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Part 3. Submission Processing

Chapter 11. Returns and Documents Analysis

Section 154. Unemployment Tax Returns (Cont. 1)

3.11.154  Unemployment Tax Returns (Cont. 1)

3.11.154.2 
General Instructions for Unemployment Returns

3.11.154.2.17  (01-01-2012)
Paid Preparer Section

  1. The Paid Preparer information is located in Part 7 of Form 940 and Form 940-PR (Revision 2008) and in Part 8 of Form 940 and Form 940-PR (Revision 2006, Revision 2007). This area was not present on 2005 and prior year revisions.

3.11.154.2.17.1  (01-01-2012)
♦Paid Preparer Social Security Number or Preparer Taxpayer Identification Number♦

  1. The preparer's Social Security Number (SSN) is a nine-digit number. The SSN cannot be all zeroes or all nines.

  2. The Preparer Taxpayer Identification Number (PTIN) consists of nine characters. The PTIN begins with the letter "P" followed by eight numbers (e.g., PXXXXXXXX).

  3. If the Preparer's SSN or PTIN is invalid, asterisk (*) to the left of the entry. No other editing is required.

3.11.154.2.17.2  (01-01-2012)
♦Paid Preparer Employer Identification Number♦

  1. The Preparer's Employer Identification Number (EIN) must consist of nine numbers. The EIN cannot be all zeroes or all nines. If the Preparer's EIN is invalid, asterisk (*) to the left of the entry. No other editing is required.

3.11.154.2.17.3  (01-01-2012)
♦Paid Preparer Phone Number♦

  1. No action is required on amended returns.

  2. If a complete Paid Preparer Phone Number is located on the Paid Preparer's Phone Number line, no editing of this line is necessary.

  3. If the Paid Preparer's Phone Number is incomplete, illegible, or less than 10 digits, review the return and all attachments.

    Note:

    If more than 10 digits are present, continue processing the return. Only the first 10 digits will be transcribed.

    IF THEN
    A complete Paid Preparer's Phone Number is located elsewhere on the return or attachments, Edit to the "Phone Number" line.
    A complete Paid Preparer's Phone Number is not located or the number is illegible, Asterisk (*) to the left of the incomplete or illegible phone number.

3.11.154.2.18  (01-01-2012)
♦ Signature Area ♦

  1. A signature and jurat are required on all returns except the following:

    • Returns prepared under IRC Section 6020(b). These returns must be signed by a Compliance Function Representative. If the Representative's signature is missing, process examiners should bring it to the attention of their responsible Planning and Analysis analyst in their campus.

      Note:

      Accept an IRC Section 6020(b) return as being signed when it is received with a Form 5604 attached and a signature is present in the " Initiating Collection Employee" field. If the return is unsigned and the 5604 is unsigned, route to Compliance.

    • Returns prepared by Examination. For example, returns indicating "SFR" or "Substitute for Return " .
      Reminder: Returns secured by Examination do require a signature and jurat.

    • Dummy returns prepared by IRS.

    • Returns filed under IRC Section 501(d), a Religious or Apostolic Organization.

    • When correspondence containing a signature and jurat is attached showing that the taxpayer is responding to an IRS letter.

    • When the taxpayer indicates that they have filed another type of return. If the taxpayer indicates this, prepare Form 4227 or Form 6882, IDRS Information Request to request research to determine the correct filing requirement.

    • Blank return with a CP 139 attached (Notification that Forms 940 or 941 may not be required because four consecutive 941 tax quarters were received with "No Liability)" .

    • When it appears that the taxpayer is "irate " because he/she has received another blank return after filing a "Final" return in the previous year.

    • Other Federal agencies.

    • Returns originally filed initially electronically (E-File), which are being re-entered. These returns may be identified by the presence of Mod E-file printouts in lieu of an actual return or " TRPRT print Do not process" printed in the top margin.

      Note:

      Circle "Do Not Process" if present on the return.

    • Do not correspond for a signature on Correspondence Imaging System Returns (CIS) that have Form 13596 attached. IRM 3.11.154.3.11.

    Note:

    Enter an asterisk (*) in the signature box when a signature is not required on the return.

  2. IRM 3.11.154.3.11 for Correspondence Imaging Returns ("CIS" ) signature instructions.

  3. Since tax examiners are not expected to be handwriting experts, Regulations allow us to presume that the signature on a return, statement or other document is the true signature of the person who actually signed the document.

  4. Very often, a tax preparer will mark a signature line with an "X" , indicating where the taxpayer should sign the return. When this happens:

    IF AND THEN
    An "X" is shown in the "Sign your name here" box, There is a name shown in the "Print your name here" box, Do not correspond.
    An "X" is shown in the "Sign your name here" box, The "Print your name here" box is blank, Correspond with the taxpayer to obtain a signature.

  5. Accept a signature declaration, (a signature with a jurat obtained through IRS correspondence), if attached to the return.

    Note:

    Edit an asterisk (*) in the left most position in the signature box to indicate that a signature declaration is attached.

    1. If the signature declaration is altered or stricken, see identification of Frivolous Returns and Claims. IRM 3.11.154.3.15.

    2. If the taxpayer responds with a self prepared "signature declaration" , it must contain the same language as the jurat on the tax return, "Under penalties of perjury, I declare that I have examined this return including accompanying schedules and statements, and, to the best of my knowledge and belief, it is true, correct, and complete, and that no part of any payment made to a state unemployment fund claimed as a credit was, or is to be, deducted from the payments to employees."

  6. A signature of an individual, officer, partner, duly authorized agent, etc. can be printed, typed, stamped, computer generated, or affixed by some other type of mechanical device. A "signature" refers to the "name" of the individual who attests that the information on the return is true, correct and complete.

    1. A signature need not be in cursive.

    2. A signature does not have to be hand-written.

  7. The signature must appear in either the " Sign your name here" box, or on the " Print your name here" box, or the " Signature" line. If the taxpayer's or duly authorized representative's signature does not appear in any one of those areas, follow the procedures in the IF/THEN Table below.

    Note:

    If the jurat was altered or stricken (crossed out), IRM 3.11.154.3.15 If the jurat is not present with a signature, follow the procedures in IRM 3.11.154.2.18(8) below.

  8. If a signature and/or jurat is not present as required, process as follows:

    IF THEN

    • The return is not signed on the line designated for the taxpayer's signature, or

    • The jurat is not present on the line designated for the taxpayer's signature (non-standard return).

    • Only the Entity information is present and there are no attachments containing tax data,


    1. Edit Action Code +"225 " (Correspondence for Signature Only) or" 226," (International Correspondence for Signature Only).

    2. Leave in batch and continue processing.

  9. Facsimile Signature - Rather than a handwritten signature, an owner, partner, corporate officer or duly authorized agent may sign a Form 940 by facsimile (i.e., by rubber stamp, mechanical device, or computer software program).
    If a facsimile is used, the person filing the form must retain a letter, signed by the individual authorized to sign the return(s) declaring under penalties of perjury that the facsimile signature appearing on the form is the signature adopted by the person and that the signature was placed there by their direction.

    1. Correspond if no facsimile signature is found.

  10. For SCRIPS processing, if a return is submitted typed with blue or black ink and the signature is in orange, or pink, place an asterisk (*) in the left most position in the signature box to prevent the SCRIPS system from generating a notice to the taxpayer.

3.11.154.2.19  (01-01-2012)
Tax Period

  1. All returns must have a Tax Period. Edit the Tax Period to the right of the form title in YY format.

    IF THEN
    The return is for current processing year, Do not edit current tax year. No editing is necessary.
    The taxpayer has notated a Tax Period other than the current year, Edit the Tax Period based on the taxpayer's indication.
    The Tax Period is missing, incomplete, or illegible, 1. Review the return and attachments for the correct period.

    2. If found, edit the Tax Period to the right of the form title in YY format.

    3. Unable to determine the Tax Period after searching the return and attachments, process the return for the year currently being processed.
    More than one Tax Period is shown on the return, 1. Review the return or the attachments for the correct Tax Period.

