The Restructuring and Reform Act of 1998 (RRA98), IRC §3705(a), provides identification requirements for all IRS employees working tax-related matters. IRS employees are required to give their name and unique identification number during taxpayer telephone, face to face and written contact. In addition, a telephone number is required on all taxpayer correspondence. This will provide taxpayers with enough information to identify an IRS employee who has previously assisted with tax-related matters.

All IRS employees who communicate by telephone, correspondence or face to face, with taxpayers or their personal representatives, on tax-related matters are required to provide (at a minimum) the following information:

Refer taxpayers to the Taxpayer Advocate Service (TAS) (see IRM Part 13, Taxpayer Advocate Service) when the contact meets TAS criteria (IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria) or has Form 911 attached, and you can't resolve the taxpayer's issue the same day. The definition of "same day" is within 24 hours. "Same day" cases include cases you can completely resolve in 24 hours, as well as cases in which you have taken steps within 24 hours to begin resolving the taxpayer's issue. Do not refer these cases to TAS unless they meet TAS criteria and the taxpayer asks to be transferred to TAS. Refer to IRM 13.1.7.4 ,Same-Day Resolution by Operations. When referring cases to TAS, use Form 911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance Order), and forward to TAS in accordance with your local procedures.

Definitions:

Trusts – A legal entity created under state law and taxed under federal law. The trust can be created either under a will or inter vivos action.

Estates – A legal entity created as the result of a person's death. The estate consists of the real and/or personal property of the deceased person. The estate pays any debts owed by the decedent and then distributes the balance of the estate's assets to the beneficiaries of the estate.

Exemption Amounts – Determined based on whether the fiduciary is filing for a decedent's estate or trust. Exemption amounts are claimed on Line 20 of Form 1041.

The following schedules are found within Form 1041:

Listed below are some additional schedules and forms which may be filed with Form 1041:

The purpose of this initiative is to achieve consistency in the Business Master File (BMF) Code & Edit processing IRMs.

Topics for BMF Consistency have been identified and developed as a coordinated effort between Cincinnati, Ogden, and Paper Processing Branch BMF Code and Edit/ERS.

BMF Consistency subsections are identified by a ♦ (diamond) before and after the title.

Text in normal print is the common processes for BMF returns. The text in BOLD print is form specific and applies to this IRM only.

For returns completed in other than U.S. currency, process as filed. However, if corresponding for missing/incomplete item(s), include in the letter to resubmit in U.S. currency.

Returns marked as "Protective Claim" , "Protective Refund" , "Protective Claim for Refund" , or similar statement will be removed from the batch and routed to Accounts Management. Notate "Protective Claim" in the remarks box of Form 4227.

Criminal Investigation (CI) investigates potential criminal violations of the Internal Revenue Code (IRC) and related financial crimes. Criminal violations of the IRC are willful and deliberate attempts to evade or defeat the income tax. Flagrant criminal activity includes, but is not limited to, the failure to pay taxes due and/or taxes collected or withheld and claims of false refunds based on bogus return information.

Pull any return identified as having any CI criteria found and place in "CI Funny Box" .

CI "Funny Box" Criteria:

The primary objective in identifying tax returns for examination is to promote the highest degree of voluntary compliance. Examination will provide support and assist Submission Processing (SP) with any questionable return identified during processing. Exam has a vast multitude of programs and tolerance criteria already identified in various IRM sections. Exam does not restrict SP with the flexibility to refer questionable returns other than what is currently identified in various IRMs.

Edit marks are edited on the return for transcription to the Automatic Data Processing (ADP) System through ISRP. The editing can be entered in brown, red, orange, purple or green pencil/pen.

The only items edited on the return are those to be transcribed except where specific instructions require editing of a non-transcribed item. Lines are left blank if the entry would be a zero amount unless otherwise instructed.

The original entry on a return is never obliterated, altered or erased when deleting or correcting an entry. Always exercise care to ensure that the original entry remains legible. Perfected entries provide a legible "edit trail" for anyone who may work with the return later.

For a description of specific edit marks, see the table below:

Document Perfection is responsible for arranging Form 1041 in the following order when transcription line entries are present:

Below are additional instructions:

Taxpayers must provide documentation to support claims for most gains, losses, debits, and credits ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

Edit forms and schedules as dollars only, except for the following Form 1041 lines which are dollars and cents:

For a display of Form 1041 transcription lines and related Forms and Schedules, see Exhibits 3.11.14-1 through 6.

Reference is made throughout this IRM to "significant entries" . A significant entry is defined as any amount other than zero.

A return must contain specific items before it is considered processable. Perfect all documents to the extent possible from schedules and other attachments. The specific items needed are:

Conditions which make a return unprocessable are:

If a return contains no entity data, or the signature on the return is illegible and the alpha letter of the last name cannot be determined and the only entries are money amounts then give the return to the manager.

Use the following guidelines for disposition of returns that cannot be perfected from schedules and other attachments and necessary data was not obtained through research. If you cannot correspond or send the return back to the taxpayer because of illegible entity data, consider the return unprocessable:

If a Form 1041 is received with a second Form 1041 attached and the second return has the same EIN and Tax Period:

See IRM 3.0.273 (Administrative Reference Guide) for additional information.

Perfect all documents if possible. Examine schedules and other attachments for the information necessary to make the document processable.

If liability for two or more Forms 1041 for the same tax class have been reported on one numbered return and the information necessary for the preparation of the individual returns is present:

If liability for two or more Forms 1041 for the same tax class have been reported on one unnumbered return and the information necessary for the preparation of the individual returns is present:

Reject all non-remittance Forms 1041 showing taxable income but no tax computation and the taxpayer notates that the return is for an exempt organization (e.g., EXEMPT, NONTAXABLE, NONPROFIT, etc.):

For all other conditions, initiate correspondence action when the document cannot be perfected from attachments or schedules. The only exceptions are when the Name and Address are missing or are so illegible that correspondence is impossible, and when a document is being re-input after correspondence has already been conducted but the document still is unprocessable.

Issue correspondence to resolve any conditions causing the return to be unworkable or unprocessable.

Examine the return so that all of the conditions can be included in the same correspondence.

CCC "C" is an invalid code which will force the return to error correction.

Edit CCC "C" if Form 8834, Form 8910, and/or Form 8936 include an invalid vehicle year or an invalid in service date.

Do not edit CCC "D" if the taxpayer requests abatement for "Failure to Pay timely" when the return is submitted. Send Letter 1382C to inform taxpayer of the proper procedure to follow to request penalty abatement, if, and when a penalty is assessed.

Edit CCC "D" if an internal use form or routing slip is attached and indicates "DO NOT ASSESS FAILURE TO PAY PENALTY" .

Edit CCC "D" on a "Final" , Balance Due return if the Received Date is after the short period due date but on or before the regular full tax period due date ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

Do not edit CCC "D" when pre-computed penalty is shown on the return.

Edit CCC "F" when the "Final Return" box is checked or there is another indication the estate or trust is not liable for future returns. Notations may include (but are not limited to):

See IRM 3.11.14.8.1 for Amended Return instructions.

Edit CCC "I" when Form 6781 (Gains and Losses from Section 1256 Contracts and Straddles) is attached.

Edit CCC "K" , for taxable periods ending in 2009 only, when Form 2210, Underpayment of Estimated Tax by Individuals, Estates, and Trusts, box "F" is checked in Part II.

Edit CCC "N" when Form 8939, Allocation of Increase in Basis for Property Received from a Decedent, is attached to Form 1041.

CCC "O" is edited when a Pre-Settlement Manual Refund will be issued and a Form 3753, or Form 5792 is attached. Verify that the Name Control, EIN, and Tax Period on the return are the same as the information on the attached form.

When editing CCC "O" , research to determine if TC 840 (Manual Refund Transaction) has posted:

CCC "R" is no longer edited when a reason is given by the taxpayer for a delay in filing a return. Issue Letter 1382C and continue editing the return.

Edit CCC "R" on the return when any of the following conditions are present:

See IRM 3.11.14.11.2 (2) for possible editing of CCC "R" on short-period final returns.

Edit CCC "T" when Form 8886, Reportable Transaction Disclosure Statement is attached to a return.

Edit CCC "V" when Form 3800, Part III, Lines 1a and/or 4a has a significant entry and Form 3468, Line 8 contains an entry.

CCC "W" is used when the return has been cleared by Statute Control. See IRM 3.11.14.8.10 .

Edit CCC "X" when any of the following conditions occur:

CCC "Y" is edited for a Change of Accounting Period. Enter only for short period returns due to change of accounting period (not due to initial or final filing). See Short Period - Editing Proof of Entitlement, IRM 3.11.14.11.5 through 3.11.14.11.9.

If a prepaid credit is claimed on a short-period Final return, see Short Period Returns -With Prepaid Credits, IRM 3.11.14.11.9

Do not edit CCC "Y" for "Initial" or "Final" returns.

Edit CCC "1" when Form 8824, Like-Kind Exchanges, is attached.

Edit CCC "2" when Form 8938, Statement of Foreign Financial Assets is attached to the return.

Edit CCC "3" when the return is unprocessable.

Edit CCC "4" when the IRS's Compliance Branch prepared a return and the Revenue Officer entered "IRC §6020(b)" .

Edit CCC "8" when any of the following conditions are present:

Also edit CCC "8" if ALL of the following conditions are met:

Edit CCC "9" when any of the following forms are attached and an entry is present on Line 2b*, Schedule G of Form 1041
*(Line 2c for 2009 and prior):

A return is considered Amended based on the following:

Examine the return for attachments:

There is an indication the return is amended and:

Do not edit CCC "G" on returns filed under Section 443(b)(2). See Exhibit 3.11.14-13, IRC Sections and Actions to be taken on Form 1041.

The following data must be present on all amended returns:

Detach Schedules K-1 for current year only through November 30th. Process according to IRM 3.0.101.

This subsection provides instructions for processing bankruptcy returns.

The bankruptcy trustee or debtor-in possession must file Form 1041 for the estate of an individual involved in bankruptcy proceedings under Chapter 7 or 11 of title 11 of the United States Code if the estate has gross income of $9,500 or more for the tax years beginning in 2011.

Prompt identification should be made of a bankruptcy related "Request for Prompt Assessment" or a "Quick Determination" of tax liability to ensure that the crucial 60 and 180 day deadlines can be met timely by Compliance. See IRM 3.11.14.8.3 .

Edit Fiduciary Code "5" on all Chapter 7 Bankruptcy Estate returns or "6" on all Chapter 11 Bankruptcy Estate returns. If neither box is checked, edit Fiduciary Code "5" if the return indicates it is a bankruptcy.

All bankruptcy returns must be routed to Entity. Completely edit the return except the "name control" before sending to Entity. See below for additional editing instructions.

If Form 6252 is attached to a nontaxable Grantor Trust or Bankruptcy Estate return, do not edit an Installment Sale Indicator Code. Form 6252 information will be included on the individual tax return.

Identification should be made for "Prompt Assessment" or "Prompt Determination" of tax liability to ensure that the crucial 60 and 180 day deadlines can be met timely by Compliance.

A Prompt Assessment is requested either in the form of a letter or on Form 4810 (Request for Prompt Assessment Under IRC §6501(d)):

Figure 3.11.14-7

If a request for Prompt Determination under Section 505(b) of the U.S. Bankruptcy Code is attached to the return and addressed to the Submission Processing Campus, determine if the request and return has been processed through the Centralized Insolvency Operation (Rev. Proc. 2006-24):

If Form 1041 is received with the notation "SEPARATE SHARE" and there are supporting returns identified as copies for information purposes: