3.11.16  Corporate Income Tax Returns

Manual Transmittal

October 14, 2014

Purpose

(1) This transmits revised IRM 3.11.16, Returns and Documents Analysis - Corporate Income Tax Returns.

Material Changes

(1) Minor editorial changes have been made throughout this IRM (e.g., line number updates, tax years, spelling, punctuation, etc.). Other significant changes to this IRM are shown below.

(2) IRM 3.11.16.1.4(4) table, Edit Marks - Added to the Types of Edit Marks table under Edit Marks Made to Other IRS Functions. Entity was added to the other areas listed and added the statement, "Do not edit (or write) over another area's edit marks" . (IPU 14U0880 issued 05/16/2014)

(3) IRM 3.11.16.1.8(3), Criminal Investigation (CI) "Funny Box" - Added Line 17 to the 6th box and added a new criteria. (IPU 14U1161 issued 07/18/2014)

(4) IRM 3.11.16.1.10, BMF Identification (ID) Theft - Added new information pertaining to BMF Identification (ID) theft.

(5) IRM 3.11.16.2.1, Action Codes - Revised to match BMF consistency IRM.

(6) IRM 3.11.16.2.7(2) and (3), Statute Returns - Revised the exceptions to editing a CCC W. Added instruction for processing a Form 12412, OAR when there are Statute concerns. (IPU 14U0935 issued 05-30-2014)

(7) IRM 3.11.16.2.7(6), Statute Returns - Added the following statement to the If/And/Then chart: "Statute N/A," or a similar statement indicating there is no statute issue. (IPU 14U0019 issued 01-02-2014)

(8) IRM 3.11.16.2.8.1(6), Form 3893 – Re-Entry Document Control and IRM 3.11.16.2.8.2(5), Form 13596, Reprocessing Returns - Removed note from IRM 3.11.16.2.8.1 and added to IRM 3.11.16.2.8.2.

(9) IRM 3.11.16.2.9(3), Amended Returns - Revised for clarity. (IPU 14U0496 issued 03-14-2014)

(10) IRM 3.11.16.2.10, IRC 847 Deduction - Revised instructions per LB&I Exam's request. (IPU 14U0496 issued 03-14-2014)

(11) IRM 3.11.16.6.3(2), Short Period – Editing Proof of Entitlement - Update chart with revised procedures.

(12) IRM 3.11.16.6.3.1, Short Period Returns – Regulation 1.1502–76 - Updated language.

(13) IRM 3.11.16.6.4(1), Short Period Returns – Missing Proof of Entitlement - Updated procedures in first Then box, no CCC "Y" is needed.

(14) IRM 3.11.16.6.6(1), Short Period Returns – Editing Form 1128 With No Indication of Approval or Disapproval - Updated procedures in first Then box, no CCC "Y" is needed.

(15) IRM 3.11.16.6.7(2), Short Period Returns – Editing Returning Correspondence - Removed the instruction to edit the CCC "Y" .

(16) IRM 3.11.16.7(2) and (6), Received Date - Added a Caution to (2) about private meter postmarks and removed the Note about the private meter post mark from (6). (IPU issued 07/01/2014)

(17) IRM 3.11.16.7(5), Received Date - Added the word "may" so that the sentence reads "A valid received date stamp may consist of the following" . (IPU 14U0367 issued 02-24-2014)

(18) IRM 3.11.16.8.1.2(2) note, CCC "B" - Schedule M-3 - Removed the mention of having an entry greater than $1.

(19) IRM 3.11.16.8.1.7, CCC "H" - Form 1042-S Attached to Form 1120-F - Add subsection for new CCC "H" .

(20) IRM 3.11.16.8.1.10, CCC "L" – Treaty Based Positions - Removed Note.

(21) IRM 3.11.16.8.1.15(2), CCC "R" – Reasonable Cause for Failing to File a Timely Return - Per chief counsel updated the due date and the IRS regulation section.

(22) IRM 3.11.16.8.1.17, CCC "T" - Form 8886 Reportable Transaction Disclosure Statement - Added Note to edit Audit Code 1 when Form 8886 is attached.

(23) IRM 3.11.16.9.1(3), Audit Codes - Added a Note to edit CCC "T" when Form 8886 is attached.

(24) IRM 3.11.16.9.1(9), Audit Codes - Removed the mention of having an entry greater than $1.

(25) IRM 3.11.16.9.2, Missing Schedule Code (MSC) - Added exceptions where applicable.

(26) IRM 3.11.16.10.4.7(2), Line 8 - Capital Gain - Added to the If/And/Then chart to address when Line 8 is blank, zero or illegible. (IPU 14U0367 issued 02-24-2014)

(27) IRM 3.11.16.10.6.6, figure, Line 33 – Estimated Tax Penalty - Corrected Form 1120 Line number to 33.

(28) IRM 3.11.16.10.7, Signature - This subsection was previously IRM 3.11.16.4.4, Moved to make the IRM flow better. (6) Revised IRC section and regulation section per suggestion of chief counsel.

(29) IRM 3.11.16.10.14.1 through IRM 3.11.16.10.14.36 - Added an exception to needed subsections. If the boxes on the Form 3800, Part III Box C, D, or G are checked then editing of the MSC or corresponding is not needed. (IPU issued 07/01/2014)

(30) IRM 3.11.16.10.14.37(1), Schedule J, Line 5d – Form 8827, Credit for Prior Year Minimum Tax - Corporations - Removed first sentence as it is no longer needed.

(31) IRM 3.11.16.10.19.7(1), Schedule J, Part II, Line 19c - Form 8827 - Added prior revision instructions.

(32) IRM 3.11.16.10.20(4) table - Schedule K, Line 2a – NAICS Code - Added note about repeat numbers not being valid.

(33) IRM 3.11.16.10.25(2) table, Schedule L, Balance Sheet - Added the words "or final" to the first If/And/Then box. (IPU 14U0880 issued 05/16/2014)

(34) IRM 3.11.16.12(3), Form 4626 - Alternative Minimum Tax - Revised to include prior year conversion instructions.

(35) IRM 3.11.16.13(1), Schedule D - Capital Gains & Losses - Added the words "and subsequent" .

(36) IRM 3.11.16.14(6), Form 1125-A - Cost of Goods Sold (Formerly Form 1120, Schedule A) - Revised (6) to say "must" instead of "should" and removed the words "from attachments" . (IPU 14U0123 issued 01-15-2014)

(37) IRM 3.11.16.17, Form 8941 - Credit for Small Employer Health Insurance Premiums - Updated the conversion for prior year Form 8941 and added in correspondence criteria for Line A.

(38) IRM 3.11.16.19(4) table, Form 3800 - General Business Credit - Added a row to the If/And/Then chart. If the boxes on the Form 3800, Part III Box C, D, or G are checked then editing of the MSC or corresponding is not needed. (IPU 14U1084 issued 07/01/2014)

(39) IRM 3.11.16.20.3(7) and (11), Form 851 - Affiliations Schedule - Added instruction for when the FYM on the subsidiary corporation does not match the parent corporations FYM.

(40) IRM 3.11.16.24(1), Return Processing - Form 1120-C - Removed last part of sentence referring to processing returns prior to 200612 as a Form 1120-C, this is no longer needed.

(41) IRM 3.11.16.24.7, IRM 3.11.16.25.9, IRM 3.11.16.26.7, IRM 3.11.16.27.6, IRM 3.11.16.28.6, IRM 3.11.16.29.8, IRM 3.11.16.30.7, IRM 3.11.16.31.7, IRM 3.11.16.32.7, IRM 3.11.16.33.7, Computer Condition Codes - Updated the list of valid codes for each subsection as needed. Removed CCC "A" , CCC "B" , CCC "P" and/or CCC "Q" from each subsection as needed.

(42) IRM 3.11.16.24.12.3(29), Missing Schedule Code (MSC) - Add in MSC "76" for Form 8941 when missing from a Form 1120-C. (IPU 14U0019 issued 01-02-2014)

(43) IRM 3.11.16.24.15(7), Tax and Payments - Line 27 through 33 - Added prior revision instructions.

(44) IRM 3.11.16.24.27(3), Form 4626 - Alternative Minimum Tax - Revised to include prior year conversion instructions.

(45) IRM 3.11.16.24.30, IRM 3.11.16.25.24, IRM 3.11.16.27.15, IRM 3.11.16.28.22, IRM 3.11.16.30.29, IRM 3.11.16.31.31, IRM 3.11.16.32.31 (2), Form 8941 - Credit for Small Employer Health Insurance Premiums - Added (2) with a table for updated prior year revisions.

(46) IRM 3.11.16.24.32(3), Form 3800 - General Business Credit - Updated chart. (IPU 14U1161 issued 07/18/2014)

(47) IRM 3.11.16.25.9, Computer Condition Codes - Added CCC "H" .

(48) IRM 3.11.16.25.12.3(43), Missing Schedule Code (MSC) - Add in MSC "76" for Form 8941 when missing from a Form 1120-F. (IPU 14U0019 issued 01-02-2014)

(49) IRM 3.11.16.25.13(8), Line 1 through 5h - Computation of Tax Due or Overpayment - Removed instruction to edit backup withholding to Line 5i. No editing of backup withholding is needed. (IPU 14U0019 issued 01-02-2014)

(50) IRM 3.11.16.25.13(10), Lines 1 through 5h - Computation of Tax Due or Overpayment - Added prior revision instructions.

(51) IRM 3.11.16.25.14, Line 5i - Computation of Tax Due or Overpayment - (1) Added reminder for CCC "H" . (2) Removed tolerance for documentation on Line 5i.

(52) IRM 3.11.16.25.19, Page 3, Section II - Income and Deductions - Added instruction for Line 8 and 9 and editing the MSC.

(53) IRM 3.11.16.25.26(3), Form 3800 - General Business Credit - Updated chart. (IPU 14U1161 issued 07/18/2014)

(54) IRM 3.11.16.25.28, Reserved - Space saved for Form 1042-S instructions.

(55) IRM 3.11.16.28.10.3(39), Missing Schedule Code (MSC) - Add in MSC "76" for Form 8941 when missing from a Form 1120-L. (IPU 14U0019 issued 01-02-2014)

(56) IRM 3.11.16.28.12(11), Tax and Payments - Added prior revision instructions.

(57) IRM 3.11.16.28.24(3), Form 3800 - General Business Credit - Updated chart. (IPU 14U1161 issued 07/18/2014)

(58) IRM 3.11.16.30.11.3(38), Missing Schedule Code (MSC) - Add in MSC "76" for Form 8941 when missing from a Form 1120-PC. (IPU 14U0019 issued 01-02-2014)

(59) IRM 3.11.16.30.15(9), Line 13 through 18 - Tax Computation and Payments - Added prior revision instructions.

(60) IRM 3.11.16.30.31(3), Form 3800 - General Business Credit - Updated chart. (IPU 14U1161 issued 07/18/2014)

(61) IRM 3.11.16.31.14(7) and (10)(a), Tax Computation – Lines 23 through 28 - Added prior revision instructions. Updated incorrect line numbers.

(62) IRM 3.11.16.31.28(3), Form 4626 - Alternative Minimum Tax - Revised to include prior year conversion instructions.

(63) IRM 3.11.16.31.33(3), Form 3800 - General Business Credit - Updated chart. (IPU 14U1161 issued 07/18/2014)

(64) IRM 3.11.16.32.13(16), Page 1 - Deduction Items, Lines 9 through 25 - Added instruction to change line 25 to 25a for 2011 and prior returns. (IPU 14U0019 issued 01-02-2014)

(65) IRM 3.11.16.32.14, Paid Preparer Information - Moved this subsection up to correlate with the form.

(66) IRM 3.11.16.32.15(7), Page 2 - Tax and Payments, Lines 27 through 32 - Corrected title to say Page 2 instead of Page 1. (IPU 14U0019 issued 01-02-2014) Added prior revision instructions.

(67) IRM 3.11.16.32.28(3), Form 4626 - Alternative Minimum Tax - Revised to include prior year conversion instructions.

(68) IRM 3.11.16.32.33(3), Form 3800 - General Business Credit - Updated chart. (IPU 14U1161 issued 07/18/2014)

(69) IRM 3.11.16.33.8.1(2)(c), Audit Codes - Removed or a statement referring specifically to IRC 6661 (Disclosure) per request of Chief Counsel. IRC 6661 was repealed in 1989 by P.L. 101-239.

(70) IRM 3.11.16.35.2 (1)a), Filing Requirements - Added note to edit boxes e and F if needed for a corporations first tax year.

(71) IRM 3.11.16.35.4(2)(b), Approved Elections - Added Form 1120-S to statement. (IPU 14U1161 issued 07/18/2014)

(72) Exhibit 3.11.16-11, Form 1120-RIC - Prior Year Conversion Chart - Added instruction for Line 25 for 2011 and prior returns. (IPU 14U0019 issued 01-02-2014)

(73) Exhibit 3.11.16-14 (prior), Form 4626 - Prior Year Conversion Chart - Deleted exhibit.

(74) Exhibit 3.11.16-14, Form 8941 - Prior Year Conversion Chart - Updated the conversion chart.

(75) Exhibit 3.11.16-17, Routing Guide - Corrected line numbers in the action column for the Form 8816. (IPU 14U0496 issued 03-14-2014) Added CP 2030 and CP 2531 to Routing Guide (IPU 14U0880 issued 05-16-2014) Added cross reference IRM for Form 5472 attached to a Form 1120-F. Form 1128 - removed instructions and referred to correct reference. Form 8902 updated line number for Schedule J. Added information for petitions. Form 2848 and Form 8821 - Added a physical address for the private delivery carriers.

Effect on Other Documents

IRM 3.11.16 dated November 8, 2013 (effective January 2, 2014) is superseded. The following IRM Procedural Updates (IPUs), issued from January 2, 2014 through September 2, 2014, have been incorporated into this IRM: 14U0019. 14U0123, 14U0367, 14U0496, 14U0880. 14U0935, 14U1084, 14U1161, 14U1310.

Audience

This IRM is intended for use by Wage and Investment (W&I) personnel in the Submission Processing Campuses.

Effective Date

(01-01-2015)

Paul J. Mamo
Director, Submission Processing
Wage and Investment Division

3.11.16.1  (01-01-2010)
General Information

  1. The purpose of this section is to provide instructions for general required processing actions on corporate tax returns in order to eliminate repetition of the same instructions in different sub-sections.

  2. In case of a conflict of instruction between this general sub-section and the subsequent specific sub-section, the specific sub-section will govern.

  3. For additional general information, see IRM 3.0.273, Administrative Reference Guide.

3.11.16.1.1  (01-01-2011)
IRS Employee Contacts - RRA Section 3705(a)

  1. The Restructuring and Reform Act of 1998, Section §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.

  2. 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:

    1. Telephone Contact – Their title (e.g., Mr., Mrs., Ms., Miss), their last name, and ID card number (badge).

    2. Face to Face – This information should be their title (e.g., Mr., Mrs., Ms., Miss), provided as appropriate during the conversation, their last name and badge identification (ID Card) number.

    3. Correspondence – All correspondence must include a telephone number where the taxpayer's question can be answered. In addition, manually generated and handwritten correspondence must have their title (e.g., Mr., Mrs., Ms., Miss), last name, and Integrated Data Retrieval System (IDRS) number, letter system number, or their badge identification (ID card) number.

    4. The IDRS number and numbers for some other letter systems are automatically generated. If it is not generated, or a handwritten note is prepared, the badge identification (ID card) number must be used. Toll-free employees may also provide their location for identification purposes. Faxes to taxpayers on tax related matters are considered manually-generated correspondence and must include the required information.

    5. Correspondence, whether sent directly to the taxpayer or to the taxpayer's personal representative, must contain the required information.

    6. When a taxpayer requests to speak with a specific employee who previously handled their inquiry or request, or complains about the level of service previously provided, every attempt should be made to resolve the taxpayer's inquiry. If the issue cannot be resolved, the employee should refer the inquiry using established procedures to his or her manager.

    7. Correspondex letters will require a specific employee name and telephone number only if the employee initiating the correspondence is in the best position to respond to any questions that the taxpayer may have about the correspondence, or the employee is asking the taxpayer to provide additional case-related information.

    8. Otherwise, if the taxpayer does not need to contact a specific employee, the correspondence needs only an IRS telephone number and standard signature.

    9. Secretaries, receptionists, or other people who answer the telephone in functional offices need to identify themselves should provide their badge identification (ID card) number only if they are answering telephones which are routinely used to provide tax or account information.

    10. It is not necessary to repeat the badge identification (ID card) number on a subsequent contact, when the nature of an employee's work involves multiple contacts with the same taxpayer, and the employee has given the taxpayer (either telephone or in-person) their badge identification (ID card) number on the first contact.

3.11.16.1.2  (01-01-2010)
♦ BMF Consistency ♦

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

  2. Topics for the BMF Consistency have been identified and developed as a coordinated effort between Cincinnati, Ogden, and Paper Processing Branch, BMF Code and Edit (C&E) /Error Resolution System (ERS).

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

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

3.11.16.1.3  (01-01-2010)
♦ Taxpayer Advocate Service (TAS) ♦

  1. Refer taxpayers to the Taxpayer Advocate Service (TAS) (see IRM Part 13, Taxpayer Advocate Service) when the contact meets TAS criteria (see 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.

3.11.16.1.3.1  (01-01-2013)
♦ TAS Service Level Agreements (SLAs) ♦

  1. The National Taxpayer Advocate (NTA) has reached agreements with the Commissioners of the Wage and Investment (W&I) Division, Small Business and Self-Employed (SB/SE) Division, Tax Exempt and Government Entities (TE/GE), Criminal Investigation (CI), Appeals, and Large Business and International (LB&I) that outline the procedures and responsibilities for the processing of Taxpayer Advocate Service (TAS) casework when either the statutory or delegated authority to complete case transactions rests outside of TAS. These agreements are known as Service Level Agreements (SLAs).

  2. The SLAs are located at http://tas.web.irs.gov/policy/default.aspx under the heading "Policy/Procedures/Guidance" .

3.11.16.1.4  (01-01-2015)
♦ Edit Marks ♦

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

  2. The only items edited on the tax 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.

  3. The original entry on a tax 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.

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

    Edit Mark Description
    "X" or "/" An "X" is used to delete tax data or to indicate that an item is not to be transcribed.
    A slash "/" can be used when deleting a form or schedule not being transcribed.
    "/ /$" "/ /$" is used in the entity area to identify the beginning and ending of a Foreign Country Code.
    For example, "/EI/$" is edited for "Ireland" or "/GM/$" is edited for "Germany" .
    "c/o" or "%" Indicates an "in-care-of" name for transcription.
    Circle Indicates that an entry is not to be transcribed. Also used to delete Entity data or a received date.

    Note:

    If the taxpayer circles an entry, edit the entry.

    Underline Indicates an entry is to be transcribed (e.g., name control, tax period, etc.).
    Arrow Indicates the correct placement of a misplaced entry. An arrow may be used if the misplaced item is close to the correct line and there is no question where the entry belongs.

    Note:

    A double arrow may be used if the same figure is to be transcribed in two different places (along with any required transcription data between the two arrows).

    Check Mark Indicates that an entry has been manually math verified and is correct.
    Bracket/Parenthesis Indicates a negative numerical amount.

    Note:

    C&E is not required to bracket negative amounts when brackets are preprinted on the form or schedule or when the taxpayer clearly indicates a negative amount with brackets "( )" or "" sign. It will be necessary to bracket negative amounts when editing negative entries on transcription lines (e.g., computing and entering a line entry, entering a missing line entry, etc.).

    Vertical Line or Decimal Point Indicates the separation of dollars and cents.
    Zero, Dash, None, or N/A "ZERO" , "DASH" , "NONE" , or "N/A" are considered valid entries except when specific instructions require editing of an entry.
    Edit Marks Made by Other IRS Functions Edit marks entered by other areas (such as Collections, Entity or Accounts Management) are not to be re-edited except to place the marks in the correct area. Do not edit (or write) over another area's edit marks.
    Rocker Indicates the amount paid when drawn under a remittance amount.

3.11.16.1.5  (04-05-2010)
♦ Frivolous Arguments ♦

  1. A frivolous argument is used for the purpose of expressing dissatisfaction with the substance, form, or administration of the tax laws by attempting to illegally avoid or reduce tax liabilities. Recognized frivolous arguments made by businesses include, but are not limited to, the examples in IRM 4.10.12, Frivolous Return Program, shown in Exhibit 3.11.16-15, Potential Frivolous Arguments for Examination Review.

  2. Review the tax return to determine whether it appears to be a frivolous return.

    If... Then...
    The tax return meets any of the conditions identified as a frivolous return. See Exhibit 3.11.16-15, Potential Frivolous Arguments for Examination Review,

    Exception:

    If the return shows Action Code "331" , and has a Form 4227 attached with the remarks, "Refer to Exam FRP for audit after processing" , continue to next procedure.

    Remove return from the batch and place the return in the locally designated basket for Examination, Frivolous Return Processing (FRP) for review.
    Examination has selected the return as frivolous (e.g., indicated by an Action Code "331" , and a Form 4227 with the remarks, "Refer to Exam FRP for audit after processing" , but sends the return for processing), Continue processing the return using procedures in IRM 3.11.16. However, do not circle or void the Action Code indicating a frivolous return.

    Note:

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3.11.16.1.6  (01-01-2010)
♦ Foreign Currency ♦

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

3.11.16.1.7  (01-21-2011)
♦ Protective Claims ♦

  1. 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.

    Note:

    Do not remove any Form 1120-F with the "Protective return" box (upper right-hand corner) checked from the batch. These returns are not considered "Protective Claims" .

    Exception:

    If the return is amended, do not remove from the batch. Edit Computer Condition Code "G" and follow normal processing procedures.

3.11.16.1.8  (01-01-2015)
♦ Criminal Investigation (CI) "Funny Box" ♦

  1. Criminal Investigation (CI) investigates potential criminal violations of the Internal Revenue Code (IRC) and related financial crimes. Criminal violations of the IRC include willful and deliberate attempts to evade or defeat the income tax. Criminal tax violations also include the willful failure to collect or pay over tax and claims of false refunds based on bogus return information.

  2. Pull any return identified as having any CI criteria found in paragraph (3) below and place in "CI Funny Box" .

  3. CI "Funny Box" Criteria:

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    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3.11.16.1.9  (01-01-2013)
♦ Examination(Exam) Funny Box ♦

  1. 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.

3.11.16.1.10  (01-01-2015)
♦ BMF Identification (ID) Theft ♦

  1. BMF identification theft is increasing. If a tax examiner in Submission Processing (SP) Code and Edit (C&E) finds a case with attachments or correspondence indicating the taxpayer is a victim of ID Theft, provide the whole case to your senior/lead. Your senior/lead will expedite the case to the Planning & Analyst (P&A) staff for referral to one of the SP BMF ID Theft liaisons. The taxpayer must clearly state that they are a victim of "ID Theft" ; do not send cases that are subject to "Funny Box" or "Fraud" review.

3.11.16.2  (01-01-2012)
Unprocessable Documents - Error Resolution System

  1. The Document Perfection tax examiner will have the first opportunity to identify a return having a problem which requires correspondence, research, or other action in order to make the return processable. Depending on the type of return, either an Action Code or Computer Condition Code (CCC) "U" is edited to identify these unprocessable returns.

  2. On Form 1120, Form 1120-C, Form 1120-F, Form 1120-H, Form 1120-L, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC the tax examiner will determine the kind of action required and assign an Action Code to the return which will force it to Error Resolution System (ERS) (on-line correction system). The code will indicate whether correspondence, research, or some other action is needed. Action Codes apply only to Form 1120, Form 1120-C, Form 1120-F, Form 1120-H, Form 1120-L, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC.

  3. Form 1120-FSC, Form 1120-ND, and Form 1120-SF are processed through a manual correction system. Use Computer Condition Code "U" on these returns when action such as correspondence is needed.

3.11.16.2.1  (01-01-2015)
♦ Action Codes ♦

  1. Action Codes are used to indicate whether correspondence, research, or some other action is needed. The Action Code will set the suspense period to be assigned to the return and place the return in the workable or unworkable suspense inventory.

  2. When necessary, a three digit Action Code will be assigned by the tax examiner. Action Codes are valid on Form 1120, Form 1120-C, Form 1120-F, Form 1120-H, Form 1120-L, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC. Any other returns are processed through a manual correction system. Use Computer Condition Code "U" on these returns when actions such as correspondence is needed.

  3. Edit the Action Code in the bottom left margin of the tax return.

  4. Assign Action Codes in the following priority:

    1. Action Code "310" (Statute Control).

    2. Action Code "320" (Entity Control).

    3. Action Code "4XX" .

    4. Action Code "6XX" .

    5. Action Code "3XX" .

    6. Action Code "2XX" (Correspondence).

      Exception:

      When more than one Action Code is needed attach Form 4227. If more than one Action Code of the same priority is required (e.g. 310 and 341), edit the Action Code with the shortest suspense period and attach Form 4227 to indicate the second unprocessable condition. Use Action Code "211" , "215" , "225" , or "226" before Action Code "341" to ensure the return is complete before a manual refund is issued.

  5. Attach Form 4227 when more than one Action Code is needed. See Figure 3.11.16-1.

    Figure 3.11.16-1
    This image is too large to be displayed in the current screen. Please click the link to view the image.
  6. Edit the following Action Codes when a return cannot be perfected:

    Action Code Description
    "211" (First Correspondence) or
    "215" (International Correspondence)
    • Return is illegible, incomplete, or contradictory and therefore cannot be processed.

    • The taxpayer notates on the tax return or attachment that they are reporting tax for more than one tax period or for more than one type of tax.

    "225" (Missing Signature Correspondence)
    • Unsigned returns (only issue for correspondence).

    "226" (Missing Signature International Correspondence)
    "480" (Early Filed – Suspense)
    • The return is an early-filed (future) return.

    "610" (Renumbered non-remittance) or
    "611" (Renumbered with-remittance)
    • A return is mis-blocked (e.g., Form 1065 found in a 1120 batch of work).

    "640" (Void)
    • To delete the assigned Document Locator Number (DLN) on the return (e.g., Re-entry Returns).

    "650" (International)
    • An international return that must be forwarded to Ogden Submission Processing Campus (OSPC).

  7. Continue perfecting the return after editing the Action Codes.

  8. Valid Action Codes are listed below:

    Action Code Chart
    Action Code Description Workday Suspense Period
    Correspondence
    211 First Taxpayer Correspondence 40
    215 International Correspondence 45
    225 Taxpayer Correspondence (Signature Only) 40
    226 International Correspondence (Signature Only) 40
    In-House Research
    310 Statute Control 10
    320 Entity Control 10
    321
    (MeF only)
    Entity Control - Form 1120 with Form 851 attached 20
    Criminal Investigation Division
    331 Frivolous Review 3
    Accounting
    341 Manual Refund 10
    342 Credit Verification 10
    343 Black Liquor 10
    345
    (MeF only)
    Form 1120-F Total Tax Math Error  
    346
    (MeF only)
    Form 1120-F Balance Due Math Error  
    Master File Transcript Request (MFTRA)
    352 Name Research 3
    360 Other In-House Research 10
    Management Suspense
    420 2006 Tax Return with Form 8913 Credit 5
    440 Manager's Suspense 15
    480 Early Filed Suspense 150
    Rejects
    610 Renumber - Non-Remittance 0
    611 Renumber - Remittance 0
    640 Void 0
    650 International 0

3.11.16.2.2  (01-01-2011)
Unprocessable Conditions and Rejection of Tax Returns

  1. A tax return is an "OSPC only" return if at least one of the following conditions exists:

    1. The tax return has a foreign address.

    2. The tax return is a Form 1120-C.

    3. The tax return is a Form 1120-F.

    4. The tax return is a Form 1120-FSC.

    5. There is a refund credit claimed because of U.S. income tax paid or withheld at source because of the Foreign Investors in Real Property Tax Act whether or not Form 8288-A is attached.

      Note:

      Form 8288-A credit must be verified by the OSPC Foreign Team.

3.11.16.2.3  (01-01-2012)
Treatment of All Unprocessable Tax Returns

  1. Cincinnati Submission Processing Campus (CSPC) If the tax return is an Ogden Submission Processing Campus (OSPC) "only" return, discontinue perfection of the return. Prepare Letter 86C to inform the taxpayer the return has been sent to Ogden Submission Processing Campus.

  2. If the tax return is other than an OSPC "only" return, perfect the return if possible:

    1. Examine schedules and other attachments for the necessary information and edit the return as needed for processing.

    2. If perfection is not possible, perfect to the extent possible and proceed as set forth in (3) below.

  3. Action to secure perfection:

    1. Where indicated, prepare Form 4227, Intra-SC Reject or Routing Slip, indicating the reason for rejecting the document and that the document should be resubmitted for processing when it has been perfected.

    2. Attach the Form 4227 to the face of document in such a position that the Employer Identification Number (EIN) is visible for transcription.

    3. If the tax return has not been numbered, withdraw it from processing and forward it to the proper activity.

    4. For numbered Form 1120-FSC, Form 1120-ND, and Form 1120-SF, edit Computer Condition Code (CCC) "U" and attach Form 4227.

    5. For numbered Form 1120, Form 1120-C, Form 1120-F, Form 1120-H, Form 1120-L, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC, edit the appropriate Action Code in the bottom left margin of the return and leave it in the block.

3.11.16.2.4  (01-01-2015)
♦ Correspondence ♦

  1. There are two types of correspondence that C&E may encounter:

    1. Correspondence received from taxpayers, and

    2. Issuing correspondence to taxpayers.

3.11.16.2.4.1  (01-01-2014)
♦Definition of Correspondence from Taxpayers♦

  1. Correspondence is all written communications from a taxpayer or his/her representative, excluding tax returns, whether solicited or unsolicited. This includes:

    1. Written communications in response to IRS requests for information or data.

    2. Written communications, including annotated notice responses, that provide additional information or dispute a notice.

    3. A telephone call that results in a written referral or research (Form e-4442, Inquiry Referral).

  2. The key to identifying taxpayer correspondence is to ask the following questions:

    1. Is the taxpayer waiting for a response from us?

    2. Is the taxpayer waiting for an action to be taken by us?

    3. Is the taxpayer asking a question?

    Note:

    A Post-It-Note, Sticky Note, or some other type of note stuck on the return by another function such as, for example - "Taxpayer (TP) requests penalties be waived" - does not constitute correspondence from the taxpayer.

3.11.16.2.4.2  (01-01-2014)
♦Issuing Correspondence♦

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

    Note:

    Do not correspond on returns prepared by Collections, Section 6020(b) or by Examination, "Substitute for Return" (SFR).

  2. Correspond for back up forms and schedules≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .
    Exceptions:

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

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

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

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

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

    If... And... Then...
    Correspondence is needed A response is required,
    1. Complete an approved Correspondence Action Sheet indicating the letter number (86C, 118C, etc.), Master File Tax (MFT), and the appropriate paragraphs.

      Note:

      Within these paragraphs, there may be fill-ins that the tax examiner will be required to enter, such as, tax period, form number, DLN, etc.


    2. Attach the Correspondence Action Sheet to the front of the return below the Entity area.

    3. Edit Action Code "211" (First Correspondence) or "215" (International Correspondence) on Form 1120, Form 1120-C, Form 1120-F, Form 1120-H, Form 1120-L, Form 1120-PC, Form 1120-REIT, or Form 1120-RIC.

      Note:

      If the return is consolidated, input a Transaction Code (TC) "590" with Closing Code "014" for each subsidiary corporation listed on the Form 851 to satisfy the filing requirement.


    4. Edit CCC "U" for Form 1120-FSC, Form 1120-ND, and Form 1120-SF.

      Note:

      If the return is a consolidated, input TC "590" with Closing Code "014" for each subsidiary corporation listed on the Form 851 to satisfy the filing requirement.


    5. Finish editing the return and leave in the batch.

    Correspondence is needed A response is not required,
    1. Complete an approved Correspondence Action Sheet indicating the letter number (86C, 118C, etc.), Master File Tax (MFT), and the appropriate paragraphs.

      Note:

      Within these paragraphs, there may be fill-ins that the tax examiner will be required to enter, such as, tax period, form number, DLN, etc.


    2. Photocopy the first page of the tax return and attach a Correspondence Action Sheet below the Entity area on the front of the photocopy. Be sure the name and address show clearly above the Correspondence Action Sheet.

    3. Forward the copy to the Correspondence area.

    4. Edit an Action Trail (e.g., "118C Sent" ) in the lower left corner going vertically up the side of the return.

    5. Finish editing the return and leave in batch.

    Note:

    There may be additional letters that are exclusive to the tax examiner's campus. These letters are for specific forms or conditions where it was deemed necessary for processing. The tax examiner should go to their lead or manager for copies of these letters to facilitate processing.

3.11.16.2.4.3  (01-01-2010)
♦ Correspondence Imaging System (CIS) Returns ♦

  1. Correspondence Imaging System (CIS) is an inventory system for scanning all Accounts Management (AM) receipts into digital images and working the cases from those images.

  2. "CIS" returns are identified with "CIS Image - Do not correspond for Signature" stamped below the signature line or "CIS" annotated on the front of the return.

  3. Verify all edit marks and ensure placement is correct on a "CIS" return.

    If... Then...
    The edit marks are black, Underline the edit mark if correct or circle if incorrect.
    The edit marks are red or green, Circle if incorrect.
    The edit marks are missing or incorrect, Perfect as necessary.


  4. Follow the correspondence instructions below for "CIS" returns

    If... And... Then...
    The "CIS" return has a Form 13596 attached

    Note:

    If there is an indication on the return that correspondence has been sent (e.g., CCC "3" is edited on the return), do not route the return to Accounts Management. Continue processing.

    The return is not complete (e.g., missing signature, schedules, or forms), Remove the return from the batch and route to Accounts Management.

    Note:

    Do not correspond for missing information on "CIS" reprocessable/reinput returns.

    The "CIS" return does not have a Form 13596 attached The return is not complete (e.g., missing signature, schedules, or forms), Follow normal correspondence procedures.


3.11.16.2.4.4  (01-01-2012)
♦ Use of Fax for Taxpayer Submissions ♦

  1. Tax return information can be received via fax as part of return perfection even if a taxpayer signature is required. In circumstances where contact with the taxpayer has been made and documented, fax signatures are acceptable.

  2. Contact with the taxpayer may be by telephone or correspondence. Follow local procedures to determine which method of contact will be used.

  3. Code and Edit tax examiners will indicate the fax paragraph on the approved Correspondence Action Sheet to advise taxpayers of the option to fax their response.

    Caution:

    Before disclosing tax information, you must be sure you are speaking to the taxpayer or authorized representative. See the Taxpayer Authentication guidelines in IRM 21.1.3.2.3, Required Taxpayer Authentication and IRM 21.1.3.2.4, Additional Taxpayer Authentication. Also, before leaving any messages on a taxpayer's answering machine, review IRM 11.3.2.6.1, Leaving Information on Answering Machines/Voice Mail. Fax procedures contained in IRM 11.3.1.11, Facsimile Transmission of Tax Information must be reviewed prior to faxing confidential information to the taxpayer.

3.11.16.2.5  (01-01-2009)
C/SC Letters

  1. Listed below are letters and a form which are provided by the Headquarters for Submission Processing Center use in corresponding for items listed in this IRM. It is expected that tax examiners or their supervisors (or delegates) will have access to and be familiar with the Submission Processing Center Correspondex Handbook for selection of appropriate letters.

    1. Letter 86(C/SC/SP) - Letter referring taxpayer inquiry/forms to another office.

    2. Letter 118(C) - Letter requesting missing schedules or documents.

    3. Letter 143(C) - Letter advising taxpayer that we have received tax form and need additional information in order to complete action on it. (Also use this letter for missing signature only.)

    4. Letter 319(C/SC) - Letter advising taxpayer that IRS cannot process return because it shows an improper tax period or a period of more than 12 months or a period less than 12 months without an explanation.

    5. Letter 105(C) - Letter disallowing Federal Telephone Excise Tax Credit, explaining appeal rights and procedures.

    6. Form 6800 - Request for Missing Information or Papers to Complete Your Tax Return or Form 8038-CP.

3.11.16.2.6  (06-27-2011)
♦ Compliance Secured/Prepared Returns ♦

  1. Compliance functions (Collections and Examination) secure returns from the taxpayer and also prepare returns if the taxpayer does not provide them.

    1. Prepared tax returns are notated with "6020(b)" or "SFR" (Substitute for Return).

    2. Secured tax returns are notated with "TC 59X" or "ICS" (Integrated Collections System) or are notated "Process as original" with an attached Form 13133, Expedite Processing Cycle. The "Delinquent Return" box on Form 13133 should be checked.

    Note:

    If "RD" is notated on the front of the return and not circled, remove from the batch and route to Collections.

3.11.16.2.6.1  (01-01-2015)
♦ IRC §6020(b) – Prepared by Collections ♦

  1. When the taxpayer fails to file a required return, IRC §6020(b) is the authority for the IRS to prepare the return.

  2. These tax returns are identified by the notation: "PREPARED AND SIGNED UNDER AUTHORITY OF SECTION §6020(b) OF THE INTERNAL REVENUE CODE" , which is located in the center bottom of Page 1.

    1. Returns must have a received date. If missing, follow the normal procedures for editing the received date. See IRM 3.11.16.7, Received Date

    2. Returns must be signed by Compliance Function representative. If not signed, route to Compliance using Form 4227.

      Note:

      Starting July 1st, 2013 we will accept the Revenue Officers (RO) electronic signature or typed signature as a valid signature on the return.

    3. Edit CCC "D" if the Compliance Function representative notates: "DO NOT ASSESS FAILURE TO PAY PENALTY"

    4. Do not correspond with the taxpayer for unprocessable conditions. If the return is unprocessable, edit CCC "3" and continue processing.

    5. Edit CCC "W" if the received date is more than 2 years and 9 months after the return Due Date. Do not send the return to Statute Control.

3.11.16.2.6.2  (03-04-2011)
♦ Collection Secured ♦

  1. These returns are identified by the notations: "TC 59X" or "ICS" .

    1. Do not edit CCC "G" on these returns.

    2. Use approved Correspondence Action Sheet to correspond for conditions that cannot be processed (e.g., missing signatures, missing schedules, etc.).

    3. Edit CCC "W" if the received date is more than 2 years and 9 months after the return Due Date. Do not send to Statute Control function.

    Reminder:

    If there is an indication a penalty or penalties should be suppressed, edit the appropriate Computer Condition Code(s). Please refer to IRM 3.11.16.8.1, Computer Condition Codes for additional information.

3.11.16.2.6.3  (01-01-2010)
♦ Examination Prepared Returns ♦

  1. These tax returns are identified by the notation "SFR" or "SUBSTITUTE RETURN" on Page 1.

    1. The return must have a received date. If no received date is present, follow the normal procedures for editing the received date.

    2. Do not correspond with the taxpayer for unprocessable conditions. If the return is unprocessable, edit CCC "3" and continue processing.

    3. If Form 13133 is attached, edit the Computer Condition Codes checked on the form.

    4. Edit CCC "W" if the received date is more than 2 years and 9 months after the return Due Date. Do not send to Statute Control function.

3.11.16.2.6.4  (03-04-2011)
♦ Examination Secured ♦

  1. These tax returns are identified by the notation "Process as Original" on Page 1 of the return and a Form 13133 attached with the "Delinquent Return" box checked.

    1. Do not edit CCC "G" on these returns.

    2. Use approved Correspondence Action Sheet to correspond for conditions that cannot be processed (e.g., missing signatures, missing schedules, etc.).

    3. Edit the Computer Condition Codes checked on Form 13133.

    4. Edit CCC "W" if the received date is more than 2 years and 9 months after the return Due Date. Do not send to Statute Control function.

    Reminder:

    If Form 13133 (or something similar) indicates a penalty or penalties should be suppressed, edit the appropriate Computer Condition Code(s). Please refer to IRM 3.11.16.8.1, Computer Condition Codes for additional information.

3.11.16.2.7  (01-01-2015)
♦ Statute Returns ♦

  1. Any tax return with a received date that is 2 years and 9 months or more after the Return Due Date is a potential statute control return.

  2. Statute returns must be routed to the Statute Control Unit daily or more often if needed.

    Exception:

    Do not route the return to Statue Control Unit for clearance, edit CCC "W" and continue processing if any of the following conditions are present:

    • Compliance (IRC §6020(b)) returns.

    • Tax returns with "TC 59X" or "ICS" notated on the face of the return.

    • Secured by Examination/Collections

    • Tax returns that are substitute returns prepared by Examination ("SFR" notated in top margin).

    • Tax returns with a stamp indicating a previous clearance by the Statute Control Unit within the last ninety days.

  3. If a Form 12412, Operations Assistance Request (OAR) is received from TAS and the return is a potential statute control return but is not stamped "Cleared by Statute" , give the return to your lead. The lead will contact the TAS employee listed on the OAR for rejection of the return back to TAS for clearance by the Statute Unit.

    Note:

    If the return is within 90 days of the statute expiration date advise the TAS employee of such and that expedited handling is needed. If requested by the TAS employee route the return directly to statute for clearance.

  4. Statute returns are unprocessable until they are cleared by Statute Control.

    If... Then...
    The return is numbered,
    1. Edit Action Code "310" on Form 1120, Form 1120-C, Form 1120-F, Form 1120-H, Form 1120-L, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC.

    2. All other returns edit CCC "U" and attach Form 4227. Check the "Statute Control" box on Form 4227.

    3. Leave the return in the batch and continue processing.

    The return is unnumbered,
    1. Do not continue processing.

    2. Pull the return from the batch.

    3. Attach Form 4227 and check the box for "Statute Control" .


  5. Edit a CCC "W" if the tax return has been cleared by the Statute Control Unit. Statutes will stamp or indicate clearance on the front of the return.

  6. Statute may stamp a return as "No Statute Issue" . Follow the chart below to determine if a CCC "W" is needed:

    If... And... Then...
    The return received date is 2 years and 9 months or more after the Return Due Date The return is stamped, "No Statute issue" , "Statute N/A" , or a similar statement indicating there is no statute issue, Edit a CCC W
    The return received date is less than 2 years and 9 months from the Return Due Date The return is stamped, "No Statute issue" , "Statute N/A" , or a similar statement indicating there is no statute issue, Do not edit a CCC W


3.11.16.2.8  (01-01-2010)
♦ Re-Entry Document Procedures ♦

  1. A tax return posted to the wrong account or module or attempting to post must be reprocessed to post to the proper account or module.

  2. Some re-entry returns may have originally been filed electronically (E-File). These returns may be identified by the presence of Mod E-File printouts in lieu of an actual return. Do not correspond for missing signatures on these documents.

  3. Each re-entry tax return must have a Form 3893, Re-Entry Document Control, or Form 13596, Reprocessing Returns, attached.

    • Form 3893 is used to reinput returns that have not posted to an account or module.

    • Form 13596 is used to reprocess returns to the correct account or module that had previously posted to the wrong account or module.

  4. Always leave the Form 3893 or Form 13596 on the front of the return. It must remain as a permanent part of the document.

  5. Examine Form 3893 or Form 13596 to determine the action needed to make the return processable.

    Caution:

    If the received date is 2 years and 9 months or more after the Return Due Date, refer to Statute procedures before re-entering or reprocessing the return. See IRM 3.11.16.2.7Statute Returns .

3.11.16.2.8.1  (01-01-2015)
♦ Form 3893 – Re-Entry Document Control ♦

  1. Form 3893, Re-Entry Document Control is used to reinput a return that has not posted to an account or module.

  2. If more than one return is in the batch and only the top Form 3893 has an entry in Box 1 (Alpha/Numeric block control no.), edit all returns using current processing instructions and keep all returns clipped together.

  3. Circle the CCC "G" if present.

  4. Do not Edit CCC "G" on amended returns.

  5. Do not send Letter 1382C if a request for reasonable cause is attached.

  6. If the return was not edited according to current processing instructions, circle any Action Codes, Computer Condition Codes and any other edit marks that are no longer applicable. Re-edit according to current processing instructions.

  7. If the return was edited according to current processing instructions, ensure that the information from Form 3893 is edited to the return.

    Form 3893 Action Taken
    Box 14 (Remarks)
    1. Ensure that the information is edited to the return.

    Box 15 (Process as)
    1. Circle any green rocker and edit marks that may indicate a receipt of remittance.

    2. Do not change any tax due amounts.

  8. Examine returns that have any color other than red editing in the tax data section to determine if the corrections are the result of improper perfection or taxpayer error.

    If... Then...
    Improper perfection, Edit the same correction in red/green (per local procedure) to the appropriate area.
    Taxpayer error, Leave the entries as shown on the document.


  9. A received date must be present on all re-input returns.

    If... Then...
    Received date is not present, Edit a received date to the middle of the return. See IRM 3.11.16.7, Received Date.
    Multiple Received Dates are present, Circle all but the earliest date.


  10. When additional information is still needed to make the return processable, prepare an approved Correspondence Action Sheet or Form 4227 for the appropriate action (e.g., correspondence, research, etc.).

  11. When perfection is not possible, edit Action Code "640" (or CCC "U" ) and attach Form 4227 noting "PERFECTION NOT POSSIBLE" and leave in batch.

3.11.16.2.8.2  (01-01-2015)
♦ Form 13596 – Reprocessing Returns ♦

  1. Form 13596, Reprocessing Returns, is used to reprocess a return to the correct account or module that had previously posted to the wrong account or module.

  2. Circle CCC "G" if present.

  3. Do not edit CCC "G" on amended returns.

  4. Do not send Letter 1382C if a request for reasonable cause is attached.

  5. If the return was not edited according to current processing instructions, circle any Action Codes, Computer Condition Codes, and any other edit marks that are no longer applicable. Re-edit according to current processing instructions.

    Caution:

    If you receive a Form 1120 converted from Form 1120S, ensure that the following items are present: EIN, name control, NAICS, received date, audit code 4, tax period (prior year returns), and CCC 3 (as applicable for No Replies). If not, then edit the needed items.

  6. If the return was edited according to current processing instructions, ensure that the information from Form 13596 is edited on the return.

    Form 13596 Action Taken
    Taxpayer Identification Number (TIN) correction, Edit the correct TIN on tax return.
    Tax period correction, Edit the correct tax period ended on the tax return.
    Reasonable cause, Edit appropriate Computer Condition Code.
    1. Edit CCC "R" if the "FTF" (Failure to File) box is checked.

    2. Edit CCC "D" the "FTP" (Failure to Pay) box is checked.

  7. Examine returns that have any color other than red editing in the tax data section to determine if the corrections are the result of improper perfection or taxpayer error.

    If... Then...
    Improper perfection, Edit the same correction in red/green (per local procedure) to the appropriate area.
    Taxpayer error, Leave the entries as shown on the document.


  8. A received date must be present on all reprocessed returns.

    If... Then...
    Received date is not present, Edit a received date to the middle of the return. See IRM 3.11.16.7, Received Date.
    Multiple received dates are present, Circle all but the earliest date.


  9. Circle any green rocker and edit marks that may indicate a receipt of remittance.

  10. When additional information is still needed to make the return processable, prepare an approved Correspondence Action Sheet or Form 4227 for the appropriate action (e.g., correspondence, research, etc.).

3.11.16.2.9  (01-01-2015)
♦ Amended Returns ♦

  1. A return is considered Amended based on the following:

    • The "Amended" box is checked

    • Words such as "Supplemental" , "Corrected" , "Additional" are present

    • Any indication from the taxpayer that a previous return was filed

      Note:

      Words such as "Copy" or "Duplicate" are not sufficient indicators and must be accompanied by a statement from the taxpayer that a previous return was filed.

  2. Examine the return for attachments:

    • Do not separate any related attachments submitted to explain the reason for the Amended return (information may be useful to Accounts Management)

    • Detach any unrelated documents and route them to the appropriate function using Form 4227. Edit an Action Trail on the return.

    Note:

    Pull any amended return that has "CBR" notated and route to AM.

  3. If there is an indication the return is amended and:

    If... Then...
    TC "59X" or "ICS" was edited on the return by Compliance Services, Do not edit CCC "G" .
    Process the return as an original.
    The return is stamped "Delinquent Original Cleared for Processing" by Statute,
    Form 3893 or Form 13596 is attached, Do not edit CCC "G" .
    See IRM 3.11.16.2.8.1, Form 3893 - Re-Entry Document Control or IRM 3.11.16.2.8.2, Form 13596 - Reprocessing Returns.
    None of the above are present, Edit CCC "G" .
    No other codes may be used with CCC "G"

    Exception:

    CCC "S" , "T" , "U" , "W" , "3" and/or Error Resolution System (ERS) Action Codes may be used with CCC "G" .


  4. The following data must be edited on all amended returns:

    1. Name control. See IRM 3.11.16.5.2, Entity Perfection - Name Control

    2. EIN. See IRM 3.11.16.5.1, Entity Perfection - Employer Identification Number (EIN)

    3. Tax period. See IRM 3.11.16.6, Tax Period

    4. CCC "G" . See Exception above

    5. Received date. See IRM 3.11.16.7, Received Date

    6. Signature. See IRM 3.11.16.10.7, Signature

3.11.16.2.10  (01-01-2015)
IRC 847 Deduction

  1. IRC 847(2) requires certain insurance companies to make Special Estimated Tax Payments (SETP) in the amount equal to the tax benefit derived from the additional deduction permitted under IRC 847.

  2. SETP are reported on Form 1120, Consolidated Form 1120, Form 1120-L, and Form 1120-PC. The payment is found on the following lines:

    Form Line Number
    Form 1120
    Form 1120 (Consolidated)
    Schedule J, Part II, Line 13 (Page 1, Line 32b for 2010 and prior revisions) identified by a notation in the margin or on the line referring to a "Form 8816" and/or "SETP" , and/or attached schedule, and/or Form 8816 is attached.
    Form 1120-L Page 1, Lines 29b and/or 29d and/or Form 8816 is attached.
    Form 1120-PC Page 1, Lines 14b and/or 14d (for 1999 and prior, Lines 16b and/or 16d) and/or Form 8816 is attached.
  3. If SETP are claimed, edit Action Code "342" and enter CCC "8" on the return. Give the return to your lead.

  4. C&E Lead or other assigned individual will do the following:

    1. Edit an action trail such as "Faxed to LB&I Exam MM-DD-YYYY" (MM-DD-YYYY would be the date faxed).

    2. Fax pages 1, 2, and 3 of the Form 1120, Form 1120-PC, and/or Form 1120-L and all Form 8816 to LB&I Exam at ≡ ≡ ≡ ≡ ≡ ≡ ≡ with your contact information (name, phone number and e-mail address). For a consolidated Form 1120, also fax the subsidiary return or attachment on which the SETP are identified. If the fax does not work, contact LB&I Exam directly at ≡ ≡ ≡ ≡ ≡ ≡ ≡ or e-mail ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    3. Set the return aside in a location designated for Section 847 returns with a copy of fax acknowledgement or other record of correspondence with LB&I Exam. Check the bin daily to ensure returns have been properly communicated to LB&I Exam.

    4. LB&I Exam will respond within 72 hours by e-mailing a Form 3809 to the person who provided the fax. Print the e-mailed Form 3809 on green paper and attach to the back of the return. If LB&I responds back stating the return is not a true Section 847 case, print that e-mail on green paper and attach to the back of the return.

    5. Place the return back in the processing pipeline.

3.11.16.2.11  (01-01-2014)
Prompt Assessment (Form 4810) / Prompt Determination

  1. A "Prompt Assessment" , IRC 6501 is requested, either in the form of a letter or on Form 4810. A "Prompt Determination" is requested under IRC 505(b) of the U.S. Bankruptcy Code.

    If... And... Then...
    A Prompt Assessment or Prompt Determination request is not attached to a tax return,   Forward the Prompt Assessment/Prompt Determination request to Examination.
    A Prompt Assessment or Prompt Determination request is attached to a tax return A TC "150" has not posted for that return, Process the return and forward the Prompt Assessment/Prompt Determination request to Examination with a copy of the tax return.
    A TC "150" has posted for that return, Route the return and the Prompt Assessment/Prompt Determination request to Examination.