    2. If the Tax Period cannot be determined, edit and process the return for the earliest Tax Period shown by the taxpayer.

    3. Edit the correct Tax Period in YY format.

  2. Prepare a dummy return for each Tax Year involved when more than one tax year is shown on a return. Correspond with the taxpayer if a dummy return cannot be prepared.

3.11.154.2.20  (01-01-2012)
Early Filed Returns

  1. An Early-Filed Return is defined as a return with a Received Date prior to the Tax Period Ending date.

  2. Never send back an early-filed return to the taxpayer.

    Note:

    When correspondence issues are present on an Early-Filed return, edit the Correspondence Action Code ("211" ,"225" , or

    "226" on the return. Edit Action Code "480" (Early filed- Suspense) on Form 4227 and forward for correspondence action.

  3. Circle out the received date if one is shown on the return.

  4. Do not edit Credit Reduction information on Early-Filed Return

  5. Do not pull from pack if the return is an early filed SCRIPS.

    IF THEN
    The taxpayer submits a return using a 2005 or prior revision and marks "2012" on the "Calendar Year" or " Año contributivo" line of the return, Process through ISRP as a current year return.

    Note:

    This is an exception to our usual procedure.
    The return is early-filed and is not a "Final"

    Note:

    This procedure includes early filed complete CIS returns.


    1. If you can determine the reason for filing a future tax year return, edit Action Code 480.

    2. If you cannot determine the reason for filing a future tax year, edit return with AC 211. Correspond with taxpayer using 142C letter.

    Exception:

    If the tax period ending is later than the received date by not more than two months (received date is November 1 through December 31), edit Action Code 480 (Early filed - Suspense).

    The return is early-filed, "Final" and complete, 1. Edit CCC "F" .

    2. Edit Action Code 480.
    The return is early-filed, "Final" and incomplete, 1. If return is incomplete, correspond for missing data using 142C letter.

    2. Suspend with AC 211.

    3. Edit CCC " F" .

3.11.154.3  (01-01-2012)
Special Conditions

  1. Processing special return conditions in the code and edit function.

3.11.154.3.1  (01-01-2012)
♦Refund Returns - 45-Day Jeopardy and Million Dollar Refunds♦

  1. Document Perfection is responsible for identifying refunds and for initiating requests for manual refunds.

    Note:

    Expeditious processing of refund returns is critical if the 45-day period is about to expire.

    IF THEN
    A refund return is batched in a non-refund batch, 1. Completely edit the return.

    2. Pull the return from the non-refund batch and merge into a refund batch using local procedures.

    Note:

    Follow the instructions below when the processing date is more than 20 days after the received date or the return due date, or the refund is $1,000,000 or more.

    The processing date is more than 20 days after the Received Date or the Return Due Date (whichever is later) and the refund amount is $5,000 or more,

    Note:

    Refund in this instruction means only the amount requested to be refunded to the taxpayer, not overpayments transferred to other periods.

    		1. Edit Action Code 341.

    2. Give the return to the manager.
    The refund is $1,000,000 or more,

    Note:

    Refund in this instruction means only the amount requested to be refunded to the taxpayer, not overpayments transferred to other periods.

    		1. Do not leave the return in the block.

    2. Edit Action Code 341 for numbered and unnumbered returns.

    3. Give the return to the manager.
    The W&I Submission Processing Liaison for TAS issues a return to be walked through Code & Edit, In addition to normal editing, edit the following:

    1. Edit CCC "O" to freeze the refund.

    2. Edit CCC "Y" to send the return to ERS.

3.11.154.3.2  (01-01-2012)
Delinquent Returns

  1. A return is normally delinquent if it is not received on or before the return due date. Accept a return as timely ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . A return is not delinquent if the return is timely postmarked and mailed before, or on the due date. If the due date falls on a weekend or legal holiday, the return is timely if postmarked by the first business day following the weekend or legal holiday. IRM 3.11.154.3.3 for instructions on determining timeliness of returns.

  2. If the return is truly delinquent, check return or attachments for an explanation of late filing. Send taxpayer 1382C Letter to inform taxpayer that we have received their request. Do not code the return " R" if a pre-computed delinquency penalty is shown.

    Exception:

    For secured or prepared returns, edit the applicable CCC as indicated on the return or attachments or Form 13133.

  3. Forms 940, 940-PR, and 940-EZ (obsolete) are annual (calendar year) returns.

    1. The due date is January 31 of the next year.

    2. If the 31st falls on Saturday, Sunday, or a legal holiday, then consider the return timely if postmarked by the first work day thereafter.

3.11.154.3.3  (01-01-2012)
♦Received Dates♦

  1. The date a document is received in the Campus or IRS Office is the date stamped as the "IRS Received Date" .

  2. A valid IRS received date is required on the following returns:

    • Delinquent

    • CCC "R" , "D" or " 7" coded

    • Amended (CCC "G" Coded)

    • Re-entry

    • IRC Section 6020(b)

    • Delinquent original is used to prepare other returns. (For example, a dummy return is prepared from a multiple period return. Tax data is transferred to the current revision of the return).

    • Pre-computed penalty and interest is present.

    IF THEN
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The return is considered timely. If present, circle out the received date.
    The due date falls on a weekend or legal holiday, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    The IRS received date stamp is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ the postmark or shipment date is on or before the due date, The return is considered timely. If present, circle out the received date.

    Note:

    A private metered postmark is to be considered timely if received within ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

  3. The received date may or may not be stamped on the face of the return.

  4. A valid Received Date Stamp consists of the following:

    • The word "Received" ,

    • Month (alpha or numeric),

    • Day (for example, "1" or "01" ,

    • Year, i.e. four digits in "YYYY" format,

    • Area Office, Campus, Field Office, Taxpayer Assistance (TAC) plus the City (location or function area within one of these sites (e.g., CSCO, EXAM, ICT, CIS, AM, etc.)

      Note:

      The Taxpayer Advocate Service (TAS) organization is not a point of filing and TAS employees have not been delegated the authority to accept returns for filing. Treat all TAS Received Dates as invalid by circling them and edit the received date according to instructions.

  5. If the received date is not present or the date is illegible/invalid, edit the Received Date in MMDDYY format in the middle of page 1 of the return. Edit the Received Date in the following priority:

    1. The earliest legible Postmark Date (U.S. Postal Service, Foreign Postmark, or Private Delivery Service on the envelope. Rules for using the U.S. Postal Service Postmark (USPS) or Foreign Postmark date are as follows:

      IF THEN
      An envelope is not attached, Use the postmark date stamped on the face of the return.
      An envelope has a USPS and private metered postmark, Always use the USPS postmark.
      An envelope has a foreign and private metered postmark, Always use the foreign postmark.
      An envelope has two private metered postmarks, Always use the latest private postmark.
      An envelope has only one private metered postmark, Use the private metered postmark.

      Note:

      A private metered postmark is to be considered timely if received within ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    2. Service Center Automated Mail Processing System (SCAMPS) digital date.

    3. Revenue Officer's Signature date.

    4. Signature date (only if within current year).

    5. Julian control date, minus 10 days.

    6. Current date, minus 10 days.

  6. Edit the Received Date as follows:

    IF AND THEN
    A timely received date is the only received date stamped on the return,   Circle the received date.
    Two or more dates stamped on the return, the return is delinquent, 1. Use the earliest IRS stamped Received Date.
    2. Circle out all other dates.
    A Federal return is addressed to the IRS, delivered to a State agency Use the postmark date as the received date.
    A Federal return is addressed to a State agency,   Use the IRS date stamp as the received date.
    Envelope is attached to the return, the return is timely 1. Check the envelope for remittance.
    2. If found, hand-carry remittance to your manager.
    The only Received Date on the return is a Taxpayer Advocate Service (TAS) Received Date,   Edit the Received Date according to instructions.

    Note:

    If the return and received date are considered timely, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ circle the received date and destroy the envelope.

