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:
ARPA - Advanced Child Tax Credit (AdvCTC) Math Errors
Internal Revenue Manual Part 25. Special Topics · 2026-10-03 edition · updated 2026-10-04 · United States
Identity theft (IDT) affecting Advanced Child Tax Credit (AdvCTC) payments will result in a math error (to increase tax or decrease credits related to AdvCTC/ACTC) when the tax year 2021 return is not reconciled correctly according to IRS records.
Review the information provided by the taxpayer to identify each advance payment that must be addressed. Refer to the scenarios below:
If
Then
(1) The taxpayer specifies what AdvCTC payments they did/did not receive (i.e., I only received payments for July and August.),
Continue to paragraph (3) below.
(2) The taxpayer provides a general statement (i.e., Someone changed my bank account information.),
Research the account to determine impact to payments.
If your research results in a clear determination, continue to paragraph (3) below.
If your research does not support a clear determination, follow table scenario 3.
(3) The taxpayer’s statement is insufficient for determining impact to AdvCTC (i.e., Someone is using my SSN.),
Follow procedures in IRM 25.23.4.18.2, Requests for Additional Information (Telephone and/or Written), to request the taxpayer specify what AdvCTC payments they did/did not receive.
(4) There is no taxpayer statement (i.e., Form 14039 does not include an explanation, or the case is IRS identified.),
Research the account to determine impact to payments.
If your research results in a clear determination, continue to paragraph (3) below.
If your research does not support a clear determination, follow table scenario 3.
Prior to inputting adjustments to correct the tax year 2021 module:
Determine the total amount of AdvCTC payments received by the valid taxpayer.
Math verify the amount of Child Tax Credit (CTC) and/or Additional Child Tax Credit (ACTC) claimed on the valid tax year 2021 return. Refer to IRM 21.6.3.4.1.24, Child Tax Credit (CTC), and IRM 21.6.3.4.2.8, Additional Child Tax Credit (ACTC), for credit qualifications and computation.
All payments issued to the invalid taxpayer will be addressed separately.
Streamline IDT Cases: Follow procedures in IRM 25.25.4.6, Reversing Identity Theft (IDT) Lost Refunds.
Non-Streamline IDT and Invalid Joint Election (IJE): Follow procedures in IRM 21.5.2.4.23.10, Moving Refunds.
CTCUP Updates: Follow procedures in IRM 25.25.4.6, Reversing Identity Theft (IDT) Lost Refunds.
After the payments issued to the invalid taxpayer have been addressed, refer to the steps below to correct the math error:
Reverse AdvCTC for each lost payment. 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).
If assigning as non-streamline or invalid joint election, input a TC 971 AC 195 on the invalid/other taxpayer’s entity using the from account TC 971 AC 199 entity information for the transaction date and MISC field inputs.
Recalculate CTC/ACTC based on the valid taxpayer’s information. Follow procedures in IRM 21.5.4.5.4, Math Error Substantiated Protest Processing, to correct the account.
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