The Restructuring and Reform Act of 1998, RRA 98 Section 3705(a), provides identification requirements for all IRS employees working tax related matters. IRS employees are required to give their name and unique identification number during taxpayer telephone, face to face and written contact. In addition, a telephone number is required on all taxpayer correspondence. This will provide taxpayers with enough information to identify an IRS employee who has previously assisted with tax related matters.

All IRS employees who communicate by telephone, correspondence, or face to face with taxpayers or their personal representatives on tax-related matters are required to provide (at a minimum) the following information:

Refer taxpayers to the Taxpayer Advocate Service (TAS) (See IRM Part 13, Taxpayer Advocate Service) when the contact meets TAS criteria (see IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria), or has Form 911 attached, and you cannot resolve the taxpayer's issue the same day. The definition of "same day" is within 24 hours. "Same day" cases include cases you can completely resolve in 24 hours as well as cases in which you have taken steps within 24 hours to begin resolving the taxpayer's issue. Do not refer these cases to TAS unless they meet TAS criteria and the taxpayer asks to be transferred to TAS. Refer to IRM 13.1.7.4, Same-Day Resolution by Operations. When referring cases to TAS use Form 911, Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order), and forward to TAS in accordance with local procedures.

Form 1065, U.S. Return of Partnership Income is an information return used to report the income, deductions, gains, losses, etc., from the operation of a partnership. A partnership does not pay tax on its income but "passes through" any profits or losses to its partners. Partners must include partnership items on their tax returns.

The due date for a partnership return is the 15th day of the 4th month following the close of the taxable year. April 15th is the due date for a calendar year return.

The purpose of this initiative is to achieve consistency in the Business Master File (BMF) Code and Edit processing IRMs.

Topics for the BMF Consistency have been identified and developed as a coordinated effort between Cincinnati, Ogden, and Paper Processing Branch BMF Code and Edit/ERS.

BMF Consistency subsections are identified by a ♦ (diamond) before and after the title.

Text in normal print is the common processes for BMF returns. Text in BOLD print is form specific and applies to this IRM only.

For returns completed in other than U.S. currency, process as filed. However, if corresponding for missing/incomplete item(s), include instructions in the letter to resubmit in U.S. currency.

(1)The Customer Account Data Engine (CADE) 2 Program Office in Headquarters is charged with the primary goal to implement a single, modernized programming solution which provides daily processing of taxpayer accounts.

The CADE 2 solution is comprised of several components, to modernize the IRS to a daily processing environment with several Transition States.

With CADE 2 there will be changes to campus cycles which will begin with cycle 201201. The new BMF campus cycles are:

BMF transaction posting timeframes are outlined as follows:

Transaction posting dates will reflect a format of YYYYCCDD. YYYY will indicate the year. CC will indicate the posting cycle. For IMF transactions, the following values for DD are defined:

Edit marks are edited on the return for transcription to the Automated Data Processing (ADP) System through ISRP. The editing can be entered in brown, red, orange, purple, or green pencil/pen.

The only items edited on the return are those to be transcribed except where specific instructions require editing of a non-transcribed item. Lines are left blank if the entry would be a zero amount unless otherwise instructed.

The original entry on a return is never obliterated, altered, or erased when deleting or correcting an entry. Always exercise care to ensure that the original entry remains legible. Perfected entries provide a legible "edit trail" for anyone who may work with the return later.

For a description of specific edit marks, see the table below:

Action Codes are used to indicate whether correspondence, research or some other action is needed. The Action Code will set the suspense period to be assigned to the return and place the return in the workable or unworkable suspense inventory.

When necessary, a three-digit Action Code will be assigned by the tax examiner.

Edit the Action Code in the bottom left margin of the return.

Assign Action Codes in the following priority:

Attach Form 4227 when more than one Action Code is needed. Edit the Action Code with the shortest suspense period on the form and edit the second Action Code on Form 4227.

Edit the following Action Codes when a return cannot be perfected:

Continue perfecting the return after editing the Action Codes.

Valid Action Codes are listed below:

IMPORTANT (regarding "Black Liquor" Claims on Form 1065 returns): This special processing only applies to Tax Years 200901 through 201011. DO NOT edit Action Code 343 (Other Accounting) on any Form 1065 for Tax Period 201012 or later.

Issue correspondence to the partnership to resolve any condition that causes the return to be unworkable or unprocessable.

Examine the return so that all of the conditions can be included in the same correspondence.

Ogden Campus Submission Processing (OSPC) will process all foreign address returns.

A foreign address is any address other than the 50 states and the District of Columbia.

An Army Post Office (APO), Diplomatic Post Office (DPO) or Fleet Post Office (FPO) is not considered a foreign address. The Postal Service established new address requirements for the APO/DPO/FPO addresses.

If an address appears in the old APO/DPO/FPO format, convert to the new State Code abbreviation based on the ZIP Code: For example, if the old address appears as "APO New York, NY 091XX" , convert to read as "APO AE 091XX" .

Route returns with a foreign address to OSPC for processing. Prepare Letter 86C to inform the partnership that the return has been sent. (Figure 3.11.15-2)

U.S. Possessions/Territories - The following U.S. Possessions/Territories are considered foreign addresses and must be sent to OSPC for processing:

A ZIP Code must be present for U.S. Possessions/Territories. Edit the appropriate ZIP code if one is not provided. Exhibit 3.11.15-1

A frivolous argument is used for the purpose of expressing dissatisfaction with the substance, form or administration of the tax laws by attempting to illegally avoid or reduce tax liabilities. Recognized frivolous arguments made by businesses include, but are not limited to, the examples in IRM 4.10.12, Frivolous Return Program (FRP), shown in Exhibit (form specific).