3.11.154.3.4  (01-01-2012)
Non-Taxable Returns

  1. Form 940 and Form 940-PR Returns are non- taxable when they are filed without any tax data entries or with no entries for tax. The taxpayer may signify that this is a non-taxable return by checking Box " c" , "No payments to employees" , or box " d" , "Final: Business closed or stopped paying wages" (Revisions 2006 through 2011).

    1. The taxpayer may also identify the return by stating "Not liable" , "No Employees" , ("No Sujeto A Impuesto" , "No Tiene Empleados" - will generally be shown on Form 940-PR) or other such statements.

    2. Ensure that the return is truly nontaxable.

  2. If there are indications on the return or attachments that the taxpayer is liable, correspond for all missing items necessary to process the return.

  3. If you determine the return is non-taxable, edit as follows:

    1. Enter the State Code

      Note:

      For editing instructions for Form 940 (Revision 2005 and prior), IRM 3.11.154.7.3.1.

      .

      Note:

      "ZZ" is applicable for credit reduction years 1974, 1976 through 1987, 1991, 1992, 2004, 2005, 2009, 2010 and 2011 Tax Year returns.

    2. If the taxpayer indicates the return is "Final" , edit a CCC "F" .

    3. If the taxpayer claims exempt status under IRC Section 501(c)(3), edit a CCC "F" . Correspond if there is any doubt about the taxpayer's claim. IRM 3.11.154.2.9.3 for correspondence instructions.

    4. Follow normal procedures for perfecting the signature area.

    5. Enter Schedule Indicator Code (SIC) "1" .

    6. If taxpayer states "not liable" or " no employees" on non - taxable returns do not edit CCC "F" .

3.11.154.3.5  (01-01-2012)
Indian Tribal Government Procedures

  1. After December 20, 2000, services rendered to a federally-recognized Indian Tribal Government (or its instrumentalities) are exempt from FUTA tax, subject to the tribe's compliance with applicable state law.

  2. For submission processing purposes, Code & Edit employees will accept all FUTA tax returns notated or referenced with the following explanations for ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    1. Indian Tribal Government for tax years 2000 and subsequent

    2. Announcement 2001-16

    3. Internal Revenue Code Section 3309(d)

    4. The Community Renewal Tax Relief Act of 2000; (Section 166)

    5. H.R. 5662, incorporated in H.R. 4577, the Consolidated Appropriations Act, 2001

    6. Public Law No. 106–554, 114 Stat. 2763

    7. Similar explanation as described above

  3. Perfect the return as "Non Taxable" and " Final." See the following procedures:

    IF THEN
    An exempt payment is claimed, Allow the entry.
    Tax data is present, 1. Edit CCC "F" and asterisk (*) to the left of all T Lines making the return " non-taxable."
    2. If the taxpayer is claiming any Federal Tax Deposits, do not asterisk (*) the amount claimed.
    3. Perfect the return so the overpayment is refunded to the taxpayer. Figure 3.11.154-1

    Figure 3.11.154-1
    This image is too large to be displayed in the current screen. Please click the link to view the image.

3.11.154.3.6  (01-01-2012)
♦ Statute Returns ♦

  1. Any return with a received date that is 2 years and 9 months or more after the return due date, or any return with a received date that is more than 2 years and 9 months before the date the return is being processed, is a potential statute control return.

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

    Note:

    Do not route the return to Statue Control Unit if any of the following conditions are present. Edit CCC "W" and continue processing if any of the following conditions are present:


    • Compliance IRC Section 6020(b) returns.

    • A return with TC 59X or ICS (Integrated Collection System) notated on the face of the return.

    • A return with a stamp indicating a previous clearance by the Statute Control Unit within the last 90 days.

    • Returns that are substitute returns prepared by Examination (SFR in top margin) of the return.

    • Tax returns that are secured by Examination ("Process as Original" is notated on page 1.)

  3. Statute returns are unprocessable until they are cleared by Statute Control.

    IF THEN
    The return is numbered, 1. Edit Action Code 310 on the return.
    2. Attach Form 4227 and check the box for Statute Control Unit.
    3. Leave the return in the batch and continue processing.
    The return is unnumbered, 1. Do not continue processing.
    2. Pull the return from the batch.
    3. Attach Form 4227 and check the box for Statute Control Unit.

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

  5. See the reference table below for statute barred dates for timely filed returns for tax years 200012 and subsequent.

    TAX RETURN TAX YEAR STATUTE BARRED DATE 90 DAYS TO STATUTE BAR DATE
    940, EZ, PR 2000 01–31–2004 11–02–2003
    940, EZ, PR 2001 01–31–2005 11–02–2004
    940, EZ, PR 2002 01–31–2006 11–02–2005
    940, EZ, PR 2003 01-31-2007 11-02-2006
    940, EZ, PR 2004 01-31-2008 11-02-2007
    940, EZ, PR 2005 01-31-2009 11-02-2008
    940, PR 2006 01-31-2010 11-02-2009
    940, PR 2007 01-31-2011 11-02-2010
    940, PR 2008 01-31-2012 11-02-2011
    940, PR 2009 01-31-2013 11-02-2012
    940, PR 2010 01-31-2014 11-02-2013
    940 PR 2011 01-31-2015 11-02-2014

3.11.154.3.7  (01-01-2012)
♦ Amended Returns ♦

  1. An amended return may be identified by checking Box " a" , "Amended" , on Form 940 or Form 940-PR (Revisions 2006 through 2011). Figure 3.11.154-2.

  2. For Revisions 2006 through 2011, when Computer Condition Code "G" is edited, Box "a" , " Amended" , should be marked. Mark Box "a" , if it is not marked.

  3. If Box "a" is marked erroneously and needs to be deleted, place as asterisk (*) as closely as possible to the left of the box.

  4. For 2005 and prior year revisions, the "Amended" box should be checked.

  5. For both current and prior year revisions, the taxpayer may use such words as "Supplemental" , "Duplicate" , "Additional" , or any other positive indication that the taxpayer has filed previously.

  6. Filing a "Copy" of a return is not sufficient reason to label a return "Amended" unless accompanied by a positive statement from the taxpayer.

  7. Examine the return for attachments. Do not separate any related attachments from the return that the taxpayer has submitted to explain the reason for the amended return; this information will be used by Accounts Management. Detach any unrelated documents and route them to the appropriate function using Form 4227. Edit the Action Trail on the return.

  8. There is an indication the return is amended and:

    IF THEN
    TC 59X or ICS was entered on the return by Compliance Services, Do not edit CCC "G" . Process the return as an original.
    The return is stamped "Delinquent Original Cleared for Processing" by Statute, Do not edit CCC "G" . Process the return as an original.
    Form 3893 or 13596 is attached, Do not edit CCC "G" .
    None of the above are present, Route to Accounts Management.

  9. If the return has a TC59X or ICS which was entered by Compliance (Collections) Services and any indication of an amended return, process the return as an original. Do not edit CCC "G" on these returns.

  10. The following data must be present on all amended returns:

    Exception:

    Non-remit Forms 940, send to Accounts Management without perfecting.

    • Name Control (unless Check Digits are present),

    • EIN,

    • Tax Year,

    • CCC "G" ,

    • Received Date, and

    • Signature.

    Figure 3.11.154-2
    This image is too large to be displayed in the current screen. Please click the link to view the image.

3.11.154.3.8  (01-01-2012)
♦ Secured Returns/Prepared Returns♦

  1. Compliance functions secure returns from the taxpayer and also prepare returns if the taxpayer does not provide them.

    Note:

    If "RD" is notated on the return and not circled remove from the batch and route to Collections.

    1. Returns notated "IRC Section 6020(b)" are prepared by Collections.

    2. Returns notated "TC 59X" or "ICS" are secured by Collections.

    3. Returns notated "SFR" (Substitute for Return) with an attached Form 13133 (Expedite Processing Cycle) are prepared by Examination.

