3.11.154  Unemployment Tax Returns

Manual Transmittal

November 08, 2013

Purpose

(1) This transmits a revised guidance of IRM 3.11.154, Document and Analysis- Unemployment Tax Return

Material Changes

(1) Various editorial changes were made throughout the IRM.

(2) IRM 3.11.154.1 Revised explanation of Form 940(cg) (IPU 13U0361 issued 02-15-2013). Provided description of Form 940(cg) returns filed under IRC 6020(b) in same manner as Form 940 returns indicating IRM 6020(b). IPU 13U0040 issued 01-03-2013)

(3) IRM 3.11.154.1.2 Removed “Section” and or the section symbol after “IRC” according to consistency standards in IRM 1.11.8-7, Citation Standards.

(4) IRM 3.11.154.1.4 Updated TAS Web link. (IPU 13U004 issued 01-03-2013).

(5) IRM 3.11.154.2.2 Paragraph (2) added Tax Year 2013 reference.

(6) IRM 3.11.154.2.3 Made the following changes:

  • Changed reference 2012 to 2013 and also added Tax Year 2013 reference.

  • Changed referenced Exhibit 11.154-2 to Figure 3.11.154-1.

  • Moved old Exhibit 3.11.154-14 as new Figure 3.11.154-1 and all subsequent figures renumbered accordingly.

  • In paragraph (1) the IF/AND/THEN Table – for Form 940, Revision 2006 through 2010, filed for Tax Year 2012, corrected the data capture to SCRIPS. (IPU 13U0040 issued 01-03-2013)

  • In paragraph (2) the IF/THEN Table – added to the Note the reasons when a Revision 2012 return filed for a tax period 201112 will generate an error in ERS, and corrected the date capture to SCRIPS. (IPU 13U0040 issued 01-03-2013) (IPU 13U0040 901-03-2013)

  • In paragraph (4) the IF/AND/THEN table, delete duplicate text in IF column, e.g. "...is missing". Also In table, corrected procedure when page 2 (Form 940) is missing, or if the attached page 2 is for another type of return (i.e. Form 941). Incorrect Form for Page 2 (and vice versa) was shown in IPU 13U1125. Also corrected correspondence Letter 21C to 142C (or Letter 142(C/SP) for Form 940PR). (IPU 13U1156 issued 06-27-2013)

  • In paragraph (4) d) the IF/THEN Table added procedure for processing Form 940 returns with multiple Schedule A pages. (IPU 13U0703 issued 04-08-2013)

(7) IRM 3.11.154.2.6 Paragraph (4) added procedures for multiple Action Codes to the Exception. Also in paragraph (6) in the last Description column deleted reference to "Return has a foreign address and must be forwarded to OSPC" and deleted "Note: An APO/DPO/FPO address is not considered foreign." (IPU 13U0040 issued 01-03-2013)

(8) IRM 3.11.154.2.8 Made the following changes to paragraph (8) Routing Guide for Attachments table:

  • Added a note for Forms 2848, 2848-SP, and 8821 to refer to IRM 3.11.54.2.7 before routing the return. (IPU 13U1125 issued 06-20-2013)

  • Deleted "Note: If there is an indication on the document it is not an original, such as “copy” etc., process as a copy and detach as necessary."

  • Added CP 504 and procedures. Also added Form 3949, Information Report Referral, and Form 3949-A, Information Referral. (IPU 13U0040 issued 01-03-2013)

  • Deleted CP 267, No Math Error Credit Offset Notice, and added Form 8655, Reporting Agent Authorization. (IPU 13U0361 issued 02-15-2013)

  • Corrected action by providing IRM reference for Form 2848.

  • Added CP504-B and corrected routing information for Form 8655, Reporting Agent authorization, e.g. street name, for Accounts Management, Ogden. (IPU 13U0450 issued 03-04-2013)

  • In paragraph (8) Removed “Section” and or the section symbol after “IRC” according to consistency standards in IRM 1.11.8-7, Citation Standards.

(9) IRM 3.11.154.2.9.1 For Computer condition Code D, clarify procedures to send Letter 1382C whenever taxpayer has requested relief from Reasonable Cause for Failing to Pay Timely penalty. (IPU 13U1125 issued 06-20-2013)

(10) IRM 3.11.154.2.9.2 Made the following changes:

  • In paragraph (1) c) and (2) removed “Section” and or the section symbol after “IRC” according to consistency standards in IRM 1.11.8-7, Citation Standards. In paragraph (2) moved the "Caution" procedure before the "Note" procedure.

  • In IF/AND/THEN table clarified Entity only condition to mean Name or Name Control, EIN, Tax Year or period, and Address, (Street, City, State, and Zip Code). (IPU 13U1125 issued 06-20-2013)

  • Correct cross reference in last row of IF/THEN table for Schedule H. (IPU 13U0274 issued 02-04-2013)

(11) IRM 3.11.154.2.9.4 Changed "We will no longer" to "Do not" . Also clarified Computer Condition Code J, procedure to send Letter 1382C whenever the taxpayer has requested relief from Reasonable Cause for Failing to Make Timely Deposits penalty. (IPU 13U1125 issued 06-20-2013)

(12) IRM 3.11.154.2.9.6 Changed "We will no longer" to "Do not" . Also Clarified Computer Condition Code R, procedure to send Letter 1382C whenever the taxpayer has requested relief from Reasonable Cause for Failing to Timely File Return penalty. (IPU 13U1125 issued 06-20-2013)

(13) IRM 3.11.154.2.9.12 Changed "We will no longer" to "Do not" .

(14) IRM 3.11.154.2.9.13 Inserted old Exhibit 3.11.154-14 as new Figure 3.11.154-2 and all subsequent figures renumbered accordingly.

(15) IRM 3.11.154.2.12 Paragraph (1) removed “Section” and or the section symbol after “IRC” according to consistency standards in IRM 1.11.8-7, Citation Standards. Clarified Computer Condition Code 7 procedure to send Letter 1382C whenever the taxpayer has requested relief from Reasonable Cause for Failing to Timely File Return penalty.

(16) IRM 3.11.154.2.13 Paragraph (4) removed “Section” and or the section symbol after “IRC” according to consistency standards in IRM 1.11.8-7, Citation Standards.

(17) IRM 3.11.154.2.14 Made the following changes:

  • Added procedure on how to identify taxpayer correspondence. (IPU 13U0040 issued 01-03-2013)

  • On THEN side of table, made minor changes to wording for consistency. IPU 13I0040 issued 01-003-2013)

  • Paragraph (4) removed “Section” and or the section symbol after “IRC” according to consistency standards in IRM 1.11.8-7, Citation Standards. Also Under “Correspondence”, identified the two types of correspondence, and added explanation for each type. (IPU 13U0040 01-03-2013)

(18) IRM 3.11.154.2.18 Made the following changes:

  • Paragraph (1) removed “Section” and or the section symbol after “IRC” according to consistency standards in IRM 1.11.8-7, Citation Standards.

  • Delete procedural Note routing unsigned IRC 6020(b) returns to Campus ERS Planning and Analysis analyst. A replacement address was provided. (IPU 13U0040 issued 01-03-2013).

  • The table below (8), added Note that a signed For 8655, Reporting Agent Authorization, is not acceptable as a substitute when Form 940 (e filed) was rejected and is being processed as a paper return. (IPU 13U0040 issued 01-03-2013 and IPU 13U0361 issued 02-15-2013 amended the note.

(19) IRM 3.11.154.2.20 Paragraph (5) changed reference 2012 to 2013.

(20) IRM 3.11.154.3.1 Revised Manual and Ten Million Dollar Refund table procedures and raised the dollar amounts as transmitted in IPU 12U1651, dated Oct. 2, 2012. (IPU 13U0040 issued 01-03-2013) Deleted 45-Day Jeopardy and added Manual and revised instructions to clarify procedures.

(21) IRM 3.11.154.3.3 Made the following changes:

  • Paragraph (2) removed “Section” and or the section symbol after “IRC” according to consistency standards in IRM 1.11.8-7, Citation Standards.

  • The IF/THEN table (e.g. Table of “Received Date” priority) in the first row, moved the Note regarding private metered postmark from THEN to beneath the IF/THEN table. Also Added Note not to consider Received Dates circled by another function. (IPU 13U0040 issued 01-03-2013)

  • Revised Received Date editing format to “MMDDYY.” (IPU 13U0274 issued 02-04-2013)

(22) IRM 3.11.154.3.4 Made the following changes:

  • Revised paragraph (3) (a) procedures for Non Taxable Returns by providing step by step processing instructions. (IPU 13U0142 issued 01-16-2013) Originally this was erroneously shown as part of 3.11.154.3.3. (IPU 13U0040 issued 01-03-2013)

  • Paragraph (3) c) changed reference 2012 to 2013. In paragraph (3) removed “Section” and or the section symbol after “IRC” according to consistency standards in IRM 1.11.8-7, Citation Standards.

(23) IRM 3.11.154.3.6 Made the following changes:

  • Paragraph (1) removed “Section” and or the section symbol after “IRC” according to consistency standards in IRM 1.11.8-7, Citation Standards.

  • Corrected potential Statute return to 2 years and 10 months after Return Due Date. Delete IPU 13U1125 change within (1) and IF/AND/THEN tables. Potential Statute returns are within 2 years 9 months after Return Due Date. Change page attached shows change deleted. (IPU 13U1156 issued 06-27-2013)

  • Added paragraph (5) table showing procedures when to edit CCC W. Revised the 1st And procedure box to read "The return is stamped, "No Statute issue" , "Statute N/A" , or similar statement indicating there is no statute issue," . Revised the 2nd "If... Then..." procedures to change "Do not edit a CCC W" to "Do not edit a CCC W and continue processing return" . Original table was added in IPU 13U0634 issued 03-28-2013)

  • Paragraph (6) added Tax Year 2013 reference to the table.

(24) IRM 3.11.154.3.7 Made the following changes:

  • Paragraph (4) add the words "Only" for the statement of the required items on an Amended return (IPU 13U1125 issued 06-20-2013). "and edit if missing" to the procedures.

  • Added bold specific text, e.g. “Delinquent Original Statue Cleared” (or with similar phasing), to clarify that there are various Statute stamps on returns, and the IRM procedures should be followed. (IPU 13U0040 issued 01-03-2013)

(25) IRM 3.11.154.3.8 Paragraph (1) removed “Section” and or the section symbol after “IRC” according to consistency standards in IRM 1.11.8-7, Citation Standards.

(26) IRM 3.11.154.3.8.1 Made the following changes:

  • Removed “Section” and or the section symbol after “IRC” according to consistency standards in IRM 1.11.8-7, Citation Standards.

  • Added In IRC 6020(b) tridoc, added Note to explain Form 940(cg) filing and to clarify processing procedures. (IPU 13U0040 issued 01-03-2013)

  • Added back in to text, the requirement for tax examiners to route IRC 6020(b) returns through Planning and Analysis analyst. Only Planning and Analysis analyst should route IRM 6020(b) returns directly to Philadelphia. IPU 13U0197 issued 01-24-2013)

  • Clarified for IRC 6020b returns the location on the return margin of TC599 cc038 and TC599 cc039 indicators.

(27) IRM 3.11.154.3.8.2 The Compliance cc references for TC59x codes expanded to 3 digits. Established cc s will use a zero in first position. (IPU 13U0274 issued 02-04-2013)

(28) IRM 3.11.154.3.9 Paragraph (2) deleted "Note Enter an asterisk (*) in the signature box when a signature is not required on the return."

(29) IRM 3.11.154.3.9.2 Paragraph (5) added new procedures in the 3rd If/Then procedure box for early filed returns. Request made through SERP feedback Control # 201304374 issued on 09/06/2013. In paragraph (7) added new procedures in the 2nd If/Then box for early filed returns. Request made through SERP feedback Control # 201304375 issued on 09-06-2013. (IPU 13U1462 issued 09-16-2013.

(30) IRM 3.11.154.3.10 Paragraph (4) added new If/Then procedures for early filed returns. Request made through SERP feedback Control # 201304376 issued on 09/06/2013. (IPU 13U1462 issued 09-16-2013)

(31) IRM 3.11.154.3.14 The first "IF" box, e.g. added words identified as a frivolous return to condition. (IPU 13U0040 01-03-2013)

(32) IRM 3.11.154.3.15 Corrected text in paragraph (1) to match consistency text. (IPU 13U0040 issued 01-03-2013)

(33) IRM 3.11.154.3.17 Paragraph one second note changed the reference of "We will no longer" to "Do not" .

(34) IRM 3.11.154.4 Made a minor text change in first “IF” box, e.g. added words identified as a frivolous return to condition.

