Part 5. Collecting Process

Chapter 7. Trust Fund Compliance

Section 7. Payment Application and Refund Claims

5.7.7  Payment Application and Refund Claims

5.7.7.1 Installment Agreements on the BMF Liability after TFRP Assessed
5.7.7.2 Pre-Assessment Payment
5.7.7.3 CSCO Application Guidelines for TFRP Accounts
5.7.7.4 Cross Referencing of Payments Made by Responsible Persons
5.7.7.5 Cross Referencing of Payments Made on Employer Balance Due Accounts
5.7.7.6 Claim for Refund
5.7.7.7 Abatements and Adjustments of a TFRP

5.7.7.1  (04-13-2006)
Installment Agreements on the BMF Liability after TFRP Assessed

1. Even after assessment of the TFRP, revenue officers may still secure an installment agreement for an in-business BMF trust fund taxpayer. Once the agreement has been approved by the group manager, the revenue officer and the group manager will give consideration to withholding collection on the TFRP balance due accounts.

2. Determine the potential success of the installment agreement and consider:

   1. What is the collection potential of the TFRP balance due accounts?

   2. Is collection of the TFRP balance due accounts in jeopardy?

   3. Will a Notice of Federal Tax Lien be filed?

   4. If no lien will be filed, will the person held responsible provide a bond, other collateral, or adequate protection (IRM 5.6.1)?

      Example:

      Adequate protection includes otherwise unencumbered assets of the business currently secured by a federal tax lien for the same periods and having sufficient equity from which the BMF tax (non-trust and trust fund) can be paid in full.

3. When the decision is made to withhold collection of the TFRP, the revenue officer will follow the procedures in IRM 5.14.7.4.1.1.

5.7.7.2  (04-13-2006)
Pre-Assessment Payment

1. A payment received on a responsible person's account prior to assessment of the TFRP will be applied using Form 3244, Payment Posting Voucher:

   1. Enter IRC 6672/55 in the Form Number/MFT block.

   2. Enter the dollar amount of the payment next to the TC 640 "Advance Payment on Deficiency" block.

   3. Enter a designated payment code (DPC) with all TC 640 payments.

      Note:

      DPC information can be found in Document 6209, ADP and IDRS Information. DPC 99 is normally used; however, use DPC 10 if the payment is for a manually monitored pre-assessed installment agreement, or use another appropriate code based on the type of payment being made.

   4. Enter in the Remarks section "Trust Fund Recovery Penalty Pending" followed by the name and TIN of the business and the approximate assessment date so the payment can be properly identified.

   5. Submit the payment with the posting voucher on Form 795.

   6. Retain a copy of Form 3244 in the TFRP case file.

5.7.7.3  (04-13-2006)
CSCO Application Guidelines for TFRP Accounts

1. Apply a voluntary undesignated payment or an involuntary payment received from a person against whom the TFRP has been assessed to the earliest unpaid portion and period of that person’s liability.

   Exception:

   If directed to apply a payment from a court proceeding, such as a suit, bankruptcy, or decedent case, or proceeds from offset or levy in a specific manner, follow those specific guidelines.

2. Payments will not be applied to a portion of any period for which all responsible persons are not liable solely to maximize the amount due from persons who did not pay.

3. In a case where there has been collected from the responsible person(s) an amount that exceeds the amount of withheld tax the corporation failed to pay, the excess may be refunded within the applicable statutory period.

4. Generally, if two or more taxpayers made payments, refund the excess overpayment to the taxpayer whose payment created the excess.

   Note:

   It may be necessary to contact Technical Services - Advisory for resolution when it is not clear whose credits or payments created the excess.