Review the return to determine whether it appears to be a frivolous return.

Criminal Investigation (CI) investigates potential criminal violations of the Internal Revenue Code (IRC) and related financial crimes. Criminal violations of the IRC are willful and deliberate attempts to evade or defeat the income tax. Flagrant criminal activity includes, but is not limited to, the failure to pay over taxes due and/or taxes collected or withheld and claims of false refunds based on bogus return information and place in “CI Funny Box”.

Pull any return identified as having any CI criteria found in paragraph (3) below.

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If CI has stamped the return, no action is required.

The primary objective in identifying tax returns for examination is to promote the highest degree of voluntary compliance. Examination will provide support and assist Submission Processing (SP) with any questionable return identified during processing. Exam has a vast multitude of programs and tolerance criteria already identified in various IRM sections. Exam does not restrict SP with the flexibility to refer questionable returns other than what is currently identified in various IRMs.

Returns marked as "Protective Claims" , "Protective Claim for Refund" , or similar statement will be removed from the batch and routed to Accounts Management. Notate "Protective Claim" in the remarks box of Form 4227.

All attachments to the return must be reviewed before the return can be considered processable.

Follow the general guidelines below written for each attachment:

The table below contains routing instructions for specific forms and/or documents attached to Form 1065 or 1065-B.

Any return with a received date that is 2 years and 9 months or more after the Return Due Date is a potential statute control return.

Statute returns must be routed to the Statute Control Unit daily or more often if needed.

Statute returns are unprocessable until they are cleared by Statute Control:

Edit CCC "W" if the return has been cleared by Statute Control Unit. Statute will stamp or indicate clearance on the front of the return. (Figure 3.11.15-4.)

IRC 6229 established a three year statute of limitation on partnerships covered under the Tax Equity Fiscal Responsibility Act (TEFRA).

This section is reserved for future use.

Compliance functions (Collections and Examination) secure returns from the taxpayer and also prepare returns if the taxpayer does not provide them.

A return posted to the wrong account or module or attempting to post must be reprocessed to post to the proper account or module.

Some re-entry returns may have originally been filed electronically (E-File). These returns may be identified by the presence of Mod E-file printouts in lieu of an actual return. Do not correspond for missing signatures on these documents.

Each re-entry return must have a Form 3893, Re-Entry Document Control or Form 13596, Reprocessing Returns , attached.

Always leave the Form 3893 or Form 13596 on the front of the return. It must remain as a permanent part of the document.

Examine Form 3893 and/or Form 13596 to determine the action needed to make the return processable.

If Schedules K-1 are attached to a Reprocessable/Re-Entry current year parent return that has not been processed, detach Schedules K-1 and process as "Loose Schedules K-1" using IRM 3.0.101.

A return is considered amended based on any of the following:

Examine the return for attachments:

There is an indication the return is amended and:

Edit the following on all amended returns:

This section provides instructions for editing short record returns. Short record returns include:

Short record returns must be edited correctly to prevent erroneous assessment of any penalties.

The Paid Preparer Checkbox is located next to the taxpayer signature area. It indicates whether the partnership has elected to allow the Paid Preparer to answer questions about the return as it is processed.

No action is required on amended or short record returns.

Take the following actions when an entry is present in the Paid Preparer Checkbox:

The Paid Preparer section is located below the taxpayer signature area at the bottom of Form 1065.

All returns must have a Tax Period Ending.

Edit the Tax Period Ending to the right of the form title in YYMM format.

Tax Periods reported under the 52/53-week rule may not end more than 6 days before and not more than 3 days after the end of the month.

If the resulting tax year is more than 12 months, correspond to obtain the correct period.

On a final return, if the tax period's month and/or year is later than the received date's month and year (future return), edit the tax period to be one month prior to the received date. (Figure 3.11.15-13.)

Figure 3.11.15-12

Figure 3.11.15-13

Edit the Tax Period Beginning to the left of the Form 1065 title area in MMDDYY format on an Initial, Final, or short period return as follows: (See Figure 3.11.15-14.)

Identify an "Initial" Short Period Return by any of the following:

Edit the Tax Period in Beginning MMDDYY format per IRM 3.11.15.8.2.

Edit initial return code "2" to the left of Line G. (See IRM 3.11.15.13.) (See Figure 3.11.15-14.)

Identify a "Final" Short Period return by any of the following:

Edit the Tax Period Beginning in MMDDYY format on a "Final" Form 1065 Return per IRM 3.11.15.8.2.

A "Final" short period return ends on the date the partnership went out of business. Use the numeric designation of the calendar month in which it ended. If the partnership does not indicate the month the business ended, edit the tax period ending as one month prior to the return received date.

Edit CCC "F" to the center of Lines 1 and 2 of the return.

If the partnership files both a "final" and "initial" short period return using one EIN, which together cover no more than one 12 month or 52-53 week period and both returns are received together for editing, combine both returns into one return. Process the combined return.

If the tax period on the return is for a short period other than an "initial" return (Form 1065, page 1, Line G, Box (1)) or a "final" return (Form 1065, page 1, Line G, Box (2)), review Form 1065 for an indication that the partnership is changing their accounting period.

Acceptable explanations include, but are not limited to: