3.11.154  Unemployment Tax Returns

Manual Transmittal

October 28, 2014

Purpose

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

Material Changes

(1) IRM 3.11.154.1.1 Made the following changes:

  • Paragraphs (1) d) and 1 (e) added "2014" reference.

  • Paragraph (3) changed references of "2013" to "2014" and "Exhibit 3.11.154-12" to "Exhibit 3.11.154-13" .

  • Paragraphs (1) d. and (1) e. changed reference "tax year 2012" to "tax year 2013 and 2012" . (IPU 14U0122 issued 01-15-2014 SERP feedback #201305635 due date 1-13-2014)

(2) IRM 3.11.154.1.4 “BMF Identification (ID) Theft”, - New - Added information pertaining to BMF Identification (ID) Theft.

(3) IRM 3.11.154.2.2 In paragraph 2 deleted the reference of "All Form 940 returns identified as IRC 6020 (b) returns." (IPU 14U0122 issued 01-15-2014 SERP feedback # 201305637 due date 1-13-2014)

(4) IRM 3.11.154.2.3 Made the following changes:

  • Paragraph (1) changed reference of "2013" to "2014" .

  • Paragraph (1) the first and fifth "And" procedure box titles were changed to "2014, 2013 or 2012" .

  • Paragraph (1) the ninth "And" procedure box was changed to read "2014 or prior," .

  • Paragraph (2) the first and third "And" procedure box changed the title reference of "Current year" to "2014" . In the fifth "And" procedure box added "2014" reference.

  • Paragraph (4) d) the first "If" procedure box changed "2003" to "2004" and in the third "If" procedure box changed "2005" to "2006" .

  • Paragraph (6) the "If" procedure box changed "2013 and prior" to "2006 and subsequent" .

  • Paragraph (9) deleted subparagraph c) All 940 returns with Schedule R attached MUST be processed through SCRIPS.

  • Paragraph (1) changed the first "Then" box procedures 1. to read "No line conversion is needed. Return should be processed through SCRIPS" . (IPU 14U0236 issued 01-31-2014 SERP feedback #201400207 due date 1-28-2014)

  • Paragraph (2) first "If" procedure box changed reference of "and" to "or" . Second "And " box procedure deleted reference to prior year. In the third and fifth "And" procedure box corrected the referenced tax years. In the "Then" procedure box changed the reference of "line number" to "line conversion" , "940" to "940PR" and "SCRIPS" to "ISRP" . (IPU 14U0236 issued 01-31-2014 SERP feedback #201400208 due date 1-28-2014)

  • Paragraph (6) changed references of "Form 940" to "The return" . (IPU 14U0236 issued 01-31-2014 SERP feedback #201400209 due date 1-28-2014)

  • Change the title to read "Return Perfection Processing of Form 940 and Form 940PR." (IPU 14U0122 issued 01-15-2014 SERP feedback # 201305638 due date 1-13-2014)

  • Paragraph (1) Form 940 Revision 2013 and 2012 procedures in the first "If" procedure box changed reference of "and" to "or" . Changed the first "And" procedure box to read "Current year 2013 or 2012." Deleted in the second "And" procedure box the reference of "and prior" . (IPU 14U0122 issued 01-15-2014 SERP feedback # 201305639 due date 1-13-2014)

  • Paragraph (1) Form 940 Revision 2011 procedures changed the first "And" procedure box to read "Current year 2013 or 2012." (IPU 14U0122 issued 01-15-2014 SERP feedback # 201305639 due date 1-13-2014)

(5) IRM 3.11.154.2.4 Made the following changes:

  • Added new Figure 3.11.154-2 of an example of a Form 940 for tax years 2014 showing misplaced edit marks made by other IRS functions.

  • Paragraph (6) first description box added to the end of the note "Do not asterisk (*) on Form 940PR " .

  • Paragraph (6) Added to paragraph (6) the Types of Edit Marks table under Edit Marks Made to Other IRS Functions. Entity was added to the other areas listed and added the statement, “Do not edit (or write) over another area's edit marks”. (IPU 14U1056 issued 06-26-2014)

(6) IRM 3.11.154.2.6 (1) and (5) Changed reference of "Exhibit 3.11.154-10" to "Exhibit 3.11.154-11" .

(7) IRM 3.11.154.2.8 Routing Guide for Attachments made the following changes:

  • Form 8821 and Form 2848 - Added the Physical street address for private delivery carriers. (09-02-2014)

  • Added "Petitions in oppositions of tax low provisions" to the routing guide. This was a result of guidance titled "Demonstration, Photo and Petition Guidance for FA Managers"

  • In the Action column for "Statement establishing Reasonable Cause for delinquent filing" changed the action to read "See IRM 3.11.154.2.9.6."

  • In the Action column for "Form 5604, IRC 6020(b) Action Sheet" changed the action to read "See IRM 3.11.154.3.8.1."

  • Changed the Form 895, Form 2644, Form 2859, Form 3198, and Form 5403, to read "See IRM 3.11.154.3.12." (IPU 14U0122 issued 01-15-2014 SERP feedback #201305650 due date 1-13-2014)

(8) IRM 3.11.154.2.9 Made the following changes:

  • Deleted paragraph (4).

  • Added new paragraph "(4) If instructed to issue a Letter 1382C See IRM 3.11.154.3.9.1 when Form 3893 is attached or See IRM 3.11.154.3.9.2 when Form 13596 is attached to determine if the letter should be issued." (IPU 14U0236 issued 01-31-2014 SERP feedback #201400211 due date 1-28-2014)

(9) IRM 3.11.154.2.9.1(1) Added "See IRM 3.11.154.3.9.1 when Form 3893 is attached or See IRM 3.11.154.3.9.2 when Form 13596 is attached to determine if a letter should be issued."

(10) IRM 3.11.154.2.9.2 Added new paragraph (2) regarding exempt to the FUTA tax for federally-recognized Indian Tribal Government (or its instrumentalities) returns. (IPU 14U0236 issued 01-31-2014 SERP feedback #201400212 due date 1-28-2014)

(11) IRM 3.11.154.2.9.4 (1) Added "See IRM 3.11.154.3.9.1 when Form 3893 is attached or See IRM 3.11.154.3.9.2 when Form 13596 is attached to determine if a letter should be issued."

(12) IRM 3.11.154.2.9.6 Added "Exception: See IRM 3.11.154.3.9.1 when Form 3893 is attached or See IRM 3.11.154.3.9.2 when Form 13596 is attached to determine if a letter should be issued."

(13) IRM 3.11.154.2.9.12 (1) Added "Exception: See IRM 3.11.154.3.9.1 when Form 3893 is attached or See IRM 3.11.154.3.9.2 when Form 13596 is attached to determine if a letter should be issued."

(14) IRM 3.11.154.2.13 (3) b) Added to the first "Then" procedure "Exception: Do not asterisk on Form 940PR returns."

(15) IRM 3.11.154.2.14(5) Changed reference of "Exhibit 3.11.154-4" to "Exhibit 3.11.154-5" .

(16) IRM 3.1.154.2.18 Made the following changes:

  • Paragraph (5) added "See IRM 3.11.154.3.14."

  • Paragraph (5) a) changed "identification of" to "IRM 3.11.154.3.14" .

  • Paragraph (7) changed to read "The signature must appear in either the “ Sign your name here” box, or on the “ Print your name here” box, or the “ Signature” line. See IRM 3.11.154.3.14."

  • Paragraph (8) changed to read "If taxpayer's or duly authorized representative's signature and/or jurat is not present or as required or has been altered, or If the jurat was altered or stricken (crossed out) process as follows:"

(17) IRM 3.11.154.3.2 (2) Added "See IRM 3.11.154.3.9.1 when Form 3893 is attached or See IRM 3.11.154.3.9.2 when Form 13596 is attached to determine if a letter should be issued."

(18) IRM 3.11.154.3.3 Made the following changes:

  • Paragraph (2) Changed reference of "Exhibit 3.11.154-18" to "Exhibit 3.11.154-15" .

  • Paragraph (2) the last "Then" procedure box added a caution statement. (IPU 14U1056 issued 06-26-2014)

  • Paragraph (4) inserted “may” prior to the word consist. (IPU 14U1056 issued 06-26-2014)

  • Paragraph (5) a) second "Then" procedure box changed reference of "Exhibit 3.11.154-18" to "Exhibit 3.11.154-15" .

(19) IRM 3.11.154.3.4 Made the following changes:

  • Paragraph (1) changed to read "Form 940 and Form 940PR returns are non- taxable when they are filed without any tax data entries or with no entries for tax. Note: Taxpayer may also indicate a non-taxable return by checking Box “c”, “No payments to employees”, or box “d”, “Final: Business closed or stopped paying wages” (Revisions 2006 and subsequent) and no tax data entries for tax are present."

  • Paragraph (3) c) changed reference of "Exhibit 3.11.154-12" to "3.11.154–13" .

  • Paragraph (3) d) changed reference of "2013" to "2014" .

  • Paragraph (3) e) added "Exception: For Form 940PR returns circle out the CR state and do not enter an asterisk (*)" .

  • Paragraph (3) c. changed referenced "Exhibit 3.11.154-14" to "Exhibit 3.11.154-12" . (IPU 14U0236 issued 01-31-2014 SERP feedback #201400220 due date 1-28-2014)

  • Moved the Note from paragraph (3) c. to paragraph (3) d. (IPU 14U0122 issued 01-15-2014 SERP feedback #201305656 due date 1-13-2014)

(20) IRM 3.11.154.3.5 (3) Made the following changes:

  • Added "Reminder: If the return is an amended return see IRM 3.11.154.3.7 Amended Returns" .

  • Second "Then" procedure box added "Exception: For Form 940PR returns do not asterisk (*) instead circle out all T Lines" .

  • Changed reference of "Figure 3.11.154-3" to "Figure 3.11.154-4" .

(21) IRM 3.11.154.3.6 Made the following changes:

  • Paragraph (3) revised to instruct the TE to give the return to their lead so the lead can contact the TAS employee. (August 13, 2014)

  • Paragraph (7) added Tax Year 2014 information to the table for Form 940 or Form 940PR.

  • Paragraph (2) added Secured by Examination/Collections, TE/GE and TE/GE EP exam to the list of exceptions for routing to the Statute Control Unit. Also removed the bullet that mentions Exam and processing as original. (IPU 14U1056 issued 06-26-2014)

  • Added new paragraph (3) with instruction on how to handle a OAR when the return attached needs to be cleared by Statute. (IPU 14U1056 issued 06-26-2014)

  • Paragraph (6) under the "AND" column combined both statement and also added to the statement "“Statute N/A”, or a similar statement indicating there is no statute issue" to apply to both condition. (IPU 14U1056 issued 06-26-2014)

(22) IRM 3.11.154.3.7 Made the following changes:

  • Paragraph (1) changed reference of "Figure 3.11.154-4" to "Figure 3.11.154-5" .

  • Paragraph (4) d) added the Exception to the reference for seeing. (IPU 14U1056 issued 06-26-2014)

  • Paragraph (5) moved the Exception into the fifth Then procedure box.

  • Paragraph (5) revised the CCC “G” information in the last row of the “Then” column. Placed an Exception immediately below the table. (IPU 14U1056 issued 06-26-2014)

(23) IRM 3.11.154.3.8.1(3) b) Added "Note: Edit an asterisk (*) in the left most position in the signature box to indicate a signature declaration is attached" .

(24) IRM 3.11.154.3(3) Changed reference of "Figure 3.11.154-5" to "Figure 3.11.154-6" .

(25) IRM 3.11.154.3.9.1 Made the following changes (IPU 14U0236 issued 01-31-2014):

  • Made the note in paragraph (6) a new paragraph (5) procedure. (SERP feedback #201400216 due date 1-28-2014)

  • Changed paragraph (9) (Old paragraph (8)) to read "An IRS Received Date must be present on all re-input returns. See IRM 3.11.154.3.3 for receive date editing procedures." (SERP feedback #201400216 due date 1-28-2014)

(26) IRM 3.11.154.3.9.2 Changed paragraph (7) procedure to read "An IRS Received Date must be present on all reprocessed returns. See IRM 3.11.154.3.3 for receive date editing procedures." (IPU 14U0236 issued 01-31-2014 SERP feedback #201400216 due date 1-28-2014)

(27) IRM 3.11.154.3.10 (4) First "Then" procedure box added "Caution: If the return comes back from AM with the information still incomplete, send the return to AM again to secure all the missing information. Indicate “Additional information needed to process incomplete CIS return, ” or similar language on Form 4227 (or other appropriate routing slip)."

(28) IRM 3.11.154.3.11(1) Added "Exception: For Form 940PR returns do not asterisk (*) instead circle out all money and T-lines" . to the first "Then" procedure box.

(29) IRM 3.11.154.3.14 Made the following changes:

  • Paragraph (1) changed reference of "Exhibit 3.11.154-11" to "Exhibit 3.11.154-12" .

  • Paragraph (2) in the "If" procedure box changed the referenced of "Exhibit 3.11.154-14" to "Exhibit 3.11.154-11" . (IPU 14U0236 issued 01-31-2014 SERP feedback #201400220 due date 1-28-2014)

(30) IRM 3.11.154.3.17 (3) Added "Exception: See IRM 3.11.154.3.9.1 when Form 3893 is attached or See IRM 3.11.154.3.9.2 when Form 13596 is attached to determine if a letter should be issued."

(31) IRM 3.11.154.5.1 Made the following changes:

  • Paragraph (4) restructured paragraph into an "If" "And" "Then" procedural table.

  • Paragraph (5) I) deleted reference of "Figure 3.11.154-6" and "Figure 3.11.154-7" .

(32) IRM 3.11.154.5.3 (2) Added to second "Then" procedure box and the Note "Exception: Do not edit an asterisk (*) on Form 940PR returns" .

(33) IRM 3.11.154.5.4(4) Made the following changes:

  • Added to the sixth "Then" procedure box "Exception: Do not asterisk (*) on Form 940PR returns instead circle the street address" .

  • Added to the seventh "Then" procedure box "Exception: Do not asterisk (*) on Form 940PR returns instead circle the second street address" .

  • Seventh procedure box changed reference of "Figure 3.11.154-8" to "Figure 3.11.154-9" .

  • Eight procedure box changed reference of "Figure 3.11.154-9" to "Figure 3.11.154-10" .

  • Changed the eight "And" procedure box to read "Shows a change of the address to a P.O. Box," .

  • Added to the eight procedure box "Exception: Do not asterisk (*) on Form 940PR returns instead circle the street address," .

(34) IRM 3.11.154.5.5 (5) Made the following changes:

  • Paragraph 5 (b) added "Exception: Do not asterisk (*) on Form 940PR returns instead circle the foreign country" . Changed reference of "Exhibit 3.11.154-8" to "Exhibit 3.11.154-9" .

  • Paragraph (5) d) changed reference of "Exhibit 3.11.154-9" to "Exhibit 3.11.154-10" .

(35) IRM 3.11.154.5.6 (1) Made the following changes:

  • First and second "Then" procedure box added" Exception: Do not asterisk (*) on Form 940PR returns instead circle the country name" .

  • Third "Then" procedure box changed to "Edit CCC 9" ."See IRM 3.11.154.2.9.13 to determine if a CCC “9 ”should be edited. "

(36) IRM 3.11.154.5.7(2) Changed reference of "Exhibit 3.11.154-8" to "Exhibit 3.11.154-9" .

