3.0.230  Lockbox Processing Procedures (Cont. 1)

3.0.230.12 
Submission Processing Campus Quality Review of Lockbox

3.0.230.12.9  (01-01-2009)
Unprocessable Items Review - With and Without Remittance

  1. A daily sample review will be performed in the Receipt & Control area by an employee from the Improvement Team Function on unprocessable work (with remittance and non-remittance) sent to the SPC.

  2. To sample, randomly select 15 with remittance documents and 15 non-remittance documents to review.

  3. Record the number of processable items found. In addition to recording the number of processable items found, it is also necessary to keep track of the common processing requirements not met among the unprocessable items (note these are not errors). A list of the codes and corresponding processing requirements is provided on the DCI.

  4. If the "other" category is selected, explain the error in the comments column.

  5. Forward the DCI to the LFC no later than the third working day of the following month.

3.0.230.12.10  (01-01-2010)
Return Sort Review - IMF / BMF

  1. IMF and BMF returns will be reviewed year around at both IMF and BMF Lockbox Sites.

  2. A daily sample review will be preformed by an employee from the Improvement Team.

  3. To sample, randomly select six batches from each category. Randomly select three returns from each sampled batch. If six batches are not available, randomly select three returns from each available batch. If sampled batches have less than three returns available, review all returns available. Do not sample another batch.

    Note:

    After the returns have been pulled for sample, the returns are individual items and are subject to individual errors, regardless what batch they came from.

  4. Record the number of returns found in error on the DCI. Use the error codes on the DCI to identify the types of errors found among the sampled returns. If the "other" category is selected, explain the error using the comments column.

  5. Review the cover sheets associated with each sampled batch. Record the number of cover sheets reviewed and the number of cover sheets in error. Each cover sheet can only be charged one error, even if it contains multiple errors. Use the additional columns to identify number of each error type found. Results will filter to the cover sheets summary tab in the workbook.

    Note:

    The review of full-paid returns may be delayed during IMF April peak because some work is shelved. Once work resumes on the shelved returns, they should then be sampled for this review.

  6. Forward the DCI to the LFC no later than the third working day of the following month.

3.0.230.12.11  (01-01-2010)
Return Sort Review - Form 1040X (April Only)

  1. A daily sample will be performed by an employee from the Improvement Team during the month of April for the IMF Lockbox Sites only.

  2. To sample, randomly select six batches of Form 1040X work. Randomly select three returns from each sampled batch. If six batches are not available, randomly select three returns from each available batch. If sampled batches have less than three returns available, review all returns available. Do not sample another batch.

    Note:

    After the returns have been pulled for sample, the returns are individual items and are subject to individual errors, regardless what batch they came from.

  3. Record the number of returns found in error on the DCI. Use the error codes on the DCI to identify the types of errors found among the sampled returns. If the "other" category is selected, explain the error using the comments column.

    Note:

    The number of errors cannot exceed the number of sampled returns. One return can have multiple errors but only count one error. Detail the multiple errors in the "types of errors" section.

  4. Review the cover sheets associated with each sampled batch. Record the number of cover sheets reviewed and the number of cover sheets in error. Each cover sheet can only be charged one error, even it if contains multiple errors. Use the additional columns to identify number of each error type found. Results will filter to the cover sheet summary tab in the workbook.

  5. Forward the DCI to the LFC no later than the third working day of the month of May.

3.0.230.12.12  (01-01-2012)
Return Sort Reviews - Prior Year and Delinquent

  1. A daily sample will be performed by an employee from the Improvement Team.

  2. To sample, randomly select a total of six batches of prior year returns and a total of six batches of delinquent returns. The sample should randomly include a mixture of both non-remit and part-paid batches. Randomly select three returns from each sampled batch. If six batches are not available in each category, randomly select three returns from each available batch. If sampled batches have less then three returns available, review all returns available. Do not sample another batch.

    Note:

    After the returns have been pulled for sample, the returns are individual items and are subject to individual errors, regardless what batch they came from.

  3. Record the number of returns found in error on the DCI. Use the error codes on the DCI to identify the types of errors found among the sampled returns. If the "other" category is selected, explain the error using the comments column.

  4. Review the cover sheets associated with each sampled batch. Record the number of cover sheets reviewed and the number of cover sheets in error. Each cover sheet can only be charged one error, even if it contains multiple errors. Use the additional columns to identify number of each error type found. Results will filter to the cover sheet summary tab in the workbook.

  5. Forward the DCI to the LFC no later than the third working day of the following month.

3.0.230.12.13  (01-01-2010)
Deposit Error Review (DER)

  1. Each Lockbox Site will pull a random sample of eight envelopes for each day mail is received, utilizing a schedule provided by LPO, for scannable and non-scannable documents.

  2. All copies will be placed in a larger envelope labeled "Deposit Error Copy or Deposit Accuracy Copy, Improvement Team" , along with the appropriate Mail Stop number. This package will be put in Box #1 along with the reports.

  3. An employee from the Improvement Team will review the selected samples provided by the Lockbox Site. The sample could include either IMF or BMF items.

    Note:

    This review must be performed throughout the year for each day the Lockbox Site receives mail.

  4. If necessary, adapt the procedures below to fit the needs of a particular reviewer or SPC. The LFC must approve the methodology of review. The following procedures provide basic instructions for performing the SPC DCI Lockbox DER utilizing the RTR system:

    1. Access RTR.

    2. Click on "Research" in tool bar at top of screen.

    3. Screen will come up: Enter criteria.

    4. Query by entering a deposit date range which is the received date plus five calendar days.

    5. Enter the TIN, name control and payment amount.

    6. Click on "Lockbox Only" at the bottom of the screen.

    7. Click on "Submit."

    8. Screen will display "Filter results: 1 Transaction found."

    9. Click on the date in the Deposit Date cell.

    10. The screen will display "ISR1340 Document Remittance Register Details" .

    11. Print screen display (landscape).

    12. Using the information in the print, verify the payment was processed accurately (correct MFT, TIN, name control, money amount, transaction date, tax period and transaction code).

      Note:

      If a payment was not processed correctly, notate the correct information on the RTR ISR1340 screen print below the data in error. Attach the screen print to each case file

      Special Instructions for split payments or multiple payments:

      • Verify all data available

      • Charge only one error per case

  5. Place the number of items in error in the appropriate worksheet cell of the DCI. Provide copies of the RTR ISR1340 and copies of the sampled case to the LFC.

3.0.230.12.13.1  (01-01-2012)
Deposit Error Review DCI Instructions

  1. Record the number of cases received on the DCI, using the received date from the sample.

    Note:

    You do not have to enter zeros for days when the review is not performed.

  2. Record the number of cases found in error on the DCI. Use the "Lockbox Error" column to document these errors. An error will result when a case was not processed accurately.

  3. Use the error codes on the DCI to identify the types of errors found among the selected items.

  4. If the "Other" category is used, record an error and use the Comment column to explain the error.

    Note:

    A case may have more than one error code identified, but only one error per case may be charged.

  5. Provide a copy of the case that is in error and the associated RTR data Screen print to the LFC.

  6. Forward the DCI to the LFC no later then the third working day of the following month.

  7. Retain all DER sample cases for a rolling six months.

3.0.230.12.13.2  (01-01-2009)
DCI Column Explanations

  1. Taxpayer Error - Used when an error occurred due to information provided by the taxpayer. This may include illegible or unclear information. For taxpayer errors, "no errors" will be notated in the categories under "Types of Errors" .

  2. Unprocessable - Used when a case is a true with / remittance unprocessable and was handled correctly by the Lockbox Site. If the Lockbox Site incorrectly sent the case to the center as an unprocessable, the case should not be entered in this column. It should instead be marked as a "Lockbox Error" .

  3. Residual - Used when the sample case does not involve a remittance. No errors will be notated on residual cases.

  4. Taxpayer Impact - Used when a Lockbox error case results in a notice, letter, penalty, and/or interest charge to the taxpayer. The number of cases in error that result in one of these should be entered under this column. If there is a case that causes taxpayer impact, the type of impact must be described in the comments column.

3.0.230.12.14  (01-01-2014)
Automatic Extension of Time to File Review - Form 4868 (April 10 - April 30 IMF Only)

  1. Each IMF Lockbox Site will pull a daily random sample of twelve envelopes from the Form 4868 PO Box if available.

  2. The Lockbox site will place all photocopied items in a larger envelope labeled with: Improvement Team, appropriate Mail Stop, and "Lockbox Form 4868 Review" . This package will be put in the daily Mail-out package.

  3. An employee from the "Improvement Team" will review the selected samples provided by the Lockbox Site.

    Note:

    Sampling will only be done at the IMF Lockbox sites.

3.0.230.12.14.1  (01-01-2012)
Form 4868 Review DCI instructions

  1. Errors will be charged when an extension has been processed incorrectly as approved or incorrectly as unapproved or if an extension has been processed as approved with a RTR transaction date later than 4/22/2012 (or 4/15 for items received 4/23 through 5/7 subject to the postmark review) or processed with an incorrect transaction date.

  2. All other errors identified (SSN, name control, etc.) may be recorded in the comments column, but will not be recorded in the "Lockbox Error" column.

  3. On a daily basis, whenever an error is identified or suspected notify the LFC IMMEDIATELY via their cell phone. It will be necessary to contact your LFC on their cell phone as they will be at the bank site during the review period.

3.0.230.12.14.2  (01-01-2012)
DCI Explanations

  1. Sample Date - The "Sample Date" is the received date of the sample case received.

  2. Lockbox DLN - For each case, enter the Lockbox DLN (xxxxx-xxx-xxxxx). The Lockbox DLN can be determined via RTR research and will have a valid Lockbox File Location Code (FLC), see Exhibit 3.0.230–3. If the case is a 'residual' enter the taxpayer's name control in place of the DLN.

    Note:

    Consider the following as residual: a non-remit Form 4868 or any form other than a Form 4868. However, if a form other than a Form 4868 was actually processed as a Form 4868, this is NOT a residual and the information should be captured on the DCI (e.g., a Form 1040ES that was processed as a Form 4868). A "check only" annotated by the taxpayer anywhere on the check as payment for an extension should be processed as unapproved.

  3. Lockbox Error - Place an "X" in the "Lockbox Error" column for the following error conditions:

    • Processed incorrectly as approved

    • Processed incorrectly as unapproved

    • Processed as approved with a transaction date of 4/23 or later (For samples with received dates 4/20 through 4/22)

    • Processed as approved with a transaction date later than 4/15 (This is for samples with received dates 4/23 through 5/7 that have a timely postmark of 4/15 or earlier)

    • Processed with an incorrect transaction date

  4. Postmark Date - Enter the earliest date (if "missing" or "illegible" ) from the envelope.

  5. RTR Transaction Date - Input the transaction date from RTR. Use the RTR instructions below to locate the transaction on RTR.
    RTR

    1. Access RTR

    2. Click on 'Research' in tool bar at top of screen.

    3. RTR Research: enter criteria, screen will come up. Query by entering a Deposit Date 'range' (note: the range should be the 'received date' plus 5 calendar days), enter the TIN, name control, and payment amount. Near the bottom of the screen click 'Lockbox Only'. After entering this information press enter or click 'Submit'.

    4. When the payment is found the following screen will come up: "Filter results: 1 Transaction found."

    5. Click on the date in the "Deposit Date" cell (e.g., 04/15/2013). The following screen will come up: ISR1340 Document Remittance Register Details - print this screen (landscape). Using the information on the print, verify that the payment was processed accurately with the correct MFT, TIN, name control, money amount, transaction date, (should be the date notated by the Lockbox bank on the case file) tax period and transaction code(s).

      Note:

      If a payment was not processed accurately notate the correct information on the RTR ISR1340 screen print below the incorrect data. Attached the screen print to each case file.


      Special instructions for split payments or multiple payments

    • Verify all data available

  6. Transaction Date Correct - Select "yes" or "no" from the drop down menu. Items received April 23 through May 7 are subject to a postmark review and should have a 4/15 transaction date if the earliest postmark is timely. Items with missing, illegible, and untimely postmarks should carry the transaction date annotated on the sample.

  7. IDRS Date - Enter the IDRS date of the Lockbox transaction. Use the IDRS instructions below to determine how the extension was processed.
    IDRS

    1. Access IDRS.

    2. Research payment via Command Code IMFOLT (other command codes may be used if necessary). Use the SSN from the RTR report to research the payment. Be sure the payment you review is the posted Lockbox Payment which will have a Lockbox FLC.

  8. Processed as approval/not approved - Place an "X" in the appropriate column indicating how the extension was processed. If the payment was processed as approved, there will be a transaction code 460 and transaction code 670 with the Lockbox DLN present on the module.

  9. Comments - Any pertinent comments, including transactions processed with an incorrect TIN, name control, etc.

    SPECIAL INSTRUCTIONS

    1. If processing errors are identified or suspected contact your LFC immediately! It will be necessary to contact your LFC on their cell phone as they will be at the lockbox site during the review period.

    2. Please take appropriate steps to ensure that any errors identified are corrected. If Service Center errors are identified during the review, the Planning and Analysis Staff should be notified.

    3. At the end of the review period, provide all copies to your LFC, this includes: all photocopied envelope and contents, IDRS prints, and RTR prints. Each sample case should be stapled together including backup research data (RTR and IDRS prints).

3.0.230.12.14.3  (04-06-2011)
After Completing the Review

  1. On a daily basis, whenever an error is identified or suspected NOTIFY the Lockbox Coordinator IMMEDIATELY via their cell phone. At the end of the review period, provide all copies to your LFC, this includes: all photocopied envelopes and contents, IDRS prints, and RTR prints even if no error was charged. Each sample case should be stapled together including backup research data (RTR and IDRS prints).

3.0.230.13  (01-01-2009)
Lockbox Field Coordinator On-site Reviews

  1. The LFCs will perform on-site reviews during mandatory trips as outlined in IRM 3.0.230.6. LFCs will use the most current PIC and Procedural DCIs and instructions.

  2. The reviews ensure the IRS Lockbox Sites' work meet the standards in the LPG. Each review examines the critical elements of the Lockbox Sites processing procedures that could cause a work stoppage if not executed accurately.

  3. Any errors found during on-site reviews should be photocopied as documentation to the DCI report. All photocopied errors will be sent back to the respective SPC via the Daily Mail-out Package.

  4. Maintain these reports for the length of the contract. The contract period is for five years with up to two one year extensions.

3.0.230.13.1  (01-01-2011)
Performance Standards

  1. Results from certain procedural reviews (high priority reviews) will be factored into the Lockbox performance standards, which assess the overall performance of each Lockbox site.

  2. The "High priority" reviews must be performed every day during each visit that coordinators are on-site and the review instructions, including sample sizes must be followed. The following have been designated as priority reviews. Each DCI has been marked as high priority:

    • Return Sort Review (IMF, BMF)

    • Form 1040X Sort Review (April Only)

    • Prior Year Return Review

    • Delinquent Return Review

    • Candling

    • Unprocessables Items (with remittances and non-remittance)

    • Candling Bags

    • Form 4868 Review in Extraction (April only)

3.0.230.13.2  (01-01-2009)
Procedural Review General Guidelines

  1. LFC will conduct all high priority reviews on a daily basis during all site visits. The rest of the reviews should be reviewed as time permits.

  2. Enter the following information on each DCI review sheet:

    • Month

    • Lockbox Site

    • Date

    • Actual Number Sampled

    • Number of Errors Found

    • Comments (document all pertinent comments regarding 'Other' errors not identified on the appropriate DCI or on the comments sheet provided)

  3. The DCI shows the type of work to be sampled, sample size, error descriptions, and other information needed to complete the review. Read both the instructions and the DCI carefully before beginning each review.

  4. Things to keep in mind:

    1. Take sample from the correct universe (i.e., blocks, transactions, returns, vouchers, checks, etc.).

    2. Sampled items are counted differently for some reviews.

    3. Errors are tracked differently depending on work being reviewed.

    4. "Randomly Select" means to select cases without conforming to a specific pattern.

3.0.230.13.3  (01-01-2010)
Return Sort Review IMF - High Priority

  1. After all Lockbox Site quality reviews are completed, review sorted returns in the batching / return preparation area.

    Note:

    Perform this review during January and April visits at IMF Lockbox Sites only.

  2. Randomly select six batches of returns for each category. Randomly select three returns from each sampled batch. If less than six batches in a category, randomly select three returns from each available batch. If there are not six batches available within a category, randomly select three returns from each batch that is available.

    Note:

    After the returns have been pulled for sample, the returns are individual items and are subject to individual error. No matter what batch they came from.

  3. Record the number of returns found in error on the DCI. Use the error codes on the DCI to identify the types of errors found among the sampled returns. If the "other" category is selected, explain the error using the comments column.

    Note:

    The number of errors cannot exceed the number of sampled returns. One return can have multiple errors but only count one error. Detail the multiple errors in the "types of errors" section.

  4. Review the cover sheet associated with each sampled batch. On the DCI, record the number of cover sheets reviewed and the number of cover sheets in error. Each cover sheet can only be charged one error, even if it contains multiple errors. Use the additional columns to show the number of each error type found. Results will filter to the cover sheets summary tab in the workbook.

3.0.230.13.4  (01-01-2010)
Return Sort Review Form 1040X - High Priority (April Only)

  1. After all Lockbox Site quality reviews are completed, review sorted returns in the batching / return preparation area.

    Note:

    Perform this review during the April visit at the IMF Lockbox Sites only.

  2. Randomly select six batches of Form 1040X returns. Randomly select three returns from each sampled batch. If six batches are not available within a category, randomly select three returns from each available batch. If there are not six batches available, randomly select three returns from each batch that is available.

    Note:

    After the returns have been pulled for sample, the returns are individual items and are subject to individual errors, regardless what batch they came from.

  3. Record the number of returns found in error on the DCI. Use the error codes on the DCI to identify the types of errors found among the sampled returns. If the "other" category is selected, explain the error using the comments column.

    Note:

    The number of errors cannot exceed the number of sampled returns. One return can have multiple errors but only count one error. Detail the multiple errors in the "types of errors" section.

  4. Review the cover sheet associated with each sampled batch. On the DCI record the number of cover sheets reviewed and the number of cover sheets in error. Each cover sheet can only be charged one error, even if it contains multiple errors. Use the additional columns to show the number of each error type found. Results will filter to the cover sheets summary tab in the workbook.

3.0.230.13.5  (01-01-2010)
Return Sort Review BMF - High Priority

  1. After all Lockbox Site quality reviews are completed, review sorted returns in the batching / return preparation area.

    Note:

    Perform this review at BMF Lockbox Sites year round.

  2. Randomly select six different batches of returns for each category. Randomly select three returns from each sampled batch. If six batches are not available within a category, randomly select three returns from each available batch. If there are not six batches available, randomly select three returns from each batch that is available.

    Note:

    After the returns have been pulled for sample, the returns are individual items and are subject to individual errors, regardless what batch they came from.

  3. Record the number of returns found in error on the DCI. Use the error codes on the DCI to identify the types of errors found among the sampled returns. If the "other" category is selected, explain the error using the comments column.

    Note:

    The number of errors cannot exceed the number of sampled returns. One return can have multiple errors but only count one error. Detail the multiple errors in the "types of errors" section.

  4. Review the cover sheet associated with each sampled batch. On the DCI record the number of cover sheets reviewed and the number of cover sheets in error. Each cover sheet can only be charged one error, even if it contains multiple errors. Use the additional columns to show the number of each error type found. Results will filter to the cover sheets summary tab in the workbook.

3.0.230.13.6  (01-01-2010)
Return Sort Review Prior Year - High Priority

  1. After all Lockbox Site quality reviews are completed, review sorted returns in the batching / return preparation area.

  2. Randomly select six batches of returns from different form types for each category. Randomly select three returns from each sample batch. If six batches are not available within a category, randomly select three returns from each available batch. If there are not six batches available, randomly select three returns from each batch that is available.

    Note:

    After the returns have been pulled for sample, the returns are individual items and are subject to individual errors, regardless what batch they came from.

  3. Record the number of returns found in error on the DCI. Use the error codes on the DCI to identify the types of errors found among the sampled returns. If the "other" category is selected, explain the error using the comments column.

    Note:

    The number of errors cannot exceed the number of sampled returns. One return can have multiple errors but only count one error. Detail the multiple errors in the "types of errors" section.

  4. Review the cover sheet associated with each sampled batch. On the DCI record the number of cover sheets reviewed and the number of cover sheets in error. Each cover sheet can only be charged one error, even if it contains multiple errors. Use the additional columns to show the number of each error type found. Results will filter to the cover sheets summary tab in the workbook.

3.0.230.13.7  (01-01-2010)
Return Sort Review Delinquent - High Priority

  1. After all Lockbox Site quality reviews are completed, review sorted returns in the batching / return preparation area.

  2. Randomly select six batches of returns from different form types for each category. Randomly select three returns from each sample batch. If six batches are not available within a category, randomly select three returns from each available batch. If there are not six batches available, randomly select three returns from each batch that is available.

    Note:

    After the returns have been pulled for sample, the returns are individual items and are subject to individual errors regardless what batch they came from.

  3. Record the number of returns found in error on the DCI. Use the error codes on the DCI to identify the types of errors found among the sampled returns. If the "other" category is selected, explain the error using the comments column.

    Note:

    The number of errors cannot exceed the number of sampled returns. One return can have multiple errors but only count one error. Detail the multiple errors in the "types of errors" section.

  4. Review the cover sheet associated with each sampled batch. On the DCI record the number of cover sheets reviewed and the number of cover sheets in error. Each cover sheet can only be charged one error, even if it contains multiple errors. Use the additional columns to show the number of each error type found. Results will filter to the cover sheets summary tab in the workbook.

3.0.230.13.8  (01-01-2009)
Candling Review - High Priority

  1. Review a sample of candled envelopes to ensure no checks or pertinent taxpayer information are destroyed. Randomly select a sample of 200 items following the final pass of the envelopes through candling. The sample should be from various bins and / or shifts.

  2. An error will result if anything other than an empty envelope is found.

3.0.230.13.9  (01-01-2010)
Unprocessable Items Review - High Priority

  1. Review a sample of unprocessable items to ensure processable items are not mixed in with unprocessable work. Select the sample after the Lockbox Site completes its review.

  2. Randomly select 25 "with remit" and 25 "non-remit" items in the exceptions / unprocessable / manual area. Do not select every item from the same bundle / box of work. Collect items from separate locations in order to obtain a more extensive sample.

  3. Record the number of processable items found. In addition, using the "Processing Requirements" codes are provided on the DCI, review the sample of unprocessable items to determine whether the site is processing the work to the fullest extent before deeming it unprocessable. Note: These are not errors.

  4. If the error code "other" is selected, use the comments column to explain the error. The number of errors found can not exceed the number of items sampled.

3.0.230.13.10  (01-01-2009)
Candling Bags Review - High Priority

  1. A sample review of candling bags received in first candling will be performed to ensure they are tagged properly identifying the extractor or equipment (OPEX) and the received date.

  2. Randomly select 10 bags of envelopes from the candling area.

  3. An error will result if the tag on the candling bag is missing or incomplete. Use the error codes provided on the DCI.

  4. If the error code "other" is selected, use the comments column to explain the error. The number of errors found can not exceed the number of items sampled.

3.0.230.13.11  (01-01-2009)
Form 4868 Review - High Priority (April Only)

  1. Sample review Forms 4868 in extraction area AFTER Lockbox Site's quality review.

    Note:

    Perform this review during the IMF April peak at the IMF Lockbox Sites only.

  2. Randomly select five blocks and select five items from each block.

  3. Record the number of Forms 4868 reviewed and the number in error on the DCI.

  4. If the error code "other" is selected, use the comments column to explain the error. The number of errors found cannot exceed the number of items sampled.

3.0.230.13.12  (01-01-2009)
Mail Review

  1. A review of the mail will be performed after it is prepared for the processing floor to determine whether the Lockbox Site correctly labeled the mail trays / tubs.

  2. Randomly select 25 mail trays / tubs for review. Select trays / tubs from various mail drops to comprehensively cover the mail coming into the Lockbox Site.

  3. An error will result when:

    • tray / tub tag is missing or incorrect

    • tray / tub contains mixed tax types

    • tray / tub is out of date / or time order

3.0.230.13.13  (01-01-2010)
Voucher and Check Review in Extraction

  1. Review a sample of vouchers and checks in Extraction after the Lockbox Sites's quality review, to determine whether the lockbox is correctly processing / batching vouchers and checks.

  2. Randomly select five scannable and five non-scannable batches for review from various extractors. Then randomly select five vouchers and checks combinations from each sampled batch.

  3. Review each batch header ticket and record the number of errors.

  4. An error will result when:

    • High dollar checks were not expedited

    • Voucher and checks missorted

    • Checks were not overstamped

  5. If the error code "other" is selected, use the comments column to explain the error. The number of errors found can not exceed the number of items sampled.

    Note:

    Count a voucher and check combination as one item.

3.0.230.13.14  (01-01-2009)
Items to be Shred Review

  1. Review a sample of the items to be shredded, following managerial review, to ensure no pertinent taxpayer information or requests are destroyed. Randomly select 200 items from the documents waiting to be shredded after being reviewed by a manager or management official. Items should be selected without looking at any taxpayer information as to not bias the selection.

  2. Charge an error if you find information which should be sent to the SPC or a payment that should be processed.

3.0.230.13.15  (01-01-2009)
Multiple Payments Review

  1. Review a sample of multiple payments and corresponding voucher should be performed to ensure they are processed correctly. The LFC will contact Lockbox Site personnel to find processed multiple payments.

  2. After the Lockbox sites quality review randomly select for review 25 multiple payments vouchers that have multiple payments. If 25 multiple payments are not available, review all available multiple payments.

  3. Charge an error if a payment is not processed correctly.

  4. Ensure multiple payments are correctly annotated with "M-2" , "M-3" , etc.

3.0.230.13.16  (01-01-2010)
Split Payments Review

  1. Review a sample of split payments and corresponding voucher should be performed to ensure they were processed correctly. The LFC should contact Lockbox Site personnel to find processed split payments.

  2. After the Lockbox sites quality review randomly select for review 25 split payments. If 25 split payments are not available, review all available split payments.

  3. Charge an error if a payment is not processed correctly.

  4. Ensure split payments are correctly annotated with "S-2 " , "S-3" , etc.

3.0.230.13.17  (01-01-2009)
Certified / Registered Mail Review

  1. Review a sample of certified / registered mail cards to ensure they are properly stamped using IRS Certified Date Stamp.

  2. Randomly select five bundles of stamped cards and select five cards from each sampled bundle. If there are not five bundles available, randomly select five cards from each available bundle.

  3. An error will result if the IRS Certified Date Stamp is missing, illegible or the date is incorrect. Report using the error codes provided on the DCI.

  4. If the error code "Other" is selected, use the comments column to explain the error.

3.0.230.13.18  (01-01-2009)
Processing Internal Controls (PIC) Review

  1. Results from this review will be used to assess the overall performance of each Lockbox Site. Reviewing as described on the DCI and below is very important.

    Note:

    Detail all "partially met" and "not met" observations on the comments sheet.

3.0.230.13.19  (01-01-2013)
Checkpoint Frequencies

  1. Checkpoints 1 should be reviewed once during the April IMF Peak Visit. Checkpoints 2-4 should only be reviewed once per Lockbox peak visit.

  2. Checkpoints 5-8 should be reviewed three times during the January (BMF) / April (IMF) peak visit and only once for all other on-site visits.

3.0.230.13.20  (01-01-2010)
Checkpoint Instructions

  1. Each checkpoint has a list of requirements which need to be checked. Each LPG reference is stated on the DCI. All listed requirements must be reviewed. Checkpoints will be assessed as follows:

    • Fully Met (FM) - All requirements must be met in order for the checkpoint to receive a FM

    • Partially Met (PM) - At least half of the requirements must be met in order for the checkpoint to receive a PM Guidelines for this are included on the DCI.

    • Not Met (NM) - If less than half of the requirements listed are met, the checkpoint will receive NM

3.0.230.13.21  (01-01-2010)
Repeat Finding

  1. Each checkpoint has a "Repeat Finding" entry. LFC will complete this on the DCI after returning home from the on-site visit.

  2. Go back to the previous PIC review. For any of the checkpoints that received a PM or NM for the current review, check to see what the Lockbox site received for the same checkpoints on the previous DCI.

  3. If the Lockbox Site received the same rating, the DCI should be marked "yes" as a "Repeat Finding" . Otherwise it should be marked "no" .

3.0.230.13.22  (01-01-2010)
Checkpoint 1 - Form 4868 Sampling Review

  1. Checkpoint 1 covers the Form 4868 sampling review.

  2. Review to ensure the following:

    • Is the Lockbox site selecting the Form 4868 sample correctly

3.0.230.13.23  (01-01-2013)
Checkpoint 2 - Lockbox Document Transmittal Review (LDT)

  1. Checkpoint 2 covers the LDT requirements

  2. Is the Lockbox site retaining the original LDTs and Acknowledgements in chronological order?

  3. Is the Lockbox site completing the LDT acknowledgement page correctly?

  4. Is there an internal control in place to ensure that a signed and dated acknowledgement is received back from the service center daily?

  5. Are the documents (LDTs and Acknowledgements) being retained for 1 year?

3.0.230.13.24  (01-01-2010)
Checkpoint 3 – Deposit Error Rate Sampling (DER)

  1. Checkpoint 3 covers the DER requirements.

  2. Review to ensure the following:

    • The Lockbox Site maintains a "Sampling Tracking Sheet"

    • The sampling methods incorporates multiple P.O. Boxes

    • The sampling method varies in the mail delivery times

3.0.230.13.25  (01-01-2010)
Checkpoint 4 – Managerial Quality Reviews

  1. Checkpoint 4 covers the Lockbox managerial quality reviews per LPG requirements.

  2. Review to ensure the following:

    • Manager is performing quality reviews on candling.

    • Manager is performing quality reviews on shreds.

    • Manager maintains logs of the desk and work area reviews. Review the previous month's log.

3.0.230.13.26  (01-01-2010)
Checkpoint 5 – IRS Date Stamps

  1. Checkpoint 5 covers the IRS date stamp safeguard against unauthorized usage requirements.

  2. Review to ensure the following:

    • The date stamps have a date stamp number and / or unique serial number

    • There is a record of the date stamp number and / or unique serial number

    • The date stamps are issued to a specific individual

3.0.230.13.27  (01-01-2010)
Checkpoints 6a thru 6d – Log Reviews

  1. Checkpoints 6a thru 6d covers the four Log reviews (Date Stamp, Candling (Form 9535), Cash and Mail).

  2. Review to ensure the following:

    • 6a - The stamp log includes current date, stamp number and / or unique serial numbers, name of employee, shift, time issued and return time

    • 6b - All items found in candling are handled correctly and documented on Form 9535 designated for Candling

    • 6c - All cash payments are handled correctly and documented on Form 9535 designated for Cash

    • 6d - The Lockbox Site is maintaining a daily mail log of incoming receipts and completing the log after every mail drop

    Note:

    Review the daily logs beginning with the first day of the month. For example, if you are performing the review on April 17, review the daily log sheets from April 1 to the day prior to your review. For January (BMF) and April (IMF) peaks, perform these reviews three times. If your second review is on April 22, review daily logs from April 17-21.

3.0.230.13.28  (01-01-2010)
Checkpoint 7 – Candling Envelopes

  1. Checkpoint 7 covers the envelopes candled requirements.

  2. Review to ensure the following:

    • Envelopes are opened (either manually or by OPEX) on three or more sides and must be candled once on the candling tables

    • All other envelopes must be candled twice on the candling tables

3.0.230.13.29  (01-01-2010)
Checkpoint 8 – High Dollars

  1. Checkpoint 8 covers the High Dollar requirements:

    • $25,000 or more will be in effect throughout the year except for the IMF April peak processing period when the $50,000 or more tolerance will apply

  2. Review to ensure the following:

    • An internal control is in place to expedite these remittances

    • Management is ensuring these remittances are collected from all areas at the end of each shift and prior to break / lunch periods, then batched and sent for processing

  3. For remittances of $25,000 or more ($50,000 or more IMF April peak processing), ensure the following:

    • If discovered in any type of work, expedite and deposit the remittance in the first available deposit

    • $100 million or more is discovered, it must be immediately hand-carried to the manager with the return / document

3.0.230.13.30  (01-01-2010)
Checkpoint Descriptions and LPG References

  1. Following is a listing of the PIC Reviews and their respective LPG references.

    1. Checkpoint 1 - Form 4868 Sampling Review.

    2. Checkpoint 2 - Lockbox Document Transmittal (LDT)

    3. Checkpoint 3 - Deposit Error Rate Sampling (DER) - LPG 8.4.

    4. Checkpoint 4 - Managerial Quality Reviews - LPG 8.1.

    5. Checkpoint 5 - IRS Date Stamping Safeguards - LPG 3.2.2.2.

    6. Checkpoint 6a - 6d Log Review (Date Stamp, Candling, Cash, Mail) - LPG 3.2.2.2.

    7. Checkpoint 7 - Candling Requirements - LPG 3.2.

    8. Checkpoint 8 - High Dollar Requirements - LPG 3.2.

3.0.230.13.31  (01-01-2010)
BMF/IMF Peak Readiness Review

  1. The purpose of the BMF / IMF Readiness Review is to determine if the Lockbox Site is prepared for peak processing. Before the start of the peak processing season, each Lockbox Site prepares a readiness package.

  2. The Readiness package addresses:

    • Annual Changes

    • Site Overview

    • Pre-peak Planning

    • Workload Management

    • Data Management

    • Staffing

    • Training

    • Security

    • Vendor Support

    • Communication

    • Internal Controls/Quality

    • Site-Specific/GAO issues

  3. The LFC will review the individual readiness packages with the Lockbox, either on-site or by telephone prior to January.

3.0.230.14  (01-01-2015)
Definitions of Terminology

  1. The following terminology has been used in the text of this document.

    TERM DEFINITION
    Acceptable payments Payments made in cash, check, or money order that can be processed by the lockbox.
    April Peak (IMF) April 15 through a pre-determined PCD.
    Audit trail Contains both taxpayer and deposit information that is on the back of all processed checks.
    Block A group of documents sequentially numbered from 00 and up.
    Business Master File (BMF) Income tax forms related to business filers.
    Candling The process of using an illuminated table to scan envelopes prior to destroying them in order to ensure that all of the contents have been removed.
    Check Lister A document which identifies all items within a block.
    Correspondence Communications received from taxpayers on separate letters or notes, or written on vouchers / documents (excluding name / address or tax period ending changes).
    Data Collection Instrument (DCI) A form used for collecting data for reporting quality review results.
    Depositary The Lockbox Site contracted by Fiscal Service to process IRS deposits and establish credit for the Treasury's general account.
    Deposit Ticket (SF–215A) The standard government accounting document used to constitute a deposit to the IRS' Lockbox account.
    Deposit Ticket (SF–215) (Credit Voucher) The standard government accounting document used to increase the amount of the deposit previously made to the IRS Lockbox account.
    Document Locator Number (DLN) A 14 digit control number assigned to every document and check input through the remittance processing system for identification purposes.
    Due Date The date a tax payment or tax return is legally due and payable. It is formally defined by a combination of Internal Revenue Code (IRC) Sec. 6654 and IRC Sec. 7503.
    Electronic Check Processing Federal Reserve Bank-Cleveland (FRB-C) will be bank of first deposit.
    Employer Identification Number (EIN) A nine digit number used to identify a taxpayer's business account.
    Encoding Errors An error that occurs when the dollar amount on the check is keyed incorrectly from the actual amount written on the check.
    Entity The area on a document where the name, address, SSN / EIN, and tax period appear.
    File Location Code (FLC) First two digits of the DLN assigned to indicate the Submission Processing Campus and to designate whether the voucher was scannable or non-scannable.
    Fiscal Service / Bureau of the Fiscal Service Agency of the Department of the Treasury responsible for outside contracting and cash management.
    Holdover Remittances that have not been deposited within the timeframes specified in LPG 2.2.4.
    Individual Master File (IMF) Income tax forms related to individual filers.
    Installment Agreement An arrangement between IRS and taxpayers to make partial payments until the balance of a tax debt is paid in full.
    Integrated Data Retrieval System (IDRS) A computerized system used by IRS for adjusting, researching, and monitoring tax accounts.
    January Peak (BMF) January 31 until site is back on a 24 hour deposit schedule.
    Lockbox Commercial Financial Agency designated by Fiscal Service to process federal tax payments.
    Lockbox Electronic Network (LEN) The system used to electronically transmit all RPS and RTR files directly from the Lockbox Sites to a Computing Center drop box (ECC-MTB / ECC-MEM).
    Lockbox Field Coordinator(s) (LFC) Designated Headquarters representatives responsible for ensuring the processing and deposit requirements stated in the LPG are followed by performing the on-site reviews.
    Lockbox Policy and Oversight (LPO) Analyst Designated Headquarters representatives responsible for the development of system, security and processing requirements for the Lockbox program.
    Lockbox Processing Guidelines (LPG) Manual providing instructions detailing remittance processing requirements for the commercial Lockbox Depositaries.
    Multiple Checks Two (2) or more remittances submitted with one document.
    Multiple documents Two (2) or more vouchers or documents submitted with one remittance.
    OTCnet Over the Counter Network is Treasury's system of inputting and confirming deposits.
    Prior Year A tax year with a due date prior to the current processing year.
    Quality Review The appraisal of processed remittances to ensure the quality standards stated in the LPG are maintained.
    Remittances Any cash, check, draft or money order drawn on and payable through financial institutions in the US.
    Residual Payments Certain forms, letters, and notices that are not directly related to the Lockbox bank, are received with a remittance.
    Unpostables Transactions that fail the consistency and validity checks at master file.
    Unprocessables Any document, item, or correspondence that cannot be processed by the Lockbox and must be sent to the SPC.
    Voucher The document the taxpayer submits with his or her remittance for a federal tax obligation.

Exhibit 3.0.230-1 
IMF Submission Processing Campus / Lockbox State Realignment

Description: The table below shows IMF SPCs with a corresponding Lockbox Sites and the applicable payment processing states.

2015 IMF SPC and Lockbox State Realignment
Kansas City and JP Morgan Chase - Louisville Fresno and Bank of America - Union City
Alabama N. Carolina Alaska New Mexico
Georgia S. Carolina Arizona Nevada
Kentucky Tennessee California Oregon
New Jersey Virginia Colorado Utah
    Hawaii Washington
    Idaho Wyoming
Kansas City and Bank of America - Windsor Austin - JP Morgan Chase- Charlotte
Connecticut New Hampshire Florida Texas
Delaware New York Louisiana International
Maine Pennsylvania Mississippi  
Maryland Rhode Island    
Massachusetts Vermont    
Missouri West Virginia    
Fresno and US Bank - Cincinnati  
Arkansas Montana    
Illinois Nebraska    
Indiana N. Dakota    
Iowa Ohio    
Kansas Oklahoma    
Michigan S. Dakota    
Minnesota Wisconsin    

Exhibit 3.0.230-2 
BMF Submission Processing Campus / Lockbox State Realignment

Description: The table below shows the BMF table SPCs with corresponding Lockbox Sites and the applicable payment processing states.

2015 BMF SPC and Lockbox State Realignment
Cincinnati and US Bank - Cincinnati Ogden and Bank of America - Windsor
Connecticut New Jersey Alabama Missouri
Delaware New York Alaska Montana
District of Columbia N. Carolina Arkansas Nebraska
Florida Ohio Arizona Nevada
Georgia Pennsylvania California New Mexico
Illinois Rhode Island Colorado N. Dakota
Indiana S. Carolina Hawaii Oklahoma
Kentucky Tennessee Idaho Oregon
Maine Vermont Iowa S. Dakota
Maryland Virginia Kansas Texas
Massachusetts West Virginia Louisiana Utah
Michigan Wisconsin Minnesota Washington
New Hampshire   Mississippi Wyoming
      International

Exhibit 3.0.230-3 
File Location Code Table

Description: A table used to specify the Submission Processing Campus or Lockbox Site that processes the documents. File Location Code is a unique two position numeric code found in the first two positions of the DLN.

LOCATION CAMPUS CODE Lockbox Site CODE
Austin SPC - JP Morgan Chase - Charlotte 18
MMIA
73 = Scan; 75 = Non Scan; "Overflow" 50 = Scan; 53 = Non Scan
Cincinnati SPC - US Bank - Cincinnati 17 35 = Scan; 31 = Non Scan
Fresno SPC - Bank of America - Union City 89 68 = Scan; 94 = Non Scan; "Overflow" 15 = Scan; 24 = Non Scan
Fresno SPC - US Bank - Cincinnati 89 33 = Scan; 77 = Non Scan; "Overflow" 80 = Scan; 90 = Non Scan
Kansas City SPC - JP Morgan Chase-Louisville 09
36 = Scan; 39 = Non Scan; "Overflow" 40 = Scan; 42 = Non Scan
Kansas City SPC - Bank of America - Windsor 09 47 = Scan; 48 = Non Scan; "Overflow" 37 = Scan; 44 = Non Scan
Ogden SPC - Bank of America - Windsor 29 91 = Scan; 92 = Non Scan

Exhibit 3.0.230-4 
Lockbox Remittance Theft Report

Description: This form is used by the LFC to report a theft of a payment that went through the Lockbox Site processing. It includes the injured taxpayer's name, the taxpayer's EIN, money amount lost, date of remittance, and name of Lockbox Site. It also lists the name of the Remittance Security Coordinator and the name of the TIGTA agent as well as actions taken to recover the funds from the perpetrator and Lockbox Site.

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Exhibit 3.0.230-5 
Glossary of Acronyms and Descriptions

Acronyms Descriptions
ACA Affordable Care Act
BMF Business Master File
COOP Continuity of Operation Plan
CSIRC Computer Security Incident Response Center
DER Deposit Error Rate
DCF Dishonored Check File
DCI Data Collection Instrument
DCVR Debit / Credit Voucher Review
DDCR Daily Deposit Cycle Report
ECC-MEM Enterprise Computing Center - Memphis
ECC-MTB Enterprise Computing Center - Martinsburg
ECP Electronic Check Presentment
EOY End of Year
FAA Financial Agent Agreement
EFTU Electronic File Transfer Utility
ERS Error Resolution System
Fin-Facts Financial Facts
FLC File Location Code
FSP (Lockbox) Functional Specification Packages
FRB-C Federal Reserve Bank-Cleveland
FSR Filing Season Readiness
GMF Generalized Mainframe
IMF Individual Master File
ISRP Integrated Submission Remittance Processing
ITAMS Information Technology Asset Management System
LEBS Lockbox Electronic Bulletins
LEN Lockbox Electronic Network
LDT Lockbox Document Transmittal
LFC Lockbox Field Coordinator
LPG Lockbox Processing Guideline
LPO Lockbox Policy and Oversight Section
LSG Lockbox Security Guidelines
MDPC Minimum Daily Processing Capacity
IT Information Technology
MOU Memorandum of Understanding
OFAS Office of the Assistant Secretary
OTCnet Over the Counter Network
PC Peak Completion (BMF)
PCD Program Completion Date (IMF)
PIC Processing Internal Controls
POAM Plan of Action and Milestones
RACS Revenue Accounting Control System
RPS Remittance Processing System
RSC Remittance Security Coordinator
RS-PCC Remittance Strategy for Paper Check Conversion
RTR Remittance Transaction Research
SAMC Situation Awareness Management Center
SAT Systems Acceptability Testing
SCCF Service Center Control File
SERP Servicewide Electronic Research Portal
SOI Statistics of Income
SPC Submission Processing Campuses
TIGTA Treasury Inspector General For Tax Administration
URF Unidentified Remittance File

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