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Part 3. Submission Processing

Chapter 11. Returns and Documents Analysis

Section 12. Exempt Organization Returns (Cont. 2)

3.11.12  Exempt Organization Returns (Cont. 2)

3.11.12.2 
Form 990

3.11.12.2.32  (01-01-2008)
Schedule A
Part V
Perfection

  1. "X" Part V if NPFRC 02 is not edited.

  2. If the NPFRC is 02, a Signature Code must be edited.

    Exception:

    Do not edit a Signature Code if you are corresponding for a missing signature.

  3. Edit the following Signature Code in the bottom right margin of Schedule A, Part V, below line 35.

    1. Code 1 if the person signing the return has entered "officer" (president, vice-president, CEO, treasurer, or secretary), "director" , or "trustee" in the "name and title" area of the jurat.

    2. Code 2 for all others.

3.11.12.2.33  (01-01-2008)
Schedule A
Parts VI–A and/or VI-B
Correspondence

  1. Correspond for Part VI–A or VI–B if all of the following apply:

    1. Part III, Question 1 is "yes" .

    2. Part III, Question 1 dollar line is blank.

    3. Part VI–A is blank.

    4. Part VI–B is blank.

3.11.12.2.34  (01-01-2008)
Schedule A
Part VI–A
Perfection

  1. Arrow all T-lines from Part VI–A, Column (a) to (b) if the corresponding entry in Column (b) is blank.

  2. Lines 36, 37, 39, 41, 42, 43, and 44: Perfect.

  3. Lines 46(e)-50(e): If Line 47(e) is greater than Line 46(e), or Line 50(e) is greater than Line 49(e):

    1. Photocopy Form 990 or 990–EZ page 1 and Schedule A, Part VI-A

    2. Route photocopies (clearly marked as photocopies) via Form 4227 noted "Referral to Exam-excess lobbying expenditures" complete as follows:

      EOCU - M/S 1112

3.11.12.2.35  (01-01-2008)
Schedule A
Part VI-B
Perfection

  1. Line i: If blank, add Lines (c)-(h).

3.11.12.2.36  (01-01-2008)
Schedule A
Part VII
Correspondence

  1. Correspond for Line 51d, Columns (a)-(d), if they are blank and any of Lines 51a through 51c are "yes" .

  2. Correspond for Line 52b, Columns (a)-(c), if they are blank and Line 52a is "yes" .

3.11.12.2.37  (01-01-2008)
Schedule B
(Forms 990/990–EZ)

  1. See Exhibit 3.11.12 - 3 for Schedule B.

  2. See 3.11.12.2.8 (990) and 3.11.12.3.8 (990-EZ) for instructions for editing the Schedule B Indicator.

  3. Form 990/990-EZ: For tax periods 200012 and subsequent, all organizations must file Schedule B if the amount on Line 1e (Form 990) or Line 1 (Form 990–EZ) is $5,000 or more. Organizations not required to file a Schedule B must certify they are not required by checking the box in Item M of Form 990, or Item H of Form 990-EZ or by checking the third box on the Schedule B, under "Special Rules" .

    Exception:

    If a statement is attached indicating contributions from any one contributor did NOT exceed $5,000 or more during the year, a Schedule B or substitute Schedule B is not required.

  4. Substitute Schedule B : Organizations may attach a substitute Schedule B. An acceptable substitution must include:

    1. Name of each contributor, and

    2. Aggregate amount of contributions for each contributor.

3.11.12.2.37.1  (01-01-2008)
Schedule B
Correspondence
(Forms 990/990–EZ)

  1. Correspond for Schedule B if all of the following apply:

    1. Organization is not a zero filer or is a zero filer and transcription lines are present in any parts of Form 990, Parts I-XI or Form 990-EZ, Parts I-V .

    2. Schedule B is missing or is present but does not contain contributor information (name(s) / amount(s)), or "anonymous" , "N/A" , "none" "zero" , "dash" in Parts I, II, or III, or the third box under "Special Rules" , page 1 is not checked.

