3.11.106  Estate and Gift Tax Returns

Manual Transmittal

November 15, 2013

Purpose

(1) This transmits revised IRM 3.11.106, Returns and Documents Analysis - Estate and Gift Tax Returns.

Material Changes

(1) IRM 3.11.106.1.7, Added instruction for Correspondence Imaging System (CIS) Returns in case one is erroneously received in a batch of work per campus request.

(2) IRM 3.11.106.1.8, Added Form 706, Schedule PC to Forms/Routing Guide.

(3) IRM 3.11.106.2.3.7, Added an Exception for new Schedule PC.

(4) IRM 3.11.106.2.4.1(11), Changed Action Code 630 to 640 for BMF consistency.

(5) IRM 3.11.106.5.10.1(5), New ~ added new paragraph (5) and table for BMF consistency.

(6) IRM 3.11.106.8.1(1)a, Added Note to allow revenue officer's electronic signature (Maureen Rattie (SE:S:ECS:ECPG:TOC) advised the BMF team that the Integrated Collection System used by the revenue officers will begin printing the 6020b returns with the user signature on July 2, 2013. The returns will begin to be submitted for processing approximately 30 days later. Maureen Rattie also advised the BMF team that counsel was notified and they agree with the use of the electronic signatures).

(7) IRM 3.11.106.10(2), New. In the past, Form 706 was only coded and edited on Page 1 of the return. Beginning in tax year 2013 (PY2014), Page 4, Part 6, Section C of the return will also need to be coded and edited. Changes were made to the DSUE calculation in a circulation of Form 706 received on September 23, 2013. As a result of the increase in the tax rates under ATRA, dividing the total gift tax paid or payable by 40% caused an error in the DSUE calculation (due to the increase in the tax rate). Additional changes were also incorporated into the instructions, specifically the Line 7 worksheet which is submitted with the Form 706 (the worksheet is NOT edited or transcribed). Line 2 was changed to "Reserved" , so Code and Edit should enter a zero on Line 2 of Form 706, Page 4, Part 6, Section C. Due to budget constraints, programming was not able to be completed so this is the work around. ISRP is going to be instructed to field release through the line (so "0" will populate on the ERS screens. ERS is instructed to make sure the line shows zero.

(8) IRM 3.11.106.10.3, Added 2013 credit amounts.

(9) IRM 3.11.106.10.3.1(3), Updated table with 2013 dates.

(10) IRM 3.11.106.10.7, Added 2013 credit amounts.

(11) IRM 3.11.106.10.7.1(18), Changed Line 9 to Line 9d as appropriate for 2012 revision of Form 706. Also updated the Note.

(12) IRM 3.11.106.10.7.2, Added 2013 credit amounts.

(13) IRM 3.11.106.10.11, New. Added new coding instructions for Form 706, Page 4, Part 6, Section C, Line 2.

(14) IRM 3.11.106.11.8, Added 2013 credit amounts.

(15) IRM 3.11.106.12.7, Added 2013 credit amounts.

(16) IRM 3.11.106.13.7, Added 2013 credit amounts.

(17) IRM 3.11.106.15(1), Added reason why TEs are instructed to staple Post-It (sticky) notes to pages 1 through 4 to be consistent with Form 706 instruction.

(18) IRM 3.11.106.15.1, Updated dates and amounts.

(19) IRM 3.11.106.15.6.1, Updated dates and added Unnumbered (remittance only) instructions to table.

(20) IRM 3.11.106.15.11(13)a, Updated table to reflect recalculated rates for 2013.

(21) IRM 3.11.106.15.12.1(1) and (2), Updated amounts and enhanced verbiage in If box.

(22) IRM 3.11.106.15.12.3(4), Updated amount in 1st Then box and added verbiage for clarification in 2nd If box.

(23) IRM 3.11.106.15.12.4, Updated dates and amounts.

(24) IRM 3.11.106.20.3(2), Updated dates.

(25) Exhibit 3.11.106-27, Added 2013 credit amounts.

(26) Exhibit 3.11.106-29, Changed title of exhibit from 2010 to 2009 as there was no 2010 form revision.

(27) Removed the word "Section" after Internal Revenue Code (IRC) throughout the IRM per IMD coordinator feedback and BMF consistency.

(28) Revised text instructions with the standards recommended by the BMF Consistency Task Team.

(29) Made various editorial changes throughout the IRM including the updating of tax years and amounts.

(30) Updated IRM references throughout the IRM.

(31) Revised figures and exhibits.

Effect on Other Documents

IRM 3.11.106, Returns and Documents - Estate and Gift Tax Returns dated November 16, 2012, is superseded. The following IRM Procedural Updates (IPUs) are incorporated in this revised IRM: 13U0302, 13U0594, and 13U0754.

Audience

Wage and Investment (W&I), Submission Processing - Document Perfection Operation, Code and Edit

Effective Date

(01-01-2014)

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

3.11.106.1  (01-01-2014)
General Information

  1. Information of a general nature was removed from IRM 3.11.106. IRM 3.0.273, Administrative Reference Guide, contains procedures previously found in this IRM.

  2. IRM 3.0.273 serves as a supplement to the Part 3 IRMs. Criteria for items contained in IRM 3.0.273 are:

    1. Not specific to one form (general in nature); information used primarily during initial training.

    2. Once learned, easily retained.

    3. Seldom requiring updating.

  3. The purpose of IRM 3.0.273 is to ensure consistency and accuracy of the basic information.

3.11.106.1.1  (01-01-2014)
Purpose

  1. This section contains instructions for coding and editing Estate and Gift Tax (Form 706 and Form 709 series) returns.

  2. This IRM cannot address every possibility that may arise while correcting returns or documents. Taxpayer intent must be taken into consideration. In some cases, it may be necessary to refer the issue to your Subject Matter Expert (SME), lead and/or manager to determine the proper corrective action.

3.11.106.1.2  (01-01-2014)
Scope

  1. This section contains instructions for coding and editing Estate and Gift Tax Returns (Form 706, Form 706-NA, Form 706-A, Form 706-D, Form 709, Form 706-GS(D), Form 706-GS(D–1), Form 706-GS(T) and Form 706-QDT). Tax examiners will code and edit returns. It is not the intent of these instructions for tax examiners to audit the returns.

  2. General instructions eliminate repetition of the same instructions for each return. If the general instructions and the specific instructions conflict, follow the specific instructions.

3.11.106.1.3  (01-01-2014)
♦Business Master File (BMF) Consistency♦

  1. The purpose of the BMF Consistency initiative is to achieve consistency in the BMF Code and Edit processing IRMs.

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

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

  4. The text in normal print within a consistency section signifies the common processes to be used for all BMF returns. The text in bold print is form-specific and applies to this IRM only.

3.11.106.1.4  (01-01-2014)
♦IRS Employee Contacts - RRA98, Section 3705(a)♦

  1. The Restructuring and Reform Act of 1998 (RRA98), 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, in the field, national, and regional offices, 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 their badge identification (ID Card) number.

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

    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 include their title (e.g., Mr., Mrs., Ms., Miss), their last name, and their IDRS (Integrated Data Retrieval System), letter system, or ID Card (badge) 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 ID Card (badge) number must be used. Toll-Free employees may also provide their location for identification purposes. E-mail and facsimiles 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 insists on speaking 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 and 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 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) his or her badge ID Card number on the first contact.

3.11.106.1.5  (01-01-2014)
♦Taxpayer Advocate Service (TAS)♦

  1. The Taxpayer Advocate Service (TAS) is an independent organization within the IRS whose employees assist taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working as it should.

  2. Refer taxpayers to TAS (see IRM Part 13, Taxpayer Advocate Service) when the contact meets TAS criteria (see IRM 13.1.7, 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 it to TAS in accordance with your local procedures.

    Note:

    If the W&I Submission Processing Liaison for TAS issues walks a return through Code and Edit; then, in addition to normal editing: (1) Edit CCC "O" to freeze the refund and (2) Edit CCC "Y" to route the return to ERS.

  3. The following subsection provides information for TAS cases.

3.11.106.1.5.1  (01-01-2014)
♦Taxpayer Advocate Service (TAS) Service Level Agreements (SLAs)♦

  1. The National Taxpayer Advocate 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) Division, Criminal Investigation (CI), Appeals and Large Business and International (LB&I, formerly LMSB) Division, 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).

3.11.106.1.6  (01-01-2014)
National Disaster/Emergency Relief Operating Procedures

  1. See IRM 25.16, Disaster Assistance and Emergency Relief, for specific conditions that qualify a taxpayer for relief.

    If Then
    A taxable return qualifies and is received within the timeframe prescribed.

    Note:

    No penalty or interest is assessed on non-taxable returns, therefore, no action needs to be taken.

    1. Prepare Form 4227, Intra-SC Reject or Routing Slip, to alert Cincinnati Compliance Services, Estate and Gift Tax Campus Operation that Computer Condition Code (CCC) "R" determination is requested.
    2. Route copy of Page 1 and letter requesting CCC "R" to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation to determine use of CCC "R" to suppress failure to file penalty.
    A qualifying return is "R" coded. Change the IRS received date and edit to reflect timely filing.
    Form 706, United States Estate (and Generation-Skipping Transfer) Tax Return, is annotated at the top of Page 1 of the return "Section 2201" or has any indications the return is the result of legislation impacting victims of terrorist attacks (April 19, 1995 - Oklahoma City bombing; September 11, 2001 - World Trade Center bombing; or references to deaths resulting from anthrax that occurred on or after September 11, 2001, and before January 1, 2002) 1. Edit CCC "B" .
    2. A special tax rate schedule will apply to victims of terrorist attacks. Error Resolution System (ERS)/Rejects will verify the appropriate tax computation.
    3. All other credits against the estate tax (including unified/applicable credit) apply to these returns.

3.11.106.1.7  (01-01-2014)
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 cases from those images.

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

  3. Estate and Gift returns should not be going through this inventory system, but if you have a CIS return in your batch of work, prepare Form 4227, Intra-SC Reject or Routing Slip, and send to Compliance Services, Estate and Gift Tax Campus Operation.

3.11.106.1.8  (01-01-2014)
Forms/Routing Guide

  1. The following table contains instructions for forms used with Estate and Gift Tax Returns:

    Note:

    Attachment must contain name, address, Social Security Number (SSN) and IRS received date. Enter, if missing. Do not detach any unsigned returns or attachments from the original return.

    FORMS TITLE DETACH ACTION TAKEN
    56 Notice Concerning Fiduciary Relationship Yes Prepare Form 4227, Intra-SC Reject or Routing Slip, and Letter of Appointment or pertinent information to Entity.
    637 Application for Registration (For Certain Excise Tax Activities) Yes Route to Stop 5701G, ATTN: Gene Neal
    706 United States Estate (and Generation-Skipping Transfer) Tax Return Yes If original return, or copy with original signature, process as directed (See IRM 3.11.106.10, Processing Form 706).
    706-A United States Additional Estate Tax Return Yes If original return, or copy with original signature, process as directed (See IRM 3.11.106.12, Processing Form 706-A).
    706-CE Certificate of Payment of Foreign Death Tax No If filed separately, route to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.
    706-D United States Additional Estate Tax Return Under Code Section 2057 Yes If original return, or copy with original signature, process as directed (See IRM 3.11.106.13, Processing Form 706-D).
    706-GS(D) Generation-Skipping Transfer Tax Return For Distribution Yes If original return, or copy with original signature, process as directed (See IRM 3.11.106.17, Processing Form 706-GS(D)).
    706-GS(D-1) Notification of Distribution From a Generation-Skipping Trust Yes If original return, or copy with original signature, process as directed (See IRM 3.11.106.18, Processing Form 706-GS(D-1)). (Forward all separate D-1s to Files.)
    706-GS(T) Generation-Skipping Transfer Tax Return For Terminations Yes If original return, or copy with original signature, process as directed (See IRM 3.11.106.19, Processing Form 706-GS(T)).
    706-NA United States Estate (and Generation-Skipping Transfer) Tax Return Yes If original return, or copy with original signature, process as directed (See IRM 3.11.106.11, Processing Form 706-NA).
    706-QDT U.S. Estate Tax Return for Qualified Domestic Trusts   See IRM 3.11.106.20, Processing Form 706-QDT.
    706 Sch PC Protective Claim for Refund No Make a copy of Sch PC, prepare Form 4227, Intra-SC Reject or Routing Slip, and send to Compliance Services, Estate and Gift Tax Campus Operation. Notate on original that a copy has been sent.
    706 Sch S Increased Estate Tax on Excess Retirement Accumulations No  
    709 United States Gift (and Generation-Skipping Transfer) Tax Return Yes If original return, or copy with original signature, process as directed (See IRM 3.11.106.15, Processing Form 709).
    709-A United States Short Form Gift Tax Return Yes If original return, or copy with original signature, process as directed (See IRM 3.11.106.16, Processing Form 709-A). If copy, leave attached as supporting document.
    712 Life Insurance Statement No Leave attached as supporting document.
    843 Claim for Refund and Request for Abatement Yes
    Send Form 843 to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation on Form 4227, Intra-SC Reject or Routing Slip, (Form 706 and Form 709 series returns).
    1127 Application for Extension of Time for Payment of Tax Due to Undue Hardship Yes Prepare Form 4227, Intra-SC Reject or Routing Slip, and send to Compliance Services, Estate and Gift Tax Campus Operation.
    1310 Statement of Person Claiming Refund Due a Deceased Taxpayer Yes Prepare Form 4227, Intra-SC Reject or Routing Slip, and route to Accounts Management.
    1332 Block and Selection Record No  
    2350 Application for Extension of Time To File U.S. Income Tax Return No  
    2848 Power of Attorney and Declaration of Representative Yes 1. Edit taxpayer name and SSN on Form 2848, if missing.
    2. Edit received date on Form 2848.
    3. Domestic address - Route to Memphis CAF (Centralized Authorization File). Foreign (International) address - Route to Philadelphia CAF
    4. Edit action trail on tax return. See IRM 3.11.106.3, Tax Information Authorization (TIA) - Form 706 Only.
    3198 Special Handling Notice for Examination Case Processing No  
    3233 Report of Gift Tax Examination No  
    3465 Adjustment Request No  
    3696 Correspondence Action Sheet No  
    3696A IDRS Correspondence Action Sheet No  
    3753 Manual Refund Posting Voucher No See IRM 3.11.106.5.7, CCC "O" -Module Freeze.
    3893 Re-entry Document Control No Stays on the front of return
    4349 Computation of Estate Tax Due With Return and Annual Installment Yes See IRM 3.11.106.10.8.2, Internal Revenue Code (IRC) Section 6166.
    4422 Application for Certificate Discharging Property Subject to Estate Tax Lien No 1. If attached to Form 706, prepare Form 4227, Intra-SC Reject or Routing Slip; attach copies of Form 4422 and Pages 1, 2, and 3 of Form 706; and route to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.
    2. If attached to Form 709, prepare Form 4227; attach copies of Form 4422 and Pages 1 and 2 of Form 709; and route to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.
    4768 Application for Extension of Time To File a Return and/or Pay U.S. Estate (and Generation-Skipping Transfer) Taxes Yes
    (Balance Due Return with Original Form 4768 only)
    Route to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.
    4810 Request for Prompt Assessment Under Internal Revenue Code Section 6501(d) Yes (Form 709 series returns only) Send original Form 4810 and copy of Page 1, Form 709, on Form 4227, Intra-SC Reject or Routing Slip, to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.
    4868 Application for Automatic Extension of Time To File U.S. Individual Income Tax Return No  
    5347 Examination Multiple Request Master File Yes Route on Form 4227, Intra-SC Reject or Routing Slip, to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.
    5495 Request for Discharge from Personal Liability Under Internal Revenue Code Section 2204 or 6905 Yes Route on Form 4227 to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.
    5792 Request for IDRS Generated Refund (IGR) No See IRM 3.11.106.5.7, CCC "O" -Module Freeze.
    6459 Return Preparers Checksheet (IRC Section 6694 and IRC Section 6695) No  
    6800 Request for Missing Information or Papers To Complete Your Tax Return or Form 8038-CP No  
    7004 Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns No  
    6882 IDRS/Master File Information Request Yes Route on Form 4227, Intra-SC Reject or Routing Slip, to Customer Service.
    8821 Tax Information Authorization (TIA) Yes 1. Edit taxpayer name and SSN on Form 8821, if missing.
    2. Edit received date on Form 8821.
    3. Domestic address - Route to Memphis CAF. Foreign (International) address - Route to Philadelphia CAF.
    4. Edit action trail on tax return.
    8833 Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b) No Edit CCC "L" . See IRM 3.11.106.5.6.
    8886 Reportable Transaction Disclosure Statement No  
    8892 Application for Automatic Extension of Time To File Form 709 and/or Payment of Gift/Generation-Skipping Transfer Tax No  
    8939 Allocation of Increase in Basis for Property Acquired from a Decedent Yes Route on Form 4227, Intra-SC Reject or Routing Slip, to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation.
    9465 Installment Agreement Request Yes Route to Collection, using Form 4227, Intra-SC Reject or Routing Slip.
    13133 Expedite Processing Cycle No Used to flag special returns for processing on an expedite basis (replaces 6469, Expedite Processing Request). See IRM 3.11.106.2.5.3, Examination Prepared and IRM 3.11.106.2.5.4, Examination Secured.
    Sch R-1 Generation- Skipping Transfer Tax (Direct Skips From a Trust Payment Voucher) Yes (If Schedule R-1 has money amounts other than zero on Page 1, Lines 1 through 6; and there is an original signature.) Rebatch as Program 75700 to Accounting Non-Master File (NMF).
    Forms 1065 (Original) U.S. Return of Partnership Income Yes Process as directed per instructions in IRM 3.11.15.
    Copies of Forms 1065 U.S. Return of Partnership Income No Leave attached to Form 706 and Form 709 series returns.
    Forms 1120 (Original) U.S. Corporation Income Tax Return Yes Process as directed per instructions in IRM 3.11.16.
    Copies of Forms 1120 U.S. Corporation Income Tax Return No Leave attached to Form 706 and Form 709 series returns.
    Forms 1120S (Original) U.S. Income Tax Return for an S Corporation Yes Process as directed per code and edit instructions contained in 3.11.16.
    Copies of Forms 1120S (copies) U.S. Income Tax Return for an S Corporation No Leave attached to Form 706 and Form 709 series returns.
    Other Business Returns (Originals) (Various return types and titles) Yes (if the return has an original signature) Process as directed per code and edit instructions used for processing of that form type.
    Copies of Other Business Returns (various return types and titles) No Leave attached to Form 706 and Form 709 series returns.
    Request for Acknowledgment   No No action required.

    Reminder:

    Do not detach any unsigned returns or attachments from the original return.

3.11.106.2  (01-01-2014)
Document Control Instructions

  1. The following instructions pertain to Document Control.

3.11.106.2.1  (01-01-2014)
Blocking

  1. Sort Estate tax returns (Form 706 and 706-NA) into blocks of 15 or less.

  2. Sort Gift tax returns (Form 709), and Form 706-GS(D) and Form 706-GS(T) into blocks of 50 or less. See IRM 3.10.72, Campus Mail and Work Control - Extracting, Sorting, and Numbering.

  3. Separate accounting controls are established for each block created.

3.11.106.2.1.1  (01-01-2014)
Numbered Returns

  1. Numbered returns will be received in Document Perfection after blocking, numbering, and listing in Deposit Activity.

  2. Any returns requiring subsequent action for perfection cannot be withdrawn from the block in Document Perfection. They can be coded for later withdrawal.

3.11.106.2.1.2  (01-01-2014)
Unnumbered Returns

  1. Unnumbered returns that are blocked should be withdrawn from the batch and appropriate action taken to perfect the returns.

3.11.106.2.1.3  (01-01-2014)
Document Control

  1. A Document Locator Number (DLN) is assigned to each document processed in the Automatic Data Processing (ADP) System and is used to locate the document.

  2. Examine the documents to ensure that all documents in a block are the same type and are in DLN order. (See Figure 3.11.106-1.)

    Figure 3.11.106-1

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

    Document Locator Number

  3. The type of document is defined as a specific tax class and document code explained in Document 6209, IRS Processing Codes and Information.