(35) IRM 3.11.154.5 Made the following changes:

  • Deleted all references and procedures in regards to check digits and pre addressed labels/returns.

  • Corrected text in (1) to match consistency text.

  • Deleted Figure 3.11.154-4, 3.11.154-5, and 3.11.154-6.

(36) IRM 3.11.154.5.1 Made the following changes:

  • “Entity Perfection – Employment Identification Number”, IF/THEN table (a) revised procedure when the taxpayer changed the EIN, and also changed the first name line on a Pre addressed Return. (IPU 13U0040 issued 01-03-2013)

  • Added back into IF/THEN table for Non-Preaddressed returns, procedures for multiple EINS on unnumbered returns. (IPU 13U0361 issued 02-15-2013)

  • The IF/THEN table (b) for Non-pre addressed returns, when an EIN is missing and you can determine the EIN, changed THEN procedures. Also, deleted row when Multiple EINs are present, but return is unnumbered. (IPU 13U0040 issued 01-03-2013)

  • Deleted all references and procedures in regards to check digits and pre addressed labels/returns.

  • Deleted Figure 3.11.154-7 and 3.11.154-8, and 3.11.154–9.

(37) IRM 3.11.154.5.2 Deleted all references and procedures in regards to check digits and pre addressed labels/returns. Also deleted Figure 1.11.154-12.

(38) IRM 3.11.154.5.4 Made the following changes:

  • Paragraph (2) added procedure to allow two business addresses on a Form 940, e.g. a mailing address and a physical location address. Also revised the 1st "Then" box the procedures to read "If not found, leave blank to allow the returns to fallout to ERS." (IPU 13U1125 issued 06-20-2013)

  • Paragraph (4) in the IF/AND/THEN table, moved if the address is blank or incomplete on the return or attachment, to the first row of the table. In IF/AND/THEN table, provide procedure when mailing address is the same on Form 8822 (or Form 8822-B), but there is no location address on Form 8822 (or Form 8822-B), line 7. Also provide procedure when mailing address is different on Form 8822 (or Form 8822-B), and/or there is a location address on Form 8822 (or Form 8822-B), line 7. For two street addresses, delete "Note" stating lined through address will be input before return leaves Code and Edit. Clarify procedures when only one street address is shown. (IPU 13U1156 issued 06-27-2013 revised IPU 13U1125 issued 06-20-2013)

  • Paragraph (4) the 1st then box procedure changed procedure 3) to read "If not found leave blank to allow the return to fallout to ERS. ". Request made through SERP feedback Control # 201304453 issued on 09/06/2013. (IPU 13U1462 issued 09-16-2013)

(39) IRM 3.11.154.5.6 Country Code-Canada IF/Then table, (first row) added procedure to see expanded table for Canadian Province/Territory Abbreviations, Postal Codes and Foreign Country Codes. Added Postal Codes to table. (IPU 13U0040 issued 01-03-2013)

(40) IRM 3.11.154.6.2.1 Made the following changes:

  • Paragraph (3) the second Then box procedure 1) changed the exception to read "Exception: If the state is not a CR state, the examiner can draw a slash (/) across the Schedule A to delete it." . Also changed paragraph 1) c to read "If the Schedule A shows multiple states, mark (X) box 2 and delete (*) box 1a." .

  • Added to IF/THEN table, if Box 1a is checked and Schedule A is attached. Provided procedures if Schedule A shows zero wages for Credit Reduction state. ( IPU 13U1156 issued 06-27-2013 deleted this procedure issued in IPU 13U1125 on 06-20-2013)

  • The third THEN box procedure changed paragraph 2) c to read "If the state is a CR state, delete (*) entry in box 1a, and enter "ZZ." . (IPU 13U0142 issued 01-16-2013)

  • Added new fourth box procedures in regards to when Box 1b is marked and Schedule A is attached.

  • The 8th Then procedure box changed paragraph 3) to read "If multi-states are shown on Schedule A, mark Box “1b” and also mark box 2." and paragraph 4) to read "If multi-states are shown on an attachment, prepare a dummy Schedule A (if not attached) and check the appropriate state boxes. Schedule A. Mark Box “1b”, and Box 2. Do not compute any Credit Reduction amounts. This will force the return to fallout to ERS."

  • Paragraph (3) procedures added as needed in the table a Note to see IRM 3.11.154.6.4.3 for a list of Exceptions which waive the requirement to attach Schedule A. (IPU 13U0040 issued 01-03-2013)

  • Paragraph (3) procedures added "Note" in IF/THEN table when Box 1a has an entry and Box 1b is also checked, to perform visual check of Schedule A to ensure Box 1a state was also checked on Schedule A. (IPU 13U0040 issued 01-03-2013)

(41) IRM 3.11.154.6.2.2 Made the following changes:

  • Paragraph (2) updated ending year to 2012 for Credit Reduction States. Also, deleted Note that for tax year 2012 Credit Reduction States will be announced. (IPU 13U0040 01-03-2013)

  • Paragraph (4) changed the first "If" box procedure to read "The taxpayer is a multi-state filer, or if Credit Reduction applies," and the first "Then" procedure to read "Check Box “2”." .

  • Paragraph (4) change the third If procedure to read "The taxpayer is a multi-state filer, or Credit Reduction applies, but the taxpayer fails to mark Box "2" ," and paragraph 1) in the Then procedure box to read "Check Box “2”." .

  • Paragraph (4) changed the fifth "Then" "Reminder" procedure to read "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. a) If Schedule A is attached, and indicates multiple states, continue to process the return. b) 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 3.11.154-14 for" Credit Reduction Years, States and Rates." " . (13U0450 issued 03-04-2013)

  • Added (as needed in the table) the Note to see IRM 3.11.154.6.4.3 for a list of Exceptions which waive the requirement to attach Schedule A. (IPU 13U0040 issued 01-03-2013)

  • The condition in the table that the return has Box 1b and Box 2 checked, but no Schedule A is attached, added blank or incomplete returns to those procedures. (IPU 13U0040 issued 01-03-2013)

  • Added to Note non-taxable returns as a condition when credit reduction does not apply. (IPU 134040 issued 01-03-2013)

  • The IF/THEN table, revise procedures when a single state filer files a taxable return from a Credit Resolution state, and from a state which is not a Credit Resolution state. In IF/THEN tables, delete requirement to enter state FUTA wage amount(s) on Schedule A. (IPU 13U0450 issued 03-04-2015)

(42) IRM 3.11.154.6.3 Paragraph (1) and (2) added tax year "2013" reference.

(43) IRM 3.11.154.6.3.2 The IF/THEN table clarify that when Lines 4, 5, and 6 are identical, its other than blank or zero. Also, added new condition for Line 4, 5, and 6, being zero, blank, etc. (IPU 13U0361 issued 02-15-2013). Revised by IPU 13U0450 issued 03-04-2013)

(44) IRM 3.11.154.6.3.5 Made the following changes:

  • Added to the Title, paragraph (1), and (2) tax year "2013" reference.

  • Correct line number to 6 being equal to line 3, e.g. rather than Line 5, resulting in Line 7 being blank or zero in IF/THEN table. (IPU 13U0361 issued 02-15-2013)

(45) IRM 3.11.154.6.3.6 Made the following changes

  • Added tax year" 2013" reference.

  • Revise procedures for Form 940 returns, Revisions 2010 and prior, or 2012 filed for tax year 2011, Line 7b since the line doesn't appear on those Revisions. (IPU 13U0361 issued 02-15-2013)

(46) IRM 3.11.154.6.3.7 Made the following changes:

  • Added tax year "2013" reference.

  • Paragraph (2) the second "Then" box procedure changed paragraph 2) to read "If an amount for line 7d cannot be determined, allow the return to generate to ERS." .

  • Added new paragraph 3) procedure to read "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." .

  • Revise procedures for Form 940 returns, Revisions 2010 and prior, or 2012 filed for tax year 2011, Line 7d since the line doesn't appear on those Revisions. (IPU 13U0361 issued 02-15-2013)

  • The last IF/AND/Then procedures corrected editing mark e.g. to an asterisk (*), in IF/THEN table when Form 940, Rev 2011 is filed for tax year 2010 and prior, or tax year 2012, and Line 7d contains an entry. (IPU 13U0040 issued 01-03-2013)

(47) IRM 3.11.154.6.3.8 Made the following changes:

  • Clarified explanation for Part 2, Line 8, FUTA Tax Before Adjustments. Also, in bullet, clarified how to determine Line 8 from Line 7c and Line 7e. (IPU 13U0040 issued 01-03-2013)

  • Added reference "2013" .

(48) IRM 3.11.154.6.3.6 Changed reference "2012" to "2013" .

(49) IRM 3.11.154.6.4.3 Made the following changes:

  • Revise explanation of Part 3, Line 11, Credit Reduction. Clarified in opening statement, Schedule A is required to be attached if FUTA wages were paid in one or more Credit Reduction states, or if FUTA wages are paid in multiple states, e.g. without respect if any of the states are Credit Reduction states. (IPU 13U0040 issued 01-03-2013)

  • Paragraph (2), revised text for Schedule A when blank, missing, or not attached. (IPU 13U0040 issued 01-03-2013)

  • IRM 3.11.154.6.4.3 After (3), reentered Note deleted in error. (IPU 13U0040 issued 01-03-2013)

  • Rewrote (4), e.g. procedures, if after reviewing return and attachments, Schedule A and/or state information is still not available. (IPU 13U0040 issued 01-03-2013)

  • The IF/THEN table, first row, changed THEN line reference to "11" if Line 9 and Line 11 both have an entry greater than zero. (IPU 13U0040 issued 01-03-2013)

  • Paragraph (4) added "2013" reference.

(50) IRM 3.11.154.6.6 Added reference "2013" .

(51) IRM 3.11.154.6.9 Paragraph (3) made the following changes:

  • Changed box 2 "If" procedures to read "The Schedule A is attached for a single Credit Reduction state, and Box 1a contains an entry," .

  • Added in the "Then" box 2 procedures new procedures 4) "If the state is a Credit Reduction state, mark Box 2, if blank." .

  • Changed the box 3 If procedure to read "An attached Schedule A indicates a single Credit Reduction state, but Box 1a is blank or illegible," .

  • Revised procedures when Schedule A is attached and multiple states are marked. (IPU 13U1125 issued 06-20-2013)

  • Added several procedures for clarity to IF/THEN table when no entry is present in Box 1a or Box 1b. (IPU 13U0450 issued 03-04-2013)

  • Changed box 7 "Then" procedure for paragraph 3) b) to read "If one state is indicated, enter the state abbreviation in Box 1a, if blank. and mark Box 2."

  • The IF/THEN table, revise procedure for deleting entire attached Schedule A. Also, deleted floating text shown after Reminder. (IPU 13U0040 issued 01-03-2013)

  • The IF/THEN table, clarify procedure when Box 1b and Box 2 are not checked, but the Schedule A indicates the taxpayer is a Multi-State filer. (IPU 13U0040 issued 01-03-2013)

  • Correct IF/THEN table procedure in last row. Box 1a was reference in error rather than Box 1b. (IPU 13U0274 issued 02-04-2013) and IPU 13U0197 issued 01-24-2013)

(52) IRM 3.11.154.6.9.1 Made the following changes:

  • Changed reference 2012 to 2013.

  • Deleted procedure in (2), item b requiring the Taxable Wages to be transferred from Schedule A (Rev 2010 and prior) to a later Revision (Rev 2011 or subsequent). (IPU 13U0634 issued 03-28-2013)

  • Added Exception to list conditions which waive the requirement for a Schedule A, or to prepare a dummy Schedule A. The IRM reference for each condition is also shown. (IPU 13U0040 issued 01-03-2013). Added procedures for Box 2 and/or Line 11. (IPU 13U0361 issued 02-15-2013)

(53) IRM 3.11.154.7.2.1 Changed paragraph (1) b) to read "If Part I, Line 1 and Line 3 have the same line entries, edit an asterisk (*) on line 3 to allow the return to fall out to ERS." .

(54) IRM 3.11.154.7.2 Changed paragraph (1) the second "Then" box procedures to read "Determine the wages by dividing this amount by .008. and edit the result to line 5." .

(55) IRM 3.11.154.7.2.3 Revise Form 940 (Revision 2005 and prior) procedure when taxpayer enters same amount on Line 1 an Line 3. (IPU 13U0274 issued 02-04-2013 and IPU 13U0197 issued 01-24-2013)

(56) IRM 3.11.154.7.4 Added reference 2013 to VDN description.

(57) IRM 3.11.154.8.1 Added reference 2013.

(58) IRM 3.11.154.9.2.1 Removed “Section” and or the section symbol after “IRC” according to consistency standards in IRM 1.11.8-7, Citation Standards.

