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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

Note:

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

For MFJ taxpayers, only one taxpayer needs to provide the subsequent update for this condition to be satisfied.

Account conditions that will require separate treatment of MFJ taxpayers for purposes of computation and payment include (Split Payment):

An innocent spouse issue has been identified (TC 971 AC 065/104).

There is a Victim of Domestic Violence (VODV) indicator (TC 971 AC 198).

When the primary or secondary taxpayer updates any feature within the CTCUP or through a CSR and the other spouse does not update their account with the exact same transaction (i.e., same bank account or address) within the same day.

AdvCTC payments will be issued on a monthly basis beginning in July 2021 and will continue through December 2021. When an account condition that postpones computation and payments has been identified, the postponement will continue until the condition has been resolved.

AdvCTC payments will not include credit interest (for original payments or reissued payments), are not subject to federal tax offsets or TOP offsets for non-tax debts, and will not be applied as a credit elect.

The IRS will issue a notice no later than January 31, 2022 to provide taxpayers with the total amount of AdvCTC payments issued to them.

Taxpayers will reconcile the amount of CTC and/or ACTC they are entitled to by reducing it by the total amount of AdvCTC payments issued to them (but not below zero). When the total amount of AdvCTC payments exceeds the amount of the credit the taxpayer is entitled to, the tax reported on the tax year 2021 return will be increased by the amount received in excess. Failure to correctly reconcile the amount of CTC and/or ACTC will be treated as a math error when processing the return. Taxpayer Notice Code (TPNC) 276 will be used to identify AdvCTC math errors. Refer to IRM 25.23.4.21.2.3, ARPA - Advanced Child Tax Credit (AdvCTC) Math Errors, for additional information.

The amount of the tax increase may be limited by a repayment protection specific to receipt of AdvCTC in an amount that exceeds the credit the taxpayer is entitled to.

The tax increase for taxpayers whose MAGI does not exceed the income threshold will be reduced by the full amount of the repayment protection (but not below zero). Refer to paragraphs (19) and (20) for additional information.

The tax increase for taxpayers whose MAGI exceeds the income threshold will be subject to phase out by a reduction percentage. Refer to paragraphs (19) and (21) for additional information.

The applicable income threshold amount for consideration of the repayment protection is based on the filing status:

$60,000 for married filing joint and surviving spouse

$50,000 for head of household

$40,000 for all other filing statuses

The repayment protection amount is determined by identifying the difference between the number of qualifying children the AdvCTC payments were based on and the number of qualifying children on the tax year 2021 return. That number is then multiplied by $2,000.

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▸Contents — Internal Revenue Manual Part 25. Special Topics
Internal Revenue Manual Part 25. Special Topics

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