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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

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

If the non-owner of the CN has a different valid TIN, this is a mixed entity (MXEN). When a refund should be issued, the tax year account must be moved to the correct TIN.

Any overpayment attributable to the non-owner of the CN that has been offset to a Bureau of Fiscal Services debt must be reversed using HC 4. If the overpayment is over one year old, move it to excess collections. A letter must also be sent to the taxpayer who has the FMS debt, notifying them of the reversal. If the BFS offset is over 6 years old, refer to IRM 21.4.6.5.1.2.4, TOP Offsets Involving ID Theft and ID Theft with Fraudulent Returns.

Reverse any IRS offsets attributable to the non-owner of the CN. If the overpayment is over one-year old, move the overpayment to excess collections. A letter should be sent to the CN owner informing them of the overpayment reversal when returning the offset to the originating module will result in a balance owed for the valid taxpayer. If the year the offset is being moved from is also impacted by identity theft, a closing letter for that tax year may be required to sufficiently describe actions taken to resolve the account. Reversal of the offset does not need to be addressed in more than one letter. Refer to IRM 25.23.4.18.1, General IDTVA Letter Procedures, for additional information.

If adjusting 2008 and FTHBC was claimed by the invalid taxpayer, see IRM 21.6.4.4.17.4, Manually Adjusting the Recapture Amount, to update the IMFOLF information.

Input an appropriate cross reference transaction with the return received date on the "from" account to cross-reference the "to" account. For NMRG cases the "from" account is the tax year on the other side of the No Merge, usually the IRSN.• TC 971 AC 001 - Used when moving the TC 150 return• TC 971 AC 002 - Used when moving the TC 976 return

If moving credits to or from excess collections, see IRM 25.6.1.7.3, Excess Collection File (XSF) and Unidentified Remittance File (URF).

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

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