5.7.7.4  (04-13-2006)
Cross Referencing of Payments Made by Responsible Persons

1. When a TFRP taxpayer makes a payment, a TC 241 with reference number 699 will be reflected on the related MFT 55 TFRP modules on:

   • IDRS CC TXMOD

   • Balance Due Accounts

   • Transcripts

2. When TFRP payments and credits from related TFRP accounts are received on a TFRP balance due account, CSCO will:

   • Receive a computer generated transcript that notifies CSCO of the action

   • Use CC UNLCER to research for related TFRP assessments

   • Complete cross referencing of payments and related actions within 45 days of the date the payment posts (IRM 5.19.7.2.12(2) through 5.19.7.2.20)

     Note:

     The cross referencing notification will be issued via ICS and will automatically post to the appropriate balance due account.

3. If the cross referencing takes place appropriately, it should be possible to determine the correct balance of the penalty by looking at only one account.

   If. . . Then. . .

   It is determined that the related account is for the same liability as that to which the payment was applied	CSCO will post TC 241, penalty reference number 699, to each related account and will generate a transcript in the amount of the payment.
   The amount of the TFRP due from the non-paying taxpayer is smaller than the remittance from the paying individual	CSCO will post TC 241, reference number 699, for the balance remaining on the TFRP account from the non-paying taxpayer.
   A module reflects a TC 241, reference number 699	It may be assumed that the module reflects all appropriate TCs 241 with reference number 699; however the person assigned the account should monitor the liability to ensure all payments and adjustments have posted properly and should take the appropriate action to adjust the account if the cross referencing has not taken place as appropriate. Do not request an adjustment unless it has been more than 90 days from the date the payment posted to the account. (See IRM 5.7.7.5(2).

4. The person assigned the balance due account should ensure that the TC 971's to cross reference all related parties are in place, especially for cases that were quick or prompt assessed. Request input of the appropriate transaction code on Form 4844 if the information is not present.

   Note:

   TC 971, action code 093 is used to cross reference the IMF data to all related IMF accounts as well as to the BMF account; TC 971 action code 097 is used to cross reference the BMF data to related IMF accounts (IRM 5.19.7.2.8).

5.7.7.4.1  (04-13-2006)
Disclosure of TFRP Payment Information

1. Section 902 of the Taxpayer Bill of Rights 2 (TBOR 2) expanded IRC 6103(e) to add subsection (e)(9) which provides for certain disclosures to persons who have been assessed the TFRP pursuant to IRC 6672. IRC 6103(e)(9) provides for disclosure to one person who has been assessed the TFRP, certain limited information regarding other persons assessed the penalty for the same underlying tax. See IRM 5.1.1.6.4 for additional information on what information can and cannot be disclosed, as well as the method of disclosure.

5.7.7.5  (04-13-2006)
Cross Referencing of Payments Made on Employer Balance Due Accounts

1. After the TFRP has been assessed, payments/credits may be applied to the underlying trust fund liability. Apply these payments according to the guidelines established in Revenue Procedure 2002-26. In order for the cross-referencing process to function correctly, employees must ensure that they are using designated payment codes appropriately. Prior to designating a payment to either trust fund or non-trust fund taxes, ensure that there is still an unpaid liability for that particular category. There should be limited need to designate any payment to non-trust fund since under the payment application method all undesignated payments are automatically applied first to non-trust fund taxes.

2. The compliance centers will cross-reference these payments to the related accounts when they receive the computer generated transcripts. If the payment is not cross-referenced within 90 days of the date the payment posted to the employer account, request adjustment of the related TFRP balance due accounts. Request input of TC 241, reference number 697, with the appropriate date and amount on Form 3870. In order to ensure that the appropriate cross referencing actions are completed, Forms 3870 related to TFRP accounts may only be input by CSCO. These adjustments may not be processed in the local offices.

3. The adjustment will be in an amount equal to the payment/credit which was applied to the trust fund portion only. Unless interest was also fully paid by the underlying trust fund taxpayer, the TFRP taxpayer will still be liable for the interest on the TFRP assessment.

5.7.7.6  (04-13-2006)
Claim for Refund

1. The taxpayer should submit a claim for refund involving a TFRP on Form 843, Request for Refund and Request for Abatement. See IRM 5.7.7.6.2 for information on the additional actions the taxpayer must take and the required timeframes in order for the Service to be required to withhold collection action. The taxpayer must submit a separate Form 843 for each period that the taxpayer wants considered for refund and abatement.

