3.11.154  Unemployment Tax Returns (Cont. 1)

3.11.154.3 
Special Conditions

3.11.154.3.2  (01-01-2015)
Delinquent Returns

  1. A return is normally delinquent if it is not received on or before the return due date. Accept a return as timely ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . A return is not delinquent if the return is timely postmarked and mailed before, or on the due date. If the due date falls on a weekend or legal holiday, the return is timely if postmarked by the first business day following the weekend or legal holiday. See IRM 3.11.154.3.3 for instructions on determining timeliness of returns.

  2. If the return is truly delinquent, check return or attachments for an explanation of late filing. Send the taxpayer Letter 1382C to inform the taxpayer we have received their request. Do not code the return "R" if a pre-computed delinquency penalty is shown. See IRM 3.11.154.3.9.1 when Form 3893 is attached or See IRM 3.11.154.3.9.2 when Form 13596 is attached to determine if a letter should be issued.

    Exception:

    For secured or prepared returns, edit the applicable CCC as indicated on the return, any attachment, or Form 13133.

  3. Form 940 and Form 940PR are annual (calendar year) returns.

    1. The due date is January 31 of the next year.

    2. If January 31 falls on Saturday, Sunday, or a legal holiday, consider the return timely if postmarked by the first work day thereafter.

3.11.154.3.3  (01-01-2015)
♦Received Date♦

  1. The date a document is received in the Campus or an IRS Office is the date stamped as the "IRS Received Date" .

  2. A valid IRS received date is required on the following returns:

    • Delinquent

    • CCC "R" , "D" or "7" coded

    • Amended (CCC "G" Coded)

    • Re-entry

    • IRC 6020(b)

    • Delinquent original that is used to prepare other returns. (For example, a dummy return is prepared from a multiple period return. Tax data is transferred to the current revision of the return).

    • Pre-computed penalty and interest is present.

    IF THEN
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The return is considered timely.
    The due date falls on a weekend or legal holiday, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    The IRS received date stamp is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ the postmark or shipment date is on or before the due date, Edit the IRS Received Date to agree with the postmark or shipment date.

    Caution:

    A private metered postmark is to be considered timely if the meter date is timely and if the document is received within the time ordinarily required for delivery (usually 14 days). For example if the private metered postmark is the return due date of Form Specific but the return is received on Form Specific, we would not change the received date.


    Note:

    For certified mail returns only in Code and Edit:- If a postmark is not present, look for a "USPS.com Track and Confirm" record attached to the return, e.g., right before the envelope. Use the "Acceptance" date to determine timeliness and follow normal editing procedures. See Exhibit 3.11.154-15. If the "USPS.com Track and Confirm" record is not attached, no action is required.

    Note:

    A private metered postmark should be considered timely if received within ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

  3. The received date may or may not be stamped on the face of the return.

  4. A valid Received Date Stamp may consists of the following:

    • The word "Received" ,

    • Month (alpha or numeric),

    • Day (for example, "1" or "01" ,

    • Year, i.e., four digits in "YYYY" format,

    • Area Office, Campus, Field Office, Taxpayer Assistance (TAC) plus the City (location or function area within one of these sites (CSCO, EXAM, ICT, CIS, AM, etc.))

      Note:

      The Taxpayer Advocate Service (TAS) organization is not a point of filing and TAS employees have not been delegated the authority to accept returns for filing. Treat all TAS Received Dates as invalid by circling them and edit the received date according to instructions.

  5. If the received date is not present or the date is illegible/invalid, edit the Received Date in "MMDDYY" format in the middle of page 1 of the return. Edit the Received Date in the following priority:

    1. The earliest legible Postmark Date (U.S. Postal Service, Foreign Postmark, or Private Delivery Service) on the envelope. Rules for using the U.S. Postal Service Postmark (USPS) or Foreign Postmark date are as follows:

      IF THEN
      An envelope is not attached, Use the postmark date stamped on the face of the return.
      The postmark is missing and the envelope is "certified" , Look for a "USPS.com Track and Confirm" record attached to the return, e.g., right before the envelope. Use the "Acceptance" date to determine timeliness and follow normal editing procedures. See Exhibit 3.11.154-15. If the "USPS.com Track and Confirm" record is not attached, no action is required.
      An envelope has a USPS and private metered postmark, Always use the USPS postmark.
      An envelope has a foreign and private metered postmark, Always use the foreign postmark.
      An envelope has two private metered postmarks, Always use the latest private postmark.
      An envelope has only one private metered postmark, Use the private metered postmark.

      Note:

      A private metered postmark should be considered timely if received within ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    2. Service Center Automated Mail Processing System (SCAMPS) digital date.

    3. Revenue Officer's Signature date.

    4. Signature date (only if within current year).

    5. Julian control date minus 10 days.

    6. Current date minus 10 days.

  6. Edit the Received Date as follows:

    IF AND THEN
    A timely received date is the only received date stamped on the return,   No action is required.
    Two or more dates stamped on the return, the return is delinquent,
    1. Use the earliest IRS stamped Received Date.

    2. Circle out all other dates.

    Note:

    Received dates, which have been circled out by another function, should be treated as if they are not present.

    A Federal return is addressed to the IRS, delivered to a State agency Use the postmark date as the received date.
    A Federal return is addressed to a State agency,   Use the IRS date stamp as the received date.
    Envelope is attached to the return, the return is timely
    1. Check the envelope for remittance.
    2. If found, hand-carry remittance to your manager.
    The only Received Date on the return is a Taxpayer Advocate Service (TAS) Received Date,   Edit the Received Date according to instructions.

    Reminder:

    If an envelope is attached to the return, always check the envelope for remittance. If found, hand carry remittance to manager.

3.11.154.3.4  (01-01-2015)
Non-Taxable Returns

  1. Form 940 and Form 940PR returns are non- taxable when they are filed without any tax data entries or with no entries for tax. The

    Note:

    Taxpayer may also indicate a non-taxable return by checking Box "c" , "No payments to employees" , or box "d" , "Final: Business closed or stopped paying wages" (Revisions 2006 and subsequent) and no tax data entries for tax are present.

    1. The taxpayer may also identify the return by stating "Not liable" , "No Employees" , ("No Sujeto A Impuesto" , "No Tiene Empleados" will generally be shown on Form 940PR), or other similar phrases.

    2. Ensure that the return is truly non-taxable.

  2. If there are indications on the return or attachments that the taxpayer is liable, correspond for all missing items necessary to process the return (unless otherwise directed by IRM procedures).

  3. If you determine the return is non-taxable, edit as follows:

    1. Review the State code in Box 1a.

    2. If Box 1a contains a valid entry, continue to process the remainder of the return

    3. If box 1a is blank, or incorrect, using the State Code of the entity state, determine if that State is a Credit Reduction state for the return filing year. See Exhibit 3.11.154–13.

    4. If the state is a CR state, enter "ZZ" in Box 1a. If the taxpayer completed Box 1a, enter an asterisk (*) to the left of the entry in Box 1a, and edit "ZZ" to the left of the asterisk.

      Note:

      State Code "ZZ" is only applicable in credit reduction years, e.g., such as, tax years 2009 through 2014.

    5. If the state is not a CR state, enter the correct entity state code. If the taxpayer completed Box 1a, enter an asterisk (*) to the left of the entry in Box 1a, and edit the correct state code to the left of the asterisk.

      Exception:

      For Form 940PR returns circle out the CR state and do not enter an asterisk (*).

    6. If the taxpayer indicates the return is "Final" , edit a CCC "F" .

    7. If the taxpayer claims exempt status under IRC 501(c)(3), edit a CCC "F" . Correspond if there is any doubt about the taxpayer's claim IRM 3.11.154.2.14 for correspondence instructions.

    8. Follow normal procedures for perfecting the signature area.

    9. Enter Schedule Indicator Code (SIC) "1" .

    10. If taxpayer states "not liable" or "no employees" on non - taxable returns do not edit CCC "F" .

3.11.154.3.5  (01-01-2015)
Indian Tribal Government Procedures

  1. Services rendered to a federally-recognized Indian Tribal Government (or its instrumentalities) are exempt from FUTA tax, subject to the tribe's compliance with applicable state law.

  2. For submission processing purposes, Code and Edit employees should accept all FUTA tax returns notated or referenced with the following explanations for ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    1. Indian Tribal Government for tax years 2000 and subsequent

    2. Announcement 2001-16

    3. Internal Revenue Code Section 3309(d)

    4. The Community Renewal Tax Relief Act of 2000; (Section 166)

    5. H.R. 5662, incorporated in H.R. 4577, the Consolidated Appropriations Act, 2001

    6. Public Law No. 106–554, 114 Stat. 2763

    7. Similar explanation as described above

  3. Perfect the return as "Non Taxable" and "Final." See the following procedures:

    Reminder:

    If the return is an amended return see IRM 3.11.154.3.7 Amended Returns.

    IF THEN
    An exempt payment is claimed, Allow the entry.
    Tax data is present,
    1. Edit CCC "F" and asterisk (*) to the left of all T Lines making the return " non-taxable."

    Exception:

    For Form 940PR returns do not asterisk (*) instead circle out all T Lines.



    2. If the taxpayer is claiming any Federal Tax Deposits, do not asterisk (*) the amount claimed.

    3. Perfect the return so the overpayment is refunded to the taxpayer. See Figure 3.11.154-4.

    Figure 3.11.154-4
    This image is too large to be displayed in the current screen. Please click the link to view the image.

3.11.154.3.6  (01-01-2015)
♦ Statute Returns ♦

  1. A potential statute control return is any return with a received date that is 2 years and 9 months or more after the return due date.

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

    Exception:

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


    • Compliance IRC 6020(b) returns.

    • Secured by Examination/Collections, Secured by TE/GE, Secured by TE/GE EP Exam.

    • A return with TC 59X or ICS (Integrated Collection System) notated on the face of the return.

    • A return with a stamp indicating a previous clearance by the Statute Control Unit within the last 90 days.

    • Returns that are substitute returns prepared by Examination (SFR in top margin) of the return.

  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 and send it 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 the return.
    2. Attach Form 4227 and check the box for Statute Control Unit.
    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 Unit.
  5. Edit CCC "W" if the return has been cleared by the Statute Control Unit. Statute 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 similar statement indicating there is no statute issue, The return is stamped, “No Statute issue” Edit a CCC W.
    The return received date is less than 2 years and 9 months from the Return Due Date, Do not edit a CCC W and continue processing return.
  7. See the reference table below for statute barred dates for timely filed returns for tax year 200612 and subsequent.

    TAX RETURN TAX YEAR STATUTE BARRED DATE 90 DAYS TO STATUTE BAR DATE
    Form 940 & Form 940PR 2006 01-31-2010 11-02-2009
    2007 01-31-2011 11-02-2010
    2008 01-31-2012 11-02-2011
    2009 01-31-2013 11-02-2012
    2010 01-31-2014 11-02-2013
    2011 01-31-2015 11-02-2014
    2012 01-31-2016 11-02-2015
    2013 01-31-2017 11-02-2016
    2014 01-31-2018 11-02-2017

3.11.154.3.7  (01-01-2015)
♦ Amended Returns ♦

  1. For Form 940 or Form 940PR (Revision 2006 and subsequent), an amended return can be identified by Box "a" , "Amended" , being checked. See Figure 3.11.154-5.

  2. Form 940 or Form 940PR (Revision 2006 and subsequent) may also be considered Amended based on the following:

    • The Amended Box is checked.

    • Words such as "Supplemental" , "Corrected" , or "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.

  3. 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 and edit the Action Trail on the return.

  4. Only the following data must be present and edited if missing on all amended returns:

    • EIN, See IRM 3.11.154.5.1

    • Name Control, See IRM 3.11.154.5.2 and IRM 3.11.154.5.3

    • Tax Year, (See IRM 3.11.154.2.19)

    • CCC "G" , (See Exception in paragraph (5) below).

    • Received Date, (See IRM 3.11.154.3.3) and

    • Signature. (See IRM 3.11.154.2.18)

  5. 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" or with similar phrasing, by Statute, Do not edit CCC "G" . Process the return as an original.
    Form 3893 or Form 13596 is attached, Do not edit CCC G. See IRM 3.11.154.3.9 and 3.11.154.2.9.3
    None of the above are present, Edit CCC G. No other codes may be used with a CCC "G" .

    Exception:

    CCC "W" , CCC "3" and/or ERS Action Codes may be used with CCC "G" .

    Note:

    When Computer Condition Code "G" is edited, Box "a" , "Amended" , (Revision 2006 and subsequent) should be marked. Mark Box "a" , if it is not marked.

  6. If Box "a" is marked erroneously and needs to be deleted, place as asterisk (*) as closely as possible to the left of the box.

    Figure 3.11.154-5
    This image is too large to be displayed in the current screen. Please click the link to view the image.

3.11.154.3.8  (01-01-2015)
♦ Secured Returns/Prepared Returns♦

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

    Note:

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

    1. Returns notated "IRC 6020(b)" are prepared by Collections.

    2. Returns notated "TC 59X" or "ICS" are secured by Collections.

    3. Returns notated "SFR" (Substitute for Return) with an attached Form 13133 (Expedite Processing Cycle) are prepared by Examination.

    4. Returns notated "Process as original" with an attached Form 13133 (Expedite Processing Request) are secured by Examination. The box "Delinquent Return" on Form 13133 should be checked.

      Note:

      Secured returns noted with "599" in the left margin and "Possible Duplicate or "Potential Duplicate" in the top margin should be processed as an original return. The notation of Possible/Potential Duplicate is relevant to Collections, a second return is being processed because the first return did not post as anticipated.

3.11.154.3.8.1  (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. These returns can be received in various formats.

    Note:

    Revenue officers may satisfy the taxpayer's requirement to report Federal Unemployment Tax by filing Form 940 or Form 940(cg) with the notation" IRC 6020(b)" . If the return is a Form 940(cg), use the Form 940 procedures shown in IRM 3.11.154 to process.

  2. At the campus' option, IRC 6020(b) Form 940 returns can be processed through ISRP or SCRIPS.

  3. These are identified by the notation: "PREPARED AND SIGNED UNDER AUTHORITY OF IRC 6020(b) OF THE INTERNAL REVENUE CODE" which is located in the center bottom of Page 1 or Page 2 of the return. The right margin should also indicate TC 599 cc 38, or TC 599 cc 39 should appear in the left upper margin.

    1. Returns must have a received date. If missing, follow the normal procedures for editing the Received Date. See IRM 3.11.154.3.3.

    2. Returns must be signed by Compliance Function. Accept the Revenue Officer (RO) signature anywhere on the return or, if Form 5604 is attached, when the signature appears in the "Initiating Collection Employee" box.

      Note:

      Edit an asterisk (*) in the left most position in the signature box to indicate a signature declaration is attached.

    3. All unsigned IRC 6020(b) returns received in Document Perfection must be brought to the attention of Campus Planning Analysis for proper handling.

      Note:

      For Planning Analysis analysts Only- If a IRC 6020(b) return is received unsigned, mail to the following address:

      Internal Revenue Service
      2970 Market St.
      Mail Stop 2 - J11.151
      Philadelphia, PA 19104

    4. Edit CCC "4"

      Note:

      CCC "R" should not be used with CCC "4" .

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

    6. Do not correspond with the taxpayer for unprocessable conditions. If the return is completely unprocessable, route to the address in (b) above.

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

    8. No special calculations or notations are necessary on an IRC 6020(b) return that involves a credit reduction state. Do not calculate any credit reduction amounts. Do not enter the credit reduction wage amount.

3.11.154.3.8.2  (01-01-2015)
♦ Collection Secured ♦

  1. These returns are identified by the notations: "TC 59X cc017" or "ICS" .

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

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

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

    Reminder: If there is an indication that a penalty (or penalties) should be suppressed, edit the appropriate Computer Condition Code(s). Please refer to IRM 3.11.154.2.9 for more information.

3.11.154.3.8.3  (01-01-2015)
♦ Examination Prepared ♦

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

    1. Returns must have a Received Date. If no 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 completely unprocessable, use "No Reply" procedures.

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

      Note:

      CCC "R" should not be used with a CCC "4" .

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

    Reminder:

    If there is an indication that a penalty (or penalties) should be suppressed, edit the appropriate Computer Condition Code(s). Please refer to IRM 3.11.154.2.9 for more information.

3.11.154.3.8.4  (01-01-2015)
♦Examination Secured♦

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

    3. On the attached Form 13133, review the "Hold Credits on Module- Generate TC 570" , to determine if the return should be edited with CCC "X" .

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

3.11.154.3.9  (01-01-2015)
♦ Re-Entry Documents ♦

  1. A return posted to the wrong account or module 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, or "TRPRT PRINT DO NOT PROCESS" printed on the top margin. Do not correspond for missing signatures on these documents.

  3. 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. See Figure 3.11.154-6.

    • Form 13596 is used to reprocess documents 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.

    Exception:

    If the return is more than 2 years and 9 months from return due date, do not use Form 3893 or Form 13596 reprocessing procedures. Route the return to the Statute Control Unit following statute procedures.

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

    Note:

    If the Received Date is 2 years and 9 months or more after the Return Due date, refer to Statute procedures before reentering or reprocessing the return. See IRM 3.11.154.3.6 Statute Returns.


    Figure 3.11.154-6
    This image is too large to be displayed in the current screen. Please click the link to view the image.

3.11.154.3.9.1  (01-01-2015)
Form 3893, Re-Entry Document Control

  1. Form 3893, Re-Entry Document Control is used to re-input 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 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 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 procedures, circle any Action Codes, Computer Condition Codes 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 to 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-input returns. See IRM 3.11.154.3.3 for receive date editing procedures.

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

3.11.154.3.9.2  (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. If the return was not edited according to current processing procedure, re-edit according to current processing instructions.

    Note:

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

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

  4. 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.

  5. 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 on return.
    The return is an early filed return See IRM 3.11.154.2.20 paragraph (5) and follow these procedures if they apply.
    Reasonable cause, Edit appropriate computer condition code.

    1. Edit CCC "R" if the "Failure to File (FTF)" box is checked.

    2. Edit CCC "D" if the "Failure to Pay (FTP)" box is checked.
  6. 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 of 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.
  7. A received date must be present on all reprocessed returns. See IRM 3.11.154.3.3 for receive date editing procedures.

  8. Circle out the green rocker and edit marks that may indicate a receipt of remittance.

  9. When additional information is still needed to make the return processable, prepare Correspondence Action Sheet Form 12522 (142C Letter) or Form 4227 for the appropriate action (e.g., correspondence, research, etc.).

3.11.154.3.10  (01-01-2015)
♦Correspondence Imaging System Returns- "CIS♦"

  1. Correspondence Imaging System "CIS" is an inventory system for scanning all Account 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 on a "CIS" return.

    IF THEN
    The edit marks are in black, Underline the edit mark if correct or circle if incorrect.
    The edit marks are in red, Circle if incorrect.
    The edit marks are missing or incorrect, Perfect as necessary.
  4. Follow the instructions below for "CIS" Returns.

    IF AND THEN
    The CIS return is an early filed return,   See IRM 3.11.154.2.20.
    The "CIS" return has a Form 13596 attached,

    Note:

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

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

    Caution:

    If the return comes back from AM with the information still incomplete, send the return to AM again to secure all the missing information. Indicate “Additional information needed to process incomplete CIS return, ” or similar language on Form 4227 (or other appropriate routing slip).



    Note:

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

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

3.11.154.3.11  (01-01-2015)
Schedule H (Form 1040)

  1. Some taxpayers are filing Form 940 returns with Schedule H (Form 1040) attached for prior tax years.

    1. IF THEN
      Form 940, Revisions 2006 and subsequent- The liability is the same as the FUTA liability for Schedule H (i.e., Form 940, Part 4, Line 12 is the same as Schedule H, Line 17 or Line 25).
      1. Edit Form 940 or Form 940PR as a non - taxable final return.

      2. Asterisk (*) out all money and T- line entries on the return.

      Exception:

      For Form 940PR returns do not asterisk (*) instead circle out all money and T-lines.



      3. Detach and route Schedule H to IMF Code and Edit.
      a. Attach Form 4227 to Schedule H.
      b. Notate: "Sch H attached to Form 940 or 940PR. Please process. Do not send Schedule H back to the taxpayer."

      4. Edit CCC "F" on the return.

3.11.154.3.12  (01-01-2015)
Prompt, Quick and Jeopardy Assessments

  1. Returns requiring "prompt" , "quick" , "jeopardy" , or "termination assessments" will be received in Document Perfection accompanied by one of the following forms:

    • Form 2644, Recommendation for Jeopardy/Termination Assessment

    • Form 2859, Request for Quick or Prompt Assessment

    • Form 895, Notice of Statute Expiration

    • Form 3198, Special Handling Notice for Examination Case Processing

    • Form 5403, Appeals Closing Record

  2. Route these returns to Accounting.

  3. If the Form 2859 is attached to the return and there is a TC 59X with no received date, edit the received date on the return from the Date of Request box on the Form 2859.

3.11.154.3.13  (01-01-2015)
Substitute Form Received from Preparers

  1. Some employers have been given permission by National Office to file computer-printed Form 940.

  2. Computer-generated/computer-printed forms which do not conform to the official version should be given to your manager so that National Office can be notified. For example:

    • Different format

    • Cramped space between lines

    • Missing line items

    • Small size returns, etc.

3.11.154.3.14  (01-01-2015)
♦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. Recognized frivolous arguments made by businesses include, but are not limited to, the examples in IRM 4.10.12., Frivolous Return Program (FRP). See Exhibit 3.11.154-12.

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

    IF THEN
    The return meets any of the conditions identified as a frivolous return shown in Exhibit 3.11.154-12,

    Caution:

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

    Remove the 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" , and so the return is send for processing, Continue to process the return using the procedures in IRM 3.11.154. However, do not circle out or void the Action Code or CCC "X" indicating a frivolous return.

    Note:

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

3.11.154.3.15  (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 the 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 the (CI) "Funny box" .

  3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

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

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

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

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

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

3.11.154.3.16  (01-01-2015)
♦CADE 2♦

  1. The Customer Account Data Engine (CADE) 2 Program Office in Headquarters is charged with the primary goal to implement a single, modernized programming solution to provide daily processing of taxpayer accounts.

  2. CADE 2 is comprised of several components to modernize the IRS to a daily processing environment with several Transition States.

  3. The CADE 2 program has began to deploy the first transition state towards implementing a single modernized environment to process individual and business taxpayer accounts.

  4. Under CADE 2, the Business Master File transaction posting time frames changed as follows:

    1. Transactions are viewable using CFOL Command Codes on Saturday following the weekly Master File processing run on Thursday.

    2. Transactions are viewable as posted transactions using IDRS Command Codes on Monday following the weekly Master File processing run on Thursday.

      Note:

      With the acceleration of the IDRS weekly analysis being performed the weekend directly after the Master File processing on Thursday, transactions are posted instead of in pending status on Monday.

  5. The BMF campus cycles are:

    1. Campus Cycle: Thursday – Wednesday

    2. Master File Processing: Friday – Thursday

    3. Notice Review Saturday: Monday (8+ days)

    4. Unpostables: New available Tuesday; Closing Tuesday

  6. Cycle posting dates will reflect a format of "YYYYCCDD." YYYY will indicate the year. CC will indicate the posting cycle.

    Note:

    BMF cycle posting dates on BMFOL will continue to reflect "YYYYCC" . YYYY will indicate the year. CC will indicate the posting cycle. BMF cycle posting dates in TXMOD will reflect a format of "YYYYCCDD" . The DD value will be 08.

3.11.154.3.17  (01-01-2015)
Aggregate Form 940 Returns and Choreworkers

  1. If the return is an Aggregate Form 940 return containing the notation of "State" , " City" , "County" in the entity area of the return, or "Notice 2003-70" , "Fiscal Agent" , " Fiscal Intermediary" , "Home-Care Service Providers" , "Household Employer Agent" , or "Choreworkers" noted on the return:

    1. Accept and process submitted Aggregate Form 940 returns containing the following notation in the entity area of the return

  2. If the Aggregate Form 940 return does not contain any of the notations mentioned in (1) above, correspond and send the return back to the taxpayer to inform them they are not eligible to file an aggregate return.

    Note:

    This is a special procedure for aggregate choreworker FUTA returns only, and is an exception to our standard correspondence procedures.

  3. If the taxpayer requests abatement for Failing to Make Timely Deposits when the return is submitted Do not edit CCC "J" . Send Letter 1382C to inform the taxpayer of the proper procedure to follow to request abatement, if, and when a penalty is assessed. If the taxpayer does not request abatement, but notates that they are filing an aggregate FUTA return, edit CCC "J" .

    Exception:

    See IRM 3.11.154.3.9.1 when Form 3893 is attached or See IRM 3.11.154.3.9.2 when Form 13596 is attached to determine if a letter should be issued.

3.11.154.3.18  (01-01-2015)
♦Foreign Currency♦

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

3.11.154.4  (01-01-2015)
♦ 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.

3.11.154.5  (01-01-2015)
♦ Entity Perfection ♦

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

    1. Employer Identification Number

    2. Name

    3. Complete Address, e.g., City, State, ZIP Code

3.11.154.5.1  (01-01-2015)
♦ 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 on the top 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 ITIN, Unnumbered
      1. Remove return from batch.

      2. Route to Entity Control following local procedures for EIN assignment.
      Numbered
      1. Edit Action Code 320.

      2. Attach Form 4227 for routing to Entity Control.

      3. Leave document in batch.
      Multiple EINs are present, Numbered
      1. Edit Action Code 320.

      2. Attach Form 4227 and leave in the batch.
       
      Unnumbered
      1. Remove return from batch.

      2. Attach From 4227 or follow local procedures.

      3. Route to Entity for EIN assignment.
       
       
       
       
      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

      • 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. Asterisk (*) to the left and line through the illegible EIN, zeroes, or all nines.

      2. Edit Action Code 320.

      3. Attach Form 4227 and leave in the 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.

      2. Attach Form 4227 and leave in the batch.
       
       
       
  4. If EIN from page 2 of Form 940 or Form 940PR or From Schedule A is missing or does not match page 1 of Form 940 or Form 940PR (Rev 2006 or subsequent) then edit as follows:

    If... Then...
    a) The EIN is missing on Page 2, Edit the last 4 digits of the EIN in the proper location.
    b) The EIN on page 2 does not match the EIN in the entity of the first page, 1) Edit an asterisk to the left of the EIN on page 2.
    Exception: Do not asterisk on Form 940PR returns.

    2) Edit the last four digits of the EIN to the left of the asterisk.
    c) If Schedule A is attached, 1) If the EIN is missing, edit the last 4 digits of the EIN from page 1 of Form 940 or Form 940PR.

    2) the EIN does not match the EIN on page 1 of Form 940 or Form 940PR,
    a) Line through the EIN.
    b) Edit the last 4 digits of the EIN from page 1 of Form 940 or Form 940PR.
  5. Listed below are the most common conditions which would indicate that a new EIN should be assigned by Entity:

    1. Individual owner dies and estate takes over business.

    2. Individual owner dies, Surviving Spouse takes over when no estate is involved.

    3. Individual ownership changes to corporation.

    4. Individual ownership changes to partnership.

    5. Partnership changes to individual ownership or disregarded entity (except where the resulting Business changes from an individual owner to another individual owner).

    6. Partnership changes to corporation (except for elective change caused by filing Form 8832).

    7. Corporation changes to individual ownership or disregarded entity (except where the resulting owner already has an EIN).

    8. Corporation changes to partnership (except for elective change caused by filing Form 8832).

    9. Sole proprietor indicates bankruptcy.

3.11.154.5.2  (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 more than one word follows.

    Note:

    If an individual and a trade name are present and it can be determined that the trade name is for a corporation or partnership, follow the Name Control procedures for corporations or partnerships. If other than a corporation or partnership, follow the Name Control procedures for individuals, regardless of which line the individuals owner's name is listed.

  2. See Job Aid Document 7071A to properly determine the Name Control.

  3. Edit the Name Control as follows:

    If... And... Then...
    Able to determine the Name Control,   Underline the Name Control.
    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).

    2. Leave the return in the batch.
    A return indicates the return 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.

3.11.154.5.3  (01-01-2015)
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" (percent).

  2. Ensure that the "in care of name" is located above the street address.

    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 below the street address,
    1. Edit an asterisk (*) and line through the "in care of name"

    Exception:

    Do not edit an asterisk (*) on Form 940PR returns.



    2. Edit the "in care of name" above the street address beginning with the percent or c/o in the first position.

    3. Continue processing the return.
    The "in care of name" is shown on an attachment,
    1. Edit the "in care of name" above the street address beginning with the percent or c/o in the first position.

    2. Continue editing the return.
    The street address for the "in care of name" is different from the street address of the employer,
    1. As necessary, asterisk (*) and line through the "in care of" street and edit below the "in care of name" , or edit the "in care of" street address below the "in care of name" , if located on an attachment.

    Exception:

    Do not asterisk (*) on Form 940PR returns.


    2. Edit an asterisk (*) to the left and line through the business address and input TC "014" .

    Exception:

    Do not asterisk (*) on Form 940PR returns.


    3. Continue editing the return.

    Note:

    Asterisk (*) to the left and line through the in care of symbol c/o or percent, if it is present with an address. Do not use the ampersand (&) or the percent sign ( percent) when editing address information. Do not asterisk (*) on Form 940PR returns.

  3. If the taxpayer crosses out the original "in care of name" , or adds a new "in care of name" , they are indicating that the "in care of name" has been changed.

    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" .
    2. Continue editing the return.
    An "in care of name" is present and there is an indication of an address change,
    1. Edit the in care of name.
    2. Correct the address.
    3. Continue to process the return.

3.11.154.5.4  (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. For a list of correct street abbreviations, see Document 7475.

    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. If the return requires that the city, state, or ZIP Code be changed, edit an asterisk (*) to the left, line through the incorrect entity, and enter the correction in the entity where space allows.

  4. The procedures for perfection of addresses are as follows:

    IF AND THEN
    The address is blank or incomplete on the return or attachment,  
    1. Research IDRS.

