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Part 3. Submission Processing

Chapter 0. General

Section 101. Schedule K-1 Processing

3.0.101  Schedule K-1 Processing

All Official Use Only content has been replaced with ≡.

3.0.101.1  (01-01-2009)
Purpose

  1. The 3.0.101 IRM is intended to provide instructions regarding the processing of Schedules K-1 through Integrated Submission and Remittance Processing (ISRP) and Service Center Recognition/Image Processing System (SCRIPS).

3.0.101.1.1  (01-01-2009)
Scope

  1. These instructions supersede all instructions in other IRM's regarding the processing of Schedule K-1's.

3.0.101.2  (01-01-2009)
Program Codes

  1. The K-1 program codes listed below should be used when performing the functions involved with processing Schedule K-1's through ISRP unless otherwise instructed:

    Return Type Program Code Tax Class/Doc Code Parent Tax Class/Doc Code
    1041 K-1 44380 566 244
    1065 K-1 44381 565 265
    1120S K-1 44382 567 316

  2. The K-1 program codes listed below should be used when processing Schedule K-1's through SCRIPS unless otherwise instructed:

    Return Type Program Code Tax Class/Doc Code Parent Tax Class/Doc Code
    1041 K-1 44386 566 244
    1065 K-1 44387 565 265
    1120S K-1 44388 567 316

  3. The K-1 program codes listed below should be used when processing Schedule K-1's through E-File unless otherwise instructed.

    Return Type Program Code Tax Class/Doc Code Parent Tax Class/Doc Code
    1041 K-1 44390 566 236
    1065 K-1 44360 565 265
    1120S K-1 44370 567 316

    1. Code & Edit: should use the parent return program codes for coding both the parent returns and the Schedule K-1's. Do not use a 4438X - program code when coding the K-1's.

    2. Batching/Numbering: should use the K-1 program codes for time actually spent batching and numbering Schedule K-1's.

    3. Data Conversion: should use the parent return program code when transcribing the parent return and the K-1 program code when transcribing Schedule K-1's. (See program codes listed above that should be used)

    4. For transcription of Schedule K-1 Error Register, program code 44920 should be used.

    5. For transcription of Schedule K-1 BOB Register, program code 44930 should be used.

    6. Error Resolution: should use function/program code 340–44380

    7. BOB Register: should use function/program code 620–44380

3.0.101.3  (01-01-2009)
Extracting and Sorting

  1. Because Schedules K-1 will be attached to the parent returns during the sorting function, no sorts will be performed on the K-1's. However, because of Schedule K-1 processing, parent returns will require additional sorts.

  2. The parent returns will be sorted in the following categories:

    1. Remittance versus Non-remittance

    2. Refund versus Non-refund

    3. Tax period

      • Current timely filed calendar year (current processing year minus 1)

      • Prior Year (current processing year minus 2 or more)

      • Current fiscal and delinquent current year (current processing year minus 1)

      • Future Years (current processing year)

    4. Current Forms and Future 1041 with Schedules K-1 attached versus without K-1's attached.

3.0.101.4  (01-01-2009)
Code & Edit

  1. This section contains instructions for processing Parent returns with Schedules K-1 through Code and Edit.

  2. K-1 editing in Cincinnati Submission Processing Center (CSPC) and Ogden Submission Processing Center (OSPC) will be done in Green ink.

  3. If the return is for prior year, do not code or detach the Schedule K-1.

  4. Schedule(s) K-1 filled out by the taxpayer in RED, ORANGE, or PINK ink cannot be read by the SCRIPS scanners. Photocopy the schedule(s) K-1, notate on original "Copy processed" , process the photocopy and leave the original attached to the parent return.

  5. If the pre-printed year of the Schedule K-1 is different from the tax year ending of the parent return, correct the pre-printed tax year on the first Schedule K-1 by lining through the last digit of the pre-printed year and editing the correct year digit to the right of the lined through digit. Example:

    • The parent return is for a calendar year ending in 2009 and the Schedule K-1 year is 2005/2006/2007/2008, line through the last digit (200/) and edit a 9 to the right of the tax year, or

    • The parent return is for a fiscal year ending in 2008 and the Schedule K-1 year is 2005/2006/2007, line through the last digit (200/) and edit a 9 to the right of the tax year

    .

    Note:

    When making this correction do not edit above the tax year in the Document Locator Number (DLN) area, edit to the right of the printed tax year.

  6. If an exact duplicate of a K-1 has been filed with the parent return, process one K-1 and cross out the duplicate K-1 with an X and leave the duplicate attached to the parent return.

  7. If Schedule K-1 is attached to a Re-processable/Re-entry, current year parent return, and has not been processed, detach K-1 and treat as "Loose Schedule K-1" . (See IRM 3.0.101.5 for Loose K-1 Instructions).

  8. If there are two pages, ensure there is some type of identifier. If no identifier (i.e. Parent/Payee Name and/or Taxpayer Identification Number (TIN) is present, write the last four digits of the payee TIN in the top center margin of page 2.

  9. Do not bracket negative amounts. (See IRM 3.0.101.6 for Money Amount Fields instructions)

  10. If the Individual Master File (IMF) Payee Social Security Number (SSN) or Business Master File (BMF) Payee EIN is not located in the correct box but it is located in the name and address box, re-write the SSN/EIN in the SSN/EIN box

  11. A payer TIN must be present on at least the first Schedule K-1. If not present, enter the TIN from the parent return in the Employer Identification Number/ Social Security Number (EIN/SSN) box. If the TIN on the parent return has changed, enter the new parent TIN on the Payer TIN Line.

  12. If the words "amended" or "corrected" are present on the parent return of the Schedule K-1 and the amended box is not checked, edit a check mark or "X" in the box. Detach from parent and continue processing.

    Exception:

    For Schedule K-1's that will be processed through Integrated Submission Remittance Process (ISRP) do not check the Amended box. Edit a "G" in the payee entity area on every K-1 attached to the parent return.

    Note:

    For Form 1041 K-1 - edit in "Beneficiary" box, Form 1065 K-1 - edit in "Partner" box, and Form 1120S K-1 - edit in "Shareholder" box.

    The amended checkbox is located in the following position on the Schedule K-1:

    Type of K-1 Location of Checkbox
    Form 1041 K-1 Above part III
    Form 1065 K-1 Above part III
    Form 1120S K-1 Above part III

  13. When Schedules K-1 are received in continuous formats (e.g. computer listings, and typed listings) correspond requesting separate Schedules K-1. Do not dispose of the listing as it is an attachment to a tax return.
    When correspondence is required for the paragraph above, any one of the following letters should be used:

    • Letter 177C for Form 1041 Schedule K-1.,

    • Letter 1355C for Form 1065 Schedule K-1, edit "1355 sent" in lower right margin

    • Letter 118C for Form 1120S Schedule K-1.

