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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

Reminder:

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

The amount of the RRC is calculated using the FS, number of qualifying children, and AGI from the tax year 2020/2021 return and is reduced by the total amount received from EIP 1 and/or EIP 2 for tax year 2020 and EIP 3 only for tax year 2021. See the tax year 2020 Form 1040 Instructions or tax year 2021 Form 1040 Instructions for additional information.

Credit Reference Number (CRN) 256 and Reason Code (RC) 096 will be used when adjusting RRC.

When you have determined the TC 150 return is invalid, input TC 971 AC 850 when direct deposit information was included on the return. Update the entity to reflect the valid taxpayer’s correct address. Use appropriate posting delay codes to ensure TC 971 AC 850 and address updates post before account actions that will result in a refund.

EIP and RRC refunds issued to the invalid taxpayer will be resolved following normal lost refund procedures applicable for the case type (i.e., streamline, non-streamline, or IJE).

Refer to the list below for determinations that will require RRC to be addressed:

One Valid Return - When EIP 1 and/or EIP 2 was based on TY 2018/2019 IDT (TY 2020 RRC)

One Valid Return - When EIP 3 was based on TY 2019/2020 IDT (TY 2021 RRC)

Valid/Invalid - When EIP 1 and/or EIP 2 was based on TY 2018/2019 IDT (TY 2020 RRC)

Valid/Invalid - When EIP 3 was based on TY 2019/2020 IDT (TY 2021 RRC)

One Invalid Return

Invalid/Valid

Invalid/Invalid

When it is determined the taxpayer does not qualify for RRC, has not received any amount (including advance payments), and did not claim RRC on their valid return, input the adjustment(s) to fully back out the credit(s) for EIP. Include BS 05, SC 0, the appropriate CRN(s) and amount(s), RC(s), and HC 4. Reduce any posted amount of RRC when adjusting the account to the valid return. If RC 139 is not included with the adjustment to the valid return figures, a separate TC 290 must be input to ensure the account reflects RC 139. Post delay the adjustments, as needed.

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

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