Master file processing uses alpha codes to identify specific conditions that are generated systemically, during the processing operation, or manually, through input of a transaction code. These alpha codes are commonly referred to as "freeze" codes. Freeze codes prevent the issuance of refunds, credit offsets, or the assessment of an accrued interest and/or penalty.

There are three types of freeze condition codes:

TAC employees should not take action on any freeze condition without complete IDRS research. See IRM 21.5.6.4 for guidance on how to resolve freeze conditions.

See Document 6209 for a complete list of freeze codes.

TAC employees are responsible for researching and resolving payment tracer inquiries.

Payments not applied to the correct tax module may cause erroneous notices or refunds.

If the payment is located:

IDAP (IDRS Decision Assisting Program) is mandatory for use in resolving payment tracer research.

If the payment is not located:

See IRM 21.5.7, Exhibit 21.5.7-2, Hardcore Payment Tracer Addresses.

All credit transfer request will be processed via IDAP (IDRS Decision Assisting Program). IDAP is mandatory for processing all credit transfer contacts. A credit transfer moves a payment or credit from one account to another, or reverses credits previously applied.

Credit transfer adjustments may not be input if another employee or organization has an open control base. Contact the person or organization with the open control base. DO NOT reassign or change the control base until this contact is made.

TAC employees can transfer a credit if at least one of the tax modules is on IDRS. If not, bring account to IDRS using CC MFREQ or create a dummy account using CC ACTON.

Credit transfers may be made based on an oral statement or correspondence received from the taxpayer. If the authorization is through oral statement, the taxpayer must confirm the payment amount or the IRS string of endorsement information on the canceled check (ISRP payment information, MFT, tax period, payment date etc.).

If a source document is required, Form 4442 / e-4442 DI (see IRM 21.3.5.4 (Referrals), for instructions on preparing Form 4442 / e-4442 DI) or the taxpayer's correspondence may be used. Otherwise, the Remarks Field on the credit transfer input must include a brief explanation for the transfer.

Caution: Follow procedures in IRM 21.4.5, Erroneous Refunds, if a refund was issued in error.

Refer to IRM 21.5.8.3.1 Determine the Source Document Requirement for Credit Transfers for examples of related accounts.

For information on credit transfers involving the Individual Retirement Account File (IRAF) refer to IRM 21.6.5.4.11.8 Retirement Account File (IRAF) Credit Transfers, and IRM 21.6.7, Adjusting Individual Tax Accounts.

For credit transfers to Non-Master File (NMF) accounts, prepare Form 4442, and forward it to your Submission Processing Center.

Every employer who, during the current or preceding calendar year, paid wages of $1,500 or more in any calendar quarter, or had one or more employees for some part of a day in any 20 or more different weeks, must file Form 940 or Form 940-EZ (obsolete after 2005) which is a streamlined form.

Form 940 / Form 940-EZ (obsolete after 2005) is a annual return due January 31 of the next year.

Agricultural employers are liable if:

Household employers must pay FUTA taxes ONLY if they paid cash wages of $1,000 or more in any calendar quarter in the current or preceding calendar year for household work. Generally, individuals, estates, and trusts that owe FUTA tax for domestic service in a private home, must file Schedule H ( Form 1040). However, if an employer has other employees in addition to household employees, the employer can choose to include the FUTA taxes for their household employees on Form 940 instead of filing Schedule H ( Form 1040). If the employer chooses to include household employees on Form 940, the employer must also report social security, Medicare, and withheld federal income taxes for household employees on Form 941, Form 944, or Form 943. See IRM 4.19.5.4.4, Sch. H Household Employment Taxes under Section 3510, and Publication 926, Household Employer's Tax Guide.

Currently IRS can process Form 940 electronically. Two program options are available for businesses.

Form 941, Employer’s QUARTERLY Federal Tax Return, is used by employers to report income tax withheld from wages, including tips, supplemental unemployment compensation benefits, third party payments of sick pay, and both the employee and employer shares of Social Security and Medicare taxes. Publication 15 (Circular E) Employer’s Tax Guide, contains complete information on filing employment tax forms and should be given to the taxpayer.

Use the following table to determine when the Form 941 is due:

Some employers have to deposit Social Security, Medicare, and Federal Income Taxes. Refer to the deposit requirements in IRM 21.7.2.4.4. Also reference the Publication 15, (Circular E), Employer’s Tax Guide for additional payment information.