    • When sending the return back to the taxpayer, use Form 6800 (Request For Missing Information or Papers to Complete Your Return), Check the appropriate box.

  14. Do not correspond for the missing Schedule K-1 for Form 1065 on the following types of returns:

    • Sec. 6020(b) returns

    • Sec. 501(d) returns, Religious and Apostolic Organizations

    • Returns filed under a Common Trust

    • Sec. 761(a) returns

    • Nominee returns

    • Inactive returns

    • IRC 1.736.1 (Payments to a retiring partner)

    • Final returns

    • Amended ("G" coded) returns

    • Payee is a foreign entity

    • Return is being reprocessed as an original return and has a Form 13596 attached

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  15. When reviewing 1065 Schedule K-1 and the partnership has indicated that the number of Schedules K-1 is "1" and/or the Schedule K-1 attached to the return has 100% interest in the partnership then follow the instructions in IRM 3.11.15.15 (4 ) when the Schedule K-1 shows two names listed in the partner's name and address section,

    • Correspond requesting separate schedule K-1 using letter 1355C or approved local correspondence procedures.

    • Notate the letter sent in the lower right margin of Form 1065.

    • Continue editing the return.

  16. Do not correspond for missing Schedule K-1 for Form 1120S on the following types of returns

    • Sec. 6020(b) returns

    • Examination Secured Substitute for Return(SFR) returns

    • Re-entry returns

    • Amended ("G" coded) returns

    • Payee is a foreign entity

    • Return is being reprocessed as an original return and has a Form 13596 attached

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  17. Do not correspond for missing Schedule K-1 for Form 1041 on the following types of returns.

    • Sec. 6020(b) returns

    • Examination Secured Substitute For Return (SFR) returns.

    • Re-entry returns.

    • Amended ("G" coded) returns.

    • Electing Small Business Trust (ESBT), Grantor Type Trust, or Bankruptcy Estate.

    • Payee is a foreign entity

    • Return is being reprocessed as an original return and has a Form 13596 attached

    • Section 642(i) Trust (Maintenance of Cemetery Property or Number of Gravesites)

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  18. Form 1041 Grantor Trust Filers are not required to file Schedule K-1's. Do not process or detach any Schedule K-1 attached to a Non-taxable or Taxable Grantor Trust. These are trusts that will be coded with a Fiduciary Code of 2 or 4 and a Trust Code of 3.

3.0.101.4.1  (01-01-2009)
Unprocessable Schedule K-1

  1. The criteria for unprocessable Schedules K-1 are as follows

    • The tax period is 200612 or prior.

    • The payer information indicates a different entity than the parent entity.

    • Form 1065B Schedule K-1 or Schedule K-1 attached to a Form 1065B

    • Schedule K-1's attached to Form 1041 Non-taxable and Taxable Grantor Trust

  2. Discontinue processing any Schedule K-1 if income reported is for a different tax year than the form.

    Note:

    If after information is requested, and it is not received or not found, route to Accounts Management. When routing to Accounts Management put a comment on form 3465 to explain the reason for sending the request.

3.0.101.4.2  (01-01-2009)
Standard Schedule K-1

  1. In order to be processable, standard Schedules K-1 must meet all of the following requirements:

    • Must contain the payer and recipients name, address and SSN/EIN

    • Each taxpayer's information must be on a separate sheet of paper

      Exception:

      Do not correspond if a husband and wife (same last name) are filing a Schedule K-1 as "one Beneficiary, Partner, or Shareholder" in a Trust, Partnership or Corporation.

    • The amount of each partner's, shareholder's or beneficiary share cannot be combined as one total

  2. If the standard Schedule K-1 does not meet the requirements listed above, research the return and attachments, if information is not found, research Integrated Data Retrieval System (IDRS). If unable to locate the missing information, and the Payee is not a foreign entity correspond requesting a valid Schedule K-1, using Form 3696 (Balance due or delinquent) or Form 6800 (Request for Missing Information Or Papers to Complete Your Return) when returning to a taxpayer, check box number 25 or appropriate box. Use the following language "Please provide us the identifying numbers for every partner/shareholder/beneficiary listed on each K-1. The identifying number for an individual partner/shareholder/beneficiary is the Social Security Number. Also, give us the names and addresses of all partners/shareholders/beneficiaries."

    Exception:

    Do not correspond if Schedule K-1 is not required per IRM 3.0.101.4.

  3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  4. See Exhibit 3.0.101-1 for example of Standard Schedules K-1.

3.0.101.4.3  (01-01-2009)
Substitute Schedule K-1

  1. Schedule K-1 can be submitted in substitute format. ( e.g. 2D Bar Code)

  2. Payor information is inserted in Section (16) to indicate Payor information. Edit (16) to tell data transcribers where to put payor information.

  3. In order to be processable, substitute Schedules K-1 must meet all of the following requirements:

    • Must contain the payer and recipients name, address and SSN/EIN

    • Each taxpayer's information must be on a separate sheet of paper

      Exception:

      Do not correspond if a husband and wife (same last name) are filing a Schedule K-1 as "one Beneficiary, Partner or Shareholder" in a Trust, Partnership or Corporation..

    • The amount of each partner's, shareholder's or beneficiary share cannot be combined as one total.

  4. If the substitute Schedule K-1 does not meet the requirements listed above, research the return and attachments, if information is not found research IDRS. If unable to locate the missing information, and the Payee is not a foreign entity,correspond requesting a valid Schedule K-1, using Form 3696 (Balance due or delinquent) or Form 6800 (Request for Missing Information Or Papers to Complete Your Return), check box number 25 or appropriate box. Use the following language "Please provide us the identifying numbers for every partner/shareholder/beneficiary listed on each K-1. The identifying number for an individual partner/shareholder/beneficiary is the Social Security Number. Also, give us the names and addresses of all partners/shareholders/beneficiaries."

    Exception:

    Do not correspond if Schedule K-1 is not required per IRM 3.0.101.4

  5. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  6. See Exhibit 3.0.101–8 for example of Substitute Schedule K-1

3.0.101.4.4  (01-01-2009)
Non- Standard Schedule K-1

  1. Schedule K-1 can be submitted in non-standard format. A non-standard K-1 will be missing lines.

  2. Payor information is inserted in Section (16) to indicate Payor information. Edit (16) to tell data transcribers where to put payor information.

  3. For all processable non-standard K-1's, DO NOT black out the Forms Identification Number found in the upper right corner of the Schedule K-1.

  4. In order to be processable, non-standard Schedules K-1 must meet all of the following requirements:

    • Must contain the payer and recipients name, address and SSN/EIN

    • Line items may be missing, however, line items that are present must be in the same order as those on the official form

    • Each taxpayer's information must be on a separate sheet of paper

      Exception:

      Do not correspond if a husband and wife (same last name) are filing a Schedule K-1 as "one Beneficiary, Partner or Shareholder" in a Trust, Partnership or Corporation.