    3. Line 1e (Form 990) or Line 1 (Form 990–EZ) is $5,000 or more.

    4. The box in Item M Form 990, or Item H Form 990-EZ, is not checked.

    5. The tax period is 200012 or subsequent.

  2. Do not correspond for Schedule B if an acceptable substitute Schedule B is attached as described in IRM 3.11.12.2.37(4).

3.11.12.3  (01-01-2008)
Form 990–EZ

  1. Form 990–EZ is a short form used by exempt organizations and section 527 political organizations with gross receipts less than $100,000 and total assets less than $250,000.

    Note:

    All Forms 990–EZ must be scanned through the imaging process. See IRM 3.11.12.1.29.

3.11.12.3.1  (01-01-2008)
Form 990–EZ
General Instructions

  1. Always convert prior years.

  2. Always follow the instructions for a "special return" .

  3. Exhibits 3.11.12-2, 3.11.12-3, and 3.11.12-4 identify the transcribed lines (T-lines) for Form 990–EZ, Schedule A, and Schedule B.

  4. Perfect all T-lines as follows:

    1. Always perfect for legibility.

    2. Always perfect from attachments, if available.

    3. Correspond if the conditions are met.

    4. Follow the stated instructions for the line.

    5. Leave the T-line blank only if it cannot be perfected in the steps above.

  5. Put Form 990–EZ in the following order:

    1. Form 990–EZ, pages 1-3.

    2. Schedule A, pages 1-7 and Schedule B, if required.

  6. For 990-EZ zero filers with no transcription lines present on any of Parts I-V, it is not necessary to put pages in order after page 1.

  7. For 990-EZ zero filers with transcription lines present on any of Parts I-V, put form in order as shown in (5) above.

3.11.12.3.2  (01-01-2008)
Form 990–EZ
Filers Defined

  1. Form 990–EZ is the primary annual short-form information return filed by a public charity to comply with the filing requirements of IRC §6012 or §6033.

  2. The only penalty Form 990–EZ is subject to is the Daily Delinquency Penalty.

3.11.12.3.3  (01-01-2008)
Special Returns

  1. Form 990–EZ special returns are:

    • Foreign Return IRM 3.11.12.1.24.6
    • Government IRM 3.11.12.1.27
    • Group Return IRM 3.11.12.1.28 and 3.11.12.1.28.1
    • LM–2 and LM–3 IRM 3.11.12.3.4
    • Zero Filer IRM 3.11.12.1.44 and 3.11.12.1.44.1

3.11.12.3.4  (01-01-2008)
Forms LM–2, LM–3,
5500

  1. Labor organizations are allowed to substitute some information from Form LM–2 or Form LM–3. Edit the corresponding information from LM-2 or LM-3 on the following lines, if blank, and LM-2 or LM-3 is attached:

    1. Form 990–EZ, Part 1, Lines 10-16 (but the organization must complete Lines 17-21).

    2. Form 990–EZ, Part II, (but the organization must complete Lines 25-27, Columns (A) and (B).

  2. Correspond for the LM-2 or LM-3 reconciliation sheet if any of (1) above is not present. Use the LM–2/LM–3 paragraph of the 2699O letter.

  3. An employee benefit plan may substitute Form 5500 for part of Form 990–EZ as follows:

    1. Form 990–EZ, Part I, Line 21: The organization may substitute Form 5500 Line 31l, Col. (b), but must complete Lines 16-20.

    2. Form 990–EZ, Part II, Line 25 Col. (A): Form 5500 Line 31f Col. (a).

    3. Form 990–EZ, Part II, Line 25 Col. (B): Form 5500 Line 31f Col. (b).

    4. Form 990–EZ, Part II, Line 26 Col. (A): Form 5500 Line 31k Col. (a).

    5. Form 990–EZ, Part II, Line 26 Col. (B): Form 5500 Line 31k Col. (b).

3.11.12.3.5  (01-01-2008)
Perfection, Editing, and Correspondence

  1. Attach an edit sheet to Form 990-EZ, if required.

    Reminder:

    Form 5800, Exempt Organization Return Edit Sheet has been revised. The majority of Form 990-EZ editing previously entered on the Edit Sheet will now be entered on the return.