Seasonal employers are relieved from filing tax returns for the quarters in which they have no tax liability. However, they must file at least one return each year and check the seasonal employer box on Form 941 to establish or maintain this status.

Currently, IRS can process Form 941 electronically. Several program options are available for businesses.

Form 943 is filed on a calendar year basis to report income tax withheld and employer and employee FICA (Social Security and Medicare) taxes on farm workers. The return is due on or before January 31 of the year following the end of the calendar year.

All cash wages paid to farm workers are subject to FICA and income tax withholding during the year if either of the two tests below are met:

Some employers have to deposit Social Security, Medicare, and Federal Income Taxes.

Beginning with the tax year 2006, certain taxpayer’s will be notified that they will have to file Form 944, a new, simpler employment tax return.

Form 944 is an annual return intended for small businesses, whose employment tax liability is $1,000 or less for employee and employer FICA taxes, and federal income tax. Taxpayers' have to be notified by mail in order to file Form 944. TP will be instructed to contact us for any questions or if TP wishes to "opt out" of the program. If filing requirements are changed at the request of the TP, a letter or acknowledgement of this change must be made by IRS. Letter 3007C may be sent to TP for acknowledgement. The chart below indicates procedures for handling most of these inquiries.

Form 944 is an annual return due by January 31 of the following year.

If a taxpayer's total employment tax liability is less than $2,500 during the calendar year, then the taxpayer may pay with the return. If the taxpayer's total employment tax liability is $2,500 or more, the taxpayer must deposit the employee and employer FICA taxes and federal income tax withheld.

The following employers cannot file Form 944.

For additional information see IRM 21.7.2.4, and Form 944 instructions.

Non-payroll income tax withholding is reported on Form 945. Non-payroll items include backup withholding and withholding for pensions, annuities, IRAs, military retirement, Indian gaming, gambling winnings, and voluntary withholdings on certain government payments.

Form 945 is a calendar year return and is due on or before January 31 of the year following the end of the calendar year.

Separate deposits are required for payroll ( Form 941, Form 943, and Form 944) and non-payroll ( Form 945) withholding.

Use Publication 15-A, Employer's Supplemental Tax Guide, and Instructions for Form 945 for resolving Form 945 questions.

A taxpayer is required to file Form 945 only for a calendar year in which the taxpayer withheld non-payroll tax.

The Social Security Domestic Employment Reform Act of 1994 was signed on October 22, 1994. Effective January 1,1995, domestic service employment taxes are collected with income tax rather than as employment taxes. Key points to consider are:

Domestic service employment taxes are reported on Schedule H ( Form 1040), which is an attachment to Form 1040. The tax is paid with the taxpayer’s estimated tax payments on Form 1040ES or through increased withholding on other income.

TAC employees will assist taxpayers who are household employers in completing the Schedule H to report wages paid to domestic employees. Schedule H must be filed with Form 1040 if the taxpayer is required to file a tax return.

TAC employees’ responsibilities must be completed in the following order:

If any tax law questions are identified while assisting a Form 2290 taxpayer, TAC employees are required to use the appropriate tax year PMG per IRM 21.3.4.3.7 to answer the question.

The Form 2290 is filed annually. A separate Form 2290 is filed for any month a taxable vehicle is first placed in service.

Form 2290 must be filed for each month a taxable vehicle is first used on public highways during the current period. The current period begins July 1, 200x, and ends on June 30th of the following year. Form 2290 must be filed by the last day of the month following the month of first use (see chart under"When to File" in Form 2290 instructions).

For vehicles first placed in service after July 31st, the tax year begins in the month the vehicle is first placed in service and ends the following June 30th. For these vehicles, the Form 2290 must be filed by the end of the month, following the month in which the vehicle was first placed in service.

The tax is due in a single payment with the return. Beginning July 1, 2005 the option to pay the tax in installments was eliminated. The tax must be paid in full with Form 2290. If the tax due is not paid in full, the taxpayer will not be issued a copy of a stamped Schedule 1, and will receive a balance due notice which will include penalties and interest, when applicable.

Special circumstances can cause a second filing of Form 2290 marked "Amended" . An amended return is due the last day of the month, following the month, that either:

Any additional tax is due in a single payment with the amended return.

Use the following steps to review the return and both Schedules 1. If discrepancies are found, have the taxpayer correct them. A third party is not authorized to make corrections.

Review entity section of Form 2290 as follows:

Use Form 2290 instructions to ensure that Parts I and II are complete and accurate.

Both Schedules 1 must be identically completed.

Secure payment for the amount entered as balance due.

The installment privilege was eliminated effected July 1, 2005. There are three methods of payment:

For the EFTPS payment to be timely, the taxpayer should make the EFTPS payment one business day before the payment is due.

Use command code EFTPS to verify payments made through the Electronic Federal Tax Payment System (EFTPS). See IRM 3.17.277.9.1.3 for command code EFTPS procedures.

If the required full payment is not received, do not stamp Schedule 1 or return Schedule 1 to the taxpayer.

If the return is filed late, advise the taxpayer to pay the tax in order to get the stamped copy of Schedule 1. Inform the taxpayer that he/she will receive a bill for any unpaid tax, Failure to File / Failure to Pay penalties, and interest in the mail. Only when the actual tax is paid in full will the taxpayer receive a copy of a stamped schedule 1.

Secure the return and edit it as follows:

After you have verified that the return is accurate and complete (or the taxpayer has made the necessary corrections), and you have secured the required payment, stamp the front of Form 2290, any attachment(s), and both Schedules 1 with an official IRS stamp.

Return the bottom copy of Schedule 1 to the taxpayer or taxpayer's representative.

Field Assistance employees will receive Form 2290 both with and without payment (cash and non-cash). Cash payments received with Form 2290 will require the issuance of Form 809 (refer to IRM 5.1.2.2(4). Returns with Form 809 receipts will be sent via Form 795 to the Submission Processing Center as aligned with the respective Area office (i.e. the site that issued the Form 809receipt book). All Forms 2290received with payments are to be sent via traceable, overnight mail.

Submit Form 2290 returns per table below:

*ALTERNATIVE: Form 2290 returns received without payments can be included on another Form 795 where other 2290 returns received with non-cash payments are being reported.

For inside envelope names and addresses, and any updated remittance processing information, go to the Field Office Payment Processing Program site. Once on the site, select the following:

Assist taxpayers (or the taxpayer's authorized representative) who report not receiving a stamped copy of Schedule 1 for a previously filed Form 2290, including those taxpayers who may have used the Electronic Federal Tax Payment System (EFTPS) to pay their Heavy Vehicle Use Tax, as follows:

If evidence is not present to show that the return has been filed and that all tax due has been paid for the period in question, do not stamp Schedule 1. Advise the customer that the 2290 must be filed and the tax paid before we can provide a stamped schedule 1.

Occasionally, a taxpayer needs to change a VIN on an already filed Form 2290. The circumstances when these changes would be handled in a TAC should be rare.

If the taxpayer states the mistake on Schedule 1 was a typographical error (transposed or incorrectly entered characters within an otherwise correct VIN), have the taxpayer prepare a duplicate return, amending the Schedule 1 page with the correct information.
Date stamp the return and each Schedule 1 as follows:

If the taxpayer states an erroneous VIN was used, and the taxpayer provides an explanation, advise the taxpayer of appropriate actions to take using the Form 2290instructions.
Use guidance from IRM 21.7.8.4.2.19, Changing VINs, to determine if explanation is sufficient.

If the explanation provided was sufficient for situations described in paragraphs 2 or 3, above, and a new, stamped Schedule 1 is issued to the customer, prepare a referral to the Excise Tax Unit on a paper Form 4442. Mail all to Cincinnati Submission Processing Center with original, erroneous Schedule 1, and the new, corrected Schedule 1 to be associated with the original return. (Include DLN of the erroneous return as shown on IDRS.) Referrals for this purpose are not part of the e-4442 system, nor are they submitted through the Group Referral Coordinator (GRC).

If explanation is insufficient, advise that the taxpayer must file a new return and pay the tax in full before a stamped Schedule 1 is issued.

See IRM 21.7.8.4.2.19 for additional information on changing VINs.

See Exhibit 21.3.4-6 to determine whether the taxpayer should complete Form 2063, U.S. Departing Alien Income Tax Statement, or Form 1040C, U.S. Departing Alien Income Tax Return.

Verify full compliance on IDRS. All returns must be filed and all tax fully paid before you issue a Certificate of Compliance.

Review Form 2063 or Form 1040C as described in IRM 21.3.4.19.2 and IRM 21.3.4.19.3.