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IRS FREEZES CREDIT ACCOUNTS

The IRS sometimes freezes taxpayer’s accounts through a special coding system that they use in their computers. Taxpayer accounts which are in “credit status” are coded as being in a freeze condition. This is sometimes referred to as a frozen credit account. This frozen credit status sometimes occurs where payments by a taxpayer exceed the assessments against them.
A problem arises because if they freeze condition is not correctly identified and resolved by the IRS then the processing of taxpayer accounts can delay income tax refunds. The frozen account could actually lead to the loss of the refund if it causes the statute of limitation to expire.
The IRS has standards and requirements in order to identify frozen credit accounts. The IRS also works on ways to improve identifying and resolving these accounts quickly.
This is an issue right now because the Treasury Inspector General for tax administration has reviewed the process and is pushing the IRS to improve it.
A report was recently released by J. Russell George who is the Treasurey Inspector General for Tax Administration, pushing the IRS to resolve these issues more quickly. The report made 10 recommendations and the IRS responded by stating that “most special conditions are resolved within a few months”.