  2. Refer to the following instructions to perfect the generic items:

    1. Action Codes (ERS), IRM 3.11.12.1.12

    2. Computer Condition Codes (F, G, L, R, T, V, W, Y, 3, 7), IRM 3.11.12.1.15

    3. Daily Delinquency Penalty, IRM 3.11.12.1.19

    4. Entity Perfection, IRM 3.11.12.1.24 through 3.11.12.1.24.6

    5. Group Return, IRM 3.11.12.1.28

    6. Group Return Perfection and Correspondence, 3.11.12.1.28.1

    7. Incomplete Return Item (IRI) Program, IRM 3.11.12.1.16

    8. Received Date, IRM 3.11.12.1.32

    9. Tax Period, IRM 3.11.12.1.42

    10. Zero Filer Defined, 3.11.12.1.44

    11. Zero Filer Perfection, 3.11.12.1.44.1

3.11.12.3.6  (01-01-2008)
Subsection Code

  1. Edit a two-digit Subsection Code (SSXX) in the lower right corner of the entity portion. See Figures 3.11.12-1a and 3.11.12-1b.

    Exception:

    It is not necessary to edit a two-digit Subsection Code on zero filer returns with no transcription lines in any of Parts I-V.

    Caution:

    If transcription lines are present in any of Parts I-V, a Subsection Code must be edited.

  2. Determine the Subsection Code from the list below:

    1. IRS label

    2. INOLES research

    3. Item J of the entity section. If using the entry in item J, perfect as follows:

      Box Checked Subsection
      501(c) XX (subsection taxpayer entered)
      4947(a)(1) 91
      527 82

  3. If the Subsection Codes conflict (e.g., preprinted label or INOLES shows SS03, but the taxpayer indicates otherwise in Item J), always use the Subsection on the preprinted label or INOLES.

  4. If you are unable to determine the Subsection Code, edit "00" .

3.11.12.3.7  (01-01-2008)
Type of Organization Code

  1. Edit the Type of Organization Code in the right margin of Form 990-EZ, page 1, next to Box F.

    1. Determine the Type of Organization Code from the Subsection Code.

    2. Edit a Type of Organization Code as follows:

    Form 990-EZ
    Type of Organization Code Description
    1 SS01 02-20, 22-28, 50, 60, 70, 71, or 81
    3 4947(a)(1) box is checked in Item J of the entity section (SS91)
    4 527 box is checked in Item J of the entity section (SS82)
    9 non-group zero filer with no transcribed lines in any of Parts I-V. Do NOT underline code 9
    9 Underline code 9 if a non-group zero filer with transcribed lines are present in any of Parts I-V
    1 All others

3.11.12.3.8  (01-01-2008)
Schedule B Indicator

  1. Edit a Schedule B Indicator to the right of Part I, Line 1 for tax periods 200012 and subsequent, as shown below:

    If And Then
    Item H in the entity section is or is not checked,

    • A Schedule B or a substitute Schedule B is attached, containing contributor information (name(s) / amount(s)), or

    • The word "anonymous" , "N/A" , "none" , "zero" , "dash" , in Parts I, II, or III, or

    • The third box under "Special Rules" , page 1 is checked,

    		Edit a Schedule B Indicator of "1" .
    Item H in the entity section is or is not checked, and Part I, Line 1 is $4999 or less, or
    There is a statement indicating contributions from any one contributor did not exceed $5000,     		A Schedule B or Substitute Schedule B is not attached, 1. Do not edit a Schedule B Indicator.
    2. Continue processing return.
    Item H in the entity section is checked and Part I, Line 1 is $5000 or more, A Schedule B or a substitute Schedule B is not attached, or
    Is attached, but does not contain:

    • contributor information (name(s) / amount(s)), or

    • The word "anonymous" , "N/A" , "none" , "zero" , "dash" , in Parts I, II, or III, or

    • The third box under "Special Rules" , page 1 is not checked,

    		1. Do not edit a Schedule B Indicator or correspond.
    2. Continue processing return.
    Item H in the entity section is not checked and Part I, Line 1 is $5000 or more, A Schedule B or a substitute Schedule B is not attached, or
    Is attached, but does not contain:

    • contributor information (name(s) / amount(s)), or

    • The word "anonymous" , "N/A" , "none" , "zero" , "dash" , in Parts I, II, or III, or

    • The third box under "Special Rules" , page 1 is not checked,

    		1. Correspond per IRM 3.11.12.2.37.1.
    2. Do not edit a Schedule B Indicator.

3.11.12.3.9  (01-01-2008)
Part I
Correspondence

  1. See IRM 3.11.12.2.37.1 for Schedule B correspondence requirements.

  2. Correspond for Form 990 if any of the following apply:

    • The sum of Line 9 and the positive version of Lines 5b, 6b and 7b is $100,000 or more

    • Part II, Line 25, Column (B) is $250,000 or more

    • Group return (see IRM 3.11.12.1.28.1(2))

3.11.12.3.10  (01-01-2008)
Part I,
Lines 1–12
Perfection

  1. Lines 1-4: Perfect. If blank, do not bring forward any amounts from Schedule B to Line 1.

  2. Lines 5b, 6b, 7b: Bracket only if a true negative i.e., Line (c) is greater than Line (a) and the form does not reflect the line as a negative amount (-) or <.

  3. Lines 5a–5c, 6a–6c, 7a–7c: Do one of the following if there is only one dollar entry. Bracket "a" and/or "c" if the result is negative and the form does not reflect the line as a negative amount (-) or <:

    Note:

    For Lines 5a–5c, 6a–6c, 7a–7c, if a line is blank and there is an amount to the left of (or above) that line, and upon computation it is determined the misplaced amount should be included on the blank line, arrow the misplaced amount to the blank line.

    EXAMPLE:
    .....$300.....(5a)_____(arrow $300 here)_____
    ...................(5b)_____$100_____
    ................................(5c)_____$200_____

    EXAMPLE:
    ..................(5a)_____$300_____
    ..................(5b)__________
    .................................(5c)_____$300_____

    1. Double arrow the "a" line to the "c" line.

    2. Edit the "b" line to the "c" line and bracket if the form does not reflect the line as a negative amount (-) or <.

    3. Double arrow the "c" line to the "a" line.

  4. Lines 5a–5c, 6a–6c, 7a–7c: Use one of the following formulas if there is only two dollar entries and bracket "a" and/or "c" if the result is negative and the form does not reflect the line as a negative amount (-) or <:

    FORMULA FORMULA
    10 − 2 = 8
    (a - b = c)     		4 − 7 = −3
    (a - b = c)
    10 − 8 = 2
    (a - c = b)     		4 − −3 = 7
    (a - c = b)
    8 + 2 = 10
    (c+ b = a)     		−3 + 7 = 4
    (c + b = a)
    Note: In this formula, "b" is always positive; "a" and "c" are negative if bracketed.

  5. Line 8: If blank, double arrow Line 9 to Line 8 if Line 9 is the first dollar entry on Part I.

  6. Line 9: If blank, add Lines 1, 2, 3, 4, 5c, 6c, 7c, and 8.

  7. Lines 10-12: Perfect.

3.11.12.3.11  (01-01-2008)
Part I,
Lines 17–21
Perfection

  1. Line 17: If blank, add Lines 10-16.

  2. Line 18: If blank, Line 9 minus Line 17.

  3. Line 20: Perfect.

  4. Line 21: If blank, add Lines 18-20. If Line 19 is missing, use the amount from Part II, Line 27, Column (A) for Line 19.

3.11.12.3.12  (01-01-2008)
Part II
Correspondence

  1. Correspond for Form 990 if Line 25, Column (B) is $250,000 or more.

  2. Correspond for Part II, Column (B), if Lines 22-27, Column (B) are blank and cannot be perfected from attachments. Do Not correspond if "0" (zero), "—" (dash), "Not applicable" , or "N/A" is present in Part II.

