1.13.6  Instructions for Processing the Taxpayer Usage Study  (01-01-2007)

  1. This section of the Internal Revenue Manual (IRM) describes the Statistics of Income (SOI) sampling requirements for the Tax Year (TY) 2006 Taxpayer Usage Study (TPUS). It gives instructions to the submission processing centers on how to select, control, photocopy, edit and ship documents in the sample.

  2. SOI has designed this special statistical study for the Commissioner, Chief Operations Officer, and the Office of Tax Analysis in the Department of Treasury. It provides early planning data about taxpayers’ use of the TY 2006 Individual Income Tax forms.  (01-01-2007)
General Instructions

  1. The sample size of the Taxpayer Usage Study is approximately 14,000 returns, which are randomly selected from all mail that the submission processing centers receive between January 2 and October 26, 2007.

  2. The sampling of the returns entails coordination with the Chief, Receipt and Control Branch, and the Lock-Box Coordinator. In the Receipt and Control Branch, sampling occurs in two locations: (1) the area with the Composite Mail Processing System (COMPS) machine and its replacement, the Service Center Automated Mail Processing System (SCAMPS); and (2) the mail room where employees open the "flats," "fats," and cloth mail pouches. In addition, sampling takes place at the off-site Lock-Box locations. All receipts are subject to sampling, except information documents.

  3. Once sampling is completed each day, the Receipt and Control unit photocopies, sorts and sequentially numbers the forms: TY 2006 Form 1040, Form 1040A, Form 1040EZ, and Form 1040EZ-T . It also photocopies and staples related materials to the returns before sending them to the center's TPUS editor. The unit includes any sampled item that is not a TY 2006 form in the daily totals, but does not photocopy it. Work is forwarded to that area the submission processing center has assigned the task of data entry.

  4. The SOI program analyst at the center, or the SOI Coordinator, maintains weekly counts from the COMPS/SCAMPS machine, bulk mail (i.e., a combined count from the "flats," "fats," and cloth mail pouches) and Lock-Box mail. The recorder maintains a count of valid sampled returns and a count of invalid sampled items, or residuals, for each of these categories. SOI defines residuals as all sampled documents other than current year Forms 1040, 1040A, 1040EZ, and 1040EZ-T. Thus, it considers prior year tax returns residuals for purposes of TPUS sampling.

  5. Editing of the sample begins January 22, 2007. The editing, as well as error resolution, occurs on-line using the Regatta computer system which is located in the Cincinnati Submission Processing Center. At SOI non-processing centers, specifically Andover, Fresno, and Philadelphia, the editing is done in the Receipt and Control Branch, the Document Perfection Branch, or the Research and Perfection Branch (Files) on a computer terminal, provided by National Office and dedicated to TPUS work.

  6. SOI requires support for sampling and photocopying from the Receipt and Control Branches. It requires editing support from the Receipt and Control Branches, Document Perfection Branches, or Planning and Analysis Staff. The line managers in the appropriate areas are responsible for ensuring that the centers follow the instructions, and when needed, seek technical assistance from the Submission Processing Center SOI program analysts, SOI coordinators or National Office analysts.  (01-01-2007)
Sampling Returns

  1. All mail that may contain tax returns is subject to daily sampling at each submission processing center between January 2 and October 26, 2007.

  2. The TY 2006 sampling rates for different types of mail are listed below:

    Type of Mail Sampling Rate
    COMPS/SCAMPS mail one envelope for every 6,000 pieces
    Bulk mail one envelope for every 600 pounds
    Lock-Box mail one envelope for every 6,000 pieces  (01-01-2007)
Sampling Procedures

  1. COMPS/SCAMPS mail and Lock-Box returns:

    1. Set the COMPS/SCAMPS machine to select every Nth return, according to the rates listed above.

    2. Check to see that the COMPS/SCAMPS machine is set to stamp the sampled envelope with the receipt date and special TPUS marking.

    3. Select and control every Nth return off the COMPS/SCAMPS machine.

    4. Carry over the selection count for one day to the next (for example, if the count ends at 1,372 on a Monday, it begins at 1,372 Tuesday).

  2. Bulk mail:

    1. Select one (1) envelope every Nth pound as specified above.

  3. Lock-Box mail:

    1. Draw the sample at the Lock-Box mail site.

    2. Send all the documents in a selected envelope to the appropriate submission processing center.

    3. Remove residuals from the envelope at the center.

  4. Each center should monitor the expected and actual sample sizes to ensure that they do not differ by more than plus or minus 5 percent . Problems are reported to Kevin Pierce at FTS (202) 874-0492 or Mike Weber at FTS (202) 874-0877.

  5. Each center excludes from selection the following documents:

    1. Any rejected envelopes that are run through the COMPS/SCAMPS machine a second time. (Exclude these from the COMPS/SCAMPS population count to avoid counting the mail twice.)

    2. Any returns that the Area Offices sent to the Submission Processing Centers after auditing.

    3. Any mail stamped "Undeliverable," which is bundled separately within pouches.

  6. When weighing the mail to figure out the number of returns, the center selects an envelope whenever it reaches "N" pounds. From this package, it extracts only the first tax form, whether it is a Form 1040, Form 1040A, Form 1040EZ, or Form 1040EZ-T. If all enclosed documents are other than a Form 1040, Form 1040A, Form 1040EZ, or Form 1040EZ-T, the document is considered a residual and counted as such. It excludes Federal Tax Deposit Coupons (FTD’s), Automated Collection System (ACS) responses, and bulk information documents from the bulk counts. It samples cloth mail in the same manner as flat mail.

