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Part 4. Examining Process

Chapter 4. AIMS Processing

Section 8. Credit Transfers and Miscellaneous Adjustments

4.4.8  Credit Transfers and Miscellaneous Adjustments

4.4.8.1  (07-11-2005)
Introduction

  1. In many situations, credit transfers and/or miscellaneous adjustments are required and must be manually performed before or in conjunction with the examination adjustments. This section provides guidelines and instructions on the use and preparation of the various forms required.

4.4.8.2  (07-11-2005)
IDRS Guidelines for Credit Transfers

  1. Before inputting any credit transfer, research IDRS to view any recent account activity that may have taken place at another campus. Consider the effects of pending transactions, previous actions, freeze codes, module balances, and posted penalty and interest adjustments. Also, consider the effects of the transaction being input.

  2. Contact any controlling examiner to coordinate actions on modules and to prevent erroneous or duplicate adjustments.

  3. Do not move payments until they post. EXCEPTION: Pending payments showing AP, CU, PN, RS, or TP can be moved if a posting delay code is used.

    Note:

    Generally, payments should not be removed from an account in debit status, or in zero balance, or if the transfer results in a debit balance.

  4. Each credit transfer affects two modules unless the transfer is for the purpose of changing the payment date only. The credit side of the transaction will post one cycle after the debit side.

  5. Each credit transfer has two sides:

    1. Debit Side - Where the credit is moved from.

    2. Credit Side - Where the credit is moved to.

    Note:

    The generated IDRS format for a credit transfer will always show the debit side as the upper portion and the credit side as the lower portion.

  6. All actions need to be input in the same cycle to prevent the issuance of erroneous notices. Use posting delay codes when inputting multiple actions such as:

    • A credit transfer and tax adjustment. If both an adjustment and a transfer of credit into the module is needed, input a posting delay code of one cycle on the adjustment. In three weeks, the taxpayer receives a notice of adjustment with the correct module balance.

    • In and out credit transfer.

    Note:

    The Posting Delay Code extends the IDRS " PN" status. It does not post with the transaction or appear with the IDRS pending transaction.

  7. Input a bypass indicator "1" or TC 570 when transferring payments to an account in zero or credit balance.

  8. In order to successfully do a transfer, transaction codes must be compatible. See Document 6209, ADP and IDRS information, for a list of transaction codes and document codes. Also reference IRM 21.5.8, Credit Transfers Exhibit 21.5.8-1, for information on transactions codes and reversals.

4.4.8.3  (07-11-2005)
Form 2424

  1. Form 2424 Form 2424 is used to effect the credit/debit transfer from MF to MF and MF to NMF. It consists of a credit copy (pink) and debit copy (blue). The form is prepared in duplicate with the credit copy as the original. See Exhibit 4.4.8–1.

  2. Transfer credits that are made available due to decreases of previously assessed tax using transaction codes 820 (debit) and 700 (credit). If allowable interest is available for transfer, use transaction codes 850 (debit) and 730 (credit).

  3. When an entire account is being deleted, such as, the secondary taxpayer when a "separate-to-joint" case is worked, or when a return posted to an erroneous period or TIN, then use reversal codes to transfer the credits.

  4. Input a TC 570, Bypass Indicator 1 as a secondary code on the debit side, credit side or both, and/or a Posting Delay Code, when necessary to:

    • Suppress notices

    • Hold credits

    • Avoid unpostable conditions

    Note:

    TC 570 creates a freeze condition (Freeze Code R) which prevents credits from refunding or offsetting until they can be transferred, absorbed or released. TC 570 is not required on the credit portion when applying credits to an outstanding balance but must be used when making a concurrent assessment to freeze the credits until the assessment posts. TC 570 is required on the debit portion in all cases where two or more Forms 2424 are used, and no money is to be refunded.

    Note:

    The bypass indicator field is always required. If "1" is not applicable, input bypass indicator of "0" .

4.4.8.4  (02-08-1999)
Form 3809

  1. Form 3809 Form 3809 is used:

    1. to transfer non-revenue receipt amounts, such as overpayments applied from another period,

    2. to transfer credit from MF to a numbered NMF account, (such as the Excess Collections File),

    3. when using transaction codes not compatible with Form 2424, (such as TC 830 and TC 710).

  2. Form 3809 is a two-part form consisting of a credit copy (yellow) and a debit copy (green). It is always prepared in duplicate with the credit copy as the original.

  3. Annotate "use Doc. Code 58" at the top of Form 3809. If a transaction code other than 700 or 730 is to be used, be sure it is compatible with Document Code 58.

4.4.8.5  (07-11-2005)
Preparation of Forms

  1. When preparing the forms, refer to the following information in addition to Document 6209 and IRM 21.5.8, Exhibit 21.5.8-1:

    1. Name and address: Only the first name is required on the MF portions. For NMF portions, enter the taxpayer’s name and address. If both boxes apply to the same taxpayer, enter the name control only in the lower box.

    2. Taxpayer’s identification number, " TIN" : MF portions will always have the SSN or EIN, but NMF portions will contain the NMF DLN or the schedule number.

    3. MFT Code: The appropriate MFT code must always be entered on master file portions of both forms. On NMF portions, enter the applicable type of return.

    4. "Document Locator Number" : This is the DLN of the form 2424/3809. The DLN is not entered by the preparer.

    5. Tax period: Enter the six digit tax period in YYYYMM format.

    6. Transaction date: Enter the date in eight digit MMDDYYYY format. This should be the date of the original transaction now being reversed, transferred, adjusted or corrected. When using reversal codes, the transaction dates must be the same. Generally, this date may not be earlier than the beginning of the related tax period, nor later than the date of input.

    7. First (primary) transaction code, " 1st T.C." : All debits and credits to master file accounts must have an entry, but this block on debits and/or credits to non-master file accounts should be left blank. TC 850 (debit) and TC 730 (credit) may be used only if they represent the primary transaction.

    8. Primary "Amount" : This is the debit/credit amount of the first transaction code. Both the credit and debit entries must be for the same amount.

    9. Second transaction code, "2nd T.C. " : This is normally used on the credit block to affect a freeze of the credit (TC 570) until the related adjustment is made to the account. TC 570 should only be entered in the debit portion if more than one transfer document is prepared to debit the same tax module. This is to prevent the issuance of a refund until all transfer documents have posted. If a portion of the overassessment is to refund, a Form 3177 (Notice of Action for Entry on Master File) with a TC 571 must be prepared and processed after all debit copies of Form 2424 have posted to the overassessment tax module.

    10. Secondary "Amount" : This is the amount relating to the 2nd T.C. When the second TC is 570, enter "0 (zero)" in the secondary amount box.

    11. Third transaction code, "3rd TC" : This allows two transaction entries on a single document. Both debit and credit blocks must have an entry when this item is used. TC 850 (debit) and TC 730 (credit) may be used in these blocks to transfer allowable interest if such amounts carry the same transaction dates as the primary transactions.

    12. Third "Amount" : This is the amount relating to the third transaction code. Debit and credit entries must be equal.

    13. "Form 813 Amount on Form 2424" : This amount is the total of the debit amounts (1st and 3rd T.C. debit amounts). These debit amounts must equal the credit amounts.

    14. Explanation: The importance of this field cannot be overemphasized. Remarks and explanatory comments entered here must be such that in any subsequent review of the case the action taken can be readily understood. Include the DLN of the original credit.

    15. Date prepared: This item must contain the month, day and year on which the document is prepared.

    16. Prepared by: This item must identify, by name or employee IDRS number, the individual preparing the document as well as Area Office or Campus Location.


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