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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

Other account conditions may prevent the refund from being systemically issued.

When HC 4 is used, the adjustment notice will not generate, and any resulting credit balance will be held from refunding or offsetting. HC 4 must be used when issuing a manual refund.

(3) Post Delay Codes

Use of a Post Delay Code will delay the posting of the adjustment/transaction by the number of cycles input as the post delay.

Post Delay Codes are necessary to ensure transactions post in the correct order.

When an adjustment is post delayed, the credit will not be systemically refunded within two (2) cycles.

(4) Override Codes

Override Code S may be used to allow a refund to be issued systemically when the module meets a specific set of conditions. Refer to paragraph (4) Table Scenario (1) for additional information.

A complete list of Override Codes can be found in Exhibit 2.4.16-4, Input Screen CC ADJ54.

(5) Excess Collections (XSF)

Credits being moved from XSF to the module using Form 8765, IDRS Control File Credit Application, must post prior to issuing a refund.\

Credits being moved from the module to XSF using Form 8758, Excess Collection File Addition, do not need to post before issuing a refund.

When monitoring for a credit to be transferred to XSF any remaining credit will not be systemically refunded within two (2) cycles. This is considered a systemic limitation.

(6) Credit Transfers

When transferring a credit to a module that also requires an adjustment, the adjustment must be post delayed by one (1) cycle to ensure they post at the same time. Any remaining credit will not be systemically refunded within two (2) cycles. This is considered a systemic limitation.

When transferring a credit out of the module and issuing a manual refund, TC 570 must be input on the debit side to hold the credit and prevent an erroneous refund from being issued before the TC 840 posts.

(7) Frivolous Return Program (FRP) Involvement

When FRP is involved (-E freeze present), and a manual refund is necessary, include the following remarks:RICS-FRP Approval for manual refund - TC 810/4

Refer to the table below for scenarios you may see when resolving identity theft modules:

Scenario

Details

(1) Override Codes

All of the following conditions must be met for an RSED Override Code to be used to allow a refund to systemically generate:

There is no hardship request.

No payments on the module belong to the invalid taxpayer.

All credits on the module are available for refund, and there are no credits that must be moved to Excess Collections (XSF).

There are no credits being transferred into the module.

The adjustment is not being post delayed.

(2) Outstanding balance due

Verify the taxpayer has no outstanding tax liabilities that must be satisfied prior to issuing a manual refund.

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

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