    4. Returns notated "Process as original" with an attached Form 13133 (Expedite Processing Request) are secured by Examination. The box "Delinquent Return" on Form 13133 should be checked.

      Note:

      Secured returns noted with "599" in the left margin and "Possible Duplicate or "Potential Duplicate" in the top margin should be processed as an original return. The notation of Possible/Potential Duplicate is relevant to Collections, a second return is being processed because the first return did not post as anticipated.

3.11.154.3.8.1  (01-01-2012)
♦ IRC Section 6020(b) Prepared by Collections♦

  1. When the taxpayer fails to file a required return, IRC Section 6020(b) of the Internal Revenue Code is the authority for the IRS to prepare the return. These returns can be received in various formats.

  2. These returns will be processed through ISRP.

  3. These are identified by the notation: "PREPARED AND SIGNED UNDER AUTHORITY OF IRC Section 6020(b) OF THE INTERNAL REVENUE CODE" which is located in the center bottom of Page 1 or Page 2 of the return. The right margin should also indicate TC 599 cc 38 or TC 599 cc 39 in the left upper margin.

    1. Returns must have a received date. If missing, follow the normal procedures for editing the Received Date.

    2. Returns must be signed by Compliance Function. If not signed, route to Compliance using Form 4227.

      Note:

      All unsigned IRC Section 6020(b) returns received in Document Perfection must be brought to the attention of the campus Planning and Analysis (P&A) Analyst for proper handling.

      Note:

      Once it has been determined the IRC Section 6020(b) is unsigned discontinue editing the return and forward as an unsigned IRC Section 6020(b) return.

      Note:

      Accept an IRC Section 6020(b) return as being signed when it is received with a Form 5604 attached and a signature is present in the " Initiating Collection Employee" field. If the return is unsigned and the 5604 is unsigned, route to Compliance.

      Note:

      Accept the Revenue Officer (RO) signature anywhere on the return.

      Note:

      Consider an IRC Section 6020(b) return signed by the taxpayer a return.

    3. Edit CCC "4" and process via ISRP.

      Note:

      CCC "R" should not be used with CCC "4" .

    4. Edit CCC "D" if the Revenue Officer notates: "DO NOT ASSESS FAILURE TO PAY PENALTY" .

    5. Do not correspond with the taxpayer for unprocessable conditions. If the return is completely unprocessable, use " No Reply" procedures.

    6. Edit CCC "W" if the received date is more than 2 years 9 months after the return due date. Do not send the return to Statute Control function.

    7. No special calculations or notations are necessary on an IRC Section 6020(b) return that involves a credit reduction state. Do not calculate any credit reduction amounts. Do not enter the credit reduction wage amount.

3.11.154.3.8.2  (01-01-2012)
♦ Collection Secured ♦

  1. These returns are identified by the notations: "TC 59X cc17" or "ICS" .

    1. Do not edit CCC "G" on these returns.

    2. Correspond for conditions that cannot be processed (e.g. missing schedules, etc.)

    3. Edit CCC "W" if the received date is more than 2 years 9 months after the return due date. Do not send the return to Statute Control function.

    Reminder: If there is an indication that a penalty (or penalties) should be suppressed, edit the appropriate Computer Condition Code(s). Please refer to IRM 3.11.154.2.9 for more information.

3.11.154.3.8.3  (01-01-2012)
♦ Examination Prepared ♦

  1. These returns are identified by the notation "SFR" or "SUBSTITUTE FOR RETURN" on Page 1.

    1. Returns must have a Received Date. If no received date is present, follow the normal procedures for editing the Received Date.

    2. Do not send the return back or correspond with the taxpayer for unprocessable conditions. If the return is completely unprocessable, use "No Reply" procedures.

    3. If the Form 13133 is attached, edit the Computer Condition Codes that are checked on the form.

      Note:

      CCC"R" should not be used with a CCC "4" .

    4. Edit CCC "W" if the received date is more than 2 years 9 months after the return due date. Do not send the return to Statute Control function.

    Reminder: If there is an indication that a penalty (or penalties) should be suppressed, edit the appropriate Computer Condition Code(s). Please refer to IRM 3.11.154.2.9 for more information.

3.11.154.3.8.4  (01-01-2012)
♦Examination Secured♦

  1. These returns are identified by the notation "Process as original" on page 1 of the return and a Form 13133 attached with the "Delinquent Return" box checked.

    1. Do not edit CCC "G" on these returns.

    2. Correspond for conditions that cannot be processed (e.g. missing schedules, etc.).

    3. On the attached Form 13133, review the "Hold Credits on Module- Generate TC 570" , to determine if the return should be edited with CCC "X" .

    4. Edit CCC "W" if the received date is more than 2 years 9 months after the return due date. Do not send the return to Statute Control function.

3.11.154.3.9  (01-01-2012)
Form 940(CG)

  1. The Form 940(CG) is a computer generated form. It may be signed by a Revenue Officer or a taxpayer.

  2. This form can be identified by the presence of Form 940(CG) in the upper left hand corner.

  3. 940(CG) Returns are processed through ISRP.

    IF THEN
    It is clear that the 940(CG) was signed by a Revenue Officer, Process as an IRC Section 6020(b) return. Edit CCC " 4" See IRM 3.11.154.3.8.1.
    A cover sheet is attached indicating that a Revenue Officer signed the 940(CG), Process as an IRC Section 6020(b) return. Edit CCC " 4" See IRM 3.11.154.3.8.1.
    The 940(CG) return is signed by a taxpayer, Process as a 940 return.
    The 940(CG) states "IRC Section 6020(b) Protest" , Process as a 940 return.
    There is no signature, 1. Examine the return and attachments.
    2. If you determine it was submitted by an Revenue Officer, process as an IRC Section 6020(b) return.
    3. If you determine that a taxpayer submitted it, return for signature.
    4. If unable to determine, the 940(CG) should be sent to Compliance.
    You are unable to determine if the return should be processed as a 940 or as an IRC Section 6020(b), Refer the return to P & A for guidance.

3.11.154.3.10  (01-01-2012)
♦ Re-Entry Documents ♦

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

  2. 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, or "TRPRT PRINT DO NOT PROCESS" printed on the top margin. Do not correspond for missing signatures on these documents.

  3. Each re-entry return must have a Form 3893, Re-Entry Document Control or Form 13596, Reprocessing Returns, attached. This will indicate to the examiner that special handling is required.

    • Form 3893 is used to re-input documents that have not posted to an account or module. Figure 3.11.154-3

    • Form 13596 is used to reprocess documents to the correct account or module that had previously posted to the wrong account or module.

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

    Exception:

    If the return is more than 2 years and 9 months from return due date, do not use Form 3893 or Form 13596 reprocessing procedures. Route the return to the Statute Control Unit following statute procedures.

  5. Examine Form 3893 or Form 13596 to determine the action needed to make the return processable:

    Note:

    If the Received Date is 2 years and 9 months or more after the Return Due date, refer to Statute procedures before reentering or reprocessing the return. See IRM 3.11.154.3.6 Statute Returns.


    Figure 3.11.154-3
    This image is too large to be displayed in the current screen. Please click the link to view the image.

3.11.154.3.10.1  (01-01-2012)
Form 3893 - Re-Entry Document Control

  1. Form 3893, Re-Entry Document Control is used to re-input a return that has not posted to an account or module.

  2. If more than one return is in the batch and only the top Form 3893 has an entry in box 1 (Alpha/Numeric block control number), edit all returns using current processing procedures and keep all returns clipped together.

  3. Circle the CCC "G" if present.

  4. Do not edit CCC "G" on amended returns.

  5. If the return was not edited according to current processing procedures, circle any Action Codes, Computer Condition Codes and any other edit marks that are no longer applicable. Re-edit according to current processing procedures.

    Note:

    Do not send letter 1382C if a request for reasonable cause is attached.

  6. If the return was edited according to current processing procedures, ensure that the information from Form 3893 is edited to the return.

