Note:

Before issuing a closing letter when addressing either of the following scenarios, refer to paragraph (11) below for letter requirements.

If CTCUP was updated by someone other than the valid taxpayer after all AdvCTC payments were issued or the taxpayer’s payments were stolen from their mailbox, the case will be worked as non-tax-related identity theft. Refer to IRM 25.23.3.2.3, Self-Identified - Non-Tax-Related Identity Theft - IDT4, for specific procedures.

If CTCUP was not updated by someone other than the valid taxpayer, payments were not stolen from the taxpayer’s mailbox, there is no invalid return for TY 2021, and/or all payments issued were returned, the taxpayer is not a victim of IDT for TY 2021. Follow procedures in IRM 25.23.4.10.8 , No Identity Theft (NOIDT), to resolve the account.

When the amount of AdvCTC was calculated using an invalid return and a return (either valid or invalid) has not been received for TY 2021, take the following actions:

Address lost payments as described in paragraph (4) above.

Reverse AdvCTC for each payment issued to the invalid taxpayer. Include BS 05, SC 0, and HC 4. Post delay the first adjustment by 1 cycle and each adjustment following by an additional cycle (i.e., if reversing 3 lost payments, the first adjustment will have PD 1, the second will have PD 2, and the third will have PD 3).

Refer to paragraph (11) below for letter requirements.

Refer to the table below for AdvCTC scenarios that do include an invalid return for TY 2021:

AdvCTC Payments

And

Then

(1) Were issued only to the valid taxpayerORWere not allowed or issued to anyone

The determination made is valid/invalid

Follow procedures in IRM 25.23.4.10.1, Identity Theft (IDT) with Invalid Returns.

Refer to paragraph (11) below for letter requirements.

(2) Were issued only to the valid taxpayerORWere not allowed or issued to anyone

An invalid return posted as the TC 150

Follow the applicable procedures:

One Return IDT:IRM 25.23.4.10.1, Identity Theft with Invalid Return

Invalid/Valid:IRM 25.23.4.10.1, Identity Theft with Invalid Returns

Invalid/Invalid:IRM 25.23.4.10.1, Identity Theft (IDT) with Invalid Returns

Refer to paragraph (11) below for letter requirements.

(3) Were issued in whole or part to the invalid taxpayer

The determination made is valid/invalid and a math error was not set

Address lost payments as described in paragraph (4) above.

Reverse AdvCTC for each payment issued to the invalid taxpayer. Include BS 05, SC 0, and HC 4. Post delay the first adjustment by 1 cycle and each adjustment following by an additional cycle (i.e., if reversing 3 lost payments, the first adjustment will have PD 1, the second will have PD 2, and the third will have PD 3).

For non-streamline cases, input a TC 971 AC 195 on the invalid taxpayer’s entity using the from account TC 971 AC 199 entity information for the transaction date and MISC filed inputs.

Follow procedures in IRM 25.23.4.10.1, Identity Theft (IDT) with Invalid Returns, to address the invalid return.

Refer to paragraph (11) below for letter requirements.

(4) Were issued in whole or part to the invalid taxpayer

The determination made is valid/invalid and a math error was set

Refer to IRM 25.23.4.21.2.3, ARPA - Advanced Child Tax Credit (AdvCTC) Math Errors, to correct the account.

Refer to paragraph (11) below for letter requirements.

(5) Were issued in whole or part to the invalid taxpayer

An invalid return posted as the TC 150

Address lost payments as described in paragraph (4) above.

Reverse AdvCTC for each payment issued to the invalid taxpayer. Include BS 05, SC 0, and HC 4. Post delay the first adjustment by 1 cycle and each adjustment following by an additional cycle (i.e., if reversing 3 lost payments, the first adjustment will have PD 1, the second will have PD 2, and the third will have PD 3).

Follow the applicable procedures to address the invalid return and adjust to the valid return (if received):

One Return IDT:IRM 25.23.4.10.1, Identity Theft (IDT) with Invalid Returns

Invalid/Valid:IRM 25.23.4.10.1, Identity Theft with Invalid Returns

Invalid/Invalid:IRM 25.23.4.10.1, Identity Theft (IDT) with Invalid Returns

For non-streamline cases, input a TC 971 AC 195 on the invalid taxpayer’s entity using the from account TC 971 AC 199 entity information for the transaction date and MISC filed inputs.

Refer to paragraph (11) below for letter requirements.