(37) IRM 3.11.154.6.1(1) Made the following changes:

  • Sixth "Then" procedure box added "Exception: Do not asterisk (*) on Form 940PR returns" .

  • Changed the Box d procedures to read "See IRM 3.11.154.2.9.2." (IPU 14U0122 issued 01-15-2014 SERP feedback #201305658 due date 01-13-2014)

(38) IRM 3.11.154.6.2 (1) Changed reference "3.11.154.6.2.2" to "3.11.154.6.2.1" .

(39) IRM 3.11.154.6.2.1 Has been revised in it's entirety and is not titled "Part 2 Boxes "1a" ,- Single State Filer, Box "1b" ,- Multi-State Filer, or Box "2" - Subject to Credit Reduction" and includes the information and procedures for Box 2 Subject to Credit Reduction.

(40) IRM 3.11.154.6.2.2 has been deleted in it's entirety and all editing procedures have been moved to IRM 3.11.154.6.2.1.

(41) IRM 3.11.154.6.3 Made the following changes:

  • Paragraph (1) changed to read "Part 2 on Form 940 and Form 940PR, Revision 2006 through 20132014, is comprised of lines 3 through 8."

  • Paragraph (2) has been deleted.

(42) IRM 3.11.154.6.3.2 (2) has been deleted.

(43) IRM 3.11.154.6.3.4 (1) Changed to read" Line 6 is the total sum of Lines 4 and 5 amounts." Deleted both the third "If" and "Then" procedure boxes.

(44) IRM 3.11.154.6.3.5 Made the following changes:

  • Paragraph (1) has been deleted.

  • Paragraph (2) is now paragraph (1) and has been changed to read "If amount is or is not present on line 7 do the following:" . In the second and third "If" procedure boxes changed reference of "2013" to "2014" and in the "Then" procedure box changed "Tax Year 2013 - 2012 or 2010 - 2006" to Tax Year "2014 - 2012 or 2010 and prior:" Also changed the Note to read "Note: If the taxpayer filed any Tax Year other than 2011 on a Revision 2011 Form 940, place an asterisk (*) to the left of any entry on Line(s) 7b or 7d. If it appears the entry (or entries) were included in the Tax Before Adjustments, line 8, allow the return to generate to ERS" and deleted the ending reference of" Tax Year 2010 and prior Follow tax year 2013 procedures."

  • Paragraph (2) added a semi colon to the end of reference "Edit AC 211" . ( (IPU 14U0236 issued 01-31-2014) SERP feedback #201400218 due date 1-28-2014)

  • Second and third "If" procedure boxes added tax year reference 2006-2010. ( (IPU 14U0236 issued 01-31-2014) SERP feedback #201400218 due date 1-28-2014)

  • Second and third "Then" procedure boxes added tax year reference 2006-2010 and also corrected paragraph number 3. to 2. ( (IPU 14U0236 issued 01-31-2014) SERP feedback #201400218 due date 1-28-2014)

(45) IRM 3.11.154.6.3.6 Made the following changes:

  • Old Paragraph (1) has been deleted.

  • Paragraph (2) is now paragraph (1) and has been changed to read "Line 7b, is FUTA Wages paid before 07/01/2011 from line 7a, Total Taxable FUTA Wages paid:" . First "And" procedure box to read "The return is a revision 2012 and subsequent, or 2010 and prior," . Second "Then" procedure box changed the reference of "enter the entry" to "edit the amount" and deleted the reference of "Allow the return to fall to ERS" . Third "Then" procedure box to read "1. Asterisk (*) the entry in lines 7b. and 7d" . Third "And" procedure box to read "Revision 2011, - for Tax Year 2012 and subsequent or 2010," . Fourth "And" procedure box to read "Revision 2011 - for Tax Year 2011," . Added a new fourth "Then" procedure box to read "No action is required, Continue to edit the remainder of the return" .

(46) IRM 3.11.154.6.3.7 Made the following changes:

  • Old paragraph (1) has been deleted.

  • Paragraph (2) now is paragraph (1) and changed to read "Line 7d, is FUTA Wages paid after 06/30/2011 from line 7a, Total Taxable FUTA Wages paid:" . First "And" procedure box changed "2013," to "2014-" . First "Then" procedure box changed "2013," to "2014,." Second "Then" procedure box changed to read "Form 940 revisions (other than on Rev 2011), no action is needed by Code & Edit." Third "Then" procedure box changed "2013," to "2014-" and paragraph 3) changed to read "If an amount for line 7d can be determined, edit the entry to the left of line 7d. Do not calculate line 7e, or the tax on line 8." The third "And" procedure box changed to read "Revision 2011 for Tax Year 2014 - 2012, or 2010 and prior," The Third "Then" procedure box changed to read 1. Asterisk (*) the entry on lines 7d. 2. If there is no entry in box 7e, take no action. Added new fourth "And" procedure box to read "Revision 2011 for Tax Year 2011," Added new fourth "Then" procedure box to read "No action is required, Continue to edit the remainder of the return."

(47) IRM 3.11.154.6.3.8 Changed paragraph (1) to read "If an amount is or is not present on line 8, do the following:" and Revised the If and Then procedures in it's entirety.

(48) IRM 3.11.154.6.4 Changed to read "Part 3 contains the taxpayers amounts for Adjustments and Credit Reduction lines 9, 10, and 11."

(49) IRM 3.11.154.6.4.1(1) Changed to read "Line 9 is taxpayers entry for All Taxable FUTA Wages paid excluded from state unemployment tax:" and Changed the second "Then" box procedure to read "There cannot be an entry on Lines 9 and 11, even if credit Reduction applies: 1. Asterisk (*) the entry on line 11. 2. Do not check box 2 if blank. 3. Asterisk (*) if marked. 4. Do not dummy a Schedule A if present. 5. If Schedule A is present edit a slash through the Schedule A."

(50) IRM 3.11.154.6.4.2 Deleted "Were" in the title and changed paragraph (1) to read " Line 10 is taxpayers entry for Some Taxable FUTA Wages paid excluded from state unemployment tax or state unemployment tax paid late:" .

(51) IRM 3.11.154.6.4.3 Made the following changes:

  • Paragraph (2) has been restructured in it's entirety.

  • Paragraph (3) has been deleted.

  • Paragraph (4) is now new paragraph (3).

  • Paragraph (3) a) changed reference of "2013" to "2014-"

  • Paragraph (3) b) changed the first "Then" box procedure to read "There cannot be an entry on Lines 9 and 11, even if credit Reduction applies: 1. Asterisk (*) the entry on line 11. 2. Do not check box 2 if blank. 3. Asterisk (*) if marked. 4. Do not dummy a Schedule A if present. 5. If Schedule A is present edit a slash through the Schedule A" .

  • Paragraph (4) a) changed the reference of "and 2012, or line 7a, Rev 2011)" to "2012 or 2010 - 2006) or line 7a (Rev. 2011)" . (IPU 14U0236 issued 01-31-2014 SERP feedback #201400220 due date 1-28-2014)

(52) IRM 3.11.154.6.5.1 (1) Changed to read "Line 12, Total FUTA Tax After Adjustments, is taxpayers for Federal Unemployment Tax (FUTA) after adjustments."

(53) IRM 3.11.154.6.5.3 (1) Changed to read "If any amounts are or are not present on lines 12, 13, or 14, do the following:"

(54) IRM 3.11.154.6.5.4 (1) Changed to read "If an amount is or is not present on line 15, do the following:"

(55) IRM 3.11.154.6.6 (1) Made the following changes:

  • Changed reference of "2013" to "2014-" .

  • Added new "If" procedure box to read "The SIC 1 has been edited," .

  • Added a new "Then" procedure box to read "No further editing is necessary to Part 5, Form 940 or Form 940PR. " .

  • Changed the second "If" procedure box to read "Line 16d (fourth quarter is blank)," .

  • Changed the second "And" procedure box to read "Line 12 is larger than the sum of Lines 16a through 16c, " .

  • Changed the second "Then" procedure box to read "Edit the difference between Line 12 and the sum of Lines 16a through 16c to Line 16d. " .

  • Fourth "Then" procedure box changed reference of "Figure 3.11.154-10" to "Figure 3.11.154-11" and "Figure 3.11.154-11" to "Figure 3.11.154-12" .

  • In the third "And" procedure added tax year 2006 reference and in the Then procedure box added tax year reference 2010-2006 and the multiplication percentage .008. (IPU 14U0236 issued 01-31-2014 SERP feedback #201400219 due date 1-28-2014)

(56) IRM 3.11.154.6.9 Made the following changes:

  • Paragraph (1) changed reference of "Exhibit 3.11.154-12" to "Exhibit 3.11.154-13" .

  • Paragraph (2) changed the First "Then" procedure box to read "Edit a slash (/) across the Schedule A." and changed the fourth procedure box to read "Mark box 1b if not marked."

  • Paragraph (2) changed second "Then" procedure box to read "Compare the Box 1a entry to the Schedule A to ensure the same state is shown. Correct any transcription errors made in Box 1a. See Exhibit 3.11.154-13 to determine if its a valid Credit Reduction state."

  • Paragraph (2) third and fourth procedure box changed reference of "Exhibit 3.11.154-12" to "Exhibit 3.11.154-13" .

  • paragraph (2) changed the sixth "Then" box procedure 1) c) to read "If the state marked on Schedule A is not a Credit Reduction state, edit a slash through the entire Schedule A."

  • Paragraph (1) changed exhibit number from 3.11.154-14 to 3.11.154-12 and in paragraph (2) changed all exhibit numbers 3.11.154-7 to 3.11.154-12 and 3.11.154-14 to 3.11.154-12. (IPU 14U0236 issued 01-31-2014 SERP feedback #201400220 due date 1-28-2014)

  • Deleted paragraph 2 and renumbered changed old paragraph (3) to paragraph (2). (IPU 14U0122 issued 01-15-2014 SERP feedback #201305657 due date 1-13-2014)

(57) IRM 3.11.154.6.9.1 Revised the procedures in it's entirety.

(58) IRM 3.11.154.7.1 Form 940, - Editing the A, B, C, D Indicator Questions (Revision 2005 and Prior) has been deleted.

(59) IRM 3.11.154.7.2.1 (4) Changed reference of "Exhibit 3.11.154-5" to "Exhibit 3.11.154-6" .

(60) IRM 3.11.154.7.3 (1) Added new first "If" box procedure "The SIC 1 has been edited," and added new first Then box procedure "No further editing is necessary to Part III, Form 940 or Form 940PR" .

(61) IRM 3.11.154.7.3.2 Form 940- Part II, Line 3 Column (b), State Reporting Numbers (Revision 2005 and Prior) has been deleted.

(62) IRM 3.11.154.7.3.3 Form 940- Part II, Line 3b, Total Tentative Credit (Revision 2005 and Prior) has been deleted.

(63) IRM 3.11.154.7.4 (1) Changed reference of "Figure 3.11.154-12" to "Figure 3.11.154-13" .

(64) IRM 3.11.154.8 Made the following changes:

  • New paragraph (2) procedure added "All Form 940-EZ returns are converted to a current year Form 940 for processing see Exhibit 3.11.154-4. If correspondence is needed to resolve unprocessable conditions, first convert the return to a Form 940. "

  • New paragraph (3) procedure added "If credit reduction applies to a state on a filed Form 940-EZ, transfer the information to a current Form 940 revision and/or Schedule A. See IRM 3.11.154.6.9 for Credit Reduction procedures."

  • Paragraph (4) changed "IRM 32.11.154.3.6" to "IRM 3.11.154.3.6."

  • Deleted paragraph (4) I) . For Conversion procedures See IRM 3.11.154.8.1.

(65) IRM 3.11.154.8.1 Form 940EZ Conversion to Form 940 (Current Revision) has been deleted.

(66) IRM 3.11.154.8.1(3) Made the following changes:

  • Paragraph (1) b) changed to read See IRM 3.11.154.6.2.1, Box “1a”,- Single State Filer or Box “1b”,- Multi-State Filer, for processing procedures.

  • Paragraph (1) c) changed reference of "Exhibit 3.11.154-5" to "Exhibit 3.11.154-6" .

  • Paragraph (3) Changed the Form 940EZ line number from B to B (1). (IPU 14U0236 issued 01-31-2014 SERP feedback #201400221 due date 1-28-2014)

(67) IRM 3.11.154.8.3 Form 940-EZ, State Reporting Number/ Multiple Identification Code (MID) has been deleted.

(68) IRM 3.11.154.6.9.1(1) Changed reference of "2013" to "2014-" .

(69) IRM 3.11.154.9.1 (1) h) Changed "IRM 3.11.154.5.1" to "IRM 3.11.154.5" .

(70) IRM 3.11.154.9.2 Form 940PR - Page 1 Editing the A B C Indicator Questions (Revision 2005 and Prior) has been deleted.

(71) IRM 3.11.154.9.2.1 Form 940PR - A B C Indicator Questions - IRC 6020(b) (Revision 2005 and Prior) has been deleted.

(72) IRM 3.11.154.9.3.1 Deleted paragraph (1) a) and (1) c). Old paragraph (1) b) is now (1) a) and reads "If Line 1 and Line 3 have the same line entries, edit an asterisk (*) on Line 3 to make the return generate to Error Resolution."

(73) IRM 3.11.154.9.3.3 (1) c) changed to read "If Line 3 equals Line 1, edit an asterisk (*) on Line 3 to make the return generate to Error Resolution."

(74) IRM 3.11.154.9.3.4(1) c) Has been deleted.

(75) IRM 3.11.154.9.3.5 (1) c) Changed to read "If Line 5 is blank or zero because Line 3 equals Line 1, edit an asterisk (*) on Line 3 to make the return generate to Error Resolution."

(76) IRM 3.11.154.9.4.5(1) b) Changed reference of "2013" to "2014-" .

(77) IRM 3.11.154.9.4.6 Form 940PR - Corporate Officers' Wages (Revision 2005 and Prior) has been deleted.

(78) IRM 3.11.154.9.5 Form 940PR - Parte II - ABC Indicator (Revision 2005 and Prior) has been deleted.

(79) IRM 3.11.154.9.5.1(1) b) In the first and second "Then" procedure box changed the reference of "Edit an asterisk (*) to the left of" to "Circle out" . Also deleted the reference "of the asterisk (*)" .

(80) IRM 3.11.154.9.6.2 Form 940PR - Parte III, Line 3, Column b, State Reporting Numbers (Revision 2005 and Prior) has been deleted.

(81) IRM 3.11.154.9.6.3 Form 940PR - Parte III, Line 3b, Total Tentative Credit (Revision 2005 and Prior) Has been deleted.

(82) IRM 3.11.154.9.6.6(1) b) In the first and second "Then" procedure box changed the reference of "Edit an asterisk (*) to the left of" to "Circle out" . Also deleted the reference "of the asterisk (*)" .

(83) IRM 3.11.154.9.7(1) Made the following changes:

  • Changed reference of "2013" to "2014-" .

  • Changed reference of "Figure 3.11.154-13" to "Figure 3.11.154-14"

(84) IRM 3.11.154.9.7 (2) c) now 3.11.154.9.6 (2) c) has been deleted.

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

(86) Exhibit 3.11.154-1 Changed reference 2013 to 2014.

(87) Exhibit 3.11.154-2 Changed reference 2013 to 2014.

(88) Exhibit 3.11.154-4 Added new exhibit for Form 940-EZ Conversion Table Current Year to 2012 or 2010 and Prior.

(89) Old Exhibit 3.11.154-4 Correspondence Action Table is now

(90) Old Exhibit 3.11.154-5 Entity State Code and ZIP Codes State Abbreviations is now Exhibit 3.11.154-6

(91) Old Exhibit 3.11.154-6 Entity State Code and ZIP Codes is now Exhibit 3.11.154-7

(92) Old Exhibit 3.11.154-7 U.S. Possessions, Abbreviations and ZIP Codes is now Exhibit 3.11.154-8

(93) Old Exhibit 3.11.154-8 Foreign Country Codes is now Exhibit 3.11.154-9

(94) Old Exhibit 3.11.154-9 Providence, State and Territory Abbreviations is now Exhibit 3.11.154-10. Changed the note to read "See Exhibit 3.11.154-10 for Canadian province abbreviations." .

(95) Old Exhibit 3.11.154-10 Action Code Chart is now Exhibit 3.11.154-11

(96) Old Exhibit 3.11.154-11 Potential Frivolous Return Criteria is now Exhibit 3.11.154-12 and made the following changes:

  • Changed title to Potential Frivolous Arguments for Examination Review and for IRC 861 Business Employment Tax - Descriptive box - Added "Code of Federal Regulations" to define CFR. (08-14-2014)

  • In the Other description box - Added a web address for The Truth About Frivolous Tax Arguments. (09–04–2014)

.

(97) Old Exhibit 3.11.154-12 Tax Years (TY) and Credit Reduction Rates (TY 2004-20132014) is now Exhibit 3.11.154-13. made the following changes:

  • Changed reference of "2013" to "2014" . Added 2014 area in the table for when credit reduction rates become available November 2014.

  • Added Credit reduction Rate amounts for Tax Year 2013. (IPU 14U0059 issued 01-07-2014)

(98) Old Exhibit 3.11.154-13 Taxable State Wage Bases is now Exhibit 3.11.154-14. Made the following changes:

  • Changed reference of "2013" to "2014" . Added 2014 area in the table for when the taxable wage base amounts become available November 2014.

  • Added Taxable Wage Base amount for Tax Year 2013 and 2012. (IPU 14U0059 issued 01-07-2014)

(99) Old Exhibit 3.11.154-14 “Track and Confirm” Receipt is now Exhibit 3.11.154-15. Changed reference 2012 to 2013.

Effect on Other Documents

IRM 3.11.154 dated October 23, 2013 (effective January 1, 2014) is superseded and includes the following IRM Procedural Updates (IPUs): 14U0059 (01-07-2014), 14U0122 (01-15-2014), 14U0236 (01-31-2014), 14U1056 (06-26-2014).

Audience

Wage and Investment, Submission Processing

Effective Date

(01-01-2015)

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

3.11.154.1  (01-01-2015)
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 6020(b)" 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 Form 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  (01-01-2015)
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 years 2014, 2013 and 2012 is 6.0 percent (.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 percent (.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 percent (.054) can be taken, leaving a net FUTA tax rate (.006 for tax years 2014, 2013 and 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 2014. For Credit Reduction tax years prior to year 2009. See Exhibit 3.11.154-13.

  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 percent (.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  (01-01-2015)
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  (01-01-2015)
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  (01-01-2015)
♦ 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 Business 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 http://tas.web.irs.gov/policy/default.aspx.

3.11.154.1.3.1  (01-01-2015)
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  (01-01-2015)
♦BMF Identification (ID) Theft♦

  1. BMF Identification Theft is increasing. If a tax examiner in Submission Processing (SP) Code and Edit (C&E) finds a case with attachments or correspondence indicating the taxpayer is a victim of ID Theft, provide the whole case to your senior/lead. Your senior/lead will expedite the case to the P & A staff for referral to one of the SP BMF ID Theft liaisons. The taxpayer must clearly state that they are a victim of “ID Theft”; do not send cases that are subject to “Funny Box” or “Fraud” review.

3.11.154.1.5  (01-01-2015)
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  (01-01-2015)
♦ 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  (01-01-2015)
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  (01-01-2015)
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  (01-01-2015)
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.

  3. The Integrated Submission and Remittance Processing System (ISRP) transcribes information from form 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 Form 940)

    • 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  (01-01-2015)
Return Perfection - Processing of Form 940 and Form 940PR.

  1. Most Form 940 returns filed on Revision 2006 through current year (2014) forms should be processed through SCRIPS. See Exhibit 3.11.154-1 for transcription lines of the Form 940 (Revision 2014).

    Note:

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

    IF Form 940 is: AND Tax Year is: THEN
    Revisions 2014, 2013 or 2012 2014, 2013 or 2012 No line conversion is needed. Return will be processed by SCRIPS.
    2011 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 2014, 2013 or 2012 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.
    Revisions 2006 through 2010 2014 or prior, 1. No line conversion 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
    Revisions 2014, 2013 or 2012 2014, 2013 or 2012, No line conversion is needed. Return will be processed through ISRP.
    2011,
    1. No line conversion is needed. Return will be processed by ISRP.

