Purpose and Program Goals: This IRM subsection provides guidance for Return Integrity Verification Operations (RIVO) employees when screening Individual Master File (IMF) returns in the Electronic Fraud Detection System (EFDS) for possible identity theft and false income and withholding.

Audience: RIVO employees

Policy Owner: Denise D. Davis

Program Owner: RIVPM program office

Timely processing of the External Leads mailbox will be prioritized. Employees assigned are our primary Point of Contact (POC) for the Bank Lead program. Therefore, it is critical that mailbox staff review all emails received daily and issue the appropriate response in accordance with established timeframes (See Table in paragraph 3 below). This also includes ensuring that each email is flagged accordingly and forwarded as appropriate (See External Lead Mailbox Process Guide and External Lead Feedback Scripts). Management will be responsible for ensuring adequate coverage each workday, taking into account any scheduled or unscheduled events including but not limited to office closures, training, and special assignments.

Leads received by Santa Barbara Tax Product Group will meet exception processing since funds are returned prior to a completed review of accounts. Follow the steps below for processing leads from this source:

Employees assigned to the External Leads mailbox will use the table below when an email is received. Refer to the RIVO External Leads (EL) Portal on SERP for supporting guidance (External Lead Mailbox Process Desk Guide and EL Feedback scripts).

Tax Examiners (TEs) will access the Bank Lead Management System (Bank LMS) to retrieve their assigned accounts and the Bank Working Drive to review the corresponding case files and documents.

TEs will also need to access a variety of other systems and electronics resources (depending on case specifics) to complete their duties, including, but not limited to: TCIS, RTR, IDRS, EUP, EFDS/STARS, the IRM, IAT, and the External Leads Tool (see local guidance for more information).

When working a Lead or Deposit with more than one account, TEs will export and update account records from the Bank LMS using the spreadsheet method (see local guidance).

Normally, all information necessary to identify the taxpayer account and return is provided by the source bank in the initial lead submission. However, if the lead is incomplete, the TE will need to conduct the necessary research to locate the tax module that corresponds to the referred account or deposit. See the Bank Lead Research job aide that provides the research required. If unable to locate the corresponding tax module, see the actions to take below.

BMF Leads cannot be worked through the EL Tool mentioned in paragraph 6. Follow the instructions in IRM 25.25.8.3.3, BMF External Lead Procedures for processing these lead types. IMF Leads, continue below.

The External Lead Tool (ELT) will be used by the Tax Examiner to systemically process and review referred IMF returns associated with a lead to determine if the refund should be recovered. Users should refer to the External Leads Tool (ELT) Desk Guide, ELT Desk Guide for information regarding its use.

Unless the lead type is a non-IRS refund, deposit only, or the lead is being reassigned, use the EL tool to first ensure that bank lead markers are added to each account. If the tool cannot be used, TEs must manually place the markers on the account if the case does not meet one of the exceptions previously mentioned. Markers must include TC 971 AC 134, TC 971 AC 850, and an open control base on IDRS, BKLD, A,MISC 148(XX)00001,*. If the TIN is an Internal Revenue Service Number (IRSN) when the SSN is available do not open a control. See IRM 3.21.263.5.5, Internal Revenue Service Number (IRSN)for other IRSN uses.

Review the detail report from the ELT to ensure actions were input to the correct tax period. Manually input any actions that did not populate from the tool. For cases in which the account errored out or the tool made a valid decision, follow the research steps below in paragraphs 9-20 to assist in processing the lead and determining if the funds should be returned.

Review the reason for the referral provided by the financial institution.

Research the account for TC 971 AC 123 with MISC field "TPP Recovery" . If present, do not research further, issue an indemnification letter to request the return of funds.

Review the account to determine if Form 4136, Credit for Federal Tax Paid on Fuels was used to claim the Fuel Tax Credit (FTC) or Form 7202, Credits for Sick Leave and Family Leave for Certain Self-Employed Individuals was used to claim the Sick Leave credit. Form 7202 is currently obsolete as it was only intended for use tax years 2020 and 2021. These credits and possibly Form 8863, Education Credits(American Opportunity and Lifetime Learning Credits) were identified as part of a social media promotion scheme that will require special handling. The table below will provide assistance with identifying the credits. See the Table in paragraph 23, Rows 7 and 8 below for guidance on processing leads involving these credits.

