4 - Erroneous AbatementThe timely filed TC 150 return for TY 2018 is determined to be a nullity. The valid taxpayer filed a return reporting tax of $.00 and withholding of $2,500 which posted as a TC 976. Form 14039 is included with the return. The ASED for the valid return is expired. Based on the original return, the account shows TC 150 tax of $5,000, and withholding of $6,000. A CP 2000 proposing a tax increase of $2,000 based on unreported income is issued to the valid taxpayer’s last known

Example:

Internal Revenue Manual Part 25. Special Topics · 2026-10-03 edition · updated 2026-10-04 · United States

A taxpayer has not filed a TY 2020 return. The TY 2019 return is filed single with no dependents and an AGI of $77,000. This exceeds the $75,000 limitation, and EIP phase out applies.EIP 3:$77,000 − $75,000 = $2,000Calculating the reduction percentage:$2,000 ÷ $5,000 = .4 (40%)Because the reduction percentage is less than 100%, an EIP 3 will be issued.Calculating the amount of the credit:$1,400 (maximum credit) × 40% (reduction percentage) = $560 (amount of reduction)$1,400 (maximum credit) − $560 (amount of reduction) = $840 (amount of EIP 3)

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▸Contents — Internal Revenue Manual Part 25. Special Topics

Internal Revenue Manual Part 25. Special Topics

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