Refer taxpayers to the Taxpayer Advocate Service (TAS) (see IRM Part 13, Taxpayer Advocate Service) when the contact meets TAS criteria (see TAS Case Criteria, IRM 13.1.7) 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 Same-Day Resolution by Operations, IRM 13.1.7.4. 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.

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

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

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

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

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.

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.

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.

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

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 Potential Frivolous Arguments for Examination Review, Exhibit 3.11.16-15.

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

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.

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.

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-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.

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

Assign Action Codes in the following priority:

Attach Form 4227 when more than one Action Code is needed. Edit the second Action Code on Form 4227.

If more than one Action Code of the same priority is required (i.e., "440" and " 480" ), edit the Action Code with the shortest suspense period and attach Form 4227 to indicate the second unprocessable condition. See Figure 3.11.16-1.

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Action Codes

Edit the following Action Codes when a return cannot be perfected from the information present:

Continue perfecting the return after editing the Action Codes.

Valid Action Codes are listed below:

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

(CSPC) If the tax return is an 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.

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

Action to secure perfection:

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

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

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

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.

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

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.

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

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

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.

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.

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.

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

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

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

An amended return may be identified by checking the "Amended" box and/or by such words as "SUPPLEMENTAL" , "DUPLICATE" , "ADDITIONAL" , or any other positive indication that the taxpayer has filed previously. Filing a "Copy" of a return is not sufficient reason to label a return "Amended " unless accompanied by a positive statement from the taxpayer.

Examine the return for attachments. Do not separate any related attachments from the return that the taxpayer has submitted to explain the reason for the Amended return; this information will be used by Accounts Management. Detach any unrelated documents and route them to the appropriate function using Form 4227. Edit an Action Trail on the return.

If there is an indication the return is amended and:

The following data must be edited on all amended returns:

IRC Section 847(2) requires certain insurance companies to make special estimated tax payments in the amount equal to the tax benefit derived from the additional deduction permitted under IRC Section 847.

On Form 1120 the special estimated tax payments may be identified by a notation in the margin near Line 32b, stating "Form 8816" and a corresponding entry for the amount of the payment.

Special estimated tax payments are also reported on a Consolidated 1120, Form 1120-L, and Form 1120-PC. The payment is found on the following lines:

If special estimated tax payments are claimed, enter Action Code "342" or CCC "U" on the return. Also enter CCC "8" . Photocopy Page 1 of the return showing the payment and Form 8816, if attached. For a Consolidated Form 1120, also photocopy the subsidiary return or attachment on which the payment is claimed.

Forward the photocopies to Accounting, or the function designated by the Submission Processing Center and continue processing the return.

Attachment of Form 8816, Special Loss Discount Account and Special Estimated Tax Payments for Insurance Companies, is an indication of IRC Section 847 deduction.

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

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:

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

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:

If a taxpayer has 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), the Form 1120S must be converted to Form 1120 in order to be processed.

Document Perfection will:

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

A signature and jurat are required on all returns except the following:

Do not correspond for a signature on "CIS" tax returns that have Form 13596 attached. For processing instructions, see Correspondence Imaging System (CIS) Returns, IRM 3.11.16.2.4.1 .

If a signature is missing, correspond:

If the jurat is altered or stricken (crossed out), see Frivolous Arguments, IRM 3.11.16.1.4.

Accept a "signature declaration " (a signature with jurat obtained through IRS correspondence) if attached to the tax return.

Since tax examiners are not expected to be handwriting experts, Section 301.6064-1 of Regulations allows the Service to presume that the signature on the tax return, statement or other document is the true signature of the person who actually signed the document.

Only one correspondence attempt is required for a signature.

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.

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.

Secured Delinquent Returns are returns secured by compliance personnel. If information is missing from one of these returns, do not send the return back to the taxpayer; correspond using an approved Correspondence Action Sheet.

If Form 1120 does not require Balance Sheet inspection (see Schedule L, Balance Sheet, IRM 3.11.16.10.22 instructions), perform the least time-consuming edit on the income section and the deductions section through Total Deductions.

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

Form 3892, Lines 1 through 18, and Lines 25 through 36 are entered in dollars only.

Edit negative entries as follows:

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

The EIN is located in the upper right area of the form ("Employer Identification Number" box) or the top left corner of the preprinted label.

Determine the EIN as follows:

The Name Control consists of four characters or less.

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

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))

Edit the Name Control as follows:

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Entity Perfection - Name Control, Non-preaddressed Return

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

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

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Entity Perfection - In-Care-Of Name

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

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" ).

The procedures for perfection of addresses for preaddressed returns and non-preaddressed returns indicating an address change are as follows:

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Entity Perfection - Domestic Address

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Entity Perfection - Domestic Address

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Entity Perfection - Domestic Address

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 (i.e., 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:

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

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

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.

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.

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

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.

All returns must have a Tax Period.

Edit the Tax Period to the right of the form title in YYMM format.

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 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 the Tax Period is for more than 12 months or 53 weeks, correspond.

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, use the numeric designation of the month the return was received.

On a "Final" return if the Tax Period's month and year is equal to or later than the Received Date's month and year (future return), edit the Tax Period to be one month prior to the Received Date. See Figure 3.11.16-9.

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Tax Period - General

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" .

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.

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

Never send an Early Filed return back to the taxpayer.

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:

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

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

Figure 3.11.16-10

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Short Period – Editing Proof of Entitlement

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 Form 1128 is disapproved, the return is considered unprocessable:

When a Form 1128 with no indication of approval or disapproval is attached and no proof of entitlement is present, research IDRS using Command Code BMFOLE for approval or disapproval and proceed as follows:

A Form 1128 with neither approval or disapproval, discontinue processing Form 1120. Route Form 1120 and Form 1128 to Entity as directed in the paragraphs below.

Figure 3.11.16-11

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Short Period Returns – Editing Form 1128 With No Indication of Approval or Disapproval

If the taxpayer provides acceptable proof, follow instructions in Short Period – Editing Proof of Entitlement, IRM 3.11.16.6.3.

If the taxpayer fails to reply, or does not provide Tax Period approval, enter CCC "Y" and "3" .

Route to Accounting for possible adjustment action any return meeting both conditions below.

Take the following action when routing these returns to Accounting. See Figure 3.11.16-12.

Figure 3.11.16-12

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Short Period Returns – With Prepaid Credits

Computer Condition Codes (CCC) are used to identify a special condition or computation for the computer. Computer Condition Codes post to the Master File.

Computer Condition Codes are edited in the center of Lines 1 and 2 of the tax return.