3.11.154  Unemployment Tax Returns (Cont. 1)

3.11.154.3 
Special Conditions

3.11.154.3.7  (01-01-2014)
♦ 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 3.11.154-4 .

  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" ,

    • 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" except "W" , "3" , and/or ERS Action Codes.

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

3.11.154.3.8  (01-01-2014)
♦ 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  (01-01-2014)
♦ 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.

    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  (01-01-2014)
♦ 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  (01-01-2014)
♦ 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  (01-01-2014)
♦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  (01-01-2014)
♦ 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 3.11.154-5.

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

3.11.154.3.9.1  (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 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. 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.

    Note:

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

  6. 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.
  7. Examine returns that have any color other than red editing in the tax data section to determine if the corrections are the result of improper perfection or taxpayer error.

    IF THEN
    Improper perfection, Edit the same correction in red to the appropriate area.
    Taxpayer error, Leave the entries as shown on the document.
  8. An IRS Received Date must be present on all re-input returns.

    IF THEN
    Received date is not present, Edit the received date to the middle of the return.
    Multiple received dates are present, Circle all but the earliest date.
  9. 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.).

  10. 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  (01-01-2014)
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. 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.

    IF THEN
    Received date is not present, Edit a received date to the middle of the return.
    The return is an early filed return See IRM 3.11.154.2.20 paragraph (5) and follow these procedures if they apply.
    Multiple received dates are present, Circle out the green rocker and edit marks that may indicate a receipt of remittance.
  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  (01-01-2014)
♦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.

    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  (01-01-2014)
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.

      3. Detach and route Schedule H to IMF Code and Edit. Attach Form 4227 to Schedule H and 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  (01-01-2014)
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  (01-01-2014)
Substitute Forms Received from Preparers

  1. Some employers have been given permission by National Office to file computer-printed Forms 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  (01-01-2014)
♦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 3.11.154-11.

  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 3.11.154-13,

    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  (01-01-2014)
♦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 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" .

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3.11.154.3.16  (01-01-2014)
♦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  (01-01-2014)
Aggregate Form 940 Returns and Choreworkers

  1. Aggregate Form 940 returns will not be accepted unless the return shows "State" , " City" or "County" in the entity area, or "Notice 2003-70" , "Fiscal Agent" , " Fiscal Intermediary" , "Home-Care Service Providers" , "Household Employer Agent" , or "Choreworkers" noted on the return. These returns should be processed as submitted. If any of these notations are not present, correspond and send the return back to the taxpayer to inform them that 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.

    Note:

    Do not edit CCC "J" when the taxpayer requests abatement for Failing to Make Timely Deposits when the return is submitted. 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" .

3.11.154.3.18  (01-01-2014)
♦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  (01-01-2014)
♦ 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 Accounts Management. Notate "Protective Claim" in the remarks box of Form 4227.

3.11.154.5  (01-01-2014)
♦ 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  (01-01-2014)
♦ Entity Perfection - Employer Identification Number (EIN) ♦

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

  2. The EIN is located 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 Page 1 and Page 2 of Form 940 and 940PR (Rev 2006 or subsequent) are separate sheets make sure that the EIN is present on page 2 and matches the EIN in the entity on the first page, e.g. page 1. If the EIN is missing on Page 2, edit the last 4 digits of the EIN in the proper location. If the EIN on page 2 does not match the EIN in the entity of the first page, edit an asterisk to the left of the EIN on page 2 and edit the last four digits of the EIN to the left of the asterisk. Also ensure the EIN on Schedule A matches the EIN in the entity area of the first page of Form 940 or 940PR. If the EIN does not match, asterisk (*) to the left and line through the EIN and enter the last 4 digits of the correct EIN. Also, enter the last 4 digits, if there is no taxpayer entry.

  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. See Figure 3.11.154-6 and also see Figure 3.11.154-7.

    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.

    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.

3.11.154.5.2  (01-01-2014)
♦ 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  (01-01-2014)
Entity Perfection -"In Care of" Name

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

  2. Ensure 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" .
    2. Edit the "in care of name" above the street address beginning with the % 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 % 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.
    2. Edit an asterisk (*) to the left and line through the business address and input TC "014" .
    3. Continue editing the return.

    Note:

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

  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  (01-01-2014)
♦ 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.
    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.
    2. Notate "TC 014" in the upper left margin.
    3. Input "TC 014" . See Figure 3.11.154-8.
    One street address is shown, The Form 940 (or Form 940-PR) 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.
    2. Notate "TC 014" in the upper left margin.
    3. Input "TC 014" . See Figure 3.11.154-9.
    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 3.11.154-8

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    Figure 3.11.154-9

    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 %) if it is present with an address. Do not use the ampersand (&) and the percent symbol (%) 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  (01-01-2014)
♦ 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 3.11.154-8 for official foreign country codes.