3.11.106.2.1.4  (01-01-2014)
Numbered Return

  1. The following information pertains to numbered returns:

    If Then
    The document is a different type than the numbered block in which it is found Use either CCC "U" or Action Code 610, whichever is applicable.
    The numbered return is in an unnumbered batch of documents Give it to your manager for inclusion in the correct batch.

    Note:

    A re-input document may have 2 different DLNs stamped on it because of reblocking. When this occurs, determine the correct DLN from the Form 3893, Re-Entry Document Control, and line through the old DLN on the return.

    The first eleven digits of the DLN on the documents in a block do not agree with the DLN stamped on Form 1332, Block and Selection Record, and on the face of the Block Jacket 1. Bring any difference to the attention of your manager.
    2. Check only the DLN of the first document in the block.
    3. Circle the number on the Form 1332 which represents the number of documents in the block.

3.11.106.2.1.5  (01-01-2014)
Block Control Document

  1. A block of documents must be controlled by a Block Control Document.

  2. The Block Control Documents are as follows:

    • Form 1332, Block and Selection Record, for no-remittance documents.

      Note:

      Generally, no-remittance returns will be processed through Code and Edit unnumbered. There should be no occasion for a block of no-remittance returns to be examined under Form 1332 control.

    • Form 3893, Re-Entry Document Control, for re-entry of document(s) under original DLN.

    If Then
    A block does not have a control document Send back to the originating unit, routed through Accounting.
    More than one document is being re-entered from the "same" original block 1. Attach Form 3893, Re-Entry Document Control, to the first document in the re-entry block.
    2. If more than one document is in the block, enter the number of documents in the document count box of Form 3893.
    3. Leave Form 3893 attached to the front of the return.

3.11.106.2.2  (01-01-2014)
Attachments to Documents

  1. The following information pertains to attachments to documents.

3.11.106.2.2.1  (01-01-2014)
Examination of Attachments

  1. The following information pertains to examination of documents:

    Note:

    Attachment must contain name, address, SSN and IRS received date. Enter, if missing.

    Reminder:

    Do not detach any unsigned returns or attachments from the original return.

    If Then
    There are attachments 1. Examine all attachments to the returns being processed and take proper action.
    2. Remove attachments only if specific instructions require it.
    3. See IRM 3.11.106.1.8, Forms/Routing Guide.

3.11.106.2.2.2  (01-01-2014)
Unrelated Attachments

  1. The following information pertains to unrelated attachments:

    Note:

    Attachment must contain name, address, SSN and IRS received date. Enter, if missing.

    If Then
    There is a request for adjustment of another document Remove the attachment requesting adjustment and forward via Form 4227, Intra-SC Reject or Routing Slip, to Accounts Management for subsequent action.
    Other unrelated documents (i.e., requests for tax forms, or letters requiring a reply) 1. Remove from the return being processed and route via Form 4227, for necessary action.
    2. Include on Form 4227 action required, name, address, SSN of the taxpayer, and IRS received date.

3.11.106.2.2.2.1  (01-01-2014)
Taxpayer Requests

  1. The following information pertains to Taxpayer requests:

    If Then
    The taxpayer writes a question or request for assistance on the return itself Photocopy the question/request and the taxpayer's Taxpayer Identification Number (TIN), name, and address. Forward this information to the appropriate area.
    Data from any removed attachment is necessary to process the return Copy the removed attachment and attach the copy to the return being processed.
    Taxpayer has requested part of the refund be applied to another account See IRM 3.11.106.5.11, CCC "X" - Return Settlement Frozen.

3.11.106.2.2.3  (01-01-2014)
Related Attachments and Required Action

  1. The following information pertains to related attachments:

    If Then
    Remittance is attached Take to your manager. See IRM 3.8.46.1, Deposit Activity - Discovered Remittance.
    An attachment indicates the taxpayer has included tax liability for more than one type of tax on a numbered or unnumbered return 1. Adjustment action is needed, therefore, prepare Form 3465, Adjustment Request; photocopy Page 1 of return, and route to Accounts Management. Leave action trail on left side of return.
    2. Edit CCC "X" on return. (See IRM 3.11.106.5.11, CCC "X" - Return Settlement Frozen.)
    3. Continue processing return.
    An attachment indicates the taxpayer has included more than one tax period on a numbered return (Form 709 series only) 1. Edit Action Code 351.
    2. Attach Form 4227 notating "Multiple Tax Periods" .
    An attachment indicates the taxpayer has included more than one tax period on an unnumbered return (Form 709 series only) Correspond using Form 3696 or other approved Correspondence Action Sheet.
    An attachment to a tax return indicates that this is the final return for which the taxpayer will be liable Enter CCC "F" on Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, only. The Date of Death must be in the same year as the gift was given.
    An attachment to a return establishes reasonable cause for delinquent filing 1. See IRM 3.11.106.5.8, CCC "R" - Reasonable Cause for Delinquency.
    2. Attach the envelope to the back of the return. It may be needed to determine the received date.
    Attachment to a return establishes reasonable cause for failure to pay 1. See IRM 3.11.106.5.3, CCC "D" - Reasonable Cause for Failure to Pay Taxes Timely.
    2. Attach the envelope to the back of the return. It may be needed to determine the received date.

3.11.106.2.3  (01-01-2014)
Unprocessable Conditions - Form 706 and Form 706-NA

  1. The following table pertains to unprocessable conditions for Form 706 and Form 706-NA, United States Estate (and Generation-Skipping Transfer) Tax Return (Estate of nonresident not a citizen of the United States):

    If Then
    Name, address, and/or SSN is illegible, incomplete or contradictory so that it is not acceptable for computer processing 1. Research IDRS.
    2. If no data found, use Form 4227, Intra-SC Reject or Routing Slip, to route to Entity.
    3. If return is numbered, edit Action Code 230.
    Taxpayer indicates on documents or attachments that the documents represent liability for more than one tax period or more than one type of tax 1. Use Action Code 211 for correspondence.
    2. See IRM 3.11.106.2.2.3, Related Attachments and Required Action.
    Tax data entries on documents are incomplete, illegible, or contradictory so that tax liability cannot be determined Edit Action Code 211 for correspondence.
    Entity cannot be perfected on amended returns with remittance 1. Research IDRS.
    2. If no data found, use Form 4227, Intra-SC Reject or Routing Slip, to route to Entity.
    3. If return is numbered, edit Action Code 320.
    Numbered returns (Form 706-NA, of taxpayers who file Form 706-NA instead of Form 706 (U.S. citizens by reason of birth, who established residence in a possession of the U.S. and died after September 2, 1958) Edit Action Code 610.

3.11.106.2.3.1  (01-01-2014)
Unprocessable Conditions - More Than One Tax Period

  1. The following table pertains to unprocessable conditions for more than one tax period:

    Note:

    Form 706 are one-time filers.

    If Then
    A remittance return and information for preparation of dummy return(s) is available Edit Action Code 351 and route to the Rejects Function to prepare a dummy return.
    Information is not available Edit Action Code 351 and correspond for information.
    An unnumbered return Correspond using Form 3696 or other approved Correspondence Action Sheet.
    Non-remittance document is unprocessable because of an illegible name or erroneous SSN Route the document to Entity Control.
    Remittance document is unprocessable because the name is illegible or the SSN is missing CCC "U" or use Action Code 320 (if name is illegible) or 351 (if SSN is missing), and route to Entity Control.
    No reply to a request for additional information on an unprocessable, incomplete or invalid return Edit "3" in the Computer Condition Code (CCC) area. This suppresses credit interest.
    The taxpayer's TIN and/or name cannot be determined from attachments or after research per local Service procedures, and the return cannot be sent back to the taxpayer for lack of name, and/or address The return is considered as an unprocessable return. The following instructions should be followed:
    1. Numbered - Edit the appropriate CCC or Action Code.
    2. Prepare a Form 4227, Intra-SC Reject or Routing Slip, indicating to the Rejects Unit to void the DLN and destroy the return in accordance with IRM 1.15.29, Records Control Schedule for Submission Processing Campus Records.
    3. Unnumbered - Pull from the batch and give to your manager for disposition in accordance with IRM 1.15.29.

3.11.106.2.3.2  (01-01-2014)
Unprocessable Conditions - Estate Tax Returns

  1. Estate Tax Returns need the following information:

    • Decedent's Name

    • Social Security Number

    • Executor's Address

    • Signature of executor or one co-executor

  2. If any of the above items are missing or cannot be perfected, prepare Form 4227 and route to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation. Exception: Correspond for signature of executor or one co-executor.

    Note:

    DO NOT correspond for death certificates.

3.11.106.2.3.3  (01-01-2014)
Unprocessable Conditions - Gift Tax Returns

  1. Gift Tax Returns need the following information:

    • Donor's Name

    • Social Security Number

    • Address

    • Signature of donor

    • Spouse's Name, if applicable

    • Spouse's SSN, if applicable

  2. If the return is incomplete (i.e., only page 1 and/or 2 are present with money amounts), continue processing.

  3. The Internal Revenue Code required quarterly gift tax returns for tax periods 197012 to 198012. If Form 709 for these periods are received, route the returns to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation on Form 4227, Intra-SC Reject or Routing Slip.

3.11.106.2.3.4  (01-01-2014)
Unprocessable Conditions - FRIVOLOUS RETURNS AND CLAIMS

  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.

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

    If Then
    The return meets any of the conditions in the table below

    Caution:

    If the return shows Action Code 331 and has a Form 4227, Intra-SC Reject or Routing Slip, 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.

    Note:

    IRM 4.10.12, Frivolous Return Program, requires Examination to expedite the return and make a determination whether it qualifies as a frivolous return within 2 business days. If a determination is not made within the allowed timeframe, the Examination examiner will edit Action Code 331 in the lower left margin of Form 706, or Form 709 preceded with the letters "AC" .

    Examination has selected the return as frivolous, e.g., indicated by an Action Code 331 and a Form 4227, Intra-SC Reject or Routing Slip, 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 3.11.106. However, do not circle or void the Action Code indicating a frivolous return.

    Note:

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

  3. Recognized frivolous arguments made by businesses include, but are not limited to, the examples in IRM 4.10.12, Frivolous Return Program, shown below:

    Reason Description
    Alleged Churches/First Amendment Income from non-religious sources and may claim a vow of poverty.
    Altered Form Altering any or all line items with the intent of facilitating non-compliance with the tax laws.
    Altered Jurat/Uniform Commercial Code (UCC) 1-207 Return contains income and deductions but the jurat has been altered or stricken. May include reference to UCC 1-207 or a statement that the return was not signed under penalties of perjury.
    Amended Returns/Form 843 Claim Amended return or a Form 843 filed to obtain a total refund of all taxes paid in prior years, based on a tax avoidance argument.
    C-Filings This frivolous position includes the following 4 categories:
    1. Files a return claiming various types of deductions, credits, or overpayments/refunds that have no relation to reality and because of their outrageous character, qualify as frivolous returns.
    2. Files a return containing the filers identifying information but does not request a refund, often lacking sufficient information to determine a tax liability.
    3. Files a return with various types of rambling dialogue and/or crazy arguments that no one could reasonably view as a good faith attempt to comply with the law.
    4. Files a return that attempts to send some type of message or protest to the IRS, but fails to include sufficient identifying information for the Service to either determine the identity of the taxpayer or correspondent or return address.
    Challenges to Authority/Due Process Questions various administrative authorities such as delegation orders, summons authority, privacy act, etc. Argues that they must be afforded a hearing or a trial before taxes can be assessed or before property can be seized.
    Challenged to Authority/Title 26 or "law" in other documents Argues that Title 26 of the United States Code is not law because it was never enacted as named.
    Collections Issues Files frivolous documents contending that various collections issues are invalid (e.g. Offers in Compromise, Collection Due Process Requests, Installment Agreements, Appeals Requests, etc.) because they are not filed and/or signed by someone with delegated authority. They may have no certificate of assessment attached, do not comply in form or content with a State or Local law, are not in a certain format or lack a valid OMB (Office of Management and Budget) number or other frivolous positions.
    Disclaimer Submits a disclaimer stating, "disclaims the liability for the tax due" , making the liability on the return zero.
    Fifth Amendment Assertion of the Fifth Amendment right against self-incrimination as a basis for not providing any financial information.
    IRS is a Private Organization/Collects Tribute, Not Taxes Argues that the IRS is an entity named the Internal Revenue and Tax Service, Inc., which was incorporated in Delaware in 1933, it is a collection agency for the Federal Reserve Bank, or is part of the United Nations and is clandestinely leading the taxpaying public into a "new world order" .
    Not a Person Argues that a taxpayer is not a "person" within the meaning of IRC 7701(a)(14).
    Obscene, Vulgar, Harassing Submits documents or other materials indicating that non-filing is due to dissatisfaction with tax policies or taxation in general. Often, this argument is expressed with obscene, vulgar, or crude language and characters in an extremely demeaning manner.
    Protest Against Government Action/Inaction Argues that refusal to file or pay is justified because they disagree with government policies or spending plans.
    Sixteenth Amendment Argues the Sixteenth Amendment was not properly ratified and therefore the federal government does not have the legal authority to collect an income tax without apportionment.
    Straw Men Argues the government has created an entity separate and distinct from the taxpayer - a "straw man" and any tax obligations are exclusively those of the "straw man" .
    Taxes are Voluntary/Law Does Not Require Submits a return, amended return, or correspondence that argues income taxes are voluntary.
    US v. Long Submits a return with zero money amounts much the same as the "Zero Return" category and "US v. Long" is referenced. (See Note in Zero Returns below.)
    Unsigned Returns The individual completes a return but fails to sign. A statement indicating disagreement with the tax system is attached or added to the return.
    Valuation Income is not taxable because of the declining fair market value of the dollar, because the dollar is not backed by gold/silver, because the value of services is offset by the value of the labor (barter income), etc.
    Zero Returns Submits a return with zero money amounts. A statement is attached claiming there is no section of the Internal Revenue Code that established an income tax liability. The statement may also contain arguments regarding the definition of income.

