Strategy to validate EIC on returns where the eligibility issue is questioned. When the EIC recertification indicator (EIC-RECERT-CD) field on the Tax Account screen is 2, 3, or 4 and EIC was disallowed during processing, the warning message "EIC credit problem" appears in the MESSAGE window. When EIC-RECERT-CD field shows an entry and: The taxpayer either did not claim EIC (no TC 768 is present) or the EIC was disallowed (TC 768 reversed by TC 765) enter a "Y" in the TP NOT QUALIFIED field of the EIC window to prevent the system from allowing any EIC. Note: If the EIC-RECERT-CD field is 2, 3, or 4 and the TC 768 was fully reversed with a TC 765, the system displays the following error message: "EIC disallowed - enter "Y" in the TP NOT QUALIFIED field." The taxpayer claimed EIC (TC 768) that was fully allowed, follow system prompts to make any changes to EIC, based on U/R income. Ensure that the TP NOT QUALIFIED field is blank. DO NOT correspond for the missing Form 8862, Information To Claim Certain Credits After Disallowance. When the EIC recertification indicator (EIC-RECERT-CD) is 2, 3 or 4 and the tax year shown in the EIC-RECERT-ELIGIBLE-TAX-PRD is subsequent to the tax year of the AUR case, the warning message "WARNING: EIC/CTC/ACTC/AOTC BAN" appears in the MESSAGE window. The AUR system won't allow an EIC calculation in these situations. The system computes the Schedule EIC based on the assigned Income Identify Code and certain income types. Verify that the correct Income Identify Code is in the INC CD field for all income types that qualify as earned income. See Exhibit 4.19.3-9, Income Identify Codes. Earned income includes anything of value (money, goods, or services) received from an employer for services performed, regardless of whether it is taxable. If taxpayer reports unearned income as earned income follow the instructions in (17) below. Examples of earned income are: Wages, salaries, tips and other employee compensation Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Net earnings from self-employment, even if less than $434 Note: Net losses from self-employment reduce earned income and the deductible part of SE tax reduces AGI and earned income. Gross income received as a statutory employee. Strike benefits reported on Form W-2. Disability retirement benefits (until taxpayer reaches minimum retirement age). See (17) below. Gulf Oil Spill Payments (GOS or GCCF) as earned income on Schedule EIC. The taxpayer has the option of including nontaxable combat pay in their earned income when computing EIC. Nontaxable combat pay can be identified with a Q in box 12 of Form W-2. The taxpayer makes this election by entering their nontaxable combat pay on Form 1040/1040-SR, line 27 with NCP notated and the amount in the space to the left of Form 1040/Form 1040-SR, line 1i.If the taxpayer elects to include nontaxable combat pay in their EIC determination, take the following action: Caution: Ensure that the election was not disallowed during original processing. If it was disallowed, notice code 165 will be present in the MATH ERROR CODE field on the Tax Account screen. If the election was disallowed, follow system prompts in the Earned Income Credit window to calculate the change to EIC. See (17) below for conditions requiring the verification of the TAXABLE EARNED INCOME field. If the election was allowed, include the amount of nontaxable Combat pay with other taxable earned income in the TOTAL EARNED INCOME field. Caution: Follow the taxpayer's intent with regard to the election. Do not recalculate the new EIC amount with and without the non-taxable combat pay amount to determine the better option. Earned income does NOT include the following: Interest or dividends Welfare benefits Veteran's benefits Pensions and annuities, except certain disability pensions received before minimum retirement age and reported on line 1 of Form 1040/1040-SR. Social Security and Railroad Retirement benefits Workers' compensation Unemployment compensation Income exempt from SE tax as a result of filing and approval of Form 4029 (relating to members of certain religious faiths) Note: Wages, salaries, tips, and other employee compensation received by these taxpayers are earned income, even if they are exempt from Social Security (FICA) taxes. Alimony Child support To qualify for EIC the taxpayer must be other than FS 3 and have earned income. AGI totaling less than: Number of qualifying children TY 2022 TY 2023 TY 2024 1 $43,492 ($49,622 if married filing jointly) $46,560 ($53,120 if married filing jointly) $59,899 ($66,819 if married filing jointly) 2 $49,399 ($55,529 if married filing jointly) $52,918 ($59,478 if married filing jointly) $55,768 ($62,688 if married filing jointly) 3 or more $53,057 ($59,187 if married filing jointly) $56,838 ($63,398 of married filing jointly) $49,084 ($56,004 if married filing jointly) 0 $16,480 ($22,610 if married filing jointly) $17,640 ($24,210 if married filing jointly) $18,591 ($25,511 if married filing jointly) For taxpayers with no qualifying children they must also meet all of the following conditions: Be at least age 25 but under age 65 at the end of the tax year Be at least 19 years of age at the end of the tax year (TY 2022) Not entitled to be claimed as a dependent on parent's or someone else's return Not a full-time student under the age of 24 (TY 2022) Main home must have been in the U.S. for more than one-half of the tax year Note: U.S. military personnel on extended active duty outside the U.S. are considered to live in the U.S. during that duty period for EIC purposes. When Schedule EIC isn't attached to the original return (EIC was allowed based on the filing of Schedule EIC with the Form 1040-X), it may be necessary to match the EIC claimed against the EIC Table, to determine the correct entry in the NUMBER OF QUALIFYING CHILDREN field in the EIC window (0, 1, 2 or 3). If taxpayer did not claim EIC on the original return and any of the following conditions exist, enter a "Y" in the TP NOT QUALIFIED field. The taxpayer's principal home is outside the United States, unless on extended active duty in the U.S. military. The taxpayer doesn't have a full 12-month tax year (unless the taxpayer died during the year). The taxpayer excludes or deducts amounts earned in a foreign country (Form 2555). The taxpayer filed Form 4563, Exclusion of Income from Bona Fide Residents of American Samoa. There is an indication the taxpayer was contacted during original processing and was asked to provide a completed Schedule EIC and TC 764 or TC 768 isn't present on the Tax Account screen, or a completed Schedule EIC isn't attached. EIC was disallowed during processing due to the Revenue Protection Strategy. Earned income tax credit must be recomputed when there is U/R income and the investment income is TY22 $10,300, TY23 $11,000, TY24 $11,600 or less. The INVESTMENT INCOME PER RETURN displays the total investment income as computed by the system. This is a required field. Note: Manual Calculation must always be used when the taxpayer files a Schedule E and/or Form 4797. Income type TY 2022 and subsequent Taxable interest Form 1040/ Form 1040-SR, line 2b Tax-exempt interest Form 1040/ Form 1040-SR, line 2a Dividend income Form 1040/ Form 1040-SR, line 3b. Capital gain net income Form 1040/ Form 1040-SR, line 7, if greater than zero (0). Any gain reported on Form 4797, line 7, (or line 9, if an amount appears there) must be subtracted from the Schedule D total. Net income from rentals of personal property not used in a business Form 1040/ Form 1040-SR, Schedule 1, line 8l minus the PPR amount deducted on Form 1040/ Form 1040-SR, Schedule 1, line 24b. Caution: Do not include U/R amounts in the manual calculation. Royalty income - Schedule E, line 4 in excess of the total related expenses on line 20 of Schedule E. Income from passive activities - Schedule E, line(s) 26, 29a (column h), 34a (column d), and 40 in excess of the losses from passive activities included on Schedule E, line(s) 26, 29b (column g), 34b (column c), and 40. Note: See Schedule E instructions to determine if Schedule E, line 26 or 40 income is from a passive activity. The AGI used in calculating EIC is the amount from 1040/1040-SR, line, 11. When EIC needs to be recomputed, and the taxpayer has not used the optional method to figure their SE tax, enter the appropriate entries in the Earned Income Credit window of the Return Value screen. See IRM 4.19.3.16.1, Self-Employment Tax, for further information. Note: If the taxpayer used the optional method to figure SE tax see (18) below. The TOTAL EARNED INCOME field displays the total earned income as computed by the system. The system determines earned income per return by combining the following items: Amount reported from Form 1040/1040-SR, line 1 PLUS, Caution: If the taxpayer reports unemployment as earned income (for example, reported as wages) and the amount is shown in the EIC window AND there are no WAGES IRs present, create a WAGES IR for ZERO. This will allow the system to accurately calculate the EIC. Amount reported on Schedule SE, line 3 (for both taxpayers), MINUS, The deductible part of SE tax. The TOTAL EARNED INCOME is a required field. If any of the following conditions exist, the system derived field must be verified: Note: Manual calculation may be completed to verify. Do not include U/R amounts in the manual calculation. The taxpayer reports: Earned income on a line other than Form 1040/Form 1040-SR, line 1 (for example, but not limited to: Wages on Form 1040/Form 1040-SR, Schedule 1, line 8z or disability pensions (COD 3) on Form 1040/Form 1040-SR, line 5b). Unearned income on Form 1040/Form 1040-SR, line 1, (for example, but not limited to, UNEMP or IRA) Send PARAGRAPH 7. See Exhibit 4.19.3-7, CP PARAGRAPHS. Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: See IRM 4.19.3.5.2, Comparison of IRP Information Returns With Return Information, for additional information. Taxable scholarship or fellowship grants and enters "SCH" next to Form 1040/Form 1040-SR, Schedule 1, line 8r. Income earned by an inmate identified by "PRI" and amount on the dotted line portion of Form 1040/1040-SR, Schedule 1, line 8u. Amount received as a non-qualified deferred compensation ("DFC" ) and amount on the dotted line portion of Form 1040/1040-SR, Schedule 1, line 8t. Nontaxable Combat pay. Schedule SE includes either the Optional method or includes church employee income. Net Schedule C or F gain or loss and Schedule SE was not filed. Statutory Wages on Schedule C . Ministers Housing allowance on Schedule SE. Earned Income on a subsequently processed Form 1040-X, Amended Return. If either/both taxpayers used the optional method to figure SE income and SE tax, claimed EIC, and there is U/R SE income a special calculation may be necessary to determine the correct entry for the TOTAL EARNED INCOME field. Use the U/R SE income and Schedule SE, Part II to determine if the taxpayer is still eligible to use the optional method. If the taxpayer is still eligible to use the optional method: Manually recompute the new Schedule SE, line 4b amount using the U/R SE income. Add any other reported earned income (include the spouse's earned income if applicable) to the amount from Part I Self-Employment Tax, line 4b as filed or as adjusted. Subtract the U/R SE income from the amount in step 2 above and enter the result in the TOTAL EARNED INCOME field. If the taxpayer is no longer eligible to use the optional method: Add the amount(s) from Schedule C, line 31 or Schedule F, line 34. Add any other reported earned income for the primary/secondary taxpayer as applicable (see (17) above), Part I Self-Employment Tax, line 4b as filed or as adjusted. Enter the result in the TOTAL EARNED INCOME field. The maximum allowable amount of EIC Number of children TY 2022 TY 2023 TY 2024 3 or more $6,935 $7,430 $7,830 2 $6,164 $6,604 $6,960 1 $3,733 $3,995 $4,213 0 $560 $600 $632 A notice must be issued for all changes to EIC unless the case is closed below tolerance. PC 20 isn't valid for EIC adjustments. PARAGRAPH 19 automatically generates when there is a change to EIC. See Exhibit 4.19.3-7, CP PARAGRAPHS. PARAGRAPH 184 automatically generates when investment income exceeds the maximum allowable amount. See Exhibit 4.19.3-7, CP PARAGRAPHS. PARAGRAPH 43 automatically generates when the net result of changes to W/H, excess SSTAX, EIC, Additional Child Tax Credit and AOC is a NEGATIVE amount. See Exhibit 4.19.3-7, CP PARAGRAPHS.

# Additional Child Tax Credit (ACTC)

4.19.3.18.4 (10-10-2025) Additional Child Tax Credit (ACTC) Additional Child Tax Credit (ACTC) enables certain qualifying taxpayers to offset tax liability or to get a refund if no tax is owed. Previously allowed ACTC appears on the Tax Account screen as a TC 766 (with Reference Code 336). If the credit was partially or fully reversed, it shows as a TC 767 (with Reference Code 336). The taxpayer is eligible for the credit if the following apply: The taxpayer claims qualifying child(ren). Note: For each qualifying child, a "check mark" must be placed in the box in column (4) of the Dependents section of the return. The taxpayer doesn't claim the full allowable amount of Child Tax Credit on Form 1040/1040-SR, line 19. Note: When Schedule 8812, line 15 box is checked see IRM 4.19.3.16.4, Child Tax Credit, for further information. When the ACTC recertification indicator (ACTC-RECERT-CD) field on the Tax Account screen is 2, 3, or 4 and ACTC was disallowed during processing, the warning message "WARNING: EIC/CTC/ACTC/AOTC BAN" appears in the MESSAGE window. The AUR system won't allow an ACTC calculation in this situation. Note: DO NOT Correspond for missing Form 8862, Information To Claim Certain Credits After Disallowance. If U/R income results in the taxpayer being eligible for the full allowable amount of Child Tax Credit, the previously allowed ACTC is adjusted accordingly. If U/R income change results in full disallowance of the Child Tax Credit, verify the ACTC is correct. If ACTC was previously claimed or allowed during original processing, and there is a Schedule 8812 present, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. In Return Value, follow system prompts to allow AUR to compute the appropriate amount of credit. If the taxpayer did not qualify for ACTC during original processing and U/R income now makes the taxpayer eligible, manually select the CREDITS FOR QUALIFYING CHILDREN AND OTHER DEPENDENTS window - whether or not a Schedule 8812 has been submitted. See IRM 4.19.3.16.4, Child Tax Credit, for further information. Additional Child Tax Credit can be affected by U/R income that changes: Amounts of Social Security Tax, Railroad Retirement Tax and Medicare Tax withheld Deductible part of SE tax Social Security Tax on Tips Uncollected Social Security and Medicare Tax on Wages Earned Income Credit Child Tax Credit The CREDITS FOR QUALIFYING CHILDREN AND OTHER DEPENDENTS window is used to verify the number of qualifying children are correct. See IRM 4.19.3.16.4, Child Tax Credit, for further information. Caution: If the taxpayer claimed the Residential Energy Credit, Adoption Credit and the Additional Child Tax Credit, use the MANUAL ADD'L CHILD TAX CREDIT and MANUAL NON-REFUNDABLE CHILD TAX CREDIT field in the CREDITS FOR QUALIFYING CHILDREN AND OTHER DEPENDENTS window to ensure the taxpayer receives the correct amount. Taxpayers are instructed to include nontaxable combat pay in earned income on Schedule 8812, Credits for Qualifying Children and Other Dependents when they either did not elect to include this pay in computing EIC or did not claim EIC and to include the nontaxable combat pay. If Schedule 8812, Credits for Qualifying Children and Other Dependents contains an amount for nontaxable combat pay, manually determine the Additional Child Tax Credit Now amount and enter in the MANUAL ADD'L CHILD TAX CREDIT field. Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Taxpayers with nontaxable Medicaid Waiver Payments (MWP) are instructed to include nontaxable MWP on Schedule 8812, Credits for Qualifying Children and Other Dependents when they either did not elect to include this pay in computing EIC or did not claim EIC and include the nontaxable MWP. If Schedule 8812, Credits for Qualifying Children and Other Dependents contains an amount, manually determine the Additional Child Tax Credit Now amount and enter in the MANUAL ADDITIONAL TAX CREDIT field. Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Certain federally declared disasters qualify taxpayer's whose current year earned income was less than their prior year earned income could elect to use their prior year earned income when figuring ACTC. Taxpayers are instructed to enter "PYEI" (Prior Year Earned Income) and the amount of their prior year earned income on the dotted line for ACTC. Enter/Verify the RETURN AMT field of the Additional Child Tax Credit in the CREDITS FOR QUALIFYING CHILDREN AND OTHER DEPENDENTS window using the TC 766 (reference code 336) amount from the Tax Account screen. Enter dollar amount ONLY - drop the cents, don't round. Enter/Verify the remaining fields. See AUR System Guide, Additional Child Tax Credit. Failure to follow this instruction will cause an Unpostable condition. There may be a $1 difference on the Summary screen, DO NOT adjust this amount. Note: The Additional Child Tax Credit in the CREDITS FOR QUALIFYING CHILDREN AND OTHER DEPENDENTS window MUST be accessed after the EIC window. If the window is accessed out of sequence, a warning message displays. A notice must be issued for all adjustments to ACTC unless the case is closed below tolerance. PC 20 isn't valid for adjustments to ACTC. PARAGRAPH 36 automatically generates when the ACTC is disallowed because the taxpayer becomes eligible for the full amount of Child Tax Credit. See Exhibit 4.19.3-7, CP PARAGRAPHS. PARAGRAPH 37 automatically generates when the taxpayer originally claimed ACTC and there is a change to the ACTC. See Exhibit 4.19.3-7, CP PARAGRAPHS. PARAGRAPH 43 automatically generates when the net result of changes to W/H, excess SSTAX, EIC, ACTC and AOC is a NEGATIVE amount. See Exhibit 4.19.3-7, CP PARAGRAPHS.

# American Opportunity Tax Credit (AOTC)

4.19.3.18.5 (10-10-2025) American Opportunity Tax Credit (AOTC) The American Opportunity Tax Credit (AOTC) is refundable. The maximum credit is $2,500 per student. Previously allowed AOTC appears on the Tax Account screen as a TC 766 (with reference code 260). The credit is computed using Form 8863 and is reported on Form 1040/1040-SR, line 29. The taxpayer isn't entitled to any of the credit when: They are claimed as a dependent on someone else's tax return. The filing status is Married Filing Separately (FS 3 or FS 6). They are a non-resident alien. They are a graduate student for the entire AUR year. See IRM 4.19.3.16.5.1, Education Credits - Responses for additional information. If the MAGI is equal to or greater than the upper limit listed in (5) below. The amount of the credit begins to decrease (phase out) when the MAGI exceeds the lower limit of $80,000 (FS 1, 4, 5), $160,000 (FS 2) and is eliminated (disallowed) when the MAGI equals or exceeds the upper limit of $90,000 (FS 1, 4, 5), $180,000 (FS 2). When the AOTC recertification indicator (AOTC-RECERT-CD) field on the Tax Account screen is 2, 3, or 4 and AOTC was disallowed during processing, the warning message "WARNING: EIC/CTC/ACTC/AOTC BAN" appears in the MESSAGE window. The AUR system won't allow an AOTC calculation in this situation. PARAGRAPH 38 automatically generates when there is a change to AOTC, unless there is an amount entered in the MANUAL RFNDBLE EDU CREDIT field in the Education Credit window. See Exhibit 4.19.3-7, CP PARAGRAPHS. Note: If decreasing AOTC due to lack of substantiation, toggle off PARAGRAPH 38 in the Summary screen. PARAGRAPH 43 automatically generates when the net result of changes to W/H, excess SSTAX, EIC, ACTC and AOTC is a NEGATIVE amount. See Exhibit 4.19.3-7, CP PARAGRAPHS.

# Net Premium Tax Credit (PTC)

4.19.3.18.6 (10-10-2025) Net Premium Tax Credit (PTC) Taxpayers who enroll themselves or any family member in health insurance through the Health Insurance Marketplace may be eligible to claim the premium tax credit. The refundable credit claimed as the amount of Premium Tax Credit (PTC) minus the amount of Advance Premium Tax Credit (APTC) from Form 1040/Form 1040-SR, Schedule 3, line 9. Taxpayer's complete Form 8962, Premium Tax Credit (PTC), to determine the amount of eligible credit: Be alert for processing changes which added APTC/PTC. Math Error Code 558 may be present on these cases although Form 8962 was not filed with the return. Take actions to recalculate APTC/PTC and include on the notice, when appropriate. Telephone assistors may request that the taxpayer respond in writing if a recomputed notice is needed and a recalculation of PTC (there is a change to AGI) is required. AUR will adjust per changes to MAGI. If there is no AGI change, don't recalculate PTC. Enter "PER RETURN" amounts from the Premium Tax Credit window in the corresponding fields in the "AMS AMOUNTS" column. To recalculate PTC take the following actions: Steps to take Screen the case to Return Value. Access the Premium Tax Credit window. The amount shown in the "MODIFIED AGI" field will be needed to recalculate PTC. Access IDRS. Access AMS. From the AMS Message Center Screen, enter the "SSN" in the TIN field box, and press enter, the account screen appears. Select "Tools" at the top of the screen. Select the "8962 PTC Calculator" listed under ACA. Once AMS populates the PTC calculator worksheet with the taxpayer's information, verify all AMS pre-populated fields. Make corrections as needed. Enter the MODIFIED AGI amount from AUR in the Adjusted Gross Income field of the PTC calculator worksheet and change all other amounts present in the income section of the PTC calculator to zero. Note: If the field amounts are not changed to zeroes the AUR MAGI will duplicate amounts. Reminder: If the taxpayer reports SS/RR, the SS/RR window MUST be worked (even if SS/RR isn't an issue) in order for the MAGI to be correct. Note: If the taxpayer provides new annual or monthly premium amounts or if there is a change to the filing status or number of exemptions, enter the correct amount(s) in the PTC calculator worksheet. Scroll to the bottom of the worksheet, check the "calculate without CDR validation box" and click the "Calculate" button. Note: If error message "All Policy Allocation X fields must be completed" is received, go to the bottom of the worksheet and click the" Clear All 0s" button and then click the "Calculate" button. Print to PDF a copy of the calculation, and send to clerical to upload into the AUR system, reset the PTC Calculator worksheet, and return to AUR. Exception: In some cases the change to MAGI doesn't cause a change to APTC/PTC. If there is no change to APTC/PTC, don't print the calculation. Select the following standard case note to document the case: Change to AGI. Accessed AMS to recalculate PTC/APTC. No change to PTC or APTC. In the Premium Tax Credit window, enter/verify the "PER RETURN" amounts for "TOTAL PTC" , "TOTAL ADVANCE PYMT OF PTC" , "NET PTC" and "EXCESS APTC REPAY" , as appropriate. Using the calculation from the AMS PTC calculator, enter amounts in the "AMS Amounts" column of the AUR Premium Tax Credit window for: TOTAL PTC TOTAL ADVANCE PYMT OF PTC NET PTC EXCESS ADVANCE PYMT OF PTC REPYMT LIMITATION EXCESS ADVANCE PYMT ABOVE LIMITATION EXCESS APTC REPAY Caution: These end results or "AMS Amounts" are the amounts from the AVS column. Continue with Return Value calculations. AUR will calculate the PTC change amount and include it in the Summary screen. PTC allowed on the original return posts with TC 766, credit reference 262. Recalculate Form 8962, Premium Tax Credit (PTC), using the "8962 PTC Calc" , found in the AMS ACA tools. When adjusting PTC related data, use the following reference numbers, as appropriate: 262 - adjusts the PTC refundable credit (Form 8962, line 26) 865 - adjusts the Advance Payment of Premium Tax Credit (TOTAL APTC as shown on IDRS) (Form 8962, line 25) 866 - adjusts the Total PTC (Form 8962, line 24) 867 - adjusts the Excess Advance PTC Repayment (APTC TX LIAB as shown on IDRS) (Form 8962, line 29) 868 - adjusts the Repayment Limitation (LIMIT AMT as shown on IDRS) (This is to record the amount being waived. Form 8962, the difference between line 27 and line 28 if line 27 is greater than 28.) When adjusting PTC related data, use the following reason codes, as appropriate: 151 - PTC 152 - Excess Advance PTC Repayment PARAGRAPH 62 automatically generates when PTC is adjusted due to a change to modified adjusted gross income. See Exhibit 4.19.3-7, CP PARAGRAPHS. Note: Currently AUR will only adjust PTC based on AGI changes.

# Penalties and Interest

4.19.3.19 (12-16-2024) Penalties and Interest The following instructions are used in calculating the various penalties and interest amounts for AUR processing. An administrative waiver for certain penalties was implemented in 2001 for tax periods with ending dates after December 31, 2000. It is referred to as First Time Abate (FTA) and is available for penalty relief the first time a taxpayer is subject to certain penalties for a single return filed by the taxpayer. The AUR program DOES NOT grant penalty relief under FTA for any penalty. If the taxpayer is requesting FTA in writing or submits Form 843, Claim for Refund and Request for Abatement, for the failure to file, failure to pay, or failure to deposit penalties, forward the request to Taxpayer Services. If the written request or Form 843 penalty only relates to the AUR issue, see IRM 4.19.3.19.5, Accuracy-Related Penalty Due to Substantial Understatement of Tax, for further information. Leave a case note and send a letter to inform the taxpayer their request has been sent to the appropriate department for consideration.

# Failure to File (FTF) Penalty

4.19.3.19.1 (10-10-2025) Failure to File (FTF) Penalty Individual income tax returns are generally due by April 15 of the year following the close of the calendar year or by the approved extension date unless April 15 or the approved extension date falls on a Saturday, Sunday, or a legal holiday; then, the return is due on the next succeeding day that isn't a Saturday, Sunday, or a legal holiday or by the approved extension date. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ An additional FTF may be due if there is a deficiency. Note: Due to Emancipation Day holiday the due date for TY 2022 tax return is April 18, 2023. Note: Due to Patriots' Day and Emancipation Day holiday the due date for TY 2023 tax return is April 17, 2024 for residents of Maine and Massachusetts. Note: See IRM 20.1.2, Failure to File/Failure to Pay Penalties, for procedures regarding the recomputation of FTF penalty. The AUR system doesn't compute additional FTF penalty if there was a prior full or partial abatement (TC 161 or TC 167). TC 167 is a computer generated abatement of the penalty. Master File recomputes a TC 167. Only a TC 160/161 manual computation of the penalty restricts recomputation. Exception: Additional FTF penalty is computed if the original FTF penalty was abated ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The abated amount is added to the additional FTF penalty. The AUR system doesn't compute FTF penalty if the original return was "R" coded. This code appears in the filing status area of the return, and indicates the taxpayer was not subject to FTF penalty because they have proved reasonable cause for filing late. If a FTF penalty was assessed, it appears on the Tax Account screen as a TC 160 or TC 166. If the penalty was partially or fully reversed, it shows as TC 161 or TC 167. Note: If the tax on a late filed balance due return is decreased or if the net result of changes to W/H, excess SSTAX, EIC, and/or other credits is a decrease in balance due, any unpaid balance is reduced and the FTF penalty is also reduced. If the return is adjusted to become a refund return, and TC 160/166 is present on the Tax Account screen, it is reversed with a TC 161. The FTF penalty percentage is generally 5 percent of the unpaid balance, with an additional 5 percent for each month or part of a month that the return is filed late, but not to exceed 25 percent. The unpaid balance is the difference between the amount required to be shown on the return and the amount paid (including W/H payments and estimated tax) on or before the due date plus any credit to which the taxpayer is entitled. For returns filed more than 60 days after the due date, a minimum penalty is assessed. The minimum penalty isn't less than $510.00 or 100 percent of the unpaid balance, whichever is less. Exception: If the failure to file was determined to be fraudulent, the FTF penalty percentage is 15 percent per month, not to exceed 75 percent. DO NOT adjust this amount. The FTF penalty for a month is reduced by the amount of any FTP for the return for that month. When the FTF penalty is based only on the unpaid balance on the return and when no payments are made after the date prescribed for payment of tax, the effect is that the FTF penalty is limited to 4.5 percent a month. (Payments made after the prescribed date reduce the FTP but not the FTF penalty.) The system computes or recomputes the FTF penalty when applicable. See IRM 20.1.2.3.7.3, Limitation Under IRC 6651(c)(1), for additional information. Exception: If certain conditions are present, the AUR system is unable to compute the additional FTF penalty. When these conditions are present, the system displays the following message: "Warning: Manual Failure to File Penalty Calculation Required. Transfer Case to designated SEID for Manual Computation." The FTF Penalty Worksheet and FTF Job Aid are available on the AUR Research Portal. Note: The FTF penalty is automatically corrected on IDRS when there is a change to pre-payments on a late-filed return. If a pre-payment change is confirmed and appropriate (PC 20 closure), no other action is needed to adjust the FTF penalty. It may be necessary to limit the penalty to an amount, including zero (0), other than what the system computes. Manually enter the limited penalty in the ADDITIONAL FAILURE TO FILE PENALTY field. See IRM 4.19.3.19.8, Limited Penalties, for further instructions. PARAGRAPH 35 automatically generates when FTF penalty is proposed. See Exhibit 4.19.3-7, CP PARAGRAPHS. When a manual assessment is done and the FTF penalty is decreased, see IRM 4.19.3.23.12.1, The Assessment Window, for special instructions.

# Failure to Pay (FTP) Penalty

4.19.3.19.2 (10-10-2025) Failure to Pay (FTP) Penalty If FTP penalty was assessed, it appears on the Tax Account screen as TC 270 or TC 276. If the penalty was partially or fully reversed, it shows as TC 271 or TC 277. FTP penalty must be manually adjusted when a TC 270/271, TC 500 or TC 780 is on the tax module and a notice must be issued. The AUR system doesn't recompute the penalty. IDRS uses a common code to recompute the penalty, if applicable. PARAGRAPH 43 automatically generates to advise the taxpayer they may receive a separate notice with the recomputed FTP. Exhibit 4.19.3-7 If the Freeze Code "G-" is due to TC 780, see IRM 4.19.3.4.3.4, Other Transaction Codes and Math Error Codes. The FTP penalty must be restricted with a TC 270 for zero if W/H and excess SSTAX are not being adjusted, but one of the other refundable credits is being adjusted, and the net AUR adjustment is an increase in liability. TC 270 or 271 for the appropriate amount after manually recomputing the FTP penalty if withholding or excess FICA/RRTA is being adjusted, and any other refundable credit (see (6) below for a list of refundable credits) is also being adjusted, unless the net AUR adjustment is a decrease in liability. The following refundable credits may affect the FTP: W/H Excess SST/RRT EIC Additional Child Tax Credit American Opportunity Credit Fuel Tax Credit Net Premium Tax Credit Notice to Shareholder of Undistributed Long-Term Capital Gains In response phase: Work the case through Return Value, commit the Return Value screen. On the Notice Summary screen, all RETURN fields must be updated, and all non-automatic paragraphs must be accounted for. The Notice Summary screen must be committed. Enter the appropriate process code and continue processing. PARAGRAPH 43 automatically generates when the total of changes to W/H and excess SSTAX are less than zero. See Exhibit 4.19.3-7, CP PARAGRAPHS.

# Estimated Tax (ES) Penalty

4.19.3.19.3 (10-06-2022) Estimated Tax (ES) Penalty If an ES penalty was assessed, it appears on the Tax Account screen as TC 170 or TC 176. If the penalty was partially or fully reversed, it shows as TC 171 or TC 177. The AUR system doesn't recompute the ES penalty. The Estimated Tax Penalty is recomputed by IDRS ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and the penalty has not been fully reversed. Caution: If the module contains a TC 171, or a TC 170 with a DLN other than the return DLN and there is a change to W/H or excess SST, the ES Penalty MUST be addressed in the Assessment Window with a priority code 8. Failure to address the ES penalty in this situation will cause the adjustment to unpost (UPC 158-0). PARAGRAPH 77 automatically generates when an ES penalty was previously charged and has not been fully reversed and there is a change to W/H or excess SSTAX. See Exhibit 4.19.3-7, CP PARAGRAPHS.

# Social Security (SS) Tip Tax Penalty

4.19.3.19.4 (09-21-2020) Social Security (SS) Tip Tax Penalty Cash and charge tips of $20 or more received in any month (working for one employer) are subject to social security tax. If the taxpayer did not report any or all of these tips to the employer, they must file Form 4137, Social Security Tax and Medicare Tax on Unreported Tip Income, attach it to their return, and pay the SS tax. The taxpayer must also file Form 4137 if reporting any part of the allocated tips shown on their Form W-2 as income on Form 1040/1040-SR, line 1c. In addition, if a taxpayer fails to report any or all of these tips to the employer, they may be liable for a SS tip tax penalty equal to 50 percent of the SS tax on Tips. Do not issue a CP 2000 solely for SS Tip Tax and/or SS Tip Tax Penalty. If a CP 2000 is issued, the system automatically generates the 50 percent penalty on social security tax on unreported tip income. It may be necessary to limit the penalty to an amount, including zero (0), other than what the system computes. Manually enter the limited penalty in the SS TIP TAX PENALTY field. See IRM 4.19.3.19.8, Limited Penalties, and AUR System Guide, Computing Worksheet Window, for further instructions. PARAGRAPH 15 automatically generates when the system generates the 50 percent penalty on social security tax on unreported tip income. See Exhibit 4.19.3-7, CP PARAGRAPHS.

# Accuracy-Related Penalty Due to Substantial Understatement of Tax

4.19.3.19.5 (10-10-2025) Accuracy-Related Penalty Due to Substantial Understatement of Tax If the taxpayer substantially understates their tax liability, they may be liable for the substantial understatement penalty. An understatement is the EXCESS amount of tax required to be shown on the return over the actual amount shown on the return as reduced by any rebate. An item for which the taxpayer either has substantial authority or has a reasonable basis and has made an adequate disclosure is treated as if it were shown on the return. Substantial authority is discussed in (8) below, and adequate disclosure is discussed in (9) below. Note: The Substantial Understatement Penalty may be proposed on returns that are also subject to the Failure to File Penalty. An understatement is substantial if it exceeds the greater of 10 percent of the tax required to be shown on the return OR $5,000. Example: The amount of tax required to be shown on the return (new Total Tax) is $125,500 and the amount of the understatement (new Total Tax minus amount shown on return) is $8,500. 10 percent of the tax required to be shown on the return is $12,550 ($125,500 x .1). The Substantial Understatement Penalty DOES NOT apply because, while the understatement exceeds $5,000 it DOES NOT exceed 10 percent of the tax required to be shown on the return, which in this case is $12,550. Example: The amount of tax required to be shown on the return (new Total Tax) is $15,500 and the amount of the understatement (new Total Tax minus amount shown on return) is $6,500. 10 percent of the tax required to be shown on the return is $1,550 ($15,500 x .1). The Substantial Understatement Penalty DOES apply because the understatement exceeds the greater of $5,000 or $1,550. The substantial understatement penalty is 20 percent of the portion of the underpayment due to a substantial understatement of income taxes required to be shown on the return. Any portion of an underpayment may be subject to only one accuracy penalty even though that portion may be attributable to both a substantial understatement of tax and negligence. However, one portion of an underpayment may be attributable to a substantial understatement of tax and a different portion to negligence or disregard of rules or regulations. See IRM 4.19.3.19.6, Accuracy-Related Penalty Due to Negligence or Disregard of Rules or Regulations (Negligence Disregard Penalty). If both penalties apply to the same underpayment, only one 20 percent penalty is imposed. The system determines the greater of the two penalties and displays it on the CP 2000. The system selects the appropriate notice paragraph(s) when penalties apply. The substantial understatement penalty displays on the system prior to issuance of the CP 2000. After a CP 2000 is issued, the substantial understatement penalty displays on the CP 2000 History window in the ACCURACY RELATED PENALTY field. Reference IRM 20.1.5, Return Related Penalties, for procedures regarding the computation of the penalty. When the taxpayer's account is assessed through the Assessment window, a Reference Code 680 displays for the substantial understatement penalty. In certain situations it may be necessary to enter or delete the Reference Code 680. See IRM 4.19.3.23.12.1, The Assessment Window, for more information. The penalty doesn't apply if the taxpayer attaches evidence of SUBSTANTIAL AUTHORITY as a basis for the tax treatment of an item that resulted in an understatement of their tax liability, such as: Examples of substantial authority Internal Revenue Code Temporary, Proposed and Final Regulations Court Cases Revenue Rulings Revenue Procedures Tax Treaties with Accompanying Regulations and Official Explanations Committee Reports (Congressional Intent) Blue Book (Joint Committee Explanations) Private Letter Rulings Technical Advice Memoranda and Expedited Technical Advice Memoranda Actions on Decisions General Counsel Memoranda IRS information including press releases, notices, announcements and other administrative pronouncements published in the Internal Revenue Bulletin Note: See IRM 20.1.5, Return Related Penalties, for additional information. The Substantial Understatement penalty doesn't apply if the taxpayer has a reasonable basis for the treatment of the item and has made an Adequate Disclosure on the tax return or in a statement attached to the return. The following are situations where the understatement is considered adequately disclosed: A taxpayer who is disputing the tax liability or treatment of income and has REASONABLE BASIS for the treatment of the issue and completes Form 8275, Disclosure Statement, or if the position is contrary to regulation, completes Form 8275-R, Regulation Disclosure Statement. Note: For definition of reasonable basis see Treasury Regulation 1.6662-3(b)(3). IRC 6664(c) also provides an exception to the imposition of any accuracy-related penalty if the taxpayer shows there was reasonable cause and acted in good faith. See IRM 20.1.5.7.1, Reasonable Cause, and Exhibit 20.1.5-6, Determining Reasonable Cause and Good Faith. The item at issue is disclosed on the taxpayer's return and is listed in Rev. Proc. 2014-15 (or its successor). If the revenue procedure doesn't include an item, disclosure is adequate with respect to that item only if made on a properly completed Form 8275, Disclosure Statement, or Form 8275-R, Regulation Disclosure Statement. If the tax examiner determines to suppress the substantial understatement penalty in full (for example, income reported, reasonable cause), enter a zero (0) in the SUBSTANTIAL UNDERSTATEMENT PENALTY field on the Limit Penalties window. If the tax examiner determines to suppress the penalty in part (for example, income reported, reasonable cause), enter the applicable amount in the SUBSTANTIAL UNDERSTATEMENT PENALTY field on the Limit Penalties window. After entering PC, the Process Code window auto populates the Penalty Waived/Not Waived/No Request window. This allows for tracking instances where the TP requests waiver of the Substantial Underpayment Penalty and whether the request has been waived, not waived or no request. Waiver requests MUST be in writing and signed by the taxpayer or valid POA. When the taxpayer makes this request, the PENALTY WAIVED/NOT WAIVED window automatically appears after entering the appropriate Process Code (PC) or Internal Process Code (IPC). Select the Waived, Not Waived, No Request button as applicable. Note: Only click the Waived button when the penalty is being suppressed (see (10) above). Do not click the button if the penalty is no longer applicable; click the No Request button in this case (for example, recomputed notice and the revised tax increase is now less than the greater of $5,000 or 10 percent of the tax required to be shown on the notice). Reminder: A case note to record managerial penalty assertion approval is required when denying the taxpayer's request. See IRM 4.19.3.23.1.4, Accuracy-Related Penalties, for additional information. See IRM 4.19.3.19.6, Accuracy-Related Penalty Due to Negligence or Disregard of Rules or Regulations (Negligence Disregard Penalty), for reasonable cause criteria. Also see IRM 20.1.1, Introduction and Penalty Relief, for more information regarding reasonable cause criteria in general, and IRM 20.1.5, Return Related Penalties, for exceptions to the Substantial Understatement Penalty. PARAGRAPH 91 automatically generates when the substantial understatement penalty applies. See Exhibit 4.19.3-7, CP PARAGRAPHS. PARAGRAPH 92 automatically generates when both penalties apply. See Exhibit 4.19.3-7, CP PARAGRAPHS.

# Accuracy-Related Penalty Due to Negligence or Disregard of Rules or Regulations (Negligence Disregard Penalty)

4.19.3.19.6 (10-29-2024) Accuracy-Related Penalty Due to Negligence or Disregard of Rules or Regulations (Negligence Disregard Penalty) The negligence or disregard penalty is 20 percent of the portion of the underpayment attributable to negligence or disregard of rules or regulations. The AUR system checks for certain characteristics of the case before applying the penalty. The penalty applies when there is a prior year TC 922 and the case is selected for the same income category as the prior year. Cases that meet the above criteria are deemed ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and are assigned to Subfile G or L or any other Subfile with a secondary Subfile G or L. The AUR program applies this penalty when a ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ contains a "2" or "3" in the TC 922 HIST field of the Tax Account screen. For instructions on completing the Negligence screen, see IRM 4.19.3.19.7, Determine Negligence Status Screen. The Negligent disregard penalty is proposed as applicable if the issues result in an underpayment of tax. Any portion of an underpayment may be subject to only one accuracy penalty even though that portion may be attributable to both negligence and a substantial understatement of tax. However, one portion of an underpayment may be attributable to negligence and a different portion to a substantial understatement of tax. See IRM 4.19.3.19.5, Accuracy-Related Penalty Due to Substantial Understatement of Tax. If both penalties apply to a given underpayment, only one 20 percent penalty may be imposed. The system determines the greater of the two penalties and displays it on the notice. The amount of an underpayment attributable to disregard of rules or regulations is reduced by any portion of the underpayment for which the taxpayer has made an adequate disclosure. A disclosure can be adequate only if it is made on Form 8275 or, if the position is contrary to a regulation, on Form 8275-R. The negligence or disregard penalty is NOT assessed if reasonable cause exists. The determination of whether the taxpayer acted with reasonable cause and in good faith must be made on a case-by-case basis, taking into account all the relevant facts and circumstances. See IRM 20.1, Penalty Handbook, for further information.≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The system automatically suppresses the negligence penalty ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ it displays in the MANUAL NEGLIGENCE PENALTY field on the Limited Penalty window and in the ACCURACY-RELATED PENALTY field on the Notice Summary screen. When the taxpayer's account is assessed through the Assessment window, a Reference Code of "680" displays for the negligence penalty. In certain situations it may be necessary to change or delete the Reference Code 680. See IRM 4.19.3.23.12.1, The Assessment Window, for more information. PARAGRAPH 92 automatically generates when both substantial understatement and negligence apply. See Exhibit 4.19.3-7, CP PARAGRAPHS. PARAGRAPH 86 automatically generates when the negligence penalty applies. See Exhibit 4.19.3-7, CP PARAGRAPHS.

# Determine Negligence Status Screen

4.19.3.19.7 (10-10-2025) Determine Negligence Status Screen The AUR system identifies cases on which the Accuracy-Related Penalty Due to Negligence may be assessed. After all IRs are marked with a status code and the Return Value option is selected, the Determine Negligence Status screen displays if applicable. The IRs displayed here are the IRs that have a status code of "U" entered on the Case Analysis screen. The total U/R of each IR displays in the TOTAL U/R AMOUNT field. IRs that are grouped in Case Analysis display only one IR from the group, but the group U/R total displays in the TOTAL U/R AMOUNT field. The NEGLIGENCE U/R AMOUNT field shows the total U/R for each IR. If reasonable cause applies, the displayed amount needs to be changed to reflect only the U/R attributable to negligence. Use the criteria in IRM 20.1.5.7.1, Reasonable Cause, to determine if reasonable cause applies. See (8) below when the taxpayer requests waiver of the Accuracy Related Penalty due to Negligence. If the taxpayer did not provide reasonable cause for ANY of the U/R IRs, the TOTAL U/R AMOUNT field must equal the NEGLIGENCE U/R AMOUNT field. If the taxpayer provided reasonable cause for ALL of the U/R IRs, enter a "Y" in the ACCURACY PENALTY OVERRIDE field. If the taxpayer provided reasonable cause for SOME of the U/R IRs, determine the negligence amount for each income type by subtracting the reasonable cause amount from the TOTAL UR AMOUNT field and enter the result in the NEGLIGENCE UR AMOUNT field. Based on the information entered on the Determine Negligence Status screen, the system computes the accuracy penalties and PARAGRAPH 86 or 91 automatically generates, as appropriate. See Exhibit 4.19.3-7, CP PARAGRAPHS. When the Determine Negligence Status screen is initially displayed and the U/R income is marked as either ALL negligent or ALL subject to reasonable cause, the Determine Negligence Status screen doesn't automatically display again. To display the Determine Negligence Status screen again, manually select it from the menu. This action isn't necessary unless you changed your initial determination and need the Determine Negligence Status screen to display for a second (or more) time(s) while in the same working session of a case. Reference IRM 20.1.5, Return Related Penalties, for procedures regarding the computation of the penalty. After entering PC the Process Code window auto populates the Penalty Waived/Not Waived/No Request window. This allows for tracking instances where the TP requests waiver of the Negligence Penalty and whether the request has been waived, not waived or no request. Waiver requests MUST be in writing and signed by the taxpayer or valid POA. The PENALTY WAIVED/NOT WAIVED window automatically appears after entering the appropriate Process Code (PC) or Internal Process Code (IPC). Select the Waived, Not Waived, No Request button as applicable. Note: Only click the Waived button when the penalty is being suppressed (see (5) above). Do not click the button if the penalty is no longer applicable; click the No Request button in this case. Reminder: A case note to record managerial penalty assertion approval is required when denying the taxpayer's request. See IRM 4.19.3.23.1.4, Accuracy-Related Penalties, for additional information.

# Limited Penalties

4.19.3.19.8 (11-29-2023) Limited Penalties The Limit Penalties window is used to fully or partially abate the Additional Failure to File Penalty, Social Security Tip Tax Penalty, Negligence Penalty, and Substantial Understatement Penalty when appropriate. This window is used only in special circumstances. Take the following actions to enter/verify the correct amounts: Enter/verify the manually computed additional Failure to File Penalty amount in the ADDITIONAL FAILURE TO FILE PENALTY field. Enter/verify the manually computed Social Security Tip Tax Penalty amount in the SSTIP TAX PENALTY field. Enter/verify the manually computed Negligence Penalty, or "0" (zero) to suppress the penalty, in the NEGLIGENCE PENALTY field. Enter/verify the manually computed Substantial Understatement Penalty, or "0" (zero), to suppress the penalty, in the SUBSTANTIAL UNDERSTATEMENT PENALTY field. Manually select the Limit Penalties window only after all other applicable windows in Return Value are assessed. The system computed penalties display in the appropriate fields. If the amounts are incorrect or need to be abated, make the necessary changes. Once a penalty is manually limited, it stays limited if the manually entered amount is present. To allow the system to compute the penalty, the manually computed penalty must be deleted, leaving the field blank. If the only action being taken is to fully or partially abate a penalty, a recomputed notice must be issued. Caution: Failure to send a recomputed notice will result in an incorrect assessment.

# Computer Generated Interest for CP 2000

4.19.3.19.9 (09-30-2014) Computer Generated Interest for CP 2000 Interest on CP 2000 Notices is generated by the IDRS interest program. Interest is charged on the portion of the deficiency that exceeds the refund amount from the original due date of the return. Certain conditions require the interest be computed manually. See IRM 4.19.3.19.10, Manually Computed Interest for the CP 2000, for further instructions. Interest is suspended from the day after the close of the 36-month period and resumes on the 21st day after a notice is sent, if the IRS fails to notify the taxpayer of additional taxes within 36 months of the later of: The original statutory due date of the return (for example, April 15th) or, The date of a timely filed return (including extensions). Note: This provision DOES NOT apply to late filed returns.

# Manually Computed Interest for the CP 2000

4.19.3.19.10 (10-10-2025) Manually Computed Interest for the CP 2000 There are certain restrictive conditions on an account which cause the IDRS interest program to reject the CP 2000 without computing the interest. When these conditions are present, cases are batched in BT 61 and interest will need to be computed manually or the case may need to be closed. See IRM 4.19.3.4.3.2, Freeze Codes, for additional information and appropriate closing PCs. Reminder: During screening, if the case requires manual interest, it will reject and be built to batch type 61. Cases will be closed PC 27, only if the case is in BT 61. The following conditions will require Manual Interest computation: Freeze Code "I-" on the account, Note: If the above condition exists and a previous IPC "MI" is present AND the case is in BT 61, close PC 27, otherwise continue processing. The system displays an alert in the Return Value screen. TC 971 AC 064 is present. Note: This condition doesn't generate a "-I" freeze, therefore no system message displays. Freeze Code "-C" with a Combat Zone Indicator 2, including refund cases. Two agreement dates. See IRM 20.2.5.6.1, Reasons to Manually Compute Interest, for an extended list. Enter IPC MI, if applicable. See IRM 4.19.3.10, Return Value Screen, for further instructions. If Then There is no response to the CP 2000 See IRM 4.19.3.22.1, No Response to BT 84, for further instructions. The Return Value screen reflects a refund and there is no "I-" freeze present Enter zero (0) in the MANUAL INTEREST field and continue processing. Do not enter IPC "MI" . Cases with IPC MI are batched in BT 61 (Manual Interest batch). These cases are worked by designated tax examiners. Compute interest ONLY when a previous IPC "MI" is present AND the case is in BT 61 on the proposed balance due (refund ONLY when" I-" freeze code is present). As necessary, refer to IRM 20.2, Interest. The interest is computed to reflect 30 days from the notice date. Note: If the TC 776 is reversed and there is no "G-" freeze code, process the case normally. An entry isn't required in the MANUAL INTEREST field. If a notice is issued (PC 55, 57, 59, 95, IPC CR, RN, SR or DR), enter the manually computed interest in the MANUAL INTEREST field of the Return Value screen or the Summary screen. Ensure Manual Interest calculation complies with IRC 6404(g). See IRM 4.19.3.19.9, Computer Generated Interest for the CP 2000. Per IRC 6631 at the point of assessment, manual interest must be recomputed and a letter providing the taxpayer with a breakdown of how the interest is calculated must be sent. Interest is generally computed to the full paid date, 30 days from the agreement date, or the 23C date of the assessment, whichever is the earliest. Prepare Letter 3535. Compute the manual interest. Print the computation and attach to Letter 3535. Note: Users of command code (CC) COMPA may only send COMPAD prints to taxpayers as an explanation of the manual interest computation. Access the assessment window. Make the appropriate entries in the assessment window. See IRM 20.2.5.6.3, Non-Restricting Transaction Code (TC) 340, for additional information on what entries are required. Prepare the letter, address and stuff envelope, and mail. Use PC 68, 88, or 94 as appropriate. If case requires a recomputed notice (IPC CR, RN, SR or DR) take the following actions: Prepare Letter 3535. Compute the manual interest. Print the computation and attach to Letter 3535. Note: Users of command code (CC) COMPA may only send COMPAD prints to taxpayers as an explanation of the manual interest computation. Prepare the letter, address and stuff envelope, and mail. Enter IPC CR/DR, RN/SR as appropriate. All reject conditions are listed in IRM 2.3, IDRS Terminal Responses, under Command Code INTST or ICOMP.

# Automated Underreporter (AUR) Rejects

4.19.3.20 (10-02-2024) Automated Underreporter (AUR) Rejects For reject cases, AUR generates a weekly listing with the SSN and Reject Code. Notice reject cases are assigned to Batch Type 39 or 61 when the CP 2501 and/or CP 2000 notices can't be processed. Use the table below and take the following action: Reject Code Action Reject Code 1 - Restricted Interest: This condition occurs when the taxpayer module has a -I freeze code See IRM 4.19.3.4.3.2, Freeze Codes, for further information. Reject Code 2 - Military Action: This condition occurs when the taxpayer module has a -C freeze code Close the case PC 15. Reject Code 4 - Invalid Interest (SCRS): This condition occurs when the interest amount is greater than the tax increase See IRM 4.19.3.19.10, Manually Computed Interest for the CP2000, for further information. Reject Code 5 - Not Found on TIF: This condition occurs when the taxpayer module wasn't available on IDRS for the interest calculation If the case has a PC 55 or PC 57, close the case PC 28. If the case has a PC 59, access IDRS and use CC MFREQC, rework the case and input the appropriate PC. Reject Code 6 - Invalid Interest (AUR): This condition occurs when the interest amount is greater than the tax increase See IRM 4.19.3.19.10, Manually Computed Interest for the CP2000, for further information. Reject Code 8 - Declared Disaster Area (Type 4): This condition occurs when the taxpayer module has a -O freeze See IRM 4.19.3.5.6, Declared Disaster Areas, for further information.

# Batch Type 84001 - 299 (Screening Cases with New Actions)

4.19.3.20.1 (09-30-2014) Batch Type 84001 - 299 (Screening Cases with New Actions) During batch assembly by the control function, the system identifies cases with new Payer Agent information and new transactions received from Master File subsequent to the tax examiner's evaluation of the case. Each of these cases should be reviewed for possible closure. More than one condition may exist on the case. If the case contains new Payer Agent information, review and rework the case as necessary. If the case contains new transactions (from Master File) which affect the case, rework the case if necessary. If a new address is present for the spouse and the last address change cycle is 20XX52 or later (the address change cycle is located next to the STREET/CITY field), use the Update Address window to enter the spouse's address. Rework the case to generate another CP 2000. For No Response BT 84300-499, see IRM 4.19.3.22.1, No Response BT 84.

# Letter Rejects

4.19.3.20.2 (09-01-2008) Letter Rejects When letters are sent to the taxpayer (for example, Letter 2626-C, Letter 4314-C) and errors are discovered during review, or IDRS incompatibility causes the letter to reject, the letters or cases are returned to the tax examiner who issued the letter.

# Stop Notice Functionality

4.19.3.20.3 (09-01-2004) Stop Notice Functionality Use the Stop Notice window if it is determined that a notice must not be mailed to the taxpayer. When an SSN is entered on the Stop Notice window, the system automatically assigns the appropriate "not mailed" PC. This option MUST be used no later than 2 Fridays before the scheduled notice date. PCs 34, 54, 58, 60, 79, and 81 (notice not mailed PCs) are systemically assigned when SSNs are committed to the Stop Notice window. Correct the information on the Case Analysis screen and/or the Return Value window. Make the necessary changes, for example, U/R amount, paragraphs, IRs that need to be included on the notice, etc. If a notice is being amended, enter an "A" in the AMENDED field on the Summary screen. Re-enter the PC. PCs 34, 54, 58, 60, 79, or 81 (the stop notice/notice-not-mailed PCs) moves the case(s) into the appropriate Unit Suspense batch. The notice-not-mailed PCs 34, 54, 58, 60, 79, and 81 must be followed by an appropriate PC in order to release the case(s).

# CP 2501 and CP 2000 Information

4.19.3.21 (09-01-2004) CP 2501 and CP 2000 Information The following instructions are used to process a taxpayer response to the CP 2000/ CP 2501 in the AUR Program.

# CP 2501

4.19.3.21.1 (10-10-2025) CP 2501 The CP 2501 is the notice sent to a taxpayer to obtain additional information prior to issuing a CP 2000. There is a single Summary screen. All cases are worked through Return Value and the Notice Summary screen must be completed through entering all necessary return amounts and all applicable PARAGRAPHS. See Exhibit 4.19.3-7, CP PARAGRAPHS. When PC 55 is committed and the U/R amount is $100,000 or more, the system displays a prompt to issue a CP 2501. See IRM 4.19.3.7, Determination of CP 2501 Issuance, for more information on when to issue a CP 2501.

# CP 2000

4.19.3.21.2 (10-10-2025) CP 2000 The CP 2000 is sent to the taxpayer to propose a change to income tax liability because of income that isn't identified or doesn't appear to be fully reported on the tax return. It is also sent due to a difference in W/H, EIC, ACTC, or excess SSTAX. The CP2000 notice can be the original notice or a subsequent notice based on the taxpayers response or lack of response. See the table below for notice definitions: Notice Name Notice Type Notice Indicator Notice Definition Original BAL Due/Refund CP2000 Null First CP2000 notice which may be issued as either a refund or a balance due. Recomputed CP2000-Post CP2501 Response BAL Due/Refund CP2000A A Used as a response to either a CP2501 or the CP2000 where the taxpayer has provided us with information which allows us to change the amount of proposed tax but still need the taxpayer to agree to the recomputed notice. Post CP2501 No Response CP2000B B CP2000 issued after the CP2501 where the taxpayer didn't respond. Response Recomputed CP2000C C Part agreed where the taxpayer has provided a response to a lower tax amount which we agree to and are making an assessment and closing the case. Response Notice CP2000D D Recomputed notice where the CP 3219A has been issued, but we are able to change the proposed amount of tax based on the taxpayers response but there is still time to petition the tax court. Response Notice Petition Indicator Expired CP2000E E Part agreed where the taxpayer has provided a response to a lower tax amount which we agree to and are making an assessment and closing the case. This is after the time to petition the tax court has expired.

# Notice Summary Screen

4.19.3.21.3 (10-10-2025) Notice Summary Screen For cases requiring a notice, the system compiles the data from the screens and windows used in the analysis of the case and displays it on the Notice Summary screen. The system doesn't allow entry of an applicable PC until the Notice Summary screen is accessed and committed. Select the Notice Summary screen. Review the displayed data. See AUR System Guide, Using the Summary Screen. If any data is incorrect, return to the applicable screen or window and make the appropriate corrections. Paragraphs are added or deleted on the Notice Summary screen by accessing the Paragraphs window. All data must be accurate, since the information on the Notice Summary screen is used to create the CP 2000 that is sent to the taxpayer. See AUR System Guide, Using the Summary Screen. Enter the amount reported on the taxpayer's return for each discrepant income type in the RETURN field. (This is a required field.) The system uses the amount entered to compute the REPORTED TO IRS field. The system doesn't allow a negative amount in RETURN and REPORTED TO IRS fields (except for income type IRA, EWPEN, MORT INT, Conduit, Security Sales, Dividend Capital Gains, Savings Bond Exclusion, and deductible part of SE tax discrepancies). Note: The AUR system doesn't allow amounts over $999,999,999 to be entered. Cases with amounts of this size are referred to the manager or Technical Lead since they require special review and processing. If the REPORTED TO IRS and/or RETURN field(s) is negative, but the system won't allow a negative amount, use the following procedures: if the INCREASE OR DECREASE field is a positive amount (U/R income), enter zero (0) in the RETURN field; if the INCREASE OR DECREASE field is a negative amount (O/R income), enter the O/R amount (as a positive) in the RETURN field. If unable to issue a notice showing the exact figures reported on the return, a letter must be sent to the taxpayer explaining the adjustment. The Notice Indicator is used to identify the type of CP 2000 issued, and is blank for an initial contact. Use Indicator "A" to generate a CP 2000A that follows a CP 2501 to which the taxpayer has responded. Use Indicator "B" to generate a CP 2000B that follows a CP 2501 to which the taxpayer has not responded. Use Indicator "A" to generate a recomputed CP 2000A that displays a paragraph which explains to the taxpayer that we used information supplied by them to refigure the amount of tax now owed to IRS. Use Indicator "C" to generate a recomputed CP 2000C that displays a paragraph which applies when the taxpayer refigures the amount of tax that is owed and provides either a signature (with or without full payment) or submits a payment for the revised tax increase and penalties in full. This paragraph indicates our agreement with the taxpayer's calculations and informs them that the notice has been sent for informational purposes only. Use Indicator "N" for those instances when the taxpayer partially agrees to the CP 2000 or Statutory Notice, explains the other discrepancies to our satisfaction, AND the Non-Refundable Credit window is used to make the system match the taxpayer's figures ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The entered Notice Indicator "N" suppresses the generation of a subsequent notice to the taxpayer and allows an assessment to be automatically generated. Use Indicator "D" to generate a recomputed CP 2000D following a Statutory Notice. In this instance, the taxpayer provided additional information to refigure the tax. The taxpayer's 90-day period for petitioning the U.S. Tax Court has not expired. Use Indicator "E" to generate a recomputed CP 2000E following a Statutory Notice. Indicator "E" notices are sent to the taxpayer as information only notices. The taxpayer's 90-day period for petitioning the U.S. Tax Court has expired and we have concluded our inquiry. For additional information see IRM 4.19.3.23.8, Partially Agreed Responses, and IRM 4.19.3.23.8.1, Recomputation Notice/Supplemental Report. Note: Use IPC DR when using Indicator "E" . Enter/Verify the total of all payments credited toward the taxpayer's current AUR account received after the initial contact notice in the AMOUNT PREVIOUSLY PAID field on the Return Value screen. When working cases in BT 61, Manual Interest, enter/verify the manually computed interest in the MANUAL INTEREST field on the Notice Summary screen. When the Notice Summary screen is completed and committed, access the Process Code window and enter the appropriate PC. If the notice should not be sent and another action is necessary, access the Process Code window and enter the appropriate PC. See Exhibit 4.19.3-4, AUR Process Codes. For a list of Internal Process Codes (IPC), see Exhibit 4.19.3-3, AUR Internal Process Codes. Enter these codes on the Process Code window when you complete all actions necessary for the current situation of the case (for example, enter a research IPC if you are requesting research). The system validates that proper actions have been taken before a PC or IPC is entered. Entering a PC is required to complete working a case, except when a case is transferred to another user or yourself in the Unit Suspense batch. The system doesn't allow you to release a work unit if a case that needs a PC is in the work unit.

# Amended/Corrected CP 2000/2501 Notices

4.19.3.21.4 (10-10-2025) Amended/Corrected CP 2000/2501 Notices If a notice is incorrect, an amended/corrected notice can be generated. Multiple amended/corrected notices can be generated if necessary. If corrections are necessary, return to the applicable screen(s) or window(s) and make the appropriate correction(s). Enter an "A" in the AMENDED INDICATOR field on the Notice Summary screen. The system is updated to reflect the new amount(s) so any subsequent notices or disclosure records are correct. A new notice date is assigned by the system. IR elements not sent on the original notice can be selected for inclusion on the amended/corrected notice. Mark the IR elements with Send Indicator "S" . The amended notice capability is also used to update the interest computation if the original CP 2000 Notice was not mailed within five (5) days of the notice date.

# Notice History Screen

4.19.3.21.5 (10-10-2025) Notice History Screen The CP 2000/ CP 2501 History screens display all the information contained on the notice sent to the taxpayer. See AUR System Guide, Viewing Display Notice History Screen. Select the Contol Case History from the Case Analysis menu to view the history of a case assigned to your location. Select the Case History from the Case History window from the Main menu to view the history of a case assigned to another unit. No update is allowed in any field on these screens. The CP 2000/ CP 2501 History screen (as applicable) can only be used to view the notice history of a case. The CP 2000 History screen is the only screen that provides the total tax due plus interest (the bottom line, balance due/refund amount) as it appears on the notice.

# No Response/Undeliverables

4.19.3.22 (09-01-2003) No Response/Undeliverables Generally, when there is no taxpayer response to an AUR Notice, the case is systemically updated to the next phase. Prior to updating the case, if certain conditions are present, the system alerts the Clerical Function to build the case into a Batch that requires additional tax examiner review.

# No Response BT 84

4.19.3.22.1 (10-10-2025) No Response BT 84 There may be multiple reasons a case is built into BT 84, so thorough research of the entire case is required to ensure all conditions and issues are resolved. For screening cases with new transactions (Batch Type 84001 - 84299), see IRM 4.19.3.20.1, Batch Type 84001-299 (Screening Cases with New Actions). The following instructions apply to all subsections of BT 84 unless otherwise specified. When there is an indication of identity theft in the message window, see IRM 4.19.3.23.1.25.1, IDT General and IRM 4.19.3.23.1.25.3, IDT Claims - Responses, for further information. If new transactions are present, the case has a new TC from Master File which may affect the case. Caution: Be alert for erroneous refund conditions. See IRM 4.19.3.5.13.1, Recovering Erroneous Refunds, for further information. If the taxpayer submitted a full payment for the tax and related penalties, before issuance of a Statutory Notice, and there was no balance due prior to the notice, assume the payment was related to the proposed U/R assessment and enter PC 53, 67 or 87, as appropriate, UNLESS the payment has a blocking series of 990-999 (IRC 6603 deposit). See IRM 4.19.3.23.1.15, Deposits to Stop the Accrual of Interest - IRC 6603, for further information on IRC 6603 deposits. Caution: Full payment received after issuance of a Statutory Notice can't be accepted as agreement to the tax increase. When sufficient time is left in the suspense period, issue a Letter 2626-C to acknowledge payment and request missing signatures. If the suspense time frame has expired, enter PC 90 to default the case. If the taxpayer submitted a partial payment, don't request the payment document. Assume the payment relates to the proposed adjustment if the account was in Zero Balance prior to the notice, or the payment blocking series is 300-399. Issue a CP 2000 if the case is from a CP 2501 with New Actions (BT 84300 - 499). Issue one Letter 2626-C requesting taxpayer's signature to consent if the case is a CP 2000 Cases with New Actions (BT 84500-799). If a Letter 2626-C has already been issued for a partial payment, continue normal processing. Enter the appropriate PC. If the partial payment new transaction is indicated during the Statutory Notice Default process (BT 84800 - 999), use PC 90 to assess by Default. Note: The following batch types are designated for processing identity theft cases with new transactions: BT 84449 - 84499, BT 84749 - 84799, and BT 84949 - 84999. If a Form 1040-X was processed, order the Form 1040-X, if necessary. If Tax Account screen shows a TC 976/977 or TC 971 AC 010, 012 through 016 or 120 with no corresponding TC 290, research AMS and EUP for the duplicate/amended return. If after performing AMS/EUP research the amended/duplicate return isn't located, correspond with the taxpayer to request a signed copy of the Form 1040-X. See IRM 4.19.3.23.1.18, Form 1040-X/Amended Return. If the new TC contains a corresponding Freeze Code -A, -C, -F, -I, -L, -U, Y-, -Z or Z-, see IRM 4.19.3.4.3.2, Freeze Codes, for instructions. If a Freeze Code "-V" or "-W" with cc of 81 or 84 is present (not reversed by TC 521 or 522), see IRM 4.19.3.23.1.10.1, Bankruptcy Procedures - Tax Examiner Instructions, for instructions. If there is a previous IPC MI on the account: If case is in And Then CP 2501 phase ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Continue processing. CP 2501 phase ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Continue processing. CP 2000 phase ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Continue processing. CP 2000 phase ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Continue processing. CP 2000 phase ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Close case with PC 73. Stat phase ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Continue Processing. Stat phase ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Close case with PC 93. If a TC 604 is present: And TC 971, AC 065, see IRM 4.19.3.23.1.19, Innocent Spouse Relief Cases. All others, refer to the Bankruptcy Coordinator. If a Letter 2625-C (payer contact letter) was issued to the payer and no response was received, see IRM 4.19.3.23.9.6, Payer Contacts. Reminder: When deleting wages see IRM 4.19.3.23.9.4, Referrals, to prepare Form 9409. If new Payer Agent information was received, review new Payer Agent information and rework the case as necessary. If a new address is present for the spouse, use the following procedures. Use the Update Address window to enter the spouse's address. Rework the case to generate an amended CP 2000. Enter an Amended Indicator on the Summary screen, or if the latest PC on the Case History is PC 79, enter PC 75 to generate a Statutory Notice. If the CP 2000 History data is incomplete, an auto assessment for fully agreed isn't possible. Enter assessment on the Assessment window. Close the case using PC 68, 88, or 94. (PC 67, 87, or 90 can't be used on these cases.) If the tax increase is $1 million or more, review, and rework if necessary, to ensure the accuracy of the case. If the balance due is over $10 million dollars, at case closing: Print ALL case contents. Print the Tax Account, Information Returns, Case Notes, Case History and CP 2000/ CP 2501 Notice(s). Prepare Form 3210 and send the copies/prints to the Chief Financial Office staff at the following address: Internal Revenue Service CFO, Business Analysis and Support Section Stop S-2, 1035 333 W. Pershing Rd. Kansas City, MO 64108 Reminder: Include a case note that the case information was sent to CFO. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, see IRM 4.19.3.14.7, Net Tax Increase/No Net Tax Increase/Tax Decrease Notices, for additional information. Use the following procedures: Exception: The following batch types are designated for processing identity theft cases with new transactions: BTs 84449 - 84499. Check the Case History for an indication of an undeliverable Action Code. If the Case History shows Action Code "U" , a newer address is available. Reissue the notice (PC 30A for CP 2501 or PC 55A for CP 2000) to the newer address. If the Action Code is blank or "T" (true undeliverable) follow the steps below. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡" ≡ ≡ ≡ ≡"≡ ≡ ≡" ≡ Note: Do not issue a Statutory Notice of Deficiency to address increases to EIC and/or ACTC. If PC 75 is entered, the system displays a warning message. When working BT 84300 - 499, if a CP 2501 was issued for questionable U/C W/H, the taxpayer did not respond and there is a ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡: Caution: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ for additional information. Check the Case History for an indication of an undeliverable Action Code. If the Case History shows Action Code "U" , a newer address is available. Reissue the CP 2501 Notice using an amended indictor "A" , to the newer address. If the Action Code is blank or "T" (true undeliverable) follow the steps below. ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" Close the case with PC 52. Caution: If the return is Virtual and there are no scanned documents to be associated with the refile DLN, enter "N" in the SOURCE DOC field in the Process Code window. When working BT 84500 - 799, if a CP 2000 was issued for questionable O/C W/H, the taxpayer did not respond and there is a ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡: Exception: The following batch types are designated for processing identity theft cases with new transactions: BTs 84749 - 84799. Caution: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ for additional information. Check the Case History for an indication of an undeliverable Action Code. If the Case History shows Action Code "U" , a newer address is available. Reissue the CP 2000 Notice using an amended indicator "A" , to the newer address. If the Action Code is blank or "T" (true undeliverable) follow the steps below. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Complete Return Value screen. If necessary adjust the Other Credits/Other Taxes window(s) so that the net tax increase is now zero (0). The only remaining issue will be the O/C W/H. Enter/Verify the appropriate entries on the Assessment window. Blocking Series 5X. TC 290-0. Reference Code 807 for the amount of O/C W/H. Close the case with PC 68. Caution: If the return is Virtual and there are no scanned documents to be associated with the refile DLN, enter "N" in the SOURCE DOCUMENT ATTACHED? field. If a notice was issued for questionable O/C SSTAX or for O/C SSTAX and ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and the taxpayer did not respond: Caution: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ for additional information. Steps to take Check the Case History for an indication of an undeliverable Action Code. If the Case History shows Action Code U, a newer address is available. Reissue the CP 2000 Notice using an amended indicator A, to the newer address. If the Action Code is blank or T (true undeliverable) follow the steps below. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Commit the Return Value screen. Enter/Verify the appropriate entries on the Assessment window. Leave the IRS RECD DATE field blank. Note: Do not enter a CREDIT INTEREST DATE on SSTAX adjustments with a TC 290-.00 (zero). Delete if present. Enter TC 290-.00. Enter Source Code 2. Enter Reason Code 055 for excess SSTAX. Enter CRN 252 as a negative money amount for O/C SSTAX. Enter Source document attached Y unless it is an ELF return, then enter N instead. Close the case with PC 68. If a review of the splitting of the taxpayers' names on a joint account is needed, see IRM 4.19.3.23.13, Instructions Specific to Statutory Notices/Responses, to make the proper adjustments to the UPDATE ADDRESS window. When working BT 84800 - 84999, don't enter PC 75 after a Notice of Deficiency has been issued. When working BT 84800 - 84999 cases with Freeze Code "-C" , research the case for the combat zone exit date. DO NOT default a case if the combat zone exit date isn't available. See IRM 4.19.3.23.1.11.1, Combat Zone Cases and IRC 7508.

# Undeliverables

4.19.3.22.2 (09-04-2015) Undeliverables The Address File updates weekly on the AUR system. New addresses loaded onto the system between the time a case is worked and the time the notice is printed automatically reflect the new address. The clerical function handles most undeliverable notices. However, when recomputed notices or additional correspondence are returned undeliverable, the cases can be assigned to a tax examiner for further review. The Case History Screen contains information about notice status. Field Description Indicator Description ACTION CODE - Indicates whether correspondence is remailed with a new address, is undeliverable and will be cancelled, or the notice was rejected. T - True Undeliverable M - Remail with new address R - Rejected U - New address/actions exist C - Cancelled CP 2000 (notice information maintained) S - CP 3219A (Stat) not mailed D - Notice information deleted DELIVERY STATUS CODE - Indicates a response from United States Postal Service (USPS) concerning the status of the certified mailing (CP 3219A). A - Notice has been delivered by USPS and it has been signed for by the intended recipient or agent approved by the recipient. BLANK -CPS has not delivered any status update to AUR. N - USPS delivery status for the mailed notice has not been received by CPS within a specified time period. P - The notice has been surrendered to the USPS. Notice is pending delivery by USPS. This status updates in two (or more) weeks to one of the other delivery status codes listed. S - The notice has been suppressed and not mailed by CPS. U - Notice was Undeliverable by USPS. X - Taxpayer refused delivery of the notice or it was unclaimed. If a new address is found from previous correspondence, enter the appropriate change on the Update Address window (Undeliverables). See AUR System Guide, Updating Address Information. Note: Use CAUTION when entering an address change because both the primary and secondary taxpayer may have received a notice. Make sure to update the address for the proper taxpayer (primary/secondary). Enter an "A" in the AMENDED field on the Notice Summary screen, if issuing a new CP notice. Re-enter the PC. If a new address is NOT found for an undeliverable notice, enter the appropriate PC. Caution: Do not issue status/interim letters on undeliverable cases. If the Post Office returns certified mail as "unclaimed" or "refused" rather than undeliverable, continue processing the case using normal procedures. An additional address check isn't necessary. Note: As the IRS receives weekly address update information from the Post Office, special instructions for forwarding orders expired are no longer needed.

# Taxpayer Responses

4.19.3.23 (09-30-2014) Taxpayer Responses Most taxpayer explanations are self-explanatory. All returns in the AUR inventory were previously evaluated for unallowable items and audit potential. They were not selected for action in either event. When evaluating a taxpayer's explanation for unreported income it isn't necessary to verify everything the taxpayer says. As a general rule, the issue of questionable items (those not clearly unallowable) won't be raised. The taxpayer's explanation will generally be taken at face value, including schedules of expense submitted by the taxpayer to offset unreported income. Consider the reasonableness of the explanation. If Exam issues are discovered during AUR processing, consult with the team lead. Then, if necessary, consult with an Exam representative to decide the appropriate action(s) to take. Tax examiners analyzing a case worked in response phase will confine themselves to the issue(s) raised on the CP 2000/ CP 2501 Notice. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Status code D displays on all IR elements not pursued on auto-generated notice cases.

# Taxpayer Responses - Overview

4.19.3.23.1 (10-10-2025) Taxpayer Responses - Overview The primary purpose of the AUR Program is to account for discrepancies between amounts on IRs and amounts on the tax return. Caution: Review all case content when working a case. A taxpayer's response to an AUR notice can be: A copy of the AUR notice (CP 2000/ CP 2501). The taxpayer response page (CP 2000/ CP 2501). A signed Form 9465, Installment Agreement Request, or Form 433-D, Installment Agreement. A copy of the Notice of Deficiency (Notice CP 3219A). Caution: THE STATUTORY NOTICE IS A LEGAL DOCUMENT. If the taxpayer sends the original Notice CP 3219A (Statutory Notice) OR the CP 2000 DON'T make any marks or corrections on either. Note: The taxpayer is allowed 90 days (150 days if the notice is addressed to a person outside the U.S.) to petition the Tax Court. The taxpayer can't receive an extension of this statutory period. However, if a response is received after the time to petition has expired but before an assessment is made, the IRS will continue to try to resolve issues. For information on responses received after an assessment is made see IRM 4.19.3.27, AUR Reconsideration (RECON) Cases. A letter, note, or fax. A letter from a third-party. A Form 1040-X or amended return. Form 3244, Payment Posting Voucher. Form 3244, is completed by Receipt and Control to record payment(s) received from the taxpayer and posts a TC 640 payment. A telephone call. A Form 4442, Inquiry Referral, from Customer Service. TDC Responses - Secure Messaging cases (TDC) are worked by a selected group of tax examiners. Cases are identified by the presence of the Restricted Case Code (RCC) "T" or "H" located on the top ribbon of the AUR screen next to the process code or the restricted field. When a response to a TDC notice is received, and the RCC is T or H, contact the Lead/Manager. The case will need to be worked by the designated TDC examiner. A taxpayer's response may indicate the taxpayer's attorney submitted a qualified offer, use the words "qualified offer" or mention "IRC 7430(g)" . In general, a taxpayer who submits a qualified offer and meets the other requirements of section 7430 may recover reasonable administrative and litigation costs from the IRS if the IRS doesn't accept the offer and the taxpayer's liability pursuant to a judgment in a court proceeding is equal to or less than the liability the taxpayer would have incurred if the IRS had accepted the offer. All purported qualified offers must be coordinated and reviewed by P&A Branch 5. Early coordination is strongly encouraged. If a purported qualified offer is received, copies of the purported qualified offer should be faxed to P&A Branch 5 at 855-592-8972, followed by an email attaching the purported offer and any relevant documentation to P&A Branch 5 via TSS4510 requesting a determination of whether the offer is a qualified offer under IRC 7430. Along with the offer document include the following information in the email: A cover sheet with the name of the taxpayer, The subject line of the cover sheet must be "Purported Qualified Offer under IRC 7430" , A brief description of the issue(s), The type of tax and The name and telephone number of a person in the campus who is the point of contact. Note: If during a phone call the taxpayer/representative mentions they have filed a qualified offer, notify the AUR Coordinator immediately so that they can obtain the case file and take the necessary actions. Caution: Don't confuse a Qualified Offer with an Offer in Compromise. If the taxpayer provides an explanation allowing the case to be closed, issue a Letter 1802-C and close the case with PC 52 (CP 2501), PC 71 (CP 2000), or PC 92 (CP 3219A). Attach a copy of the letter to the qualified offer being sent to Counsel. Digital assets can be used to pay for rent, royalties, or any type of goods or services and is to be treated as ordinary income by the recipient if received as part of operating a trade or business. An employer may use it as payment for wages, salaries and compensation. If the taxpayer engaged in certain transactions involving digital assets, the digital asset check box at the top of Form 1040/1040 entity section will be checked "Yes" . Follow the appropriate response procedures, based on the type of document the payer used to report the income. Caution: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ IDTVA scans all correspondence into AMS/CII. It may be necessary to access AMS/CII to review the information when working cases previously referred then reintroduced in the AUR Program. If the taxpayer includes their telephone number in the response to any notice (CP 2000/ CP 2501, or CP 3219A) take the following actions: Enter/update the telephone number. If appropriate, call them to resolve the outstanding U/R issue(s) before sending any written correspondence. See IRM 4.19.3.23.2.4.1, Out Calls - Calling the Taxpayer, for additional information. Note: Only one attempt is required. An attempt must be made even when the taxpayer provides only an evening phone number for a day shift tax examiner or a day phone number for a swing (night) shift tax examiner. See IRM 4.19.3.23.2.2, Disclosure, IRM 4.19.3.23.2.2.1, Disclosure Verify Screen, and guidelines regarding answering machines in IRM 11.3.2.6, Methods for Communication of Confidential Information. Always identify yourself by title (for example, Tax Examiner and LAST name or Mr, Mrs, Miss, Ms, and LAST name, or first name and LAST initial), unique identification (ID) Number, and as an IRS employee during telephone contact with the taxpayer. Provide the taxpayer with a telephone number to contact the IRS about their case if needed. Always use courteous behavior when speaking to a taxpayer via the telephone. See IRM 4.19.3.23.2, Telephone Responses, for additional telephone and mandatory Disclosure procedures which must be followed. Caution: Don't provide your first and last name when identifying yourself, use one of the examples shown above. Leave a case note to document action taken or when a phone call is attempted. When evaluating responses, review the Payer Agent information if Payer Agent Indicators are present on the Case Analysis screen for the IR(s) in question. If the taxpayer indicates receipt of an AUR notice/letter but there is no record on the AUR system of any notice/letter issuance for the tax year in question (fake CP 2000), see IRM 4.19.3.5.8.1.1, Online Fraud and Other Scams (PHISHING), for additional information. While evaluating the taxpayer's response, make changes to the Case Analysis and Return Value screens when appropriate. The system uses data from the screens and windows to display on the Summary screen. This action verifies revised calculations of the U/R amount, adjustments, tax, credits, and balance due/refund amounts are accurate. It also leaves an audit trail of your actions and will make assessment information correct, if needed. Note: The following suggested method may be used for processing a No Change case: All taxpayer addressed IRs now resolved (in other words, no longer U/R) should be marked with status code "R" , "D" or "N" , and the Return Value screen must be committed (to account for any "other taxes or credits" issues), before entering a PC. If the taxpayer writes in with a question or requests assistance on a non-AUR related matter: Print a copy of the taxpayers request and attach to a completed Form 4442. Forward to the appropriate area for consideration. Send the appropriate letter to the taxpayer to explain their inquiry has been sent to the appropriate area for consideration. Leave a detailed case note and continue processing the case per AUR procedures. Any response may require a new address be entered on the Update Address window. The Clerical Function may update the address. See IRM 4.19.3.23.1.6, Address Updates. Caution: Because both the primary and secondary taxpayer may have received a notice, use caution when entering an address. Make sure to update the proper taxpayer (primary/secondary) address. Caution: ≡ ≡≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If a notice is generated, but NOT YET MAILED to the taxpayer, and information from the response makes it necessary to prevent the notice from being mailed, use the Stop Notice option. THIS OPTION MUST BE USED NO LATER THAN TWO FRIDAYS BEFORE THE SCHEDULED NOTICE DATE. See IRM 4.19.3.20.3, Stop Notice Functionality, for additional information. When working with correspondence not processed through the Clerical Function (for example, a faxed response sent directly to a specific tax examiner), send to clerical to upload into the AUR system. Exception: A faxed Form 2848, Power of Attorney and Declaration of Representative, with no explanation isn't considered correspondence for purposes of updating the AUR Received Date. See IRM 4.19.3.23.1.21, Letters From a Third-Party and Authorization From a Valid Power of Attorney (POA), for further information.

# Controlling Responses

4.19.3.23.1.1 (10-10-2025) Controlling Responses In the response phase, certain situations require specific procedures. The following instructions cover responses that need special handling and Refiling Cases.

# Responses - Special Handling

4.19.3.23.1.1.1 (10-10-2025) Responses - Special Handling If the associated response doesn't belong with the case take the following actions: Notify the lead to have clerical associate the response with the correct case and unassociate the incorrect response from the case it's in. Input a detailed case note. Continue processing with normal AUR processing procedures. If the case contains an extra response: Notify the lead to have clerical associate the response with the correct case and unassociate from the case it's in Work the response belonging to the case with normal AUR processing procedures. Input a detailed case note.

# Refiling Cases (Internal Process Code RF)

4.19.3.23.1.1.2 (10-10-2025) Refiling Cases (Internal Process Code RF) Refile cases to the previous AUR suspense batch type 40, 50, 55, 60, and 70 using IPC "RF" .

# Abatement of Interest

4.19.3.23.1.2 (10-10-2025) Abatement of Interest IRC 6404(e)(1) provides information for abatement of interest on deficiencies or payments of deficiencies attributable to any unreasonable error or delay by the IRS in performing a ministerial or managerial act. A ministerial act is a procedural or mechanical action that doesn't involve the exercise of judgment or discretion, and that occurs during the processing of a taxpayer's case after all prerequisites to the act have taken place. A managerial act is an administrative action that occurs during the processing of a taxpayer's case and that involves the temporary or permanent loss of records or the exercise of judgment or discretion relating to management of personnel. Interest attributable to a general administrative decision, such as the IRS's decision on how to organize the processing of tax returns, may not be abated. IRC 6404 also provides several exceptions to the IRC 6601 general requirement that interest be charged from the due date of the return until the balance due is paid in full. Interest can also be abated if there was an IRS computational error. Forward taxpayer requests and claims for abatement of interest to the Interest Abatement Coordinator (IAC) that meets the criteria above for processing. Do not request Form 843, Claim for Refund and Request for Abatement. If Form is received send Letter 1802-C include paragraph "V" . Reminder: AUR doesn't abate interest. Interest can't be abated for reasonable cause.

# Accounts Receivable Guidelines

4.19.3.23.1.3 (10-10-2025) Accounts Receivable Guidelines Due to the adverse impact on Accounts Receivable (A/R), the IRS must strive to minimize the volume of unresolved large dollar debit and credit modules/issues in the inventory. Therefore, in accordance with prevailing guidelines and in tandem with all other processing timeliness requirements (first in, first out, etc.), it is necessary to ensure that all modules/issues involving a balance of $100,000 and over are expeditiously resolved. When monitoring large dollar cases identified on the Large Dollar Accounts Receivable system, if cases include the Large Corporation code; contact the Technical Unit (or designated function) to determine the current status of the account/module. Most of the cases that meet the large dollar case criteria (the proposed assessment is $100,000 or more) are identified by the system (prior to the assessment being entered) and the required special case processing initiated by the AUR Control Function. Cases not identified by AUR system checks (including fully agreed cases), the tax examiner will: Enter a case note to make the case audit trail complete. Transfer the case and notify the designated SEID for specialized processing. If necessary, issue an interim letter to the taxpayer, see IRM 4.19.3.23.1.5, Policy Statement P-21-3 guidelines. The Tax Examiners (TE) designated to work Accounts Receivable Dollar Inventory (ARDI) cases, take the following actions: Review the proposed assessment for technical and mathematical accuracy. Analyze the taxpayer's account to ensure that all affected tax periods process appropriately. Verify that the payer information is accurate. Note: For disagreed cases, telephone contact with the taxpayer MUST be made as part of the case resolution when a telephone number is available. Leave a case note to indicate the disposition of the case review. When the case evaluation is completed, take the appropriate case action, enter the assessment, revise the proposal and issue a Recomputed Notice, or close the case No Change, using standard processing procedures. If the taxpayer agrees to over $100,000 in tax, penalties, and interest, but doesn't full pay, then the deficiency needs to be assessed (23C date) within 30 days from receipt of the agreement. If a quick assessment is made, the interest computation must be mailed to the taxpayer. If the case is being closed with an assessment of over $10 million dollars: photocopy the entire AUR case contents, make prints of the: Tax Account, Information Returns, Case Notes, Case History and CP 2000/ CP 2501 Notices and send the copies/prints to the Chief Financial Office Staff at the following address: IRS, CFO, Business Analysis and Support Section, Stop S-2, 1035, 333 W. Pershing Rd., Kansas City, MO 64108. Reminder: Include a case note that the case information was sent to CFO.

# Accuracy-Related Penalties

4.19.3.23.1.4 (11-29-2023) Accuracy-Related Penalties IRC 6751(b)(1) provides that, in general, no Accuracy-Related Penalties shall be assessed without prior written managerial approval. However, even though the Code refers to assessment, managerial approval is needed at the time the penalty is being asserted unless an exception in (2) and/or (3) below, apply. The AUR system electronically calculates the Accuracy Related penalties; therefore, a penalty notice may be issued in the initial letter to the taxpayer proposing a deficiency for Substantial Understatement, if the taxpayer did not attach evidence of substantial authority or attached unacceptable evidence to the tax return and did not make an adequate disclosure on that return. If the taxpayer doesn't provide a written response that challenges the proposed penalty or the amount of tax to which the penalty relates, the penalty may be assessed without written managerial approval. The AUR system electronically calculates the Accuracy Related penalties; therefore, a penalty notice may be issued (in the initial letter to the taxpayer proposing a deficiency) for negligent conduct when the determination is automatically made because the taxpayer failed to report income reported on a third-party IR for a second tax year. If the taxpayer doesn't provide a written response that challenges the proposed penalty or the amount of tax to which the penalty relates, the penalty may be assessed without written managerial approval. If the taxpayer provides a written response that challenges the proposed penalty or the amount of tax to which the penalty relates, managerial approval is needed at the time the tax examiner determines to continue processing the case. Take the following actions: Refer the case to the manager. The manager must select the appropriate standard case note to record managerial penalty assertion approval to continue to assert the penalty. Issue Letter 2626-C explaining why the taxpayer's request for penalty waiver was denied. Caution: Only a manager is authorized to approve the penalty assertion. Note: If a Recomputed CP 2000 is issued and the penalty waiver is denied, send PARAGRAPH 170 for negligence penalty or send PARAGRAPH 179 for substantial understatement. See Exhibit 4.19.3-7, CP PARAGRAPHS. Depending on the taxpayer's response, the Accuracy-Related Penalty Due to Negligence or Disregard of Rules or Regulations and/or the Accuracy-Related Penalty Due to Substantial Understatement of Tax could be: Assessed Determined to be not applicable Waived for reasonable cause, or Note: See IRM 4.19.3.19.7, Determine Negligence Status Screen, if the penalty is being suppressed due to reasonable cause. One penalty may be replaced by the other Use the Determine Negligent Status screen to indicate if the IR(s) are considered negligent. See IRM 4.19.3.19.7, Determine Negligence Status Screen, and AUR System Guide, Penalty Waived/Not Waived. If the taxpayer's response claims/cites substantial authority, see IRM 4.19.3.19.5, Accuracy-Related Penalty Due to Substantial Understatement of Tax. Waive the penalty if the taxpayer provides a signed explanation that meets reasonable cause criteria. Consider ALL facts and circumstances of each case on an IR by IR basis in determining reasonable cause. Refer to IRM 20.1, Penalty Handbook, for uniform application of reasonable cause criteria. See IRM 20.1.1.3, Criteria for Relief From Penalties, in general. Note: If the penalty is being waived see IRM 4.19.3.19.8, Limited Penalties. If reasonable cause is established for only some of the IRs, all additional taxes, tax credits, and prepayment credits must be allocated between the IRs with reasonable cause and those without. If a CP 2000 is issued and the substantial understatement penalty is waived, enter a zero (0) in the SUBSTANTIAL UNDERSTATEMENT PENALTY field on the Limit Penalty window. Note: See IRM 4.19.3.19.5, Accuracy-Related Penalty Due to Substantial Understatement of Tax, if the penalty is being suppressed due to reasonable cause. Send PARAGRAPH 101, see Exhibit 4.19.3-7, CP PARAGRAPHS. After entering PC the Process Code window auto populates the Penalty Waived/Not Waived/No Request window. This allows for tracking instances where the TP requests waiver of the Accuracy Related penalty due to Negligence or Substantial Underpayment and whether the request has been waived, not waived or no request. Waiver request MUST be in writing and signed by the taxpayer or valid POA. When the taxpayer makes this request and the tax examiner determines: The request is granted, select the WAIVED button on the Penalty Waived/Not Waived/No Request window after entering the appropriate Process Code (PC) or Internal Process Code (IPC). The request is denied or partially waived, select the Not Waived button on the Penalty Waived/Not Waived/No Request window after entering the appropriate Process Code (PC) or Internal Process Code (IPC). Note: The NEGLIGENCE PENALTY or SUBSTANTIAL UNDERSTATEMENT PENALTY field must contain a value greater than zero in order to check the PENALTY NOT WAIVED field. A case note to record managerial penalty assertion approval is required when denying the taxpayer's request. The penalty isn't addressed, select the No Request button on the Penalty Waived/Not Waived/No Request window after entering the appropriate Process Code (PC) or Internal Process Code (IPC). Note: Only check the box when the penalty is still applicable, but is being suppressed (see (9) above). Do not check the box if the penalty is no longer applicable, for example, the case is being close No Change or the threshold for applying the penalty is no longer applicable.

