Chapter 3: Refunds and Compliance |
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3.1 Refund Overview
A Statement of Employer Account, Form C69QCR can be generated by Accounts Examiners at any time or by the Tax System quarterly. The employer has the option of applying all or part of the credit balance towards future amounts due or may elect to request a partial or full refund of the credit. In order to request a refund, the employer must complete the lower portion of the Form C69QCR and mail the entire page.
The Texas Workforce Commission, Controller Department receives refund requests from the employer then microfilms and groups them into batches of 75. The Data Processing Department receives the batched refunds for keying into the computer system by Data Entry Unit.
The Refunds and Compliance Unit receives the batched refund requests and related computer output in the daily tax run. The refund process begins distribution to examiners.
Each day, the processed refund requests entered into the system that day are assembled and placed given to the unit supervisor.
Administrative staff organizes the processed requests into a refund package and delivers the package to the Field Tax Operations’ Assistant Manager. The Assistant Manager reviews the package, signs the authorization document and returns the package to the Unit Supervisor.
The refund package is forwarded to the Texas Workforce Commission, Controller Department for processing.
The Texas Workforce Commission, Controller Department keys the refund information into the State Comptroller’s automated system. The State Comptroller prints the refund warrants and sends them to the Texas Workforce Commission, Controller Department to mail to the employers along with a letter of explanation.
3.1.1 Refunds – Screens to Review
Screens that are viewed to determine the validity of the refund request include (but are not limited to):
CASH JOURNAL (QRM) – To determine if a credit exists and to assure that it is not tied to a pending report or adjustment.
ERA INFORMATION (SER) – To determine if the total and taxable wages appear reasonable for the history of the account, and if any estimated reports have been posted to the account.
MASTER RECORD (STS) – To check first wages date and first chargeable quarter.
SUMMARY QUARTERLY LEDGER (ALR) – To assure that rates were posted to every quarter.
TRANSACTION LOG (TDO) – To determine that all reports have been received, supplemental reports processed and a signed Status Report (Form C-1) has been submitted.
ENTITY COMMENTS (FTC) and DELINQUENCY COMMENTS (CDC) – To review comments for any past or pending actions that could adversely effect the refund request.
DETAIL DELINQUENCY (CDD) – To check for any outstanding liabilities.
DELINQUENCY SUMMARY (CDS) - Look for "Additional Flags" indicating successor liability.
STOP INFORMATION (TSI) – To check for active stops.
REFUND APPROVAL/DENIAL (ARA) – Approve or deny a refund.
RATE SUMMARY (RAT) – Tax rates should match rates on STS and ALR.
SURPLUS CREDIT ASSIGNED (ASG) - To check for a negative surplus credit amount. If the amount of negative credit is less than the established tolerance level, document the account and proceed with the refund request. If the amount of negative credit exceeds the established tolerance level, a refund of the amount in excess of the negative entry may be approved.
3.1.2 Refunds – Signature Required
Accounts Examiners should perform the following:
Check for proper signature. Acceptable signatures on refund requests are:
- Owner, if proprietorship
- Partner, if partnership
- Duly Authorized Individual
- Corporate Officer, if corporation. Acceptable corporate officer designations are:
- Director
- Chairman of the Board
- President
- Vice-President or Assistant Vice-President
- Secretary or Assistant Secretary
- Treasurer or Assistant Treasurer
- Secretary Treasurer or Assistant Secretary Treasurer
- Controller or Assistant Controller
- Comptroller or Assistant Comptroller
- Cashier or Assistant Cashier
- Chief Executive Officer
- Chief Financial Officer
- Registered Agent
- Power-of-Attorney approved by Texas Workforce Commission
Refund requests without proper signatures are void. Examiners use the Refund Approval/Denial (ARA) screen to deny the refund request and use the Statement of Employer Account (CSA) screen to request another Form C69QCR. Mail the new Form C69QCR to the employer together with a letter to secure a proper signature. Examiners use the Entity Comments (FTC) comment screen to document the action taken.
3.1.3 Refunds – Current Balance Audit
The accounts examiner should compare the requested refund amount with the current balance in the account. If no overpayment currently exists, determine the reason. If the reason "no overpayment exists" is legitimate, then use the ARA screen to deny the refund request. An examiner notifies the employer that we denied the refund request unless you are voiding a duplicate refund request. Make appropriate FTC comments.
The credit currently in the account is more than the amount of refund requested, refund the amount requested.
3.1.4 Refund – Validity of Overpayment
The accounts examiner should verify that the overpayment is valid. Identify the cause of the overpayment. Reasons for an overpayment include, but are not limited to:
- Employer not subject to the Unemployment Act.
- Employer reported incorrect wage amounts.
- Employer miscalculated tax, penalty, or interest.
- Employer submitted a duplicate payment.
- Employer used an incorrect tax rate.
- Texas Workforce Commission computed an incorrect tax rate.
- Texas Workforce Commission recorded an incorrect tax rate.
- Texas Workforce Commission recorded incorrect wage amounts.
- Texas Workforce Commission posted money to the incorrect account.
- Texas Workforce Commission extended the report due dates.
- Texas Workforce Commission transferred credit from another account.
- Payment is credited to the wrong account by agency personnel.
3.1.5 Refund– Account Errors Review
The Accounts Examiner should review the account for errors.
- Examine status liability information. Use Screen STS.
- Examine taxable wage information for reasonableness. Use screens SER, ADT, ASM, AUD, and ALR.
- Compare tax rates on STS, RAT, AUD screens for agreement.
- If the review of the account reveals a need for adjustments or corrections then notify the Collection Section, Employer Accounting and Review Unit of the needed adjustment or correction.
- Note: The refund process stops at this point in order to process the appropriate adjustment. It may be necessary to use the Approve Refund (ARA) screen to deny the refund request temporarily, in order to facilitate account maintenance. Once adjustment action is complete, the examiner resumes the refund process. The examiner uses Add Refund (ADF) screen with a new statement number provided by the Employer Accounting and Review Unit. Make the appropriate FTC comments.
NOTE: An active STOP will delay use of ARA screen to approve a refund. The STOP may be a system generated or result of an examiner action. The examiner reviews account for action taken or notify appropriate unit for needed action. The computer system will not approve the refund if there is an active STOP on the account.
- Notify the Collections Section, Tax Bankruptcy by e-mail when an active Bankruptcy STOP is on the account. Obtain instructions from Tax Bankruptcy on location of mailing of refund warrant, for example to the Bankruptcy Trustee, employer or deny the refund based on a situation not satisfied to the Tax Bankruptcy.
3.1.6 Refunds - Statute of Limitations
- The Tax Department will process application of the credit or a requested refund dated no later than three years from the postmark date of the remittance. If the credit is not applied for by the employer on or before the third anniversary date, it will be canceled in accordance with Section 213.072 of the Texas Unemployment Compensation Act, Labor Code [previously Subsection 14(j)(1)].
- Credits may need to be reinstated for timely received refund requests dated before the deadline. On the other hand, after the deadline if the employer receives a statement reflecting a credit which has cancelled and has never given a timely notification of credit. An examiner will reinstate credits when an employer did not have a reasonable amount of time to apply for the refund.
3.1.7 Refund - Amounts $1000 or greater.
- An examiner uses the Uniform Statewide Accounting System (USAS) to secure employer's Payee Identification Number only for refunds greater than $1000. When using the Approve Refund (ARA) screen to key a refund amount $1000 or more the employer’s Payee Identification Number is required.
- An examiner follows the same procedure in denying a refund except there is no need for a Payee Identification Number. This field will be populated with a "0".
- The following sites will be used when a Payee Identification Number is not found on USAS:
State Comptroller’s – Taxpayer Search
Secretary of State’s- Business Organizations
3.1.8 Refund – Mailing Address Change
- Notify the Tax Department, Status Section of permanent address changes indicated on refund requests. The Refunds Names/Addresses (ARN) action screen allows restricted access to add a special mailing address for a particular refund warrant.
3.1.9 Refund Requests – Approved or Denied
- Examiners must make comments on each approved or denied refund. The examiner enters on the Refund Request Approval (ARA) screen the code to Approve "A" or Denial "D" based on findings from the refund audit process. In the overnight tax run, the Cash Journal (QRM) refunds status changes from "pending" to "approved" or "denied". The Controller keys refund status to "mailed" and mails the refund the next day. The computer changes the transaction date of the refund at each step.
3.1.10 Refund – Standard Time Delay
- The 21-day hold procedure affecting refund approvals was selected by the Texas Workforce Commission, to insure that checks posted to an employer’s account do not bounce after a refund warrant is mailed to an employer. It is sometimes necessary to override the time delay when the computer system references the transaction date rather than the actual postmark date of a remittance. This problem occurs when a wage adjustment or a monetary adjustment processes on an employer’s account.
3.1.11 Refund Report - Aged
- A copy of the Aged Refund Report is distributed to staff weekly. The Aged Refund Report is a daily listing of refunds that have been pending for 60 or more calendar days. The report serves as a management tool to monitor aged refund activity and assists the examiner in identifying those aged refunds that are in their possession.