2. In order to file a claim for refund of a TFRP, for each applicable tax period the taxpayer must pay the tax attributable to either:

   • One individual if the TFRP is based on employment taxes

   • One transaction if the claim relates to a TFRP for excise taxes

     Note:

     This allows the government to place the unpaid portion of the TFRP before the court by means of counterclaim. If the amount cannot be accurately determined, the Service may accept a representative amount.

3. Generally, the Service will consider TFRP claims for refund (and for related abatement of unpaid TFRP portions) if they are filed within two years after the date the required payment was made.

4. The Technical Services - Advisory office where the claimant resides should work the claim.

   If: Then:

   The claimant does not reside in a location covered by the Technical Services - Advisory office where the claim was submitted	Use Form 3210, Document Transmittal, to forward the Form 843, the TFRP files, as well as any associated Appeals or other files to the Technical Services - Advisory office where the claimant resides.
   The Form 843 claim is received in the office where the claimant resides, but the TFRP was not assessed in that office	Contact the Advisory group in the originating office to have them transmit the TFRP files as well as any other needed files or documentation.

5.7.7.6.1  (04-13-2006)
Technical Services - Advisory Actions

1. Date stamp Form 843 upon receipt. Technical Services - Advisory should complete the initial review of the claim within 30 days of receipt. Form 843 claims must be processed promptly since the taxpayer may file suit if the claim is not acted upon within six months of receipt. Technical Services - Advisory should issue interim status letters as needed to avoid unnecessary litigation.

2. Open an ICS NF Other Investigation (OI) to control the claim. Check ICS for any prior claims or inquiries. Review the closed files for any prior claims.

   Note:

   All actions taken on the claim will be documented in the ICS history including, but not limited to:

   • Results of research and reviews

   • Dates any correspondence was initiated to the claimant

   • Deadlines set for the claimant and follow-ups

   • Determinations and reasons for the determinations

   Note:

   If a prior claim was rejected and the current claim provides no additional information, notify the claimant in writing that the new claim cannot be considered. Explain that the right to bring suit was lost if not exercised in a timely fashion after denial of the earlier claim. Contact Area Counsel for any questionable issues involving the taxpayer's right to bring suit. Update the ICS history with the date the claimant was notified and the reason(s) for not being considered.

3. Review transcripts to identify credits made within two years of receipt of Form 843; these are the only credits that may be considered for refund (see IRC 6511(a)).

   Note:

   If the taxpayer is determined to be not responsible for the TFRP, payments made beyond this two year period may not be refunded to the taxpayer but must be transferred to excess collections (see IRM 5.7.7.7.1(1)).

4. Review Form 843 for processability and to identify the issues involved. Generally, a Form 843 claim is processable if the taxpayer and tax periods can be identified, the required payment has been made, and there is some type of explanation provided. If the form is not processable:

   1. Address the basic issues of the case, even if the claim is not processable.

   2. Prepare a letter to the claimant outlining and explaining the defects, needed corrections, and the additional information needed.

   3. Include a reasonable timeframe for response (generally 30 days).

   4. Close the control with no further action if no response is received.

      Note:

      In some cases, an incomplete claim may be considered a valid claim. In such cases, issue a formal denial (IRM 5.7.7.6.4) advising the taxpayer of his or her right to bring litigation. Consult Area Counsel to resolve uncertainties as to the proper response.

5. Retrieve the TFRP file(s) and review them to determine:

   • If any basic procedural defects exist

   • If sufficient file information exists to evaluate and respond to the issues raised

     Note:

     If the TFRP balance due or the employer balance due accounts are assigned to a revenue officer, identify that person and coordinate all actions and determinations with him/her.

6. If an Appeals determination was already made in regard to the TFRP at issue, neither Advisory nor field collection employees can reverse the prior determination made by Appeals. Only Appeals can reverse such a determination. Consult Appeals to determine how a particular case should be processed.

7. If the TFRP clearly cannot be substantiated, Technical Services - Advisory should follow the procedures in IRM 5.7.7.6.3 for accepting the claim and preparing Form 3870 to abate the assessment. Consult Area Counsel if there are questions over the validity of the assessment.

8. Possible actions by Technical Services - Advisory include:

   • Acceptance of the claim (IRM 5.7.7.6.3)

   • Use of Fast Track Mediation (IRM 5.7.6.1.3(3))

   • Denial of the claim (IRM 5.7.7.6.4 or 5.7.7.6.5)

   • Referral to Appeals (may be interim or final action — IRM 5.7.7.6.1.2)

5.7.7.6.1.1  (04-13-2006)
Incomplete TFRP Files

1. If the information in the file is not sufficient to support assertion and/or if any procedural defects are identified, Technical Services - Advisory may issue a Courtesy Investigation to the appropriate field group based on the location of the account for resolution of the defects, when possible, or to secure additional documentation.

   Note:

   Some procedural defects may invalidate the assessment. Consult Area Counsel if there are questions over the validity of the assessment.

2. Identify the specific additional documentation and/or corrective actions that are needed. Transmit all TFRP files with the Courtesy Investigation via Form 3210, Document Transmittal, and set a reasonable deadline for response.

3. Send an interim response to the claimant.

4. If the TFRP file(s) cannot be located and/or reconstructed, consult with Counsel to make a determination as to whether the claim should be accepted (IRM 5.7.7.6.3) or if the claim should be denied (IRM 5.7.7.6.4 and IRM 5.7.7.6.5) based upon the hazards of litigation for defending the Service's position if the taxpayer later files suit.

   Note:

   The Service is not necessarily required to concede a case solely because the case file cannot be located or has been destroyed. If this situation arises, consult with local counsel in deciding whether or not to concede the case.

5.7.7.6.1.2  (04-13-2006)
Referral to Appeals and Fast Track Mediation (FTM)

1. If the revenue officer or Technical Services - Advisory does not fully abate the TFRP, determine if a referral to Appeals is appropriate.

   Reminder:

   Neither Advisory nor field collection employees can reverse a prior determination made by Appeals. Only Appeals can reverse such a determination.

2. Situations where referral to Appeals may be appropriate include the following:

   • Appeals has already made a determination on the case

   • It is not clear that the claimant was given adequate access to the appeal process (or if it is clear that they did not), and a determination by Appeals would be beneficial to the government's position

   • Other situations in which it is deemed advisable, generally to ensure or strengthen the Government's position in potential litigation

3. If referral to Appeals is appropriate, the revenue officer will:

   1. Prepare the rebuttal narrative.

   2. Update the TFRP file.

   3. Prepare and mail Letter 1154(DO) to the claimant.

   4. Return the files to Advisory to be forwarded to Appeals.

4. Advisors should consider FTM as an option since taxpayers may also use the FTM process for Form 843 claims that are being rejected. The advisor may advise the taxpayer of FTM at any time during the review process. If FTM has not been discussed prior to issuance of the rejection letter (see IRM 5.7.7.6.4 and 5.7.7.6.5), include Publication 3605 with the letter denying the claim.

   Note:

   Remind taxpayers that even if the IRS agrees to use FTM, the time frames for formally appealing the denial and filing suit still apply.

5.7.7.6.2  (04-13-2006)
Withholding Collection — IRC 6672(c)

1. Under IRC section 6672(c) the Service is required to withhold collection of the TFRP before a refund suit has been filed if the taxpayer takes the three following actions within 30 days after notice and demand for payment:

   • Makes payment to satisfy the divisible assessment concept (IRM 5.7.7.6(2))

   • Submits Form 843

   • Furnishes a bond for an amount equal to 1 1/2 times the unpaid portion of the TFRP (see IRM 5.6.1)

     Note:

     When collection of the TFRP is in jeopardy, the Service may take immediate collection action, even if the taxpayer complies with the provisions of sections 6672(c).

