1.2.12  Policy Statements for Submission Processing Activities

Manual Transmittal

October 15, 2012

Purpose

(1) This transmits new IRM 1.2.12, Servicewide Policies and Authorities, Policy Statements for Submission Processing Activities.

Material Changes

(1) These policy statements are renumbered according to applicable IRS business processes:

  • P-3-1 (Formerly P-2-1), Tolerances to relieve districts and service centers of less productive work

  • P-3-2 (Formerly P-2-7), Reasonable cause for late filing of return or failure to deposit or pay tax when due

  • P-3-3 (Formerly P-2-9), Timely mailed returns bearing foreign postmarks to be accepted

  • P-3-4 (Formerly P-2-10), Abatement of Interest on Erroneous Refunds

  • P-3-5 (Formerly P-2-11), Certain unsigned returns will be accepted for processing

  • P-3-6 (Formerly P-2-50), Taxpayer's determination generally accepted as to location of principal place of business for purpose of filing employment and miscellaneous excise tax returns

  • P-3-7 (Formerly P-2-51), Excess payments determined during processing of quarterly employment or excise tax returns generally applied to a taxpayer's account

  • P-3-8 (Formerly P-2-63), Extensions of time for filing certain information returns, approved in bona fide case

  • P-3-9 (Formerly P-2-64), Extensions of time for furnishing statements to recipients approved in bona fide cases

  • P-3-10 (Formerly P-2-65), Extensions of time for filing Forms W-2 approved in bona fide cases

  • P-3-11 (Formerly P-2-66), Extensions of time for furnishing Form W-2 to employees approved in bona fide cases

  • P-3-12 (Formerly P-2-67), Late filed applications for extensions of time to file returns will not be approved

  • 3-13 (Formerly 2-77), Mailing of blank tax return forms to taxpayers

  • 3-14 (Formerly 2-88), Elections to apply income tax overpayments to estimated tax may be reversed upon showing of undue financial hardship

  • 3-15 (Formerly 2-89), Reconsideration of an Unpaid Assessment

(2) Exhibit 1.2.12-1 contains a new, complete inventory of the policy statements for Submission Processing Activities.

Effect on Other Documents

This obsoletes IRM 1.2.1, dated June 15, 2012.

Audience

All Divisions and Functions

Effective Date

(10-15-2012)

Kathryn A. Greene
Director, Servicewide Policy, Directives
and Electronic Research

1.2.12.1  (10-15-2012)
Introduction

  1. This IRM contains the Policy Statements which relate to Submission Processing Activities. Each Policy Statement is now categorized by the process to which it belongs. Distribution of the IRM should be to all persons having a need for any of the Policy Statements. Policy Statements apply to all Service personnel involved in the type of program, activity, function, or work process they cover.

  2. Any Policy Statement approved after this revision of IRM 1.2.12 is posted to IRS.gov and can be accessed through the ReferenceNet web site under the Instructions to Staff tab at the top and then to "Recently Approved Policy Statements." They will remain on the web until the next revision is made to this IRM. The address is http://rnet.web.irs.gov/index.htm.

    Note:

    If any Policy Statements have been inadvertently omitted from this Section they are still considered official and in full force and effect. Please send any discrepancies found to spder@irs.gov.

  3. The following is a listing of all sections in the Policy Statement series:

    • IRM 1.2.1, Policies of the Internal Revenue Service;

    • IRM 1.2.10, Policy Statements for Organization, Finance and Management Activities;

    • IRM 1.2.11, Policy Statements for Information Technology Activities;

    • IRM 1.2.12, Policy Statements for Submission Processing Activities;

    • IRM 1.2.13, Policy Statements for the Examining Process;

    • IRM 1.2.14, Policy Statements for the Collecting Process;

    • IRM 1.2.15, Policy Statements for Human Resources Management Activities;

    • IRM 1.2.16, Policy Statements for the Rulings and Agreements Process;

    • IRM 1.2.17, Policy Statements for the Appeals Process;

    • IRM 1.2.18, Policy Statements for Criminal Investigation Activities;

    • IRM 1.2.19, Policy Statements for Communications, Liaison and Disclosure Activities;

    • IRM 1.2.20, Policy Statements for Penalties and Interest Activities;

    • IRM 1.2.21, Policy Statements for Customer Account Services Activities;

    • IRM 1.2.22, Policy Statements for Taxpayer Education and Assistance Activities;

    • IRM 1.2.23, Policy Statements for Office of Chief Counsel Activities; and

    • IRM 1.2.24, Policy Statements for Special Topic Activities.

1.2.12.1.1  (03-24-1960)
Policy Statement 3-1 (Formerly P-2-1)

  1. Tolerances to relieve districts and service centers of less productive work

  2. In the interest of efficient and economical operation, it is necessary that there be an official Servicewide plan to relieve districts and service centers of the responsibility of devoting production time to the smaller, less productive cases where the revenue involved would not warrant the handling costs and the interests of the Government would not be jeopardized. To this end, tolerances will be prescribed and used for screening off the cases, i.e., returns, accounts, balances due, etc., selected on the basis of amount, percentage, or other criteria, where it would not be worthwhile to follow the normal procedure.

  3. Tolerances to be uniformly applied except in special cases

  4. Such tolerances will be prescribed in the Law Enforcement Manual and will be uniformly applied in all districts. However, District Directors may, in their discretion, forego use of a tolerance in particular cases in which they believe that such action would be in the best interests of the Government.

1.2.12.1.2  (12-29-1970)
Policy Statement 3-2 (Formerly P-2-7)

  1. Reasonable cause for late filing of return or failure to deposit or pay tax when due

  2. Any sound reason advanced by a taxpayer as the cause for delay in filing a return, making deposits under the Federal Tax Deposit System, or paying tax when due, will be carefully analyzed to determine whether the applicable penalty should be asserted. Examples of sound causes for delay which, if established, will be accepted as reasonable cause are shown below:

    1. Death or serious illness of the taxpayer or a death or serious illness in his/her immediate family. In the case of a corporation, estate, trust, etc., the death or serious illness must have been of an individual having sole authority to execute the return or make the deposit or payment or of a member of such individual's immediate family.

    2. Unavoidable absence of the taxpayer. In the case of a corporation, estate, trust, etc., the absence must have been of an individual having sole authority to execute the return or make the deposit or payment.

    3. Destruction by fire or other casualty of the taxpayer's place of business or business records.

    4. Taxpayer was unable to determine amount of deposit or tax due for reasons beyond the taxpayer's control. However, this cause will be acceptable for taxpayers required to make deposits or payments of trust fund taxes only when the taxpayer was unable to have access to his/her own records.

    5. The facts indicate that the taxpayer's ability to make deposits or payments has been materially impaired by civil disturbances.

    6. Lack of funds is an acceptable reasonable cause for failure to pay any tax or make a deposit under the Federal Tax Deposit System only when a taxpayer can demonstrate the lack of funds occurred despite the exercise of ordinary business care and prudence.

  3. Other explanations may be acceptable

  4. Acceptable explanations of delinquency are not limited to the examples given above, since any reason for delinquency in filing or making deposits or payments which established that the taxpayer exercised ordinary business care and prudence but was nevertheless unable to comply within the prescribed time will be accepted as reasonable cause.

  5. State or local law interpretations as prohibiting advance payment of taxes withheld not acceptable

  6. For agencies or instrumentalities of a State or political subdivision thereof, interpretation of State or local laws as prohibiting advance payment or deposit of taxes withheld is not acceptable as reasonable cause for delay in making deposits or payments.

1.2.12.1.3  (07-27-1967)
Policy Statement 3-3 (Formerly P-2-9)

  1. Timely mailed returns bearing foreign postmarks to be accepted

  2. Returns mailed by taxpayers in foreign countries will be accepted as timely if postmarked on or before midnight of the last date prescribed for filing, including any extension of time for such filing. If the last day for filing falls on a Saturday or Sunday, returns will be considered timely if postmarked on or before midnight of the next day. Whenever appropriate for the answering or anticipating of public inquiries, all offices of the Service are authorized to announce this policy.

1.2.12.1.4  (03-22-1993)
Policy Statement 3-4 (Formerly P-2-10)

  1. Abatement of Interest on Erroneous Refunds

  2. Fair and equitable administration of the tax laws requires that taxpayers should not be held liable for interest on erroneous refunds until the taxpayer is asked to repay the refund. The Service must clearly be at fault in making the refund, however, and the refund must not exceed $50,000.

1.2.12.1.5  (07-26-2011)
Policy Statement 3-5 (Formerly P-2-11)

  1. Unsigned income tax returns will not be accepted for processing; delinquency penalty generally will not be imposed on timely filed unsigned income tax returns

  2. An unsigned tax return is not a valid tax return. The Service, therefore, will not accept unsigned income tax returns for processing, although these returns may constitute informal claims for refund or credit if the taxpayers report overpayments of tax on the returns.

  3. The Service will return unsigned income tax returns to taxpayers requesting that the taxpayers sign the tax returns and resubmit them for processing.

  4. Except as provided in the paragraph below, the Service will not impose a delinquency penalty when an unsigned tax return is filed timely on the prescribed form and accompanied by proper payment, and the taxpayer, upon request, subsequently files a proper income tax return.

  5. The Service will impose a delinquency penalty when the facts show willful intent to disobey the Internal Revenue laws or gross negligence in connection with the taxpayer’s failure to sign the income tax return. Additionally, the Service may impose a delinquency penalty if the taxpayer asserts a statute of limitations defense to the assessment of tax stated on the income tax return that relies in whole, or part, on the filing of the unsigned tax return.

1.2.12.1.6  (03-24-1960)
Policy Statement 3-6 (Formerly P-2-50)

  1. Taxpayer's determination generally accepted as to location of principal place of business for purpose of filing employment and miscellaneous excise tax returns

  2. In cases where there may be doubt as to the Internal Revenue district in which returns of taxes under subtitles C and D of the Code (employment and miscellaneous excise tax returns) should be filed, the Service will as a general rule accept the taxpayer's determination as to the location of the principal place of business for purposes of filing his/her returns. The taxpayer's determination, however, will not be accepted if it is an obvious attempt to avoid the effect of law and regulations

1.2.12.1.7  (09-19-1969)
Policy Statement 3-7 (Formerly P-2-51)

  1. Excess payments determined during processing of quarterly employment or excise tax returns generally applied to a taxpayer's account

  2. When a taxpayer reports an overpayment on his/her quarterly return for certain employment or excise taxes, he/she may elect either to apply the excess to his/her next return or to receive a refund. In the absence of such an election, when the Service Center Director determines during processing of an employment or excise tax return that there is an excess payment, the excess will generally be applied to the taxpayer's account.

1.2.12.1.8  (07-31-1993)
Policy Statement 3-8 (Formerly P-2-63)

  1. Extensions of time for filing certain information returns, approved in bona fide case

  2. A reasonable extension of time will be granted for filing information returns, Forms W–2G, 5498, 1098, and 1099, on the basis of a timely filed request, where real need for more time is clearly established.

  3. Period of extension

  4. In general, extensions of time will be for no more than 30 days. If the need for additional time is clearly shown, payers may request a second extension for no more than 30 days. Second requests will be granted based on the evidence that extenuating circumstances prevented filing by the first extension date.

1.2.12.1.9  (07-31-1993)
Policy Statement 3-9 (Formerly P-2-64)

  1. Extensions of time for furnishing statements to recipients approved in bona fide cases

  2. A reasonable extension of time will be granted for furnishing statements to recipients. However, because recipients will need this information to prepare their income tax returns, extensions of this type will be granted only when the request is based on circumstances that could not reasonably have been foreseen and provided for in advance.

  3. Period of extension

  4. In general, extensions of time will be for no more than 15 days, unless need for an extension up to a total of 30 days is clearly shown.

1.2.12.1.10  (07-31-1993)
Policy Statement 3-10 (Formerly P-2-65)

  1. Extensions of time for filing Forms W–2 approved in bona fide cases

  2. A reasonable extension of time will be granted for filing Form W–2, on the basis of a timely filed request, where real need for more time is clearly established.

  3. Period of extension

  4. In general, extensions of time will be for no more than 30 days. If the need for additional time is clearly shown, payers may request a second extension for no more than 30 days. Second requests will be granted based on the evidence that extenuating circumstances prevented filing by the first extension date.

1.2.12.1.11  (01-22-1965)
Policy Statement 3-11 (Formerly P-2-66)

  1. Extensions of time for furnishing Form W–2 to employees approved in bona fide cases

  2. Employers will be granted reasonable extensions of time for furnishing Form W–2 to employees. However, since employees will need this information to prepare their income tax returns, extensions of this type will be granted only when the request is based upon circumstances which could not reasonably have been foreseen and provided for in advance.

  3. Period of extension

  4. In general, extensions of time will be for no more than 15 days, unless need for an extension up to a total of thirty days is clearly shown.

1.2.12.1.12  (06-19-1987)
Policy Statement 3-12 (Formerly P-2-67)

  1. Late filed applications for extensions of time to file returns will not be approved

  2. The Service will neither consider nor approve on a case-by-case basis late filed applications for extensions of time to file returns. The Commissioner may extend the due date for filing returns for broad classes or groups of taxpayers, but only in cases of natural disaster, catastrophe or other extraordinary situations.

1.2.12.1.13  (03-24-1960)
Policy Statement 3-13 (Formerly P-2-77)

  1. Mailing of blank tax return forms to taxpayers

  2. As a service and convenience to taxpayers and to encourage voluntary compliance by reminding them of their obligation to file returns, the Service will, in general, mail blank tax return forms to persons who filed returns for the previous tax period or are otherwise on record as being potentially liable for the filing of returns.

  3. Blank forms also to be made available at post offices, banks, etc.

  4. As a further service, certain blank forms designed for general and widespread public usage will be made available at district offices, banks, post offices, etc., for over-the-counter distribution.

1.2.12.1.14  (10-21-1971)
Policy Statement 3-14 (Formerly P-2-88)

  1. Elections to apply income tax overpayments to estimated tax may be reversed upon showing of undue financial hardship

  2. When an income tax overpayment is elected for credit to estimated tax for the following year, it must be so applied. If the taxpayer wishes to change his/her election (after the filing of the overpayment return) in order to have the overpayment refunded, the refund may be made only upon a showing that the taxpayer would suffer undue financial hardship. Refunds in such cases will be limited to individual taxpayers whose requests are submitted far enough in advance to permit refund to be made prior to the end of the taxable year to which the credit was applied. Interest will not be allowed on the overpayment for the reason that the Service was precluded from making the refund within the usual 45-day interest-free period.

1.2.12.1.15  (09-20-1999)
Policy Statement 3-15 (Formerly P-2-89)

  1. Reconsideration of an Unpaid Assessment

  2. A request for reconsideration of an unpaid assessment will be considered if:

    1. The taxpayer requests in writing the abatement of an assessment based on enclosed information that was not previously considered which, if timely submitted, would have resulted in a change to the assessment;

    2. An original delinquent return is filed by the taxpayer after an assessment was made as a result of a return executed by the IRS under IRC § 6020(b) or other substitute for return procedure; or

    3. There was an IRS computational or processing error in assessing the tax.

  3. A request for reconsideration of an unpaid assessment based on item 1 or 2 above will not be considered if:

    1. The assessment was made as a result of a closing agreement entered into under IRC § 7121, or as a result of a compromise under IRC § 7122;

    2. The assessment was made as a result of final adjustments of partnership items;

    3. The assessment was made as a result of the taxpayer entering into an agreement on Form 870-AD, Offer to Waive Restrictions on Assessment and Collection of Tax Deficiency and to Accept Over assessment ; or

    4. The assessment relates to a return closed on the basis of a final order of the United States Tax Court or other court.

Exhibit 1.2.12-1 
All Active Policy Statements for Collecting Process Activities

New Number Old Number Title
3-1 2-1 Tolerances to relieve districts and service centers of less productive work
3-2 2-7 Reasonable cause for late filing of return or failure to deposit or pay tax when due
3-3 2-9 Timely mailed returns bearing foreign postmarks to be accepted
3-4 2-10 Abatement of Interest on Erroneous Refunds
3-5 2-11 Unsigned income tax returns will not be accepted for processing; delinquency penalty generally will not be imposed on timely filed unsigned income tax returns
3-6 2-50 Taxpayer's determination generally accepted as to location of principal place of business for purpose of filing employment and miscellaneous excise tax returns
3-7 2-51 Excess payments determined during processing of quarterly employment or excise tax returns generally applied to a taxpayer's account
3-8 2-63 Extensions of time for filing certain information returns, approved in bona fide case
3-9 2-64 Extensions of time for furnishing statements to recipients approved in bona fide cases
3-10 2-65 Extensions of time for filing Forms W-2 approved in bona fide cases
3-11 2-66 Extensions of time for furnishing Form W-2 to employees approved in bona fide cases
3-12 2-67 Late filed applications for extensions of time to file returns will not be approved
3-13 2-77 Mailing of blank tax return forms to taxpayers
3-14 2-88 Elections to apply income tax overpayments to estimated tax may be reversed upon showing of undue financial hardship
3-15 2-89 Reconsideration of an Unpaid Assessment

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