Internal Revenue Manual
IRM 5.9.15 — Payments in Bankruptcy
Part 5. Collecting Process
Chapter 9. Bankruptcy and Other Insolvencies Section 15. Payments in Bankruptcy 5.9.15 Payments in Bankruptcy Manual Transmittal June 30, 2025 Purpose (1) This transmits a revised IRM 5.9.15, Bankruptcy and Other Insolvencies - Payments in Bankruptcy. Material Changes (1) This transmit revised IRM 5.9.15, Payments in Bankruptcy. The IRM has been updated to comply with January 2025 Executive Order and OPM guidance. Effect on Other Documents IRM 5.9.15, dated December 27, 2024 is superseded. This revision incorporates. Audience Small Business/Self-Employed, Specialty Collection Insolvency. Effective Date (06-30-2025) Thomas D. Kramer, Director, Collection Policy Small Business/Self Employed
Program Scope and Objectives
5.9.15.1 (12-15-2017) Program Scope and Objectives Purpose: To provide step-by step instructions for posting insolvency/bankruptcy and related payments received by the Centralized Insolvency Operation (CIO) located in the Philadelphia Campus and by the local Field Insolvency (FI) offices. This IRM section and subsections provide guidance on processing insolvency/bankruptcy payments (Bankruptcy Trustee checks) and Insolvency-related payments (checks received from parties other than the Bankruptcy Trustee). Audience: SCI caseworkers and management are the primary users of this IRM section. Advisors, Revenue Officers (RO), and other Small Business/Self Employed (SB/SE) employees may refer to these procedures. Employees in functions other than SB/SE may refer to this section when working with taxpayers that have filed an Insolvency proceeding. Policy Owner: The Director of Collection Policy is responsible for issuing policy for the Insolvency Program. Program Owner: The program owner is Collection Policy, Insolvency, an organization within SB/SE. Primary Stakeholders: The primary stakeholders are SCI and SB/SE Collection. Program Goals: To facilitate the efficient posting of payments received by SCI caseworkers and to promote timely and effective actions. By following these procedures, SCI caseworkers will help to ensure the Government's interests are protected during the bankruptcy proceedings.
Background
5.9.15.1.1 (12-15-2017) Background Internal Revenue Manual (IRM) 5.9, Bankruptcy and Other Insolvencies, contains the IRS's position, procedures, information, instructions, guidance, and references concerning bankruptcy cases, stockbroker, insolvencies, receiverships, assignments for the benefit of creditors, corporate dissolutions, and bulk sales. This IRM specifically provides procedures and step-by step instruction for the posting of Insolvency and Insolvency-related payments.
Authority
5.9.15.1.2 (06-30-2025) Authority The SCI program operates within the guidelines of the Bankruptcy Code 11 USC, the Bankruptcy Reform Act of 1994 (BRA 94), and the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA).
Roles and Responsibilities
5.9.15.1.3 (12-15-2017) Roles and Responsibilities The Director, SCI is responsible for program oversight. Field Specialists are responsible for preparing payment posting vouchers for payments received by the local Field Insolvency office. Centralized Insolvency caseworkers are responsible for preparing payment posting vouchers for payments received at the Philadelphia Campus. IRM 5.9.1, Bankruptcies and Other Insolvencies - Overview of Bankruptcy, provides a list of titles and responsibilities with an explanation of their roles and authority.
Program Management and Review
5.9.15.1.4 (12-15-2017) Program Management and Review IRM 1.4.51, Resource Guide for Managers, Insolvency, provides guidance for program management and review of SCI programs. Managers are required to follow program management procedures and controls addressed in IRM 1.4.51.5.2, Reviews (Overview), IRM 1.4.51.15, Controls, and IRM 1.4.51.16, Quality. Operational reviews are conducted during the fiscal year. See IRM 1.4.51.17.1, Frequency and Planning and IRM 1.4.51.17, Operational Review and Employee Engagement, for more information.
Program Controls
5.9.15.1.5 (12-15-2017) Program Controls SCI caseworkers must ensure payment amounts and posting vouchers balance exactly to the amount of the check. SCI caseworkers must resolve errors on the Unpostable Payment Report prior to forwarding vouchers for processing. See IRM 21.1.7.5.6, Centralized Insolvency Operation (CIO) Payment Processing.
Terms/Definitions/Acronyms
5.9.15.1.6 (12-27-2024) Terms/Definitions/Acronyms A glossary of terms used by SCI can be found in Exhibit 5.9.1-1, Glossary of Common Insolvency Terms. Common acronyms acceptable are listed in IRM 5.9.1-2, Acronyms and Abbreviations. Acronyms used locally in this IRM section are shown in the table below. Acronym Definition AIS Automated Insolvency System BAPCPA Bankruptcy Abuse Prevention and Consumer Protection Act CAG Case Assignment Guide BizOb Business Objects CCP Collection Case Processing CIO Centralized Insolvency Operation CPM Confirmed Plan Monitoring DPC Designated Payment Code EFTPS Electronic Federal Tax Payment System FI Field Insolvency GII Generalized IDRS Interface NDC National Data Center PACER Public Access to Court Electronic Records PCC Paper Check Conversion POC Proof of Claim SCI Specialty Collection Insolvency URF Unidentified Remittance File (URF) Additional acceptable acronyms and abbreviations are found in the ReferenceNet Legal and Tax Research Services.
Related Resources
5.9.15.1.7 (12-15-2017) Related Resources Document 13219, Automated Insolvency System - User Guide. Title 11 of the United States Code, 11 USC, known as the Bankruptcy Code. IRM 3.8.44, Campus Deposit Activity.
Payment Addresses
5.9.15.2 (04-05-2011) Payment Addresses Chapter 7 and Chapter 13. Trustees have been instructed to send all Chapter 7 and Chapter 13 payments to the Centralized Insolvency Operation (CIO). The proper mailing address for these checks is: P.O. Box Street Mailing Address P.O. Box 7317 Philadelphia, PA 19101-7317 Internal Revenue Service Mail Stop 5-Q30-133 2970 Market St. Philadelphia, PA 19104-5016 Attention: Payment Team Chapters 11,12, and 15. Payments for Chapter 11, 12, and 15 should be sent to the local FI office assigned to the cases. If a Chapter 11, 12, or 15 check is inadvertently mailed to the CIO, the CIO Payment Processing Unit must post the check as required by Campus procedures.
Applying Payments in Bankruptcy
5.9.15.3 (08-06-2015) Applying Payments in Bankruptcy Automated Insolvency System (AIS) Processing. AIS processing is available for most bankruptcy and bankruptcy-related payments. Step-by-step instructions for posting payments are provided in this IRM section. Payment posting vouchers are prepared by FI and routed with the accompanying payments to the delegated Campus for posting. Bankruptcy payments remitted by the bankruptcy estate and received by the CIO are processed at the Philadelphia Campus. Only Chapter 7 and Chapter 13 trustee checks should be going to the CIO. Bankruptcy-related payments not being paid by the bankruptcy estate (payments with a designated payment code (DPC) other than 03 or 11) received by the CIO will be processed by the CIO. CIO will route the payment posting voucher(s) and the accompanying payment(s) to the Philadelphia Campus Support function for posting. IRM 3.8.45.5.3, Remittance Not Payable to United States Treasury, outlines acceptable payee names. Note: To resolve payment posting problems, SCI employees must familiarize themselves with all aspects of AIS, including the AIS User's Guide (Document 13219). Bankruptcy – Involuntary Payments. Payments received through the bankruptcy proceeding are considered involuntary payments. Absent court orders or confirmed plan designations to the contrary, bankruptcy payments are applied as follows: First to earliest assessed secured liabilities; Then to earliest assessed unsecured priority; and Lastly, to the claim's earliest assessed unsecured general class. Note: For details of automatic allocation, see Exhibit 5.9.15-4, AIS Automatic Allocation Dischargeable Liabilities. While payments should usually be applied to the earliest assessment, in some cases it may be in the government's best interest to apply the payment first to the later dischargeable assessments if earlier assessments are non-dischargeable. Payments should be applied to dischargeable liabilities in the same manner as above (earliest assessments first). Note: If a dischargeable liability has been adjusted at the time the payment is received, the SCI caseworker in receipt of the payment, should readjust the account and apply the payment to the discharged liability before applying it to the non-discharged liability on the proof of claim or according to local guidelines. Court Designation. If a confirmed plan or a court order defines payment designation, the payment will be manually applied as directed. (See IRM 5.9.15.15.4, Partially Designated, Semi Automatic, and Manual Payments). Individual MFT 35 Liabilities. Beginning in 2015, individuals may be assessed a Shared Responsibility Payment (SRP), under MFT 35. Any payments resulting from lien, levy, or seizure action cannot be applied to the SRP. Employer MFT 43 Liabilities. With enforcement for all employers beginning in 2017, employers may be assessed an Employer Shared Responsibility Payment (ESRP), under MFT 43. Any payments resulting from lien, levy or seizure action can be applied to the ESRP. Counsel Guidance. When complex or unusual concerns arise, Counsel should be consulted.
MFT 31/65 Payments
5.9.15.3.1 (03-01-2006) MFT 31/65 Payments MFT 31/65 Payment and Credit Applications. Once MFT 31/65 mirror modules have been created, both modules carry a TC 971 AC 110 which causes certain payments and credits to systemically cross-reference from one MFT 31/65 mirrored module to the other. When a credit is posted to one module, IMF will cross reference the related module with TC 290 for .00 and TC 766 ref number 337. This credit will reduce the unpaid balance on the module. The credit is a nonrefundable credit. The credits that will systemically cross-reference are: TC 610 TC 64X TC 66X TC 67X TC 68X TC 69X TC 79X TC 72X TC 73X TC 76X TC 80X TC 82X Note: When IMF cross-references these credits, it bypasses unpostable reviews for freeze conditions related to bankruptcy, offers in compromise, innocent spouse, Taxpayer Assistance Orders, and Examination. Non-Transferable MFT 31/65 Credits. Credits with a DPC 31 on an MFT 31/65 mirror module will not cross-reference to the spouse's MFT 31/65 module. Note: DPC 31 is used only on MFT 31/65 mirror modules to prevent credits from cross-referencing.