(59) IRM 3.11.154.9.4.5 Paragraph (1) b) added reference 2013.

(60) IRM 3.11.154.9.5.1 Changed paragraph (1) b) to read "Perfect the Balance Due/Overpayment by subtracting Line 4 from Line 1 of Part II, Form 940PR."

(61) IRM 3.11.154.9.6.1 Removed “Section” and or the section symbol after “IRC” according to consistency standards in IRM 1.11.8-7, Citation Standards.

(62) IRM 3.11.154.9.7 Paragraph (1) added reference 2013.

(63) Exhibit 3.11.154-1 Changed reference 2012 to 2013.

(64) Exhibit 3.11.154-2 Changed reference 2012 to 2013.

(65) Exhibit 3.11.154-3 Deleted Form 940 and Schedule A (Revision 2011) - Road map. This will now be part of the Form 940 job aid.

(66) Exhibit 3.11.154-4 Made the following changes:

  • Deleted Form 940PR and Anexo A/Schedule A (Revision 2011) - Road map. This will now be part of the Form 940PR job aid.

  • Changed the first suggested Correspondence box procedures to read "Edit AC 225 (AC 226 for International)." .

  • Changed the Suggested Correspondence box eight procedures to read "If final and complete, Edit AC 480 and CCC “F”. Otherwise, complete Form 12522 for letter 142C, (or local letter as permitted by campus) and edit AC 211." .

(67) Exhibit 3.11.154-13 Removed “Section” and or the section symbol after “IRC” according to consistency standards in IRM 1.11.8-7, Citation Standards.

(68) Exhibit 3.11.154-14 Updated Tax Years (TY) and Credit Reduction Rates with the Credit Reduction States and rates for Tax Year 2012. (IPU 13U0040 issued 01-03-2013)

(69) Exhibit 3.11.154-17 Changed reference 2012 to 2013.

Effect on Other Documents

IRM 3.11.154 dated October 23, 2012 (effective January 1, 2013) is superseded and includes the following IRM Procedural Updates (IPUs): IPU 13U0040 (01-03-2013), IPU 13U0142 (01-16-2013), IPU 13U0197 (01-24-2013), IPU 13U0274 (02-04-2013), IPU 13U0361 (02-15-2013), IPU 13U0450 (03-04-2013), IPU 13U0634 (03-28-2013), IPU 13U0703 (04-08-2013), IPU 13U1125 (06-20-2013), IPU 13U1156 (06-27-2013) and IPU 13U1462 (9-16-2013).

Audience

Wage and Investment, Submission Processing

Effective Date

(01-01-2014)

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

3.11.154.1  (01-01-2014)
Overview

  1. This Internal Revenue Manual (IRM) section provides instructions for the coding and editing of Form 940 series returns.

  2. The documents processed using the instructions in this IRM are:

    1. Form 940, Employer's Annual Federal Unemployment (FUTA) Tax Return, Schedule A (Form 940) Multi-State Employer and Credit Reduction Information (Revisions 2006 and subsequent), and Schedule R, Allocation Schedule for Aggregate Form 940 Filers.

    2. Form 940PR, Planilla para la Declaracion Federal Anual del Patrono de la Contribucion Federal para el Desempieo (FUTA) (Puerto Rico - Spanish version) and Anexo A (Formulario 940PR) (Puerto Rico - Spanish version)- Revisions 2006 and subsequent Processed at Ogden Submission Processing Center (OSPC) only.

    3. Form 940(cg), Employer's Annual Federal Unemployment Tax return-Computer Generated. This return reports the same Federal Unemployment (FUTA) taxes as Form 940. These returns are computer generated rather than hand written or typed, and Form 940(cg) is filed by Examination or Collection personnel based on secured taxpayer information (i.e. as a Secured return) rather than mailed by the taxpayer. Also, in Compliance, some Revenue Officers use Form 940(cg) returns under IRC 6020(b) and indicate "IRC 6020b" on the return. Submission Processing examiners should process Form 940 (cg) returns using the same applicable procedures in IRM 3.11.154 as they would a Form 940.

  3. The exhibits in this IRM were made based on proof copies of the Form 940, Form 940PR, and Schedule A (Form 940). The Forms may be changed in their final version after this IRM is distributed. Any calculations must be consistent with the final revision of the returns.

3.11.154.1.1  (01-01-2014)
Background for Form 940 Series Returns

  1. The Federal Unemployment Tax Act (FUTA) established the Federal Unemployment Tax and required cooperation between the States, Internal Revenue Service, and the Department of Labor to determine an employer's contribution to the Unemployment System.

    1. Under this system, employers are subject to payroll taxes on State and Federal returns.

    2. The States establish their own unemployment laws but must meet Internal Revenue Code (IRC) requirements in order to be given administrative funds from the Federal Government.

    3. The State system must also meet Internal Revenue Code (IRC) requirements in order for their employers to receive credit against the FUTA tax for payments paid into the State Unemployment System.

    4. The gross FUTA tax for tax year 2012 is 6.0% (.060) of the first $7,000 of taxable FUTA wages for each employee.

      Note:

      For tax year 1983 through June 30, 2011, the gross FUTA tax was increased by a .002 surtax to 6.2% (.062). The additional surtax legislation expired July 1, 2011.

    5. If the employer made all payments required to the State by the due date of the return, a credit of 5.4% (.054) can be taken, leaving a net FUTA tax rate (.006 for tax year 2012, or .008 for tax periods beginning prior to June 30, 2011) for the FUTA Wages paid.

  2. Tax revenue collected from the Form 940 and Form 940PR is applied under the FUTA Trust Fund and passed on to the States by the Department of Labor (DOL) to help them administer their unemployment programs.

  3. Credit Reduction States are announced by the Department of Labor each November.

    • A state is subject to Credit Reduction when it is unable to fully repay a loan made from the Federal Unemployment Trust Fund.

    • Federal law requires that the FUTA tax credit be reduced when a federal loan is not repaid within two years.

    • An employer doing business in a Credit Reduction State is required to pay an additional tax on their Form 940. This is done by a reduction of the allowable credit given for timely payments to the states.

    • The additional amount collected because of the reduced credit is applied against the outstanding loan balance for that state.

    • Credit Reduction States were named for tax years 2009 through 2012. For Credit Reduction tax years prior to year 2009. See Exhibit 3.11.154-12.

  4. After the return is processed, the FUTA Certification Program verifies the credit claimed and the FUTA wage amount reported by the employer on their Form 940 return. Information is exchanged with the states to certify the amounts.

    1. The FUTA Certification Program locates and identifies most discrepancies (overstatements or understatements) in state credit claimed by an employer.

    2. There are sources of wages that are taxable on the Form 940 that are not treated as being taxable by the State. This could give the taxpayer a lesser credit amount than the maximum 5.4% (.054) allowed.

    3. The State Experience Rate (the percentage used to determine the FUTA tax rate) may be changed during the year by each State Unemployment Authority.

3.11.154.1.2  (01-01-2014)
IRC 3705(a) IRS Employee Contacts

  1. The Internal Revenue Service Restructuring and Reform Act of 1998, Section 3705, provides identification requirements for all IRS employees working tax related matters.

  2. IRS employees are required to give their name and unique identification number during taxpayer telephone, face to face and written contact. In addition, name of the employee and unique identification number are required on all manually generated taxpayer correspondence. Other correspondence must include a telephone number that the taxpayer may contact. This will provide taxpayers with enough information to identify an IRS employee who has previously assisted with tax related matters.

3.11.154.1.2.1  (01-01-2014)
Contact Procedures

  1. All IRS employees in the field, territory office, or headquarters who communicate by telephone, correspondence, or face to face with taxpayers, or their personal representatives, on tax-related matters are required to provide (at a minimum) the following information:

    • Your title (e.g., Mr., Mrs., Ms., Miss),

    • Your last name, and

    • Your badge identification (ID Card) number.

  2. Correspondence - All correspondence must include a telephone number where the taxpayer's questions can be answered. In addition, manually generated and handwritten correspondence must include:

    • Your title,

    • Your last name, and

    • Your IDRS (Integrated Data Retrieval System), letter system, or ID Card Number.

  3. The IDRS number and numbers for some other letter systems are automatically generated. If it is not generated, or a handwritten note is prepared, the ID Card number must be used.

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

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

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

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

  8. However, the ID Card number must be provided to the taxpayer upon request.

3.11.154.1.3  (01-01-2014)
Form 911, Request for Taxpayer Advocate Service Assistance(TAS) (And Application for Taxpayer Assistance Order)

  1. A referral to a TAS office should be made if the IRS employee receives a taxpayer contact that meets TAS acceptance criteria (IRM 3.11.154.1.3 (5)) and the employee cannot initiate action to resolve the taxpayer's inquiry or provide the relief requested by the taxpayer. A taxpayer should not have to specifically request TAS assistance to be referred to TAS. IRS employees will advise taxpayers of the option to seek TAS assistance when appropriate. TAS will generally accept the taxpayer's problem at a face value, and will not require documentation from the taxpayer unless it is needed by the IRS to provide the requested relief, or required by the IRM for TAS to provide the relief.

  2. A referral to a TAS office is not necessary even if TAS Case Criteria are met if the IRS employee can resolve a taxpayer's inquiry or provide the relief requested, as outlined in IRM 13.1.7.4 Same Day Resolution. The definition of "Same Day Resolution" "is within 24 hours" . However, although you cannot completely resolve the issue within 24 hours, if you have taken steps within 24 hours to resolve the taxpayer's issue, these cases also meet the definition of "same day" . Do not refer these cases to TAS unless the taxpayer asks to be transferred to TAS.

    Note:

    It is important that all IRS employees handle potential TAS cases with the taxpayer's best interest in mind.

  3. Refer also to IRM 21.1.3.18, Taxpayer Advocate Service (TAS) Guidelines, for more information. The National Taxpayer Advocate (NTA) toll-free number, 1-877-777-4778 or TTY/TDD 1-800-829-4059, should be provided to the taxpayer and the taxpayer should be advised that TAS is available if the taxpayer is not satisfied with the service he or she received.

  4. The following types of cases should not be referred to TAS:

    • The taxpayer's complaint or inquiry only questions the constitutionality of the tax system.

    • Cases where the focus of the taxpayer's inquiry is solely to employ frivolous tax strategies to avoid or delay filing or paying federal taxes.

  5. TAS Case Acceptance Criteria:

    • The taxpayer is experiencing economic harm or is about to suffer economic harm.

    • The taxpayer is facing an immediate threat of adverse action.

    • The taxpayer will incur significant costs if relief is not granted (including fees for professional representation).

    • The taxpayer will suffer irreparable injury or long-term adverse impact if relief is not granted.

    • The taxpayer has experienced a delay of more than 30 days to resolve a tax account problem.

    • The taxpayer has not received a response or resolution to their problem or inquiry by the date promised.

    • A system or procedure has either failed to operate as intended, or failed to resolve the taxpayer's problem or dispute within the IRS.

    • The manner in which the tax laws are being administered raise considerations of equity, or have impaired or will impair the taxpayer's rights.

    • The NTA determines compelling public policy warrants assistance to an individual or group of taxpayers.

      Note:

      Case criteria are not meant to be all-inclusive; each taxpayer situation should be evaluated based on the unique facts and circumstances of each case.

3.11.154.1.4  (01-01-2014)
♦ TAS Service Level Agreement♦

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

  2. The SLAs are located at The SLAs are located at http://tas.web.irs.gov/policy/default.aspx.

3.11.154.1.5  (01-01-2014)
Local Desk Procedures

  1. Some Submission Processing Centers have developed local use Desk Procedures.

  2. Such procedures are only to be used:

    • To supplement existing Headquarters' procedures,

    • To expand Submission Processing Center Returns and Documents Analysis procedures by incorporating material from other IRMs, ADP (Automatic Data Processing) handbooks, etc.,

    • For local routing procedures.

  3. Unit managers must have a signed approval on file from the responsible Operations Manager on all Submission Processing Center Desk Procedures.

  4. All existing local information and procedural issuances should be reviewed by the Operations Manager upon receipt of the new IRM revision to ensure conformance with Headquarters procedures.

3.11.154.1.6  (01-01-2014)
♦ BMF Consistency ♦

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

  2. Topics for the BMF Consistency have been identified and developed as a coordinated effort between Cincinnati, Ogden, and Wage and Investment Division (Paper Processing Branch, BMF Code and Edit /ERS Section).

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

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

3.11.154.2  (01-01-2014)
General Instructions for Unemployment Returns

  1. This section provides general processing instructions for the Coding and Editing of Federal Unemployment Tax Returns (FUTA) and the related documents.

  2. Instructions in specific Sections of this IRM take precedence over the general Section instructions in case of a conflict.

  3. Always consider the taxpayer's intent while editing returns in the Code and Edit function by:

    1. Reviewing the return and/or attachments,

    2. Applying the appropriate Actions Codes and Computer Conditions Codes as outlined in this IRM,

    3. Corresponding with the taxpayer if needed to perfect the return for processing.

3.11.154.2.1  (01-01-2014)
Coding and Editing Returns

  1. The purpose of Document Perfection is to code and edit returns and other documents for input to the Master File.

  2. The Service Center Recognition Image Processing System (SCRIPS) and the Integrated Submission and Remittance Processing System (ISRP) process Form 940 Series Returns. See IRM 3.11.154.2.2 for specific information regarding Form 940 and Form 940PR.

  3. Some lines on the return are correctly entered as zero "-0-" , dash "–" "N/A" or "none" and do not need to be edited.

  4. Edit all money amounts in dollars and cents, if the distinction between dollars and cents is not clear.

  5. Edit any misplaced or illegible transcription entry to the proper transcription line. The entry may have to be computed from other figures on the return or attachment.

  6. If the taxpayer submits tax information for any year after 2005 on a Form 940 or Form 940PR with a prior revision year, edit the return, as necessary. See IRM 3.11.154.2.2

  7. All Form 940-EZ returns must be converted to the current year Form 940.

3.11.154.2.2  (01-01-2014)
Processing Guidelines for Form 940 Series Returns

  1. Form 940 returns are processed through the Service Center Recognition Image Processing System (SCRIPS), or the Integrated Submission and Remittance Processing System (ISRP).

  2. Form 940 returns which should be processed through SCRIPS are:

    • The current tax year filed on Form 940, Revision 2006 through 2013

    • Any prior tax year after 2005 filed on Form 940, Revisions 2006 through 2011.

    • All Form 940 returns identified as IRC 6020(b) returns.

  3. The Integrated Submission and Remittance Processing System (ISRP) transcribes information from forms that cannot be input through SCRIPS. ISRP should process the following forms:

    • Tax year 2005 and prior (filed on any Form 940 revision including the current year revision)

    • Re-entry/reprocessable forms (Form 3893, Form 13596 or Form 13133 from the front of F940)

    • Ripped or torn returns and forms

    • Non-standard returns or forms.

    • All Form 940PR returns. These are processed only at the Ogden Submission Processing Campus.

    • Any Form 940-EZ (Obsolete) converted to a Form 940 return.

    • Any Form 940(CG) This form can be identified by the presence of "Form 940(CG)" in the upper left hand corner.

3.11.154.2.3  (01-01-2014)
Return Perfection - Processing of Form 940 (Revisions 2006 through 2013)

  1. Most 940 returns filed on Revision 2006 through current year (2013) forms should be processed through SCRIPS. See Exhibit 3.11.154-1 for transcription lines of the Form 940 (Revision 2013).

    Note:

    Do not change the line numbers for any return being processed through SCRIPS.

    IF Form 940 is a: AND Tax Year is: THEN
    Revision 2013 and 2012 Current year 2013 No line conversion is needed. Return will be processed by SCRIPS.
    2011 and prior No line conversion is needed. Return will be processed by SCRIPS.

    Note:

    For tax year 2011, return will fall out to ERS for correction, e.g. when total tax is computed incorrectly, or if taxable wages are not provided for line 7b and/or 7d, or if the difference in the total wages of line 7b plus line 7d are greater than the tolerance when compared to line 7 (line 7a, Revision 2011) wages.

    2006 through 2010 No line conversion is needed. Return will be processed by SCRIPS.
    2005 and prior No line conversion is needed. Form 940, Tax Year 2005 and prior filed on Revision 2006 and subsequent requires ISRP processing.
    Revision 2011 Current year (2013) No line conversion is needed. Return should be processed by SCRIPS. Continue processing.

    Note:

    If there is a significant entry (or entries) on line(s) 7b and/or 7d, allow the return to fall to ERS. Incorrect tax computation should also generate the return to ERS.

    2011 No line conversion is needed. Return can be processed by ISRP.
    2006 through 2010 No line conversion is needed. Return should be processed by SCRIPS. Continue processing.

    Note:

    If there is a significant entry (or entries) on line(s) 7b and/or 7d, allow the return to fall to ERS. Incorrect tax computation will also generate the return to ERS.

    2005 and prior Renumber line 7a to line 7. Form 940, Tax Year 2005 and prior filed on a Revision 2006 and subsequent requires ISRP processing.
    Revision 2006 through 2010 Current year (2013) or prior 1. No editing or line renumbering is needed. Return should be processed through SCRIPS.
    2. If return is for tax period 2011, allow return to fall out to ERS for correction, e.g. Lines 7b through 7d missing from form.

  2. Form 940PR (all Revisions) are processed through ISRP. Form 940PR has the same transcription lines as Form 940. See Exhibit 3.11.154-2 for transcription lines.

    IF Form 940PR is: AND Tax Period is: THEN
    Revision 2013 & 2012 Current year 2013 or 2012 No editing is needed. Return will be processed through SCRIPS.
    2011 and prior 1. No editing is needed. Return will be processed by ISRP.

    Note:

    For tax year 2011, a taxable Form 940 should fall out for correction to ERS for any of the following reasons:
    a. The total tax was computed incorrectly.
    b. When taxable FUTA wage amounts were not provided for the line 7b and/or line 7d, (e.g. when Revision 2011 is filed for tax year 2011, or an alternate year Form 940 revision is filed tax year 2011).
    c. When the total of the FUTA wages on lines 7b and 7d (7b+7d) is greater than line 7a wages,( e.g. when Revision 2011 is filed for tax year 2011).

    Revision 2011 Current year (2013), or 2006 through 2010 1. No editing is needed. Return will be processed by SCRIPS. SCRIPS or ISRP will correct line 7a to line 7 upon input.

    2. Allow return to fall out to ERS for correction, if needed.
    2011 No editing is needed. Return can be processed by ISRP.
    Revision 2006 through 2010 Current year (2013) or prior 1. No editing is needed. Return will be processed by ISRP. ISRP will correct line 7a to line 7 upon input.
    2. Allow return to fall out to ERS for correction.

  3. Returns processed through SCRIPS are batched and prepared separately as "Perfects" or "Imperfects" .

    1. "Perfects" are returns with no attachments, such as envelopes, letters, copies of notices, internal forms for processing or routing, etc. "Perfect" returns cannot have extraneous writing on the face of the return.

    2. "Imperfects" are returns not covered in a) above.

    3. A two sided return is a "Duplex" return.

    4. A return submitted on two separate sheets of paper is a "Non-Duplex" Return.

  4. Form 940 returns (Revisions 2006 and subsequent), which are batched as "Perfects" , must be prepared as follows:

    1. Carefully remove all staples. It is permissible to cut off the left corner of the return providing that no identifying information is damaged or lost (e.g., the return year, entity information, etc.).

    2. Repair any large staple holes and all rips or tears on the top or right hand side of the return.

    3. If the EIN is missing on page 2 or on Schedule A, edit the last 4 digits of the Employer Identification Number (EIN) in the EIN field. This is not necessary if the taxpayer has submitted a duplex form.

      Note:

      If the return is damaged or the print is too light (difficult to read), pull the return from the batch and request that the return be re-batched as "Original Entry (OE) PAPER" . For Form 940, and Form 940PR revisions being processed through OE paper, edit e.g. change the line numbers, only if required by ISRP procedures.

    4. "Perfects and Imperfects" :

      IF THEN
      The taxpayer completes Form 940 (Revisions 2006 through 2013) using orange, or pink ink,

      Note:

      If the signature is in orange or pink ink, see (5) below.

      1. Batch and process the return as an "Imperfect" .

      2. Photocopy the return to allow processing through SCRIPS.

      3. Consider the original Form 940 as an attachment and request the document be merged into an "Imperfect" batch.
      Page 1 Form 940 is missing (one sided return), (Revision 2006 and subsequent) 1. Follow local procedures to reduce the chance of duplicate letters being sent to the taxpayer.
      Use tools such as IDRS Decision Assisting Program (IDAP) and IDRS (Command Codes BMFOL and ERVIN) and request Page 2 to be associated with Page 1, when possible.

      2. If it is not possible to associate Page 2 with Page 1, then:
      a. Insert a blank copy of Page 1.

      b. Edit from Page 2 to Page 1:
      c. Taxpayer's Name (If name only, research for EIN).
      d. EIN (If EIN only, research for Name).

      Note:

      If Name and EIN field are blank on Page 2, use the information from the envelope, if available, to research.
      a. If the Name and EIN are blank, and research cannot be performed to obtain the necessary information, give the return to your lead for disposition.
      b. If there is a legible signature, route to Entity for research.



      3. If necessary, edit the tax period.
      4. If necessary, edit the address in the following priority:
      • From the envelope, if there is a name match.

      • Otherwise, leave blank and allow to fall out to ERS (Error Resolution System).

      Note:

      If research is being performed for Name and/or EIN, research also for address.



      5. Edit a Received Date, if necessary.

      6. Edit Action Code 211 and correspond for a Damaged Form. (Refer to Form 12522).
      A page 2 (on one sided) Form 940 (Rev 2005 and subsequent) is missing, or the page 2 attached is from Form 941, 1. Follow local procedures to ensure that the taxpayer does not receive duplicate correspondence. Use IDRS tools (Command Code BMFOL and ERVIN) that are available. Request Page 2 to be associated with Page 1, when possible.

      2. If it is not possible to associate:
      a. Insert a blank copy of Page 2 behind the taxpayer's Page 1.
      b. Line through page 2 (Form 941) and attach the page to the back of the Form 940 return.
      c. Use AC 211 to correspond using Letter 142C for Form 940 (or Letter 142(C/SP) for Form 940PR) for a missing page.

      d. Edit SIC (Schedule Indictor Code) "1" if Line 12 is ≡ ≡ ≡ ≡ ≡ ≡ ≡
      The taxpayer encloses a duplicate Page 2 in error (one sided or duplex return), 1. Consider the extra page as an attachment and request the document be merged into an "Imperfect" batch.

      2. Line through (/) the duplex Page 2.
      The taxpayer used only Page 1 of a duplex return (two sided) and a separate Page 2, 1. Photocopy the original Page 1.

      2. Line through (/) the original Page 1 and Page 2. This now becomes an attachment.

      3. Request the document be merged into an Imperfect batch.
      Taxpayer used only Page 2 of a duplex (two sided) return and a separate Page 1, 1. Photocopy the original Page 2.

      2. Line through (/) the original page 1 and the duplex page 2. This now becomes an attachment.

      3. Request the document be merged into an Imperfect batch.
      Taxpayer files Form 940 with more than one Schedule A page
      1. Batch and process the return as "Perfect"

      2. Perform normal editing for the Form 940 and the top page of Schedule A.

      3. Place all subsequent pages of Schedule A behind the top page of the Schedule A. Do not edit or change Line 11. Allow the return to generate to ERS.

      4. Process as normal.

  5. When a SCRIPS 940 return is submitted typed or with blue or black ink and any check box or the signature is in orange, or pink, recheck the boxes in red or place an asterisk (*) in the left most position in the signature box.

  6. When Code and Edit reviews the Form 940, determine:

    IF THEN
    A Form 940 (Revision 2013 and prior) with attachments was incorrectly assigned to a "Perfect" batch, Pull the return from that batch and request that it be merged into an Imperfect batch, unless it can be made "Perfect" .
    A Form 940 (Revision 2013 and prior) with no attachments was incorrectly assigned to an Imperfect batch, Do not take any action.

  7. Code and Edit examiners should ensure that the jurat and authorized signature are shown and are in their proper location on the return, e.g. Form 940 or Form 940PR.

  8. After review and editing, when placing the return in a batch, Form 940 (or Form 940PR) and Schedule A or attachments should be in sequential order. This will assist SCRIPS and ISRP during data transcription.

    • Return Page 1

    • Return Page 2

    • Schedule A, if it applies

    • Schedule R/Schedule R continuation sheet

    • Any attachments

  9. Form 940 Schedule R/Schedule R Continuation Sheet:

    1. Edit a Schedule R Indicator (SRI) "R" when Schedule R (Form 940) Allocation Schedule for Aggregate Form 940 Filers or Schedule R Continuation Sheet is attached to Form 940.