    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, 1. Edit the appropriate providence, state, or territory abbreviation. See Exhibit 3.11.154-9
      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  (01-01-2014)
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.
    2. Edit the appropriate country code based on the providence/territory preceded by a "/" and followed by a "/$" as the last entry in the address.
    The foreign address does not contain a Canadian Providence/Territory name or abbreviation shown in the table below, 1. Edit an asterisk (*) and line through the country name.
    2. Edit the country code "/CA/$" 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  (01-01-2014)
♦ Entity State Codes ♦

  1. An Entity State Code is required on ALL Forms 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 940/940PR, 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 3.11.154-8

3.11.154.6  (01-01-2014)
Form 940 and Form 940PR - Code and Edit Return Procedures (Rev. 2006 and subsequent)

  1. For editing Form 940/940PR (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  (01-01-2014)
"Type of Return" Boxes - Form 940/940PR (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. Edit CCC "9" .
    Box "d" is checked, The taxpayer is indicating this is their final return and that they have stopped paying wages. Edit CCC "F" .
    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.
    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  (01-01-2014)
Form 940/940PR (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 3.11.154.6.2.2 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  (01-01-2014)
Box "1a" ,- Single State Filer or Box "1b" ,- Multi-State Filer

  1. Employers who paid Federal taxable wages in only one state are considered to be "Single State" filers. Box "1a" is used by single state filers to enter the abbreviation of the state in which the Federal unemployment taxable wages were paid. See Exhibit 3.11.154-5 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. Box 1b, when checked, identifies the employer as a "Multi-State" filer. The employer attaches a completed Schedule A to the return to indicate which of the 50 US States, District of Columbia, Puerto Rico or US Virgin Islands employee wages were paid. For an explanation of Schedule A, see IRM 3.11.154.6.9.

  3. If the taxpayer has marked Box "1a" and/or Box "1b" , examine the return and attachments to determine the taxpayer's intent. Use the table below.

    IF THEN
    Box "1a" contains an entry, Box "1b" should not be marked. Only one of these boxes can contain an entry,
    The taxpayer is a single state filer (Box 1a contains an entry, or an attachment indicates the taxpayer is a single state filer) and the return is taxable, .
    1. Review Box 1a to determine if the box contains a valid state code. See Exhibit 3.11.154-7.

      Note:

      If Schedule A or other attachment indicates the taxpayer is a single state filer, but Box 1a is blank, enter the state code from the entry on Schedule A to Box 1a.
      a. Then, if the return is being filed for a Credit Reduction (CR) year, use Exhibit 3.11.154-7 to determine if that state is a Credit Reduction (CR) state. If not, continue to process. Exception: If the state is not a CR state, the examiner can draw a slash (/) across the Schedule A to delete it.

      b. If the state is a Credit Reduction state, and 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.

      c. If the Schedule A shows multiple states, mark (X) box 2 and delete (*) box 1a.

    2. If the taxpayer's entry in Box 1a is not a valid state code, or the entry is incorrect for a state, edit an asterisk (*) to the left of Box 1a, and to the left of the asterisk (*), edit the correct state code.

    3. If the taxpayer's entry in Box 1a is a valid state code, (or after being corrected) and the return year is a Credit Reduction year, then follow procedures a. through c in the NOTE above

    4. If the state is a Credit Reduction state, (or Schedule A shows more than one state), ensure Box 2 is checked. If Box 2 is not checked, "X" the box.

    The taxpayer is a single state filer subject to Credit Reduction and the return is non-taxable, (Box 1a contains an entry, or an attachment indicates the taxpayer is a single state filer)
    1. Review the entry in Box 1a to determine if the box contains a valid state code. See Exhibit 3.11.154-7.

      1. If the entry in Box 1a is a valid state code, continue to process the remainder of the return

      2. 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 3.11.154-14.

      3. If the state is a CR state, delete (*) entry in box 1a, and enter "ZZ.

      4. If the state is not a CR state, enter the entity state code.

    Box "1b" is marked and Schedule A is attached, See IRM 3.11.154.6.9 for instructions.
    Box "1a" contains a valid state code but an attachment indicates the employer is a multi-state filer.
    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 and mark Box 2, if not marked."

    Box "1b" is marked and Schedule A is not attached,
    1. Review the return and attachments for an additional indication of multiple states.

    2. If there is no further indication of multiple states on the return or on an attachment, edit the valid state code from the entity section of the return to Box "1a" Use an asterisk (*) to delete Box "1b" If the State shown in the entity portion is a Credit Reduction state, also check Box 2. This will cause the return to error in ERS.

    Box "1a" contains a valid state code and Box "1b" is checked,
    1. Review the return and attachments.

    2. If the state shown in Box "1a" is the only state checked on Schedule A, continue to process the return. Enter an asterisk (*) to the left of the entry in Box "1b"

      Note:

      Perform a visual check of Schedule A to ensure the state entered in box 1a is the same state box checked on Schedule A. If it is, no further editing is necessary on Schedule A. If not, asterisk the incorrect state box on Schedule A, and check the correct state box for the state in Box 1a.

    3. If multi-states are shown on Schedule A, enter an asterisk (*) to the left of the entry in Box 1a. Also, mark Box 2, if blank.

    4. If Schedule A is not attached, but the return or attachments indicate the employer is a multi-state filer, 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.


