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Part 3. Submission Processing

Chapter 12. Error Resolution

Section 3. Individual Income Tax Returns

3.12.3  Individual Income Tax Returns

All Official Use Only content has been replaced with ≡.

3.12.3.1  (01-01-2010)
Introduction

  1. This section of the Internal Revenue Manual (IRM) provides instructions for Individual Master File (IMF) Error Resolution System (ERS) processing. The instructions in this manual are for correcting the following:

    1. Errors made by taxpayers and tax preparers.

    2. Errors made during return processing.

  2. The instructions in this manual are for Forms 1040, 1040A and 1040EZ.

  3. Throughout this manual, forms will be referred to by numbers only and schedules will be referred to by letters only.

  4. The following introductory information is contained in this subsection of the manual:

    • General Guidelines

    • Organization of Text

3.12.3.1.1  (01-01-2010)
General Guidelines

  1. Instructions in this manual are for a typical return. Apply the instructions, as far as possible, when a unique situation exists. Refer any unusual situations and complex cases to Lead Tax Examiner.

  2. Lines in this manual marked with "#" are for official use only and must not be disclosed.

  3. This manual is the main source of information on correcting the record on the screen and the related return. Other procedures may be found in the following IRMs:

    1. IRM 3.12.37, General Instructions — Contains general instructions for correcting records on the screen, document control, inventories and management reports.

    2. IRM 3.11.3, Returns and Document Analysis, Individual Income Tax Returns — Contains coding and editing procedures.

    3. IRM 3.0.273, Administrative Reference Guide — Contains supplemental information that is common to all Part 3 IRMs.

      Note:

      Use the instructions in other IRMs only when specifically instructed in this IRM to do so.

  4. An ERS Job Aid (2515–015) was developed as a reference guide for this manual. This manual refers the tax examiner to appropriate explanatory information or exhibits in the Job Aid. When a conflict between any reference or training material and this manual occurs, the manual instructions take precedence.

3.12.3.1.2  (01-01-2010)
Organization of Text

  1. This manual is organized so that correction procedures can be located quickly. All related procedures are contained in a single location, whenever possible.

  2. The text is organized as follows:

    • General Information

    • Special Procedures

    • Suspense Correction

    • Field Errors (Priority III)

    • Error Codes (Priority IV)

    • Exhibits

    • No Reply Instructions

    • No Reply To Correspondence

3.12.3.2  (01-01-2010)
General Information

  1. The general information contained in this subsection of the manual are:

    • Background

    • Perfecting the Tax Return and Error Screen Display

    • Command Codes

    • Revalidating with OLE

    • Taxpayer Notice Code (TPNC)

    • Computer Assisted Review of Error Resolution System (CARE)

    • Computer Assisted Pipeline Review (CAPR)

    • Correspondence Procedures

    • Types of Errors

3.12.3.2.1  (01-01-2010)
Background

  1. Records will be placed into the Error Inventory or the Workable Suspense Inventory for correction.

  2. You must do one of the following when the error record is displayed on the screen:

    1. Correct the displayed Error Codes or displayed invalid conditions.

    2. Suspend document for additional information.

    3. Remove document from pipeline processing.

  3. ERS screen display corrections may also include correcting errors in editing & transcribing, or in the case of taxpayer errors, notifying the taxpayers of the error on return.

3.12.3.2.2  (01-01-2010)
Perfecting the Tax Return and Error Screen Display

  1. The following information will be shown in the header portion of each error record on the Error Screen Display:

    • Document Locator Number (DLN)

    • Social Security Number (SSN) or IRS Individual Taxpayer Identification Number (ITIN)

    • Check Digits or Name Control, if present

    • Previously assigned Taxpayer Notice Code(s)

3.12.3.2.2.1  (01-01-2010)
Document Locator Number

  1. A DLN is the unique number assigned to every return processed by the Automatic Data Processing (ADP) Systems.

  2. The DLN is used to control, identify and locate a document.

  3. Always make certain that the DLN on the Error Screen matches the DLN of the document before making any corrections to the screen display. See IRM 3.12.3.2.2.1.3.

3.12.3.2.2.1.1  (01-01-2010)
Julian Date

  1. A Julian Date is the numeric day of the year. For example, April 15, 2009, is Julian Date 105, the 105th day of 2009.

  2. The sixth, seventh, and eighth digit in a DLN make up the Julian Date.

3.12.3.2.2.1.2  (01-01-2010)
Sequence Number

  1. The twelfth and thirteenth digits of the DLN are the sequence number.

    1. Returns in a block are numbered from "00" to "99" .

    2. The maximum number of returns in a numbered block is 100.

    3. Numbered returns in a block should stay in sequence number order.

3.12.3.2.2.1.3  (01-01-2010)
Mixed Data

  1. Before making corrections to the Error Screen Display, make certain that the DLN of the screen display matches the DLN of the Document.

  2. Mixed data situations exist when either of the following are present:

    1. Information from two different tax returns appear on the error record under one DLN.

    2. The information on the return for the DLN does not match the return on the screen display.

  3. Take the following actions on mixed data situations:

    1. Stop processing.

    2. Give the block of work to your manager.

      Note:

      Management will decide if the mixed data situation can be corrected via the terminal, or if the individual returns must be deleted and re-input.

3.12.3.2.2.2  (01-01-2010)
Corrections

  1. Make certain the taxpayer's entries are on the appropriate lines of the tax return.

  2. Check and correct all coding and transcription errors on the screen display.

  3. Follow all instructions for each Error Code or displayed invalid condition.

3.12.3.2.2.2.1  (01-01-2010)
Internal Use Forms

  1. Form 3471, Edit Sheet — This form is used to edit unallowable conditions. Generally edited by Code and Edit or Examination.

  2. Form 4227, Intra-SC Reject/Routing — This form is used when special conditions require additional research, referral and/or action before document can be processed.

  3. Form 6001, Letter 12C Correspondence Action Sheet — This form is used to generate a 12C Letter to the taxpayer asking for additional information needed to continue processing their tax return.

3.12.3.2.2.2.2  (01-01-2010)
Working Trails

  1. A working trail is a written and legible statement placed on a document as a record of action taken. They are used when information may be needed for other campus functions to accurately process tax returns.

  2. ERS working trails will be determined locally by each campus.

  3. Working trails can contain the following:

    • SSN

    • Information about detached documents (i.e., detached Form 1040X, etc.)

  4. A working trail must also be written on any detached document. The following information, if present, must be indicated in the working trail of the detached document:

    1. Current date if before April 22, 2009.

    2. The received date of the return if April 22, 2009 and after.

    3. Tax period of return in YYYYMM format.

3.12.3.2.2.2.3  (01-01-2010)
Attachments to Returns

  1. You must take the appropriate action as defined in the Attachment Guide Exhibit 3.12.3–10 when you are led to and find a taxpayer correspondence or attachment to a return.

    Note:

    You are not required to search for attachments or correspondence unless specifically instructed to in the section or error code; however, you should be conscientious in taking the appropriate action on any attachments or correspondence found. Particular attention must be paid to remittances in the form of checks, money orders, etc. If check or money order is found see manager or lead.

3.12.3.2.2.2.4  (01-01-2010)
Missing Signatures

  1. A signature is required, below the jurat (perjury statement), on most returns.

    Exception:


    a. Faxed copies with the annotation "Process as Original-Faxed Copy."
    b. ELF prints being processed as an original with a Temporary SSN, even when there is not a copy of Form 8453 attached or they were "PIN" signed.

  2. Joint returns require the signature of both taxpayers.

    Exception:

    When a notation indicates that the spouse is:

    1. Deceased and taxpayer is filing as the surviving spouse

    2. A POW-MIA

    3. Handicapped

    4. Unable to sign the return for reasons of health

    5. In a combat zone

  3. One signature is acceptable on a joint return when a Power of Attorney (POA) is attached and the POA is valid for both taxpayers.