Review IRM 25.25.2.2, Data Mining Screening to assist in making your determination. As a reminder, External Leads will not have a dollar tolerance on refunds.

Identify any previous IDRS reversal adjustments on the account.

Review the account for Exam activity (TC 42X, -L freeze etc.).

Search entity modules for indications of identity theft such as a previously posted TC 971 with Action Code (AC) 5XX. See IRM 3.5.20.2.8.1, Identity Theft Indicator.

Review IDRS for any payments (TC 610, TC 670, TC 430, TC 716, etc.) and subsequent reversal(s).

Review account for any balance due conditions (this may indicate other actions taken on the account).

Review IDRS for an extension to file (TC 460) posted after the return was posted or refund issued, which indicates a possible IDT filing.

Review account posted TC 971 action code 078, indicating forgery.

Review IDRS CC TXMOD for the tax period in question and ensure that there are no open controls or indications of other IRS function involvement. Contact the open control assignee(s), if found, before taking an action.

Update the EL Tool spreadsheet with any “manual” determinations made on accounts that the Tool rejected or worked incorrectly. Re-run those accounts through the Tool. Review the re-run accounts on IDRS, closing any duplicate or erroneous bank lead control bases. The assigned TE will then continue case processing actions following the If And Then chart below (in order) based on their tool’s review of the account. For cases where funds have been returned, instead see IRM 25.25.8.4 IRM 25.25.8.4, Processing External Lead Deposits. The guidance in the table below referencing CI, SBSE, or TIGTA, applies to cases that are actively being worked by them. If the submission was to assist the financial institution with no plans to open a criminal case, then follow normal guidance for processing the lead.

While the table above provides guidance for determining if a refund should be recovered, information may be provided after a determination is made that may change the decision to recover or release a refund. If directed to take an action by RIVPM P&A or RIVO P&A, update LMS Results, if applicable, and notate in the Comment field, the action taken (for example, issue indemnification letter, input a D Stop) and the Analyst that requested the action.

Following the issuance of an indemnification letter, 45 days are allowed for a response. See IRM 25.25.8.6, Monitoring External Leads, Row 3, for further instructions if funds are not returned within this timeframe.

Once notification is received that funds were returned, the designated POC will prepare the deposit using the procedures in the Preparing a Deposit Job Aid. The assigned Tax Examiner (TE) will then work the deposit beginning with paragraph 2 below.

Before working an assigned deposit, the Tax Examiner will review that morning’s 132 Report (see local guidance) to assist in processing the deposit. Use of the ELT is mandatory when working a deposit unless there is a programming limitation that prohibits its use. See the External Leads Tool (ELT) Desk Guide for further information. See the table below for leads requiring special handling or actions to be taken. Once an entire deposit has been completed, the assigned TE will notify their designated POC, who will ensure that the deposit record, associated leads and accounts, and commingled funds memo (if applicable), are ready for closure. For BMF deposits, review the table below and then skip to Paragraph 6.

Run the ELT with case type Deposit. The tool is programmed to take all necessary actions based on the determinations it makes. If an account rejects from the tool because it was unable to make a determination or makes a “valid” determination, manual actions, as described in paragraph 4, steps a-f must be followed to process the deposit.

Use the table below if the ELT Detail Report shows that the transaction or account errored out and the TE was unable to correct it; the tool’s limitations will not allow the posting of the deposit; or the return displays a social media scheme credit. Also see the table for commingling instructions.

Bad or invalid IMF accounts requiring referral to a treatment stream see IRM references IRM 25.25.8.6, Monitoring External Leads for Social Media Promoted Schemes and others.

The table below provides instructions for processing BMF return deposits. Once an entire deposit has been completed, the assigned TE will notify their designated POC, who will ensure that the deposit record, associated leads and accounts, and commingled memo (if applicable), are ready for closure.

Financial Institution Automated Clearing House (ACH)

After 14 days from the ACH Deposit, see the Table below for case actions:

Each week, the designated local Point of Contact (POC) will utilize SQL Reporting Services and SNAP to merge the Bank LMS account listings, and the Bank Leads Integrated Data Retrieval System (IDRS) Automated Age Listing (AAL). The resulting file/Age List will then be distributed to the Operation via e-mail.

The Workleader and manager in each team (or another locally designated POC) will then disseminate the Age List for their team to the assigned Tax Examiners for follow-up actions (described in the table in 3 and 4 below). Resolve Age Listing in Lead Received Date order.