Payments on Unfiled Returns
5.9.15.3.2 (12-27-2024) Payments on Unfiled Returns Trustee Payments on Unfiled Returns or Unassessed Deficiencies. During a bankruptcy proceeding, the IRS may file an unassessed (estimated) proof of claim (POC) to protect the government's interests. (See IRM 5.9.13.18.1, Unassessed Claims.) The trustee sends payments to the IRS on the proposed liability based on the IRS's claim when: The debtor has failed to file a tax return, or An assessment based on an unfiled return is present, or An assessment for a tax deficiency has been proposed. Payment Retention - Exception Allowed for Bankruptcy. Because of the bankruptcy, the IRS is allowed to retain trustee payments based on the IRS's unassessed claims even though the case has unmatched payments (e.g. unresolved credits) if: The IRS's claim has been estimated, and the debtor has not filed an original return or a proposed assessment is present; or There is an open Examination or Automated Under Reporter (AUR) indicator for the unassessed claim; or Examination or AUR does not pursue the assessment of a proposed deficiency, but other balance due periods exist. Assessment Proposed or No Return Filed. In situations where the IRS has an estimated POC because a proposed assessment is present, or the debtor has not filed an original return, the IRS may apply the payment(s) to other tax periods with balances due, provided they are of the same claim type (secured, priority, or general). If there are no other balances due of the same claim type, the payment should be deposited to the Unidentified Remittance File (URF) or Excess Collections File (XSF). See IRM 5.9.15.3.2 (5) below. Open Exam or AUR Indicators. In situations where the IRS has an estimated proof of claim and: There is an open Examination or AUR indicator, follow the guidance in IRM 5.9.18.3(2), Caseworker Actions, and IRM 5.9.18.7(2), Initial Credit Balance and Unresolved Credit Balance. An Examination or AUR assessment will not be pursued, the IRS may apply the payment(s) to other tax periods with balances due of the same claim type, if they exist, with any remaining balance refunded to the trustee. A proposed deficiency assessment is rescinded because the debtor has provided adequate documentation to Examination, the IRS may apply the payment(s) to other tax periods with balances due of the same claim type, if they exist, with any remaining balance refunded to the trustee. Deposit to Unidentified Remittance File (URF) or Excess Collections File (XSF). If the IRS's rights to payment retention apply as described in IRM 5.9.15.3.2(3), Assessment above, the payment(s) should be deposited by the IRS, posted through AIS, and credited to either the URF or XSF. The determining factor is the age of the payment. URF Guidelines. If the IRS posting date to master file is less than one year, the credit can be transferred to URF. The caseworker must prepare Form 2424, Account Adjustment Voucher. When completing the form, the caseworker should use the Fill Forms IAT Tool. The tool will assist the caseworker with completing the form and ensure accuracy. The payment will be deposited to URF by the Accounting Function. Note: Form 2424, debit processing may take three to six weeks for removal of the credit from Masterfile. DO NOT RESUBMITForm 2424 to URF until 30 days from the original submission to allow the debit to post. See IRM 3.17.10.3, Unidentified Remittance File (URF). Form 2424 must be prepared indicating the credit side to the URF account. A separate form must be completed for each credit being moved. A TXMODA/IMFOLT/BMFOLT screen print showing the availability in the Masterfile and Service Center balance, payment and payment date of the credit to be transferred to URF must be attached to Form 2424, Account Adjustment Voucher. The form must be annotated, This credit is a bankruptcy payment and should not be refunded or applied. Also, the form must indicate, No follow-up action with taxpayer is required, so the IRS will not attempt to contact the debtor. XSF Guidelines. If the IRS posting date to master file is one year or more, the credit can be transferred to XSF by preparing the Form 8758, Excess Collections File Addition. The use of the Fill Forms IAT Tool will assist the caseworker with completing the form and ensure accuracy. The payment will be deposited to XSF by the Accounting Function. Form 8758 must be completed to move the credit to XSF. A separate form is required for each credit being transferred. The form must be annotated, This credit is a bankruptcy payment and should not be refunded or applied. The form must also state No follow-up action with the taxpayer is required, so the IRS will not try to contact the debtor. A TXMODA/IMFOLT/BMFOLT screen print showing the availability in the Masterfile and Service Center balance, payment and payment date of the credit to be transferred to XSF must be attached to Form 8758. See IRM 21.2.4.3.10.1, Excess Collections File (XSF) and Unidentified Remittance File for AMRH. Credit Resolution. When an unresolved credit appears on a tax module for a bankruptcy account, SCI caseworkers must exhaust all efforts to resolve the credit prior to its transfer to either URF or XSF. Note: If a payment has been transferred to the Excess Collections File, and a return is subsequently filed by the debtor, the payment can usually be retrieved from the XSF and applied to the account.
Payments on Claims Filed on Behalf of IRS
5.9.15.3.3 (06-30-2025) Payments on Claims Filed on Behalf of IRS No Plan Loaded. When the IRS does not file a claim in a bankruptcy proceeding, and the debtor or trustee files a claim on behalf of the IRS without their knowledge, neither the AIS claim screen nor the plan payment screen is loaded before payments are received by CIO Payment Posting Team. The following steps explain the actions necessary to post payments on these claims. See IRM 5.9.13.3(2), Claims Filed on Behalf of IRS. Step Action 1 When the first payment is received on a claim filed by the debtor or trustee on behalf of the IRS, the caseworker posting the payment must apply the payment to the non-plan screen so the payment can be processed. Note: If the case is not on AIS, the caseworker must retrieve case information from the court's electronic records (usually Public Access to Court Electronic Records (PACER)) and load the case onto AIS prior to applying the payment. 2 The Payment Posting Team must advise the assigned FI caseworker of the payment so a claim can be prepared and filed by the IRS. 3 Regardless of whether the FI caseworker files a claim, he/she will be responsible for establishing a plan payment screen on AIS and moving the payment from the non plan screen to the plan payment screen within fifteen business days of notification by the CIO. 4 If a plan payment screen has not been updated by FI by the time a second payment is received, the CIO caseworker will open a dummy plan screen using the total IDRS balance due up to the petition date for each period as the claim amount. Each period will be listed as priority tax. The plan payment amount will be $0.50 to identify this as a claim filed on behalf of the IRS.
Surplus Payments from Trustee
5.9.15.3.4 (10-03-2023) Surplus Payments from Trustee Trustee Overpayments. When the dollar amount on the AIS plan screen has been overpaid, AIS generates an overpayment message on the payment voucher advising the user of the overpayment. This message does not indicate the IDRS balance due has been overpaid. Overpayments cannot always be identified by AIS. If a trustee remits a payment that is more than the unpaid balance of a claim against a debtor, the surplus payment amount, or the entire check, if appropriate, should be returned promptly to the trustee. Note: The overpayment is payable to the debtor and sent in care of the trustee. If a check from a trustee is for a single debtor and the claim has previously been full paid, the check should be marked "VOID" and returned to the trustee accompanied by Form 3699, Return Documents to Taxpayer, explaining the reason the check is being returned. If a check from a trustee is for a single debtor and only a portion of the remittance is needed to full pay the claim, the payment should be applied to the non-plan screen and the overpayment monitored to refund to the trustee. If an overpayment of a claim (either full or partial) has been received from a trustee on a check for multiple debtors, the actions in paragraph (2) below must be followed. The CIO Payment Processing Team is responsible for determining the cause of the overpayment and posting the payment accompanied by a request for input of TC 570 to prevent the overpayment from being refunded to the debtor. Correcting the underlying cause of an overpayment, such as an incorrect plan screen or lack of an amended claim or credit letter, is the responsibility of the applicable FI office. If the payment identified by AIS as an overpayment is not to be refunded to the trustee because it is not a true overpayment, FI must ensure the payment is posted to the correct module. This may require a credit transfer and/or moving the payment from the AIS non-plan screen to the plan screen and adjusting the dollar amount on the "overpayment" field on the master plan screen. Working Overpayment Errors. Not every overpayment error identified by AIS is a true overpayment. IDRS, AIS, and PACER research may be required. The following check list can help in determining if the overpayment is genuine and requires a manual refund. The caseworker should compare the AIS claim screen to the AIS plan screen. If the dollar amount of the claim does not equal or exceed the dollar amount of the plan screen, the caseworker should, as necessary: Check the claim screen to determine if a dollar amount has been input in the offset field. This amount should not be included on the plan, because this is money the trustee will not be sending to the IRS; Determine if the claim has been amended, but the plan screen has not been updated accordingly; Look for the presence of an administrative claim; Determine if general unsecured claims have been correctly loaded to the CPM; Determine if post-petition accrued interest is allowed on the IRS's claim; Research for duplicate check posting; Research PACER for a claim filed on behalf of the IRS (See IRM 5.9.15.3.3, Payments on Claims Filed on Behalf of IRS); and/or Review prior AIS history for indication of BMF liabilities being paid through the plan. Caution: The "Overpaid Amt" field on the AIS plan screen does not necessarily reflect the true amount of an overpayment and may require manual adjustment. Amended Claims. If a claim has been amended, a number appears in the amended claim field with a date below the number on the AIS claim screen. The caseworker should compare the amended claim amount and the plan amount. If the amount on the amended claim screen is larger than the plan screen, the caseworker should compare the period screens of both to determine where to post the overpayment. Then the case must be transferred to the appropriate FI group to update the plan screen. FI must correct the plan, move the payment from the non-plan screen to the appropriate period (if applicable), and then remove the payment from the non-plan screen within 15 business days of notification by CIO. Loading General Unsecured Plans. Unsecured general claims must be loaded for the full amount of the unsecured general liability, not just the dollar amount provided in the plan. This will prevent trustee overpayment errors resulting from estates that generate more money than expected. If the Payment Posting Team identifies a case where the unsecured general plan is not loaded correctly, the caseworker should update the plan for the full amount of the unsecured general liability and continue processing the check. Interest Not Shown on the Plan. If the claim screen and the plan screen match, the caseworker should determine if any periods have been classified as secured on the claim. The IRS may be entitled to interest on a secured claim. Note: In some instances, BAPCPA allows accrued interest to be paid on priority as well as secured claims. In addition, some plans are providing for accrued interest to be paid on unsecured general claims. The actions provided in this paragraph apply to any claim designation where accrued interest will be collected. The AIS master plan screen should indicate if the plan detail screen was loaded correctly to allow for accrued interest as either Simple, IDRS Compounded, or Daily Compounded. If the debtor's plan provides for interest, an interest rate should appear in the Optional interest field to indicate the interest rate the trustee is paying on the secured claim. An interest amount should appear in the 13 Priority field if the Chapter 13 plan provides for interest on the IRS's priority claim. If the Optional and 13 Priority interest fields are blank and a potential trustee overpayment has been identified, the caseworker should check the AIS history for documentation indicating any interest amounts being paid. If none is found, the case must be transferred to the appropriate FI office for further research and follow-up actions. Note: Interest on unsecured general periods will not be calculated on AIS. Refer to IRM 5.9.15.4 (1), Excess Interest, for TC 340 information. Duplicate Posting. Sometimes, a trustee payment may be posted on AIS more than once. When this occurs, the duplicate posting(s) must be removed so only one posting remains on the AIS system. Duplicate posting can be identified through the Plan Monitoring Payment Record report. To generate this report for a specific docket number, the caseworker must take the following steps. Step Actions 1 Access the case on AIS. (See IRM 5.9.11-1, Accessing a Case on AIS, steps 1 through 4.) 