  4. If return is filed by a guardian, personal representative, executor, trustee, or fiduciary, the return must contain a live signature and supporting documentation that the appointee has the legal right to file on behalf of the taxpayer. If supporting documentation is not attached SSPND 211.

  5. If the taxpayer is a minor child and tax return is:

    1. Signed by a parent — never requires documentary evidence such as birth certificate, but the parent must sign as "Parent for Minor Child" .

    2. Signed by a guardian or other fiduciary designee — ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

  6. Suspend using SSPND 225 to correspond for a missing signature only unless:

    Exception:

    For a return that meets the criteria of an Economic Stimulus Payment see 3.12.3.3.16 (7).

    1. "Substitute for Return Prepared by IRS" is noted or "dummy" return.

    2. "Section 6020(b)" or "prompt assessment" is noted or Form 4810 is attached.

    3. Return is "amended" , "corrected" , "revised" , "tentative" , or "superseding" .

    1. Note:

      You are not required to inspect returns for missing signatures since no Error Code will appear for a missing signature; however, if you are led to the signature area of the return and it is not signed, you should take the appropriate actions.

      Exception:

      When corresponding for other missing information, you are required to correspond for a missing signature.

3.12.3.2.2.2.5  (01-01-2010)
Missing Schedules

  1. You are not required to prepare a "Dummy" schedule when a return has a missing schedule and Code and Edit has not prepared a dummy schedule from attachments.

3.12.3.2.2.2.6  (01-01-2010)
Money Fields

  1. For Forms 1040 and 1040A, ISRP will transcribe:

    1. All money fields from page 1 as dollars only.

    2. All money fields from page 2 up to and including Household Employment Taxes as dollars only.

    3. All Section 05 fields, and Total Tax from Section 04 as dollars and cents.

    4. All attachment schedules/forms as dollars only

    Note:

    ISRP will continue to transcribe all of Form 1040EZ as dollars and cents.

  2. Some of the fields that are transcribed as dollars only will display in ERS as dollars and cents (i.e., two zeros computer generated for cents).

  3. If any field displays with "**" , any correction to that field must be input as dollars only. If the field displays without "**" , the field must be input as dollars and cents.

3.12.3.2.2.2.7  (01-01-2010)
Clear Code C and 000

  1. A field labeled "CL" will be displayed for the entry of a Clear Code when there is a possibility that a change or correction may not be needed. This field is located on line 4 of the screen display, to the right of CRECT. These records are cleared by either of the following actions:

    1. Correcting the error condition and transmitting.

    2. Entering Clear Code "C" to indicate no correction is needed.

    Note:

    If a correction is made, you must transmit prior to entering the Clear Code "C" .

  2. Unfinished records from the previous day will not contain any of the "C" Clear Codes that were assigned to the record. All Clear Codes are removed by the system for the new day's inventory. Programming will erase all "C" Clear Codes when a record has been suspended with the CC SSPND.

  3. Use the numeric "000" as a Clear Code to delete invalid or erroneous Action Codes when there is no reason to suspend the record.

  4. Clear Action Codes 410 and 700 before resolving other errors in a record. All other Action Codes, enter "C" in the Clear Code Field after corrections for the Action Code have been completed.

3.12.3.2.2.2.8  (01-01-2010)
Entity Information

  1. Input entity changes when any acceptable written notification, as defined in the following, is received from the taxpayer and you are led to the Entity area:

    1. Written notification signed by the taxpayer informing the Service he/she wants their address changed.

    2. IRS correspondence returned by the taxpayer with new address information. No signature is required.

    3. A return (including an amended return) filed by a taxpayer with new address information.

    4. Form 8822, Change of Address, is attached to the return. Enter as intermediate or long entity.

3.12.3.2.2.2.9  (01-01-2010)
Miscellaneous Payments

  1. When taxpayers attach a state income tax return with their federal return, detach and route the state income tax return to the Receipt & Control Branch. Receipt & Control will route the return to the appropriate state taxing agency. If the state income tax return is not attached, but the taxpayer is attempting to pay "state income tax" on the federal return, assign Taxpayer Notice Code 298.

  2. A Presidential Task Force has determined that taxpayers can make a contribution to reduce the Public Debt. Certain tax packages contain a message from the Commissioner telling taxpayers that they may send a separate check made out to the Bureau of Public Debt with their tax returns. If a check made out to the Bureau of Public Debt is found attached to the return, route to Receipt & Control.

3.12.3.2.3  (01-01-2010)
Command Codes

  1. Use the appropriate Command Codes (CC) when correcting the Error Inventory and the Workable Suspense Inventory or when additional research is necessary. The ERS and IDRS Command Codes are as follows:

    ERS COMMAND CODES
    COMMAND CODE DESCRIPTION
    CRECT Used to enter a correction.
    DLSEC Used to delete a section from the data record.
    GTREC Used to access the first error in a block in the Error Inventory or a specific record in the Workable Suspense Inventory. It can also be used to redisplay any uncorrected error.
    GTSEC Used to obtain the display of any section of a record in process.
    NWDLN Used to change (renumber) the DLN and MFT of the record and reject the record.
    RJECT Used to reject a record from ERS.
    SSPND Used to enter an Action Code and place a record in suspense.
    TRDBV Used to obtain the display of edited, transcribed, and corrected data from ELF and Telefile returns for tax year 1998 and later.
    TRERS Used to link the DLN entered with the command code GTREC with the TRDBV and display the electronic return.

    IDRS COMMAND CODES
    COMMAND CODE DESCRIPTION
    ENMOD Used to request the entity module for a specific Taxpayer Identification Number.
    ENREQ Used to input entity changes for all master files.
    ENREQR Used to input CC IRCHG.
    ERINV Used to research a DLN or TIN on the ERS Control File.
    IMFOL Will display entity and tax module information on-line for query access.
    INCHG Response to CC ENREQ for IMF and IRAF accounts. This is a generated command code with a screen format.
    INOLE Used to access the most current entity data from the national (NAP) files.
    IRCHG Response to CC ENREQR. Used to add a name control to the valid name controls for a given TIN (make an account "IRS valid" ). Initiates an account merge of the valid and invalid TINs for a given account.
    IRPTR Contains entity data, cross reference information, DOD/DOB, and income summary information. CC IRPTR is available for researching information (before or after correspondence), to determine items such as gross social security benefits, withholding, social security tax withheld, and Medicare tax withheld. IRPTR is updated monthly. On-line research will be available for the current tax year plus the two previous years. It is anticipated that in late July the current years data will post and the data older than three years will be dropped.
    NAMEB Name and address data is entered to research a missing EIN.
    NAMEE Name and address data is entered to research a missing EIN.
    NAMEI Name and address data is entered to research a missing SSN.
    NAMES Name and address data is entered to research a missing SSN.
    RTVUE Contains edited, transcribed, and corrected data from data entry lines of returns and related forms and schedules filed in the current processing year (including two prior tax years).
    TXMOD Used to research a specific tax period for a specific type of tax.

    Note:

    Additional information is contained in IRMs 3.12.37, 2.3, and 2.4 and Job Aid 2515-015.

  2. SSPND 351 when IDRS is unavailable.

3.12.3.2.4  (01-01-2010)
ERROR RESOLUTION SYSTEM Action Code

  1. Description — ERS Action Code indicates that specific information is missing, suspended, or removed from processing. ERS Action Codes will have sufficient detail to indicate if correspondence, in-house research, or other action(s) are required. Exhibit 3.12.3-3 explains the Action Codes.

  2. Code and Edit tax examiners assign Action Codes to numbered returns that are unprocessable, require research, correspondence, etc. The code is entered on the lower center margin of the return.

  3. Correspondence Action Sheets (Form 6001) are attached by Code and Edit for initiating correspondence. Action Codes will generally be sufficient with no further explanations, when routing within the campus for in-house research.

  4. The Action Code assigned by Code and Edit is transcribed and kept as part of the Form 1040 record. It will always display as a Priority 1 Error.

  5. Correction Procedures — Use CC SSPND, RJECT, or NWDLN to enter an Action Code on the record, correct an invalid code, resuspend, or delete a record from ERS. If the Action Code assigned by Code and Edit is invalid or incomplete, use "000" as a Clear Code to delete invalid or erroneous Action Codes when there is no reason to suspend the record.

    Note:

    Only one Action Code can be assigned at one time to a record from ERS

    .

  6. Enter a valid Action Code with CC SSPND to clear the record from the screen and place it in either Workable or Unworkable Suspense.

  7. Enter CC RJECT to delete the ERS record from ERS Inventory and the Service Center Control File (SCCF). Only Action Codes 620, 630, 640, 650, 660 and 670 are valid with CC RJECT.

  8. Enter an Action Code with CC NWDLN to delete the record from ERS and the SCCF and establish a new DLN for input.

3.12.3.2.5  (01-01-2010)
Revalidating With OLE

  1. ERS allows for the on-line revalidation of the TIN and Name Control using the Online Entity System (OLE). Corrections made in ERS to TIN and Name Control will revalidate by accessing the National Accounts Profile (NAP). The Error Codes where this occurs for primary taxpayers are as follows:

    • Error Code 003

    • Error Code 004

    • Error Code 005

    • Error Code 006

    • Error Code 007

    • Error Code 008

    • Error Code 009

    • Error Code 011

  2. The Error Codes where NAP revalidation takes place for Secondary SSN, dependents and EIC children are:

    • Error Code 010

    • Error Code 011

    • Error Code 012

    • Error Code 013

  3. The Error Codes where NAP revalidation takes place for Schedule H information (EINs only) are:

    • Error Code 164

    • Error Code 170

    • Error Code 172

  4. Various Error Codes will provide instructions to move your cursor to the bottom of the screen and transmit. This will send the record back out for revalidation by the NAP.

3.12.3.2.6  (01-01-2010)
Taxpayer Notice Code (TPNC)

  1. Taxpayer Notice Codes (TPNC) are used when a math error is present involving the tax liability or refund/amount owed. TPNCs are entered on the ERS screen display following the Literal "NC" .

  2. Once a code is transmitted to the record, it cannot be changed unless a correction causes an Error Code with a higher priority or a correction erases an Error Code previously cleared with a TPNC. Refer to IRM 3.12.3.2.10.4.(4) and (5).

  3. A TPNC assigned on an Error Code will be redisplayed with subsequent displays of that record.

  4. Multiple TPNCs can be entered when multiple error conditions are shown. IMF ERS can generate a maximum of five TPNCs; the fifth must be TPNC 100, unless the fifth is your last TPNC.

  5. When working a converted return and a TPNC is required to resolve the error, assign TPNC 111 as the first notice code to inform the taxpayer the return has been converted to a Form 1040.

  6. TPNCs assigned must be valid for that Error Code. If an invalid TPNC is entered, the same math Error Code will re-display.

  7. Only enter TPNCs after you have determined that no other corrections to the screen display are needed. If you determine that you need to change information on the screen and send a TPNC; first correct the appropriate field(s), and transmit. When the Error Code redisplays, send the TPNC(s).

  8. On rippling Error Codes (subsequent Error Code is result of previous Error Code) determine if the subsequent math Error Code is a direct result of the previous math Error Code. If so, assign any previously assigned TPNC.

    Caution:

    It is important that the taxpayer be advised of all errors that are present on the return. Caution should be used when entering any previously assigned TPNC.

  9. Use TPNC 100 and take the appropriate action when the following apply:

    If using TPNC 100... Then...
    A] As the fifth TPNC,
    1. Attach a 3X5 sheet or Form 12126 to the return.
    2. Indicate that there are more than five TPNCs.
    3. Show all applicable TPNCs (including 100) on the return and on the 3X5 sheet.
    B] When no existing TPNC fits the error situations, 1. Print message (exactly as it should read on the notice) on a 3X5 sheet or Form 12126.
    2. Attach the sheet to the front of the return.
    3. List TPNC 100 (and any other TPNCs sent) on the return and on the 3X5 sheet.
    4. Follow local procedures (i.e. leave return in the block or charge out the return and route directly to Notice Review.)

    Note:

    The list of allowable TPNCs shown at the end of each math Error Code will only display a short description of the actual literal. Refer to Exhibit 3.12.3–2 for a complete list of TPNCs with the actual literals.

  10. SSPND 640 to return to originator and indicate on Form 4227 the error condition and the TPNC that would have to be sent when any of the following exist:

    1. Substitute for Return Prepared by IRS under authority of Section 6020(b).

    2. An assessment made from Form 2859, "Request for Quick or Prompt Assessment" .

    3. The return is an Examination adjustment case, identified as Secured by Examination.

    4. Form 3198 is attached.

    Note:

    If you can determine that the originator wishes to have a TPNC sent, you may send one.

3.12.3.2.7  (01-01-2010)
Computer Assisted Review of Error Resolution System (CARE)

  1. Computer Assisted Review of Error Resolution System (CARE) is the "on-line" quality review of TPNCs initiated by the ERS system. The CARE system is a management tool used to identify incorrect or erroneous TPNCs, prior to the normal Notice Review process.

  2. Notices corrected by CARE prevent the following:

    • Delays in refunds

    • Delays in balance due notices issued

    • Incorrect direct deposits

    • Erroneous notices being generated to the taxpayer

  3. CARE reviewers correct TPNCs on-line using the ERS system, the day following ERS processing. The CARE process begins with the selection of TPNCs to be reviewed using any of the following criteria:

    • All of an Examiner's Work

    • All Notice Codes

    • Money Amount

    • Batch and Block Number

3.12.3.2.8  (01-01-2010)
Computer Assisted Pipeline Review (CAPR)

  1. For 2002 and later, ERS Tax Examiners will no longer be required to enter a CAPR code.

  2. If an entry is made in the first position after the Field number, a CAPR error will display stating the Valid CAPR Codes (M, C, T, E, D, S, and Blank).

3.12.3.2.9  (01-01-2010)
Correspondence Procedures

  1. All missing information must be identified and requested when correspondence is necessary. Throughout the text of this IRM, instructions are present to correspond with Action Code 211 (Use Action Code 225 for signature only correspondence).

  2. Correspondence is necessary when a return is incomplete or illegible and cannot be processed.

  3. Stop processing the return when you have identified a need to correspond and take the appropriate action(s) as follows:

    1. Scan tax return for any additional correspondence issues (e.g. missing schedules, missing dependent/EIC child information such as name, relationship and/or SSN and/or missing signature). Do not correspond for only the SSNs of dependents or EIC children. See IRM 3.12.3.2.2.2.4. for exceptions when corresponding for missing signatures.

    2. Check the return for a Power of Attorney (POA) to ensure that the correspondence is correctly addressed. POA will be on Form 2848 or similar statement.

    3. Ensure that data is entered in the Second Name Line (Field 01NL2) when a return is for a minor taxpayer and the parent's name is known. This situation can be identified on a Form 8615 or on the signature line of the return.

    4. Verify that a signature is present, if required. Keep in mind that a signature is required on most returns (refer to IRM 3.12.3.2.2.2.4).

    5. Request enclosures of blank Schedule SEs when corresponding for Schedule C or F and there is a ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ on page 1 of Form 1040 and no Schedule SE is present.

    6. Enter all money amounts in dollars and cents when corresponding with taxpayers.

    7. Always select paragraph (e) on Form 6001 regarding electronic filing when the return is:
      * A current year return.
      * There is no indication of electronic filing.

      Exception:

      Do not select paragraph (e) when corresponding on decedent returns or returns from U. S. Possessions.