      Check the appropriate state box for each state including the state originally shown in Box 1a. Also, 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.

    .
    There is no entry in Box "1a" or Box "1b" ,
    1. Examine the return and attachments.

    2. If there is no indication of a state (or more than one state) listed, edit the valid state code from the entity section of the return to Box "1a" .

    3. If multi-states are shown on Schedule A, mark Box "1b" and also mark box 2.

    4. If multi-states are shown on an attachment, prepare a dummy Schedule A (if not attached) and check the appropriate state boxes. Mark Box "1b" , and Box 2. Do not compute any Credit Reduction amounts. This will force the return to fallout to ERS.

      Note:

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

    5. If unable to determine a valid state code, leave blank

    There is no entry in Box "1a" or Box "1b" and 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, Leave Box 1a and Box 1b blank.

3.11.154.6.2.2  (01-01-2014)
Box "2" , - Schedule A Attached

  1. Employers are required to pay Federal Unemployment Tax on the first $7,000 earned by each individual they employ. The tax is used to pay the federal share of unemployment benefits paid to unemployed individuals living in the state. However, if the state paid more unemployment benefits during the year than the amount of unemployment taxes in their state's fund, then the state receives a loan from the federal government. This allows unemployed individuals in the state to continue to receive their benefits. When the state has not repaid the federal loan within two years, federal law provides for a decrease in the federal unemployment tax credit for each employer in the state. The decrease in the FUTA tax credit paid by an employer is known as "credit reduction" . This tax is shown on Form 940, Line 11. See Exhibit 3.11.154-1 and also see Exhibit 3.11.154-2.

  2. All employers who have paid wages in a "credit reduction state" for the tax year should check Box "2" and complete and file Schedule A with their Form 940 or Form 940PR return. For tax years 2009 through 2013, there were Credit Reduction states. For an explanation of Schedule A, see IRM 3.11.154.6.9.

  3. Box 2 should also be checked if the employer is a multi-state filer. All employers who pay employees in multiple states must complete Schedule A, even if there are no Credit Reduction states.

  4. See Exhibit 3.11.154-12 for a table of "Credit Reduction States, Years and Rates" .

    Note:

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

    IF THEN
    The taxpayer is a multi-state filer, or
    if Credit Reduction applies,
    Check Box "2" .
    The taxpayer checks Box "2" , A completed Schedule A should be attached.
    The taxpayer is a multi-state filer, or
    Credit Reduction applies but the taxpayer fails to mark Box "2" ,
    1. Check Box "2" .

    2. If the credit reduction information is available, i.e. an attachment shows the state or states where employee wages were paid and the state wage amounts, but Schedule A is not attached or missing, prepare a dummy Schedule A by marking (X) the appropriate state box for each state indicated on the return or attachment. See IRM 3.11.154.6.9.1.

      Note:

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

    The taxpayer enters a valid state code in Box "1a" and checks Box "2" ,
    1. If the state in Box 1a is a credit reduction state, but Schedule A is not attached or missing, prepare a dummy Schedule A (Rev 2011 or subsequent).

      Note:

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

    2. Check the box to the left of the state abbreviation for the state shown in the entity portion of the return. Refer to See Exhibit 3.11.154-12 for Credit Reduction Years, States and Rates.

    3. If the state shown in Box "1a" is not a credit reduction state:

      1. Edit an asterisk (*) to the left of the entry in Box "2"

      2. With only one state on Schedule A, edit a slash ("/") across the Schedule A to indicate to Data Conversion not to capture the form.

      3. Edit an asterisk (*) to the left of the entry on Line 11, Form 940.

    The taxpayer checks Box "1b" and Box "2" , Review the return and attachments

    Reminder:

    As a multiple state filer, (Box 1b checked), Schedule A is required to be attached whether FUTA wages were reported paid in a Credit Reduction state(s) or not.

    1. If Schedule A is attached, and indicates multiple states, continue to process the return.

    2. If Schedule A is not attached, but the return or attachment indicates the applicable states, then Dummy a Schedule A and mark (X) the applicable state code for each state shown. Allow the return to generate to ERS. See Exhibit 3.11.154-12 for" Credit Reduction Years, States and Rates."

      Note:

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

    3. If Schedule A is not attached, blank, or incomplete, and you are unable to determine the states and/or credit reduction state wage information, continue to process the return. The return will generate to Error Resolution.

    Caution:

    Be sure to edit an asterisk (*) to the left of any box or line being deleted.

3.11.154.6.3  (01-01-2014)
Part 2, Form 940/940PR (Rev. 2006 and subsequent) - Determining Taxable FUTA Wages

  1. Part 2 on Form 940 and Form 940PR, Revision 2006 through 2013, is comprised of lines 3 through 8. The taxpayer should report the gross total wages payments made to all employees for the taxable year (Line 3), and then by moving down the form to each line, be able to determine the taxable FUTA wages (line 7, Rev 2006-2010 and 2012-2013, or line 7a, Rev 2011), for the return tax year, and the FUTA tax on those wages before adjustments.

    Exception:

    Due to the expiration of the .002 surtax legislation on July 1, 2011, Form 940 and Form 940PR (Rev 2011) had 2 additional lines for FUTA wages and 2 lines to enter the computed tax. Line 7b showed the taxable FUTA wages before July 1, 2011 at a tax rate of .008, and a tax computation line (line 7c). Line 7d showed the taxable FUTA wages after June 30, 2011 at a tax rate of .006, and a tax computation line (line 7e).

  2. Part 2, Lines 3 through 5 should have been completed by the taxpayer. If there is insufficient information on Line(s) 3 through 5 to determine a correct Line 7, Total Taxable FUTA Wages, (Rev 2013 and 2012 and/or Rev 2010 and prior), amount, then allow the return to generate to Error Resolution.

3.11.154.6.3.1  (01-01-2014)
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  (01-01-2014)
Line 4 - Payments Exempt from FUTA Tax

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

  2. If the taxpayer enters on Line 4 an amount, they should check one or more of the boxes (boxes 4a through 4e) to indicate the type of exempt payment(s) being claimed.

    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  (01-01-2014)
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  (01-01-2014)
Line 6 - Subtotal

  1. The taxpayer should add Line 4 and Line 5 and enter the total on Line 6.

    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).

    The taxpayer does not respond,
    1. Enter an asterisk (*) as closely as possible to the left of the taxpayer's entry.

    2. Edit the amount on Line 3 to Line 7, (or Line 7a, Rev 2011) making the return taxable.

3.11.154.6.3.5  (01-01-2014)
Line 7, (Rev 2013, 2012 and 2010 or prior), or Line 7a, (Rev 2011)- Total Taxable FUTA Wages

  1. Line 7, (Rev 2013, 2012 and 2010 and prior), Total Taxable FUTA Wages, is computed by subtracting the Line 6, Subtotal (e.g. Line 4 + Line 5) from Line 3, Total Payments to All Employees. Do not change the line numbers for any return being processed through SCRIPS.

  2. If correspondence is needed, use Letter 142c (or local letter, as permitted) with the selective or open paragraph on Form 12522 (or for SCRIPS paperless editing). Edit AC 211

    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)

    Note:

    If the taxpayer files Tax Year 2011 on a Form 940 revision for the current year, or Revision 2010 and prior year form, the Form 940 should generate to Error Resolution (ERS). The return will also generate to ERS if Line 7a (Rev 2011) is completed, and any line(s) 7b through 7e are blank or have a calculation error.

    Line 3 and Line 7 (Rev 2013 and 2012, or Line 7a, Rev 2011) have no entries (blank) Tax Year 2013 and 2012: 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 Tax Year 2013 and 2012 on a Revision 2011, 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.
    3. 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.
    Tax Year 2010 and prior
    Follow tax year 2013 procedures
    Line 7 (Rev 2013 and 2012 or line 7a, Rev 2011) is blank or zero because Line 6 equals Line 3, Tax Year 2013 and 2012: 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 Tax Year 2013 or 2012 on a Revision 2011, 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 confirmation of the entries, or for revised entries.
    3. 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.
    Tax Year 2010 and prior
    Follow tax year 2013 procedures.

3.11.154.6.3.6  (01-01-2014)
Line 7b, (Rev 2011) -FUTA Wages paid before 7/1/2011

  1. Line 7b, FUTA Wages paid before 7/1/2011, applies to Tax Year 2011 only.

  2. Line 7b, FUTA Wages paid before 7/1/2011, represents the taxable FUTA Wages paid to employees before July 1, 2011, e.g. wages paid between January 1, 2011 and June 30, 2011. The tax on these FUTA wages is entered to the right of the wage amount, on line 7c, by multiplying the wages by the tax rate, e.g. (wages X .008).

    1. IF AND THEN
      Line 7b was not on the form revision, Revision 2013, 2012, or 2010 and prior Tax Year 2013, 2012, or 2010 and prior:
      Code and Edit has no action.

      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.

      2. During tax year 2011, legislation which raised the Federal Unemployment tax rate expired on June 30, 2011. Thus, taxpayers computed their FUTA tax liability on taxable wages paid before July 1, 2011 times .008, and on taxable wages paid after June 30, 2011 times .006. Since these separate calculation lines are not shown on Form 940 revisions (other than on Rev 2011), no changes are needed. Allow the return to fall to ERS to determine any tax calculation errors.

      Line 7b does not have an entry or the entry is "None", zero (0), etc., Revision 2011, Tax Year 2013, 2012, or 2010 and prior:
      Code and Edit has no action.

      Tax Year 2011
      1. Code and Edit should review the return and attachments for the line 7b amount.

      2. If an amount for line 7b cannot be determined, allow the return to generate to ERS

        If an amount for line 7b can be determined, enter the entry to the left of line 7b. Do not calculate line 7c, or the tax on line 8. Allow the return to fall to ERS.

      Line 7b contains a significant entry, Revision 2011, Tax Year 2013, 2012, or 2010 and prior:

      1. Asterisk (*) the entry in line 7b. Do the same for any entry on line 7d.
      2. No further action is necessary by Code and Edit. Allow the return to generate to ERS for the total tax, Schedule A, if needed, etc. Allow the return to continue processing.

      Tax Year 2011
      Code and Edit has no action. If there is no entry in box 7c, (or Line 7e) the return will generate to ERS.

3.11.154.6.3.7  (01-01-2014)
Line 7d - FUTA Wages paid after 06/30/2011

  1. Line 7d, FUTA Wages paid after 6/30/2011, applies to Tax Year 2011 only.

  2. Line 7d, FUTA Wages paid after 6/30/2011, represents the taxable FUTA Wages paid to employees after 6/30/2011, e.g. wages paid between July 1, 2011 and December 31, 2011. The tax on the FUTA wages is entered to the right of the wage amount, on line 7e, by multiplying the wages by the tax rate, e.g. (wages X .006).

    IF AND THEN
    Line 7d was not on the form revision, Revision 2013, 2012, or 2010 and prior Tax Year 2013, 2012, or 2010 and prior:
    Code and Edit has no action.

    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.

    2. During tax year 2011, legislation which raised the Federal Unemployment tax rate expired on June 30, 2011. Thus, taxpayers computed their FUTA tax liability on taxable wages paid before July 1, 2011 times .008, and on taxable wages paid after June 30, 2011 times .006. Since these separate calculation lines are not shown on Form 940 revisions (other than on Rev 2011), no changes are needed. Allow the return to fall to ERS to determine any tax calculation errors.

    Line 7d does not have an entry or the entry is "None", zero (0), etc., Revision 2011, Tax Year 2013, 2012, or 2010 and prior:
    Code and Edit has no action.

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

    2. If an amount for line 7d cannot be determined, allow the return to generate to ERS

    3. If an amount for line 7d can be determined, enter the entry to the left of line 7d. Do not calculate line 7e, or the tax on line 8. Allow the return to fall to ERS

    Line 7d contains a significant entry, Revision 2011, Tax Year 2013, 2012, or 2010 and prior:

    1. Asterisk (*) the entry in line 7d. Also delete any entry on line 7b.
    2. No further action is necessary by Code and Edit. Allow the return to generate to ERS for the total tax, Schedule A, if needed, etc. Allow the return to continue processing.

    Tax Year 2011
    Code and Edit has no action. If there is no entry in box 7e, the return will generate to ERS.

3.11.154.6.3.8  (01-01-2014)
Line 8 - FUTA Tax Before Adjustments

  1. Line 8 (Rev 2013 and 2012 ) is the result of multiplying the line 7, FUTA Wage entry by the tax rate of .006 for tax year 2012. For tax year 2010 and prior, line 8 is the result of multiplying line 7 entry by the tax rate of .008.

    Note:

    Line 8 (for Tax Year 2011 ) result is determined by several calculations. Refer to the Year 2011 Form 940, Lines 7a through 7e.

    • Multiply the wage entry on line 7b (FUTA Wages paid before July 1, 2011) by the tax rate of .008, and enter the tax on line 7c.

    • Multiply the wage entry on line 7d (FUTA Wages paid after June 30, 2011) by the tax rate of .006, and enter the tax on line 7e.

    • Then, the results from lines 7c and line 7e are added to determine Line 8, "Total tax before adjustment" .

    IF THEN
    Line 8 is blank or illegible, For Tax Year 2013 2012, or 2010 and prior: If there is an entry on Line 7 (greater than zero, blank, etc.) take no action. Error Resolution will perfect the return based on the computer's calculation. Do not compute the tax using total taxable wages.

    Note:

    If Tax Year 2011 was filed on Rev 2011, and there are wage amounts on lines 7b and 7d, but lines 7c and 7e are either blank, or have tax amounts, do not compute the tax for line 8.

    The entry is a negative number, Enter an asterisk (*) as closely as possible to the left of the entry.

3.11.154.6.4  (01-01-2014)
Part 3, Form 940/940PR (Revision 2006 and subsequent) - Adjustments and Credit Reduction

  1. The taxpayer determines the figures to enter on the adjustment lines. The taxpayer is not required to attach any supporting documentation. The 940 Instructions guide the taxpayer in determining the amount of the adjustments, if any. Adjustments apply only in certain instances, such as:

    • When all of the FUTA wages paid by the taxpayer were excluded from state unemployment tax.

    • When part of the FUTA wages paid by the taxpayer were excluded from state unemployment tax, or if the taxpayer paid any state unemployment tax late.

    • When the taxpayer paid FUTA wages in a Credit Reduction state. (Credit Reduction states were announced for Tax Years 2009 through 2012.)

    Note:

    If credit reduction does not apply for a particular year, Line 11 will not be present on the tax form. It will be grayed out.

3.11.154.6.4.1  (01-01-2014)
Line 9 - All Wages Paid Excluded From State Unemployment Tax

  1. A taxpayer should complete Line 9 only if all the FUTA wages paid were excluded from state unemployment tax. The taxpayer should calculate the minimum state tax amount (e.g. Line 7, Rev 2013 and subsequent, or Rev 2010 and prior, times .054) and enter the result on Line 9.

    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 also on Line 11, even if Credit Reduction applies.
    1. Enter an asterisk (*) as closely as possible to the left of the entry on Line 11.

    2. Do not edit the Schedule A. Allow the return to fall out to ERS.

    Both lines 10 and 11 are blank The line 9 entry is equal to:
    1. The total of some or all of the previous lines above Line 9, or

    2. 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  (01-01-2014)
Line 10 - Some FUTA Wages Were Paid Excluded from State Unemployment Tax, or
State Unemployment Tax Was Paid Late

  1. A taxpayer should complete line 10 only if part of the taxable FUTA wages were excluded from state unemployment tax, or if the state unemployment tax amount was paid late. The taxpayer should compute the amount on the worksheet in the Form 940 instructions and enter the result on Line 10.

    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  (01-01-2014)
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. 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. 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. (See "Note" for exceptions.)

    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. The "Total Credit Reduction" amount should appear in the box located in the lower right hand corner of Schedule A (Revision 2011 and subsequent) and on Form 940, Line 11. (See Exhibit 3.11.154-14 to determine the Credit Reduction states for the return tax year.)

    Note:

    if there are no Credit Reduction states for a particular year, Line 11 will be not present or will be grayed out on the return.

  4. 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. 2013 and 2012, 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 Line 11. If line 9 also contains an entry, edit an asterisk (*) to the left of the entry on line 11. Do not edit the Schedule A. Allow the return to fall out to ERS.
    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  (01-01-2014)
Part 4, Form 940/940PR (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  (01-01-2014)
Line 12 - Total FUTA Tax After Adjustments

  1. Line 12, Total FUTA Tax After Adjustments, represents the calculated Federal Unemployment Tax (FUTA) the taxpayer owes for the return's tax year. To determine the total FUTA tax due, the taxpayer adds Lines 8, 9, 10, and 11 (Line 8 + Line 9 + Line 10 + Line 11 = Line 12) and enters the result on Line 12, Total FUTA Tax 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  (01-01-2014)
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  (01-01-2014)
Line 14 - Balance Due

  1. If the balance due is $500 or more, the taxpayer must make a deposit. If the balance due is $500 or less, the taxpayer may elect to either make a final deposit for the return's tax year, or submit a payment with the return.

    Reminder:

    Code and Edit no longer edits a Penalty and Interest Code on Form 940 or Form 940PR.

    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  (01-01-2014)
Line 15 - Overpayment

  1. Line 15 should have an entry when Line 13, Total FUTA Deposits and Payments, is more than the Total FUTA Tax on Line 12. The taxpayer may indicate their election to either apply the overpayment to the next return ( by checking the box, "Apply to next return" ) or to receive a refund (by checking the box "Send a refund" .)

    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.

3.11.154.6.6  (01-01-2014)
Part 5, Form 940/940PR (Revision 2006 and subsequent) - Record of Quarterly Federal Unemployment Tax Liability (ROFTL)

  1. Part 5 of Form 940 or Form 940PR consists of Lines 16a through 16d, the Record of Tax Liability (ROFTL) quarterly liability amounts, and Line 17, "Total Tax Liability for the Year" amount. The quarterly amounts on Lines 16a through Line 16d are transcribed, and Line 17 is generated by the system (e.g. not transcribed).

    IF AND THEN
    Only the fourth quarter is blank, e.g. Line 16d Line 12 is larger than the total of the first three quarters, e.g. Total of Lines 16a through 16c, Edit the difference between Line 12 and the total of the three quarters (Lines 16a through 16c) to the fourth quarter, e.g. on Line 16d
    The taxpayer entered a negative figure in any quarter of the liability fields on Lines 16a through 16d,   Enter SIC "1" and see IRM 3.11.154.6.6.1
    The taxpayer entered FUTA wages on Lines 16a through 16d and/or the Total FUTA Wages on Line 17,
    • Line 7 (Rev 2013, 2012 or 2010 and prior, or Line 7a, Rev 2011) is the same amount as Line 17, (or the total of Lines 16a through 16d), and

    • Line 12 is ≡ ≡ ≡ ≡ or more,

    *For Tax Year 2013 and 2012
    1. Multiply each wage amount on Line(s) 16a through 16d by .006.

    2. Enter an asterisk (*) to the left of the taxpayer entry and enter the corrected figure to the left of the asterisk (*).


    See Figure 3.11.154-10. * For Tax Year 2011-
    1. Enter an asterisk (*) to the left of the taxpayer entry on Line 16a and Line 16b. Multiply the wage amounts on Line 16a and Line 16b by .008.

    2. Enter an asterisk (*) to the left of the taxpayer entry on Line 16c and Line 16d. Multiply those wage amounts on Line 16c and Line 16d by .006. Do not calculate a new amount for Line 17. It is not a transcribed line. The total deposits are generated.


    See Figure 3.11.154-11.

    Figure 3.11.154-10
    This image is too large to be displayed in the current screen. Please click the link to view the image.

    Figure 3.11.154-11
    This image is too large to be displayed in the current screen. Please click the link to view the image.

3.11.154.6.6.1  (01-01-2014)
Form 940/940PR (Revision 2006 and subsequent) - Schedule Indicator Code - SIC

  1. The Schedule Indicator Code (SIC) is used to notify the computer that the quarterly federal tax liability for Unemployment Tax (ROFTL) in Part 5 is incomplete or unnecessary.

  2. Edit SIC Code "1" when:

    1. Line 12 is $500 or less.

    2. The ROFTL total is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    3. There is a negative amount in the ROFTL.

    4. The ROFTL is blank.

    5. Line 17 ROFTL total has an entry, but there are no quarterly liability amounts present.

    6. Line 12 is ≡ ≡ ≡ ≡ ≡ ≡ , the ROFTL total is ≡ ≡ ≡ ≡ ≡ ≡ , and there is a difference of ≡ ≡ ≡ or more between the two amounts.

  3. When SIC "1" is edited, the computer determines if a Federal Tax Deposit (FTD) penalty should be assessed based on a quarterly average of the total liability for the year. Edit the SIC Code in the following locations:

    FORM LOCATION
    940 (Revision 2006 and subsequent) On Page 1, to the right of the Part 1 line. See Exhibit 3.11.154-1
    940PR (Revision 2006 and subsequent) On Page 1, to the right of the Parte 1 (Part 1) line. See Exhibit 3.11.154-2

3.11.154.6.7  (01-01-2014)
Part 6, Form 940/940PR (Revision 2006 and subsequent) - Third Party Designee

  1. See IRM 3.11.154.2.16

3.11.154.6.8  (01-01-2014)
Part 7, Form 940/940PR (Revision 2006 and subsequent)- Signature Area

  1. Part 7 of Form 940 and Form 940PR consists of an area on Page 2 for the taxpayer to sign the return, date the return, indicate their title, and provide a daytime phone number. The signature must appear in the "Sign your name here" box, or on the "Signature" line. See IRM 3.11.154.2.18.

  2. Below the signature area on Page 2, Form 940 or Form 940PR is a designated area for Paid Preparer information. See IRM 3.11.154.2.17.

3.11.154.6.9  (01-01-2014)
Schedule A (Form 940), (Rev. 2011 and subsequent) - Multi- State Employer and Credit Reduction Information

  1. Schedule A (Form 940) shows the amount of taxable FUTA Wages paid to employees by state, provides the State taxable Credit Reduction rate, if any and provides a way for the employer to determine the total Credit Reduction amount for Line 11 of Form 940 or Form 940PR. See Exhibit 3.11.154-14 for Tax Years and Credit Reduction Rates."

    Exception:

    Credit Reduction should not be computed for non-taxable returns, (e.g. line 5 equals line 3), IRC 6020(b) returns, early filed returns, or returns claiming Line 9.

  2. To complete Schedule A, the taxpayer should check the box to the left of the state abbreviation for each state in which they were required to pay state unemployment tax. Then, enter the amount of taxable wages paid to employees within the state, and if the state was subject to Credit Reduction, multiply the State Wage amount by the State Credit Reduction rate and enter the result in the third column.

  3. On Schedule A, if the box to the left of the state abbreviation is not checked, then check the box. Do not compute the Credit Reduction amount. Allow the return to fall out to ERS who will compute any Credit Reduction.

    IF THEN
    The entire Schedule A should be deleted,
    1. .Edit a slash (/) through the entire page being deleted.

      Reminder:

      Remember to place an asterisk (*) to the left of any entry on Line 11 if the entire Schedule A is being deleted.

    The Schedule A is attached for a single Credit Reduction state, and Box 1a contains an entry,
    1. Compare the Box 1a entry to the Schedule A to ensure the same state is shown. Correct any transcription errors made in Box 1a by checking the entry against Exhibit 3.11.154-7 to determine if its a valid state.

    2. If the state code is not valid in Box 1a, correct the entry by placing an asterisk (*) to the left of Box 1a and enter the correct state code.

    3. If the state code shown or entered in Box 1a is not the state marked on Schedule A, then place an asterisk (*) to the left of the state checked on Schedule A, and mark the box for the correct state.

    4. If the state is a Credit Reduction state, mark Box 2, if blank.

    5. If the same state is indicated on Schedule A, continue to process.

    An attached Schedule A indicates a single Credit Reduction state, but Box 1a is blank or illegible,
    1. Enter the correct state code for the state indicated on Schedule A in Box 1a.

    2. Determine if the state on Schedule A is a Credit Reduction state for the Form 940 tax year being filed. See Exhibit 3.11.154- 14

      1. If the state is a Credit Reduction state, mark Box 2, if blank.

      2. If the state is not a Credit Reduction state, no action is needed. Continue to process.

    3. If the state is a Credit Reduction state, allow the return to generate to Error Resolution to correct the Credit Resolution amount on Schedule A and the amount on the return, Line 11.

    Schedule A is attached, and multiple states are marked, Follow the procedures in IRM 3.11.154.6.2.1 for Box 1b being marked and Schedule A is attached.
    Schedule A is not attached, but Form 940 or an attachment indicates the taxpayer is a multi-state filer, e.g. Box 1b checked, multiple states are listed for the current tax year on a Form 940 page from a prior year revision, an attachment to a correct revision Form 940 indicating the multiple states, etc.
    1. Prepare a dummy Schedule A and check the appropriate box for each state.

      1. Mark Box 1b, if not marked.

      2. Mark Box 2, if not marked.

      3. If Box 1a is marked, edit an asterisk (*) to the left of the state code entry.

    Box 1a contains a valid state code and Box 1b is checked,
    1. If the only state checked on Schedule A is the state shown in Box 1a:

      1. Determine if the state on Schedule A is a Credit Reduction state for the return tax year (See Exhibit 3.11.154-14.)

      2. If the state is a Credit Reduction state, no action is needed on the Schedule A. Edit an asterisk (*) to the left of the entry in Box 1b. If Box 2 was not checked, check Box 2.

      3. If the state marked on Schedule A is not a Credit Reduction state, edit an asterisk (*) to the left of the state abbreviation on Schedule A. Also, edit an asterisk (*) to the left of the entry in Box 1b and Box 2 on the return, if checked.

    2. If Schedule A shows multiple states:

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

      2. Check that the state initially shown in Box 1a was also checked on Schedule A. If not checked, then check the box of the state on Schedule A.

      3. Check Box 2 on the return, if not checked.

    3. If Schedule A is not attached, but the return or attachments indicate the return is a multi-state filer:

      1. Prepare a dummy Schedule A (Rev 2011 and subsequent) by checking the appropriate state boxes.

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

      3. Check the box for the state initially shown in Box 1a on Schedule A, if not checked.

      4. Check Box 1b, if not checked.

      5. Check Box 2, if not checked.

    .
    There is no entry in Box 1a or Box 1b.
    1. Examine the return, Schedule A, and all attachments.

    2. If no states are listed:

      1. Consider the taxpayer to be a single state filer. Edit the valid state code from the entity section of the return to Box 1a.

      2. Determine if the state in the entity is a Credit Reduction state.

      3. If the state is not a Credit Reduction state for the return tax year, no action is needed. If the state in Box 1a is a Credit Reduction state for the return tax year, prepare a dummy Schedule A. See IRM 3.11.154.6.9.1, "Preparing a Dummy Schedule A" . Also, if Box 2 is blank, mark Box 2.

    3. If one or more Credit Reduction states or multiple states are listed on an attachment:

      1. Prepare a dummy Schedule A (Rev 2011 and subsequent). See IRM 3.11.154.6.9.1, "Preparing a Dummy Schedule A" Schedule A (Rev 2011) and check a box for each state indicated on the attachment.

      2. If one state is indicated, enter the state abbreviation in Box 1a, if blank and mark Box 2.
        If multiple states are indicated, mark Box 1b, if blank. Also, mark box 2, if blank.

    4. If multi-states are shown on the Schedule A, check Box 1b, if not checked, and/or Box 2, if not checked.

    5. If unable to determine a valid state code, leave blank.

3.11.154.6.9.1  (01-01-2014)
Preparing a "Dummy" Schedule A

  1. If a Schedule A is required, (i.e. Multi-State employer, or due to FUTA wages paid in a state subject to Credit Reduction, but not attached to the return), prepare a "dummy" Schedule A, if possible. Use Schedule A for the return tax year being filed, or if the return tax year is prior to year 2011, either Schedule A, Revision 2011 or Revision 2013.

    Exception:

    If the return has a valid entry on Line 9 (IRM 3.11.154.6.4.1), is a non-taxable return (IRM 3.11.154.3.4), is an early-filed return (IRM 3.11.154.2.20), or indicates IRC 6020(b) on its margin (IRM 3.11.154.3.8.1, Schedule A is not required. Also, do not calculate or edit Credit Reduction amounts or information if the return has one of the prior conditions. Also edit an asterisk (*) to the left of Box 2, and/or Line 11 if they contain an entry.

    Note:

    If a loose Schedule A is received without a Form 940, forward the Schedule A to Accounts Management.

  2. For processing, replace any Schedule A (Rev 2010 or prior) with a Schedule A, (Rev 2011 and subsequent).

    1. Mark the box to the left of each state on the dummy Schedule A (Revision 2011 or subsequent) which is indicated on the Schedule A (Rev 2010 or prior)

    2. Edit an asterisk (*) to the left of each state with an entry on Schedule A, (Rev. 2010 or prior) as you transfer the information to the Schedule A (Rev 2011 or subsequent). This will ensure all of the reported states have been transcribed. Then, place the Schedule A (Rev 2010 and prior) behind the Schedule A, (Rev 2011 and subsequent).

3.11.154.7  (01-01-2014)
Form 940- Revision 2005 and Prior

  1. General guidelines for editing returns: See Exhibit 3.11.154-1.

3.11.154.7.1  (01-01-2014)
Form 940, - Editing the "A" , "B" , "C" , "D" Indicator Questions (Revision 2005 and Prior)

  1. We will no longer edit the ABCD Indicator Code. No action is necessary.


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