- The report is useful in identifying refunds that are lost or misrouted. The examiner should give the report their immediate attention, and promptly approve or deny the refund. If there is a STOP on the account, or if pending action by another unit or section is delaying the refund approval, the unit supervisor should be notified and the account closely monitored. An examiner makes the necessary FTC comments.
3.1.12 Refunds to Not Liable and Error Accounts
The Status Section or Field Tax determines when an account is "Not Liable" or an "Error" account; they refer the account to the Field Tax Operations Section, ADP & Audit Unit. The ADP & Audit Unit reviews the account to determine if reports are incorrectly posted. If a Not-Liable or Error account has a credit balance, a Form C-69 QCR is requested by the ADP & Audit Unit examiner and forwarded to Refunds to process a Commission initiated refund. The Unit audits the account and validates the refund before approving the request. Refunds issued to a Not Liable or Error account do not require the employer's signature.
3.1.13 Refund - Successor Liability
Refunds are reviewed for successor liability. If a predecessor account shows total acquisition approved and has a monetary delinquency of $100 or more, along with a $500 or more credit in the successor account, a request is sent to the Employer Accounting and Review to transfer money to satisfy the debt. This procedure is in accordance with Section 204.086 of the Texas Unemployment Compensation Act, Labor Code [previously Subsection 14(o)]. Each accounts examiner has the responsibility to enforce the Texas Unemployment Compensation Act Labor Code, Sec., 204.086, which address successor liability for a predecessor's debt.
The Tax Department enforces successor liability in several ways. The Collections Section receives a monthly system generated report list of all new accounts with predecessor liability. Examiners review the list and make assignments to Field Tax. The assignment directs them to contact the employer and attempt collection. The Collections Section will use all legal remedies (Default Letter, Tax Lien, Bank Claim, Certification, Judgment, and Assessment) when cost effective. The Refunds and Compliance Unit identifies credit that is used to satisfy debts.
If appropriate, the credit is transferred to the predecessor to satisfy the underpayment after reviewing a successor liability checklist.
The successor must be subject under Section 201.022, 19f(2). The transfer of the predecessor's tax rate is not necessary for the enforcement of the T.U.C.A. Labor Code, Sec., 204.086, 14(o) if the subject date is the same as the acquisition date of the predecessor. (Examiner verifies information using the predecessor field of the STS screen.)
There can be multiple predecessors for one successor, but only one total successor for each predecessor.
Tax will not proceed with T.U.C.A. Labor Code, Sec., 204.086, action if the following is the case:
- The predecessor account has an assessment pending, is certified, or bankrupt. Send to Collections for action. (Place a comment documenting your action on FTC)
- A payment agreement in process with the predecessor.
- The date of acquisition is past the three year Statute of Limitations based on the acquisition date.
- An acquisition is the result of a foreclosure or acquisition through the bankruptcy courts.
- A partnership succeeded by one of the partners and we have a judgment against the partnership, we will not enforce Sec., 204.086, 14(o).
- The partner is already individually liable and a routine credit transfer is applicable.
3.1.14 Refunds – Potential Adjustments/Corrections
It may be necessary to perform further adjustments upon an account when, for example, an adjustment report processed for reasons not allowed. Other reasons exist where the adjustment report needs further action, such as when the beginning balances do not match at the point of data entry.
During the use of the input action screens erroneous data is attempted, several on-screen warnings will be displayed, depending on the adjustment attempted. Samples of subject on-screen messages include:
- "REMITTANCE NOT FOUND"
- "HIGHLIGHTED AREAS IN ERROR"
The screen is disabled and prevents further input of data with the display of an on-screen image. Some corrective action is then taken, depending upon the error condition noted, and another on-screen/on-line input attempted.
For example, if Column 'A' of the Adjustment Report (Form C-5) increasing or decreasing, does not match wages keyed into the system. The TDO - Transaction Log screen will show record of the C-5, but it will not come up on the ADT screen. The Data Entry Unit sends to the Refunds and Compliance Unit C-5's so the accounts examiner to review both the C-5 and the account to determine necessary adjustments to be performed.
Action to be taken will be to either adjust the C-5 or reprocess to the Controller Department, or correct the calendar quarter with the AAW screen. In either case, a note should be put onto FTC- COMMENTS screen.
In those cases where a communication with the employer is necessary to resolve an adjustment issue, the examiner may initiate a telephone call, letter, or Field Tax Office contact.
The TSI information screen can identify a system stop.