Use the If/And/Then Table below for monitoring and resolving the assigned accounts on your Age List.

Following the closure of each invalid account in the LMS and on IDRS as described in Paragraph 3 above, follow the steps in a. or b. below to ensure the account is sent for treatment.
a. Non-IDT invalid accounts needing referral to a RIVO treatment stream, follow the table below

Use the table below to respond to phone inquiries regarding a tax refund if there are indicators of External Lead involvement or the taxpayer mentions the program. See Exhibit 25.25.8-2, External Lead Involvement Indicators to assist in identifying External Lead involvement. Leads can involve both IMF and BMF accounts. If considering releasing a refund, the TE assigned to the account must be contacted before any action is taken. See External Lead Point of Contact to assist with locating one if the assigned TE cannot be found.

When a tax return preparer contacts the IRS about refunds deposited into their account, whom their bank advised was returned to the IRS, use the table below to respond.

The External Leads Program, supported and managed by the IRS Return Integrity & Verification Operation (RIVO), works in conjunction with IRS Submission Processing (SP) to receive, screen and validate leads, and request the recovery of refunds to reconcile accounts. Financial institutions can return refunds associated with leads electronically, rather than a paper check, via Bureau of the Fiscal Service (BFS) Credit Gateway.

Sources must provide a spreadsheet containing personally identifiable information (PII) that helps the IRS identify the source of the funds received as well as to ensure accurate processing of them.

When working these leads, conduct complete and accurate research on them and then notify the lead source the amount to return to the IRS.

RIVO will provide the source with a Credit Gateway Account Locator Number (ALC) for the submission of funds. See table in 8 below.

RIVO will then receive via the efleads@irs.gov mailbox, a batch file of funds with the locked down accounts, along with an e-mail including the Lead Number(s).

Any sources using the BFS Credit Gateway must be provided the fund transfer instructions below for the site working the inventory. The accounting POC for the site must be included in the instructions.

Update Lead Management System as required.

To initiate the fund transfer, use the following account information:

External Offset Leads primarily include the following:

Office of Child Support Enforcement (OCSE) receives and manages various state’s child support Treasury Offset Program (TOP) offset referrals. OCSE accounts for the vast majority of questionable offsets received in the External Lead program. When a state identifies through their filters a suspicious offset, or the custodial parent advises the agency they are not entitled to the funds, each state gathers the account information pertaining to the offset and then forwards it to Health and Human Services (HHS). HHS collects the referrals from all states and then download it through their website portal. The referrals are retrieved from their portal for IRS review and response. Below is a list of information provided by HHS.

The IRS works directly with the OCSE to provide a response to the states on returning questionable offsets referred. It is critical the TE conducts complete and accurate research to ensure the success of the partnership since the response directs the states to hold funds pending an offset reversal adjustment or provides an authorization to release the funds to the custodial parent. The assigned examiner must consider the following when reaching a determination:

Input the TC 971 AC 134 with MISC "BKLD OFFSET" on all receipts to identify RIVO External Lead involvement.

If the batch process is unable to verify the return against CC IRPTR due to the presence of Schedule C or other "unverifiable" data, including TIN and/or tax modules that cannot be located, the case will be referred to the External Lead team to make a decision in phase two. TE will need to include in their review the items in paragraph 3 above and the research listed in the bullet items below. In addition, the TE must input the marker on the account to indicate External Lead involvement as specified in paragraph 4 above.

Utilize the table below after the research is complete to determine the next actions to take to resolve the case. HHS will be expecting one of the following responses below. A description was provided to understand the response.

Based on the response to the scenarios from the table in paragraph 6 above, use the table below for case actions.

The designated POC will take the following actions:

Only questionable debit cards received at an IRS facility should be mailed in a sealed envelope to the Kansas City Service Center address listed below. Any other card (i.e., gift cards or credit cards, etc.) or correspondence not related to a questionable IRS refund, must be returned to the originator to resolve.

Reloadit cards are used by some taxpayers to add funds, to pay their balance due. Send the taxpayer letters and Reloadit cards to the Kansas City SP Payment Processing Unit. The SP payment processing unit does not accept credit/debit cards as a valid form of payment. The Payment Processing Unit returns the debit cards to the taxpayer with an explanation of how they can pay their balance due.