2. Request input of TC 520, closing code 82, to stay collection until the final resolution of the court proceedings and the taxpayer's claim for refund. If the taxpayer's claim is later denied, the Service must continue to withhold collection if the taxpayer files suit within 30 days of the date of the letter denying their claim. If the taxpayer fails to file suit within this time period, the Service may take action to apply the bond to the liability (IRM 5.6.2).

3. During the pendency of a taxpayer's TFRP refund suit for tax periods beginning after December 31, 1998, the Service is also now generally required by IRC section 6331(i) to refrain from issuing new levies to collect the remainder of the taxpayer's unpaid TFRP amounts that are at issue in the suit. See policy statement P-5-16 (IRM 1.2.1.5.3).

5.7.7.6.3  (04-13-2006)
Claim Accepted

1. Technical Services - Advisory will take the following actions if the claim is allowed:

   1. Notify the taxpayer in writing (Letter 3782).

   2. Initiate action to release bond (IRM 5.6.1) to the taxpayer if taxpayer complied with the provisions of IRC 6672(c) — IRM 5.7.7.6.2(1).

   3. Prepare Form 3870, Request for Adjustment, to adjust the TFRP account accordingly and forward to CSCO for abatement action.

   4. Close the ICS NF OI control once the Form 3870 is correctly processed and properly posted to IDRS.

   5. Print out a copy of the ICS history and include in the TFRP file along with the claim and copy of the Form 3870.

   6. Process the TFRP file based on the records retention schedule.

5.7.7.6.4  (04-13-2006)
Claim Denied — IRC 6672(c) Not Applicable

1. Technical Services - Advisory will take the following actions if the claim is denied and the taxpayer did not take the actions outlined in IRM 5.7.7.6.2:

   1. Issue a certified letter (Letter 3784) to indicate disallowance of the claim and to notify the taxpayer of the 2-year period to file a suit. Enclose Publication 3605 if appropriate (see IRM 5.7.7.6.1.2(4)). Taxpayers should be instructed to mail appeals of denied claims to Technical Services - Advisory.

   2. Prepare and submit Form 4844 for input of TC 290 for $0.00 (use blocking series 98) to establish a record of the claim denial on the taxpayer's account for future reference. Attach a copy of the denial letter to the input document.

   3. Establish a 60-day follow-up on ICS, pending receipt of an appeal.

   4. At the expiration of the 60 days and no appeal has been received, close the NF OI on ICS.

   5. Print out a copy of the ICS history and include in the TFRP file along with the claim and denial documents.

   6. Process the TFRP file based on the records retention schedule

   7. If an appeal is received, follow IRM procedures for processing the appeal.

5.7.7.6.5  (04-13-2006)
Claim Denied — IRC 6672(c) Applicable

1. Technical Services - Advisory will take the following actions if the claim is denied and the taxpayer took the actions outlined in IRM 5.7.7.6.2:

   1. Issue a certified letter (Letter 3783), signed by the appropriate individual (SB/SE Delegation Order 5.7), to indicate disallowance of the claim and to notify the taxpayer of the 30 day period for bringing suit under IRC 6672(c)(2). Enclose Publication 3605 if appropriate (see IRM 5.7.7.6.1.2(4). Taxpayers should be instructed to mail appeals of denied claims to Technical Services - Advisory.

   2. Establish a 30 day hold file and monitor the file to determine if a suit is filed timely (contact Associate Area Counsel, if necessary, to make this determination).

   3. Follow the procedures in 5.7.7.6.5(2) if the suit is not filed timely.

   4. If the suit is filed timely, the TC 520 will remain on the account to stay collection until the final resolution of the court proceedings and the taxpayer's claim for refund.

   5. Close the control on the inventory database at the end of the 30 day hold period.

   6. Associate the closed control file with the TFRP file. Maintain the TFRP file in the Technical Services - Advisory office for at least 45 days following issuance of the denial letter. If the taxpayer later files an appeal, then the TFRP file can more easily be submitted to Appeals for their review.