  7. When sampling on the COMPS/SCAMPS machine, if an envelope is selected which contains more than one document, and at least one document is a Form 1040, Form 1040A, Form 1040EZ, or Form 1040EZ-T, the center selects those forms. If the envelope selected does not contain a Form 1040, a Form 1040A, a Form 1040EZ, or a Form 1040EZ-T, it counts the document as one residual and returns it to the regular processing stream without photocopying.

  8. When dealing with flats, fats, or cloth pouches, the center photocopies all documents and envelopes associated with the sampled Form 1040, Form 1040A, Form 1040EZ, Form 1040EZ-T and schedules. If the selected document is not a Form 1040, Form 1040A, Form 1040EZ, or Form 1040EZ-T, it counts the document as one residual and returns it to the regular processing stream without photocopying.  (01-01-2007)
Photocopying Documents in the Sample

  1. Receipt and Control Branch photocopies completely each return selected for the sample. The center photocopies both sides of the return (including Form 1040EZ), schedules, and forms. It attaches the original envelope to the photocopies of returns filed by April 15, 2007. For those returns not timely filed, it photocopies both sides of the envelope. If a COMPS/SCAMPS-selected envelope contains more than one return, the center photocopies all TY 2006 returns in it and makes enough photocopies of the envelope to attach one to each selected return. When photocopying Form 1040EZ returns, setting the machine to dark copy to pick up the lighter ink used in printing is extremely important. In the past Form 1040EZ returns that the center did not photocopy on the dark setting caused editing errors.

  2. The center photocopies all attached Forms W-2 and payments (checks or money orders). It verifies that the following fields are legible on the photocopied W-2(s): taxpayer’s name and social security number, and the amount in box 13. If they are illegible, the centers write the entries on the photocopy.

  3. Centers photocopy oversized sheets containing schedules completely, even if this requires more than one exposure to complete the job. If a return contains typed or handwritten schedules, the center photocopies only the side with taxpayer entries. If the return contains schedules with instructions on the reverse side, it photocopies only the side with taxpayer entries.

  4. Each center must assign an individual to review all of the photocopies to ensure completeness and legibility of photocopies before releasing the originals to pipeline processing. It is crucial that the center not cut off any portion of any return during photocopying, for the entity area and the paid preparer line are important items in this study. Validity, accuracy, and preciseness are fundamental to producing accurate estimates. It is imperative that the center maintains the integrity of the sample, as initially selected. The center cannot replace sampled returns with other returns for any reason.  (01-01-2007)
Documenting Each Return in the Sample

  1. The individual assigned to photocopy sampled 1040, 1040A, 1040EZ, or 1040EZ-T returns must put the appropriate notations in red ink on the front of the photocopy as follows:

    1. All photocopies must be stamped "PHOTOCOPY."

    2. For those returns containing cash, enter the amount of cash submitted with a dollar sign in the upper left margin of the photocopy.

    3. For those returns sampled from flats, fats, or cloth mail pouches stamp the word "Flats" in red ink in the upper margin of the

    4. If Forms W-2 are not attached, write the words "No W-2" in the upper right margin of the photocopy.

    5. For those returns sampled from mail received from Lock-Box, stamp the word "Lock-Box" in red ink in the upper margin of the photocopy.

  2. The centers number sequentially the photocopies. Each center starts with the number ‘0001’, whatever form type.

  3. When associating the return with its attachments, the center assembles the photocopied documents so the tax form is on top, followed by any schedules or forms, then the payment, the envelope and the Form(s) W-2 last. It staples together all of the photocopied documents, so that all the related materials are together as a unit.  (01-01-2007)
Controlling the Sample

  1. The SOI Branch Chief, or the SOI coordinator, monitors and coordinates the sample selection, editing, and subsequent processing in the submission processing center. Counts of the sample, including residuals, are maintained to confirm that the number selected is consistent with the total volume and the number of each return type received in the center. Photocopies are reviewed periodically to see that they are complete and legible.

  2. After sampling, photocopying, sorting, and numbering the documents, the center packages and forwards them to the designated submission processing center person(s) for editing and error resolution.

  3. Each week, after the center has entered and corrected the selected returns on the Regatta, it produces and prints the Batch Control Sheets by selecting the appropriate options from the TPUS Menu. It compares the returns with the sheets, making sure the returns are numbered sequentially. It adds any missing returns, and edits any incomplete returns. If editors make changes, it produces and prints the Batch Control Sheets again, repeating the process of verification until it accounts for all the returns.

  4. National Office will select and process a quality review sample during February and March.  (01-01-2007)
TPUS Editing

  1. Centers edit the returns on terminals connected to the Regatta system at the Cincinnati center.

  2. Editing and error correction of the returns received during a given week must be completed by close of business of the next Monday so that National Office receives the data Monday evening.  (01-01-2007)
Work Planning and Control

  1. Centers use the codes listed in the table below to charge volumes and time spent in controlling and editing the returns in this study:

    Organization, Function and Program (OFP) Codes
    Organization Function Program
    Cincinnati 12000 210 27000
    Andover 31000
    Atlanta, Austin, Fresno, Kansas City and Philadelphia 34000

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