Note:

See IRM 21.4.5.5, Erroneous Refund Categories and Procedures, for more information on erroneous refund categories and procedures.

The following situations may cause or create an erroneous refund. This list is not all encompassing and other causes and effects do exist.

A misapplied payment is a payment applied to the wrong TIN. The misapplied payment overpays the account, causing an erroneous refund.

A taxpayer's designated payment posts to the correct TIN but the wrong type of tax or tax year.

A credit refund, of any type, if the taxpayer is not entitled.

Return of court ordered restitution.

An incorrect tax assessment, such as an incorrect use of Hold Codes or Priority Codes causing an incorrect refund.

An incorrect tax adjustment causing an erroneous refund.

Two taxpayers file refund returns, using the same TIN, and the refund goes to the wrong taxpayer.

A taxpayer fraudulently or by mistake, receives refunds from more than one TIN for the same tax period.

A taxpayer receives a manual refund (TC 840) and a computer- generated refund (TC 846) for the same overpayment.

A taxpayer files a claim on a lost check, receives a replacement check, finds the original check and cashes both.

A taxpayer makes an advance payment against a pending tax increase, and the money refunds before tax assessment posts.

Incorrectly computed interest.

A direct deposit is applied to the wrong taxpayer's account due to IRS error. (Owner of account may or may not be known.)

Improper release of the TC 700 (false credit), U Freeze. See Document 6209 Section 8 Chapter 2 for a complete description of TC 700.