    2. If found, edit to the proper location.

    3. If not found, leave blank to allow the return to fallout to ERS.
    The address contains information other than a street address or P.O. Box,   No perfection is necessary. ISRP or SCRIPS 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, Change of Address, or Form 8822-B (Change of Address for Business) is attached, Mailing address information is the same and no location address is listed on Form 8822, Line 7 (or Form 8822-B, line 7) Take no action.
    Mailing address information is different and/or a location address is listed on Form 8822, Line 7 (or Form 8822-B, line 7) Detach Form 8822 (or Form 8822-B) and route to Entity following local procedures.
    Both a P.O. Box and a street address are shown,  
    1. Edit an asterisk (*) to the left and line through the street address.

    Exception:

    Do not asterisk (*) on Form 940PR returns instead circle the street address.


    2. Notate "TC 014" in the upper left margin.
    3. Input "TC 014"
    Two street addresses are shown,  
    1. Edit an asterisk (*) to the left and line through the second street address.

    Exception:

    Do not asterisk (*) on Form 940PR returns instead circle the second street address.



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

    3. Input "TC 014" . See Figure 3.11.154-7.
    One street address is shown, Shows a change of the address to a P.O. Box,
    1. Edit an asterisk (*) to the left of the address, and if the taxpayer has not already done so, line through the street address.

    Exception:

    Do not asterisk (*) on Form 940PR returns instead circle the street address.



    2. Notate "TC014" in the upper left margin.
    3. Input "TC 014" See Figure 3.11.154-8.
    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 return.
    [For ISRP returns only] 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 (MCC), 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.

    Figure 3.11.154-7

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

    Figure 3.11.154-8

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

    Note:

    Always asterisk (*) to the left and line through the "care of" symbol (c/o or percent) if it is present with an address. Do not use the ampersand (&) and the percent symbol ( percent) when editing address information.

  5. The U.S. Postal Service established address requirements for Army Post Office (APO), Fleet Post Office (FPO) and Diplomatic Post Office(DPO) addresses. If the old address appears, convert to the state code abbreviation based on the ZIP Code (e.g., APO New York, NY 091XX would be converted to APO AE 091XX). APO/DPO/FPO addresses are considered domestic addresses. Refer to the Conversion Chart below:

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

3.11.154.5.5  (01-01-2015)
♦ Entity Perfection - Foreign Addresses ♦

  1. A foreign (international) address is any address that is not one of the 50 U.S. states, or the District of Columbia.

  2. Returns with APO/DPO or FPO addresses are considered domestic addresses. See IRM 3.11.154.5.4

    Note:

    All returns with a Foreign Address should be processed through ISRP at the Ogden Submission Processing Center. If the return is batched for SCRIPS processing, after editing, pull the return from the batch and request the return be batched for ISRP processing. If numbered take the necessary steps to cancel the DLN.

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

  4. Returns with addresses in the following U.S. Possessions are considered to be a foreign address 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 ABBREVIATION
      American Samoa AS
      Federated States of Micronesia FM
      Guam GU
      Marshall Islands MH
      Northern Mariana Islands MP
      Palau PW
      Puerto Rico PR
      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 3.11.154-9.

  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. Edit an asterisk (*) and line through the foreign country. Then, edit the country code preceded by a "/" and followed by "/$" . See Exhibit 3.11.154-9 for official foreign country codes.

      Exception:

      Do not asterisk (*) on Form 940PR returns instead circle the foreign country.

    3. A unique country code will be edited for returns filed with an address in Canada. See "County Code Canada" IRM 3.11.154.5.6.

    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 name is present, Edit the appropriate providence, state, or territory abbreviation. See Exhibit 3.11.154-10
      A province, state or territory is not present, Continue editing the return.
      Province, state or territory is shown in abbreviated format, Continue editing the return.
    5. A ZIP Code is 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.

3.11.154.5.6  (01-01-2015)
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 providence/territory.

    IF THEN
    The foreign address contains a Canadian Province /Territory name, or abbreviation shown in the table below,
    1. See table below to ensure the correct Canadian Province/Territory is present or edited on the return. If incorrect edit an asterisk (*) to the left and line through the country name.

    Exception:

    Do not asterisk (*) on Form 940PR returns instead circle the country name.



    2. Edit the appropriate country code based on the providence/territory preceded by a "/" and followed by a "/$" as the last entry in the address.
    The foreign address does not contain a Canadian Providence/Territory name or abbreviation shown in the table below,
    1. Edit an asterisk (*) and line through the country name.

    Exception:

    Do not asterisk (*) on Form 940PR returns instead circle the country name.



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

3.11.154.5.7  (01-01-2015)
♦ Entity State Codes ♦

  1. An Entity State Code is required on ALL Form 940.
    Exception: "G" coded returns (Amended) or, an entity containing an International address other than Puerto Rico or one of the U.S. Possessions or Territories shown in the table in IRM 3.11.154.5.5.

  2. Perfect the Entity State code as follows:

    IF THEN
    The State code is present and in a 2- digit format (e.g., "MT" for Montana), No action is necessary.
    The State is spelled out in full, No action is necessary.
    No State or State code is present in the entity portion of the return,
    1. Search return and attachments for State code.

    2. If found, edit to the entity section.

    3. If not found, research IDRS.

    Note:

    Revisions 2006 and subsequent: The state code in on Form 940 or Form 940PR, Box 1a can be used ONLY if one state is present.

    Revision 2005 and prior: The state code shown on Form 940, Part II, Line 3a can be used if ONLY one state is present.

    A return is filed with a foreign address, CSPC ONLY -Route to OSPC. See IRM 3.11.154.5.5. -OSPC ONLY -Edit country code. See Exhibit 3.11.154-9

3.11.154.6  (01-01-2015)
Form 940 and Form 940PR - Code and Edit Return Procedures (Rev. 2006 and subsequent)

  1. For editing Form 940 or Form 940PR (Revisions 2006 and subsequent), follow procedures below:

    1. For Editing, see IRM 3.11.154.2.1

    2. For Third Party Designee Returns, see IRM 3.11.154.2.16

    3. For Signature, see IRM 3.11.154.2.18

    4. For Tax Period, see IRM 3.11.154.2.19

    5. For Received Date, see IRM 3.11.154.3.3

    6. For Indian Tribal Returns, see IRM 3.11.154.3.5

    7. For Entity Perfection, see IRM 3.11.154.5

3.11.154.6.1  (01-01-2015)
"Type of Return" Boxes - Form 940 and Form 940PR (Rev. 2006 and subsequent)

  1. The "Type of Return" box can be found in the upper right hand corner, to the right of the entity area on Form 940 (Rev. 2006 and subsequent). See Exhibit 3.11.154-1 and also see Exhibit 3.11.154-2

    IF THEN
    Box "a" is checked The taxpayer is indicating this is an amended return. Edit CCC "G" . See IRM 3.11.154.3.7 for "Amended Return" procedures.
    Box "b" is checked, The taxpayer is indicating they are entitled to special credits as a successor employer and have based their calculations on that fact. Edit CCC "5" .
    Box "c" is checked, The taxpayer is indicating no payments were made to any employees during the tax year. The return can be blank, or contain zeroes, dashes, or some other indication that no payments were made to employees. See IRM 3.11.154.2.9.13 to determine if a CCC "9 " should be edited.
    Box "d" is checked, See IRM 3.11.154.2.9.2.
    The taxpayer does not check a box, but indicates on the return or on an attachment that any of the four boxes applies to the return,
    1. Enter the appropriate Computer Condition Code.
    2. Check the box, as applicable.
    A box is marked erroneously, Place an asterisk (*) as closely as possible to the left of the box.

    Exception:

    Do not asterisk (*) on Form 940PR returns.


    An example of a box that would be considered to be marked erroneously would be a return that the taxpayer has marked "Amended." However, Code and Edit receives the return with a "TC 599" notation on the return. Since returns notated "TC 599" cannot be "G" coded, the check box must be deleted.