    Note:

    Returns having only zeros, no entries, are blank, or indicate "None" , "Not Liable" , etc., with no evidence of frivolous arguments are not to be considered as frivolous returns.

    Other All others including those listed in Notice 2008-14. This category includes non-filer accounts resulting from initial compliance check such as cross-reference TINs.

    Note:

    Frivolous arguments citing "Collection Due Process" (CDP) should be reviewed by Collections for possible referral to Appeals. Refer to IRM 5.19.8, Collection Appeal Rights, for additional information.

3.11.106.2.3.5  (01-01-2014)
Unprocessable Conditions - No Entry Return

  1. A "Tentative" estate or gift tax return on the appropriate form showing only the taxpayer's name, address, and estimated amount of tax due is not considered a complete return since it does not contain a signature, information about the decedents gross estate (Form 706) or the total gifts of donor (Form 709), and allowable deductions, credits and prepayments.

  2. An estate or gift tax return containing only the taxpayer's name and referring to various constitutional provisions which are said to excuse filing a return should be treated as a "no entry return" , invalid, and unprocessable.

  3. A bare statement of gross/net estate (Form 706) or total gifts (Form 709) constitutes an invalid and unprocessable return.

  4. An estate or gift tax return which is blank, except for the heading and the signature, is considered as a "no entry return" , invalid and unprocessable.

  5. If correspondence is not needed for unprocessable items, the statute begins when IRS receives the return. If correspondence is needed, the statute begins when the reply is received.

    If Then
    An unprocessable estate or gift tax return is received in the mail and indicates tentative, undetermined, etc. (numbered or unnumbered) 1. Enter zeros on all transcription lines, Page 1, except Line 9 (Form 706 and enter the Unified/Applicable Credit amount for Date of Death (DOD) on Lines 9 and 11.
    2. For estate and gift tax returns, process as incomplete using the best available information.

    Note:

    The statute begins with the earliest received date.

3.11.106.2.3.6  (01-01-2014)
♦Foreign Currency♦

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

3.11.106.2.3.7  (01-01-2014)
♦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 Cincinnati Compliance Services, Estate and Gift Tax Campus Operation. Notate “Protective Claim” in the remarks box of Form 4227.

    Exception:

    A new Schedule PC, Protective Claim for Refund, has been added (August 2012 revision) to Form 706. If Sch PC is attached, copy the schedule and route to Cincinnati Compliance Services, Estate and Gift Tax Campus Operation. Leave the original with the return notating a copy was sent and continue processing.

3.11.106.2.3.8  (01-01-2014)
♦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 are willful and deliberate attempts to evade or defeat the income tax. Flagrant criminal activity includes but is not limited to the failure to pay taxes due and/or taxes collected or withheld and claims of false refunds based on bogus return information.

  2. Pull any return identified as having CI criteria found in paragraph (4) below and place in "CI Funny Box" .

  3. If CI has stamped the return, no action is required for CI but may fit other criteria (i.e., frivolous).

  4. ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡

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3.11.106.2.3.9  (01-01-2014)
♦Examination (Exam) "Funny Box" ♦

  1. The primary objective in identifying tax returns for Examination (Exam) is to promote the highest degree of voluntary compliance. Exam 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.

3.11.106.2.4  (01-01-2014)
♦Re-Entry Documents♦

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

  2. Each re-entry return must have a Form 3893, Re-Entry Document Control, or Form 13596, Reprocessing Returns, attached. This will indicate to the examiner that special handling is required.

    • Form 3893 is used to re-input documents that have not posted to an account or module.

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

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

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

    Caution:

    If the IRS 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.

3.11.106.2.4.1  (01-01-2014)
♦Form 3893 - Re-Entry Document Control♦

  1. Form 3893, Re-Entry Document Control, is used to re-input a return that has not been 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 number), edit all returns using current processing procedures and keep all returns clipped together.

  3. Circle the CCC "G" if present.

  4. Do not edit CCC "G" on an amended return.

  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 procedures, circle any Action Codes, CCCs, and any other edit marks that are no longer applicable. Re-edit according to current processing procedures.

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

    Form 3893 Action Taken
    Box 14 (Remarks) Ensure that the information is edited to the return.
    Box 15 (Process as) 1. Circle out the 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 to the appropriate area.
    Taxpayer error Leave the entries as shown on the document.

  9. An IRS received date must be present on all Re-Entry returns:

    If Then
    IRS received date is not present Edit a received date to the middle of the return.
    Multiple IRS received dates are present Circle out all but the earliest date.

  10. When additional information is still needed to make the return processable, prepare Form 3696, 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 on the return and attach Form 4227 noting, "Perfection Not Possible" and leave in batch.

3.11.106.2.4.2  (01-01-2014)
♦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 an 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 procedures, circle out any action codes, CCCs and any other edit marks that are no longer applicable. Re-edit according to current processing procedures.

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

    Form 13596 Action Taken
    TIN correction Edit correct TIN on return.
    Tax period correction Edit correct tax period ended on return.
    Reasonable cause Edit appropriate CCC.
    1. Edit CCC "R" if the "FTF" box is checked.

    2. Edit CCC "D" if the "FTP" box is checked.

  7. Examine returns that have any color other than red edited 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 to the appropriate area.
    Taxpayer error Leave the entries as shown on the document.

  8. An IRS received date must be present on all reprocessed returns.

    If Then
    IRS received date is not present Edit a received date to the middle of the return.
    Multiple IRS received dates are present Circle out all but the earliest date.

  9. Circle out the 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 Form 3696, Correspondence Action Sheet, or Form 4227 for the appropriate action (e.g., correspondence, research, etc.).

3.11.106.2.5  (01-01-2014)
♦Compliance Secured/Prepared Returns♦

  1. Compliance functions (Collections and Exam) 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 Transaction Code 59X ("TC 59X" ) or "ICS" (Integrated Collections System) or 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.

3.11.106.2.5.1  (01-01-2014)
♦IRC Section 6020(b) - Prepared by Collection♦

  1. When the taxpayer fails to file a required return, Section 6020(b) of the Internal Revenue Code is the authority for the IRS to prepare the return.

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

    1. Returns must have an IRS received date. If no received date is present per the Compliance Function, follow the normal procedures for editing the IRS received date.

    2. Returns must be signed by a Compliance Function representative. If not signed, route to Compliance using Form 4227, Intra-SC Reject or Routing Slip.