    Exception:

    Do not correspond per (2) above if this is a "zero" filer with no transcription lines in Parts I-V.

3.11.12.3.13  (01-01-2008)
Part II
Perfection

  1. Figure 3.11.12-13 demonstrates how to perfect Part II from an attachment.

  2. Always edit "1" on Line 25, Column (B) if Column (B) has no dollar entries and you are not corresponding for Column (B).

  3. Line 25, Column (A) and/or (B): If blank, add Lines 22-24. If Line 27 is the first dollar entry in Part II, edit the Line 27 amount to Line 25.

  4. Line 26, Column (A) and/or (B): If blank, Line 25 minus Line 27.

  5. Line 27, Column (A) and/or (B): If blank, Line 25 minus Line 26.

    Figure 3.11.12-13

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

    Form 990–EZ, Part II, Balance Sheet Perfection

3.11.12.3.14  (01-01-2008)
Part IV
Correspondence

  1. Correspond for Part IV if both of the following apply:

    1. Part I, Line 12 is more than $25,000.

    2. No names are present in Part IV, Column (A) and not on an attachment.

3.11.12.3.15  (01-01-2008)
Part V
Perfection

  1. Question 35a: "X" Form 990, page 7, if it is attached with lines 85a-85h completed to support Question 35a.

  2. Lines 37a, 39a, and 39b: Perfect.

  3. Line 43: Edit Code 1 to the right of the box if both of the following apply:

    1. Type of Organization code is 3.

    2. The Line 43 box is checked, or there is a dollar entry on Line 43.

3.11.12.3.16  (01-01-2008)
Preparation Code

  1. Edit a Preparation Code "1" in the lower right margin of the return next to the Preparers SSN/PTIN box if both of the following apply:

    1. The return is signed.

    2. The Paid Preparer's section has information that is different than the person signing the return.

3.11.12.4  (01-01-2008)
Form 1041–A

  1. Form 1041–A is an information return filed by a trust claiming a contribution deduction under Section 642 of the IRC or Trust described in Section 4947(a).

3.11.12.4.1  (01-01-2008)
Form 1041–A
General Instructions

  1. Exhibit 3.11.12 - 5 identifies the transcribed lines (T-lines) for Form 1041–A.

  2. Perfect all T-lines as follows:

    1. Always perfect for legibility.

    2. Always perfect from attachments, if available.

    3. Correspond if the conditions are met.

    4. Follow the stated instruction for the line.

  3. Put Form 1041–A in the following order: Pages 1 and 2.

3.11.12.4.2  (01-01-2008)
Form 1041–A
Filers Defined

  1. Form 1041–A is a supplementary annual information return filed by a trust to comply with the filing requirements of IRC §6034.

  2. The only penalty that Code and Edit should edit on Form 1041–A is a late filing (Daily Delinquency) penalty.

3.11.12.4.3  (01-01-2008)
Perfection, Editing, and Correspondence

  1. An edit sheet is not used for Form 1041–A.

  2. Refer to the following instructions to edit the following generic items on the return:

    1. Computer Condition Codes,(F, G, R, U, V, W, 3, and 7) IRM 3.11.12.1.15. Edit the CCC below the OMB number.

    2. Daily Delinquency Penalty, IRM 3.11.12.1.19

    3. Entity Perfection, IRM 3.11.12.1.24 through 3.11.12.1.24.6

      Note:

      Perfect the name and EIN. Address perfection is not required on this form.

    4. Received Date, IRM 3.11.12.1.32

    5. Tax Period, IRM 3.11.12.1.42

      Note:

      If tax period month is other than 12, correspond for a calendar year return using a 319C letter. Exception : Do not correspond on "Final" returns.

3.11.12.4.4  (01-01-2008)
Part I
Perfection

  1. Line 9: If blank, add lines 1-8.

3.11.12.4.5  (01-01-2008)
Part II
Perfection

  1. DDP: Edit the DDP amount paid to the right of the Part II title if the return was received ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . See IRM 3.11.12.19.