  4. SSPND 640 (do not correspond) to return to the originator if the return is any of the following or is incomplete or unprocessable:

    1. Substitute for Return Prepared by IRS under the authority of Section 6020(b).

    2. An assessment made from Form 2859, "Request for Quick or Prompt Assessment" .

    3. An Examination Adjustment case identified as "Secured by Examination" .

    4. Form 3198 is attached.

  5. When providing the taxpayer with a contact number, provide a toll-free number whenever one is available. The following is a list of some of those numbers:

    1. W&I — 1–800–829–0922

    2. IMF SB/SE accounts — 1–800–829–8374

    3. Taxpayers with EINs — 1–800–829–0115

    4. Estates and Gifts — 1–866–699–4083

    5. Excise — 1–866–699–4096

    6. TE/GE accounts — 1–877–829–5500

    7. TAS — 1–877–777–4778, TTY/TDD — 1–800–829–4059.

3.12.3.2.9.1  (01-01-2010)
Second Correspondence

  1. Treat missing information on a return as a No Reply, except in the situations in the following list when contact from any area of Processing has previously been made with the taxpayer. SSPND 212 to correspond a second time when any of the following seven exceptions apply and had not been requested during first correspondence:

    1. Form 6251 as required by Error Code 270.

    2. Form 5329 when no determination can be made as to which taxpayer is liable.

    3. Schedule SE when no determination can be made as to which taxpayer is liable.

    4. Form 4137 when no determination can be made as to which taxpayer is liable.

    5. Schedule H when no determination can be made as to which taxpayer is liable.

    6. Form 8606 when no determination can be made as to which taxpayer is liable.

    7. Form 8919 when no determination can be made as to which taxpayer is liable.

  2. Do not correspond again if the information was previously requested and the taxpayer did not furnish the information or furnished an incomplete response. Treat as a No Reply, a math error, or identify as an unallowable condition. Refer to Exhibit 3.12.3–1 to determine the correct action to take for No Reply to correspondence when these issues were requested during the first correspondence.

3.12.3.2.10  (01-01-2010)
Types of Errors

  1. The ERS system will identify errors according to type and priority as follows:

    • Action Code Error (Priority I)

    • Section Error (Priority II)—Includes terminus error and Integrated System Remittance Processing(ISRP) problem code

    • Validity Error (Priority III)—Includes field errors

    • Math/Consistency Error (Error Codes) (Priority IV)

3.12.3.2.10.1  (01-01-2010)
Priority I Errors — Action Code

  1. Priority I Errors consist of the following:

    1. Invalid or valid Action Code assigned by Code and Edit.

    2. Valid Action Code assigned to Suspense Inventory.

  2. Use the following error correction for Action Codes:

    If the... Then...
    A] Action Code requires a Suspense Action, 1. SSPND with correct Action Code.
    2. Go to the bottom of the screen and transmit.
    B] Action Code does not require a Suspense Action, 1. Enter numeric "000" in the Clear Field (CL).
    2. Go to the bottom of the screen and transmit.
    C] Action Code is 001, 1. Enter CC GTSEC for each record section that contains data.
    2. Add the required data.
    3. Enter C in the Clear Field.
    4. Go to the bottom of the screen and transmit.
    (record will go through normal validity checks).

    Note:

    Do not remove the document from the block unless the case is a Priority Statute or manual refund case.

3.12.3.2.10.2  (01-01-2010)
Priority II Errors — Section Errors

  1. Priority II Errors may be present if normal ISRP validity checks have been bypassed. These conditions are as follows:

    1. Split screen transmission (Edit Error Code 1). Key Verifier attempted to change the Check Digit, Key Verifier changed four or more digits of the Primary TIN, or the Original Entry Operator indicated that a required section was missing, or the Depositor Account Number (DAN) in Section 06 (that is input twice) was not entered the same both times. The second entry of the DAN is dropped by ISRP. ERS must determine if the entries in Section 06, especially Field 06DAN, have been transcribed correctly.

    2. Invalid section ending point (Edit Error Code 3).

    3. Invalid field length (Edit Error Code 4).

    4. Questionable Section (a section entered twice or entered out of sequence by ISRP) (Edit Error Code 5).

    5. Missing required section.

    6. Terminus errors (no error in record).

  2. The display will only show one section (error) at a time for the transcribed fields (except ERS Action Code and Remittance). Display will be in columnar format with or without data. The error type will also be indicated for ISRP Problem Code errors.

  3. The content will have any individual section, excluding computer generated fields and the Action Code. The Action Code is an uncorrectable field except as defined for CC SSPND and RJECT.

  4. Use the following general guidelines when correcting a Priority II Error:

    1. ISRP Errors — All fields of the section must be examined when this condition exists. If Section 01 of a return is coded, examine the section (via CC GTSEC) for an error to ensure that the return is for the taxpayer whose name is in Section 01. Correct the section. Once the section is correct, transmit.

    2. Missing Section Errors — If data is present for the missing section, enter all the data for the section and transmit. If no data is present for the missing section, see specific IRM procedures for initiating research (IRM 3.12.3.2.3) or correspondence ( IRM 3.12.3.2.9). After initiating research or correspondence, SSPND the record with the appropriate Action Code.

    3. Terminus Errors — All fields of the section must be examined when this condition exists. Make the necessary corrections to the record. Once the section is correct, transmit.

    4. Questionable Section — Verify and enter all the data for the displayed sections. When all of the data is correct, transmit.

  5. Correct all displayed fields before transmitting.

  6. Go to the bottom of the screen and transmit when no corrections are necessary.

3.12.3.2.10.3  (01-01-2010)
Priority III Errors — Validity Errors - Includes Field Errors

  1. Priority III Errors generate when any field fails to meet the requirement(s) for that field (and that field only). The following is a list of some conditions that may create a field error:

    1. Non-numeric character in a numeric field.

    2. Non-alphabetic character in an alpha field.

    3. Blank space in a number field.

    4. Blank in the first position of an alpha field.

  2. Priority III Errors will display in columnar format in the order encountered in the record. Overflow fields can be identified by all question marks (for money fields) or a single pound sign in the last position of a Name Line. Every field that displays is in error.

  3. Use the following general guidelines when correcting Priority III Errors:

    1. Check for coding and transcription errors.

    2. Enter the correct data for each field displayed.

    3. Blank the field when no data should be in a displayed field.

    4. Follow section instructions for fields in error.

      Note:

      SSPND 490 when "Unrecognizable Field Error" .

3.12.3.2.10.4  (01-01-2010)
Priority IV Errors — Math/Consistency Errors (Error Codes)

  1. Priority IV Errors generate when any valid field is used in any computation in which the results are inconsistent with or contradictory to other valid field(s). EC 001–999 will be assigned by the Computer. If the result of the computer computation of an amount differs from the taxpayer's amount, the computation fields will be shown as a Priority IV Error. Error types will be one of the following:

    • Consistency Errors

    • Validity Errors

    • Math Errors

  2. The display will show the Error Code assigned and the fields needed to make the necessary correction(s).

  3. Resolve all errors by either eliminating the error, entering clear codes, or entering a TPNC.

    Note:

    All math Error Codes will require a correction to a field or the entry of a TPNC.

  4. When correction causes an Error Code with a higher priority than the previous Error Code to display, all Clear Codes and TPNCs already entered for lower priority Error Codes will be deleted. All lower priority Error Codes, still present in the record, will be re-displayed for resolution even when previously cleared with a TPNC or Clear Code.

  5. When a correction causes a cleared Error Code to no longer be in error; the TPNC or Clear Code for that Error Code will be deleted. All TPNCs and Clear Codes assigned to all lower priority (higher numeric) Error Code(s) will also be deleted. Any remaining Error Codes, previously cleared (deleted because of a correction), will re-display.

  6. Use the following general guidelines when correcting a Priority IV Error:

    1. Compare the displayed fields with the return.

    2. Correct all fields edited or transcribed incorrectly.

    3. Enter correct taxpayer amounts for ERS input only fields (e.g. Other Statutory Credits).

    4. Follow the instructions for the displayed Error Code when correcting fields in error.

3.12.3.2.10.5  (01-01-2010)
"500/600 Series" Error Codes — Changes in Statutory Credits

  1. Error Codes in the 500 and 600 Series (except 601) provide the opportunity to inform the taxpayer(s) of adjustments made to their statutory credits when there is no change to his/her refund. This happens when the taxpayer has more statutory credits available than are needed to zero out the tax. These excess credits are not refundable but can be carried over to the following year. Sometimes the taxpayer will make a mathematical error on his/her return which makes it necessary to use more or less of the credits to offset the tax, but the error still results in no change to their anticipated refund. The taxpayer will be notified of the adjustment to the credit so they can have an accurate record of the carryover credits available to offset tax in the future year. The taxpayer is usually notified by means of the 2719C letter. See the following example:

    Before Correction After ERS Correction
    1. Line 44 Tax Amount is $1,000.
    2. Investment Credit is $1,500.
    3. Credit is limited to $1,000.
    4. Credit taxpayer will carry forward is $500.     		1. Line 44 Tax Amount is $1,400.
    2. Investment Credit is $1,500.
    3. Credit is limited to $1,400.
    4. Credit taxpayer will carry forward is $100.

  2. Prepare Form 3696–A to initiate the 2719C Letter when the change to credits is $100 or more. Complete the following:

    1. Boxes 1 through 9 (as appropriate), on Form 3696–A.

    2. "Fill-ins" portion of Form 3696–A.

    3. "Fill-ins" 01 through 05 of Form 2719C Letter (these are required).

    Note:

    If preparing Form 3696–A for Form 3800 (TY97 and later), and line 3 (Passive Activity Credits Included) or line 5 (Passive Activity Credits Allowed) of Form 3800 is present; do not reference on Form 3696–A individual general business credit. Instead, reference any and all Form 3800 credits as "your general business credit" .

3.12.3.3  (01-01-2010)
Special Procedures

  1. This tridoc addresses the following special situations, return types and procedures:

    • Amended/Duplicate Returns

    • Automated Substitute for Return (ASFR)

    • Frivolous Filer

    • Accounts Over 100 Million Dollars

    • Injured Spouse Allocation

    • Innocent Spouse Relief Request

    • International Returns

    • KITA/KIA — Killed in Terrorist Action

    • Combat Zone Returns

    • Conversion of Returns

    • Prior Year Returns

    • Re-Entry (Reinput) Returns

    • Form 911–Hardship

    • Economic Stimulus Payment Returns

  2. Manual Refund — Any return hand walked by a W & I SP liaison for Taxpayer Advocate Service (TAS) as a manual refund should be processed by a Lead Tax Examiner or designated tax examiner. (See IRM 3.12.3.71.5.3 EC 260.)

3.12.3.3.1  (01-01-2010)
Amended/Duplicate Returns

  1. Taxpayers sometimes file amended returns on Forms 1040/A/EZ to correct or change previous returns. Some taxpayers send copies of original returns with payments or correspondence.

3.12.3.3.1.1  (01-01-2010)
Amended Returns

  1. Consider the return amended when any of the following notations or conditions are present:

    • Amended

    • Corrected

    • Revised

    • Superseded

    • Attached IRS Notice indicating a previous return posted for the same tax period

    • Only changes are entered

    • Taxpayer indicates he/she received a refund

    • Tax was paid with original return

      Exception:

      Treat timely filed returns that do not require correspondence as original.

  2. Take the following actions when the return has been identified as amended:

    1. Enter G in Field 01CCC.

    2. Follow procedures for Error Code 048.

      Note:

      Do not correspond for missing information on amended returns.

3.12.3.3.1.2  (01-01-2010)
Duplicate Return

  1. Treat the return as a possible duplicate when any of the following notations or conditions are present:

    • Copy

    • Duplicate

    • Only page 1 and/or 2 submitted

    • Substitute

      Exception:

      Process the return as an original when CCC 4 is present.

  2. Research for another return currently in the ERS system using CC ERINV (second DLN present for the same tax period) or a posted original return using CC IMFOL (TC 150 is present for the same tax period under a different DLN) when the return is identified as a possible duplicate return:

    If return data is... And... Then...
    A] Not Present, CC ERINV shows a second DLN is in ERS status 2XX, 3XX or 4XX, 1. SSPND 420.
    2. Complete a Form 4227.
    CC ERINV shows a second DLN is in ERS Status 100, 1. SSPND 640.
    2. Complete a Form 4227.
    A TC 150 for the same tax period is shown using CC IMFOL, 1. SSPND 640.
    2. Complete a Form 4227.
    A second DLN or TC 150 for the same tax period using CC ERINV or CC IMFOL is not found, Process return as original.
    B] Present, Data has not changed, 1. SSPND 640.
    2. Complete a Form 4227.
    Data has changed 1. Enter G in Field 01CCC.
    2. Follow procedures in EC 048.

3.12.3.3.2  (01-01-2010)
Automated Substitute for Return (ASFR)

  1. Most "Substitute For Returns" (SFRs) have been automated and are now called ASFRs.

  2. Take the following action when an ASFR is received in ERS. ASFRs are usually Section 01 validity errors (e.g., a "ZIP Code" problem or an invalid character). You will not have the actual document:

    1. Research using CC INOLE.

    2. Re-enter the entity data into the field(s) in error.

3.12.3.3.3  (01-01-2010)
Frivolous Filer

  1. SSPND 331 any return on which the taxpayer:

    1. Argues — for any reason — the filing of a tax return or the paying of tax.

    2. Makes use of a frivolous argument to reduce income or liability.

    3. Marks out or alters — in any manner — the penalty of perjury statement (jurat) above the signature.

  2. A Frivolous Return Process stamp in the upper left hand corner should be present if the return has already been reviewed by the Exam FRP Coordinator.

  3. Some common examples of frivolous returns are listed below. This list is not all-inclusive but represents the current most common frivolous filings. See Exhibit 3.12.3-12, Frivolous Filer Definitions, for additional examples and complete descriptions.

    • Wages Not Income.

    • Wages of the Primary Taxpayer deducted on Schedule A or C.

    • Zero Returns with and without refunds claimed.

    • Zero Returns with and without Form(s) W-2 attached.

    • Zero or Little Income Returns and Substitute Form(s) W-2, Form 4852, or corrected Form(s) 1099.

    • Altered Form/Jurat/UCC 1–207.

    • Entitlement Refund Requests — Filer claims exempt from taxation and requests a refund related to their birthright. These include Reparations for Slavery (40 Acres and a Mule, Black Investment Tax, African American Tax, etc.), Native American Indian Treaty, Bosnian Refugee, Daughters of the American Revolution, etc.

    • Constitutional Amendment References to Avoid Tax — 1st, 5th, 13th, 16th, etc.

    • IRC References to Avoid Tax — 861, 1001, 1341, 3121, etc.

    • Form 2555 Deduction — Eliminates income on line 21 even though the taxpayer and their employer are U.S. residents.

    • Taxes are Voluntary/IRS Has No Authority/Law Does Not Require.

    • Not a Person/Not a Citizen/Untaxed.

    • Protest Government Action/Inaction.

    • Prisoner Returns citing any Frivolous Argument.

    • Prisoner Returns attaching calculations of income derived from Work Assignments within the prison (may be based on minimum wage) and generally claiming a refund of withholding (may be Substitute Form(s) W-2)

    • Confused Taxpayer Filings — Outlandish dollar amount on any line and/or nonsequential gibberish language..

    Note:

    Any documentation attached to the return by Chief, Fraud Detection Center must remain attached to the return.

3.12.3.3.4  (01-01-2010)
Accounts Over 100 Million Dollars

  1. Any Form 1040 with an amount for tax, withholding, or any refundable credits of $100,000,000 or more cannot be processed to Master File correctly. These returns should be SSPND 620 to be routed via overnight mail to the following address:
    Accounting Control/Services Operation
    201 West River Center Blvd., Stop 21
    Covington, KY. 41011.

3.12.3.3.5  (01-01-2010)
Injured Spouse Allocation

  1. An "Injured Spouse" allocation request can be filed by one spouse to protect his or her share of a joint overpayment. Injured Spouse returns can be identified by one of the following:

    1. "Injured Spouse" written on the return.

    2. Form 8379, Injured Spouse Claim Allocation attached.

    3. Batched in Blocking Series 920–929 (Form 1040/A/EZ/X).

  2. Use the following table to determine procedures for handling "Injured Spouse" claims:

    If the return... Then...
    A] Has Blocking Series 920–929, 1. Continue Processing.
    2. Leave Form 8379 or Form 1040X attached.
    B] Does not have Blocking Series 920–929 (found in regular block of work), SSPND 610 or 611 to have renumbered.

3.12.3.3.6  (01-01-2010)
Innocent Spouse Relief Request

  1. A taxpayer may make a claim of relief from joint and several tax liabilities in the following three ways:

    1. Innocent Spouse Election — An election made by a person who filed a joint return or filed a return as "married filing separately" in a community property state, and later claimed that, the understatement of tax on the return was attributable to an erroneous item of the other spouse, of which the claimant had no knowledge or reason to know and taking into account all the facts and circumstances, it would be inequitable to hold that person liable.

    2. Separate Liability Election — An election made by a person who filed a joint return and later claimed separate liability from their spouse. The claimant must be legally separated, living apart for 12 months or more, or no longer married to the spouse with whom he or she filed the joint return at the time the claim was filed.

    3. Equitable Relief — Request made by a person who filed either a joint return or a return as "married filing separately" in a community property state, and later claimed that taking into account all of the facts and circumstances, it would be inequitable to hold that person liable.

    Note:

    IRM 25.15 provides technical and procedural guidance.

  2. Taxpayers are instructed to file Form 8857, Request for Innocent Spouse Relief, to request relief if they are making the preceding claims.

  3. Enter a CCC 3 when the taxpayer either attaches correspondence to the return and indicates "Innocent Spouse" , "Separate Liability Election" , "Equitable Relief" , "Joint and Several Liability" or when a Form 8857 is attached to the return.

    Note:

    When multiple CCCs are present, CCC 3 must be entered first.

  4. Innocent Spouse Relief requests are processed at CSPC only. When the taxpayer either attaches correspondence to the return which identifies him/her as a claimant or when a Form 8857 is attached to the return:

    1. Detach the correspondence/Form 8857 and all supporting documentation.

    2. Edit working trails on both the return and the correspondence/Form 8857.

    3. Prepare Form 4227, notating "Innocent Spouse Request" and attach it to the detached item.

    4. Give the request to your manager.

    5. Leave the return in the block and continue processing.

  5. Send all claims to CSPC daily, overnight via traceable mail, using the following address:
    Internal Revenue Service
    Stop 829, Unit 25
    201 W. Rivercenter Blvd.
    Covington, KY 41019

    Exception:

    CSPC — Follow local procedures for routing the claim to Examination.

3.12.3.3.7  (01-01-2010)
International Returns

  1. Treat any return with an address outside the 50 United States and District of Columbia as an International return.

    Note:

    This does not include APO/FPO addresses.

  2. An International return can be identified by the presence of one of the following forms attached to an IMF return:

    1. Form 2555/2555-EZEZ, Foreign Earned Income

    2. Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa

    3. Form 5074, Allocation of Individual Income Tax to Guam or the Commonwealth of the Northern Mariana Islands (CNMI)

    4. Form 8288-A, Statement of Withholding on Dispositions by Foreign Persons of U.S. Real Property Interests

    5. Form 8805, Foreign Partner's Information Statement of Section 1446 Withholding Tax

    6. Form 1040-NR/1040NR–EZ

      Caution:

      When Form 1040NR/1040NR-EZ is attached to Form 1040, DO NOT SEPARATE THEM. SEND BOTH RETURNS TO AUSPC.

    7. Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding

    8. Form W-2 PR or 499R-2

    9. Form 1040-PR

    10. Form 1040-SS or 1040-SS (NMI) (Northern Mariana Islands)

    11. Form 1040 Guam

    12. Form 8689, Allocation of Individual Income Tax to the Virgin Islands

  3. An International return can also be identified by the presence of one of the following on an IMF return:

    1. Notation of "Dual Status" .

    2. Taxpayer indicates exemption or exclusion of tax and/or income as a result of an international treaty (e.g., student treaty), article, or code (not IRC). This instruction does not apply to "American Indian Treaty" or similar statement.

    3. Indication of treaty trader or Fulbright grantee.

    4. Notation of Section 911, 931, or 933 of the Internal Revenue Code (IRC).

  4. SSPND 651 to forward returns to AUSPC for immediate processing when identified as an International return in the preceding paragraph (1), (2) or (3).

    Note:

    Do not transship returns when the taxpayer is only converting income paid in foreign currency (e.g., income paid in Canadian dollars and reported, after conversion, on the return in American dollars).

    Note:

    In AUSPC SSPND 610 for renumbering if the return isn't numbered as an international return.

3.12.3.3.8  (01-01-2010)
KITA — Killed in Terrorist Action

  1. Route all returns identified as "KITA/KIA" , "KITA-Oklahoma City" , "KITA-9/11" , or "KITA-Anthrax" to the KITA coordinator in Accounts Management for processing.

    Note:

    A list of current KITA/KIA coordinators can be found at the SERP home page under the tab Who/Where.

  2. If the taxpayer writes Sec 692(d)(2) on the "Other Payments" line (line 65 for 2001 and line 59 for TY 1995 returns only) of Form 1040 with a money amount to the right, Code & Edit should route to the KITA/KIA coordinators. Convert Form 1040A/EZ with Sec 692(d)(2) written anywhere on the return to a Form 1040 before sending the return to the KITA/KIA coordinator.

  3. If the KITA/KIA coordinator determines that the return does not qualify for KITA/KIA, the coordinator will attach a Form 4227 notating "Not eligible for KITA/KIA" to the front of the tax return. The Form 1040 will be returned to Code & Edit to complete processing. Code & Edit will "X" any amount on the return where the taxpayer has written "Section 692(d)(2)" .

    Note:

    If the KITA/KIA coordinator determines that the return is not eligible under Sec 692(d)(2), Code & Edit should "X" the amount claimed to the right of the "Other Payments" line.

  4. ERS should enter the computer's amount for tax in Field 0444V and assign TPNC 650.

    Note:

    "X" any amount claimed on the return for tax forgiveness under Section 692(d)2.

  5. If Code & Edit failed to identify a return as KITA/KIA then ERS should take the following action:

    1. Prepare Form 4227 stating KITA/KIA.

    2. SSPND 360 (other in-house research) and route the return to the KITA Coordinator.

  6. If the KITA Coordinator determines the taxpayer qualifies for KITA, the Coordinator will ship the return to the Kansas City KITA Coordinator.

  7. The KITA Coordinator will notify ERS Suspense when the return is routed to the Kansas City KITA Coordinator for processing. ERS should SSPND 640 (Suspense Reject 640) in order to remove the document from ERS inventory.

3.12.3.3.9  (01-01-2010)
Combat Zone Returns

  1. Members of the US armed forces paid by the US armed forces and serving in a combat zone or in a qualified hazardous duty area are entitled to an exclusion of wages earned in that zone and certain extensions of time for filing and paying. To identify that they are entitled to certain extensions of time, these taxpayers write the location or operation of the military endeavor on the top of their tax return.

    Note:

    Do not enter CCC "M" if the return is a Combat Zone return.

  2. Do not allow write-ins of income exclusions for combat zone pay. If the taxpayer excludes income earned in a combat zone, enter Y in Field 01CCC. Delete the exclusion on line 21 of Form 1040 or restore in full the wages on line 7 of Form 1040 or 1040A. Assign TPNC 165. Further instructions appear in EC 260.