The Centralized Check Process (CCP) program was initially created to address checks from all service centers that were returned due to probable identity theft. These checks were being routed to RIVO External Lead team to assess if the return associated with the refund was valid. The payments returned included Treasury check copies, third-party checks, and miscellaneous payments in the form of money orders, savings bonds, personal checks etc. Now with the creation of the Identity Theft Victim Assistance organization these cases are mostly worked by them while payments are processed by the Payment Processing Unit. Below is a brief description of each CCP inventory type.
Treasury Check - This is an official check the IRS authorized for release.
Third-Party Checks - These are refund repayments that are not made payable to the United States Treasury or one of the other acceptable names as stated in the OverstampingIRM subsection.
Miscellaneous Check- These are personal checks or other forms of payment made payable to the United States Treasury or one of the other acceptable names because the taxpayer did not believe they were entitled to the refund received.

If documentation containing a live signature is received with the check, file the document(s) per IRM 25.25.5.2.1, General Replies to Letters/Notices and Undeliverable Mail.

Beginning January 2013, an Opt-In Program developed by the IRS, Department of Treasury Bureau of Fiscal Services (BFS) and the National Automated Clearing House Association (NACHA) repurposed reject reason code 17 to allow the IRS a dedicated return reason code to reject ACH direct deposits associated with name mismatches, ID theft, and questionable fraud returns. All rejects are identified for this program as reject reason code 17. However, the addendum record field, when completed, provides the specific reason for the rejected direct deposit. Paragraphs 2, 3, and 4 provides details for each addendum record.

Financial Institutions use Reject Reason Code 17, Addendum Record 17 (R17), to reject current year direct deposit refunds when the name/taxpayer identification number (TIN) listed on the Treasury Automated Clearing House (ACH) file for the tax refund does not match the account holder information in the bank’s records. R17 rejects post to IDRS with a TC 841 DLN ending in "77711" and a control base with an assigned number of "1487111117" . Taxpayer receives a CP 53A, Attempt to Direct Deposit Your Refund, Could Not Be Processed. A Paper Check Will Be Issued. A Reject Reason Code 17 REFC (refund cancellation) will generate when one or more of the following situations occur in banking filters:

Financial institutions use Reject Reason Code 17, Addendum Record 18 (R18) to reject current year direct deposit refunds when the bank determines the tax refund is identity theft. R18 rejects post with a TC 841 DLN ending in "77712" and a control base with an assigned number of "1487111118" . Notice CP 53B," Direct Deposit Rejected Financial Institution - Refund Check Mailed" , is mailed to the taxpayer.

Financial institutions use Reject Reason Code 17, Addendum Record 19 (R19) to reject current year direct deposit refunds when the bank determines the account holder’s tax refund is fraudulent. R19 post with a TC 841 DLN ending in "77713" and a control base with an assigned number of 1487111119. Taxpayer is mailed a CP 53C, Direct Deposit Rejected by Financial Institution - Refund Check Mailed.

Subsequently a refund cancellation R17 transcript listing generates to Return Integrity Compliance Services (RICS) External Leads for workload distribution and refund verification. The refund will be released or held upon the completion of the review. If held the return will be referred to the appropriate treatment stream.

Financial Institutions use reject reason code 23 (R23) when a customer advises them they were not entitled to the refund received.d These will be identified on IDRS CC TXMODA with blocking series number, 77714 contained in the DLN. R23, will generate notice CP-53B.

Pull Control D files for NACHA and save as a text file in the appropriate reject folder.

Send R23s received to ACE/Adjustments and input the "BKL - R23" note along with the "RIVO EL IDT BKLD" note.

Separate the results in two tabs, TE & Valid. Run the DLNs through SNAP to determine which accounts have split refunds. Load the accounts that do not contain split refunds on the TE tab in Case, and anything that has not been previously disposition will be sent to ACE/ADJ with the appropriate note "RIVO EL IDT BKLD" . Leave returns with the disposition SCHEME/Verification alone, and send returns in any other process besides Re-file to ACE/ADJ. Review returns in re-file to determine:

Undeliverable refunds involve paper checks returned as undeliverable that were prior R17, R18, R19 rejects and R23. Fraud Referral and Evaluation (FRE) team, compiles a listing of these checks for RIVO to review the account and determine if it meets IDT characteristics. Follow the chart below to determine the applicable action to take: