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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

If the CNC module does not meet the criteria above, contact ITVA CSCO Headquarters Analyst for instructions on how to proceed with the case by emailing a completed Form 4442, Inquiry Referral.

When corresponding with the taxpayer, inform them the overpayment applied to their balance due was removed, and they will receive a separate notice explaining the changes and amount they owe.

(4) The overpayment from an invalid return was applied to a valid balance due,

Reinstatement of an Offer In Compromise (OIC) is required,

Prepare Form 4442, Inquiry Referral, requesting the reinstatement, and transmit the information to Offer-in-Compromise (OIC) Centralized Service Center Locations listed in SERP.

When corresponding with the taxpayer, inform them the overpayment applied to their balance due was removed, and they will receive a separate notice explaining the changes and amount they owe.

(5) The tax module reflects a balance owed in notice status,

A CN ownership determination has not been made.

Input TC 470 CC 90 to prevent balance due notices from generating while the taxpayer’s case is open.

(6) TC 470 CC 90 was input,

The valid taxpayer will have a balance owed.

Input TC 472 to reverse the TC 470 CC 90.

(7) The tax module reflects a balance owed in collection status,

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Refer to IRM 25.23.4.12, Collection Activity - Form 14394/13794.

(8) The valid taxpayer’s return is not the TC 150 and requests a credit elect,

The year the credit elect is to be applied to reflects a balance due that will be full paid once the credit elect is applied,

Input TC 470 CC 94 to prevent balance due notices, offset to the module, and collection activity.

(9) The valid taxpayer’s return is not the TC 150 and requests a credit elect,

The year the credit elect is to be applied to reflects a balance due that will not be fully resolved once the credit elect is applied,

Input TC 470 CC 94 to prevent balance due notices, offsets to the module, and collection activity. Once the case has been resolved, input TC 472 CC 94 to resume normal balance due activity.

(7) After completing the actions above, your case may need to be referred outside of your functional area. Refer to the chart below:

If

And

Then

(1) The TC 976/977 return bypassed Discriminant Index Function (DIF),

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Forward to Examination for DIF scoring. Also input a Priority Code 1 on the adjustment. Use local procedures to refer the case.

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

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