2 Click on the "CPM" tab. 3 From the Plan Screen, select the "Payment Record" tab. 4 View the Payment Record report that appears on the screen or print a copy of the report to identify duplicate payments. 5 Analyze the report for duplicate payments by looking for two or more identical check numbers, identical dates, and/or identical dollar amounts. Also, consider possible typographical errors (e.g., check 083115, versus check 0831115). Note: If a duplicate posting is for a check processed by FI, the case must be referred to the appropriate FI group for correction. Reminder: Payments posted in duplicate are nonrefundable. Payments Posted on the Non Plan Screen. Payments that have posted to the non plan screen and subsequently moved to the plan screen must be removed from the non plan screen. Instructions for removing a payment can be found in IRM 5.9.15.18(2), Removing Non Plan Payments. The caseworker who copies a payment from the non plan screen onto the plan screen must also remove it from the non plan screen. Administrative Plan. The AIS Proof of Claim and the CPM screens must be reviewed to identify the presence of an Administrative claim and the corresponding plan. If the CPM displays an open Administrative Plan, then the caseworker will be able to post the payment by following the steps below: Step Action 1 From the AIS main menu select payments and then post-automatic. 2 Select "insert" . 3 Input the AIS case number and court key. 4 Under payment type, make sure "automatic" is selected. 5 Complete the fields for "payment data" (date, amount, check number) 6 Under "plan type" click the drop down arrow and select "Administrative" . 7 Select save and a pop-up message will display indicating "added successful" . Reminder: If only the original regular claim exists on the Proof of Claim Screen and an amended claim has not been filed, the caseworker must read the AIS history to determine if a reason can be found for the overpayment. Research of the court's electronic records (PACER) may be required to determine if more than one claim has been filed for the IRS or if the claim filed with the court matches the dollar amount on the AIS plan screen. Note: If there are any discrepancies between the amounts in the Proof of Claim screen and the CPM, or if no plan is loaded, then the CIO caseworker must assign the case to FI for resolution. Posting Overpayments. Procedures for trustee overpayments received on single checks should be handled according to IRM 5.9.15.3.4, Surplus Payments from Trustee. Overpayments identified on bulk checks should be posted on periods found on the plan. (See IRM 5.9.15.7, Proper Application of Payments.) To view the plan periods, the caseworker should follow the steps in Exhibit 5.9.15-2, Accessing the AIS Claim Screen. From the CPM screen, a payment can be applied by selecting pending payments and then insert payment. If a case is open on AIS, a TC 520 with closing code (cc) 60 or 61 should be posted to the case before the payment is posted. If the overpayment is for a case that has been full paid, dismissed or discharged, a request for a TC 570 must accompany the payment. This will prevent the overpayment from systemically refunding to the debtor. Note: For detailed information about the process of posting payments in AIS, see IRM 5.9.15.15, Payment Posting Steps. Monitoring for Overpayment Posting at the CIO. The caseworker must input an AIS history explaining where the payment was posted, along with an annotation that the payment might have to be refunded/payable to the debtor and sent in care of the trustee. CIO caseworkers must complete a "Monitoring for Payment Posting" follow up sheet and place in the designated follow-up folder. Working Follow-ups. After a true overpayment from a bulk trustee check has posted, it must be refunded. A CIO caseworker will be assigned to work the overpayment follow-up folder weekly. IDRS must be accessed to determine if the payment has posted. If not, the caseworker will set the follow up for one additional week. Once the payment has posted, AIS must be checked for case disposition and the following actions should be taken: Discharged Cases. The caseworker should call the trustee before refunding the payment. Since the trustee may have to reopen the case to distribute the money, they may ask the IRS to refund the overpayment to the debtor. Dismissed Cases. The caseworker should review IDRS and input a TC 571 if required. Once the dismissal is processed and the bankruptcy freeze is released, any credit balance remaining will systemically offset to any debit modules or be systemically refunded to the debtor. Recomputing the Plan. After all payments which were refunded have been reversed, the plan must be recomputed. See Exhibit 5.9.15-3, Plan Recomputation, for step-by-step instructions on plan recomputation. Request for Return of Payment. A trustee may send the IRS a payment in error and ask for its return. The IRS will honor the trustee's request. Once the payment has posted to the debtor's account, a manual refund must be prepared for the trustee and the payment backed out of the AIS plan payment screen. Note: The payment is refunded payable to the debtor in care of the trustee. No Interest Computation. If a payment is sent by a trustee in error (e.g., the IRS is not entitled to any payment on the distribution scheme, or the IRS has been paid out of turn), the trustee will not receive interest on the refund. However, if a trustee's payment is in excess of the IRS's claim, the amount of the excess may be an overpayment, and the trustee may be entitled to interest.
Payments Received After AIS Discharge Closure
5.9.15.3.5 (04-05-2011) Payments Received After AIS Discharge Closure Chapter 13 Final Distribution. Some Chapter 13 trustees hold the final distribution of funds to creditors until the case has been closed by the court. Generally, the IRM requires closing actions on a case be initiated within 30 calendar days of notification of a discharge, dismissal, or non-discharge. (See IRM 5.9.17.4, Time Frames for Required Actions.) However, in cases where trustees send the final distribution after the discharge, closing actions need not be initiated until the final payment is posted on AIS. Nonetheless, a case may be closed on AIS before final distribution is received. If the case is closed on AIS and an abatement has been completed on IDRS, the abatement should be reversed, and the trustee payment(s) should be applied to the debtor's account. Chapter 7 Asset Final Distribution. Chapter 7 trustees may remit final distributions months or years after a case has closed. IRM 5.9.17.12, Closing Corporate Chapter 7 and Chapter 7 Limited Liability Companies (LLCs), gives instructions on how to process corporate Chapter 7 Asset cases. Non-corporate Chapter 7 Asset cases cannot be closed as currently not collectible while the IRS awaits a possible distribution from the trustee. See IRM 5.9.17.10(5), Asset Discharge for Individual Debtor, for procedures for processing final distributions to non-corporate Chapter 7 cases.
Payments Resulting from Litigation
5.9.15.3.6 (08-06-2015) Payments Resulting from Litigation Negotiated Settlement. When SCI requests a referral for an objection to a plan, the Department of Justice (DOJ) files the objection on behalf of the IRS. DOJ and the trustee or debtor-in-possession may arrive at a negotiated settlement of the tax claim. If a settlement is reached, DOJ sends the check to the IRS lockbox for the payment to post to the debtor's account on IDRS with a designated payment code of 99. The amount received in the settlement should be posted through the debtor's account on AIS, so SCI can receive the credit for collecting the funds. Restitution Assessments. A taxpayer who has been ordered to pay restitution as a result of conviction for a tax related offense may file bankruptcy. Payments made pursuant to a plan for restitution must be applied to the restitution assessment. If it is necessary to determine how any restitution-designated payment(s) received in bankruptcy should be applied, the SCI caseworker should contact the assigned Advisor for guidance.
Designated Payment Code
5.9.15.3.7 (03-01-2006) Designated Payment Code Payment Codes. DPC 03 should be used for most bankruptcy payments. When a confirmed plan provides for designation to trust fund taxes, DPC 11 must be used. For additional information regarding DPC, see Document 6209 and IRM 21.1.7-5, Designated Payment Code.
Taxes Owed by Bankruptcy Estate
5.9.15.3.8 (03-01-2006) Taxes Owed by Bankruptcy Estate Admin Expenses. Taxes paid by a trustee or a debtor-in-possession as an administrative (admin) expense are credited only against the taxes incurred by the bankruptcy estate. Non-pecuniary loss penalties that relate to taxes paid by the trustee are also an administrative expense. Penalties that do not relate to any tax but which were incurred post-petition during the normal operation of the business may be entitled to administrative expense status.
Plan Interest Rates
5.9.15.4 (06-30-2025) Plan Interest Rates Excess Interest. Sometimes the interest rate of the plan may exceed the usual rate of interest charged by the government (as prescribed in IRC 6621). This excess interest may result in a credit balance on the account. These credits must not be refunded to the debtor or transferred to any other modules. To resolve the excess interest payment, SCI must input TC 340, restricted interest assessment, in the same amount as the excess interest payment. (See IRM 5.9.15.3.4, Surplus Payments from Trustee.) Post BAPCPA Interest. The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA) amends 11 USC 511(a) to establish a uniform interest rate on Chapter 11, 12, and 13 tax claims, or administrative expense taxes, using the interest rate being charged by the IRS as determined by IRC 6621. For taxes being paid through a confirmed plan, the rate of interest is determined as of the calendar month the plan is confirmed. Note: For large corporate underpayments, the interest rate is two percentage points greater than the normal underpayment rate. Post-Petition Interest. For cases filed on or after October 17, 2005, 11 USC 1222(b)(11) and 1322(b)(10) specifically allow post-petition interest on claims that are not dischargeable under 1228(a) and 1328(a)1. The IRS may be able to obtain interest on those taxes to the extent they are provided for in the plan, but only if the debtor has sufficient disposable income to pay the interest after full payment of all allowed claims. This provision does not affect the IRS's right to interest under the "best interest of creditor's test" set forth in 1325(a)(4).
Non-Pecuniary Loss Penalty Payments
5.9.15.5 (03-01-2006) Non-Pecuniary Loss Penalty Payments Punitive Penalty Rule. A non-pecuniary loss penalty is a punitive penalty, or fine; such as a failure to file or failure to pay penalty. The priority of payments made in a Chapter 7 case is set forth in 11 USC 726. Because general unsecured claims are paid ahead of any claims for non-pecuniary loss penalties, payments should not be applied to non-pecuniary loss penalties until all other general unsecured claims are paid.
Unassessed Liability/No Open Modules
5.9.15.6 (10-03-2023) Unassessed Liability/No Open Modules Establishing Modules for Pending Assessments. SCI sometimes receives payments on a bankruptcy case when the IRS's proof of claim reflects a liability not yet assessed, and no modules or filing requirements are open on IDRS. Dummy modules must be established on IDRS when the proof of claim is prepared, so payments are held until assessments have posted. Example: A tax module is set up on IDRS in preparation for a pending assessment of a Trust Fund Recovery Penalty (a pecuniary loss penalty assessment), or for a secondary (debtor) spousal situation, the spouse having now filed a separate return after filing jointly for prior year(s). Procedures for Creating New (Dummy) Modules. Payments received on an estimated claim cannot post unless a valid entity has been established on master file and a corresponding module appears on IDRS. If the estimated claim covers a period currently appearing on IDRS, such as a Taxpayer Delinquency Investigation (TDI), Insolvency Interface Program (IIP) will input a systemic TC 520 on the period allowing payments to post. However, if a module does not appear on IDRS, a new module (sometimes referred to as a "dummy" module) must be created prior to receipt of the trustee's first payment. In jurisdictions where trustees routinely remit payments prior to confirmation, dummy modules should be created upon initial case review. In all events dummy modules must be created prior to transferring cases with estimated claims to the CIO. Three scenarios must be considered in creating dummy modules: Entity with Valid Established Date. If the entity on master file was established prior to the estimated claim period, a dummy module is created by inputting a TC 520 with the appropriate closing code on IDRS for the estimated period. CIO should use CC REQ77 to input the TC 520 CC 61 while FI use Form 3177Notice of Action for Entry on Master File. Example: The entity was established on master file in 2009 and the estimated period is for 201112. Entity with No Valid Established Date. If the entity on master file was established after the date of the estimated period, the entity establishment date must be post dated to include the estimated period. Without this master file change, payments to the estimated period will go unpostable. The CIO will complete the necessary actions on-line using CC ENREQ for cases initially in their inventory. (See IRM 2.4.9-2, Command Code ENREQ.) Field Insolvency will prepare Form 2363, Master File Entity Change, directing Centralized Case Processing (CCP) to move the entity establishment date to an earlier period for cases initially in their inventory. The current version of Form 2363 does not provide a line for the entity establishment date, therefore caseworkers should attached a secondary sheet with what is requested. Additionally, as part of changing the entity establishment date, on the From side of the Form 2363, caseworkers must select transaction code 016, Change miscellaneous codes. For detailed information about Form 2363, see IRM 3.13.5.36, Form 2363 Master File Entity Change. Example: The entity was established on master file in 2011 and the estimated period is for 200912. Reminder: The processing of Form 2363 by CCP can take up to 14 days. Once the entity establishment date has been changed, the caseworker must create a dummy module by using CC REQ77 to input TC 520 cc 61 for the estimated period. The caseworker will know the establishment date has been changed when the Name Line Yr on ENMOD reflects the requested date. Caution: Attempting to input the TC 520 with a posting delay before the entity has been changed will cause the TC 520 to unpost. Entity Not Established on Master File. If the debtor has never filed a return or has always filed as a secondary taxpayer with a primary spouse (for joint returns filed prior to January, 2001), the debtor will not have an entity established on master file. (For joint returns filed on or after January, 2001, entities are established systemically for secondary spouses.) Without an established entity, payments made toward an estimated claim will go unpostable. The CIO will complete the on-line actions necessary to establish the entity using CC ENREQ for cases initially in their inventory. (See IRM 2.4.9-2, Command Code ENREQ.) FI must prepare Form 2363 directing CCP to establish the entity on master file for cases in their inventory. Once the entity has been established, the FI caseworker must create a dummy module by using CC REQ77 to input TC 520 cc 61 for the estimated period. Note: When ENMOD updates and a new module is created with the input of TC 520 through CC REQ77, the new module will not be identified on IDRS as "dummy" . Field Prevention of Unwarranted Refunds. To avoid systemic refunds when trustee payments are received on unassessed claims: FI must ensure TC 520s with appropriate closing codes are entered on all tax modules for which unassessed claims are filed, and FI caseworkers must establish the module on IDRS prior to receipt of the first payment to allow the CIO Payment Processing Team to post the payment on AIS automatically, avoiding the need for manual application. Note: When IIP inputs the statistical indicator on a proof of claim period identified as unassessed due to certain proof of claim statements, a TC 520 cc 60 or 61 is systemically input to freeze pre-petition credits from systemically refunding to the taxpayer. CIO Prevention of Unwarranted Refunds. When trustee payments are received on unassessed claims or on cases that have closed as no liability (NL), the CIO must: Reopen the case, if the case was previously closed; Input a TC 520 on pre-petition periods; Request input of a TC 570 when posting a payment; Post the payment as non-plan; and Refer the case to FI via email or reassign the case using CAG.
Proper Application of Payments
5.9.15.7 (03-01-2006) Proper Application of Payments Plan Guidelines. SCI must apply payments appropriately and in accordance with the terms and conditions of a plan or court order. Payments received must be applied only to the tax periods covered under the bankruptcy. Note: CIO posts payments in accordance to the governments best interest. Avoiding Improper Application. Payments received from the bankruptcy for pre-petition taxes must not be applied to any part of a tax period for which a proof of claim has not been filed, or any component of a tax liability that is not allowed or not payable under the particular provisions of the bankruptcy chapter (for example, post-petition penalty). BAPCPA adds 11 USC 524(i), stating that a willful failure to credit payments received under a confirmed plan in a manner required by the plan that causes material injury to the debtor is a violation of the discharge injunction and may subject the IRS to damages and attorney's fees under IRC 7433(e). SCI should correct any misapplication of payments as soon as the error is brought to the IRS's attention. Note: If the order confirming the plan is revoked, the plan is defaulted, or the IRS has not received payments required under the plan, 11 USC 524(i) does not apply.
Campus Support Error Reports
5.9.15.7.1 (12-27-2024) Campus Support Error Reports GII (Generalized IDRS Interface) Tool. CIO caseworkers must use the GII Name Control/Tax Period Validation Tool in order to resolve posting errors prior to submitting the Trustee Plan Payment Log to Campus Support for posting to IDRS. CIO caseworkers must follow the chart below in order to resolve GII Tool errors. Note: See your Technical Lead for instructions on GII Tool processing. Correcting Payment Posting Errors. Using payment posting vouchers generated by AIS or the Trustee Plan Payment Log, the IRS Campus Support function posts payments processed by the CIO to IDRS. When the period on the payment voucher does not reflect any open module on IDRS, the Campus Support workers post the payment to any balance due on the account or on a cross reference account without regard to the bankruptcy status of that module. Generally, these posting errors result from incorrectly loaded AIS plan payment screens. CIO payment posting caseworkers must take the following actions to resolve posting errors identified by the Campus Support function. IF... THEN... The name control on the plan payment screen is incorrect, CIO will update the name control on the TIN screen. The TIN on the plan payment screen is obviously incorrect, CIO will: Correct the TIN on the plan payment screen. Add non-debtor spouse TIN on AIS entity screen if necessary. Complete credit transfer if necessary. The primary taxpayer on IDRS is deceased, but the secondary taxpayer on IDRS is the debtor, and the CSED has expired. CIO will: Take actions to ensure the payment is not systemically refunded. Correct the AIS plan screen to show the correct MFT and the debtor's TIN. The tax period is obviously incorrect per IDRS, Example: 30 200204 CIO will correct the tax period on the plan payment screen. An unassessed period is on the plan payment screen no dummy module has been created; and the entity has not been established on master file or the unassessed module is for a period falling prior to the establishment of an entity on master file the unassessed module is for a period falling after the entity for the taxpayer was established on master file, CIO will follow the steps described in IRM 5.9.15.6, Unassessed Liability/No Open Modules and IRM 2.4.9-10, IMF-Establishment of an Account on the Master File for detailed instructions about the required actions. The case does not have a confirmed plan loaded. CIO will transfer the case to FI to input a confirmed plan on the plan payment screen. See Exhibit 5.9.15-1, Posting Non Plan Payments, for additional information relating to posting payments to a case with no confirmed plan present on AIS. Note: This includes when a claim has been filed by the debtor or trustee on behalf of the IRS. Campus Support posts the payment to a pre-petition period. Payment Posting unit will leave the payment where it has been posted. Note: Payments incorrectly posted to pre-petition periods will be worked by exception. Incorrectly posted payments resulting from Field Insolvency errors in loading the plan will be corrected by the appropriate Field Insolvency office. Example: Payments will be moved to comply with the plan if the debtor needs exact payoff amount for lien release. Campus Support posts the payment to a post-petition period. Payment Posting Unit will move the payment to comply with the plan. Reminder: The AIS history must be updated to reflect any corrective actions.
Multiple Refunds
5.9.15.7.2 (08-06-2015) Multiple Refunds Caseworker Actions. Cases may be identified where more than one systemic refund (TC 846) LTS appears on a specific module. See IRM 5.9.16.2.4, All Other LTS. Not all cases identified are a result of bankruptcy or bankruptcy processes. The caseworker must first determine if bankruptcy is a factor in the issuance of multiple refunds. IF... THEN... The refund is on a TIN and is not the result of bankruptcy actions. Advise the initiator of the notification that bankruptcy is not a factor in the issuance of the refunds. The refund is due to payments received in violation of the stay, not previously refunded to the debtor and trustee payments (DPC 03). CIO Action: Input TC 520 cc 81. Update the freeze screen. Reassign the case to FI. Document actions. FI Action: Compute the dollar amount of the systemic refunds and deduct the amount from the total of the payments received in violation of the stay. If the dollar amount of the payments received is greater than the amount of the systemic refund, prepare a manual refund for the difference to go to the debtor. Document actions. Note: The dollar amount of the systemic refunds should not exceed the dollar amount of the payments received in violation of the stay. If it does, a secondary reason exists for the multiple systemic refunds. The refund is due to an adjustment of the balance due or payments received from a non-debtor source and result from trustee payments (DPC 03). CIO Action: Input TC 520 cc 81. Update the freeze screen. Reassign the case to FI. Document actions. FI Action: Prepare an amended claim. Update the CPM Screen. Document actions. The refund is due to a claim filed on behalf of IRS by debtor or trustee that exceeds the true balance due or an estimated claim filed by the IRS that exceeds the balance due of a return subsequently filed by the debtor, and the refunds result from trustee payments (DPC 03). CIO Action: Input TC 520 cc 81. Update the freeze screen. Reassign the case to FI. Document actions. FI Action: Prepare an amended claim. Update the CPM Screen. Document actions. The refund is due to trustee error and result from trustee payments (DPC 03), Example: IRS filed an amended claim but the trustee is still paying on the original claim. CIO Action: Input TC 520 cc 81. Update the freeze screen. Reassign the case to FI. Document actions. FI Action: Prepare an amended claim. Update the CPM Screen. Document actions. The refund is due to a joint liability and both taxpayers filed individual bankruptcies CIO Action: Input TC 520 cc 81. Update the freeze screen. Reassign the case to FI. Document actions. FI Action: Prepare an amended claim. Update the CPM Screen. Document actions. The trustee is paying on the original IRS claim and payments refund in error due to the TC 520 closing code, CIO Action: Input TC 520 cc 81. Update the freeze screen. Reassign the case to FI. Document actions. FI Action: Prepare an amended claim. Update the CPM Screen. Follow erroneous refund procedures see IRM 21.4.5, Erroneous Refunds. Document actions.
Balancing Payments
5.9.15.8 (04-05-2011) Balancing Payments Discrepancies. Payment amounts and posting vouchers or the trustee plan payment log must balance exactly to the amount of the check. Discrepancies discovered after payments have been received by SCI must be handled and resolved by SCI. SCI Responsibility. Prior to forwarding bankruptcy payments and vouchers or the trustee plan payment log to remittance processing, CIO employees must be precise in preparing checks for final posting. When they leave Insolvency, all payments must be ready for immediate processing and, if appropriate, immediate deposit by the IRS.