    FORM 3893 ACTION TAKEN
    Box 14 (Remarks) Ensure that the information is edited to the return.
    Box 15 (Process as), 1. Circle out the green rocker and edit marks that may indicate a receipt of remittance.
    2. Do not change any tax due amounts.

  7. Examine returns that have any color other than red editing in the tax data section to determine if the corrections are the result of improper perfection or taxpayer error.

    IF THEN
    Improper perfection, Edit the same correction in red to the appropriate area.
    Taxpayer error, Leave the entries as shown on the document.

  8. A received date must be present on all Re-Entry returns.

    IF THEN
    Received date is not present, Edit the received date to the middle of the return.
    Multiple received dates are present, Circle all but the earliest date.

  9. When additional information is still needed to make the return processable, prepare approved Correspondence Action Sheet or Form 4227 for the appropriate action (e.g., correspondence, research, etc.).

  10. When perfection is not possible, edit Action Code 640 on the return and attach Form 4227 notating, "Perfection Not Possible" and leave in batch.

3.11.154.3.10.2  (01-01-2012)
Form 13596 - Reprocessing Returns

  1. Form 13596, Reprocessing Returns, is used to reprocess a return to the correct account or module that had previously posted to the wrong account or module.

  2. If the return was not edited according to current processing procedure, re-edit according to current processing instructions.

    Note:

    Do not edit CCC "G" on an amended return.

  3. Do not send Letter 1382C if a request for reasonable cause is attached.

  4. If the return was not edited according to current processing instructions, circle any Action Codes, Computer Condition Codes, and any other edit marks that are no longer applicable. Re-edit according to current processing instructions.

  5. If the return was edited according to current processing procedures, ensure that the information from Form 13596 is edited on the return.

    Form 13596 Action Taken
    TIN correction, Edit correct TIN on return.
    Tax period correction, Edit correct tax period on return.
    Reasonable cause, Edit appropriate computer condition code.
    1. Edit CCC " R" if the " Failure to File (FTF)" box is checked.
    2. Edit CCC "D" if the "Failure to Pay (FTP)" box is checked.

  6. Examine returns that have any color other than red edited in the tax data section to determine if the corrections are the result of improper perfection of taxpayer error.

    IF THEN
    Improper perfection, Edit the same correction in red to the appropriate area.
    Taxpayer error, Leave the entries as shown on the document.

  7. A received date must be present on all reprocessed returns.

    IF THEN
    Received date is not present, Edit a received date to the middle of the return.
    Multiple received dates are present, Circle out the green rocker and edit marks that may indicate a receipt of remittance.

  8. Circle out the green rocker and edit marks that may indicate a receipt of remittance.

  9. When additional information is still needed to make the return processable, prepare Correspondence Action Sheet Form 12522 (142C Letter) or Form 4227 for the appropriate action (e.g. correspondence, research, etc.).

3.11.154.3.11  (01-01-2012)
Correspondence Imaging System Returns- "CIS"

  1. Correspondence Imaging System "CIS" is an inventory system for scanning all Account Management (AM) receipts into digital images and working the cases from those images.

  2. "CIS" returns are identified with " CIS Image. Do not correspond for signature" stamped below the signature line or "CIS" annotated on the front of the return.

  3. Verify all edit marks on a "CIS" return.

    IF THEN
    The edit marks are in black, Underline the edit mark if correct or circle if incorrect.
    The edit marks are in red, Circle if incorrect.
    The edit marks are missing or incorrect, Perfect as necessary.

  4. Follow the instructions below for "CIS" Returns.

    IF AND THEN
    The "CIS" return has a Form 13596 attached,

    Note:

    If there is an indication on the return that correspondence has been sent (for example, CCC "3" is edited on the return), do not route the return to Accounts Management. Continue processing the return.

    		It is not a complete return (i.e., missing signature, schedules or forms), Remove the return from the batch and route to Accounts Management.

    Note:

    Do not correspond for missing information on "CIS" reprocessable returns.

    The "CIS" return does not have a Form 13596 attached, It is not a complete return (i.e., missing signature, schedules or forms), Follow normal correspondence procedures.

3.11.154.3.12  (01-01-2012)
Schedule H (Form 1040)

  1. Some taxpayers are filing Form 940 or Form 940-EZ (obsolete) with Schedule H (Form 1040) attached for tax years 1995 and later.

    1. IF THEN
      The liability for the Form 940, Revisions 2006 through 2011, is the same as the FUTA liability for Schedule H (i.e., Part 4, Line 12 is the same as Line 17 or Line 25 of Schedule H).


      For Revision 2005 and prior, Form 940 and Form 940-EZ (Obsolete) is the same as the FUTA liability for Schedule H (i.e., Line 7a of Part II of Form 940, or Line 6 of Part I of Form 940-EZ (Obsolete), is the same as Line 17 or Line 25 of Schedule H),       		1. Edit Form 940, Form 940-EZ (Obsolete) or Form PR as a non - taxable final return.

      2. Asterisk (*) out all money and (T) lines on the return.

      3. Detach and route Schedule H to IMF Code & Edit. Attach Form 4227 to Schedule H and notate: " Sch H attached to Form 940, 940-PR, or 940-EZ (Obsolete). Please process. Do not send Schedule H back to the taxpayer."

      4. Edit CCC "F" on the return.
      The liability for Form 940 (Revision 2008 and prior) or Form 940-EZ (Obsolete) , is not the same as the FUTA liability for Schedule H, 1. Edit as a taxable return.

      2. Detach and route Schedule H following Campus Routing Guide.

      3. Attach Form 4227 to Schedule H and notate: "Sch H attached to Form 940 or 940-EZ (Obsolete) . Please process. Do not send Sch H back to taxpayer" .
      The taxpayer makes a statement on Form 940 (Revision 2008 or prior), or 940-EZ (Obsolete), such as "My FUTA taxes will be reported and paid on Sch H" , and Form 940 or 940-EZ (Obsolete) reports no liability, 1. Edit as a final non - taxable return.

      2. Edit CCC "F" .

3.11.154.3.13  (01-01-2012)
Prompt, Quick and Jeopardy Assessments

  1. Returns requiring "prompt" , "quick " , "jeopardy" , or "termination assessments" will be received in Document Perfection accompanied by one of the following forms:

    • Form 2644, Recommendation for Jeopardy/Termination Assessment

    • Form 2859, Request for Quick or Prompt Assessment

    • Form 895, Notice of Statute Expiration

    • Form 3198, Special Handling Notice for Examination Case Processing

    • Form 5403, Appeals Closing Record

  2. Route these returns to Accounting.

  3. If the Form 2859 is attached to the return and there is a TC 59X with no received date, edit the received date on the return from the Date of Request box on the Form 2859.

3.11.154.3.14  (01-01-2012)
Substitute Forms Received from Preparers

  1. Some employers have been given permission by Headquarters to file computer-printed Forms 940.

  2. Computer-generated/computer-printed forms which do not conform to the official version should be given to your manager so that Headquarters can be notified. For example:

    • Different format

    • Cramped space between lines

    • Missing line items

    • Small size returns, etc.

3.11.154.3.15  (01-01-2012)
♦Frivolous Returns and Claims♦

  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) Exhibit 3.11.154-18.

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

    IF THEN
    The return meets any of the conditions shown in Exhibit 3.11.154-19,

    Caution:

    If the return shows Action Code 331 a CCC "X" and has a Form 4227 attached with the remarks "Refer to Exam FRP for audit after processing " , then continue to next procedure.

    		Remove the return from the batch and place the return in the locally designated basket for Examination, Frivolous Return Processing (FRP) for review.
    Examination has selected the return as frivolous, e.g. indicated by an Action Code 331 a CCC X and a Form 4227 with the remarks "Refer to Exam FRP for audit after processing" , and so the return is send for processing, Continue to process the return using the procedures in IRM 3.11.154. However, do not circle out or void the Action Code or CCC " X" indicating a frivolous return.

    Note:

    Returns having only zeros, no entries, are blank or indicate "None" , "Not Liable" , etc. with no evidence of a frivolous argument are not to be considered as frivolous returns.

