Every year, the IRS works a large batch of ”unpostable” tax returns. An Unpostable tax return happens when your tax return is unable to be posted to the master file. An unpostable condition occurs if there is a discrepancy between information on the taxpayer’s account and data on the tax return that prevents IRS from posting the tax return to the taxpayer’s account.
What Is An Unpostable Tax Return?
An Unpostable tax return happens when your tax return is unable to be posted to the master file. The (IRS) Master File is the system of records that houses tax account information for individual and business taxpayers. As such, the IRS must timely and accurately post transactions to these tax accounts. To ensure the timely and accurate posting of transactions, the IRS established a series of validity checks that a transaction must pass prior to a transaction posting to a taxpayer’s account. The validity check process is in place to maintain the integrity of the Master File.
The IRS has set 850 validity checks (574 for business transactions and 276 for individual transactions) used for the transaction validation process. For transactions that fail one or more validity checks, the IRS deems the transaction unpostable. An unpostable transaction is one that cannot be posted to a taxpayer account on the Master File and must be resolved by the IRS.
Causes of unpostable transactions include the following:
- Dates or money amounts do not match on credit transfers
- Adjustments are input to an account with no transaction code (TC) 150 posted
- Priority codes (PCs) are omitted
- Amounts are reduced below zero, except adjusted gross income (AGI)
- Errors are made in data entry
- Payments are input on settled accounts
- Freeze codes are not considered
- Pending transactions are not considered
- Presence of certain identity theft indicators
The IRS has three types of corrective actions to resolve unpostable transactions. These are
- resolution by a tax examiner
- automatic resolution by the Generalized Unpostable Framework system, and
- mass resolution at a Tax Processing Center (whereby a tax examiner or manager uses a batch process to close multiple cases with one input to the Generalized Unpostable Framework system).
Unpostable conditions always require research by service center staff to resolve the discrepancies. It takes around 12-16 weeks for the IRS to resolve an unpostable tax return. Other types of errors are also resolved by the Error Resolution Unit in the service center, Returns sent to that unit involve such things as computational errors made by taxpayers in filling out the returns and errors made by IRS staff in transcribing numbers from the returns during processing. Not all returns sent to Error Resolution involve errors, however. Some returns are sent to the unit because they meet certain predetermined criteria. Upon review, these returns may prove to be error-free.
- Unpostables are transactions that cannot post to the IDRS Master File. While we should be taking every action to prevent unpostables from occurring, it is critical that all unpostable cases are worked within seven business days of receipt.
- Each IDRS transaction is subjected to a series of validity checks prior to posting to the Master File. A transaction is termed unpostable when it fails to pass any of the validity checks and is then returned to the campus for follow up action(s).
- An IRS employee may encounter unpostables when working the weekly list from the Enterprise Computing Center, Martinsburg (ECC-MTB) returned to the campus Unpostable Unit, when answering a taxpayer inquiry, or when his/her own adjustment case is returned for resolution.
- Unpostables are handled through identification, research, resolution, and response.
Unpostable Tax Return Research
- The Unpostable Program also referred to as Generalized Unpostable Framework (GUF), is a database inventory system containing tax returns or source documents that have failed validity and consistency checks at the Master File.
- The Unpostable System may either assign or close the Unpostable record to a unique function, such as Accounting, Entity, Criminal Investigation (CI), or Examination for resolution, or
- Place the Unpostable record in an open inventory to be worked by Criminal Investigation, Entity Control, Examination, Statutes, or Unpostables.
- The Unpostable Record must be closed off the system using defined resolution codes.
- General Procedures for Unpostables are as follows:
- New Unpostables will be loaded Monday night by Enterprise Operations and taken into the Unpostable, Criminal Investigation, Exam, Statute, Employee Plans Master File (EPMF) Entity, Exempt Organization, and Entity inventories within three days after receipt. They will be available to work Tuesday morning. Weekly GUF reports pertaining to new inventory will be available Tuesday morning.
- The Integrated Document Solutions Enterprise (IDSE) will transmit the closed Unpostables on Tuesday or they will miss the Weekly Update. Missing this update will cause adverse effects such as incorrect cycling.
- GUF corrections will be transmitted only on Tuesday night. Missing this update will not allow the weekly closures to be included in the GUF Inventory reports. Weekly GUF reports pertaining to closed inventory will be available Wednesday morning.
- Total Aged Unpostable cases will be worked as quickly as possible and must not exceed 20 percent of the ending inventory. The 20 percent requirement is applicable to each master file category separately (e.g., Business Master File (BMF) aged inventory will not exceed 20 percent of BMF ending inventory).
- Repeat Unpostables should not exceed 10 percent of the current week’s receipts. The 10 percent requirement is applicable to each Master File category separately.
- Correspondence for Unpostable cases must be issued within 10 workdays of determining contact is needed.
- Unworkable and workable inventory levels (excluding bankruptcies) should not exceed a 21-workday processing cycle.
- If a campuses ending inventory exceeds its receipts by 15 percent for three consecutive weeks, or its aged inventory exceeds 20 percent per week the inventory will be considered unmanageable. Aged inventory percentages are determined for each function worked within the individual Master Files. Stringent management measures must be taken to bring percentages back to manageable levels. The following are for all functions working Unpostables to help in maintaining these levels:
- Nullified Unpostables that are to be reinput will receive expedite processing. Reinput tax returns should not be shelved.
- Review and completely resolve, to the extent possible, all Unpostable conditions that could result in a repeat Unpostable.
- Review the aged inventory so that high dollar amounts ($25,000 or more) and VERY old cases are kept to a minimum.
Refund and payment documents must be given a higher priority than other Unpostables. Local Management will decide the highest priority. Specific Unpostable listings are generated to identify refund tax returns to ensure the 45 calendars day interest-free period is met. After the tax return due date, refund tax returns will receive the highest priority to meet the 45-calendar day interest-free period.
Exception: An interest-free period of 180 days applies to an overpayment resulting from tax deducted and withheld.
Unpostable tax returns do not have a simple fix. And if you talk to a rep at the IRS most of them will not inform you that your tax return is unpostable. Each Unpostable tax return must be fully looked at by the IRS to try to figure out the root cause of the problem causing the unpostable tax return, once the IRS determines the problem they will either try to correct the issue or they will send you a letter requesting more.
You can find out more information about unpostable tax returns here!