Time Frames for Processing of Payments
5.9.15.9 (11-21-2022) Time Frames for Processing of Payments Field Processing of Payments. Insolvency payments must be processed timely and efficiently under strict time frames. Field Insolvency payments and related documents, such as tax returns, must be prepared for shipment to the processing Campus site by close of business on the date of receipt from the debtor, or as soon as possible the next business day. Campus Processing of Payments. Because trustee single and bulk checks are deposited upon receipt, the CIO has up to 10 business days to post payments and forward the vouchers to the Campus Support unit.
Chapter 7 Asset Trustee Checks
5.9.15.10 (04-05-2011) Chapter 7 Asset Trustee Checks Chapter 7 Asset Checks. The Chapter 7 trustee sends payments based on properly filed proofs of claim after the trustee liquidates the debtor's assets. Some claimants may not receive a distribution in a Chapter 7 Asset filing. IRM 5.9.17.10(5), Asset Discharge for Individual Debtor, gives instructions for handling individual Chapter 7 Asset cases while awaiting distribution, and IRM 5.9.17.12, Closing Corporate Chapter 7 Bankruptcies and Chapter 7 Bankruptcies Filed by Limited Liability Companies, explains approved procedures for corporate cases in 7 Asset proceedings. Payment Application. When the distribution payment from the Chapter 7 trustee is received, the payment is applied based on the trustee's instructions, or: IF... THEN... The trustee does not specify how the payment is to be applied. Follow IRM 5.9.15.3 (2), Bankruptcy - Involuntary Payments. The liability has been adjusted. Follow IRM 5.9.15.3 (3), Dischargeable Liabilities. Once the tax period has been identified, the caseworker should follow the posting procedures in IRM 5.9.15.15.5, Non-Plan Payments. Voucher(s) and check(s) must be sent to the Campus Support function.
Payment Posting Responsibility
5.9.15.11 (03-01-2006) Payment Posting Responsibility Field Payments. AIS systemically inputs the office address of the assigned SCI caseworker in the proof of claim box directing where payments for Chapter 11 and Chapter 12 plans should be mailed. If FI caseworkers find Chapter 11 or 12 payments for their cases are being mailed to the CIO, they must contact the payor and ask that future payments be sent directly to them and not to the CIO. CIO Actions. Centralized Insolvency Operation must process all bankruptcy checks received at the Campus regardless of which SCI function is assigned the case, FI or CIO. When a Chapter 7, Chapter 11, or Chapter 12 check is processed for a case assigned to Field Insolvency, the CIO caseworker must advise the FI caseworker assigned the account of the payment receipt by fax, phone, or secure email.
Chapter 13 Trustee Payments
5.9.15.12 (06-30-2025) Chapter 13 Trustee Payments Bulk Checks. These trustee payments, usually disbursed monthly, cover multiple debtors with one check. The dollar amounts and frequency of payments are based on the IRS's proofs of claim and provisions in the confirmed Chapter 13 plans. Individual Checks. Some trustees send individual checks, meaning one check for one debtor. Or, a trustee may have neglected to include a debtor's plan payment on a bulk check, so a supplemental check is remitted as an individual check. The different posting methods on AIS for Chapter 13 payments are: Automatic Semi-Automatic Partial Designated Manual Non-plan Note: See IRM 5.9.15.15, Payment Posting Steps, for instructions on posting methods.
Processing CIO Payments in the Mail Room
5.9.15.13 (12-27-2024) Processing CIO Payments in the Mail Room Embedded CIO Caseworkers. CIO caseworkers are embedded in the Campus Support (CS) mail room to review SCI remittance mail and separate single payments from bulk payments. When a payment is misrouted, SCI caseworkers return it to Campus Support for processing. Electronic Federal Tax Payment System (EFTPS). Funds are transmitted to the IRS by the Chapter 13 trustees through a high speed internet connection. The information is downloaded to AIS to create posting vouchers, see IRM 21.1.7.10.4.4, Insolvency Payment Processing with Front End Electronic Federal Tax Payment System (EFTPS). Paper Check Conversion (PCC). This system scans all trustee checks, both multiple and single cases, then funds are deposited to a suspense account. Payment vouchers are created on AIS and credited to a taxpayer's account on IDRS. Funds are then moved from the suspense account to proper Treasury accounts, see IRM 21.1.7.10.4.2, Processing Insolvency Payment via Paper Check Conversion (PCC). Single Payments. Payments with one check for one debtor are received in the mail room. Caseworkers from CS scan the trustee checks through the PCC that enters an electronic deposit into Treasury's account. Next, CIO caseworkers load the payments on AIS and generate payment vouchers via BOE for processing. The voucher(s) for the check must add up to the total amount of the check. Vouchers are batched in packets of up to 20 payments and electronically transmitted to the Campus Support unit upon completion for paper check conversion and posting onto IDRS. IRM 5.9.15.15.3, Posting Individual Trustee Checks, gives step-by-step instructions for posting individual checks on AIS. Multiple Payments. When a Chapter 13 trustee submits one check for multiple debtors, the payments are generally processed through EFTPS or PCC. After payments from the trustee checks are loaded to AIS, the CIO caseworker generates the Trustee Plan Payment Log. This log is used in lieu of payment posting vouchers. This eliminates the need for CIO employees to batch payments and manually balance the vouchers. The steps in this process are as follows: Payments from the trustee check are systemically or manually loaded to AIS. The caseworker generates the Business Objects (BO) report titled Trustee Plan Payment Log. When a payment is posted via the Non Plan Payment option of AIS, the caseworker generates the BO report titled Non Plan Payment Log. Process the report through the GII Name Control Tool to resolve errors prior to submitting to Campus Support. The caseworker saves the Trustee Plan and Non Plan Payment Log (when applicable) and ensures the total of the check matches the amount of the Trustee Plan and Non Plan Payment log. The saved log is forwarded to Campus Support via secure email to the multi mailbox *W&I PCC OTC TOOL. If the totals do not match, the employee must match entries on the report with the voucher listing submitted by the trustee to resolve the error. Once errors are resolved, the report is corrected and the amended report is forwarded to Campus Support. Note: For additional information on the methods used by the CIO to process checks, see IRM 21.1.7.5.6, Centralized Insolvency Operation (CIO) Payment Processing.
Receipt of Bulk Payments
5.9.15.14 (04-05-2011) Receipt of Bulk Payments Deposit Ticket. Payments covering multiple debtors will be routed via Form 3210, Document Transmittal, to Campus Support. The Campus Support unit will prepare a deposit ticket containing all payments to go into that day's deposit to Insolvency Suspense Account 4625. Form 784, Recapitulation of Remittances, will list each individual check. Distribution Copies. The deposit clerk will make copies of the deposit ticket, Form 784, and copies of the check for SCI, Accounting, and for the file. CIO Pick Up. SCI caseworkers will pick up a copy of the deposit ticket, bulk trustee check, Form 784, and the paper listing or disk, at least once daily.
Payment Posting Steps
5.9.15.15 (03-01-2006) Payment Posting Steps Bankruptcy Payments and AIS. As previously noted in this IRM section, AIS is capable of processing bankruptcy payments through several methods. This subsection deals with differing check scenarios and the proper handling and posting of those payments.
Trustee Checks with Paper Rosters
5.9.15.15.1 (12-27-2024) Trustee Checks with Paper Rosters Bulk Checks. Trustees may send payment rosters for bulk checks as a hardcopy listing of debtors and payment amounts. These payments must be individually added to the AIS payment posting screen. To do so, the CIO caseworker must take the following steps: STEP ACTION 1 Select the Payments tab from the AIS home page. 2 Select Post Automatic Payments from the Payment Monitoring Menu 3 Click on the Insert button on the tool bar and input the docket number in the AIS Case number field or input the Court Case number 4 Select the Submit button to populate debtor information. 5 Verify that the case that has been loaded is for the correct debtor. 6 Complete the required information in the Payment field: The Date Received The Check number The Amount The Plan Type (Select the appropriate radio button.) The TRC (transaction code) 7 Select the Save button on the tool bar. 8 If the payment has been successfully saved, Record Saved will appear in the bottom left hand corner of the screen. If the payment was not successfully saved, error messages will appear in the bottom left hand corner of the screen. Resolve the error(s) using the information in the following table: IF an error message appears stating... THEN "No Confirmed Plan" Determine if another kind of plan exists (Administrative or Probate). If so, apply the payment to that plan by selecting the respective radio button for the plan type. If no plan exists: Determine the most appropriate tax period to credit following the posting priority listed in IRM 5.9.15.3, Applying Payments in Bankruptcy Post the payment on the non plan screen using the directions in Exhibit 5.9.15-1, Posting Non Plan Payments. Update the AIS history. If the case is closed in CIO, the CIO caseworker should reopen the case on AIS, input a case history advising the payment has been applied as a non-plan payment, and assign by selecting Assign CAG to FI. If the case is closed in FI, the CIO caseworker should reopen the case on AIS, input case history advising the payment has been applied as a non-plan payment, send email to FI caseworker based on case assignment and copy the FI caseworker's Group Manager. If the case is open and assigned to FI caseworker, the CIO caseworker will input a history advising the payment has been applied as a non-plan payment, send email to FI caseworker and copy the FI caseworker's Group Manager. "Case/Plan Closed" Reopen the case and/or the plan; Apply the payment using steps 2 through 7 above; Determine if the case and/or plan is truly closed; If so, close the case/plan on AIS. If not, leave the case/plan open. "No Confirmation Date" Input the petition date in the "Confirmed" field on the Taxpayer Screen; and Post the payment following steps 2 through 7 in IRM 5.9.15.15.1 (1) above. Once all errors have been resolved and corrections saved successfully, continue posting the payments for the remaining cases listed on the check. Repeat steps 2 through 7 to post more than one payment, before selecting the Save button. Continue until every docket number and payment amount has been added. Note: Striking keyboard keys "Shift" and "F5" simultaneously in the date and check number fields will repeat the information in the previous entry. Follow the steps in Exhibit 5.9.15-4, AIS Automatic Allocation, to allocate payments.
Trustee checks via download from National Data Center (NDC)
5.9.15.15.2 (12-27-2024) Trustee checks via download from National Data Center (NDC) Trustees submitting bulk payments can provide rosters listing debtors and payment data via the National Data Center (NDC). Special access is required and is granted by the Payment Posting Manager. To upload the information take the following steps: Step Action 1 Access NDC.org via the internet and logon using your user name and password. 2 Access vouchers on the tool bar. 3 Locate the name of the Trustee using the drop menu. 4 Input the check number, the check will show at the bottom of the page. 5 Select Download. 6 Select Open file. 7 Save the file to My documents or a secure folder on your desktop. 8 On AIS, under Payments select Upload File. 9 Locate the Trustee file saved by selecting choose file and then go to my documents or the secure folder on your desktop and click the file and select open. 10 Return to AIS, input the "Received on date" and select "SavedPayments."
Posting Individual Trustee Checks
5.9.15.15.3 (10-03-2023) Posting Individual Trustee Checks Single Checks. Some Chapter 13 trustees send an individual check for each debtor. Chapter 7, 11, and 12 bankruptcy payments are always received as individual checks. When individual checks are received at the CIO, they are input by SCI caseworkers embedded in the mail room. (See IRM 5.9.15.13, Processing CIO Payments in the Mail Room.) If a single check is received for an individual debtor, the caseworker must take the following steps: Select the "Payments" tab from the AIS main menu. Select "Post Automatic Payments" from the drop down menu Payment Monitoring Menu. Select the "Insert" tab on the AIS tool bar and input the docket number in the "AIS Case" field, and input the "Court Case " . Click on the "Submit Search" button to download the debtor information. Verify the account accessed on AIS is for the correct debtor. Enter the "Date Received" , "Check number" , "Amount" , "Plan Type" (select the appropriate radio button), and "TRC" (transaction code) in the Payment Information area. Select "Save" on the AIS tool bar to save the payment. If the payment has been saved successfully, "Add Successful" pop-up message will be displayed. Note: If the payment does not successfully save, an error message will appear at the bottom of the screen. To resolve common error messages, follow the guidance in the If/Then table in IRM 5.9.15.15.1 (9). Continue this process until each individual check has been added. Allocate payments by following the procedures in Exhibit 5.9.15-4, AIS Automatic Allocation.
Partially Designated, Semi Automatic and Manual Payments
5.9.15.15.4 (12-27-2024) Partially Designated, Semi Automatic and Manual Payments Partially Designated Payments. The Partially Designated Payment option is normally used in Chapter 11 cases when the payment is to be applied to: Non-trust fund taxes; Trust fund taxes; or Accrued interest. Semi Automatic Payments. The Semi Automatic Payment option can be used on any type of bankruptcy case when the payment has been designated for application according to the claim classification, such as a designated payment to a secured claim. Manual Payments. Payments requiring manual posting are usually Chapter 13 remittances designated for trust fund taxes. A shortcut exists for posting these payments. See paragraph 5 below for procedures. Posting Steps. To post partially designated payments, manual payments, and semi automatic payments, take the following actions: Step Action 1 From the Taxpayer Screen, select the CPM tab. 2 Select from the index the applicable plan (administrative, confirmed or adequate protection). 3 Select "Pending Payments" and then "Insert Payment." 4 Select the payment type Semi Automatic, Partial Designated, or Manual by clicking the radio button for the payment type. 5 Complete the Payment Data information including the following: Date (date payment received by the IRS) Amount (the amount to be posted) Check number TRC (payment transaction code selected from the drop down list) 6 For semi automatic and manual claims only, select the Claim Code from the drop down menu to select General, Priority, Secured, Over Secured or Manual claim type. 7 For partial and manual payments only, fill in the following fields as appropriate: Non-Trust Fund Trust Fund Pre-Petition Penalty Pre-Petition Interest Post-Petition Penalty Accrued Interest 8 For manual payments only, complete the fields in the box titled Manual Payment Information Only, including: MFT Code Tax Period Assessed TIN Check Designated if the payment is designated. 9 Once all the required information has been entered, select Save and the system will display the payment as pending until allocation takes place. Repeat the steps above if you need to post another payment. 10 After posting the payment, select Allocate Plan Payments and AIS will display a message indicating the number of payments allocated and the number of payments that went unpostable. 11 To print the voucher(s), select Payments from the AIS home page and choose Payment Voucher. Input the information in the applicable fields and select Submit Search. AIS will display all the payment vouchers. From the Index section select the voucher(s) that you want to generate and select Payment Vouchers. Note: When a payment is posted partially designated or manual, the CPM will require the caseworker to input a justification of why they are using one of the aforementioned options.
Non-Plan Payments
5.9.15.15.5 (10-03-2023) Non-Plan Payments Purposes of the Non-Plan Payment Feature. Non-plan payments can be submitted by an individual debtor for a Chapter 13 post-petition liability, or a Chapter 7 pre-petition, non-dischargeable liability. A non-plan payment can also be a final distribution from a Chapter 7A trustee. Occasionally, a mis-routed Chapter 11 payment must be processed through this posting option when the payment is misdirected to the CIO and must be posted, or when a posting error message appears on a Chapter 13 payment being posted by the CIO stating that the case has "No Confirmed Plan" . Chapter 11 Cases or No Confirmed Plan Cases. When a Chapter 11 check is received at the CIO, or when a message appears while posting a Chapter 13 payment stating "No Confirmed Plan" , the CIO caseworker should: Send a secure email to the Field liaison to advise of the posting problem; Determine the appropriate tax period to credit, following the posting priority described in IRM 5.9.15.3, Applying Payments in Bankruptcy; Annotate on the check that it is to be applied via the "Non-Plan Payment" screen; and Update the AIS history. Non-Plan Payment Posting Actions. To post a payment to the Non-Plan screen, take the following actions: Step Action 1 On the Search Case File screen input the case number and court key 2 Click Submit Search 3 Verify the account that has been loaded is the correct case; 4 From the taxpayer screen select Non-Plan Payment 5 Click Insert 6 Complete the Payment fields with the following information Date received Check number TRC 1 (select from drop down list) Amount 1 TRC 2 (if the payment is being split) Amount 2 Designated payment code 7 Complete the Period fields with the following information: TIN Name control MFT code Claim code (select from drop down list) Tax period (year format YYYY) Assessment (optional) Comments (optional) 8 Click Save (AIS will display a message indicating added successful) Limitations of Non Plan Posting. The Non Plan Payment posting does not: Use the allocate routine; Access the plan modules; Retain totals; or Verify the TIN exists in the AIS TIN table.
Common Payment Posting Errors
5.9.15.16 (06-30-2025) Common Payment Posting Errors Correcting Errors. Some payment posting errors can be easily remedied as the payments are being posted; others require intervention from Field Insolvency. Field Insolvency has 15 business days from the date the CIO notifies them of a payment issue to correct the problem. When the CIO experiences simple posting problems, having CIO caseworkers correct the errors themselves without relying on FI caseworkers can accelerate the bulk processing of trustee payments. The following paragraphs offer instructions on resolving some posting errors. Note: As a courtesy it is recommended that Field Insolvency caseworkers respond within 2 business days to the CIO Operation Mail Team with a plan of action to resolve the payment posting error. Missing Plan. This error is generated when a payment is received and one of the following conditions occurs: The plan has not been loaded. The plan has been loaded, but all periods have not been verified. Reminder: When loading confirmed plans, Field caseworkers should ensure all periods are verified. A proof of claim has not been filed by the IRS, but has been filed by the debtor or trustee on behalf of the IRS. A pre-petition "Regular" proof of claim has not been filed by the IRS, but an "Administrative" claim has been filed by the IRS under 1305 for post-petition liabilities. Note: Proofs of Claim filed for post-petition taxes under 1305 should generally be filed on Form B10, or the "Regular" claim (see IRM 5.9.10.9.2, 11 USC Section 1305 Claims). The liability should be added to the CPM screen as a priority tax. When the CIO caseworker cannot resolve the payment posting issue expeditiously, the caseworker should follow the guidance in IRM 5.9.15.15.5, Non-Plan Payments, and load the payment on the Non Plan screen. No Case Found. Querying the TIN on the AIS "Search Case File screen" can sometimes identify cases marked "No Matching Records Found" on AIS. This error may result from one of the two following scenarios: A case may have erroneously been closed as no liability (NL) when a tax is owed but the balance due falls below the criteria for claim filing, see ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡. The IRS receives payment because the debtor has filed a claim on behalf of the IRS. If the case has been moved to the index for closed cases, the case should be reopened by removing the closure date from the "On AIS" field in the "Closing Info & Dates" area on the Taxpayer Screen. After the changes have been saved, the payment can be input as a non-plan payment. After the payment has been posted, the case must be transferred to the Field to add the claim information to the Plan Monitoring screen. The TIN on AIS differs from the TIN provided by the trustee. The CIO should alert the Field to call the trustee to correct the TIN in their database. Case Closed. SCI sometimes does not receive notice from the court that a dismissed case has been reinstated. If a payment is received on a case that has been closed as "dismissed" , the CIO caseworker should check the court's electronic records to determine if the bankruptcy has been reinstated. If the error states "Case Closed" , and the bankruptcy has been dismissed and not reinstated, the payment should be posted to the earliest assessed liability. If the dismissal has been vacated and the case reinstated, the case should be reopened on AIS so the payment can be posted through AIS. If the case was dismissed before the confirmation date, the case must be transferred back to the appropriate Field Insolvency caseworker to complete pre-confirmation work. Note: When processing an order vacating dismissal (reinstatement), caseworkers must follow the guidance in IRM 5.9.17.6.6, Order Vacating Dismissal (Reinstatements). Multiple Cases. Errors for multiple cases occur because the system looks for TINs instead of case numbers. Every case associated with the TIN on the payment will be identified. The error will be corrected by the CIO caseworker clicking on "Set Button number" and selecting the correct case number and appropriate radio button for the plan type: Confirmed Plan Payment (Y) Non-Plan Payment (M) Plan Closed. The "Plan Closed" error message is usually generated for one of the two following reasons: The case has been discharged and processed through ADS, but closure was prevented by a Discharge Determination Report (DDR) flag. The case has SUP DIS PROCSNG-SA or REG DIS PROCSNG-RA in the method of closure field on the AIS entity screen. The plan must be reopened and the payment posted. The CIO technical unit processing discharges is responsible for resolving the DDR condition if the case is assigned to it. If the case is assigned to Field Insolvency, the FI caseworker must resolve the DDR. The plans have been closed because of dismissal notice. Note: When this error appears, the technician should select the Confirmed plan type radio button. Taxpayer Entity Record Closed. This error is identified when the AIS entity screen has "REG DIS COMPLTE-RC" or "SUP DIS COMPLTE-SC" in the "Closure Method" field and an AIS closing date. If Then If the payment is received 30 days or less after the AIS closing date The assumption will be made that the payment represents the final installment from the bankruptcy estate, and should be posted following instructions in Exhibit 5.9.15-5, Posting Payments on a Closed Case. If the payment is received more than 30 days after the AIS closing date PACER research is required to determine if the case has been reopened, if the TIN or debtor name is incorrect, or if the discharge was entered on AIS erroneously. If research determines the payment should be posted, the instructions in Exhibit 5.9.15-5 should be followed. If the propriety of the payment is in question, contact with the trustee is necessary. If PACER indicates a discharge was entered on AIS in error and the case was erroneously closed The caseworker must: Input TC 520 with the petition date Remove the closed date on the AIS Taxpayer Screen. Remove the information in the Closure Method field. Follow normal payment posting procedures. If the trustee has submitted a payment after the valid entry of a discharge and the payment is received more than 30 days after the AIS closing date The caseworker must remove the closed date on the AIS Taxpayer Screen and follow payment posting procedures in Exhibit 5.9.15-5 if there were dischargeable liabilities. If there were no dischargeable liabilities, follow normal payment posting procedures and close the case using the present closing date.