3.11.12.4.6  (01-01-2008)
Part IV
Perfection

  1. Line 38, Columns (a) and (b): If blank, add lines 25-37 for each column(s).

  2. Line 42, Columns (a) and (b): If blank, add lines 39-41 for each column(s).

  3. Line 45, Columns (a) and (b): If blank, add lines 43 and 44 for each column(s).

  4. Line 46, Columns (a) and (b): If blank, add lines 42 and 45 for each column(s).

3.11.12.5  (01-01-2008)
Form 5227

  1. Form 5227 is the Split-Interest Trust Information Return used by trusts that are treated as private foundations under Section 4947.

    Note:

    All Forms 5227 must be scanned through the imaging process. See IRM 3.11.12.1.29.

3.11.12.5.1  (01-01-2008)
Form 5227
General Instructions

  1. Exhibit 3.11.12 -6 identifies the transcribed lines (T-lines) for Form 5227.

  2. Perfect all T-lines as follows:

    1. Always perfect for legibility.

    2. Always perfect from attachments, if available.

    3. Correspond if the conditions are met.

    4. Follow the stated instruction for the line.

    5. Leave the T-line blank only if it cannot be perfected in the steps above.

  3. Put Form 5227 in the following order: Pages 1-7.

3.11.12.5.2  (01-01-2008)
Form 5227
Filers Defined

  1. Form 5227 is the primary annual information return filed by a split interest trust.

3.11.12.5.3  (01-01-2008)
Perfection, Editing, and Correspondence

  1. Only attach an edit sheet to Form 5227 if needed.

  2. Always convert prior year returns. See Exhibit 3.11.12-30.

  3. Refer to the following instructions to perfect the generic items:

    1. Action Codes (ERS), IRM 3.11.12.1.12

    2. Computer Condition Codes (F, G, R, V, W, 3, and 7), IRM 3.11.12.1.15

    3. Daily Delinquency Penalty, IRM 3.11.12.1.19

    4. Entity Perfection, IRM 3.11.12.1.24 through 3.11.12.1.24.6

    5. Penalty and Interest Code, IRM 3.11.12.1.30

    6. Received Date, IRM 3.11.12.1.32

    7. Tax Period, IRM 3.11.12.1.42

      Note:

      If tax period month is other than 12, correspond for a calendar year return using a 319C letter. Exception : Do not correspond on "Final" returns.

3.11.12.5.4  (01-01-2008)
Type of Organization Code

  1. Item B of the Entity section: Perfect

    1. Check box two (2) if no box is checked.

    2. Check box two (2) if more than one box is checked. Circle out the other boxes that are checked.

3.11.12.5.5  (01-01-2008)
Part I
Perfection

  1. Item C of the Entity Section: If blank, edit from Part IV, Line 50, Column (c).

  2. Item D of the Entity Section: If blank, add Part I, Lines 8 and 13. For 2006 and prior revisions, circle out Item D.

  3. Line 8: If blank, do one of the following:

    1. Add Lines 1-7.

    2. Double arrow the amount from Item D to Line 8 if Line 13 is also blank and Line 13 cannot be perfected per (4) below.

  4. Line 13: If blank, add Lines 9 and 10.

  5. Line 26: If blank, add Lines 22-25. If unable to perfect, leave blank.

3.11.12.5.6  (01-01-2008)
Part III-A and Part III-B
Perfection

  1. Line 35: If blank, add Lines 33-34c.

  2. Line 37: If blank, add Lines 36a-36c.

3.11.12.5.7  (01-01-2008)
Part IV
Correspondence

  1. Correspond for Part IV if Part IV, Column (b) is blank.

    Note:

    Do not correspond if Part I has no dollar entries.

3.11.12.5.8  (01-01-2008)
Part IV
Perfection

  1. Line 50, Column (b): If blank, zero, dash, N/A, or none, do one of the following:

    1. Add Lines 38-49, Column (b).

    2. If unable to perfect per 1) above, and you are NOT corresponding, edit "1" dollar.