4.1.4     Statute of Limitations Credit Cancellation

[ 4.1.4.1 - Procedure ]

Credit balances that are older than three years on employer tax accounts will not be refunded and will be cancelled.

Examine Statute of Limitations Credit Cancellation Register to determine if credit cancelation is appropriate.

4.1.4.1     Procedure

The accounting responsibility for canceling monetary credits which are older than three years from the Employer Master File (EMF) is delegated to the Field Tax Operations, Employer Accounting and Review Unit. The credits are systematically canceled under the provisions of the stated section of the T.U.C.A.

The Automated Tax Program posts notice to the Collection Section that a credit has been canceled by sending an Overpayment Detail Listing. This report, is produced monthly by the Data Processing Department, and routed to the Employer Accounting and Review Unit. The report may also be generated upon special request from the Employer Accounting and Review Unit.

The report lists the following fields:

• EID (employer identification number);
  
  
• STATUS (status of the account, i.e. active, inactive, terminated);
  
  
• POSTMARK DATE (postmark date associated with the remittance as having been received);
  
  
• RMT NBR (the sequence number of the remittance, as found in remittance journal)
  
  
• CREDIT AMOUNT (the amount which has been canceled as of the date of the report);
  

When credit balances approach a three year anniversary date, credit amounts become eligible for an cancelation from the Employer Master File (EMF) after notice to the taxpayer. Notice is posted to the taxpayer upon Form C-69QCR, which specifies the date upon which the credit is scheduled to be canceled if not used or refunded.

The credits cancel monthly on or after the first business day of the month. With noted exceptions, additional reports may be generated upon request when special issues regarding Surplus Credit for example, arise.

Arising from these credit cancellation transactions, certain program exceptions occur:

• Credit is canceled on the first of the month, yet the on time/timely Employer's Quarterly Report (Form C-3) posts to the account after that date, thereby producing an erroneous billing, if the taxpayer contemplated using the credit;
  
  
• Stops on the account, 'No Bill' instructions, or other address problems, legitimate question may arise as to whether the taxpayer was in fact notified that the credit would be canceled on a certain date, prior to the credit being canceled;
  
• Refund transaction may be in process while the credit has been subject to cancellation, and in fact canceled;
  
  
• Credit subject to a transfer to another account may cancel, producing erroneous account balances in both the account from which the credit was to be transferred as well as the account to which the transfer would have applied;
  
  
• Issues of report and accompanying money transfers arise from the proper employer rate computation process, as it applies to both the predecessor and successor accounts;
  
  

From time to time it is necessary to perform further adjustments upon an account when, for example, a postmark date needs to be corrected, or a credit reinstated to accord the taxpayer proper payment of tax under state law. In these cases, a communication may be initiated by the accounts examiner via telephone, letter, or Field Tax Office contact, in order to resolve the issue at hand, and communicate intentions of correcting the taxpayer's account.

In the event of account balance errors, feedback originates from the taxpayer, taxpayer's representative, or through Field Office or State Office Tax personnel, regarding need to reinstate credit amounts to apply to tax amounts due.