# Policy Statement P-21-3

4.19.3.23.1.5 (10-10-2025) Policy Statement P-21-3 Policy Statement P-21-3 is the result of a task force initiated to provide timely and quality responses to taxpayer correspondence. The general guidelines are: A quality response is an accurate and professional communication which, based on information provided, resolves the taxpayer's issues, requests additional information from the taxpayer, or notifies the taxpayer we have requested information from outside the IRS. A quality response is timely when initiated within 30 calendar days of the IRS received date. When a quality response can't be issued timely, an interim response is initiated by the 30th calendar day from the IRS received date. Issue a Letter 4314-C. Reminder: Ensure all responses to AUR notices received are worked on a first in, first out basis. Control AUR RECON cases on IDRS (or on AUR for accessible Tax Years) with the IRS received date no later than 14 days from the AUR received date (and send an interim letter if the 30-day criteria outlined above can't be met). See IRM 4.19.3.27, AUR Reconsideration Cases, for additional information about AUR RECON cases. All interim letters will inform the taxpayer when a final response can be expected and will give a name/number to contact to resolve additional inquiries. When a response batch is in "AB" or "BF" status, the AUR system automatically generates a Letter 4314-C on any case where the most recent IRS Received Date is beyond the Policy Statement P-21-3 Age Date entered by the AUR Coordinator. Ensure Policy Statement P-21-3 guidelines are met in all other situations. Note: Monitor cases in suspense to determine if a manual Letter 4314-C should be sent.

# Address Updates

4.19.3.23.1.6 (10-02-2024) Address Updates When a taxpayer contact includes clear and concise notification of an address change, including foreign address change, enter the appropriate entries on the Update Address window to update Master File (use Address Type Code I). Information regarding state and address abbreviations, and Major City Codes can be found in Document 7475, State Abbreviations, Major City Codes and Address Abbreviations. Standard address abbreviations, state abbreviations and major city codes can also be found in IRM 3.24.37-5, State Codes for States, IRM 3.24.37-3, Major City Codes, and IRM 3.24.37-1, Standard Address Abbreviations. Changes to a name line due to a spelling error can be entered on AUR by selecting ADDRESS TYPE "N" (name line change), but must ALSO be entered on IDRS. To access the UPDATE ADDRESS window, take the following action: Select Ref tools from the CASE ANALYSIS screen. Select Update Address from the drop-down menus. When the window is selected, the current master file address information displays. Note: Valid entries for the second name line are A-Z, 0-9, -, &, / and blank. Use C/O to indicate in care of. Do not use "%" . Valid entries for the address line are A-Z, 0-9, -, / and blank. For a list of major city codes press <F6> while in the City field and select the appropriate code. For a list of valid state codes press <F6> while in the State field and click on the item needed. There are several instances when the address or name line on an account needs to be changed. To Take the following actions Change a name line due to a spelling error Note: Change should ALSO be input on IDRS. Select ADDRESS TYPE N (name line change). Update/correct the name line. Press <F4> to commit the change. Press <F8> to exit. Change the name line on joint accounts (i.e., MFT 31 accounts, Letter 2625-C for spouse) Access the CREATE CORRESPONDEX LETTER window Access the letter you are creating. The ADDRESS INFORMATION window displays. Enter a "Y" in the INPUT MANUAL NAME LINES box. Press <F12>, the EDIT NAME INFORMATION screen displays with name and address information for only the addresses which can be modified. This screen is used to make required changes to the name line only. Note: If you only need to send one letter with a single name, go to step 5. Place your cursor in the first available (blank) Address Type field. Enter address type I in the ADDRESS TYPE field. Press <ENTER>, the system populates the name and address information. Note: This also applies if you need to send the same letter to different taxpayers at the same address. Modify the Name line(s) for each address type I as needed to include only the name of the taxpayer the letter should be sent to. Enter a "Y" in the Select Address for the taxpayer/address you want to send the letter. Press <F12>. Add DECD to the taxpayer's name(s) Enter address type I in the ADDRESS TYPE field. Enter "DECD" after the taxpayer's last name in the FIRST NAME LINE field for other than joint returns (e.g., JOHN SMITH DECD). For joint returns, enter "DECD" after the first name of the decedent in the FIRST NAME LINE (e.g., JOHN DECD SMITH and MARY SMITH). Enter second name line, if needed. Enter D in the split code box. Press <F4> to commit the change. Press <F8> to exit. Change an address Enter address type I in the ADDRESS TYPE field. Enter second name line or any changes to the second name line in the SECOND NAME LINE field. Enter the updated street address in the STREET ADDRESS field. Enter the city or a valid major city code in the CITY field. Enter a valid state code in the STATE code field. Enter the 5, 9, or 12 - digit ZIP code in the ZIP field. (The system validates the zip code according to the state code that has been input. Press <F4> to commit the change. Press <F8> to exit. Add or change an Authorized Third Party or POA address Enter address type A1 for First Authorized Party or A2 for Second Authorized Third Party, P1 for the primary taxpayer's first POA or P2 for the primary taxpayer's second POA, P3 for the secondary taxpayer's first POA or P4 for the secondary taxpayer's second POA in the ADDRESS TYPE field. Enter second name line or any changes to the second name line in the SECOND NAME LINE field. Enter the third name line or any changes to the third name line in the THIRD NAME LINE field. Enter the street address in the STREET ADDRESS field. Enter the city or valid major city code in the CITY field. Enter a valid state code in the STATE code field. Enter the 5, 9, or 12 - digit ZIP code in the ZIP field. (The system validates the zip code according to the state code that has been input. Press <F4> to commit the change. Press <F8> to exit. Add or change a business name or address based on IDRS (CC INOLES) research Enter address type B1 through B9 Enter the first name line in the FIRST NAME LINE field. Enter second name line or any changes to the second name line in the SECOND NAME LINE field. Enter the third name line or any changes to the third name line in the THIRD NAME LINE field. Enter the street address in the STREET ADDRESS field. Enter the city or valid major city code in the CITY field. Enter a valid state code in the STATE code field. Enter the 5, 9, or 12 - digit ZIP code in the ZIP field. (The system validates the zip code according to the state code that has been input. Press <F4> to commit the change. Press<F8> to exit. Add or change a foreign address Enter address type I (alpha) in the ADDRESS TYPE field. Enter the street address of the foreign address in the SECOND NAME LINE field. Enter the city, province, or county, directional, and foreign postal code in the STREET ADDRESS field. Enter the country name in the CITY field. Enter a period (.) followed by a blank space in the STATE field. Leave the ZIP field blank (A ZIP code isn't entered for a foreign address). Press <F4> to commit the change. Press<F8> to exit. Input a temporary address Enter address type T in the ADDRESS TYPE field. Enter the address change, as applicable. Enter the beginning date that the temporary address will be in effect (MMDDYY). This date can't be earlier than the current date. Enter the ending date of the temporary address (MMDDYY). Press <F4> to commit the change. Press<F8> to exit. Update more than one address type Enter a valid address type code in the ADDRESS TYPE field. Make applicable entries in the remaining field. Press <F4> to commit the changes, the cursor returns to the ADDRESS TYPE field. Repeat steps 1 through 4, if additional address updates are required. Press<F8> to exit. Add or change an Army Post Office/Fleet Post Office/Diplomatic Post Office (APO/FPO/DPO) address Enter address type I in the ADDRESS TYPE field. Enter any changes to the FIRST NAME field. Enter the second name line in the SECOND NAME LINE field. Input the STREET ADDRESS. Enter APO, FPO OR DPO in the CITY field. Enter AA, AE or AP in the STATE field. Note: "AE" is the alpha code to use if the first three digits of the ZIP codes are between 090-098, "AA" is for all ZIP codes that begin with 340 and "AP" is for ZIP codes that start with 960-966. Refer to the chart below for additional information. Enter the 5, 9 or 12 digit ZIP code. Press <F4> to commit the change. Press<F8> to exit. Use the following foreign address Zip codes, if applicable: First Three ZIP Code Digits Country 090-092 Germany 094 United Kingdom 095 Atlantic/Mediterranean Ships 096 Italy and Spain 097 Other Europe 098 Middle East and Africa 340 The Americas (except the United State and Canada) 962 Korea 963 Japan 964 Philippines 965 Other Pacific and Alaska 966 Pacific/Indian Ocean Ships To view available addresses, enter a valid address type and press <Enter>. To delete an address, access the UPDATE ADDRESS window. When the applicable address display press <F3> to delete followed by <F4> to commit and <F8> to exit. For certain notices, such as the Statutory Notice of Deficiency, the Internal Revenue Code provides that when the notice is sent to the taxpayer's last known address (LKA), the notice is legally effective even if the taxpayer never receives it. Note: As a point of reasonable diligence, if there is taxpayer correspondence with a different address mail a copy of the Statutory Notice to that address, using the Address Update window to enter a Temporary Address, see (3) above. Do not update Master File without clear and concise notification from the taxpayer. Contacts that are considered clear and concise notification of an address change include the following: The taxpayer returns an IRS initiated correspondence (including notices) that solicits or requires a response to IRS with corrections marked on their address information. The taxpayer's signature on the correspondence (for this purpose) isn't required. A return (including an amended return, Form 1040-X) filed by a taxpayer with new address information. Update the Master File for address changes on any amended returns, including Form 1040-X, that bypass normal pipeline processing and are processed as a response. Form 8822, Change of Address, when received in conjunction with an AUR case. Use the Address Update window with Address Type I to update the Master File. Oral notification made in response to an AUR notice which meets appropriate disclosure guidelines or if a taxpayer is contacted by phone by an IRS employee in connection with the taxpayer's account (not related to an address change). The taxpayer may provide a change of address to the IRS employee who responded to the phone call or initiated the phone contact. See IRM 4.19.3.23.2, Telephone Responses, for additional information regarding telephone responses. Caution: If the notification for an address update is made on a closed AUR case, update the address on AUR and on IDRS, using IDRS CC ENMOD, if taking another account action, such as, correcting/removing the AUR assessment. If no account action is being taken don't change the address; advise the taxpayer to send Form 8822, Change of Address, to change their address. Caution: If the account is marked with a TC 971 AC 504 SPCL1 or EFAIL, there have been unsuccessful attempts to obtain an IP PIN. Use high risk disclosure procedures, see IRM 4.19.3.23.2.2, Disclosure, for additional information. Notification of an address change made by the U.S. Postal Service. Caution: Always verify the name on the Post Office notification with the name on the notice before updating the address. Note: A new address indicated as a return address on the envelope or in the letterhead of taxpayer correspondence isn't, by itself, clear and concise notification and isn't sufficient to change a taxpayer's address of record. Clear and concise notification, whether written or oral, must contain the following: The taxpayer's full name. Note: Individuals who have changed last names must provide the last name shown on the most recently filed return and the new last name. Joint filers should provide both names. For written requests, the taxpayer's signature (both signatures for jointly filed returns) or the signature of an authorized representative. For oral requests, successful completion of the disclosure notification when calling in reference to a CP notice. Note: An address change is made upon a taxpayer's request, even if only one of the taxpayers from a joint return requested it. Caution: If either taxpayer has established a separate residence after filing a joint return, the spouse who has moved from the joint return address, must provide clear and concise written or oral notification of a new address to the IRS. The taxpayer's new address. The taxpayer's old address, unless you can determine it from the posted data. Do not request the old address from the taxpayer. The taxpayer's social security number (for joint filers, the social security numbers of both taxpayers). If any of the information from (3) or (4) above is missing from the taxpayer's request, don't update Master File. Enter the appropriate entries on the Update Address window to make a temporary address change (use Address Type "T" ). Send the appropriate letter to the taxpayer, at the new address, using a Special Paragraph to advise them of the information needed. Enclose 8822, Change of Address. If the taxpayer provides a temporary address, a beginning and ending date of when the taxpayer will be using that address must be given. Enter the temporary address on the Update Address window, using Address Type T. Do not update Master File. If the taxpayer doesn't provide an ending date, enter a date that is 60 days from the current date. Any time doubt exists as to whether an address should be changed, discuss it with your lead/manager who will either provide an answer or refer the question to the Disclosure Office. If a document is received containing a name or address change which doesn't meet the specific requirements for updating Master File, the information will be noted and maintained in the AUR case file. If a notice is returned, the IRS is required to use due diligence in locating the taxpayer, which includes a search of existing records to locate any updated information supplied by the taxpayer.

# Adjustment Cases Relating to AUR

4.19.3.23.1.7 (12-15-2015) Adjustment Cases Relating to AUR The Taxpayer Services (TS) adjustment function frequently receives Form 1040-X or correspondence from taxpayers who received AUR notices. Multiple assessments could result if both Adjustments and AUR simultaneously work these cases. To eliminate multiple assessments, TS will: Route cases related to an OPEN AUR case to AUR at the Campus that issued the notice. AUR will work these cases following normal AUR procedures. Work responses or Form 1040-X related to a CLOSED AUR case as part of the subsequent adjustment or RECON process for prior AUR assessments. See IRM 21.3.1.6.41, Status of IMF Underreporter Cases, for additional information. Responses that deal with multiple tax years are treated as separate responses whenever feasible. In such instances, print the response so each tax year has the appropriate response to resolve the case. Route copies of the responses that are non-AUR to TS. Exception: Coordinate Net Operating Losses (NOL) and carryback/carryforward (CB/CF) issues between Taxpayer Services and AUR. Exercise caution with regard to Statute of Limitations and payment of interest. The program redistribution may impact working cases with NOL and CB/CF issues. If it is evident from a taxpayer response that the case involves a scrambled SSN or mixed entity, use the IAT "aMend" tool, research portion, to determine Scrambled SSN or Mixed Entity. If yes, prepare Form 4442, for referral to TS and close PC 52, 71, or 92 or IPC 9R, as appropriate. See IRM 21.6.2, Adjusting TIN-Related Problems. Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

# Independent Office of Appeals

4.19.3.23.1.8 (04-25-2025) Independent Office of Appeals If the taxpayer makes a non-docketed appeals request (i.e., specifically requests a hearing with an Appeals Officer or submits a Form 12203, Request for Appeals Review) or otherwise submits an adequate protest as required in Pub 5, Your Appeal Rights and How to Prepare a Protest if You Disagree, take the following actions: If Then Prior to issuance of a Statutory Notice AND there are less than 365 days left on the ASED Attempt to resolve the issue(s) by telephone. Document the call(s) with a case note(s). Advise the taxpayer (either verbally or using a Letter 2626-C) that Appeals doesn't accept non-docketed cases when there are less than 365 days left on the statute. If the taxpayer still wants to file a petition with the U.S. Tax Court, inform the taxpayer that they will receive a Statutory Notice of Deficiency that will allow them to appeal their case to the U.S. Tax Court. Issue a CP 3219A Notice to the taxpayer. Prior to issuance of a Statutory Notice AND there are more than 365 days left on the ASED OR Case is a RECON Review taxpayer correspondence and if the notice can be recomputed or closed no change, continue normal AUR processing. If there is no new information to consider, attempt to resolve the issue(s) by telephone. Document the call in a case note. If unable to resolve the issue and the taxpayer still would like to go to Appeals, transfer the case and notify the designated Appeals case liaison. After the issuance of a Statutory Notice Issue a Letter 2626-C advising the taxpayer that their request can't be honored and that they need to follow the instructions in Statutory Notice they received and file a petition with the U. S. Tax Court within the period specified (usually 90 days). Note: If less than 30 days remains on the 90-day period, the tax examiner must attempt to contact the taxpayer by telephone to advise them that their request has been denied. Leave a case note documenting the contact. Inform the taxpayer that a case petitioned to the U.S. Tax Court will usually be considered for settlement by Appeals before their trial date. Continue processing, refiling the case as necessary for the remainder of the Statutory Notice suspense period or until you are notified to pull the case from suspense because the taxpayer filed a U.S. Tax Court petition. Note: See IRM 4.19.3.2.2, Statute Awareness Program, for Statute guidelines. See IRM 4.19.3.23.2, Telephone Responses, for telephone procedures. If the case also involves Innocent Spouse related issues, see IRM 4.19.3.23.1.19, Innocent Spouse Relief Cases. Note: DO NOT USE PC 80 FOR NON-DOCKETED CASES. In Recon Attempt to resolve the issue(s) by telephone. Document the call(s) with a case note(s). If it is still necessary to transfer the request to Appeals, research: Case Routing Into The Independent Office of Appeals to find the appropriate Campus Appeals office based on the IRS Campus source of the case. Prepare a Form 3210, Document Transmittal. Print Tax Account, Information Returns, Case History, CP 2000 Notice,CP 2501 Notice, if applicable, and attach to Form 3210. Send Letter 86-C to advise the taxpayer their request has been forwarded to Appeals. Close the case with PC 9R. Communications between AUR and Appeals regarding ministerial, administrative or procedural matters at any stage of a case are permissible without involving the taxpayer/representative. If communications between AUR and Appeals extend beyond ministerial, administrative or procedural matters in that the substance of proposed adjustments or issues of the case are addressed, those communications are prohibited unless the taxpayer/representative is given an opportunity to participate. Refer to Rev. Proc. 2012-18, Ex Parte Communications Between Appeals and Other Internal Revenue Service Employees, (and IRM 4.2.7, Ex Parte Communication Procedures, or IRM 4.2, General Examining Procedures, as applicable) for additional information regarding ex parte communications with Appeals. Communications between AUR and Appeals are referred to as ex parte and are covered in sections 2.02(6) and 2.03(3) of Revenue Procedure 2012-18, Ex Parte Communications Between Appeals and Other Internal Revenue Service Employees, and IRM 4.2.7, Ex Parte Communications Procedures, or IRM 4.2, General Examining Procedures, as applicable. Communications that address the strengths and weaknesses of the issues and positions of the parties, accuracy of the facts, credibility or cooperation of the taxpayer, etc. are prohibited unless the information communicated has been shared with the taxpayer. Communications between AUR and Appeals that relate to ministerial, administrative or procedural matters are permissible. If the taxpayer's response indicates "qualified offer" or mentions "IRC 7430(g)" see IRM 4.19.3.23.1, Taxpayer Responses Overview, for additional information. Caution: Do not confuse Qualified Offer with Offer in Compromise.

# AUR Appeals Liaison Responsibilities

4.19.3.23.1.8.1 (04-25-2025) AUR Appeals Liaison Responsibilities If the taxpayer is making a non-docketed request to go to Appeals, the designated Appeals liaison must take the following action: Save the following as a PDF file Tax Return Note: Only include the tax return when it's a scanned paper return. CML (Certified Mail Listing) CP 2501, CP 2000 and CP 3219A notices Letters Tax Account Information Returns Case History Case Notes (if present) Digital Responses (if present) If the case is an eGain case, contact the clerk assigned to eGain to have them create a PDF file Route digitally to Appeals Electronic Case Receipts. See Digital Routing to Appeals job aid on the AUR Research Portal, for further information. Close the case PC 66. Exception: For Recon cases, close case IPC 9R and send Letter 86-C to the taxpayer letting them know their request has been sent to Appeals. When the taxpayer files a petition with the U.S. Tax Court, the newly docketed Tax Court cases are uploaded and used to create the Docketed Information Management System (DIMS) list. Docketed cases are high priority and must be worked upon receipt and returned to the clerical function for immediate processing. The case will be transferred to the designated tax examiner who will perform a thorough review of the case contents and take the following actions: If Then If there are no case contents and case needs to be transferred to Appeals OR If there is correspondence and it is determined further change is needed to the case and you are unable to close no change The designated tax examiner will determine if case actions (6) through (8) below are applicable. Establish the case on Audit Information Management System (AIMS) for Appeals using IDRS CC AM424A and the Appeals Office Code. Research SERP, under the Who/Where tab, to link to the Appeals Case Routing for current Appeals Office addresses and routing instructions. Note: Seethe IDRS Command Code Job Aide (CCJA) on SERP for information on transaction codes. Leave a detailed case note Close case with PC 80 Correspondence is received, and it is determined that the case can be closed no change to the original tax liability, see IRM 4.19.3.23.6, Discrepancy Explained/No Change-General. Complete Form 14121, No Change Certification Access Appeals Electronic Case Receipts For Business Unit - Select" SBSE" For Type of Cases - Select "DKT No-Change F14121" Enter Taxpayer's Name Enter TIN (SSN) Enter MFT(s) Enter Tax Period(s) Enter Docket Number (if applicable) Requestor - Auto populates Click - Add Attachment and upload completed Form 14121 Click - Submit Leave a detailed case note Send Form 14121 to clerical to upload into the AUR system. Close the case using the appropriate process code. Appeals sends a Docketed Examination Assistance (EA) request through the SBSE CEA Appeals Distribution listing for AUR technical advice on Form 14361 when new information is received. If the new information isn't provided the request will be denied. Note: Appeals retains jurisdiction over docketed cases and is responsible for any revised tax computations and any required taxpayer contact. Caution: Use Form 14362, to reject the request if it isn't related to the Notice of Deficiency or addresses penalties only. The designated tax examiner will provide a recommendation per AUR guidelines. See IRM 4.19.3.23, Taxpayer Responses. Leave a detailed case note. TEs will review the new information provided and determine if it meets IRM guidelines. Complete Part C of Form 14362, with your recommendation. Provide your contact information in Part D. Respond with case recommendations within 14 days on Form 14362, to the originator from the Appeals email. Clerical builds PC 80 Appeals closures to designated Recon batches for the Appeals Liaison to review. Assign batch status AU to control the batch while it is being reviewed, take the following action: Note: Cases may be transferred to the designated AUR Appeals Liaison. If there is no TC 300 assessment for the AUR amount, route digitally to Appeals Electronic Case Receipts. See Digital Routing to Appeals job aid on the AUR Research Portal, for further information. Close case IPC 9R and send Letter 86-C to the taxpayer letting them know their request has been sent to Appeals. If there is a TC 300 assessment for the AUR amount, leave case in batch. Once all cases in the batch have been reviewed, return batch to general Recon inventory. Update batch status to CB. The Clerical Function is responsible for monitoring the daily DIMS listing and preparing identified cases for transfer to Appeals. If the case is MFJ, refer to IRM 4.19.3.23.1.8.1.1, Responses – Petitioning Spouse (PS) and Non-petitioning Spouse (NPS) - Docketed Cases, for additional information. The Tax Court doesn't have jurisdiction over certain underpayments of tax/penalties and overstatements of payments/credits (non-statutory items). Therefore, when these non-statutory items exist in a case, an assessment or adjustment must be made prior to ASED expiration (see below). (IRC 31, IRC 6211 and IRC 6652(b)). Note: When a Statutory Notice is issued, and a TC 560 is entered to extend the ASED, it doesn't extend the non-statutory items ASED. If non-statutory items are an issue, a partial assessment on AUR or IAT REQ54 tool is required for the following items before transferring the docketed case to Appeals: W/H Excess SSTAX Additional Medicare Tax withheld Additional Medicare tax on wages or RRTA compensation FICA tax on tip income and tip penalty under IRC 6652(b) FICA tax on other income (such as, NEC) If W/H, excess SSTAX, Additional Medicare Tax withheld is the issue: Enter the assessment, using the IAT "REQ54" tool, for the credit adjustment, NOT the tax and use HC 2. Send the taxpayer a Letter 2626-C, using the IAT "Letters" tool, explaining the partial assessment and advise them that the remaining issues will be addressed as part of the docketed case process. Input the last suspense batch number in the AUR control number field of the letter. Include a copy of the letter in the case file. Leave a case note documenting the actions taken. Enter PC 80 and release the case. If FICA tax, SS Tip tax or Additional Medicare tax on wages or RRTA compensation is an issue: Enter the assessment, using the IAT "REQ54" tool, with a TC 290 and the appropriate reference number, blocking series "05" and HC 2. The hold code is released when the next TC 290 posts. Send the taxpayer a Letter 2626-C, using the IAT "Letters" tool, explaining the partial assessment and advise them that the remaining issues will be addressed as part of the docketed case process. Input the last suspense batch number in the AUR control number field of the letter. Include a copy of the letter in the case file. Leave a case note documenting the actions taken. Enter PC 80.

# Responses - Petitioning Spouse (PS) and Non-petitioning Spouse (NPS) - Docketed Cases

4.19.3.23.1.8.1.1 (04-25-2025) Responses - Petitioning Spouse (PS) and Non-petitioning Spouse (NPS) - Docketed Cases Married Filing Joint (MFJ) docketed cases require research to determine if: Both taxpayers' names are reflected on the petition, or Both taxpayers filed their own petition, or Only one taxpayer filed a petition. Perform the research as follows: Access the U.S. Tax Court Website at United States Tax Court. Hover over "Efiling and Case Maintenance" , select SEARCH (Case, Order, Opinion). Select either Docket Number or Individual Party Name. Enter the required information to access the case. Once accessed, view the petition and/or party's names. If only one taxpayer name is reflected on the petition, refer to (3) – (18) below. If both taxpayer's names are reflected or both taxpayers filed a separate petition, continue normal processing; see IRM 4.19.3.23.1.8.1, AUR Appeals Liaison Responsibilities, for additional information. A non-petitioning spouse (NPS) case occurs on a MFJ account when ONLY one taxpayer files a petition with the Tax Court. A MFT 31 module must be established on the non-petitioning taxpayer. The petitioning spouse's (PS) case is referred to Appeals. Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ If the NPS is deceased close the case with PC 80 and follow procedures for docketed cases; see IRM 4.19.3.23.1.8.1, AUR Appeals Liaison Responsibilities. Leave a detailed case note indicating the NPS is deceased, the case has been closed to Appeals with PC 80 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Complete Petition/Non-Petitioning Spouse (P/NPS) Coversheet, and return the case to clerical. Include the following information on the P/NPS Coversheet: Explanation: This is the case file for the petitioning spouse. The non-petitioning spouse is deceased; ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Petitioning spouse's name and TIN Deceased spouse's name and TIN Establish the MFT 31 module for the NPS and attempt to secure the NPS' consent to the tax, as follows: Reminder: If non-statutory items are an issue see (6) below before transferring the docketed case to Appeals. Issue Letter 2626-C to ONLY the NPS; see IRM 4.19.3.23.1.6, Address Updates, for instructions. Request the signed consent, advise that both taxpayers are jointly and separately liable for the tax, and that the letter doesn't extend the time to file a petition with Tax Court, if they choose to do so. Leave a detailed case note and include which taxpayer filed a petition, for example, primary taxpayer petitioned. If the NPS is the secondary taxpayer research IDRS CC IMFOLT to determine if the SSN is invalid (an asterisk is present after the secondary SSN if it is invalid), if the SSN is invalid, send Form 3210 to Entity to request SSN validation; see the Invalid SSN Job Aid on the AUR Portal for additional information at AUR Research Portal IMF, leave a detailed case note and hold in unit suspense until the invalid situation is resolved. Caution: Failure to resolve an invalid secondary SSN will cause an unpostable condition. Access the Process Code window and enter "P" in the MFT 31 field, if the primary taxpayer is the NPS (primary taxpayer DID NOT file a petition). Enter "S" in the MFT 31 field, if the secondary taxpayer is the NPS (secondary taxpayer DID NOT file a petition). Caution: Ensure the entry in the MFT 31 field is correct. Enter IPC S8. The case is moved to BT 89. Caution: If a case needs to be refiled to BT 89, enter IPC S8. DO NOT enter IPC RF to refile cases to BT 89. Note: When "P" or "S" is present in the MFT 31 field, at disassembly the AUR system uploads TC 971 AC 103 to create the MFT 31 module for the appropriate taxpayer. This process can't be reversed, once the disassembly process is complete. Complete P/NPS referral packet and send to clerical Include Content Completed P/NPS Coversheet On coversheet notate the following: Explanation: "This is a non-petitioning spouse case. AUR retained a duplicate case file for the non-petitioning spouse, awaiting the conclusion of the 90 day suspense period. If the non-petitioning spouse doesn't petition the Tax Court within the 90 period, AUR will assess the non-petitioning spouse when an agreement is received or when defaulted. After assessing the non-petitioning spouse case, AUR will forward the assessment documents and any new responses to your office. The default of Notice of Deficiency is (date)." Petitioning spouse's name and TIN. Non-petitioning spouse's name and TIN. Copy of Letter 2626-C (if available) Letter 2626-C that was issued to the PS to explain a partial assessment of non-statutory items. Use the batch listing for batch 89005 or Agree/Non-Agree and Docketed Appeals (NPS) Suspense Inventory Report, to monitor the NPS case to await expiration of the Stat suspense time frame (default). If additional correspondence or a recomputed notice is necessary, see (10) below. Once the Stat suspense time frame expires, request the case; see (16) below. The Tax Court doesn't have jurisdiction over certain underpayments of tax/penalties and overstatements of payments/credits (non-statutory items). Therefore, when these non-statutory items exist in a case, an assessment or adjustment must be made prior to ASED expiration (see below). (IRC 31, IRC 6211 and IRC 6652(b)). Note: When a Statutory Notice is issued, and a TC 560 is entered to extend the ASED, it doesn't extend the non-statutory items ASED. If non-statutory items are an issue, a partial assessment on the MFT 30 module on IDRS is required for the following items before transferring the docketed case to Appeals: W/H, see (8) Excess SSTAX, see (8) Additional Medicare Tax withheld, see (8) Additional Medicare tax on wages or RRTA compensation, see (9) FICA tax on tip income and tip penalty under IRC 6652(b), see (9) FICA tax on other income (such as, NEC), see (9) Shared Responsibility Payment (SRP), see (10) If W/H, excess SSTAX, Additional Medicare Tax withheld, is the issue: Enter the assessment, using the IAT "REQ54" tool, for the credit adjustment, NOT the tax and use HC 2. Send the PS a Letter 2626-C, explaining the partial assessment and advise them that the remaining issues will be addressed as part of the docketed case process and/or once the time frame to file a petition with the United States Tax Court expires. Include a copy of the letter in the case file. Note: No other AUR correspondence will be issued to the PS. Leave a detailed case note. If FICA tax, SS Tip tax, Additional Medicare tax on wages or RRTA compensation is an issue: Enter the assessment, using the IAT "REQ54" tool, with a TC 290 and the appropriate reference number, blocking series "05" and HC 2. The hold code is released when the next TC 290 posts. Send the taxpayer a Letter 2626-C, explaining the partial assessment and advise them that the remaining issues will be addressed as part of the docketed case process and/or once the time frame to file a petition with the United States Tax Court expires. Include a copy of the letter in the case file. Note: No other AUR correspondence will be issued to the PS. Leave a detailed case note. If additional correspondence or a recomputed notice is necessary, see the table below: If Then Additional correspondence is necessary Issue Letter 2626-C ONLY to the NPS; see IRM 4.19.3.23.1.6 Address Updates. Address all response issues, advise that both taxpayers are jointly and separately liable for the tax, and that the letter doesn't extend the time period to file a petition with Tax Court, if they choose to do so. Enter IPC S8 and release the case; the case is moved to BT 89005. Use the batch listing for batch 89005 or Agree/Non-Agree and Docketed Appeals (NPS) Suspense Inventory Report, to monitor the NPS case and take action, as appropriate. A recomputed notice is required (Stat suspense time frame NOT expired) Re-work the case following normal procedures. Enter PC 95. Monitor the case for the PC to post. Once posted, request the case. Print to PDF a copy of the recomputed notice and complete P/NPS Coversheet. Include: Explanation: "This is a supplemental notice to the STAT for the non-petitioning spouse case. The petitioning spouse case file was sent to Appeals on (date)." ; petitioning spouse name and TIN; non-petitioning spouse name and TIN. Route digitally to Appeals Electronic Case Receipts. See Digital Routing to Appeals job aid on the AUR Research Portal, for further information. Enter IPC S8 and release the case; the case is moved to BT 89005. Use the batch listing for batch 89005 or Agree/Non-Agree and Docketed Appeals (NPS) Suspense Inventory Report, to monitor the NPS case and take action, as appropriate. If a response is received from the PS, print to PDF and complete P/NPS Coversheet. Include: "This is a response received from the petitioning spouse. The petitioning spouse case file was sent to Appeals on (date)" ; petitioning spouse name and TIN; non-petitioning spouse name and TIN. Route the case to the Appeals Office digitally through Electronic Case Receipts. See Digital Routing to Appeals job aid, for further information. If the NPS later files a separate petition or joins the existing petition, take the following actions: On Enter/Verify or Include MFT 31 Assessment Window BLOCK NUM – 6X. Remove the date from the IRS-RCVD- DT field and leave the field blank. HOLD CD - 4. TRANS CODE - 290.00. REMARKS – "AUR NPS Filed Petition" . Commit the MFT 31 Assessment Window. Caution: The AUR system prepopulates a Y in the "Send Primary Taxpayer Assessment" or "Send Secondary Taxpayer Assessment" depending on the "P" or "S" indicator. Do not remove the Y. MFT 30 Assessment Window Correct to 290.00. Remove all other transaction and reference codes. REMARKS - "AUR NPS Filed Petition" . SOURCE DOCUMENT ATTACHED? – "Y" . Leave a detailed case note. Enter PC 80. Reminder: A copy of the NPS case file is sent with the MFT 30 adjustment. If information provided allows the case to be closed no change, delete all UR issues, work the case through Return Value then take the following actions: For the Enter/Verify or Include MFT 31 Assessment Window BLOCK NUM – 6X. Remove the date from the IRS-RCVD- DT field and leave the field blank. HOLD CD - 4. TRANS CODE - 290.00. REMARKS – "AUR NPS No Change" . Commit the MFT 31 Assessment Window. Caution: The AUR system prepopulates a Y in the "Send Primary Taxpayer Assessment" or "Send Secondary Taxpayer Assessment" depending on the "P" or "S" indicator. Do not remove the Y. MFT 30 Assessment Window Change the REMARKS to "NPS No Change" . Issue Letter 1802-C to the NPS to advise the case was closed no change. Leave a detailed case note. Enter PC 92. NPS Referral Package Complete P/NPS Coversheet. Include: "This is a response for a non-petitioning spouse case. It allowed the case to be closed no change. The petitioning spouse case file was sent to Appeals on (date)." ; Petitioning spouse name and TIN; Non-petition spouse name and TIN. Print to PDF the NPS response. Complete and attach Form 14121, No Change Certification. Reminder: A copy of the NPS case file must be sent with the MFT 30 adjustment. Route digitally to Appeals Electronic Case Receipts. See Digital Routing to Appeals job aid on the AUR Research Portal, for further information. If an agreed NPS assessment is needed: If Then MFT 31 Enter/Verify the following: BLOCK NUM – 6X. IRS-RCVD-DT. CORSP-DT. CREDIT INTEREST DT – see IRM 4.19.3.23.12.1, The Assessment Window. SOURCE CD. REASON CD – as appropriate. Caution: RC 138 MUST be entered when there is a change to EITC and or refundable credits. PRIORITY CD – as appropriate. Note: Anytime there is a change to EITC and/or refundable credits or a combination of them, Priority Code 9 MUST be used. HOLD CD – Leave blank. TRANS CODE – 290 for the appropriate amount. Penalty (for example, TC 680, TC 170/171, 160/161). EITC (TC 764/765). Opportunity Credit and net PTC. Note: Changes to refundable credits will be netted (+ or -). The netted amount will be entered with TC 766/767. For example, if the American Opportunity Credit adjustment is $766 and the Additional Child Tax Credit adjustment is -$166, the TC 766 amount is $600. REMARKS – "NPS agreed" . Caution: The AUR system prepopulates a Y in the "Send Primary Taxpayer Assessment" or "Send Secondary Taxpayer Assessment" depending on the "P" or "S" indicator. Do not remove the Y. MFT 30 Correct entries to ensure none of the items included on the MFT 31 Assessment Window are included on the MFT 30 Assessment Window; change the 290 amount to zero (.00) and remove any adjustments to EITC or refundable credits. REASON CD – use the same Reason Codes as on the MFT 31 assessment. Exception: Do not use RC 138 on MFT 30. HOLD CD – 4. SOURCE DOCUMENT ATTACHED? – "Y" . REMARKS - "NPS agreed" . Leave a detailed case note. Enter PC 62. If the NPS provides information for the case to be closed partially agreed (see IRM 4.19.3.23.8, Partially Agreed Responses); IPC SR/DR can't be used. Rework the case through Return Value and complete the Summary screen. Prepare NPS referral package and include the response and print of Summary screen. Complete P/NPS Coversheet with the following information: Explanation: "This is the duplicate file for a non-petitioning spouse case. The non-petitioning spouse provided information that allowed the case to be recomputed and assessed. The petitioning spouse case file was sent to Appeals on (date)." Petitioning spouse's name and TIN. Non-petitioning spouse's name and TIN. A print of the Summary Screen. Note: Route digitally to Appeals Electronic Case Receipts. See Digital Routing to Appeals job aid on the AUR Research Portal, for further information. If Then MFT 31 Enter/Verify the following: BLOCK NUM – 6X. IRS-RCVD-DT. CORSP-DT. CREDIT INTEREST DT – see IRM 4.19.3.23.12.1, The Assessment Window. SOURCE CD. REASON CD – as appropriate. Caution: RC 138 MUST be entered when there is a change to EITC and or refundable credits. PRIORITY CD – as appropriate. Note: Anytime there is a change to EITC and/or refundable credits or a combination of them, Priority Code 9 MUST be used. HOLD CD – Leave blank. TRANS CODE – 290 for the appropriate amount. Penalty (for example, TC 680, TC 170/171, 160/161). EITC (TC 764/765). Opportunity Credit and net PTC. Note: Changes to refundable credits will be netted (+ or -). The netted amount will be entered with TC 766/767. For example, if the American Opportunity Credit adjustment is $766 and the Additional Child Tax Credit adjustment is -$166, the TC 766 amount is $600. REMARKS – "NPS partially agreed" . Caution: The AUR system prepopulates a Y in the "Send Primary Taxpayer Assessment" or "Send Secondary Taxpayer Assessment" depending on the "P" or "S" indicator. Do not remove the Y. MFT 30 Correct entries to ensure none of the items included on the MFT 31 Assessment Window are included on the MFT 30 Assessment Window; change the 290 amount to zero (.00) and remove any adjustments to EITC or refundable credits. REASON CD – use the same Reason Codes as on the MFT 31 assessment. Exception: Do not use RC 138 on MFT 30. HOLD CD – 4. SOURCE DOCUMENT ATTACHED? – "Y" . REMARKS - "NPS partially agreed" . Leave a detailed case note. Issue Letter 1802-C to inform the NPS that the case was closed based on the information provided. Enter PC 88. If a default assessment is needed: If Then MFT 31 Enter/Verify the following: BLOCK NUM – 6X. IRS-RCVD-DT – the date the assessment is entered. CREDIT INTEREST DT – leave blank. SOURCE CD. REASON CD (Reason Code). Caution: RC 138 MUST be entered when there is a change to W/H, excess SST, EITC and or refundable credits. PRIORITY CD (Priority Code). Caution: Priority Code 9 MUST be entered when there is a change to W/H, excess SST, EITC and/or refundable credits, or a combination of these). HOLD CD (Hold Code) – Leave blank. TC 290. Penalty (for example, TC 680, TC 170/171, TC 160/161), if applicable. Withholding (TC 806/807), if applicable. EITC (TC 764/765), if applicable. Excess SST adjustments (CRN 252), if applicable. Refundable credits: Additional Child Tax Credit, American Opportunity Credit and net PTC. Note: Changes to refundable credits will be netted (+ or -). The netted amount will be entered with TC 766/767. For example: if the American Opportunity Credit adjustment is $766 and the Additional Child Tax Credit adjustment is -$166, the TC 766 amount is $600. Remove any transaction codes, reference codes, etc., applicable to MFT 30. REMARKS - "AUR split/spousal default" . Caution: The AUR system will prepopulate a Y in the "Send Primary Taxpayer Assessment" or "Send Secondary Taxpayer Assessment" depending on the "P" or "S" indicator. Do not remove the Y. Commit the MFT 31 Assessment Window. MFT 30 Access the MFT 30 Assessment window and enter/verify/correct the following: Caution: DO NOT change the entries in the CREDIT INTEREST DATE or IRS RECEIVED DT fields. Remove all items included on the MFT 31 assessments. BLOCK NUM – 6X. TRANS CODE – 290.00. SRCE CD (Source Code) - 2. REFERENCE CD (Reference Codes). SOURCE DOCUMENT ATTACHED? field – "Y" . REMARKS - "AUR split/spousal default" . Commit the MFT 30 Assessment window. Leave a detailed case note of actions taken, including which taxpayer agreed and which taxpayer defaulted. Enter PC 82. If there is a payment(s) on the MFT 30 account, determine who is the non-petitioning spouse (NPS) and move/cross reference the payment(s) accordingly. If the primary taxpayer is the NPS, then use the credit transfer tool to move the payment(s) from the MFT 30 to the NPS MFT 31 account. If the NPS is the secondary taxpayer, then the payment(s) will need to be cross referenced to the NPS MFT 31 account. These actions will be taken when the assessment PC is entered in AUR. See the MFT 31 credit transfer and cross referencing help available on the AUR Portal at AUR Research Portal IMF. The AUR system displays the following messages when there is an MFT 31 module present for NPS: "MFT31 PRESENT ON IDRS. SEE IRM 4.19.3" displays when MFT 31 accounts modules are present on IDRS due to Bankruptcy, Innocent Spouse or AUR system initiated MFT 31 modules, due to only one spouse signing consent. "MFT 31 PRESENT PER PETITION NON-PETITION FOR PRIMARY; SEE IRM 4.19.3" displays when the AUR System set the indicator "P" . This message displays even if the MFT 31 modules have not yet posted to IDRS. "MFT 31 PRESENT PER PETITION NON-PETITION FOR SECONDARY; SEE IRM 4.19.3" displays when the AUR System set the indicator "S" . This message displays even if the MFT 31 modules have not yet posted to IDRS.

# Backup Withholding (BWH)

4.19.3.23.1.9 (10-25-2023) Backup Withholding (BWH) The BWH status won't update unless an assessment was made and the change to the AGI includes the income types listed in paragraph (2) below. BWH applies primarily to income reported on forms in the 1099 series. A taxpayer who fails to report interest, dividend, or patronage dividend income is subject to BWH prior to payment. The rate for payments made is 24 percent. The following indicators are located on the Master File to reflect the taxpayer's BWH status and display on the Tax Account screen in the BACKUP W/H field: 0 - No BWH consideration 1 - Potentially liable 2 - Subject to BWH 4 - BWH satisfied/manual stop 8 - Suspended M - Multiple periods When the taxpayer submits additional information (for example, a second reply after the case is closed) and indicates they are no longer subject to BWH, take the following action: Prepare Form 4442. Attach a copy of the response to the Form 4442. Send the Form 4442 to the Collection Branch. See (6) and (7) below for the appropriate address. Send the taxpayer a Special Paragraph to inform them the response will be reviewed and they will be notified of the decision. When the taxpayer calls and provides additional information after the case is closed, and indicates they are no longer subject to BWH, take the following action: Prepare Form 4442, list in detail the information provided to indicate no underreporting exists or has been corrected. Send the completed Form 4442 to the Collection Branch. See (6) and (7) below for the appropriate address. Inform the taxpayer the response will be reviewed and they will be notified of the decision. Send the Form 4442 or correspondence to: Internal Revenue Service Mail Stop 4-N-31.142 2970 Market St. Philadelphia, PA 19104 Or fax the Form 4442 or correspondence to 1-855-235-6786 For International BWH issues, send the Form 4442 or correspondence to: Internal Revenue Service Mail Stop 4-N-31.143 2970 Market St. Philadelphia, PA 19104

# Bankruptcy Procedures - Responses

4.19.3.23.1.10 (10-10-2025) Bankruptcy Procedures - Responses Once the taxpayer has been contacted by AUR and there is an indication that the taxpayer has filed bankruptcy or the taxpayer states they have filed for bankruptcy, see IRM 4.19.3.23.1.10.1, Bankruptcy Procedures - Tax Examiner Instructions, for further instructions. The following Freeze Codes and/or Transaction Codes, present on the Tax Account screen indicates that the taxpayer filed for Bankruptcy: Freeze Code "-V" Freeze Code "-W" and an unreversed TC 520 with cc 81 or cc 84 only

# Bankruptcy Procedures - Tax Examiner Instructions

4.19.3.23.1.10.1 (10-10-2025) Bankruptcy Procedures - Tax Examiner Instructions If the taxpayer states Bankruptcy was filed (or there is an indication of bankruptcy on the Tax Account), transfer the case to the AUR Bankruptcy Coordinator when: The taxpayer's response doesn't result in either a No Change or Agree/Partial Agree or TC 604 is present on the Tax Account screen, which isn't due to Innocent Spouse (indicated by TC 971 AC 065). If the taxpayer states BANKRUPTCY was filed (or there is an indication of bankruptcy on the Tax Account), the case can be closed as a No Change or Agree/Partial Agree and TC 604 isn't present: Close the case with the appropriate PC. Notify the AUR Bankruptcy Coordinator with actions taken. Do not transfer cases to the AUR Bankruptcy coordinator when the taxpayer states Bankruptcy or there are bankruptcy indicators present and DBTCN is the only issue. See IRM 4.19.3.23.5.16, Cancellation of Debt, for further information to resolve the DBTCN issue(s).

# Bankruptcy Procedures - AUR Bankruptcy Coordinator Instructions

4.19.3.23.1.10.2 (10-10-2025) Bankruptcy Procedures - AUR Bankruptcy Coordinator Instructions If, based on the instructions in this section, contact with insolvency is required go to Centralized Insolvency Operation (CIO) Team Assignment and obtain the phone or fax number. Click on the state in question listed in the Table. A list of Internal Use Only phone and fax numbers displays. Tax examiners transfer cases with bankruptcy indicators (including taxpayer statements that bankruptcy has been filed without the presence of bankruptcy indicators on Tax Account) when: The response doesn't result in either a no change or agree/partial agree closing and/or TC 604 is present on the Tax Account screen, which isn't due to Innocent Spouse. Caution: If the TC 604 is due to reasons other than Bankruptcy or Innocent Spouse, close with the appropriate PC (71 for CP 2000 or 96 for CP 3219A) and assess on MFT 31 accounts. If the case is closed with a PC 71 leave a case note indicating that the closure isn't a "No Change" . Note: If the taxpayer's response results in an assessment and TC 604 is present on the Tax Account screen, post the assessment on the appropriate existing MFT 31 account(s) or contact the Centralized Insolvency Operation to request a temporary reversal of the TC 604 if MFT 31 account(s) have not been established. When a TC 604 and TC 971 AC 031 due to Bankruptcy are present, close the case with the appropriate PC (71 for CP 2000 or 96 for CP 3219A). Note: If the TC 604 is due to reasons other than Bankruptcy or Innocent Spouse, contact the appropriate Collections Office to request a temporary reversal of the TC 604 if MFT 31 account(s) have not been established. If the MFT 31 account is established, close case with PC 71 for CP 2000 or PC 96 for CP 3219A and assess on the MFT 31 account. When closing a case with PC 71, leave a case note indicating the closure isn't a No Change. If the taxpayer states Bankruptcy was filed, doesn't provide bankruptcy paperwork and there are no bankruptcy indicators on the Tax Account screen, research AIS (Automated Insolvency System) and/or PACER (Public Access Court Electronic Records) to determine if a bankruptcy petition was filed. If there is no indication that a bankruptcy petition was filed, issue a Letter 2626-C. Advise the taxpayer to address the AUR issues and provide a copy of the bankruptcy petition. If there is an indication that a bankruptcy petition was filed, determine whether the AUR issues are pre-petition or post-petition. Note: If the bankruptcy was filed before December 31st of the AUR tax year, the AUR issues are considered post-petition. For example, if the taxpayer files for bankruptcy on 07/28/23, any issues raised on a TY 2023 CP 2000 Notice are considered post-petition. If the AUR tax year is post-petition: Contact the appropriate Insolvency office within 48 hours and advise them of the status of the AUR case in order for them to determine if a Proof of Claim must be filed. Leave AUR case note(s) to document contact with Insolvency. Continue normal AUR processing. When the AUR tax year is pre-petition and The proposed ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" Contact Insolvency and advise them of the action taken. Leave an AUR case note(s) to document contact with Insolvency. Exception: If the taxpayer's response acknowledges/indicates that the AUR liability has been added to the Proof of Claim (POC), issue a Letter 2626-C to signature on the consent to tax and continue processing. If a signature isn't secured, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Contact Insolvency and advise them of the action taken. Leave AUR case note(s) to document contact with Insolvency. Note: When working BT 84, if full payment has been received and case is in CP 2000 phase, follow agreed procedures. See IRM 4.19.3.23.7, Agree Responses. If a Statutory Notice has been issued send a Letter 2626-C to obtain the taxpayers signature. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Caution: If the return is Virtual and there is no information (loose forms, schedules or correspondence) to be associated with the refile DLN, enter "N" in the SOURCE DOC field in the Process Code window. The proposed ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, contact the appropriate Insolvency office within 48 hours and advise them of the status of the AUR case in order for them to determine if a Proof of Claim must be filed. Leave AUR case note(s) to document contact with Insolvency. The taxpayer has made any payments, issue a Letter 2626-C using the IAT Letters tool to obtain the taxpayer's signature. Send a Special Paragraph using the following verbiage as an example: "We have received full payment or partial payment from you regarding [the notice of deficiency or Letter XXX] regarding income tax year XXXX. However, while you are in bankruptcy, we need to honor the bankruptcy automatic stay that is in place until your bankruptcy has been closed, discharged or dismissed. Your payment appears to indicate that you agree to the proposed changes on your tax return. If this is true, please sign and return the consent form below. If you filed a joint return, both spouses must sign." Note: Input the last suspense batch number in the "AUR control number" field of the letter. Note: Payments made by the Bankruptcy trustee are posted as either a TC 670, 680 or 690 with designated payment code (DPC) 03 or 11. The taxpayer has not made any payments, issue a Letter 2626-C using the IAT "Letters" tool. Send a Special Paragraph using the following verbiage as an example: "Although you are currently in bankruptcy and the bankruptcy automatic stay is in place until your bankruptcy has been closed, discharged or dismissed, we require additional information to indicate your agreement or disagreement regarding the proposed changes. If you disagree, please provide an explanation. If you agree, please sign the notice and return it for processing. You may be able to pay the amount owed through your bankruptcy. Please refer to IRS Publication 908 for additional information." Note: Input the last suspense batch number in the "AUR control number" field of the letter. Insolvency contacts the AUR Bankruptcy Coordinator when they identify impacted account(s) through the AIS system and a TC 922 is present, to request information to assist them in establishing or updating the Proof of Claim. The AUR Bankruptcy Coordinator will provide the proposed tax deficiency and any other requested information within 48 hours of contact. Leave AUR case note(s) to document contact with Insolvency. If the Insolvency contact occurs before a notice has been issued (during screening phase), or on a pre-petition case after a notice has been issued, and the proposed ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ advise Insolvency ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. If Insolvency informs AUR they are requesting a signed consent to tax from the taxpayer, suspend the case for 45 days. If the suspense time frame expires and Insolvency was unable to obtain a signed consent ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. Advise Insolvency of the action taken. Leave case notes on AUR to document the call. Some conditions require contact with Insolvency, see the table below for additional information: If Then Mirroring is needed Send an email request to *CIO Issues. TC 520 and/or freeze condition isn't present, there is an indication of an open bankruptcy filing and the bankruptcy is open on PACER Note: The most common reasons TC 520 or a freeze condition isn't present, even though the taxpayer has filed for bankruptcy, are the IRS was not listed as a creditor when the bankruptcy was originally filed or there were no balances due when notice of filing was received. Check AIS: If the case is open or is closed as "No Liability" : Determine case assignment (or last case assignment, if the case is closed). Contact the appropriate individual/CIO by phone or email to request a TC 520 be entered on IDRS for the AUR tax year. Contact may be with Field or Campus Insolvency, depending on where the case is or was assigned. Include the AUR proposed assessment information. Note: If contacting by phone, see (1) above. If the case isn't on AIS, contact the appropriate individual in CIO via email. Insolvency guidance or clarification is needed Contact Insolvency by phone or fax; see (1) above. MFT 31 modules must be established for EACH taxpayer when taxpayers file jointly, only one taxpayer files for bankruptcy and CIO can't mirror the module. Take the following actions to establish the MFT 31 module for each taxpayer: Note: Master file won't create the MFT 31 account when the SSN for the secondary spouse is invalid. Prior to establishing the MFT 31 module(s), research IDRS CC IMFOLT to determine if the SSN is invalid (an asterisk is present after the spousal social security number). If invalid, send a request for SSN validation to Entity via Form 3210. Access the primary taxpayer's MFT 30 account using IDRS cc TXMODA. Use the IAT "REQ 77" tool to establish the MFT 31 account for both the primary and secondary taxpayer. TC: Enter "971" . TRANS DT: Date the TC 971 was entered. TC 971/151-CD: Enter "103" . XREF-TIN: Enter SSN (create a module for both SSNs). Leave remarks: for example, "Bankruptcy Spousal MFT 31 established" . Monitor to ensure MFT 31 accounts were established for both taxpayers. Once the MFT 31 accounts have been created use the IAT "REQ 77" tool to enter TC 971 AC 110 on EACH MFT 31 account: Note: TC 971 AC 103 generally posts within 3 - 4 weeks after input. TC: Enter "971" . TRANS DT: Date the TC 971 was entered. TC971/151-CD: Enter "110" . XREF-TIN: Enter the SSN of the spouse (on the primary's account enter the secondary SSN; on the secondary's account enter the primary SSN). Leave remarks: for example, "TC 971 AC 110" . If there are payments on the MFT 30 account wait until the TC 971 AC 110 posts then move the payments to the primary taxpayer's MFT 31 account. Once the payment posts to the primary taxpayer's MFT 31 account cross reference the payment to the secondary taxpayer's MFT 31 account. Note: Payments which posted to either MFT 31 module prior to TC 971 AC 110 posting require cross-referencing so both MFT 31 accounts reflect the payments. Example: Payment of $200 was received on 01/15/2025 and $350 was received 03/01/2025. The TC 971 AC 110 posted to the account on 02/20/2025. The payment of $200 would need to be manually crossed referenced. When the petitioning and/or non-petitioning spouse is ready for assessment/default, use the IAT "REQ 54" tool to enter the adjustment on the appropriate account. If information needs to be mailed to Insolvency, send the information to the following address: Internal Revenue Service, P.O. Box 7246, Philadelphia, PA 19101-7346 or for overnight Internal Revenue Service, 2970 Market Street Stop 5-Q30.133, Philadelphia, PA 19104-5016 When more than one bankruptcy petition is filed within 12 months of the previous dismissal, the automatic stay may terminate or not go into effect at all. If AIS or PACER reflects a subsequent bankruptcy filing (serial filer case) and the previous case was dismissed, contact Insolvency to request the status of the automatic stay as follows: If the case is assigned to the Centralized Insolvency Operation (CIO) on AIS, contact CIO. Contact information can be found on the SERP Who/Where tab (Centralized Insolvency Operation (CIO) Team Assignment. Select the state which the bankruptcy was filed, contact the manager/lead listed. These cases are identified by 85000 in the Org1 field on the Taxpayer screen on AIS. The CIO will refer the case to the appropriate Field Insolvency caseworker based on the Case Assignment Tool. If the case is assigned to Field Insolvency, contact the assigned caseworker directly. These cases are identified by 26000 or 27000 in the Org1 field on the Taxpayer screen on AIS. Note: If the sequential filing(s) are deemed by the court to not be in good faith, the automatic stay may terminate 30 days after the petition was filed or may not arise at all. PACER and/or AIS generally doesn't contain a history item stating the stay is or isn't in place and, depending on the court, there may be no order granting a motion to indicate the stay is or isn't in effect. If the AUR Bankruptcy Coordinator has concerns with the information provided by Insolvency, elevate the issue to the caseworker's manager. If the taxpayer provides a subsequent response(s), that reduces the proposed AUR balance due (including closing the case a No Change), contact Insolvency and advise them of the change in status so the proof of claim can be adjusted accordingly. Leave AUR case note(s) to document contact with Insolvency. Note: Do not issue a recomputed notice when the taxpayer has provided an acceptable explanation for one or more of the IRs and the proposed ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. Contact Insolvency and advise them of the action taken. Leave AUR case notes to document contact with Insolvency. The AUR Bankruptcy Status listing is available to assist the AUR Bankruptcy Coordinator identify and manage Bankruptcy inventory cases. This report provides a listing of SSNs with bankruptcy indicators: "-V" , "-W" , and the current CSN of the case. Running a New Transaction Report for Batch Type 89001 will show indicators of recent changes in Bankruptcy status (ex: the posting of a TC 521). Note: These reports/listings are available to assist the AUR Bankruptcy Coordinator remain current with their inventory and MUST be reviewed on a weekly basis. Cases identified with bankruptcy indicators in pre-notice phase will be assigned and closed with PC 27. Cases identified with bankruptcy indicators after a notice has been issued will be reviewed to determine if the proposed ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the proposed ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ see c - e below. Review AIS/PACER for an indication of the automatic stay lifting; case is closed, dismissed, discharged or discharge was denied. Note: If the taxpayer is in Chapter 11 bankruptcy, contact the Field Insolvency caseworker to determine if the automatic stay has been lifted. Determine if contact with Insolvency is necessary. Leave AUR case note(s) to document contact with Insolvency. Note: The bankruptcy inventory is monitored from the date a case has been identified as a bankruptcy issue until the bankruptcy closes. The inventory MUST be reviewed once every month using AIS, PACER and IDRS for any changes made to the account. Note: All cases in inventory will have been issued a Statutory Notice of Deficiency. The Bankruptcy Coordinator will assess all non-statutory items prior to the Statutory Notice being issued. If a Statutory Notice has been issued and the taxpayer has not replied, the case is ready to assess by default and bankruptcy indicators are present on the case, determine if the case is pre-petition or post-petition. If the case is post-petition, enter PC 90 at the end of the Statutory Notice suspense period and contact Insolvency to advise that the assessment has been processed. Reminder: The automatic stay doesn't suspend the time frame for the taxpayer to petition U.S. Tax Court for cases concerning post-petition liabilities. AUR will follow normal default processing procedures. If the case is pre-petition, the AUR case must remain in suspense. Enter PC 98 to move the case to Bankruptcy Suspense Batch 89001. Monitor cases in BT 89001 on, at minimum, a monthly basis. Note: If a TC 604 and TC 971 AC 031 due to Bankruptcy are present on the Tax Account screen close the case with the appropriate PC (71 for CP 2000 or 96 for Stat). Reminder: Assignment of PC 98 to Employee cases won't move them to Batch 89001, they will remain in BT 92. The assessment by default can't occur on pre-petition cases until the stay has been lifted and the taxpayer has had the entire 90-day period, plus an additional 60 days, to petition U.S. Tax Court, as the automatic stay prevents the taxpayer from filing a petition in Tax Court. Exception: Deficiencies in which the statutory period for petitioning the U.S. Tax Court has expired prior to the bankruptcy petition filing can be assessed even though the assessment may post to IDRS after the petition date. Example: The Statutory Notice was issued 11/12/2022, the time to petition U.S. Tax Court expired on 02/10/2023 and the taxpayer filed bankruptcy on 03/01/2023. Since the taxpayer had the entire 90-day petition period to petition the U.S. Tax Court and the time frame expired, the proposed amount can be assessed by default. Notify Insolvency of the assessment by default, document in AUR Case Notes and include the dismissal/discharge date as well as how the case was resolved and enter the appropriate PC. The time to file a petition with U.S. Tax Court and the assessment statute for the deficiency isn't suspended for the spouse who did not file bankruptcy. If the non-petitioning spouse doesn't timely file a Tax Court petition, the deficiency must be assessed against the non-petitioning spouse prior to the ASED expiration. Generally, the automatic stay lifts on the earlier of the granting or denial of discharge, dismissal or closing of the case. Contact Insolvency to determine if the default assessment can be made during the suspense time when: Notification is received by Insolvency contact indicating the stay has been lifted PACER research indicates the case has been closed, discharged or dismissed IDRS update to AUR indicates the stay has been lifted (for example, posting of TC 521 and TC 522) Note: Recompute the ASED when needed. If the default assessment can't be made prior to the AUR Tax Year archive date, at that time, close any remaining cases on the AUR system (PC 96) and establish an IDRS control base to continue monitoring. The taxpayer's 90-day period for filing a U.S. Tax Court petition relating to a pre-petition liability is suspended by the automatic stay and begins to run 61 days after the stay is lifted. For any taxable periods ending after the date the bankruptcy petition was filed neither the taxpayer's 90-day period nor the ASED is suspended (for those tax years) even though the bankruptcy may still be ongoing. The important dates for determining ASED are the date the: Return was filed Bankruptcy petition was filed Statutory Notice was issued and Automatic stay lifted Note: Any questions regarding the ASED must be coordinated with Insolvency. For more information, see IRM 5.9.4.3, ASED/CSED. Reminder: The taxpayer is allowed the full 90-day time period, plus an additional 60 days, to file a petition with the U.S. Tax Court. If the taxpayer files a bankruptcy petition on the 75th day, the automatic stay is imposed with 15 days remaining on the taxpayer's 90-day time period. Once the stay terminates the taxpayer has 60 days plus whatever time is left on the 90-day period (15 days) to file a petition with the U.S. Tax Court. Take necessary precautions to protect the ASED. Note: The assessment period is suspended during the automatic stay plus an additional 60 days beyond the day the stay is lifted under section 6503(a) and 6213(f). Additional information may be found in Rev. Rul. 2003-80. Recomputation of ASEDs are identified and coordinated with Insolvency by the AUR Bankruptcy Coordinator. Bankruptcy Coordinators will identify cases that require mirroring and will contact CIO to request the mirroring process early on in the bankruptcy proceeding, prior to trustee payments being received whenever possible, to potentially avoid mirroring problems from occurring. Mirror cases when there is a jointly filed return, only one taxpayer is in bankruptcy and the suspense period for the Statutory Notice has expired (ie: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ for taxpayers living outside the United States). In order to protect the statute, the assessment must be made on the non-petitioning spouses MFT 31 account prior to ASED expiration. Include Reason Code 138 on MFT 31 adjustments for jointly filed returns, when credits, TC codes 76x and/or 80x, should not be cross referenced to the other spouse's MFT 31 tax account. The Tax Court doesn't have jurisdiction over certain underpayments of tax/penalties and overstatements of payments/credits (non-statutory items). Therefore, when these underpayments/overstatements exist in a case, an assessment or adjustment will be made prior to ASED expiration (see (26) below). (IRC 31, IRC 6211 and IRC 6652(b)). If non-statutory items are an issue a partial assessment on AUR or IAT "REQ54" tool is required for the following items: W/H, see (27) and (28) below Excess SSTAX see (27) and (28) below Additional Medicare Tax withheld, see (27) and (28) below Additional Medicare Tax on wages or RRTA compensation, see (29) below FICA tax on tip income and tip penalty under IRC 6652(b), see (29) below FICA tax on other income (such as, NEC), see (29) below Shared Responsibility Payment (SRP), see (30) below If a Statutory Notice has not been issued and W/H, excess SSTAX, or Additional Medicare Tax is the issue, enter the assessment on AUR for the credit adjustment, NOT the tax. Issue a letter informing the taxpayer that the non-statutory items have been assessed and enter PC 77 to manually generate a stat notice. If a Statutory Notice has been issued and W/H, excess SSTAX, or Additional Medicare Tax is the issue, enter the assessment using the IAT "REQ54" tool, for the credit adjustment, NOT the tax, send a recomputed notice (PC 95) removing the non-statutory items assessed. If FICA tax, SS Tip tax or Additional Medicare Tax on wages or RRTA compensation is an issue: Assess the FICA tax, SS Tip Tax or Additional Medicare Tax on wages or RRTA compensation with a TC 290 and the appropriate reference number using HC 3. The hold code is released when the next TC 290 posts. Use blocking series "05" to enter FICA/SSTAX adjustment. Enter PC 77. Example: The original FICA tax on the CP 2000 is $150 with the total tax due of $750. Enter TC 290 with the appropriate reference number for $150 and issue the Stat notice (using STN 90) or a recomputed notice (PC 95) for $600. If a partial assessment for non-statutory items was previously entered, and the case is being closed and not placed into bankruptcy suspense, close the case with PC 88. If Insolvency identifies a case that has been assessed by AUR in violation of the automatic stay, they will contact AUR to make an adjustment. The AUR Bankruptcy Coordinator will verify if the assessment was done in violation. If so, then the AUR Bankruptcy Coordinator will reverse the assessment, ensure that notices are suppressed and establish an IDRS control base for continued monitoring, using IAT tools as appropriate.

# Combat Zone

4.19.3.23.1.11 (10-10-2025) Combat Zone If the taxpayer's response indicates participation in military action as a member of the U.S. Armed Forces (in an area designated as a combat zone as defined in IRC 7508 or in an area certified by the Department of Defense as being in direct support of military operations in a combat zone, for which the person receives special pay for duty subject to hostile fire or imminent danger, or in a qualified hazardous duty area or performing qualifying service outside such area as defined by Congress, per Pub 3, Armed Forces' Tax Guide, Combat Zone Exclusion, for the tax year at issue and for the most recent year for listings of specific areas) take the following action: Note: The Tax Cuts and Jobs Act (TCJA) enacted December 2017, designated the "Sinai Peninsula of Egypt" as a qualified hazardous duty area to be treated as a combat zone for purposes of IRC 7508. This benefit is effective retroactively from the period beginning June 10, 2015, through subsequent taxable years beginning before January 1, 2026. Research IDRS CC IMFOLE for the combat zone indicator. See IRM 4.19.3.4.3.2, Freeze Codes, for additional information. Close all Combat Indicator 1 cases with proposed tax increase with PC 15 and issue a Letter 1802-C. If the case is in Statutory Notice phase or if necessary to release a payment, enter TC 290-0 in the Assessment window. Process any responses with Combat Indicator 2 or involving refund cases per (2) below. Verify the presence of the "-C" Freeze code. If And Then The -C freeze isn't present ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Enter TC 500 with cc 52 for Desert Storm, cc 54 for Bosnia/former Yugoslavia or Allied Force, or cc 56 for Afghanistan, cc 56 Sinai Peninsula or cc 57 Enduring Freedom (to reflect when the taxpayer entered the combat zone) on the tax module being worked. Per the taxpayer's response the Combat Indicator is 1, see steps 2 or 3 above. The "-C" freeze isn't present No entry date was provided Enter the TC 500 cc 5x using the correspondence date or the date of the telephone contact. Per the taxpayer's response the Combat Indicator is 1, see steps 2 or 3 above. See IRM 5.19.2.6.4.1.1, Combat Zone IMF Procedures, for more detailed instructions. Note: The combat zone exit date is reflected with cc 53 for Desert Storm, cc 55 for Bosnia/former Yugoslavia or Allied Force, or cc 57 for Afghanistan or Enduring Freedom. Combat zone indicator 2 indicates the taxpayer is no longer serving in a combat zone, continue normal AUR processing. Manual Interest computation may be required for the notice to generate. If there is U/R income, enter IPC MI (Manual Interest) only if a CP 2000 is being issued AND the case is in batch type 61. See IRM 4.19.3.19.10, Manually Computed Interest for the CP 2000. The deadline extension provisions also apply to individuals serving in the combat zone in support of the U.S. Armed Forces, such as Merchant Marines serving aboard vessels under the operational control of the Department of Defense, Red Cross personnel, accredited correspondents, and civilian personnel acting under the direction of the U.S. Armed Forces in support of those forces. Follow the instructions in (1) above to close the case PC 15.

# Combat Zone Cases and IRC 7508

4.19.3.23.1.11.1 (12-13-2018) Combat Zone Cases and IRC 7508 IRC 7508 provides that the period for performing acts required to be performed by a certain date as outlined in IRC 7508 and related guidance is suspended while a taxpayer is on active duty to a combat zone, plus during any period of qualified hospitalization thereafter, plus 180 days. See IRC 7508(a)(1),(g). When a combat zone entry date is prior to the return due date, and there is no exit date, then there is no due date. That "no due date" condition is represented by a due date of 12/31/XXXX. Example: A Notice of Deficiency is sent to the taxpayer dated 11/15/2022. A TC 500 posts in the entity indicating a combat zone entry date of 11/25/2022 (10 days after the notice date). The taxpayer has until 260 days (90 -10 + 180) after they leave the combat zone to file a petition with the U.S. Tax court. The deficiency can't be assessed during that time UNLESS the taxpayer signs a waiver to assess and collect. If after a notice is generated the system displays one of the following messages: "12/31/9999 date is present, possible combat zone - See IRM 4.19.3" or "Note: Possible Combat Zone Indicator. Manual Interest and FTF Penalty computations may be necessary. Additional research required." ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ take the following actions: Research IDRS CC IMFOLE for TC 500 cc 57. Determine exit date. If not available, go to (3) below. If the case is at the point of assessment, transfer the case to unit suspense, and monitor until the suspense period outlined in (1) above expires. Caution: If the exit date isn't available, DON'T assess the case by default. See (3) below. After the suspense period in (1) above expires, if issuing a notice, manually calculate the FTF penalty and interest if applicable, and make the appropriate entries in the assessment window. If the exit date isn't available ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡.

# Community Property

4.19.3.23.1.12 (09-01-2013) Community Property If the taxpayer's response indicates the income is community property, refer to IRM 4.19.3.5.4, Community Property States, for additional information.

# Congressional Cases

4.19.3.23.1.13 (09-01-2008) Congressional Cases A case is considered a Congressional if correspondence/inquiry is received on U.S. Congressional Letterhead or attached to U.S. Congressional Letterhead. If you discover a Congressional case, immediately give the case to the AUR TAS liaison for expedite handling. Do not consider a case a Congressional if the taxpayer states they sent a copy of the AUR notice to a member of Congress or the White House, or contacted or is going to contact a member of Congress or the President, or threatens to do so if the case isn't resolved. See IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria, for cases meeting the TAS criteria.

# Decedents

4.19.3.23.1.14 (10-02-2024) Decedents ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Exception: If the surviving spouse indicates the taxpayer died after the date the CP 2000 was issued, continue processing and send Paragraph 129 or a Special Paragraph (Letter 2626-C) using the following verbiage as an example: "All income attributable to you or your spouse must be included on the joint tax return filed for that year" . If a response is received stating both taxpayers are deceased (for married filing jointly), or a single taxpayer is deceased (including letters marked "Deceased" by the Post Office), ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Full payment is submitted Partial payment is submitted. Acknowledge payment and continue processing Executor or surviving spouse signs the notice, with no disputing comments The response indicates that more time is required to investigate the matter. Continue processing the case. If a disagreed response is received and the income is jointly owned with a surviving spouse, issue an appropriate letter with a Special Paragraph using the following verbiage as an example: "All income attributable to you or your spouse must be included on the joint return you filed." or send PARAGRAPH 129 on the notice. See Exhibit 4.19.3-7, CP PARAGRAPHS. Note: Joint accounts with one spouse deceased may need to be split into MFT 31 accounts for one or both taxpayers. For additional information see IRM 21.6.8, Split Spousal Assessments (MFT 31). If the response to an AUR notice states the taxpayer died since filing the tax return for the AUR year, see IRM 4.19.3.23.1.6, Address Updates, for further information.

# Killed in Terrorist Action/Killed in Action (KITA/KIA)

4.19.3.23.1.14.1 (06-17-2013) Killed in Terrorist Action/Killed in Action (KITA/KIA) IRC 692(d) provides an exemption from taxes in the following situations: Any individual who dies as a result of wounds or injury incurred due to terrorist attacks against the United States on April 19,1995, or September 11, 2001, or Any individual who dies as a result of illness incurred due to a terrorist attack involving anthrax occurring on or after September 11, 2001, and before January 1, 2002, unless the individual was a participant of the attacks. Any astronaut whose death occurs in the line of duty after December 31, 2002. Note: These taxpayer accounts are being centralized and worked at the Kansas City Campus, as are all Killed in Terrorist Action/Killed in Action (KITA/KIA) cases. Based on the taxpayer's response or the presence of "KITA/HSTG" in the KITA IND field on the Tax Account screen, determine if the U/R income belongs to the decedent. If all U/R income belongs to the decedent: Use PC 18 to close. Document the Case Notes: "KITA/KIA" or similar wording. Issue a Letter 1802-C. If the case is in the Statutory Notice phase or if a payment has been received, enter TC 290-0 in the Assessment window. Prepare Form 4442 and fax to your Taxpayer Services KITA/KIA Coordinator. See SERP Who/Where tab for KITA/KIA Coordinators and fax numbers. Attach a copy of the written response or include a synopsis of the telephone call to the Form 4442. If only part of the income belongs to the KITA/KIA decedent, delete those issues and pursue issues for the surviving spouse. If none of the issues pertain to the KITA/KIA decedent, continue normal processing.

# Deposits to Stop the Accrual of Interest - IRC 6603

4.19.3.23.1.15 (10-02-2024) Deposits to Stop the Accrual of Interest - IRC 6603 A taxpayer may stop the further accrual of interest while the case is being resolved by making either a payment or an IRC 6603 deposit. Note: See IRM 4.19.3.23.7, Agreed Responses, for the requirement that BOTH signatures are required on a consent to a tax increase for a jointly filed tax return that isn't fully paid. IRC 6603 allows taxpayers to submit deposits to suspend the running of interest on potential underpayments. IRC 6603 deposits replace Cash Bond designations and are identified on the Tax Account screen by a TC 640 with a Blocking Series of 990-999 in the DLN, or TC 640 with DPC 12. See IRM 20.2.4, Overpayment Interest. The taxpayer must use the specific designation for the payment to be considered an IRC 6603 deposit. Unlike Cash Bonds, the taxpayer may be entitled to interest on the excess portion of an IRC 6603 deposit. To the extent the deposit is attributable to a disputable tax, interest is paid at the Federal short-term rate provided under IRC 6621(b), compounded daily. The ACT/DMI Program (version 6.13 and subsequent) provides a Federal Short-Term Rate Chart specifically for computing interest on IRC 6603 deposits. The rate of interest allowed is lower than the rates for overpayments. Note: After an assessment is made and the funds are applied as a payment against the assessed liability, the normal rules regarding interest on overpayments would apply. A taxpayer may request the return of all or part of an IRC 6603 deposit before the deposit is used for a payment of tax. The requests must be in writing and include the following: The date(s) and amount(s) of the original deposit(s); The type(s) of tax to which the deposit was intended to be applied; The tax year(s) to which the deposit was intended to be applied. If the request is complete, a manual refund is required. See IRM 21.4.4, Manual Refunds, IRM 21.5.1, General Adjustments, IRM 21.5.2, Adjustment Guidelines, and IRM 20.2.4.9.2.3, Request for Return of an IRC 6603 Deposit, for more information. Leave a case note documenting the actions when processing manual refunds. Note: The accrual of interest stops only on the amount actually remitted by the taxpayer on the date the remittance is received. Interest continues to accrue on other unpaid amounts, including unpaid interest. Note: Some Directorships have centralized the processing of manual refunds.

# Disaster Cases

4.19.3.23.1.16 (10-10-2025) Disaster Cases When working disaster cases, approach taxpayers impacted by a disaster with sensitivity to their personal circumstances. Note: Refer systemically or self-identified disaster cases with Form 14039 and/or a police/law enforcement incident report or Form 14157 and/or Form 14157-A to the AUR IDT liaison. If the taxpayers response results in a no change, agreement, or an adjustment resulting in a refund, continue normal AUR case processing. It may be necessary to override the disaster message. See (5) below for further information. If the case is systemically identified as entitled to disaster relief (-O freeze) and a response is received, see the table below to determine the proper action to take: If Then The taxpayer indicates ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Issue a Letter 1802-C. Enter TC 290-0 in the Assessment window if the case is in Statutory Notice phase or if necessary to release a payment. The taxpayer doesn't indicate≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Attempt a phone call to see if the taxpayer would like to continue processing their case. Explain because they live in a FEMA declared disaster area, we are unable to process their case until the disaster end date unless they choose to continue Compliance activities/opts out. If the taxpayer agrees to opt out, leave a detailed case note and continue normal AUR case processing. See (5) below for further information. If the taxpayer doesn't request to continue Compliance processing or unable to reach them by phone, put the case in unit suspense until the disaster end date has passed, continue normal AUR processing. Explain this process to the taxpayer and leave a detailed case note. Caution: If the case is statute imminent, see IRM 4.19.3.23.13, Instructions Specific to Statutory Notices/Responses, for further information. Taxpayers residing outside the zip code(s) in the disaster relief memo may self-identify, indicating they were impacted by the disaster. Since the AUR System doesn't recognize the case as a disaster case, which prevents any systemic notice issuance and ensures assessment suppression, these cases require special handling to ensure notices are not issued and assessments are not made until after the disaster end date. Refer to the table below to determine the proper action to take: If Then The taxpayer self-identifies (AUR System doesn't identify the case as a disaster case) Attempt to reach the taxpayer by phone and provide them with the IRS disaster toll-free number, 866-562-5227, to self-identify for disaster relief. If unable to reach the taxpayer by phone, issue a manual letter through IAT. Send a special paragraph with the IRS toll-free disaster number, 866-562-5227, to self-identify for disaster relief. Leave a detailed case note. Enter IPC 0D, 3D, 6D or 8D, as appropriate. Caution: If the case is statute imminent, see IRM 4.19.3.23.13, Instructions Specific to Statutory Notices/Responses, for further information. The taxpayer self-identifies and indicates ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Issue Letter 1802-C. Enter 290-0 in the Assessment Window if the case is in Statutory Notice phase or if necessary to release a payment. If the case can be closed no change, agreed, the adjustment results in a refund or the taxpayer requests AUR Compliance activities continue/opt out take the following actions: Leave a detailed case note. Work the case following established IRM procedures. Note: Telephone assistors will follow IRM 4.19.3.23.2.5, Universal Case, when working the case. When entering the PC, select the "Override" prompt from the disaster message to allow notice or letter issuance or assessment. Although general compliance activities are suspended, AUR can take compliance action as necessary, such as assessing or defaulting a case to prevent barred statutes.

# Divorced/Separated Taxpayers

4.19.3.23.1.17 (10-10-2025) Divorced/Separated Taxpayers If a taxpayer files a joint return and later becomes separated or divorced, both taxpayers remain responsible for the full amount of tax due on the jointly filed return. For this reason, mail a copy of the CP 2000 or Statutory Notice to each taxpayer at their separate residences. Reminder: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Caution: Do not make any changes to the first name line when updating spousal addresses. Use the address input with Address Type "S" on any subsequent correspondence. The signatures of BOTH taxpayers are required on consent to tax increase for a jointly filed tax return that isn't fully paid. Exception: A signature (both for jointly filed returns) is required if full payment was received after the CP 3219A Notice was issued. If only one taxpayer has signed the consent to tax increase or each taxpayer signed separate consent forms that are dated differently (different IRS received dates), refer to IRM 4.19.3.23.1.17.1, Divorced/Separated Taxpayers – Single Signature on Consent, for additional information. If the response indicates the taxpayer isn't liable for the tax and there is no signed consent received for either taxpayer, determine if the non-responding spouse was issued a copy of the notice by researching the address portion of the Case History Screen, refer to AUR System Guide, Viewing Display Notice History Screen. If And Then Both taxpayers received a notice, The address of the non-responding spouse is known Issue a Letter 2626-C to both taxpayers to obtain the missing signature. Exception: If the suspense time frame on a CP 3219A Notice has expired, enter PC 90 to default the case. The non-responding taxpayer did NOT receive a copy of the notice The responding spouse provides the address Enter the non-responding spouse's address on the Update Address window using Address Type "T" , using a date that is 60 days from the current date. Issue a recomputed notice. Send PARAGRAPH 182, see Exhibit 4.19.3-7, CP PARAGRAPHS. Issue Letter 2626-C to the responding spouse to inform them that both taxpayers are jointly and separately liable for the tax and that a signed consent to tax is required. Caution: Ensure the correct address is selected for the appropriate spouse. Refer to AUR System Guide, Correspondex Letters, for additional information. The non-responding taxpayer did NOT receive a copy of the notice The address is obtained from IDRS CC INOLES or ENMOD Enter the non-responding spouse's address on the Update Address window using Address Type "S" . (Do not make any changes to the first name line.) See IRM 4.19.3.23.1.6, Address Updates. Issue a recomputed notice (which is sent to both spouses). Send PARAGRAPH 182, see Exhibit 4.19.3-7, CP PARAGRAPHS. If the address for the non-responding spouse isn't known and there is no signed consent received for either taxpayer, research IDRS using CC INOLE with a Definer of "S" or CC ENMOD. If Then The spouse's address can't be obtained Issue a Letter 2626-C to the responding taxpayer to obtain the spouse's address. The spouse's address is obtained with an address change cycle of 20XX52 or later, Follow instructions in (3) above. The taxpayer who filed a joint return may respond to a Statutory Notice that they are now divorced and/or separated and not fully liable for tax. Use the following procedures to process the case. Caution: If only one taxpayer has signed the consent to tax refer to IRM 4.19.3.23.1.17.1, Divorced/Separated Taxpayers – Single Signature on Consent. If the taxpayer is providing their address, enter the address on the Address Update window using either Address Type "I" or "S" , as appropriate. The address entered is used on any subsequent correspondence. Obtain a copy of the Statutory Notice, delete the divorced/separated spouse's address. Do not change the date on the Statutory Notice. Edit the attached CP 2000 to show any payments made by the first spouse contacted. Delete the address shown on the CP 2000 and write in the address of the spouse it is being sent to. Attach a copy of the notice to a Letter 2626-C. Use paragraph G. Note: Use extra caution to ensure that the divorced/separated spouse is the person who is listed on the return. If the Statutory Notice is sent to anyone else, it constitutes an unauthorized disclosure. See IRM 11.3.1.4, Disclosure and Safeguarding of Returns and Return Information, or IRM 10.5.4, Privacy and Information Protection, Incident Management Program, for additional information on unauthorized disclosure. Note: If speaking to the taxpayer on the phone advise the taxpayer to see Pub 504, Divorced or Separated Individuals, for additional information. If neither spouse responds to the Statutory Notice (i.e. fails to respond to the IRS and to petition the Tax Court), assess (default at the end of the Statutory period) the joint account for the full amount of the deficiency. If either spouse disagrees with the notice, (no signed consent to tax received from either spouse) contact the disagreeing spouse for resolution. If unresolved, refile the case for default.