STOP DATE: date after stop keyed
RELEASE DATE: date stop released
STOP REASON: 81 WAGE ADJ. PROCESSING C5
DAYS: 9999 number of day’s stop is on the EMF
ACCOUNTS EXAMINER: SYSTEM
Individual classes of STOPS prevent certain output and transactions per Tax System User's Manual. In the example given, a coded "81" Stop has the effect of halting the following transactions in an account:
- Application of Money (other than a report)
- Statement (daily and monthly)
- Default Notice
- Tax Lien
- Bank Claim Notice
- Rate Change
- Archive Quarterly Detail
- Assessment
The examiner releases the System Stop when all needed review or action is complete.
Once the System Stop is released, transactions prevented by the Stop can now be perform normally within the automated tax system
3.1.15 Refund - Cancel before Mailing
Upon receipt of communication from the employer requesting that the refund request be canceled; or review of the account shows a debit balance of $100 or greater.
Examine the Cash Journal (QRM) to verify that the refund status is REF APPROVED—Not REF MAILED.
E-mail the designated person in the Texas Workforce Commission, Controller Department an interoffice memo. The e-mail requests the reversal of refund and the credit reinstated. Provide the account number, and refund amount.
3.1.16 Refund - USAS
USAS provides access to the State Comptroller's computer system. Tax uses USAS to search for and/or verify the Payee Identification Number of the entity that submitted a refund request.
Go to the screen that has TPTX1/TSO at the upper left corner
Type in USAS and press [ENTER]
Type in your assigned ACCESS ID
Type in your selected PASSWORD
Press [ENTER]
Type in number 9 where it says 'Choose system NUMBER...'
Press [ENTER]
To look up the payee ID of a business entity:
Type in PYADDR.(include the dot)
After the dot, type in the 11-digit Payee ID
Number Corporation is 1 + FEID, Individual is 2 + SSN Temporary ID IS 3 + FEID or SSN
Press [ENTER]
To look up the name of a business entity:
Type in MTSUMM.(include the dot)
After the dot, type in the 11-digit Payee ID
Press [ENTER]
3.1.17 Refund - Package Assembly
Put the over $1000 Forms C69 in alphabetical order
Put the under $1000 Forms C69 in alphabetical order
Paper clip together:
Refund Transaction Audit Report
Controller Refund Audit Report
Paper clip together:
Refund Batch Summary
Aged Refund Report.
Refund Approval Error Listing
There will be three Batch Cover Vouchers for over $1000, and three Batch Cover Vouchers for under $1000.
Paper clip together:
Batch Cover Voucher for over $1000
Multi-Vendor Voucher Detail for over $1000
(There will be three sets).
Paper clip together:
Batch Cover Voucher for under $1000
Multi-Vendor Voucher Detail for under $1000
(There will be three sets).
Over $1000 group, rubberband together:
Two sets of Batch Cover Vouchers
Multi-Vendor Voucher Detail
The matching C-69QCR refund requests
The matching computer produced refund letters
Under $1000 group, rubberband together:
Two sets of Batch Cover Vouchers
Multi-Vendor Voucher Detail
The matching C-69QCR refund requests
The matching computer produced refund letters
Assemble the refund package in the following order:
- Cover sheet
- First set of under $1000 vouchers
- Second set of under $1000 vouchers
- Forms C-69QCR under $1000
- Computer printed letters under $1000
- First set of over $1000 vouchers
- Second set of over $1000 vouchers
- Forms C-69QCR over $1000
- Computer printed letters over $1000
Rubberband the under $1000 group and the over $1000 group. Then rubberband the entire packages. Give the package to the Assistant Manager of Field Tax Operations for signature. When signed and returned, send the refund package to the Texas Workforce Commission, Controller Dept.
The third copy of the vouchers and all other reports will be filed in the Tax Department.
3.1.18 Refund Warrants - Lost or Destroyed
The employer calls or writes a letter notifying TWC that a refund warrant is lost, destroyed, stolen or not received.
Determine if a warrant is outstanding by inquiring on the State Comptroller Warrant Inquiry System. Access the State Comptroller Warrant Inquiry System from USAS. Key in upper left-hand corner "ZWR0" Warrant Inquiry System <enter>. Key in the ten-digit warrant number from the Cash Journal (QRM) usually beginning with a one.
If a warrant is classified as "C" cashed; the employer may request that TWC order a copy. The copy will identify the endorser by viewing the front and back of the warrant.
If a warrant was not cashed, instruct the employer to review deposits at the time of mailing. If there is no record deposit, the employer can mail or fax us a written request for TWC to void the warrant and issue a replacement warrant. The "Certification for Warrants Lost, Destroyed, Stolen or Not Received" form should be signed by an officer of the company.
The Texas Workforce Commission, Controller will send the completed certification to the State Comptroller for cancellation of the original/warrant and issuance of a replacement warrant.
