98 Trust Administrator Master Class

So I was having a VERY interesting conversation with AI this week about potential “holes” in the 810 code detection algorithm which we will address on tonight’s call.

When people file tax returns containing refund claims predicated on the box 4 entry from IRS form 1099OID, very frequently they will notice that the IRS has placed a refund freeze hold on their account which reflects as IRS code 810 on the 1099OID recipient’s record of account transcript.

It seems that IRS code 810 uses a three-part matching scheme which automatically triggers the code on an account showing a withholding refund whenever one of the three parts to the algorithm don’t match at the time an income tax return transcript containing the refund credit is generated internally at the IRS. The three “checks” run by the 810 algorithm at the time a return transcript is generated are:

1. Does the 1099OID or other information return appear in IRMF data for the tax year in which the withholding refund is claimed?

The IRMF is the IRS’s Information Return Master File database system. It exists as a separate “audit trail” record distinct from the Wage & Income transcript which the IRS (and specifically the 810 code algorithm and RIVO department) use when confirming or denying that a form 1099OID or other 1099 information return has been filed with the IRS. The way they see it, if a form 1099 or other information return does not appear in the IRMF, that form is considered as having never been filed, even if they are wrong and the 1099 form or information return actually was filed.

As of the date of this video article, the IRMF algorithm records 1099 information returns for the prior tax year during January through September of the current calendar year, so in order to have a 2025 form 1099OID recorded into the IRMF electronic records database, the 1099OID would have to get filed between January and September of 2026. If the 810 algorithm finds that the 1099OID or other information return IS contained within the IRMF, the algorithm proceeds to check #2:

2. If the 1099OID or other information return does appear in the IRMF system for the tax year in which the refund is being claimed, does the information from the 1099OID or other information return perfectly match the information contained within the payer/recipients’ return transcripts?

For this check, the 810 code algorithm looks at the contents of the form 1099OID in the IRMF system and compares those contents with the contents of the 1099OID payer’s and recipient’s tax returns to see if the entries on the 1099OID match the entries on the payer’s and recipient’s returns. Specifically, the algorithm checks:

• Whether the payer’s name & TIN from the 1099OID match the name & TIN on the payer’s income tax return and 945 backup withholding return for the tax year of the 1099OID,

• Whether the recipient’s name & TIN from the 1099OID match the name & TIN on the recipient’s income tax return,

• Whether the numerical income and withholding amounts from boxes 1 & 4 of the 1099OID are reported (as in, are less than or equal to) in the numerical income and withholding amounts contained on the payer’s backup withholding tax return (which is usually a form 945) and the recipient’s income tax (which is usually a form 1040 or 1041 as discussed in the 1099OID master class video if the recipient is using a trust).

If the 1099OID data from the IRMF matches the tax return transcript data for the payer and the recipient, the 810 code algorithm proceeds to check #3:

3. If the information from all involved return transcripts match the information from the 1099OID or other information return itself, do the federal income tax withholding amounts from box 4 of the 1099OID or other information return reflect as paid to the IRS on the payer’s 945 backup withholding return transcript for the tax year in which the refund was claimed?

For this check, the 810 code algorithm looks at the 945 return transcript for the 1099OID payer for the tax year of the 1099OID to check if the payer’s 945 backup withholding tax liability deposit has been paid or “credited” to the payer’s account and is showing on the payer’s 945 account transcript as a negative number which signifies a tax payment or tax credit. If this deposit is showing as a credit or a negative number on the payer’s 945 backup withholding return transcript, the 810 algorithm considers the tax return “cleared,” and will not trigger a refund hold.

If all three conditions are met at the time the tax return claiming the refund is filed, the return should bypass the 810 code algorithm entirely and release the withholding refund automatically within 30 days of being filed.

The AI suggested that IRMF data only updates for forms 1099 and other information returns that are actually filed in the specific tax year listed in the upper-righthand corner of the form and does not update at all for paper-filed 1099 forms. The AI also suggested that while it may be possible to amend prior 1099 forms or information return packets in the IRMF system submitted by the payer in the specific tax year of the withholding, 1099 returns for that specific tax year which were filed after the tax year had already happened would bypass the IRMF data system altogether and never get recorded in it, even if those 1099 forms or information returns appeared on the payee’s wage & income transcripts, thus triggering the 810 code algorithm and refund delays pending manual review.

So in the interests of speeding things along and securing automated refunds, our workflow (looking at the “private” side of the ledger) becomes:

1. Retrieve 1099OID Payer Data:

Trace the 1099OID payers’ TINs through a standard CUSIP # tracing protocol. Once the TINs have been located, pull each payer’s 4506-t transcripts through the IRS CAF unit. This allows us to confirm that the TINs we traced are real EINs on-file in the IRS’s own transcript record, and allows us to further confirm whether those EINs have established federal tax payment histories under their applicable income tax return transcripts and 945 backup withholding return transcripts.

2. Confirm 945 Transcript Shows Payment History or File 945 Return With Revenue Procedure 2002-26 Cross-Module Transfer Request:

Confirm from the transcript data collected from the IRS CAF unit whether each 1099OID payer’s 945 return transcript shows a 945 return filing history and tax payment history for amounts at least as high as those claimed in box 4 of our forms 1099OID (preferably higher). If the 945 return transcript data from this step does not show such a federal tax payment history, then arrangements should be made for the 1099OID payer’s form 945 return to get filed showing a backup withholding tax liability for these amounts so that this liability can appropriately be collected from the overpayment credits sitting on the 1099OID payers’ income tax return transcript (a-la OUR HJR-192 credit or exemption as the principal).

The AI suggested that once the aforementioned 945 return is filed and has posted onto each 1099OID payer’s 945 return transcript, this re-allocation of the overpayment credit on the 1099OID payers’ income tax return transcripts to the payers’ actual 945 withholding tax liability deposit due on their 945 return transcript can be initiated via a cross-module transfer request on the 1099OID payer’s EIN, which is made through a written letter invoking Revenue Procedure 2002-26. This letter would go to the IRS field office corresponding to wherever the payer regularly files their income tax return. Appropriate permissions to file the 945 return and the cross-module transfer request can be delegated over to our CAF number entity from the 4506-t packet by filing IRS form 56.

In summary, this step would confirm that each payer’s 945 return and 945 withholding tax deposit had been paid in advance of us filing the 1099OID and refund return, which bypasses check number 3 in the 810 code algorithm.

3. File Form 1099OID:

Once steps 1 & 2 above have all been completed and the 945 and payer’s TIN information from steps 1 & 2 are all showing on the 1099OID payers’ income tax return transcripts and 945 return transcripts from our 4506-t packet published in the #documents channel of the 98 Trust Administrator Master Class private Discord Server, we proceed with filing forms 1099OID as shown in the 1099OID master class YouTube video based off of this CAF unit-verified information (in the current tax year for this particular workflow. For prior tax years, a slightly different protocol with IRS form 945x and a corrected form 1099OID would be used, but this method is so technical, in my humble opinion, it is impractical since prior-year 1099OID withholding credits can always be accelerated to the current tax year’s return through an accounting method known as amortization).

4. File Tax Return Claiming Refund for 1099OID Withholding:

Once the 1099OID from step 3 posts onto our recipient’s wage & income transcript showing all of the CAF unit-verified information discussed in steps 1-3, we file the tax return as shown in the 1099OID masterclass video. Because the information on the tax return is confirmed as valid by the IRS’s CAF unit BEFORE the return is filed, the return should bypass checks 1, 2 & 3 in the 810 code algorithm and automatically release the refund through the automated algorithm on a consistent basis every single time.