# Divorced/Separated Taxpayers - Single Signature on Consent

4.19.3.23.1.17.1 (10-10-2025) Divorced/Separated Taxpayers - Single Signature on Consent If only one taxpayer signed the consent, the address of both taxpayers is known or the responding spouse provides the address of the non-agreeing spouse or the non-agreeing spouse's address is obtained from IDRS CC INOLE or ENMOD, update the taxpayers' addresses, as appropriate. Enter the address of the primary spouse using Address Type "T" , and an end date one year (365 days) from the current date. Edit the first name line to reflect only the primary spouse's name. Enter the address of the secondary spouse on the Address Update window using Address Type "S" . Edit the first name line to reflect only the secondary spouse's name. Caution: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Attempt to secure the non-agreeing taxpayer's consent to the tax. Determine if the non-agreeing spouse was issued a copy of the notice by researching the address portion of the History Screen, refer to AUR System Guide, Viewing Display Notice History Screen. If Then Both taxpayers received a notice Issue Letter 2626-C separately to each taxpayer. When the Address Information screen displays, enter "Y" in the INPUT MANUAL NAME LINES box; the Edit Name Information screen will display. Note: The AUR system auto-populates the name and address information from the Update Address window, for the address types which can be modified. Enter the appropriate address type in the Address box and press enter, to display the name line and address information. For example, if both taxpayers reside at the same address, enter Address Type "I" . Modify/edit the names and address lines to display each taxpayer individually. Select the addresses which need to have a letter issued by entering "Y" in the Select Address field. Press F12 to access the Create Letter window. Include a Special Paragraph to attempt to obtain the missing signature and advise the taxpayers they are jointly and separately liable for the tax, using the following verbiage as an example: "We sent a copy of our proposed changes to the other taxpayer on your joint return for the tax year listed above. When you file a joint return, both taxpayers are jointly and separately responsible for the full amount of tax owed on the return, even if you separate or divorce after you file. We are unable to continue processing your signed agreement until we have received both signatures." Reminder: Edit the salutation "Dear Primary and Secondary Taxpayer" to "Dear Taxpayer" . Leave a detailed case note to indicate which spouse agreed; for example, secondary taxpayer agreed. For TY23 and prior, input IPC S6 (CP 2000) or IPC S3 (CP 3219A). For TY24 and subsequent, input IPC S6 (CP 2000, CP 3219A). Use the MFT 31 Inventory Report to monitor the case for 45 days. The non-agreeing taxpayer did NOT receive a copy of the notice Reminder: If the case is in Stat phase and the time to petition Tax Court has expired, default the case; see (7) below. Issue a recomputed notice (which is sent to both taxpayers). Send PARAGRAPH 273 Monitor for the recomputed notice to post. Once the notice has posted request the case through Universal Work Case (UWC). See IRM 4.19.3.23.2.5, Universal Case, for further information. For TY23 and prior, input IPC S6 (CP 2000) or IPC S3 (CP 3219A). For TY24 and subsequent, input IPC S6 (CP 2000, CP 3219A). Leave a detailed case note to indicate the taxpayers are divorced/separated and identify which taxpayer agreed; for example, taxpayers are divorced and only secondary taxpayer agreed. Use the batch listing for the 89004 or 89005 batch or Agree/Non-Agree and Docketed Appeals (NPS) Suspense Inventory Report, to monitor the case for 45 days: Note: If the notice is full paid prior to the issuance of a Stat, or if both signed consents are received and have the same IRS received date, follow normal AUR agreed procedures. See IRM 4.19.3.23.7, Agreed Responses, and (5) below. If 45 days have passed And Then The case is in CP 2000 phase The spouse's signature is received or the notice is full paid Treat as agreed; see (5) below and follow the appropriate table section instructions. The case is in CP 2000 phase The spouse's signature isn't received or the notice isn't full paid Continue processing; if CP 3219A Notice issuance is necessary, issue ONLY to the non-agreeing spouse. See (4) below. The case is in Stat phase The spouse's signature is received Treat as agreed; see (5) below and follow the appropriate table section instructions. The case is in Stat phase and MFT 31 modules are not present No response is received If the primary taxpayer is the non-agreeing spouse, go to step 5. If the secondary taxpayer is the non-agreeing spouse research IDRS CC IMFOLT to determine if the SSN is invalid (an asterisk is present after the secondary SSN if it is invalid). If valid, go to step 5. If the SSN is invalid, send Form 3210 to Entity to request SSN validation; see the Invalid SSN Job Aid on the AUR Portal for additional information at AUR Research Portal IMF. Once the invalid situation is resolved, go to step 5. Caution: Failure to resolve an invalid secondary SSN will cause an unpostable condition. Leave a detailed case note. Access the Process Code window and input "P" in the MFT 31 field, if the non-agreeing spouse is the primary taxpayer. If the non-agreeing spouse is the secondary taxpayer, input "S" in the MFT 31 field. Caution: Ensure the entry in the MFT 31 field is correct. Note: When "P" or "S" is present in the MFT 31 field, at disassembly, the AUR system uploads TC 971 AC 103 to create MFT 31 modules for both taxpayers. This process can't be reversed, once the disassembly process is complete. For TY23 and prior, input IPC S3 (CP3219A). For TY24 and subsequent, input IPC S6 (CP 3219A). Use the MFT 31 Inventory Report, to monitor the case for the TC 971 AC 103 to post and await expiration of the CP 3219A Notice time frame. Once the time frame has expired, request the case. See IRM 4.19.3.23.7.1, Responses – Married Filing Joint – Single Signature on Consent, to input the default assessment. If the address for the non-agreeing taxpayer can't be obtained or isn't known: Issue a Letter 2626-C to the responding taxpayer to obtain the address using paragraph G and explain that we are unable to process the signed consent until both signatures are received using the following verbiage as an example: "We are unable to continue processing your signed agreement until we have received both signatures." Leave a detailed case note to indicate the taxpayers are divorced/separated and identify which taxpayer agreed; for example, taxpayers are divorced and only secondary taxpayer agreed. For TY23 and prior, input IPC S6 (CP2000) or IPC S3 (CP 3219A). For TY24 and subsequent, input IPC S6 (CP 2000, CP 3219A). Use the batch listing for the 89004 or 89005 batch or the Agree/Non-Agree and Docketed Appeals (NPS) Suspense Inventory Report, to monitor the case to await expiration of the notice/letter suspense time frame. Once expired, request the case and take appropriate action. If Stat issuance to the non-agreeing spouse is necessary, take the following actions: If the non-agreeing spouse is Then The primary taxpayer Go to step 1 below The secondary taxpayer Research IDRS CC IMFOLT to determine if the SSN is invalid (an asterisk is present after the secondary SSN if it is invalid). If the SSN is valid, go to step 1 below. If the SSN is invalid, send Form 3210 to Entity to request SSN validation; see the Invalid SSN Job Aid on the AUR Portal for additional information at AUR Research Portal IMF. Leave a detailed case note. Once the invalid situation is resolved, go to step 1 below. Caution: Failure to resolve an invalid secondary SSN will cause an unpostable condition. Access the Process Code window and input "P" in the MFT 31 field, if the non-agreeing spouse is the primary taxpayer. If the non-agreeing spouse is the secondary taxpayer, input "S" in the MFT 31 field. Caution: Ensure the entry in the MFT 31 field is correct. This alerts the AUR system to generate a CP 3219A Notice only to the non-agreeing spouse. Note: When "P" or "S" is present in the MFT 31 field, at disassembly, the AUR system uploads TC 971 AC 103 to create MFT 31 modules for both taxpayers. This process can't be reversed, once the disassembly process is complete. Input PC 75. If an agreed assessment is needed, see the table below: Reminder: If the notice is full paid prior to the issuance of a Stat, or if both signed consents are received and have the same IRS received date, follow normal AUR agreed procedures. See IRM 4.19.3.23.7, Agreed Responses, for additional information. Caution: If MFT 31 modules have been established, research the secondary taxpayer's MFT 31 account on IDRS to verify the name control isn't different prior to accessing the MFT 31 Assessment window. If it is different, manually correct the secondary taxpayer's name control in the MFT 31 Assessment window. Failure to make the correction will cause an unpostable condition. If the case is in Then CP 2000 phase, both taxpayers' signatures were received but have different IRS received dates and MFT 31 modules are not present Access the MFT 30 Assessment window and enter/verify the earliest IRS received date in the IRS RECEIVED DATE and CREDIT INTEREST DT fields. See IRM 4.19.3.23.12.1, The Assessment Window, for additional information. Enter/Verify the assessment data. Input "Y" in the SOURCE DOCUMENT ATTACHED field. Input "AUR agreed criteria" in the REMARKS field. Commit the Assessment window. Leave a detailed case note. Input 68. Caution: PC 67 can't be used on MFJ cases when the taxpayers' signed consents have different IRS received dates. CP 2000 phase, both taxpayers' signatures were received but have different IRS received dates and MFT 31 modules are present Access the MFT 31 Assessment window and enter/verify the following for each taxpayer: BLOCK NUM – 5X. TRANS CODE – 290.00. HOLD CODE – 4. Remove the date from the IRS-RCVD-DT field and leave the field blank. REMARKS – "AUR agreed criteria" . Caution: Remove all assessment data that no longer applies (such as, transaction and reference codes). DO NOT remove the "Y" from the "SEND PRIMARY TAXPAYER ASSESSMENT" or "SEND SECONDARY TAXPAYER ASSESSMENT" fields. Commit the Assessment window. Access the MFT 30 Assessment window and enter/verify the following: IRS RECEIVED DATE and CREDIT INTEREST DT - input the earliest IRS received date. See IRM 4.19.3.23.12.1, The Assessment Window, for additional information. Assessment data. SOURCE DOCUMENT ATTACHED field – "Y" . REMARKS - "AUR agreed criteria" . Commit the Assessment window. Leave a detailed case note. Input PC 69. CP 2000 or Stat phase, both signed consents were received AND have the same IRS received date, or the notice was full paid prior to issuance of the Stat and MFT 31 modules are not present Enter/Verify assessment data; see IRM 4.19.3.23.12, Assessments, and IRM 4.19.3.23.7, Agreed Responses, for additional information. Input PC 67/87, as appropriate. Reminder: Full payment after issuance of a Stat can't be treated as an agreement. Stat phase, both taxpayers' signatures were received but have different IRS received dates and MFT 31 modules are not present Access the MFT 30 Assessment Window and enter/verify the earliest IRS received date in the IRS RECEIVED DATE and CREDIT INTEREST DT fields. See IRM 4.19.3.23.12.1, The Assessment Window, for additional information. Enter/Verify the assessment data. Input "Y" in the SOURCE DOCUMENT ATTACHED field. Input "AUR agreed criteria" in the REMARKS field. Commit the Assessment window. Leave a detailed case note. Input PC 88. Caution: PC 87 can't be used on MFJ cases when the taxpayers' signed consents have different IRS received dates. Stat phase, both taxpayers' signatures were received but have different IRS received dates and MFT 31 modules are present Access the MFT 31 Assessment window and enter/verify the following for each taxpayer: BLOCK NUM – 6X. TRANS CODE – 290.00. HOLD CODE – 4. Remove the date from the IRS-RCVD- DT field and leave the field blank. REMARKS – "AUR agreed criteria" . Caution: Remove all assessment data that no longer applies (such as, transaction and reference codes). DO NOT remove the "Y" from the "SEND PRIMARY TAXPAYER ASSESSMENT" or "SEND SECONDARY TAXPAYER ASSESSMENT" fields. Commit the Assessment window. Access the MFT 30 Assessment window and enter/verify the following: IRS RECEIVED DATE and CREDIT INTEREST DT the earliest IRS received date. See IRM 4.19.3.23.12.1, The Assessment Window, for additional information. Assessment data. SOURCE DOCUMENT ATTACHED field – "Y" . REMARKS - "AUR agreed criteria" . Commit the Assessment window. Leave a detailed case note. Input PC 39. Note: When assessments are made on MFT 31 accounts, AUR sends the required TC 971 AC 110 at the time the assessment is uploaded. When a default assessment is needed, see IRM 4.19.3.23.7.1, Responses – Married Filing Joint – Single Signature on Consent, for additional information. If the case can be closed no change and MFT 31 modules are present, see IRM 4.19.3.23.7.1, Responses – Married Filing Joint – Single Signature on Consent, for additional information. If there is a payment(s) on the MFT 30 account, see IRM 4.19.3.23.7.1, Responses – Married Filing Joint – Single Signature on Consent, for additional information. If the non-agreeing spouse disagrees with the notice, contact them for resolution (for example, issue Letter 2626-C. For TY 23 and prior, input IPC S6 (CP2000) or S3 (CP 3219A). For TY24 and subsequent input IPC 6S (CP 2000, CP 3219A).

# Form 1040-X/Amended Return

4.19.3.23.1.18 (10-10-2025) Form 1040-X/Amended Return When the taxpayer responds to an AUR notice with a Form 1040-X or an amended return, review the Tax Account screen to determine if the adjustment posted. While the following instructions refer to Form 1040-X, they also apply for amended returns. Consider CAT A criteria when reviewing the Form 1040-X or amended return submitted by the taxpayer. CAT A criteria can be found in IRM 21.5.3-2, Examination Criteria (CAT-A) - General. Note: Form 1040-X or an amended return must be signed before it is referred to Exam. Do not refer unsigned Forms 1040-X/amended returns. When the taxpayer submits a Form 1040-X (regardless of revision date): Verify the correct tax year, the name, address and filing status. Math verify all lines and columns. Check the signatures - if joint, both taxpayers must sign the Form 1040-X. If the Form 1040-X adjustment isn't posted and meets the criteria in (4) above determine: If And Then The Form 1040-X/Amended return is in response to a CP 2000 or CP 3219A notice The figures match the tax change shown on the AUR notice Includes penalties (if any) Contains the necessary signatures, AND There are no disputing comments Input PC 67 or 87 as appropriate. See IRM 4.19.3.23.7, Agreed Responses, for additional information. The Form 1040-X/Amended return is in response to a CP 2501 The figures match the tax change shown on the AUR system Includes penalties (if any) Contains the necessary signatures, AND There are no disputing comments Access the Assessment window. See IRM 4.19.3.23.12.1, The Assessment Window, for further information. Commit (F4) the assessment. Input PC 53. The Form 1040-X/Amended return includes information that was not included in the original notice (for example, Schedule C expenses, additional dependent(s)). Reminder: Use good judgement in determining if the taxpayer is entitled to the adjustment(s). However, dependents must be verified using IDRS CC INOLES and DUPOL, see (6) and (7) below. The recomputed net tax change per AUR doesn't agree with the taxpayer's figures OR not all the AUR issues are addressed. Reminder: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Issue a revised notice to obtain the taxpayer's signature. Send PARAGRAPH 251. See Exhibit 4.19.3-7, CP PARAGRAPHS. It may be necessary to enter/verify changed amounts in the Case Analysis and Return Value screens. If the necessary adjustments can't be made using specific screens or windows, use the Miscellaneous Adjustment/Schedule C Expense window to make the necessary changes. For penalties send PARAGRAPH 171. See IRM 4.19.3.23.8, Partially Agreed, and IRM 4.19.3.23.13, Instructions Specific to Statutory Notices/Responses, for additional information. The Form 1040-X/Amended return includes information that was not included in the original notice (for example, Schedule C expenses, additional dependent(s). Reminder: Use good judgement in determining if the taxpayer is entitled to the adjustment(s). However, dependents must be verified using IDRS CC INOLES and DUPOL, see (6) and (7) below. The recomputed tax on the AUR system matches the Form 1040-X or amended return and meets agreed criteria, see IRM 4.19.3.23.7, Agreed Responses. Input IPC CR, RN, SR or DR as appropriate to issue a supplemental notice. See IRM 4.19.3.23.8, Partially Agreed, for additional information. Note: If the tax increase shown on the Form 1040-X or amended return exceeds the tax increase shown on the AUR notice, see IRM 4.19.3.23.13, Instructions Specific to Statutory Notices/Responses, for additional information. The Form 1040-X/Amended return results in no tax deficiency (for example, tax decrease) AUR issues have not been addressed. Reminder: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Attempt to resolve the issue by telephone (out call). If unable to contact the taxpayer, issue a Letter 2626-C informing the taxpayer that we were unable to accept the Form 1040-X or amended return as filed since it did not address the AUR issues. Request specific information/documentation needed to resolve the issue. Caution: Do not make adjustments to the current AUR proposal based on the Form 1040-X provided (such as, cost basis, additional expenses). Unable to determine changes to Form 1040-X or amended return Additional information/clarification is needed Attempt to resolve the issue by telephone (out call). If unable to contact the taxpayer, issue a Letter 2626-C informing the taxpayer that we were unable to accept the Form 1040-X or amended return as filed. Request a specific breakdown of the changed item(s). Note: If questionable issues are involved contact your lead/team leader for additional instruction. Research CC INOLES to validate the name or name control and social security number of dependent(s). CC INOLES displays the date of birth which can be used to determine eligibility for child tax credit, additional child tax credit, and earned income tax credit. Do not allow any exemption amount or credit if the information on Form 1040-X doesn't match data on CC INOLES. If the information matches, see (7) below. Attempt an outcall to secure the dependent's correct SSN, name or date of birth. If unable to contact the taxpayer by phone issue a Letter 2626-C, include a Special Paragraph using the following verbiage as an example: "The information you provided for the additional dependent(s) doesn't match our records. Please confirm the name, social security number and date of birth of the person(s) being added as a dependent on Form 1040-X and submit the information to us with a copy of this letter/notice." Research CC DUPOL, using the Processing Year not the Tax Year (for example, search 2023 Tax Processing Year for TY 2022 Tax Return), to verify if the additional dependent was claimed on another return as an exemption or earned income credit for the tax year in question. Review the 'DEPD STAT IND' field in the CC DUPOL response screen. This field indicates the dependent's exemption status. If Then The response is 'No Data Found' OR the value is 1 Allow the additional exemption for the dependent. The value is 0 or blank Do not allow the additional exemption for this dependent. Issue a letter including a Special Paragraph using the following verbiage as an example: "Our records indicate the additional dependent(s) claimed on your Form 1040-X have been claimed on another return. Dependents can't be claimed on more than one tax return therefore we can't allow an exemption for the additional dependent(s) claimed on your Form 1040-X." The taxpayer still disagrees and states they are entitled to claim the additional dependent(s), with or without supporting documents Refer to Exam for technical advice. Note: Consider Category A criteria for referring the case to Exam for Earned Income Tax Credit for the additional dependents per IRM 21.5.3-3, Examination Criteria (CAT-A) - Credits. Form 1040-X or an amended return must be signed before it is referred to Exam. Do not refer unsigned Forms 1040-X/amended returns. If the Form 1040-X/Amended return results in no change to original tax, there are no changes to AGI or prepayment credits AND a TC 976/977 or TC 971 AC 010, 012-016 or 120 is posted: Enter/Verify TC 290-0 in the Assessment window. Use appropriate blocking series to release the "-A" freeze. PC 47 (CP 2501), PC 70 (CP 2000) or PC 91 (CP 3219A) as appropriate. Caution: Do not use IPC CR, RN, SR or DR to create the Assessment when the tax change is zero. If the Form 1040-X was received on or before the initial AUR contact date and includes all AUR issues, don't pursue penalties. If the U/R issue is resolved, but the taxpayer states that another amount was NOT CLAIMED, UNDERCLAIMED, OR OVER-STATED on the original return AND: The taxpayer provides sufficient information, make the necessary adjustment(s); follow (4) above. Refer to IRM 21.5.1, General Adjustments, and/or IRM 21.6, Individual Tax Returns, If the taxpayer doesn't provide all the necessary information, adjust the AUR issues and close the case. Issue a Letter 1802-C, informing the taxpayer to file Form 1040-X. Be sure to mention specific documentation to support the claim. If a math error is found on the Form 1040-X and you are: Able to correct (work through), follow (5) above. Unable to correct, issue a Letter 2626-C informing the taxpayer we were unable to process the Form 1040-X as filed. Provide specific information for the taxpayer to resolve the math error. Note: If the taxpayer doesn't respond, issue a recomputed notice. Include a Special Paragraph to inform the taxpayer that we were unable to accept the return as submitted and request any additional information. If there are questionable issues involved, contact your lead/team leader for additional instruction. Form 1040-X adjustment has posted. If Then The Form 1040-X includes all U/R issues. Close the case using the appropriate no change PC. The Form 1040-X addresses all of the U/R issues BUT doesn't include the Accuracy related penalties, AND the Form 1040-X was filed AFTER the AUR contact date Pursue the penalty through the manual notice process and transfer the case to the AUR Coordinator for processing. The Form 1040-X addresses all of the U/R issues BUT doesn't include the Accuracy related penalties, AND the Form 1040-X was filed BEFORE the AUR contact date Do not pursue the penalty. Close the case with the appropriate PC. The Form 1040-X does NOT include all U/R issues Adjust the U/R by reworking the case. Send PARAGRAPH 251. See Exhibit 4.19.3-7, CP PARAGRAPHS. Send the appropriate recomputed notice for the taxpayer's signature. Ensure all windows reflect the processed Form 1040-X information/figures. The taxpayer replies that Form 1040-X reporting the income in question was filed, review the Tax Account screen. If And Then Tax Account screen shows a TC 290 Form 1040-X isn't included with the case, and the tax increase due to U/R income matches the TC 290 Close the case with the appropriate no change PC. Tax Account screen shows a TC 290 Form 1040-X isn't included with the case, and the tax increase due to U/R income does NOT match the TC 290 Order the TC 290 DLN. See IRM 4.19.3.27.7, Ordering Returns, for additional information. Tax Account screen shows a TC 977 There is no corresponding TC 290 Research AMS and EUP for the correspondence. If correspondence isn't available, contact the taxpayer to request a signed copy of the Form 1040-X. Note: The Tax Account screen will indicate if the adjustment source document is a CII document. View the CII document on AMS and see (5) above. If there is no indication of "CII" , contact the taxpayer to request a signed copy of the Form 1040-X. If the Tax Account screen doesn't show a TC 976/977 or TC 971 AC 010, 012 - 016 or 120, or the requested Form 1040-X can't be obtained: Send the appropriate letter to request a signed copy from the taxpayer. Include a paragraph using the following verbiage as an example: "You indicated the income in question was reported on Form 1040-X, however, we are unable to locate it. Please send or fax us a signed copy attached behind a copy of this letter."

# Innocent Spouse Relief Cases

4.19.3.23.1.19 (09-01-2022) Innocent Spouse Relief Cases A taxpayer who files a joint return with a spouse is generally jointly and separately liable for all tax due in that tax year. If a taxpayer believes they should not be required to pay the tax (including penalties and/or interest) for a tax year in which they filed a joint return, the taxpayer may be eligible for Innocent Spouse Relief. Caution: Do not confuse Innocent Spouse cases with Injured Spouse cases, which are worked in Taxpayer Services. The taxpayer must file Form 8857, Request for Innocent Spouse Relief, or a similar written statement signed under penalties of perjury in order to be considered for relief and a tax liability must exist. Because AUR notices are proposed tax liability changes and not bills, AUR will: Reject Form 8857 sent with responses. Advise the taxpayer to submit Form 8857 to the proper area, once tax has been charged. Process the case following normal procedures. If assessment is needed on a case with Freeze Code "L-" or a TC 604 with TC 971 AC 065, see (5) and (6) below. If a response includes Form 8857, Request for Innocent Spouse Relief, or a written request, send Letter 2626-C to the responding spouse as follows: Access the Address Update window and input the address of the spouse who submitted the Form 8857 using address type "S" . Edit the first name line to reflect only the spouse's name. Create Letter 2626-C and include a paragraph, using the following verbiage as an example: "Your request for innocent spouse relief won't be considered at this time. Once a determination is made that results in additional tax owed, you can request innocent spouse relief once the tax is charged by submitting a completed Form 8857 to the address in the form instructions." Address all response issues and include appropriate paragraphs; see IRM 4.19.3.23.10, Correspondence, for additional information. Leave a detailed case note. TC 604 with TC 971 AC 065 indicates Cincinnati Centralized Innocent Spouse Operation (CCISO) previously granted full Innocent Spouse relief to one taxpayer and mirrored the accounts. Mirrored accounts require special processing and may require TC 604 to be temporarily reversed to post an assessment; see (6) below for additional information. If an MFT 30 account has been mirrored: Open cases, the tax assessment will be input on each taxpayer's MFT 31 account using the IAT "REQ 54" tool. Changes to AGI/TXI, SE income, etc., will be made on the MFT 30 account, using the AUR Assessment window. Recon cases, changes to MFTs 31 and 30 will be input using the IAT "REQ 54" tool. Partial/full reversal of the tax assessment will be input on the MFT 31 account of the non-requesting spouse. Changes to AGI/TXI will be made on MFT 30. Note: When full relief is granted, the MFT 31 account of the requesting spouse will show a zero balance and TC 604 may be present. Note: If assistance is needed with MFT 31 assessments, consult the AUR Bankruptcy Coordinator. If Freeze Code "L-" or a TC 604 with TC 971 AC 065 is present, and an assessment is needed, see the table below for the appropriate actions to take: If Then The case is open on AUR and there is a Freeze Code "L-" on the account (there is no TC 604) Follow normal processing procedures. The case is open on AUR and there is a TC 604 with TC 971 AC 065 On each MFT 31 account input/select: Note: It may be necessary to temporarily reverse TC 604 to input the assessment on MFT 31. If TC 604 reversal is needed see (6) below. Activity - 54TAXADJ. Category - URPS. Status Code – C (closed). Received date - on agreed cases input the agreement date; see IRM 4.19.3.23.12.1, The Assessment Window, IRS Received Dt, to determine the correct agreement date. On default cases, the TCB-DT will be blank and the IRS-RECV-DT will be the date the assessment is input. Use * in the IRS-RECV-DT to populate the current date in the field. TC 290/291. Penalty (for example, TC 680, TC 170/171, 160/161). Withholding (TC 806/807). EITC (TC 764/765). Excess SST adjustments (CRN 252). Refundable credits: Additional Child Tax Credit, American Opportunity Credit and net PTC. Note: Changes to refundable credits will be netted (+ or -). The netted amount will be input with TC 766/767. For example: if the American Opportunity Credit adjustment is $766 and the Additional Child Tax Credit adjustment is -$166, the TC 766 amount is $600. Blocking Series - see IRM 4.19.3.23.12.1, The Assessment Window. Correspondence date, see IRM 4.19.3.23.12.1, The Assessment Window, for additional information. Hold Code (HC) 0. Source Document "N" . Remarks - "AUR MFT 31 IS Adj" . Priority Code (determined on a case-by-case basis). Caution: Priority Code 9 MUST be used anytime there is a change to W/H, Excess SST, EITC, and/or refundable credits or a combination of them (that is, + or – totaled into one TC 766/767). Source Code (SC) 2. Reason Codes (RC). Caution: RC 138 MUST be input anytime there is a change to W/H, Excess SST, EITC, and/or refundable credits. TCB-DT (credit interest date). Note: On agreed cases input the agreement date. See IRM 4.19.3.23.12.1, The Assessment Window, IRS Received DT, to determine the correct agreement date. On default cases, the TCB-DT will be blank and the IRS-RECV-DT will be the date the assessment is input. Use * in the IRS-RECV-DT to populate the current date in the field. On AUR enter/verify: TC 290.00 with all reference codes. Include applicable Reason Code(s) (RCs). Use the same RCs on MFT 30 and MFT 31. Exception: Do not use RC 138 on MFT 30. Source Code (SC) 2. Hold Code (HC) 4. Caution: Correct the AUR Assessment window entries to ensure none of the items included on the MFT 31 adjustment are included on the assessment uploaded by AUR. Note: Do not change the entries in the CREDIT INTEREST DATE or IRS RECEIVED DT fields. Source Document "Y" . Remarks – "AUR MFT 31 Adj" . The case is closed on AUR, there is a TC 604 with TC 971 AC 065 and Recon correspondence results in either a full or partial abatement of the AUR assessment On the MFT 31 account of the non-requesting spouse input/select: Activity - 54TAXADJ. Category - URPS. Status Code – C (closed). Received date - see IRM 4.19.3.23.12.1, The Assessment Window, IRS Received Dt, to determine the correct date to use. TC 290/291. Penalty (TC 680, TC 170/171, 160/161). Withholding (TC 806/807). EITC (TC 764/765). Excess SST adjustments (CRN 252). Refundable credits: Additional Child Tax Credit, American Opportunity Credit and net PTC. Note: Changes to refundable credits will be netted (+ or -). The netted amount will be input with TC 766/767. For example: if the American Opportunity Credit adjustment is $766 and the Additional Child Tax Credit adjustment is -$166, the TC 766 amount is $600. Blocking Series - 55 or 65, as appropriate; see IRM 4.19.3.23.12.1, The Assessment Window. Correspondence date, see IRM 4.19.3.23.12.1, The Assessment Window, for additional information. Hold Code (HC) 0. Source Document "N" . Remarks - "AUR MFT 31 NRS Recon Adj" . Priority Code (determined on a case-by-case basis). Caution: Priority Code 9 MUST be used anytime there is a change to W/H, Excess SST, EITC, and/or refundable credits or a combination of them (that is, + or – totaled into one TC 766/767). Source Code (SC) 2. Reason Codes (RC). Caution: RC 138 MUST be input anytime there is a change to W/H, Excess SST, EITC, and/or refundable credits. TCB-DT (credit interest date). On the MFT 30 account input/select: Activity - 54TAXADJ. Category - URPS. Status Code – C (closed). Received date - see IRM 4.19.3.23.12.1, The Assessment Window, IRS Received Dt, to determine the correct date to use. TC 290 .00 with all reference codes. Reminder: Do not input adjustments to tax, W/H, Excess SST, EITC and refundable credits; these are input on MFT 31. Exception: Do not use RC 138 on MFT 30. Source Code (SC) 2. Hold Code (HC) 4. Source Document "Y" . Remarks – "AUR MFT 31 IS Recon Adj" . If it is necessary to temporarily reverse the TC 604, access the appropriate MFT 31 account and use the IAT "REQ 77" tool to input the following: TC: Input "972" . TRANS-DT: Date of TC 971 input. TC 971/151-CD: Input "131" . Leave remarks: For example, "AUR MFT 31 IS Adj" . Once the TC 972 AC 131 posts, refer to (5) above information on assessment input. If a balance due remains after the adjustment posts, TC 971 AC 132 MUST BE INPUT to generate the TC 604: TC: Input "971" TRANS-DT: Date of TC 971 input. TC971/151-CD: Input "132" . Leave remarks: For example, "AUR MFT 31 IS Adj" .

# Installment Agreements

4.19.3.23.1.20 (10-10-2025) Installment Agreements To be considered an IA request, the request must be a completed Form 9465, a completed Form 433-D or a written request for a payment plan. If the taxpayer checks the Installment Agreement box in the "Indicate your payment option" section of the CP 2000 but doesn't complete a Form 9465, or Form 433-D or include a specific written request for a payment plan, DO NOT send to Collections. If the taxpayer AGREES (contains signature and no disputing comments) to the proposed AUR adjustment and STATES they can't pay, will pay later, includes Form 9465 or Form 433-D, or submits a specific written request for an installment agreement (I/A), a payment plan or requests the additional tax due be added to an existing installment agreement, close the case agreed. Verify the taxpayer's name, SSN, and Tax Year are correct on Form 9465, Form 433-D or written IA request. Efax the IA request to Collections. See Service Center Address for Collection Operations, refer to information for SBSE to determine the correct fax number. Annotate in the subject line of the efax either "Form 9465 w/AUR Assess" or "Form 433-D w/AUR Assess" as applicable. Leave AUR case note "IA request to Coll" or similar wording. Issue a Letter 1802-C (Paragraph A or B and F and W). If an installment agreement is present but the case can't be closed (e.g. a recomputed notice or letter is necessary), check the "IA" box in Case History to digitally flag the installment agreement on the case. If the Message window displays "IA Present" , the taxpayer has previously submitted an installment agreement. At the point of assessment take the following action: Verify the taxpayer's name, SSN, and tax year are correct on Form 9465, Form 433-D or written IA request. Efax the IA request to Collections. See Service Center Address for Collection Operations, refer to information for SBSE to determine the correct fax number. Annotate in the subject line of the efax either Form 9465 w/AUR Assess or Form 433-D w/AUR Assess as applicable. Leave AUR case note IA request to Coll or similar wording. Uncheck the "IA" box in Case History. If the case is closed No Change and: There is no balance due on the module leave the Form 9465, Form 433-D or written IA request with the case. Ensure the IA box in Case History is unchecked. There is a module balance, fax Form 9465, Form 433-D or written IA request to Collections following (2) step 2 above and indicate the AUR case was closed No Change. Ensure the IA box in Case History is unchecked.

# Letters From a Third-Party and Authorization From a Valid Power of Attorney (POA)

4.19.3.23.1.21 (10-10-2025) Letters From a Third-Party and Authorization From a Valid Power of Attorney (POA) Information supplied by an unauthorized third-party may be used. However, SEND NO TAX INFORMATION TO, OR DISCUSS TAX INFORMATION WITH AN UNAUTHORIZED PERSON. Any further correspondence required must be sent directly to the taxpayer. The Third-Party Designee (Check box) authority on Form 1040/ Form 1040-SR doesn't apply to Compliance issues, including AUR. Therefore don't send copies of AUR correspondence to a Third-Party Designee and don't disclose specific case or tax return information based on a Third-Party Designee check box. A completed authorization statement on the CP 2000/ CP 2501 allows the IRS to address the CP 2000/CP 2501 information with the Authorized Third-party. When communicating (orally or in writing) with an Authorized Third-Party, input the name on the Update Address window, selecting Address Type A for Authorized Third-Party. See IRM 4.19.3.23.1.6, Address Updates, for further information. Do not send copies of letters/notices to an authorized third-party. Note: If the communication results in a no change determination, or if the taxpayer agrees to the proposed tax change, the above actions are recommended, but are not mandated. Taxpayers can grant Power of Attorney to several specific categories of individuals to represent them before the IRS. While more than one individual may be named, only individuals can be named to represent the taxpayer. For example, POA authority can't be granted to a firm. These individuals must meet two eligibility criteria to represent a taxpayer: Note: If the taxpayer is deceased the POA is no longer valid. On joint returns determine if the POA is valid for the surviving spouse. If the POA is no longer valid, refer to (7) below. They must be part of a specifically authorized category of representative sanctioned by regulation (see Form 2848, Power of Attorney and Declaration of Representative, Part II for a complete list of eligible persons). They must be specifically designated by the taxpayer via a properly completed POA. Form 2848 conveniently includes all the elements required by regulation but isn't the only allowable document that can be used to grant an authorization. While the taxpayer has the discretion to grant authority to a representative to act on their behalf, the IRS has the power to determine who is eligible to practice before the IRS, consistent with Treasury regulations. Sometimes a taxpayer will sign Form 2848 authorizing someone to perform actions that are not permitted by regulation. If Form 2848 lists an ineligible representative, the form can't be accepted as an authorization to represent the taxpayer before the IRS. See (7) below. If the POA isn't valid for the surviving spouse, Form 56, Notice Concerning Fiduciary Relationship, designates a fiduciary for a decedent's estate. There is no restriction regarding the information a fiduciary can receive for the entity for whom they are acting. A fiduciary assumes the powers, rights, duties and privileges of the taxpayer(s), until notice is given that the fiduciary capacity is terminated. The submitter of the Form 56 (Most Current Revision) must indicate in Part III on line 4 the specific tax year(s)/period(s) they are authorized to receive taxpayer information). The fiduciary is instructed to check the box and provide the specific tax periods within Section B, line 5. When Form 56 is received, the following is required: The taxpayer's name line information Identifying number (SSN, ITIN, or EIN) Fiduciary name and address Note: If the taxpayer's address is missing, use the fiduciary's address. If the fiduciary address is missing, return the Form 56 back to the taxpayer. Title of fiduciary (if available) Signature of fiduciary Note: A facsimile stamped signature will be acceptable for a fiduciary. Tax forms to be filed Tax years/tax periods In order to represent a taxpayer before the IRS, a person must be authorized by Form 2848. A Form 2848 also authorizes the representative to receive confidential tax return information from the IRS. A taxpayer may authorize the IRS to discuss and provide specific confidential tax return information to any individual, corporation, firm, trust, partnership, or organization designated on Form 8821, Tax Information Authorization, but this form doesn't authorize the person to respond to the IRS on behalf of the taxpayer if the response constitutes practice before the IRS. A document/letter request may be used in lieu of Form 2848, Form 8821 or Form 56, provided it contains all the information described in (8) above or (10) below. Students working in a Low-Income Taxpayer Clinic (LITC) or Student Tax Clinic Program (STCP) can represent taxpayers under a special order by the Director, Office of Professional Responsibility. The instructions for Form 2848 require that such students attach a copy of the letter from the Office of Professional Responsibility authorizing practice before the Internal Revenue Service. Students who have been authorized to practice by special order may, subject to any limitations set forth in the letter from the Office of Professional Responsibility, represent taxpayers before any IRS office and will be viewed the same as any other taxpayer's representative for which a Form 2848 has been submitted. The taxpayer may give oral authorization to address issues with a third-party. Oral authorizations don't take the place of Form 2848 authorizing a third-party to represent the taxpayer before the IRS or Form 8821, authorizing an appointee to receive the taxpayer's confidential information. The Form 2848, Form 8821, or a document/letter in lieu of these two forms, a facsimile (FAX), or photocopy of these forms should contain relevant information requested on the Form 2848 or Form 8821, including: Note: CAF will only accept the Form 2848 with a revision date of October 2011 or later. Name, SSN, and mailing address of the taxpayer Name and mailing address of the designated representative POA or Tax Information Authorization (TIA) Type of tax (for example, income, employment) and the Federal tax form number Tax year(s) or period(s) or specific use (POA) or specific matter (TIA) The taxpayer's signature and date of signature In the case of a Form 2848, a completed Declaration of Representative (Part II) Note: For each POA listed, use the Update Address function to issue a copy of the notice to each representative. When a valid POA/TIA/Fiduciary (addressing the AUR notice) is received, input the information on the Update Address window. See IRM 4.19.3.23.1.6, Address Updates, for further information. If Then input by selecting Form 2848 box in 2 is checked Address Type P1/P2 for the primary taxpayer POA or P3/P4 for the secondary taxpayer POA. Caution: Do not input P3/P4 POA information for Married Filing Separate accounts. Form 2848 box in 2 or Form 8821, line 2 box isn't checked Address Type A1 or A2 for First or Second Authorized Third-Party. Form 8821, line 2 box is checked Address Type P1 or P2 for First or Second POA. Form 56 Address Type P1 or P2 for First or Second Authorized Third-Party. Exception: Do not input P1/P2 if C1/C2 for the same individual already exists. Note: When a valid POA/TIA is received in response to an AUR notice, the original POA/TIA/Fiduciary will remain with the case file. If the POA/TIA/Fiduciary is attached to the return or is received without a return or document and contains all the items in either (8) or (10) above, route the authorization to the appropriate CAF Function for further processing and leave a case note. If a letter request is used in lieu of Form 2848, Form 8821, or Form 56 and contains all of the items shown in (8) or (10) above, route request to the CAF Function for processing. Refer to CAF Contacts, for faxing information and leave a case note. POAs/TIAs filed for specific issues are not to be detached from the related document and sent to the CAF Function, unless the document authorizes recognition for a return in addition to the specific issue. In this case, send a copy of the POA/TIA to the CAF Function to input the return portion on the CAF system. Examples of specific issues include, but are not limited to, the following: Form 843, Claim for Refund and Request for Abatement Form 966, Corporate Dissolution or Liquidation Form W-4, Employee's Withholding Allowance Certificate Form 4361, Application for Exemption from Self-Employment Tax for Use by Ministers, Members of Religious Orders, and Christian Science Practitioners Form 1128, Application to Adopt, Change, or Retain a Tax Year Form SS-4, Application for Employer Identification Number CP 2000, Notice of proposed change to tax liability "General Power of Attorney" or "Durable Power of Attorney" generally don't contain sufficient information to process on the CAF and will be retained in the case file and treated as a third-party authorization. If, however, a general or durable power of attorney is submitted attached to a completed Form 2848 (a transmittal power of attorney), send both forms to the CAF Function for processing. Note: A durable power of attorney is effective so that a representative may transact an individual's responsibilities at a time when the individual is either incapable or incompetent to act, until the individual dies. A properly executed and effective durable power of attorney doesn't require the representative to sign a Form 2848 to act on behalf of the taxpayer. Thus, the representative may sign the taxpayer's returns, or any other form and discuss taxpayer's situation without any further authorization. When an invalid POA/TIA is received, return it to the taxpayer or authorized representative and send a Letter 2626-C with paragraph D. Do not update the update address window. See IRM 21.3.7, Processing Third-Party Authorizations onto Centralized Authorization File (CAF), for further information. When a valid POA is processed, the system generates a copy of all notices to both the taxpayer and the designated representative, unless otherwise indicated. The POA address(es) automatically displays when sending a letter, but the tax examiner must select the address. If the taxpayer requests in writing that a current POA be revoked or the representative indicates that they want to withdraw from the representation and that no further information should be sent to this representative, handle the revoked/withdrawn POA request by the following instructions: Photocopy the correspondence and send the copy to the CAF Function for processing. Transfer the case to unit suspense. Monitor for the TC 961 to post on IDRS to ensure information isn't sent to a POA who has withdrawn from representing or to whom the taxpayer has revoked their authorization.

# Schedule D Changes

4.19.3.23.1.22 (10-10-2025) Schedule D Changes Take the following steps to ensure the system uses losses in excess of $3,000 ($1,500 if MFS) to offset against U/R Schedule D income: If And Then The taxpayer identifies that the U/R gains from STOCK, CG, REAL or Schedule D NEC/MERCH income can be reduced by current unused Schedule D losses States any of the following: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Enter/Verify the Income Identify Code(s) ("SD" or "ST" ) for the U/R STOCK/REAL IR(s) the taxpayer is addressing on the new or revised Schedule D/Form 8949. Note: Modify IR(s) when the taxpayer has split the sale income as both a short-term and long-term sale. Ensure the COMPUTE SCHEDULE D LOSS window is accessed and enter the correct values per return in the SCHEDULE D LOSS and the CAPITAL GAIN/LOSS fields. Enter the negative Schedule D, line 16 amount in the SCHEDULE D LOSS field. If the amount is a positive amount, leave blank. Enter the Form 1040, Line 7 amount in the CAPITAL GAIN/LOSS field. If the line is a loss, enter as a negative amount. Adjust any U/R STOCK/REAL by any cost basis information provided. Note: See IRM 4.19.3.23.5.17, Securities Sales, and IRM 4.19.3.23.5.17.1, Cost Basis - Responses, for further information. The taxpayer identifies that the U/R gains from STOCK, CG, REAL or Schedule D NEC/MERCH income can be reduced by current unused Schedule D losses Does not address the carryover losses have been or will be adjusted Enter/Verify the Income Identify Code(s) ("SD" or "ST" ) for the U/R STOCK/REAL IR(s) the taxpayer is addressing on the new or revised Schedule D/Form 8949. Note: Modify IR(s) when the taxpayer has split the sale income as both a short-term and long-term sale. Ensure the COMPUTE SCHEDULE D LOSS window is accessed and enter the correct values per return in the SCHEDULE D LOSS and the CAPITAL GAIN/LOSS fields. Enter the negative Schedule D, line 16 amount in the SCHEDULE D LOSS field. If the amount is a positive amount, leave blank. Enter the Form 1040, Line 7 amount in the CAPITAL GAIN/LOSS field. If the line is a loss, enter as a negative amount. Adjust any U/R STOCK/REAL by any cost basis information provided. Note: See IRM 4.19.3.23.5.17, Securities Sales, for further information. Issue a recomputed notice or a Letter 1802-C. Inform the taxpayer the current unused Schedule D losses need to be adjusted for future filings. The taxpayer may claim additional Schedule D losses if they reported either a gain or a capital loss of less than $3,000 ($1,500 if MFS). Enter/Verify the Income Identify Code(s) ("SD" or "ST" ) for the U/R STOCK/REAL IR(s) the taxpayer is addressing on the new or revised Schedule D/Form 8949. Adjust any U/R STOCK/REAL by any cost basis information provided. Note: See IRM 4.19.3.23.5.17, Securities Sales, and IRM 4.19.3.23.5.17.1, Cost Basis -Responses, for further information. Select the COMPUTE SCHEDULE D LOSS window and enter the correct values per return in the SCHEDULE D LOSS and the CAPITAL GAIN/LOSS fields. Enter the negative Schedule D, line 16 amount in the SCHEDULE D LOSS field. If the amount is a positive amount, leave blank. Enter the Form 1040, Line 7 amount in the CAPITAL GAIN/LOSS field. If the line is a loss, enter as a negative amount. The TOTAL AGI CHANGE field will include the additional losses up to the maximum of $3,000 ($1,500 if MFS). Reminder: If taxpayer's original Schedule D was limited to the maximum capital loss of $3,000, the per return figures MUST be input in the COMPUTE SCHEDULE D LOSS window. If the CP 2000 was issued because the taxpayer reported ordinary dividends on Schedule D, reduced by cost or other basis, and the taxpayer states that the income is other than ordinary dividends: Accept if the taxpayer provides documentation. If the taxpayer doesn't provide documentation, issue a Letter 2626-C. Send a paragraph using the following verbiage as an example: "The dividend income in question was reported to IRS as ordinary income and isn't subject to capital gains treatment. Please contact the payer for written verification that the information furnished to us is incorrect. We are unable to change our proposal without this information." If issuing a recomputed notice, send PARAGRAPH 52. See Exhibit 4.19.3-7, CP PARAGRAPHS. If you determine U/R NEC/MERCH should be reported on Schedule D: Input Income Identify Code "SD" if U/R NEC/MERCH amount(s) is a long-term capital gain/loss (Schedule D, Part II). Input Income Identify Code "ST" if U/R NEC/MERCH amount(s) is a short-term capital gain/loss (Schedule D, Part I). Note: Income Identify Codes "SD" and "ST" enable the system to compute the Schedule D tax if applicable. See IRM 4.19.3.14.2, Schedule D Tax Window, for further instructions. Follow the procedures in (1) above. If the taxpayer response indicates U/R STOCK amount(s) are other than a short-term capital gain/loss: Input Income Identify Code "SD" if the U/R STOCK amount(s) is determined to be a long-term capital gain/loss, or Delete the Income Identify Code if the U/R STOCK amount(s) don't belong on Schedule D/Form 8949. Leave the Income Identify Code blank or input the appropriate Income Identify Code for the income to be treated as subject to SE tax.

# Spousal Notices

4.19.3.23.1.23 (09-04-2015) Spousal Notices A second CP 2000/ CP 2501 may be generated for the spouse whenever the secondary spouse address changed from the year of liability to the year of the latest filed return. The second notice is an exact duplicate of all the information contained in the original notice mailed to the primary taxpayer with the exception that the second notice contains the current address of the secondary taxpayer. The AUR system makes a request to the National Account Profile (NAP) to research and provide address information for the secondary SSN. If there is a match, the address updates on the system and a notice generates to the primary and secondary SSN. If the tax examiner enters a spousal address on the Update Address window, no systemic search for the spousal address is performed. The tax examiner entered address supersedes the systemically generated address.

# Return Preparer Misconduct (RPM)

4.19.3.23.1.24 (10-02-2024) Return Preparer Misconduct (RPM) Unscrupulous return preparers may alter taxpayer tax data and/or misdirect a portion or all of the refund. Taxpayers may become aware of misconduct through taxpayer initiated contact or through IRS correspondence and may submit Form 14157, Complaint: Tax Return Preparer, and/or Form 14157-A, Tax Return Preparer Fraud and Misconduct Affidavit. When a taxpayer states a preparer altered tax return data or misdirected a portion of or all of the refund, telephone assistors will research IDRS CC ENMOD or IMFOLE for an existing TC 971 AC 504 with the literal RPMX (X represents a numeric value of 1 through 4) of the AUR tax year. If present, take the following action: Leave a detailed case note. Close the case no change following normal AUR procedures. If there is no TC 971 AC 504 with the literal RPM for the current tax year take the following action: Advise the taxpayer to complete and return both Form 14157, Complaint: Tax Return Preparer, and Form 14157-A, Tax Return Preparer Fraud and Misconduct Affidavit. Inform the taxpayer additional information is available on IRS.gov and search keyword preparer misconduct. Leave a detailed case note. When working responses and a taxpayer states a preparer altered tax return data or misdirected a portion of or all of the refund, take the following action: If Then There is no Form 14157 and/or Form 14157-A present Research IDRS CC ENMOD for an existing TC 971 AC 504 with literal RPM, for the AUR tax year. If present, close the case no change following normal AUR procedures and go to step 7. If not present, follow steps 4-7. Issue Letter 2626-C advising the taxpayer to complete and return both Form 14157 and Form 14157-A. Inform the taxpayer additional information is available on IRS.gov and search keyword "preparer misconduct" . Input IPC 6L, or 8L as appropriate. Leave a detailed case note. Form 14157 and/or Form 14157-A is present Leave a detailed case note. Transfer to the designated SEID. Place in the designated area for the AUR IDT liaison.

# Identity Theft (IDT) Claims - Overview

4.19.3.23.1.25 (10-02-2024) Identity Theft (IDT) Claims - Overview For cases in Subfile P, AUR will disregard the TC 971 ID Theft indicator(s) and continue normal AUR processing. If issuing a notice, Paragraph 45 will automatically generate. See Exhibit 4.19.3-7, CP PARAGRAPHS. The IRS established Identity Theft Victims Assistance Specialized Teams (IDTVA). The IDTVA tax examiner will be the taxpayer's single point of contact (SPOC) for IDT and other account related issues. All cases with a Form 14039, Identity Theft Affidavit, and/or a police/law enforcement incident report received in AUR will be referred to the IDTVA by the AUR IDT Liaison. The IDTVA makes all IDT account determinations and performs Complete Case Analysis. After all IDT account related issues/actions are completed, the cases are referred back to AUR for processing/closure. An allegation or claim of identity theft is identified by the presence of Form 14039, Identity Theft Affidavit, a police/law enforcement incident report or key words/phrases such as ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. IDTVA scans all correspondence into AMS/CII. It may be necessary to access AMS/CII to review the information, including potential research on other than the AUR tax year, when working cases previously referred then reintroduced in the AUR Program. Note: It may be necessary to research years other than the AUR tax year because documents are filed under the earliest year listed on Form 14039. Caution: Scanned documents are associated with the SSN of the taxpayer claiming identity theft. If the return is MFJ it may be necessary to research both SSNs, if applicable, access AMS/CII to view the return.

# IDT General

4.19.3.23.1.25.1 (10-10-2025) IDT General In situations where the taxpayer makes an allegation of identity theft, such as ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, when working scanned paper responses, or when answering incoming toll-free calls. Research IDRS CC ENMOD or IMFOLE for an IDT indicator, TC 971 AC 5XX. If there is a TC 971 AC 5XX with literals shown in the table below, see IRM 4.19.3.23.1.25.3, IDT Claims - Responses, for further information. AC Literal 501 ALTRD, DECD, ICMCCA, INCMUL, INCOME, MULTFL, NOFR, OTHER, PRISNR, REFCCA 504 ACCT, ACCT-M,EMPL, EMPL-M, ICMCCA, NKI, NKI-MRPMX 505 There is no literal for this Action Code 506 DDB, DECD,INCMUL, INCOME, MULTFL, NOFR, OTHER, OTHER1, PRISNR, 522 PNDCLM or UNWORK 522 INCOME, MULTFL, INCMUL, NOFR, OTHER, if the identity theft claim was made prior to April 3, 2017 524 There is no literal for this Action Code 525 There is no literal for this Action Code 528 TPRQ and DEPND When a case has multiple IDT indicators, the case is processed as follows: If there are multiple unreversed IDT indicators for the AUR tax year Then Input on various dates Process the case based on the most recent IDT indicator. Input on the same date, and these are the most recent IDT indicators Consider all these IDT indicators. If one indicates the case should be closed no change but another indicates some other action should be taken, such as, transfer the case to the AUR IDT Liaison; take the other action. DO NOT close the case no change. If there is no IDT TC 971 indicator immediately input TC 971 AC 522 with the appropriate literal, using the IAT REQ 77 tool to input on ENMOD, taking the following steps: Exception: If there is an existing TC 971 AC 522 PNDCLM/UNWORK for the same tax year, DO NOT apply a second TC 971 with a matching literal. Note: Ensure IDRS updates are made for the correct taxpayer. Note: If multiple tax years are involved enter TC 971 AC 522 for each year. In the Transaction Code Field enter 971. In the 971/151 Code field enter 522. In the Secondary Date field enter the AUR Case Year as 1231YYYY. In the Miscellaneous Field, enter SBSE AUR PNDCLM if the taxpayer doesn't provide a completed Form 14039 or police/law enforcement incident report. Enter WI ITVAC UNWORK if the taxpayer provides a completed Form 14039 or police/law enforcement incident report In the Remarks field enter IDT. If there is an existing TC 971 AC 522, verify the IDRS CC ENMOD updates were made for the correct taxpayer. If it is determined the IDRS updates were made to the incorrect taxpayer, (for example, the secondary taxpayer (spouse) is the victim and the indicator was placed on the primary), input a reversal to the primary taxpayer account by inputting a TC 972 by taking the following steps: In the Transaction Code field enter 972. In the 971/151 Code field enter 522. In the Miscellaneous field, enter the literal that was input on the original TC 971. In the Secondary Date field enter the transaction date of the corresponding TC 971 AC 522 being reversed. In the Remarks field enter IDT. Input a TC 971 AC 522 with the appropriate literal for the correct taxpayer. Note: To avoid an unpostable condition when inputting any TC972 reversal, enter the transaction date of the corresponding TC 971 AC 5XX being reversed. Determine if the case is already assigned to or has already been referred to IDTVA; look for a case note indicating referral to IDTVA, IPC SI, or an IDRS control using CC TXMODA with a category of IDIX, IDSX,or IDTX (X represents a numeric value, for example, IDI2 is used when the case is assigned to IDTVA). If it is determined during the call the case is assigned to IDTVA provide the taxpayer with the IDTVA contact information shown in (4) below. If the taxpayer states they have lost, misplaced or did not receive their Identity Protection PIN (IP PIN) and needs a replacement, advise the taxpayer to contact IDTVA at 800-908-4490, for assistance. Telephone assistors refer to IRM 4.19.3.23.1.25.2, IDT Claims – Telephone, for additional information and if working responses refer to IRM 4.19.3.23.1.25.3, IDT Claims - Responses. If responses/RECONs with a Form 14039, Identity Theft Affidavit, and/or a police/law enforcement incident report are found in any response batches, transfer the case to the AUR IDT liaison for referral to the IDTVA.

# IDT Claims - Telephones

4.19.3.23.1.25.2 (10-10-2025) IDT Claims - Telephones If the taxpayer makes a claim of identity theft determine if the taxpayer has submitted Form 14039, Identity Theft Affidavit or police report/law enforcement report and take one of the following actions: If the taxpayer states they haven't submitted Form 14039, see (2) below. If the taxpayer states they have submitted Form 14039, see (3) below. Reminder: IDT indicators must be for the AUR tax year. If there is no Form 14039 submitted, take the following actions: Caution: Research IDRS CC ENMOD and if the TC 971 AC 501, 504, 505, or 506 has been reversed with a corresponding TC 972 - continue normal AUR processing. If there is a TC 972 AC 522 or a AC 522 with literals NOIDT, NORPLY, or IRSERR, see IRM 4.19.3.23.1.25.3 IDT Claims - Responses, for further information. If And Then There are no IDT indicators or There is a TC 971 AC 505, 506 (with or without the literal WI PRP), 525, 528 (with literals TPRQ or DEPND) or There is a TC 971 AC 522 with literals PNDCLM or IRSID N/A Advise the taxpayer to submit Form 14039 or a police report/law enforcement report and follow steps 3-6 below the table Input a TC 971 AC 522 PNDCLM if one isn't already present. See IRM 4.19.3.23.1.25.1, IDT General, for further information. Caution: Ensure the literal PNDCLM is input on the appropriate taxpayer account. Leave a detailed case note. There is a TC 971 AC 501 or a TC 971 AC 504 with literals ACCT, ACCT-M, EMPL, EMPL-M, ICMCCA, NKI, NKI-M or a TC 971 AC 506 (without literal WI PRP) or TC 972 AC 522 A revised notice was issued or partial adjustment was made after IDTVA made their determination and the taxpayer states some or all of the remaining issues is the result of IDT or The taxpayer disagrees with the determination from IDTVA Advise the taxpayer to respond to our notice by providing a written response indicating the income they disagree with. Inform the taxpayer to refer to the letter sent by IDTVA and follow the instructions. If the taxpayer hasn't received a letter from IDTVA, provide them with the following contact number for assistance, 800-908-4490. Leave a detailed case note. There is a TC 971 and AC 504 with literal RPMX (X represents a numeric value of 1 through 4) of the AUR tax year Caution: Verify the taxpayer isn't confusing Return Preparer Misconduct (RPM) with IDT N/A Refer them to the following contact number for assistance, 800-908-4490. If the case is controlled at your site, request the case via UWC. Exception: If the case is unavailable through UWC, notify the AUR IDT liaison via secure email that the case needs to be referred to IDTVA and leave a detailed case note. Leave a detailed case note. Close the case no change following normal AUR procedures. If the case is NOT controlled at your site, check the action required box. Exception: For statute imminent cases, contact the AUR Coordinator at your site. If none of the above is present, input TC 971 AC 522 PNDCLM, as appropriate, using the IAT "REQ77" tool to input on ENMOD. See IRM 4.19.3.23.1.25.1, IDT General, for further information. Exception: If there is an existing TC 971 AC 522 PNDCLM/UNWORK for the same tax year, DO NOT apply a second TC 971 with a matching literal. Attempt to secure Form 14039 or a police/law enforcement incident report via fax. If the taxpayer faxes the document(s) in while on the call, advise them their case is being referred to the Identity Theft Victims Assistance, and if additional information is needed a representative from that area will contact them. Forward the faxed document to clerical to upload into the AUR system and notify the AUR IDT Liaison. If the taxpayer indicates Form 14039 or a police/law enforcement incident report will be sent later, advise them once their document(s) is received, their case will be referred to the Identity Theft Victims Assistance, and if additional information is needed a representative from that area will contact them. Inform the taxpayer they should contact the Federal Trade Commission at 877-438-4338 or IdentityTheft.gov and that they should make a report to their local police and the three major credit bureaus. For additional information, visit IRS.gov key word "Identity Theft" or see Pub 5027, Identity Theft Information for Taxpayers. Ask the taxpayer which income issues are a direct result of the identity theft. Leave a detailed case note documenting the call and actions taken. If the taxpayer states they have submitted Form 14039, research AMS/CII and/or the RESPONSE tab in the Case History screen to verify the receipt of the form and take the following actions: Note: If unable to locate Form 14039, see (2) above. Request a copy of the Form 14039 from the taxpayer. Caution: Research IDRS CC ENMOD and if the TC 971 AC 501, 504, 505, or 506 has been reversed with a corresponding TC 972 - continue normal AUR processing. If there is a TC 972 AC 522 or a AC 522 with literals NOIDT, NORPLY, or IRSERR, see IRM 4.19.3.23.1.25.3 IDT Claims - Responses, for further information. If And Then There are no IDT indicators on the account or There is a TC 971 AC 504 with the literal RPM(X)(X represents a numeric value of 1 through 4) of the AUR tax year There is a TC 971 AC 505, 506 (with or without the literal WI PRP), 525, 528 (with literals TPRQ or DEPND), or There is a TC 971 AC 522 with literals PNDCLM or IRSID N/A If the case is controlled at your site, request the case via UWC. Exception: If the case is unavailable through UWC, notify the AUR IDT liaison via secure email that the case needs to be referred to IDTVA and leave a detailed case note. Follow steps 4–6 in (2) above. Transfer case and notify the AUR IDT Liaison. If the case is NOT controlled at your site, check the action required box. Exception: For statute imminent cases, contact the AUR Coordinator at your site. There are no IDT indicators on the account or There is a TC 971 AC 504 with the literal RPM(X)(X represents a numeric value of 1 through 4) of the AUR tax year There is a TC 971 AC 505, 506 (with the literal WI PRP), 525 or There is a TC 971 AC 522 with literals PNDCLM or IRSID The response has been referred to IDTVA Note: To determine if the case has been referred to IDTVA check for an AUR case note and/or IPC SI (TY 2023 and prior) or T3 (TY 2024 and subsequent) Refer taxpayer to IDTVA at 800-908-4490, for assistance. There is a TC 971 AC 501 There is a TC 971 AC 504 with literals ACCT, ACCT-M, EMPL, EMPL-M, ICMCCA, NKI, NKI-M or a TC 971 AC 506(without literal WI PRP) or TC 972 AC 522 A revised notice was issued or partial adjustment was made after IDTVA made their determination and the taxpayer states some or all of the remaining issues is the result of IDT or The taxpayer disagrees with the determination by IDTVA Advise the taxpayer to respond to our notice by providing a written response indicating the income they disagree with. Inform the taxpayer to refer to the letter sent by IDTVA and follow the instructions. If the taxpayer hasn't received a letter from IDTVA, provide them with the following contact number for assistance, 800-908-4490. Leave a detailed case note. If the taxpayer indicates ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ advise the taxpayer to submit a signed statement indicating they did not file or that they did not have a filing requirement with a completed Form 14039 or a police/law enforcement incident report. Leave a detailed case note outlining the taxpayer response and actions taken (for example, "Taxpayer response didn't file and/or has no filing requirement. Requested signed statement and Form 14039." ). If the cases is closed with PC 26, advise the taxpayer to contact IDTVA at 800-908-4490 for the status of their claim. If the taxpayer is claiming IDT and the case is closed off the AUR system, see IRM 4.19.3.27, AUR Reconsideration (RECON) Cases, for further information.

# IDT Claims - Responses

4.19.3.23.1.25.3 (10-10-2025) IDT Claims - Responses For cases in Subfile P, AUR will disregard the TC 971 ID Theft indicators(s) and continue normal AUR processing. Exception: If the case in Subfile P AND the taxpayer makes a new claim of ID theft, follow procedures below. Research IDRS CC ENMOD and if TC 971 AC 501, 504, 505, or 506 has been reversed with a corresponding TC 972, continue normal AUR processing. If there is a TC 972 AC 522 or a AC 522 with literals NOIDT, NORPLY, or IRSERR take the following actions: If the taxpayer is disputing the taxability of the income, continue normal AUR processing. The taxpayer claims some or all of the issues should be included as part of their IDT claim, transfer and notify the AUR IDT Liaison. If the taxpayer responds with a completed Form 14039, Identity Theft Affidavit or a police/law enforcement incident report, transfer and notify the AUR IDT Liaison, for case processing. If a case involves a claim of identity theft and Innocent Spouse, see the table below for the proper action to take: If Then There is Form 8857 and Form 14039 or a police/law enforcement incident report Access the Address Update window and input the address of the spouse who submitted the Form 8857 using Address Type "S" . Edit the first name line to reflect only the spouse's name. Create Letter 2626-C and select paragraph H. Leave a detailed case note. Transfer the case and notify the AUR IDT Liaison. There is Form 8857 and a claim of identity theft but no Form 14039 or police/law enforcement incident report Input TC 971 AC 522 with literal PNDCLM on the impacted taxpayer module, if applicable, using the IAT REQ77 tool. See IRM 4.19.3.23.1.25.1, IDT General, for further information. Caution: Ensure the literal PNDCLM is input on the appropriate taxpayer account. Access the Address Update window and input the address of the spouse who submitted the Form 8857 using Address Type "S" . Edit the first name line to reflect only the spouse's name. Create Letter 2626-C to request Form 14039 or a police/law enforcement incident report, a written statement for each AUR issue, and include a paragraph, using the following verbiage as an example: "Your request for innocent spouse relief won't be considered at this time. When a determination is made that results in additional tax owed, you can request innocent spouse relief once the tax is charged by submitting a completed Form 8857 to the address in the form instructions." Leave a detailed case note. Input the appropriate IPC and release the case. If the response indicates the taxpayer ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡and the AUR system (Entity under Ref Tools) shows there is a PNDCLM or no IDT indicators present, use the IAT aMend tool, research portion, to determine Scrambled SSN or Mixed Entity. If the case meets the criteria, take the following action: Leave a detailed case note. Prepare Form 4442 for referral to TS and close PC 52, 71 or 92 or IPC 9R, as appropriate. If the Taxpayer indicates the U/R income was the result of identity theft, their SSN is being used illegally, or there are IDT indicators on BT 84 case and the AUR system (Entity under Ref Tools) shows an unreversed TC 971, AC 501, 504, 506, 522, 523, 524 or 525 see the table below to determine appropriate action to take: Exception: The AUR system doesn't update entity information on closed cases. IDRS CC ENMOD research will be necessary. If Then There is a TC 971 AC 522 with literal PNDCLM or AC 525 with no literals or AC 504 EFAIL, SPCL1, SPCL2 Research AMS/CII for Form 14039 or police/law enforcement incident report. Reminder: It may be necessary to research years other than the AUR tax year because documents are filed under the earliest year listed on Form 14039. If AMS/CII includes a copy of a Form 14039 or police/law enforcement incident report then: Leave a detailed case note. Transfer and notify the AUR IDT Liaison. If AMS/CII doesn't include a copy of Form 14039 or police/law enforcement incident report and/or there are no IDT indicators present: Input TC 971 AC 522 with literal PNDCLM. Caution: Ensure the literal PNDCLM is input on the appropriate taxpayer account. Send Letter 2626-C using paragraph T requesting Form 14039 or police/law enforcement incident report. Leave a detailed case note. Input IPC 6L or 8L as appropriate. There is a TC 971 with AC 501 with the literals ALTRD, DECD, ICMCCA, INCMUL, INCOME, MULTFL, NOFR, OTHER, PRISNR, REFCCA, or AC 504 with the literals ACCT, ACCT-M, EMPL, EMPL-M, ICMCCA, NKI, NKI-M Leave a case note. Transfer and notify the AUR IDT Liaison. AC 504 with literal RPMX (X represents a numeric value of 1 through 4) of the AUR tax year. Leave a detailed case note. Close the case no change following normal AUR procedures. AC 505, 506, or 528 (with literal TPRQ or DEPND) Send Letter 2626-C using paragraph T requesting Form 14039 or police/law enforcement incident report. Leave a detailed case note. Input IPC 6L or 8L as appropriate. AC 524 Follow IRM 4.19.3.5.5, Deceased Taxpayers, and IRM 4.19.3.23.1.14, Decedents. If Form 14039 or police/law enforcement incident report was previously requested but the taxpayer doesn't provide the requested document(s) take the following actions: Issue a Letter 2626-C to address the taxpayer's correspondence. Include a paragraph to advise the taxpayer we are not able to consider their IDT claim because Form 14039 or police/law enforcement incident report was not provided. Research the AUR system (Entity under Ref Tools) for an AUR initiated TC 971 AC 522 SBSE AUR PNDCLM for the tax year in question. If present, reverse using NORPLY. See IRM 4.19.3.23.1.25.1, IDT General, for further information. Input the appropriate process code to move the case to the next phase.

# AUR IDT Liaison Responsibilities

4.19.3.23.1.25.4 (10-10-2025) AUR IDT Liaison Responsibilities The AUR IDT Liaison is responsible for: Managing IDT and RPM referrals (both to IDTVA and from IDTVA). Input of the closing PC when the case is returned from IDTVA. Reviewing all cases meeting referral criteria and Form 4442 prior to sending to IDTVA. Monitoring cases sent to IDTVA for 120 days, see (9) and (10) below. Tracking all the time they spend working on IDT, see IRM 4.19.3.23.1.25, Identity Theft (IDT) Claims - Overview There will be five types of cases that will require action by the AUR IDT liaison: Cases received from clerical with Form 14039 or police/law enforcement incident report. Cases received from clerical with Form 14157 and/or Form 14157-A. Cases received where the TE has determined the case needs to be sent to the IDTVA, for example, action required box is checked, case criteria meets IDTVA referral requirements; such as the existing IDT markers on the account require IDTVA referral. Form 4442 referrals from the AUR Coordinator. Conditions are met for IDTVA referral when there is a TC 971 AC 5XX. See the tables in IRM 4.19.3.23.1.25.2, IDT Claims - Telephones and IRM 4.19.3.23.1.25.3, IDT Claims - Responses, for further information. When an incoming response contains a Form 14039, Identity Theft Affidavit, and/or a police/law enforcement incident report, Form 14157, Complaint: Tax Return Preparer, and/or Form 14157-A, Tax Return Preparer Fraud and Misconduct Affidavit, clerical will transfer the case, and notify the AUR IDT liaison for referral to the IDTVA. Exception: Incoming Recon responses containing either Form 14039 and/or a police/law enforcement incident report or Form 14157 and/or Form 14157-A will be routed directly to IDTVA by clerical. Note: Refer cases with Form 14039 and/or a police/law enforcement incident report or Form 14157 and/or Form 14157-A which are systemically or self-identified disaster cases, to IDTVA (see (4) below), and identify the case as a disaster case in the case note. When an incoming response contains a Form 14039 or police/law enforcement incident report, take the following actions: Leave a case note indicating case is being referred to IDTVA. The case note must also include the following: Tax year(s) impacted, if known, indication of any Statute issues, see (7) below for additional action(s) if required, date of the Statutory Notice of Deficiency and last day to petition if applicable (Statutory Notice phase cases will also be flagged with the last day to petition noted on the flag), indication of Collection issues. Note: Include in the case note a detailed description of conversations from eGain, chatbots, and phone calls. Input the IRS received date on AUR on open cases, if not present. Input the appropriate identity theft IPC SI (TY 2023 and prior) or T3 (TY 2024 and subsequent). See Exhibit 4.19.3-3, Internal Process Codes, for further information. Close AUR IDT IDRS control, if present. Enter/Verify input of TC 971 AC 522 UNWORK, on IDRS CC ENMOD as appropriate. Input IDRS CC TXMODA/STAUP for 15 cycles, as needed. Exception: If the case is in collection status, input TC 470 on IDRS. See Exhibit 4.19.3-14, Notice Delay Actions (Reconsiderations). Complete Form 3210, Document Transmittal. Route digitally to IDTVA to mailbox *TS AUR ID Theft Referrals notating - AUR ID Theft Referral from XSC or XXSC (X or XX = Service Center) in the subject line of the email. Note: Ensure documentation from eGain is uploaded to the AUR system prior to sending to IDTVA. When the taxpayer provides Form 14157, Complaint: Tax Return Preparer, and/or Form 14157-A, Tax Return Preparer Fraud and Misconduct Affidavit, take the following actions: Leave a case note indicating the case is RPM and is being referred to the IDTVA. Input the appropriate identity theft IPC SI (TY 2023 and prior) or T3 (TY 2024 and subsequent). See Exhibit 4.19.3-3, Internal Process Codes, for further information. Input CC STAUP for 15 cycles, as needed. Exception: If the case is in collection status, input TC 470 on IDRS. See Exhibit 4.19.3-14, Notice Delay Actions (Reconsiderations). Complete Form 3210 and route digitally to IDTVA to mailbox *TS AUR ID Theft Referrals notating - AUR RPM Referral from XSC or XXSC (X or XX = Service Center) in the subject line of the email. When a case is referred by a tax examiner in RECON phase with Form 14039, or Form 14157, and/or Form 14157-A, complete Form 3210 and route digitally to IDTVA mailbox *TS AUR ID Theft Referrals notating - AUR IDT or RPM Referral from XSC or XXSC (X or XX = Service Center) in the subject line of the email. There may be cases where the ASED needs to be recomputed/extended when the case is statue imminent. If And Then AUR (IDT or RPM) case is statute imminent at the time of referral; 90 days or less remaining Statutory Notice of Deficiency has been issued Input TC 560, as applicable, prior to referral to the IDTVA. Refer to IRM 4.19.3.23.13, Instructions Specific to Statutory Notices/Responses. Refer to the IDTVA following the procedures in (4) and (6) above. AUR (IDT or RPM) case is statute imminent at the time of referral; 90 days or less remaining Statutory Notice of Deficiency has not been issued If the case is an IDT case: Ensure Letter 1802-C is issued to inform the TP they'll receive a Notice of Deficiency and their claim of identity theft is being referred to the appropriate area for processing. Use the following verbiage as an example "We received your Identity Theft claim and are referring your case to Identity Theft Victims Assistance. An examiner will be assigned to your case and will contact you within 60 days. You will receive a Statutory Notice of Deficiency in the near future." Input PC 75 or 77, as applicable. Refer the case to IDTVA; following (4); steps 1, 2 and 5 - 8 and (5), above. Monitor the case for notice issuance, and once issued, request the case. Input the appropriate identity theft IPC SI (TY 2023 and prior) or T3 (TY 2024 and subsequent). See Exhibit 4.19.3-3, Internal Process Codes, for further information. If the case is an RPM case: Ensure Letter 1802-C is issued to inform the taxpayer they'll receive a Notice of Deficiency and their claim of RPM is being referred to the appropriate area for processing. Use the following verbiage as an example: "We received your Tax Return Preparer Misconduct complaint and are referring your case to Identity Theft Victim Assistance. An examiner will be assigned to your case and will contact you within 60 days. You will receive a Statutory Notice of Deficiency in the near future." Input PC 75 or 77, as appropriate. Refer the case to the IDTVA, per (6), above. Monitor the case for notice issuance, and once issued, request the case. Input the appropriate identity theft IPC SI (TY 2023 and prior) or T3 (TY 2024 and subsequent). See Exhibit 4.19.3-3, Internal Process Codes, for further information. AUR (IDT or RPM) case becomes statute imminent while the case is in suspense; IPC SI (TY 2023 and prior) or T3 (TY 2024 and subsequent). See Exhibit 4.19.3-3, Internal Process Codes, for further information. Statutory Notice of Deficiency has not been issued IDTVA will notify the AUR IDT liaison no later than March 15th of the statute year that the case can be either closed no change or returned to AUR inventory. If the case isn't, or can't be returned to AUR, take the following actions: Inform IDTVA that AUR is issuing the Statutory Notice of Deficiency. Input PC 75 or 77, as applicable. Monitor the case for notice issuance, and once issued, request the case. Input the appropriate identity theft IPC SI (TY 2023 and prior) or T3 (TY 2024 and subsequent). See Exhibit 4.19.3-3, Internal Process Codes, for further information. AUR (IDT or RPM) case becomes statute imminent while case is in suspense; IPC SI (TY 2023 and prior) or T3 (TY 2024 and subsequent). See Exhibit 4.19.3-3, Internal Process Codes, for further information. Statutory Notice of Deficiency has been issued IDTVA is responsible for input of TC 560. IDTVA will notify the AUR IDT liaison no later than August 1st of the statute year that the case can be either closed no change, defaulted or returned to AUR inventory for recomputed notice issuance (IPC SR or PC 95). When a case is transferred to the liaison, the liaison will review the case to validate whether the case will be sent to IDTVA. If the case is sent to the IDTVA, follow the procedures in (4) or (6) above. If the case isn't sent to the IDTVA, return the case to clerical with instructions to transfer back to the TE. Leave a case note indicating why the case is being returned. IDTVA has 120 days to take the necessary actions to resolve IDT and RPM cases unless they contact AUR for an extension of time to resolve the issue. If a Stat notice has been issued, see (10) below. The AUR IDT Liaison will monitor the BT 89003 inventory for IDT and RPM cases. See the table below for the appropriate actions to take: If Then The IDT case has not been returned by the end of the 120-day period and IDTVA has not contacted AUR for an extension Leave a detailed case note. Close the case PC 26. The RPM case has not been returned by the end of the 120-day period and IDTVA has not contacted AUR for an extension Leave a detailed case note. Close the case with PC 52, 71 or 92, as appropriate. IDTVA contacts AUR for an extension of time on an IDT or RPM case Allow an extension of up to 40 additional days. Do not allow more than 160 days total from the input the appropriate identity theft IPC SI (TY 2023 and prior) or T3 (TY 2024 and subsequent). See Exhibit 4.19.3-3, Internal Process Codes, for further information. Leave a detailed case note which includes the new negotiated closure date. If the case is returned by the negotiated closure date, take the appropriate action based on the IDTVA case note. If the case isn't returned by the negotiated closure date, leave a detailed case note. Close IDT cases with PC 26 or RPM cases with PC 52, 71 or 92, as appropriate. Note: IDTVA will notify AUR of any RPM cases which are transferred to Exam because the taxpayer completed a "return as intended to be filed" . These cases will also be closed with PC 52, 71 or 92, as appropriate. Cases where a Stat notice has been issued are time sensitive. The AUR IDT liaison provides the last date for the taxpayer to petition the court in the case note. IDTVA will work these cases as a priority. Depending on the received date of the response and the last day for the taxpayer to petition, IDTVA (in most cases) will notify AUR of the determination regarding the AUR issue before the last day for the taxpayer to petition the court. If the IDTVA resolves the IDT issue and there are still AUR issues remaining, IDTVA will return the case to AUR with instructions to continue the processing (for example, recomp, Stat, no change). The AUR IDT Liaison will ensure the following: Appropriate actions are taken. Review AMS for related correspondence and if present leave an AUR case note indicating imaged correspondence is on AMS and instruct the TE to review AMS when working the response. Any AUR initiated TC 971 AC 522 has been reversed before releasing the case back into normal AUR inventory, see IRM 4.19.3.23.1.25.3, IDT Claims - Responses, when necessary. Release the case back into normal AUR inventory. IDTVA will return a listing of SSNs for cases requiring input of a closing PC. If all U/R IRs are determined to be due to IDT, or if after deleting all U/R IRs determined to be due to IDT any remaining IRs ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ close the case using PC 17. If the U/R IRs are determined not to be IDT, but some or all will be deleted for another reason (for example, the name on the IR isn't the taxpayer's), close the case no change ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ PC. Caution: If IDTVA advises there is a payment on the account (noted in a case note) and the case is closed PC 17, hold the case for 2 weeks before input of PC 17. This will allow time for IDTVA to release the payment.

# Victims of Terrorist Attacks

4.19.3.23.1.26 (08-22-2017) Victims of Terrorist Attacks For tax years ending after September 10, 2001, disability payments for injuries incurred as a result of a terrorist attack directed against the United States or its allies are not taxable and should not be included in income. This includes attacks that occur both within and outside the United States. For additional information, see Pub 907, Tax Highlights for Persons with Disabilities ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Refer to Pub 3920, Tax Relief for Victims of Terrorist Attacks, for additional information. See IRM 4.19.3.23.1.14.1, Killed in Terrorist Attack/Killed in Action, for more information on death due to an act of terrorism.

# Telephone Responses

4.19.3.23.2 (10-10-2025) Telephone Responses The purpose of the AUR toll-free telephones is to assist taxpayers and/or their POA/authorized representatives who call IRS regarding AUR initiated contacts. Use instructions for written responses as guidance for telephone responses/accepting oral statements. Note: During a call telephone assistors may verbally provide information and guidance from instructions for written responses, in lieu of sending a letter. A detailed case note of the information provided is required. Caution: When these instructions refer to the taxpayer, the instruction also applies to the POA who calls for the taxpayer. See IRM 4.19.3.23.2.2, Disclosure, for additional information regarding authorized representatives. Written documentation may be requested if unable to determine if the oral statement is valid. The response form and the documentation should be returned in the enclosed notice envelope or during a call, by fax or efax. See IRM 4.19.3.23.2.5 Universal Case, for additional information. Hearing-impaired taxpayers may be speaking through a relay operator. The operator will announce they are calling as a relay operator on behalf of a taxpayer as soon as you answer. Perform disclosure verification as if you were talking directly to the taxpayer and continue with the conversation. For additional information see IRM 21.2.1.56, Deaf/Hard of Hearing (DHOH) Callers and TTY/TDD Equipment. Calls may be received on employee cases; these cases can only be accessed on the AUR system by specific TEs. If a call back is needed, advise the taxpayer their call will be returned within 2 business days, complete Form 4442/ telephone referral form and fax it to the appropriate AUR Coordinator the same day the call is received. See the SERP Who/Where tab for AUR Coordinators for a list of the AUR Coordinators and fax numbers. Reminder: Do not provide internal contact numbers to callers. When accessing View Case due to a phone call, you must click on the PHONE CONTACT field. The AUR program extracts telephone contact data based on this entry. Beginning June 1, 2021 through December 31, 2022, Notice 1445, Tax Help in other Languages is included as an enclosure with CP 2000 Notices. If the taxpayer inquiries about the services provided from Notice 1445, instruct the taxpayer they need to call the number on Notice 1445 or visit Languages, for further assistance. Over the Phone Interpreter (OPI) Service - The IRS Language Line Services Web page is designed as a consolidated language resource across the IRS, to provide links to internal and external tools to better serve taxpayers with limited English proficiency (LEP). If you receive a call from a non-English speaking taxpayer, use the OPI service. For Spanish speaking taxpayers, transfer the call to a bilingual assistor by using 1842. Certain assistors in the AUR sites are allowed to use the OPI service for Spanish speaking callers. To contact OPI service take the following actions: Click Consult/Conf (it will place the caller on hold) Use the drop down box to select Interpreter or dial ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. Press dial On the Hard Phone, enter your PIN number (xxxx-xxxxx). Select the language and option needed from the table in (6) below. Brief the interpreter. Summarize what you wish to accomplish and provide any special instructions. Add the non-English speaking taxpayer to the line. Complete disclosure verification as if you were speaking directly to the taxpayer. Note: It is important to speak in the "first person" versus the "third person" . For additional information refer to IRM 4.19.19.14.1, Interpreter's Role. Continue with the conversation; asking specific questions to relay. Language options: Language Press Spanish 1 Creole 2 Mandarin 3 Korean 4 Vietnamese 5 Somali 6 Russian 7 French 8 Arabic 9 For any other language needs or concerns 0, for operator assistance TDC Phones - If a phone assistor receives a phone inquiry from a taxpayer regarding Secure Messaging and, upon researching the case on AUR, confirms the taxpayer has received an invitation to participate in the project, provide assurance and direction to the taxpayer regarding the Secure Messaging program. If a telephone assistor receives a call on a case where the RCC is T or H, answer any questions the taxpayer has and advise them how to respond via Secure Messaging. If the taxpayer provides information that meets Oral Statement Authority in (13) below or requests a call back from the assigned TDC examiner, prepare and fax Form 4442 to the team efax number at the appropriate campus. When Form 4442 is received, it needs to be saved as part of the electronic file. To save the Form 4442 as part of the case file, take the following actions on eGain: Save the Form 4442 as a PDF to your designated TDC folder. Create a Task in the Inbox by selecting New, then selecting Task from the drop-down menu, the Task Pane displays. Change the subject line to Form 4442. Click on attachments. Once the attachment is uploaded, click the Complete button. Return the call within three business days of receipt of Form 4442. Address the taxpayer's questions/issues. If documentation is required (i.e., but not limited to, signed consent, Form 8889), advise the taxpayer to submit the documentation using Secure messaging. Leave a Case Note in AUR to document the call. Actions to take on AUR when Form 4442 is received: Request the case using Universal Work or Request Case. Enter the IRS received date. Leave a case note documenting the conversation and any actions taken on eGain. Input the appropriate PC and release the case. If the taxpayer calls and indicates they wish to fax their response/agreement to the AUR issue, a faxed consent to assess additional tax (CP 2000, Letter 2626-C, Form 5564 (CP 3219A Notice), Form 9465 or Form 433-D) can be accepted by fax/efax. Leave a detailed case note to indicate the taxpayer's intent to fax/efax a signed consent. See IRM 4.19.3.23.2.5, Universal Case, for additional information on when to use the general fax number or the employee efax number. Identity Theft - AUR will disregard the ID Theft indicator and continue normal AUR processing on Subfile P (Identity Theft) cases. Follow normal Telephone Response procedures. Note: If the taxpayer indicates they are a victim of identity theft, see IRM 4.19.3.23.1.25.1, IDT General, IRM 4.19.3.23.1.25.2, IDT Telephones, IRM 4.19.3.23.1.25.3, IDT Claims - Responses, for additional information. Oral Statement Authority is acceptance of information provided verbally to resolve account inquiries. Note: An Oral Statement can't be used to close a case fully agreed. A signature (both if married filing joint) must be secured. Case can be closed fully agreed if receipt of full payment, prior to the issuance of a Notice of Deficiency, can be verified. The AUR telephone system always advises the taxpayer that the telephone call doesn't extend the 90-day period in which they have to petition the Tax Court as specified in the Notice of Deficiency. The taxpayer will always hear this announcement prior to speaking with an assistor. Should the taxpayer question this announcement, inform the taxpayer that this is a requirement and answer any other related questions. Identity Theft - if the taxpayer indicates they are a victim of identity theft, see IRM 4.19.3.23.1.25.1, IDT - General, IRM 4.19.3.23.1.25.2, IDT Claims - Telephones, IRM 4.19.3.23.1.25.3, IDT Claims - Responses, for additional information. Note: Ensure the correct OFP code is used for all time spent on phone calls that involve a claim of identity theft. Innocent Spouse Relief/ Form 8857 - if the taxpayer requests Innocent Spouse relief or indicates they intend to submit Form 8857, advise the taxpayer: The notice is a proposal to change tax and not a bill. A determination must be made on the notice issues before the Innocent Spouse relief request/Form 8857 will be considered; provide guidance following established telephone/response procedures, as appropriate. Form 8857 can be submitted to the address shown in the form instructions, once a determination is made that results in additional tax owed. See IRM 4.19.3.23.1.19, Innocent Spouse Relief Cases, for additional information. It isn't the policy of the IRS to respond to frivolous arguments on a point by point basis. When calls are received from argumentative taxpayers and/or representatives, it is important to stay in control of the call and don't argue with the taxpayer. Advise the taxpayer you can assist them with their tax account issues, but that you are unable to address their comments regarding the constitutionality of the tax system. You will refer the taxpayer to Pub 2105, Why do I have to Pay Taxes?, or to IRS.gov for further information. Remain calm and don't take the comments personally. If the taxpayer continues to discuss issues other than their tax matters, re-emphasize you will assist them with an account issue, but you will need to terminate the call if they continue with the current questioning. If the taxpayer continues their arguments, disconnect the call. Sometime taxpayers can be very upset when calling to discuss notice issues. If the taxpayer makes a threat of wanting to take their own life, see IRM 1.4.19.4.1.4, Suicide Threats, for further information.

# Answering the Telephone

4.19.3.23.2.1 (10-10-2025) Answering the Telephone EMPLOYEE IDENTIFICATION: When speaking with a taxpayer, tax examiners are required to provide their name (for example, Tax Examiner and LAST name or Mr, Mrs, Miss, Ms, and LAST name or first name and LAST initial) and unique identification number. Be courteous, polite, and professional. Note: The Restructuring and Reform Act of 1998 requires that IRS employees use a unique identifier in written or verbal communications with taxpayers. The entire 10 digits of the Position Identification (PID) replaces the current badge number and is used in the same manner. Caution: DO NOT provide your first and last name when identifying yourself, use one of the examples shown above. When accessing View Case due to a phone call, you must click on the PHONE CONTACT field. The AUR program extracts telephone contact data based on this entry Important actions to provide quality taxpayer telephone assistance include the following: Greet the taxpayer: Identify yourself, including employee identification (badge) number, and indicate a willingness to help. Respond to the taxpayer's opening statement: Actively listen to the taxpayer; deal with the taxpayer's feelings, if appropriate, and acknowledge the ability to help. If appropriate, apologize for any mistakes made by IRS. Target the taxpayer's questions: Listen to the taxpayer's opening statement; form and use confirming questions; gain agreement from the taxpayer; and determine any targeting required to better identify the taxpayer's issue. Get the necessary facts: When appropriate, ask closed-ended questions, paraphrase information to confirm taxpayer understanding, and utilize oral statement authority or secure information by efax during the call. Use appropriate hold procedures: Do not keep the caller on hold for more than a few minutes without giving them an explanation and apology. If additional research time is, or will be, too lengthy, offer to return the call with the requested information. Provide assistance: Provide accurate and complete assistance and/or appropriately refer the taxpayer to another source, if required. Secure, verify and input/enter a call back phone number (taxpayer/authorized representative), when the taxpayer requests a call back or the issue is complex and requires further research resulting in a subsequent contact (such as, call back to explain research findings). Research performed during the call doesn't require securing, verifying, or inputting/entering of a call back number. Note: Taxpayer contact information isn't required if issues/case is resolved during the call. Close the conversation: Verify the taxpayer's understanding and conclude the contact courteously. Telephone assistors are expected to handle AUR actions on the account while the taxpayer is on the phone. Telephone actions will be taken in talk or hold status. Wrap time is appropriate when: The caller doesn't wish to stay on the line, The case is complex requiring significant time to complete documentation or research, The taxpayer is abusive or is using inappropriate language and the phone assistor has to end the call, or The caller is an unauthorized third-party and assistor needs to leave a case note or complete any necessary actions. Reminder: Muting a call isn't appropriate when research is being conducted; the caller will be placed on hold. The service is under no obligation to determine if the taxpayer is using a cordless device, for example, cell phone, cordless phone. However, if you become aware it is a cordless device (for example, you know that the number the taxpayer is calling from is a cell phone because they previously told you it is, or they mention during the conversation that it is a cell phone), advise the taxpayer that there is a privacy risk as cordless devices use unsecured lines, and the conversation may be heard on another device. Note: The taxpayer isn't prohibited from using any unsecured platform (for example, cell phone, cordless phone, speaker phone). The caller accepts any security vulnerability by using the cordless device or unsecured platform. Refer to IRM 10.5.1.6.7.1, Cell phone or cordless devices. If the taxpayer doesn't agree to cordless use, the IRS employee will advise the taxpayer to call back on a more secure land line. If the taxpayer agrees to continue the discussion, leave a case note.