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

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

3.11.106.2.5.2  (01-01-2014)
♦Collection Secured♦

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

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

    2. Correspond for conditions that cannot be processed (e.g., missing signatures, missing schedules, etc.).

    3. Edit CCC "W" if the IRS received date is more than 2 years and 9 months after the return due date. Do not route the return to Statute Control.

3.11.106.2.5.3  (01-01-2014)
♦Examination Prepared♦

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

    1. Return must have an IRS received date. If no IRS received date is present, follow the normal procedures for editing the received date.

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

    3. If Form 13133, Expedite Processing Cycle, is attached, edit the CCCs that are checked on the form.

    4. Edit CCC "W" if the IRS received date is more than 2 years and 9 months after the return due date. Do not route the return to Statute Control.

3.11.106.2.5.4  (01-01-2014)
♦Examination Secured♦

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

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

    2. Correspond for conditions that cannot be processed (e.g., missing signatures, missing schedules, etc.).

    3. If Form 13133, Expedite Processing Cycle, is attached, edit the CCCs that are checked on the form.

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

3.11.106.2.6  (01-01-2014)
Precomputed Penalties Other Than Delinquency or Failure to Pay

  1. The following information pertains to penalties other than delinquency to pay:

    Type of Penalty What to Do
    Penalty other than delinquency or failure to pay is present (e.g., fraud, negligence, etc.)
    1. Prepare Form 3465, Adjustment Request, requesting assessment of penalty.
    2. If return remittance includes penalty amount, request on Form 3465 that this portion of remittance be applied to assessment.
    3. Note on return "3465 prepared" and route Form 3465 to Adjustment function. (See Figure 3.11.106-2.)
    Penalties and interest are imposed by Service Enforcement Officers and reasonable cause is given and accepted per documents attached Enter necessary CCC in condition code area of return (as determined by Exam).

    Figure 3.11.106-2

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

    Form 3465

3.11.106.2.7  (01-01-2014)
Obsolete Forms

  1. The following information pertains to obsolete returns:

    If Then
    Taxpayer uses an obsolete form as a current year return or files on an improper form, but computer program has been changed to accommodate current revision of form (e.g., Form 709 for tax periods prior to 7701), and line entries differ from the current year form 1. Renumber form to current year revision, if possible.
    2. Copy data to be input to the BMF on current year return.
    3. Staple current year return with necessary code and edit markings to the face of taxpayer's prior year return.
    4. Use entity data on taxpayer's return, if possible, by cutting off or folding entity portion of the dummy return before stapling to taxpayer's return.
    5. NEVER destroy, mutilate, obliterate, or throw away any part or portion of return submitted by taxpayer.

3.11.106.2.8  (01-01-2014)
♦Refund Returns/45-Day Jeopardy and 10 Million Dollar Refunds♦

  1. Document Perfection will identify refund returns and initiate requests for manual refunds in the following instances.

    Note:

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

  2. Action Code 341 should be input by Code & Edit to show that a manual refund is needed. If these conditions are not identified in Code & Edit, ERS must follow the following criteria:

    If Then
    A refund return is batched in a non-refund batch 1. Completely edit the return.
    2. Pull the return from the non-refund batch and merge into a refund batch using local procedures.

    Note:

    Follow the instructions below when the processing date is more than 20 days after the IRS 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 IRS 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.
    2. Give the return to your manager.
    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. Do not leave the return in the block.
    2. Edit Action Code 341 (Form 706, 706-NA, and Form 709). Edit CCC "U" for all other Form 706 and Form 709 series returns. This includes numbered and unnumbered returns.
    3. Give the return to your manager.
    The W&I Submission Processing Liaison for TAS issues walks a return through Code and Edit In addition to normal editing:
    1. Edit CCC "O" to freeze the refund.
    2. Edit CCC "Y" to route the return to ERS.

3.11.106.2.9  (01-01-2014)
Penalty and Interest (P&I) Code

  1. The following information pertains to penalty and interest.

  2. Edit Code "1" when the return reflects a precomputed delinquency penalty and/or interest and the return is received ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . If only interest is shown, enter CCC "R" and Penalty and Interest (P&I) Code "1" . If only penalty is shown, enter P&I Code "1" .

    If Then
    The return has precomputed penalty or interest, but no IRS received date Determine received date and edit it. See IRM 3.11.106.8, Received Date.
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Enter P&I Code "1" .
    A Form 706; Form 706-GS(D), Generation-Skipping Transfer Tax Return For Distributions; Form 706-GS(T), Generation-Skipping Transfer Tax Return For Terminations; and Form 706-NA Edit the P&I Code in the upper right margin. (See Figure 3.11.106-3.)
    Form 709 Enter the P&I Code between Lines 2 and 3 of the Tax Computation Section.
    A precomputed penalty, other than delinquency or failure to pay (i.e., Section 6660 penalty) is shown on the return Prepare Form 3465, Adjustment Request.

    Note:

    Delete penalty and interest from the total and edit the Balance Due to the left of the original entry. Otherwise, accept taxpayer's entry.

    Figure 3.11.106-3

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

    Penalty and Interest Code

3.11.106.3  (01-01-2014)
Tax Information Authorization (TIA) - Form 706 Only

  1. A valid Form 8821, Tax Information Authorization or Form 2848, Power of Attorney, attached to Form 706 takes precedence over a TIA. If detaching and routing a Form 8821 or Form 2848, do not edit a TIA.

    Note:

    A valid Form 8821 or Form 2848 must contain: an IRS received date, taxpayer's name and SSN, signature and date.

  2. The following information pertains to TIA for Form 706 only:

    If Then
    A TIA declaration on Page 2 of Form 706 is signed by someone other than the Executor
    1. Edit "TIA" on Form 706 in the bottom margin and also in the top margin, left side, of Page 1.
    2. If Page 2 of Form 706 states, "See attached for TIA Information" , flag attachment page.
    3. Place return behind the batch when finished.

    Note:

    Clerks will copy TIAs and attachment pages.


    4. Route TIAs (domestic address) to Memphis CAF function and TIAs (foreign (international) address) to Philadelphia CAF function.

3.11.106.4  (01-01-2014)
Error Resolution System (ERS) Coding (Form 706, Form 706-NA, and Form 709 Only)

  1. The following sections contain information pertaining to ERS coding.

3.11.106.4.1  (01-01-2014)
Background

  1. The Error Resolution System (ERS) replaced the input perfection procedures for manual corrections to paper Error Register.

  2. ERS displays data on terminal display screens with corrections made and integrity verified in a real time environment.

  3. The Document Perfection tax examiner will have the first opportunity to identify a record having a problem which requires correspondence, research or other action in order to make the return processable.

3.11.106.4.2  (01-01-2014)
♦Action Codes (General)♦

  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 3 digit Action Code will be assigned by the tax examiner.

  3. Action codes are valid on Form 706, Form 706-NA, and Form 709. Any other returns are processed through a manual correction system. Use CCC "U" on these returns when action such as correspondence is needed.

