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Chapter 5. TE/GE AIMS Manual

Section 3. TE/GE AIMS Special Processing Procedures (Cont. 1)

4.5.3  TE/GE AIMS Special Processing Procedures (Cont. 1)

4.5.3.12 
Adjustments Involving Married Taxpayers

4.5.3.12.5  (06-01-2003)
Invalid Joint Return-Husband Not Required to File Separate Return

  1. Zero out the incorrect joint account by preparing Form 5599 with the appropriate TCs and amount in Item 12 to reduce to zero all tax and penalties assessed.

    1. Make whatever entries are necessary in Item 15 to reduce the unrefunded prepayment credit by the amount allowed as a credit on the wife’s separate account.

    2. Process Form 5599 with the original joint return.

    3. Transfer cash payments with Form 2424 to the wife’s separate account.

     

  2. Prepare and process a substitute return (TC 150 -0-) to set up the wife’s separate account. The received date for the substitute return should be the same as that of the joint return.

    1. When the TC 150 posts to the MF, establish the account on AIMS.

    2. Prepare and process Form 5599 for the wife’s return entering in Item 12 the total tax including any adjustment by TE/GE.

    3. Enter in Item 15, the withholding credit equal to that which was decreased on the joint account.

    4. Process Form 5599 with a copy of the substitute return numbered in the 90X blocking series.

     

4.5.3.12.6  (06-01-2003)
Innocent Spouse-Public Law 91-679

  1. Public Law 91-679 provides that in certain cases a spouse will be relieved of liability arising from a joint income tax return. The three types of situations that can occur:

    1. An assessment against the culpable spouse only

    2. Two assessments-one against the culpable spouse, and one against the joint account

    3. An assessment against the culpable spouse and an overassessment to the innocent spouse

     

  2. Cases must be flagged with a Form 3198, noted "P.L. 91-679, " and the type of situation must be identified. An appropriate notation in Item 31, Form 5403 should identify Innocent Spouse cases received from Appeals. A transcript of the account must be secured before the adjustment(s) can be processed.

4.5.3.12.6.1  (06-01-2003)
Processing Form 5599 and Form 3177

  1. Assessment against the culpable spouse only.

    1. On a new or copy of Form 5599 for the joint account, line out the name of the innocent spouse and note in the top center of the form " Innocent Spouse Case."

    2. Do not process through the terminal. Process as an NMF assessment - the account must not be transferred to the MF. Process the joint Form 5599 with DC 02 and TC 300 with a zero ($0.) amount, through the terminal. If the deficiency IS NOT fully paid, input TC 130 on Form 3177, Notice of Action for Entry on Master File, with the names as they appear on the MF. Exhibit 4.5.3-5 and Exhibit 4.5.3-6for instructions on completing Form 3177.

     

  2. Form 3177 should:

    1. Include the form number and tax period of the outstanding liability

    2. Include any cross-reference taxpayer ID numbers

    3. Annotate as "Innocent Spouse Case"

    4. Rout to the Campus Center "Attn: CP 44 Processing Unit. "

     

  3. Assessment against both the culpable spouse and the innocent spouse.

    1. The RAR must show the amount to be assessed jointly and the additional amount of the assessment against the culpable spouse.

    2. Prepare two Forms 5599, one for the joint account and one for the culpable spouse only.

    3. Process Form 5599 for the culpable spouse as an NMF assessment. Do not process through the terminal. DO NOT transfer it to the IMF.

    4. Process Form 5599 for the joint account through the terminal. Refile the case under the refile DLN assigned this Form 5599.

    5. If the deficiency IS NOT fully paid, input TC 130 on Form 3177 with the names as they appear on the MF. See (2) above.

     

  4. Assessment against a culpable spouse, overassessment to an innocent spouse.

    1. The RAR must show the amount to be assessed and the amount of the overassessment.

    2. Prepare one Form 5599 for the joint account and another Form 5599 for the culpable spouse.

    3. Process Form 5599 for the culpable spouse as an NMF assessment and DO NOT transfer it to the MF. Do not process through the terminal.

    4. If the overassessment of the innocent spouse will result in a refund, prepare Form 3753, so the refund will be issued in the name of the innocent spouse only. Enter the amount of allowable interest.

    5. The joint Form 5599 must be used to process the overassessment for the innocent spouse, but a name change should NOT be initiated.

    6. Process through the terminal, use Hold Code 1 in Item 07, and include in Item 12, TC 770 with a zero amount.

    7. Submit both Forms 5599 and Form 3753 at the same time.

    8. If the deficiency IS NOT fully paid, input TC 130 on Form 3177. See (2) above. The case must be filed under the refile DLN of the joint Form 5599.

     

4.5.3.13  (06-01-2003)
Joint Committee Cases