    2. Write the last four digit of the EIN, if the EIN is not present on the Schedule R.

    3. All 940 returns with Schedule R attached MUST be processed through SCRIPS.

    Note:

    A Schedule R attached to a Form 940PR will be processed through ISRP. Form 940PR with a Schedule R attached must have the Schedule R Indicator code edited in the right margin of the return next to Line 6, "Subtotal" . See Figure 3.11.154-1

    Figure 3.11.154-1
    This image is too large to be displayed in the current screen. Please click the link to view the image.

3.11.154.2.4  (01-01-2014)
♦ Edit Marks ♦

  1. Edit marks are edited on the return for transcription through ISRP or SCRIPS.

  2. The editing must be entered in red pen only.

  3. The only items edited on the return are those to be transcribed except where specific instructions require editing of a non-transcribed item. Lines are left blank if the entry would be a zero amount unless otherwise instructed.

  4. The original entry on a return is never obliterated, altered, or erased when deleting or correcting an entry. Always exercise care to ensure that the original entry remains legible. Perfected entries provide a legible "edit trail" for anyone who may work with the return later.

  5. The return line format on returns should correspond to the current year's revision. To convert a return to the current format, you must renumber the lines to the current revision. See Exhibit 3.11.154-3, Form 940/940PR, Revision 2005 and prior table for the conversion lines.

  6. The table below provides a description of edit marks for SCRIPS and ISRP processing:

    Edit Mark SCRIPS ISRP Description
    Asterisk "*" X X Used to prompt the SCRIPS or ISRP system operator to stop at a field so that the operator can make a change. The "*" is used to delete tax data or to indicate that an item is not to be transcribed.

    Note:

    The asterisk must be placed to the left of the entry as close as possible.


    Exception:

    An asterisk (*) in the signature box indicates that the signature is on an attachment or is not needed.

    Circle X X Used to removed an entry in a Code and Edit field (i.e. Action Code, CCC, Received Date, Schedule Indicator Code (SIC), Schedule R Indicator (SRI), or Tax Period.)
    Decimal point X X Indicates the separation of dollars and cents.
    Edit Marks Made by Other IRS Functions X X Edit marks entered by other areas such as Compliance or Accounts Management, are not to be re-edited except to place the marks in the correct area.

    Note:

    If the edit mark is in other than a Code and Edit field (i.e. Action Code, CCC, Received Date SIC, SRI or Tax Period) and the edit mark is in orange or pink ink, re-edit using red ink.

    Line through X X Entity Perfection Only - Used to delete data. Unless otherwise specified, a horizontal line through data will always indicate the data is being deleted from the return.

    Note:

    Always edit an asterisk (*) as closely as possible to the left of the lined through entry.

    Percent Sign (%) X X Indicates the presence of a "Care of Name" or address.
    Underline X X Used to identify a Name Control that is to be transcribed.
    Zero, Dash, or None X X "Zero" , "dash" or "None" are considered valid entries except when specific instructions require editing of an entry.
    "/" X X A"/" through the entire page can be used when deleting a form or schedule that is not to be transcribed.
    "/" XX "/$"
    XX represents the two digit foreign country code
      X ISRP ONLY: Indicates a foreign address. The two digit alpha foreign country code will be preceded by / and followed with "/$" . See Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries. This cannot be used for documents processed via SCRIPS.

    Note:

    The "X" and "arrow" will no longer be used in editing Form 940 Series returns.

3.11.154.2.5  (01-01-2014)
Audit Trails/Action Trails

  1. The following action will be edited on the Unemployment Returns in the Code and Edit program:

    IF THEN
    Changes to Employer Identification Numbers (EIN) or Taxpayer Identification Numbers (TIN), Edit change on the Entity portion of the return.
    Only One Action Code (AC) needed, Notate the Action Codes on bottom left hand corner of the return.
    More than one Action Code (AC) is needed, Notate the first Action Code on the bottom left hand corner of the return and the additional Action Codes on Form 4227.
    An IDRS transaction is input, A notation must be made on the document showing the TC (Transaction Code) and the date.
    Instructed to prepare Form 3465 (Adjustment Request), 1. Make a copy of the original return and attachments, notate "COPY" on the photocopy and place in the "BMF Adjustment Out Box" .

    2. Notate 3465 Prep in the bottom left margin of the original Form/Return.

3.11.154.2.6  (01-01-2014)
♦Action Codes♦

  1. Action Codes are used to indicate whether correspondence, research, or some other action is needed. The Action Code will set the suspense period to be assigned to the return and place the return in the workable or unworkable suspense inventory. See Exhibit 3.11.154-10 for suspense periods.

  2. When necessary, a three-digit Action Code will be assigned by the tax examiner.

  3. Edit Action Codes for Form 940 and Form 940PR (Revisions 2006 and subsequent) just below the line that states "For Privacy Act....." . Do not extend into the left margin. Edit the Action Code in the bottom left margin of the return (Revision 2005 and prior).

  4. Assign Action Codes in the following priority order:

    1. Action Code 310 (Statute Control).

    2. Action Code 320 (Entity Control).

    3. Action Code 4XX.

    4. Action Code 6XX.

    5. Action Code 3XX.

    6. Action Code 2XX. (Correspondence)

    Exception:

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

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

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

    Action Code Description
    211 (First Correspondence) or "215" (International Correspondence 1. Return is illegible, incomplete, or contradictory and therefore cannot be processed.

    2. The taxpayer notates on the return or attachment that they are reporting tax for more than one tax period or for more than one type of tax.
    225 (Missing Signature Correspondence) Unsigned return (only issue for correspondence).
    OSPC Only: 226 International Taxpayer Correspondence (Signature Only) Unsigned return (only issue for correspondence).
    480 (Early Filed - Suspense) The return is an early filed current return.
    610 (Renumbered Non-remittance) or 611 (Renumbered with remittance) A return is mis-blocked (e.g. Form 1065 found in a 1120 batch of work)
    640 (Void) To delete the assigned DLN (Document Locator Number) on the return (e.g. Re-entry returns).
    650 (AC International) An International return that must be forwarded to Ogden Submission Processing Center (OSPC).

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

  8. For a list of the valid Action Codes, See Exhibit 3.11.154-10.

3.11.154.2.7  (01-01-2014)
♦ CAF Codes ♦

  1. Editing of CAF codes is no longer required.

  2. The Centralized Authorization File (CAF) contains the type of authorization that taxpayers give to representatives regarding the taxpayers' accounts. Representatives may submit Form 2848 or Form 2848-SP, "Power of Attorney (POA) and Declaration of Representative" , or Form 8821, Tax Information Authorization (TIA).

    IF THEN
    Form 2848, Form 2848-SP, or Form 8821 is attached, 1. Detach Form 2848, 2848-SP, or 8821 from the return.
    2. Edit taxpayer name and EIN on Form 2848, 2848-SP, or 8821, if missing.
    3. Edit received date on Form 2848 or 8821.
    4. Route Form 2848, 2848-SP, or 8821 to CAF function.
    5. Edit action trail on tax return.
    A "General Power of Attorney" or a "Durable Power of Attorney" or "Tax Information Authorization" is submitted on any document other than Form 2848, Form 2848-SP, or Form 8821, Take no action. Leave the Power of Attorney or Tax Information Authorization attached to the return. Do not route to the CAF function.

3.11.154.2.8  (01-01-2014)
♦ Routing Guide for Attachments ♦

  1. All attachments to the return must be reviewed before the return can be considered processable.

  2. Attachments should only be detached when specifically instructed.

  3. Before detaching an attachment for routing, verify that it contains the Name, EIN (Employer Identification Number) or SSN (Social Security Number). Edit if missing.

  4. When a document is detached, also edit the Received Date in the lower left corner, ( for example Rec'd MM/DD/YY).

  5. For Form 940 and Form 940PR returns Code and Edit must ensure the taxpayer's EIN is on all attachments, in case they are separated from the return during processing. If the EIN is not shown on an attachment, (to be processed with the return), edit the last 4 digits of the taxpayer’s EIN. Routed attachments should show the Name, full EIN, and a Received Date.

  6. Imperfect Form 940 and 940PR (Rev 2006 and subsequent) - After detaching a document from the return, and only page(s) 1, 2, and (if applicable) Schedule A and Schedule R remain, do not pull the return, leave return in “Imperfect” batch.

  7. Edit Action Trail(s) in the lower left corner going vertically up the side of the return.

    Note:

    This Attachment Guide is included for use in assisting in the identification of possible forms or conditions that require action or routing to other functions. Space limitations do not always allow for full instructions in the Attachment Guide.

  8. Follow the general guidelines below for each attachment:

    FORM/DOCUMENT DETACH ACTION
    CP 161 No Math Error, Balance Due No Route to Accounts Management.
    CP 259, or CP 515 - 518, Return Delinquency No Route notice and tax return to Collections.

    Exception:

    Do not route when there is a notation of "599" on the return.

     
     
    CP 504/504-B No 1) Pull CP 504/504-B to the front.
    2) Route notice and return to Accounts Management.
     
    Includes tax liability for MULTIPLE tax periods or types of tax No 1. Numbered returns - route to Rejects.
    2. Unnumbered returns - prepare a dummy return if possible; otherwise correspond.
     
    Other tax returns (original signatures) Yes Route to appropriate function unless specifically directed otherwise.
    Example: returns such as those attached to a consolidated return.
     
    Returns marked as "Protective Claim" , "Protective Refund" "Protective Claim for Refund" , or similar statement Yes
    1. Remove return from batch.

    2. Notate "Protective Claim" in the remarks box of Form 4227.

    3. Route to Accounts Management.

     
    State Tax Return, original or copy with original signature Yes Route to Receipt and Control.  
    Statement establishing Reasonable Cause for delinquent filing No 1. Issue 1382C Letter.
    2. Continue editing the return.
     
    Remittance found No Immediately hand carry return and remittance to supervisor.  
    Request for Acknowledgement No No action required.  
    Requests for information or inquiries Yes 1. Photocopy the attachment if it contains any data necessary to continue processing the return.
    2. Attach the copy to the return.
    3. Route original attachment to the proper office for necessary action.
     
    Request for adjustment to another document Yes Route to appropriate function. Attachment must contain Name, Address, EIN and Received Date. Edit if missing.  
    Request for money transfer Yes If the taxpayer notates transfer of money to the return you are processing:
    1. Prepare Form 3465 to route the requests to Accounts Management (AM).
    2. Hold the return for 2 cycles before processing.
    If the taxpayer notates transfer of money from the return you are processing :

    1. Edit CCC X.
    2. Prepare Form 3465 and route to Accounts Management (AM) with a photocopy of the front page of the return. Notate Form 3465 Prepared on the original Form 940.
     
    Request for Forms or Schedules No Request for Current Year Forms:
    1. Prepare Form 4190.
    2. Forward to Forms Distribution Center for processing.

    Request for Prior Year Forms:
    1. Prepare Form 6112.
    2. Forward to Forms Distribution Center.

    Note:

    Forms 4190 and 6112 are generally used for IMF (Individual Master File) requests. Therefore, enter all BMF requests for forms and/or schedules in the "WRITE-IN" portion of the form.

     
    Form CT-1X, Adjusted Employer's Annual Railroad Retirement Tax Return of Claim for Refund Yes Route to Accounts Management.  
    Form 56, Notice Concerning Fiduciary Relationship Yes Enter Received Date and route to Entity. Review attachments for evidence of fiduciary authority to be routed at the same time.  
    Form 433–B, Collection Information Statement for Businesses Yes Ogden - Route to Collections.

    Cincinnati - Route to Receipt and Control
     
    Form 433–D, Installment Agreement Yes Ogden - Route to Collections.

    Cincinnati - Route to Receipt and Control
     
    Form 637, Application for Registration (For Certain Excise Tax Activities) Yes Route to Excise. Complete Form 13538 and place in outgoing mail to:

    Cincinnati Service Center
    M/S 5701G,
    Attn: Exam
     
    Form 843, Claim for Refund and Request for Abatement Yes Route to Accounts Management if the claim is for a tax or tax period other than that covered by the return.  
    Form 895, Notice of Statute Expiration No Follow campus routing guide.  
    Form 911, Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order) Yes Route to Taxpayer Advocate Service (TAS).  
    Form 940-B, Request for Verification of Credit Information shown on Form 940 No Route to Accounts Management. (If received without return, route to FUTA Certification Unit).  
    Form 940-C, Employer Account Abstract No Route to Accounts Management. (If received without return, route to FUTA Certification Unit).  
    Form 940-V or 940-EZ (V), Payment Voucher Yes, if payment present. Hand-carry remittance and voucher to supervisor. If no payment, leave attached.  
    Form 941 Schedule B, Report of Tax Liability for Semiweekly Schedule Depositors Yes Route to Accounts Management.  
    Form 941C, Supporting Statement to Correct Information Yes Route to Accounts Management  
    Form 941X, Adjusted Employer's Quarterly Federal Tax Return or Claim For Refund Yes Route to Accounts Management.  
    Form 943X, Adjusted Employer's Annual Tax Return for Agricultural Employees or Claim For Refund Yes Route to Accounts Management.  
    Form 944X, Adjusted Employer's Annual Federal Tax Return or Claim For Refund Yes Route to Accounts Management  
    Form 945X, Adjusted Annual Return of Withheld Federal Income Tax or Claim For Refund Yes Route to Accounts Management  
    Form 1042, Annual Withholding Tax Return for U.S. Source Income of Foreign Persons Yes CSPC Route to OSPC.
    OSPC Route to Receipt and Control.
     
    Form 1042S, Foreign Person's U.S. Source Income Subject to Withholding Yes CSPC Route only Copy A to OSPC.
    OSPC Route only Copy A to Receipt and Control.
    Leave all other copies attached to return.
     
    Form 1096, Annual Summary and Transmittal of U.S. Information Returns Yes Route to Receipt and Control  
    Form 1099, U.S. Information Return Yes (Copy A Only) Route Copy A Only to Receipt and Control (R and C).  
    Form 1331 (NMF), Notice of Adjustment Yes Route to Accounting.  
    Form 2275, Record Request-Charge and Recharge Yes Photocopy return and route to requestor. Process original.  
    Form 2644, Recommendation for Jeopardy/Termination Assessment No Follow campus procedures.  
    Form 2848 or Form 2848-SP, Power of Attorney and Declaration of Representative Yes
    • Ogden - Route to:
      Stop 6737

    • Cincinnati - Route to:
      Internal Revenue Service PO Box 268, Stop 8423 Memphis, TN 38101-0268

      Note:

      See CAF Code procedures for Form 2848 or Form 2848-SP. See IRM 3.11.154.2.7 before routing return.

     
    Form 2859, Request for Quick or Prompt Assessment No Reject. Hand-carry to Accounting (NMF) or follow local procedures.  
    Form 3198, Special Handling Notice/ Examination Case Processing No Follow campus procedures.  
    Form 3244, Payment Posting Voucher Yes, if original Route original voucher to Receipt and Control.  
    Form 3753, Special Handling Manual Refund Posting Voucher No 1. If name control, EIN, and tax period are the same as return, leave attached and edit CCC "O" . Research IDRS for TC 840.

    2. If data is not the same, send return and attachment back to originating function.
     
    Form 3870, Request for Adjustment Yes Photocopy return and route copy and 3870 to Collections.  
    Form 3949, Information Report Referral Yes
    • Route Form 3949 according to page 2 of Form 3949 to CI, Exam, Disclosure, etc. following local procedures.

    • Continue processing the return

     
    Form 3949-A, Information Report Referral Yes
    • Route Form 3949- A to the Fresno Service Center.

    • Continue processing the return.

     
    Form 4251, Return Charge Out Yes Photocopy return and route to requestor. Process original.  
    Form 5403, Appeals Closing Record No Follow campus routing guide.  
    Form 5604, IRC 6020(b) Action Sheet No Enter CCC 4.  
    Form 5792, Request for IDRS Generated Refund No 1. If Name Control, EIN, and Tax Period are the same as return, leave attached and edit CCC "O" . Research IDRS for TC 840.
    2. If data is not the same, send return and attachment back to originating function.
     
    Form 5884, Work Opportunity Credit Yes, if original. Return to taxpayer. Advise that it should be filed with income tax return.  
    No, if copy. Leave attached.  
    Form 8274, Certification by Churches and Qualified Church-Controlled Organizations Electing Exemption From Employer Social Security and Medicare Taxes Yes Route to Ogden Entity Control Unit.  
    Form 8655, Reporting Agent Authorization Yes Accounts Management Service Campus
    MS 6748 RAF Team
    1973 North Rulon White Blvd. Ogden, Utah 84404

    Note:

    See Note in IRM 3.11.154.2.18(8).

     
    Form 8821, Tax Information Authorization Yes See Form 2848 in IRM 3.11.154.2.8

    Note:

    See CAF Code procedures for Form 8821. SeeIRM 3.11.154.2.7 before routing return.

     
    Form 8822, Change of Address, or Form 8822-B, Business Change of Address No If information is the same, leave attached.  
    Yes If information is different, detach and route to Entity on Form 4227.  
    Form 9465, Installment Agreement Request, or letter substitute Yes
    • Ogden - route to Collections

    • Cincinnati - Route to Receipt and Control

     
    Form 12857, Refund Transfer Posting Voucher No 1. If name control, EIN, and tax period are the same as return, leave attached and edit CCC "O" .
    2. If data is not the same, send return and attachment back to originating function.
     
    OAR-7010, Notice of SSA Determination Yes Follow Campus Routing Guide.  
    SCH H (1040), Household Employment Taxes Yes Follow Campus Routing Guide.  
    Schedule R, Form 940, Allocation Schedule for Aggregate Form 940 Filers No Edit Schedule R Indicator (SRI) "R" . See IRM 3.11.154.2.3(9). Also, edit SRI "R" when the Schedule R Continuation page is attached.  
    SS-4, Application for Employer Identification Number No, if for return. Route return and SS-4 to Entity.  
    Yes, if for separate account. Detach SS-4 and route to Entity.  
    SS-16, Certification of Election of Coverage Under FICA Yes Route to Entity.  
    W-2, Wage and Tax Statement Yes Follow Campus Routing Guide.  
    W-3, Transmittal of Income and Tax Statement Yes Follow Campus Routing Guide.  
    W-4, Employee's Withholding Allowance Certificate, attached to Form 3210 and no return is included, Yes Route to:
    Withholding Compliance
    Internal Revenue Service
    P.O. Box 9047
    Mail Stop 837
    Andover, MA 01810-0947.
     
    W-4, Employee's Withholding Allowance Certificate, attached to a return, No Leave it attached. No action is required. Do not verify any information. Do not edit any information.  

3.11.154.2.9  (01-01-2014)
♦ Computer Condition Codes (CCC) ♦

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

  2. For Secured and Prepared Returns, edit the applicable CCC as indicated on the return, attachment, or Form 13133.

  3. Edit Computer Condition Codes in the following locations:

    FORM LOCATION
    Form 940 (Revisions 2006 and subsequent) Edit immediately to the right of the line that states: "You MUST fill out both pages of this form and SIGN it." If spacing on the form will not allow CCC to be edited, enter the CCC below Line 15, in the center. See Exhibit 3.11.154-1
    Form 940PR (Revisions 2006 and subsequent) Edit to the right of the words "DEBE llenar ambas paginas del Formulario 940PR luego y FIRMARLO" . See Exhibit 3.11.154-2
    Form 940 (Revision 2005 and prior) Edit to the center of the bottom margin on Page 1.
    Form 940PR (Revision 2005 and prior) Edit to the center of the bottom of Page 1.

3.11.154.2.9.1  (01-01-2014)
♦ CCC "D" - Reasonable Cause for Failing to Pay Timely ♦

  1. Do not edit CCC "D" , if the taxpayer requests abatement for Failing to Pay Timely when the return is submitted. Whenever the taxpayer has requested penalty relief, send Letter 1382C to inform the taxpayer of the proper procedure to follow to request abatement, if, and when a penalty is assessed.

    Exception:

    For Secured and Prepared Returns, edit the applicable CCC as indicated on the return, attachment, or Form 13133.

    Note:

    In the case of a disaster, specific instructions for the use of this code will be provided at that time.

3.11.154.2.9.2  (01-01-2014)
♦ CCC "F" - Final Return ♦

  1. Edit CCC "F" when the taxpayer:

    1. Checks the box for "Will not have to file returns in the future" (Revision 2005 and prior) or "Business Closed or stopped paying wages" (Revisions 2006 and subsequent).

    2. Gives positive indication that he/she will not be liable for filing future returns.

    3. The common indications of a final return are notations such as (but not limited to) "Final" , "Deceased" , "Out of Business" , "Liquidation" , "Dissolved" , "Exempt under IRC 01(c)(3) or (5)" , etc.

  2. If Box "d" (e.g. "Final Return" shown on Revisions 2006 or later) is not marked, mark the box in addition to entering CCC "F" .

    IF AND THEN
    Only Entity information is present e.g. Name or Name Control, EIN, Tax Year or period, Address, e.g. Street, City, State, and ZIP Code, and there are no attachments containing tax, The return is not signed, Correspond for signature.

    Caution:

    Before corresponding, research IDRS for status of filing requirement. If the filing requirements are finalized (closed) or there is no filing requirement, send the return back to the taxpayer using Form 6800-A. Inform the taxpayer that they are no longer required to file a Form 940 and do not need to file a return now.


    Note:

    If the return indicates it is being filed under IRC 6020(b), e.g. "IRC 6020(b)" indicated on margin, DO NOT correspond. Send the return to the address shown in IRM 3.11.154.3.8.1 If the return meets the criteria for a Collection Secured Return or Examination Secured Return, see IRM 3.11.154.3.8.2, or 3.11.154.3.8.4 for processing procedures.

    There is an indication of a previously filed Final Return,   Research IDRS to determine the status of the filing requirements.
    If the filing requirements are finalized or there is no filing requirement, send the return back to the taxpayer using Form 6800-A. Inform the taxpayer that they do not need to file a return now.
    IRC 501(c)(3) or 501(c)(5) is notated on the return, ONE of the following is present in the Entity Name:
    Church(es) - IRC 501(c)(3)
    Unions - IRC 501(c)(5)
    Municipal Groups+ - IRC 501(c)(3)
    (non profit organizations) (Schools and Hospitals)
    Foundations - IRC 501(c)(3)
    Tax Exempt Organizations - IRC 501(c)(3)
    (Colleges, Museums, etc.)
    Edit CCC "F" on the return and continue processing.
    IRC 501(c)(3) or 501(c)(5) is notated on the return, None of the above is present in the Entity Name 1. Research IDRS for Form 990 F/R. If found, then edit CCC "F" on the return and continue processing.
    2. If no 990 F/R is found, correspond using 142C Letter requesting copy of "Exemption Letter" from the IRS.
    3. If No Reply, notate on Form 4227 "Do Not Edit CCC "F" on return" and continue processing.
    Form 1040, Schedule H is attached The 940 liability (on line 12) is the same as the Sch H FUTA liability (Sch H, line 17 or line 25) See IRM 3.11.154.3.11(1)

3.11.154.2.9.3  (01-01-2014)
♦ CCC "G" - Amended Return ♦

  1. See IRM 3.11.154.3.7 (Amended Returns).

3.11.154.2.9.4  (01-01-2014)
♦ CCC "J" - Reasonable Cause for Failing to Make Timely Deposits ♦

  1. Do not edit CCC "J" when the taxpayer requests abatement for Failing to Make Timely Deposits when the return is submitted. Whenever the taxpayer has requested penalty relief, send Letter 1382C to inform the taxpayer of the proper procedure to follow to request abatement, if, and when a penalty is assessed.

  2. If the taxpayer does not request abatement, but notates that they are filing an aggregate FUTA return, edit CCC "J" . See IRM 3.11.154.3.17 You can identify the return as being filed in the aggregate by any of the following notations indicated by the taxpayer at the top of the return or in the entity section of the return:

    • State

    • City

    • County

    • Notice 2003-70

    • Fiscal Agent

    • Fiscal Intermediary

    • Home-Care Service Provider

    • Household Employer Agent

    • Choreworkers

    Note:

    In the case of a disaster, specific instructions for the use of this code will be provided at that time.

3.11.154.2.9.5  (01-01-2014)
♦ CCC "O" - Module Freeze ♦

  1. CCC "O" is entered when a pre-settlement Manual Refund will be made and a Form 3753, Form 5792 or 12857 is attached. Verify that the Name Control, EIN, and Tax Period on the return is the same as the data on the form. When editing CCC "O" , research to determine if TC 840 (Manual Refund Transaction) has posted.

    IF THEN
    TC 840 has posted Enter CCC "O" and continue processing.
    TC 840 has not posted Enter Action Code 341 to issue Manual Refund.

3.11.154.2.9.6  (01-01-2014)
♦ CCC "R" - Reasonable Cause for Failing to Timely File Return ♦

  1. Do not edit CCC "R" if the taxpayer requests abatement for Failing to Timely File, when the return is submitted. Whenever the taxpayer has requested penalty relief, send Letter 1382C to inform the taxpayer of the proper procedure to follow to request abatement, if, and when a penalty is assessed.

    Exception:

    For Secured and Prepared Returns, edit the applicable CCC as indicated on the return, attachment, or Form 13133.

    Note:

    Edit CCC "R" to the return when there is an indication such as "Do not assess failure to file penalty" on a secured return annotated with "599" .


    (2) In the case of a disaster, specific instructions for the use of this code will be provided at that time.

3.11.154.2.9.7  (01-01-2014)
♦ CCC "W" - "Cleared by Statute" Stamped on Return ♦

  1. See IRM 3.11.154.3.6.

3.11.154.2.9.8  (01-01-2014)
CCC "X" - Refund/Settlement Freeze

  1. Edit CCC "X" when the following conditions occur:

    IF THEN
    The taxpayer requests any balance left over after paying tax and/or penalties be applied to another account,

    Note:

    Subtract the tax, penalties and interest amounts from the remittance amount, if available.

    1. Edit CCC "X" .
    2. Prepare Form 3465 and route to Accounts Management with the request and a photocopy of page 1 of the return.
    3. Notate "Form 3465 Prepared" on original Form 940.
    There is no reply to correspondence and a refund is due, Edit CCC "X" and "3" .

3.11.154.2.9.9  (01-01-2014)
♦ CCC "3" - No Reply to Correspondence ♦

  1. Edit CCC "3" when the return becomes unprocessable due to no reply from correspondence, e.g. for example, correspondence for the signature.

3.11.154.2.9.10  (01-01-2014)
♦ CCC "4" - IRC 6020(b) Return ♦

  1. Edit CCC "4" when the IRS's Compliance Branch has prepared a return and the Revenue Officer has entered IRC 6020(b). See IRM 3.11.154.3.8.1 for IRC 6020(b) processing procedures.

    Note:

    CCC "4" cannot be used with CCC "R" .

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

3.11.154.2.9.11  (01-01-2014)
CCC "5" - Successor Employer

  1. The taxpayer will signify if they are a Successor Employer by checking Box "b" of the Form 940 or Form 940PR (Revisions 2006 through 2011). This designation will notify IRS that the employer is entitled to certain credits based on payments made by the predecessor employer. If the taxpayer marks Box "b" , enter CCC "5" , which will signify that they are a successor employer.

  2. If the taxpayer signifies that they are a Successor Employer on the return or attachments, and Box "b" is not checked, check Box "b" in addition to entering CCC "5" .

3.11.154.2.9.12  (01-01-2014)
♦ CCC "7" - Reasonable Cause Denied ♦

  1. Do not edit CCC "7" when the taxpayer requests an abatement for failing to file or for failing to pay taxes timely, when submitting a return. Whenever the taxpayer has requested penalty relief, send Letter 1382C to inform the taxpayer of the proper procedure to follow to request abatement, if, and when a penalty is assessed.

3.11.154.2.9.13  (01-01-2014)
CCC "9" - No Payments to Employees — Revision Year 2006 and subsequent

  1. The taxpayer should indicate that no payments were made to employees by checking Box "c" (Revisions 2006 and subsequent).

  2. If Box c is checked on a signed return, (or on a return with a signed statement attached, e.g. indicating or using phrases to indicate no payments were made to employees,) and the return lines indicate "0" (zero), or none, or dashes, then edit a CCC 9.

    Note:

    Do not edit CCC 9 on returns with no tax data that are not signed or do not have an attached signed statement, e.g. indicating "No payments to employees".

  3. If the taxpayer has indicated on a signed return, (or on a return with an signed statement attached), that no payments were made to employees, and box c is not marked, mark box c, and edit CCC 9.

    Figure 3.11.154-2
    This image is too large to be displayed in the current screen. Please click the link to view the image.

3.11.154.2.10  (01-01-2014)
Pre-Computed Penalty and Interest Code

  1. Code and Edit will no longer edit the Penalty and Interest code "1" on the Form 940, or 940PR.

3.11.154.2.11  (01-01-2014)
Pre-Computed Penalties - Failure to Deposit Penalty

  1. Code and Edit will no longer edit the FTD Penalty on Form 940, or 940PR.

3.11.154.2.12  (01-01-2014)
Other Pre-Computed Penalties

  1. The Internal Revenue Code (IRC) provides for other penalties to be assessed against taxpayers. Those penalties are explained in IRC 6663 and 6674.

  2. Provisions have not been made for assessing these penalties on the original input of the return. Therefore, they should not be included in the penalty and interest box.

  3. Pre-Computed penalties other than Delinquency (Late Filing Penalty), Failure To Deposit Penalty (FTD) or Failure to Pay (FTP) should be handled as follows:

    1. Prepare a Form 3465 to request an assessment of the penalty.

    2. If a remittance amount includes all or part of the penalty, indicate on the Form 3465 that this portion of the remittance is available for application to the assessment.

    3. Edit CCC "X" to freeze the refund until the assessment for penalty posts to the BMF.

    4. Annotate in the left margin of the return "3465 Prep" .

    5. Route Form 3465 to Accounts Management.

  4. Failure to Deposit - When a pre-computed Failure to Deposit penalty is shown on the return, add the penalty amount to the balance due amount or, subtract the amount of the penalty from the overpayment (refund) amount claimed.

  5. Delinquency, Failure to Pay and Minimum Penalty - When a Delinquency, Failure to Pay, or Minimum Penalty is shown on the return, subtract the penalty from the balance due amount if the taxpayer has computed the penalty and interest, and added it to the balance due amount.

3.11.154.2.13  (01-01-2014)
Unprocessable Conditions

  1. A return must contain specific items before it is considered processable and timely filed. Perfect all documents to the extent possible from schedules and other attachments. The specific items needed are:

    • An Employer Identification Number (EIN)

    • A legible name (for name control)

    • A valid Tax Year

    • Legible tax data, if tax liability is indicated

    • A signature attesting to the perjury statement shown on the document

  2. Conditions which make a document unprocessable are:

    1. Name so illegible or incomplete that the name control cannot be determined.

    2. EIN is other than 9 numeric digits (XX–XXXXXXX), and cannot be perfected from information on the return or attachment.

    3. The document has two or more EINs.

    4. Taxpayer files a return for more than one type of tax,

    5. Tax data entries on the document are so incomplete, illegible or contradictory that the tax liability cannot be determined.

    6. The document is blocked incorrectly.

    7. Any condition set forth as unprocessable in the specific procedures.

    8. The return is unsigned, or signed in the wrong location,

    9. The return has only entity data and no other statements, attachments or signature by the taxpayer.

  3. Procedures for Unprocessable Documents

    1. After IDRS research, returns with unresolved entity problems should be routed to the Entity Control function for research (AC 320).

    2. On a return with multiple EINs or illegible name, take the following action:

    IF THEN
    The return is a numbered document, Place an asterisk (*) to the left of the EIN.

    Note:

    The record will automatically be placed on the Error Inventory of ERS.

    Illegible name, Edit Action Code 320 on the return and prepare a Form 4227 for research action.
    The return is unnumbered, Pull the return from the block, prepare Form 4227 or Form 6882, (IDRS/Master File Information Request), and send return to the Entity Control Function for research.
    The document is unnumbered and the Employer Identification Number (EIN) is missing, applied for, pending, etc., 1. Research IDRS for EIN.
    2. Unable to locate EIN, send to the Entity Control function for EIN.
    The taxpayer's EIN, name or address cannot be determined from the attachments, or after research procedures, and the return cannot be returned to the taxpayer due to the illegible entry data, Pull the return from the batch and give it to your lead tax examiner or supervisor for disposition in accordance with IRM 1.15.20, Records Control Schedule for Administration/Organization Support Operational Records.
     

  4. DO NOT send the following unprocessable returns to the Hold File:

    Note:

    Local procedures determine where the Hold File will be maintained.

    1. IF THEN
      Overpaid returns for which the taxpayer replied but it is still unprocessable or for which no reply has been received, Edit CCC "X" on the return.
      The only tax data entries on the return represent FTD credits and/or balance due/overpayment amounts, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
      The return is an IRC 6020(b) prepared by a Compliance, Substitute For Return (SFR) prepared by Examination, and the return is unprocessable, Route the return (per local procedures) to: Internal Revenue Service
      2970 Market St.
      Mail Stop 2 - J11.151
      Philadelphia, PA 19104
      The return contains no entity data or signature, and the only entries on the return are figures, Give the return to your manager for administrative determination.
      The return falls into the category of undeliverable, this includes returns devoid of entity that cannot be identified by a signature after IDRS research, Pull the return from the batch and give to your manager for disposition in accordance with the IRM 1.15.20 Records Management - Records Control Schedule for Administration/Organization Support Operational Records.

3.11.154.2.13.1  (01-01-2014)
Blank Returns Indicating Payroll Service or Leased Employees

  1. Returns received with no tax data and taxpayer states the return is filed by another company should be processed as follows:

    IF THEN
    The taxpayer submits a blank Form 940 (no tax data entries) and states that he/she has a payroll service that files the return, Give the return to your manager or lead to be disposed of as classified waste.
    The taxpayer submits a blank Form 940 (no tax data entries) and states he/she has leased employees, but you are unable to determine if it is a payroll service or a company who leased employees, Correspond using 142C letter, as applicable. If the initial return was unsigned also correspond for the signature.

3.11.154.2.13.2  (01-01-2014)
Unprocessable Returns with Replies

  1. This function will take place in Rejects.

3.11.154.2.13.3  (01-01-2014)
No Replies on Unprocessable Returns

  1. This function will take place in Rejects.

3.11.154.2.14  (01-01-2014)
♦ Correspondence ♦

  1. There are two types of correspondence Code and Edit may encounter:

    1. Correspondence received from taxpayers, and

    2. Issuing correspondence to taxpayers.

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

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

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

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

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

    1. Is taxpayer waiting for a response from us?

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

    3. Is taxpayer asking a question?

    Note:

    A Post-It-Note, Sticky Note, or some other type of note stuck on the return by another function does not constitute correspondence from the taxpayer. For instance, the note may state something like the following: "Taxpayer (TP) requests penalties be waived" .

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

    Note:

    Do not correspond on returns prepared by Compliance, indicate IRC 6020(b) or by Examination and Substitute for Return (SFR)

    .

  5. Examine the return to address all of the conditions in the same correspondence.

    • Form 12522, Correspondence Action Sheet, or a local equivalent of Form 12522, is used to correspond on numbered returns and unnumbered delinquent or balance due returns.

    • Paperless Correspondence Action Code Procedures - edit Action Code 211 followed by a dash (-), then the appropriate Selective Paragraph Codes from Form 12522 and any additional paragraph(s) shown on the Letter 142C representing the correspondence issue.

    • Form 6800-A(Eng/Sp) - Used to send a return back to the taxpayer. 6800-A(Eng/Sp) will only be used where indicated in this IRM.

      Note:

      6800-A(Eng/Sp) is the only document to send Form 940 or Form 940PR back to the taxpayer.

    IF AND THEN
    Correspondence is needed, Requires a response, 1. Complete Form 12522, or Paperless Correspondence, indicating the letter number (142C, 86C, etc.), or local equivalent, Master File Tax Code (MFT), and the appropriate paragraphs.

    Reminder:

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

    Note:

    It is now acceptable to receive a missing signature, forms, etc. by fax. Be sure to include the letter paragraph advising the taxpayer of this option when completing Form 12522, or the local equivalent to Form 12522.


    2. Attach Form 12522, or the local equivalent to the front of the return below the entity area.
    3. Edit Action Code "211" (First Correspondence) or, "215 " (International Correspondence), on the return.
    4. Finish editing the return and leave in the batch.
    Correspondence is needed, Does Not require a response, 1. Complete Form 12522, or Paperless Correspondence, or the local equivalent of Letter 142C, 86C, etc., MFT (Master File Tax Code), and the appropriate paragraphs.

    Reminder:

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


    2. Photocopy the first page of the tax return and attach the Form 12522 below the Entity area on the front of the copy of the return. Be sure the name and address shows clearly above the Form 12522.

    3. Forward the copy to the Correspondence area.

    4. Edit an Action Trail (e.g.: 142C sent) in the lower left corner going vertically up the side of the return.

    5. Finish editing the return and leave in batch.

  6. Conditions requiring correspondence and the suggested correspondence action: See Exhibit 3.11.154-4.

3.11.154.2.15  (01-01-2014)
♦Use of Fax for Taxpayer Submissions♦

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

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

    Note:

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

  3. Code and Edit examiners will indicate the fax paragraph on the Form 12522, Correspondence Action Sheet, to advise taxpayers of the option to fax their response.

3.11.154.2.16  (01-01-2014)
♦ Third Party Designee ♦

  1. The Third Party Designee election was created to allow a designated individual to discuss and/or disclose information about the taxpayer's Form 940, or Form 940PR, with the IRS. The Third Party Designee election applies only while the return is being processed, and only for the return's tax year.

  2. The Third Party Designee is located in Part 6, Form 940 and Form 940PR (Revisions 2006 and subsequent).

3.11.154.2.16.1  (01-01-2014)
Third Party Designee Checkbox

  1. The Third Party Designee Checkbox (Yes or No) indicates whether the taxpayer has elected to allow the named Third Party Designee to answer questions about the taxpayer's return as it is processed.

  2. No action is required.

3.11.154.2.16.2  (01-01-2014)
Third Party Designee Phone Number

  1. The Third Party Designee phone number is located in Part 6 of Form 940 and 940PR.

  2. No action is required.

3.11.154.2.16.3  (01-01-2014)
Third Party Designee Personal Identification Number (PIN)

  1. The PIN number is self-selected by the taxpayer or designee. It is not assigned by IRS.

  2. This field can be up to 5 characters long.

  3. The entry may be a combination of alpha (a-z) and numeric (0-9).

  4. Asterisk (*) to the left if illegible.

3.11.154.2.17  (01-01-2014)
Paid Preparer Section

  1. The Paid Preparer information is located in Part 7 of Form 940 and Form 940PR (Revision 2008 and subsequent).

3.11.154.2.17.1  (01-01-2014)
♦Paid Preparer Social Security Number or Preparer Taxpayer Identification Number♦

  1. The Paid Preparer's Social Security Number (SSN) is a nine-digit number. The SSN cannot be all zeroes or all nines.

  2. The Preparer Taxpayer Identification Number (PTIN) consists of nine characters. The PTIN begins with the letter "P" followed by eight numbers (e.g., PXXXXXXXX).

  3. If the Preparer's SSN or PTIN is invalid, asterisk (*) to the left of the entry. No other editing is required.

3.11.154.2.17.2  (01-01-2014)
♦Paid Preparer Employer Identification Number♦

  1. The Paid Preparer's Employer Identification Number (EIN) must consist of nine numbers. The EIN cannot be all zeroes or all nines. The Paid Preparer's EIN is the TIN of the firm or business where the individual preparer works. If the Paid Preparer's TIN is invalid, asterisk (*) to the left of the entry. No other editing is required.

3.11.154.2.17.3  (01-01-2014)
♦Paid Preparer Phone Number♦

  1. No action is required on amended returns.

  2. If a complete Paid Preparer Phone Number is located on the Paid Preparer's Phone Number line, no editing of this line is necessary.

  3. If the Paid Preparer's Phone Number is incomplete, illegible, or less than 10 digits, review the return and all attachments.

    Note:

    If more than 10 digits are present, continue processing the return. Only the first 10 digits will be transcribed.

    IF THEN
    A complete Paid Preparer's Phone Number is located elsewhere on the return or attachments, Edit to the "Phone Number" line.
    A complete Paid Preparer's Phone Number is not located or the number is illegible, Asterisk (*) to the left of the incomplete or illegible phone number.

3.11.154.2.18  (01-01-2014)
♦ Signature Area ♦

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

    • Returns prepared under IRC 6020(b). These returns must be signed by a Compliance Function Representative. If the Compliance Representative's (ROs) signature is missing, route to:

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

      Note:

      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.

    • Returns prepared by Examination. For example, returns indicating "SFR" or "Substitute for Return" .
      Reminder: Returns secured by Examination do require a signature and jurat.

    • Dummy returns prepared by IRS.

    • Returns filed under IRC 501(d), a Religious or Apostolic Organization.

    • When correspondence containing a signature and jurat is attached showing that the taxpayer is responding to an IRS letter.

    • When the taxpayer indicates that they have filed another type of return. If the taxpayer indicates this, prepare Form 4227 or Form 6882, IDRS Information Request to request research to determine the correct filing requirement.

    • When the taxpayer appears to be "irate" because he/she has received another request (with a blank return) after filing a "Final" return the previous year.

    • Other Federal agencies.

    • Returns originally filed initially electronically (E-File), which are being re-entered. 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 in the top margin.

      Note:

      Circle "Do Not Process" if present on the return.

    • Do not correspond for a signature on Correspondence Imaging System Returns (CIS) that have Form 13596 attached. See IRM 3.11.154.3.10.

    Note:

    Enter an asterisk (*) in the signature box when a signature is not required on the return.

  2. See IRM 3.11.154.3.10 for Correspondence Imaging Returns ("CIS" ) signature instructions.

  3. Since tax examiners are not expected to be handwriting experts, Regulations allow us to presume that the signature on a return, statement or other document is the true signature of the person who actually signed the document.

  4. Very often, a tax preparer will mark a signature line with an "X" , to indicate where the taxpayer should sign the return. When this happens:

    IF AND THEN
    An "X" is shown in the "Sign your name here" box, There is a name shown in the "Print your name here" box, Do not correspond.
    An "X" is shown in the "Sign your name here" box, The "Print your name here" box is blank, Correspond with the taxpayer to obtain a signature.

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

    Note:

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

    1. If the signature declaration is altered or stricken, see identification of Frivolous Returns and Claims.

    2. If the taxpayer responds with a self prepared "signature declaration" , it must contain the same language as the jurat on the tax return, "Under penalties of perjury, I declare that I have examined this return including accompanying schedules and statements, and, to the best of my knowledge and belief, it is true, correct, and complete, and that no part of any payment made to a state unemployment fund claimed as a credit was, or is to be, deducted from the payments to employees."

  6. A signature of an individual, officer, partner, duly authorized agent, etc. can be printed, typed, stamped, computer generated, or affixed by some other type of mechanical device. A "signature" refers to the "name" of the individual who attests that the information on the return is true, correct and complete.

    1. A signature need not be in cursive.

    2. A signature does not have to be hand-written.

  7. The signature must appear in either the " Sign your name here" box, or on the " Print your name here" box, or the " Signature" line. If the taxpayer's or duly authorized representative's signature does not appear in any one of those areas, follow the procedures in the IF/THEN Table below.

    Note:

    If the jurat was altered or stricken (crossed out), See IRM 3.11.154.3.14 If the jurat is not present with a signature, follow the procedures in IRM 3.11.154.2.18(8) below.

  8. If a signature and/or jurat is not present as required, process as follows:

    IF THEN
    • The return is not signed on the line designated for the Form 940 or Form 940PR signature, or

    • The jurat is not present on the line designated for the Form 940 or Form 940PR signature (non-standard return).

    • Only the Entity information is present and there are no attachments containing tax data,


    1. Edit Action Code +"225 " (Correspondence for Signature Only) or" 226," (International Correspondence for Signature Only).

    2. Leave in batch and continue processing.

    Note:

    Returns, which were previously rejected through E-file and are being submitted as a paper return, must meet the paper return signature requirements. The Form 8655 submitted as part of the E-file return, is not acceptable to meet the paper return signature requirements. See above for those requirements.

  9. Facsimile Signature - Rather than a handwritten signature, an owner, partner, corporate officer or duly authorized agent may sign a Form 940 or Form 940PR by facsimile (i.e., by rubber stamp, mechanical device, or computer software program).
    If a facsimile is used, the person filing the form must retain a letter, signed by the individual authorized to sign the return(s) declaring under penalties of perjury that the facsimile signature appearing on the form is the signature adopted by the person and that the signature was placed there by their direction.

    1. Correspond if no facsimile signature is found.

  10. For SCRIPS processing, if a return is submitted typed with blue or black ink and the signature is in orange, or pink, place an asterisk (*) in the left most position in the signature box to prevent the SCRIPS system from generating a notice to the taxpayer.

3.11.154.2.19  (01-01-2014)
Tax Period

  1. All returns must have a Tax Period. Edit the Tax Period to the right of the form title in YY format.

    IF THEN
    The return is for current processing year, Do not edit current tax year. No editing is necessary.
    The taxpayer has notated a Tax Period other than the current year, Edit the Tax Period based on the taxpayer's indication.
    The Tax Period is missing, incomplete, or illegible, 1. Review the return and attachments for the correct period.

    2. If found, edit the Tax Period to the right of the form title in YY format.

    3. Unable to determine the Tax Period after searching the return and attachments, process the return for the year currently being processed.
    More than one Tax Period is shown on the return, 1. Review the return or the attachments for the correct Tax Period.

    2. If the Tax Period cannot be determined, edit and process the return for the earliest Tax Period shown by the taxpayer.

    3. Edit the correct Tax Period in YY format.

  2. Prepare a dummy return for each Tax Year involved when more than one tax year is shown on a return. Correspond with the taxpayer if a dummy return cannot be prepared.

3.11.154.2.20  (01-01-2014)
Early Filed Returns

  1. An Early-Filed return is a return with a Received Date prior to the Tax Period Ending date.

  2. Never send back an Early-Filed return to the taxpayer.

    Note:

    When correspondence issues are present on an Early-Filed return, edit the Correspondence Action Code ("211" ,"225" , or

    "226" on the return. Edit Action Code "480" (Early filed- Suspense) on Form 4227 and forward for correspondence action.

  3. Circle out the received date if one is shown on the return.

  4. Do not edit Credit Reduction information on Early-Filed return

  5. Do not pull from pack if the return is an early filed SCRIPS.

    IF THEN
    The taxpayer submits a return using a 2005 or prior revision and marks "2013" on the "Calendar Year" or "Año contributivo" line of the return, Process through ISRP as a current year return.
    The return is early-filed and is not a "Final"

    Note:

    This procedure includes early filed complete CIS returns.

    1. If you can determine the reason for filing an early-filed return, edit Action Code 480.

    2. If you cannot determine the reason for filing a early-filed return, edit AC 211. Correspond with the taxpayer using Letter 142C, (or an accepted local letter).

    Exception:

    If the tax year ending is later than the Received Date by not more than two months (received date is November 1 through December 31), edit Action Code 480 (Early filed - Suspense) and leave in batch.

    The return is early-filed, "Final" and complete, 1. Edit CCC "F" .

    2. Edit Action Code 480.
    The return is early-filed, "Final" and incomplete, 1. If return is incomplete, correspond for missing data using Letter 142C (or an accepted local letter).

    2. Suspend with AC 211.

    3. Edit CCC "F" .

3.11.154.3  (01-01-2014)
Special Conditions

  1. Processing special return conditions in the code and edit function.

3.11.154.3.1  (01-01-2014)
♦Refund Returns - Manual and Ten Million Dollar Refunds♦

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

    Note:

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

    IF THEN
    A refund return is batched in a non-refund batch, 1. Completely edit the return.

    2. Pull the return from the non-refund batch and merge into a refund batch using local procedures.

    Exception:

    Follow the instructions below when the processing date is more than 20 days after the received date, or the return due date, or when the refund is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    The processing date is more than 20 days after the Received Date or the Return Due Date (whichever is later) and the 45 Day Interest Free period is in jeopardy and the refund ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Note:

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

    1. Edit Action Code 341.

    2. Attach Form 4227 and check the "Reject Correction" (or other appropriate routing slip) and give the return to the manager.
    The refund is $10,000,000 or more,

    Note:

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


    1. Do not leave the return in the block.
    2. Edit Action Code 341 for numbered or unnumbered returns.

    3. Give the return to the manager for expedite processing.
    The W&I Submission Processing Liaison for TAS issues a return to be walked through Code & Edit, In addition to normal editing, edit CCC "O" to freeze the refund.

3.11.154.3.2  (01-01-2014)
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.

    Exception:

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

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

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

    2. If January 31st 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  (01-01-2014)
♦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.

    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 3.11.154-18. 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 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 (e.g., 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 3.11.154-18. 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  (01-01-2014)
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 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).

    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 3.11.154-14.

      Note:

      State Code "ZZ" is only applicable in credit reduction years, e.g. such as, tax years 2009 through 2013.

    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.

    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.

    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  (01-01-2014)
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:

    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."
    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 3.11.154-3.

    Figure 3.11.154-3
    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  (01-01-2014)
♦ 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.

    Note:

    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 020(b) returns.

    • 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.

    • Tax returns that are secured by Examination ("Process as Original" is notated on page 1.)

  3. 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.

  4. 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.

  5. 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, Edit a CCC W.
    The return received date is less than 2 years and 9 months from the Return Due Date, The return is stamped, “No Statute issue” Do not edit a CCC W and continue processing return.

  6. 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
    940, PR 2006 01-31-2010 11-02-2009
    940, PR 2007 01-31-2011 11-02-2010
    940, PR 2008 01-31-2012 11-02-2011
    940, PR 2009 01-31-2013 11-02-2012
    940, PR 2010 01-31-2014 11-02-2013
    940, PR 2011 01-31-2015 11-02-2014
    940, PR 2012 01–31–2016 11–02–2015
    940, PR 2013 01–31–2017 11–02–2016


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