Resolving Payment Posting Errors
5.9.15.16.1 (12-27-2024) Resolving Payment Posting Errors Unpostable Payment Report. An error message may appear on the "Allocate" screen, or a list will appear when printing the posting vouchers. Payments that cannot be resolved by the Payment Posting Unit will be applied manually using the "Post Non Plan Payment" screen. CIO will email the Field Insolvency liaison advising them of the posting problem. A TC 570 request will be added to the posting voucher/balancing report. For All Errors Except "Admin Plan Found" . The error report identifies payments that AIS is unable to allocate to the bankruptcy plan. Payment errors listed on the Unpostable Payment Report must be corrected and reallocated. Errors. Types of errors and the function responsible for correction of Chapter 13 payments are shown in the table below. Field Insolvency is responsible for correcting all payment errors on cases other than Chapter 13. Error Action Function Responsible No Confirmed Plan If the case is closed in CIO, the CIO caseworker should reopen the case on AIS, input a case history advising the payment has been applied as a non-plan payment, and assign the case per CAG FI. If the case is closed in FI, the CIO caseworker should reopen the case on AIS, input case history advising the payment has been applied as a non-plan payment, send email to Field caseworker based on case assignment and copy the FI caseworker's Group Manager. If the case is open and assigned to FI caseworker, the CIO caseworker will input a history advising the payment has been applied as a non-plan payment, send email to FI caseworker and copy the FI caseworker's Group Manager. Field loads confirmed plan ensuring money is properly allocated. Actions may include but are not limited to: Loading payment to the Confirmed Plan Monitoring (CPM) screen and removing it from the non plan screen. Preparing credit transfer based on AIS allocation. Reminder: When loading a plan, ensure all periods are verified and any secured issues are addressed. Caution: There should be no administrative plan for a Chapter 13 case. All claims filed under USC 1305 for post-petition taxes should be added to the CPM screen as a priority liability by selecting plan type "Confirmed" from the drop down menu. No Valid Case Found (when the trustee has not redacted the SSN) CIO caseworker should assign the case to FI by selecting Assign CAG, input case history advising the payment has been applied as a non-plan payment, send email to FI caseworker based on case assignment and copy the FI caseworker's Group Manager. Field contacts the trustee to correct the TIN in their database, and Updates the AIS history. Actions may include but are not limited to: Loading payment to the CPM screen and removing it from the Non-Plan screen. Preparing credit transfer based on AIS allocation. Reminder: When loading a plan, ensure all periods are verified and any secured issues are addressed. No Valid Case Found (when trustee has redacted TIN) CIO caseworkers must locate the case on AIS using the redacted SSN and case number. CIO Case Closed See IRM 5.9.15.16 (4), Case Closed. CIO Multiple Cases See IRM 5.9.15.16 (5), Multiple Cases. CIO Plan Closed See IRM 5.9.15.16 (6), Plan Closed. CIO Manually Designated-Amount too large See IRM 5.9.15.3.4, Surplus Payments from Trustee. CIO Partially Designated-Amount too large See IRM 5.9.15.3.4, Surplus Payments from Trustee. CIO Tax modules for case number, plan type XX are not all verified Review the Detail Record for each tax period to ensure plan is verified. Click the "Verified Period" box to verify the period. CIO Note: CIO must advise Field Insolvency of action taken by telephone, fax or secure email. Unable to find master record plan type CIO caseworker contacts the Field liaison by secure email to advise payment has been applied as a non-plan payment. Field Insolvency reviews the CPM screen to ensure all plans are input. Inputs any missing plan information, loads payment to the CPM screen and removes it from the Non Plan screen. Error in the field / Field contains invalid data. Input correct data in the highlighted field CIO Payment date input is after today's date. Correct payment date CIO Manual payment posting is required Post manual payment CIO This field requires an entered value. Input the appropriate data in the cursor field CIO Semi-Automatic payment amount too large. See IRM 5.9.15.3.4, Surplus Payments from Trustee. CIO Missing Confirmation date Review the Taxpayer Screen and input the confirmation date. If date is not present on the Taxpayer Screen, research PACER. If case is unconfirmed, input the received date of the payment as the confirmation date. CIO Valid Payment Field. The cases on the error report will have a bullet next to the invalid payment. This bullet should appear next to the "Confirmed Plan" line or the "Manual Payment" line when the payment has posted correctly. To work the error report, the caseworker should print the "Check Summary Report" and take the following actions: On the AIS home page, select the "Payments" button. On the Payment Screen, select the "Trustee check" button to access the "Trustee Payments" screen and then select pending checks. Select the check you are working. It will bring you to the next page that shows any invalid payments/confirmed plan payments. Click the column labeled 'Payment Type' twice. This will bring any invalid payments to the top of the list. If you have invalid payments, click on the index number of the invalid payment. Select search case and then search. Find the last 4 of the SSN and court key on the page that populates after you hit the search tab. Select the index number, status should change to Confirmed plan payment or Non-plan payment. Hit save. Common unpostable conditions can be corrected by following the If/Then table below: If the error message is ... Then the caseworker should... Missing Plan Add the claim to Plan Monitoring. Manually Designated - Amounts too large Review the Payoff Report for correct amount and input the correct amount. Partially Designated payment amount too large Review the Payoff Report and input the correct amount. The tax modules for case number, Plan type XX are not all verified Review the Detail Record for each tax period to ensure plan is verified. Select the "Verified Plan" box. Unable to find master record __plan type__ Review the Plan Monitoring File to ensure all plans are input. All plans must be input before payments can allocate. Error in field, field contains invalid data Review the invalid data in the cursor field and input the correct data. Payment date input is after today's date The payment date must be prior or equal to the date of input. No Case Found Add the claim information to the Plan Monitoring screen. Manual Payment posting required Review the code input to the Payment Monitoring Screen and input the DPC. This field requires an entered value Review each screen field for required data and input the appropriate data in the cursor field. Invalid Choice Review each case number to ensure data is correct. When case numbers do not match an AIS Taxpayer Data File, input the correct case number and research for missing record if the case number is correct. Data doesn't match Review the Payment Monitoring Detail Record to correct payment information. Semi-Automatic Payment amount too large Review the Payoff Status Report and input the correct amount. Missing Confirmation Date Review the Taxpayer Detail File and input the confirmation date. If not present, enter the petition date. Missing Petition date Review the Taxpayer Screen for the petition date and input the petition date.
Dishonored Checks
5.9.15.17 (03-01-2007) Dishonored Checks Prior to Posting on AIS. If SCI is advised a payor has stopped payment on a trustee check, or if Accounting advises SCI a check has been dishonored before payment has been posted to AIS, the check is not to be posted. If the payments have been posted but the vouchers have not been sent to Campus Support, the payments must be removed from the AIS payment screen and a short AIS history input. Example: The history may state, "Payment on check number XXXXX removed from plan screen due to dishonored check." After Posting on AIS. If SCI is advised a check has been dishonored after the payment has been posted to AIS and sent to Campus Support, the payments must be removed from the AIS payment screen and a short AIS history input. Accounting must fax the SCI office processing the check copies of the front and back of the dishonored check. Note: Reversed payments from third parties with a bankruptcy DPC are not assessed a dishonored check penalty. However, reversed payments from a debtor-in-possession remain subject to the dishonored check penalty.
Removing Trustee Payments
5.9.15.18 (12-27-2024) Removing Trustee Payments Removing Plan Payments. Occasions will occur when it is necessary to delete payments from the AIS payment record, for example, in the case of dishonored checks or lost checks. When trustee payments are reversed, confirmed plan payments and non-plan payments are removed, and the trustee check record is removed. Specific payments may be reversed for an individual debtor, or all payments covered by a bulk trustee check can be reversed at one time. See tables below: Steps for removing bulk payment check from AIS: Step Action 1 Select the "Payments" button on the AIS Home Page. 2 From the Payment Monitoring Menu that appears, select the "Trustee Check Option" button. 3 Inside the Trustee Check Option menu, choose "Applied Payments". 4 Complete the fields in the Trustee Check Information section of the screen and click on the "Submit Search" button. 5 Click Reversed Posted Payment button. 6 Type "Y" (yes) to complete reversal of the trustee check. 7 Remove the check record. Reversing Individual Payments from AIS: Step Action 1 From the Taxpayer Screen click on the CPM tab. 2 From the Plan Screen that appears, click on the "Applied Payments" Button. 3 Click on the "Next" button until the payment to be reversed appears and then select the index number of the payment. 4 Click on the "Reverse this Payment" button. 5 A pop-up message will appear indicating the payment was successfully reversed. Note: The assigned Field Insolvency caseworker must recompute the plan on AIS. Recomputing the plan does not bring the overpayment amount to zero. Removing Non-Plan Payments. When trustee payments have been posted to the non-plan screen because a plan has not been loaded or has been improperly loaded, the CIO should forward the case to FI for plan correction. Upon correcting the plan screen, the FI caseworker must move the payment in question from the non-plan screen to the Confirmed Plan Monitoring screen. To prevent an overpayment error in the future, the caseworker must also delete the payment from the non-plan screen following the steps below. Step Action 1 From the Taxpayer Screen Home Page, click on the "Non Plan Payments" button. 2 Select the index number of the payment that will be reversed. 3 Under Updated Non -Plan Payment select Delete Note: The Field caseworker must then recompute the plan on AIS. (See Exhibit 5.9.15-3, Plan Recomputation.)
Non-Insolvency Checks
5.9.15.19 (08-06-2015) Non-Insolvency Checks Non-Debtor Spouse or Third Party. Checks from parties other than the trustee may be applied toward a period covered by the bankruptcy stay. A non-debtor spouse may make a payment toward a joint tax liability owed by a debtor, or a third party such as a family member may elect to help a debtor pay a tax liability. When it is evident the check is meant to be applied toward a tax debt covered by the bankruptcy proceeding, the caseworker must post the payment through AIS as designated, or if no designation is made, as is outlined in IRM 5.9.15.3 (2), Bankruptcy - Involuntary Payments. Debtor Payments. Debtors may submit voluntary payments for post-petition taxes, or in some instances, for non-dischargeable taxes, during the pendency of their bankruptcy. IRM 5.9.4.5.2, Post-Petition Payments and Credits, and IRM 5.9.4.20, Installment Agreements and Bankruptcy, give guidance on determining when the IRS is allowed to retain voluntary payments. Posting Responsibilities. Vouchers for the non-SCI checks discussed in paragraphs (1) and (2) above must be posted on AIS by the SCI function (Field or CIO) receiving the checks. CIO Processing. Payments related to accounts in bankruptcy that are not remitted by a trustee or debtor-in-possession will be loaded to the AIS Non Plan Screen and a voucher printed. AIS will only allow a DPC of "03" or "11" to be printed on the payment vouchers it generates. The caseworker must cross out the "03" and replace it with "99" . The check and the payment posting voucher will be forwarded to the Philadelphia Campus Support unit for the check to be scanned and the payment credited to the taxpayer's account on master file. An AIS history item must be created explaining the nature of the payment (e.g., "payment rcvd from NDS" or "payment rcvd for post-petition 30-2007" ). Field Insolvency Processing. Field Insolvency will load these payments to the AIS Non-Plan Payment Screen and print a voucher. AIS will only allow a DPC of "03" or "11" to be printed on the payment vouchers it generates. The caseworker must cross out the "03" and replace it with "99" . Field Insolvency will overnight their payments and vouchers to the Campus assigned to their geographical location. An AIS history item must be created explaining the nature of the payment (e.g., "payment rcvd from NDS" or "payment rcvd for post-petition 30-2007" ). Estimated Tax Payments. Some plans include the requirement debtors make estimated tax payments on future periods so they do not continue to accrue liabilities post-petition. These payments cannot be processed through AIS. Field Insolvency must prepare Form 3244, Payment Posting Voucher, to be sent along with the payment to the appropriate Campus remittance unit by overnight delivery. Estimated tax payments received erroneously at the CIO will be scanned and loaded on IDRS by Campus Support. Note: Field Insolvency must advise debtors to send estimated tax payments to the Field Insolvency office address.
Tracing Missing Payments
5.9.15.20 (12-27-2024) Tracing Missing Payments A payment tracer is the process used to locate a missing or misapplied payment. A missing payment is one that cannot be found on the taxpayer's account. A payment tracer case is not resolved until the missing or misapplied payment is correctly applied to a taxpayer's account. Before conducting research to locate the payment, determine if at least two weeks have passed since the taxpayer mailed their payment or scheduled an authorized electronic payment. If not, ask the taxpayer to call back at that time & input a 20 day follow-up in AIS. If more than two weeks have passed since the payment was mailed or electronically issued, then an attempt should be made to resolve the missing payment through internal research, including using the Remittance Transaction Research (RTR) system, refer to IRM 21.5.7.3.1, Remittance Transaction Research (RTR) System, before requesting any documentation from the taxpayer. The caseworker assisting the taxpayer can also research IDRS and CFOL command codes. For detailed information about the command codes that should be used to research missing payment see IRM 21.5.7.3.2, Integrated Data Retrieval System (IDRS) Research for Payment. If the payment information cannot be located through internal research, determine if the documentation can be obtained via the Document Upload Tool (DUT) while you are on the phone with the taxpayer. If the taxpayer can upload the information, provide them with the unique access code and the URL to upload the required information. If the taxpayer cannot provide a copy of the documentation while you are on the phone, explain to them that the unique access code is valid for 70 days. Provide the taxpayer a due date to submit the information, usually within 30 days and add a follow up to AIS. Do not amend the claim until the taxpayer provides the evidence of payment. The caseworker may need the following information to better assist the taxpayer in locating the missing payment: Items that may be require for tracing missing payments Evidence of payment (e.g., copy of cancelled check, front and back) Date payment cleared Taxpayer name and address Taxpayer Identification Number (TIN) Date of payment Amount of payment Tax period payment intended for Where payment was sent or delivered (if mailed) Type of payment (e.g., check, money order, Debit/Credit card, electronic payment) Encoding information (e.g., check or money order) Direct Pay or Debit/Credit Card Payment confirmation number Electronic Federal Tax Payment System (EFTPS) 15-digit EFT number Routing number for financial institution on which the check was drawn. All functions work the initial phase of a payment tracer case. If a transferable payment is found, follow the credit transfer procedures in IRM 21.5.8, Credit Transfers. Refer taxpayers to the Taxpayer Advocate Service (TAS) (see IRM 13.1, Taxpayer Advocate Case Procedures) when the case 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 in 24 hours, as well as cases in which you have taken steps within 24 hours to begin resolving the taxpayer's issue. 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 accordance with your local procedures. If you cannot locate the payment, prepare Form 4446, Payment Tracer Research Record, and forward the case to the Hardcore Payment Tracer Function (HPTF). HPTF is usually located in the Accounting Control/Services Operation. Hardcore Payment Tracer addresses, telephone numbers, and fax numbers can be found by accessing Servicewide Electronic Research Program (SERP) under the Who/Where tab under the title Hardcore Payment Tracer Addresses. Follow procedures in IRM 21.5.7.4.2, Payment Tracer Referrals to Hardcore Payment Tracer Function (HPTF), to refer payment tracers.
Posting Non-Plan Payments
Exhibit 5.9.15-1 Posting Non-Plan Payments The steps for manually inputting data for non-plan payments and payments for which an error message of "no confirmed plan" appears are as follows: Verify the debtor account showing on AIS matches the debtor name given by the trustee. Click the "Non Plan Payments" button on the Taxpayer Screen. Click on the "Insert" button to post the payment. Add the required information and then select "Save" . In the "Payment" section of the Non-Plan Payment screen, complete the fields for: Date payment received Check number Transaction code Amount DPC TIN (if more than one, select from the drop down menu) MFT Claim code Tax Period Assessment date (optional) Comments (optional) Click on the "Save" button and the system will take you to the non plan payment main screen. Select the index number and click "Payment Vouchers" button.
Accessing the AIS Claim Screen
Exhibit 5.9.15-2 Accessing the AIS Claim Screen To view the claim(s) filed by the IRS in a particular case, the caseworker should take the following steps. From the AIS Main Screen, select "Case Files" . Enter the case number in the AIS Case Number field. Enter the case number in the "AIS Case Number" field and the court key. Select "Submit Search" on the navigation tool bar. Select the "Index number" of the case you want to access. Select the "Proof of Claim" folder tab and the Proof Screen will appear. From the Proof of Claim Screen select the "Index" number of the type of claim you want to access. Claim types are: Regular Administrative Probate Note: All claim information for a specific type of claim, such as original claims and amendments, will be with the file for the specific claim type. The original claim number and filing information will be shown in the field for the "Original" claim. The amended claim number, prepared date, and acknowledgement date for the last amended claim filed will be shown in the "Amended" field. A copy of the proof of claim can be viewed or printed by selecting "Reference Copy" or the "Previously Filed Claim" when more than one claim has been filed.
Plan Recomputation
Exhibit 5.9.15-3 Plan Recomputation The following steps will reallocate all payments after a payment on the AIS plan screen has been successfully reversed. Step Action 1 From the Taxpayer Screen, select the "CPM" tab. 2 If more than one type of plan is available (e.g. administrative, confirmed), select the index number of the plan you want to recompute. 3 Verify that the tax periods included in the Plan Screen are correct by selecting "Show Periods" . 4 Click Cancel to return to the CPM main menu. 5 Click on "Recompute Plan" . A pop-up message will appear, indicating the number of payments allocated and the number of payments posted. 6 Resolve any posting errors using the instructions in IRM 5.9.15.16.1, Resolving Payment Posting Errors. Caution: Caseworkers should take care not to confuse the "Recompute Plan" and "Reset Plan to Zero" options on AIS. The Recompute Plan option should be used when there are changes to the plan; e.g. the confirmation date, the plan effective date, interest options, etc. These changes impact the entire plan, so this option applies the new parameters and automatically re-allocates the payments. The Reset Plan to Zero option should be used when there are changes to individual periods or payments on a plan; e.g., to take out payments and apply them another way, to modify the plan by adding or deleting a tax period, to adjust tax amounts, etc. For detailed information on these functions in AIS, see Document 13219, AIS User Guide. Overpayments Caused by Recomputing the Plan. A mismatch or overpayment condition can exist when payments are reallocated. Plan payments may not match the reallocated payments on AIS. This can occur when a proof of claim is amended or an Administrative Claim is updated. To correct the mismatch in IDRS and AIS, take the following actions: Step Action 1 Select a transcript of the account(s) from IDRS. 2 Print an AIS Payment Record from the CPM main menu. 3 Match the two records. 4 Prepare appropriate form or input a credit transfer to move the payments on IDRS to match the payment reallocation on the Payment Record. 5 Verify both IDRS and AIS payment records match for the applicable periods.
AIS Automatic Allocation
Exhibit 5.9.15-4 AIS Automatic Allocation Secured Periods. AIS payment allocation is based upon the IRS's claim and how the plan screen is loaded. Beginning with the earliest assessed secured period, allocation is made by AIS in the following order: 1) non trust fund taxes, 2) trust fund taxes, 3) pre-petition interest, 4) pre-petition penalty, 5) the next oldest secured period following the order just stated, 6) then all accrued penalties for secured periods starting with the oldest period, and 7) finally all accrued interest for secured periods starting with the oldest period. Unsecured Priority Payments. Beginning with the earliest assessed unsecured priority period, allocation is made by AIS in the following order: 1) non trust fund taxes, 2) trust fund taxes, 3) pre-petition interest, 4) the next oldest unsecured priority period, and 5) finally all accrued interest for unsecured priority periods starting with the oldest unsecured priority period. Unsecured General Payments. Beginning with the earliest assessed unsecured general period regardless of payment date, allocation is made by AIS in the following order: 1) non trust fund taxes, 2) pre-petition interest, 3) then the next oldest period in the order just stated, and 4) all priority pre-petition penalty periods starting with the oldest period, and 5) finally all other pre-petition penalty periods, starting with the oldest period.
Posting Payments on a Closed Case
Exhibit 5.9.15-5 Posting Payments on a Closed Case If both AIS and PACER confirm a case has been discharged, the TC 604 transaction date (23C date) governs the proper actions to be taken by the SCI caseworker. IF... THEN... the case has been closed on AIS, Remove the closure date from the Closed On AIS field on the Taxpayer Screen. the payment 23C date is prior to the TC 604 23C date, IDRS will generate a systemic TC 605 allowing the caseworker to post the payment by following normal payment posting procedures. the payment 23C date is after the TC 604 23C date, The caseworker must reverse the abatement manually on IDRS by inputting: TC 520 cc 81 with the petition date; TC 971 AC 031 (3 cycle posting delay); and TC 521 cc 81 (4 cycle posting delay). Then follow normal payment posting procedures. Note: After the payment posts, the caseworker must input a follow-up to re-input the abatement. The case should be closed on AIS once the payment and all adjustments have posted to IDRS.
Source: official text