3.11.154.6.2  (01-01-2015)
Form 940 and Form 940PR (Rev. 2006 and subsequent)- Part 1

  1. Form 940 and Form 940PR, Part 1 allows the employer to indicate whether:

    • They have been paying wages to employees in only one state, or

    • They have been paying wages to employees in more than one state, and

    • The state, or any of the multiple states, was identified as a "Credit Reduction" state for the tax period (year) of the return. See IRM 3.11.154.6.2.1 for an explanation of a "Credit Reduction" state.

    See Exhibit 3.11.154-1 and also see Exhibit 3.11.154-2

3.11.154.6.2.1  (01-01-2015)
Part 2 Boxes "1a" ,- Single State Filer, Box "1b" ,- Multi-State Filer, or Box "2" - Subject to Credit Reduction.

  1. Employers who paid Federal taxable wages in only one state are considered to be "Single State" filers and should enter in Box "1a" the abbreviation of the state in which the Federal unemployment taxable wages were paid. See Exhibit 3.11.154-6 for a list of the valid abbreviations for each state.

    Note:

    "G" coded returns are not edited.

  2. Employers who paid Federal taxable wages in more than one state or territory are considered to be "Multi-State" filers and should mark Box 1b. A completed Schedule A indicate which of the 50 US States, District of Columbia, Puerto Rico or US Virgin Islands employee wages were paid should filed with return. For an explanation of Schedule A, see IRM 3.11.154.6.9.

  3. All employer who have paid employee wages in a "credit reduction state" for the tax year should check Box "2" and file a completed Schedule A with their Form 940 or Form 940PR return. For an explanation of Schedule A, see IRM 3.11.154.6.9.

    Exception:

    Credit Reduction is not applicable to IRC 6020(b) returns, Early-Filed returns, non-taxable returns, or on returns claiming a Line 9 amount.

    Note:

    For tax years 2009 through 2014, there were Credit Reduction states. See Exhibit 3.11.154-13 for a table of "Credit Reduction States, Years and Rates"

  4. If Box "1a" and/or Box "1b" , and/or Box "2" , Is or Is not marked examine the return and attachments to determine and use the table below to determine the proper boxes that's would be marked:

    If... And... Then...

    Box 1a contains an entry, or
    an attachment or Schedule A indicates the taxpayer is a single state filer and the return is taxable,

    Box 1a entry is missing or is not a valid state code or
    the attachment or the Schedule A indicates the entry is not a valid state code,

    See Exhibit 3.11.154-7 for a list of valid sate codes.

    1. Edit an asterisk (*) to the left of Box 1a, and to the left of the asterisk (*), edit the valid state code from the entity.

    Exception:

    If the state code in the entity portion of the return is AA, AE, AP, AS, FM, GU, MH, MP, or PW, or a foreign country, do not edit the state code.



    2. If unable to determine a valid state code,
    a. Edit an asterisk (*) to the left of Box 1a
    b. Edit an asterisk (*) to the left of Box 1b if marked.
    c. Edit an asterisk (*) to the left of Box 2 if marked.
    d. slash (/) across the attachment or the Schedule.

    Box 1a entry is a valid state code or the attachment indicates a valid state code,

    See Exhibit 3.11.154-7 for a list of valid sate codes.
    Determine if the state code is a valid Credit Reduction state. See Exhibit 3.11.154-13 for a list of valid Credit Reduction states.

    1. If the state code is not a valid Credit Reduction state,
    a. Edit an asterisk (*) to left of box 1b if marked.
    a. Edit an asterisk (*) to the left of Box 2 if marked.
    b. Slash (/) across the attachment or the Schedule A.

    2. If the state code is a valid Credit Reduction state,
    a. If Schedule A is not attached, prepare a dummy Schedule A by marking (X) the state code box for the state on Schedule A. (See IRM 3.11.154.6.9.1 for "Exceptions" to requiring a Schedule A.) Then continue to process the return.
    b. Edit an asterisk (*) to left of Box 1b if marked.
    c. Edit a mark in Box 2 If not marked.

    Box 1a contains an entry, or
    an attachment indicates the taxpayer is a single state filer, and
    the return is non-taxable,

    Box 1a entry is missing or not a valid state code or
    the attachment indicates the entry is not a valid state code,

    See Exhibit 3.11.154-7 for a list of valid sate codes.

    Determine if the entity state code is a valid Credit Reduction state. See Exhibit 3.11.154-13 for a list of valid Credit Reduction states.

    1. If the entity state code is not a Credit reduction state,
    a. Edit an asterisk (*) to the left of Box 1a, and to the left of the asterisk (*), edit entity state code.

    Exception:

    If he state code in the entity portion of the return is AA, AE, AP, AS, FM, GU, MH, MP, or PW, or a foreign country, do not edit the entity state code.


    b. Edit an asterisk (*) to left of Box 1b if marked.
    b. Edit an asterisk (*) to the left of Box 2 if marked.

    2. If the entity state code is a Credit Reduction state,
    a. edit an asterisk (*) to the left of Box 1a, and to the left of the asterisk (*) edit "ZZ" .
    b. Edit an asterisk to the left of Box 1b if marked.
    c. Edit an asterisk (*) to the left of Box 2 if marked.
     
    Box 1a entry is a valid state code or the attachment indicates a valid state code,

    See Exhibit 3.11.154-7 for a list of valid sate codes.

    Determine if the state code is a valid Credit Reduction state. See Exhibit 3.11.154-13 for a list of valid Credit Reduction states.

    1. If the state code is not a Credit reduction state,
    a. Edit an asterisk to left of Box 1b if marked.
    b. Edit an asterisk (*) to the left of Box 2 if marked.

    2. If the state code is a Credit Reduction state,
    a. Edit an asterisk (*) to the left of Box 1a, and to the left of the asterisk (*) edit "ZZ"
    b. Edit an asterisk (*) to the left of Box 1b if marked.
    c. Edit a mark in Box 2 if not marked.
      Box 1a has an entry and Box 1b is not marked,
    1. If Schedule A is not attached, prepare a dummy Schedule A from the attachment. Check the appropriate state boxes on Schedule A for each state. Do not compute the Credit Reduction amounts. The return will generate to ERS.

    Note:

    See IRM 3.11.154.6.4.3(1) for a list of filing conditions which waive the Schedule A requirement.



    2. Edit an asterisk (*) to the left of Box 1a to delete the state code.

    3. Mark Box 1b if not marked.
    4. Mark Box 2 if not marked.

    An attachment or Schedule A indicates the taxpayer is a multi state filer,
    Box 1a does or does not have entry and Box 1b is marked
    1. If multi-states are shown on Schedule A,
    a. Edit an asterisk (*) to the left of the entry in Box 1a.
    b. Mark Box 1b if not marked.
    c. Mark Box 2, if nor marked.

    2. If Schedule A is not attached,
    a. Prepare a dummy Schedule A.

    Note:

    See IRM 3.11.154.6.4.3(1) for a list of filing conditions which waive the Schedule A requirement.


    b. Check the appropriate state box for each state including the state originally shown in Box 1a.
    c. Enter the FUTA Wage amounts, if available, to the applicable column on Schedule A for each state. Do not compute any Credit Reduction amounts. The return will generate to ERS.
    d. Mark Box 1b, if not marked.
    e. Mark Box 2, if not marked.
    Box 1a does not have entry and Box 1b is not marked,

3.11.154.6.3  (01-01-2015)
Part 2, Form 940 and Form 940PR (Rev. 2006 and subsequent) - Determining Taxable FUTA Wages

  1. Part 2 on Form 940 and Form 940PR, Revision 2006 through 2014, is comprised of lines 3 through 8.

3.11.154.6.3.1  (01-01-2015)
Line 3 - Total Payments to All Employees

  1. The taxpayer will enter the amount of total payments made to all employees on Line 3, Total Payments to Employees.

    IF THEN
    The taxpayer enters the same amount on Line 3 and Line 5, Edit an asterisk (*) on Line 5 to make the return generate to Error Resolution.

3.11.154.6.3.2  (01-01-2015)
Line 4 - Payments Exempt from FUTA Tax

  1. The taxpayer will enter on Line 4 the total of all exempt payments, if any.

    IF THEN
    There is an entry on Line 4, Accept the taxpayer's figure.
    None of the boxes 4a through 4e are checked, Consider the entry to be box 4e. Do not correspond.
    Lines 4, 5, and 6 are identical significant entries other than zero, blank, etc., Consider them as a misplaced entry and correspond for the correct line entries.
    Lines 4, 5, and 6 all have zero, blank, etc., entries, but there are entries with significant amounts other than zero, blank, etc., on Line 7 (or 7a) and/or Line 8, Accept Lines 4, 5, and 6 being zero, blank, etc. Do not correspond to verify or secure the correct entries.

3.11.154.6.3.3  (01-01-2015)
Line 5 - Total Payments to Employees in Excess of $7,000

  1. The taxpayer will enter the amount of total payments made to employees in excess of $7,000.

    IF THEN
    The taxpayer enters the same amount on Line 3 and Line 5, Edit an asterisk (*) on Line 5 to make the return generate to Error Resolution.

3.11.154.6.3.4  (01-01-2015)
Line 6 - Subtotal

  1. Line 6 is the total sum of Lines 4 and 5 amounts.

    IF THEN
    There is no entry on Line 4 or Line 5, but there is an entry on Line 6, Accept the taxpayer's entry on Line 6. Do not correspond.
    If Line 6 is greater than Line 3, Correspond with the taxpayer using Form 12522 (Letter 142C, or local letter as permitted) requesting the correct amounts for line 3, line 4, line 5, and line 6.

    Note:

    The total of exempt and excess payments (Line 4 and Line 5) cannot exceed total payments to employees, (Line 3).

3.11.154.6.3.5  (01-01-2015)
Line 7, (Rev 2013, 2012 and 2010 or prior), or Line 7a, (Rev 2011)- Total Taxable FUTA Wages

  1. If amount is or is not present on line 7 do the following:

    IF THEN
    If there is an entry on Line 3 (Total Payments) and Lines 4 through 6 show an entry, such as, a "0" (zero), dash"-" or "None" written on the line, Edit the amount from Line 3 to Line 7 (or Line 7a, Rev 2011)
    Line 3 and Line 7 (Rev 2014 - 2012 or 2010 - 2006) or Line 7a, (Rev 2011) have no entries (blank), Tax Year 2014 - 2012 or 2010 and prior:
    1. Review the return and attachments for an indication by the taxpayer; e.g., "Final" , "Out of Business" , "No Activity" , etc.
    2. If there is no indication, continue to process the return. The return may generate to ERS for correction.

    Note:

    If the taxpayer filed any Tax Year other than a 2011 on a Revision 2011 Form 940, place an asterisk (*) to the left of any entry on Line(s) 7b or 7d. If it appears the entry (or entries) were included in the Tax Before Adjustments, line 8, allow the return to generate to ERS.


    Tax Year 2011:
    1. Review the return and attachments for an indication by the taxpayer; e.g., "Final," "Out of Business" "No Activity" , etc.
    2. If there is no indication, allow the return to generate to ERS. The return should generate to ERS due to no entries or incorrect entries on lines 7b through 7e.
    Line 7 (Rev 2014 - 2012 or 2010 - 2006) or line 7a, (Rev 2011) is blank or zero because Line 6 equals Line 3,
    A. Tax Year 2014 - 2012 or 2010 and prior:
    1. Review the return and attachments for confirmation of the entries, or for revised entries.
    2. If there is no indication, continue to process the return. The return may generate to ERS for correction.

    Note:

    If the taxpayer filed any Tax Year other than 2011 on a Revision 2011 Form 940, place an asterisk (*) to the left of any entry on Line(s) 7b or 7d. If it appears the entry (or entries) were included in the Tax Before Adjustments, line 8, allow the return to generate to ERS.



    B. Tax Year 2011:
    1. Review the return and attachments for confirmation of the entries, or for revised entries.
    2. If there is no indication, allow the return to generate to ERS. The return should fall to ERS due to no entries or incorrect entries on lines 7b through 7e.

3.11.154.6.3.6  (01-01-2015)
Line 7b, - FUTA Wages paid before 7/1/2011

  1. Line 7b, is FUTA Wages paid before 07/01/2011 from line 7a, Total Taxable FUTA Wages paid:

    1. IF AND THEN
      Line 7b was not on the form revision, The return is a revision 2012 and subsequent or 2010 and prior,
      A. Tax Year 2014 - 2012, or 2010 and prior:
      Code and Edit has no action.

      B. Tax Year 2011
      1. Code and Edit should review the return to ensure its complete, e.g., name, complete address, tax period clearly indicated, filing status- single or multi-state, entries on lines (where needed), signature, etc.
      Line 7b does not have an entry or the entry is "None", zero (0), etc., Revision 2011, 1. Tax Year 2014 - 2012, or 2010 and prior:
      Code and Edit has no action.

      2. Tax Year 2011:
      a. Code and Edit should review the return and attachments for the line 7b amount.
      b. If an amount for line 7b cannot be determined, take no action.
      c. If an amount for line 7b can be determined, edit the amount to the left of line 7b.
      Do not calculate line 7c, or the tax on line 8.
      Line 7b contains a significant entry, Revision 2011 - for Tax Year 2014 and subsequent or 2010 and prior,

      1. Asterisk (*) the entry on lines 7b and 7d.
      Revision 2011 - for Tax Year 2011, No action is required, Continue to edit the remainder of the return.

3.11.154.6.3.7  (01-01-2015)
Line 7d - FUTA Wages paid after 06/30/2011

  1. Line 7d, is FUTA Wages paid after 06/30/2011 from line 7a, Total Taxable FUTA Wages paid:

    IF AND THEN
    Line 7d was not on the form revision, Revision 2014 - 2012, or 2010 and prior
    1. Tax Year 2014 - 2012, or 2010 and prior:
    a. Code and Edit has no action.

    2. Tax Year 2011
    a. Code and Edit should review the return to ensure its complete, e.g., name, complete address, tax period clearly indicated, filing status- single or multi-state, entries on lines (where needed), signature, etc.

    b. Form 940 revisions (other than on Rev 2011), no action is needed by Code & Edit.
    Line 7d does not have an entry or the entry is "None", zero (0), etc., Revision 2011,
    1. Tax Year 2014 - 2012, or 2010 and prior:
    a. Code and Edit has no action.

    2. Tax Year 2011:
    a. Code and Edit should review the return and attachments for the line 7d amount

    b. If an amount for line 7d cannot be determined, take no action.
    c. If an amount for line 7d can be determined, edit the entry to the left of line 7d. Do not calculate line 7e, or the tax on line 8.
    Line 7d contains a significant entry, Revision 2011 for Tax Year 2014 - 2012, or 2010 and prior,
    1. Asterisk (*) the entry on lines 7d and 7b.
    2. If there is no entry in box 7e, take no action.
    Revision 2011 for Tax Year 2011, No action is required, Continue to edit the remainder of the return.

3.11.154.6.3.8  (01-01-2015)
Line 8 - FUTA Tax Before Adjustments

  1. If an amount is or is not present on line 8, do the following:

    IF THEN
    Line 8 is blank, "0" or "none" , Do not compute or edit an amount on line 8.
    Line 9 is illegible, Asterisk the negative entry.
    The entry is a negative number, Asterisk the negative entry.

3.11.154.6.4  (01-01-2015)
Part 3, Form 940 and Form 940PR (Revision 2006 and subsequent) - Adjustments and Credit Reduction

  1. Part 3 contains the taxpayers amounts for Adjustments and Credit Reduction lines 9, 10, and 11.

3.11.154.6.4.1  (01-01-2015)
Line 9 - All Wages Paid Excluded From State Unemployment Tax

  1. Line 9 is taxpayers entry for All Taxable FUTA Wages paid excluded from state unemployment tax:

    IF AND THEN
    There are significant entries on both Line 9 and Line 10   There cannot be an entry also on Line 10. Enter an asterisk (*) as closely as possible to the left of the entry on Line 10.
    There are significant entries on both Line 9 and Line 11  
    There cannot be an entry on Lines 9 and 11, even if credit Reduction applies:

    1. Asterisk (*) the entry on line 11.
    2. Do not check box 2 if blank.
    3. Asterisk (*) if marked.
    4. Do not dummy a Schedule A if present.
    5. If Schedule A is present edit a slash through the Schedule A.
    Both lines 10 and 11 are blank The line 9 entry is equal to:
    a. The total of some or all of the previous lines above Line 9, or

    The taxpayer's Line 12 entry,
    Asterisk (*) out the line 9 entry.
    There is a valid entry on Line 10 or Line 11 The Line 9 entry is equal to the total of some or all of the previous lines above line 9 Asterisk (*) out the line 9 entry

3.11.154.6.4.2  (01-01-2015)
Line 10 - Some FUTA Wages Paid Excluded from State Unemployment Tax, or
State Unemployment Tax Was Paid Late

  1. Line 10 is taxpayers entry for Some Taxable FUTA Wages paid excluded from state unemployment tax or state unemployment tax paid late:

    IF THEN
    Both Line 9 and Line 10 have entries, There cannot be an entry on line 10. Enter an asterisk (*) as closely as possible to the left of the entry on line 10.
    Both line 10 and line 11 have entries, No action is necessary – the taxpayer is allowed to have amounts on both lines.

3.11.154.6.4.3  (01-01-2015)
Line 11 - Credit Reduction

  1. If FUTA wages are paid to an employee, or to employees, in at least one state subject to Credit Reduction, or in multiple states, the employer must file a Schedule A (Rev 2011 or subsequent) with their return.

    Exception:

    Credit Reduction should not be computed for non-taxable returns, (i.e., line 5 equals line 3), early filed returns, IRC 6020(b) returns, or for return claiming an amount on line 9. For those returns Line 11 should not contain an amount. If an amount was entered on Line 11, edit an asterisk (*) to the left of the entry of Line 11.

  2. If the taxpayer does not attach a Schedule A, (when required), or the Schedule A filed with the return is blank, or missing, Code and Edit should review the return and any attachments for an indication of the states in which employees were paid, and for the wage amount(s) paid in each state.

    1. If the state information is found, (e.g., the states in which wages were paid, and the wage amount paid in each state to employees), the Code and Edit examiner should prepare a "dummy " Schedule A (if not attached) with the state information.

    2. If the Schedule A is attached but blank, Code and Edit should enter the state information to the Schedule A. Code and Edit is not required to compute the Credit Reduction on the Schedule A.

      Exception:

      Though a return may indicate wages paid in one or more states, Credit Reduction should not be computed for non-taxable returns, (i.e., line 5 equals line 3), early filed returns, IRC 6020(b) returns, or for returns claiming a Line 9 amount. For those returns, Line 11 should not contain an amount. If an amount was entered to Line 11, edit an asterisk (*) to the left of Line 11.

  3. If state information is not found upon review of the return and attachments, and a dummy Schedule A cannot be prepared, (when missing or unattached), then refer to the procedures below for the return filing type.

    1. "Taxpayer claims a single state- " Edit the amount from line 7 (Rev. 2014 - 2012 or 2010 - 2006) or line 7a, (Rev 2011) to the Schedule A in the "FUTA Taxable Wages" column alongside the applicable state.

      Note:

      Do not compute the Credit Reduction amount using the applicable State credit reduction rate, or edit an amount to Form 940, line 11. Allow the return to fall out to Error Resolution.

    2. "Taxpayer claims multiple states- " No action is required by Code and Edit. The Form 940 will generate to Error Resolution.

    IF THEN
    There is an entry greater than zero (or $0.00, or "None, etc.) on Line 9 and Line 11,
    There cannot be an entry on Lines 9 and 11, even if credit Reduction applies:

    1. Asterisk (*) the entry on line 11.
    2. Do not check box 2 if blank.
    3. Asterisk (*) if marked.
    4. Do not dummy a Schedule A if present.
    5. If Schedule A is present edit a slash through the Schedule A.
    There are entries on Line 10 and Line 11, No action is necessary. The taxpayer is allowed to have amounts on both lines.
    There is any entry on Line 11 other than Zero or 0.00 and the return is submitted for a state(s) not subject to credit reduction in the tax period year, Asterisk (*) the entry on Line 11

3.11.154.6.5  (01-01-2015)
Part 4, Form 940 and 940PR (Revision 2006 and subsequent) - Determine FUTA Tax After Adjustments, and
Balance Due or Overpayment

  1. In Part 4 of Form 940 or Form 940PR, the taxpayer calculates the total FUTA tax for the return tax year, applies any payments, deposits, or overpayments from a prior year against the calculated FUTA tax, and determines the balance due or overpayment amount.

3.11.154.6.5.1  (01-01-2015)
Line 12 - Total FUTA Tax After Adjustments

  1. Line 12, Total FUTA Tax After Adjustments, is taxpayers for Federal Unemployment Tax (FUTA) after adjustments.

    IF THEN
    Line 12 is "zero" blank, dash or none, Edit the total of Lines 8, 9, 10, and 11 to Line 12.
    Line 12, Line 13, and Line 14 are the same amount, Edit an asterisk (*) to the left of the entry on line 13.
    The entry is a negative number, Enter an asterisk (*) as closely as possible to the left of the entry on Line 12.

3.11.154.6.5.2  (01-01-2015)
Line 13 - FUTA Tax Deposited

  1. The amount in Line 13 should be the total amount of FUTA tax deposited for the year of the return. This amount should also include any credit elect applied from a prior tax year.

    IF THEN
    Line 13 is blank or contains an entry, and the line cannot be perfected from the return or an attachment, Leave Line 13 as filed.
    The entry is a negative number, Enter an asterisk (*) as closely as possible to the left of the entry on Line 13.

3.11.154.6.5.3  (01-01-2015)
Line 14 - Balance Due

  1. If any amounts are or are not present on lines 12, 13, or 14, do the following:

    IF THEN
    Line 12, Line 13, and Line 14 are the same amount, Edit an asterisk (*) to the left of the entry on line 13.
    Line 12 is more than line 13, and line 14 is blank or illegible,
    1. Perfect line 14 by subtracting line 13 from line 12.

    2. If line 13 is blank, dash, zero, None, etc., edit line 12 to line 14.
    The return shows an FTD Penalty, Subtract the FTD penalty amount from the Line 14 balance due amount.
    Line 14 includes a penalty amount (other than the FTD penalty) or interest, Reduce the balance due by these amounts.

3.11.154.6.5.4  (01-01-2015)
Line 15 - Overpayment

  1. If an amount is or is not present on line 15, do the following:

    IF THEN
    Line 13 is more than Line 12, The difference should be entered on Line 15.
    Line 15 is zero (0), blank, dash, None, N/A, or illegible, and line 13 is more than line 12,
    1. Subtract line 13 from line 12.

    2. Edit the difference to line 15.
    The return shows a FTD Penalty, Add the FTD penalty to the overpayment.

More Internal Revenue Manual