    • The amount of each partner's, shareholder's or beneficiary share cannot be combined as one total.

  5. If the non-standard Schedule K-1 does not meet the requirements listed above, research the return and attachments, if information is not found research IDRS. If unable to locate the missing information, and the Payee is not a foreign entitycorrespond requesting a valid Schedule K-1, using Form 3696 (Balance due or delinquent) or Form 6800 (Request for Missing Information Or Papers to Complete Your Return), check box number 25 or appropriate box. Use the following language "Please provide the identifying numbers for every partner/shareholder/beneficiary listed on each K-1. The identifying number for an individual partner/shareholder/beneficiary is the Social Security Number. Also, give us the names and addresses of all partners/shareholders/beneficiaries."

    Exception:

    Do not correspond if Schedule K-1 is not required per IRM 3.0.101.4

  6. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3.0.101.5  (01-01-2009)
Loose Schedule K-1

  1. If loose Schedule K-1's are received in Code & Edit , research for the parent return DLN and proceed as follows:

    If parent return DLN And Schedule K-1 Then
    Is found Is for either current or future year Take the following actions:
    • Write the parent DLN in the upper left of the Schedule K-1

    Note:

    If the DLN is an E-filed DLN (Beginning with 14, 16, 22, 35, 38, 41, 43, 52, 64, 65, 72, 75, 76, 92, 93 or 95) route directly to appropriate Campus


    • Edit the Schedule K-1
    • Place the Schedule K-1 in a gusset folder
    • Forward the folder with the Schedule K-1 to Batching/Numbering to continue processing
    Is not found Is for either current or future year Hold in suspense (see bullets below for specific criteria) and monitor weekly for parent return DLN. If parent DLN is found follow procedures above. If parent DLN is not found, route to Accounts Management as a loose schedule.

    • Current Year: Hold until six weeks after parent return PCD.

    • Future year: Hold for six weeks (research ERS Suspense and Master File)

    • Note: All Schedules K-1 need to be suspended for research of parent DLN for a minimum of six weeks

    Is not found Is for a prior year Route to Accounts Management as a loose schedule

3.0.101.6  (01-01-2009)
Money Amounts Fields

  1. Do not bracket negative amounts.

  2. If taxpayer enters a negative amount in a positive only field, "X" the negative amount. See table below for positive only fields for each Schedule K-1.

    Note:

    Lines with multiple entries, edit the first line only

    Form 1065
    Line Number and Title
    Line 4 — Guaranteed Payments
    Line 12 — Section 179 deduction
    Form 1120S
    Line Number and Title
    Line 11 — Section 179 deduction
    Line 13 — Credits and Credit recapture
    Form 1041
    Line Number and Title
    Line 3 — Net Short-Term Capital Gain
    Line 4a — Net Long-Term Capital Gain
    Line 14 — Other Information

  3. Amounts are transcribed in dollars only. If taxpayer enters a positive or negative $.49 or less, "X" the amount. If taxpayer enters a positive or negative $.50 to $.99, edit a $1 or -$1, respectively.

  4. A Schedule K-1 with zeros, blanks or dashes in the entire money amount T-Lines are considered a "Zero Balance K-1" and are valid, continue processing.

  5. Ogden Campus Only

    • Foreign documents – if a circled "U." is coded to the right of the name on name line 1, enter "U." in the 2nd TIN Notification field in Section 02. The "U." code is valid with File Location Code 60 (Ogden) only.

    • When transcribing money amounts, the equivalent U.S. cents amount should not be transcribed. Many Europeans currencies use commas for decimals and decimals for commas. Do not transcribe punctuation. Do not transcribe the last two numerics of a foreign money amount if that amount is preceded by either a decimal or a comma.( e.g.) Deutsche Marks may be written as "DM 2.941,18" ; only 2941 should be transcribed).

3.0.101.7  (01-01-2009)
Converting Schedule K-1 Forms

  1. If the payer entity data matches the parent return entity but the wrong K-1 form type is used (e.g. 1041 Schedule K-1 is attached to a Form 1065), convert the Schedules K-1 by .

    • Changing the T-lines as indicated below

    • Circling out the original form type

    • Editing the form number to which it is being converted into in the upper left hand corner.

    • Blacking out the Forms ID Number found in the upper right corner of the Schedule K-1. See figure 3.0.101–1

    Figure 3.0.101-1

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

    Exception:

    Do not convert a Form 1120S or 1065 Schedule K-1 into a Form 1041 Schedule K-1. There must be a valid 1041 Schedule K-1 attached to the Form 1041. If not present, follow the instructions found in IRM 3.11.14.20.4(4) or 3.11.14.20.4.(5) 1

    Converting Form 1065 Schedule K-1

    Change this Form 1065 K-1 Line To Form 1120S K-1 Line
    1 1
    2 2
    3 3
    4 "X" -out
    5 4
    6a 5a
    7 6
    8 7
    9a 7a
    12 11

    Converting Form 1041 Schedule K-1

    Change this Form 1041 K-1 Line To Form 1065 K-1 Line To Form 1120S K-1 Line
    1 5 4
    2a 6a 5a
    3 8 7
    4a 9a 8a
    5 7 6
    7 "X" out "X" out
    8 3 3
    14 (first line) "X" out 13

    Converting Form 1120S Schedule K-1

    Change this Form 1120S K-1 Line Change this Form 1065 K-1 Line
    1 1
    2 2
    3 3
    4 5
    5a 6a
    6 7
    7 8
    8a 9a

3.0.101.7.1  (01-01-2009)
Non-Standard or Prior Year Format for Schedule K-1's through ISRP

  1. All current year K-1’s on a prior year form must be reformatted to current year format. See Exhibit 3.0.101–8.

  2. If the K-1 is on other than current year format (may be either a prior year or non-standard form) and the lines cannot be numbered to agree with the current year Schedule K-1, correspond with the taxpayer.

3.0.101.7.2  (01-01-2009)
Prior Year Format for Schedule K-1's through SCRIPS

  1. All current year K-1’s on a prior year form must be reformatted to current year format. See Exhibit 3.0.101–8

  2. If there is a bar code present on the prior year revision (2006 and prior for Forms 1120S Sch. K-1 and Forms 1065 Sch. K-1 or 2006 and prior for Forms 1041 Schedule. K-1) return, using a marker, black out the straight lines on both sides of the bar code. See Figure 3.0.101–2

    Figure 3.0.101-2

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

3.0.101.8  (01-01-2009)
Moving Processable Schedules K-1

  1. Separate processable Schedules K-1 from the parent return.

  2. Staple the parent return, attachments, un-processable Schedules K-1 and envelope together.

  3. Move the processable Schedules K-1, un-stapled, to the back of the parent return.

3.0.101.9  (01-01-2009)
Numbering Parent Returns

  1. When Numbering the parent return , the Numbering function will:

    1. Provide Batching with an estimated count of K-1's.

    2. Separate Schedules K-1 from the parent return and make sure the first Schedule K-1 reflects the tax year ending of the parent return if other than calendar year.