    Note:

    If the return is numbered, edit Action Code "370" and continue processing.


3.11.16.2.12  (01-01-2015)
Form 8913 - Credit for Federal Telephone Excise Tax Paid Only Tax Return

  1. For corporation returns claiming ONLY a refund of the Federal Telephone Excise Tax Credit (Form 8913) and no other income or deduction entries are present on the corporate return, edit the following:

    1. Entity area. See IRM 3.11.16.5.

    2. Tax period. See IRM 3.11.16.6.

    3. Action code "420" . (CCC "U" for Forms 1120-FSC/ND/SF.)

    4. Received date. See IRM 3.11.16.7.

    5. Initial return code (Form 1120, Form 1120-REIT, and Form 1120-RIC). See IRM 3.11.16.8.3.

    6. Signature. See IRM 3.11.16.10.7.

    7. Form 8050 (Form 1120, place in sequence order if entries are present).

    8. Form 8913 (place in sequence if Line 15, Column (d) or (e) contain a significant entry).

3.11.16.3  (01-01-2015)
♦ Refund Returns - 45 Day Jeopardy / Million Dollar Refunds ♦

  1. Document Perfection is responsible for identifying refunds and for initiating requests for manual refunds.

    Note:

    Expeditious processing of refund returns is critical if the 45 day period is about to expire.

    If... Then...
    A refund tax return is batched in a non-refund batch,
    1. Completely edit the return.

    2. Pull the return from the non-refund batch using local procedures.

    Note:

    Follow the instructions below when the processing date is more than 20 days after the received date or the return due date OR the refund is $10,000,000 or more.

    The processing date is more than 20 days after the received date or the return due date (whichever is later) and the refund amount is $25,000 or more,

    Note:

    "Refund" in this instruction means only the amount requested to be refunded to the taxpayer, not overpayments transferred to other periods.

    1. Edit Action Code "341" for Form 1120, 1120-C, 1120-F, 1120-H, 1120-L, 1120-PC, 1120-REIT, and 1120-RIC.

    2. Edit CCC "U" for Form 1120-FSC, Form 1120-ND, and Form 1120-SF. Attach Form 4227 and check the "Reject Correction" box.

    3. Unnumbered returns: Give the return to the manager.

    4. Numbered returns: Leave in batch.

    The refund is $10,000,000 or more,

    Note:

    "Refund" in this instruction means only the amount requested to be refunded to the taxpayer, not overpayments transferred to other periods.

    1. Edit Action Code "341" for numbered and unnumbered Forms 1120, Form 1120-C, Form 1120-F, Form 1120-H, Form 1120-L, Form 1120-PC, Form 1120-REIT, and 1120-RIC.

    2. Edit CCC "U" for numbered and unnumbered Form 1120-FSC, Form 1120-ND, and Form 1120-SF. Attach Form 4227 and check the "Reject Correction" box.

    3. Unnumbered returns: Give the return to the manager.

    4. Numbered returns: Leave in batch.

    Reminder:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    The W&I Submission Processing TAS Liaison walks a return through C&E, In addition to normal editing, edit the following:
    1. CCC "O" , to freeze the refund.

    2. CCC "Y" , to send the return to ERS.


3.11.16.4  (01-01-2012)
Examination of Tax Data

  1. This subsection addresses general tax data editing procedures.

3.11.16.4.1  (01-01-2010)
Non-Standard or Prior Year Format

  1. All prior year returns must be reformatted to current year format. See prior year conversion exhibits and the Job Aids for specific year coding.

  2. If the return is on other than current form format (may be either a prior year or non-standard form) and the transcription lines cannot be numbered to agree with the current year return:

    1. Edit all available transcribed tax data items to the tax data portion of a blank current year form.

    2. Place a large "X" across the tax data entries of the prior year (or non-standard) form.

    3. Staple the forms together, attaching the dummied form (current format) on top so that ISRP can enter the Entity data from the prior year (or non-standard) form.

3.11.16.4.2  (01-01-2014)
Conversion of Form 1120S to Form 1120

  1. If a taxpayer filed Form 1120S and the Entity Control Unpostable Unit has determined the Taxpayer does not have a valid Small Business Election on file (Form 2553), Rejects will convert Form 1120S to a Form 1120. No action is required for Document Perfection.

    Caution:

    If you receive a Form 1120 converted from Form 1120S and the Form 13596, Reprocessing Returns, is attached for reprocessing, see IRM 3.11.16.2.8.2, Form 13596 - Reprocessing Returns for additional information.

3.11.16.4.3  (01-01-2009)
Significant Entries

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

    Note:

    Blank, Dash, "None" , "N/A" , or zero are not significant entries unless otherwise specified.

3.11.16.4.4  (01-01-2015)
Incomplete Return

  1. When the return serves only as a transmittal for statements, schedules, and other attachments, or is otherwise incomplete, analyze the supporting documents and edit the missing entries on the form itself.

  2. Examine attachments and edit the information to appropriate transcription lines of both the income and deduction sections. This does not apply to Consolidated – Mixed Component returns.

    Exception:

    See instructions for Minimum Edit, IRM 3.11.16.4.5.

    1. Edit the income section if Line 11 is the only entry in the income section.

    2. Edit the deduction section if Line 27 is the only entry in the deduction section.

    3. Edit the income and/or deduction section if blank and there is an indication the income and/or deduction items are included on an attachment (e.g., a notation such as "See attached" , "See Schedule F" , "Statement attached" , etc.).

    Note:

    When a doubt exists concerning placement of an income or deduction item because of terminology used by taxpayer, edit income items as "other income" deduction items as "other deductions" .

  3. Secured Delinquent Returns are returns secured by compliance personnel. If information is missing from one of these returns, correspond using an approved Correspondence Action Sheet.

3.11.16.4.5  (01-01-2015)
Minimum Edit

  1. If Form 1120 does not require Balance Sheet inspection (see IRM 3.11.16.10.25, Schedule L, Balance Sheet instructions), perform the least time-consuming edit on the income section and the deductions section through Total Deductions.

    1. If only totals are shown in Total Income and/or Total Deductions, edit Total Income to the Other Income line and/or edit Total Deductions to the Other Deductions line.

    2. If there is an entry on Form 1120, Page 1, Line 29b, enter Form 1120, Page 1, Line 4 (Dividends), from Schedule C, Page 2, Line 19. Subtract the Line 4 (Dividends) amount from Line 11 (Total Income) to determine the difference. Enter the difference on Line 10 (Other Income).

    3. On a "Final" Form 1120, analyze and edit to appropriate lines any entry on the attachments for Income and Deductions items.

    Note:

    (Form 1120 Only) Form 1120 filed by a large corporation (defined as a corporation with $10 million or more of assets in Box D), where "see attached" is notated in the Income Section and the Deduction Section, should be brought to the attention of your supervisor. Taxpayer correspondence should be initiated on these returns. Suggested language for the correspondence is as follows:
    "Complete every applicable entry space on Form 1120. Do not write "see attached" instead of completing the entry spaces. If you need more space on the forms or schedules, attach separate sheets, using the same size and format as the printed forms. Be sure to put the corporation's name and EIN on each sheet."

3.11.16.4.6  (01-01-2012)
Editing Dollars and Cents

  1. Document Perfection is not required to edit a vertical line, 00, dash, or decimal point to indicate dollars and cents.

    If... Then...
    The taxpayer has entered money amounts showing dollars and cents separated by a decimal point, No editing is required.
    The taxpayer has entered dollars only where dollars only should be entered,
    The taxpayer has entered dollars only where dollars and cents should be entered,


3.11.16.4.7  (01-01-2009)
Negative Entries

  1. Edit negative entries as follows:

    If... Then...
    Brackets are pre-printed on the form, No editing is required.
    The taxpayer indicates a negative amount with brackets or a minus () sign,
    Editing a negative amount to a transcription line (e.g., computing a line entry, entering a missing entry, etc.), Bracket the negative amount.


3.11.16.5  (01-01-2014)
♦ Entity Perfection - General ♦

  1. The entity of a tax return identifies the taxpayer on the Business Master File. The entity area of the return contains the following:

    • Employer Identification Number (EIN)

    • Name

    • "In-care-of" Name

    • Address

3.11.16.5.1  (01-01-2014)
♦ Entity Perfection – Employer Identification Number (EIN) ♦

  1. The EIN is a nine digit number (xx-xxxxxxx) assigned to identify the taxpayer.

  2. The EIN is located in the upper right area of the form ("Employer Identification Number" box).

  3. Determine the EIN as follows:

    1. If... And... Then...
      The EIN is missing You can determine the correct EIN from the attachments and/or schedules, Edit the EIN to the proper location.
      The EIN is either a PTIN or Individual Taxpayer Identification Number (ITIN), or
      Multiple EINs are present
      Unnumbered,
      1. Remove return from batch.

      2. Route to Entity Control following local procedures for EIN assignment.

      Numbered,
      1. Edit Action Code "320" on Form 1120, Form 1120-C, Form 1120-F, Form 1120-H, Form 1120-L, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC. All other returns edit CCC "U" .

      2. Leave return in batch.

      The EIN contains any of the following conditions and cannot be determined from attachments and/or schedules:
      • Illegible;

      • Missing;

      • Other than 9 digits;

      • All zeroes; or,

      • All nines

      Unnumbered,
      1. Research IDRS.

      2. If found, edit to the proper location.

      3. If not found, route to Entity Control following local procedures.

      Numbered,
      1. Circle all illegible EINs, zeroes, or nines.

      2. Edit Action Code "320" on Form 1120, Form 1120-C, Form 1120-F, Form 1120-H, Form 1120-L, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC. All other returns edit CCC "U" .

      3. Leave return in batch.

      "PENDING" , "APPLIED FOR" , etc., is indicated in the EIN area, Unnumbered,
      1. Research IDRS.

      2. If found, edit to the proper location.

      3. If not found, route to Entity Control following local procedures.

      Numbered,
      1. Edit Action Code "320" on Form 1120, Form 1120-C, Form 1120-F, Form 1120-H, Form 1120-L, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC. All other returns edit CCC "U" .

      2. Leave return in batch.


3.11.16.5.2  (01-01-2015)
♦ Entity Perfection – Name Control ♦

  1. The Name Control consists of four characters or less.

    1. Valid characters are alpha, numeric, ampersand (&), hyphen (-), and blank. However, blanks are only valid in the last three positions.

    2. Disregard the word "THE" in the Name Control only when followed by more than one word.

  2. See Job Aid Document 7071A, Name Control Job Aid – For Use Outside the Entity Area, to determine the Name Control.

  3. If Box E(3)* "Name Change" , Form 1120 is checked, route the return to Entity Control following local procedures.
    *(For Form 1120-C - Box D(3), Form 1120-F - Box "Name or address change" , Form 1120-FSC - Box F(2), 1120-H - Box (2), Form 1120-L - Box E(2), Form 1120-ND - Box D(2), Form 1120-PC - Box E(2), Form 1120-REIT - Box F(2), Form 1120-RIC - Box E(2), Form 1120-SF - Box (2))

  4. Edit the Name Control as follows:

    1. If... And... Then...
      Able to determine the Name Control,   Underline the Name Control.
      See Figure 3.11.16-2.
      Unable to determine the Name Control, Unnumbered,
      1. Research IDRS.

      2. If found, edit to the proper location.

      3. If not found, route to Entity Control following local procedures.

      Numbered,
      1. Edit Action Code "352" (Name Research) on Form 1120, Form 1120-C, Form 1120-F, Form 1120-H, Form 1120-L, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC.

      2. All other returns, edit CCC "U" . Attach Form 4227 and indicate "Name Research" in the "Other (explain)" area.

      3. Leave return in batch.

      A return indicates the taxpayer has filed bankruptcy (e.g., shows "RECEIVER" , "TRUSTEE" , or "DEBTOR IN POSSESSION" in the entity area, or on an attachment),   Route to Entity Control following local procedures.


    Figure 3.11.16-2
    This image is too large to be displayed in the current screen. Please click the link to view the image.

3.11.16.5.3  (01-01-2014)
♦ Entity Perfection – "In-Care-Of" Name ♦

  1. An "in-care-of" name can be identified by the words "in care of" or the symbols "c/o" or "%" (percent).

  2. Ensure the "in-care-of" name is located in the proper location.

    If... Then...
    The "in-care-of" name is located on the street address line preceding the street address, No editing is required.
    The "in-care-of" name is located above the first name line or below the street address,
    1. Arrow the "in-care-of" name so it appears below the first name line and above the street address.

    The "in-care-of" name is shown on an attachment, Edit the "in-care-of" name above the street address beginning with the "%" or "c/o" in the first position.
    The street address for the "in-care-of" name is different from the street address of the corporation,
    1. Arrow the "in-care-of" street address below the "in-care-of" name or edit the "in-care-of" street address below the "in-care-of" name if included on an attachment.

    2. Circle the corporation street address and input TC "014" .

    Note:

    Always circle the in-care-of symbol (% or c/o) if it is present with an address. Do not use the ampersand (&) and the percent sign (%) when editing address information.

  3. A change in the "in-care-of" name can be determine by any of the following:

    • A check mark in the "Name change" box, or

    • A check mark in the "Address change" box, or

    • An indication that the "in-care-of" name is changed (e.g., the taxpayer crossed out the original "in-care-of" name and added the new name or has entered a new "in-care-of" name in brackets)

      If... Then...
      An "in-care-of" name is changed but there is no indication of an address change,
      1. Edit the "in-care-of" name as shown above.

      2. Continue editing the return.

      An "in-care-of" name is present and the "Address change" box is checked (or there is an indication of an address change),
      1. Edit the "in-care-of" name as shown above.

      2. Correct the address. See IRM 3.11.16.5.4, Entity Perfection – Domestic Addresses.

      3. Continue editing the return.


3.11.16.5.4  (01-01-2015)
♦ Entity Perfection – Domestic Addresses ♦

  1. Perfection of the address is necessary when the mailing address (Street or P.O. Box) is not easily identified.

    Exception:

    Do not perfect the address on amended returns (CCC "G" ).

  2. A business may have two addresses. One is the mailing address and the other is the location address or physical location of the business.

  3. The procedures for perfection of returns indicating an address change are as follows:

    If... And... Then...
    The address contains information other than a street address or P.O. Box,   No perfection is necessary. ISRP will enter the complete address.
    There is an indication on an attachment that the address has been changed,   Edit the new address in the Entity Section of the return.
    Form 8822, Address Change Requested or Form 8822-B, Change of Address or Responsible Party - Business is attached Mailing address information is the same and no location address is listed on Line 7, Take no action.
    Form 8822, Address Change Requested or Form 8822-B, Change of Address or Responsible Party - Business is attached Mailing address information is different and/or a location address is listed on Line 7, Detach Form 8822/Form 8822-B and route to Entity Control following local procedures.
    Both a P.O. Box and street address are shown,
    See Figure 3.11.16-3.
     
    1. Notate "TC 014" in the upper left margin.

    2. Input TC
      "014" .

    Two street addresses are shown,  
    1. Underline the second street address.

    2. Notate "TC 014" in the upper left margin.

    3. Input TC "014" .

    One street address is shown The taxpayer changes the address to a P.O. Box,
    1. Notate "TC 014" in the upper left margin.

    2. Input TC "014" .

    The city and state are not shown on the return, but are shown on an attachment,   Edit the city and state in the Entity Section of the tax return.
    The ZIP Code is missing or illegible Is not available from the return or attachments, See Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries to determine the ZIP Code.

    Note:

    Edit the 3 digits followed by "01" of the first zip code listed for the applicable state (e.g., "99501" for Alaska).

    Only the first three digits of the ZIP Code can be determined,   Edit "01" for the fourth and fifth digits.
    The "Change of Address" box is checked An "in-care-of" name is present,
    1. Edit the "%" (percent sign) or "c/o" to the left of the "in-care-of" name (in the first position) followed by the appropriate name.

    2. Correct the address.

    The National Change of Address (NCOA) label is present,   Underline the Name Control.
    It is necessary to edit the street address,   See Document 7475, State and Address Abbreviations, Major City Codes, ZIP Codes, and Countries.

    Note:

    Always circle the "in-care-of" symbol ("c/o" or "%" ) if it is present with an address. Do not use the ampersand (&) and the percent symbol (%) when editing address information.

    Figure 3.11.16-3
    This image is too large to be displayed in the current screen. Please click the link to view the image.
  4. The U.S. Postal Service established new address requirements for APO/DPO/FPO addresses. If the old address appears, convert to the new state code abbreviation based on the ZIP Code (e.g., APO New York, New York 091XX would be converted to APO AE 091XX). APO/DPO/FPO addresses are considered domestic addresses. Refer to Conversion Chart below:

    ZIP Code State Code
    340 AA
    090–098 AE
    962–966 AP

3.11.16.5.5  (01-01-2010)
♦ Entity Perfection – Foreign Address (OSPC) ♦

  1. A foreign (international) address is any address that is not in the 50 states or the District of Columbia.

  2. Returns with APO, DPO, and FPO addresses are considered domestic addresses. See IRM 3.11.16.5.4, Entity Perfection – Domestic Addresses.

  3. Route returns with a foreign address to the Ogden Submission Processing Center (OSPC) for processing. Prepare Letter 86C to inform the taxpayer the return has been sent to Ogden.

  4. Returns with addresses in the following U.S. Possessions/Territories are considered to be a foreign for processing purposes but are edited in the same way as domestic addresses.

    1. A two-character alpha code must be edited for the possession name.

      U.S. Possession / Territory Abbreviation
      American Samoa AS
      Federated States of Micronesia FM
      Guam GU
      Marshall Islands MH
      Northern Mariana Islands MP
      Palau PW
      Puerto Rico PR
      U.S. Virgin Islands (U.S.) VI
    2. A ZIP code must be present for U.S. Possessions/Territories. Edit the appropriate ZIP Code if one is not provided. See Exhibit 3.11.16-19, U.S. Possessions ZIP Codes.

  5. All other foreign addresses are edited the same as a domestic address with the following exceptions:

    1. The foreign country must be the last entry in the address.

    2. Circle the foreign country and edit the country code preceded by a "/" and followed by "/$" (e.g., "/GM/$" is edited for Germany). For official foreign country codes, see Document 7475 State and Address Abbreviations, Major City Codes, ZIP Codes, and Countries.

    3. A unique country code will be edited for returns filed with an address in Canada. See IRM 3.11.16.5.5.1, Country Code – Canada.

      Note:

      Submission Processing BMF Foreign Address Job Aid (Number 2324-002) provides examples for editing foreign addresses.

    4. If the foreign address is from Australia, Brazil, Canada, Cuba, Italy, Mexico, or The Netherlands, check if the address contains a province, state, or territory.

      If... Then...
      A province, state, or territory is present,
      1. Circle the province, state, or territory name.

      2. Edit the appropriate abbreviation. See Exhibit 3.11.16-16, Province, State and Territory Abbreviations .

      A province, state, or territory is shown in abbreviated format, Continue editing the return.
      A province, state, or territory name is not present,


  6. A ZIP Code or state are not required on a foreign address. Foreign addresses use a postal code that is entered before the city or foreign country and is part of the address.

3.11.16.5.5.1  (01-01-2010)
♦ Country Code – Canada ♦

  1. In an effort to assist Compliance with workload assignment, returns filed with an address in Canada will be edited using a unique country code based on the province.

    If... Then...
    The foreign address contains a Canadian province/territory name, abbreviation, or postal code beginning letter shown in the table below,
    1. See table below to ensure the correct Canadian Province/Territory is present or edited to the return.

    2. Circle the country name.

    3. Edit the appropriate country code based on the province/territory preceded by a "/" and followed by a "/$" as the last entry in the address.

    The foreign address does not contain a Canadian province/territory name shown on the table below,
    1. Circle the country name.

    2. Edit the country code "/CA/$" as the last entry in the address.

    Canadian Province / Territory Province Abbreviation Postal Code beginning Country Code
    Alberta AB T XA
    British Columbia BC V XB
    Manitoba MB R XM
    New Brunswick NB E XN
    Newfoundland and Labrador NL A XL
    Northwest Territories NT X XT
    Nova Scotia NS B XS
    Nunavut NU X XV
    Ontario ON K, L, M, N, or P XO
    Prince Edward Island PE C XP
    Quebec QC G, H, or I XQ
    Saskatchewan SK S XW
    Yukon YT Y XY
  2. The rest of the foreign address is edited using procedures in IRM 3.11.16.5.5, Entity Perfection – Foreign Address (OSPC).

3.11.16.6  (01-01-2013)
Tax Period

  1. This section addresses the editing of the period for which the tax return is being filed.

3.11.16.6.1  (01-01-2015)
Tax Period - General

  1. All returns must have a tax period.

  2. Edit the tax period to the right of the form title in YYMM format.

    If... Then...
    The return is for the current processing calendar year (e.g., 201412), Do not edit the tax period.
    The return is for a prior year, Edit the tax period.
    The taxpayer has notated a tax period other than the preprinted year on the return, Edit the tax period based on the taxpayers indication, per paragraph (3).
    The tax period is missing, incomplete, or illegible,
    1. Review the return or attachments for the correct period.

    2. If found, edit the tax period to the right of the form title in YYMM format.

    3. If unable to determine the tax period after researching, process the return for the year currently being processed.


  3. A tax period should end on the last day of a month. (Ignore a minor discrepancy such as October 30 instead of October 31.) The exceptions are a 52/53 week filer, and final and/or short period returns. The table below identifies examples of tax periods.

    Tax Period Ends Tax Period
    Oct. 3, 2014 (52-53 week document) 1409
    Oct. 3, 2014 (Final short period return) 1410
    Oct. 25, 2014 (52-53 week document) 1410
    Oct. 25, 2014 (Final short period return) 1410
    Nov. 30, 2014 1411
    Dec. 31, 2014 1412 (No editing required)
    Feb. 28, 2015 1502
  4. Tax periods reported under the 52-53 week rule may end not more than 6 days before, and not more than 3 days after, the end of a month. In the edit format, use the numeric designation of the month, the last day of which is closest to the actual ending date.

    If... Then...
    The tax period ending date is not more than 3 days after the beginning of the month, Edit the previous month.
    (e.g., October 3, use the numeric designation for September, YY09.)
    The tax ending date is not more than 6 days before the end of the month, Edit the month shown on the return,
    (e.g., October 25, use the numeric designation for October, YY10.)


  5. If the tax period is for more than 12 months or 53 weeks, correspond.

  6. A "Final" short period return ends on the date the taxpayer went out of business. This may be any day of the month. Use the numeric designation of the calendar month in which it ends. If the taxpayer has not indicated in which month the business ended, edit the tax period to be one month prior to the received date.

  7. On a "Final" return if the tax periods month and year is equal to or later than the received dates month and year (future return), edit the tax period to be one month prior to the received date. See Figure 3.11.16-4.

    Note:

    If a prepaid credit* is claimed on a short period "Final" return, see IRM 3.11.16.6.8, Short Period Returns – With Prepaid Credits.
    *(Form 1120, Page 3, Schedule J, Line 12, 13 or 16 (2010 and prior revision Form 1120, Page 1, Line 32a, 32b, or 32e) or applicable line on other Form 1120 series.)

    Figure 3.11.16-4
    This image is too large to be displayed in the current screen. Please click the link to view the image.
  8. On a "Final" return, if the received date is after the short period due date but on or before the regular full tax period due date ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , edit CCCs "R" and "F" .

    Note:

    Also edit CCC "D" if the return is a Balance Due.

  9. The separate short period return of a subsidiary which became affiliated with a "consolidated" group may end on the day preceding such affiliation. As a practical matter, do not question the ending date on any change-of-accounting period return.

  10. Check all tax periods for the Statute of Limitation (2 years and 9 months from the normal due date of the return). Refer to IRM 3.11.16.2.7, Statute Returns.

3.11.16.6.2  (01-01-2012)
Early Filed Returns – Full Year and Short Period

  1. Never send an early filed return back to the taxpayer.

  2. If the month of the tax period is the same or after the month of the received date, determine how early the return has been filed:

    If... Then...
    The received date and the tax period ending (TPE) are the same month (e.g., the received date and the TPE are both April), or
    The received date is prior to the TPE by four months or less (e.g., the received date is April but the TPE is May, June, or July,
    1. Edit Action Code "480" for Form 1120, Form 1120-C, Form 1120-F, Form 1120-H, Form 1120-L, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC. (Early Filed - Suspense).

    2. All other returns edit CCC "U" and attach Form 4227. "Edit Early Filed - Suspense" in the "Other Activity" box.

    3. Leave return in batch.

    The received date is prior to the TPE by more than four months (e.g., the received date is April but the TPE is August or later),
    1. Edit Action Code "211" or "215" (International Correspondence) for Form 1120, Form 1120-C, Form 1120-F, Form 1120-H, Form 1120-L, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC.

    2. Edit CCC "U" for Form 1120-FSC, Form 1120-ND, and Form 1120-SF.

    3. Attach an approved Correspondence Action Sheet to request confirmation of the TPE.

    4. Completely edit the return. Edit the future tax period indicated by the taxpayer.

    Note:

    Action Codes are only applicable to Form 1120, Form 1120-C, Form 1120-F, Form 1120-H, Form 1120-L, Form 1120-PC, Form 1120-REIT, and Form 1120-RIC. Use CCC "U" for other returns in the 1120 series.


3.11.16.6.3  (01-01-2015)
Short Period – Editing Proof of Entitlement

  1. A Short Period Return is one which covers a period of less than 12 months or 52–53 weeks.

    • If the Short Period Return is marked "Final" , see IRM 3.11.16.6.1, Tax Period - General.

    • If the Short Period Return is marked "initial" , "first return" , "new corporation" , etc. or meets any of the identifying conditions for "Initial Return Code" see IRM 3.11.16.8.3, Initial Return Code.

    • Process all other Short Period Returns as a "Change of Accounting Period" . In such cases, proof of entitlement to the change is required.

      Exception:

      Proof of entitlement is not required for Form 1120-H. For editing Form 1120-H short period returns, see IRM 3.11.16.27.4 (2), Tax Period.

  2. Use the table below to identify and edit proof of entitlement.

    Note:

    Research of IDRS using Command Code BMFOLE may be needed for the following chart.

    Proof of Entitlement
    If... And... Then...
    A statement the corporation is changing the tax period under:
    1. Headquarters "Grant Letter" .

    2. Revenue Procedure 2006–45 or 2006–46.

    Command Code BMFOLE shows a Transaction Code (TC) 053 or TC 054
    (This is an indication that the Form 1128 or National Office "Grant Letter" has been approved.)
    Continue processing

    Note:

    No CCC “Y” is needed.

    Note:

    Audit Code "3" is also applicable for Form 1120-F, Form 1120-FSC, and Form 1120-SF.
    For Form 1120-F see, IRM 3.11.16.25.12.2Audit Codes,
    For Form 1120-FSC see, IRM 3.11.16.26.16.1, Audit Codes, and
    For Form 1120-SF see, IRM 3.11.16.33.8.1Audit Codes.

    Command Code BMFOLE shows a Transaction Code (TC) 059
    (This is an indication that the Form 1128 or National Office "Grant Letter" has not been approved.)
    The return is unprocessable. Follow the instructions in IRM 3.11.16.6.5, Short Period Returns - Editing a Disapproved Application (Form 1128)
    A statement the corporation is:
    1. Coming out of consolidation; or

    2. (Parent) is no longer a consolidated group; or

    3. Changing the tax period to "get in step with" Parent (may note "affiliation with a consolidated group" ); or

    4. Filing under "Section 338 Election" or attached Form 8023 and tax period begins after the acquisition date.

      Do all of the following:
    1. Edit CCC "R" if filed before the specially privileged (full tax year of parent return) due date; and

    2. Edit CCC "Y" .


    See Figure 3.11.16-5.
    Notation referring to:
    1. Section 898(c)(1)(A); or

    2. Election Change in Taxable Year under Section 898(c)(2); or

    3. "Section 1398 election" (Bankruptcy Petition has been filed), or

    4. "Second Short Year after Section 1398 Election"

      Edit CCC "Y" . Do not correspond.
    Form 1128 attached Command Code BMFOLE shows a Transaction Code (TC) 053 or TC 054
    (This is an indication that the Form 1128 has been approved.)
    Continue processing

    Note:

    No CCC “Y” is needed.

    Command Code BMFOLE shows a Transaction Code (TC) 059
    (This is an indication that the Form 1128 has not been approved.) or there are no transaction codes.
    The return is unprocessable. Follow the instructions in IRM 3.11.16.6.5, Short Period Returns - Editing a Disapproved Application (Form 1128)
    Notation on Form 1120 or 1120-F indicates: "Section 444 Election Terminated" .   Edit CCC "Y" if the tax return is for a Personal Service Corporation
    (e.g., Form 1120, Page 1, Box A, Item 3 is marked or Schedule J, Page 3, Line 2 box is marked; or
    Form 1120-F, Page 2, Question O is marked or Schedule J, Page 4, Line 2 box is marked).

    Figure 3.11.16-5

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

3.11.16.6.3.1  (01-01-2015)
Short Period Returns – Regulation 1.1502–76

  1. Regulation section 1.1502-76 applies to returns filed by a corporation which becomes a member of a consolidated group during the tax year. These returns may be identified by a statement referencing "Changing the tax period to get in step with parent" or "Affiliation with a Consolidated Group" .

  2. The short period return has the same due date as the consolidated return of the parent. This is sometimes referenced on the return as a "specially privileged" due date. It is important to recognize these returns and follow the procedures outlined in this section in order to suppress the penalties for late filing and late payment of tax that would otherwise be assessed.

  3. When processing a short period return under Regulation 1.1502-76, it is necessary to do all of the following:

    1. Edit Computer Condition Codes "R" if filed before the specially privileged (full tax year of parent return) due date.

    2. Edit Computer Condition Code "Y"

3.11.16.6.4  (01-01-2015)
Short Period Returns – Missing Proof of Entitlement

  1. If proof of entitlement is missing or the taxpayer states on the return or an attachment that the corporation has filed an application but has not received a response, research IDRS using Command Code BMFOLE for approval or disapproval information and proceed as follows:

    If... Then...
    BMFOLE shows a Transaction Code 053, 054, or 055,
    (This is an indication that the Form 1128 or Form 8716 has been approved.)
    Continue processing

    Note:

    No CCC “Y” is needed.

    BMFOLE shows a Transaction Code 058 or 059,
    (This is an indication that the Form 1128 or Form 8716 has not been approved.)
    The return is unprocessable.
    See IRM 3.11.16.6.5, Short Period Returns – Editing a Disapproved Application (Form 1128).
    BMFOLE does not show a Transaction Code 053, 054, 055, 058, or 059, Correspond using Letter 319.


3.11.16.6.5  (01-01-2009)
Short Period Returns – Editing a Disapproved Application (Form 1128)

  1. If Form 1128 is disapproved, the return is considered unprocessable:

    1. Edit Action Code "211" or "215" (International Correspondence) or CCC "U" and correspond.

    2. In the correspondence, instruct the taxpayer to file a return for the next regular full period due. Request a disposition of any remittance paid with the return or other credits which have posted to the short period module.


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