2. If the suit is not filed timely, the bond, or other collateral, will be converted to satisfy the TFRP liability in accordance with the agreement. Request reversal of the TC 520, and process the bond or other collateral in accordance with procedures in the IRM 5.6.2. Do not assign the balance due accounts to the field.

5.7.7.6.6  (04-13-2006)
Informal Claims for Refund or Abatement

1. Taxpayers may also submit claims for refund and/or abatement that are not submitted on Form 843. A taxpayer who is not asking for a refund does not need to use Form 843 to receive consideration of the claim. Revenue officers may process claims that are not submitted on Form 843; however, if the taxpayer intends to file suit, the claim must be submitted on Form 843 and the required payment must be made. If the taxpayer submits the required payment along with a letter requesting refund and the letter contains the required elements from Form 843, contact area counsel to determine if the letter should be considered a valid claim.

2. If the claim has merit, the appropriate adjustment or abatement should be requested using Form 3870. The Form 3870 should be submitted to the TFRP unit in CSCO for input of the Form 3870. These adjustments or abatements may not be input in the local offices.

3. If the claim does not have merit, prepare a letter to the claimant advising of:

   • The action taken

   • The reason(s) for non-abatement

   • The available options (OIC, etc.), including instructions to submit Form 843 Claim for Refund and Abatement if the taxpayer wishes to file suit

5.7.7.7  (04-13-2006)
Abatements and Adjustments of a TFRP

1. Abatement of a TFRP liability is made in any of the following circumstances:

   1. Collection determines that all or a portion of the liability is not owed.

   2. Appeals decides that all or part of the liability is not owed and should be conceded.

   3. Federal court judgment is reached in favor of the taxpayer and the government decides not to appeal (Assessments of other responsible persons should not be abated based on this judgment).

2. Only Technical Services - Advisory is authorized to request abatements on cases outlined above in b) and c) above.

3. Adjustment of a TFRP liability is made in any of the following circumstances:

   1. Withheld taxes were collected from the underlying trust fund taxpayer by payment or refund offset.

   2. Full payment of the TFRP has been made by one or more related TFRP taxpayers.

   3. Acceptance of an employer's offer in compromise when the penalty has been assessed and when abatement of the TFRP is a condition of the employer's OIC that the Service has accepted.

4. Abatements and adjustments are requested using Form 3870, Request for Adjustment. Responsibility for preparation of Form 3870 is determined as follows:

   If the case is assigned to. . . Then. . .

   CFf (balance due or other investigation) and the TFRP will be abated or adjusted	the revenue officer assigned the case should prepare the Form 3870.
   ACS and an adjustment is to be made, or abatement of TFRP does not involve a question as to responsibility and/or willfulness	ACS should prepare Form 3870.
   ACS and abatement of TFRP involves a question as to responsibility and/or willfulness	forward case to CFf or Technical Services - Advisory for consideration and preparation of Form 3870
   ACS and involves payment/credit posted to be adjusted	ACS should prepare Form 3870 after contacting Technical Services - Advisory to determine the amount and quarters of liability to be adjusted for an underlying trust fund liability.
   neither CFf or ACS	Technical Services - Advisory will be responsible for preparation of Form 3870.

5.7.7.7.1  (04-13-2006)
Preparation of Form 3870

1. Prior to completing Form 3870 for an adjustment, carefully analyze the BMF account and all related IMF accounts to ensure the adjustment is necessary. Request Forms 3870 at the same time for all related parties. Interest will be due on the IMF accounts unless the interest was already fully paid on the underlying BMF account (IRM 5.19.7.2.18). Since most credits will be cross-referenced systemically, do not request any adjustment for credits that have been applied to an account for less than 60 days. All TC 241's with credit reference numbers 699 or 697 as well as TC 538's on the BMF account need to be accurately analyzed to determine if an abatement is necessary. Check UNLCER for the BMF and all related IMF accounts since the responsible parties are not always assessed the same amount for the same quarters.

   • Credit reference number 699 will be reflected on all TC 241's input on an IMF account for payments made by any related responsible parties.

   • Credit reference number 697 will be reflected on all TC 241's input on an IMF account for payments made by the related BMF account.

   • Transaction code 538 will be input on the BMF account to reflect payments made by any of the responsible parties.

2. Prepare Form 3870 for an abatement or adjustments as follows:

   • Complete all information in line items 1–10 as stated.

     Reminder:

     Joint name lines do not apply to TFRP accounts.

   • Enter line item 11-Reason for Adjustment: Requested action: Abate <$ amount applicable> of TC 240, reference number 618, dated <enter assessed date>, or Adjust <$ amount applicable> of TC 240, reference number 618, dated <enter assessed date> and assessed for <assessed amount of TC 240>.

     Reminder:

     An abatement is requested if the individual is determined to be not responsible for all or a portion of the TFRP; an adjustment is requested when the balance due needs to be updated based on payments made by related parties (IRM 5.7.7.7).

   • Justification: For abatements, the reasons specified must address responsibility and willfulness. " The taxpayer is not liable" is not sufficient justification.

     Reminder:

     Abatements of TFRP accounts may not be based on reasonable cause.

   • Complete line item 13, including the preparer's phone number.

   • Submit for approval by the preparer’s immediate manager (line item 14).

   • Attach an account transcript (and UNLCER print) for all applicable periods and all related accounts. The Campuses need a corrected list of periods adjusted and the resulting trust fund amounts so they can correct UNLCER and the Memo Money Amounts. For abatement requests, identify the payments to be refunded to the taxpayer and those that must be transferred to excess collections. Under IRC 6511(a), only payments made within 2 years of filing the Form 843 claim for abatement may be refunded to the taxpayer. Indicate if any collection fees, bad check fees, etc. should be abated. Be sure to include instructions to reverse any applicable TC 241's with reference numbers 699 or 697 on other responsible parties or any TC 538's on the corporate account based on the adjustment you are requesting.

   • Send to the CSCO TFRP unit via Form 3210 or other suitable transmittal.

     Note:

     Request release of lien when applicable.

3. If the Form 3870 is prepared by a revenue officer, forward to Technical Services - Advisory:

   1. Copy of Form 3870

   2. Revised TFRP computation for association with the TFRP administrative file.

4. In order to ensure that the appropriate adjustments are made to UNLCER and that the appropriate cross-referencing takes place, only the TFRP unit in the compliance center can input Form 3870 TFRP adjustments. Forms 3870 on TFRP accounts may not be processed in the local offices.

5.7.7.7.2  (04-13-2006)
Reversal of TFRP Adjustments

1. The following procedures will be used on reversal of prior TFRP adjustments for:

   • TFRP payments and credits from related TFRP accounts

   • Compromise of Employment Excise and Partnership Tax Liabilities

2. Technical Services - Advisory will prepare:

   • Another Form 3870, Request for Adjustment

   • Memorandum of authority which requests a reversal of the adjustment and refers to the related Form 3870.

   If. . . Then. . .

   the account is on UNLCER	prepare Form 3870 using UNLCER.
   the account is not on UNLCER	contact compliance center TFRP Unit for the information needed to prepare Form 3870

3. Manual coordination procedures must be used to assure that over-collection does not occur. The employee posting a payment or credit to a balance due account must notify all other persons to whom a related case is assigned.

4. If one of the accounts is fully satisfied, other responsibility units will be so advised. Form 3870 and a memorandum of authority will be prepared to adjust the account(s). The Form 3870 and memorandum are to be forwarded to the compliance center.

5. For those cases adjusted with TC 241, reference number 699, reversal of adjustments will be accomplished as follows:

   1. Technical Services - Advisory will advise CSCO by Form 3870 and memorandum of authority to reverse adjustment of the assessment. In the case of a reversal related to the refund suit, a suspense file should be opened so that the balance due account can be assigned to Technical Services - Advisory.

   2. Instruct CSCO to post TC 240, reference number 699, with an identical date and amount for each TC 241 reference number 699, posted to the module. Include dates and amounts of transactions to be reversed.