GN 02201.038: Tax Refund Offset (TRO) Problem Cases
Effective Dates: 01/09/2013 - Present TN 17 (06-94) GN 02201.038 TRO Problem Cases A. Policy - General Internal Revenue Service (IRS) has special requirements for resolving “problem cases” in the TRO program. Problem cases involve unique or unusual circumstances which cannot be resolved without the help of IRS. These special cases should be few in number. Generally, problem cases have the following characteristics:
- * The referring agency cannot resolve the situation with its own records and information.
- * IRS must conduct additional investigation and advise the referring agency of its findings.
* The debt has been certified to and offset by IRS. * In most instances, the problem cases arise after the debtor or other individual receives notice from IRS that the offset has occurred. NOTE: Tax matter questions, such as when the balance of a refund will be paid, are not considered to be problem cases. Refer callers with tax matter questions to the IRS toll-free telephone number (1-800-829-1040). B. Policy - Guidelines IRS has strict guidelines for handling problem cases. The most important guideline is that contact between referring agencies and IRS be done through a single contact point. SSA's Office of Financial Policy and Operations (OFPO), located in central office, is the contact point with IRS. OFPO is responsible for:
- * Referring problem cases to IRS.
* Conducting regular followups with IRS on the status of cases. * Advising SSA components of resolutions and actions. IMPORTANT: For problem cases, do not reverse the offset by refunding the amount to the debtor. OFPO will advise when any refunding or other corrective action is necessary. C. Procedure
- 1. Situation Identified as Problem Case
If a situation is identified as a problem case, PCs and FOs will generally identify and document. When a situation is identified as a problem case, proceed as follows: * Describe the situation in as much detail as possible on a Form SSA-5002 (Report of Contact). Be sure to include the debtor's name (and name of any other involved individual), debtor's SSN, date and amount of offset, debtor's or other person's daytime telephone number and your name, work number and office. * Obtain copies of any TRO related correspondence from IRS and SSA to the debtor or other persons, if possible. Also include any letters from the individual. * Provide a copy of the TRO query, MBR and ROAR. * Explain to the person that SSA cannot resolve the case on its own and that we will coordinate with IRS to resolve the issue.
- 2. Routing Problem Cases
After all required documentation is obtained, send routing problem cases as quickly as possible to the appropriate RO. (Do not send directly to OFPO.) Transmit the material via fax, if possible. Otherwise, proceed as follows: * PC/FO Action * Place all material in an envelope marked “TRO PROBLEM CASE.” * Forward the material to the RO, Program Operations and System, RSI/SSI Program Branch, RSI Operation Section.
- * RO Action
- Proceed as follows with the documentation:
* Review the documentation, clarify any outstanding issues and determine whether or not the situation is a problem case. * If it is a problem case, send the information to OFPO, Office of Payment and Recovery Policy. Transmit the material to OFPO via email, if possible, using the following email address: ^TOP ECO Questions. * If material cannot be emailed, transmit the material to OFPO via fax using the following fax number: (410) 965-0384 * If material cannot be emailed or faxed, send it in an envelope (clearly marked “TRO Problem Case—DO NOT OPEN in the Mailroom”) to:OFPO Office of Payment and Recovery Policy 2-A-10 East High Rise 6401 Security Boulevard Woodlawn, Maryland 21235-6401 * If additional PC documentation is needed prior to sending the case to OFPO, send the material to the Operations Analysis Staff in the PC. Ask the PC to obtain the data and send it directly to OFPO, and inform the RO when the case is sent to OFPO.
- 3. Investigation Complete
If IRS notifies OFPO when it completes its investigation, take the following actions: * OFPO will: * Notify the RO which is controlling the problem case.
- * Advise of any necessary action.
- * RO will:
* Coordinate notice preparation if SSA must notify the debtor or other individual. * Tailor the language to address each situation. Do not use predeveloped or “canned” language because it is not conducive to problem cases. * Ensure that any corrective action, such as refunding the offset amount, is taken by SSA. * Inform the RO if IRS notifies the person when a problem is resolved. And, if possible, send the RO a copy of the IRS notice. D. Examples
- Following are some examples of what is and is not a problem case:
- 1. Wrong SSN on Tax Return
Jack Spratt erroneously used his daughter's SSN when filing his Federal income tax return. His daughter, Pat, was overpaid as a student because she ceased full time attendance and did not notify SSA. SSA referred Pat's debt to IRS for offset. Because Mr. Spratt used his daughter's SSN on his form 1040, his refund was offset to recover Pat's delinquent debt. In February, Mr. Spratt contacted SSA to ask why his refund was offset. Since SSA cannot resolve the issue without information from IRS regarding Mr. Spratt's tax return, the situation must be handled as a problem case.
- 2. Two Agencies Claim Tax refund
Mr. August Hickey, a former disabled wage earner, owes SSA a delinquent debt of $1,294. He also defaulted on a $1,500 student loan made by the Department of Education (DOE). Both agencies referred their debts to IRS for offset. In March, Mr. Hickey's entire refund of $1,525 was offset. Since Mr. Hickey had received SSA's preoffset notice but not DOE's preoffset notice, he was unaware that DOE had referred the defaulted student loan. Confused, he contacted SSA to ask why his entire refund of $1,525 was withheld to recover SSA's debt of $1,294. This is a problem case because SSA must have IRS verification of the offset amount.
- 3. Amount Withheld Exceeds Amount Certified For Offset
SSA notified Dwight Randle, an overpaid ex-student beneficiary, that his $543 debt had been referred to IRS for offset. When offset occurred, IRS notified Mr. Randle that SSA's debt of $593 had been withheld. Since SSA's records still showed a debt for $543, IRS intervention is required to resolve the issue. The situation must be handled as a problem case.
- 4. Congressional Inquiry Resulting From Offset (Not a Problem Case)
SSA referred Susan Smith's delinquent debt to IRS for offset. The offset occurred in March. The debt met all of SSA's criteria for referral to IRS and was correctly referred. Objecting to the offset on the basis of legal enforceability, Susan and her attorney contacted her Congressperson for support. The Congressperson wrote a letter to the Commissioner asking why the offset was applied and if it was a legal action on SSA's part. Although the Congressional inquiry requires special processing, the situation is not a problem case. SSA has all of the information it needs in its own records and can respond to the inquiry without help from IRS.
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