  4. Edit Action Codes in the bottom left margin of the return for Form 706 and Form 709. (See Figure 3.11.106-4.)

    Figure 3.11.106-4

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

    Action Code and Form 3696

  5. Edit Action Codes for Form 706-NA in the bottom center margin of the return.

  6. Assign Action Codes in the following priority order:

    • Action Code 310 (Statute Control)

    • Action Code 320 (Entity Control)

    • Action Code 4XX

    • Action Code 6XX

    • Action Code 3XX

    • Action Code 2XX (Correspondence)

    Exception:

    Use Action Code 211, 215, 225, or 226 before Action Code 341 to ensure the return is complete before a manual refund is issued.

  7. Attach Form 4227 when more than one Action Code is needed. Edit the Action Code with the shortest suspense period on the form and edit the second Action Code on Form 4227.

  8. Edit the following Action Code when a return cannot be perfected:

    Action Code Description
    211 (First Correspondence) or 215 (International Correspondence 1. Return is illegible, incomplete, or contradictory and therefore cannot be processed.
    2. The taxpayer notates on the 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 return (only issue for correspondence).
    226 (Missing Signature International Correspondence) Unsigned foreign (international) return (only issue for correspondence).
    480 (Early Filed-Suspense) Early filed return. See IRM 3.11.106.8.7.1, Tax Period-Early Filed Returns.
    610 (Renumbered Non Remittance) or
    611 (Renumbered with Remittance)
    A return is mis-blocked (e.g., Form 706-NA found in a 706 batch of work, or Form 706 is found in a batch of Form 709, etc.).
    640 (Void) To delete the assigned DLN on the return (e.g., Re-entry returns).

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

  10. Valid Action Codes are listed below:

    Action Code Description Workday Suspense Period
    211 First Taxpayer Correspondence 40
    212 Second Correspondence 25
    215 International Correspondence 45
    225 Taxpayer Correspondence (Signature Only) 40
    226 International Taxpayer Correspondence (Signature Only) 40
    310 Statute Control 10
    320 Entity Control 10
    331 Frivolous Review 3
    341 Manual Refund 10
    342 Credit Verification 10
    343 Black Liquor 10
    352 Name Research 3
    360 Other in-house Research 10
    410 Assistance Needed/Special Handling 3
    420 Manager's Suspense 5
    480 Early Filed Suspense 150
    610 Renumber - Non-remit 0
    611 Renumber - Remit 0
    640 Void 0
    650 International 0

3.11.106.4.2.1  (01-01-2014)
Numbered Return

  1. The following information pertains to numbered returns:

    If Then
    A numbered return cannot be perfected 1. Edit Action Code 211.
    2. This code applies only to numbered returns (Form 706, Form 706-NA and Form 709) and will cause a record to print on the SC New Suspense List.
    However, continue to perfect the document to the extent possible as though it did not contain an Action Code.

3.11.106.4.3  (01-01-2014)
Action Codes (AC) - Form 706, Form 706-NA, and Form 709

  1. Some of the conditions in which Form 706, Form 706-NA and Form 709 would be assigned an Action Code (AC) are described in the following: See IRM 3.11.106.4.3.1, AC 610/611, and IRM 3.11.106.4.3.2, AC 620.

3.11.106.4.3.1  (01-01-2014)
AC 610/611

  1. The document has been misblocked (the DLN is not the proper one to be assigned to the document), but it is an ADP document.

    • AC 610 - Non-Remittance

    • AC 611 - Remittance

3.11.106.4.3.2  (01-01-2014)
AC 620

  1. The document is for a tax period prior to the beginning of ADP Processing for that type of document. Also, if the document is of a type not prescribed to be input to the ADP System.

3.11.106.4.4  (01-01-2014)
Additional Action Codes

  1. The Action Codes used throughout the handbook are the codes to be edited for those specific situations. The following is a list of codes that are valid for Document Perfection use and may be used for other situations that may arise during processing. The codes, their meanings, suspense periods, and function are as follows:

    Action Code Description Workday
    Suspense
    Period
    Function *
    * CE = Code and Edit, EC = Error Correction, S = Suspense, GEN = Computer Generated
    211 First Taxpayer Correspondence 40 CE, EC, S
    212 Second Taxpayer Correspondence 25 CE, EC, S
    213 Correspondence to Other than Taxpayer 40 CE, EC
    215 International Correspondence 45 CE, EC, S
    225 Signature Only 40 CE, EC, S
    226 Signature Only (International) 45 CE, EC, S
    310 Statute Control 10 CE, EC, S
    320 Entity Control 10 CE, EC, S
    331 Frivolous Review 3 CE, EC
    332 Questionable Refund Detection Team (QRDT) Review 3 CE, EC
    333 Prompt Audit 10 CE, EC
    334 Joint Committee 10 CE, EC, S
    335 Frivolous Case 10 CE, EC, S
    336 QRDT 10 CE, EC, S
    337 Other Criminal Investigation Division (CID) 10 CE, EC, S
    341 Manual Refund 10 CE, EC, S
    342 Credit Verification 10 CE, EC, S
    343 Other Accounting 10 CE, EC, S
    351 TIN Research 0 EC, S
    352 Name Research 3 CE, EC, S
    353 Address Research 3 CE, EC, S
    354 Filing Requirements Research 3 CE, EC, S
    355 Other MFTRA Research 3 CE, EC, S
    360 Other In House Research 10 CE, EC, S
    370 Examination 10 CE, EC, S
    410 Assistance Needed/Special Handling 3 CE, EC, S
    420 Management Suspense A 5 CE, EC, S
    430 Management Suspense B 10 CE, EC, S
    440 Management Suspense C 15 CE, EC, S
    450 Management Suspense D 20 CE, EC, S
    460 Management Suspense E 25 CE, EC, S
    480 Early Filed Suspense 150 CE, EC, S
    510 Missing Document 0 CE
    511 Missing Document 1st Suspense 25 EC, S
    512 Missing Document 2nd Suspense 20 S
    513 Missing Document 3rd Suspense 20 S
    515 Missing Document Short Term 5 EC, S
    550 Magnetic Tape Attachment 3 CE
    551 Magnetic Tape Inconsistent Data 3 CE
    610 Renumber 0 CE, EC
    611 Remittance Renumber 0 S
    620 NMF/Non-ADP 0 CE, EC, S
    630 Re-input 0 EC
    640 Void 0 CE, EC, S
    650 International 0 CE, EC
    660 Data Control Delete
    (Tape Edit Processing (TEP) Delete)
    0 GEN
    670 Deleted Missing Document 0 GEN
    700 Duplicate Block 0 GEN
    711 Duplicate Document DLN from CE NA GEN
    712 Duplicate Document DLN from EC NA GEN
    713 Duplicate Document DLN from Unpostables NA GEN
    714 Duplicate Document DLN from Unworkable Suspense NA GEN
    715 Duplicate Document DLN from Workable Suspense NA GEN
    900 Unpostable Record 0 GEN


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