Reimbursement of Bank Charges Due to Service Loss or Misplacement of Taxpayer Checks

Policy Statement 5-39 (Reimbursement of Bank Charges Due to Erroneous Levy and Service Loss or Misplacement of Taxpayer Checks) provides that the Internal Revenue Service will reimburse taxpayers for bank charges resulting from Service loss or misplacement of taxpayer checks during processing. In practice, Small Claims are paid from the Judgment Fund, 31 U.S.C. 1304 (a) (3), after they are processed by the IRS/Beckley Office, Beckley, WV, under the authority granted by the Bureau of the Fiscal Service (BFS, formerly FMS), a bureau of the Department of the Treasury. BFS acts under a 6/28/1996 delegation from OMB which has authority pursuant to 31 USC 3702. See also IRM 5.19.6.13.4, Erroneous Levy, Reimbursement of Bank Charges.

For purposes of administering Policy Statement 5-39:

"Bank" is any financial institution or other institution providing remittance-issuing services, i.e., bank, credit union, savings bank, savings and loan.

"Charges" include stop payment, reissue and research or photocopy fees charged by banks for having to stop payment, when the IRS, having mislaid the original remittance, has advised the taxpayer to again make payment or to prove payment;

Charges cannot exceed one thousand dollars ($1,000.00)

Charges must represent actual expense paid by the taxpayer (cannot be waived by the bank or paid by someone other than the taxpayer or his/her authorized representative); and

Charges must be appropriately claimed of the Campus by the taxpayer within one year of its accrual.

"Loss or misplacement" includes failure to properly credit the taxpayer's account as well as mishaps occurring during the deposit operation. Malfeasance or misfeasance by agents of the Campus such as Lockbox personnel, Postal Service or couriers and embezzlement by Campus personnel are within the scope of Policy Statement 5-39.

"Checks" include remittances such as personal or business checks, bank drafts, cashier's checks, money orders; and

Checks must be paid in full to the IRS at the time the taxpayer claims reimbursement under Policy Statement 5-39. (For example, if the misplaced remittance was for $530.00 and the stop-payment charge was $25.00, the taxpayer's replacement payment must be for $530.00. The taxpayer does not qualify for reimbursement by submitting a replacement check for $505.00 [original amount less expense].)

IDRS research will be necessary to verify taxpayer's information.