    3. Assign and stamp a DLN on the parent return. Stamp this same DLN in the upper left corner (at least 2 inches from the edge) of the first K-1 for that parent. If there is no room in the upper margin stamp DLN in the right side margin. Do Not use the Entity area. See Figure 3.0.101–3

      Note:

      It is very important that the parent DLN is clearly stamped on the first Schedule K-1 as it is used during SCRIPS processing of the Schedules K-1.

    4. Stamp or write the parent block DLN on the gusset folder, place the parent returns in the folders and put the folders on the batch cart, in DLN order and forward to Data Conversion.

    5. Stamp or write the parent block DLN on the gusset/blue Schedule K-1 folder or use a SCRIPS breaker sheet , with the parent block DLN written on it, in place of the gusset folder.

    6. Make sure the Schedules K-1 are in parent DLN sequential order within each parent block DLN.

    7. Place the Schedules K-1 in parent DLN order on a batch cart or in a "stat." box.

    8. Place a copy of the parent return transmittal in the first slot of the Schedule K-1 batch cart or in the first "stat" box.

    9. Forward the Schedules K-1 to be batched.

      Figure 3.0.101-3

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

    10. Stamp or write the parent block DLN on the gusset folder, place the folders on the batch cart, in DLN order, and forward to Data Conversion.

    11. Stamp or write the parent block DLN on the gusset/blue Schedule K-1 folder, place the Schedules K-1 in the folder in sequential order, and place the folder on a batch cart or in a "stat" box, in parent DLN order.

    12. Place a copy of the parent return transmittal in the first slot of the Schedule K-1 batch cart or in the first "stat" box.

    13. Forward the Schedules K-1 to Pre Doc Prep.

      Note:

      When separating these documents, two batch carts will be required. One for the parent returns and the other for the Schedules K-1.

3.0.101.10  (01-01-2009)
Batching

  1. Set up the Schedule K-1 batches on Batch/Blocking Tracking System (BBTS). Maintain the integrity of the parent return DLN and tax year ending.

  2. It is very important to keep current and future year Schedules K-1 in different batches. The year is input once for each batch and it is repeated for each return in the batch.

    • Current = Current processing year minus 1.

    • Future = Current processing year (fiscal years)

  3. If tax year ending is the current processing year, write "FUTURE" on the batch transmittal.

  4. Make sure Schedules K-1 are in gusset/blue folders or separated by a SCRIPS breaker sheet by parent block DLN.

  5. Document count will be 80 documents for each block. You can allow BBTS to default to the number of blocks or change the count to "1" .

  6. Forward to the Pre Doc Prep Unit.

3.0.101.10.1  (01-01-2009)
Loose K-1's

  1. Batching will keep loose K-1's in a colored folder, and notate "Re-file" on the outside, route to Pre Doc Prep Unit.

3.0.101.11  (01-01-2009)
Numbering Schedule K-1's

  1. When Numbering the Schedule K-1, the Numbering function will:

    1. Assign and stamp a K-1 DLN on each processable K-1.

    2. Edit the two digit year at the top right-hand corner of the 1332.

    3. Number the Schedules K-1 from 00–99 in upper right hand margin as normal.

    4. If there are more than 100 K-1's create a new block and write the parent DLN on the first K-1 of the new block in the upper left of the K-1.

    5. Count the number of parent return DLN's cross-referenced in the K-1 block and annotate the Form 1332 in the transaction code box with PF count.

    6. Place the Schedule K-1 in a separate gusset folder keeping the K-1's in parent return DLN order.

    Exception:

    Schedule K-1's that will be processed through SCRIPS will be sent to the Doc- Prep -Unit.

    Note:

    Ensure document "00" is blocked correctly, and there is information in Payer Section.

3.0.101.11.1  (01-01-2009)
K-1's Processed Through SCRIPS

  1. Prepare the K-1 folders or scrips breaker sheets the same time the parent returns are numbered.

    1. Assign and stamp a DLN on the parent return.

    2. Stamp this same DLN in the upper left of the first K-1 from that parent return as a cross-reference.

    3. Stamp the parent return gusset folder and the K-1 gusset/blue folder or scrips breaker sheet with the File Location Code (FLC), tax class and document code then write the block number on both folders.

      Note:

      If Service Center is not using gusset/blue folders for the Schedules K-1, place a pink piece of paper between each parent block DLN.

    4. Place K-1's (in folders or with pink paper) on batch cart or in stat boxes.

    5. If batch of work is for future year (2009), notate on the 9382 (Batch Transmittal) "Future Year 2009."

    6. Forward to the Pre Doc prep Unit.

3.0.101.12  (01-01-2009)
Schedule K-1 Processing Through ISRP

  1. This section provides instructions for entering data using the Integrated Submission and Remittance Processing System.

3.0.101.12.1  (01-01-2009)
Forms/Programs Numbers/Tax Class, Doc Codes

  1. When transcribing Form 1332, ensure the Tax Class and Doc Code matches the document type being transcribed

    FORMS PROGRAM NUMBERS TAX CLASS DOC CODES PARENT TAX CLASS/DOC Code
    1041 K-1 44380 566 244
    1065 K-1 44381 565 265
    1120S K-1 44382 567 316

  2. If Tax Class or Doc Code is different, contact lead or supervisor.

3.0.101.12.2  (01-01-2009)
Document Blocking

  1. All documents in any given block should be of the same type, (i.e. all 1041 K-1's present in the same block). If documents are mixed, consult your supervisor.

3.0.101.12.3  (01-01-2009)
Specific Instructions for Entry of Data

  1. This section provides specific instructions for entering data.

3.0.101.12.3.1  (01-01-2009)
Required Sections

  1. Original Entry (OE)– Section 01 and 06 are always required.

  2. Key Verification (KV)– Sections 01 and 06 can be key verified at management's discretion.

3.0.101.12.3.2  (01-01-2009)
Schedule K-1 Name and Address Information

  1. Form 1041 Schedule K-1

    • Payee (Sections 01 and 02)-- Transcribe name(s) and address information from the box labeled "Beneficiary's name, address, and ZIP code."

    • Payer (Section 16) -- Transcribe Payer Name Line 1 from the box labeled "Name of trust or decedent's estate" . Transcribe Payer Name Line 2 and address information from the box labeled "Fiduciary's name, address, and ZIP code" .

  2. Form 1065 Schedule K-1

    • Payee (Sections 01 and 02) -- Transcribe name(s) and address information from Part II.

    • Payer (Section 16) -- Transcribe name(s) and address information from Part I.

  3. Form 1120S Schedule K-1

    • Payee (Sections 01 and 02) -- Transcribe name(s) and address information from Part II.

    • Payer (Section 16) -- Transcribe name(s) and address information from Part I

3.0.101.12.3.3  (01-01-2009)
Name Entries — BMF and IMF

  1. Except as noted below, enter the information exactly as shown with as many characters as permitted and then press <ENTER>. Refer to Exhibit 3.0.101-4 for a list of standard abbreviations. Do not enter the # sign.

    (a)Example Iris Frank Enter as: IRIS FRANK
    (b)Example Estate of Lilly Family Enter as: ESTATE OF LILLY FAMILY

  2. Space before and after an ampersand (&). In the Payer name line enter "and" or "&" as shown.

    (1) Example: Jim Lime and Joe Doe, PTRS Enter as: JIM LIME AND JOE DOE PTRS
    (2) Example: J. Elm & R. Ash, Inc Enter as: J ELM & R ASH INC

  3. Omit punctuation, except for hyphens (-). The hyphen will be keyed using the MINUS (-) Field Termination key.

    (a) Example: O'Tulare Enter as: OTULARE
    (b) Example: Maple-Pecan Enter as: MAPLE-PECAN

  4. Space within a true last name if shown:

    Example: De Pine Enter as: DE PINE

  5. Do not enter the Partner number if present.

    Example: Jon Oak Partner #1 Enter as: JON OAK

  6. If account number is present enter as shown

    Example: Harry Maple Account # 14675 Enter as: HARRY MAPLE ACCT 14675

  7. If the % falls in the middle of name line 2 enter as shown

    Example: John Oak Enter as: JOHN OAK
    Grandchildren's Trust GRANDCHILDRENS TRUST
    FBO Alexis Maple % Mary FBO ALEXIS MAPLE %
    Oak TTEE MARY OAK TTEE

  8. In the second name line change "and" to "&" .

    • Roger Banana % Amalgamated Trucking and Moving Corporation

      ROGER BANANA (First Name Line)
      % AMALGAMATED TRUCKING & MOVING CORP (Second Name Line)

  9. IMF Only

    • Do not enter titles such as MR., MRS, CAPT., DR, REV, etc. in any individual's name in Section 01.

      Exception:

      Enter "MRS" or "MR" if it precedes a masculine name, initials or a first name which could be masculine or feminine.

    • If the name appears with the last name first, and the first name last, enter the first name first and the last name last.

    Example: Birch, John A Enter as JOHN A BIRCH

  10. BMF Only

    • Abbreviate name information only when it is abbreviated on the document, except for standard abbreviations: CO for company, CORP. for corporation and INC. for incorporated. (See Exhibit 3.0.101–4 for a list of valid abbreviations)

    • For the "¢" symbol enter "CENT" .

    • For the "+" symbol enter "PLUS"

    • For the "@" symbol enter "AT"

    • For the "$" symbol enter "DOLLAR"

    • For ".com" enter a space instead of the "."

    • If initials are DBA, CPA, LLC, MD, PC, etc. you do not need spaces or periods. The initials must be run together.

    • If a city or state is shown as part of the first name line, enter the complete name of the city or state, no abbreviations.

      Example: First Bank of GA
      Enter as: FIRST BANK OF GEORGIA

    • If the name begins with the word "the" and has more than one word following "the" DO NOT enter "the" .

      Example: The First National Bank
      Enter as: FIRST NATIONAL BANK

    • If the name begins with the word"the" and has only one word following "the" , enter "the" .

      Example: The Hideaway
      Enter as: THE HIDEAWAY

3.0.101.12.3.4  (01-01-2009)
Address Elements

  1. Enter Standard Abbreviations for street abbreviations as shown in Exhibit 3.0.101-5 or located in IRM 3.24.8(ISRP General IRM).

    • If the address begins with "PO BOX" , press <F11> in place of "PO BOX" .

      Note:

      You do not need to space between pressing <F11> and entering the box number.

    • If the address is missing or illegible, enter "Z" and press <ENTER>.

  2. Enter the Major City Code if the city is in the designated district. For a list of the Major City Codes see Exhibit 3.0.101-6.

  3. Enter Standard Abbreviations for states and territories as shown in Exhibit 3.0.101-6.

  4. Enter all City, State, Zip Code elements if present. If the city is missing, illegible, enter "ZZZ" and press <ENTER>. If the State or Zip Code is missing leave the field blank.

  5. For APO and FPO instructions see IRM 3.24.38.

  6. If address field overflows, enter as many characters as permitted for the field, using the standard abbreviations when possible and then press <ENTER>. DO NOT ENTER THE "#" sign.

  7. If two complete addresses (address, city, state, and ZIP) are present take the following actions:

    If Then
    1. One of the addresses is a PO Box, Enter the PO Box, city, state, and ZIP.
    2. Both are street addresses, Enter the first address, city, state and ZIP.

  8. If two addresses with the same city, state and ZIP are present take the following action:

    If Then
    1. One of the addresses is a PO Box Enter the PO Box, city state, and ZIP
    2. Both are street addresses Enter the first address, city, state and ZIP

3.0.101.12.3.4.1  (01-01-2009)
Foreign Address

  1. The foreign street address should be transcribed in the NAME2 field (2nd Name Line, Section 01). (See Exhibit 3.0.101–4 and Exhibit 3.0.101–5 for standard abbreviations)

  2. The IRM 3.24.38 general address rules apply for this field except that the hyphen (-), slash (/) and pound sign (#) are allowed.

  3. This field should NOT be used for "in care of" information. Omit any "In care of" information.

  4. The foreign city, state, territory or province, and mailing code, if present, should be transcribed in the ADDR field (Street Address, Section 02). Spell out the city, state, territory or province, if abbreviated. (See Exhibit 3.0.101–12 or 3.0.101–13).

    Note:

    If the city, state, territory or province name exceeds 32 spaces (leave the last three positions for a space and the postal code), input only the first 32 characters.

  5. The foreign country code should be transcribed in the "CITY" field. If it can not be determined enter "XX" Spell out the country, if abbreviated by the taxpayer. (See Exhibit 3.0.101–10 or Exhibit 3.0.101–11)

  6. Always enter a period (.) in the first position of the "ST" field (State).

3.0.101.12.4  (01-01-2009)
Amount Fields

  1. Amount box field numbers correspond to the preprinted number on each document, except when changed by Code and Edit

  2. On other than standard forms, the amount box field numbers will be edited.

  3. If an amount is illegible, or more than one amount is entered in one amount box, press the "F12" key on the keyboard. It may or may not be necessary to press <ENTER>

  4. If the taxpayer enters a negative amount in a positive only field, enter "zero" . Negative amounts can be identified by a minus sign or being enclosed in parentheses.

  5. If the taxpayer enters a positive or negative $.49 or less, enter a zero. If the taxpayer enters a positive or negative $.50 to $.99, enter a $1 or -$1, respectively.

  6. If the taxpayer files a State K-1, and it has a column with the Federal information, transcribe the information form the Federal column

  7. All fields will be dollars only. A space and a dollar sign following the prompt (i.e. LN2 $) denotes dollars only fields.

  8. Ogden Campus Only

    • Foreign documents - if a circled "U" is coded to the right of the name on name line 1, enter U in the 2nd TIN Notification field in Section 02. The "U" code is valid with File Location Code 60 only.

    • When transcribing money amounts, the equivalent U.S. cents amount (e.g. Euro Dollars.) should not be transcribed. Many Europeans currencies use commas for decimals and decimals for commas. Do not transcribe punctuation. Do not transcribe the last two numerics of a foreign money amount if that amount is preceded by either a decimal or a comma. (e.g. Deutsche Marks may be written as "DM 2.941,18" ; only 2941 should be transcribed.

3.0.101.12.5  (01-01-2009)
MUST ENTER Fields

  1. Some fields require entry of data. These fields are referred to as MUST ENTER fields. They are indicated in the Transcription Operation Sheets by the presence of stars (★★★★★★) See IRM 3.24.38 for procedures related to MUST ENTER fields.

3.0.101.12.6  (01-01-2009)
ISRP Transcription Operation Sheets

  1. The following tables represent specific data entry procedures.

3.0.101.12.6.1  (01-01-2009)
Block Header Data Entry FORM 1332

  1. The following table contains specific data entry procedures for Block Header Data Entry Form 1332.

    Elem No. Data Element Name Prompt Fld Term. Instructions
    (1) SC Block Control ABC <ENTER> The screen displays the ABC that was entered in the End of Phrase (EOP) Dialog box, as described in IRM 3.24.37.2.6. It cannot be changed.
    (2) Block DLN DLN <ENTER> Enter the first 11 digits as shown:
    (a) Form 1332- from the "Document Locator No" . box.

    (c) The KV EOP will verify the DLN from the first document of the block.
    (3) Batch Number BATCH <ENTER> Enter the batch number as follows:
    (a) Form 1332 – from the Batch Control Number box.

    (c) If not present, secure the number from the batch transmittal sheet.
    (d) If two or more TINS are shown, enter 9 periods.
    (4) Document Count COUNT <ENTER> Enter the document count as follows:
    (a) Form 1332 – the circled serial number. If a full block (100 documents) or if a number is not circled, enter 100.
    (5) Credit Amount CR <ENTER> No entry required. Press <ENTER> only.
    (6) Debit Amount DB <ENTER> No entry required. Press <ENTER> only.
    (7) Tax Year Indicator TRCODE <ENTER> Enter the last two digits of the tax year as follows:
    (a) Form 1332 – two digits from the upper right corner.
    (b) Always present for K-1's.
    (8) Account Type Code
    Amend Doc Code
    Count Code     		IRPACC <ENTER>
    ★★★★★★     		Enter the alpha-numeric digits from the "Trans. Code" box. Do not enter a hyphen (-), if present.
    (9) MFT Code MFT <ENTER> Press <ENTER> only.
    (10) Secondary Amount SECAMT <ENTER> No entry required. Press <ENTER> only.
    (11) Source Code SOURCE <ENTER> .No entry required. Press <ENTER> only.
    (12) Year Digit YEAR <ENTER> No entry required. Press <ENTER> only.

3.0.101.12.6.2  (01-01-2009)
Section 01 ALL DOCUMENTS

  1. The following table contains specific data entry procedures for Section 01 All Documents.

    Elem No. Data Element Name Prompt Fld. Term. Instructions
    (1) Section Number SECT:   Section "01" will always be generated. No entry is required.
    (2) DLN Serial Number SER#   Enter the last two digits of the 13-digit DLN from the upper portion of the form.
    (3) TIN of Payee TIN <ENTER> Enter the nine digit TIN.
    (a) If not present, press <ENTER> only.
    (b) If less than nine digits, enter the digits shown followed by period (s)
    (c) If more than nine digits, enter the first eight followed by a period.
    (d) If two or more TINS are shown, enter 9 periods.
    (4) Delete Indicator DELE <ENTER> Enter a "D" in this field and end the document whenever it is determined that a document is misblocked.
    (a) Example: 1099A mixed with a block of 1041 Schedule K–1.
    (b) DO NOT REMOVE THE DOCUMENT FROM THE BLOCK.
    (5) First Name Line NAME1 <ENTER> Enter the full name as shown from the following area:
    • Form 1041 -- Beneficiary name, address and Zip code.
    • Form 1065 -- Partners name, address and Zip code.
    • Form 1120S -- Shareholders name, address and Zip code.
    (6) Second Name Line NAME2 <ENTER> Enter Second Name Line items as follows:
    (a) For in care of names, enter the percent sign (%), space, and the name.
    (b) See special instructions in IRM 3.0.101.12.3.3
    (c) Use this field for a foreign street address.
    (d) See IRM 3.0.101.12.3.4.1 for Foreign Address procedures.

3.0.101.12.6.3  (01-01-2009)
Section 02 ALL DOCUMENTS

  1. The following table contains specific data entry procedures for Section 02 all documents.

    Elem. No. Data Element Name Prompt Fld. Term. Instructions
    (1) Section Number SECT: <ENTER> <ENTER> If already present on the screen; otherwise enter "02" always. NOTE: See IRM 3.0.101.12.3.4 for address and foreign address procedures.
    (2) Street Address ADDR <ENTER> Enter the street from the following area:
    • Form 1041 -- Beneficiary name, address and ZIP code.
    • Form 1065 -- Partners name, address and ZIP code.
    • Form 1120S -- Shareholders name, address and ZIP code.
    a) If the address is missing or illegible enter "Z"
    (b) Use this field for foreign city, state or province, and mailing code.
    (3) City CITY <ENTER> Enter the city from the appropriate entity area.
    (a) Use Major City Codes if appropriate.
    (b) If the city is missing, illegible, , enter "ZZZ" and Press <ENTER>.
    For foreign addresses see IRM 3.0.101.12.3.4.1
    (4) State Code ST <ENTER> Enter the state code.
    (a) Press <ENTER> only if a Major City Code was used.
    (b) If foreign address, use the first position of this field for the period (.).
    (5) ZIP Code ZIP <ENTER> Enter the ZIP code.
    (6) Payer Account Number Payee PACCT# <ENTER> Press <ENTER> only.
    (7) 2nd TIN Notification 2NDTIN <ENTER> OSPC only. If a circled "U" is coded to the right of the name on name line 1, enter "U" in the 2nd TIN Notification field in Section 02. Enter a "1" if the 2nd TIN Not. box is checked at the bottom of the form. Otherwise, leave blank.
    (8) Amended Doc. Code ADC <ENTER> Enter a "G" if edited in the payee entity area. (1041 K-1 - "Beneficiary" box, Form 1065 K-1 - "Partner" box, Form 1120S K-1 - "Shareholder" box) (Do not end the document.)

3.0.101.12.6.4  (01-01-2009)
Section 06 FORMS 1041 K-1 (Program 44380)

  1. The following table contains specific data entry procedures for Section 06 for Forms 1041 K-1.

    Elem. No. Data Element Name Prompt Fld. Term. Instructions
    (1) Section Number SECT: <ENTER> Press <ENTER> if already present on the screen; otherwise enter "06" always.
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡     		≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡     		≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡     		≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡     		≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡     		≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡     		≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡     		≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡     		≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡     		≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3.0.101.12.6.5  (01-01-2009)
Section 06 FORMS 1065 K-1 (Program 44381)

  1. The following table contains specific data entry procedures for Section 06 for Forms 1065 K1.

    Elem. No. Data Element Name Prompt Fld. Term. Instructions
    (1) Section Number SECT: <ENTER> Press <ENTER> if already present on the screen; otherwise enter "06" always.
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡     		≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡     		≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡     		≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡     		≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡     		≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
      ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡     		≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡     		≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡     		≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡     		≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3.0.101.12.6.6  (01-01-2009)
Section 06 FORMS 1120S K-1 (Program 44382)

  1. The following table contains specific data entry procedures for Section 06 for Forms 1120S K-1.

    Elem. No. Data Element Name Prompt Fld. Term. Instructions
    (1) Section Number SECT: <ENTER> Press <ENTER> if already present on the screen; otherwise enter "06" always.
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡     		≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡     		≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡
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    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ <≡ ≡ ≡ ≡ ≡ ≡
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    ≡ ≡ ≡     		≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
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3.0.101.12.6.7  (01-01-2009)
Section 16 ALL DOCUMENTS

  1. Only enter section 16 on documents with a new parent DLN present.

    Elem. No. Data Element Name Prompt Fld. Term. Instructions
    (1) Section Number SECT: <ENTER> Press <ENTER> if already present on the screen; otherwise enter "16" always.
    (2) Payer Name Line 1 NAME1 <ENTER> Enter the Payer Name Line 1 from the following area:
    • Form 1041 -- Name of trust or decedent's estate.
    • Form 1065 -- Partnership's name, address and ZIP code.
    • Form 1120S -- Corporation's name, address and ZIP code.
    (a) If illegible or not present, press <ENTER>.
    (3) Payer Name Line 2 NAME2 <ENTER> Enter the Payer Name Line 2 shown on the form.
    (a) If illegible or not present, press <ENTER>.
    (b) NOTE: Foreign addresses should NOT be entered in this section. If foreign address is present, enter "Z" and press <ENTER>
    (4) Payer Street Address ADDR <ENTER> Enter the Payer Street Address shown on the form.
    (a) See IRM 3.0.101.12.3.4 for address procedures.
    (b) If the address is missing or illegible enter "Z" and Press <ENTER>.
    (5) Payer City CITY <ENTER> Enter the Payer City shown on the form.
    (a) Use Major City Code if appropriate.
    (b) If the city is missing or illegible enter "ZZZ" and Press <ENTER>.
    (6) Payer State ST <ENTER> Enter the Payer State shown on the form.
    (a) Press <ENTER> only if a Major City Code was used.
    (b) If illegible or not present, press <ENTER>,
    (7) Payer ZIP ZIP <ENTER> Enter the Payer ZIP Code shown on the form.
    (a) If illegible or not present , press <ENTER>.
    (8) TIN Group TIN <ENTER> Enter the 9 digit Payer Identifier TIN shown on the form as follows:
    (a) If not, present, press <ENTER> only.
    (b) If less than nine digits, enter the digits shown followed by enough period (s) to fill the field.
    (c) If more than nine digits, enter the first eight followed by a period.
    (d) If two are more TINS are shown, enter 9 periods.
    .
    (e) For all Foreign Documents, where the TIN is missing, illegible, or incomplete, enter nine "9s" .
    (9) Payer DLN PDLN <ENTER> Press <Enter> only.
    (10) Foreign Country Code FORE <ENTER> The two character alpha code will be located immediately below the Payer Name.

3.0.101.13  (01-01-2009)
Schedule K-1 Pre-Document Preparation (Pre Doc Prep)

  1. When preparing K-1's for the scanner, the most critical area for repair is the right side of the K-1.

  2. The Pre Doc Prep function is responsible for the following:

    • Removing staples from the Schedule K-1, if present

    • Ensure all pages are oriented in the correct direction to be scanned.

    • Remove all Schedule K-1's, with tax period 200712 or prior, write the parent DLN on the top left corner if not already present, and return back to the Code & Edit function

    • Remove all attachments, write the parent DLN on the upper left corner, and give to lead or manager

    • ALL damage on the right side must be repaired prior to sending to the scanner function.

    • Repair any rips, tears or holes prior to sending to the scanner function and make sure document is laid out flat for scanning

    • If two pages are present, ensure they are in the correct order. (Page 1, then page 2)

    • If there are two consecutive Page 2's , continue processing.

    • If code and edit has put a slash (/) or "X" on form, pull and put in blue gusset folder and place in front of batch.

3.0.101.13.1  (01-01-2009)
Loose K-1's

  1. Loose K-1's will be received from Batching in a colored folder.

  2. After preparing K-1's, place back in folder and route to SCRIPS.

3.0.101.13.2  (01-01-2009)
Duplex K-1's

  1. Duplex (Carbon Copy) K-1's, cannot be processed through the SCRIPS System. When received take the following actions:

    1. Photocopy the duplex K-1's,

    2. Staple the duplex K-1's together by parent EIN.

    3. Place stapled duplex K-1's in a folder and place in front of the block.

    4. Place photocopied K-1's in the block to be processed through SCRIPS.

3.0.101.14  (01-01-2009)
Schedule K-1 Processing Through SCRIPS

  1. This section provides instructions for entering data through the Service Center Recognition/Image Processing System.

  2. Listed below are terms and their definitions related to SCRIPS processing.

    Term Definition
    Alpha Character A character (letter) of the alphabet.
    Alphanumeric Field A field that accepts both alpha and numeric characters.
    Application Refers to the form type being processed (e.g. Schedule K-1 or IRP).
    Bleached Image One of the two images created by the scanner software. The system uses the bleached image for character recognition purposes. Also see "True and Complete Image" .
    Block A group of Schedule K-1 documents identified with consecutive DLN's. The output program creates a block by combining documents from various units of work that share a block DLN.
    Block DLN An 11-digit DLN that consists of a two-digit district code, tax class (always 5 for Schedule K-1), a two-digit document type, a three-digit Julian date and a three-digit block number.
    Block Number Also called "blocking series" . The 9th, 10th and 11th digits in a DLN. Up to 100 sequence numbers may be associated with one block number 00 through 99.
    Capture The process of obtaining images of a document for character recognition and operator use.
    Character Any symbol or alpha (special or numeric), that represents information.
    Character Recognition The process of converting information from payer to digital form.
    Check Digit (CD) Two alpha characters found in the upper left corner of the IRS preprinted label.
    Cursor A vertical line showing the position where the next entry will be keyed.
    Data Fields Those fields that do not include entity fields (e.g. money amounts, dates, etc).
    DLN A 14-digit Document Locator Number that consists of a two-digit district code, tax class (always 5 for Schedule K-1), a two-digit document type, a three-digit Julian date and a three-digit block number, two-digit sequence number and a year digit.
    EIN An Employer Identification Number (a nine-digit number) typically identifies an entity such as a corporation, or trust. Usually in nn-nnnnnnn format.
    Entity/Entity Fields That portion of the document that deals with TIN, name and address information.
    Field Specific area provided for data entry.
    Flag A question mark used to "mark" an unrecognizable character , or an error within a field.
    Function Keys The upper row of keys on the keyboard. The function keys are <F1> through <F16>.
    Highlighting A three-dimensional shadowing of a template field used to direct attention to the field. Use in OE to show the current cursor position. Used in DV to show the current field containing an error.
    Image Strip A section of the true and complete image. Each strip corresponds to a particular field.
    Key Combination Keystroke commands that require two or more simultaneous keystrokes. For example, press <CTRL>-<P> for post-to-close means to press and hold the <CTRL> key and then press the <P> key before releasing the <CTRL> key.
    Menu A list of operations/options from which the workstation operator makes a selection.
    Message Window A window that appears within the main window. It usually appears in the center of the screen. The system uses these windows to relay messages to the operator.
    NABR Name and Address Block Reader. NABR compares the address captured from the scanner and the United States Postal Service database of addresses.
    Name Control A code of up to four alphas, numerics, &, –, or blanks derived from a taxpayer's name.
    Non-Conforming Form A form the scanner cannot recognize.
    Numeric Character A number ranging from 0 to 9.
    Payee A recipient of money amounts issued by the payer. A filer may identify a payee on the form as one of the following: Beneficiary, Partner, Shareholder.
    Payer An issuer of money amounts to a payee. A form may identify the payer as one if the following: Parent, Fiduciary, Estate, Partnership, Corporation.
    Prompt A message or statement displayed that requires an operator response.
    Reverse Video A reversed display of the black and white on an image (i.e. black becomes white and white becomes black).
    Sequence Number/Serial Number A two-digit number within the DLN that uniquely identifies the document.
    Sight-Verify Examine a highlighted field in DV. If correct, release the field. If incorrect, correct the field. Also called "verify" .
    Special Characters (symbols) *, &, /, %, #, ?, etc.
    SSN Social Security Number, a nine digit number issued to an individual by the Social Security Administration. Usually in nnn-nn-nnnn format.
    Status Line A strip of information found along the bottom right side of the main working window below the prompt area.
    Template A window that contains fields for data entry. The template mirrors the actual form layout, to the extent possible. The system always displays it in the right side of the monitor screen.
    TIN Taxpayer Identification Number. Either an EIN or an SSN.
    Transmittal A Form 1332-SC Block and Selection Record/Breaker Sheet.
    True and Complete Image The image that the system displays for data entry or validation purposes. If available, the system will always display it on the left half of the monitor screen. It is similar to a photocopy.
    Unit-of-Work (UW) A group of Schedule K-1 documents containing one transmittal and the Schedule K-1's.

3.0.101.14.1  (01-01-2009)
Forms/Program Number/Tax Class, Doc Codes

  1. The program codes listed below should be used when entering Schedules K-1 through SCRIPS.

    FORMS PROGRAM NUMBERS TAX CLASS/DOC CODES
    1041 K-1 44386 566
    1065 K-1 44387 565
    1120S K-1 44388 567

  2. The input year will be determined from the tax year ending on the form. If the tax year ending is blank, input the Form year.

3.0.101.14.1.1  (01-01-2009)
Work Prioritization

  1. The system will automatically set the Unit Task Prioritization using the following criteria:

    Program Number Form Type Description based on cycle
    44388 Form 1120S, Schedule K-1 Prior (by cycle, then batch #), then Current Cycle (by batch #)
    44386 Form 1041, Schedule K-1 Prior (by cycle, then batch #), then Current Cycle (by batch #)
    44387 Form 1065, Schedule K-1 Prior (by cycle, then batch #), then Current Cycle (by batch #)
    44388 Form 1120S, Schedule K-1 Future Cycle (by cycle then batch #)
    44386 Form 1041, Schedule K-1 Future Cycle (by cycle then batch #)
    44387 Form 1065, Schedule K-1 Future Cycle (by cycle then batch #)

  2. The system will automatically re-prioritize the work every time the cycle on the system changes.

  3. Forms 1120S, Schedules K-1 must be processed on cycle. They cannot be shelved.

  4. Form 1065, Schedules K-1 and Form 1041, Schedules K-1 can be shelved. However, they must be completed by Program Completion Date (PCD)

3.0.101.14.2  (01-01-2009)
Reserved

  1. This subsection is reserved.

3.0.101.14.3  (01-01-2009)
Scanner Reject

  1. The scanner will print a one-character reject code to the left of the DLN area on any form that is routed to the Reject Bin. The rejected form will then be sent back to Batching.

    Note:

    Prior to sending to Batching, write the parent DLN in the upper left margin of the K-1.

    Form Reject Code Description
    44386 (Form 1041 K-1)
    44387 (Form 1065 K-1)
    44388 (Form 1120S K-1)     		M Mixed document type within a unit-of-work. (e.g. 1041 Schedule K-1 within a 1065 Schedule K-1 unit-of-work)

3.0.101.14.4  (01-01-2009)
Loose K-1's

  1. Loose K-1's will be received in a colored folder.

  2. After scanning the SCRIPS operators will place back in folder and send to Post Doc Prep.

3.0.101.14.5  (01-01-2009)
Workstation Operations

  1. Refer to the IRM 3.41.274, General Instructions for Processing via SCRIPS, for a description of these and other items:

    • Keyboard Layout

    • Login/Logoff

    • Operator Statistics

    • Post-to-Close

    • Interrupt/Resume

    • Suspend/Resume

    • Status Line

  2. Whenever the IRM 3.41.274 and this IRM conflict, this IRM will take precedence.

3.0.101.14.6  (01-01-2009)
Forms Identification (FI) Function

  1. The scanner will not recognize all documents. These documents are called non-conforming forms. They range from photocopies of official documents, documents that might be official forms but for some reason do not meet the official specification for measurement, homemade documents of varying formats, to non-Schedule K-1 forms. The FI function allows the workstation operator to identify the form to avoid rework at the scanner. The FI screen has an image on the left and an entry template on the right. The entry template permits the operator to select what form type the image is, or to delete a single image or an entire submission from further processing. The menus shown on the screen will vary depending on how your supervisor profiled you. For instance, if you are not profiled for the FI function, this option will not be present on the OE Function Menu.


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