    • Members of the U.S. armed forces serving in a defined combat zone or in direct support of one are entitled to an exclusion of all or a portion of their compensation received for active service in the armed forces of the United States. The Department of Defense excludes the eligible combat pay from the wages reported in box one of the W-2.

    • The taxpayer may not further reduce the wages.

    • This benefit is available only to members of the US armed forces.

    • Employees of firms under contract by the Defense Department may not exclude income earned in a combat zone.

    .

  3. Take the following appropriate action when one of the military operations listed is noted on the return:

    If the taxpayer notes... And... Then...
    A] Operation Enduring Freedom
    Operation Noble Eagle
    Operation Iraqi Freedom:
    Egypt
    Jordan     		09/19/2001 and later
    03/19/03 to 04/20/03 (Egypt)
    03/19/03 and later (Jordan)     		Enter K in Field 01CCC.
    B] Bosnia
    Croatia
    Former Yugoslavia
    Herzegovina
    Joint Guard
    Macedonia
    Operations Allied Force
    Operation Joint Endeavor     		TY97 or later, Enter R in Field 01RPC.
    C] Former Yugoslavia TY94 & TY93, 1. Enter D in Field 01CCC.
    D] Desert Storm (Persian Gulf area)
    Joint Forge
    Joint Guard
    Northern Forge
    Northern Watch     		TY90, Enter Z in Field 01CCC.
    E] Haiti
    Operational Uphold Democracy
    Operation GTMO     		TY94 & 93, 1. Enter D in Field 01CCC.
    F] UN Operation TY92, 1. Enter D in Field 01CCC.
    G] Somalia TY93 & TY92, 1. Enter D in Field 01CCC.

  4. Enter Y in Field 01CCC if the taxpayer notes a combat zone or tax period not listed in the preceding table.

    Note:

    Several military operations are covered under UN Operation notation. Refer to your Lead Tax Examiner, who will contact National Office.

  5. For further information about military returns see EC 260.

3.12.3.3.10  (01-01-2010)
Natural Disaster/Emergency Relief Program

  1. The Natural Disaster / Emergency Relief Program provides relief from late filing and/or late payment penalties for taxpayers in declared disaster or emergency areas.

    1. The program coordinator will notify the campuses when an area has been designated for natural disaster or emergency relief.

    2. Disaster and emergency notifications will include the dates of the extensions of time to file returns and pay taxes.

    3. Taxpayers will be required to call to self-identify themselves as disaster filers.

  2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3.12.3.3.11  (01-01-2010)
Conversion of Returns

  1. In some instances, it is necessary to convert a Form 1040A or 1040EZ to a Form 1040 to process it.

  2. Convert all Forms 1040A and 1040EZ to Form 1040 by using action code 610 for non-remittance returns and action code 611 for remittance returns.

  3. When working a converted return and a TPNC is required to resolve the error, assign TPNC 111 as the first notice code to inform the taxpayer that the return has been converted to a Form 1040.

  4. Use the following table to identify instances when it is necessary to convert a Form 1040A or 1040EZ to a Form 1040 in order for the form to be processed through the system.

    Exception:

    If suspending 211 for any missing information, then do not convert.

    Exception:

    If Form 1099 MISC is attached with an amount in box 7 and no indication of whether the amount for non employee compensation is Self Employed Income, SSPND 211 for explanation of the amount with Schedule SE enclosures.

    Condition Present or Claimed Form Type
    Additional Standard Deduction for Age/Blindness, Form 1040EZ
    Any line is used that is not a printed line (write-ins) or ERS input only field, Form 1040A/1040EZ
    Community Property is indicated by the taxpayer, Form 1040EZ
    Dependent(s) claimed, Form 1040EZ
    Filing Status Code is other than 1 (single) or 2 (married filing joint), Form 1040EZ
    Gambling losses that are greater than the taxpayer's correct standard deduction amount, Form 1040A/1040EZ
    Interest Income of greater than $1,500, or a negative interest amount, Form 1040EZ
    Prizes/awards over $1,000, Form 1040EZ
    Self Employment — Clear indication of self-employment income of

    • $434 or more if the EIC is claimed;

    • of $2,000 or more otherwise,

    		 Form 1040A/1040EZ
    Social Security and Equivalent Railroad Retirement Benefits, Form 1040EZ
    Tax period less than 12 months, Form 1040A/1040EZ
    Tax period is other than calendar year (month ending 12), Form 1040A/1040EZ
    Tax period is prior to 197212, Form 1040A
    Tax period is prior to 198212, Form 1040EZ
    Taxable Income is $100,000 or more, Form 1040A/1040EZ

  5. The preceding list is not all inclusive. Any time a Form 1040A/EZ is filed with a form or schedule that is applicable to Form 1040 exclusively ( Sch D attached to Form 1040A, for example), the return should be converted. See your Lead Tax Examiner for other miscellaneous situations.

  6. SSPND 640 to send return back to the originator (Accounts Management, Exam, etc.) when incorrect changes will make the return unprocessable or create an unpostable condition.

  7. SSPND 611 when Form 1040/A is filed for a deceased taxpayer and information on the return indicates that a Form 1041 (U.S. Fiduciary Income Tax Return) (Estate/Trust Return) should be filed.

    Note:

    For further information about renumbering remittance returns, refer to IRM 3.12.37.

3.12.3.3.12  (01-01-2010)
Misblocked Returns

  1. Forms 1040 and 1040A identified as Injured Spouse returns should be batched together in blocking series 920-929. Use the procedures in 3.12.3.3.11(2) to convert such returns.

  2. SSPND 211 for all missing information. Do not convert returns before corresponding.

    Note:

    For further information on renumbering documents, refer to IRM 3.12.37, General Instructions.

3.12.3.3.13  (01-01-2010)
Prior-Year Returns

  1. The computer is programmed to perform calculations for the current year and the two prior years. Follow current-year procedures to resolve errors for these three years. TY06 and prior returns require a manual computation. Follow prior-year procedures when applicable.

  2. Validity errors and math errors are identified and corrected in the same manner as with current-year returns, with some exceptions or variations. These exceptions or variations are listed in the section descriptions or located at the end of the error code.

  3. Use the following general guidelines when processing prior-year returns:

    1. Correct coding errors, transcription errors and misplaced entries in displayed fields.

    2. Always ensure the tax period is entered correctly.

    3. Use the prior-year tax form to verify an amount manually and give the taxpayer the most beneficial allowable tax computation.

    4. TPNCs 500 to 549 apply to prior year and reject situations only.

3.12.3.3.14  (01-01-2010)
Re-Entry (Reinput) Returns

  1. Tax returns that are being put through the system again will generally have a Form 3893 attached indicating what, if any, actions were taken. The following are some of the reasons that documents will be re-entered or reinput:

    1. Withholding has been adjusted because of a prior refund.

    2. The period ending is being changed.

    3. An amended return is being changed to an original return.

    4. Filing Status is being changed.

    5. A CP-29 or CP-36 is attached.

    6. Substitute for Return (SFR) or has previously corresponded with the taxpayer.

    7. SSN / TIN change

  2. The following are general guidelines for working Re-entry returns.

    1. Do not change corrections shown in brown or red ink on the form/return.

    2. Do not correspond - SSPND 640 and return document to the originator when the return is unprocessable.

    3. Follow normal processing procedures when the originator states "process as an original return" .

  3. Assign Unallowable Code 79 to re-entry returns when the document is being re-entered because of a release credit.

    Note:

    Additional information can be found in IRM 3.12.37, General Information.

3.12.3.3.15  (01-01-2010)
Form 911 — Hardship

  1. Taxpayers, their representatives, or IRS employees may complete Form 911, "Request For Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order)," when a taxpayer meets TAS criteria.

  2. Refer a return with a notation of TAS criteria to your Lead Tax Examiner. TAS criteria include, but are not limited to, the following:

    • The taxpayer is facing an immediate threat of adverse actions.

    • The taxpayer will incur significant costs if relief is not granted (including fees for professional representation).

    • The taxpayer will suffer irreparable injury, or long term adverse impact if relief is not granted.

    • The taxpayer has experienced a delay of more than 30 calendar days in resolving a tax account problem .

    • The taxpayer is experiencing economic harm or is about to suffer economic harm.

    • The taxpayer has not received a response or resolution to their problem or inquiry by the date promised.

    • A system or procedure has either failed to operate as intended, or failed to resolve the taxpayer's problem or dispute with the IRS.

    • The manner in which the tax laws are being administered raise considerations of equity, or have impaired or will impair the taxpayer's rights.

    • The NTA determines compelling public policy warrants assistance to an individual or group of taxpayers.

      Note:

      Case criteria are not meant to be all inclusive; each taxpayer situation should be evaluated based on the unique facts and circumstances of each case.

      Note:

      If the taxpayer specifically requests Taxpayer Advocate Service (TAS) assistance, the case should be automatically referred to the Local Taxpayer Advocate regardless of whether the case meets any of the preceding criteria. A referral to the TAS office should be made if the IRS employee receives a taxpayer contact and cannot initiate action to resolve the inquiry or provide the relief requested by the taxpayer within 24 hours.

  3. The Local Taxpayer Advocate (LTA) decides whether a case meets TAS criteria. Refer to the Attachment Guide (Exhibit 3.12.3–10) for procedures for routing Form 911 to the TAS Office and IRM 3.0.273.12.6, Administrative Reference Guide, Taxpayer Advocate Service Case Criteria, for further instructions.

3.12.3.3.16  (01-01-2010)
Request for Economic Stimulus Payment

  1. The IRS will send tax returns filed solely for the sake of claiming the Economic Stimulus Payment back to the taxpayers. Other tax returns for 2007 will be processed as regular returns.

3.12.3.3.17  (01-01-2010)
Deceased Taxpayer

  1. If the return is being filed by a spouse, personal representative (executor, administrator, fiduciary designee or trustee) or an individual other than the deceased taxpayer, documentation may need to be attached to verify they have the legal right to file the return on behalf of the deceased taxpayer.

    1. If the surviving spouse filed the return (FSC 2), no documentation is needed.

    2. If a personal representative (executor, administrator, fiduciary designee or trustee) is filing the return on behalf of the deceased taxpayer and the return shows a refund of $100 or more, a copy of the certificate showing the appointment must be attached. If the certificate is not attached SSNPD 211.

    3. All others filing on behalf of the deceased taxpayer must attach a completed Form 1310 whenever the refund is $100 or more. Form 1310 isn't required for a refund less than $100. If Form 1310 is required but missing or incomplete SSPND 211.

      Note:

      To be considered complete, Form 1310 must meet these three requirements.
      It must be signed.
      Question 2a and 2b in Part II must be answered "no." (If question 2a or 2b is answered "yes" or left unanswered, correspond for a court certificate.)
      Question 3 in Part II must be answered "yes" unless a court certificate is provided. (If question 3 is answered "no" or left blank and no court certificate is present, correspond for a court certificate that entitles the person to the refund.

    4. If the date of death is not present on the return follow the procedures in IRM 3.12.3.54.4.3 (1) through (6).

  2. If the return is an Economic Stimulus Return see IRM 3.12.3.3.16.

3.12.3.4  (01-01-2010)
Section 01 Data—Entity And Miscellaneous Information

  1. Section 01 includes the following information.

3.12.3.4.1  (01-01-2010)
Error Record Format—Section 01

  1. Section 01 contains the following Fields:

    Field Designator 1040/A/EZ Field Title Field Location
    01PNC Primary Name Control Entity Area
    01PS Primary SSN Entity Area
    01SNC Secondary Name Control Entity Area
    01SS Secondary SSN Entity Area
    01NL1 Name Line 1 Entity Area
    01NL2 Name Line 2 Entity Area
    01ADD Street Address Entity Area
    01C/S City/State Entity Area
    01ZIP Zip Code Entity Area
    01TXP Tax Period Page 1 of tax return
    01PEF PECF Filing Code Page 1 of tax return
    01FSC Filing Status Code Page 1 of tax return
    01CCC Computer Condition Code Page 1 of tax return
    01EXC Exemption Code Field Page 1 of tax return
    01EXV Exemption Code Verified ERS Input Only
    01DSI Dependency Status Field Page 1 of tax return
    01DN1 Dependent Name Control-1 Page 1 of tax return
    01DS1 Dependent SSN-1 Page 1 of tax return
    01CT1 Child Tax Credit Indicator-1 Page 1 of tax return
    01DN2 Dependent Name Control-2 Page 1 of tax return
    01DS2 Dependent SSN-2 Page 1 of tax return
    01CT2 Child Tax Credit Indicator-2 Page 1 of tax return
    01DN3 Dependent Name Control-3 Page 1 of tax return
    01DS3 Dependent SSN-3 Page 1 of tax return
    01CT3 Child Tax Credit Indicator-3 Page 1 of tax return
    01DN4 Dependent Name Control-4 Page 1 of tax return
    01DS4 Dependent SSN-4 Page 1 of tax return
    01CT4 Child Tax Credit Indicator-4 Page 1 of tax return
    01RCD Received Date Page 1 of tax return
         
    01DTR Dependent TIN Requirement ERS Input Only
    01CEV Child Tax Credit Total Eligible Verified ERS Input Only
    01RPC Returns Processing Code Field Page 1 of tax return
    01SPC Special Processing Code Field Page 1 of tax return
    01ACD Audit Code Page 1 of tax return
    01PT Preparer's TIN Signature area
    01PE Preparer's EIN Signature area

  2. Form 1040EZ appears on page xx of the 2010 ERS Job Aid (Training Publication 2515–015), Form 1040A on page 68, and Form 1040 on page 72.

3.12.3.4.2  (01-01-2010)
Entity Information

  1. The entity area consists of the taxpayer's name, address and SSN. The taxpayer's name, address and SSN (Fields 01PNC through 01ZIP) are transcribed as short entity, partial entity, intermediate entity, or long entity. The type of transcription is based on:

    1. Whether or not the return has a preprinted label.

    2. If there is no label, whether or not there is a "match" with the Entity Index File (EIF).

  2. The following table shows descriptions of Entity types:

    Entity Type Field Used Look for
    A] Short —
    01PNC
    01PS
    01SS     		1. Labeled return with no change in name, address or Primary SSN.
    2. Unlabeled return that agrees with EIF for name, address or Primary SSN.
    B] Partial —
    01PS
    01SS
    01NL1
    01NL2     		Labeled return with changes in First or Second Name Line.
    C] Intermediate —
    01PNC
    01PS
    01SS
    01ADD
    01C/S
    01ZIP     		1. Labeled return with changes in any part of the street, address, City/State or first five digits of the ZIP Code.
    2. Returns with National Change of Address (NCOA) information (indicated by a set of #s printed in the upper left corner of the pre-printed label).
    3. No IRS label, but EIF indicates a Change of Address.
    D] Long —
    01PS
    through
    01ZIP     		1. Labeled return with a change in the Primary SSN.
    2. Labeled return with a change in both the Name and Address.
    3. Unlabeled return that does not agree with EIF for Primary SSN, name or address.
    4. Unlabeled return when ISRP cannot use EIF.
    5. Entity Control Function has changed the Primary SSN or has assigned a temporary number.

    Note:

    Processing will enter the Secondary SSN, if present, at the NAP file when FSC is 2 and the Secondary SSN field is blank (i.e. short or intermediate entry).

3.12.3.4.3  (01-01-2010)
Correction Procedures

  1. Correction procedures for Section 01 fields follow.

3.12.3.4.3.1  (01-01-2010)
Field 01PNC Check Digits/Name Control

  1. Correction procedures for Check Digits and Name Control follow.


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