3.11.154.3.16  (01-01-2012)
Criminal Investigation (CI) “Funny Box”

  1. 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 taxes due and/or taxes collected or withheld and claims of false refunds based on bogus return information.

  2. Pull any return identified as having any CI criteria's and place in the (CI) "Funny box" .

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3.11.154.3.17  (01-01-2012)
Cade 2

  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.

    Note:

    The CADE Master File, as it existed from 2004 – 2011, will transition from Production and be retired at the end of 201152.

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

  3. With CADE 2 there will be changes to campus cycles which will begin with cycle 201201.

  4. The new BMF campus cycles are:

    1. Campus Cycle: Thursday – Wednesday

    2. Master File Processing: Friday – Thursday

    3. Notice Review Saturday: Monday (8+ days)

    4. Unpostables: New available Tuesday; Closing Tuesday

  5. BMF transaction posting timeframes are outlined as follows:

    1. Transactions will be viewable using CFOL command codes on Saturday following the weekly Master File processing run on Thursday.

    2. Transactions will be viewable as posted transactions using IDRS command codes on Monday following the weekly Master File processing run on Thursday.

    Note:

    With the acceleration of the IDRS weekly analysis being performed the weekend directly after the Master File processing on Thursday, transactions will be posted instead of in pending status on Monday.

  6. 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:

    • 01 = Friday

    • 02 = Monday

    • 03 = Tuesday

    • 04 = Wednesday

    • 05 = Thursday

3.11.154.3.18  (01-01-2012)
Aggregate Returns and Choreworkers

  1. Aggregate returns will not be accepted unless the return shows "State" , " City" or "County" in the entity area, or "Notice 2003-70" , "Fiscal Agent" , " Fiscal Intermediary" , "Home-Care Service Providers" , "Household Employer Agent" , or "Choreworkers" noted on the return. These returns should be processed as submitted. If any of these notations are not present, correspond and send the return back to the taxpayer to inform them that they are not eligible to file an aggregate return.

    Note:

    This is a special procedure for aggregate choreworker FUTA returns only, and is an exception to our standard correspondence procedures.

    Note:

    We will no longer edit CCC "J" when the taxpayer requests abatement for Failing to Make Timely Deposits when the return is submitted. Send Letter 1382C, which will inform the taxpayer of the proper procedure to follow to request abatement, if, and when a penalty is assessed. If the taxpayer does not request abatement, but notates that they are filing an aggregate FUTA return, edit CCC "J" .

3.11.154.3.19  (01-01-2012)
Foreign Currency

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

3.11.154.4  (01-01-2012)
♦ Protective Claims ♦

  1. Returns marked as "Protective Claim" , "Protective Refund" "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.

3.11.154.5  (01-01-2012)
♦ Entity Perfection ♦

  1. The entity area of a tax return identifies the taxpayer on the Business Master File. The entity section of the return contains the following:

    1. Check Digits (on preprinted label).

    2. Employer Identification Number.

    3. Name.

    4. Address. Figure 3.11.154-4

    Figure 3.11.154-4

    This image is too large to be displayed in the current screen. Please click the link to view the image.

  2. There are two types of entities:

    1. Preaddressed - an IRS preprinted label (with check digits) Figure 3.11.154-5

    2. Non-preaddressed - Handwritten or typed (no check digits). Figure 3.11.154-6

      Note:

      Some forms have IRS labels printed under the National Change of Address (NCOA) program. These returns can be identified by either a solid black line or by pound signs above and to the left of the entity area. These returns do not contain Check Digits and are not considered to be pre-addressed.

      Note:

      When perfecting the entity always asterisk and line through the entry that is not to be transcribed. If the taxpayer has lined through a portion of the entity also place an asterisk to the left of the entry that is not to be transcribed.

    Figure 3.11.154-5

    This image is too large to be displayed in the current screen. Please click the link to view the image.

    Figure 3.11.154-6

    This image is too large to be displayed in the current screen. Please click the link to view the image.

3.11.154.5.1  (01-01-2012)
♦ Entity Perfection - Employer Identification Number (EIN) ♦

  1. The EIN is a nine-digit number (XX-XXXXXXX) assigned to identify the taxpayer.

  2. The EIN is located on the top of the form (" Employer Identification Number" box) or under the title of the form on preprinted label returns.

    1. Examine the pre-addressed label below.

    2. The check digits are missing so you will underline the name control.

    3. In this example, the Name Control is the first four letters of the last name. Figure 3.11.154-7

    Figure 3.11.154-7

    This image is too large to be displayed in the current screen. Please click the link to view the image.

  3. Determine the EIN as follows:

    1. Preaddressed returns:

      IF AND THEN
      The taxpayer changes the EIN, also changes the first name line, 1. Underline the Name Control.
      2. Edit an asterisk (*) to the left and line through the check digits (if present).
      3. Continue processing the return.
      There is any major change to the first name line, the EIN is not changed, The return is unprocessable.

      1. Route to Entity Control following local procedures for assignment of a new EIN.
      There is an EIN change by the taxpayer, no change to the first name line, 1. Research IDRS.

      2. If a new EIN is located on IDRS, asterisk (*) to the left of the EIN and line through the old EIN and Check Digits, if the taxpayer has not already done so.
      3. If unable to locate EIN, route to Entity. Figure 3.11.154-8
      The return was given a new EIN by Entity Control, is notated "TC 011" or "IDRS EIN" (entity has already taken the necessary action), 1. Underline the Name Control.
      2. Asterisk (*) to the left and line through the Check Digits and old EIN, if present. Figure 3.11.154-9

      Figure 3.11.154-8

      This image is too large to be displayed in the current screen. Please click the link to view the image.

      Figure 3.11.154-9

      This image is too large to be displayed in the current screen. Please click the link to view the image.

    2. Non-Preaddressed Returns:

      IF AND THEN
      The EIN is missing, You cannot determine the correct EIN from the attachments and/or schedules, Send for research per IDRS. If unable to locate EIN, prepare Form 4227 with notation of "EIN research" and sent to Entity.
      The EIN is either a PTIN or ITIN, Unnumbered 1. Remove return from batch.
      2. Route to Entity Control following local procedures for EIN assignment.
      Numbered 1. Edit Action Code 320.
      2. Attach Form 4227 for routing to Entity Control.
      3. Leave document in batch.
      Multiple EINs are present, Unnumbered 1. Remove return from batch.
      2. Attach From 4227 or follow local procedures.
      3. Route to Entity for EIN assignment.
      Numbered 1. Edit Action Code 320.
      2. Attach Form 4227 and leave in the batch.
      The EIN contains any of the following conditions and cannot be determined from attachments and/or schedules:

      • Illegible

      • Missing

      • Other than 9 digits

      • All zeroes

      • All nines

      		 Unnumbered 1. Research IDRS.
      2. If found, edit to the proper location.
      3. If not found, route to Entity Control following local procedures.
      Numbered 1. Asterisk (*) to the left and line through the illegible EIN, zeroes, or all nines..
      2. Edit Action Code 320.
      3. Attach Form 4227 and leave in the batch.
      "Pending" , "applied for" , etc., is indicated in the EIN area, Unnumbered 1. Research IDRS.
      2. If found, edit to the proper location.
      3. If not found, route to Entity Control following local procedures.
      Numbered 1. Edit Action Code 320.
      2. Attach Form 4227 and leave in the batch.
      "Pending" "Applied For " etc. is indicated in the EIN area, Unnumbered 1. Research IDRS.
      2. If found, edit to the proper location.
      3. If not found, route to Entity Control following local procedures.
      Numbered 1. Edit Action Code 320.
      3. Leave return in batch.

  4. If Page 1 and Page 2 of Form 940 and 940-PR (Rev 2005 or subsequent) are on a separate sheets make sure that the EIN is present on page 2 and matches the EIN in the entity of the first page. If the EIN is missing on Page 2, edit the last 4 digits of the EIN in the proper location. If the EIN on page 2 does not match the EIN in the entity of the first page, edit an asterisk to the left of the EIN on page 2 and edit the last four digits of the EIN to the left of the asterisk. Also ensure the EIN on Schedule A matches the EIN in the entity area of the first page of Form 940 or 940-PR. If the EIN does not match, asterisk (*) to the left and line through the EIN and enter the last 4 digits of the correct EIN. Also, enter the last 4 digits, if there is no taxpayer entry.

  5. Listed below are the most common conditions which would indicate that a new EIN should be assigned by Entity:

    1. Individual owner dies and estate takes over business.

    2. Individual owner dies, Surviving Spouse takes over when no estate is involved.

    3. Individual ownership changes to corporation.

    4. Individual ownership changes to partnership.

    5. Partnership changes to individual ownership or disregarded entity (except where the resulting Business changes from an individual owner to another individual owner).

    6. Partnership changes to corporation (except for elective change caused by filing Form 8832).

    7. Corporation changes to individual ownership or disregarded entity (except where the resulting owner already has an EIN).

    8. Corporation changes to partnership (except for elective change caused by filing Form 8832).

    9. Sole proprietor indicates bankruptcy. Figure 3.11.154-10 and Figure 3.11.154-11

    Figure 3.11.154-10

    This image is too large to be displayed in the current screen. Please click the link to view the image.

    Figure 3.11.154-11

    This image is too large to be displayed in the current screen. Please click the link to view the image.

3.11.154.5.2  (01-01-2012)
♦ Entity Perfection - Name Control ♦

  1. The name control consists of four characters or less.

    1. Valid characters are alpha, numeric, ampersand (&), hyphen (-), and blank. However, blanks are only valid in the last three positions.

    2. Disregard the word "The" in the Name Control only when more than one word follows.

    Note:

    If an individual and a trade name are present and it can be determined that the trade name is for a corporation or partnership, follow the Name Control procedures for corporations or partnerships. If other than a corporation or partnership, follow the Name Control procedures for individuals, regardless of which line the individuals owner's name is listed.

  2. See Job Aid Document 7071A to properly determine the Name Control.

  3. Edit the Name Control as follows:

    1. Preaddressed return ( a return with check digits):

      IF AND THEN
      Check digits are present, No changes were made to the IRS label by the taxpayer, No editing is necessary.
      A first name line change clearly relates to the same taxpayer, Is a minor change that does not affect the Name Control, Input Transaction Code 013. A new EIN is not needed. Figure 3.11.154-12
      There is a change to the first name line and the EIN is not changed,

      Note:

      If the EIN was changed, see the instructions for (Entity Perfection - EIN) instructions.

      		 Unnumbered, 1. Remove return from batch.
      2. Route to Entity Control following local procedures.
      Numbered, 1. Edit Action Code 320.
      2. Attach Form 4227 and leave in batch.
      A change to the second Name Line,   1. Notate TC 016 in the upper left margin of the return.
      2. Input TC 016.
      There are any questionable entity changes, Unnumbered, Remove return from batch and route to Entity.
      Numbered, 1. Edit Action Code 320.

      2. Attach Form 4227 and leave in batch.

      Figure 3.11.154-12

      This image is too large to be displayed in the current screen. Please click the link to view the image.

    2. Non-preaddressed return (a return with a label that has been altered, hand-written, typed, or computer generated.)

    Note:

    If a return indicates the taxpayer has filed bankruptcy (e.g. shows "receiver" , "trustee" , or "debtor in possession" in the entity area, signature line or an attachment), route to Entity.

3.11.154.5.3  (01-01-2012)
Entity Perfection -"In Care of" Name

  1. An "in care of name" can be identified by the words "in care of" or the symbols "c/o" or "%" (percent).

  2. Ensure that the "in care of name" is located above the street address.

    IF THEN
    The "in care of name" is located on the street address line preceding the street address, No editing is required.
    The "in care of name" is located below the street address,
    1. Edit an asterisk (*) and line through the "in care of name" .
    2. Edit the "in care of name" above the street address beginning with the % or c/o in the first position.
    3. Continue processing the return.
    The "in care of name" is shown on an attachment, 1. Edit the "in care of name" above the street address beginning with the % or c/o in the first position.
    2. Continue editing the return.
    The street address for the "in care of name" is different from the street address of the employer,
    1. As necessary, asterisk (*) and line through the "in care of" street and edit below the "in care of name" , or edit the "in care of" street address below the "in care of name" , if located on an attachment.
    2. Edit an asterisk (*) to the left and line through the business address and input TC "014" .
    3. Continue editing the return.

    Note:

    Asterisk (*) to the left and line through the in care of symbol c/o or %, if it is present with an address. Do not use the ampersand (&) or the percent sign (%) when editing address information.

  3. If the taxpayer crosses out the original "in care of name" , or adds a new "in care of name" , they are indicating that the "in care of name" has been changed.

    IF THEN
    An "in care of name" is changed but there is no indication of an address change, 1. Edit the "in care of name" .
    2. Continue editing the return.
    An "in care of name" is present and there is an indication of an address change, 1. Edit the in care of name.
    2. Correct the address.
    3. Continue to process the return.

3.11.154.5.4  (01-01-2012)
♦ Entity Perfection - Domestic Addresses ♦

  1. Perfection of the address is necessary when the mailing address (Street or P.O. Box) is not easily identified. For a list of correct street abbreviations, see Document 7071A.

    Exception:

    Do not perfect the address on amended returns (CCC "G" ).

  2. If the return requires that the city, state, or ZIP Code be changed, edit an asterisk (*) to the left and line through the incorrect entity and enter the correction in the entity where space allows.

  3. The procedures for perfection of address for preaddressed returns indicating an address change and non-preaddressed returns are as follows:

    IF AND THEN
    The address contains information other than a street address or P.O. Box,   No perfection is necessary. ISRP and SCRIPS will enter the complete address.
    There is an indication on an attachment that the address has been changed,   Edit the new address in the Entity section of the return.
    Form 8822, Change of Address, is attached, Information is the same, Take no action.
    Information is different, 1. Detach Form 8822 and route to Entity.
    2. If necessary, edit the address shown on the Form 8822 to the return.
    3. Route Form 8822 to Entity Control.
    Both a P.O. Box and a street address are shown,   1. Asterisk (*) to the left and line through the street address.
    2. Notate "TC 014" in the upper left margin and route for input of a "TC 014" .
    Two street addresses are shown,   1. Asterisk (*) to the left and line through the second street address.
    2. Notate "TC 014" in the upper left margin and route for input of a "TC 014" . Figure 3.11.154-13

    Note:

    The lined through address information will be input on IDRS before the return leaves Code & Edit (C&E).
    One street address is shown, the taxpayer changes the address to a P.O. Box, 1. Asterisk (*) to the left and line through the street address, if the taxpayer has not already done so.
    2. Notate "TC 014 " in the upper left margin and route for input of a "TC 014" . Figure 3.11.154-14

    Note:

    The lined through address information will be input on IDRS before the return leaves Code & Edit.
    The city and state are not shown on the return but are shown on an attachment,   Edit the city and state on the form in the Entity section.
    The Zip Code is missing or illegible, Is not available from the return or attachments, Exhibit 3.11.154-13

    Note:

    Edit the three digits followed by 01 of the first zip code listed for the applicable state (e.g., "99501" for Alaska).

    Only the first three digits of the Zip Code can be determined,   Edit "01" for the fourth and fifth digits.
    The address is blank or incomplete on the return or attachment,   Leave blank and allow to fall out to ERS.

    Exception:

    Only correspond if the return is being sent back to the taxpayer for additional information.

    Figure 3.11.154-13

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    Figure 3.11.154-14

    This image is too large to be displayed in the current screen. Please click the link to view the image.

    Note:

    Always asterisk (*) to the left and line through the "care of" symbol (c/o or %) if it is present with an address. Do not use the ampersand (&) and the percent symbol (%) when editing address information.

  4. The U.S. Postal Service established new address requirements for Army Post Office (APO)/Fleet Post Office (FPO) and Diplomatic Post Office(DPO) addresses. If the old address appears, convert to the new state code abbreviation based on the zip code (e.g., APO New York, NY 091XX would be converted to APO AE 091XX). APO/DPO/FPO addresses are considered domestic addresses. Refer to the Conversion Chart below:

    Zip Code State Code
    340 AA
    090-098 AE
    962-966 AP

3.11.154.5.5  (01-01-2012)
♦ Entity Perfection - Foreign Addresses ♦

  1. A foreign (international) address is any address that is not in the 50 states or the District of Columbia.

  2. Returns with APO/DPO or FPO addresses are considered domestic Addresses. IRM 3.11.154.5.4

    Note:

    All returns with a Foreign Address will be processed through ISRP. If the return is batched for SCRIPS processing, after editing, pull the return from the batch and request the return be batched for ISRP processing. If numbered take the necessary steps to cancel the DLN.

  3. Route returns with a foreign address to Ogden Submission Processing Center (OSPC) for processing. Prepare 86C letter to inform the taxpayer that the return has been sent to OSPC.

  4. Returns with addresses in the following U.S. Possessions are considered to be a foreign address for processing purposes but are edited in the same way as domestic addresses.

    1. A two-character alpha code must be edited for the possession name.

      U.S. POSSESSION ABBREVIATION
      American Samoa AS
      Federated States of Micronesia FM
      Guam GU
      Marshall Islands MH
      Northern Mariana Islands MP
      Palau PW
      Puerto Rico PR
      Virgin Islands (U.S.) VI

    2. A ZIP code must be present for U.S. Possessions/Territories. Edit the appropriate ZIP code if one is not provided. See Exhibit 3.11.154-13 and Exhibit 3.11.154-14.

  5. All other foreign addresses are edited the same as a domestic address with the following exceptions:

    1. The foreign country must be the last entry in the address.

    2. Edit and asterisk and line through the foreign country and edit the country code preceded by a "/" and followed by " /$" . Exhibit 3.11.154-15 for official foreign country codes.

    3. A unique country code will be edited for returns filed with an address in Canada. See "County Code Canada" IRM 3.11.154.4.6.

    4. If the foreign address is from Australia, Brazil, Canada, Cuba, Italy, Mexico, or The Netherlands, check if the address contains a province, state or territory.

      IF THEN
      A province, state, or territory name is present, 1. Edit the appropriate providence, state, or territory abbreviation . Exhibit 3.11.154-16
      A province, state or territory is not present, Continue editing the return.
      Province, state or territory is shown in abbreviated format, Continue editing the return.

    5. A ZIP code is not required on a foreign address. Foreign addresses use a postal code that is entered before the city or foreign country and is part of the address.

3.11.154.5.6  (01-01-2012)
Country Code- Canada

  1. In an effort to assist Compliance with workload assignment, returns filed with an address in Canada will be edited using a unique country code based on the providence/territory.

    IF THEN
    The foreign address contains a Canadian Province /Territory name, or abbreviation shown in the table below, 1. Edit an asterisk and line through the country name.
    2. Edit the appropriate country code based on the providence/territory preceded by a "/" and followed by a "/$" as the last entry in the address.
    The foreign address does not contain a Canadian Providence/Territory name or abbreviation shown in the table below, 1. Edit an asterisk and line through the country name.
    2. Edit the country code "/CA/$" as the last entry in the address.
    Canadian Province/Territory Province Abbreviation Country Code
    Alberta AB XA
    British Columbia BC XB
    Manitoba MB XM
    New Brunswick NB XN
    Newfoundland and Labrador NL XL
    Northwest Territories NT XT
    Nova Scotia NS XS
    Nunavut NU XV
    Ontario ON XO
    Prince Edward Island PE XP
    Quebec QC XQ
    Saskatchewan SK XW
    Yukon YT XY

3.11.154.5.7  (01-01-2012)
♦ Entity State Codes ♦

  1. An Entity State Code is required on ALL Forms 940.
    Exception: "G" coded returns (Amended) or an Entity containing an International address other than Puerto Rico or Virgin Islands.

  2. Perfect the Entity State code as follows:

    IF THEN
    The State code is present and in a 2- digit format (e.g. MT for Montana), No action is necessary.
    The State is spelled out in full, No action is necessary.
    No State or State code is present in the entity portion of the return, 1. Search return and attachments for State code.
    2. If found, edit to the entity section.
    3. If not found, research IDRS.

    Note:

    The state code on Line 1a of the 940/940-PR form (Revisions 2006 through 2011) can be used if ONLY one state is present.

    For Revision 2005 and prior, the state code shown on Form 940, Part II, Line 3a can be used if ONLY one state is present.

    For Revision 2005 and prior, the state code on Line B(1) of Form 940-EZ converted to Line 1a of Form 940 can be used.

    For Revision 2005 and prior, the state code on Part III, Line 3(a) of the 940-PR can be used, if only one state is present.


    OSPC ONLY -A return is filed with a foreign address, Edit country code. Exhibit 3.11.154-15

3.11.154.6  (01-01-2012)
Form 940 and Form 940-PR - Procedures for Coding & Editing Returns (Revisions 2006 through 2011)

  1. For editing Form 940/940-PR (Revisions 2006 through 2011), follow procedures below:

    1. For Editing, IRM 3.11.154.2.1

    2. For Third Party Designee Returns, IRM 3.11.154.2.16

    3. For Signature, IRM 3.11.154.2.18

    4. For Tax Period, IRM 3.11.154.2.19

    5. For Received Date, IRM 3.11.154.3.3

    6. For Indian Tribal Returns, IRM 3.11.154.3.5

    7. For Entity Perfection, IRM 3.11.154.5

3.11.154.6.1  (01-01-2012)
Type of Return Boxes - Form 940/940-PR (Revisions 2006 through 2011)

  1. The "Type of Return" box can be found in the upper right hand corner, to the right of the entity area, of the redesigned Form 940 (Revisions 2006 through 2011). Exhibit 3.11.154-1 and Exhibit 3.11.154-2

    IF THEN
    Box "a" is checked The taxpayer is signifying that this is an amended return. Edit CCC "G" .
    Box "b" is checked, The taxpayer is signifying that they are entitled to special credits as a successor employer and have based their calculations on that fact. Edit CCC "5" .
    Box "c" is checked, The taxpayer is signifying that no payments were made to employees during the tax year. The return can be blank, or contain zeroes, dashes, or some other indication that no payments were made to employees. Edit CCC "9" .
    Box "d" is checked, The taxpayer is signifying that this is their final return or they stopped paying wages. Edit CCC "F" .
    The taxpayer does not check a box, but indicates on the return or on an attachment that any of the four boxes applies to the return, 1. Enter the Computer Condition Code, as appropriate.
    2. Check the box, as applicable.
    A box is marked erroneously, Place an asterisk (*) as closely as possible to the left of the box.
    An example of a box that would be considered to be marked erroneously would be a return that the taxpayer has marked "Amended." However, Code & Edit receives the return with a "TC 599" notation on the return. Since returns notated "TC 599" cannot be "G" coded, the check box must be deleted.

3.11.154.6.2  (01-01-2012)
Part 1 of Form 940/940-PR (Revisions 2006 through 2011 ) - Single Multi-State and Credit Reduction Boxes

  1. Box "1a" will be used by single state filers. The taxpayer will enter the state abbreviation in Box "1a" . Box "1b" is used by multi-state filers. Exhibit 3.11.154-1 and Exhibit 3.11.154-2

    Note:

    "G" Coded returns are not edited.

  2. Box "2" is used by taxpayers who have paid wages in states that are subject to credit reduction. Credit reduction applies to Tax Years 1974, 1976, through 1987, 1991, 1992, 2004, 2005, 2009, 2010 and 2011 returns. Exhibit 3.11.154-1 Exhibit 3.11.154-2


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