# Disclosure

4.19.3.23.2.2 (02-10-2020) Disclosure When responding to telephone inquiries, disclose no information until you confirm the person making the inquiry is the taxpayer or their authorized representative. Most calls to the AUR toll-free number are in response to AUR Notices and are not considered high risk. See below for the information needed for normal disclosure checks: Reminder: The Third-Party Designee check box is intended to facilitate the processing of tax returns and doesn't cover Compliance issues, including AUR, don't disclose specific case or tax return information. AUR uses the Customer Callback option, a technology that gives the caller the option to disconnect from the call queue and receive a callback at a designated time. It announces to the taxpayer the expected wait-time and permits the caller to choose to either continue to hold for a telephone assistor or request a return call and provides the taxpayer with an estimated time for a return call. Note: If the taxpayer thanks the assistor for returning their call the assistor should acknowledge the taxpayer's statement. Some taxpayers may inform the assistor they have a 4 digit transfer PIN provided by a previous assistor. If the taxpayer requests to use this PIN for disclosure purposes, apologize to the taxpayer and explain that AUR doesn't use the transfer PIN process and resume normal disclosure. Disclosure must be completed using the Disclosure Verify screen, see IRM 4.19.3.23.2.2.1, Disclosure Verify Screen, for additional information. The following is required for authentication before discussing the taxpayer's account: Note: If the caller is a designated representative, see (8) below. Tax Identification Number - The primary or secondary Social Security Number The first and last name (filing status 1, 3 or 4) or names (filing status 2) The complete mailing address including city, state and zip code Reminder: Taxpayers may use "apartment" , "unit" , "number" , etc., interchangeably, when providing their apartment or condominium number. Note: Cases closed on the AUR system will not update. It may be necessary to research IDRS CC ENMOD for the taxpayers most current address. The filing status used on the return, or the date of birth (primary or secondary). Note: If the taxpayer can't verify the items above see (5) below. The tax year in question isn't required for authentication, but is necessary to provide assistance to the taxpayer. If there remains some doubt as to the identity of the caller you may use account related systems to verify at least two of the following: Date of birth for dependents. The refund amount on the return. The amount of income reported on the last return. Employers shown on Form W-2. The names of financial institutions. When the taxpayer can't answer the disclosure questions in (4) above correctly and ID theft is suspected or verified, it will be necessary to perform additional high risk authentication for disclosure as follows: If the taxpayer was unable to verify their address, verify the taxpayer address against prior year returns or IDRS CC ENMOD. Keep in mind that in certain cases, the "Good" taxpayer may not know the address on the current "Bad" return or may have moved to a new address. In addition to the AUR tax year return information, ask question(s) about any available IRP information on prior tax returns or inquire about previous tax return information, such as filing history, wages, W/H, schedules filed, or refund amount. If the case involves an ITIN, check for ITIN application information on Employee User Portal (EUP) - ITIN RTS, the W-7 History screen. For more information on ITIN RTS, see IRM 3.21.263.8.1, Disclosure Guidelines for ITIN Data. Did you have any previous names and what were they? What year did you receive your ITIN? What is your country of birth? If the caller is inquiring about: A jointly filed return, only one TIN is necessary, preferably the primary number. The secondary TIN will be required if the primary is unavailable, or for use as an additional authentication check. Returns and return information of a minor, the information can be disclosed to the minor's parents if the caller signed the return on behalf of the minor or the child's return contains earned income. Continue the disclosure checks. A decedent's return and the caller's name appears on the second name line, they are an authorized representative. Continue the disclosure checks. If a person states they are the designated representative, request the taxpayer's name and TIN to check the Disclosure Verify screen. If the designated representative's information isn't present determine if a POA or authorized third-party was filed for that person to represent the taxpayer. The information can be discussed after verification of the identity of the person who is listed as the representative. Caution: The Third-Party Designee (check box) authority on the tax return doesn't apply to compliance issues. See IRM 4.19.3.23.1.21, Letters From a Third-Party and Authorization From a Valid Power of Attorney (POA), for further information. If the POA isn't reflected on the Disclosure Verify screen research using IDRS CC CFINK before requesting the taxpayer or POA to submit Form 2848. If the CFINK screen shows there is a valid POA or authorized third-party for the tax year being worked, ask the POA to verify their CAF number or if they don't have the CAF number, their name and address. Caution: Do not send copies of notices/letters if IDRS CC CFINK shows "NO" on NOTICE field on the AUTHORIZATION section. Note: Provide the CAF number shown on RPINK or CFINK to the caller ONLY AFTER verifying the representative's name, street address, city, state and zip code. Do not provide the caller the CAF number shown on RPINK or CFINK if you are unable to authenticate the caller. Advise caller that you will mail the CAF number to the POA address of record. Use the appropriate letter with a paragraph using the following verbiage as an example: "Your correct Centralized Authorization File (CAF) identification number is _____________. Please use this number on all future powers of attorney/tax information authorizations for which you are the representative/appointee or when you are representing a taxpayer." If there is no POA or authorized third-party on file, taxpayer information such as tax figures or case information must be discussed ONLY with the taxpayer. Caution: The CP 2000 Authorization Statement is valid only for the tax year shown on the CP 2000 in question. Therefore, only that CP 2000 and issues related to it can be discussed with the third-party. See IRM 4.19.3.23.1.21, Letters From a Third-Party and Authorization From a Valid Power of Attorney (POA), for additional third-party information. ORAL DISCLOSURE CONSENT - Treasury Reg. 301.6103(c) - 1(c) authorizes the IRS to accept verbal consents authorizing the disclosure of return information to third parties assisting taxpayers in resolving Federal tax matters. Note: Do not solicit verbal authorization from the taxpayer. If Then The taxpayer wishes to verbally authorize a third-party to assist them with AUR related matters, ensure that the taxpayer understands that this consent will allow AUR to continue discussion with the designated third-party until the issue is resolved. If the taxpayer still wants the authorization Enter "ORAL DISCLOSURE" or similar wording in the AUR Case Note window. Enter the designee's full name in the Address Update window. The taxpayer indicates they want the designee to act for them in matters beyond AUR, ensure that the taxpayer understands that this consent will allow the IRS to continue discussion with the designated third-party until this particular tax matter is resolved. If the taxpayer still wants the authorization Record the Oral Disclosure Consent on IDRS, using IDRS CC ACTON to input History Items on each tax module (TXMOD) under consideration. See IRM 21.1.3.3.2, Oral Disclosure Consent/Oral TIA, for further information. Follow instructions in IRM 4.19.3.23.2.3, General Inquiries, for actions relating to non-AUR inquiries.

# Disclosure Verify Screen

4.19.3.23.2.2.1 (08-22-2017) Disclosure Verify Screen TEs must complete phone call disclosure using the Disclosure Verify screen. Note: If the information isn't available in the Disclosure Verify screen, other account related systems may be used. The Disclosure Verify screen automatically displays when the PHONE CONTACT field of the HISTORY/VIEW/REQUEST window is checked. The Disclosure Verify screen contains information that allows the phone assistor to perform disclosure without accessing the taxpayer's account. This will eliminate inadvertent disclosure prior to verifying the caller's identity. Note: The current batch type is displayed in the "BATCH" box in the Disclosure Verify screen, allowing the case to be identified as open or closed without accessing the case. Complete the Disclosure Verify screen following procedures in IRM 4.19.3.23.2.2, Disclosure: Click in the box to the right of the SSN field after verifying the primary or secondary social security number. Click in the box to the left of the NAME OR NAMES field after verifying the first and last name (filing status 1, 3 or 4) or names (filing status 2). Click in the box to the left of the ADDRESS field after verifying the complete mailing address including city, state and zip code. Reminder: Taxpayers may use "apartment" , "unit" , "number" , etc., interchangeably, when providing their apartment or condominium number. Note: If the caller provides information that requires updating the account (for example, clear and concise notification of a new address, a new authorized third-party), the phone assistor can input "Y" in the "CHANGE ADDR" box, after disclosure verification has been completed and the "DISCLOSURE COMPLETE" button has been clicked on. This will display the UPDATE ADDRESS window. Once changes have been made and committed, the system will move to the Case Analysis screen. See Rev. Proc. 2010-16 for what constitutes clear and concise notification of an address change. Click in the box to the right of the FILING STAT CD field after verifying the filing status used on the return, OR the box to the right of the DOB field after verifying the date of birth. If the caller is an authorized third-party or POA click in the box to the left of the AUTHORIZED THIRD-PARTY field or P.O.A. field after verifying the authorized third-party's name or POA's CAF number and/or name and address. When disclosure has been completed, click on the "DISCLOSURE COMPLETE" button. If the required disclosure has been met, the system automatically displays the taxpayer's account. If the required disclosure has not been met, the following message displays: "ERROR: DISCLOSURE INCOMPLETE" . Verify that you have asked the required disclosure questions and checked the corresponding boxes. If the caller fails disclosure, normal procedures for failed disclosure will be followed. If it is necessary to verify additional information (see IRM 4.19.3.23.2.2, Disclosure) click one of the boxes in (4) step 4 above. If it is necessary to perform high risk authentication (see IRM 4.19.3.23.2.2, Disclosure) click the "High Risk" box. If the caller is an unauthorized third-party providing information on the taxpayer's case, access the case after the call has ended. Do not check the phone call box, leave a case note and take any necessary actions on the case.

# Contact Recording

4.19.3.23.2.2.2 (09-30-2018) Contact Recording Contact Recording is a telephone application/tool/system that records incoming toll-free telephone contacts for the purpose of possible subsequent monitoring. When the taxpayer calls the AUR toll-free number, they are notified that their call may be recorded. If the taxpayer objects to being recorded, use the "Stop On Demand" icon on your desktop to disable the contact recording feature. If the call is transferred, advise the caller that they will have to restate their request that they don't wish to be recorded. If the caller also asks to record the conversation, advise the caller that they must not record the call; however, they may request a copy of the call under the Freedom of Information Act (FOIA). All requests under FOIA must be in writing and contain the date, name, identification number of the employee, and the approximate time of the call. See IRM 21.1.3.17.1(5), Freedom of Information Act (FOIA), for FOIA recording requests. Note: If the caller requests copies of the case contents, the assistor may provide copies as long as this won't impair enforcement. Formal requests may also be received under the Freedom of Information Act (FOIA). All requests under FOIA must be in writing and contain the date, name, identification number of the employee, and the approximate time of the call. See IRM 21.1.3.17.1, Freedom of Information Act (FOIA), for more information.

# General Inquiries

4.19.3.23.2.3 (10-02-2024) General Inquiries If the taxpayer's call is a general inquiry or they request information about: Note: If the issue is Tax Law, see (2) below. When the issue is Function Transfer number Account issues (any account issues that don't pertain to the AUR case, including missing payments) Taxpayer Services Toll-Free lines (TS) Hours of Operation are Monday - Friday, 7:00 am to 7:00 pm local time. If outside the hours of operation, advise the taxpayer of TS hours and provide them with the toll-free number, 800-829-1040. 1020 English 1021 Spanish Balance Due (non status 22) Note: AUR case must be closed. Taxpayer Services Toll-Free lines (TS) If the balance due is because of an AUR assessment, the taxpayer states they can't pay or requests a payment plan, inform the taxpayer that payment options are available online at IRS.gov OR If the balance due is because of an AUR assessment and the taxpayer doesn't have internet access, inform the taxpayer that Form 9465, Installment Agreement Request, can be requested by phone, by calling 1-800-829-3676 (toll-free). For all other inquiries, transfer the call. Hours of Operation are Monday - Friday, 7:00 am to 7:00 pm local time. If outside the hours of operation, advise the taxpayer of TS hours and provide them with the toll-free number, 800-829-1040. 1010 English 1011 Spanish Refunds - Taxpayer's inquiring about their refund and it has been more than 21 days since they filed an Electronic return, or more than 6 weeks since they filed a paper return Taxpayer Services Toll-Free lines (TS) Hours of Operation are Monday - Friday, 7:00 am to 7:00 pm local time. If outside the hours of operation, advise the taxpayer of TS hours and provide them with the toll-free number, 800-829-1040. 1020 English 1021 Spanish Refunds - Taxpayer's inquiring about their refund and it has been less than 21 days since they filed an Electronic return, or less than 6 weeks since they filed a paper return (Automated Service) Refund Hotline 800-829-1954 3158 English 3258 Spanish Balance Due (IDRS status 22) ACS Hours of Operation are Monday - Friday, 8:00 am to 8:00 pm local time. If outside the hours of operation, advise the taxpayer of ACS hours and provide them with the toll-free number for TS, 800-829-7650 or for SBSE 800-829-3903. Note: If the return was processed by a TS campus, transfer to the appropriate TS number. If the return was processed by an SBSE campus, transfer to the appropriate SBSE number. 1075 TS English 1071 TS Spanish 1085 SBSE English 1076 SBSE Spanish Open TC 420 or -L freeze EXAM Hours of Operation for the TS toll-free line are Monday - Friday 8:00 am to 8:00 pm and for the SBSE toll-free line are Monday - Friday, 7:00 am to 7:00 pm local time. If outside the hours of operation, advise the taxpayer of Exam hours and provide them with the toll-free number for TS, 866-897-0177 or for SBSE 866-897-0161. 1517 TS English 1518 TS Spanish 1861 SBSE English 1862 SBSE Spanish Note: Inform the taxpayer when they are being transferred. Tax forms, provide the toll-free number for forms, 800-829-3676; or provide the IRS web site address, IRS.gov or refer the taxpayer to the IRS office listed in the local telephone directory. Tax transcript, provide the toll-free number, 800-908-9946, or provide the IRS web site address, IRS.gov. TS only answers specific tax law questions during filing season (January 15th - April 16th). After April 16th, TS support is limited and only the following topics are to be transferred to Tax Law at 1001. Tax-Exempt Government Entities (TEGE) Special Services: Military or Civilian Combat; Federally Declared Affordable Care Act (ACA) International Tax Law (overseas calls only) If the taxpayer inquire about specific tax law questions, other than shown above, inform the taxpayer that you can't provide assistance on that topic and refer them to the following: IRS.gov - Select the Help & Resources tab on the home page. Options are listed on the left side of the page, Interactive Tax Assistant - Enter "ITA" into the Search feature, IRS Tax Map - Enter "IRS Tax Map" into the Search feature for more detailed information. If the caller doesn't want to be referred to the website, transfer the call to the Out-of-scope automated message as follows: English - 3013 Spanish - 3014 Note: If unable to transfer to the numbers above, use 1001.

# Case Specific Inquiries

4.19.3.23.2.4 (10-10-2025) Case Specific Inquiries If the taxpayer has questions relating to their case, access the Taxpayer Information window. Use the Case Note section to document any pertinent information, such as, any statement by the taxpayer that provides information to allow the tax examiner to make a change to the case. The information entered will append to the Case Note window. Note: Case notes remain a part of the case file and caution must be used when case notes are composed. The non-privileged portions of these case notes may be obtained by the taxpayer in a number of ways: from Appeals under the newly adopted procedures; through litigation discovery procedures, if the taxpayer files a court case in response to a notice of deficiency; or through a Freedom of Information Act (FOIA) request. When the taxpayer requests a call back or is told the tax examiner will call them back, secure/verify and input/enter the phone number. If the taxpayer provides a new address, click on the address change box and use the Update Address screen following guidelines in IRM 4.19.3.23.1.6, Address Updates. The latest Primary/Secondary/POA address displays. This may not, however, be the address that received a notice. If the caller requests the case contents, the assistor may provide copies by mail, as long as providing the files to them won't impair enforcement. Formal requests can also be received under the Freedom of Information Act (FOIA). All requests under FOIA must be in writing and contain the date, name, identification number of the employee, and the approximate time of the call. FOIA requests must reasonably identify the documents sought and the applicable tax year(s). See Freedom of Information Act on the Disclosure and Privacy Knowledge Base site for more information on FOIA. Information may be faxed to the taxpayer or authorized representative when the taxpayer has specifically authorized facsimile transmission, in writing or in a documented oral consent, to themselves or to an authorized representative. Prior to faxing any tax information to the taxpayer or representative, Disclosure must be completed. See IRM 4.19.3.23.2.2, Disclosure, for additional information. When faxing information to the taxpayer or authorized third-party: Inform the taxpayer or authorized representative of the potential risk of disclosure if the fax machine is used by others, or when an efax service is used, and the consent shall be documented in the case file. Use the following proposed language on the fax cover sheet: This communication is intended for the sole use of the individual to whom it is addressed and may contain information that is privileged, confidential, and exempt from disclosure under applicable law. If the reader of this communication isn't the intended recipient or the employee or agent authorized to deliver the communication to the intended recipient, you are hereby notified that any dissemination, distribution, or copying of this communication will be strictly prohibited. If you have received this communication in error, please notify the sender immediately by telephone call. Thank you. Enter "oral disclosure received authorizing to fax information" or similar wording in the AUR Case Note window to document facsimile transmission authorization. Note: If consent to fax information isn't received, inform the caller the information will be mailed to the taxpayer address of record. When the information you requested is available, return the taxpayer's call within the specified time frame. Advise the taxpayer when a delay is experienced in obtaining the requested information. Caution: Information containing Federal Taxpayer Information (FTI) such as transcripts of accounts, copies of AUR notices, etc., must be mailed to the taxpayer at the address on file. Ask the taxpayer to identify themselves by stating their full name and SSN. Never discuss or give specific information on the taxpayer's account to anyone other than the taxpayer without a valid POA or a completed authorization statement. See IRM 4.19.3.23.2.4.1, Outcalls - Calling the Taxpayer, for additional information. Inform the taxpayer that you have the information necessary to discuss their case. If the taxpayer disclaims knowledge of the income or disputes the amount, inform the taxpayer to contact the payers in dispute. If the taxpayer requests the payer address, provide the address from the IR on the Case Analysis screen. See IRM 4.19.3.23.9.1, Responses Needing Correspondence, for additional information. If the taxpayer agrees with the proposed changes, instruct the taxpayer to sign (both signatures are needed for married filing joint returns), date, and return the consent to tax increase, or refer the taxpayer to the consent page of the notice which provides complete information. A signature isn't required: To adjust W/H, excess SSTAX and/or additional MCTXW if that is the ONLY issue. When the Statutory Notice suspense time frame has expired. Advise the taxpayer we will be assessing the account. Input PC 90 to default the case. Note: See IRM 4.19.3.23.2.5, Universal Case, for additional information on when to use the general fax number or the employee efax number. If the taxpayer agrees and states they can't pay or requests a payment plan, instruct the taxpayer to sign (both signatures are needed for married filing joint returns) and date the notice in the space provided. Inform the taxpayer that payment options and Form 9465, Installment Agreement Request, are available online at IRS.gov OR If the taxpayer doesn't have internet access, inform the taxpayer that Form 9465 can be requested by phone, by calling 800-829-3676 (toll-free). If the taxpayer agrees and requests to add the AUR balance due to an existing installment agreement or states they can pay within 120 days: Instruct the taxpayer to sign (both signatures are needed for married filing joint returns) and date the notice in the space provided. Advise the taxpayer to include the request to add to an existing installment agreement or their intent to pay within 120 days on their signed agreement. If the taxpayer states they're making a payment other than by credit card, provide check annotation information if needed. The AUR phone script provides check annotation information if the taxpayer selects the "Agree" path or chooses to speak with a tax examiner. You are not required to address this subject unless the taxpayer asks a specific question. To respond to the taxpayer's specific question, refer them to the consent page of the notice or advise them to make the check or money order payable to the "United States Treasury" and include the SSN and tax year from the Notice and annotate CP 2000. If the taxpayer inquires about paying with their credit card, Advise the taxpayer to sign and return the consent to tax page (both signatures are needed for married filing joint returns) in order to complete action on their case. If the taxpayer wishes to pay using the internet provide the following web address: Make a Payment. If the taxpayer wishes to call, provide these toll-free numbers: 888-729-1040 and 888-872-9829. If the taxpayer is calling from a foreign country provide these telephone numbers: 615-550-1491 and 334-521-3843. If necessary, advise that the service provider at those numbers will provide any additional information. If the taxpayer requests the balance due amount, provide the CP 2000 amount and advise that penalty and interest continue to accrue. If the taxpayer requests a specific payoff amount computed to a certain date, use IDRS CC INTST if the AUR assessment has posted or IDRS CC COMPA on open AUR cases. If the taxpayer states the balance due has already been paid AND the payment is displayed on the Tax Account screen, close the case, using "Agreed Response" criteria. See IRM 4.19.3.23.7, Agreed Responses, for more information. Exception: A signature (both signatures are needed for married filing joint returns) is required if full payment was received after the Statutory Notice was issued. If Then The suspense time frame has not expired Acknowledge payment and advise the taxpayer to sign and return the notice. The suspense time frame has expired Advise the taxpayer we will be assessing the account. Input PC 90 to default the case. If the taxpayer states a payment was sent and the payment is NOT shown on the Tax Account screen, determine if at least three weeks have passed since the taxpayer made the payment. If yes, use the IAT "TC Search" tool to research the payment. Perform research before requesting the taxpayer send a copy of the front and back of the cancelled check. If the payment is found posted on another tax module (for example, subsequent year) ensure that the payment is transferred to the correct tax module using the IAT "Credit Transfer" tool. If the payment is for the balance due, close the case, using "Agreed Response" criteria. See IRM 4.19.3.23.7, Agreed Responses, for more information. If the payment posted as a TC 670 on a different tax year, use the IAT "Credit Transfer" tool to transfer the credit to a TC 640. Note: On married filing joint returns check both the primary and secondary taxpayers for a payment. If the payment is located on the secondary taxpayer account, use the IAT "Credit Transfer" tool to transfer the credit to the primary taxpayer account. If there is no record of the payment, research IDRS CC TXMOD as the payment may be pending or unpostable. If the payment is unpostable, print TXMOD to PDF showing the payment and refer to the lead. Note: If the payment is unpostable, action to resolve the unpostable condition must be initiated within 7 days. If the taxpayer states they have paid the balance due in full and now received a bill for additional interest, research IDRS CC TXMOD to determine if a TC 276 has posted after the AUR adjustment. If a TC 276 has posted inform the taxpayer that per the paragraph titled Failure To Pay Penalty - IRC 6651(a) on their notice an additional penalty (FTP) was assessed on their account. Inform the taxpayer that interest is compounded daily until the entire amount due is paid, including penalties and interest. Payments received are applied in the following order: Tax. Penalties. Interest. If the taxpayer paid online or by credit card and the payment isn't found on another tax module, request that they sign and return the consent to tax page (both signatures are needed for married filing joint returns) in order to complete action on their case. See IRM 4.19.3.23.2.3, General Inquiries. If during the telephone call, it is determined the taxpayer is due a refund or expects a refund, inform the taxpayer the refund will be issued if they owe no other taxes or federal obligations. Some examples, other than Federal tax liability, are child support and Federal non-tax liability, such as student loans. If the taxpayer needs additional information regarding a potential refund offset, refer them to the Customer Service toll-free number, 800-829-1040. If during the telephone call, the taxpayer indicates receipt of an AUR notice/letter but there is no record on the AUR system of any notice/letter issuance for the tax year in question; in other words, a fake CP 2000, see IRM 4.19.3.5.8.1.1, Online Fraud and Other Scams (PHISHING), for additional information. Accept oral statements from the taxpayer or a third-party which result in revising or closing a case as No Change (no increase in tax). Use instructions for written responses as guidance for oral statements. Note: A written response/documentation may be requested if unable to determine if the oral statement is valid. If the taxpayer agrees to the proposed assessment during the phone conversation, they may fax the signed agreement while on the call. Follow procedures in IRM 4.19.3.23.7, Agreed Responses, if the case is from your site or see IRM 4.19.3.23.2.5, Universal Case for additional information on when to request information during the telephone call and when to use the general fax number or the employee efax number. If during a phone call, AUR or IDRS research shows the taxpayer's account balance due status is the result of an AUR assessment and the taxpayer provides documentation or an acceptable oral statement to resolve/change the assessment. Exception: Do not accept oral statements to make changes to AUR assessments for tax years in which the statute has expired. DO NOT check the action required box. Advise the taxpayer to respond in writing. Provide the address and/or fax number of the originating site, if appropriate. Input IDRS CC STAUP with a definer "S" , to prevent issuance of additional balance due notices while the case is being worked. Exception: If the case is in collection status, input TC 470 on IDRS. See Exhibit 4.19.3-14, Notice Delay Actions (Reconsiderations). Access the Case Note/TP Info window. Leave a detailed case note explaining ALL the needed changes to the previous AUR assessment. Check the ACTION REQUIRED box on the Case Note window. Note: If the case is located in your own site, the ACTION REQUIRED box can't be checked, ensure clerical receives the correspondence to be built into BT 81. If during a phone call, AUR or IDRS research shows the taxpayer's account balance due status is the result of an AUR assessment and the taxpayer agrees to send in documentation, advise the taxpayer they will continue to receive notices until the documentation is received and reviewed. Note: DO NOT check the action required box. If during a phone call AUR or IDRS research shows the taxpayer's account balance due status is the result of an AUR assessment and the taxpayer indicates Private Debt Collection/Private Collection Agencies (PDC/PCA) involvement and states they want to set up an I/A, or no longer want to work with PCA, research IDRS CC ENMOD or CC IMFOLE to determine if an unreversed TC 971 AC 054 is present with no corresponding TC 972 AC 054. Refer to IRM 4.19.3.27.1, Private Debt Collection and RECON Cases, for additional information on researching cases. Note: If the taxpayer states they don't want to work with the PCA, the taxpayer must provide a written statement to the PCA. If Then An unreversed 971 AC 054 is present, Advise the taxpayer to contact the PCA. Provide the PCA contact information if necessary; see (29) below. TC 972 AC 054 is present Inform the taxpayer that the account was turned back over to the IRS. Refer the taxpayer to TS; see IRM 4.19.3.23.2.3, General Inquires, for additional information. No TC 971 AC 054 Inform the taxpayer there doesn't appear to be any debt collection agency assigned to this account. Continue normal processing. Note: It isn't necessary to research non-AUR related tax years to determine PDC assignment. Exception: It isn't necessary to refer taxpayers to their PCA if they can full pay their liability using online payment options; for example, Direct Pay, credit or debit card payments by phone or internet, a check or money order. If the taxpayer requests the payer address, provide the address from the IR on the Case Analysis screen. If during the telephone call, the taxpayer inquires about a year in which the Refund Statute Expiration Date (RSED) has passed, advise the taxpayer that a claim for refund must be filed within 3 years from the time the original return was filed or 2 years from the time the tax was paid, whichever is later. If during the telephone call, the taxpayer inquires about a year that is statute imminent take the appropriate action to prevent the barred assessment. If the case belongs to another site, notify the site with the imminent statute immediately (for example. phone call, email, fax statute referral). If during a telephone call, the taxpayer requests an interest and/or penalty waiver, inform the taxpayer/caller the request must be in writing and signed by the taxpayer or valid POA. If the case is currently assigned to a private collection agency and the taxpayer requests PCA contact information research IDRS CC ENMOD or CC IMFOLE and provide them with their assigned PCA information. See IRM 4.19.3.27.1, Private Debt Collection and Recon Cases. If during a telephone call an erroneous refund is discovered due to the AUR payment refunding, tell the taxpayer to void and return the check, if it has not been cashed. See IRM 4.19.3.5.13.1.4, Recovering Erroneous Refunds - Category D, for further guidance.

# Out Calls - Calling the Taxpayer

4.19.3.23.2.4.1 (10-10-2025) Out Calls - Calling the Taxpayer During the response phase there may be times when calling the taxpayer will expedite the resolution of the case. An out call can eliminate the need to send the taxpayer a letter to resolve their account when the taxpayer has provided telephone contact information. Example: The taxpayer responds to a notice but inadvertently omits required information or signatures, delaying the action on the case. Out calls also provide better topic and time control of a conversation. While tax information protected by IRC 6103 generally can't be left on an answering machine or voice mail, there are exceptions. When making an out call or returning the taxpayer's/representative's call and prior approval to leave a message isn't noted, use the following guidelines in the table in (4) below. Reasonable belief is supported by the greeting on the answering machine or voice mail refers to the taxpayer being contacted or the taxpayer has indicated that this is the telephone number where they can be reached directly. If Then You reasonably believe you have reached the taxpayer's correct answering machine or voice mail It is acceptable to leave your name, telephone number, any appropriate reference number for the inquiry, the fact that you work for the IRS (identifying your function is permissible), and the name of the person who will return the call. You don't have a reasonable belief that you have reached the correct taxpayer No tax or other confidential information should be disclosed on the message. There are times during the response phase when you must attempt to call the taxpayer to resolve the issue. You must always document the attempt in a case note. You must attempt to call the taxpayer when the taxpayer: Note: Normal telephone procedures will be followed when making an out call. See IRM 4.19.3.23.2.1, Answering the Telephone, for additional information. Requests an appeal of our findings. Note: Attempt to resolve the issue(s) by phone prior to forwarding the appeals request. See IRM 4.19.3.23.1.8, Independent Office of Appeals, for additional information. Requests a phone call. Note: An attempt must be made even when the taxpayer provides a contact time which is outside the tax examiner's shift. Fully agrees - but is missing required signature(s). Submits full payment after a Statutory Notice is issued, missing required signature(s). Note: If unable to reach the taxpayer by phone and you are requesting a missing signature for a case in Statutory Notice phase where the suspense time frame has expired, don't issue a Letter 2626-C, input PC 90 to default the case. Omits requested information or documentation (other than for identity theft). Requests case to be sent to their local Area Office. Form SS-8 is incomplete or missing original signature. See IRM 4.19.3.23.5.23, Self-Employment Tax (SE Tax) vs, Employee Share of FICA, for further information. Note: If unable to reach the taxpayer by phone, issue a Letter 2626-C to request the missing information. Access the Case Note window and check the out call box to leave an Action trail in the Case History window. The indication in Case History may not show immediately - DO NOT check the box more than once. When you initiate an outgoing phone call, the taxpayer may be reluctant to provide their Taxpayer Identification Number (TIN). To ease any concerns of the taxpayer, provide them with the last four digits of their TIN (Social Security Number) and request that the taxpayer verify the first five digits. After you verify the TIN, follow IRM 4.19.3.23.2.2, Disclosure and IRM 4.19.3.23.2.2.1, Disclosure Verify Screen. If taxpayer is still reluctant to provide information, leave a detailed case note outlining the information that is needed from the taxpayer. Provide the taxpayer with the AUR toll-free number. The taxpayer can then call the toll-free number and the assistor can inform the taxpayer what is needed. Continue normal AUR processing. Use the guidelines in IRM 4.19.3.23.2.4, Case Specific Inquiries, when leaving messages that contain confidential information on answering machines/voice mail. These guidelines are consistent with prudent business practices and disclosure rules while still providing good customer service. If the taxpayer indicates they will be faxing missing information/documentation transfer the case to unit suspense, hold for up to 5 days. If the information isn't received within the 5 days continue normal processing.

# Universal Case

4.19.3.23.2.5 (10-10-2025) Universal Case Whenever you can assist the taxpayer using oral statement authority or accepting faxed/efaxed information, Universal Work should be utilized. When a TE is on the phone with a taxpayer, cases in major suspense batches (BTs 40, 43, 47, 49, 50, 55, 59, 60, 63, 70, 73, 79, 93, 96 and 98) can be requested to work through View case. Caution: DO NOT stop notices when universally assigning a closed case BT96. Only the following batches can be requested to work when in AB status: BT 44, 52, 53, 58, 74, 81, and 84. Universal Work Case (UWC) gives the TE control of the case and actions can be taken. Reminder: After all case actions are completed, the TE must release the case. If the case can't be requested using Universal Work, the system displays the following error message: "Case is not in a batch allowed for universal work case." Take the following actions: If And Then Unable to request through UWC The case is controlled at another campus Leave a detailed case note explaining the actions that are needed. Check the action required box. Unable to request through UWC The case is controlled at your campus Request the case using normal procedures, see AUR System Guide, Controlling Individual Inventory. Note: If the case is closed, it needs to be built into a Recon batch to control it. The case is suspended for special handling (for example, Bankruptcy, BT 89001, or Identity Theft BT 89003, or cases requiring MFT 31 processing, BT 89004 - 89005) AND an action is required (such as, Recomputed notice) The case is controlled at another campus Leave a detailed case note explaining the actions that are needed. Check the action required box. The case is suspended for special handling (for example, Bankruptcy, BT 89001, or Identity Theft BT 89003, or cases requiring MFT 31 processing, BT 89004 - 89005) AND an action is required (such as, Recomputed notice) The case is controlled at your campus Route detailed instructions of the required action to the appropriate area. If the case requires documentation from the taxpayer and meets all the following criteria, the case may be worked using UWC, regardless of which site controls the case: Caution: Ensure you are able to process and release the case before assigning it universally. The case is open AND The case is available for UWC AND Receipt of one document (per IR) will allow the case to be closed with a recomputed notice issued, fully agreed or no change (for example, taxpayer faxes a signed consent, a corrected document, a document which verifies questioned W/H) AND The taxpayer must efax the document(s) during the call. Note: If the taxpayer can't efax the documents during the call they may call back when they are able to efax the documents, or advise them to use the response options provided in the notice (see (6) below). If all the criteria in (4) above is met, take the following actions to resolve the case: Provide the taxpayer with the appropriate unit efax number, to submit the documentation or signed consent. Review the faxed document(s) to ensure it allows the case to be closed fully agreed, recomputed, or no change. Caution: If the return is a married filing joint return BOTH signatures are required for the response to be considered fully agreed. Select Control, Case, univ Work and click the "Yes" button to select the case to work. Take the necessary case actions. Forward the faxed document, and PTC calculation if applicable, to clerical to upload into the AUR system. Note: Manually check the STATUS box once clerical has uploaded the response. Leave a detailed case note to document the actions taken. Note: If the taxpayer faxes the required signature document to close the case fully agreed this must be clearly documented in the case note. Input the appropriate PC and release the case. Caution: Do not release the case until clerical uploads the response and STATUS box is checked. If the case requires a paper document or a fax, but doesn't meet the criteria in (4) above, don't use UWC; provide the taxpayer with the (clerical) efax number for the controlling site or advise them to use the response options provided in the notice. Ensure the taxpayer is aware if faxing a signed consent both taxpayers must sign on married filing joint returns. Leave a case note. If the taxpayer provides acceptable information for a recomputed notice to be generated, issue the notice. It isn't necessary to wait for the new figures to be provided by the taxpayer in writing since the recomputed notice will be provided to the taxpayer for signature. If the case is in the Statutory Notice phase, this procedure can be done ONLY for a decrease in the amount of tax shown on the Statutory Notice. Select Control, Case, univ Work. Click the "Yes" button to select the case to work. Rework the case. If PTC is recalculated, print to PDF the PTC calculation and send to clerical to upload into the AUR system; see IRM 4.19.3.18.6, Net Premium Tax Credit (PTC). Note: Telephone assistors may request that the taxpayer respond in writing if a recomputed notice is needed and a recalculation of PTC (there is a change to AGI) is required. Leave a detailed case note to document the information provided for the recomputed notice. Input the correct PC. After all the necessary actions are complete (including review if necessary), release the case. Caution: If you don't work the case, you must use IPC RF to refile it back to the original batch. If the suspense batch has aged a message displays "Invalid Process Code - Batch is aged" . Take necessary actions to issue a letter or move the case to the next phase. Note: If the user attempts to control a case that isn't in a Suspense or Purge batch, the following message appears: "Error: Case is not in a batch allowed for Universal Work Case." If the case is controlled at another site, leave a case note and only check the ACTION REQUIRED if there is further action that can be taken by the other campus. If the taxpayer requests an extension to respond to a CP 2501: Inform the taxpayer that they have been granted a 15-day extension. Advise the taxpayer to respond as soon as possible and that if the response isn't received within 45 days of the notice date, a subsequent contact will be initiated. Leave a case note on the Case Note/TP Info screen documenting the call. Exception: If the assistor is able to grant extension without accessing the case, it isn't necessary to leave a case note documenting the call. DO NOT GRANT A SYSTEMIC EXTENSION. If the taxpayer requests an extension to respond to a CP 2000 Notice and it isn't necessary to respond to the taxpayer with a letter: Determine the notice due date. The notice due date is 30 days from the notice issuance date and is shown on page 1 of the CP 2000 Notice Series. If the call occurs before the date to respond to the Notice (before the 30th day). DO NOT grant a systemic extension. Inform the caller they have an additional 30 days to respond. If the caller asks for a specific date, provide a date that is 30 days from the call or 30 days from the date to respond and leave a detailed case note. Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the call occurs either on or after the date to respond to the Notice (on or after the 30th day). Select Control, Case, univ Work, click the Yes button to select the case to work, document the extension request in a detailed case note, input IPC 6X and release the case. Inform the caller of the new due date to respond which is 30 days from the call or 30 days the IPC 6X was input. Note: Do not grant multiple extension requests unless extenuating circumstances apply. Leave a detailed case note justifying each additional extension request. If the taxpayer requests an extension to respond to the Letter 2626-C issued after a CP 2000 but prior to a Statutory Notice: Inform the taxpayer they have been granted a 30-day extension from the date of the call to respond to the notice. Advise the taxpayer to respond as soon as possible and if the response isn't received within 30 days of this call a subsequent contact will be issued. Select Control, Case, univ Work. Document the extension request in a detailed case note in the Case Note/TP Info screen. Input IPC 6X . Release the case. Note: Do not grant multiple extensions unless extenuating circumstances apply. Leave a detailed case note justifying each additional extension request. If the taxpayer requests an extension to respond to the Statutory Notice: Do not grant the extension. Advise the taxpayer that the period of time to provide a response or to petition the U.S. Tax Court can't be extended. Leave a detailed case note on the Case Note/TP Info screen. If the taxpayer has information that would allow you to close the case no change but doesn't meet the criteria in (4) above (for example, oral statement is being accepted), take the following actions: Select Control, Case, univ Work. Click the "Yes" button to select the case to work. Leave a case note explaining why you are closing the case. Input appropriate PC. If the case is in CP 2000/ CP 2501 status, enter "N" in the SOURCE DOC field in the Process Code window. Release the case. If the taxpayer has information that would allow you to make a change on a closed case (a RECON) from BT 96 see IRM 4.19.3.23.2.4, Case Specific Inquiries. If the taxpayer provides information that won't result in a change to a closed case (a RECON) from BT 96, don't check the action required box on the Case Note window. Take the correct action or provide the taxpayer with the needed information, as appropriate. The following are examples (not all-inclusive) of when the action required box must not be checked: Taxpayer requests a payment plan Taxpayer requests a copy of a CP 2501 or CP 2000 Notice Taxpayer requests a refund to be applied to tax liability The taxpayer states they will fax information

# Live Chat Assistance-Overview

4.19.3.23.3 (10-10-2025) Live Chat Assistance-Overview AUR Chat was implemented to provide assistance for taxpayers who receive AUR notices and visit IRS.gov web pages for further information. The goal of text chat is to assist taxpayers through a chat environment in lieu of calling into the AUR toll free lines. Automated Chatbot assistance answers a limited range of general questions. If the taxpayer requests additional assistance, they're added to the Live Chat queue. AUR Text Chat uses the eGain application as its platform. Users obtain access to the eGain application through a request on the BEARS application. The eGain application includes Quick Responses and Knowledge Base Articles (KBAs) to assist employees with responses. Employees can edit them to response to taxpayer specific questions or formulate their own responses as needed. There are two types of chat, Unauthenticated and Authenticated Text Chat. They're defined as followed: Unauthenticated Text Chat: Employees don't have access to taxpayer information and can't access the taxpayers account. Employees can respond to general inquires and provide alternative online options to taxpayers to assist them in meeting their tax obligations. Additionally, the eGain application masks taxpayer identification numbers (TINs) to ensure taxpayer data is secure. Authenticated Text Chat: Employees can provide responses to specific questions after the taxpayer authenticates through the Secure Access Digital Identity (SADI). Refer to IRM 21.2.1.58, Secure Access Digital Identity (SADI), for further information. Assistors provide a link to the taxpayer to route them to the SADI/ID.me (taxpayers will see ID.me as the web address on their screen) where they log in. Once authenticated, their data passes to eGain and routed back to the same assistor on eGain. If the taxpayer fails authentication, they will be routed back to the assistor but can only be offered unauthenticated chat. General guidance for all text chats are as follows: Greet the taxpayer when connected. For unauthenticated chats use the Quick Response "Unauthenticated Greeting" which includes the disclaimer advising taxpayers not to enter their sensitive information into the chat window. Use the Quick Response "Authenticated Greeting" only after authenticating a chat. This greeting is programmed to input the assistors name and badge number when selected. Note: When completing your BEARS for text chat access document in the special instruction field how you would like your name to appear. These are the options on how your name can appear in text chat: Tax Examiner and LAST name or Mr, Mrs, Ms and LAST name, or first name and LAST initial) and your 10-digit (SmartID Card) Personal Identification (PID) Number. See IRM 4.19.3.23.2.1, Answering the Telephone, for further information. Generally, assistors should use the "Quick Responses" and "KBAs" in eGain whenever possible to ensure consistency. However, assistors can edit existing KBAs in the text field or save their own frequently used paragraphs to the Scratchpad when needed to quickly answer recurring taxpayer questions if a response is not already available. See Live Chat Assistance User Guide, for further information. Assistors must provide the Quick Response "Chat-Chat Transcript" to taxpayers prior to closing the chat. This will give taxpayers instructions on how to print and/or save their chat transcript. Suicide/Bomb/Other Threats for Authenticated chats: Assistors should notify their manager for any suicide, bomb, or other treats. See IRM 4.19.3.23.2, Telephone Responses, for further information. Suicide/Bomb/Other Threats for Unauthenticated chats: Assistors will attempt to secure the taxpayers phone number or other information that can be used to track the taxpayer. They should try to call the taxpayer and then follow the guidelines above. See IRM 4.19.3.23.2, Telephone Responses, for further information. Note: Currently there's no method to track an unauthenticated user.

# Live Chat Assistance-Unauthenticated and Authenticated

4.19.3.23.3.1 (10-29-2024) Live Chat Assistance-Unauthenticated and Authenticated A chat session may be unauthenticated or authenticated. Assistors can answer general questions in the unauthenticated chat. If it becomes necessary to access the taxpayer's account, then use paragraph (3) below to authenticate the taxpayer. Note: If the taxpayer chat is already authenticated, move to the first row of the table in (3) below. For unauthenticated chat, assistors will answer general questions. If the taxpayer attaches documentation while in an unauthenticated chat, send the documentation to clerical to be associated with the AUR case. Note: If at any point the chat becomes authenticated, DO NOT forward documentation to clerical. Work the case universally. See Live Chat Assistance User Guide, for further information. If it becomes necessary to access the taxpayer's account, forward the Secure Access Digital Identity (SADI) link to authenticate the taxpayer and take actions using the table below: Note: If a POA/authorized representative is chatting on behalf of their client, the Customer pane may display their information rather than the taxpayers. The POA/authorized representative may attach a Form 2848, Power of Attorney and Declaration of Representative, or Form 8821, Tax Information Authorization, to validate the representation. If the Form 2848 or Form 8821 is attached see IRM 4.19.3.23.1.21, Letters From a Third-Party and Authorization From a Valid Power of Attorney (POA), for further information. If Form 2484 or Form 8821 is not present, ask the POA/authorized representative to attach one. Once you determine the validity of the POA/authorized representative, use the If/Then chart below to determine the appropriate actions. If Then Taxpayer and/or their valid POA/authorized representative passes authentication Use the appropriate Quick Response to request the tax year, if applicable. Access the account on the AUR system, by entering the taxpayers SSN and checking the "TEXT CHAT" box on the HISTORY/VIEW/REQUEST window. Note: Bypass the DISCLOSURE VERIFY window by checking the required boxes. The taxpayer has already passed disclosure during the authentication process. Enter the Case ID number from eGain in a case note. Note: This should be a separate case note. The same procedures for correspondence outside of eGain are followed when controlling a case through Universal Work or determining the validity of the taxpayer's response. See IRM 4.19.3.23.2.5, Universal Case and IRM IRM 4.19.3.23.2, Telephone Responses, for further information. If the taxpayer submits documentation during the chat, and unable to work universally, forward the document to clerical to upload into the AUR system. Note: If the document can be worked universally, don't forward as it's kept on eGain. If the taxpayer provides an oral statement and you're unable to work the case universally, check the action required box. See IRM 4.19.3.23.2.5, Universal Case, for further information. Use the appropriate Quick Responses, KBAs, and manually formatted responses to the taxpayer to respond. Leave a detailed case note. Reminder: Don't include the case note with the case id number, as it's a separate note. Taxpayer and/or their POA/authorized representative doesn't pass authentication Taxpayer will be redirected back to the assistor where unauthenticated chat can resume. If the taxpayer agrees to continue unauthenticated chat, use the appropriate Quick Responses and KBAs to response to their general questions. If the taxpayer submits documentation during the chat, forward the document to clerical to upload into the AUR system. Caution: Don't access the case as result of the submission during the chat. There is no authorization for AUR assistors to attach any documents to chats and send to the taxpayer. Exception: During authenticated chat ONLY, AUR assistors can attach a copy of the notice if requested by the taxpayer. Please see Live Chat Assistance User Guide, for further information.

# Taxpayer Digital Communication (TDC) Overview

4.19.3.23.4 (10-02-2024) Taxpayer Digital Communication (TDC) Overview Taxpayer Digital Communication (TDC) provides an alternative communication option for taxpayers under review in the Automated Underreporter (AUR) Program. One segment of TDC is Secure Messaging. The eGain system is used to communicate with the taxpayer via secure messaging. Access to eGain requires a Business Entitlement Access Request System (BEARS). The AUR system is used to process the cases. TDC leverages technology to improve communication with the taxpayer (referred to as Customer on eGain). Taxpayers often experience long gaps between communications with the IRS due to the inherent slowness of the standard mail process. Secure Messaging shortens the communication period and provides more real-time decisions which can decrease overall case time. Secure Messaging provides taxpayers the opportunity to interact with the TE without using the mail. Taxpayers can upload and submit documentation directly to the TE working their case. Communications between the taxpayer and the TE are done through a secure email server. Authorized representatives are also allowed to participate. Secure Messaging doesn't change IRM procedures. The unique feature of TDC is the use of digital communication technology. Many TDC procedures mirror those actions normally taken by AUR TEs in their non-TDC interactions. Correspondence must be viewed online, not printed

# Overall Process

4.19.3.23.4.1 (10-10-2025) Overall Process TDC Secure Messaging AUR cases include taxpayers who have apparent underreported (UR) income. Ensure the correct OFP code is used to record all time spent on TDC cases. Restricted Cases Codes (RCC) have been established to identify TDC cases and whether the taxpayer has opted to use secure messaging to correspond with AUR. They are as follows: RCC Code Meaning Action T Taxpayer opts into TDC. TE updates this code to "T" . H Taxpayer opts into TDC and submits correspondence outside of eGain. TE updates this code to "H" . The RCC will be checked in the Analysis screen each time the case is worked to ensure the correct code is assigned to the case. RCCs are extremely important to measure the project. Unless otherwise stated in this IRM section, the same procedure for correspondence outside of eGain are followed when controlling a case or determining the validity of the taxpayer's response: The IRS Received date must be updated on AUR every time a new secure message is received from the taxpayer or authorized 3rd party. Mark the VIRTUAL CORR box when updating an IRS Received date from a secure message. When communicating through secure messaging, mark the TDC NOTICE SUPPRESSION box before releasing the case. This will suppress future notices. See Secure Messaging Taxpayer Digital Communication Guide, for further information. Note: This won't suppress the Statutory Notice of Deficiency. Taxpayers will always receive the Statutory Notice of Deficiency by mail as this is required by law. Knowledge Based Articles (KBAs) have been developed to mimic the information normally sent in a Letter 2626-C or a Letter 1802-C. An Open letter is available in Secure Messaging to allow any of the KBAs to be selected and sent digitally to the taxpayer. A copy (pdf version) of the revised CP 2000 Notice will be included as an attachment to the taxpayer. Check your Secure Messaging Inbox daily for any new cases assigned, new correspondence from the taxpayer or authorized representative, or any new assigned task activities. Review all new messages to determine if a reply is necessary. For example: the taxpayer may have a question or request an extension. The eGain system uses different terminology users must be aware of: Customer - Each taxpayer is one Customer. It is possible to have multiple customers linked to one case (Primary Taxpayer, Secondary Taxpayer, POA). Case - A case is comprised of multiple Activities. Each case has a unique Case number. Activities - Each interaction (secure message) or task with a customer is an activity. Each activity has a unique Activity number. Advisor Screen - The main screen displayed when user access eGain.

# Secure Messaging

4.19.3.23.4.2 (12-19-2023) Secure Messaging eGain is designed to use your PIV to access the system, therefore, no "login" is required. When you access the Secure Messaging application, the Advisor screen displays. The Advisor Logo is designated to work as a Home button. Users can click the Advisor logo to return to the Home screen. The Advisor screen is divided into 3 panes: Inbox, Reply, and Information. An additional option, Scratchpad, to the far right of the screen can be expanded for use. Inbox - This pane defaults to Main and contains the user's inbox information. To access any of the messages in the inbox, the user clicks on the desired message. Reply/Task - This pane defaults to Reply and is used to reply to the taxpayer's messages or to monitor and track assigned tasks. The pane is blank until an inbox selection is made. Some information, such as the "To" and "Subject" lines are auto populated based on the user's inbox selection. Information - This pane defaults to Activity and contains a variety of information regarding a specific case depending on which icon is selected. The information doesn't display until input selection is made. Note: Upon access, there is a hidden pane called Scratchpad. This pane can be expanded by clicking on the Scratchpad tab on the far right of the screen. This pane is used to write and save notes for future reference. These notes are private to the user and can only be viewed by the user in Scratchpad. The user can add these notes to replies. Each pane can be fully expanded or compressed to better display the necessary information. Clicking the small arrows next to the various areas will maximize and minimize the panes. To adjust the panes without maximizing, click and drag the borders to adjust the dimensions. Please see Secure Messaging Taxpayer Digital Communication Guide, for further information on eGain functionality.

# New Case in eGain

4.19.3.23.4.3 (12-19-2023) New Case in eGain The eGain system automatically takes the following actions after the taxpayer goes through Guided Help and authenticates: Assigns the case(s) to a user via Round Robin. Sends a welcome message to the taxpayer allowing them to reply. Note: Once the taxpayer/representative receives the welcome message, they can submit documentation. Sends a welcome message to the user's inbox on eGain. Displays the questions and answers the taxpayer/representative completed during Guided Help in the Activity Body on the Information Pane.

# Viewing a Message/Task

4.19.3.23.4.4 (12-19-2023) Viewing a Message/Task When a new activity comes into the user's inbox, it needs to be reviewed to determine if any action is needed. To view a message/task, you must first select the activity from the inbox. Once an activity is selected, the Reply pane and the Information pane refresh to display the contents and details of the email activity. Note: Depending on the resolution of your desktop, you may need to click the Activity Body tab in the Information pane to view the content of the message. If there are any attachments, the Attachment icon (paperclip) is displayed in the Inbox. To download the attachment, navigate to the Activity Body tab of the Activity pane and click the attachment file. The system prompts you to choose Open, Save or Cancel.

# Actions to Take on a New Case

4.19.3.23.4.5 (10-10-2025) Actions to Take on a New Case A welcome message will appear in the user's inbox on eGain which indicates a new case is assigned to them. To work the case take the following action: Research Case History for the presence of a response received outside of eGain. Ensure the case information with the tax period, project/category code and primary SSN is correct in the Case Details section. Update and Save the information if appropriate. Request the case on AUR using Universal Work Case (UWC). See AUR System Guide, Controlling Individual Inventory. Input a History item "AUR-TDC" on IDRS. See (3) below. Input a case note on AUR to document the taxpayer has opted into Secure Messaging, and include the taxpayer's TDC Case ID number and leave a separate case note for any actions taken. Update the RCC on AUR to "T" . Update the RCC to "H" instead, if a response received outside of eGain is present. Hold the case for 5 days from the date of the Welcome Message, pending a message from the taxpayer. If a message is received from the taxpayer, see IRM 4.19.3.23.4.6, Actions to Take When the Taxpayer Responds via Secure Messaging, for further information. If no message is received, release the case using IPC RF. Complete the activity in eGain. See Secure Messaging Taxpayer Digital Communication Guide, for more information on eGain procedures. Note: Digitized responses outside of eGain can be worked through Universal Work Case at any campus. See IRM 4.19.3.23.2.5, Universal Case, for further information. To leave a history item using IAT: Access IAT Tool Click on Quick CC, QCC IAT displays Enter SSN with dashes in TIN field, 30 in MFT field, 20XX12 in TXPD, then click on TXMODA TXMOD displays Return to IAT Click on Act On, the Act On Histories window displays Enter "AUR-TDC" in the History field, click Transmit

# Actions to Take When the Taxpayer Responds via Secure Messaging

4.19.3.23.4.6 (10-02-2024) Actions to Take When the Taxpayer Responds via Secure Messaging When a message is received on an assigned case, the tax examiner requests the case on AUR using Universal Work Case (UWC). If the taxpayer's reply contains an attachment, the system automatically sends an acknowledgement message. Review case history to determine if a response outside of eGain has been received and update the RCC if appropriate. Digitized responses outside of eGain can be worked through Universal Work Case at any campus. When a message is received, take the following actions for each case: Input the IRS Received Date on AUR and mark the VIRTUAL CORR box. Review the taxpayer's reply, any attachments and take the necessary actions: If the TP's reply Perform on AUR Perform on eGain Resolves all issues Leave a case note stating case closed per taxpayer reply in TDC. Input appropriate closing PC and release the case. Send closing message. Mark IRS Case Status Completed. See Secure Messaging Taxpayer Digital Communication Guide, for further information. Resolves some of the issues Review any responses received outside eGain to ensure they have been addressed. Recompute the tax based on remaining issues. Input appropriate PC to issue recomputed notice. Mark the TDC NOTICE SUPPRESSION box in Case Analysis and release case. Monitor for recomputed notice to post. Once posted create a PDF of the notice. Check the TDC UPLOADED box in the PRINT NOTICE window in Case History Window. Create response to taxpayer using KBA's or open paragraph. Attach PDF copy of recomputed notice. Click Send and Complete. See Secure Messaging Taxpayer Digital Communication Guide, for further information. Meets agreed criteria. See IRM 4.19.3.23.7, Agreed Responses Leave a case note stating case closed per taxpayer reply in TDC. Input the appropriate PC or IPC. Release the case. Create message using appropriate KBA to explain case closed agreed. Update IRS Case Status to Completed and click Save. Click Send and Complete. See Secure Messaging Taxpayer Digital Communication Guide, for further information. Requests an extension Leave a case note documenting request for extension. Input IPC 6X to suspend the case. Release the case. Create message using appropriate KBA granting the extension. Click Send and Complete. See Secure Messaging Taxpayer Digital Communication Guide, for further information. If after reviewing the taxpayer's reply additional information is needed, take the following actions: Perform on AUR Perform on eGain Leave a case note documenting the information being requested. Use the CREATE CORRESPONDEX LETTER window to create a manual Letter 2626-C. Use the appropriate IPC (3S, 6S, 8S). Release the case. Create message using appropriate KBA to request the information. Click Send and Complete. See Secure Messaging Taxpayer Digital Communication Guide, for further information

# Closed Case - Response/Recons in eGain

4.19.3.23.4.7 (04-25-2025) Closed Case - Response/Recons in eGain Closed case responses in eGain are routed back to the Campus eGain Unit who handled the case last. When the taxpayer signs up for Secure Messaging after the closure of the AUR case, the eGain case must be assigned to a RECON TDC examiner to be worked. These cases can be worked through Universal Work Case. The Lead/Manager will evaluate the response and determine if the IRS Case Status should be updated and transfer to designated TDC examiner in eGain. If the message doesn't contain a request for the case to be reopened, click Complete in the Reply pane to close the issue. Input appropriate IPC. If the case can be handled as a one-time response and does NOT require an adjustment, let the IRS case status remain completed. Input the IRS received date and the appropriate IPC. If the case meets Recon criteria and requires an adjustment or correspondence, take the following actions: If necessary, input STAUP, see IRM 4.19.3.27.4, Initial Case Actions, for further information. Change the IRS Case Status to "Open" . Update the Recon Indicator in the Case Details pane to "Y" , then click the Save Button. Compose reply to the taxpayer. When the recon is resolved (i.e., adjustment made and/or response to correspondence received) change the IRS Case Status to Completed. Input the appropriate IPC. Caution: When issuing disallowance Letter 105-C or 106-C, do not attach through eGain. These letters must be completed through the IAT letter tool, which will mail a certified letter to the taxpayer. If necessary, use the appropriate KBA(s) to explain the issue.

# Termination and Terms of Service

4.19.3.23.4.8 (12-19-2023) Termination and Terms of Service Taxpayers, and any authorized representatives, must agree to the "Terms of Service" prior to registering and being granted access to the eGain Secure Messaging system. The Terms of Service describe the types of communication approved and restrictions to be followed when using the system. Some examples of prohibited behaviors are sending unacceptable content, such as inappropriate pictures, attaching viruses, excessive correspondence, and other behaviors meant to disrupt the process. The Terms of Service agreed to are in the Knowledge Base Articles in the eGain system. If determination has been made which a user has violated the terms of service, send a warning message regarding the violation. If they continue to disregard the Terms of Service, they are terminated from the system. Note: Prior to sending a warning message or termination notice, supervisory approval must be obtained and documented accordingly on both AUR and eGain. To terminate Terms of Service, remove RCC T/H and the "Y" in the TDC INVITE field in Summary Screen. Leave a detailed case note on actions taken. For actions to take on eGain see Secure Messaging Taxpayer Digital Communication Guide, for further information.

# Disaster Procedures

4.19.3.23.4.9 (12-19-2023) Disaster Procedures Normal disaster procedures apply to all taxpayers in Secure Messaging. If a taxpayer signs up for Secure Messaging during the disaster suspense period, don't take any further follow up action (sending a notice, letter asking for information, etc.) unless the taxpayer replies to our welcome message. If the taxpayer replies, see IRM 4.19.3.23.1.16, Disaster Cases, for further information.

# Instructions Specific to Income/Issue Types

4.19.3.23.5 (09-01-2004) Instructions Specific to Income/Issue Types The following instructions provide guidelines for working specific AUR issues. See IRM 4.19.3.5.8, Fraud Referral Program, for potential FRAUD referrals.

# Wages

4.19.3.23.5.1 (10-10-2025) Wages If the taxpayer replies that the U/R income is a STIPEND (scholarship/fellowship) and is excludable from income, follow procedures in IRM 4.19.3.8.1.4, Fellowships, Grants, and Stipends. If the taxpayer responds that the income identified as underreported is strike benefits that did not exceed the amount of their contributions to a strike benefit fund, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. Income of this type is taxable ONLY when it exceeds the amount contributed. If the taxpayer responds that unreported wages are nontaxable sick pay, and states: They paid the premiums, and provides payer documentation, consider the issue resolved. The employer paid the premiums, correspond with the taxpayer and advise that sick pay is taxable. Both the taxpayer and the employer paid the premiums, issue a Recomputed Notice, Statutory Notice, or Supplemental Report (Recomputed Notice after the Statutory Notice) on the amount of sick pay the taxpayer actually received from payments made by the employer. If the taxpayer responds that the unreported wages are ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the taxpayer's response includes an SSA determination letter on the WAGE IR(s) in question, consider the issue resolved. As SSA has already made a determination, don't prepare a Form 9409, IRS/SSA Wage Worksheet. Note: A taxpayer response indicating contact with SSA isn't justification to delete WAGE IR(s). Issue a Letter 2626-C to request a copy of the SSA determination. Reminder: If deleting Wage IRs and there is no SSA determination letter, see IRM 4.19.3.23.9.4, Referrals, to prepare a Form 9409, IRS/SSA Wage Worksheet.

# Statutory Wages

4.19.3.23.5.1.1 (10-07-2019) Statutory Wages The taxpayer explanation is acceptable when the taxpayer provides ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. Consider the taxpayer a statutory employee if the explanation meets all three of the following criteria The taxpayer understood from the service contract with the employer that they were to perform the services personally. The taxpayer did not have a substantial investment in facilities (other than transportation) used to perform the services. The service involved a continuing relationship (between the taxpayer and the payer) with the person for whom the services were performed and the taxpayer engages in any of the activities listed below: Agent-driver or commission-driver who delivers meat, vegetables, fruit, bakery products or beverages (other than milk) or laundry or dry cleaning for someone else. Full-time life insurance salesperson. "Home worker" who works by the guidelines of the person for whom the work is done with materials or goods furnished by and returned to that person or to someone that the person designates. Traveling or city salesperson (other than an agent-driver or commission-driver) who works full-time (except for sideline sales activities) for one firm or person getting orders from customers. The order must be for items for resale or used as supplies in the customer's business. The customers must be retailers, wholesalers, contractors, or operators of hotels, restaurants, or other businesses dealing with food or lodging.

# Dependent Care Benefits

4.19.3.23.5.1.2 (10-07-2019) Dependent Care Benefits The taxpayer explanation is acceptable when they are participating in one of the following ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: Prepare a Mock 2441 to determine if the taxpayer still qualifies to take the Child Care Credit. Pursue any disallowed Child Care Credit.

# Interest

4.19.3.23.5.2 (10-10-2025) Interest 99INT IRs with EIN 38-1798424 is credit interest paid by the IRS to the taxpayer from previously filed tax return(s). If the taxpayer requests information or disclaims knowledge of this IR, DO NOT issue a Letter 2625-C. Use IDRS CC IMFOLT or Control D for MFTRAC to request a complete Master File transcript. Interest appears as TC 770 or 776. A reversal appears as TC 771, 772 or 777. If interest posted to the taxpayer's account and was subsequently reversed, or isn't present, delete or adjust the IR(s) as necessary. Send the appropriate letter or a Recomputation Notice (CP 2000) or Supplemental Report (Recomputed Notice after the Statutory Notice) to the taxpayer and apologize for the error. If sending a letter, send a paragraph using the following verbiage as an example: "The interest from the United States Treasury shown on our CP 2000 was incorrect. We apologize for any inconvenience this may have caused you." If issuing a notice, send PARAGRAPH 247, see Exhibit 4.19.3-7, CP PARAGRAPHS. If the interest was posted to the taxpayer's account and not reversed, issue a Recomputation Notice or Supplemental Report. If the taxpayer replies that the Saving Bond Interest was inherited and/or was reported on the estate return, issue a Letter 2626-C with a paragraph using the following verbiage as an example: "Saving bond interest is taxable to the beneficiary, unless the entire amount of interest was reported on the decedent's final individual (Form 1040) tax return. Please verify the decedent's tax treatment and submit a signed statement of explanation." Accept the explanation and delete the IR when: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

# Savings Bond Exclusion

4.19.3.23.5.2.1 (11-29-2023) Savings Bond Exclusion The taxpayer may recompute a savings bond exclusion that differs from the system's as displayed in the RECOMPUTED SAVINGS BOND EXCLUSION field. When this happens: Enter the taxpayer's figure in the RECOMPUTED SAVINGS BOND EXCLUSION field. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the taxpayer's figure is within the tolerance range, as defined in Step 2 above, the entry is accepted. If the taxpayer's figure isn't within the tolerance range, the entry isn't accepted and a message displays showing the acceptable tolerance range. SAVINGS BOND EXCLUSION window is used to compute/recompute the savings bond exclusion when there is a change to the taxpayer's AGI. See IRM 4.19.3.8.3.4, Savings Bond Exclusion, for further information. Note: The ADJUSTED GROSS INCOME window may display.

# Dividends

4.19.3.23.5.3 (08-26-2016) Dividends Accept the taxpayer's explanation and delete the IR when: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the taxpayer responds that ordinary dividends are reported on Schedule D, see IRM 4.19.3.23.1.22, Schedule D Changes. The taxpayer may respond that they are entitled to qualifying dividends or additional qualifying dividends (QDIV). The QDIV is the amount of ORDIV that is eligible for the 20 percent or lower capital gain rate. If the taxpayer did not claim qualifying dividends on the original return and now states they want the capital gain rate, take the following actions: Note: This allows the system to use the revised qualified dividends in calculating the Schedule D tax rate. If Then There are no QDIV IRs Create an IR with the Income Type literal of QDIV for the total amount of ORDIV that is eligible for the 20 percent or lower capital gain rate. Enter status code "U" for the created QDIV IR(s). Enter zero (0) in the reported per return filed. There is more than 1 IR containing QDIVs and the IR amount is less than the taxpayer is requesting Group the QDIV IRs. Note: The Group function is a tool to assist the TEs in computing the correct U/R amount. It may not be necessary to use the Group function if the correct U/R can be determined without it. To determine the amount for step 4 below, compare the requested amount with the amount on the return. Enter status code R for the group. Create an IR for the difference (from step 2 above) and DO NOT add to group. Enter status code U on the created IR. Enter zero (0) as the reported per return. The QDIV IR(s) equal the amount of QDIVs the taxpayer is requesting Enter status code U on the IR. Note: If there are multiple IRs the Group function can be used to determine the U/R amount. Enter amount reported on return. If no amount enter zero (0) in reported per return field.

# SITR

4.19.3.23.5.4 (10-25-2023) SITR ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The total of the SITR IR amount(s) must match the Form 1040/ Form 1040-SR, Schedule 1, line 1. If they don't match, delete the existing IR(s) and create a new one equal to the amount of SITR that needs to be refunded. Enter the amount of SITR to be refunded in the REPORTED SITR field. Enter a zero (0) in the PRIOR YEAR TOTAL ITEMIZED DED field on the SITR window Accept the explanation when: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Numerous states don't issue paper Form 1099-G documents. If the taxpayer responds that they did not receive the Form 1099-G, advise them that failure to receive information documents isn't an acceptable explanation.

# Fishing Income

4.19.3.23.5.5 (10-06-2022) Fishing Income Accept the taxpayer explanation that ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the income is NEC, FISH, or FRSL accept the response when it states the taxpayer is a fisherman and one of the following: ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

# Retirement Distributions - Form 1099-R

4.19.3.23.5.6 (11-29-2023) Retirement Distributions - Form 1099-R If the taxpayer responds with a completed Form 4972 and the U/R income in question is from a 1099R, Lump-Sum Distribution IR, verify Form 4972, Part 1 to determine if the taxpayer qualifies. If so, consider the taxpayer entitled to the special tax treatment and input the appropriate entries on the Lump Sum Tax window. See IRM 4.19.3.8.10.8, Lump-Sum Distributions, and AUR System Guide, Computing Worksheet Windows, for further instructions. Include ALL qualifying income in the ORDINARY INCOME field. This includes any unreported income which also qualifies for the special tax treatment. If there was a math error on the taxpayer's Form 4972, issue a Recomputation Notice (CP 2000) or Supplemental Report (Recomputed Notice after the Statutory Notice). Send PARAGRAPH 130, see Exhibit 4.19.3-7, CP PARAGRAPHS. If there is NO math error, accept the taxpayer's Form 4972. Input status code "R" in the IR CD field on the Case Analysis screen for the 1099R IRs included on Form 4972. Note: If the taxpayer indicates the Lump-Sum distribution was received by multiple recipients, enter a "Y" in the MULTIPLE RECIPIENT IND field. Enter the taxpayer's percentage of the income in the MULTI RECIPIENT PERCENT field. (Use the information from taxpayer's response, or the percentage from Form 1099-R, box 8 or 9.) If the taxpayer responds with a completed Form 4972 and the U/R income in question is from a 1099R IRA distribution IR(s), issue a Letter 2626-C advising the taxpayer that IRA distributions don't qualify for Form 4972 treatment. Note: If issuing a Recomputed Notice, send PARAGRAPH 152. See Exhibit 4.19.3-7, CP PARAGRAPHS. When adjusting U/R Form 1099-R distributions, review the Retirement Savings Credit window to ensure the entries in the TOTAL DISTRIBUTIONS field have been correctly updated. The explanation is acceptable when: The Taxpayer States or Provides ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The retirement distribution was rolled over and provides Form 5498 or similar documentation. See (6) below if the response indicates rollover was not timely (within 60 days) and (7) below if response indicates rolled over to a Roth IRA. Note: Military retirement distributions and 1099R IRs with COD "E" , "L" , "P" , "U" , "3" , "5" , and "8" can't be rolled over. The taxpayer indicates they qualify for a waiver under Rev. Proc. 2016-47, IRC 402(c), IRC 408(d)(3)(I), or their employment or plan was terminated, and the outstanding plan loan offset was rolled over and provides Form 5498 or similar documentation indicating the rollover was made by the due date, including extensions, of the return. Note: The remaining distribution, if any, must be rolled over within the 60-day timeframe or be reported as a taxable distribution on the appropriate line of Form 1040 and may be subject to additional tax on early distributions. See IRM 4.19.3.8.10.4, for additional information. Documentation reflects rollover fees and the amount of the fees match the U/R amount. The distribution was ≡ ≡ ≡≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ The taxpayer indicates ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡" . ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: If Form 8606 isn't correctly completed, see (8) below. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The Simple IRA distribution (COD "S" was rolled over (provides Form 5498 or similar documentation), ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The Roth IRA Distribution was rolled over (provides Form 5498 or similar documentation,≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The Roth IRA Distribution≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The Roth IRA Distribution≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The Roth IRA Distribution ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The IRA (traditional or ROTH) distribution≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The distribution is a life insurance policy surrendered for cash and ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. Reminder: If accepting the taxpayer explanation for an IRA Deduction or Form 1099-R Distribution, review the Retirement Saving Credit window to ensure entries are correct per the taxpayer response. Note: See IRM 4.19.3.8.10.7, IRA Distributions, for further information. If there is an indication of a non-spousal IRA with an IR containing a COD 4 and the taxpayer reply doesn't indicate it is a trustee to trustee rollover, send PARAGRAPH 241, see Exhibit 4.19.3-7, CP PARAGRAPHS. If the taxpayer's reply indicates the rollover was NOT made within 60 days, issue a Letter 2626-C and include a paragraph using the following verbiage as an example: "Since you indicated the rollover was not timely (within 60 days), your distribution is taxable." Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the taxpayer states they rolled over their traditional IRA into a Roth IRA, a portion may be taxable. Advise the taxpayer to complete Form 8606 to determine the taxable amount. If the FMV amounts are not included on Form 8606, line 6, don't accept the Form 8606, Part I. Consider the IR(s) partially or fully U/R. Send PARAGRAPH 54, see Exhibit 4.19.3-7, CP PARAGRAPHS. If the taxpayer's response indicates they are a Military member with a combat related disability, see IRM 4.19.3.8.10.6.1, Military Pensions.

# Rent and Royalty Income

4.19.3.23.5.7 (10-07-2019) Rent and Royalty Income Accept the explanation when: Taxpayer is a member of a federally recognized Native American tribe ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The rental was ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The rental income was ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

# Conduit Income

4.19.3.23.5.8 (09-21-2020) Conduit Income Accept the explanation when: The Taxpayer ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

# Agricultural Subsidies

4.19.3.23.5.9 (08-16-2011) Agricultural Subsidies Accept the taxpayer statement that their AGSUB payments are nontaxable ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

# Patronage Dividends

4.19.3.23.5.10 (09-01-2003) Patronage Dividends Accept the explanation when: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

# Unemployment Compensation

4.19.3.23.5.11 (10-10-2025) Unemployment Compensation Accept the taxpayer explanation when ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Many states have Paid Family and Medical Leave (PFML) benefits. If the taxpayer states the income reported on Form 1099-G, Certain Government Payments, box 1 as unemployment is related to PFML or uses similar language, the income is generally fully taxable. Taxpayers may exclude medical leave benefit amounts attributable to employee contributions or employer paid contributions on behalf of the employee. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡Send PARAGRAPH 238, see Exhibit 4.19.3-7, CP PARAGRAPHS.

# Social Security/ Railroad Retirement (SS/RR)

4.19.3.23.5.12 (10-29-2024) Social Security/ Railroad Retirement (SS/RR) If the taxpayer replies that the proposed taxable SS/RR benefits includes nontaxable Workers' Compensation, issue a Letter 2626-C and inform the taxpayer that Workers' Compensation that reduces SS/RR benefits is considered as SS/RR when computing taxable benefits. Note: The Workers' Compensation appears as WCOMP on the SS/RR IR. The WCOMP amount is included in the SS/RR amount. If the taxpayer disagrees with the underreported SS/RR because a portion of the gross benefits includes payments for previous year(s), take the following action: If Then The taxpayer provides an LSE worksheet ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Issue a recomputed notice, if appropriate. The taxpayer states prior year return(s) was amended to include the taxable SS/RR for that year(s) Check IDRS CC IMFOL. If the adjustment(s) posted, then determine if the taxpayer reported the proper amount of SS/RR for the AUR tax year. Issue a recomputed notice, if appropriate. The prior year(s) was not adjusted Issue Letter 2626-C to advise the taxpayer they may benefit by using the Lump Sum Election method to calculate Social Security Benefits. Refer the taxpayer to Pub 915, Social Security Benefits and Equivalent Railroad Retirement Benefits. Note: If a recomputed notice is necessary, create a SS/RR IR for the benefits received in the AUR tax year. If the taxpayer disclaims knowledge of a Form SSA-1099, don't generate a Letter 2625-C to the Social Security Administration. Issue a Letter 2626-C and inform the taxpayer that they will need to contact their local SSA office to obtain a corrected statement. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ if there is an indication the taxpayer is a resident of one of the following countries: Canada Egypt Germany Ireland Israel Italy Japan Romania The United Kingdom If the taxpayer's response indicates that the SS/RR isn't taxable because they are disability benefits, send a letter to advise the taxpayer that disability benefits received from the Social Security Administration are treated the same as regular SS/RR benefits. If a recomputed notice is being sent, send PARAGRAPH 253. See Exhibit 4.19.3-7, CP PARAGRAPHS, for further information. If there is an indication the payments were a result of a terrorist attack, see IRM 4.19.3.23.1.14.1, Killed in Terrorist Action/Killed in Action (KITA/KIA), and IRM 4.19.3.23.1.26, Victims of Terrorist Attacks, for additional information.

# NEC and MERCH

4.19.3.23.5.13 (10-10-2025) NEC and MERCH See IRM 4.19.3.8.6.1, NEC Analysis and IRM 4.19.3.8.7.1, MERCH Analysis to determine where MERCH and/or NEC can be reported. Taxpayers may reduce amounts by expenses. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ It isn't necessary to request a Schedule C. Assess SE tax, as applicable. Digital assets, for example, bitcoin, may be used to pay for goods and/or services or held for investment. It may be reported on Form 1099-MISC, Form 1099-NEC, Form W-2, Form 1099-B or Form 1099-K. Digital assets received as payment for goods or services when operating a trade or business is generally treated as ordinary income and is generally subject to SE tax. Digital assets held for investment is generally treated as a capital asset and may result in a gain or loss upon the sale or exchange, similar to stocks, bonds and other investment property. See IRM 4.19.3.8.23.1, Securities Sales - Analysis. If the taxpayer's response states: Note: If the taxpayer engaged in any transactions involving digital assets, the digital asset check box at the top of Form 1040/1040-SR will be checked "Yes" . The underreported NEC/MERCH is income from digital assets transactions received for goods or services or was held for investment, and the income is reported on the return, for example, the amount is reported on Schedule C or Schedule D, accept the taxpayer's explanation. Note: If the taxpayer states they reported the fair market value of the digital assets, as of the date and time it was received, accept the income as reported. The unreported NEC/MERCH is from the sale of digital assets held for investment, and the income isn't reported on the return, advise the taxpayer these are capital assets. Any gain or loss from the sale or trade is generally a capital gain or loss and must be reported on Schedule D. The underreported NEC/MERCH income is payment(s) of digital assets, for services rendered by the taxpayer, and the income isn't reported on the return, advise the taxpayer these types of payments are taxable as ordinary income and may be subject to SE tax. In general, the fair market value of the digital assets, as of the date and time the digital assets was received, is taxable income. Accept the explanation if: Accept the taxpayers explanation if: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ Note: If the condition isn't met see (5) below. The income is from the sale of collectibles/items held for investment (for example, gold, silver, stamps, coins, gems), and was reported on Schedule D. See IRM 4.19.3.23.1.22, Schedule D Changes, for additional information. Note: If the condition isn't met see (5) below. The income is from sale of personal items, such as, clothing, refrigerator, stove, sofa, car, electronics, and was reported on Schedule D with net gain (including zero), see (5) below for additional information. Note: If the condition isn't met see (5) below. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: If the condition isn't met see (5) below. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: If the condition isn't met see (5) below. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: If the condition isn't met see (5) below. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The taxpayer responds that the NEC ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: This list isn't all inclusive. If the taxpayer's response indicates: The unreported MERCH/NEC income is from a hobby, advise the taxpayer the income should be reported on Schedule 1, line 8z . The unreported MERCH/NEC income is from sale of collectibles/items held for investment, such as, gold, silver, stamps, coins, gems, advise the taxpayer these are capital assets except when held for sale by a dealer. Any gain or loss from the sale or trade is generally a capital gain or loss and must be reported on Schedule D. The unreported MERCH income is from sale of personal items, for example, clothing, refrigerator, stove, sofa, car, electronics, advise the taxpayer the income can be reported on Schedule D, however losses can't be claimed on the sale of personal items, see (6) below or additional information. The MERCH income is from a fund raiser/charity and doesn't provide the name of the recipient (individual or organization), correspond and request the name of the recipient. Do not adjust the SE tax until the taxpayer responds with the requested information. The MERCH/NEC income was reported on the partnership return or Schedule E, Part II, and Schedule E, Part II doesn't reflect income or loss, or the taxpayer doesn't provide the name and/or EIN of the business the income was reported on. Issue a Letter 2626-C to request additional information. The taxpayer cannot claim a loss on sale of personal items. The taxpayer CANNOT reduce the amount in excess of the MERCH IR. If And Then The taxpayer indicates the MERCH was reported on the original Schedule D The Schedule D reflects a loss for the MERCH IR Consider the IR reported. Recapture the loss in excess of the MERCH IR. See IRM 4.19.3.23.1.22, Schedule D Changes, for additional information. If necessary, issue a recomputed notice. The taxpayer is responding with a new Schedule D The Schedule D reflects a loss for the MERCH IR Consider the IR reported. Advise the taxpayer they can't claim a net loss for the sale of personal items. NEC and MERCH may be subject to SE tax, if the net result is a profit of $400 or more, see IRM 4.19.3.17.1, Self-Employment Tax.

# Other Income

4.19.3.23.5.14 (12-19-2023) Other Income These payments may have been pursued as miscellaneous NEC or as OTINC. They may represent Disaster/FEMA payments, Court Award Settlements or Prizes and Awards. When the U/R NEC or OTINC is from the same payer as the taxpayer's employer and the taxpayer's response indicates that the U/R amount represents a reimbursement of business expenses: Accept the explanation if the taxpayer doesn't attempt to claim excess expenses over the reimbursement amount. Note: If the taxpayer indicates that the expenses were less than the reimbursement, the difference is taxable income. If the taxpayer attempts to claim excess expenses over the reimbursement amount and doesn't provide a completed Form 2106, don't allow the excess deduction. Send PARAGRAPH 159, see Exhibit 4.19.3-7, CP PARAGRAPHS, if issuing a recomputed notice, or use the content from PARAGRAPH 159 in the applicable Correspondex letter. Note: Only Armed Forces Reservists, qualified performing artists, fee basis state or local government officials and employees with impairment related work expenses can use Form 2106. Form 2106 expenses are reported on Schedule 1, line 12. Accept the response/explanation if: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The taxpayer states the OTINC is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ When U/R income is from a NMS/IFR settlement payment(s): If Then ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Accept the taxpayer's response/explanation. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Accept the taxpayer's response/explanation. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Determine the taxable portion. Subtract the exclusion amount from the gain. If the sum of step 1 is less than the NMS/IFR amount, consider the IR partially reported and pursue the result from step 1. Example: taxpayer is filing status 1, the NMS/IFR payment is $2,000, and the gain is $251,000. $251,000 (gain) - $250,000 (exclusion) =$1,000. The U/R amount would be $1,000 ($2,000 (IR) - $1,000 (result of step 1) = $1000). If the sum of step 1 is equal to or greater than the NMS/IFR payment(s), consider the IR fully U/R. Example: taxpayer is filing status 1, the NMS/IFR payment is $2,000, and the gain is $255,000. $255,000 (gain) - $250,000 (exclusion) =$5,000. The U/R amount would be $2,000 (IR amount). Note: Beneficiaries of National Mortgage Settlement and Independent Foreclosure Review payments may treat the distribution(s) in the same manner as the decedent would have had the decedent lived and received the income. Settlements of $50,000/$12,500 issued on Form 1099-MISC (as OTINC) from the Judgment Fund Branch of the USDA as a result of a class action discrimination suit filed by farmers (known as Black Settlement or Pigford claims) is considered taxable income. If the taxpayer disagrees that the $50,000 OTINC amount is taxable, advise the taxpayer that the settlement is taxable income as described in the letter they received. If the taxpayer disagrees with the $12,500 OTINC amount, research IDRS CC TXMOD for the prior year for the presence of a TC 660 (ES Tax Payment) for $12,500 and determine the date the amount was applied. Advise the taxpayer that the $12,500 credited to their account as an estimated tax payment to defray the tax due on the $50,000 portion of the settlement is considered taxable income in the year it was applied. Inform the taxpayer of the date the amount was applied. If the taxpayer's response indicates the income was from either credit card disability or unemployment insurance plan, advise the taxpayer the income may be taxable. If the taxpayer provides the amount of premiums they paid, follow the chart below: If the premium paid is Then Less than the IR amount The difference is U/R. Equal to or more than the IR amount Delete the issue. Accept the taxpayer's response if it indicates the income is from a physical injury or sickness as part of wrongful incarceration suit or cites IRC 104a(2).

# Court Award/Settlement

4.19.3.23.5.14.1 (09-01-2006) Court Award/Settlement If the taxpayer response doesn't provide a breakdown of the award and claims some portion is non-taxable, and a recomputed notice is being issued send PARAGRAPH 119. See Exhibit 4.19.3-7, CP PARAGRAPHS. If issuing a Letter 2626-C, ensure the letter includes wording similar to PARAGRAPH 119. If the taxpayer response includes a breakdown of the award, accept the following explanations: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ See IRM 4.19.3.8.18.2, OTINC Miscellaneous, for more information.

# Prizes

4.19.3.23.5.14.2 (09-01-2013) Prizes If the taxpayer states that they reported the fair market value of a prize and the amount reported is: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ issue a Letter 2626-C, include a paragraph using the following verbiage as an example: "Please submit verification of the fair market value of your prize at the time it was received." ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ accept the taxpayer's explanation.

# Gambling

4.19.3.23.5.15 (09-01-2006) Gambling If the taxpayer attempts to change the reporting of lump sum payments from their lottery winnings from ordinary income to a capital gain (on Schedule D), disallow the claim. See IRM 4.19.3.8.19.1, Gambling Income - Analysis, for further instructions. If the taxpayer responds with losses (with or without a revised Schedule A), see IRM 4.19.3.8.19.2, Gambling Losses.

# Cancellation of Debt (DBTCN)

4.19.3.23.5.16 (06-01-2023) Cancellation of Debt (DBTCN) When the taxpayer responds that the DBTCN is excludable due to bankruptcy or insolvency, or because it was from a qualified farm indebtedness or qualified real property business indebtedness AND the taxpayer has tax attributes, then Form 982, Part II, Reduction of Tax Attributes Due to Discharge of Indebtedness (And Section 1082 Basis Adjustment), must be completed to determine the required (not allowable) reduction of tax attributes. Tax attributes are the following: Net Operating Loss (NOL) General Business Credit Carryover (Form 3800, General Business Credit) Minimum Tax Credit (Form 8801, Credit For Prior Year Minimum Tax -Individuals, Estates, and Trusts) Capital Losses (from Schedule D) Basis in real or rental property (from Schedule E, Part I or Form 4562, Depreciation and Amortization (Including Information on Listed Property), is attached) Passive Activity Loss and credit carry-overs (Schedule E, Part II) Foreign and Possessions Tax Credit (from Form 1116) Note: Use a Letter 2626-C to correspond for a completed Form 982. Accept the explanation when the taxpayer states that ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. If the taxpayer indicates that the Bankruptcy was Chapter 12, 13 or doesn't indicate the Chapter, then the taxpayer must state or provide documentation that the DBTCN was included as one of the creditors in the Bankruptcy papers. If necessary, correspond with the taxpayer using a Letter 2626-C. If the taxpayer claims insolvency, they MUST provide a statement listing assets and liabilities. The taxpayer is considered insolvent when total liabilities exceed the fair market value (FMV) of assets before the debt was cancelled. The taxpayer may only exclude DBTCN up to the insolvent amount. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Issue a recomputed notice for the remaining taxable DBTCN amount when the DBTCN amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Issue a Letter 2626-C if Form 982 is submitted without a statement listing assets and liabilities include a paragraph using the following verbiage as an example: "The Form 982 you submitted indicates you were insolvent. In order to be considered insolvent, you must provide a statement of your assets and liabilities immediately before the debt was cancelled. You are considered insolvent only when your liabilities exceed your assets. You may only exclude Debt Cancellation up to the insolvent amount." If the taxpayer response indicates the DBTCN isn't taxable under "≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ accept the response and delete the IR(s). If the taxpayer response indicates that the DBTCN includes interest that accumulated on the debt, but was forgiven as part of the DBTCN and was: Non-deductible (for example, interest on a personal loan, credit card) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Deductible (for example, mortgage interest, business loan, investment interest) ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ There is no INTFG amount on the IR, issue a Letter 2626-C to request the documentation. If the taxpayer's response indicates that the DBTCN was for a foreclosure or repossession and: Provides a Fair Market Value (FMV) amount that is larger than the DBTCN amount, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Example: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The DBTCN was due to a non-recourse debt, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ See IRM 4.19.3.8.20.1, Cancellation of Debt (DBTCN) - Analysis. Note: If Form 982, box 1(e) is checked, the taxpayer is allowed to exclude up to two million dollars (one million dollars if married filing separately) of DBTCN resulting from a foreclosure of the principal residence. If Form 982 is incomplete or missing, issue a Letter 2626-C to request the information. A worksheet for Foreclosures and Repossessions or a similar statement is attached, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Entitled to take any losses claimed, issue a Letter 2626-C stating that losses are non-deductible, unless the property was held for use in a trade or business or for investment, in which case a portion of the loss may be deductible. Consider the DBTCN reported when, DBTCN is from a Student Loan, and the taxpayer has indicated either of the following: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the taxpayer states that the discharge of debt is from a Qualified Farm Debt or real property business indebtedness, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, see (1) above. If the taxpayer responds that their financial institution offered a discount for early payment of a mortgage loan, issue a Letter 2626-C to inform the taxpayer that the amount of the discount is considered a cancelled debt and as such is fully taxable and must be reported on their tax return. Do not delete the issue if the taxpayer provides a statement from the creditor/collection agency stating the settlement was paid in full. Issue a Letter 2626-C to inform the taxpayer the difference between the original debt and the settlement offer amount is considered taxable income. Accept the taxpayer's explanation that they are a qualified individual whose principal residence was located in a Midwestern disaster area during the period beginning May 20, 2008, and ending on July 17, 2008.

# Securities Sales

4.19.3.23.5.17 (04-25-2025) Securities Sales If the taxpayer acknowledges the U/R STOCK (for example, provides broker statements or cost basis), however, the response doesn't include a completed Schedule D and/or Form 8949, Sales and Other Dispositions of Capital Assets, take either of the following actions: For single (or relatively few) STOCK IR discrepancies, adjust the U/R STOCK amount by the cost basis provided by the taxpayer or in the broker statement(s) OR For multiple STOCK IR discrepancies, issue a Letter 2626-C with a paragraph using the following verbiage as an example: "Your response did not include the requested completed Schedule D and Form 8949, detailing each securities sales transaction listed on our previous notice. When the necessary information is received, we will adjust your account accordingly." If the taxpayer responds with a revised Schedule D/Form 8949 or cost basis AND the original Schedule D/Form 8949 was a gain or loss, see IRM 4.19.3.23.1.22, Schedule D Changes: Note: If issuing a recomputed notice send PARAGRAPH 44. See Exhibit 4.19.3-7, CP PARAGRAPHS, and toggle off PARAGRAPH 166 in the Summary screen. When the taxpayer disagrees with the U/R STOCK, accept the statement when: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡" ≡ ≡≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If security transactions or STOCK income is related to day trading, see IRM 4.19.3.23.5.17.2, Day Trader - Securities or Commodities.

# Cost Basis - Responses

4.19.3.23.5.17.1 (09-30-2014) Cost Basis - Responses If the taxpayer responds with a completed Schedule D and Form 8949 claiming adjusted cost basis (not shown on the 1099B IR), ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

# Day Trader - Securities or Commodities

4.19.3.23.5.17.2 (12-14-2020) Day Trader - Securities or Commodities ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Advise the taxpayer that in order to avoid future correspondence on this issue, securities transactions relating to trader activities must be reported on Form 4797, Sales of Business Property. Refer the taxpayer to Pub 550, Investment Income and Expenses, for further instructions. If the taxpayer responds with a statement that they wish to make a mark to market election now, take the following action: Note: The election must be filed by the date the return is due (without extensions) for the year immediately preceding the election year (i.e., generally April 15th) for the election to be valid for the election year. Any current statement of mark to market election won't be valid for the AUR tax year. The taxpayer must also file Form 3115, Application for Change in Accounting Method. Review the statement for completeness. The statement must include the following information: The election is made under IRC 475(f), the first tax year for which the election is effective and the trade or business for which the election is being made. If the taxpayer cites Rev. Proc. 99-17 and the current automatic consent procedures (Rev. Proc. 2025-123), require the election statement be attached to the return filed (without extensions) or the extension request for the year preceding the election year. Advise the taxpayer: The election isn't valid for the current AUR tax year; the tax year that the election is valid; and that a Form 3115 must be filed in compliance with the most recent automatic change revenue procedure requirements for the Mark-to-Market Election, Section 24.01 of Rev Proc. 2025-23 If Form 3115 is attached, forward it for processing. Continue normal AUR case processing. If the taxpayer responds that the U/R STOCK is from their trader activities and the taxpayer filed a Form 4797 or provided other evidence of a previously filed mark to market election, delete Income Identify Code "ST" from the affected IR(s) to ensure that the lower capital gain rates and the limitation on capital losses doesn't apply.

# Real Estate

4.19.3.23.5.18 (10-10-2025) Real Estate An adjustment is required when the taxpayer agrees that an amount was U/R or omitted and provides the basis to compute the taxable gain or loss. If the taxpayer doesn't provide the basis to compute the taxable gain or loss, contact the taxpayer to obtain the information needed to make the adjustment using normal processing procedures. Accept the response when: States ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Submits a Form 1099-S, box 4 is checked and a Form 8824 is attached. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The taxpayer may exclude up to $250,000 ($500,000 if married filing jointly or qualifying surviving spouse) on the principal residence, regardless of age. Any gain in excess of the exclusion is taxable. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

# Qualified Education Payment Program (QTP, EARN, GRDIS, or CESA) Distributions

4.19.3.23.5.19 (09-21-2020) Qualified Education Payment Program (QTP, EARN, GRDIS, or CESA) Distributions Accept the explanation when the taxpayer states or there is an indication: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡"≡" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If there is an indication the qualified education expenses were less than the gross distribution (GRDIS), take the following actions: Issue Letter 2626-C (or a recomputed notice) and include a paragraph using the following verbiage as an example: "Your response indicated the amount of qualified education expenses paid were less than the gross distribution of your qualified tuition payment. Generally, a portion of the distribution is taxable when expenses are less than the amount distributed. Please refer to Publication 970, Tax Benefits for Education, to calculate the taxable portion of the distribution and provide us a copy of the computation. Publication 970 is available online at IRS.gov or by calling 800-829-3676." Input the appropriate IPC. If the taxpayer provides a recomputed taxable amount or copy of the computation, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the taxpayer doesn't provide the requested information, continue processing. When adjusting the taxable amount of the distribution a manual calculation of the 10 percent tax is required. See IRM 4.19.3.17.5, 10 Percent Tax on Qualified Education Program Payments, for exceptions to the 10 Percent additional tax.

# Long-Term Care Benefits (LTC)

4.19.3.23.5.20 (09-01-2003) Long-Term Care Benefits (LTC) Accept the following explanations: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

# Foreign Income

4.19.3.23.5.21 (10-10-2025) Foreign Income Accept the explanation when ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Accept the explanation of U/R foreign income for: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

# Mortgage Interest

4.19.3.23.5.22 (11-29-2023) Mortgage Interest If the taxpayer's response includes acceptable explanations for some of the amounts ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If additional research is required to resolve the issue, see Pub 936, Home Mortgage Interest Deduction. If the taxpayer's response states the mortgage interest in question is related to a Schedule E property or makes reference to a passive loss limitation/restriction, determine if the passive loss rules affect the property for which mortgage interest deductions apply, by comparing Schedule E, line 22 (deductible rental loss) to Schedule E, line 21 (income or loss from rental/royalty property). If the deductible loss on Schedule E, line 22 is equal to or greater than the loss on Schedule E, line 21, work the issue as a normal O/D case. If the deductible loss on Schedule E, line 22 is less than the loss on Schedule E, line 21, the loss is subject to passive activity loss rules. When the passive loss activity rules apply, the adjustment to MORT may not affect the current tax year's AGI, but impacts the amount of loss that can be carried forward to the subsequent year. If the taxpayer agrees to the U/R MORT, and claims no impact due to passive activity loss limitations, take the following action: Accept the taxpayer's explanation regarding the U/R MORT issue for the property(ies) in question and ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Send PARAGRAPH 239, see Exhibit 4.19.3-7, CP PARAGRAPHS. Complete Form 5346, Examination Information Report. Include a narrative explaining the nature of the adjustment (to the passive loss carry forward), the amount of the adjustment, the related property that was affected, and all other return information required on the form. Forward the completed Form 5346 to Examination. Leave a case note documenting the actions taken. Note: If the passive activity rules apply, and the taxpayer doesn't respond or doesn't agree with the proposed adjustment to the MORT, follow normal No Response or Disagreed response procedures for the O/D MORT. If the taxpayer responds with Form 8829, see IRM 4.19.3.11.2.1, MORT - Analysis, for further instructions. Accept the explanation when: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Contact the taxpayer and include a paragraph using the following verbiage as an example: "In order to deduct home mortgage interest you must have ownership interest in the property. You can't deduct payments made on someone else's behalf if you are not legally liable to make them. Please provide us with any documentation showing that you have ownership interest in the property." If sending a recomputed notice, send PARAGRAPH 240, see Exhibit 4.19.3-7, CP PARAGRAPHS.

# Self-Employment Tax (SE Tax) vs. Employee Share of FICA

4.19.3.23.5.23 (10-10-2025) Self-Employment Tax (SE Tax) vs. Employee Share of FICA If the taxpayer responds they are NOT LIABLE for SE tax on NEC because they're an employee, take the following action: Issue a Letter 2626-C. Include a paragraph using the following verbiage as an example: "Our records show that you were paid as an independent contractor, subject to Self Employment tax. Please complete, sign and return Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, and attach it to a copy of this letter. Please use one of the response options shown in our notice. To expedite processing please write AUR along the top of Form SS-8." Reminder: During Statutory Notice phase, select paragraph h, to alert the taxpayer that the 90-day period for petitioning U.S. Tax Court is still in effect. Ensure Form SS-8 is sent to the taxpayer. Caution: This process isn't for misclassification of wages (for example, bonus income, supplemental wages). This process is to determine worker status. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the taxpayer responds with a completed (all questions are answered and contains an original signature) Form SS-8: Note: An electronically transmitted signature (for example, a faxed or digitally signed PDF Adobe document) is permitted for determinations requested under Section 12.04 Rev. Proc. 2018-1 regarding the Form SS-8 program. The SS-8 unit will reject any incomplete Form SS-8, see (5) below for incomplete forms. Attach the IRs for the payer in question and Form SS-8. Exception: If the original payer documents (such as, Form 1099-MISC, Form W-2) are attached to the return, print to PDF and attach to the document. Route the Form SS-8 digitally to the SS-8 Group in Holtsville to mailbox *SBSE BCEA SS8 notating AUR-Please Expedite in the subject line of the email. Include any supporting pertinent documentation provided by the taxpayer that may be useful in rendering their determination. Leave a case note. Manually issue a Letter 4314-C to the taxpayer. Provide the following point of contact: SS-8 (BIRSC - Holtsville): Office of the SS-8 Program, 631-977-4597. Suspend the case in the unit for 60 days and monitor. If, after 60 days, the SS-8 group has not responded, contact ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ for determination status. Caution: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The SS-8 unit will reject cases back to AUR in either of the following instances: A 218 agreement exists for the occupation. In this case, the worker has been determined to be an employee and is subject only to FICA tax. See (7) below to compute the employee share of FICA. There is a lawsuit/litigation between the two parties. In this case, inform the taxpayer the payer reported the income as nonemployee compensation, which is subject to SE tax, and we can't change the SE Tax determination without corrected payer information/documentation. Leave a detailed case note and continue processing. If Form SS-8 is incomplete, it will be rejected back through the AUR Coordinator. If the taxpayer responds with an incomplete Form SS-8, take the following actions: If the taxpayer has provided contact information (telephone number), attempt to contact the taxpayer by telephone to secure the information. Advise the taxpayer that each line of Form SS-8 must have an entry or the form will be rejected. Request that the taxpayer complete, sign and resubmit the form. See IRM 4.19.3.23.2.4.1, Out Calls - Calling the Taxpayer, for additional information. Hold the case in unit suspense to wait for the completed form; after 60 days continue normal processing. If the taxpayer has not provided contact information, issue a Letter 2626-C. Include a paragraph using the following verbiage as an example: "The Form SS-8 you submitted was incomplete. In order for a determination to be made you must complete, sign and mail Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, attached to a copy of this letter. To expedite processing please write AUR along the top of Form, SS-8." When the SS-8 Group notifies AUR that the Taxpayer is subject to SE tax: Issue a Letter 2626-C and include a paragraph using the following verbiage as an example: "Our records indicate that a determination has been made that you are an independent contractor subject to self-employment tax." Leave a case note. Continue processing. When the SS-8 Group notifies AUR that the Taxpayer is an employee (subject only to FICA), take the following action: Select the SE Tax window and enter zeroes (0) in the primary and secondary SE TAX NOW fields. This prevents the system from assessing SE tax on the FICA income. Use the Additional FICA Tax window to compute the 7.65 percent of the employee's share of FICA on the gross NEC instead of the originally proposed SE tax amount. Change the Income Identify Code on NEC IR(s) subject only to FICA tax to "PE" or "SE" as applicable. Enter/verify the primary/secondary total reported and U/R NEC subject to FICA tax in the PRIMARY/SECONDARY INCOME SUBJECT TO FICA field(s). Enter/verify the primary/secondary total reported and U/R Social Security wages, tips, and Railroad Retirement compensation subject to FICA tax in the PRIMARY/SECONDARY SS/RR WAGES/TIPS field(s). The REASONABLE CAUSE fields displays only if a computation is required for the Accuracy Related Penalty Due to Negligence. If applicable, enter the portion of any U/R amount meeting reasonable cause criteria. Send PARAGRAPH 163, see Exhibit 4.19.3-7, CP PARAGRAPHS. Note: If the NEC is partially reported on Schedule C, verify the SSNs to be sure you adjust the correct Schedule C. Also, select the FICA Tax window in the proper sequence, see IRM 4.19.3.4.2, Case Analysis Screen. If selected out of order, a message displays describing the proper sequence. See AUR System Guide, Computing Worksheet Windows. When the taxpayer submits an AUR RECON request disagreeing with the assessment of SE tax: Send the appropriate C-Letter advising the taxpayer to complete, sign and submit the Form SS-8, per the instructions on Form SS-8. Include a statement that the process can take up to 180 days to be completed before a determination is rendered. Include Form SS-8. Close the AUR control (assign IPC 9I). If the taxpayer submits an AUR RECON request that includes a Form SS-8 take the following action: Caution: This process isn't for misclassification of wages. (such as, bonus income, supplemental wages). This process is to determine worker status. Attach the IRs for the payer in question and Form SS-8. Exception: If the original payer documents (for example, Form W-2) is attached to the return, make a photocopy of the document to attach. Route Form SS-8 digitally to the SS-8 Group in Holtsville to mailbox *SBSE BCEA SS8 notating "AUR-Form SS-8" on the subject line. Include any supporting pertinent documentation provided by the taxpayer that may be useful in rendering their determination. Note: Do not include verbiage to "AUR - Please Expedite" . Send the taxpayer the appropriate C-Letter advising the taxpayer that the Form SS-8 has been forwarded for consideration and provide the following point of contact: SS-8 (BIRSC - Holtsville): Office of the SS-8 Program, 631-977-4597. Include a statement that the process can take up to 180 days to be completed before a determination is rendered. Close the AUR control (assign IPC 9I ). Note: Once the SS-8 group renders their determination, they will instruct the taxpayer to file a Form 1040-X, including a copy of the favorable determination letter to the Service Center where they filed their original tax return.

# O/C Withholding - Responses

4.19.3.23.5.24 (10-10-2025) O/C Withholding - Responses Schedules K-1 may contain BWH. Accept the taxpayer's response if it includes a copy of the following: Form 1041 - Schedule K-1 and an amount in box 13 with a code "B" OR Form 1065 - Schedule K-1 and an amount in box 15 with a code "O" OR Form 1120-S - Schedule K-1 and an amount in box 13 with code "O" If the taxpayer responds to a notice issued solely for O/C questionable W/H and provides the necessary documentation, close the case No Change. If the taxpayer responds to a notice issued for O/C questionable W/H and doesn't provide the necessary documentation: If the O/C W/H was the only issue, assess the undocumented O/C W/H amount. Issue a letter to inform the taxpayer that we have disallowed the additional W/H, and they will receive an adjustment notice and they may file an amended Form 1040-X when the necessary documentation is obtained. Close the case with PC 53 (CP 2501) or PC 68 (CP 2000). If the notice contains other issues, ensure that the AGREE criteria (see IRM 4.19.3.23.7, Agreed Responses) is met before assessing the account. Caution: If the return is Virtual and there is no information (loose forms, schedules or correspondence), to be associated with the refile DLN, enter "N" in the SOURCE DOCUMENT ATTACHED? field of the Assessment window. If the tax increase is below tolerance, see IRM 4.19.3.22.1, No Response BT 84, before assessing the account. Note: A Statutory Notice of Deficiency can't be issued when there is no tax increase (or the tax increase is below tolerance). The taxpayer has no appeal rights concerning W/H. If the taxpayer responds to a notice issued solely for O/C questionable W/H and indicates that Estimated Payments (ES) were included in the W/H amount, input the adjustment for the ES amount claimed: Ensure that the Return Value screen correctly reflects the needed changes. After committing Return Value screen, access the Assessment window. Confirm the presence of TC 290-0 and Reference Code 807 for the ES amount claimed erroneously. If the taxpayer disputes the proposed adjustment, issue a letter to inform the taxpayer of the pending adjustment. Close the case with PC 53 (CP 2501) or PC 68 (CP 2000). Note: If Tax Account doesn't contain any TC 660s, perform IDRS research to determine where the ES Payments could have posted (for example, possible Spousal Dummy Account). Caution: If the return is Virtual and there is no information (loose forms, schedules or correspondence), to be associated with the refile DLN, enter "N" in the SOURCE DOCUMENT ATTACHED? field of the Assessment window.

# U/C Withholding - Responses

4.19.3.23.5.25 (05-02-2005) U/C Withholding - Responses If the taxpayer responds to a CP 2501 Notice that was issued only for U/C questionable W/H or U/C questionable W/H with U/R issue(s) that result in a below tolerance net tax change and Provides documentation or acknowledges that the U/C W/H should have been reported on the return, allow the additional U/C W/H. See (2) below for further instructions. Example: The taxpayer signs the CP 2501 and makes no indication of disagreement. Fails to address/verify the U/C W/H, close the case with PC 52 (no closure letter). Send a Letter 1802-C to inform the taxpayer that we have concluded our investigation and they may file a Form 1040-X if they have any additional information they want us to consider. Only addresses SOME of the U/C W/H, input the adjustment for the additional documented/acknowledged W/H ONLY on the ASSESSMENT window. See (2) below for further instructions. Send a letter to explain the W/H adjustment allowed and instruct the taxpayer to file a Form 1040-X if they have any additional information they want us to consider. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If all other issues have been resolved or result in a below tolerance net tax change and allowable U/C W/H is still an issue: Exception: If the taxpayer responds with an acceptable Form 1040-X or provides revised figures, pursue all issues. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Complete and commit Return Value screen. Access the Assessment window. Input Priority Code "3" . Close the case with PC 53 (CP 2501), PC 68 (CP 2000) or PC 88(CP 3219A). Caution: If the return is Virtual and there are no scanned documents to be associated with the refile DLN, enter "N" in the SOURCE DOCUMENT ATTACHED? field of the Assessment window.

# Discrepancy Explained/No Change- General

4.19.3.23.6 (10-10-2025) Discrepancy Explained/No Change- General Close a case with no change to original tax liability if a response to the notice contains an acceptable explanation for the full amount in question. Note: Complete the Return Value screen prior to closing the case no change. Note: If the taxpayer gives an acceptable explanation for all income in question and requests an interview, conference, or hearing, take appropriate action to resolve the case. Also contact the taxpayer (via telephone call or a Letter 1802-C), and tell them the issue was resolved and to contact their local Area Office if they still would like an interview. If a case is being closed No Change and the taxpayer submits a payment, enter/verify the TC 290-0 on the Assessment window to refund the payment. Note: Delete any other Reference Code(s), TC(s), and/or amount(s) that are present on the Assessment window (for example, Reference Code(s) 886, 888). If the case is closed No Change and an adjustment to prepayment credits and/or AGI/TXI is necessary, see IRM 4.19.3.23.8, Partially Agreed Responses. No change PCs 15, 47, 48, 51, 52, 70, 71, 72, 73, 91, 92 and 93 automatically generate a TC 290-0 with a "Y" in the SOURCE DOCUMENT ATTACHED? field in the Assessment window for electronically filed returns. If "M" is entered in the Auto/Manual IND field, the automatic assessment doesn't generate. The assessment must be input using the IAT "REQ54" tool. If there is no information (loose forms, schedules or correspondence) to be associated with the refile DLN, enter an "N" in the SOURCE DOC field in the Process Code window. If the taxpayer provides an acceptable explanation of all the income in question, close the case using PC 47, 52, 70, 71, 91 or 92 as appropriate. If the U/R issues are only partially resolved, follow instructions in IRM 4.19.3.23.8, Partially Agreed Responses, or see IRM 4.19.3.23.8.1, Recomputation Notice/Supplemental Report, to determine the correct action (such as, Notice Indicator, PCs). If the case is closed No Change and there is a written request for an IA or Form 9465/Form 433-D is attached, see IRM 4.19.3.23.1.20, Installment Agreements, for further information.

# Discrepancy Explained/No Change

4.19.3.23.6.1 (11-14-2018) Discrepancy Explained/No Change Use the following examples as a guide for evaluating taxpayer responses. These examples are not all inclusive. The explanation of disagreement with the proposal on one or more of the issues is acceptable when the response meets the following criteria: Acceptable Explanations The income in question is nontaxable, and information sources (for example, the Internal Revenue Code, Pub 17) confirm the nontaxability. The same issue was addressed in a prior year and was correctly closed No Change. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Reminder: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Accept the response if the taxpayers states they have ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Caution: If deleting Wage IRs, see IRM 4.19.3.23.9.4, Referrals to prepare a Form 9409 unless the taxpayer has provided an SSA determination letter on the WAGE IR(s) in question. If Master File shows an indication of a mixed entity situation, forward to Taxpayer Services. See IRM 21.6.2, Adjusting TIN-Related Problems. AUR may utilize the IAT "aMend" tool, research portion, to assist in determining scrambled SSN or Mixed Entity. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

# Agreed Responses

4.19.3.23.7 (10-10-2025) Agreed Responses An agreed response must contain no disputing comments and must meet ONE of the following conditions: Be full paid - prior to issuance of a Statutory Notice - for tax and all penalties, except the following: ES Penalty, social security tax on tips, Accuracy-Related Penalty Due to Negligence/Substantial Understatement if evidence of reasonable cause is provided and accepted and FTF/FTP relating solely to adjustments to W/H and/or excess SSTAX. Contain the necessary signatures on the CP 2000, Form 9465, Form 433-D for both tax and penalties, Waiver, Form 1040-X, statement, or similar document. Note: A statement or similar document must contain (in addition to the signature) the tax year, the tax increase amount, and applicable penalties unless attached to the notice. Note: A consent to assess additional tax (CP 2000, Letter 2626-C, Form 5564 (CP 3219A), Form 9465 and Form 433-D) can be accepted by fax. A signature on a CP 2501ONLY when the taxpayer provides a complete, accurate tax computation. Note: If only one taxpayer has signed the consent and the criteria in a) above isn't met or both taxpayer's signed separate consent forms, see IRM 4.19.3.23.7.1, Responses – Married Filing Joint – Single Signature on Consent, for additional information. Full payment received after issuance of a Statutory Notice can't be accepted as agreement to the tax increase. Attempt to contact the taxpayer by phone to request the missing signature(s). If unable to reach the taxpayer by phone, issue a Letter 2626-C to acknowledge payment and request missing signature(s). Note: If the suspense time frame has expired, input PC 90 to default the case. Both signatures are required on a jointly filed return that isn't fully paid (the signature of a surviving spouse is acceptable). See IRM 4.19.3.23.1.17, Divorced/Separated Taxpayers, and IRM 4.19.3.23.1.17.1, Divorced/Separated Taxpayers - Single Signature on Consent, for additional information if the taxpayers are divorced or separated. If on a MFJ return full payment isn't received prior to Statutory issuance and only one taxpayer signs the consent or both taxpayers sign separate consent forms (different IRS received dates), see IRM 4.19.3.23.7.1, Responses – Married Filing Joint – Single Signature on Consent, for additional information. The signature of a third-party is acceptable if: A POA has been filed authorizing the third-party to sign, or The third-party is executor or administrator of the taxpayer's estate. If the taxpayer agrees to the notice but disputes the interest charges, issue Letter 1802-C to inform the taxpayer. See IRM 4.19.3.23.1.2, Abatement of Interest. Note: Comments concerning interest are not considered disputing, treat as an agreed response. The taxpayer doesn't have to consent to the assessment of interest as this is a statutory adjustment. If the taxpayer agrees to the notice and indicates they would like to talk to someone: Contact the taxpayer by phone (only one attempt is required), and Take the appropriate action. If the taxpayer requests that the subsequent year's refund be applied to the deficiency and the case can be closed agreed: Close the case agreed. Fax request to: 855-278-1129 Atlanta CSCO Attn: Lead Team 203 Note: Be sure the request includes the SSN, Tax Year, amount due and the taxpayers request. Issue a Letter 1802-C to the taxpayer. Inform them the request has been forwarded to the appropriate department, but we may not have time to deduct the liability from this year's refund. Leave AUR case note, "TC 130 Req to Coll" or similar verbiage. If the taxpayer doesn't request an Installment Agreement, but indicates that they can pay the balance due within 180 days, forward the extension to pay to Collections for processing. Issue a Letter 1802-C to the taxpayer. Inform them the request has been forwarded to the appropriate department. Leave AUR case note, "Extension to Pay to Coll" or similar verbiage. Close the case agreed. If there is an entry in the MANUAL INTEREST field on the Return Value screen, transfer the case to the designated SEID. If the case is designated as an ARDI case (proposed adjustment of $100,000 or more), don't input the assessment even if the taxpayer has fully agreed. Transfer the case and notify the designated SEID for processing. Leave AUR case note. See IRM 4.19.3.23.1.3, Accounts Receivable Guidelines, for additional information. Close case using PC 53, 67, or 87 as appropriate. If the case has been flagged for an installment agreement, remove the flag from the Form 9465, Form 433-D or written IA request and send to Collections. An assessment record generates automatically, no later than the dates listed in the table below. After that time, manual assessments must be input on IDRS. Notice Type TY 2022 TY 2023 TY 2024 CP 2000 January 2, 2026 January 1, 2027 January 7, 2028 Statutory Notice May 1, 2026 May 7, 2027 May 5, 2028

# Responses – Married Filing Joint – Single Signature on Consent

4.19.3.23.7.1 (10-10-2025) Responses – Married Filing Joint – Single Signature on Consent If only one taxpayer signed the consent, take the following actions: If Then The case is in CP 2000 phase Issue Letter 2626-C separately to each taxpayer. When the Address Information screen displays, enter "Y" in the INPUT MANUAL NAME LINES box; the Edit Name Information screen will display. Note: The AUR system auto-populates the name and address information from the Update Address window, for the address types which can be modified. Input the appropriate address type in the Address box and press enter, to display the name line and address information. For example, if both taxpayers reside at the same address, input Address Type "I" . Modify/edit the names and address lines to display each taxpayer individually. Select the addresses which need to have a letter issued by inputting "Y" in the Select Address field. Press F12 to access the Create Letter window. Include a paragraph to attempt to obtain the missing signature and advise the taxpayers they are jointly and separately liable for the tax, using the following verbiage as an example: "When you file a joint return, both taxpayers are jointly and separately responsible for the full amount of tax owed on the return and both signatures agreeing to the consent to tax are required. We are unable to continue processing your signed agreement until we have received both signatures." Reminder: Edit the salutation "Dear Primary and Secondary Taxpayer" to "Dear Taxpayer" . Leave a detailed case note to indicate which spouse agreed; for example, secondary taxpayer agreed. Input IPC S6 and release the case; the case is moved to BT 89005. Use the batch listing for the 89005 batch and the Agree/Non-Agree and Docketed Appeals (NPS) Suspense Inventory Report to monitor the case for 45 days. If the spouse's signature is received or the notice is full paid (prior to the issuance of a CP 3219A Notice), treat as an agreed response. See (5) below and refer to the appropriate table section instructions. If after 45 days the spouse's signature isn't received or the notice isn't full paid (prior to issuance of a CP 3219A Notice), see (2) below. Note: If a telephone number is provided, an out call to secure the missing signature must be attempted before proceeding to (2). The case is in Statutory phase and the time to petition Tax Court has not expired If the non-agreeing spouse is the primary taxpayer, go to step 4. If the non-agreeing spouse is the secondary taxpayer, research IDRS CC IMFOLT to determine if the SSN is invalid (an asterisk is present after the secondary SSN if invalid). If the secondary SSN is valid, go to step 4. If the SSN is invalid, send a request for SSN validation to Entity via Form 3210, Document Transmittal, and leave a detailed case note of actions taken. Once the invalid situation is resolved, go to step 4. Caution: Failure to resolve an invalid secondary SSN will cause an unpostable condition. Attempt to secure the non-agreeing spouse's signature. See steps 1 – 7 above to issue Letter 2626-C to both taxpayers. Reminder: Include a paragraph to inform the taxpayers the time to petition Tax Court isn't extended by the letter. Access the Process Code window. If the non-agreeing spouse is the primary taxpayer, input "P" in the MFT 31 field. If the non-agreeing spouse is the secondary taxpayer, input "S" in the MFT 31 field. Caution: Ensure the entry in the MFT 31 field is correct. This alerts the AUR system to generate a CP 3219A Notice to ONLY the non-agreeing spouse. Note: When "P" or "S" is present in the MFT 31 field, at disassembly, the AUR system uploads TC 971 AC 103 to create MFT 31 modules for both taxpayers. Input IPC 8L. The case is in Statutory phase and the time to petition Tax Court has expired (case is ready for default) See (7) below and follow the appropriate table section instructions. If after 45 days the spouse's signature isn't received or the notice isn't full paid and Statutory issuance to the non-agreeing spouse is necessary, take the following actions: If the non-agreeing spouse is Then The primary taxpayer Go to step 1, below the table. The secondary taxpayer Research IDRS CC IMFOLT to determine if the SSN is invalid (an asterisk is present after the secondary SSN if it is invalid). If the SSN is valid, go to step 1 below. If the SSN is invalid, send Form 3210 to Entity to request SSN validation; see the Invalid SSN Job Aid on the AUR Portal for additional information at AUR Research Portal IMF. Leave a detailed case note. Once the invalid situation is resolved, go to step 1 below. Caution: Failure to resolve an invalid secondary SSN will cause an unpostable condition. Access the Process Code window and input "P" in the MFT 31 field, if the non-agreeing spouse is the primary taxpayer. If the non-agreeing spouse is the secondary taxpayer, input "S" in the MFT 31 field. Caution: Ensure the entry in the MFT 31 field is correct. This alerts the AUR system to generate a CP 3219A Notice only to the non-agreeing spouse. Note: When "P" or "S" is present in the MFT 31 field, at disassembly, the AUR system uploads TC 971 AC 103 to create MFT 31 modules for both taxpayers. This process can't be reversed, once the disassembly process is complete. Input PC 75. The AUR system displays the following messages when there is an MFT 31 module present: "MFT 31 Present on IDRS. See IRM 4.19.3" displays when MFT 31 accounts modules are present on IDRS due to Bankruptcy, Innocent Spouse or AUR system initiated MFT 31 modules, due to only one spouse signing consent. "MFT 31 present per agreed/non-agreed for primary; See IRM 4.19.3" displays when the AUR system initiated MFT 31 modules, even if the modules have not yet posted to IDRS. If a recomputed notice is needed, see the table below: Note: If the case can be closed partially agreed, see (6) below. If the case is in Then CP 2000 or CP 3219A phase and MFT 31 modules are not present Follow normal procedures to issue the recomputed notice, using PC 59/95, as appropriate. See IRM 4.19.3.23.8.1, Recomputation Notice/Supplemental Report, for additional information. Note: Do not establish MFT 31 modules. CP 2000 phase and MFT 31 modules are present Follow normal procedures to issue the recomputed notice. Input Indicator "A" in the NOTICE IND field of the Summary screen. Send PARAGRAPH 182. See Exhibit 4.19.3-7, CP PARAGRAPHS, for further information. Leave a detailed case note. Input PC 59 and release the case. Monitor for the PC 59 to post. Once PC 59 posts, request the case and input IPC S6. Use the MFT 31 Inventory report to monitor the case for 45 days. If both signatures are received or the notice is full paid, treat as agreed. See (5) below and follow the appropriate table section instructions. If no response is received after 45 days, input PC 75. If information is received to close the case no change, see (8) below. Statutory phase and MFT 31 modules are present Follow normal procedures to issue the recomputed notice. Send PARAGRAPH 182. See Exhibit 4.19.3-7, CP PARAGRAPHS, for further information. Leave a detailed case note. Input PC 95 and release the case. Monitor for the PC 95 to post. Once PC 95 posts, request the case and input IPC S3(TY23 and prior) or S6 (TY24 and subsequent) suspense. Use the batch listing for the 89004 or the Agree/Non-Agree and Docketed Appeals (NPS) Suspense Inventory report to monitor the case until a response is received or the 105-day time frame on the CP 3219A Notice has expired; see IRM 4.19.3.23.13.3, Default Statutory Notices, for additional information. If both signatures are received see (5) below and follow the appropriate table section instructions. If no response is received or the issue can't be resolved see (7) below and follow the appropriate table section instructions. Note: If a taxpayer files a petition with Tax Court, see IRM 4.19.3.23.1.8.1.1, Responses – Petitioning Spouse (PS) and Non-petitioning Spouse (NPS) – Docketed Cases, If information is received to close the case no change, see (8) below. If an agreed assessment is needed, see the table below: Caution: If MFT 31 modules have been established, research the secondary taxpayer's MFT 31 account on IDRS to verify the name control isn't different prior to accessing the MFT 31 Assessment window. If it is different, manually correct the secondary taxpayer's name control in the MFT 31 Assessment window. Failure to make the correction will cause an unpostable condition. If the case is in Then CP 2000 phase, both taxpayers' signatures were received but have different IRS received dates and MFT 31 modules are not present Access the MFT 30 Assessment window and enter/verify the earliest IRS received date in the IRS RECEIVED DATE and CREDIT INTEREST DT fields. See IRM 4.19.3.23.12.1, The Assessment Window, for additional information. Enter/Verify the assessment data. Input "Y" in the SOURCE DOCUMENT ATTACHED? field. Input "AUR agreed criteria" in the REMARKS field. Commit the Assessment window. Leave a detailed case note. Input PC 68. Caution: PC 67 can't be used on MFJ cases when the taxpayers' signed consents have different IRS received dates. CP 2000 phase, both taxpayers' signatures were received but have different IRS received dates and MFT 31 modules are present Access the MFT 31 Assessment window and enter/verify the following for each taxpayer: BLOCK NUM - 5X. HOLD CD – 4. TRANS CODE – 290.00. Remove the date from the IRS-RCVD-DT field and leave the field blank. REMARKS – "AUR agreed criteria" . Caution: Remove all assessment data that no longer applies (such as, transaction and reference codes). DO NOT remove the "Y" from the "SEND PRIMARY TAXPAYER ASSESSMENT" or "SEND SECONDARY TAXPAYER ASSESSMENT" fields. Commit the Assessment window. Access the MFT 30 Assessment window and enter/verify the following: IRS RECEIVED DATE and CREDIT INTEREST DT – input the earliest IRS received date. See IRM 4.19.3.23.12.1, The Assessment Window, for additional information. Assessment data. SOURCE DOCUMENT ATTACHED? field – "Y" . REMARKS - "AUR agreed criteria" . Commit the Assessment window. Leave a detailed case note. Input PC 69. CP 2000 or CP 3219A phase, the notice was full paid prior to issuance of the CP 3219A, and MFT 31 modules are not present Enter/Verify assessment data; see IRM 4.19.3.23.12, Assessments, for further information. Input PC 67/87, as appropriate. Reminder: Full payment after issuance of a CP 3219A can't be treated as an agreement. Statutory phase, both taxpayers' signatures were received but have different IRS received dates and MFT 31 modules are not present Access the MFT 30 Assessment window and enter/verify the earliest IRS received date in the IRS RECEIVED DATE and CREDIT INTEREST DT fields. See IRM 4.19.3.23.12.1, The Assessment Window, for additional information. Enter/Verify the assessment data. Input "Y" in the SOURCE DOCUMENT ATTACHED? field. Input "AUR agreed criteria" in the REMARKS field. Commit the Assessment window. Leave a detailed case note. Input PC 88. Caution: PC 87 can't be used on MFJ cases when the taxpayers' signed consents have different IRS received dates. Statutory phase, both taxpayers' signatures were received but have different IRS received dates and MFT 31 modules are present Access the MFT 31 Assessment window and enter/verify the following for each taxpayer: BLOCK NUM – 6X. Remove the date from the IRS-RCVD-DT field and leave the field blank. HOLD CD – 4. TRANS CODE – 290.00. REMARKS – "AUR agreed criteria" . Caution: Remove all assessment data that no longer applies (such as, transaction and reference codes). DO NOT remove the "Y" from the "SEND PRIMARY TAXPAYER ASSESSMENT" or "SEND SECONDARY TAXPAYER ASSESSMENT" fields. Commit the Assessment window. Access the MFT 30 Assessment window and enter/verify the following: IRS RECEIVED DATE and CREDIT INTEREST DT - the earliest IRS received date. See IRM 4.19.3.23.12.1, The Assessment Window, for additional information. Assessment data. SOURCE DOCUMENT ATTACHED? field – "Y" . REMARKS - "AUR agreed criteria" . Commit the Assessment window. Leave a detailed case note. Input PC 39. Note: When assessments are made on MFT 31 accounts, AUR sends the required TC 971 AC 110 at the time the assessment is uploaded. If there are payments on the MFT 30 account, see (9) below. If a partially agreed assessment is needed, see the table below: Caution: If MFT 31 modules have been established, research the secondary taxpayer's MFT 31 account on IDRS to verify the name control isn't different prior to accessing the MFT 31 Assessment window. If it is different, manually correct the secondary taxpayer's name control in the MFT 31 Assessment window. Failure to make the correction will cause an unpostable condition. If the case is in Then CP 2000 phase, the criteria is met to close the case partially agreed and MFT 31 modules are present IPC RN can't be used. Rework the case through Return Value then take the following actions: Access the MFT 31 Assessment window and enter/verify the following for each taxpayer: BLOCK NUM – 5X. Remove the date from the IRS-RCVD-DT field and leave the field blank. HOLD CD – 4. TRANS CODE – 290.00. REMARKS – "Partially agreed criteria" . Caution: Remove all assessment data that no longer applies (such as, transaction and reference codes). DO NOT remove the "Y" from the "SEND PRIMARY TAXPAYER ASSESSMENT" or "SEND SECONDARY TAXPAYER ASSESSMENT" fields. Commit the Assessment window. Access the MFT 30 Assessment window, enter/verify all assessment information and ensure the following: SOURCE DOCUMENT ATTACHED? field – "Y" . REMARKS - "Partially agreed criteria" . Commit the Assessment window. Issue Letter 1802-C to each taxpayer (see (1) above) to confirm we used the information/computation they provided to make the assessment to their account. Leave a detailed case note. Input PC 69. Statutory phase, the criteria is met to close the case partially agreed and MFT 31 modules are present IPC SR can't be used. Rework the case through Return Value then take the following actions: Access the MFT 31 Assessment window and enter/verify the following for each taxpayer: BLOCK NUM – 6X. Remove the date from the IRS-RCVD-DT field and leave the field blank. HOLD CD – 4. TRANS CODE – 290.00. REMARKS – "Partially agreed criteria" . Caution: Remove all assessment data that no longer applies (such as, transaction and reference codes). DO NOT remove the "Y" from the "SEND PRIMARY TAXPAYER ASSESSMENT" or "SEND SECONDARY TAXPAYER ASSESSMENT" fields. Commit the Assessment window. Access the MFT 30 Assessment window and enter/verify all information and ensure the following: SOURCE DOCUMENT ATTACHED? field – "Y" . REMARKS - "Partially agreed criteria" . Commit the Assessment window. Issue Letter 1802-C to each taxpayer (see (1) above) to confirm we used the information/computation they provided to make the assessment to their account. Leave a detailed case note. Input PC 39. Note: When assessments are made on MFT 31 accounts, AUR sends the required TC 971 AC 110 at the time the assessment is uploaded. If there are payments on the MFT 30 account, see (9) below. If a default assessment is needed, see the table below: Caution: If MFT 31 modules have been established, research the secondary taxpayer's MFT 31 account on IDRS to verify the name control isn't different prior to accessing the MFT 31 Assessment window. If it is different, manually correct the secondary taxpayer's name control in the MFT 31 Assessment window. Failure to make the correction will cause an unpostable condition. If Then The case is ready for default and MFT 31 modules are not present If the primary taxpayer is the non-agreeing spouse, go to step 5. If the secondary taxpayer is the non-agreeing spouse research IDRS CC IMFOLT to determine if the SSN is invalid (an asterisk is present after the secondary SSN if it is invalid). If valid, go to step 5. If the SSN is invalid, send Form 3210 to Entity to request SSN validation; see the Invalid SSN Job Aid on the AUR Portal for additional information at AUR Research Portal IMF. Once the invalid situation is resolved, go to step 5. Caution: Failure to resolve an invalid secondary SSN will cause an unpostable condition. Leave a detailed case note, including which taxpayer agreed and which taxpayer defaulted. Access the Process Code window and input "P" in the MFT 31 field, if the non-agreeing spouse is the primary taxpayer. If the non-agreeing spouse is the secondary taxpayer, input "S" in the MFT 31 field. Caution: Ensure the entry in the MFT 31 field is correct. Note: When "P" or "S" is present in the MFT 31 field, at disassembly, the AUR system uploads TC 971 AC 103 to create MFT 31 modules for both taxpayers. This process can't be reversed, once the disassembly process is complete. For TY23 and prior, input IPC S3. For TY24 and subsequent, input IPC S6. Use the MFT 31 Inventory Report, to monitor the case for the TC 971 AC 103 to post. Once posted request the case and input the assessments, as shown below. Only one signature was received or the notice was full paid after CP 3219A has expired Access the MFT 31 Assessment window and enter/verify/correct the following for each taxpayer: BLOCK NUM – 6X. IRS-RCVD-DT - input the IRS received date from the agreed response in the agreeing taxpayer's MFT 31 Assessment window ONLY. Leave the field blank in the non-agreeing taxpayer's MFT 31 Assessment window. CREDIT INTEREST DT - input the IRS received date from the agreed response in the agreeing taxpayer's MFT 31 Assessment window ONLY. Leave the field blank in the non-agreeing taxpayer's MFT 31 Assessment window. SOURCE CD (Source Code). REASON CD (Reason Code). Caution: RC 138 MUST be input when there is a change to W/H, excess SST, EITC and or refundable credits. PRIORITY CD (Priority Code). Caution: Priority Code 9 MUST be input when there is a change to W/H, excess SST, EITC and/or refundable credits, or a combination of these). HOLD CD (Hold Code) – Leave blank. TC 290. Penalty (for example, TC 680, TC 170/171, TC 160/161), if applicable. Withholding (TC 806/807), if applicable. EITC (TC 764/765), if applicable. Excess SST adjustments (CRN 252), if applicable. Refundable credits: Additional Child Tax Credit, American Opportunity Credit and net PTC. Note: Changes to refundable credits will be netted (+ or -). The netted amount will be input with TC 766/767. For example: if the American Opportunity Credit adjustment is $766 and the Additional Child Tax Credit adjustment is -$166, the TC 766 amount is $600. Remove any transaction codes, reference codes, etc., applicable to MFT 30. REMARKS - "AUR split/spousal agreed" for the agreeing taxpayer and "AUR split/spousal default" for the non-agreeing taxpayer. Caution: DO NOT remove the "Y" from the "SEND PRIMARY TAXPAYER ASSESSMENT" or SEND "SECONDARY TAXPAYER ASSESSMENT" fields. Commit the MFT 31 Assessment Window. Access the MFT 30 Assessment window and enter/verify/correct the following: Caution: DO NOT change the entries in the CREDIT INTEREST DATE or IRS RECEIVED DT fields. Remove all items included on the MFT 31 assessments. BLOCK NUM – 6X. TRANS CODE – 290.00. REFERENCE CD (Reference Codes). SRCE CD (Source Code) - 2. REASON CD – use the same Reason Codes as on MFT 31. Exception: Do not use Reason Code 138 on MFT 30. SOURCE DOCUMENT ATTACHED? field – "Y" . REMARKS - "AUR split/spousal agreed" for the agreeing taxpayer and "AUR split/spousal default" for the non-agreeing taxpayer. Commit the MFT 30 Assessment window. Leave a detailed case note, including which taxpayer agreed and which taxpayer defaulted. Input PC 89. Caution: PC 90 can't be used when MFT 31 modules are present. Only one signature was received, information was provided to revise the notice and the CP 3219A has expired Rework the case through Return Value. Follow the procedures in the row above to enter/verify/correct entries on the MFT 31 Assessment and MFT 30 Assessment windows; commit both Assessment windows. Issue Letter 1802-C to each taxpayer (see (1) above) to explain the assessment to their account was based on the information they provided. Leave a detailed case note, including which taxpayer agreed and which taxpayer defaulted. Input PC 89. Note: When assessments are made on MFT 31 accounts, AUR sends the required TC 971 AC 110 at the time the assessment is uploaded. If there are payments on the MFT 30 account, see (9) below. If the case can be closed no change and MFT 31 modules are present, take the following actions: Access the MFT 31 Assessment window and enter/verify the following, for each taxpayer. BLOCK NUM – 5X or 6X, as appropriate. Remove the date from the IRS-RCVD-DT field and leave the field blank. HOLD CD – 4. TRANS CODE – 290.00. REMARKS – "AUR split/spousal no change" . Commit the Assessment window. Access the MFT 30 Assessment window and change REMARKS to "AUR split/spousal no change" . SOURCE DOCUMENT ATTACHED? field – "Y" . Leave a case note. Input PC 70/91, as appropriate. If there is a payment(s) on the MFT 30 account, move the payment(s) to the primary taxpayer's MFT 31, and cross reference to the secondary taxpayer's MFT 31 account, when the assessment PC is input AUR. See the MFT 31 credit transfer and cross referencing help available on the AUR Portal at AUR Research Portal IMF.

# Partially Agreed Responses

4.19.3.23.8 (10-10-2025) Partially Agreed Responses A response is considered partially agreed when the taxpayer includes acceptable explanations for SOME of the amounts in question. Recompute the tax on the remaining AUR issues. See IRM 4.19.3.23.8.1, Recomputation Notice/Supplemental Report for further information. Note: A Form 1040-X can be considered a partially agreed response. Use the Recomputed Notice process to update the taxpayer's account. Using IPC CR (CP 2501), "RN" (CP 2000), "SR" (CP 3219A) or DR (CP 3219A - Default) with the appropriate Notice Indicator ensures that State Disclosure information is properly updated. Note: IPC "CR" and "DR" were developed to work in the same manner as IPC "RN" and "SR" . IPC "CR" is used to recompute the tax on a CP 2501 and IPC "DR" is used when a change to the tax computation is required and the suspense time frame for the Statutory Notice has expired. If the system recomputes an amount LESS than the taxpayer's calculation, always use the system figures. Use Notice Indicator C to ensure the taxpayer receives a "for your information only" CP 2000 Notice. When the taxpayer responds to a CP 2501, CP 2000, or Statutory Notice CP 3219A, use the NET TAX CHANGE tolerance to determine future action on the case. See IRM 4.19.3.14.7, Net Tax Increase/No Net Tax Increase/Tax Decrease Notices, for further description of net tax change. If there is an entry in the MANUAL INTEREST field on the Return Value screen, transfer the case to the designated SEID. When the taxpayer responds to a CP 2501 with an acceptable explanation for some of the amounts in question, or ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡: If Then The taxpayer submits a signed Form 1040-X or submits a payment which equals or exceeds the new tax increase ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and all penalties (except ES Penalty and FICA tax on tips) OR The taxpayer's acceptable response results in no tax deficiencies (for example, tax decrease with no decreases to either EIC or ACTC), with or without a signed consent: Note: See IRM 4.19.3.14.7, Net Tax Increase/ No Decrease Notices, for definition of items. OR The taxpayer provides revised figures and meets agreed criteria. Rework the case as necessary. Consider penalties as applicable. Enter/Verify the appropriate entries on all screens. If the system is unable to compute the same amounts as the taxpayer did ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, adjust the F1040, LN 16 SUPPLEMENTAL TAXES window (TY 2023 and subsequent) or the MISCELLANEOUS CREDITS field of the Non-Refundable Credits window in Return Value to resolve the difference. Input "C" or "N" in the NOTICE IND field of the Summary screen. Reminder: Notice Indicator" N " will only be used when the Non-Refundable Credits window is used to make the AUR system match the TP's figures or payment ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Send a letter confirming the information/computation provided was used to make the assessment to their account. If the system recomputes an amount LESS than the taxpayer's calculation, always use the system figures. Send the appropriate letter with a paragraph explaining the difference. Input IPC "CR" . When IPC CR is used, the system generates an automatic assessment and assigns PC 37 to the account. If Form 9465, Form 433-D, or written IA request is included in the case file, refer to (11) below. Taxpayer has not Provided figures Signed a consent to tax increase Fully paid with no disputing comments, See IRM 4.19.3.23.8.1, Recomputation Notice/Supplemental Report. Rework the case as necessary. Consider penalties as applicable. Enter/Verify the appropriate entries on all screens. In the Notice IND field of the Summary Screen input "A" . Input PC "57" to issue a CP 2000. Note: If Form 9465, Form 433-D or written IA request is attached, see (11) below for further instructions. When the taxpayer responds to a CP 2000 with an acceptable explanation for some of the amounts in question, and≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡: If Then The taxpayer doesn't provided revised figures but Signs the consent to tax increase on the CP 2000, Waiver or attached statement or similar document (with or without full payment) OR Submits a payment which equals or exceeds the new tax increase ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and all penalties (except ES Penalty and FICA tax on tips). OR The taxpayer's acceptable response results in no tax deficiencies (for example, tax decrease with no deceases to either EIC or ACTC), with or without consent. Note: See IRM 4.19.3.14.7, Net Tax Increase/No Net Tax Increase/Tax Decrease Notices, for definition of deficiency items. OR The taxpayer provides revised figures and meets agreed criteria Rework the case as necessary. Consider penalties as applicable. Enter/Verify the appropriate entries on all screens. If the system is unable to compute the same amounts as the taxpayer did ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, adjust the F1040, LN 16 SUPPLEMENTAL TAXES window (TY 2023 and subsequent) or the MISCELLANEOUS CREDITS field of the Non-Refundable Credits window in Return Value to resolve the difference. Input "C" or "N" in the NOTICE IND field of the Summary screen . Reminder: Notice Indicator "N" will only be used when the Non-Refundable Credits window is used to make the AUR system match the taxpayer's figures or payment ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ In these situations, a letter will be sent to the taxpayer confirming that we used the information/computation they provided to make the assessment to their account. If the system recomputes an amount LESS than the taxpayer's calculation, always use the system figures. Send the appropriate letter with a paragraph explaining the difference. Input IPC "RN" . When IPC RN is used, the system generates an automatic assessment and assigns PC 67 to the account. If Form 9465, Form 443-D, or written IA request is included in the case file, refer to (11) below. Does not provide revised figures and Has NOT signed a consent to tax increase Has NOT fully paid with no disputing comments Input PC "59" to issue a recomputed notice. Input the appropriate indicator in the Notice IND field of the Summary Screen. See IRM 4.19.3.23.8.1, Recomputation Notice/Supplemental Report. Note: If Form 9465, Form 433-D or written IA request is attached, see (11) below for further instructions. Example: The CP 2000 was originally issued for a tax increase of $1,000 and an increase to W/H of $800. Based on the taxpayer's response, the recomputed tax increase is now $840, with an increase to W/H of $800. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the agreed criteria isn't met, the tax examiner MUST issue a revised CP 2000 for the taxpayer's signature(s). When the taxpayer responds to a Statutory Notice with an acceptable explanation for some of the amounts in question and the suspense time frame has NOT expired and ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If Then The taxpayer doesn't provide revised figures but signs the consent to tax increase on the waiver, attached statement, or similar document (with or without payment) OR The taxpayer's acceptable response results in no tax deficiencies (for example, tax decrease with no deceases to either EIC or ACTC), with or without consent. Note: See IRM 4.19.3.14.7, Net Tax Increase/No Net Tax Increase/Tax Decrease Notices, for definition of deficiency items. OR The taxpayer provides revised figures and meets agreed criteria Caution: Full payment received after issuance of a Statutory Notice can't be accepted as agreement to the tax increase. Rework the case as necessary. Consider penalties as applicable. Enter/Verify the appropriate entries on all screens. If the system is unable to compute the same amounts as the taxpayer did ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, adjust the F1040, LN 16 SUPPLEMENTAL TAXES window (TY 2023 and subsequent) or the MISCELLANEOUS CREDITS field of the Non-Refundable Credits window in Return Value to resolve the difference. Input "C" or "N" in the NOTICE IND field of the Summary screen . Reminder: Notice Indicator "N" will only be used when the Non-Refundable Credits window is used to make the AUR system match the taxpayer's figures or payment ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ In these situations, a letter will be sent to the taxpayer confirming that we used the information/computation they provided to make the assessment to their account. If the system recomputes an amount LESS than the taxpayer's calculation, always use the system figures. Send the appropriate letter with a paragraph explaining the difference. Input IPC "SR" . When IPC SR is used, the system generates an automatic assessment and assigns PC 87 to the account. If Form 9465, Form 433-D, or written IA request is included in the case file, refer to (11) below. Taxpayer hasn't signed a consent to tax increase Input PC 95 to issue a recomputed notice. In the Notice IND field on the Summary Screen input "D" . Note: If Form 9465, Form 433-D or written IA request is attached, see (11) below for further instructions. When the taxpayer responds to a Statutory notice with an acceptable explanation for some of the amounts in question and the suspense time frame HAS expired and ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If Then The taxpayer doesn't: Provide revised figures or, Sign the consent to tax increase on the Waiver or attached statement or similar document (with or without payment) Provide a signed Form 1040-X. OR The taxpayer's acceptable response results in no tax deficiencies (for example, tax decrease with no deceases to either EIC or ACTC), with or without consent. Note: See IRM 4.19.3.14.7, Net Tax Increase/No Net Tax Increase/Tax Decrease Notices, for definition of deficiency items. OR The taxpayer provides revised figures and meets agreed criteria Caution: Full payment received after issuance of a Statutory Notice can't be accepted as agreement to the tax increase. Rework the case as necessary. Consider penalties as applicable. Enter/Verify the appropriate entries on all screens. If the system is unable to compute the same amounts as the taxpayer did ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, adjust the MISCELLANEOUS CREDITS field of the Non-Refundable Credits window or the F1040, LN 16 SUPPLEMENTAL TAXES window (TY 2023 and subsequent) in Return Value to resolve the difference. Input "E" in the NOTICE IND field of the Summary screen . Note: Notice Indicator "E" can't be used when the Non-Refundable Credits window is used to make the AUR system match the taxpayer's figures or payment. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ In these situations, close PC 90 and send a letter to the taxpayer confirming that we used the information/computation they provided to make the assessment to their account. If the system recomputes an amount LESS than the taxpayer's calculation, always use the system figures. Send the appropriate letter with a paragraph explaining the difference. Input IPC "DR" . When IPC DR is used, the system generates an automatic assessment and assigns PC 90 to the account. If Form 9465, Form 433-D, or written IA request is included in the case file, refer to (11) below. When the recomputed net tax increase is below tolerance take the following actions: If And Then Recomputed net tax increase is below tolerance The taxpayer doesn't submit a payment, or doesn't request a bill/notice Close the case No Change. Recomputed net tax increase is below tolerance An adjustment to prepayment credits (W/H, excess SSTAX, and additional MCTXW) and/or AGI/TXI is NOT necessary. Input PC 47 (CP 2501), PC 70 (CP 2000) or PC 91 (CP 3219A), as appropriate, to close the case. Note: If Form 9465, Form 433-D or a written IA request is attached, refer to (11) below. Recomputed net tax increase is below tolerance An adjustment to prepayment credits (W/H, excess SSTAX, and additional MCTXW) IS necessary. Enter/Verify the appropriate entries in the Assessment window. See IRM 4.19.3.23.12.1, The Assessment Window, for further information. Input PC 53 (CP 2501), PC 68 (CP 2000), or PC 88 ( CP 3219A) as appropriate to close the case. The recomputed tax change is zero (example: taxpayer agrees to unreported income that impacts the AGI, however due to negative TXI, the tax change is zero) An adjustment to AGI and/or TXI ONLY is necessary Enter/Verify the appropriate entries in the Assessment window. Issue the appropriate Correspondex letter to advise the taxpayer of the adjustment to AGI and/or TXI . Input PC 52 (CP 2501), PC 71 (CP 2000) or PC 92 (CP 3219A), as appropriate, to close the case. Note: Do not include AGI/TXI changes for amounts that the taxpayer has not agreed to. For example: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Caution: Do not use IPC CR, RN, SR, or DR to create the assessment record when the tax change is zero. Reminder: See IRM 4.19.3.23.6, Discrepancy Explained/No Change-General, for further information when closing Virtual cases. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ An adjustment to AGI and/or TXI is necessary ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Issue the appropriate Correspondex letter to advise the taxpayer of the adjustment to AGI and/or TXI. Input Notice PC 52 (CP 2501), PC 71 (CP 2000) or PC 92 (CP 3219A), as appropriate, to close the case. Note: Do not include AGI/TXI changes for amounts that the taxpayer has not agreed to. For example: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Caution: Do not use IPC CR, RN, DR, or SR to create the assessment record when the tax change is zero. Recomputed net tax change is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Taxpayer or authorized representative acknowledges the existence of a remaining balance due/refund (for example, submits a payment, a signed Form 1040-X, requests a "bill" or "notice" Enter/Verify the appropriate entries on all screens. Enter/Verify the appropriate entries on all screens. If the system is unable to compute the same amounts as the taxpayer did ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, adjust the F1040, LN 16 SUPPLEMENTAL TAXES window (TY 2023 and subsequent) or the MISCELLANEOUS CREDITS field of the Non-Refundable Credits window in Return Value to resolve the difference. Input appropriate indicator in the NOTICE IND field of the Summary screen. Reminder: Notice Indicator "N" will only be used when the Non-Refundable Credits window is used to make the AUR system match the taxpayer's figures or payment ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ In these situations, a letter will be sent to the taxpayer confirming that we used the information/computation they provided to make the assessment to their account. Close the case with IPC "CR" (Recomputed notice after CP 2501), "RN" (Recomputed Notice), or IPC "SR" (Statutory Recomputation Notice). Exception: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ When Form 9465, Form 433-D or written IA request is attached: If Then If the case is closed No Change and there is no balance on the module Leave Form 9465, Form 433-D or written IA request with the case. Make sure to uncheck the "IA" box in Case History. If the case is closed No change and there is a module balance Fax Form 9465, Form 433-D or written IA request to Collections indicating AUR case was closed No Change. See IRM 4.19.3.23.1.20, Installment Agreements, for further information. Make sure to uncheck the "IA" box in Case History. IRM 4.19.3.23.1.21 Issuing a revised notice (PC 57, 59, or 95) Leave the Form 9465, Form 433-D or written IA request in the case file. Make sure the "IA" box is checked in Case History. Issuing a recomputed notice (IPC RN, SR, CR or DR) Leave the Form 9465, Form 433-D or written IA request in the case file. Make sure the "IA" box is checked in Case History. IRM 4.19.3.23.1.21 If there is a recomputed refund less than $1 and the taxpayer requests a refund, issue it using manual refund procedures in IRM 21.5.1, General Adjustments, IRM 21.4.4, Manual Refunds, and IRM 21.5.2, Adjustment Guidelines. Note: Leave a case note documenting the actions taken when processing manual refunds.

# Recomputation Notice/Supplemental Report

4.19.3.23.8.1 (10-10-2025) Recomputation Notice/Supplemental Report Rework and input appropriate indicators to: Recompute the tax when the taxpayer's response is partially agreed Correct an erroneous CP 2000 or Statutory Notice Send the taxpayer an "information only" notice Suppress the issuance of another CP 2000 when the taxpayer has partially agreed and provided revised figures The system recomputes the tax, if required, based on changes input on applicable screens and windows. The interest updates and any payment submitted by the taxpayer is included on the recomputed notice. PARAGRAPH 87 automatically generates when the payment posted as a TC 640 (see Exhibit 4.19.3-7, CP PARAGRAPHS). However; if the payment posted as a TC other than TC 640, send PARAGRAPH 87. See IRM 4.19.3-7, CP PARAGRAPHS. When the notice is complete, if there is an entry in the MANUAL INTEREST field on the Return Value screen or the Summary screen, transfer the case to the designated SEID. See IRM 4.19.3.19.10, Manually Computed Interest for the CP 2000, for further instructions. Note: Enter the payment in the Return Value screen when using IPC/PC CR, DR, MI, RN, SR, 57, 59, or 95 (N/A if using Notice Indicator N). All screens and windows used in the initial analysis of the case are available to the response tax examiner. After the case is reworked and if the proposed Social Security Tax on Tips Penalty and/or FTF penalty still need to be partially or fully abated, select the Limit Penalties window. See IRM 4.19.3.19.8, Limited Penalties, for further instructions. See AUR System Guide, Penalty Waived/Not Waived. When a condition exists that requires a recomputation notice: Enter/Verify the total of all payments credited towards the taxpayer's current AUR account received subsequent to our initial contact notice in the AMOUNT PREVIOUSLY PAID field on the Return Value screen. Note: When the taxpayer's response indicates a payment was made, research Tax Account screen or IDRS for payments previously made. Enter/Verify on Return Value screen in the AMOUNT PREVIOUSLY PAID field, when issuing a recomputed or amended notice to the taxpayer. Input Amended Indicator A (for amended notices) and Notice Indicators as shown in the table below in the appropriate INDICATOR field(s) on the Summary screen. Note: Do not use BOTH the Amended AND a Notice Indicator on a case unless the previous PC is 59 or 95. Notice Indicator Definition Process Code E The 90-day period for petitioning the U.S. Tax Court has expired. IPC SR IPC DR D The 90-day period for petitioning the U.S. Tax Court isn't expired. PC 95 A A response to a CP 2501 was received. PC 57 B No response to the CP 2501 was received. PC 57 A Information supplied by the taxpayer used to refigure the amount of tax they now owe the IRS. PC 59 C The taxpayer indicates partial agreement, sends information to refigure their tax, meets "agree criteria" and the notice is being sent for informational purposes ONLY. IPC CR IPC RN IPC SR N Used when the taxpayer partially agrees to the CP 2000, AND the Non-Refundable Credit window ) is used to make the system match the taxpayer's figures ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ This is the case where the taxpayer has agreed to some of the proposed items, explained the other discrepancies satisfactorily, and recomputed the figures on the CP 2000. Indicator N updates the recirculating file (for an automatic assessment) but doesn't generate or send a notice to the taxpayer. Note: The non-refundable credit is used ONLY when unable to match the base tax using the Supplemental Tax window. See IRM 4.19.3.14.4, Supplemental Taxes (TY 2023 and Subsequent), for further information. IPC CR IPC RN IPC SR Elements of IRs that were not sent on the original CP 2000 can be selected for inclusion on the recomputation notice. Mark the elements of additional IRs with Send Indicator "S" . Reminder: If an element of an IR is NOT to be included, the Send Indicator "S" must be removed. Review the notice PARAGRAPHs in the Summary screen. Delete any PARAGRAPHs that no longer pertain to the recomputed notice (for example, the original issue requiring the PARAGRAPH has been resolved). If a decrease to the tax deficiency is necessary after a Statutory Notice was issued, issue a recomputed CP 2000 using PC 95 (if there is sufficient time left on the Statutory Notice suspense period). If there isn't sufficient time, input IPC DR and Notice Indicator E. Note: Issuance of a Statutory Notice doesn't extend the period for assessing FICA tax. If the taxpayer's response indicates agreement to a tax increase that is more than the deficiency shown on the Statutory Notice and: The taxpayer doesn't provide the revised tax figures, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The taxpayer doesn't provide the revised tax figures, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ see IRM 4.19.3.23.13.2, Rescinding Statutory Notices. The taxpayer supplies revised tax figures, see IRM 4.19.3.23.13, Instructions Specific to Statutory Notices/Responses. When Form 9465, Form 433-D or written IA request is attached, see IRM 4.19.3.23.1.20, Installment Agreements, for further information.IRM 4.19.3.23.1.21

# Responses Needing Further Action

4.19.3.23.9 (10-10-2025) Responses Needing Further Action AUR receives responses that require additional action before the case can be closed. Additional action include: Correspondence with the taxpayer via a letter or recomputation notice Correspondence with a payer Research Referral Routing of information, including non-IRP related inquiries Address updates Extension of the CP 2000 suspense period Telephone contact Designation as an ARDI case (Proposed Adjustment of $100,000 or more) see IRM 4.19.3.23.1.3, Accounts Receivable Guidelines. Form 9465, Form 433-D, or written IA requests, see IRM 4.19.3.23.1.20, Installment Agreements. Note: Do not issue multiple Letter 2626-Cs to request the same information and/or documentation or to provide the taxpayer the same clarification. If unable to secure the information after the second attempt, continue processing. If the taxpayer wants to talk to (or have their case reviewed by) a manager, refer the case to a manager. The manager will attempt to resolve the issue(s) by telephone contact. If the telephone contact doesn't resolve the issue(s), continue normal processing. If, in response to a request to verify a previous response of "didn't file a tax return" , the taxpayer submits a tax return or a signed statement that they did not have a filing requirement, see IRM 4.19.3.23.1.25.3, IDT Claims - Responses.

# Responses Needing Correspondence

4.19.3.23.9.1 (10-10-2025) Responses Needing Correspondence Tax examiners determine if further contact would help to resolve the U/R issue. Issue a letter or contact the taxpayer by telephone when: A response indicates the taxpayer doesn't understand the notice The taxpayer requests further information regarding taxability Further contact will help resolve the U/R issue Note: Document any telephone contacts in the case note. If the taxpayer replies the U/R income belongs to another person and doesn't provide the name OR the SSN of the recipient: Send Letter 2626-C to request the name and SSN of the person responsible for the income and recommend the taxpayer contact the payer to correct their records. If the taxpayer responds to the Letter 2626-C and provides EITHER the name or the SSN of the other person, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the taxpayer responds to the Letter 2626-C by stating they are unable to furnish either the name or SSN of the person, issue a CP 2000 (CP 2501 phase), Statutory Notice (CP 2000 phase). If a Statutory Notice was issued, send the appropriate letter and send a paragraph using the following verbiage as an example: "We are unable to change the proposed adjustment to your income tax based on your explanation that the income belongs to another person because you did not provide the name and/or social security number of the actual recipient." If the taxpayer doesn't respond to the Letter 2626-C, issue a CP 2000 (CP 2501 phase), a Statutory Notice (CP 2000 phase) or, if a Statutory Notice was issued, resuspend the case for the remaining time in the Statutory Notice suspense period. Caution: If deleting Wage IRs, see IRM 4.19.3.23.9.4, Referrals, to prepare a Form 9409 unless the taxpayer has provided an SSA determination letter, on the WAGE IR(s) in question. If the taxpayer replies the U/R income belongs to a minor child and no return was required, accept the taxpayer's explanation at face value if the U/R income in question ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. If the U/R income is greater than the amounts in table below follow instructions in (2)a – d above. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the taxpayer disagrees with our proposal because they did not receive the Form W-2 or Form 1099, inform the taxpayer they are responsible for reporting all taxable income received. Send Letter 2626-C using paragraph L to inform the taxpayer that they will need to contact the payer. If And Taxpayer disclaims knowledge of the income or disputes the amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, AND The IR was NOT TIN PERFECTED The taxpayer disputes the amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, AND The IR was NOT TIN PERFECTED If the taxpayer indicates they attempted to contact the disputed payer, but the issue wasn't resolved (the payer did not respond or refused to provide information), and the taxpayer continues to disclaim knowledge of or dispute the amount(s), send Letter 2626-C using paragraph M and include Form 2624, Consent for Third-Party Contact, as an enclosure. See AUR System Guide, Selecting, Creating, Editing and Deleting Letter Paragraphs, for additional information. If the taxpayer returns the completed Form 2624, Consent for Third-Party Contact, refer to IRM 4.19.3.23.9.6, Payer Contacts. Note: Payer contact can't be made unless a signed Form 2624 is provided. If the taxpayer requests a copy of the tax return for the open AUR tax year, mail a printed copy of the scanned paper return to the taxpayer at no charge. If the taxpayer filed electronically print a transcript using AMS, Control D (for MFTRAX) or IDRS CC TRPRT to mail to the taxpayer. If the taxpayer requests that we deduct the AUR balance due from their expected refund, and The case is being closed (assessed), see IRM 4.19.3.23.7, Agreed Responses, for additional information. The case can't be closed, issue a Letter 2626-C (include paragraph "m" ) or A recomputed notice is being issued, send PARAGRAPH 177. See Exhibit 4.19.3-7, CP PARAGRAPHS. If the taxpayer requests to have their estimated tax payment election reversed to be applied towards the additional tax liability. Send a paragraph using the following verbiage as an example: "The election to apply part or all of the overpaid amount to your subsequent year estimated tax payments is binding and can't be changed at this time" . If the taxpayer requests an explanation for the amount of time it took the IRS to notify them of the unreported income, issue a Letter 2626-C, and include paragraph "I" . If issuing a recomputed notice send PARAGRAPH 181. See Exhibit 4.19.3-7, CP PARAGRAPHS. If the taxpayer admits that the U/R income was reported in an incorrect tax year, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the taxpayer doesn't provide this information or U/C W/H is an issue, take the following action: Inform them that the proposed tax assessment on the CP 2000 is correct. Advise the taxpayer to file Form 1040-X to adjust the income claimed in the incorrect year. Send PARAGRAPH 89, see Exhibit 4.19.3-7, CP PARAGRAPHS. Obtain the taxpayer's signature (both signatures on a jointly filed return) if it was not on the previous correspondence. After receiving the signature(s), make the assessment and close the case. When the response indicates the investment income (for example, Int, Div, CG) was reported on Form 8814 (parent's return) and the taxpayer reported non-investment income on their return, don't accept the explanation. Advise the taxpayer that the income must be reported on their return. Send a paragraph using the following verbiage as an example: "The income can't be claimed on your parents Form 8814 since you reported non-investment income on your return." If the taxpayer requests a copy of Form W-2, 1099 series, Schedule K-1 or other payer documents, advise them to request a duplicate copy from the payer. If issuing a recomputed notice, send PARAGRAPH 180 (see Exhibit 4.19.3-7, CP PARAGRAPHS). Whenever possible, provide the taxpayer with the payer's name and address. If the U/R issue is resolved, but the taxpayer states that another amount was not claimed, underclaimed, or overstated on the original return, and the taxpayer provides sufficient information, enter/verify the appropriate entries on all applicable windows to make the adjustment. Use good judgement in determining if the taxpayer is entitled to this adjustment. If questionable issues are involved (for example, increased exemptions) discuss with a manager/lead to determine the action to be taken. Reminder: NOL carryback/carryforward cases are not worked by AUR, see the Exception at IRM 4.19.3.23.1.7, Adjustment Cases Relating to AUR. If the U/R issue is resolved, but the taxpayer states that another amount was not claimed, underclaimed, or overstated on the original return and the taxpayer does NOT provide sufficient information to make the adjustment, close the case. Issue a Letter 1802-C to the taxpayer with a paragraph using the following verbiage as an example: "Form 1040-X can be used to reduce the income you indicated was overstated on your original return. Form 1040-X is available at 800-829-3676 or online at IRS.gov." Note: Be alert to Statutes of Limitations. See IRM 4.19.3.2.2, Statute Awareness Program. If the taxpayer requests to change their filing status, see IRM 4.19.3.23.9.4, Referrals. If the taxpayer's response indicates ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, see IRM 4.19.3.23.1.25.3, IDT Claims - Responses. If the taxpayer indicates they will be submitting a Form 1040-X, take the following actions: Issue a Letter 2626-C, include a paragraph using the following verbiage as an example: "Your response indicated that you will be filing an amended tax return. Please send a signed copy, including all applicable forms and schedules in response to this letter. To ensure that the amended return is received by the appropriate area, please attach a copy of this letter to the front of the amended return." Input appropriate IPC.

# Responses Needing Research and Correspondence

4.19.3.23.9.2 (10-10-2025) Responses Needing Research and Correspondence If the taxpayer states U/R income was reported, review the return and the Tax Account screen for applicable adjustments. If the income can't be found, issue a Letter 2626-C. Send a paragraph using the following verbiage as an example: "You indicated that the income in question was reported. However, we are unable to find this income on your return. Please indicate where on your return the income is reported, so that we can give you proper credit." If the taxpayer indicates the U/R income was reported on Form 1065 (Partnership), Form 1120-S (Small Business), or Form 1041 (Trust), check the return to see if the taxpayer reported income or a loss from these sources. Exception: If the U/R income is conduit, don't accept taxpayer's explanation. Advise the taxpayer the income must be reported on Schedule E, Part II or Part III or they must provide a corrected Schedule K-1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, if income or a loss (in any amount) is shown on Schedule E. If the taxpayer provides the name and/or the EIN of the business, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If no income or loss is reported, or the name and/or EIN of the business isn't provided, issue a Letter 2626-C to request additional information. If the taxpayer response states that we did not adjust the non-refundable carry forward credit(s)and: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Enter the revised amount(s) in the appropriate field(s) of the Non-Refundable Credit window. Does not address the subsequent year carry forward credit issue, research the subsequent tax year (using IDRS CC IMFOL) for evidence that a Form 1040-X was filed. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Does not address the subsequent year carry forward credit issue and there is no indication that the subsequent year return was amended or if the subsequent year tax return has not been filed, issue a Letter 2626-C. Inform the taxpayer that we can't adjust the allowable amount of credit until either the filed subsequent year tax return has been amended/corrected or a signed statement is received confirming that the carry forward credit records have been corrected. If the taxpayer replies that a payment was submitted by check, but there is no indication on the Tax Account screen that the payment was received and at least three weeks have passed since the IRS Received Date: Use the IAT "TC Search" tool to research the payment. Note: If there is no record of the payment, research IDRS CC TXMOD as the payment may be pending or unpostable. If the account is married filing joint, check the secondary spouses account. If the payment is unpostable, action to resolve the unpostable condition must be initiated within 7 days. If payment is found posted on another tax module (such as, subsequent year) ensure the payment is transferred to the correct module using the IAT "Credit Transfer" tool. If no record of the payment is found, issue a Letter 2626-C to request a copy of the front and back of the canceled check. When the taxpayer replies with the copy of the front and back of the check, use the encoding on the check to determine where the payment has posted. The back of the check will display the following information Name Control or CK Digit, the DLN, the TC, the MFT Code, the EIN or SSN, the Tax Period and the Posting Date. See Document 6209, IRS Processing Codes and Information. Note: The Remittance Tracking Research (RTR) System provides 3 years of check images (from ISRP and Lockbox Bank processing sites) and can be used to research the payment. If the taxpayer replies that a payment was made online or by credit card, but there is no indication on the Tax Account screen that the payment was received and at least two weeks have passed since the payment date: Use the IAT "TC Search" tool to research the payment. Note: If there is no record of the payment, research IDRS CC TXMOD as the payment may be pending or unpostable. If the account is married filing joint, check the secondary spouses account. If payment is found posted on another tax module (such as, subsequent year) ensure the payment is transferred to the correct module using the IAT "Credit Transfer" tool. If no record of the payment is found, issue a Letter 2626-C select paragraph i to request a signature (both signatures for married filing joint) to complete action on the case. Advise the taxpayer that we have no record of their payment and provide them with the Customer Service toll-free number, 800-829-1040 to initiate a payment tracer.

# Extension Requests (Correspondence)

4.19.3.23.9.3 (11-29-2023) Extension Requests (Correspondence) When the taxpayer requests an extension to respond to the notice, or indicates they will obtain information and send it later, take the following action(s): If Then The taxpayer requests an extension to respond to the CP 2501: Issue a CP 2000 and send PARAGRAPH 242, see Exhibit 4.19.3-7, CP PARAGRAPHS. Input PC 57. The taxpayer requests an extension to respond to the CP 2000: Issue a Letter 2626-C informing the taxpayer their request for an extension has been granted. Input IPC 6L. Note: DO NOT grant a subsequent extension, unless extenuating circumstances apply. The taxpayer requests an extension to respond to the Statutory Notice: Issue a Letter 2626-C advising the taxpayer that the period of time to petition the U.S. Tax Court can't be extended. Input IPC 8L. Reminder: All Statutory Notice responses are worked on an expedite basis.

# Referrals

4.19.3.23.9.4 (10-10-2025) Referrals If a non-IRP related inquiry is included with the response: Print the inquiry and route to the appropriate function. Include the taxpayer's name, address, SSN, and the Received Date. Send an acknowledgment letter to the taxpayer. If an original current year return is attached to a response, route it to the appropriate area for processing. If the taxpayer requests to change their filing status: From To Then Married filing separately, single, or head of household Married filing jointly Caution: Both taxpayers' signatures are needed for married filing joint requests. Check Tax Account for a TC 640/670. If no payment is present, go to step 4 otherwise: Access the AUR Assessment window and change the AUTO/MANUAL indicator from "A" (auto) to "M" (manual). Commit <F4> the Assessment window. Access IDRS and input TC 290 .00 with Hold Code 4. Send Letter 1802-C to inform the taxpayer their request for a filing status change has been sent to the appropriate area. Input closing PC 71 (CP 2000) or PC 96 (Stat). Send the case file to Taxpayer Services. Caution: Be sure that all U/R issues have been answered by the taxpayer prior to transferring the case to Taxpayer Services. If not, correspond with the taxpayer to resolve all U/R issues before sending the case to Taxpayer Services. Married Filing Joint Any other filing status after the due date of the return Disallow the request. Send the appropriate letter and include a paragraph using the following verbiage as an example: "Once you file a joint return, you can't change your filing status for that year after the due date of the return." Note: If the taxpayer states the return is invalid, see IRM 4.19.3.5.8.2, AUR Tax Examiners Fraud Responsibilities. Note: If any other filing status change is requested (such as Single to Head of Household), the AUR system uses the correct filing status to recompute the tax, when the filing status is changed on the Return Value screen. However, Master File adjustments are necessary. IDRS CC ENMOD must be updated. If the taxpayer's response indicates they ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, see IRM 4.19.3.23.1.25.3, IDT Claims - Responses. If the taxpayer response includes a petition for U. S. Tax Court refer to the table below to determine the correct actions to take: If Then The petition was received timely (within the 90-day period required or 150-day period, if mailed to a person outside the United States) Prepare Letter 4370. Attach a copy of the letter to the Petition. Print to PDF a copy of the letter and send to clerical to upload into the AUR system to be retained with the case file. Prepare Form 3210, attach to the petition and Letter 4370. Using regular mail, send to: United States Tax Court, 400 Second Street, NW, Washington, DC 20217. Caution: The envelope containing Form 3210, Letter 4370 and the petition must be postmarked on or before the 90/150-day time period expires. Issue Letter 2626-C to acknowledge receipt and respond to any AUR issues and include a paragraph using the following verbiage as an example: "We received your petition and forwarded it to the U.S. Tax Court at 400 Second St. NW, Washington, DC 20217. We can't guarantee the petition will be considered timely since it wasn't mailed directly to the Tax Court, as stated in the Statutory Notice of Deficiency. Please contact the Tax Court to confirm receipt of your petition." Leave a detailed case note. Take any other appropriate actions. Input the appropriate PC. The petition was not received timely (within the 90-day period required or 150-day period if mailed to a person outside the United States) Issue Letter 2626-C to acknowledge receipt and respond to any AUR issues and include a paragraph using the following verbiage as an example: "We're returning your petition to U.S. Tax Court, which is required to be mailed to 400 Second St. NW, Washington, DC 20217, as stated in the Statutory Notice of Deficiency. The last day to petition Tax Court was XX/XX/XXXX and there is no provision in the law to extend the period for filing a petition." Caution: Ensure the last day to petition Tax Court is included in the paragraph. Return the petition to the taxpayer using Form 14219, Return of Documents to Taxpayer, or a cover letter. Leave a detailed case note. Take any other appropriate actions. Input the appropriate PC. When deleting WAGES IRs, correct the taxpayer's records by preparing Form 9409, including full AUR contact information at the bottom of the form. Mail Form 9409 to the Social Security Administration (SSA) at the following address: Note: Form 9409 must ONLY be used for Wage IRs that contain the SSWAG element. Social Security Administration Office of Earnings Records Operations 6100 Wabash Ave. LL-F-1A Baltimore, MD 21215 Do not complete Form 9409 if: The SSN has been TIN perfected or is an ITIN (begins with "9" ) as these will be rejected by SSA. The employer indicates that the information has been corrected with SSA (Form W-2 C, Statement of Corrected Income and Tax Amounts). If the taxpayer wants their case sent to their local Area Office, advise the taxpayer that their case can't be transferred to the local Area Office. Attempt to resolve the issue(s) by telephone contact and take the following action: Note: See IRM 4.19.3.23.1.8, Independent Office of Appeals, when the taxpayer wants the case sent to Appeals. If Then The phone contact doesn't resolve the issue(s) When Statutory Notice has not been issued, inform the taxpayer that a Statutory Notice of Deficiency will be issued via certified mail. Close the case with PC 75. When Statutory Notice has been issued, advise the taxpayer they need to file a petition with the U.S. Tax Court, following the instructions in the Statutory Notice they received. For filing status other than married filing joint, advise the taxpayer that if their intent is to change their filing status to Married Filing Joint, they MUST do so before filing a petition with the Tax Court as they will be precluded from changing their filing status once the petition is filed with the Tax Court. Remind the taxpayer that they must file their petition within the 90-day period. Also, inform the taxpayer that a case petitioned to the U.S. Tax Court will usually be considered for settlement by Appeals before their trial date. If necessary, refile the case for the remainder of the Statutory Notice suspense period or until you are notified to pull the case from suspense because the taxpayer filed a U.S. Tax Court petition. Leave a detailed case note. Unable to contact the taxpayer by phone When Statutory Notice has not been issued, issue a Letter 2626-C and advise the taxpayer that we are unable to transfer their case to the local area office. Inform the taxpayer that a Statutory Notice of Deficiency will be issued via certified mail. Input PC 75. When Statutory Notice has been issued, issue a Letter 2626-C and advise the taxpayer we are unable to transfer the case to the local area office and that they need to file a petition with the U.S. Tax Court, following the instructions in the Statutory Notice they received. Remind the taxpayer that they must file their petition within the 90-day period. Also, inform the taxpayer that a case petitioned to the U.S. Tax Court will usually be considered for settlement by Appeals before their trial date. Leave a detailed case note.

# Exam Technical Advice and Cat A Referral Procedures

4.19.3.23.9.5 (10-10-2025) Exam Technical Advice and Cat A Referral Procedures Exam technical advice and CAT A referrals will be directed to the AUR aligned SBSE Exam site. Referrals will be made via efax unless the SBSE Exam is co-located with AUR. Exam has a 15-day turnaround timeframe and will notify the site AUR coordinator by email of the determination. The AUR Coordinator will keep recordation of cases referred to Exam and the determination of the cases that Exam provides. Refer response technical advice questions or cases meeting CAT A criteria to SBSE Exam. Prepare efax cover sheet (or referral sheet for co-located sites): notate the following: Status of the AUR case (pre-Stat, Stat notice, or Recon). ASED (Assessment Statute Expiration Date). IF ASED is within 14 months notate "IMMINENT" . Description of the referral, i.e., CAT A or Technical Advice. AUR Coordinator's name and phone number. Date of the referral. Note: Forms 1040-X/Amended Returns MUST BE SIGNED before they can be referred to Exam. Exception: If ASED will expire within 180 days, don't refer. Continue normal case processing. Fax the cover sheet, AUR case contents, including a copy of the last CP 2501 or CP 2000 Notice, and the entire response to the aligned SBSE classification site listed in the table below. Co-located sites will physically refer. Note: Leave a case note to document the referral. Exam Site efax number Cincinnati (AUR sites are Austin and Atlanta) 855-887-7739 Ogden (AUR sites are Ogden and Fresno) 855-244-3572 Brookhaven (AUR sites are Brookhaven and Andover) 855-242-4479 Philadelphia Physically refer, located within Campus Exams determination email or response to the AUR Coordinator should state: Exam Response Actions Case selected for audit: "Selected-close AUR controls" , Leave a detailed case note of Exams determination. Close case with the appropriate Exam closure PC. Input TC 971 AC 013 using the IAT "REQ77" tool. Reminder: The IAT "REQ77" tool must be used to input/update the TC 971. See IRM 4.19.3.2.6, Integrated Automated Technologies, and Exhibit 4.19.3-18, Mandated IAT tools, for additional information. Taxpayer's explanation/information accepted: "Accepted as filed" Leave a detailed case note of Exams determination. Work the case, as appropriate. Taxpayer's explanation/information not accepted: The email will also include a standard paragraph to be sent to the taxpayer explaining why their information isn't acceptable/allowable. Leave a detailed case note of Exams determination. Work the case as appropriate. Provide the taxpayer with the information supplied by Exam.

# Payer Contacts

4.19.3.23.9.6 (10-10-2025) Payer Contacts Payer contacts will only be made when the taxpayer returns a completed Form 2624, Consent for Third-Party Contact, for the disputed payer. If a completed Form 2624 has not been provided, issue Letter 2626-C to request the information. See IRM 4.19.3.23.9.1, Responses Needing Correspondence. Note: A separate Form 2624 must be provided for each disputed payer. Per RRA 98 IRC 3417, third-party contact requirements must be followed whenever a Letter 2625-C is sent to a third-party. When a Letter 2625-C is generated through the AUR system, the third-party information for Form 12175, Third-Party Contact Report Form, is systemically uploaded. When the Letter 2625-C is manually issued through the IAT "Letters" tool or IDRS, Form 12175 must be manually completed and forwarded to the designated Third-Party Coordinator. To find the designated Third-Party Coordinator go to Third-Party Contacts-Exam Technical Services. Reminder: Manually completed Form 12175 must be routed to the designated Third-Party Coordinator weekly. If the taxpayer disclaims knowledge of the income/payer or disputes the amount and provides a completed Form 2624 for the payer, research IDRS using CC INOLE or ENMOD to obtain the employer/payer address; if the payer address can't be obtained, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. If payer contact is necessary, see (4) below. Reminder: Do not issue a Letter 2625-C to the Social Security Administration, see IRM 4.19.3.23.5.12, Social Security/ Railroad Retirement (SS/RR). To issue Letter 2625-C: Update the address for the employer/payer on the AUR system using the Update Address window with Address Type B1 - B9, as appropriate. See IRM 4.19.3.23.1.6, Address Updates, for further information. Issue Letter 2625-C to the employer/payer; select paragraph D and ensure the correct SSN is input in the "07" fill-in field. Caution: Input of the correct SSN in the "07" fill-in field in paragraph "D" is imperative to prevent unauthorized disclosure. Always select paragraph "P" and enter "Signed Form 2624" in the fill-in field. In paragraph S ensure the correct SSN is entered in the "32" fill-in field. Caution: Input of the correct SSN in the "32" fill-in field in paragraph "S" is imperative to prevent unauthorized disclosure. Include other applicable paragraphs to compose the body of the letter. Print a copy of the completed Form 2624 and include as an enclosure to Letter 2625-C. See AUR System Guide, Selecting, Creating, Editing and Deleting Letter Paragraphs, for additional information. Leave a detailed case note. Send a letter to advise the taxpayer we are contacting the payer and will contact them again within 60 days. Address any other issues from the response, as appropriate. Note: If the taxpayer agrees they received income but disputes the amount and doesn't provide the correct amount, request the correct amount and any supporting documentation. If Letter 2625-C was issued, take the following actions when the employer/payer responds or if the employer/payer doesn't respond: If Then The Letter 2625-C was mailed to an individual, and the response indicates "Fear of Reprisal" Document the case file. Note: Any concern raised by the third-party with respect to reprisal will be taken at face value. Do not question any third-party claims to reprisal. Replace the Form 12175 that was previously completed; either manually or systemically, with a new Form 12175 to reflect the reprisal determination. Route Form 12175 to the designated Third-Party Coordinator. To find the designated Third-Party Coordinator go to: Third-Party Contacts - Exam Technical Services. The information provided by the employer/payer indicates the income doesn't belong to the taxpayer ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: If the result is a no change closure, use normal no change PCs, not those designated for Stolen Identity. The employer/payer indicates the same situation occurred in a subsequent year ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and attach a copy of the response from the employer/payer and the IR(s) to the subsequent year's return. See IRM 4.19.3.23.9.7, Prior and/or Subsequent Year Impact, for further information. Note: If the result is a no change closure, use normal no change PCs, not those designated for Stolen Identity. The information provided by the employer/payer indicates that the income DOES belong to the taxpayer (the name and SSN on the IR is correct) Issue a Letter 2626-C and select paragraph O. Include a copy of the payer response as an enclosure. See AUR System Guide, Selecting, Creating, Editing and Deleting Letter Paragraphs, for additional information. Caution: If Letter 2625-C was mailed to an individual, and the response indicates "Fear of Reprisal" , ensure the individual's name is removed from the copy of the Letter 2625-C response, before sending to the taxpayer. Continue processing the case. The information provided by the employer/payer indicates that the income DOES belong to the taxpayer (the name and SSN on the IR is correct) but provides a different amount Issue a revised notice including the amount of income the payer provided. Send Letter 2626-C and include a paragraph explaining the amount the payer verified and the change will be reflected in a revised notice. Remove the Send Indicator from the IR in question. Leave a detailed case note. If it can't be determined that the income belongs to the taxpayer OR if the payer doesn't respond to Letter 2625-C or refuses to furnish the necessary information, AND the taxpayer disclaims knowledge of or denies receipt of the income ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Note: If the result is a no change closure, use normal no change PCs, not those designated for Stolen Identity. The payer doesn't respond to Letter 2625-C or refuses to furnish the necessary information, AND the taxpayer agrees they received the income but disputes the amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Issue a revised notice ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. Reminder: When deleting Wage IRs, see IRM 4.19.3.23.9.4, Referrals, to prepare a Form 9409 unless the taxpayer has provided an SSA determination letter, on the WAGES IR(s) in question. If the taxpayer responds AFTER the employer verifies the income and still disclaims knowledge or denies receipt of the income, take the following actions: Issue a Letter 2626-C and include a paragraph, using the following verbiage as an example: "The payer has confirmed that the income was paid to your social security number. If you believe that someone is illegally using your social security number, please send either a completed, signed Form 14039, Identity Theft Affidavit (available at IRS.gov) or a copy of a police report and provide a signed statement identifying each specific item(s) that is a result of the identity theft." Note: The case isn't considered IDT until the taxpayer makes a claim. Use the appropriate non-IDT letter IPC. Exception: Phone assistors may provide this information during a call, in lieu of sending Letter 2626-C. If after being provided the information, the taxpayer still disclaims knowledge of or denies receipt of the income, advise the taxpayer we can't change our notice without a corrected document from the payer. Advise the taxpayer we can't change our notice without a corrected document from the payer. Continue processing the case. Reminder: When deleting Wage IRs, see IRM 4.19.3.23.9.4, Referrals, to prepare a Form 9409 unless the taxpayer has provided an SSA determination letter, on the WAGES IR(s) in question.

# Prior and/or Subsequent Year Impact

4.19.3.23.9.7 (11-08-2005) Prior and/or Subsequent Year Impact If the taxpayer's response indicates that the same error of income omission was made on a subsequent and/or prior tax year: Process the AUR issue(s) per normal procedures. Send the appropriate letter and inform the taxpayer to file a Form 1040-X to include the omitted income in the affected tax year. If the taxpayer's response includes acceptable explanations for some or all of the AUR issues AND indicates that the same erroneous payer information will occur in the subsequent year, take the following action: Leave a case note explaining that a copy of the taxpayer's response was sent to be associated with the subsequent year tax return. Advise the taxpayer that a copy of their response has been forwarded to be associated with their subsequent year's tax return. Research IDRS for the subsequent year tax return DLN in order to forward a photocopy of the response to the Campus Files Function. If Then The subsequent year tax return was Electronically filed, there is no paper return stored in the Campus Files function to associate the photocopied response. Use IDRS to post a TC 290-0 in a "05" blocking series. Do not use an attachment or association form. There is an indication that the subsequent year's tax return has not yet been filed, Correspond with the taxpayer and advise them to include a copy of their explanation/documentation with their tax return.

# Correspondence

4.19.3.23.10 (10-10-2025) Correspondence When taxpayer responses require additional correspondence, use Create Correspondence Letter screen to select the appropriate letter and applicable paragraphs. See AUR System Guide, Create Letter Window, for more information. If none of the pattern paragraphs are applicable, use an Open Paragraph. Review Open Paragraphs before mailing. To prevent unnecessary communication, ensure all issues are addressed. When correspondence includes the name of a specific contact person, use the name of an actual IRS employee unless procedures allow for the use of a registered pseudonym. Employees who have contact with the public, and don't believe use of only their last names provides sufficient anonymity, may ask to use a pseudonym. Employees have the option of using only their last names on correspondence. Refer to IRM 10.5.7, Use of Pseudonyms by IRS Employees for detailed procedures. When acknowledging the response input the date using the following priority: Exception: When issuing Letter 4314-C, input the IRS received date for the taxpayer's correspondence. Note: When Letter 4314-C is automatically generated by the AUR system, the acknowledgement date will be systemically input from AUR records. The date will be the IRS or AUR received date for the taxpayer's correspondence. The date the taxpayer entered on their most recent correspondence. Note: If the letter is being generated based on a phone conversation, use the date of the phone call as the taxpayer response date. Envelope postmark date or date stamped by fax machine. Three days prior to the IRS Received Date. Current date. If subsequent correspondence (other than a Recomputed Notice or Supplemental Report) on a response case requires a reply from the taxpayer, payer, or employer, use the applicable IPC to issue the letter and move the case into a suspense batch. See Exhibit 4.19.3-3, AUR Internal Process Codes, for more information about IPCs. Caution: Certain conditions (for example, misplaced paragraphs, invalid money amounts) may cause letters to reject. There are some situations where it is necessary to issue a letter to the taxpayer and take another action on the case at the same time. If a notice needs to be issued and there are no paragraphs to explain the changes, send the appropriate letter with an open paragraph to explain the changes and that a CP notice is forthcoming. Input the PC or IPC of the subsequent action. DO NOT input the IPC of the letter. Miscellaneous letter information uploads daily to generate the appropriate IDRS letter after the batch is disassembled. Note: Miscellaneous letters are generated for cases that remain in Unit Research Suspense (BT 42, 62, and 77). The letter displays the case sequence number (CSN). Clerks file cases in the appropriate suspense file based on the PC input by the tax examiner. Note: Format and commit the letter screen before you exit the window or the letter won't generate. The system does NOT automatically delete a letter if the PC is changed (for example, if a tax examiner inputs a Letter 2893-C with PC 20 then decides to do a PC 55 to issue a Notice, the tax examiner must DELETE the letter first). If the information provided by the taxpayer doesn't justify a change in the tax deficiency, and it is necessary to send an appropriate letter for further information, always send the Consent paragraph for a CP 2000 or a Statutory Notice. Note: If a Statutory Notice was issued and a letter sent, suspend the case for the remainder of the 90-day period. If the necessary information isn't present at the end of the 90-day period (150 days for notices mailed outside the United States), plus 15 additional days, the tax deficiency is assessed by default. A letter sent to a taxpayer requesting information should have the following paragraphs, as applicable, in addition to other paragraphs sent for a specific condition: Send a paragraph that informs the taxpayer a response is needed within 30 days. Exception: The system inputs a date which is 30 days later than the letter date when a selected paragraph asks for this type of response (or 45 days for foreign addresses). If a payment was submitted, send a paragraph acknowledging the payment. If the taxpayer submitted a request for a payment plan, send a paragraph informing the taxpayer their request will be forwarded to the proper department once an agreement is received and a fee may be charged for processing the request. Note: If Form 9465, Form 433-D or written IA request is attached see IRM 4.19.3.23.1.20, Installment Agreements, for further information. When a Statutory Notice was issued, send a paragraph to inform the taxpayer whether the 90-day period to petition the Tax Court has expired. Note: Refer to IRM 21.3.3, Incoming and Outgoing Correspondence/Letters, for further information on taxpayer correspondence. When it is necessary to send the taxpayer a letter that isn't one of the AUR online letters, there are designated letters, Campus (SC), IDRS, or a combination of both SC and IDRS, which may be used. These are considered "manual" letters. Use these manual letters on an exception basis only. Letters don't update the balance due amounts in the AUR tables, and the AUR system doesn't monitor this type of case for special handling during the No Response processing of 30 days. For these reasons, use Recomputed Notices for this type of case. If additional correspondence is required after the Statutory Notice was issued, make every effort to correspond with the taxpayer before the statutory period expires to allow the taxpayer enough time if they decide to petition the Tax Court. Send a Letter 2626-C; paragraph g is sent automatically.

# Disagreed Responses

4.19.3.23.11 (10-10-2025) Disagreed Responses A response is disagreed when: The taxpayer clearly doesn't agree with at least some part of the adjustment (excluding interest) and doesn't provide an acceptable explanation. The taxpayer makes any comment that they don't intend to waive their appeal rights, even if the Consent to Tax Increase on the CP 2000 or the Waiver on the Statutory Notice is signed, or the tax and all penalties (except for ES Penalty, FICA Tax and/or Penalty on Tips, and Employee's share of FICA tax) have been fully paid. The taxpayer submits full payment after issuance of the Statutory Notice and the necessary signature(s) are not present. Issue a Letter 2626-C to acknowledge payment and request missing signature(s). If the suspense time frame has expired, input PC 90 to default the case. Reminder: An out call must be attempted before issuing a Letter 2626-C. See IRM 4.19.3.23.2.4.1, Out Calls - Calling the Taxpayer, for further information. Take the follow action when a response contains a frivolous argument: Route digitally with Form 3210 to mailbox *TS EEF ICO T609 and notate in the subject line of the email Frivolous Referral-AUR. Leave a detailed case note. Continue normal AUR processing. The following items are examples of frivolous arguments: Examples of frivolous arguments: CONSTITUTIONAL BASIS - Refusal to provide requested information because of violation of constitutional rights, including Porth-Daley type returns, Fourth Amendment, Fifth Amendment, or Sixteenth Amendment basis. FAIR MARKET VALUE - The taxpayer reduced gross income because of the declining value of the dollar. GOLD/SILVER STANDARD - The taxpayer stated that only gold or silver currency can be taxed. NONPAYMENT - The taxpayer did not pay or underpaid because of belief based on reasoning other than accuracy of findings. VOW OF POVERTY - The taxpayer received income from non-religious sources and declares that it is nontaxable because of vow of poverty (also referred to as mail order ministry). DISAGREEMENT LETTER - The taxpayer disagrees with the use of taxes for war, defense, welfare, etc., and indicates that this affects reporting and payment of taxes. FAMILY ESTATE - Showed that income was reported on Form 1041 filed for a family, equity, pure, prime, or constitutional trust and provides the name or SSN of the actual recipient. OID and W/H amount on the same IR. REPARATIONS - African-Americans get a special tax refund. No taxes being withheld from your wages. I don't pay taxes, why should I? Pay the tax, then get the prize. Untax yourself. Social Security tax scheme. I can get you a big refund -- for a fee. Share/Borrow EIC dependents. Put money in a trust and never pay taxes again. IRS "Agent" comes to your home to collect. Home based business. Claim disabled access credit for pay phones. CLAIM OF RIGHT, includes IRC 1341 - Compensation for personal labor and IRC 1001. IRC 1341. Note: For a full list of recognized frivolous arguments, refer to The Truth about Frivolous Tax Arguments for additional information. A frivolous return or response is defined as noncompliance with filing and/or paying tax based on unfounded legal or constitutional arguments. Objecting to paying interest/penalty, being upset because they were not notified sooner, using off-color language, etc., are NOT frivolous arguments and must be handled with a normal reply to the taxpayer. If in doubt about whether the return and/or response is frivolous, consult with your lead or manager. If it is determined that the return or response is frivolous, see (2) above for further information.

# Assessments

4.19.3.23.12 (10-10-2025) Assessments Automatic adjustment processing was expanded to include most assessments made by the tax examiner. Tax examiners have the capability of generating an auto assessment by either entering an assessment PC or completing the assessment window. The manual assessment document isn't required on the majority of assessments but is available to the tax examiner if necessary. The AUR system automatically creates an assessment record on all cases based on control parameter dates as set by the AUR Coordinator. Information is uploaded by AUR to IDRS on tape. AUR uploads the transaction codes, reference numbers, and other data items necessary for an automatic assessment for PC 67, 87, 90 and 91-93. Note: AUR uploads the same information for PC 53 when it is preceded by IPC CR. The tax examiner verifies and/or inputs the necessary items on the Assessment window to create an automatic assessment for the following PCs, when necessary: PC PC 15 PC 20 PC 35-39 PC 44, 46, 47 and 48 PC 51-53 Exception: When PC 53 is preceded by IPC CR, the system will upload the assessment information PC 62-66 PC 68-71 PC 73-75 PC 77 PC 80 PC 82-86 PC 88 and 89 PC 94 PC 95 Note: PCs 15, 47, 51, 52, 70, 71, and 73 automatically generate a TC 290-0. If there is no information to be associated with the refile DLN, enter N in the SOURCE DOC field in the Process Code window. Note: PCs 39, 69 and 89 no longer designate identity theft closures. These PCs are input on jointly filed return cases which require assessment to MFT 31 accounts for each taxpayer. See IRM 4.19.3.23.7.1, Responses - Married Filing Joint - Single Signature on Consent, for further information. Reminder: If Form 9465, Form 433-D or written IA request is attached, see IRM 4.19.3.23.1.20, Installment Agreements. After dates designated by the AUR Coordinator have passed, ALL assessments must be input via IDRS. Enter an M in the AUTO/MANUAL box in the Assessment window. On the AUR system, the Tax Account screen updates weekly with all the new transactions posted to the module at Master File (IDRS pending transactions don't display). Prior to selecting the Assessment window, refer to Document 6209, IRS Processing Codes and Information, for freeze codes that appear on the Tax Account screen. If the Tax Account screen shows a -L Freeze and an open TC 420 or 424, check for a case note indicating prior contact with Exam. Take the following actions based on the results: If a case note is present indicating Exam doesn't want the case, continue processing and input the assessment with Priority Code 1. If there is no indication of prior contact with Exam, see IRM 4.19.3.4.3.2, Freeze Codes, to make the necessary Exam contact before inputting the assessment. Note: Always use Priority Code 1 when inputting an assessment and the case contains a -L Freeze code and open TC 420. If the Tax Account screen shows a -I Freeze, TC 29X must be input with a TC 34X to prevent an unpostable condition. Refer to IRM 20.2.5, Interest on Underpayments, for Manual Interest computation. See IRM 4.19.3.19.10, Manually Computed Interest for the CP 2000, for additional instructions. Note: Use a non-restricting TC 340, whenever possible. See IRM 20.2.5.6.3, Non-Restricting Transaction Code (TC) 340, for additional information. Prior to the input of a refund adjustment, when there is an indication that the taxpayer is deceased refer to IRM 21.5.1, General Adjustments, and IRM 21.4.4, Manual Refunds, for manual refund procedures. Note: Leave a case note documenting the actions taken when processing manual refunds. If at the point of inputting an IPC/PC, an error message indicator appears stating ERROR: SICK AND FAMILY LEAVE PRESENT, the case will need a manual assessment. Take the following actions: Enter/Verify the correct entries in the assessment window, see IRM 4.19.3.23.12.1, The Assessment Window, for further information. Note: When inputting the Credit Reference Numbers (CRN) for Sick and Family Leave, CRN 271 relates to amounts from Schedule H, Line 8f (TY 2022 and TY 2023) and CRN 299 relates to amounts from Schedule H, line 8e (TY 2022 and TY 2023). Caution: Ensure decreases don't exceed the original amount of credit allowed. Failure to do so may result in an unpostable condition. Send Letter 1802-C explaining the adjustment to the taxpayer. Input PC 53, PC 68, PC 88, or PC 94 as appropriate.

# The Assessment Window

4.19.3.23.12.1 (10-10-2025) The Assessment Window When responses are closed with a PC 53, PC 68, PC 88, or PC 94, use the Assessment window to input the adjustment. When the Assessment window is committed an assessment record generates and posts to IDRS when the batch is disassembled. Note: Do not commit the Assessment window unless there is a valid assessment to be made. If the Assessment window was committed and it is subsequently determined that an assessment isn't necessary at this time, delete the assessment to prevent the assessment from posting. To delete an assessment record: Use the Delete Record <F3> sequence to delete any applicable field in the Assessment window. Commit the window and Exit. Adjustment data pertaining to the case displays upon entry into the Assessment window. The REASON CD, SOURCE DOCUMENT ATTACHED, and REMARKS fields are the only fields required for input by the tax examiner. Before a window is allowed to be committed, the system verifies that these fields and any other required fields have valid entries. Caution: Verify the entry in the RECEIVED DATE field of the Assessment window. BLOCKING NUM - The blocking series of the adjustment. For AUR adjustments, the following blocking series display: Blocking Series 500 - 519 for CP 2000 responses that are both TIMELY (within 30 days of the notice date) and FULL PAID (in their entirety) and for TC 291 (tax decrease). Blocking Series 550 - 589 for CP 2501 responses or CP 2000 responses that are OTHER THAN FULL PAID. Blocking Series 600 - 619 for Statutory Notice responses that are FULL PAID. A full payment is equal to or more than the balance due on the CP 2000. Blocking Series 650 - 679 for Statutory Notice responses that are OTHER THAN FULL PAID. The system uses Blocking Series 05 for pre-Stat no change closures for Virtual returns to file correspondence in Document Retention. CORRESP DT - This date is required on all AUR assessments when the taxpayer has submitted a response. Input using the following priority: The date the taxpayer entered on their most recent correspondence. Envelope postmark date or the date stamped by the Fax machine. Three days prior to the IRS Received Date. Current date. Note: In subsequent notices to the taxpayer, provide the date of the correspondence that was used for the assessment. DB INT TO DT - Debit Interest to Date is the date Manual Interest was computed to on TC 34X cases. It is a required field when a TC 340 or 341 is input on the Assessment window. IRS RECEIVED DT - The IRS Received Date is part of the control base history record and is systemically updated on Master File every time a PC is entered. If it is necessary to enter the IRS received date, determine the date using the following priority: Received date stamped on correspondence. Envelope postmark date or the date stamped by the Fax machine. Signature date. Current date. CREDIT INTEREST DATE (Agreement) - The taxpayer is entitled to an interest-free period if IRS fails to generate a Master File Settlement Notice to them within 30 days after receiving a waiver of restrictions on assessment. This interest free period begins on the 31st day after the IRS Received Date and continues until the date of the notice and demand for payment (the date an assessment is made or 23C date). The agreement date assures that any computer-generated interest on a subsequent notice to the taxpayer takes into account this interest free period if applicable. If it is necessary to input the agreement date, use the priority for determination of dates listed in (7) above. Use the following criteria to determine if an agreement date is necessary: Verify the correct agreement date is present in the Assessment window on all agreed assessments. Ensure that the CREDIT INTEREST DATE field is blank if the case is being assessed by Default (For example, PC 94). Verify the correct CREDIT INTEREST DATE field is input, even on fully paid assessments. Even though interest stops automatically at the date of the payment, the taxpayer may be entitled to this interest-free suspension period on a subsequent assessment. Verify that the CREDIT INTEREST DATE field is blank on tax decrease cases. Verify that the CREDIT INTEREST DATE field is blank on W/H, SSTAX and/or additional MCTXW adjustments with a TC 290-0 (zero). Verify the CREDIT INTEREST DATE is blank when inputting a TC 290-0 on a pre-Stat No Change Virtual case closure to file correspondence in Document Retention. This prevents an unpostable condition. Verify the CREDIT INTEREST DATE is blank when inputting a TC 290-0 and adjusting AGI/TXI only. REFUND STATUTE CONTROL DATE (RFSCDT) - This field helps identify cases with an expired Refund Statute Expiration Date (RSED) based on the time that has elapsed since the filing of the tax return (3-year period of limitation). The field doesn't display on the Assessment window since cases with this condition can't be worked on AUR. However, if the condition exists, a warning message displays. If the message displays, place the case in unit suspense and refer to IRM 2.4, IDRS Terminal Input, for processing instructions. OVERRIDE CD - An Override Code of "R" displays when the IRS Received Date is over one year old. TRANSACTION CODES - Transaction codes display in the TRANS CODE field as applicable. The corresponding transaction amount displays in the TRANS AMT field. TC 290/291 - Adjusts the tax. TC 170/171 - Adjusts the ES Penalty when a penalty was previously assessed and there is a change to W/H. TC 160/161 - Adjusts the Failure to File penalty. Note: When the Failure to File penalty is being reversed with a TC 161, access the Tax Account screen. Add all the displayed TC 16Xs together and compare this total with the TC 161 on the Assessment window. If the TC 161 is more than the total from the Tax Account, change the TC 161 to reflect the total from the Tax Account window. This action is needed because of rounding discrepancies and prevents an unpostable condition. TC 310 - Assesses the SS Tip Penalty. In order to post this penalty, a Reference Code 891/892 with an amount must be input. Leave an action trail indicating the SS Tip Penalty has been assessed. TC 766 (with CRN 252) - Adjusts excess SSTAX. TC 766/767 (with CRN 336) - Adjusts the Additional Child Tax Credit. SRCE CD - These codes are used with TC 29X adjustments and display in the SRCE CD field. The Source Codes determine the statement which appears on the taxpayer's adjustment, with the Reason Code completing the statement. See Document 6209, IRS Processing Codes and Information, for a complete list of Source Codes. Note: Use Source Code "9" on Default cases where no response was received. REASON CODES - At least one reason code is required unless the only TC input is a TC 290 for zero amount and no reference numbers are present. Up to three Reason Codes may be used. The Reason Code(s) determine the explanation that prints on the adjustment notice. For valid codes see Document 6209, IRS Processing Codes and Information. HOLD CD - Use Hold Codes with TC 29X adjustments to prevent or delay the issuance of a refund and/or notice. See Document 6209, IRS Processing Codes and Information, for a list of valid codes. PRIORITY CD - Priority Codes display in the PRIORITY CD field and are used to post adjustments to the Master File when certain module conditions exist. Failure to use the Priority Code when specified causes the transactions to unpost. Always use Priority Code 1 when there is an -L freeze. See IRM 4.19.3.4.3.2, Freeze Codes, for further instructions. Use Priority Code 2 when there is an -L Freeze on the account AND a refund is being issued. Use Priority Code 3 when issuing a refund. Exception: Do not use Priority Code 3 when refunding a payment. Use Priority Code 5 to bring interest and penalty accruals up to date, especially on no change cases with a balance due. Exception: Cases in current IA status. Priority Code 8 is system generated when there is an increase to EIC (TC 764/768 is present on the Tax Account screen). Priority Code 8 automatically generates when there is a change to W/H credits, excess SSTAX and/or additional MCTXW and a TC 170/171 is present on the Tax Account screen, but no adjustment to the ES Penalty (TC 170/171) is necessary. Priority Code 8 must be input when an AUR tax increase/decrease is within $10 of a previous TC 290/291 adjustment. FLC - The File Location Code identifies the District Code for DLN purposes on foreign returns being assessed. Valid codes are 66 for Puerto Rico returns and 98 for Office of International Operations (OIO) returns. This must be input in the FLC field when applicable. Otherwise, leave this field blank. REFERENCE CD - The following Credit Reference Numbers, (18) - (36) below, display in the REFERENCE CODE field as applicable. The corresponding adjustment amount displays in the REFERENCE AMOUNT field. Note: If more than eight (8) Reference Codes are necessary, see IRM 4.19.3.23.12.2, Over Eight Credit References. 680 - Assesses the Accuracy-Related Penalty (imposed for Negligence or Disregard of Rules or Regulations, or Substantial Understatement). The computer generates a TC 240. If the Assessment window is used to input an adjustment, the 680 doesn't display correctly on: CP 2501 responses, and partially agreed CP 2000 responses. In these cases, manually enter or correct the displayed 680 amount. Consider the following information when entering/verifying the 680 amounts on the Assessment window: The correct negligence penalty displays in the MANUAL NEGLIGENCE PENALTY field on the Limit Penalty window. Compare this amount with the 680 amount on the Assessment window and correct the 680 amount if necessary. If the 680 isn't present, use INSERT RECORD <F2> to add the 680 and corresponding amount. Refer to IRM 4.19.3.19.5, Accuracy-Related Penalty Due to Substantial Understatement of Tax, to determine if the Substantial Understatement penalty still applies. If applicable, manually compute the Substantial Understatement penalty by multiplying the NET CHANGE field in Return Value by 20 percent. Correct the 680 amount if necessary. If the 680 isn't present, use INSERT RECORD <F2> to add the 680 and corresponding amount. If the penalty no longer applies, use DELETE RECORD <F3> to delete the 680 and the corresponding amount. If both the Negligence and the Substantial Understatement penalties apply to a given underpayment, only one 20 percent penalty may be imposed. 764/765 - Adjusts EIC. 806/807 - Adjusts W/H. 886 - Adjusts taxable income (TXI). If the adjustment is a decrease, the taxable income can't be adjusted to less than zero (0). The module shows the TXI as zero (0) even if the taxpayer's TXI on the return is a negative amount. If the adjustment is an increase which changes a zero (0) or negative taxable income per return, the 886 amount is the amount of the new corrected taxable income. Note: An 886 entry isn't necessary if the TXI remains zero (0) or negative. An incorrect entry will cause an unpostable condition. 861 - Adjusts Net Investment Income. 862 - Adjusts Net Investment Income Tax. 863 - Adjusts Additional Medicare Tax on Medicare wages PLUS the Additional Medicare tax on SE income. 864 - Adjusts Additional Medicare Tax on Railroad Retirement compensation. 878 - Adjusts self-employment income for the primary taxpayer. 879 - Adjusts self-employment income for the secondary taxpayer. 887 - Adjusts the number of exemptions claimed on the original return. When the EXEMPTIONS NOW field reflects a change from the EXEMPTIONS PER RETURN field in the Return Value screen, the system automatically enters the 887 change in the Assessment window. 888 - Adjusts the Adjusted Gross Income (AGI). Note: Do not adjust the AGI if the taxpayer responds that a lump-sum distribution qualifies for the Special 5/10 Year Averaging Method on Form 4972 and there is no other U/R issue which changes the TXI. 889 - Adjusts SE tax. Note: Reference Number 878/879 and/or 895/896 must ALWAYS be used in conjunction with Reference Number 889. 891 - Adjusts the primary allocated tip income. 892 - Adjusts the secondary allocated tip income. 895 - Adjusts the primary Medicare income. 896 - Adjusts the secondary Medicare income. 898 - Adjusts the primary Medicare tip income. 899 - Adjusts the secondary Medicare tip income. SOURCE DOCUMENT ATTACHED?- This is a required field and is used to inform the Campus Files function when an assessment(s) with a source document (for example, tax return, correspondence) is routed there for attachment of CF 5147. Valid entries for this field are: Y - Source Document attached Note: Digitized responses are considered source documents. N - No Source Document attached REMARKS- This is a required field input by the tax examiner. Use it to leave an action trail concerning the adjustment. AUTO/MANUAL IND - Use this field when the assessment must be manually input to IDRS. This field is required after the dates listed in the table below. Notice Type TY 2022 TY 2023 TY 2024 CP 2000 January 2, 2026 January 1, 2027 January 7, 2028 Statutory Notice May 1, 2026 May 7, 2027 May 5, 2028 Caution: If the assessment window is marked with an "M" , the assessment MUST be input manually on IDRS. Assessment indicator "M" is generally used only after the dates listed above. Verify that all fields in the Assessment window are correct before committing the window. This ensures an accurate adjustment to the taxpayer's account. If a field (such as TRANSACTION, CODE/AMOUNT or REFERENCE CODE/AMOUNT) contains an entry that must be changed or deleted: Place the cursor in the field of the change. Use the <F3> (Delete Record) key to delete a TC and/or amount or a Ref Code. Use the <F5> (Clear Field) key to delete any other fields in the Assessment screen. Input the appropriate entry or leave blank. Note: Do NOT use the Clear Field key to remove the entry. Commit the screen. Caution: Accessing the Assessment window after you have committed and exited, deletes any changes and restores the original figures. To enter a new TC/Amount or Reference Code/Amount in a field that doesn't already contain an entry: Place the cursor in the last TRANS CODE or REFERENCE CD field which contains an entry. Use the INSERT RECORD <F2> function. The cursor moves to the next blank field. Input new Transaction/Reference Code and Amount. Commit the screen. Caution: Accessing the Assessment window after you have committed and exited, will delete any changes and restore the original figures. After the assessment PC posts, a history of the assessment can be viewed by accessing the Case History screen and clicking on the date of the assessment. See AUR System Guide, Viewing Cases. If a case is being closed No Change and an adjustment to prepayment credits is necessary, see IRM 4.19.3.23.8, Partially Agreed Responses.

# The MFT 31 Assessment Window

4.19.3.23.12.1.1 (10-07-2019) The MFT 31 Assessment Window The MFT 31 Assessment Window is used to generate assessment records and post assessments to MFT 31 modules, established for MFJ and divorced/separated taxpayer cases, when only one taxpayer signed consent to the tax and, on docketed Appeals cases for MFJ taxpayers, when only one taxpayer filed a petition with Tax Court. These cases require an assessment on both the MFT 30 and MFT 31 modules. See IRM 4.19.3.23.1.17.1, Divorced/Separated Taxpayers – Single Signature on Consent, IRM 4.19.3.23.1.8.1.1, Responses – Petitioning Spouse (PS) and Non-petitioning Spouse (NPS) - Docketed Cases, and IRM 4.19.3.23.7.1, Responses – Married Filing Joint – Single Signature on Consent, for additional information.

# Over Eight Credit References

4.19.3.23.12.2 (10-07-2019) Over Eight Credit References AUR will systemically process two assessments when there are over eight Credit Reference Codes and PCs 67, 87 or 90 are used. To view the assessments on the Case History screen: Click on the date of the assessment, which will display as "ASSESSMENTOVER8," to view the first assessment screen. Arrow down to view the second assessment screen. If the assessment contains over eight Credit Reference Numbers and PCs other than 67, 87 or 90 will be used, follow the instructions see (4)-(6) below. Access the AUR Assessment Window and identify the Credit Reference Codes causing the over-eight condition. (These reference codes will be input separately on IDRS.) Note: Enter/Verify the tax on the AUR assessment (the TC 290 amount). Determine if the TC 888 and 886 amounts are the same. If the amounts are the same and the TXI remains a positive amount, the TC 886 and the corresponding amount can be deleted using the <F3> key. When the AUR adjustment downloads to IDRS, the TC 886 will automatically post an amount matching the TC 888 amount. Caution: If only one Credit Reference Code is causing the over-eight condition, this procedure will eliminate the need for a separate IDRS adjustment. Identify Credit Reference Codes that relate to each other (for example, TC 878, TC 895 and TC 889) and that adjust income only (for example, do NOT use TC 764 or TC 765, since these adjust EIC; a prepayment credit). Ensure all Credit Reference Codes related to SE are made on the same adjustment to avoid an unpostable condition. Remove the PTC Credit Reference Numbers 866, 865, 867 (and Reason Code 152) and 868. Note: These items will be included on the IDRS adjustment. Exception: Do not remove Credit Reference Number 262 or Reason Code 151. This will create a bill or refund and must remain with the AUR assessment. Once identified, the Credit Reference Codes are input on IDRS as follows: Input a TC 290 - 0. Use blocking series 05. Enter Hold Code 2. Enter Source Code 0, 1, or 2. Enter applicable Reason Codes (same as those shown in the AUR Assessment window). Enter Posting Delay Code 1. Enter the credit references identified from (2) above and the related money amounts. Enter an "N" in the SOURCE DOCUMENT ATTACHED field of the ADJ54 screen. Enter "Over 8 Reference Codes" in the Remarks field. Once the IDRS adjustment has been input, take the following actions on AUR: Access the Assessment window. Delete the credit reference numbers and the related money amounts that were input on IDRS using the <F3> key. Commit the Assessment window. Leave a case note over eight references were input on IDRS. Use the applicable PC to close the case (PC 53 for CP 2501, PC 68 for CP 2000, PC 88 or PC 94 for CP 3219A).

# Instructions Specific to Statutory Notices/Responses

4.19.3.23.13 (10-10-2025) Instructions Specific to Statutory Notices/Responses A Statutory Notice of Deficiency includes the following: CP 3219A, Notice of Deficiency, which explains how and when to file a petition with Tax Court. Form 5564, Notice of Deficiency - Waiver, which is the consent to assess and collect. A partial reprint of the most recent CP 2000. The following non-statutory items are not included in the increase in tax (deficiency) on CP 3219A, Notice of Deficiency, or Form 5564, Notice of Deficiency - Waiver: Withholding Excess SST FICA tax Additional Medicare tax withheld Additional Medicare tax on wages or RRTA compensation Note: Any non-statutory items were included or addressed in notices or letters sent to the taxpayer previously. Before generating a Statutory Notice, the system automatically checks for posted payments, proper splitting of the primary and secondary taxpayers' names, and address changes on all No Response cases. HOWEVER, it doesn't check for payments on Disagreed cases. Prior to entering a PC to generate a Statutory Notice on a Disagreed CP 2000 case, follow instructions in IRM 4.19.3.23.9.2, Responses Needing Research and Correspondence. Also look for payments that were made for issues other than the AUR case. If the taxpayer's account was in BALANCE DUE STATUS prior to the CP 2000 and the BLOCKING SERIES of the payment is other than 300-399, assume the payment is NOT related to the proposed U/R assessment. Input PC 75 (PC 77 if a manual stat notice is required) and issue a Statutory Notice. Note: Although there are no enclosures for the Statutory Notice of Deficiency, a copy of the tax computation, generally the CP 2000, must be attached. In order to ensure proper tracking of the taxpayer's account, PC 75 or PC 77 must be posted. When the IRS is proposing a deficiency on a jointly filed tax return, RRA '98, section 3201(d), a non-code provision, requires for a joint return that the IRS issue a copy of the Statutory Notice of Deficiency to the primary and secondary taxpayer residing at the same address. Each will have a Certified number. The AUR system can split most of all filing status "2" name lines. Whenever the AUR system can't confidently split the primary and secondary taxpayers, the system alerts the tax examiner to review the split before a Statutory Notice of Deficiency can be generated. The Update Address window contains the following fields, PRIMARY STAT NAME, SECONDARY STAT NAME and SPLIT CODE. The SPLIT CODES and their meanings are as follows: C - Auto Confident - System confidently split names and doesn't require review before Statutory Notice of Deficiency is generated. D - taxpayer deceased - Does not require review before Statutory Notice of Deficiency is generated. A - Auto - System unable to confidently split names. Tax examiner review is required before the Statutory Notice of Deficiency is generated. M - Manual - Tax examiner split filing status "2" into PRIMARY STAT NAME and SECONDARY STAT NAME. When PC 75 is entered and the SPLIT CODE is "A" , the UPDATE ADDRESS window displays how the system split the name line. The tax examiner must review the information, making any necessary changes, and enter SPLIT CODE "M" (manual). If the tax examiner is updating the FIRST NAME LINE adding "DECD" , the system will require the tax examiner to enter SPLIT CODE "D" . When it is necessary to close a case without posting a TC 290-0 (for example, transfer to another function), use PC 96. After a PC 75 is assigned, the notice can be stopped no later than two Fridays before the notice date. Cases with PC 75 are automatically stopped, and PC 79 is automatically generated when the cases are added to the Stop Notice tape. However, Statutory Notices generated by PC 77 don't have a bar code and must be pulled manually. Notify the Clerical Function about PC 77 Stop Notices. To "stop" Statutory Notices from being mailed, use the following instructions: Select the Stop Notice option. The system posts a C (Notice not generated) or D (Deleted - Notice stopped before it was generated) and the PC doesn't display in the Case History. The system generates a PC 79 and batches the case to BT 65 (CP 2000 Unit Suspense). When a response is received after the Statutory Notice generates, but before it is mailed, the Clerical Function builds the case into BT 58 (Late CP 2000 Response/Statutory Notice Generated). The system generates PC 79. Process the response per CP 2000 response procedures. If the SSN isn't entered in time to stop the Statutory Notice mailout, clerical will build these cases to a Statutory Notice response batch. When working BT 58, it may be determined that the Statutory Notice should be mailed. The AUR Coordinator can delete PC 79, if the SSN is entered in time to stop the notice. When the taxpayer response includes a signed Form 1040-X/Amended return or a signed computation including the amount of tax, that is more than the tax increase per the Statutory Notice, review the Tax Account screen to determine if the adjustment has already posted. If it has not posted: Math verify the taxpayer's figures. Ensure all AUR issues are addressed. Update the Assessment window per the Form 1040-X/Amended return. Close the case with PC 88. Note: If the Form 1040-X has posted AND all AUR issues are included - close the case with a "no change" PC that doesn't generate an automatic closure letter. After a Statutory Notice is mailed it may be necessary to rescind the notice. See IRM 4.19.3.23.13.2, Rescinding Statutory Notices, for further information. Consider the assessment statute expiration date (ASED) before inputting U/R transactions. If the ASED is greater than ninety (90) days, the statute isn't imminent. Process the case using normal procedures. If the ASED is ninety (90) days or less, the statue is imminent. An AUR assessment MUST NOT be made using normal procedures. TC 560 can't be input during the CP 2000 phase to extend the assessment input date. TC 560 is for Statutory Notice assessments only, take the following actions: Recompute the ASED and input the TC 560 using CC REQ77 with Blocking Series 700 Caution: An unpostable condition with code 178 will result if the TC 560 isn't input prior to an assessment. If the Statute is imminent after the input of TC 560, or if the TC 560 isn't input to extend the ASED, access the Automated Manual Assessment (AMA) tool is mandatory and MUST be used to prepare Form 2859, Request for Quick or Prompt Assessment, for a quick assessment, and route to the Accounting Operations for assessment via Form 3552, Prompt Assessment Billing Assembly. Use SERP, Who/Where tab, Prompt, Quick, Jeopardy and Termination Assessments for routing information. See IRM 4.19.3.25.2.3, Confirmation Receipt of Quick Assessment Fax when faxing Prompt Assessments. Note: See AMA 2859 User Guide for further information on using the AMA tool. Caution: Do not input the TC 560 and TC 290 in the same IDRS cycle. If the TC 560 doesn't post, the TC 290 won't post which will result in a barred assessment. Reminder: All manual assessments made on Form 2859 must have the interest manually computed. If the return doesn't need to be restricted, a TC 190 can be used. Per IRC 6631 the interest computation must be mailed to the taxpayer. See IRM 4.19.3.19.10, Manually Computed Interest for additional information. Ensure the signed Form 2859 PDF is sent to clerical to upload into the AUR system to be associated with the case. If the case is statute imminent (including disaster cases), it can be assessed as long as the suspense time frame (105 days) has elapsed. Only extend the ASED when the CP 3219A 90 day period will expire after the ASED. For a Statutory Notice with a subsequent agreement received prior to expiration of the 90 days, the assessment period can be extended, when necessary to protect the assessment, for the number of days the Statutory Notice was outstanding (from the issue date to the taxpayer reply date). See IRM 4.19.3.25.2, General Procedures. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

# Non-Statutory Items

4.19.3.23.13.1 (10-29-2024) Non-Statutory Items Tax Court doesn't have the jurisdiction over certain underpayments and overstatements (non-statutory items). Therefore, when these non-statutory items exist in a case, an assessment or adjustment must be made prior to ASED expiration (see (2) below) and (IRC 31, IRC 6211, IRC 6652(b)). Note: When a Statutory Notice is issued, and a TC 560 is input to extend the ASED, it doesn't extend the non-statutory items ASED. Reminder: DO NOT issue a Statutory Notice which only contains non-statutory items as shown in (2) below. If non-statutory items are an issue a partial assessment on AUR or IAT "REQ54" tool is required for the following items: W/H, see (3) and (4) Excess SSTAX, see (3) and (4) Additional Medicare Tax Withheld, see (3) and (4) Additional Medicare Tax on wages or RRTA compensation, see (5) FICA tax on tip income and tip penalty under IRC 6652(b), see (5) FICA tax on other income (such as NEC), see (5) If a Statutory Notice has not been issued and W/H, excess SSTAX, or Additional Medicare Tax is the issue, input the assessment on AUR for the non-statutory item adjustment, NOT the tax. Issue a letter informing the taxpayer the non-statutory items have been assessed and input PC77 to manually generate a stat notice. If a Statutory Notice has been issued and W/H, excess SSTAX, or Additional Medicare Tax is the issue, input the assessment using the IAT "REQ54" tool, use HC 2 for the non-statutory item adjustment, NOT the tax. Issue a recomputed notice removing the non-statutory items assessed and send PARAGRAPH 237, see Exhibit 4.19.3-7, CP PARAGRAPHS. If FICA tax, SS Tip tax or Additional Medicare Tax on wages or RRTA compensation is an issue: Using the IAT "REQ54" tool, assess the FICA tax, SS Tip Tax or Additional Medicare Tax on wages or RRTA compensation with a TC 290 and the appropriate reference number using HC 2. The hold code is released when the next TC 290 posts. Use blocking series "05" to input FICA/SSTAX adjustment. Input PC 77 or PC 95. Example: The original FICA tax on the CP 2000 is $150 with the total tax due of $750.00. Input TC 290 with the appropriate reference number for $150 and issue the Stat notice (using STN 90) or a recomputed notice (PC 95) for $600. If a Statutory Notice was sent that contained only non-statutory items, an adjustment to non-statutory items MUST be done. Enter/Verify the appropriate entries in the Assessment window Leave a detailed case note Use PC 88 (Statutory Notice) or PC 94 (Default Statutory Notice) to closes the case Send an 1802-C letter to inform the taxpayer of the assessment

# Rescinding Statutory Notices

4.19.3.23.13.2 (10-10-2025) Rescinding Statutory Notices After a Statutory Notice is mailed, it may be necessary to rescind the notice. The taxpayer or the IRS may initiate rescission of a Statutory Notice. The decision to rescind is discretionary on the part of the IRS, is made on a case-by-case basis and requires the taxpayer's written consent. AUR tax examiners will NOT rescind Statutory Notices without prior managerial approval confirmed in a case note AND approval from AUR HQ Policy. When a taxpayer requests the rescission of a Statutory Notice, the first step is to attempt taxpayer contact to resolve the concern/issue. Per Revenue Procedure 98-54, 1998-2 C. B. 529, a rescission may be agreed to if: The notice was issued as a result of an administrative error (to the wrong taxpayer, for the wrong tax period or without considering a properly executed Form 872, Consent to Extend the Time to Assess Tax, or Form 872-A, Special Consent to Extend the Time to Assess Tax). Note: If the Statutory Notice was issued for the wrong taxpayer or wrong tax period, close the case with the applicable No-Change PC. The taxpayer submits information establishing the actual tax due is less than the amount shown in the notice. Note: Issue a Recomputed notice for the lesser amount. Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ to the Statutory Notice deficiency. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡, leave a case note and process the case on the original deficiency. The taxpayer requests a conference with Appeals (for the purpose of entering into settlement negotiations - as determined by Appeals) and the case will be received in Appeals with at least 365 days remaining on the statute of limitations. Note: If there is less than 365 days remaining on the statute of limitations a rescission may be agreed to if the Appeals Office also agrees with the decision to rescind. Per Revenue Procedure 98-54, 1998-2 C. B. 529, a rescission won't be considered when: On the date of the rescission, 90 days or less remain before the expiration date of the period of limitations on assessment; however, a notice of deficiency may be rescinded in these circumstances if, before rescission, the taxpayer and the IRS execute a consent to extend the period of limitations on Form 872 or Form 872-A. The 90-day (or 150-day for taxpayers living outside the U. S.) restriction period under IRC 6213(a) has expired and the taxpayer has not filed a petition with the Tax Court. The taxpayer has petitioned Tax Court or, The taxpayer and the IRS, prior to issuance of the notice of deficiency, executed a Form 872-A covering any of the tax years in the notice. After all the conditions in (1), (2), and (3) have been considered (managerial approval is required), follow these steps to obtain the taxpayer's consent: Complete a Letter 2264-(SC) to print and mail to the taxpayer. Print a duplicate Letter 2264 to PDF and send to clerical to upload into the AUR system. Prepare a Form 8626, Agreement to Rescind Notice of Deficiency, in duplicate. Attach one copy to the Letter 2264-(SC) and attach the other copy to the file copy of the Statutory Notice, if available on the AUR system or Control D, otherwise attach to a print of the Statutory Notice History screen. Send the Letter 2264-SC with a copy of the Form 8626 and a return envelope to the taxpayer that day. Leave a case note. Use IPC 8S to resuspend the case. Note: If communicating with the taxpayer pending receipt of the rescission agreement, be sure to include notification that the 90-day period to petition Tax Court is still in effect. When the taxpayer returns the signed Form 8626 (both signatures are needed for jointly filed returns), the Form 8626 must be countersigned by the Director Compliance Service, Field or designated official. The rescission is effective on the date the Director or designated official countersigns the Form 8626. Take the following actions: Send the taxpayer one copy of the letter and a copy of the countersigned Form 8626. Leave a case note. Ensure the signed copy of Form 8626 by the Director is sent to clerical to upload into the AUR system. Assign PC 78 and continue processing. Note: PC 75 can't follow PC 78.

# Default Statutory Notices

4.19.3.23.13.3 (10-10-2025) Default Statutory Notices Thoroughly review each case prior to defaulting to ensure: Note: If there is a previous IPC MI on the case, transfer the case to the designated SEID. There is no agreed response from the taxpayer. If there is an agreed response, process the case using agreed response procedures. Do not use default instructions to process the case. Caution: Full payment received after issuance of a Statutory Notice can't be considered agreement to the tax increase. Since the necessary signature(s) were not obtained, these cases are closed as Defaults. The suspense time frame (105 days) has elapsed before assigning PC 90. If not, use IPC "RF" to continue the suspense time frame. Note: If the suspense batch has aged a message displays "Invalid Process Code - Batch is aged" . Take necessary actions to issue a letter or move the case to the next phase. Any case with Freeze Code "-C" has been researched to ensure there is a combat zone exit date and the required suspense time frame has expired. DO NOT default a case if the combat zone exit date isn't available. See IRM 4.19.3.23.1.11.1, Combat Zone Cases and IRC 7508. Verify the ASED of each default case. If the ASED is more than 90 days, the statute isn't imminent. Process the case using normal procedures. TC 560 IS NOT NEEDED ON THESE CASES. If there are five workdays or fewer before the 90-day time frame, input the adjustment immediately. If the ASED is less than 90 days, recompute the ASED and input TC 560. Note: The assessment (TC 290) on a default case that needs a TC 560 can't be input until the TC 560 has posted. Caution: Every effort must be taken to input the TC 560 before April 15th. Compute the EXDATE (Extended Statute Expiration Date) for a Defaulted Statutory Notice: Determine the original ASED and convert to the Julian date, which is the number of continuous days since the beginning of the calendar year. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Convert the sum to a calendar date. Example: The Defaulted Statutory Notice has an original ASED of April 15th. April 15 is 105 days from the beginning of the year, so its Julian date is 105 (see step 1 above). ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Default cases with a TC 560 input on or before the date listed in the table below don't require input of a Transaction Date (TRANS-DT). TY 2022 TY 2023 TY 2024 04-18-2026 04-17-27 04-15-28 Exception: For TY 2022, taxpayers had until April 18, 2023 to file, due to the Emancipation Holiday in the District of Columbia, even if they weren't a resident of the District of Columbia. For TY 2023, Maine and Massachusetts had until April 17, 2024, due to Patriots' Day and Emancipation Day holidays. Input TC 560 using the IAT "REQ77" tool. Input and/or verify the following: TIN. MFT code. Tax period (YYYYMM). Name control. TC 560. Extension date (MMDDYYYY) - (new ASED). DLN-CD blocking code 70. Used only when the ASED on TXMOD has expired at the time of TC 560 input; this is commonly used on AUR Bankruptcy cases. Remarks - Input New ASED.

# CP 2000 Notice Review

4.19.3.24 (10-10-2025) CP 2000 Notice Review A statistically valid sample of cases is produced for review. This is a product review toward perfecting the quality of notices. In the review, the case is reworked from the beginning, including the determination of the U/R amount. The selection of sample notices is performed from all CP 2000 Notice runs with the exception of Employee AUR cases, and CP 2000s posted after CP 2501 Notices. Employee AUR cases continue to be processed in accordance with IRM 4.19.3.26, Employee Cases. Automated Generated Notices (AGN) will be included in the notice sample. AGN cases are identified in the SSN Batch Listing Report with an "AV" indicator. Note: When reviewing AGN notices, only the asterisk items will be screened. The reviewer will review all the sampled cases. The case file is built into BT 95. The tax examiner verifies the CP 2000 for correctness and overall quality by reworking the case. If no error is found, no action is necessary. Reminder: Instructions for the AGN review process are located on the AGN Review Tracker on the SharePoint and only the Notice Review Coordinator can make entries. If a Critical or Noncritical error is found, the CP 2000 Notice needs to be corrected, the reviewer must stop the original CP 2000 by either transferring the case(s) or using the Stop Notice window, as applicable and: Note: "Critical" errors affect the total balance due. "Noncritical" errors DO NOT affect the total balance due. If Then A notice still needs to be issued. Issue a corrected notice. Note: If the CP 2000 can't be stopped, send PARAGRAPH 88. See Exhibit 4.19.3-7, CP PARAGRAPHS. The case will be closed Use the applicable closing PC. Note: If the CP 2000 can't be stopped, close with PC 71. Issue a Letter 1802-C apologizing for the incorrect notice. When the SSN is entered on the Stop Notice window, the system automatically assigns the appropriate "not mailed" PC. If it is subsequently necessary to remove the SSN from Stop Notice the following message displays "Transfer case to the AUR Coordinator. Process code needs to be deleted" . The CP 2000 Notice review is mandated, requiring review results be posted to the Notice Review and/or AGN Tracker(s) on SharePoint Monday of each week. The review MUST be completed the same week the batch is built. Exception: If Monday is a non-workday (such as, holiday or inclement weather) the tracker must be completed on the 1st workday of the week. Notice Review: Submit information only on those cases that are found in error. Use the appropriate error codes. AGN Review: Submit information only on those cases that are found in error. Complete all appropriate fields on the AGN tracker. If the critical error rate exceeds 10 percent for Notice Review, do the following: Decide on a plan of corrective action. Within 2 days of determining that the "Critical" error rate exceeds 10 percent advise P&A of the error rate and describe the corrective action(s) for concurrence. See Exhibit 4.19.3-11, Notice Review Error Codes.

# Accounts Maintenance Research (AMRH) Transcripts 25 and 27

4.19.3.25 (09-01-2008) Accounts Maintenance Research (AMRH) Transcripts 25 and 27 An AMRH transcript 25 or 27 generates for an unsettled AUR case module as an alert that an action (for example, closure, assessment) needs to take place to resolve a taxpayer's account.

# Overview of AMRH Transcripts

4.19.3.25.1 (06-28-2021) Overview of AMRH Transcripts The AMRH transcripts generate to identify over aged freezes and unsettled conditions that failed to be resolved following normal procedures and processing as a result of oversight, procedural shortcomings, systemic issues, etc. Caution: IT IS CRITICAL TO WORK THESE TRANSCRIPTS TIMELY - WITHIN 120 DAYS - AND COMPLETELY TO RESOLVE A CASE BEFORE THE ASSESSMENT STATUTE DATE EXPIRES. The AMRH transcripts with TC 922 (IRP/AUR) posted are transferred or forwarded to AUR from TS to identify unresolved accounts that were not closed within a certain length of time. AMRH transcripts with TC 922 in module(s) are referred by TS to AUR for processing. An unresolved TC 922 condition exists when: There is a credit balance (surplus) on the module. This condition creates the AMRH 25 transcript. A credit balance may be caused by a variety of conditions (such as, an unreversed TC 640, Advance Payment of Determined Deficiency on AUR Proposal, erroneous no change closure). Caution: Do not release any credit balance when a TC 971 AC 134 is present, with or without a corresponding TC 720 which sets a P- freeze condition, or when the case was closed with PC 10. A closing PC isn't present on the module or doesn't post as the last PC in the TC 922 string. This condition creates the AMRH 27 transcript. A closing PC may be missing for several reasons (such as, a CP 2000 or subsequent notice was generated and no follow-up or closing action was taken, or a closing PC may have posted the cycle after the transcript was generated). An AMRH 27 transcript is also created when a closing assessment PC is posted, but an adjustment in the AUR blocking series isn't on the account. AMRH transcripts for 25/27 are routed directly to the AUR by Information Systems. AUR must handle these transcripts to completion. Take the necessary action to review the following conditions: The AUR issue is resolved. All appropriate closing PCs are in the last position of the TC 922 string. Required adjustments are posted in an AUR blocking series. There is no credit balance. No freeze codes are present. No systemic or programming problems exist. If all the conditions in (5) above exist, discard the transcript and close the IDRS control base. For any case where there is no longer an AUR issue, but there is a freeze code present that can't be resolved by AUR, direct the transcript to the appropriate area and close the IDRS control base.

# General Procedures

4.19.3.25.2 (10-10-2025) General Procedures Review AMRH transcripts to determine the last PC reflected on the TC 922. If the tax module on IDRS reflects a TC 922 without PCs, research CC IMFOLT or Control D for MFTRA. For instructions regarding AMRH 25 and AMRH 27 transcripts and required procedures for specific PCs, see IRM 4.19.3.25.2.1, AMRH 25 Transcripts, and IRM 4.19.3.25.2.2, AMRH 27 Transcripts. When reviewing AMRH 25 or AMRH 27 transcripts, be alert for cases open on IDRS CC AMDISA (Source Code 14 or 85). If open on AMDISA take the following action: Exception: Do not follow these procedures if there is a PC 80 or TC 520 present on the module. Rework the case to determine if an assessment is necessary. Note: The assessment must be input before transferring the case. Close the case with PC 27, 51, 73, or 93 as appropriate. Transcripts having category code ST25/ST27/X04 are statute imminent/expired and require immediate action. See IRM 4.19.3.25.2.1, AMRH 25 Transcripts, or IRM 4.19.3.25.2.2, AMRH 27 Transcripts, for further information. Review AUR and IDRS to determine the actions needed to resolve the account. In most situations the return isn't necessary. The transcript can be used as the source document for many adjustments. Note: Ensure all closing actions have been taken on AUR. After the necessary actions to resolve the account have been taken, close all related control bases. If the case is open and currently being processed, take the following actions: Discard the transcript. Close all related control bases on IDRS. Exception: If the ASED is imminent, ensure that all required adjustments and actions are completed before the statute expires. If a "No Change" PC has unposted or has posted out of sequence, input a TC 290-0 in an AUR blocking series to resolve the account. If a required adjustment has unposted or did not post to an account and there are more than 90 days before the statute expiration date, input the adjustment using an AUR blocking series. Note: If the adjustment is unpostable, action to resolve the unpostable condition must be initiated within 7 days. If less than 90 days remain until the ASED, prepare the case for adjustment and route to the Revenue Accounting Control System (RACS) Function for input. See IRM 4.19.3.23.13, Instructions Specific to Statutory Notices/Responses and IRM 4.19.3.25.2.3, Confirmation Receipt of Quick Assessment Fax, for further information. If the assessment went unpostable because the account had been resequenced, reinput the assessment on the new (resequenced) account. DO NOT issue a second manual notice on any cases with a resequenced SSN. If a required adjustment has unposted or did not post to an account and the statute has expired, prepare for processing as a barred assessment by completing Form 3999, Statute Expiration Report for their function, and email the completed Form to HQ within 7 days of discovery via the *SBSE CCS Statutes mailbox. The *SBSE CCS Statutes mailbox was established as a vehicle to report all potential and/or final barred statute reports. Note: After statute processing it may be necessary to input a TC 290-0 using an AUR blocking series to clear the account. If a TC 640 payment needs to be released, input a TC 290-0 adjustment using an AUR blocking series. Exception: If the case was closed in error (for example taxpayer recomputed the amount of tax owed) and there is remittance, input the adjustment using an AUR blocking series. Bankruptcy, Innocent Spouse, MFT 31 and merged accounts may require additional research. Take all necessary actions to ensure that all related accounts and issues are resolved. If a TC 780 (OIC) has posted to the account, discard the transcript and close all AUR and/or transcript control bases. Note: An adjustment with an AUR blocking series won't post to these accounts. Exception: If TC 788 has posted to the account, input a TC 290-0 using the appropriate AUR blocking series, to close the AUR control base and resolve the transcript issue. If the AMRH transcript reflects TC 922 with a DLN for another Campus forward the AMRH transcript immediately to the attention of the Chief AUR Operations for that Campus if more than 90 days remain on the assessment period. Note: If less than 90 days remain until the ASED, prepare the case for adjustment and route to the Statute RACS Function for input. If the return was timely filed (not on extension) the case is statute imminent on April 15th of the Statute year. However, if a Statutory Notice of Deficiency was issued on an AUR case, the assessment period is suspended and AUR can work the case past April 15th. A Statutory Notice of Deficiency increases the assessment period for the number of days from the date of the letter/notice until the taxpayer responds with an agreement, PLUS the 60 days mandated by the Internal Revenue Code. To compute the ASED on cases where the taxpayer's signed agreement is received prior to the expiration of the 90 days: Determine the original ASED (using the Julian Date). Determine the number of days from the date of the Statutory Notice to the taxpayer reply date. Add this to the result from step 1. Add ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ processing days. Note: The general rule for disagreed or defaulted cases is to ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ to the normal statute date if the return is filed timely. This determines the new ASED. Caution: An assessment CANNOT be made on IDRS within 60 days of the ASED. If the ASED is ninety (90) days or less, the statue is imminent. An AUR assessment MUST NOT be made using normal procedures. TC 560 can't be input during the CP 2000 phase to extend the assessment input date. TC 560 is for Statutory Notice assessments only, take the following actions: Recompute the ASED and input the TC 560 using CC REQ77 with Blocking Series 70. Caution: An unpostable condition with code 178 will result if the TC 560 isn't input prior to an assessment. If the Statute is imminent after the input of TC 560, or if the TC 560 isn't input to extend the ASED, the Automated Manual Assessment (AMA) tool must be used to prepare Form 2859, Request for Quick or Prompt Assessment, to prepare a manual assessment, and route to the Accounting Operations for assessment via Form 3552, Prompt Assessment Billing Assembly. See IRM 4.19.3.25.2.3, Confirmation Receipt of Prompt Assessment Fax when faxing Prompt Assessments. Caution: Do not input the TC 560 and TC 290 in the same IDRS cycle. If the TC 560 doesn't post, the TC 290 won't post which will result in a barred assessment. Reminder: All manual assessments made on Form 2859 must have the interest manually computed. If the return doesn't need to be restricted, a TC 190 can be used. Per IRC 6631 the interest computation must be mailed to the taxpayer. See IRM 4.19.3.19.10, Manually Computed Interest for the CP 2000, for additional information.

# AMRH 25 Transcripts

4.19.3.25.2.1 (10-10-2025) AMRH 25 Transcripts Do not release any credit balance when: TC 971 AC 134 is present, with or without a corresponding TC 720 which sets a P- freeze condition, or when The case was closed with PC 10. Use TC 290.00 and HC 2 to close the AUR IDRS control base. Hold code 2 must be used to hold the credit and notice. If PC 67, 68, 87, 88, 90-94, or 96 is the last action taken, refer to instructions in IRM 4.19.3.25.2.2, AMRH 27 Transcripts. If no assessment information is available: Assess the entire amount of the remittance as TC 290. Restrict the interest using TC 340-0, and DO NOT issue a notice to the taxpayer. Use the appropriate hold code to suppress the notice from generating. Note: DO NOT assess if open on AMDISA with Source Code 14 or 85 and the transcript shows a balance due. Input PC 73 or 96 as appropriate to resolve the unsettled condition for cases open on AMDISA. If PC 39, 47-53, 58, 69, 70, 71, 73, 74, 89, 91-93, or 96 is the last action taken, see IRM 4.19.3.25.2.2, AMRH 27 Transcripts. These control bases are identified as AM25 or ST25 (statue imminent). Input TC 290-0 to refund the taxpayer's payment that is associated with the AUR notice. Exception: If the case was closed in error (such as, taxpayer recomputed the amount of tax owed) and there is a remittance, follow instructions in IRM 4.19.3.25.2.2, AMRH 27 Transcripts. Caution: PCs 39, 69 and 89 no longer designate identity theft no change closures. These PCs are input on jointly filed return cases which require assessment to MFT 31 accounts for each taxpayer. Do not release payments on MFT 30 accounts. If PC 20 is the last action taken, refer to instructions in IRM 4.19.3.25.2.2, AMRH 27 Transcripts. If PC 30, 55, 57, 59, 75-79, or 95 is the last action taken, refer to the instructions in IRM 4.19.3.25.2.2, AMRH 27 Transcripts.

# AMRH 27 Transcripts

4.19.3.25.2.2 (10-02-2024) AMRH 27 Transcripts If PC 47-53, 58, 70, 71, 73, 74, or 96 is the last action taken: Close the IRP control base on IDRS if not already closed. Close the IDRS control base created by generation of the TS transcript(s). (Generally, these control bases are identified by AM27 or ST27.) Caution: DO NOT CLOSE any control base that isn't assigned to AUR. If PC 91, 92, or 93 is on the module, research the account for a TC 290-0 in the AUR Blocking Series. If found, close the IRP and TS bases. If not found, follow instructions in (5) below. If the last action is a PC 20, verify that an assessment with the TC(s) 806/807 or 766/767 with CRN 252 was input. If the assessment did not post, secure the original return. If the original return can't be secured, research case history for assessment record information. Use this information to input the assessment. If PC 30, 55-57, 59, 75, or 77-79 is the last action taken, research the case history to see if any other PC is present. If other PCs are present, notate the PC and secure the return. If PCs are the same, notate the current notice date and research for any taxpayer correspondence. Note: If there are multiple PC discrepancies between IDRS and AUR there may be a problem with the downloads. Notify your manager for additional instructions. If PC 39, 62, 67-69, 87-89, or 90-94 is the last action taken, determine if TC 290/291 or TC 300/301 posted. Note: If the adjustment is unpostable, action to resolve the unpostable condition must be initiated within 7 days. If an unresolved unpostable condition is present, coordinate with the Unpostables Function to resolve the unpostable condition as quickly as possible. If a deleted unpostable, attempt to secure the return to resolve the unsettled conditions. If TC 290/291 or TC 300/301 did not post, secure the original return. If the original return can't be secured, research case history for assessment record information. Use this information to input the assessment manually on IDRS. If TC 290/291 or TC 300/301 did post, close the AM27 control base.

# Confirmation Receipt of Quick Assessment FAX

4.19.3.25.2.3 (12-16-2024) Confirmation Receipt of Quick Assessment FAX Confirmation must be made, and documentation saved on all Form 3210, Document Transmittal, faxed to accounting for "Quick Assessments" . Ensure an electronic receipt is requested on all faxes sent to accounting. Save a copy of the FAX confirmation sheet along with the dated Form 3210. The signed Form 3210 should be sent back from accounting notated with the DLN of the prompt assessment. Attach a copy of the confirmed fax to the signed Form 3210 with the DLN of the adjustment(s). If you don't receive confirmation, you MUST follow up with accounting to ensure it was received by: Calling the appropriate accounting site to confirm receipt of the Quick Assessment forms that need to be made be for the ASED expires. Securing confirmation from the appropriate Accounting Unit for all Quick Assessments faxed to that office by requesting they fax you the signed Form 3210 with the DLNs. Notating on the Form 3210 the date, time of call and who is confirming the receipt of the faxed Quick Assessment next to each TIN on the Form 3210. Note: For multiple TINs listed on Form 3210 ensure each Quick Assessment case has a copy of the Form 3210 with notations and a confirmation sheet attached.

# Employee Cases

4.19.3.26 (09-01-2003) Employee Cases To ensure the integrity of IRS employees, the IRS provides careful and urgent treatment of employee cases.

# Overview of Employee Cases

4.19.3.26.1 (10-10-2025) Overview of Employee Cases Employee AUR (EUR) cases are handled differently from other AUR cases only in urgency, control, and confidentiality, and may result in appropriate disciplinary actions. In all other matters, make no distinction between an employee and any other taxpayer. This handling includes: Application of tolerances Criteria for referral to Examination or Criminal Investigation Preparation of assessments Handling of remittances Appeal rights Caution: Negligence Penalty must be asserted if the Tax Account screen shows a "2" or "3" in the TC 922 HIST/CAT field(s) and a notice is issued. Employee cases generate by matching the AUR inventory against a list of SSNs for individuals who currently work for the IRS. The majority of these cases are Subfile 2; however, subfiles with higher priority may also contain IRS employee cases. Employee cases download in BTs 01-26 with PC 06 and are systemically moved into Employee Download BT 90000. IDRS Access Data (employee identification) is produced semi-monthly and updates AUR. Newly identified Employee cases already in a normal batch don't update with PC 06 and remain in the current batch. During the working of the case (Screening, Response, or Statutory Notice), AUR displays a message to the tax examiner to transfer these cases to the SEID of the employee designated to work employee cases. Note: Occasionally, the individual working the normal AUR Program encounters cases with IRS Form(s) W-2 attached to the returns or with IRs. Do not process these cases within Subfile 2 unless the taxpayers are currently employed by the IRS. To expedite the handling of EUR cases, the responsible AUR employee processes all the employee cases as soon as possible. Note: If case requires specialized processing (bankruptcy, appeals, etc.), refer to the appropriate IRM sections and consult the SME for guidance.

# Confidentiality and Security

4.19.3.26.2 (09-01-2013) Confidentiality and Security Since EUR cases involve IRS employees, or their families, it is imperative that all persons involved in handling these cases regard the privacy of an employee as paramount in performing their work. Observe the following rules: Employee cases are processed by as few employees as possible. As with any taxpayer case, EUR cases are discussed only with individuals specifically involved in processing them. When cases are not being worked, employee tax returns require additional security - keep in a locked cabinet. Only AUR employees with an Employee Profile Code of 8324 have access to the employee file cases. The AUR Coordinator assigns these profile codes to the designated employee(s) prior to the processing of the Subfile 2 cases.

# Quality

4.19.3.26.3 (11-23-2022) Quality Subject all case actions to normal Quality Review procedures in IRM 21.10.1, Embedded Quality (EQ) Program for Accounts Management, Compliance, Field Assistance, Tax-Exempt/Government Entities, Return Integrity and Compliance Services (RICS), and Electronic Products and Services Support, with the exception of the CP 2000, Notice Review. Ensure the confidentiality of these cases. Note: As only employees with the Employee Case profile can access these cases consider cross reviews.

# Receiving and Controlling Employee Cases

4.19.3.26.4 (09-01-2013) Receiving and Controlling Employee Cases When extract tapes download into PC 06 status, information is assigned to Employee Download Batch Type 90000. Cases remain assigned to the batch until scanned by the user into an Employee Screening batch. Refer to IRM 4.19.2, IMF Automated Underreporter (AUR) Control, for information on batch building and batch status codes. Charge-outs (Form 4251, Return Charge-Out) are received as a separate print file. The system moves cases from Employee Screening BT 90 to BT 91, Employee Suspense (after initial screening). Form 4251 without tax returns are not batched into Employee Screening BT 90001-999. The SSNs remain in Employee Download Batch Type 90000. The system reorders the tax return based on the reorder date input by the AUR Coordinator. If the system doesn't indicate the return was received (built to Employee Screening BT 90001-999), the system closes the case with PC 29 and the SSN(s) displays on the Employee Case Aging Report until the report is generated for the next week. The Employee Extract downloads can only be built into Employee Screening BT 90001-999 after the extract download has been completed. If the employee extract download has not been done or is incomplete, the system displays a message indicating the extract is incomplete and can't be batched. When cases are missing the TIF and/or U/R data, the system doesn't allow the cases to be built into Employee Screening BT 90001-999. The SSN(s) remain assigned to Employee Download BT 90000. If the missing data isn't received within sixty (60) days, the system assigns a PC 28 and displays the SSN(s) on the Employee Case Aging Report until the report generates for the week. If the missing data is received, the SSN(s) displays on the Employee Aging Report until the SSN(s) are assigned to BT 90001-000. Batch the cases into Employee Screening BT 90.

# Batch Building

4.19.3.26.4.1 (04-12-2024) Batch Building When cases are assigned to a batch, there are specific stated requirements that must be met. System constraints require that a case must meet specific PC and current batch type criteria for assignment to a batch. Cases assigned to an Employee Screening BT 90000 are built by the user and the system assigns cases to Employee Suspense BT 91000. Parameters are set for the maximum volume for each work unit and batch. When the maximum volume for the work unit is reached, the system closes the work unit currently being input. Indicate the batch and work unit number on the folder and insert the cases in the folder. The system indicates the batch is complete. Close the batch using the CLOSE option. The system updates the batch status to AB (Associated Batch). Note: Batches may be manually closed at any point prior to reaching maximum volume for the batch. If a batch is created and the system is exited before entering the SSNs for the batch, the batch number deletes from the system. If the batch is created and the system is exited before completing the work unit/batch, commit the work unit currently being input. Indicate the batch and work unit number on the folder and insert the cases assigned to the work unit. When using the ADD option, the system indicates when the batch is full and cases can't be added. When adding to a batch that isn't full, the system: Indicates if the previous work unit has reached maximum size, or Displays a message indicating the SSNs are being added to a previous work unit. After a batch is closed it is possible to reopen it. SSNs may be added if the maximum volume for the work unit or batch isn't reached. Note: The batch status reverts to a blank value. Closing a batch automatically updates batch status to AB (Associated Batch). Once the maximum volume is reached or the volume of the batch is such that you don't want to add any additional SSNs, close the batch using the CLOSE option. The system updates the batch status to AB (Associated Batch). After the batch status is updated, the Sequence-SSN Batch Listing may be printed. The Batch Listing is a transmittal document verifying the contents of the batch. Employee correspondence for closed cases from BT 9600X for tax years 2015 and subsequent must be built to BT 83. BT 83 is used to control, monitor and track correspondence for closed cases received in AUR for reconsideration of the assessment. To build BT 83, see IRM 4.19.2.5.3.2.2, RECON Response Batch Building - BT 81 and BT 83 - TY 2015 and Subsequent, for further information.

# Case Sequence Number (CSN)

4.19.3.26.4.2 (09-01-2004) Case Sequence Number (CSN) Keep employee cases in the original batched order for all phases of the program. Cases retain the last seven (7) digits of the CSN. Only the BT changes from 90 to 91 during system disassembly. Cases transferred to Employee Unit Suspense BT 92 only have a five (5) digit CSN. The first two (2) digits are 92 and the last three (3) digits are the unit location number. These cases are filed in SSN order.

# Assigning and Releasing Employee Cases

4.19.3.26.4.3 (09-01-2004) Assigning and Releasing Employee Cases Cases in Employee Screening BT 90 are assigned and released by work unit or individual cases. Each Case in Employee Suspense BT 91 and Employee Unit Suspense BT 92 are assigned and released individually. Cases with notice, letter, and closure PC(s) released Monday through Friday upload on the weekend runs. If the case is in BT 91 or 92, and Employee Disassembly (AURX047) did not process the changes previously made to the case, the message "WARNING: EMPLOYEE DISASSEMBLY HAS NOT PROCESSED CHANGES ON THIS CASE" displays when assigning a case. Analyze the case to determine the appropriate actions necessary to process the case. Cases with automatic assessments upload daily to SCRS.

# Employee Unit Suspense Batch Type 92

4.19.3.26.4.4 (09-01-2004) Employee Unit Suspense Batch Type 92 These are cases the system identified as employee cases during processing. When cases are transferred to Unit Suspense, the system automatically generates IPC 0E, 3E, 6E, or 8E and moves the case to BT 92.

# Case Actions

4.19.3.26.5 (10-10-2025) Case Actions Several actions taken during the course of Employee case file processing have unique handling instructions. Note: When the Employee Tax Compliance Program (ETCP) needs case data, print to PDF the entire AUR case contents and forward the information using the procedures supplied via the ETCP contact. These instructions apply to all tax years currently being worked in the AUR Program. The entire AUR (system) case contents includes the following: Tax Account Information Returns Case Notes Case History CP 2000 CP 2501 The AUR system maintains a copy of the Statutory Notice. A copy of these Statutory notices can be accessed and printed using the following: Print menu - Case contents - Statutory Notice Case - Case History - click on the View Notice box Note: See AUR System Guide for additional information. For notices dated prior to 02-24-2014 copies are maintained on Control D.

# Examination and Fraud Referrals

4.19.3.26.5.1 (10-10-2025) Examination and Fraud Referrals Due to the sensitivity of Employee cases, manually coordinate cases which require Examination or Fraud referral. The use of IPCs, 0F, 3F, 6F, 8F (TY 2023 and prior), F2 (TY 2024 and subsequent) 3D, 6D, and 8D are used for case referrals. As the system maintains a record of these IPCs, no additional notation is needed in the case file, unless an explanation for the referral is deemed appropriate as a case note. See IRM 4.19.3.5.8, Fraud Referral Program, for new Fraud referral procedures.

# Case Transfer/Closure

4.19.3.26.5.2 (10-10-2025) Case Transfer/Closure Transfer/Closure of cases removes the case from AUR processing and reassigns control of the case to another Operation (Examination or Criminal Investigation). As the system maintains a record of these closing PCs, no additional notation is needed in the case file, unless an explanation for the transfer/closure is deemed appropriate as a case note. Print to PDF the complete AUR case contents (See IRM 4.19.3.26.5, Case Actions) and include them as part of the case file.

# Case Notes

4.19.3.26.5.3 (10-02-2024) Case Notes Use the Case Note window to document significant case actions and taxpayer contact. Events may occur in the working of a case which are important, significant or justify your determination/action. A case note should be left as an appropriate action trail. Case Notes are not meant to be a full case history; they are an abbreviated record to ensure all cases are correctly and expeditiously handled. Reminder: Do not include personally identifiable information (PII) in case notes. See IRM 4.19.3.4.1, Underreporter Cases, for further information.

# Manual Interest

4.19.3.26.5.4 (09-30-2014) Manual Interest The tax examiner must compute Manual Interest when necessary. The system displays a warning message if conditions exist for Manual Interest. Identify notice dates for CP 2000/ Recomps prior to working employee cases. See IRM 20.2.5.6.1, Reasons to Manually Compute Interest, for additional information regarding when interest needs to be manually computed. See IRM 4.19.3.19.10, Manually Computed Interest for the CP 2000, for additional instructions. Ensure BT 90, with Manual Interest, is updated to "RB" status or release cases from BT 91 and 92 during the week ending date for the notice date selected during the Manual Interest computation.

# Internal Process Codes (IPC)

4.19.3.26.5.5 (10-10-2025) Internal Process Codes (IPC) Due to the sensitivity or extensive physical control required by the use of certain IPCs, the following IPCs are not valid when working employee cases: 0P, 3P, 6P, and 8P 0T, 3T, 6T, 8T (TY 2023 and Prior) and T3 (TY 2024 and subsequent) MI, RC, CR, RN, SR, DR, and RF The following IPCs are valid when working employee cases: 0A, 3A, 6A, and 8A 0D 3D, 6D, and 8D 0F, 3F, 6F, 8F (TY 2023 and Prior) and F2 (TY 2024 and subsequent) Note: The SSN remains assigned to the current batch when the above IPCs are input. WP

# Potential Payer Agent

4.19.3.26.5.6 (11-20-2017) Potential Payer Agent Employee cases can't be transferred to the Payer Agent/Fraud Coordinator if IRs appear to be erroneous and were not identified with a Payer Agent or Fraud Code. Coordinate manually with the Payer Agent/Fraud Coordinator for instructions regarding any potential erroneous IR(s).

# Notice Indicators and Process Codes

4.19.3.26.5.7 (06-28-2021) Notice Indicators and Process Codes Due to the extensive physical control required, only Notice Indicator A is valid for employee cases. IPC CR, RN, SR, and DR are not valid for Employee Cases. If the taxpayer's response is a partial agree that would otherwise have been closed with IPC CR, RN or SR, issue a recomputed notice (PC 59 or PC 95) for taxpayer's signature. This ensures the CP 2000 History is properly updated to allow for correct State Disclosure Information. However, if there is insufficient time left on the Statutory Notice suspense period use PC 88 to assess the case.

# Releasing Employee Screening Batch Type 90

4.19.3.26.6 (09-01-2004) Releasing Employee Screening Batch Type 90 PCs are not verified on SSN(s) within the batch. Refer to IRM 4.19.2, IMF Automated Underreporter (AUR) Control, for further information on updating batches to "RB" (Release Batch) status. When updating BT 90 to "RB" status, only notice, letter, and closure PCs are valid.

# Notice Rejects

4.19.3.26.7 (09-01-2004) Notice Rejects AUR generates a weekly listing for notice rejects on Employee cases. The listing includes the SSN and Reject Code. See IRM 4.19.2, IMF Automated Underreporter (AUR) Control, and see IRM 4.19.3.20, Automated Underreporter (AUR) Rejects, for more information. The Clerical Function provides employee case SSNs and reject conditions to the tax examiner responsible for working Employee cases.

# Undeliverables

4.19.3.26.8 (09-01-2004) Undeliverables When a CP 2501, CP 2000/ Recomp, or Statutory Notice is returned by the Post Office as undeliverable, either: Research IDRS and take appropriate actions to remail the notice to a better address, if found or Under the EMPLOYEE option on the Case Analysis screen, select UNDELIV NOTICE. The cursor displays a message indicating the case has a new address or no new address was found. The system enters the appropriate Undeliverable Indicator ("T" or "U" ) in the UNDELIVERABLE IND field. After entering the SSN(s), press <COMMIT>.

# Correspondence Received

4.19.3.26.9 (09-01-2010) Correspondence Received Employee case responses are either: Handled by the manager of Receipt and Control's Unidentified Unit, who opens the response to determine if a remittance is enclosed, deposits the remittance, and forwards all responses to AUR or Routed to AUR unopened. When a response to a CP 2501, CP 2000, CP 2000 Recomp, or Statutory Notice is received, input the IRS Received Date. Use the following priority criteria to determine the IRS Received Date: Received Date stamped on correspondence, Envelope postmark date or the date stamped by the Fax machine, Signature date, or Current date. Under the EMPLOYEE option on the Case Analysis screen, select RCVD DATE. The cursor displays in the SSN field. Enter the SSN and press <ENTER>. The AUR RCVD DATE field displays the current date. The cursor moves to the IRS RCVD DATE field. Enter the IRS Received Date and press <ENTER>. After entering the SSN(s), press <COMMIT>. Request Employee Suspense BT 91001-999 and update to AU, Assigned Unit, status when the tax examiner begins working responses.

# Letters

4.19.3.26.10 (10-29-2024) Letters Use the IAT Letters tool to issue letters on Employee cases. Create the letter on IAT. Input the last suspense batch number in the AUR control number field. Print to PDF a copy of the letter and send to clerical to upload into the AUR system to be retained in the case file. Leave a case note. Use IPC 6S (CP 2000 phase) or 8S (Statutory Notice phase), as appropriate. Return the case to the suspense file with the date the letter was created clearly annotated on the folder. Monitor the case. At the end of the letter suspense time frame, take appropriate action to continue processing.

# Employee Case Assessments

4.19.3.26.11 (10-29-2024) Employee Case Assessments Auto assessment and Statutory Notice assessment processing were expanded to include most assessments. Generate an auto assessment by either entering an assessment PC or completing the Assessment window. Enter/Verify the necessary items on the Assessment window to create automatic assessments. The manual assessment document is no longer required on the majority of assessments, but can be created if necessary. The system automatically creates an assessment record on all cases based on control parameter dates as set by the AUR Coordinator. After dates designated by the AUR Coordinator have passed, all assessments MUST be input via IDRS. Enter an M in the AUTO/MANUAL IND box in the Assessment window. AUR uploads the Transaction Codes, Reference Numbers, and other data items necessary for automatic assessments.

# Aging Cases in Batch Type 91 and 92

4.19.3.26.12 (09-01-2005) Aging Cases in Batch Type 91 and 92 If a CP 2000/ CP 2501 case was not worked and released within 60 days from the notice/letter date (CP 2000 Foreign/FPO/APO is 75 days), the system generates an Employee Case Aging Report displaying the SSN(s). The SSN(s) remain on the report until the case is assigned. Statutory Notice cases display on the report after 105 days from the Statutory Notice date (Statutory Notice Foreign/FPO/APO is 165 days).

# No Response Cases

4.19.3.26.13 (09-01-2005) No Response Cases No response cases that meet the required suspense time frames are systemically checked to identify conditions that require action before issuing a Statutory Notice. For a list of these conditions, refer to IRM 4.19.2, IMF Automated Underreporter (AUR) Control. See IRM 4.19.3.22, No Response/Undeliverables, for instructions in resolving these conditions. Note: More than one condition may exist on the case. However, the system only displays one condition when assigning the case. Before generating Statutory Notices, research both spouses on IDRS for a better address. The system identifies a new address for the primary taxpayer but not for the secondary taxpayer. If a new address is found for an undeliverable case, issue a new CP 2000 to that address. If more than one address is found, and you are in doubt as to the correct address, issue Statutory Notices to every address. This applies regardless of whether the taxpayer already received the notice.

# Reports

4.19.3.26.14 (09-01-2004) Reports Employee File Information displays on the Open Transfer, Unit Inventory, and Cases in Error reports to managers with an Employee File profile. Reports and Batch Listings for Employee File cases are available to managers, tax examiners, and clerks with an Employee File profile.

# Employee Case Aging Report

4.19.3.26.14.1 (09-01-2004) Employee Case Aging Report This report indicates which cases have met appropriate suspense time frames, cases closed by the system, or cases where missing data was received. This report is systemically generated on a weekly basis and is printed by the user. The report displays the following information: Cases with Missing Data/BT 90000. The system closes the case with PC 28. Cases where the Missing Data was received. Cases in BT 90000 that were systemically reordered and not received. The system closes these cases with PC 29. Cases in BT 91 and 92 that have met the suspense time frames were met. Cases in BT 91 and 92 that have had no action taken at the end of the suspense time frame.

# Employee Case Open Inventory Report

4.19.3.26.14.2 (10-10-2025) Employee Case Open Inventory Report This report is systemically generated on a weekly basis and is viewed by the user. Use this report to monitor open employee cases. Cases in BT 90 and 91 display in CSN order. Cases in BT 92 display in SSN order. The following information displays on the report: SSN Batch Latest Process Code Latest Process Code date Confirm Indicator ("Y" displays if the PC and/or CP 2000/ Recomp Page 2 information was confirmed). Latest Notice/Letter date Latest Received Date of correspondence ASED date - Statute date

# Employee Case Closed Inventory

4.19.3.26.14.3 (10-10-2025) Employee Case Closed Inventory This report displays all employee cases that were closed. The report is systemically generated on a weekly basis and displays the following information: SSN UID Process Code Process Code date

# Employee Case Auto Assessments

4.19.3.26.14.4 (10-10-2025) Employee Case Auto Assessments This report is used to verify auto assessment cases are in the correct adjustment sequence series for shipment to Files. This report generates daily by the system and is printed by the user. This report must be reviewed daily if assessments are input. Each time AURX060 is run, the report displays new information. The following information displays on the report: Seq Number - sequence number the case must be in when sent to Files Old Loc - the location of the case SEID - the SEID of the tax examiner who input the automatic assessment SSN - the SSN of the Employee case Note: Returns must be kept in the order in which they are scanned.

# AUR Reconsideration (RECON) Cases

4.19.3.27 (01-21-2025) AUR Reconsideration (RECON) Cases AUR RECON, sometimes called "first-read" or "late response" cases, are responses received after the case has been closed (assessment or no change) on the AUR system. An AUR RECON is a claim for a credit or refund not previously reported, requested, or allowed i.e. no change due to no response to a refund CP 2000, expenses against the AUR notice issue(s), a request for abatement of tax, penalty, and/or interest. Use the same guidelines in making determinations for RECON correspondence as when working open AUR cases. When working with non-current AUR tax year requests for RECON, as a general rule, the most current AUR procedures in the processing of the RECON applies. The tax examiner needs to consider year specific issues such as, but not limited to Advance on Child Tax Credit (applies only to TY 2003 and TY 2021), Rate Reduction Credit (applies only to TY 2001), ACA provision 10908 (applies to TY 2009 and subsequent), as well as year specific regulations regarding limitations, phase-outs, or tax rates. If the RECON is based on a claim of identity theft and the response includes Form 14039 or a police/law enforcement incident report, or the taxpayer states a preparer altered tax return data or misdirected a portion of or all of the refund and includes Form 14157, Complaint: Tax Return Preparer, and/or Form 14157-A, Tax Return Preparer Fraud and Misconduct Affidavit, close case IPC 9R and refer to the AUR IDT liaison. If the RECON is based on a claim of identity theft and the response doesn't include Form 14039 or a police/law enforcement incident report, see IRM 4.19.3.23.1.25, Identity Theft (IDT) Claims - Overview, IRM 4.19.3.23.1.25.1, IDT - General, and IRM 4.19.3.23.1.25.3, IDT Claims - Responses, for guidance to work the case. If the Recon is a claim a preparer altered tax return data or misdirected a portion of or all of the refund but doesn't include Form 14157, Complaint: Tax Return Preparer and/or Form 14157-A, Tax Return Preparer Fraud and Misconduct Affidavit, see IRM 4.19.3.23.1.24. Return Preparer Misconduct (RPM), for guidance to work the case. If RECON correspondence is received on a case in a declared disaster area, continue normal AUR case processing. If the taxpayer self-identifies, see IRM 4.19.3.23.1.16, Disaster Cases, for further information.

# Private Debt Collection and RECON Cases

4.19.3.27.1 (03-17-2023) Private Debt Collection and RECON Cases When a tax account with a balance due is inactive for one year or longer, IRC 6306(c)(1) requires the IRS to use a Private Debt Collection (PDC) agency. IRS and the Private Collection Agency (PCA) will send a letter to the taxpayer to inform them that their account has been assigned to a PCA. Taxpayers can confirm the names of the PCAs under contract with the IRS on IRS.gov. An account assigned to a PDC is identified on IDRS CC ENMOD or CC IMFOLE with TC 971 AC 054. Note: When TC 971 AC 054 is present with a corresponding TC 972, PDC is no longer involved. The taxpayer's PCA is identified on IDRS CC ENMOD or CC IMFOLE by the following PDC-ID Numbers: PDC – ID Number PCA 01 CBE Group P.O. Box 2217 Waterloo, IA 50704 800-910-5837 02 ConServe P.O. Box 307 Fairport, NY 14450-0307 844-853-4875 05 Coast Professional, Inc P.O. Box 425 Geneseo, NY 14454 888-928-0510 Cases assigned to PDC require special handling when the taxpayer is in balance due status as a result of an AUR assessment, and: Requests an Installment Agreement. States they don't want to work with the PCA. Has any other unresolved Collection related issues. If an unreversed TC 971 054 is present and the taxpayer indicates any of the above, advise the taxpayer AUR can work with them to resolve AUR account related issues but they must work directly with their assigned PCA to resolve Collection related issues. If necessary, provide the taxpayer their PCA information; see (2) above. Note: If the taxpayer states they don't want to work with the PCA, the taxpayer must provide a written statement to the PCA. Exception: If an unreversed TC 971 054 is present, it isn't necessary to refer the taxpayer to their PCA if they can full pay their liability using online payment options; for example, Direct Pay, credit or debit card payments by phone or internet, or via a check or money order. IDRS actions are necessary when an AUR RECON case is assigned to the PDC. When an unreversed TC 971 AC 054 is present on a RECON case, a control base on IDRS must be opened and either updated or closed using IDRS CC ACTON or IAT "ACTON" tool, when appropriate. Refer to IRM 4.19.3.27.3, RECON Receipt Tracking and Reporting, for additional information.

# Appeals Closures - PC 80

4.19.3.27.2 (07-11-2022) Appeals Closures - PC 80 If the case was closed with PC 80, research to determine if the case can be appealed (worked as a RECON). Cases that are closed with finality including "dismissals for lack of prosecution" can't be appealed. Cases identified as closed/dismissed "due to lack of jurisdiction" , can be worked using the AUR RECON process. See IRM 8.7.7.16, Reconsideration of Claims for Liabilities Previously Considered by Appeals, for additional information on cases closed with finality. Caution: If the case was closed with PC 66, Appeals denied the request and has returned the case to AUR, see IRM 4.19.3.23.1.8, Independent Office of Appeals. To determine if the case can be worked as a recon take the following actions: Research IDRS for the presence of an assessment for the AUR amount. If no (TC 300) assessment is present, transfer the case an notify the AUR Appeals Liaison. If an assessment is present, go to step 2. Access the U.S. Tax Court Website at U.S. Tax Court. Hover over "Efliling and Case Maintenance" , select SEARCH (Case, Order, Opinion). Select either Docket Number or Individual Party Name. Enter the required information to access the case. Once accessed, read the court decision to determine if the case was closed due to lack of jurisdiction or closed with finality. The decision of the Tax Court is final 90 days from the date the decision is entered unless either party files a timely notice of appeal. Unlike a regular case (non-S case), an "S case" (a case with a docket number that ends with "S" ) can't be appealed. If the decision indicates the case was dismissed for "lack of jurisdiction" , continue processing as an AUR RECON case. Use TC 291 when decreasing the original assessment. Note: The IAT "xMend" or "REQ54" tool must be used when making an adjustment on an account. If the decision indicates the case was closed with finality, issue a Letter 916-C, using the IAT "Letters" tool, to the taxpayer denying the reconsideration. Use the following verbiage as an example: "Your request for reconsideration is denied. Our records indicate you filed a petition with the U.S. Tax Court regarding this issue. The Court has entered a final decision which can't be considered by the IRS."

# RECON Receipt, Tracking and Reporting

4.19.3.27.3 (10-29-2024) RECON Receipt, Tracking and Reporting Correspondence is initially sorted by the Clerical Function based on whether or not the AUR case is still open. If open, the correspondence is batched with regular AUR receipts. If the AUR case is closed, the correspondence is considered a RECON. Correspondence for RECONs may also be sorted by tax year. Ensure RECON casework is reported under the correct OFP code. Reminder: Consider time spent on cases that involve claims of identity theft, cases that result in an adjustment to the AUR assessment (RC 067 and 068) and cases that don't result in an adjustment to the AUR assessment (RC 064 and 066) when reporting time for RECON casework. Note: If an IDRS control base is open, an adjustment TC 29X with the appropriate Reason code must be input, except for re-routes and miscellaneous correspondence that doesn't request a change to the AUR assessment. The IAT "xMend" or "REQ54" tool must be used when making an adjustment on an account. The clerical function counts and records the volume of RECON correspondence. As a rule, these receipts are delivered to Technical Managers for assignment. Closed cases for specific tax years may be built into BT 81, 88 or 83 (Employee Reconsiderations). If cases don't build into BT 81, 88 or 83, they are not controlled within AUR, and accurate manual counts of correspondence/cases received and resolved must be maintained. RECONs must be controlled no later than 10 business days from the AUR received date on: AUR for TY 2015 and subsequent. IDRS (TXMOD) for TY 2014 and prior. IDRS (all years) when an unreversed TC 971 AC 054 is present. AUR RECONs are subject to Policy Statement P-21-3 guidelines per IRM 4.19.3.23.1.5, Policy Statement P-21-3, (taxpayer contact must be made within the 30 days criteria). Note: The IAT "Letters" tool must be used to issue a letter to the taxpayer. Input the last open suspense batch number in the AUR control number field of the letter. IDRS Letter 86-C is sent to the taxpayer if you are referring the response to another campus/area. IDRS Letter 4314-C is sent to the taxpayer as a first or second interim letter. RECON phone calls must be controlled by the TE receiving/working the case. Incoming phone call or response which qualifies as a RECON must be counted into the inventory. A case count is taken for each account that requires an action. Report each new RECON receipt to the lead or manager. It is recommended that an action be taken within one day of receipt of these cases. Note: Phone call initiated RECONS must be controlled on AUR/IDRS if held for further action. Exception: Telephone RECONs that qualify for inclusion in inventory will be built into BT 81 or 83. IDRS actions are necessary on certain AUR RECON cases. If IDRS actions are necessary on an assigned RECON case, the control base on IDRS must be opened and either updated or closed using IDRS CC ACTON or IAT "ACTON" tool, when appropriate. Use the ACTIVITY field to document actions and pending dates. When suspending a case, ordering a document or contacting the payer, update your status control to "M" (monitor). Use IDRS history items to document additional information. Cases are considered aged when the IRS received date is greater than 45 days. The following Reason Codes are used to indicate the type of RECON resolution: Caution: AUR RECON Reason Codes CANNOT be entered in the fourth position (REQ54 on IDRS or IAT). The fourth position is reserved for penalty reason codes only. RC 064 - Reconsideration No-Response - use this code when the initial RECON case doesn't supply sufficient information and the request for additional documentation is a No-Response. RC 066 - Reconsideration Disallowed in Full - use this code when the original AUR assessment is NOT adjusted. RC 067 - Reconsideration Disallowed in Part - use this code when the original AUR assessment is partially adjusted. RC 068 - Reconsideration Allowed in Full - use this code when the original AUR assessment is fully reversed. The IAT "xMend" or "REQ54" tool must be used when making an adjustment on an account.

# Batch Type 81 and 88 - Reconsiderations and Batch Type 83 - Employee Reconsiderations

4.19.3.27.3.1 (10-10-2025) Batch Type 81 and 88 - Reconsiderations and Batch Type 83 - Employee Reconsiderations Closed cases for TY 2014 and subsequent are built into BT 81, 88 or 83. BT 81 and 83 are used to control, monitor and track correspondence on closed cases received in AUR for reconsideration of the assessment. Caution: RECON cases don't have full functionality on the AUR system and must not be transferred. BT 88 is used to control, track and count RECON correspondence which doesn't require any actions (for example, request for copy of a CP 2000, duplicate response). BT 88 segments correspond to specific RECON issue codes. When the batch status is updated to "RB" , cases in BT 88 are updated to IPC 9I (TY 2021 and prior) and IPC 9C (TY 2022 and subsequent) and moved to BT 96002. See Exhibit 4.19.3-5, Batch Types, for additional information. Internal PCs have been designated for use with cases in BT 81, 88 or 83 as follows: IPC Definition Action 9B Recon Research Required Moves case to BT 82 for Recon Suspense. 9C Clerical RECON information Request- closure (TY 2022 and Subsequent) Closes the Recon case within AUR and moves the case to closed BT 96002 (BT 88 Only). 9E Recon Research/Referral within AUR Moves case to BT 82 for Recon Suspense. 9F Recon Full Abatement of the AUR Assessment Closes the Recon case within AUR and moves the case to closed BT 96002 - use with IDRS RC 068. 9I Recon Information Request/MISC Closes the Recon case within AUR and moves the case to closed BT 96002. 9L Recon Payer Letter Moves case to BT 82 for Recon Suspense. 9N Recon No Change to AUR Assessment Closes the Recon case within AUR and moves the case to closed BT 96002 - use with IDRS RC 066 or RC 064, as appropriate. 9P Recon Partial Abatement of the AUR Assessment Closes the Recon case within AUR and moves the case to closed BT 96002 - use with IDRS RC 067. Note: IPC 9P will NOT be used when the original AUR closure was no change and the RECON results in a change to the account. See IRM 4.19.3.27.6.2, Partial Adjustment Determinations, for further information. 9R Recon Referral - Non-AUR Issue Closes the Recon case within AUR and moves the case to closed BT 96002.

# Batch Type 82 - RECON Suspense

4.19.3.27.3.2 (10-10-2025) Batch Type 82 - RECON Suspense RECON cases in BT 81 that the tax examiner determines needs additional action are systemically moved to suspense BT 82 at assignment of IPC 9B, 9E and 9L. Caution: IPC 9L is ONLY used for Payer letters (Letter 2625-C). When the requested research or a taxpayer response is received, the clerks will route the information to the appropriate technical unit as designated in the Remarks Field on the Research Document. Closed cases in BT 96 that are universally assigned are systemically moved to suspense BT 82. Note: These cases can be identified by the last three numbers of the suspense batch 82950. AUR reports are available to monitor the age of cases in BT 82.

# Initial Case Actions

4.19.3.27.4 (10-29-2024) Initial Case Actions A STAUP prevents issuance of collection notices until the cycle delay request has expired or has been released. Generally, a STAUP is set no longer than 9 cycles but can be set up to 15 cycles, if necessary. If AUR and/or IDRS research shows the taxpayer's account is in balance due notice status, ensure input of IDRS CC STAUP with a definer "S" , to prevent the taxpayer from receiving additional collection notices while the response is being worked. A STAUP isn't released by input of a TC 29X, whether the adjustment is an increase, decrease, or a zero amount. If the case is in collection status input TC 470 on IDRS using the IAT "REQ77" tool. See Exhibit 4.19.3-14, Notice Delay Actions (Reconsiderations). If resolution of the case results in a remaining balance due, reduce STAUP to allow the notice routine to continue, see Exhibit 4.19.3-15, Cycle Chart (Reconsiderations). Note: When closing or updating a case and the adjustment creates a zero or credit balance, this action isn't required. If the case was closed with PC 66, Appeals denied the request and has returned the case to AUR, see IRM 4.19.3.23.1.8, Independent Office of Appeals. When suspending cases for payer contact, additional research, returns, etc., a record of case actions must be maintained. Options for this record include: Case notes on AUR, providing the case has not been archived IDRS History Items Assignment of IPC 9B, 9E or 9L, if the case is in BT 81 or 83 Note: Worksheets used in recomputation or any TE notes will be maintained with the case. Each correspondence sent to the taxpayer must: Cover all questions asked by the taxpayer Address all adjustments requested by the taxpayer Address all AUR Tax Year issues Many RECONs received in AUR don't require a written notification to the taxpayer, unless an interim letter has been sent. Some examples are: Duplicate correspondence - the adjustment has already been made per an earlier request for a tax change or an adjustment action. Credit transfers - taxpayer wants a payment moved to another account. Penalty abatement request granted - follow penalty relief guidelines to make a determination. Note: If these cases are in BT 81 or 83, assign IPC 9I, which closes the AUR case control. Input TC 290-0 using the IAT "xMend" or "REQ54" tool, if applicable. Close the IDRS control base, if applicable. The following list includes the most common reasons written notification to the taxpayer is needed: Explain W/H adjustments Request additional information Answer taxpayer's questions Explain penalty abatement request denial - follow penalty relief guidelines to make a determination Note: A case note to record managerial penalty assertion approval is required. See IRM 4.19.3.23.1.4, Accuracy-Related Penalties. Explain the inability to abate interest Provide recomputed figures (if the taxpayer did not provide the figures) Send a disallowance or partial disallowance letter Note: The IAT "Letters" tool must be used to issue a letter to the taxpayer. Input the last open suspense batch number in the AUR control number field of the letter. AUR must NOT release the TC 360 lien fee. Even in instances when the AUR adjustment is completely abated, the Notice of Federal Tax Lien (NFTL) must NOT be abated. The fee is charged because the taxpayer did not timely and/or completely address a balance due AND the fee could apply to multiple amounts due or cover more than one lien and is compounded because the taxpayer did not resolve the compliance issue in a timely manner. Therefore, even though the AUR assessment may be fully abated, the taxpayer will still be liable for the lien fee. Refer the abatement request to (SERP, Who/Where) Advisory and Advisory addresses are shown in Pub 4235, Collection Advisory Group Addresses. If the only remaining assessment on the module is the lien fee, the lien won't release unless the fee is paid. Issue a letter to the taxpayer informing them that the lien fee must be paid in order for the lien to release. IDRS research is necessary to determine if two or more people/areas have an open control base on the same account. When it is determined that a multiple control condition exists, coordinate with the other person/area for potential case resolution.

# Routing/Work Flow Determination

4.19.3.27.5 (10-29-2024) Routing/Work Flow Determination Routing to other areas may be required for some RECON correspondence. Within AUR routing: Spanish correspondence may need to be sent to the appropriate bilingual person. Manual refunds must be approved by the manager and leave a case note documenting the actions taken. Note: If the case is in BT 81 or 83 transfer the case to yourself; the AUR system will assign IPC 9E. Outside AUR Issues, route the following non-AUR issues shown below as examples, (The examples are not all inclusive). When routing an unprocessed Form 1040-X/Amended Return to TS input TC 971 AC 010, or to Exam input TC 971 AC 013. See IRM 4.19.3.23.1.18, Form 1040-X/Amended Return for additional information. Route To When there's an indication of Taxpayer Services Injured Spouse AUR Examination closures NOL cases Scrambled SSN Mixed Periods/Entity Filing status changes (Married filing separately, single, or head of household to married filing joint) Adjustments outside of AUR issues, such as Tentative Carrybacks (TENTs), Restricted Interest Claims (RINTs), entity change only requests, payments tracers. Increase to Sick and Family Leave. Examination Examination Criteria (CAT-A) refer to IRM 21.5.3-2, Examination Criteria (CAT-A) - General Note: Form 1040-X or an amended return must be signed before it is referred to Exam. Do not refer unsigned Forms 1040-X/amended returns. Appeals Appeals request, see IRM 4.19.3.23.1.8, Independent Office of Appeals, for additional information. Note: If the case is in BT 81 or 83 assign IPC 9R. Originating Campus: If IDRS CC TXMODA or CC IMFOLT shows TC 922 with the initial PC 03 and an AUR closing PC send the correspondence to the campus that issued the original CP 2000. The campus is identified by the first two digits of the TC 290 DLN. Follow the routing guidelines in (7) below. Caution: If the received date is old, fax the correspondence to the originating Campus to expedite the case. Call the originating AUR Campus to advise of the incoming fax. Use IDRS CC MESSG for other Campus phone numbers. Route the original correspondence. Note: Some RECON correspondence require special/expedited handling and may be retained and worked by the receiving site. Exception: If the first PC is 02, the case was worked manually prior to the automated system. Do not route these cases. Order the return if the case can't be worked with available information. Backup Withholding - Route Backup Withholding issues to Collections. See IRM 4.19.3.23.1.9, Backup Withholding (BWH), for additional information. If the case is in BT 81 or 83 assign IPC 9R. Deceased/Incarcerated - If the issue is ONLY a payment of balance due, route to Campus Collection. If the issue is the amount of the assessment, work as an AUR RECON. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the case is in BT 81 or 83 assign IPC 9R. When routing RECON correspondence: Send IDRS Letter 86-C to the taxpayer using the IAT "Letters" tool. Input a CC STAUP for 9-15 cycles, as needed. Document the reason for routing in the case file. If established, close the control on IDRS, and update the activity. If there is a TC 971 AC 015 on TXMOD, input TC 971, with the appropriate action code (AC), to indicate the amended return/claim was routed to another function. See Document 6209, Section 8c-9, TC 971 Action Codes and Information, for additional information.

# Evaluating RECON Correspondence

4.19.3.27.6 (10-26-2024) Evaluating RECON Correspondence As with all taxpayer correspondence, determine if AUR is the appropriate area to respond to the taxpayer's need. Carefully read the entire contents of the correspondence and address all the AUR issues, including other AUR tax years. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Perform appropriate research so timely actions can be taken. Full and partial adjustment refers to the AUR assessed amount. When fully or partially disallowing RECON requests, send the appropriate C-Letter using the IAT "Letters" tool. Input the last open suspense batch number in the AUR control number field of the letter. If a response is received for another AUR site and the Assessment Statute date expires within 90 days, work the RECON and see (7) b below. TDC Closed case - Responses are routed back to the person who handled the case last. See IRM 4.19.3.23.4.7, Closed Case - Response/Recons in eGain, for further information When W/H is an issue, verify the information provided by the taxpayer before adjusting. Note: When the case was closed no change due to the taxpayer not responding to the AUR notice reflecting a refund and additional information and/or documentation isn't provided to support the refund; contact the taxpayer for documentation to verify the W/H. Refer to IRM 4.19.3.27.8, Taxpayer Contact for Additional Information. Taxpayers who originally filed a joint return can't be changed to married filing separately after the due date of the return unless the original joint return was fraudulently filed. If the taxpayer requests a filing status change from joint to married filing separate take the following action: Send appropriate letter and leave a detailed case note. If the taxpayer states their original return was fraudulently filed, refer the case to Exam and close the case IPC 9R. An erroneous refund is any receipt of money from the IRS to which the recipient isn't entitled. It includes all erroneous payments to the taxpayer, even if the erroneous refund involves returning the taxpayer's own money. Refer to IRM 4.19.3.5.13, Erroneous Refunds, for additional information. ASED - Assessment Statute Expiration Date normally expires three years from the date the original return was filed or three years from the due date of the return, whichever is later. Some conditions extend the ASED, such as bankruptcy, 25 percent omission, filing joint after filing separate, fraud. Refer to IRM 25.6.1.5, Basic Guide for Processing Cases with Statute of Limitation Issues, for additional information. If the Assessment Statute date expires within 90 days, and there is an increase to tax, the case will need to be sent to the RACS Unit for Assessment. Refer these cases to the AUR Statute Coordinator for preparation of Form 2859. RSED - Refund Statute Expiration Date. Generally, a claim for refund must be filed within 3 years from the time the original return was filed or 2 years from the time the tax was paid, whichever is later. Claims for refunds must be filed on or before the RSED. An abatement may be made for any unpaid portion of an assessment for which an RSED barred refund doesn't result. See IRM 25.6.1.10.1.1, Abatement Authority, and IRM 25.6.1.10.3.3, Claims for Credit or Refund - General Time Period for Submitting a Claim, for further information. If the RSED has expired, the payment(s) must be moved to the Excess Collection File. See (15) below for further information. When adjusting an account, the RSED may be imminent or may have expired. Refer to IRM 25.6.1.5, Basic Guide for Processing Cases with Statute of Limitations Issues, IRM 25.6.1.7.2, Time When Payments and Credits are Considered to be Made, and IRM 25.6.1.10.3.3, Claims for Credit or Refund - General Time Period for Submitting a Claim, for additional information. Some conditions extend the RSED, such as overpayment resulting from bad debts and worthless security losses, or their effect on carry overs and carry backs, net operating (NOL) or capital loss carry backs or certain credit carry backs, financial disability. Refer to IRM 25.6.1.10.3.4, Claims for Credit or Refund - Special Items of Income, Deduction, Loss or Credit, and IRM 25.6.1.10.3.5, Claims for Credit or Refund - Taxpayers in Special Situations, for additional information. When the taxpayer's response results in either a full or partial abatement refer the table below to determine the appropriate action: If And Then AUR adjustment is fully unpaid ASED is open Follow appropriate adjustment procedures per IRM 4.19.3.27.6.1, Full Adjustment Determinations, or IRM 4.19.3.27.6.2, Partial Adjustment Determinations. Response results in either a full or partial abatement of the AUR assessment TC 604 is present on the account due to bankruptcy discharge/dismissal Coordinate with the AUR Bankruptcy Coordinator: If TC 604 is present due to the mirroring process, post the assessment on the appropriate existing MFT 31 account. If TC 604 is due to discharge of the bankruptcy: Send an email to *CIO Issues and in the subject line, identify the case as an AUR Reconsideration case. Request temporary reversal of the TC 604. Once the TC 604 is reversed, input the adjustment to correct the AUR assessment. Caution: If the adjustment will result in a refund, or if there are payments/refundable credits which need to be addressed, include Hold Code 1 on the adjustment. Send an email to *CIO Issues and in the subject line, identify the case as an AUR Reconsideration case. Request re-input of TC 604. Caution: If the adjustment will result in a refund, or if there are payments/refundable credits which need to be addressed also advise CIO there is a credit on the account which needs to be resolved. Response results in either a full or partial abatement of the AUR assessment TC 604 is present on the account due to approved refund of funds on an Innocent Spouse case See IRM 4.19.3.23.1.19, Innocent Spouse Relief Cases, for additional information. Response results in either a full or partial abatement of the AUR assessment The TC 604 is due to reasons other than Bankruptcy or Innocent Spouse. Coordinate with the AUR Bankruptcy Coordinator to: Post the assessment on the appropriate existing MFT 31 account if the MFT 31 account(s) has been created or Contact the appropriate Collections Office to request a temporary reversal of the TC 604 if MFT 31 account(s) have not been established. See IRM 21.6.8.5.2, Adjusting Accounts, and IRM 21.6.8.4.2.1, Mirrored Modules, for additional information. Response results in either a full or partial abatement of the AUR assessment TC 706 is present See (14) through(17) below. Response results in either a full or partial abatement of the AUR assessment The RSED has expired on all or part of the payments See (12) below. Taxpayers filed a joint return but are now divorced A payment is being refunded Verify the refund is issued to the taxpayer that made the payment. A credit transfer may be necessary to ensure the payment refunds from the appropriate taxpayer module. To transfer the credit, use the IAT "Credit Transfer" tool. See (16) below. When it is determined the RSED has expired on all or part of the payments (TC 610, 640, 670, or 706) or refundable credit (TC 806, 764, 766 and 768) or when the tax will be partially or fully reversed, but the RSED has expired on all or part of the payments, move the expired payment(s) to the Excess Collection File (XSF). To correct the account, take the following actions: Caution: Do not create a refund condition by allowing more net credits than the tax increase. Note: For additional information on RSED expiration see IRM 25.6.1.5, Basic Guide for Processing Cases with Statute of Limitations Issues. Use the IAT "xMend" or "REQ54" tool to reverse the AUR assessment using a HC 4 to stop the adjustment notice and hold the credit. Note: If the claim date is later than the RSED, input the claim date into the Refund Statute Control Date (RFSCDT) field and input Override Code "S" . If the override code isn't entered, the following error message displays; "Override Needed." If the response received date is more than 1 year old; use Override Code "R" . Both Override Code "S" and "R" may be necessary. Note: The date input in the RFSCDT field can't be after the RSED if the claim is timely, or a "-D" freeze transcript will generate. A resulting credit balance is frozen at Master File with a "-D" freeze that will stop any payments from refunding. Open a new IDRS control to monitor the account for the adjustment to post. Send the taxpayer a disallowance letter explaining that the refund statute has expired. Do not ask the taxpayer for additional information if the statute has expired. Use the IAT "Letters" tool to issue either the Letter 105-C, Claim Disallowed, or Letter 106-C, Claim Partially Disallowed. Note: Since the taxpayer won't receive an adjustment notice, be very specific in the explanation of the adjustment on the letter. See IRM 21.5.3.4.6.1, Disallowance and Partial Disallowance Procedures, for further information. After the AUR adjustment posts: Use the IAT "Credit Transfer" tool to transfer payment(s) to the appropriate module for refunding, when appropriate (for example, TC 706). See (18) below. Move any expired payment(s) to the Excess Collection File (XSF). Complete Form 8758, Excess Collections File Addition, and route using SERP, Who/Where tab, Excess Collection. Complete a separate form for each payment or credit that needs to be moved to (XSF). Exception: A Form 8758 must not be used for TC 736. Statute handles this TC when it is expired. Update the IDRS control to a monitor status and update activity (example, "6800CR" or "8758toxcss" ). Input TC 971 AC 296 using the IAT "REQ77" tool. Use the current date in the TRANS-DT field and "expired payments" or similar wording in the remarks field. Note: If total credits are over $100,000, secure managerial approval. Monitor the case and once the credit is moved, address any refundable credit remaining on the account. See IRM 4.19.3.27.10, Miscellaneous RECON for Manual Refund Procedures. If the taxpayer's response results in either a full or partial abatement of the AUR assessment on a married filing joint (MFJ) account, any refund generated by the abatement must be paid jointly to both spouses unless one or more TC 706 is present and all four of the following items are true: The spouses' names on the account don't both appear on the originating account. Meaning, the TC 706 credits must transfer from one spouse on the originating account either as a single or separate filer or as a joint filer with a new spouse. Example: Mary Doe filed single for 20XX. The 20XX overpayment offsets with TC 706 to the prior year account filed as John and Mary Doe, married filing joint. (The year shown as "20XX" will be the AUR year of the case you are working.) No payments or credits other than a TC 706 posted to the account since the AUR assessment. In the case of partial abatements, all TC 706 credits transferred from the same person. All TC 706 occurred less than two years before the date of the full or partial abatement. If a TC 706 is present and all four of the above items are true, move the applicable TC 706 credits back to the modules where they originated using the IAT Credit Transfer tool. When considering claims for refund on an account that includes a TC 706 payment filed within two years, use the cycle date of the offset and not the transaction date of the offset. To determine the exact date within the cycle, refer to the Julian Date of the DLN. If an adjustment is made to abate the tax and a credit transfer is made, use the appropriate hold code and input TC 570 when appropriate. The IAT "Credit Transfer" tool contains a box for Debit Freeze and Credit Freeze and will input the TC 570 when checked. Reminder: TC 29X will release a TC 570. Example: Spouse and Spouse file a joint return for the AUR year. IRS assesses an additional $800 for their joint liability based on an AUR examination. The taxpayers divorce. Spouse files an income tax return the subsequent year that claims a $500 overpayment. Spouse doesn't file an income tax return for the subsequent year that claims an overpayment. Because of the outstanding AUR assessment, the $500 credit is transferred in April 20XX (filing year) to the married filing joint (MFJ) tax liability for the AUR year. No other payments or credits are made to the AUR year MFJ account. On September 1, 20XX (filing year or subsequent), the IRS partially abates $400 of the AUR assessment. Because all four requirements above are met, move the $100 credit that results from the partial abatement back to Spouse's subsequent year account to prevent the credit from refunding from the AUR year MFJ account. Example: Spouse and Spouse file a joint return for the AUR year. IRS assesses an additional $800 for their AUR year joint liability based on an AUR examination. The taxpayers divorce. Spouse files an income tax return for the subsequent year that claims a $500 overpayment. Spouse files an income tax return for the subsequent year that claims a $300 overpayment. Because of the outstanding AUR assessment, the $500 and $300 credits are transferred in April 20XX (filing year) to the married filing joint (MFJ) tax liability for the AUR year. No other payments or credits are made to the AUR year MFJ account. On September 1, 20XX, the IRS fully abates the AUR assessment. Because all four requirements above are met, move the $500 credit back to Spouse's subsequent year account and the $300 credit back to Spouse's subsequent year account before refunding to prevent the credits from refunding from the AUR year MFJ account. Note: If the payment isn't moved an erroneous refund situation may occur. If the conditions in (13) above are met or if one or both taxpayers are deceased take the following actions: Check the entity information for the tax years involved. Verify the address is that of the taxpayer before issuing any notice/refund. Determine if the name line changed. If the name line changed, ensure the TC 706 is placed on the correct module. Use the IAT "Credit Transfer" tool to move the TC 706 back to the correct year and module for refunding the payments. Note: If the payment isn't moved to the correct tax year/module, an erroneous refund situation may occur. When considering claims for refund on an account that includes an offset such as a TC 706 payment filed within two years, use the cycle date of the offset and not the transaction date of the offset. To determine the exact date within the cycle, refer to the Julian Date of the DLN. If the taxpayer's response results in a full or partial abatement of the AUR assessment, check TXMOD/SUMRY for collection status. If the account is in collection status 26, coordinate with the Area Office Collection Revenue Officer. Refer to SERP, WHO/WHERE link RO by TSIGN/ZIP/STATE.

# Full Adjustment Determinations

4.19.3.27.6.1 (10-10-2025) Full Adjustment Determinations If the taxpayer provides acceptable explanations for all of the issues or there is enough information to fully reverse the AUR assessment: Input the full reversal adjustment using the IAT "xMend" or "REQ54" tool. Caution: DO NOT use the "Full Back Out" button. Note: The adjustment automatically releases the -A freeze, if present. Use RC 068 (AUR assessment fully adjusted). Close the IDRS control. Leave a case note. If the case is in BT81, assign IPC 9F. Note: The taxpayer will receive a CP 21/ CP 22 as notification of the adjustment. If TC 604 is present on the account see IRM 4.19.3.27.6, Evaluating RECON Correspondence.

# Partial Adjustment Determinations

4.19.3.27.6.2 (10-10-2025) Partial Adjustment Determinations If the taxpayer provides acceptable verification for some of the issues or doesn't address all of the AUR issues: If the taxpayer provides a computation, rework and math verify all figures or rework based on the taxpayer's response. Refer to the appropriate tax year publications and worksheets for necessary schedules, EIC tables, tax tables, etc. Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Input a partial adjustment, using the IAT xMend or REQ54 tool. Use reason codes (RC) that apply to the adjustment including RC 067 (Reconsideration Disallowed in Part). Note: The fourth RC position is used ONLY for penalty adjustments. If the penalty is the partial adjustment due to reasonable cause, use RC 062 (Penalty Adjustment due to Reasonable Cause). Reminder: First time abate (FTA) does NOT apply to the accuracy related penalty TC 240, Penalty Reference Number (PRN) 680. Send the appropriate C-Letter using the IAT "Letters" tool to provide a clear explanation of what the adjustment was based on and that they may send any additional information for consideration. Note: Print to PDF and send to clerical to upload into the AUR system. Exception: If Form 1040-X or amended return matches the AUR tax change, a C-Letter isn't required. Leave a detailed case note outlining determinations made and actions taken. Assign IPC 9P. Exception: When the original AUR closure was no change and the RECON results in a change to the account, assign IPC 9I. Close the IDRS control base, if present. When there is a penalty present on the account take the following: If there is a partial adjustment to taxes and/or credits and an accuracy related penalty is on the account, the TC 240 PRN 680 MUST be recalculated. When reducing the penalty, input the TC 680 as a negative amount. If the account contains a TC 160/166 (Failure to File) penalty, always input a TC 162 for zero. If TC 604 is present on the account see IRM 4.19.3.27.6, Evaluating RECON Correspondence.

# No Adjustment Determinations

4.19.3.27.6.3 (10-10-2025) No Adjustment Determinations If the taxpayer states they don't agree with the AUR assessment, but doesn't provide a complete response including a reasonable explanation or acceptable verification or there are no credits that can be refunded on the account: If the case is in BT 81 or 83 assign IPC 9N or 9I if requesting additional information from the taxpayer. If the case was suspended (that is, in BT 82 due to assignment of IPC 9E) and the taxpayer did not respond to the request, assign IPC 9N. Send the appropriate C-Letter using the IAT "Letters" tool to explain why an adjustment isn't being made and indicate what documentation or information is necessary, if applicable. Note: If there are no credits that can be refunded on the account, send a Letter 105-C to disallow the claim. Be sure to include a paragraph that explain appeal rights. Print to PDF and send to clerical to upload into the AUR system. Leave a detailed case note indicating what action was taken and/or what documentation/information was requested from the taxpayer. Close the IDRS control base if one was established. Use RC 064 (no response) or RC 066 (disallowed in full). A TC 290 for zero will need to be input using the IAT "xMend" or "REQ54" tool when an "-A" Freeze is present on the account, using Blocking Series 05. When disallowing a claim and a 105-C Letter was issued, use a TC 290 for zero using Blocking Series "98" when the return was originally filed as paper or "99" when the return was electronically filed.

# AUR RECON Issue Codes - TY 2015 and Prior

4.19.3.27.6.4 (09-30-2018) AUR RECON Issue Codes - TY 2015 and Prior When taking a closing action on the AUR system (for example, entering IPC 9F, 9I, 9N, 9P, or 9R) a drop-down menu displays with a listing of the most common RECON issues. Exception: Beginning with TY 2016, AUR RECON issue codes will no longer be displayed or selected when taking a closing action on the AUR system. Select the RECON issue code that most closely corresponds with the case or causes the most significant change. If the issue on the case doesn't relate to any of the available options, use Issue Code 28, Issue Not Listed Above. Refer to Exhibit 4.19.3-13, AUR Reconsideration Issue Codes, for additional information. Note: When using Issue Code 28, leave a case note to further explain the issue(s) and action taken, including the requested taxpayer information.

# Ordering Returns

4.19.3.27.7 (10-29-2024) Ordering Returns Order the tax return if information is missing or there isn't enough information present to work the case. Example: The taxpayer states the income and/or deductions were properly reported on the original return and research is inconclusive or when there isn't enough information present to work the case. When ordering the tax return, use the IAT "eClerical" tool and: Exception: Use IDRS CC RTFTP to order an E-Filed Return. A copy of the ELF return transcript can be printed and mailed to the taxpayer. Complete a history item. Suspend the case. Monitor for 30 days. If the return isn't received, make a second request. Note: ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Check the STAUP and extend, if needed. Send the appropriate C-Letter (interim), using the IAT "Letters" tool, to the taxpayer, as needed. Input the open last suspense batch number in the AUR control number field of the letter. Update the IDRS control base. If the case is in BT 81 or 83, transfer the case to yourself and the AUR system will assign IPC 9E. If an amended return is posted and there is an indication that it is a CII document, view the return using AMS. If a duplicate/amended return is posted (TC 976/977 or TC 971 AC 010, 012 through 016 or 120), and a TC 290/291 is NOT present, and the duplicate/amended return isn't in the case file research AMS and EUP for the duplicate/amended return. If after performing AMS/EUP research the amended/duplicate return isn't located, correspond with the taxpayer and request a copy.

# Taxpayer Contact for Additional Information

4.19.3.27.8 (10-29-2024) Taxpayer Contact for Additional Information When the taxpayer correspondence doesn't include all the necessary information to make a redetermination, take the following actions: If a phone number is present on the account, call the taxpayer and ask them to submit the missing information. See IRM 4.19.3.23.2.4.1, Out Calls - Calling the Taxpayer, for further information. Note: See IRM 4.19.3.23.2.2, Disclosure and IRM 4.19.3.23.2.2.1, Disclosure Verify Screen, when making telephone contact to ensure that disclosure procedures are followed. If unable to contact by phone, send the appropriate C-Letter using the IAT "Letters" tool. Input the last open suspense batch number in the AUR control number field of the letter. Note: For Statute imminent tax years with a potential tax increase, hold case in unit suspense for 45 days for reply from taxpayer. Assign IPC 9I, and Recon Issue Code 12 (TY 2015 and prior). Leave a detailed case note indicating what action was taken and/or what documentation or information was requested from the taxpayer. Close the IDRS control base if one was established.

# Payer Contact

4.19.3.27.9 (10-10-2025) Payer Contact Prior to initiating payer contact, make sure the information was not verified during the original AUR case processing. If payer contact is needed: Complete a history item and update the IDRS control. Note: When suspending a case, update your status control to "M" (monitor). Contact the payer using a Letter 2625-C. Note: Input the last open suspense batch number in the "AUR control number" field of the letter. Reminder: See IRM 4.19.3.23.9.6, Payer Contacts, for 3rd Party Contact procedures. Note: Prior to payer contact, taxpayers must provide a signed Form 2624. See IRM 4.19.3.23.9.1, Responses Needing Correspondence, for additional information. Send the appropriate C-Letter (interim), using the IAT "Letters" tool, to the taxpayer, as needed. Research CC STAUP and adjust the number of cycles, if needed. Refer to Exhibit 4.19.3-15, Cycle Chart (Reconsiderations). Suspend for 60 days. If the case is in BT 81 or 83, assign IPC 9L, which moves the case to BT 82 for suspense and monitoring. If the payer doesn't respond within the 60 day suspense, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ See IRM 4.19.3.27.6.1, Full Adjustment Determinations, for a full adjustment or IRM 4.19.3.27.6.2, Partial Adjustment Determinations, for a partial adjustment.

# Miscellaneous RECON

4.19.3.27.10 (10-10-2025) Miscellaneous RECON Manual Refunds are issued based on specific criteria. Some examples of situations when a manual refund will be issued are: Note: The IAT "Manual Refund" tool must be used to issue a manual refund. The taxpayer requests a refund amount below one dollar. The taxpayer is deceased and a refund is to be issued to anyone other than surviving spouse. If Form 1310, Statement of Person Claiming Refund Due a Deceased Taxpayer, isn't attached, correspond to request one. The refund is to be issued in a name and/or address other than the one on Master File. The account was pulled from the retention register. The case is considered a hardship, such as, unable to meet living expenses, eviction, and other situations of similar magnitude. The RSED on the account has expired, but the account has credits eligible for a refund under the 2-year rule. Note: Leave a case note documenting the actions taken. Adjustment Notice - If the taxpayer requests an adjustment notice that shows the computation and assessment of accrued unrestricted interest, and/or penalties, take the following actions: Mail a transcript of the account to the taxpayer using Control D for MFTRAX or IDRS CC PINEX. Assign IPC 9I if the case is in BT 81 or 83. If, in addition to an AUR RECON request, the taxpayer requests an installment agreement: Efax the IA request to Collections. See Service Center Address for Collection Operations, refer to information for SBSE to determine the correct fax number. Leave AUR case note "IA request to Coll" or similar wording. Notify the taxpayer that their IA request has been routed. Assign IPC 9P or 9R, as appropriate, if the case is in BT 81 or 83.

# Document Disposition

4.19.3.27.11 (10-10-2025) Document Disposition Material that has a direct bearing on the case should be retained. Attach the documents to the adjustment (including TC 290-0). Exception: TDC cases and digitized AUR cases may contain imaged correspondence on AUR, AMS or eGain systems. It isn't necessary to print and maintain the imaged correspondence as part of the case file. When it is necessary to associate documents to a return in files: Locate the controlling DLN. If viewing IDRS CC TXMODA, the controlling DLN of the return is associated with the TC 150 or the last adjustment DLN annotated by an "X" . If viewing IDRS CC IMFOLT, the controlling DLN is shown at the top left side of the screen. If the adjustment is "pending" it may not have a complete DLN, monitor the case until it is available. For Virtual cases, if no tax adjustment is made during AUR RECON processing - input TC 290-0, using the IAT "xMend" or "REQ54" tool, with Blocking Series 05 to file the correspondence under its own DLN. Include RC 064 (no response) or RC 066. Enter "corr sent to files" or similar wording in the REMARKS field. Form 8453, U.S. Individual Income Tax Transmittal for an IRS e-file Return, will be refiled under their own DLN.

# Releasing Payments

4.19.3.27.11.1 (10-10-2025) Releasing Payments If not making a tax adjustment but need to release a TC 640 payment take one of the following actions: Input a TC 290-0 with Blocking Series 55/65, using the IAT "xMend" or "REQ54" tool, include RC 064 (no response) or RC 066. Do a credit transfer, using Credit Transfer tool and change the payment from a TC 640 to a TC 670. Be sure to input Bypass Indicator 1.

# Unpostable AUR Transactions

4.19.3.28 (10-10-2025) Unpostable AUR Transactions Unpostable transactions are those which failed validity checks to allow them to be posted to the Master File. Unpostables that can't be resolved by the Unpostable Function are closed to the initiating function for correction. A Form 4251 is usually generated to pull source documents. Reminder: Unpostables must be handled in a timely manner to avoid possible statute cases. Most unpostables are controlled on IDRS to the employee who input the transaction. For adjustments that were input through AUR, unpostables are controlled to IDRS number SC890NNNNN (SC = service center, NNNNN = the AUR batch number from which the adjustment was released). These controls are listed on the Case Control Activity (CCA) reports (age listings). Input of STAUP and interim letters will be addressed if applicable. Unpostable Codes (UPC) identify the condition that caused the transactions to be unpostable. The Form 4251 shows the 3-digit unpostable code and a 1-digit unpostable reason code (RC) next to the unpostable code. Refer to the unpostable section in Document 6209, Section 8b-3, Unpostable Codes IMF, for interpretation of these codes; Find the 3-digit number in the "UPC" column. Find the 1-digit number in the "RC" column. The explanation in the corresponding "Description" column will identify the cause of the unpostable condition. Note: The 3-digit unpostable code and 1-digit unpostable resolution code (RC) is shown on the CCA 4243 listing. This report can be retrieved through ORCAS (Overage Report Compiler and Sorter) or Control-D and are searched by team, employee number, SSN, etc. The CCA 4243 age listings must be monitored weekly to ensure all unpostable transactions are resolved. Actions to resolve unpostable conditions must be initiated within 7 days. Unpostables are identified on IDRS by the following Pending Transaction Identification Codes: DU - Deleted Unpostable - this case has been closed and deleted from the ECC-MTB Unpostables tape - research to determine appropriate action. DC - Transaction deleted by ERS or SC Reject Processing. Note: These codes are displayed in front of the unpostable transaction.

# Basic Steps for Resolving Unpostables (UP)

4.19.3.28.1 (10-10-2025) Basic Steps for Resolving Unpostables (UP) To determine why the transaction did not post, consider the description for the UPC/RC and determine if the previous transaction was in error. See Document 6209, Section 8b-3, Unpostable Codes IMF, for a complete list of Unpostable Codes, Reason Codes and a brief description of each. If the Form 4251 with the source document was not returned to the AUR function, attempt to resolve the issue without these items. If the unpostable was an adjustment to the account and can be resolved without the source document, complete Form 2275 to instruct Files to pull the unpostable document (DU or NU DLN) and attach it to the corrected adjustment. This is required since the DLN of the unpostable transaction won't be retained once the account is resolved. If the source document is required to resolve the unpostable condition, request the document (DU or NU DLN) using the IAT "eClerical" tool. Take the following actions as appropriate: Review the module for freeze conditions. Examine the unpostable transaction document for other errors. Use the IAT "REQ54" tool to input new adjustment with the correct information using the appropriate source tag (for example, Form 12249, Adjustment Document, Form 12775, ADJ54 Adjustment Format.) Ensure that the new adjustment doesn't exceed the original assessment amount and notify the taxpayer of the change, if applicable. If the assessment went unpostable because the account had been resequenced, reinput the assessment on the new (resequenced) account. DO NOT issue a second, manual notice on any cases with a resequenced SSN. If the unpostable is a credit transfer, review both accounts/modules for erroneous refunds and/or to ensure that both sides unposted. If one side did not unpost, take to your Lead. Use the IAT "Credit Transfer" tool to reinput the credit transfer with the correct information. If the unpostable is an address change or TC 844/845, reinput the transaction and then close your unpostable control base (if appropriate). These transactions may be identified on your old age listing as MFT 00 and period 0000, referring to an open control on ENMOD. AUR Unpostable transactions must be resolved in a timely manner to ensure minimum impact to AUR and to the taxpayer. Monitor actions until they post. When all unpostable actions are completed check the CORRECTED UNPOSTABLE box in the ASSESSMENT HISTORY window. Note: Checking the CORRECTED UNPOSTABLE box will remove the case from the Missing Assessment report.

# Unpostables IDRS Command Codes

4.19.3.28.2 (09-01-2008) Unpostables IDRS Command Codes Use IDRS CC UPTIN, UPDIS (UPRES), and UPCASZ to research/resolve unpostables. UPTIN: This command code displays all open unpostable cases for the input TIN. Closed unpostables for the input TIN are displayed for 3 months before dropping off IDRS. Research IDRS CC UPTIN for the following information: The unpostable sequence number of an open case. The case status (open, suspended, or closed). The employee assignment number. The corrective action taken to resolve a previously closed case, when IDRS CC UPDIS can no longer be accessed. UPDIS: This command code displays unpostable records. When IDRS CC UPDIS is input, the automatic screen display UPRES appears. Research IDRS CC UPDIS for the following information: To display a specific closed unpostable for the input sequence until the correcting action is included in the Thursday night correction tape run. The information displayed on UPDIS varies depending on the type of unpostable. IDRS CC UPDIS must also be used as a prerequisite for IDRS CC UPRES and IDRS CC UPCASZ. Note: IDRS CC UPDIS may be used via Universal Access. UPCAS: This command code is used for: Requesting an MRS transcript of the unpostable record. Requesting a document or return. Placing or updating a case in suspense status. Adding information to aid the Unpostables Function in the resolution of the unpostable condition. Note: Use IDRS CC UPCAS with the definer "Z" to input message/history information; up to 80 characters are available. For a closed case, research the UP case on IDRS CC UPTIN to determine how it was closed.

# Guidelines for Preventing Unpostable IDRS Transactions

4.19.3.28.3 (09-21-2020) Guidelines for Preventing Unpostable IDRS Transactions The following list provides guidelines for preventing unpostable transactions: Use a TXMODA or IMFOL print/view when making an adjustment to a taxpayer's account. Ensure the TXMODA print is for the correct SSN and year. Do not attempt to move (credit) or remove (tax and/or penalty) for an amount larger than is shown on the TXMODA print. Rounding "up" frequently results in an unpostable. Review the TXMODA print for manual interest (TC 340 / TC 341). Refer to the Lead if you are unable to work. Check for previous adjustments for the same amount you are adjusting. Check for and consider any previous adjustments when making your adjustment. If appropriate, input TC 570 (credit side) on credit transfers. This will help prevent an erroneous refund if the debit side goes unpostable. An alternate solution is to use Document Code 34 for credit transfers when possible. Use of Doc. Code 34 depends on the original posted transaction. This credit transfer document is considered a "two-sided" document because the credit doesn't attempt to post until the debit side has posted. Make sure hold codes and priority codes are used when necessary. Be especially watchful for the following transaction codes: TC 160/161 - FTF penalty TC 170/171 - ES penalty TC 270/271- FTP penalty TC 340/341- Restricted interest "-I" freeze TC 420/424 or TC 576 - "-L" or unallowable issue TC 768/764 - EIC Do NOT reduce the following line reference numbers below zero: Reference Number Income Type 878 Primary SE Income Note: The amounts can't exceed money amounts listed in (4) below. 879 Secondary SE Income Note: The amounts can't exceed money amounts listed in (4) below. 885 Advanced EIC 886 Taxable Income 889 SE Tax 891 Primary Tip Income 892 Secondary Tip Income 895 Primary Medicare Income 896 Secondary Medicare Income 897 Spousal Claim on DMF (IMF only) 898 Primary Medicare Tip Income 899 Secondary Medicare Tip Income The table below contains the maximum amount social security wages by tax year: TY Money amount 2015 $118,500 2016 $118,500 2017 $127,200 2018 $128,400 2019 $132,900 2020 $137,700 2021 $142,800 2022 $147,000 2023 $160,200 2024 $168,600 Additional information is available in Document 6209, Section 8b-3, Unpostable Code IMF, under Unpostable Codes.

# Guidelines for Resolving Unpostable IDRS Transactions

4.19.3.28.4 (09-21-2020) Guidelines for Resolving Unpostable IDRS Transactions Use the information in the table (not all inclusive) below to resolve common unpostable IDRS transactions: Note: For additional information refer to Document 6209, Section 8b-3, Unpostable Codes IMF, under Unpostable Codes. Reminder: Leave a case note documenting actions taken to resolve the unpostable. Condition To Resolve UPC 155-0 A TC 29X is attempting to post to an account that is restricted from generating interest. Reinput the adjustment, the adjustment must include a recomputed TC 34X. Note: Use a non-restricting TC 340, whenever possible. UPC 158-1 The TC 29X is within $10.00 of a previous TC 29X. Research to determine if the adjustment is a duplicate. If the adjustment is necessary, reinput and use Priority Code 8. UPC 158-1 The account has a TC 170/171 and an adjustment to the refundable credits attempted to post without adjusting the Estimated Tax (ES) Penalty. Reinput the adjustment and correct the ES penalty amount. UPC 179-0 A TC 290/291 is attempting to post without a secondary TC 160,161, or 162 to a module containing a TC 160,161, or 162. Reinput the adjustment. Include recomputed TC 16X amount. UPC 180-2 An adjustment with an increase to earned income tax credit (EITC) with CRN 764 attempted to post when a previous tax adjustment already posted. Reinput the adjustment. Include Priority Code 1 or 8, as applicable. UPC 189-0 Certain transactions attempting to post to the account are greater than the net amount on the account. Verify amounts; tax increases/decreases, credit reference numbers, adjustments are made to the appropriate taxpayer (primary or secondary). Example: A Form 1040-X is received from the taxpayer requesting a taxable income decrease of $2,500.00. TXMODA indicates the taxable income is $620.00. If an adjustment is input with CRN 886 for any amount greater than $620.00 it will unpost. Reinput the adjustment.

# Abbreviations (also see Glossary)

Exhibit 4.19.3-1 Abbreviations (also see Glossary) The abbreviations below are not required to be used. This list is intended to offer suggested shortened forms of common terms or words only. Acronym Definition 3rd PTY Third-Party AC Action Code ACDS Appeals Centralized Database System ACK Acknowledge ACTC Additional Child Tax Credit ADEA Age Discrimination in Employment Act AdMT Additional Medicare Tax ADP Automated Data Processing AGI Adjusted Gross Income AGN Auto-Generated Notice AGSUB Agricultural Subsidy AIMS Audit Information Management System AIS Automated Insolvency System AMD Accrued Market Discount AMRH Accounts Maintenance Research AMSA Archer Medical Savings Account AMT Amount AN Auto Notice AO Area Office AOC American Opportunity Credit AOD Action of Decision APO/FPO Address used for correspondence to overseas military personnel. APTC Advance Premium Tax Credit ARDI Account Receivable Dollar Inventory AUR Automated Underreporter AUTH Authorized BK Bankruptcy BOD Business Operating Division BPD Bureau of Public Debt BT Batch Type CA Case Analysis CAF Centralized Authorization File CC Command Code cc Closing Code CCA Case Control Activity CCC Commodity Credit Corporation CCF Capital Construction Fund CCISO Cincinnati Centralized Innocent Spouse Operation CESA Coverdell Education Saving Account CI Criminal Investigation CII Correspondence Imaging Inventory COD Category of Distribution Code CP Computer Paragraph CRP Conservation Reserve Program CS Customer Service CSN Case Sequence Number CTR Currency Transaction Report CRN Credit Reference Number CUSIP Committee on Uniform Security Identification Procedures DBTCN Cancellation of Debt DCB Dependent Care Benefits DIMS Docket Information Management System DIST Distribution DIST CD Distribution Code DIV Dividends DLN Document Locator Number DOC Document DPAD Domestic Production Activity Deduction EAPTC Excess Advance Premium Tax Credit ECC-MEM Enterprise Computing Center at Memphis ECC-MTB Enterprise Computing Center at Martinsburg ECR Education Credit Recapture EGC Employee Group Code EIC Earned Income Credit EIN Employer Identification Number EPAB Employer Provided Adoption Benefits ERRF Erroneous Refund ES Estimated Tax ESA Education Savings Account ESOP Employee Stock Option Plan ESPP Employee Stock Purchase Plan EUR Employee Underreporter EWPEN Early Withdrawal Penalty EXAM Examination EXP Expense FICA Federal Insurance Contribution Act FMS Financial Management Service FMV Fair Market Value FOIA Freedom of Information Act FRC Federal Records Center FRP Fraud Referral Program FSC Filing Status Code FTF Failure to File Penalty FTP Failure to Pay Penalty FUD Follow Up Date GR/A Gross Pension/Annuity HC Hold Code HCTC Health Coverage Tax Credit HFD Health Savings Account Funding Distribution HSA Health Savings Account HSTG Hostage HQ Headquarters IA Installment Agreement ID Identity, Identification IDRS Integrated Data Retrieval System IDT Identity Theft IDTVA Identity Theft Victims Assistance IHSS In Home Support Services IMF Individual Master File IND Indicator INEXP Investment Expense INT Interest IPC Internal Process Code IR Information Return IRA Individual Retirement Account IRC Internal Revenue Code IRM Internal Revenue Manual IRMF Information Returns Master File IRP Information Return Processing ISO Incentive Stock Options ISRP Integrated Submission and Remittance Processing ISTS Innocent Spouse Tracking System ITIN Individual Taxpayer Identification Number IUP Infrastructure Upgrade Project KBA Knowledge Base Articles IVO Integrity and Verification Operation KIA Killed in Action KITA Killed in Terrorist Action LSE Lump Sum Election LTA Local Taxpayer Advocate LTC Long-Term Care (Benefit) MAGI Modified Adjusted Gross Income MAMSA Medicare Advantage Medical Savings Account MCTXW Medicare Tax withheld MFJ Married Filing Joint MFS Married Filing Separate MFT Master File Tax MISC Miscellaneous MKTDS Market Discount ML Message Left MORT Mortgage Interest Deduction MSA Medical Savings Account MT Medicare Tax N/C No Change NEC Nonemployee Compensation NDDIS Non-Dividend Distribution NIIT Net Investment Income Tax NOL Net Operating Loss NPS Non-petitioning Spouse NQDC Non-Qualified Deferred Compensation O/C Overclaimed OCR Optical Character Recognition O/D Over-deducted OID Original Issue Discount ORCAS Overage Report Compiler and Sorter ORIG Original OTINC Other Income OTPOR Other Portfolio Income P/A Payer Agent PC Process Code PCA Private Collection Agencies PDC Private Debt Collection PID Position Identification PIK Payment in Kind POA Power of Attorney PSO Public Safety Officer PTC Premium Tax Credit PTP Primary Taxpayer QBID Qualified Business Income Deduction QCD Qualified Charitable Distribution QDIV Qualifying Dividend QRSC Qualifying Retirement Savings Contribution QTP Qualified Tuition Program RC Reason Code RACS Revenue Accounting Control System RCTC Refundable Child Tax Credit RDP Registered Domestic Partner RECON Reconsideration ROMID Refund of Overpaid Mortgage Interest RPM Return Preparer Misconduct R/R Rent/Royalty RRB Railroad Retirement Benefits RRTA Railroad Retirement Tax RTAA Reemployment Trade Adjustment Assistance RTF Return Transaction File RV Return Values for Calculations SBSE Small Business / Self-Employed SBC Secondary Business Code SC Service Center (now called Campus) SCRIPS Service Center Recognition/Image Processing System SE Self-Employment SEHID Self-Employed Health Insurance Deduction SEI Self-Employment Income SEID Standard Employee Identifier SEP Simplified Employee Pension SERP Servicewide Electronic Research Program SF Subfile SITR State Income Tax Refund SLID Student Loan Interest Deduction SNE Special Needs Exclusion SNOD Statutory Notice of Deficiency SRP Shared Responsibility Payment SS Social Security SSA Social Security Administration SSN Social Security Number SS/RR Social Security/Railroad Retirement SST Social Security Tax SSTAX Social Security Tax and/or Railroad Retirement Tax STAT / STN Statutory Notice of Deficiency STP Secondary Taxpayer TAS Taxpayer Advocate Service TS Taxpayer Services TC Transaction Code TCJA Tax Cuts and Job Act TDA Taxpayer Delinquent Account TDC Taxpayer Digital Communication TE Tax Examiner TEBND Tax-Exempt Bond TEFRA Tax Equity and Fiscal Responsibility Act TIA Taxpayer Information Authorization TIF Taxpayer Information File TIN Taxpayer Identification Number TP Taxpayer TRDB Tax Return Data Base TUTFE Tuition and Fees (TY 2020 and prior) TX/A Taxable Annuity TXI Taxable Income TY Tax Year U/C Underclaimed UNAUTH Unauthorized UP Unpostable U/R Underreported; Underreporter (per context) UVC Universal View Case UWC Universal Work Case W/H Withholding XFER Transfer

# Glossary

Exhibit 4.19.3-2 Glossary The following is a list of terms used in IRM 4.19.3 and their definitions. Agreed Case - A response from the taxpayer with signature(s) agreeing to our changes with no disputing comments, or full payment of tax and penalties received before issuance of the Statutory Notice of Deficiency with no disputing comments, or a completed Installment Agreement with signature(s) and no disputing comments. Appealed Case - A case in which the taxpayer requests an Appeals hearing. Appeals Centralized Database System (ACDS) - An automated program used by Appeals to control inventory, record case activities and time charges, and produce statistical reports. Assessments (TC 29X) - A change to the amount of tax on the taxpayer's account, this TC will generate a bill or a refund, a new DLN, and/or release a payment or freeze code. AUR Received Date - A system generated date reflecting when the IRS Received Date is input on the case record. Auto-Generated Notice Cases (AGN) - Cases systemically moved from Extract to CP 2000. Bar Code - Contains the SSN and the tax year and is used for scanning information into the control computer, using a laser gun. It is found on the lower right corner of the Form 4251 and on several pages of notices. Batch - Collection of returns, correspondence, or cases (digital) that have been grouped together. Batch Number - Five digit number used to describe/define the type of batch and the sequential number of the batch or the physical location of the batch. Batch Runs - Automatic updates to the entire AUR system, currently scheduled for weekends only. Batch Status Codes - Two digit alpha codes that define the status of a batch at any given time during processing. Batch Type (BT) - First two digits of a Batch Number that describe the type of work within the batch. Centralized Authorization File (CAF) - Contains Power of Attorneys (POA) and other authorized disclosure contacts for taxpayer accounts. Case Analysis - The technical review of computer identified discrepancies compared to the tax return. The Screening phase of the Underreporter Program is referred to as either Screening or Analysis. Case Sequence Number (CSN) - Nine digit number which indicates the exact location of a case. CP 2501 - Preliminary notice sent to the taxpayer requesting an explanation of an underreported discrepancy. CP 2000- Notice sent to the taxpayer with proposed changes to income, deductions, and/or credits, explanations of those changes, and a tax computation for those changes. Disagreed Case - Response from the taxpayer that doesn't agree to our proposed changes and has disputing comments attached. (Full payment received after issuance of a Statutory Notice must be considered disagreed until signature(s) are obtained.) Docket(ed) Cases - A tax case in the U. S. Tax Court assigned a docket number. When taxpayer files a petition with U. S. Tax Court, in response to a Notice of Deficiency, the court assigns a docket number, which is used to identify the court case. Docket Information Management System (DIMS) - An automated program used to track and monitor receipt of docketed administrative files. The program is maintained by Appeals and is a subsystem of the Appeals Centralized Database System (ACDS) system. Document Locator Number (DLN) - Number assigned to all returns and documents input to the IRS computer system. Employer Identification Number (EIN) - Nine digit number formatted XX-XXXXXXX used to identify businesses/payers. Employee Underreporter - IRS (government) employee cases in the Underreporter Program. Extract - Group of SSNs selected from the inventory of cases identified with possible discrepancies. Federal Insurance Contributions Act (FICA) - Social Security and Medicare Taxes Federal Record Center (FRC) - A place where tax returns are stored outside the campuses. Freedom of Information Act (FOIA) - Permits taxpayer to request copies of their records. Form 4251 - Return Charge-out - Form generated from IDRS tape and to Files/FRC to pull the requested returns. Individual Taxpayer Identification Number (ITIN) - Assigned to individuals not qualified for a social security number. Integrated Submission and Remittance Processing (ISRP) - Automated system that converts all paper documents to electronic form, including payments. Integrity and Verification Operation (IVO) - Pre-refund fraud identification in Taxpayer Services. Internal Process Code (IPC) - Two digit numeric/alpha code used for tracking cases on the AUR system (doesn't upload to IDRS). IRS Received Date - Date the IRS received the taxpayer correspondence or notice in the campus. It can usually be found on the first page of the receipt and is a stamp (round or square) containing the campus name and date the IRS received the correspondence in the campus. Location Code - Three digit character code that can be alpha or numeric. It identifies the place where batches and/or cases can be found. Non-Docketed Case - A case in which the taxpayer requests an Appeals hearing (without filing a petition with Tax Court). Priority Responses - Responses which that are aged beyond recommended time frames, also referred to as Expedites or Early Received Date Responses. Process Codes (PC) - Two digit numbers used to identify the action taken on a case. Process Codes reside in AUR and are uploaded to IDRS. When posted to IDRS, they update the TC 922. Recomputed Notice (Recomp) - Notice in which the original CP 2000 figures were changed due to a taxpayer response. Reconsideration Cases - Responses received after the case has been closed (assessment or no change) on the AUR system, also referred to as first read, late response or audit recon cases. Referral - Case sent to another area for technical determination (for example: Examination, Criminal Investigation). Refile Case (RF) - Internal Process Code used to return a case to a suspense batch before further assignment. Research - Request for additional information (such as, returns, IDRS research, information return files) needed to continue case processing. Response - All correspondence received from or on behalf of the taxpayer. Review Sampling - Cases to be reviewed by Management or quality reviewers. Screening - Technical review of computer identified discrepancies compared against the tax return. The Screening phase of the Underreporter Program is also referred to as Case Analysis and Analysis. SEID - Standard Employee Identifier. A combination of five alpha/numeric characters which identifies employees. Sequence Order - Order in which cases are key entered or scanned into AUR. Social Security Number (SSN) - Used to identify taxpayer accounts. Statutory Notice (Stat) - Legal notification sent to taxpayers by Certified mail, which explains the taxpayer's right to file a petition with Tax Court and the IRS' right to change tax without taxpayer consent if no timely petition is filed. An Underreporter Statutory Notice consists of a CP 3219A, Form 5564, a partial reprint of the most recent CP 2000. Taxpayer Information File (TIF) - Individual Master File data from ECC-MTB (Enterprise Computing Center at Martinsburg) containing tax account and tax transaction information. Taxpayer Identification Number (TIN) - Used to identify taxpayer accounts. Undeliverable - Correspondence returned from the Post Office that the taxpayer did not receive. Universal Work Case - Describes cases the Tax Examiner can control and work when actions can be taken.

# AUR Internal Process Codes

Exhibit 4.19.3-3 AUR Internal Process Codes Pre-Notice 0A - Screening Research Request for Tax Return 0D - Reserved 0E - Screening Technical/Manager Referral 0F - Screening Fraud Referral (TY 2023 and prior) 0P -Reserved 0T - Screening Telephone A6 - Special Project A All Phases (TY 2024 and subsequent) B7 - Special Project B All Phases (TY 2024 and subsequent) C8 - Special Project C All Phases (TY 2024 and subsequent) D9 - Special Project D All Phases (TY 2024 and subsequent) F2 - Fraud Referral All Phases (TY 2024 and subsequent) T3 - Identity Theft Referral All Phases (TY 2024 and subsequent) CP 2501 3A - CP 2501 Research Request - Return and/or Transcript 3D - Reserved 3E - CP 2501 Technical/Manager Referral 3F - CP 2501 Fraud Referral (TY 2023 and prior) 3L - Reserved 3P - Reserved 3S - CP 2501/Manual Letter (For TDC Only) 3T - CP 2501 Telephone (Request Case) CP 2000 6A - CP 2000 Research Request - Return and/or Transcript 6D - Reserved 6E - CP 2000 Technical/Manager Referral 6F - CP 2000 Fraud Referral (TY 2023 and prior) 6L - CP 2000 AUR Correspondex Letter 6P - Reserved 6S - CP 2000 Manual Letter (letter not on AUR) 6T - CP 2000 Telephone (Request Case) 6X - CP 2000 Extension Request S6 - CP 2000 - Only One taxpayer Signature on Consent (releases AUR Correspondex Letter and moves case to BT 89005suspense) for TY23 and prior Statutory Notice 8A - Statutory Research Request - Return and/or Transcript 8D - Reserved 8E - Statutory Technical/Manager Referral 8F - Statutory Fraud Referral (TY 2023 and prior) 8L - Statutory AUR Correspondex Letter - No Revision to Deficiency 8M - Statutory AUR Correspondex Letter - Change to Deficiency 8P - Reserved 8S - Statutory Phone Call/Manual Letter (Letter not on AUR) 8T - Statutory Telephone (Request Case) S3 - Statutory Notice - Only One taxpayer Signature on Consent (releases AUR Correspondex Letter and moves case to BT 89004 suspense) for TY23 and prior S6 - Statutory Notice - Only One taxpayer Signature on Consent (releases AUR Correspondex Letter and moves case to BT 89004 suspense) for TY24 and subsequent S8 - Statutory Notice - Only One Spouse Files Petition (moves case to BT 89005 suspense) Miscellaneous - Open Cases CR - Recomputation Notice after CP 2501 (Indicator A and N Only) DR - Recomputation Notice after Stat Default date (Indicator E Only) MI - Manual Interest RC - Restore Case RF - Refile Case RN - Recomputation Notice Case (Indicators A and N Only) SR - Statutory Recomputation Notice (Indicators E, A and N Only) WP - Wrong Pull Identity Theft SI - Stolen Identity (TY 2023 and prior) S9 - Reserved Reconsideration - Closed Cases 9B - RECON Research Required 9C - Clerical RECON Information Request - closure (TY 2022 and subsequent) 9E - RECON Research/Referral within AUR - suspense 9F - RECON Full Abatement of the AUR assessment - closure 9I - RECON Information Request/ MISC - closure 9L - RECON Payer Letter - suspense 9N - RECON No change to AUR assessment - closure 9P - RECON Partial adjustment - closure 9R - RECON Referral non-AUR issue - closure

# AUR Process Codes

Exhibit 4.19.3-4 AUR Process Codes U/R Case Selected 01 - ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ 02 - Reserved 03 - AUR selected case 04 - Reserved 06 - AUR Employee Cases 07 - AUR Soft Notice selected 08 - Reserved 09 - Establish IDRS Control Base - CP 2000 Interest Pending Pre-Notice Transfer/Referral/Closures 10 - DUP TIN closure 11 - Field Audit 12 - Office Audit 13 - Campus Examination 14 - ≡ ≡ ≡ ≡ ≡ ≡ 15 - Military Action/Disaster Closures 16 - HQ Identified Program Problem - Closure 17 - IDTVA Closure 18 - KITA/HSTG/KIA Closures 19 - AUR Soft Notice issued Pre-Notice Closures 20 - Adjustment for W/H and/or excess SSTAX discrepancies only 21 - Discrepancy accounted for 22 - Balance due/Refund below tolerance 23 - ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ 24 - Payer Agent 25 - ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ 26 - IDTVA Expired 27 - ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ 28 - Other Closure 29 - Return can't be secured 31 - Auto Notice Screen Out (Case systemically closed through auto notice programming). CP 2501 Notice - Transfer/Referral/Closure 30 - CP 2501 (establishes IDRS Control Base) 34 - CP 2000 not mailed after a CP 2501 (PC 57) 35 - Case closed to Field Audit (Acknowledgement letter, CP 2006) 36 - Case closed to Office Audit (Acknowledgement letter, CP 2006) 37 - Agreed CP 2501 38 - Case Closed to Campus Exam (Acknowledgement letter, CP 2006) 44 - ≡ ≡ ≡ ≡ ≡ 46 - ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ 47 - No change (closure letter CP 2005) 48 - HQ Identified Program Problem (closure letter CP 2005) 49 - AUR Soft Notice not issued 51 - ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ 52 - No change (no closure letter) 53 - Amended return closed case (no closure letter) 54 - Notice CP 2501 not mailed CP 2000 Notice - Transfer/Referral/Closure 55 - CP 2000 (establish IDRS Control Base) 56 - Reserved 57 - CP 2000 after CP 2501 58 - CP 2000 Notice not mailed 59 - Recomputation (updates IDRS Control Base) 60 - Amend/ Recomp not mailed (PC 59 and amended PCs 55, 57 and 59) 61 - Reserved 63 - Case closed to Office Audit (Acknowledgement letter, CP 2006) 64 - Case closed to Campus Exam (Acknowledgement letter, CP 2006) 65 - ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ (no acknowledgement letter) 66 - Disagreed - Appeals Request (no acknowledgement letter) 67 - Fully Agreed (no closure letter) 68 - Adjustment to Prepayment Credits Only closures (no closure letter), Partial Adjustments 69 - Taxpayers Agreed on Different Dates - Account Split 70 - No change to original tax liability (closure letter, CP 2005) 71 - No change to original tax liability closure (and HQ Identified Program Problem) (no closure letter) 72 - ≡ ≡ ≡ 73 - ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ (closure letter, CP 2005) 74 - Other closure (closure letter, CP 2005) Statutory Notice - Transfer/Referral/Closure 39 - One taxpayer Agreed at a Later Date - Account Split 62 - Non-petitioning Spouse Agreed 75 - Statutory Notice - Updates IDRS Control Base 76 - ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ (no acknowledgement letter) 77 - Statutory Notice - STN90 (computation change - not generated, input via IDRS CC STN90) 78 - Statutory Notice Rescinded 79 - Statutory Notice not mailed 80 - Transfer Docketed Cases to Appeals (no acknowledgement) 81 - Recomp not mailed after Statutory Notice (PC 95) 82 - Non-petitioning Spouse Default 83 - Statutory case closed to Office Audit (Acknowledgement letter, CP 2006) 84 - ≡ ≡ ≡ ≡ ≡ 85 - Statutory case closed to Campus Exam (Acknowledgement letter, CP 2006) 86 - Disagreed Statutory Case - Appeals Request 87 - Fully Agreed (no closure letter) 88 - Adjustment to Prepayment Credits Only closures (no closure letter) and Employee Case Partially Agreed 89 - One taxpayer Agreed - Case Defaulted - Account Split 90 - Assessed by default 91 - No change to original tax liability (closure letter, CP 2005) 92 - No change to original tax liability (no closure letter) 93 - ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡≡ ≡ 94 - Default assessments based on revision(s) to Statutory Notice 95 - Statutory Recomputation Notice 96 - Other Closure (closes AUR system control, used for manual monitoring of active Bankruptcy cases or referral of non-bankruptcy cases to another area, etc.) Miscellaneous 97 - Response received - Correspondence sent for additional information 98 - Bankruptcy Suspense (also applicable for Employee cases) 99 - Reserved

# Batch Types

Exhibit 4.19.3-5 Batch Types BATCH TYPES 01-26 - SCREENING ASSOCIATION BATCH TYPES 27 - AUTO GENERATED NOTICE (AGN) BATCH TYPE 29 - PRIORITY SCREENING BATCH TYPE 30 - MISSING RETURN SUSPENSE BATCH TYPE 31 - COMPLETE SCREENING CASES BATCH TYPE 33 - SCREENING REFERRAL/RESEARCH COMPLETE BATCH TYPE 34 - SCREENING RESEARCH SUSPENSE BATCH TYPE 35 - SCREENING MISCELLANEOUS REFERRALS BATCH TYPE 36 - SCREENING UNIT SUSPENSE BATCH TYPE 37 - RELEASED UNIT SUSPENSE BATCH TYPE 38 - REMAIL CP 2000 /RECOMP BATCH TYPE 39 - REJECTS BATCH TYPE 40 - CP 2501 SUSPENSE BATCH TYPE 41 - CP 2501 IDENTITY THEFT RESPONSE BATCH TYPE 42 - CP 2501 UNIT RESEARCH SUSPENSE BATCH TYPE 43 - CP 2501 MISCELLANEOUS REFERRAL BATCH TYPE 44 - CP 2501 MIXED DATE RESPONSE BATCH TYPE 45 - CP 2501 UNIT SUSPENSE BATCH TYPE 46 - CP 2501 RESPONSE RELEASE BATCH TYPE 49 - AGED CP 2501/ CP 2000 PREPARATION BATCH TYPE 50 - CP 2000 SUSPENSE BATCH TYPE 505XX - CP 2000 SUSPENSE FOR AUTO-GENERATED NOTICE CASES BATCH TYPE 51 - CP 2000/RECOMP AGREED RESPONSE BATCH TYPE 52 - CP 2000/RECOMP DISAGREED RESPONSE BATCH TYPE 53 - CP 2000/RECOMP PRIORITY RESPONSE BATCH TYPE 55 - RECOMPUTED CP 2000 SUSPENSE BATCH TYPE 58 - LATE CP 2000 RESPONSES/STATUTORY NOTICE GENERATED BATCH TYPE 59 - AGED CP 2000 STATUTORY NOTICE PREPARATION BATCH TYPE 60 - CP 2000 LETTER SUSPENSE BATCH TYPE 61 - MANUAL INTEREST REJECTS BATCH TYPE 62 - CP 2000 UNIT RESEARCH SUSPENSE BATCH TYPE 63 - CP 2000 MISCELLANEOUS REFERRAL BATCH TYPE 65 - CP 2000 UNIT SUSPENSE BATCH TYPE 66 - CP 2000 RESPONSE RELEASE BATCH TYPE 67 - PARTIAL AGREEDS BATCH TYPE 68 - MANUAL STAT NOTICE PREP BATCH TYPE 70 - STATUTORY NOTICE SUSPENSE BATCH TYPE 71 - STATUTORY AGREED RESPONSE BATCH TYPE 72 - STATUTORY IDENTITY THEFT RESPONSE BATCH TYPE 73 - STATUTORY REFERRAL MISCELLANEOUS REFERRAL BATCH TYPE 74 - STATUTORY RESPONSE BATCH TYPE 75 - STATUTORY UNIT SUSPENSE BATCH TYPE 77 - STATUTORY UNIT RESEARCH SUSPENSE BATCH TYPE 79 - STATUTORY DEFAULTS BATCH TYPE 81- RECONSIDERATION - These batches are used for controlling and tracking RECON cases on the AUR system. BATCH TYPE 82 - RECONSIDERATION UNIT SUSPENSE BATCH TYPE 83 - EMPLOYEE RECONSIDERATION - These batches are used for controlling and tracking employee RECON cases on the AUR system. BATCH TYPE 84 - CASES WITH NEW ACTIONS - These are cases the system has identified with new actions since batches or cases were released by the tax examining units. The batch is divided as follows: Batch Segments Definitions 84001-84299 Screening Cases with New Actions 84300-84499 CP 2501 Cases with New Actions 84500-84799 CP 2000 Cases with New Actions 84800-84999 Statutory Notice Cases with New Actions These batches are available for assignment to the tax examining units upon request BATCH TYPE 85 - REMAIL STATUTORY NOTICES BATCH TYPE 86 - STATUTORY RESPONSE RELEASE BATCH TYPE 87 - PARTIAL AGREED STATS BATCH TYPE 88 - RECONSIDERATION CASES WITH NO ASSESSMENTS - These batches are used to control, track and count recon receipts which don't require an assessment. The batch segments correspond to Reconsideration issue codes. When batch status is updated to "RB" , cases are updated to IPC 9I and moved to BT 96002. Batch Segments Recon Issue Code Definition 88001 - 88299 3 Copy of CP 2000 88300 - 88499 6 Duplicate response 88500 - 88699 20 Refile signature document 88700 - 88999 27 Subsequent payment BATCH TYPE 89001 - BANKRUPTCY SUSPENSE BATCH TYPE 89002 - Reserved BATCH TYPE 89003 - IDENTITY THEFT SUSPENSE BATCH BATCH TYPE 89004 - STATUTORY SUSPENSE ONLY ONE TAXPAYER SIGNATURE ON CONSENT BATCH TYPE 89005 - CP 2000 SUSPENSE ONLY ONE TAXPAYER SIGNATURE ON CONSENT BATCH TYPE 89006 - STATUTORY SUSPENSE ONLY ONE TAXPAYER FILED PETITION BATCH TYPE 90 - EMPLOYEE SCREENING BATCH TYPE 91 - EMPLOYEE SUSPENSE BATCH TYPE 92 - EMPLOYEE UNIT SUSPENSE BATCH TYPE 93 - DECLARED DISASTER - Cases identified, usually by the system, as meeting disaster criteria are built into BT 93. These cases remain in BT 93 until the system expiration date is met and the next action can be taken on the case. Cases meeting disaster criteria are built into BT 93 as follows: Batch Segments Definitions 93001-299 Screening 93300-399 CP 2501 93400-699 CP 2000 93700-799 CP 2000 Statutory Prep 93800-899 Stats 93900-999 Default Holds BATCH TYPE 94 - FRAUD SUSPENSE BATCH TYPE 95 - REVIEW - There are five types of review batches: Batch Segments Definitions 95001-199 Reserved 95200-399 CP 2000 Notice Review 95400-499 Reserved 95500-599 CP 2000 Sort Code/Override Review 95600-799 Pre-Statutory Notice Review 95800-999 Statutory Recomp Review BATCH TYPE 96000 - CLOSURE SUSPENSE BATCH TYPE 96002 - CLOSURE SUSPENSE AFTER RECONSIDERATION BATCH TYPE 97 - RESERVED BATCH TYPE 98 - LOST CASE SUSPENSE BATCH TYPE 99 - UNASSOCIATED RESPONSE SUSPENSE

# Category of Distribution (COD) Chart - Form 1099-R

Exhibit 4.19.3-6 Category of Distribution (COD) Chart - Form 1099-R 1 - Early (Premature) Distribution, no known exception 2 - *Early (Premature) Distribution, exception applies 3 - *Disability 4 - *Death 5 - Prohibited Transaction (such as borrowing or using as loan security) 6 - Section 1035 Exchange (tax-free) 7 - Normal Distribution 8 - Excess Contributions Refunded plus Earnings (taxable) 9 - Cost of life insurance (taxable) A - May be eligible for 10-year tax option (Form 4972) B - Designated Roth account distribution (not a qualified distribution) C - Reportable Death benefits under section 6050Y D - Annuity payments from nonqualified annuities that may be subject to tax under section 1411 E - * Distributions under Employee Plans Compliance Resolutions System (EPCRS) F - Charitable gift annuity G - *Direct rollover to a qualified plan, tax sheltered annuity, a governmental 457(b) plan or IRA. H - *Direct rollover of a designated Roth account distribution to a Roth IRA. J - Early Distribution from a Roth IRA - no known exception K - Distribution of IRA assets not having a readily available FMV. L - Loans treated as distributions M - Qualified plan loan offset distribution N - Recharacterized IRA contribution made for current year P - Excess Contributions plus earnings/excess deferrals taxable in prior year Q - *Roth IRA qualified distribution R - Recharacterized IRA contribution (made for prior year and recharacterized for current year) S - Early distribution from a SIMPLE IRA in first two years - no known exception T - Roth IRA distribution - exception applies U - Dividend distribution from ESOP under sec 404(k) - Distribution isn't eligible for rollover W - Charges or payments for purchasing qualified long-term care insurance contracts under combined arrangements Note: *designates Form 5329 not required The following are reserved for Railroad Retirement Board's use: Code Definition V- RRB Vested Dual Benefit (Windfall) X - RRB Tier 1 Y - RRB Tier 2 Z - RRB Supplemental

# CP PARAGRAPHS

Exhibit 4.19.3-7 CP PARAGRAPHS Some numbered paragraphs listed below don't appear within the IRM. These paragraphs are system generated within the body or specific area of the notice sent. Note: The verbiage in the following paragraphs matches what is in the data base for the most current AUR year. The verbiage for previous years may vary slightly and will reflect the impacted AUR year. 2 - Wages reported incorrectly The wages reported on your tax return were taken from the wrong box on Form W-2, Wage and Tax Statement. 3 - Capital gains distributions The amount of capital gain distributions shown on your Schedule D, Capital Gains and Losses, wasn't included on Form 1040, U.S. Individual Income Tax Return. 4 - Qualified dividends Based on the information your financial institution reported to us, we used the qualified dividends shown in box 1b, of Form 1099-DIV, Dividends and Distributions to recompute your tax. 5 - Real estate transaction We show you sold or transferred real estate during the tax year in question. However, you didn't show this transaction on your tax return. You must report any gain from real estate transactions which are more than any applicable exclusion amount. Complete the appropriate forms or schedules and return them to us along with: Proof of your cost or adjusted basis in the property The date you acquired the asset for each Form 1099-S, Proceeds From Real Estate Transactions, shown on this notice A statement as to how you used each property, e.g., personal residence, second home, rental, investment or business use. You can find the forms or schedules and more information in: Publication 523, Selling Your Home Publication 544, Sales and Other Dispositions of Assets 6 - Withholding credit not given due to joint ownership We can't allow your withholding credits on jointly owned income without more information about how they were distributed. Send the names and taxpayer identification numbers of the other joint owners. Provide a list of the income and tax withheld for each joint owner separately. 7 - Unearned income reported as wages Our records show you reported unemployment compensation or non-disability retirement distribution as wages. These types of income aren't considered earned income and can't be included in the calculation of your Earned Income Credit. 8 - AGI decrease - Early withdrawal of interest savings penalty You were charged a penalty when you withdrew your savings early. You can claim this as an adjustment on your return to reduce your adjusted gross income (AGI). 9 - Your standard deduction is now larger than your itemized deductions The standard deduction amount is now larger than your total itemized deductions. We used the standard deduction to recalculate the proposed taxable income amount in this notice. 10 - Schedule A medical and dental expenses percentage limitation Medical and dental expense deductions are reduced by 7.5 percent of your adjusted gross income (AGI). Since we recalculated your AGI, we also recalculated your medical and dental expense deduction. 11 - 10 Percent additional tax on premature distributions from a qualified retirement plan Early distributions from a qualified retirement plan, are subject to a 10 percent additional tax. A distribution is considered early when paid before you reached age 59 1/2. Exceptions may apply as shown in the instructions for Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts. If the distributions shown on this notice qualify for an exception, send us a completed Form 5329. Refer to Publication 17, Your Federal Income Tax (For Individuals), Publication 590-B, Distributions from Individual Retirement Arrangements (IRA), or Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) for more information. If the distributions shown on this notice are exempt from the additional tax, submit Form 5329. 12 - Employment status determination We show you were paid as an independent contractor who is subject to self-employment tax. If you disagree, complete and return Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, along with the response form of this notice. Write "AUR" along the top of the Form SS-8 to help us expedite processing. 13 - Credit for the Elderly or Disabled Your credit from Schedule R, Credit for the Elderly or Disabled, can't be more than your tax. The credit is based on earned income and adjusted gross income (AGI). Since we adjusted your income and tax, we also adjusted the amount of the credit you can claim. 14 - Gambling losses on Schedule C Gambling winnings, related expenses, or gambling losses can only be reported on Form 1040, Schedule C, Profit or Loss from Business, if you make a living gambling full time. We disallowed the expenses or gambling losses claimed on Schedule C and adjusted your self-employment tax. The actual cost of the wagers can be claimed as gambling losses along with other allowable expenses you incur in connection with gambling on Schedule A. However, you can't deduct more that you reported as gambling income. 15 - Penalty for not reporting tip income to your employer You didn't report tips to your employer and as a result are subject to a penalty, which is 50 percent of the Social Security and Medicare tax you owe on the tip income. The penalty applies when you received tips of $20 or more in a single month while working for any one employer. If you disagree with our determination, write and provide the reason. We'll review your explanation to determine if there's reasonable cause to remove the penalty. (Internal Revenue Code Section 6652(b)). 16 - Reduction to income because of your state or local income tax refund Since you didn't claim an itemized deduction for state and local taxes on your prior year federal tax return, you don't have to report your state or local tax refund as income on this federal tax return. 17 - Self-employment tax on self-employment (SE) income We computed the self-employment (SE) tax on the net SE income from your reported and underreported SE income. SE income generally includes nonemployee compensation, merchant card payments, third-party network payments, and other income from part-time or full-time work. Net earnings from SE income are subject to SE tax. See Form 1040, Schedule SE, Self-Employment Tax, for more information. 18 - Self-Employment Tax decrease Based on the amount of Social Security tax paid on your wage income, we decreased the amount of self-employment tax owed on your self-employment income. 19 - Earned Income Credit Changes to your adjusted gross income (AGI) will impact your allowable Earned Income Credit. The Earned Income Credit is based on your earned income and AGI. See instructions for Form 1040 to locate the specific amount for your filing status. 20 - Potential adjustment of non-refundable credits You included unused non-refundable credits on your tax return. Review your return to determine if adjustments are needed based on our proposal. If you applied the unused credits to another tax year, you must file a Form 1040-X, Amended U.S. Individual Income Tax Return, for that year before you can claim them on the return in question. 21 - Schedule A casualty and theft loss deduction percentage limitation You can deduct personal casualty or theft losses only when they are attributable to a federally declared disaster. Each separate casualty or theft loss must first be reduced by $100. The total amount of all remaining losses is then reduced by 10 percent of your adjusted gross income (AGI). Since we recalculated your AGI, we recalculated your casualty and theft loss deduction claimed on your Schedule A. 22 - Student loan interest deduction not substantiated We didn't receive a Form 1098-E, Student Loan Interest Statement for the amount of student loan interest deduction you claimed on your return. Send Form 1098-E showing the amount you claimed. 23 - Student loan interest deduction decreased We decreased the student loan interest deduction claimed on your tax return because your modified adjusted gross income (MAGI) is between the income limitations for the impacted tax year. See instructions for Form 1040 for the specific amounts for your filing status. There is no allowable deduction when: Your MAGI equals or exceeds the limitations listed in the Form 1040 instructions for your filing status. Your filing status is married filing separately. You or your spouse if filing jointly and can be claimed as a dependent on someone else's tax return. 24 - Capital gains loss ($3,000/$1,500) limitation The capital gains (for example, from a sale of stock) shown in this notice are treated as ordinary income because we need additional information regarding gains or losses, or both. To respond to this notice, send a complete amended Schedule D, Capital Gains and Losses. If you have unused capital losses on your Schedule D and you want to apply these losses to capital gains, you must acknowledge you'll correct the affected tax years. Send a completed Form 1040-X, Amended U.S. Individual Income Tax Return, to correct other affected tax returns you've already filed. If you haven't filed the tax return for the affected year, return to us a signed statement informing us you'll correct your records. If your capital losses exceed capital gains, the excess losses are only allowed to the extent of the lesser of $3,000 ($1,500 if married filing separately), or the excess loss amount. 25 - Sick pay Sick pay is taxable if your employer directly pays it from a benefit fund or from an employer-paid insurance plan. However, if you paid the premiums on an accident or health insurance policy, the benefits you received under the policy aren't taxable. Send us documentation to verify you paid the premiums on your sick pay insurance. 26 - Disallowed Form 5329 exception The exception listed on Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, doesn't apply to the type of distribution received. Therefore, we disallowed the exception claimed. 27 - Overclaimed withholding We show you're entitled to a lesser amount of income tax withholding or additional Medicare tax withholding than what you claimed on your tax return. Send us a copy of Forms W-2, Wage and Tax Statement, Forms 1099, or other withholding documentation to verify the withholding claimed on your tax return. 28 - Underclaimed withholding You may be entitled to a larger deduction for income tax withholding or additional Medicare tax withholding than you claimed on your tax return. Compare the payer information provided in this notice with your records. If the information is incorrect, send us a statement to explain the differences. 29 - Self-employment tax - optional method Due to the proposed changes on this notice, you no longer qualify for the optional method. See Form 1040, Schedule C instructions for more information. 30 - Contributions to Roth or Education IRA You can't deduct contributions to a Roth IRA or Coverdell Savings Account as an adjustment to income. You can only deduct contributions to a traditional IRA. For more information, see the instructions for Form 1040 and 1040-SR, U.S. Individual Income Tax Return, or Publication 17, Your Federal Income Tax (For Individuals), chapter 17. 31 - Payments from qualified education programs Generally, earnings from Qualified Tuition Programs (QTPs) or Coverdell Education Savings Accounts (CESAs), are tax-exempt if you: Use them to pay expenses for qualified education. Transfer them between trustees. Rolled over to another qualified education program within 60 days. If the distributions weren't used for those purposes listed above, you must include them in your income. Most taxable earnings are also subject to an additional 10 percent tax. You can find more information in Publication 970, Tax Benefits for Education. If you believe all or part of your QTP or CESA earnings qualify for tax-exemption, return to us a statement showing the qualified expenses, rollover documentation, or the computation you used to determine the taxable portion. 32 - Joint liability for tax If you filed a joint return, you and your spouse (or former spouse) are jointly and separately liable for the full amount of the deficiency. We'll send your spouse (or former spouse) a copy of the proposed adjustment if you provide their address. 33 - Schedule A general sales tax deduction Based on our proposed changes to your income, you may be entitled to claim additional state and local sales taxes. Return to us an amended Schedule A, Itemized Deductions, showing the amount of the additional deduction you're entitled to claim. 34 - Borrowing from pension/annuity plan You may need to treat money you borrowed from an employer's qualified pension or annuity plan as a distribution for tax purposes. If the borrowed amount was reported to you on Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., with a distribution code L, the deemed distribution is taxable. See Publication 575, Pension and Annuity Income, for more information. If you disagree with our proposed adjustment, return to us a detailed statement explaining the reason you disagree and the amount you believe is taxable, even if it's zero. 35 - Filing and/or Paying Late - IRC 6651 We assess a 5 percent monthly penalty for filing your return late for each month or part of a month the return is late, for up to 5 months. When a penalty for paying late applies for the same month, the amount of the penalty for filing late for that month is reduced by the amount of the penalty for paying late for that month. The penalty for paying late is 1/2 percent for each month or part of a month. We base the monthly penalty for filing late on the tax required to be shown on the tax return that you didn't pay by the original return due date, without regard to extensions. We base the monthly penalty for paying late on the net unpaid tax at the beginning of each penalty month following the payment due date for that tax. When an income tax return is more than 60 days late, the minimum penalty is $510.00 or 100 percent of the tax required to be shown on the return that you didn't pay on time, whichever is less. (Internal Revenue Code Section 6651) 36 - Additional Child Tax Credit disallowed Our proposed changes to your adjusted gross income result in an increase to the amount of Child Tax Credit for your filing status. Therefore, you're no longer eligible for the Additional Child Tax Credit. 37 - Additional Child Tax Credit adjusted - Schedule 8812 Our proposed change to your adjusted gross income resulted in an adjustment to the allowable amount of Additional Child Tax Credit. 38 - Refundable American Opportunity Credit We decreased or eliminated the American Opportunity Credit you claimed on your tax return because it phased out due to the proposed modified adjusted gross income (MAGI). See Form 1040 instructions for phase out amounts. 39 - Self-employment tax on other income We figured self-employment (SE) tax on other income you reported on Schedule 1, Additional Income and Adjustments to Income. SE income generally includes nonemployee compensation, merchant card payments, third-party network payments, and other income from part-time or full-time work. If you believe the amount on Schedule 1, line 8z isn't subject to SE tax, send us a signed statement explaining why and include supporting documentation. 40 - Your mortgage interest deduction needs verification The mortgage interest deduction and points claimed on your return were more than the amount your lenders reported to us on Form 1098, Mortgage Interest Statement. Send us copies of the documents used to support the amounts claimed on Form 1040, U.S. Individual Income Tax Return: Schedule A, line 8a Schedule C, line 16a Schedule E, line 12 Schedule F, line 21a Form 4835, line 19a or Form 8829, line 10 41 - Substitute payments in lieu of dividends and interest You can't report substitute dividend or interest payments your broker receives on your behalf as dividends or interest (including tax-exempt interest) on your tax return. You must report these payments as ordinary income on your tax return. 42 - Gambling losses You must include gambling winnings as income on your tax return. You can claim gambling losses on Schedule A, Itemized Deductions. The amount of losses you claim can't be more than the amount of gambling income you reported on your tax return. If you already filed Schedule A and your total itemized deductions exceed the standard deduction amount, we included your gambling losses on Schedule A to reduce your taxable income. If you didn't file a Schedule A and total itemized deductions now exceed your standard deduction, send a completed Schedule A to claim those deductions. 43 - Failure-to-pay penalty - Internal Revenue Code 6651 (a) (2) When you fail to pay the amount of tax shown or required to be shown on your return, we add to the tax a penalty at a rate of 0.5 percent per month on the unpaid balance for as long as it remains unpaid, up to a maximum of 25 percent of the amount due. This addition to tax applies even if you filed the return on time. * The due date for paying increases in tax is within 21 days of the date of our notice demanding payment (10 business days if the amount in the notice is $100,000 or more). If we issue a Notice of Intent to Levy and you don't pay the balance due within 10 days of the date of the notice, the penalty for paying late increases to 1 percent per month. For individuals who filed on time, the penalty decreases to 1/4 percent per month while an approved installment agreement with the IRS is in effect for payment of the tax. After your account has been assessed, you may receive an additional bill for the Failure to Pay penalty. (Internal Revenue Code Section 6651(a)(2)). 44 - Stocks or bonds To recalculate your tax, we used the capital gains or losses reported on your original Form 1040, Schedule D, Capital Gains and Losses, along with the new information you provided. 45 - Income unrelated to Identity Theft Claim We reviewed the identity theft claim present on your account. The income items shown in this notice don't appear to be related to your identity theft claim. 46 - Double exclusion of line of duty injury income We show the amount of income related to your injury in the line of duty reported on your Form W-2, Wage and Tax Statement, has already been excluded from your gross wages. You can't exclude it again on your return. 47 - Amended information from your payers This notice reflects the new or amended information we received from your payers or employers. 48 - Credit for child and dependent care expenses We base the credit for child and dependent care expenses on your expenses, your earned income, adjusted gross income, and any dependent care benefits received from your employer. The credit can't be more than your tax. Because we proposed changes to your income and tax, we also changed your Form 2441, Child and Dependent Care Expenses. 49 - Withholding from retirement distribution is taxable Your tax return showed you rolled over your entire retirement distribution. However, the payer withheld an amount for taxes making the amount you received smaller than what you reported on your return. Unless you replaced the withheld amount with funds from another source, the amount the payer withheld is considered taxable. 50 - Distributions from a non-qualified plan or non-governmental 457(b) plans If you received a pension or annuity from a non-qualified deferred compensation plan or a non-governmental section 457(b) plan and it was reported in box 1 of Form W-2, do not include this amount on Form 1040, line 1a. This amount is reported on Schedule 1, line 8t. 51 - Early distributions taxable as income Although the 10 percent tax on early distributions was reported on Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts, the distribution must also be reported as income on page 1 of your tax return. 52 - Ordinary dividends don't qualify for capital gains treatment The dividend income you reported on Form 1040, U.S. Individual Income Tax, line 7, or Form 1040, Schedule D, Capital Gains and Losses was reported to us as ordinary dividends. We determined they don't qualify for capital gains treatment, so we changed your tax return to treat them as ordinary income. 53 - IRA deduction exceeds age limitation or earned income We adjusted your IRA deduction because you were under the age of 50 at the end of the year and the deduction amount claimed exceeded the tolerance amount. Or you were 50 or older at the end of the year and the deduction amount you claimed exceeded the tolerance amount. If you or your spouse were covered by a retirement plan through your employer, the deduction could be further limited. We only allow an IRA deduction if you (or your spouse if married filing jointly) have earned income. We limit the deduction to the lesser amount of either your IRA contribution or the amount of your earned income. For more information, see Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs). 54 - Form 8606 and Fair Market Value for IRAs The Fair Market Value (FMV) of all your Traditional, SEP and SIMPLE IRAs must be included on Form 8606, Nondeductible IRAs. Your IRA trustees have reported FMV amounts on Form 5498, IRA Contribution Information, not included on the Form 8606. Please send us a revised Form 8606 if applicable. Please refer to Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs), for additional guidance. 55 - Archer or Medicare MSA distributions/Long-Term Care benefits - Form 8853 We need more information to determine the taxable amount of the Archer Medical Saving Account, Medicare Advantage MSA distribution, or Long-Term Care benefits shown on this notice. Return a completed Form 8853, Archer MSAs and Long-Term Care Insurance Contracts. 56 - Credit For qualified retirement savings contributions Form 8880, Credit for Qualified Retirement Savings Contributions, has been adjusted due to underreported income and income limitations based on filing status. Please refer to Form 1040 instructions, for further information. 57 - Interest or dividend income You didn't include the amounts of interest or dividend income reported on your Schedule B as income on Form 1040, U.S. Individual Income Tax Return. We used the unreported interest or dividend reported to us by the payers shown in this notice to refigure the proposed taxable income on this notice. 58 - Education credits Based on proposed changes to your income and tax, we're also proposing an adjustment to the amount of education credits (American Opportunity and Lifetime Learning Credits) you can claim on your tax return. 59 - Recompute your Form 8615 If the proposed changes on this notice are correct, recompute Form 8615, Tax for Certain Children Who Have Unearned Income, using the proposed unreported investment income shown on this notice and return the form with your response. We'll revise our notice accordingly. 60- Form W-2 or 1099 not received The income reported on your return doesn't match the documents we received from your employer or payers. The law requires you to accurately report all income you receive. If your employers don't send proper information documents or forms (for example, Form W-2, Wage and Tax Statement, Form 1099), you must estimate your income based on your paycheck stubs, bank statements, or other records and include your estimate on your tax return. 61 - Information mailed separately We mailed additional information (forms, schedules, worksheets, etc.) concerning this notice in a separate envelope. 62 - Premium tax credit We based the change to the premium tax credit on the proposed changes to your modified adjusted gross income. 63 - Special 10-year averaging method Form 4972 Your Form 1099-R, Distributions from Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., shows you received a periodic IRA or SEP distribution. These distributions don't qualify for the special 10-year averaging computation on Form 4972, Tax on Lump-Sum Distributions. 64 - Unlocated interest, dividends, and/or capital gain amounts Your tax return doesn't include a breakdown to include payer names for interest, dividends, or capital gains distributions. We can't match the amounts payers reported to us, which we've included in this notice. We allowed credit for the total amount included on your tax return. If this is incorrect, send us a list of specific amounts of interest, dividends, or capital gain distributions you received, along with the name of each payer and the type of income. 65 - Qualified dividends not included in ordinary dividends You must include qualified dividends as ordinary dividends on Form 1040 or 1040-SR. We show you deducted qualified dividends from ordinary dividends, so we're disallowing it and adding it back into your income. 66 - Dependent Care benefits/recomputed Child Care Credit You received dependent care benefits (shown on your Form W-2, Wage and Tax Statement), but didn't claim them correctly on Form 2441, Child and Dependent Care Expenses. You must use dependent care benefits to compute your allowable Child Care Credit and the amount of taxable dependent care benefits. We recalculated your Form 2441 using the information in Part II of Form 2441 and the dependent care benefits information we received from your employers. This notice shows the changes proposed to your taxable dependent care benefits or allowable Child Care Credit. If you file for this credit on future tax returns, be sure to complete Parts I, II, and III of Form 2441. 67 - Unemployment compensation We're proposing to increase your income for unemployment compensation reported to us by the payer shown in this notice. Unemployment compensation benefits are fully taxable. Payers report unemployment compensation on Form 1099-G, Certain Government Payments. If you repaid any of these benefits, provide us with the amount and the dates you repaid the benefits and we'll reconsider our proposal to adjust your income. 68 - Social Security and Medicare Tax on unreported tip income Since we increased your wages to include unreported tip income, we also increased your Social Security and Medicare Tax. 69 - State and local income tax refund Because you claimed an itemized deduction for state and local taxes on your prior year federal tax return, you must report any refund or credit of the state or local taxes as income on your federal tax return for the year in which you received the refund or credit. 70 - Your individual retirement account (IRA) contributions aren't verified Your trustee didn't verify the amount you claimed on your tax return as contributions to your individual retirement account (IRA). Contributions made after December 31st for the previous tax year aren't reported to the IRS until the end of that calendar year. Send us a copy of your Forms 5498, IRA Contribution Information, or similar documents to support your IRA deduction. If you or your spouse were covered by a pension plan, we may reduce or eliminate your IRA deduction if your modified adjusted gross income is more than the amount allowed for your filing status. For more information, see Publication 590-A, Contributions to Individual Retirement Arrangements (IRAs). 71 - Social Security Lump Sum Election method We show a discrepancy between the amount reported by the Social Security Administration and the amount you reported on your tax return. Send us a copy of the worksheets showing the method used to calculate the Lump Sum Election (LSE). More information is available in Publication 17, Your Federal Income Tax (For Individuals), and Pub 915, Social Security and Equivalent Railroad Retirement Benefits. 72 - Cancellation of Debt - Form 1099-C If a federal government agency, financial institution, credit union, or other lender cancels or forgives a debt you owe, you may receive a Form 1099-C, Cancellation of Debt. In most cases, you must include the canceled or forgiven amount in your income. There are several situations you don't have to include the canceled amount as income but these exclusions aren't automatic. You must claim the benefit of any exclusion by filing Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment). You may exclude debt cancellation up to the insolvent amount. To do this, provide a statement of your total assets and liabilities immediately before the discharge. You're insolvent if your total liabilities exceeded your total assets. For more information and a worksheet to help calculate insolvency, see Publication 4681, Canceled Debts, Foreclosures, Repossessions and Abandonments (for Individuals). You must include any canceled debt exceeding the amount of your insolvency as income on your tax return, unless another exclusion applies. 74 - Joint ownership information needed for early withdrawal of savings penalty You withdrew funds from a certificate of deposit or other deferred interest account before maturity and received a penalty from the payer. You can deduct this penalty from your income since it's interest you didn't receive. For us to determine the amount of deduction you're entitled to, provide the names and Social Security numbers of the other joint owners on this account and a detail of the income and early withdrawal penalty each joint owner reported. 75 - Early withdrawal of savings penalty deduction Based on information from your payers, you may have over deducted an amount for the early withdrawal penalty in the Adjustments to Income section of your tax return. To verify the amount, send us documentation for the early withdrawal penalty claimed. 76 - Alternative minimum tax Based on changes to your taxable income, we recalculated your alternative minimum tax. If your calculations differ from ours, send us a copy of your Form 6251, Alternative Minimum Tax-Individuals. 77 - Estimated tax penalty When you don't pay enough taxes for the year with your quarterly estimated tax payments and you don't have enough withholding, we charge a penalty for not properly estimating your tax. For information about estimated tax requirements, download Instructions for Form 2210 or Tax Withholding and Estimated Tax (Publication 505) from IRS.gov or call us for a copy (Internal Revenue Code Section 6654). 79 - Interest/dividend math error You made a calculation error on Schedule B, Interest and Ordinary Dividends. We used the information you reported to propose a change to your return. If our calculations aren't correct, send us a revised Schedule B. 80 - Taxable Health Savings Account distributions not reported You didn't carry forward the taxable portion of the health savings account distribution payment reported on Form 8889, Health Savings Accounts, to Schedule 1, Additional Income and Adjustments to Income. This notice shows the proposed changes to your return after we included it in your income. 81 - Rollover IRA contributions You incorrectly deducted a rollover contribution, which verified with the Form 5498, IRA Contribution Information, provided by your payers. If the information we received is incorrect, send us a copy of your IRA statement or a similar document so we can correct our records. 82 - Health Savings Account distributions - Form 8889 You can exclude health savings account (HSA) distributions or Health Savings Account Funding distributions (HFD) used exclusively to pay qualified medical expenses. However, in your gross income you must include any part of a distribution not used to pay qualified medical expenses. That amount is subject to an additional 20 percent tax unless an exception applies. We need more information to determine the taxable portion of the distribution shown on this notice. Return to us a complete Form 8889, Health Savings Accounts (HSAs). 83 - Nondeductible IRAs - Form 8606 You didn't report the full taxable amount of your retirement distributions as shown on Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., on your tax return. If the Form 1099-R you received shows a different taxable amount, return a copy of your Form 1099-R with your response. If the full amount isn't taxable, complete the appropriate part of Form 8606, Nondeductible IRAs and return it with your response. For more information, see Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs). 84 - Foreign earned income tax If the proposed changes to your return are correct, you may need to recalculate your foreign earned income exclusion. If you have any itemized deductions or exclusions you couldn't claim, use the worksheet in the Form 1040, U.S. Individual Income Tax Return, instructions to recalculate your foreign earned income exclusion and provide us with a copy. 85 - Backup Withholding on interest and dividends This notice includes interest or dividends you didn't report on your tax return. If you agree our proposal is correct but you don't pay the tax increase, we may notify payers to deduct and withhold 24 percent of any payments they make to you in the future. This is called backup withholding. 86 - Accuracy-related penalty due to negligence We charge an accuracy-related penalty if there's any underpayment of tax on your return due to negligence or disregard of rules or regulation. This penalty is 20 percent of the portion of the underpayment of tax attributable to negligence or disregard of rules or regulation. For more information, see IRS.gov/payments/accuracy related penalty. If you think we shouldn't charge this penalty, explain the reason the penalty doesn't apply in a statement and send any supporting documents. We'll review your request and determine if there's reasonable cause to eliminate the penalty. 87 - Payments you made We received your payment and applied it to your account. Payments are first applied to your tax, then to any penalties, then to interest owed. 88 - Incorrect tax change in our previous notice Please disregard the previous CP2000 notice we sent you, the proposed tax change was incorrect. We apologize for any inconvenience this may have caused. Please follow the instructions on this notice for submitting a response and send your response by the due date shown. 89 - Income reported in the wrong tax year Although you stated you reported the income in question in another tax year, we couldn't verify where. We're including the income and tax for the year stated on this notice. File a Form 1040-X, Amended U.S. Individual Income Tax Return, for the year in which you incorrectly included the income. 91 - Accuracy-related penalty for substantial understatement of tax We charge an accuracy-related penalty if you understate your tax liability by 10 percent of the tax required to be shown on your tax return or $5,000, whichever is greater. The penalty is 20 percent of the portion of the underpayment of tax attributable to a substantial understatement of income tax. We may reduce or eliminate the penalty if you provide a statement with one of the following: Facts to support your treatment of the understated income and the authority for your decision, such as the Internal Revenue Code, Treasury Regulations, Revenue Rulings, Revenue Procedures, etc. An explanation showing you clearly disclosed the item, such as by attaching Form 8275, Disclosure Statement, or Form 8275-R, Regulation Disclosure Statement, and there is a reasonable basis for your position. 92 - Accuracy-related penalties We assessed an accuracy-related penalty because your understatement of tax is either substantial, due to negligence or disregard of rules or regulation, or both. We assessed the penalty on the entire underpayment. If we determine part or all of the underpayment isn't due to negligence or disregard of rules or regulation or substantial understatement, we may still apply the penalty for the remaining underpayment. An accuracy-related penalty applies if you underpay the tax required to be shown on your return. Underpayment may happen if you don't report all your income or you claim deductions or credits for which you don't qualify. We apply two common accuracy-related penalties to individuals, negligence or disregard of the rules or regulations (IRC 6662(b)(1) and (c)) and substantial understatement of income tax (IRC 6662(b)(2) and (d)). 94 - Negative taxable income You had a zero or negative taxable income amount on your original or amended return. To receive proper credit for deductions, this notice reflects the actual amount of your taxable income. 95 - IRA deduction adjusted The deduction for IRA contributions is dependent upon your filing status, coverage by an employer retirement plan or through self- employment, and your modified adjusted gross income (MAGI). See instruction for Form 8606, Nondeductible IRAs on IRS.gov, for contribution limitation amounts. If you weren't covered by a retirement plan but your spouse is covered, the deduction for IRA contributions may be limited. See instruction for Form 8606 on IRS.gov, for limitation amounts. To avoid contact about this issue on future tax returns, complete and attach Form 8606 to your tax returns. Keep a copy for your records. 96 - Retirement distributions We couldn't identify the retirement distribution reported on your return based solely on information your payers reported to us. We need to know if the reported distribution is a pension, annuity, IRA, lump sum distribution, or employee savings plan. If it's a pension or an annuity, and you're recovering your after-tax contributions using the Simplified Method or General Rule, submit a statement with the date of your first payment, the amount you receive monthly, and the total amount you contributed. If it's not a pension or annuity, submit a copy of the document showing the gross and non-taxable amount of the distribution you received. If all or part of the distribution was rolled over, return Form 5498, IRA Contribution Information or similar documentation showing a rollover. 97 - Social Security/Railroad Benefits You didn't correctly report your gross Social Security/railroad retirement benefits on your original tax return. As a result, we changed your taxable benefits while processing that return. This notice uses the gross amount reported to us by the Social Security Administration to correct your taxable benefits. 98 - Education credits We need to verify the education credits you claimed on Form 1040, U.S. Individual Income Tax Return. We didn't receive Form 1098-T on your behalf to verify the amount you claimed. Send us a detailed explanation of the amounts you paid to support the amounts claimed. For more information, see Publication 970, Tax Benefits for Education. 99 - Social Security or Tier 1 Railroad Retirement benefits Our notice includes Social Security or railroad retirement benefits. These benefits are partially taxable if your modified adjusted gross income, plus 50 percent of the gross benefits received exceeds certain limitations. However, up to 85 percent of your benefits can be taxable. To find more information about the taxable portion of your benefits, see Publication 915, Social Security and Equivalent Railroad Retirement Benefits for more information. We cap the amount of taxable Social Security or Tier 1 railroad retirement benefits at 85 percent of the gross benefits you receive. Gross benefits are reported to you on Form 1099-SSA or Form RRB-1099, box 5. If we need to change the proposed underreported items shown on this notice, we'll adjust the taxable portion of your Social Security or Tier 1 railroad retirement benefits accordingly. 100 - Social Security/Railroad Retirement benefits workers' compensation offset You incorrectly reduced the net (taxable) benefits reported in box 5 of Form SSA-1099 or Form RRB-1099 by subtracting the workers' compensation you received a second time. Workers' compensation benefits are included in the benefits paid for the year in box 3 of Form SSA-1099 or in box 6 of Form RRB-1099. The workers' compensation you received has already been subtracted from the taxable amount in box 5 of Form SSA-1099 or Form RRB-1099. This notice shows the proposed recomputed taxable portion of your benefits. For more information, see Publication 915, Social Security and Equivalent Railroad Retirement Benefits, or contact your local Social Security Administration or Railroad Retirement office for an explanation of the workers' compensation offset. 101 - Accuracy related penalty waived The circumstances you described allowed us to remove the penalty for failure to properly report income or deductions. 102 - Commodity Credit Corporation (CCC) loans forfeited You didn't repay a Commodity Credit Corporation (CCC) loan or you repaid a CCC loan with Commodity Credit Certificates. If you believe this was a nontaxable transaction, explain your reasons in a signed statement and send us a copy of the form or schedule for any years showing how you reported the income. 103 - Crop insurance We show you received crop insurance proceeds. We're unable to locate this amount on your Form 1040, Schedule F, Profit or Loss From Farming, or Form 4835, Farm Rental Income and Expenses. If you elected to postpone reporting your crop insurance proceeds as income, return an explanation in a statement or a copy of the tax return where the crop insurance proceeds are reported as income. 104 - Farm income - market gain You received a taxable market gain from the repayment of a secured Commodity Credit Corporation (CCC) loan which was less than the original loan amount. If you believe this market gain is non-taxable, return to us an explanation. 105 - Education savings bond interest exclusion adjusted The exclusion you claimed for education savings bond interest has been reduced because the proposed changes to your return resulted in an increase to your modified adjusted gross income. See instructions for Form 1040, U.S. Individual Income Tax. 106 - Withholding claimed incorrectly You may have claimed a withholding amount from the wrong box of your Forms W-2, Wage and Tax Statement. We used information reported to us by your payers to compute the proposed changes shown on this notice. If our information is incorrect, return to us the documents you used to compute the withholding amount you claimed. 107 - Education savings bond interest exclusion disallowed Since your filing status is married filing separate for the tax year in question, you can't claim the Education Savings Bond Exclusion, even if the bonds were used to pay for qualified higher education expenses. 108 - Unsubstantiated education savings bond interest exclusion We didn't receive a Form 1099-INT, Interest Income, or a similar document for savings bond interest, with the amount claimed for the Education Savings Bond Interest Exclusion. If you have documents to substantiate what you claimed, return a copy to us. 109 - Payment card and third-party network transactions You received Form 1099-K, Payment Card and ThirdParty Network Transactions, because you accepted merchant cards for payments, or received payments through a third-party network. The amount included on this notice for Form 1099-K reflects the gross reportable transaction amount and not the taxable amount. The taxable amount from Form 1099-K should be reported on your Form 1040, Schedule C, Schedule E, or Schedule F. 114 - Revised Schedule A included in proposed changes We received your revised Schedule A, Itemized Deductions, and used your amounts to adjust your income and tax as shown on this notice. 115 - Statutory employee income differs The statutory employee income your employers reported to us on Form W-2, Wage and Tax Statement, doesn't match the amount you reported. If the information we received is incorrect, return to us a statement from your employers verifying you're a statutory employee and the amount of income you earned. 116 - Schedule C expenses used to reduce income We show you didn't earn the income you reported on Schedule C, Profit or Loss From Business, as a statutory employee. Therefore, we can't allow the expenses claimed on your Schedule C. If our records are incorrect, send us a statement from your employers verifying you're a statutory employee. If you're not a statutory employee, you must include the income as wages on Form 1040, U.S. Individual Income Tax Return or Form 1040-SR, U.S. Tax Return for Seniors. 117 - Mark-to-market election We show you made a mark-to-market trader election for your securities transactions. Since you made this election, you need to report securities transactions relating to your trader activities on Form 4797, Sales of Business Property. Your trading income may also be subject to the net investment tax. See Form 8960, Net Investment Income Tax – Individuals, Estates, and Trusts, for more information. For more information, see Publication 550, Investment Income and Expenses. To report your election properly, use Form 4797 in the future. 118 - Day trader loss limitation Our records indicate you didn't make a mark-to-market trader election for your securities transactions. You must report the sale of securities on Form 8949, Sales and Other Dispositions of Capital Assets, and then carry the results to Schedule D, Capital Gains and Losses. Losses from these transactions are subject to the limitations on capital losses. If your capital losses exceed your capital gains, the amount of the excess loss you can claim to lower your income is the lesser of $3,000 ($1,500 if married filing separately) or your total net loss shown on line 16 of Schedule D. For more information, see Publication 550, Investment Income and Expenses. 119- Court award or settlement For us to determine what portion (if any) of your award or settlement is taxable, submit to us the following: A written explanation of the nature and cause of your award. A copy of the original complaint filed, along with the final court order or settlement agreement. 120 - Child Tax Credit The allowable amount of the Child Tax Credit or Credit for Other Dependents is based on your filing status, the number of qualifying persons, modified adjusted gross income, and tax. Either credit is adjusted when your modified adjusted gross income changes. The credit can't be more than the tax. If you filed and claimed credits for mortgage interest, adoption credit, residential energy credit or the District of Columbia first-time homebuyer credit with your original tax return, provide us recomputed worksheets from Form 1040, Schedule 8812 Credits for Qualifying Children and Other Dependents. To apply any unused credits from these sources, provide us the recomputed forms. If you've already applied these unused credits to any other tax years, you need to file a Form 1040-X, Amended U.S. Individual Tax Return, for the other years. 121 - Mortgage interest deduction allocation We couldn't match mortgage interest amounts you claimed to specific forms or schedules on your tax return. We gave credit for amounts you claimed in the following order if you filed the appropriate form or schedule: Schedule C, Profit or Loss From Business Schedule E, Supplemental Income and Loss Schedule F, Profit or Loss From Farming Form 4835, Farm Rental Income and Expenses Form 8829, Expenses for Business Use of Your Home Schedule A, Itemized Deductions If this is incorrect, provide us a detailed breakdown and verification of all mortgage interest amounts you claimed on your return. 122 - Double exclusion of penalty on early withdrawal of savings isn't allowed You included an amount for the penalty on early withdrawal of savings as a deduction to income on your tax return. You also used the same amount to reduce interest income on Schedule B, Interest and Ordinary Dividends. You can't take a double exclusion for the same amount. We're allowing the amount claimed as a deduction of your gross income and disallowing the reduction to interest income on Schedule B. 123 - Overpaid mortgage interest refund You received a refund or credit for overpaid mortgage interest but didn't include it as income on your tax return in the year in which you received it. You must report this as income because you claimed an itemized deduction for mortgage interest on your prior year tax return. 124 - Scholarship or fellowship grant information needed To determine if any portion of the scholarship or fellowship payments you received qualify for exclusion from income, tell us whether you were a degree candidate when the scholarship or fellowship was granted If you were a degree candidate, tell us which amounts were used solely for tuition and course-related expenses. If you weren't a degree candidate, the full amount of the scholarship or fellowship is taxable. 125 - We corrected your adjusted gross income and/or taxable income We found a math error and made corrections while processing your tax return. Therefore, the adjusted gross income and/or taxable income as shown in the "Proposed changes to your tax return" section of this notice is different than the amount you originally reported on your return. 126 - Broker and barter exchange transactions We received Forms 1099-B, Proceeds From Broker and Barter Exchange Transactions, but didn't see the amounts included in income on your return. This notice shows amounts reported as bartering on Forms 1099-B. For each Form 1099-B received, give us the date you acquired the asset and the cost or adjusted basis, if needed. For more information, see Publication 525, Taxable and Nontaxable Income. 128 - Education credit disallowed We disallowed education credits claimed on your return because of the incomplete lines, 23-26 on Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits). If you're eligible to claim the credit, complete Form 8863, including lines 23 -26, and return it to us. 129 - Jointly filed return of surviving spouse All income attributable to you or your spouse must be included on the joint tax return you filed. 130 - Form 4972, Tax on Lump-Sum Distributions You made a math error on your original or recomputed Form 4972, Tax on Lump-Sum Distributions. We recalculated your tax using the correct amount. 131 - Retirement distributions as Social Security/Railroad Retirement benefits You incorrectly reported retirement distributions from Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. or Form RRB-1099-R, Annuities or Pensions by the Railroad Retirement Board, as Social Security/railroad retirement benefits. You should treat and report this type of income as a normal distribution. This notice shows our proposed changes to the amount incorrectly reported. For more information, see Publication 575, Pension and Annuity Income. 132 - Reemployment Trade Adjustment Assistance payments You didn't report the full amount of the Reemployment Trade Adjustment Assistance (RTAA) payments shown on Form 1099-G, Certain Government Payments, box 5. This income is taxable. Please see Publication 17, Your Federal Income Tax (For Individuals) for more information. 134 - Retirement distributions don't qualify for capital gains treatment The retirement distributions you reported as capital gains on your return doesn't qualify for capital gain treatment and we have adjusted your return accordingly. If you carried forward the loss on your Schedule D to a subsequent year, you must adjust it accordingly. Return to us a revised Schedule D and, if necessary, correct other affected tax years you've already filed on Form 1040-X, Amended U. S. Individual Income Tax Return. If you haven't filed a return for the affected year, return to us a signed statement indicating you'll correct your records. 135 - Health savings account deduction (Form 1040, Form 8889) The health savings account deduction you reported on your tax return doesn't match the information your trustees sent us. Return to us copies of Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information, or other documents, to support your health savings account deduction. 136 - Health savings account distribution The health savings account distribution reported on your tax return doesn't match the information provided to us on Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA. Return to us a completed Form 8889, Health Savings Accounts (HSAs). Use Part II (lines 14-17) of Form 8889 to calculate the taxable distribution amount. Refer to Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans, for further information. 137 - Excess Social Security/Railroad Retirement Tax withheld from one employer If one employer withheld excess Social Security or Railroad Retirement Tax from your pay, you must ask the employer to reimburse you because you can't claim the excess amount on your federal income tax return. 138 - Qualified and Non-Qualified Stock Plan Based on information shown on your Form W-2, Wage and Tax Statement, it appears you sold or exchanged stocks through your employer. We are unable to determine if any of these transactions were exercised as a qualified or non-qualified stock option. Please provide a completed Schedule D and Form(s) 8949, Sales and Other Dispositions of Capital Assets, or applicable stock option statements. 139 - Documents attached to your tax return were not reported You didn't include all the income or withholding you should've reported based on the Forms W-2, Wage and Tax Statement, 1099, or other documents you provided with your tax return. This notice shows the amounts included. If the proposed change is incorrect, return to us an explanation. 140 - 20 Percent Tax on Health Savings Account distribution Your distributions from a health savings account are subject to an additional 20 percent tax because they were taken prematurely. A distribution is premature if it was paid before you reached age 65. The 20 percent tax is based on the taxable portion of the distribution. Exceptions may apply as shown in Publication 969, Health Savings Accounts and Other Tax-Favored Health Plans. If the distributions shown on this notice are exempt from the additional tax, please return to us a explanation. 141 - Netted state and local income tax refund You incorrectly netted your state and local income tax refund by deducting it from the amount withheld and failed to include it as income. In the future, report the refund on Form 1040, Schedule 1, Additional Income and Adjustments to Income. Report tax withheld on line 5a of your Form 1040, Schedule A, Itemized Deductions. 142 - 179 Expenses double deduction You deducted the Section 179 expenses from your distributive share of income (or loss) on Part II, column (j), of Form 1040, Schedule E, Supplemental Income and Loss, and as a deduction on Part II, column (i), of Schedule E (Form 1040). We disallowed this double deduction. 143 - Additional Medicare Tax withheld We adjusted the amount you claimed as Additional Medicare Tax withheld on Form 1040, U.S. Individual Income Tax Return, because it appears you incorrectly completed Form 8959, Additional Medicare Tax. 144 - Gambling losses limited to gambling winnings You claimed gambling losses on Form 1040, Schedule A, Itemized Deductions, but didn't report gambling winnings. You can claim gambling losses only up to the amount of income reported from your gambling winnings. Since you didn't report any gambling winnings, we're proposing to remove the gambling losses claimed on your Schedule A. If you have gambling winnings, return to us a statement with this information. 146 - Disallowed Simplified Employee Pension (SEP) or SIMPLE deduction You're not eligible to claim a deduction for contributions to your own SEP, SIMPLE, or qualified plans because you didn't report self-employment income on your tax return. We disallowed the deduction. For more information, see Publication 560, Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans). 147 - Potential change to self-employed health insurance deduction If the self-employment income shown on this notice is correct, you may want to recalculate the self-employed health insurance deduction. Return to us your updated calculation if applicable. 148 - Potential change to charitable contributions increase Due to the proposed increase in your income, you may now be entitled to claim additional charitable contributions if you didn't use them in a later tax year. If you're entitled to additional charitable contributions, return to us a revised Form 1040, Schedule A, Itemized Deductions, or a statement showing the additional amount. 150 - Refigured tax based on Schedule D computation We recalculated your tax using the Form 1040, Schedule D, Capital Gains and Losses. 151 - Excess Social Security Tax/Railroad Retirement Tax (SST/RRT) The law limits Social Security withholding to $10,453.00 per taxpayer, per year, but more may have been withheld by your employers. You must figure the credit separately for each spouse to determine if either one had excess withholding. You can claim a credit for any excess withholding if you had 2 or more employers. If one employer withheld excess Social Security or Railroad Retirement tax from your pay, you must ask the employer to reimburse you because you can't claim the excess amount on your federal income tax return. If your employer will not reimburse you, use Form 843, Claim for Refund and Request for Abatement, to claim a refund of excess withholding. See Publication 505, Tax Withholding and Estimated Tax for more details. 152 - Form 4972 - Special tax treatment does not apply to IRA distributions We show the distribution you claimed on Form 4972, Tax on Lump-Sum Distributions, is from an IRA reported on Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. This distribution doesn't qualify for special tax treatment on Form 4972. If our information is incorrect, return to us an explanation. 153 - Excess advance premium tax credit repayment We adjusted your excess advance premium tax credit repayment based on proposed changes to your modified adjusted gross income. 154 - Non-active military personnel Allowances paid to retired military officers and retired enlisted members, who are employed in the junior program of the Reserve Officers Training Corps (ROTC), are considered taxable compensation. You should include allowances for items such as uniforms, housing, and subsistence, in gross income. For more information, see Revenue Ruling 71-307 and 72-69. 155 - Military retirement distributions You didn't include distributions from your military retirement plan in income, which are fully taxable. If you don't agree because you received a retroactive disability rating after you retired, return to us a statement from the Department of Veterans Affairs. The statement must show the dates of the retroactive period and the amount of your retirement pay you would've been able to receive as disability benefits. For more information on military disability pensions, see Publication 525, Taxable and Nontaxable Income. 156 - Dependent care benefits We considered the employer-provided dependent care benefits shown in box 10 of Form W-2, Wage and Tax Statement, as fully taxable because Form 2441, Child and Dependent Care Expenses, is missing or incomplete. If you paid for child or dependent care for the tax year in question, return a completed Form 2441. Use Part III to determine the taxable amount of benefits you received, any excluded benefits, and the allowable amount of qualified expenses. 157 - Contributions to 401(K) were deducted incorrectly Contributions made by you or your employer to a 401(k), or other deferred compensation plan, have already been excluded from the wage amount shown in box 1 of Form W-2, Wage and Tax Statement. Therefore, you can't deduct them again from your income. If you believe box 1 of your Form W-2 erroneously included the amounts of these contributions or shows a wrong box checked, return to us a statement from your employer containing the correct information. 158 - Amendments or adjustments to your return have been included in this notice We considered previous changes to your original tax return in figuring the amounts under "Changes to your tax return" . This may include adjustments we made when you filed or changes requested on an amended return. 159- Reimbursement of employee business expenses Business expenses, which exceed reimbursement, are deductible only if reported on Form 2106, Employee Business Expenses. If the income shown on this notice is a reimbursement of employee business expenses and you qualify for the deduction, please complete and return Form 2106. Refer to the Form 2106 instructions for qualification information. 160 - Cancellation of Debt reduced by Fair Market Value We reduced the cancellation of debt amount by the fair market value of the property as reported to the IRS from the lender who canceled the debt. 161 - Self-employment tax change due to mortgage interest adjustment We're proposing changes to the mortgage interest amount you deducted on Form 1040, Schedule C, Profit or Loss From Business, line 16a, or Form 1040, Schedule F, Profit or Loss From Farming, line 21a. The change, under "Changes to your tax return" , results in an increase to your net self-employment income. Therefore, we're also proposing changes to the reported self- employment tax. 162 - Social Security benefits for taxpayers who filed married filing separately We're proposing to increase the taxable amount of your Social Security Benefits. Since you and your spouse filed separately but lived together during the tax year in question, you must include 85 percent of your Social Security Benefits as income. For more information, see Form 1040, U.S. Individual Income Tax Return, instructions on Social Security Benefits or Publication 915, Social Security Benefits and Equivalent Railroad Retirement Benefits. 163 - Employee's share of Federal Insurance Contributions Act You're required to pay the employee share of Federal Insurance Contributions Act (FICA) tax because your employer didn't withhold this amount from your pay. This notice shows your employee share of FICA tax at 7.65 percent of gross wages, which were incorrectly reported as nonemployee compensation. We based the proposed change on the determination from Form SS-8, Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding, regarding your employee status for the nonemployee compensation you received. No further action is needed from you for your social security earnings to be credited to your social security record. 164 - Wage adjustments based on stock option statements You can't reduce wages by amounts shown on stock option statements. This notice shows the proposed changes to the reported wages. 165 - Tax treatment of non-statutory stock options We consider exercised non-statutory employee stock options included in box 1 of Form W-2, Wage and Tax Statement, as ordinary income. They don't qualify for capital gain treatment. 166 - Cost basis of stock sold In reviewing the stock proceeds your broker reported to us, we used the cost basis shown in box 1e, of Form 1099-B, Proceeds From Broker and Barter Exchange Transactions. If there isn't an amount in box 1e, we used a zero-cost basis. If you have cost basis for the stock transactions in question, return to us a completed Form 1040, Schedule D, Capital Gains and Losses, along with a completed Form 8949, Sales and Other Dispositions of Capital Assets, (or similar attachment) showing the following for each listed stock transaction: The asset name The date you acquired the asset The cost or adjusted basis 167 - Illegal use of Social Security number If you believe someone is illegally using your Social Security number, return to us a statement identifying each item on the notice which is the result of identity theft, as well as a copy of either a police report or completed IRS Form 14039, Identity Theft Affidavit (available at IRS.gov/form). You may also want to contact the Federal Trade Commission Identity Theft Hotline (877-438-4338) or visit FTC.gov for information about correcting your records. 168 - 10 Percent additional tax claimed as early withdrawal penalty You can't deduct the 10 percent additional tax on distributions from qualified retirement plans as an early withdrawal of savings. You must report it as an additional tax on your tax return. 169 - Mortgage interest included on Form 8829 You deducted the same mortgage interest on Form 8829, Expenses for Business Use of Your Home, as you did on Form 1040, Schedule A, Itemized Deductions. We can't allow this double deduction. We gave credit for amounts you claimed first to Form 8829 and then Schedule A. 170 - Accuracy-related penalty for negligence not waived The information you sent didn't establish the reasonable cause necessary to exempt you from the accuracy-related penalty due to negligence or intentional disregard of the rules or regulations. Pay the full amount you owe as soon as possible to avoid additional interest charges. 171 - Your Form 1040-X doesn't include penalties We received your Form 1040-X, Amended U.S. Individual Income Tax Return, in response to our previous notice. However, it didn't address the proposed penalties. If you think we shouldn't charge these penalties, return to us a statement explaining the reason why they don't apply and include supporting documents. We'll review your request and determine if we can remove them. 172 - Additional Medicare tax We recalculated the additional Medicare tax based on proposed changes to your wages, Railroad Retirement Tax Act compensation, or self-employment income. See instructions for Form 1040 for limitation amounts. 173 - Net Investment Income Tax We're proposing a change to your net investment income and your net investment income tax (NIIT). In general, net investment income includes the excess of: Income from interest, dividends, non-qualified annuities, royalties, and rents. Income from passive activities. Income from trading and financial instruments or commodities. Capital gains. Gains from trading in financial instruments or commodities over allowable deductions. See instructions for Form 1040, U.S. Individual Income Tax, for more information on limitations. 174 - Interest and additional tax on nonqualified deferred compensation You received income reported on Form W-2, Wage and Tax Statement (box 12 with code Z) or Form 1099-MISC, Miscellaneous Income (box 15), due to participation in a nonqualified deferred compensation plan subject to Internal Revenue Code (IRC) Section 409A. Because your plan didn't comply with IRC Section 409A, this income is subject to a premium interest tax and an additional 20 percent tax. This notice includes the additional 20 percent tax. For more information, see Publication 17, Your Federal Income Tax (For Individuals) and IRC Section 409A. 175 - Post-secondary educational institution and education credit Education credits can only be claimed for qualified education expenses paid to a post-secondary educational institution. Based on the information provided on your tax return we have disallowed the education expenses and credit claimed for your dependent. 176 - Stolen identity documentation received We received documentation showing you're a victim of identity theft. If the discrepancies shown in this notice are a direct result of the identity theft, return to us a statement identifying each specific discrepancy impacted by the identity theft. 177 - Deduct tax from refund We may not have enough time to deduct your tax increase from your expected refund, as requested. If you receive your full refund, we'll send you a bill for any tax you owe. 178 - Power of Attorney We sent a copy of this notice to your representative as shown in your Power of Attorney. 179 - Accuracy-related penalty for substantial understatement not waived The information you sent didn't establish the reasonable cause necessary to exempt you from the accuracy-related penalty due to a substantial understatement of income tax. Pay the full amount you owe as soon as possible to avoid additional interest charges. 180 - Request for information document We can't send you a copy of the information you requested because we received it electronically. To get a paper document with the amount reported to us, contact the payers in this notice. Alternatively, you can obtain a wage and income transcript by visiting IRS.gov/individuals/transcript-types-and-ways-to-order-them. 181 - Unable to contact taxpayer sooner We couldn't contact you sooner because we must process and compare the information we receive from all employers, businesses, and financial institutions before we can notify you of any discrepancy. 182 - Copy of notice sent to spouse We're required to send a copy of this notice to both you and your spouse. Each copy contains the information you are authorized to receive. Please note: Only pay the amount due once. Since you filed a joint return we require the signature of both spouses on the response form. 184 - Earned Income Credit disallowed due to investment income We're proposing to disallow the amount of Earned Income Credit you claimed because your investment income now exceeds applicable limitations. For applicable limitation amounts, see instruction for Form 1040, U.S. Individual Income Tax Return. 185 - Archer MSA deduction (Form 1040, Form 8853) The Archer Medical Savings Account deduction you reported on Form 1040, U.S. Individual Income Tax Return, doesn't match the information provided to us by your trustees. Return to us documents to support your deduction, such as Form 5498-SA, HSA, Archer MSA or Medicare Advantage MSA Information. 186 - Archer MSA distribution The Archer Medical Savings Account or Medicare Advantage MSA distribution you reported doesn't match the information provided to us on Form(s) 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA. 187 - Long-Term Health Care Benefits (Form 1040, Form 8853) The long-term health care benefits you reported don't match the information provided to us on Form 1099-LTC, Long-Term Care and Accelerated Death Benefits. Return a copy of the documents you used to compute amounts reported on Form 8853, Archer MSAs and Long-Term Care Insurance Contracts. 188 - Adoption credit adjusted We're proposing to adjust the amount of adoption credit you claimed based on our proposed changes to your modified adjusted gross income (MAGI). For more information and the MAGI limitations, see the instructions for Form 8839, Qualified Adoption Expenses. 189 - Adoption credit disallowed We're proposing to disallow the amount of adoption credit you claimed based on our proposed changes to your modified adjusted gross income (MAGI). For more information and the MAGI limitations, see the instructions for Form 8839, Qualified Adoption Expenses. 190 - Employer-provided adoption benefits (Form 8839) We're proposing to adjust the amount of employer-provided adoption benefits you claimed based on information provided on Form(s) W-2, Wage and Tax Statement, box 12 with code T or other changes to your income. 191 - Taxable employer provided adoption benefits not included in income You didn't include the taxable benefits reported on Form 8839, Qualified Adoption Expenses, line 29, as income on your tax return. 194 - Early distributions from a SIMPLE IRA Plan Early distributions from your SIMPLE IRA plan are subject to an additional 10 percent tax. A distribution is early if it was paid before you reached age 59 1/2. However, the 10 percent tax is increased to 25 percent if the distribution was made within 2 years of beginning participation. Exceptions may apply as shown in the instructions for Form 5329, Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts. Refer to Publication 17, Your Federal Income Tax (For Individuals), Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs) or Publication 560, Retirement Plans for Small Business (SEP, SIMPLE Plans and Qualified Plans). If the distributions shown on this notice are exempt from the additional tax, submit Form 5329. 195 - Employer-provided adoption benefits subtracted from wages You deducted employer-provided adoption benefits from your wages, which isn't allowed. We added the amount back to your wages. To determine if any of your benefits are excludable, return a completed Form 8839, Qualified Adoption Expenses. 196 - 20 Percent tax on Archer Medical Saving Account distributions (Archer MSA) Premature distributions from Archer Medical Savings Accounts are subject to an additional 20 percent tax. A distribution is considered premature if it was paid before you reached age 65. Exceptions may apply as shown in Publication 969, Health Saving Accounts and Other Tax-Favored Health Plans. If the distributions shown on this notice are exempt from the additional tax, return to us an explanation. 197 - Taxable Archer MSA distributions - Long-Term Care payments not reported You didn't include the amount of taxable Archer MSA distributions or long-term care payments reported on your Form 8853, Archer MSAs and Long-Term Care Insurance Contracts, as income on Form 1040, Schedule 1, Additional Income and Adjustments to Income. 200 - Qualified business income deduction adjustment The proposed changes made to your taxable income may affect the qualified business income deduction claimed. If you believe an adjustment to the qualified business income deduction is necessary, complete the appropriate Form 8995, Qualified Business Income Deduction Simplified Computation or Form 8995-A, Qualified Business Income Deduction. Return the completed worksheet to us along with a statement explaining what changes were made to the original qualified business income deduction reported. 201 - Allowed qualified business income deduction Based on the worksheet and statement you provided, we adjusted the amount of your qualified business income deduction. 202 - Limited qualified business income deduction The qualified business income deduction amount you claimed was more than the statutory maximum allowed. We limited the deduction accordingly. See Form 1040, Individual Income tax or Publication 535, Business Expenses, for more information. 203 - Dependent tax credit The allowable dependent tax credit is based on filing status, number of qualifying dependents (other than yourself, your spouse, or qualifying children), modified adjusted gross income (MAGI), and tax. The credit is adjusted when the MAGI changes. The credit can't be more than the tax. 204 - Deduction limited on taxes paid Your state and local, income and general sales, real estate, or personal property tax deduction is limited. See instructions for Form 1040, Schedule A, Itemized Deductions, for limitation amounts. 205 - Automotive Manufacture Incentive Payments Automotive manufacturer incentive payments made to a vehicle salesperson who is not self-employed can't be offset by Form 1040, Schedule C, Profit or Loss From Business (Sole Proprietorship) expenses. We disallowed the expenses and refigured your tax. 212 - Taxable Medicare Advantage Medical Savings Account (MAMSA) subject to additional 50 percent tax Early distributions from Medicare Advantage Medical Savings Accounts (MSA) are subject to an additional 50 percent tax. Exceptions may apply as shown in Publication 969, Health Saving Accounts and Other Tax-Favored Health Plans. If the distributions shown on this notice are exempt from the additional tax, return to us an explanation. 216 - Graduate student doesn't qualify for American Opportunity Credit The information you provided indicates you, or your dependent, are a graduate student. In order to claim the American Opportunity Credit, you mustn't have completed the first four years of postsecondary education before the start of the tax year. For more information, refer to Publication 970, Tax Benefits for Education, available at IRS.gov/PUB970 or by calling 800-TAX-FORM (800-829-3676). 217 - Taxpayer is not eligible to claim Education Credit Education credits can't be claimed if your filing status is married filing separately, you're claimed as a dependent on someone else's tax return, or you're a nonresident alien. We disallowed the amount claimed on Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits), because our records indicate you aren't eligible. 218 - Form 8863, Part III is not completed appropriately for Education Credit We're unable to allow the education credits claimed on your Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits), because lines 23-26 are incomplete. If you're eligible to claim the credit, complete Form 8863, including lines 23 -26, and send it to us. 219 - Reported EARN income is subject to 10 percent additional tax Most taxable earnings from qualified education programs are subject to an additional 10 percent tax. Your taxable earnings reported to us don't fall within any of the exceptions to the 10 percent additional tax. For more information, refer to Publication 970, Tax Benefits for Education, available at IRS.gov/PUB970 or by calling 800-TAX-FORM (800-829-3676). 220 - Income now subject to Alternative Minimum Tax (AMT) Based on our proposed changes to your income, you may now be subject to the alternative minimum tax calculations. If you disagree with our calculations, return Form 6251, Alternative Minimum Tax – Individuals. For more information, refer to the Instructions for Form 6251, available at IRS.gov/forms or by calling 800-TAX-FORM (800-829-3676). 221 - Withholding claimed with Stock Options The federal withholding or Social Security tax withheld, shown on your stock option statement, has already been included in the federal withholding or Social Security tax withheld on your Form W-2. Therefore, we disallowed the additional amounts claimed. 222 - Recovery Rebate Credit You're response included a request for Recovery Rebate Credit; however, we can't process the request. To claim the Recovery Rebate Credit, you need to file an Amended U.S. Individual Income Tax Return. Return the amended return to the processing center for your state, the information is located on IRS.gov-Where to File Paper Tax Returns With or Without a Payment. If your response included Form 1040-X and resolves the discrepancies in the notice, we'll forward your Form 1040-X to the appropriate processing center for the Recovery Rebate Credit. 223 - Breakdown of Insolvency is required The Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness (and Section 1082 Basis Adjustment), attached to your tax return indicates you were insolvent. To be considered insolvent, you must provide a statement of your assets and liabilities immediately before the debt was cancelled. You're considered insolvent only when your liabilities exceed your assets. If you can exclude the canceled debt due to insolvency, provide a detail of your total assets and liabilities immediately before the discharge. For more information and a worksheet to help calculate insolvency, see Publication 4681, Canceled Debts, Foreclosures, Repossessions, and Abandonments (for Individuals). 224 - Proceeds from sales, exchanges, or other dispositions of digital assets This notice reflects an adjustment to your gross income based on taxable proceeds from sales, exchanges, or other dispositions of digital assets reported to us on information returns filed by third parties. The sale or trade should be reported on Form 1040, Schedule D, Capital Gains or Losses, as a capital gain or loss. For more information visit IRS.gov/businesses/small-businesses-self-employed/digital-assets. 225 - Age requirement not met for Qualified Charitable Distributions (QCD) Our records indicate you didn't meet the minimum age requirement to qualify for a non-taxable charitable IRA distribution. If our records are incorrect, provide documentation showing both your date of birth and the date the distribution was made by the trustee of your IRA. 226 - Digital Assets Reported by Third Parties This notice reflects an adjustment to your gross income based on taxable receipts from digital asset activities reported to us on information returns filed by third parties. For more information visit IRS.gov/filing/digital-assets. 228 - Document Upload Tool Send us your documents using the Document Upload Tool within 30 days from the date of this notice. To use the tool, visit IRS.gov/dutreply and enter the access code 895ny-k9654. 229 - Bond income included as Capital Gains on Schedule D The Bond income you reported on Form 1040, line 7 or Form 1040, Schedule D, Capital Gains and Losses, doesn't qualify for capital gain treatment. Your payers reported this income to us as bond interest, so you must report the income as ordinary income on your tax return. 230 - Qualified Charitable Maximum exclusion The maximum annual exclusion for Qualified Charitable Distributions (QCD) is $105,000. Any QCD in excess of the $105,000 exclusion limit is included in income as any other distribution. If you file a joint return, your spouse can also have a QCD and exclude up to $105,000. Please refer to Publication 590-B, Distributions from Individual Retirement Arrangements (IRAs), for more information. 231 - Gambling Income as Ordinary Income Gambling winnings are ordinary income and don't qualify for capital gains treatment. 232 - Revised to include CCF We revised our proposed adjustment to include the Capital Construction Fund (CCF) based on your response to our prior notice. 233 - Domestic Production Activities (DPAD) Deduction from Cooperatives Our records show you have a domestic production activities deduction from cooperatives as shown on Form 1099-PATR, Taxable Distributions Received From Cooperatives, box 6. We used this information to revise your Form 8995-A, Qualified Business Income Deduction. 234 - Recalculation of Education Credit We used the information you provided to recalculate your education credit. 235 - Other Taxes include the previous changes made to Withholding The other taxes as shown on this notice include the previous change made to your federal income tax withheld. 236 - Excess Social Security Tax/Railroad Retirement Tax is not substantiated Our records indicate the credit for excess social security tax/railroad retirement tax claimed on your return isn't substantiated by information on your Forms W-2, Wage and Tax Statement. Return to us a copy of your Forms W-2, to verify the credit claimed on your tax return. 237 - Account adjusted to correct overclaimed or understated payments Your account has been adjusted to correct the amount of overclaimed or understated payments. This may include federal withholding, excess social security tax, FICA tax, additional Medicare tax withheld, additional Medicare tax on wages, or railroad retirement tax act compensation. 238 - Repayment of unemployment benefits made in a subsequent year Repayment of unemployment benefits made in a subsequent year may be deducted on Schedule A, or taken as a tax credit for the year of the repayment if the repayment is more than $3,000 and was previously included as income under a claim of right under Internal Revenue Code Section 1341. Refer to Publication 525, Taxable and Nontaxable Income. 239 - Mortgage Interest carry forward must be corrected Although the adjustment to the mortgage interest deduction doesn't impact your current year's taxable income, the passive loss carry forward for the property must be corrected. We adjusted our records. You will need to make the necessary corrections to your passive loss carry forward worksheets. 240 - Ownership of property in order to take a Mortgage interest deduction In order to deduct home mortgage interest you must have ownership interest in the property. You can't deduct payments made on someone else's behalf if you aren't legally liable to make them. Provide us with any documentation showing you have ownership interest in the property. 241 - An IRA inherited from someone other than a spouse When you inherit an IRA from someone other than your spouse, you can't roll it over into another account unless you make a trustee to trustee transfer. Provide documentation to verify the amounts were rolled over into an account maintained in the name of the deceased IRA owner for the benefit of you as the beneficiary. 242 - Extension request We received your request for an extension of time to respond. This notice allows you the additional time to respond. 243 - Schedule C changes included The miscellaneous adjustment included in this notice reflects the changes made to your Form 1040, Schedule C, Profit or Loss from Business (Sole Proprietorship). 244 - Foreign Income must be included in total Foreign earned income must first be included as income and then can be excluded by completing Form 2555, Foreign Earned Income. 245 - NEC can't be reported as capital gain Nonemployee Compensation is subject to self-employment tax and can't be reported as Capital Gains. 246 - Form W-2, box 12 coded with "W" Contributions through a cafeteria plan to an HSA, which are reflected as a "W" coded amount in box 12 of Form W-2, Wage and Tax Statement, are treated as employer contributions and can't be included on line 2 of Form 8889, Health Savings Account. Therefore, we adjusted the allowable amount. 247 - U.S. Treasury Interest The interest paid by the United States Treasury shown on our previous notice was incorrect and has been corrected on this notice. We apologize for any inconvenience this may have caused you. 248 - Form W-2, box 12 coded with "Z" Income recognized due to participation in a nonqualified deferred compensation plan doesn't meet the requirements of Internal Revenue Code 409A and is taxable. You can't reduce your wages or nonemployee compensation by this amount. 249 - Claiming state and local taxes as itemized deductions Since state and local taxes weren't claimed as an itemized deduction on either you or your spouse's prior year tax return, you aren't required to report the refund for the spouse who didn't itemize deductions. We reduced the amount reported as State Income Tax Refund on your return. This change is reflected on our notice as a miscellaneous adjustment. 250 - Helpful Information If the income displayed above doesn't belong to you, inform the payer listed above to update their records to avoid future inaccurate reporting to the IRS. Provide us with the name and taxpayer identification number of the individual who received the income, if known. This isn't an audit; your return may be subject to an examination later. 251 - Unable to process Form 1040-X We are unable to process your Form 1040-X, Amended U.S. Individual Tax Return, as submitted due to one or more of the following reasons: Not all the issues from our previous notice were included in the Form 1040-X. Review the "What caused the difference" section from our previous notice to verify what income is missing. The amount in Column A of Form 1040-X didn't match the figures from your original filed return. Your Form 1040-X didn't include the required forms or schedules to support the reported income. Return the required documents if there are any changes to your credits, taxes, income or deductions. See Form 1040 Instructions for further information. We used the information provided and adjusted our notice accordingly. 252 - Repayment of Social Security/Railroad Benefits Social Security railroad retirement repayment amounts may ONLY be deduction in the year they are repaid. See Publication 915, Social Security and Equivalent Railroad Retirement Benefits, for further information, or contact your local Social Security Administration or Railroad Retirement office for an explanation of repayment of benefits. 253 - Disability Benefits from the Social Security Administration Disability benefits received from the Social Security Administration are treated the same as regular Social Security railroad retirement benefits. See Publication 915, Social Security and Equivalent Railroad Retirement Benefits, for further information, or contact your local Social Security Administration or Railroad Retirement office for an explanation of disability benefits. 254 - Life Insurance Costs on IRA Contribution To compute your IRA deduction, you must subtract the cost of life insurance as shown in box 6 of Form 5498, IRA Contribution Information. This notice shows the proposed recomputed IRA deduction. See Publication 590-A, Contributions to Individual Retirement Arrangements(IRAs), for further information. 255 - Schedule A calculation error The Schedule A, Itemized Deductions, provided with your response had a calculation error. If you disagree with the figures shown in this notice, provide us with a corrected Schedule A. 256 - Federal withholding payment Federal withholding is a payment towards the total income tax owed. Therefore, the income and withholding should be reported on your return. 257 - First Time Abatement request The accuracy-related penalty for substantial understatement of tax can't be forgiven under First Time Abatement (FTA) guidelines. Accuracy-related penalties may only be waived if reasonable cause is demonstrated for the omission of the income from your original return. Visit IRS.gov/penalties, for more information. 258 - Installment Agreement Request We referred your installment agreement request to the appropriate office. They'll contact you about payment arrangements and applicable fees within 60 days from the date of this letter. If you have questions about this process, call customer service at 800-829-1040. 259 - Self-Employed Health Insurance Deduction The miscellaneous adjustment on this notice reflects the changes to the self-employed health insurance deduction on Form 1040. If you disagree, return to us an updated calculation. 260 - Unreported Wages The taxable wages reported on your return doesn't match the documents we received from your employer or payers. We used the unreported wages to refigure the proposed taxable income shown on this notice. 261 - Unreported Interest Income The taxable interest reported on your return doesn't match the documents we received from your employer or payers. We used the unreported interest to refigure the proposed taxable income shown on this notice. 262 - Unreported Dividend Income The taxable dividends reported on your return doesn't match the documents we received from your employer or payers. We used the unreported dividends to refigure the proposed taxable income shown on this notice. 263 - Unreported Nonemployee Compensation The taxable nonemployee compensation reported on your return doesn't match the documents we received from your employer or payers. We used the nonemployee compensation to refigure the proposed taxable income shown on this notice. If you incurred expenses in earning this income, complete and return Form 1040, Schedule C, Profit or Loss from Business, with your response. 264 - Unreported Medical Payments The taxable medical payments reported on your return doesn't match the documents we received from your employer or payers. We used the unreported medical payments to refigure the proposed taxable income shown on this notice. 265 - Unreported Fishing Income The taxable fishing income reported on your return doesn't match the documents we received from your employer or payers. We used the unreported fishing income to refigure the proposed taxable income shown on this notice. 266 - Unreported Rents/Royalties Income The taxable rent and/or royalty income reported on your return doesn't match the documents we received from your employer or payers. We used the unreported rent and/or royalty income to refigure the proposed taxable income shown on this notice. 267 - Unreported Conduit Income The taxable allocable share from a partnership (Form 1065), Small Business Corporation (Form 1120-S), or Estate and Trusts (Form 1041) income reported on your return doesn't match the documents we received from your payers. We used the unreported income to refigure the proposed taxable income shown on this notice. 268 - Unreported Agricultural Subsidies The taxable agricultural subsidies reported on your return doesn't match the documents we received from your employer or payers. We used the unreported agricultural subsidies to refigure the proposed taxable income shown on this notice. 269 - Unreported Patronage Dividends The taxable patronage dividends reported on your return doesn't match the documents we received from your employer or payers. We used the unreported patronage dividends to refigure the proposed taxable income shown on this notice. 270 - Unreported Other Income The taxable other income reported on your return doesn't match the documents we received from your employer or payers. We used the unreported other income to refigure the proposed taxable income shown on this notice. 271 - Unreported Taxable Grants The taxable grants reported on your return doesn't match the documents we received from your employer or payers. We used the unreported grants income to refigure the proposed taxable income shown on this notice. 272 - Unreported Substitute Payments in Lieu of Dividends The taxable payments in lieu of dividends reported on your return doesn't match the documents we received from your employer or payers. We used the unreported payments in lieu of dividends to refigure the proposed taxable income shown on this notice. 273 - Divorced/Separated Taxpayers-Single Signature Consent When you file a joint return, both taxpayers are jointly and separately responsible for the full amount of tax owed on the return, even if you separate or divorce after you file. We are unable to continue processing your signed agreement until we have received both signatures. 274 - Review Form 461, Limitation on Business Income Your Form 461, Limitation on Business Losses, may need to be adjusted based on proposed changes to business income. Review your records to determine what changes are needed and provide a revised Form 461. If the loss reflected was carried forward to a subsequent year, file a Form 1040X, Amended U.S. Individual Income Tax Return, for that year. If the tax return for the affected year hasn't been filed, confirm with a signed statement your records will be corrected. 275 - Revised Form 461, Limitation on Business Loss allowed We allowed the new limitation on business losses amount you provided. 276 - Clean Vehicle Credit eliminated We eliminated the Clean Vehicle Credit you claimed on your tax return because the proposed modified adjusted gross income (MAGI) exceeded the limit for your filing status. See Form 8936 on IRS.gov for the limit amounts.

# Form W-2 - Box 12 Codes

Exhibit 4.19.3-8 Form W-2 - Box 12 Codes The following list explains the codes shown in box 12, Form W-2. Elective deferral (codes AA, BB, EE, D, E, F, G, H, and S) under all plans are generally limited to $23,000 ($16,000 if only the SIMPLE plan; $26,000 for section 403(b) plans, if the taxpayer qualified for the 15-year rule as explained in Publication 571. Deferrals under code G are limited to $23,000, and code H to $7,000. However, taxpayers who were at least age 50 in the AUR year, may have been allowed an additional deferral by the employer, of up to $7,500 ($3,500 for section 401(k)(11) and 408(p) SIMPLE plans). This additional deferral amount isn't subject to the overall limit on elective deferrals. Amounts in excess of the overall deferral limit must be included in income. Code Definition A Uncollected social security or RRTA tax on tips. B Uncollected Medicare tax on tips. C Taxable cost of group-term life insurance over $50,000 (included in boxes 1, 3 (up to social security wage base), and 5). D Elective deferrals to a section 401(k) cash or deferred arrangement. Also includes deferrals under a SIMPLE retirement account that is part of a section 401(k) arrangement. E Elective deferrals under a section 403(b) salary reduction agreement. F Elective deferrals under a section 408(k)(6) salary reduction SEP. (this includes elective deferrals made to a ROTH SEP IRA). G Elective deferrals and employer contributions (including nonelective deferrals) to a section 457(b) deferred compensation plan. H Elective deferrals to a section 501(c)(18)(D) tax-exempt organization plan. J Nontaxable sick pay (information only, not included in boxes 1, 3, or 5) K 20 percent excise tax on excess golden parachute payments. L Substantiated employee business expense reimbursements (non-taxable). M Uncollected social security or RRTA tax on taxable cost of group-term life insurance over $50,000 (former employees only). N Uncollected Medicare tax on taxable cost of group-term life insurance over $50,000 (former employees only). P Excludable moving expense reimbursements paid directly to a member of the U.S. Armed Forces (not included in box 1, 3, or 5) Q Nontaxable combat pay. R Employer contributions to Archer (MSA). S Employee salary reduction contributions under section 408(p) SIMPLE plan (this includes salary reduction contributions made to Roth SIMPLE IRA ). T Adoption benefits (not included in box 1). Form 8839 must be completed to compute taxable amount. V Income from exercise of non-statutory stock option(s) (included in boxes 1, 3 (up to social security wage base), and 5). W Employer contributions to Health Savings Account. Y Deferrals under a section 409A nonqualified deferred compensation plan. Z Income under a section 409A nonqualified deferred compensation plan. AA Designated Roth contributions to a section 401(k) plan. BB Designated Roth contributions under a section 403(b) salary reduction agreement. DD Cost of employer-sponsored health coverage. The amount reported with Code DD isn't taxable. EE Designated Roth contributions under a governmental section 457(b) plan. This amount doesn't apply to contributions under a tax-exempt organization section 457(b) plan. FF Permitted benefits under a qualified small employer health reimbursement arrangement. GG Income from Qualified Equity Grants under Section 83(i). HH Aggregate Deferrals Under Section 83(i) Elections as to the Close of the Calendar Year are being added. II Medicare waiver payments excluded from gross income under Notice 2014-7.

# Income Identify Codes

Exhibit 4.19.3-9 Income Identify Codes Value Meaning ES Employee Savings Plan FT FICA Tax Withheld LC Long-term Cost Basis LS Lump Sum Distribution MA Mortgage Interest Deduction - Schedule A ME Mortgage Interest Deduction - Schedule E or Form 4835 MS Medical Savings Account Deduction MT Medicare Tax Withheld PB Primary Business Self-Employment Income PE Primary Earned Income PF Primary Farm Self-Employment Income PN Pension/Annuity RO Rollover (used to the suppress 10 percent or 25 percent penalty) RT RRTA Tax Withheld SB Secondary Business Self-Employment Income SC Short-term Cost Basis SD Schedule D Capital Gains-Long-Term Gain/Loss No Code Assigned (This value will display as blank in the INC CD field) SE Secondary Earned Income SF Secondary Farm Self-Employment Income ST Schedule D Capital Gains-Short-Term Gain/Loss SW Statutory Wages 5P Form 1099-R distribution subject to 5 percent premature distribution tax

# Non-Select Table

Exhibit 4.19.3-10 Non-Select Table The table is used to identify Non-Select terms associated with payee/payer field of the Information Return and is for information purposes only. Non-Select Terms N/A N/A ACCOUNT ACF ACT ACCT ADM ADMIN ADMINISTRATOR AGENT AGT AS ASSN ASSOC ASSOCIATES ASSOCIATION ATF ATTORNEY ATTY ATTYS CF CHILDREN CSN CO COMP COMPANIES COMPANY CONS CONSERV CONSERVATOR CORP CORPORATION COTRUSTEE COTR CUST CUSTODIAN CUSTODIAN for ESCROW EST ESTATE EX EXEC EXECUTOR EXECUTRIX EXTRX FBO FOUNDATION GDN GIFT GUAR GUARDIAN HEIRS INC INCORPORATED INFANT ITF LEG LEGAL LIMITED LTD MARITAL MINORS ORDER PARENT RESIDUARY SPECIAL SUCCESSOR TF TR TTEE TRUST TRUSTEE TRUSTEES UA UGMA UGTMA UNDER UNIF UNIFORM USE UW N/A N/A

# Notice Review Error Codes

Exhibit 4.19.3-11 Notice Review Error Codes Critical Errors Code Error 01 Wage income amount incorrect 01b Partially reported wages not considered 01c Two wage IRs for the same taxpayer, from the same payer; IRM not followed 01d EPAB income amount incorrect 01e Dependent Care amount incorrect 02 Interest income amount incorrect 03 Dividend income amount incorrect 04 Capital Gain Distribution amount incorrect 05 State Income Tax Refund amount incorrect 06 Nonemployee Compensation amount incorrect 06a Nonemployee Compensation not identified on Form 1040, Schedule 1, line 8z 06b Indication that taxpayer is incorporated/partner/shareholder was not considered 06c Nonemployee Compensation included in larger total on Sch C, F, Form 4835 06K Merchant Card amount incorrect 07 Gross Medical Receipt amount incorrect 08 Fishing income amount incorrect 09 Retirement income amount incorrect 09a Retirement income not identified when reported on a different line 09b Form 8606 not considered 09c Disability pension, Income Identify Code not entered 09d QCD/PSO notated on return but not considered 09e Rollover not identified 10 Rent/Royalty income amount incorrect 11 Conduit income amount incorrect 11a Conduit IDRS research not performed or misinterpreted 11b Form 8582 not considered 11c ORINC/REAL/OTREN/G-PAY/BNINC/OTPOR partially reported; IRM procedure wasn't followed 12 Agricultural Subsidy income amount incorrect 13 CCC Loan income amount incorrect 14 Patronage Dividend amount incorrect 15 Crop Insurance amount incorrect 16 Unemployment Compensation amount incorrect 17 SS/RR income amount incorrect 18 Other Income amount incorrect 19 Gambling income amount incorrect 20 Cancellation of Debt amount incorrect 21 Taxable Grants amount incorrect 22 Substitute Payment in Lieu of Dividend amount incorrect 23 Securities Sales income incorrect 23a Securities IRs not grouped (ST or SD) when appropriate 23b Securities IRs not matched to breakdown of stock included with return 23c Schedule D loss window incorrect 23d Non-statutory employee stock options on Form W-2 not considered 24 Barter income amount incorrect 25 Real Estate amount incorrect 26 Refund of Overpaid Mortgage (ROMID) interest amount incorrect 27 Qualified Tuition Program income amount incorrect 28 Archer Medical Savings Account / Health Savings Account income amount incorrect 29 Long-Term Care Benefits income amount incorrect 30 IRA, SEP or Simple Deduction amount incorrect 31 Archer Medical Savings / Health Savings Account deduction amount incorrect 32 Early Withdrawal Penalty Deduction amount incorrect 33 Student Loan Interest Deduction amount incorrect 33a No 1098E IR with SLID present; over-deducted SLID not pursued 33b SLID pursued in error; IRM procedure wasn't followed 33d Domestic Production Activity Deduction amount incorrect 34 AGI Window incorrect 34a Filing status incorrect 34c QBID 35 Mortgage Interest Deduction amount incorrect 35a Mortgage Insurance Premium amount incorrect 36 Schedule A Deduction amount incorrect 37 Additional Tax amount incorrect 37a Form 8814 37b Form 4972 37c Form 6251 38 Taxable Income per return amount incorrect 39 Tax per return amount incorrect 39a Schedule D window incorrect 40 Non-refundable credit amount incorrect 40a Foreign Tax credit incorrect 40b Child Care credit incorrect 40c Credit for the Elderly incorrect 40d Education credit incorrect 40e Retirement Savings Contributions incorrect 40f Child Tax / Other Dependent credit incorrect 40g Adoption credit incorrect 40h Miscellaneous credit incorrect 41 SE tax incorrect 41a SE tax incorrect - failure to correct $1 difference 41b SE tax not assessed on income reported on Form 1040, Schedule 1, line 8z 41c Incorrect entries in the SE tax window 41d Income Identify Code not input/verified to assess SE tax when appropriate 42 Other taxes amount incorrect (except SE tax) 42a Social Security and Medicare tax incorrect 42b Tax on qualified plans incorrect 42d Household employment tax incorrect 42e Miscellaneous tax incorrect 42f Net Investment Income tax incorrect 42g Additional Medicare tax amount incorrect 43 Withholding change amount incorrect 43a $1 rounding not allowed/withholding not verified in the Withholding window 43b IR not created when appropriate 43c Withholding window not accessed 44 Earned income credit amount incorrect 45 Excess SSTAX change amount incorrect 46 Additional Child Tax Credit amount incorrect 47 Estimated Tax Penalty / Failure to File amount incorrect 48 American Opportunity Credit amount incorrect 49 Additional Medicare Tax withheld amount incorrect 50 Net Premium Tax Credit amount incorrect 51 CP 2000 generated erroneously - case will have been closed 52 29X will have been ordered Non-Critical Errors (No change in tax) Code Error 01N Wage income amount incorrect 01dN EPAB income amount incorrect 01eN Dependent Care amount incorrect 02N Interest income amount incorrect 03N Dividend income amount incorrect 04N Capital Gain Distribution amount incorrect 05N State Income Tax Refund amount incorrect 06N Nonemployee Compensation amount incorrect 07N Gross Medical Receipt amount incorrect 08N Fishing income amount incorrect 09N Retirement income amount incorrect 10N Rent/Royalty income amount incorrect 11N Conduit income amount incorrect 12N Agricultural Subsidy income amount incorrect 13N CCC Loan income amount incorrect 14N Patronage Dividend income amount incorrect 15N Crop Insurance amount incorrect 16N Unemployment Compensation amount incorrect 17N SS/RR income amount incorrect 18N Other Income amount incorrect 19N Gambling income amount incorrect 20N Cancellation of Debt amount incorrect 21N Taxable Grants amount incorrect 22N Substitute Payment in Lieu of Dividends amount incorrect 23N Security Sales income amount incorrect 24N Barter income amount incorrect 25N Real Estate amount incorrect 26N Refund of Overpaid Mortgage interest amount incorrect 27N Qualified Tuition Program income amount incorrect 28N Archer Medical Savings Account / Health Savings Account income amount incorrect 29N Long-Term Care Benefits income amount incorrect 30N IRA, SEP or Simple Deduction amount incorrect 31N Archer Medical Savings deduction amount incorrect 32N Early Withdrawal Penalty Deduction amount incorrect 33N Student Loan Interest Deduction amount incorrect 34cN QBID 35N Mortgage Interest Deduction amount incorrect 36N Schedule A Deduction amount incorrect 38N Taxable income per return incorrect 39N Tax per return amount incorrect 39aN Schedule D window incorrect 51N CP 2000 generated erroneously - should have been CP 2501 53N Information Return omitted or incorrect information return selected 54N Incorrect paragraph selected or paragraph omitted 55N Schedule A incorrect 55aN Medical amount incorrect 55bN Contribution amount incorrect 55cN Casualty and Theft amount incorrect 55dN Miscellaneous amount incorrect 56N Return amount on Summary screen incorrect

# Titles of Forms and Schedules

Exhibit 4.19.3-12 Titles of Forms and Schedules Forms Title Form 1040 U.S. Individual Income Tax Return Form 1040-SR U.S. Income Tax Return for Seniors Form 1040-X Amended U.S. Individual Income Tax Return Form 1041 U.S. Income Tax Return for Estates and Trusts Form 1041-QFT U.S. Income Tax Return for Funeral Trusts Form 433-D Installment Agreement Form 461 Limitation on Business Losses Form 843 Claim For Refund and Request for Abatement Form 872 Consent to Extend the Time to Assess Tax Form 911 Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order) Form 966 Corporate Dissolution or Liquidation Form 982 Reduction of Tax Attributes Due to Discharge of Indebtedness (And Section 1082 Basis Adjustment) Form 1045 Application for Tentative Refund Form 1065 U.S. Return of Partnership Income Form 1098 Mortgage Interest Statement Form 1098-E Student Loan Interest Statement Form 1098-T Tuition Statement Form 1099-A Acquisition or Abandonment of Secured Property Form 1099-B Proceeds From Broker and Barter Exchange Transactions Form 1099-C Cancellation of Debt Form 1099-DIV Dividends and Distributions Form 1099-G Certain Government Payments Form 1099-INT Interest Income Form 1099-K Payment Card and Third-Party Network Transactions Form 1099-LTC Long-Term Care and Accelerated Death Benefits Form 1099-MISC Miscellaneous Income Form 1099-NEC NonEmployee Compensation Form 1099-OID Original Issue Discount Form 1099-PATR Taxable Distributions Received From Cooperatives Form 1099-Q Payments From Qualified Education Programs (Under Section 529 and 530) Form 1099-R Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc. Form 1099-S Proceeds From Real Estate Transactions Form 1099-SA Distributions From an HSA, Archer MSA, or Medicare Advantage MSA Form 1116 Foreign Tax Credit Form 1120 U.S Corporation Income Tax Return Form 1120-S U.S. Income Tax Return for an S Corporation Form 1128 Application to Adopt, Change, or Retain a Tax Year Form 1310 Statement of Person Claiming Refund Due a Deceased Taxpayer Form 2106 Employee Business Expenses Form 2275 Records Request, Charge and Recharge Form 2441 Child and Dependent Care Expenses Form 2555 Foreign Earned Income Form 2848 Power of Attorney and Declaration of Representative Form 2859 Request for Quick or Prompt Assessment Form 3115 Application for Change in Accounting Method Form 3210 Document Transmittal Form 3244 Payment Posting Voucher Form 3552 Prompt Assessment Billing Assembly Form 3800 General Business Credit Form 3903 Moving Expenses Form 3999 Statute Expiration Report Form 4029 Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits Form 4137 Social Security and Medicare Tax on Unreported Tip Income Form 4251 Return Charge-Out Form 4361 Application for Exemption From Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners Form 4442 Inquiry Referral Form 4562 Depreciation and Amortization Form 4563 Exclusion of Income for Bona Fide Residents of American Samoa Form 4684 Casualties and Thefts Form 4797 Sales of Business Property Form 4835 Farm Rental Income and Expenses Form 4952 Investment Interest Expense Deduction Form 4972 Tax on Lump-Sum Distributions Form 5147 IDRS Transaction Record (Electronic Only) Form 5329 Additional Taxes on Qualified Plans (Including IRAs) and Other Tax-Favored Accounts Form 5344 Examination Closing Record Form 5346 Examination Information Report Form 5405 Repayment of the First-Time Homebuyer Credit Form 5498 IRA Contribution Information Form 5498-ESA Coverdell ESA Contribution Information Form 5498-SA HSA, Archer MSA, or Medicare Advantage MSA Information Form 5564 Notice of Deficiency - Waiver Form 5695 Residential Energy Credit Form 6198 At-Risk Limitations Form 6251 Alternative Minimum Tax - Individuals Form 6252 Installment Sale Income Form 6781 Gains and Losses from Section 1256 Contracts and Straddles Form 7202 Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals Form 8082 Notice of Inconsistent Treatment or Administrative Adjustment Request (AAR) Form 8275 Disclosure Statement Form 8396 Mortgage Interest Credit Form 8453 U.S. Individual Income Tax Transmittal for an IRS e-file Return Form 8582 Passive Activity Loss Limitations Form 8606 Nondeductible IRAs Form 8615 Tax for Certain Children Who Have Unearned Income Form 8626 Agreement to Rescind Notice of Deficiency Form 8796 Request for Return/Information (Federal/State Tax Exchange Program) Form 8801 Credit For Prior Year Minimum Tax-Individuals, Estates, and Trusts Form 8805 Foreign Partner's Information Statement of Section 1446 Withholding Tax Form 8814 Parents' Election To Report Child's Interest and Dividends Form 8815 Exclusion of Interest From Series EE and I U.S. Savings Bonds Issued After 1989 Form 8821 Tax Information Authorization Form 8822 Change of Address Form 8824 Like-Kind Exchanges Form 8829 Expenses for Business Use of Your Home Form 8839 Qualified Adoption Expenses Form 8853 Archer MSAs and Long-Term Care Insurance Contracts Form 8857 Request for Innocent Spouse Relief Form 8862 Information to Claim Certain Credits After Disallowance Form 8863 Education Credits (American Opportunity and Lifetime Learning Credits) Form 8880 Credit for Qualified Retirement Savings Contributions Form 8889 Health Savings Accounts Form 8903 Domestic Production Activities Deduction Form 8915-B Qualified 2017 Disaster Retirement Plan Distributions and Repayments Form 8915-D Qualified 2019 Disaster Retirement Plan Distributions and Repayments Form 8915-F Qualified Disaster Retirement Plan Distributions and Repayments Form 8919 Uncollected Social Security and Medicare Tax on Wages Form 8949 Sales and Other Dispositions of Capital Assets Form 8958 Allocation of Tax Amounts Between Certain Individuals in Community Property States Form 8959 Additional Medicare Tax Form 8960 Net Investment Income Tax - Individuals, Estates, and Trusts Form 8962 Premium Tax Credit Form 9355 Barred Statute Report Form 9409 IRS/SSA Wage Worksheet Form 9452 Filing Assistance Program (Do you have to file a Federal Income Tax Return?) Form 9465 Installment Agreement Request Form 9856 Attachment Alert Form 8995 Qualified Business Income Deduction Simplified Computation Form 8995-A Qualified Business Income Deduction Form 12175 Third-Party Contact Report Form Form 12203 Request for Appeals Review Form 12249 Adjustment Document (Electronic Only) Form 12412 Operations Assistance Request (OAR) (Electronic Only) Form 13549 Campus Fraud Lead Sheet Form 13794 Request for Release or Partial Release of Notice of Federal Tax Lien Form 14027-B Identity Theft Case Referral Form 14039 Identity Theft Affidavit Form 14103 Identity Theft Assistance Request (ITAR) Form 14157 Complaint: Tax Return Preparer Form 14157-A Tax Return Preparer Fraud and Misconduct Affidavit Form 14219 Return of Documentation to the Taxpayer Form 14394 Identity Theft Collection Alert Form 8275 Disclosure Statement Form 8288-A Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests Form 872-A Special Consent to Extend the Time to Assess Tax Form SS-4 Application for Employer Identification Number Form SS-8 Determination of Worker Status for Purposes of Federal Employment Taxes and Income Tax Withholding Form W-2 C Statement of Corrected Income and Tax Amounts Form 1042-S Foreign Person's U.S. Source Income Subject to Withholding Form W-2 G Certain Gambling Winnings Form W-2 Wage and Tax Statement Form W-4 Employee's Withholding Allowance Certificate Form 1040 Schedules Schedule Title Form 1040 Schedule 1 Additional Income and Adjustments to Income Form 1040 Schedule 2 Additional Taxes Form 1040 Schedule 3 Additional Credits and Payments Form 1040 Schedule 8812 Child Tax Credit Form 1040 Schedule A Itemized Deductions Form 1040 Schedule B Interest and Ordinary Dividends Form 1040 Schedule C Profit or Loss From Business (Sole Proprietorship) Form 1040 Schedule D Capital Gains and Losses Form 1040 Schedule E Supplemental Income and Loss Form 1040 Schedule EIC Earned Income Credit Form 1040 Schedule F Profit or Loss From Farming Form 1040 Schedule H Household Employment Taxes Form 1040 Schedule J Income Averaging For Farmers and Fishermen Form 1041 Schedule K-1 Beneficiary's Share of Income, Deductions, Credits, etc. Form 1120-S Schedule K-1 Shareholder's Share of Income, Deductions, Credits, etc. Form 1065 Schedule K-1 Partner's Share of Income, Deductions, Credits, etc. Form 1040 Schedule R Credit for the Elderly or the Disabled Form 1040 Schedule SE Self-Employment Tax

# AUR Reconsideration Issue Codes - TY 2015 and Prior

Exhibit 4.19.3-13 AUR Reconsideration Issue Codes - TY 2015 and Prior Recon Issue Code Text PC/IPC Compatibility 1 Accuracy Related Penalty abatement 9P 2 Accuracy Related penalty abatement denied 9N 3 Copy of CP 2000 9I 4 Corrected document 9F, 9P 5 DBTCN 9P 6 Duplicate response 9I 7 Filing status change 9P 8 Gambling losses on Schedule A 9F, 9P 9 RESERVED 9F, 9P 10 Income belongs to someone else 9F, 9P 11 Incorrect AUR processing 9P 12 Information requested from taxpayer 9I 13 Information sent to taxpayer 9I 14 Interest abatement 9P 15 Interest abatement denied 9N 16 MORT verified 9F, 9P 17 NEC included in partnership 9F, 9P 18 O/C W/H verified 9F, 9P 19 U/C W/H verified 9F 20 Refile signature document 9I 21 Refund allowed- W/H verified 9F, 9P 22 Release Freeze codes 9N 23 Retirement 9P 24 Schedule C Expenses 9F, 9P 25 Schedule D cost basis 9P 26 Schedule D losses 9F, 9P 27 Subsequent payment 9I 28 Other 9F, 9I, 9N, 9P 29 Copy of CP 2000 9F, 9I, 9P 30 Interest/Penalty abatement denied 9N

# Notice Delay Actions (Reconsiderations)

Exhibit 4.19.3-14 Notice Delay Actions (Reconsiderations) Current IDRS Status Description Cycles to Next Status Next Status STAUP Required to Stop Next Notices Remarks 12 Full paid or Credit None N/A N/A There may be accruals Check CC INTST 19 Balance Due before Due Date - MF Notice issued Later of: Return Due Date or 5 Cycles 20 STAUP20 1st IDRS notice will issue the later of 5 Cycles after MF Notice or Return Due Date 20 First IDRS Notice - 501 5 56 STAUP56 No remarks 21 Balance Due - MF Notice issued 5 20(IMF) 58(BMF) STAUP 20 STAUP 58 This status for MF notices after return due date 22 TDA Issued (ACS) Various 24 or 26 N/A Input TC 470 23 Balance Below $1,000 tolerance (BMF); $1,500 (IMF) None N/A N/A MF Notice issued yearly Aggregate Balance below $1,000 (BMF); $1,500 (IMF) 24 TDA (Queue) Various 26 N/A Input TC 470 26 TDA (CFF) None N/A N/A Input TC 470 41/42 43/44 Stay of Collection Various 22 N/A No remarks 47 Temp Collection Freeze - TC 470 26 or Manual Release Various N/A Review - Reinput TC 470 if required 48 Temp Notice Freeze - CCSTAUP Number Input (1-15) As Requested Various Review - Update if required 50 Causes module to be accelerated to requested notice/TDA status Number Input (0) Various N/A No remarks 51 Undeliverable Notices 1 22 N/A No remarks 53 Temp Collect. Frz TC 470 - cc 90/93 26 or Manual Release (ST58) 20 N/A Review - Reinput TC 470 if required 53 TC 530 Account Uncollectable Various 22 N/A No remarks 56 Third IDRS Notice - 503 5 58 STAUP58 No remarks 58 Fourth IDRS Notice 504 6 22 or 23 or 26 STAUP22 No remarks 60/61 63/64 Installment Agreement Various Various Collection Branch Collection Branch 71 Offer in Compromise Various Various Collection Branch Collection Branch 72 Bankruptcy or other litigation Various Various Collection Branch Collection Branch 73 Coll/Offset Frz TC470 - CC99 Manual Release 58 N/A Freeze doesn't expire 76 Immediate TDA Pending 1 22 STAUP22 504 Notice & TDA next cycle 77 Accelerated TDA 3-8 58 STAUP58 504 is only IDRS notice 91 Criminal Investigation Various 22 CI Branch CI Branch 99 Out of service Center location Various Various N/A Review-input TC 470 if required

# Cycle Chart (Reconsiderations)

Exhibit 4.19.3-15 Cycle Chart (Reconsiderations) Action Cycles Closing case with a letter and a balance due will remain on the account 3-5 Closing case and action will resolve balance due 3 Routing correspondence or 1040-X to another area and issuing a Letter 86-C 9-15 Ordering documents from files 15 Sending correspondence for additional information 9-15

# Identity Theft Action Codes

Exhibit 4.19.3-16 Identity Theft Action Codes Action Code Description 501 Indicates identity theft case closure - Taxpayer initiated. 504 Indicates documented identity theft that may not be applicable to AUR/U/R income. 505 Indicates IRS data loss incidents 506 Indicates IRS determined identity theft. 522 Provides the status of an in-process identity theft case. 523 Reserved 524 Indicates the taxpayer is deceased and the account has been locked to prevent any tax return from posting. AC 524 may not be currently associated with IDT. 525 This indicator is systemically applied and indicates employment related identity theft.

# Identity Theft -Tax Administration Source Terms and Descriptions

Exhibit 4.19.3-17 Identity Theft -Tax Administration Source Terms and Descriptions To facilitate effective identity theft case tracking and reporting, the Identity Protection office developed new Administration Source Fields used in certain circumstances, dependent upon the facts and circumstances of the case. The following table provides the Source Codes, their descriptions needed for IDRS input of TC 971 AC 522. Term/Acronym Description DDB Used by RICS Pre-Refund for cases selected by DDB filter and identified as an Identity Theft return. DECD Deceased taxpayer. EC027 Primary Taxpayer under 14 years old. EMPL and EMPL-M Non-tax-related issues: Victim's SSN Used for Employment and/or Unemployment Insurance. INCUML Both INCOME and MULTFL apply. INCOME Income reported under taxpayer's SSN without their consent or knowledge. IRSADM Cases involving Economic Impact Payment (EIP). IRSERR Indicator reversed that was erroneously placed on the account. IRSID During the normal course of business, the IRS suspects identity theft occurred, and the case isn't yet resolved. MULTFL Two or more returns filed for the same tax period under the same SSN. NKI and NKI-M Non-tax-related issues: No known impact has been identified by the taxpayer. NODCRQ Prior to 2015, NODCRQ was applied when the taxpayer claimed identity theft and there was a posted TC 971 AC 501/ 506. Beginning in 2015, used in conjunction with BOD PPDS and Program OPIP (TC 971 AC 522 PPDS OPIP NODCRQ) to identify and track on-line accounts and EPSS accounts disabled due to identity theft. NOFR Victim isn't required to file a tax return. OMBG Return is valid. OTHER Identity theft which can't be identified as related to any existing Tax Administration Source types. OTHER1 Used by RICS to identify an SSN where there is at least one good return filed with a valid address. OTHER2 Taxpayers who chose to opt in to receive an IP PIN. PNDCLM The taxpayer made an allegation of identity theft by telephone, has filed a return with a claim attached or sent a reply to a Compliance function alleging identity theft without a Form 14039 or police report/law enforcement incident report. PRISNR Incarcerated Taxpayer. RFND Identity theft identified by the filing of a false return in order to obtain a refund. UNWORK The taxpayer made an allegation of identity theft and provided the required Form 14039 or police report/law enforcement incident report, and the case was forwarded to IDTVA for determination. UPC147 Input on the identified IRSN corresponding to the non-legitimate unpostable return with UPC147 RC 1 as identified and determined by SP. UPCMUL Input on true SSN owner's account when a non-legitimate unpostable return with UPC147 RC 1 has been filed using the taxpayer's SSN as identified and determined by SP.

# Mandated IAT Tools

Exhibit 4.19.3-18 Mandated IAT Tools Action IAT Tool AUR Reconsiderations xMend REQ54 REQ77 Address Letters eClerical Credit transfer Fill Forms Manual Refund Stop Refund (CC NOREF) Issue a Letter (unable to generate through AUR system) Letters tool Make adjustment to taxpayer account (unable to complete through AUR system) REQ54 tool When TC 971, 972, 470, 500, or 560 is needed REQ77 tool Researching specific payments or a range of payments TC Search Ordering a return/document (unable to order through AUR system) eClerical tool Move payments Credit Transfer tool Move credits to excess collections Fill Forms tool Manual Refund Manual Refund

# Additional IAT Tools Available (Use Not Mandated)

Exhibit 4.19.3-19 Additional IAT Tools Available (Use Not Mandated) Clerical Recon tool Screening tool Managers tool Quick CC tool ACTON CSI tool Prints tool

# Examples of Self-Employment Professions

Exhibit 4.19.3-20 Examples of Self-Employment Professions This list is NOT all inclusive. A Accountant Actor/Actress Administrator Agent Airplane Pilot Analyst Appraiser Architect Art Worker Artist Athlete Auctioneer Automatic Data Processing Equipment Operator B Babysitter Baggage Porter Bailiff Baker Bank Teller Barber Bartender Baseball player Bellhop Billing Clerk Bookbinder Bowler Brick Mason Brick Setter Broker Building Contractor Bus Driver C Cabinet Maker Caddie Cafeteria Worker Civil Engineer Cleaner Clerk (any kind) Commercial Artist Commissions Computer Operator Computer Specialist Conductor Construction Worker Consultant Cook Cutter D Dancer Data Processing Operator Decorator Designer Dental Assistant Detective Dentist Director's Fees Disc Jockey Domestic Cook Draftsperson Dressmaker Driver E Economist Electrician Elevator Operator Engineer (any kind) Engraver Entertainer F Farm Worker Farmer Firefighter Football Player Fortune Teller Freelance Writer Funeral Director G Garbage Collector Gardener Gas Station Worker Geologist Golfer Guard Guide H Hairdresser Host/Hostess Hotel Worker Housekeeper I Inspector Instructor Interpreter Investigator J Janitor Jockey Judge K Keypunch Operator L Laborer Launderer Lawn Care Lawyer Lay Midwife Librarian Library Assistant Longshore Worker M Mail Carrier Mail Clerk Mechanic Messenger Metal Worker Miner Model Motion Picture Worker Mover Musician N Navigator Newspaper Carrier (18+ years old) Nurse Nursemaid Nursery Worker O Official (sports) Optical Worker Optician Optometrist P Painter Palmist Parking Lot Attendant Pharmacist Photographer Pilot Plumber Police Officer Pollster Porter Printer Proofreader Protective Agency Publisher R Radio DJ Railroad Conductor Railroad Worker Real Estate Worker Receptionist Recreation Worker Registered Nurse Repair Person (any kind) Reporter Retail Trader Roofer S Sales Clerk Scientist (any kind) Sculptor Seamstress/ Seamster Secretary Singer Sheriff Social Worker Statistical Clerk Statistician Stenographer Steward Stock Clerk Surgeon Surgical Worker Surveyor T Tailor Taxicab driver Teacher (any kind) Teamster Telegraph Operator Telephone Operator Telephone Repairperson Telephone Worker Teller Textile Worker Therapist Timekeeper Trainer Transcriber Translator Truck Driver Tutor Typist U Upholsterer Usher V Veterinarian W Waiter Waitress Washer Watchperson Welder Wholesale Trader Window Washer Writer Y Yardperson INCOME THAT IS NOT SELF-EMPLOYMENT (This list isn't all-inclusive.) INCOME TYPES Alimony Award Bingo Child support ESOP Fellowship Gambling Grant Jury Duty Newspaper Route (Under age 18) Prize Rebate Scholarship Wages from Parent Wages from Spouse