    Note:

    For tax year 2011, a taxable Form 940PR 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 940PR 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 2014, 2013, 2012, or 2006 through 2010,
    1. No line conversion 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, if needed.
    2011 No editing is needed. Return can be processed by ISRP.
    Revisions 2006 through 2010 2014, 2013, 2012, or 2006 through 2010,
    1. No line conversion 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 2014) 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 2006 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 returns 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 return, determine:

    IF THEN
    The return (Revision 2006 and subsequent) 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" .
    The return (Revision 2006 and subsequent) 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.

    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  (01-01-2015)
♦ 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 or Form 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. Do not asterisk (*) on Form 940PR.


    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, Entity, or Accounts Management, are not to be re-edited except to place the marks in the correct area. Do not edit (or write) over another area's edit marks.

    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.

    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.

3.11.154.2.5  (01-01-2015)
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  (01-01-2015)
♦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 also Exhibit 3.11.154-11 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 3.11.154-11.

3.11.154.2.7  (01-01-2015)
♦ 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, Form 2848-SP, or Form 8821 from the return.
    2. Edit taxpayer name and EIN on Form 2848, Form 2848-SP, or Form 8821, if missing.
    3. Edit received date on Form 2848 or Form 8821.
    4. Route Form 2848, Form 2848-SP, or Form 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  (01-01-2015)
♦ 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 - CP518, 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 or CP504-B No
    1) Pull CP 504 or CP504-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.
    Notate "Protective Claim" in the remarks box of Form 4227.
    2. Route to Accounts Management.
     
    Petitions in opposition of tax law provisions Yes

    Note:

    No action Trail needs to be edited when detaching a petition.

    Route to:

    IRS
    ≡ ≡ ≡ ≡ ≡
    1111 Constitution Ave,
    NW
    Washington, DC 20224
     
    State Tax Return, original or copy with original signature Yes Route to Receipt and Control.  
    Statement establishing Reasonable Cause for delinquent filing No See IRM 3.11.154.2.9.6.  
    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
    A. 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.
    B. 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
    A. Request for Current Year Forms:
    1. Prepare Form 4190.
    2. Forward to Forms Distribution Center for processing.

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

    Note:

    Forms 4190 and Form 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 See IRM 3.11.154.3.12.  
    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 Form 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 See IRM 3.11.154.3.12.  
    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

    For Private Delivery Carriers:
    Internal Revenue Service
    5333 Getwell Road Stop 8423
    Memphis, TN 38118

    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 See IRM 3.11.154.3.12.  
    Form 3198, Special Handling Notice/ Examination Case Processing No See IRM 3.11.154.3.12.  
    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
    1. Route Form 3949 according to page 2 of Form 3949 to CI, Exam, Disclosure, etc. following local procedures.

    2. Continue processing the return
     
    Form 3949-A, Information Report Referral Yes
    1. Route Form 3949- A to the Fresno Service Center.

    2. Continue processing the return.
     
    Form 4251, Return Charge Out Yes Photocopy return and route to requestor. Process original.  
    Form 5403, Appeals Closing Record No See IRM 3.11.154.3.12.  
    Form 5604, IRC 6020(b) Action Sheet No See IRM 3.11.154.3.8.1.  
    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
    Ogden - Route to: Stop 6737

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

    For Private Delivery Carriers:
    Internal Revenue Service
    5333 Getwell Road Stop 8423
    Memphis, TN 38118

    Note:

    See CAF Code procedures for Form 8821. See IRM 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  (01-01-2015)
♦ 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.
  4. If instructed to issue a Letter 1382C See IRM 3.11.154.3.9.1 when Form 3893 is attached or See IRM 3.11.154.3.9.2 when Form 13596 is attached to determine if a letter should be issued.

3.11.154.2.9.1  (01-01-2015)
♦ 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. See IRM 3.11.154.3.9.1 when Form 3893 is attached or See IRM 3.11.154.3.9.2 when Form 13596 is attached to determine if a letter should be issued.

    Exception:

    For Secured 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  (01-01-2015)
♦ 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 the return is a federally-recognized Indian Tribal Government (or its instrumentalities) See IRM 3.11.154.3.5 when any of the following nations are present to indicate exempt to the FUTA tax:

    • Indian Tribal Government for tax years 2000 and subsequent

    • Announcement 2001-16

    • Internal Revenue Code Section 3309(d)

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

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

    • Public Law No. 106 -554, 114 Stat. 2763

    • Similar explanation as described above

  3. 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  (01-01-2015)
♦ CCC "G" - Amended Return ♦

  1. See IRM 3.11.154.3.7 (Amended Returns).

3.11.154.2.9.4  (01-01-2015)
♦ 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.

    Exception:

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

  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  (01-01-2015)
♦ 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  (01-01-2015)
♦ 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. See IRM 3.11.154.3.9.1 when Form 3893 is attached or See IRM 3.11.154.3.9.2 when Form 13596 is attached to determine if a letter should be issued.

    Exception:

    For Secured 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  (01-01-2015)
♦ CCC "W" - "Cleared by Statute" Stamped on Return ♦

  1. See IRM 3.11.154.3.6.

3.11.154.2.9.8  (01-01-2015)
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  (01-01-2015)
♦ 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  (01-01-2015)
♦ 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  (01-01-2015)
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  (01-01-2015)
♦ 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.

    Exception:

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

3.11.154.2.9.13  (01-01-2015)
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 3.11.154-3
    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  (01-01-2015)
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 Form 940PR.

3.11.154.2.11  (01-01-2015)
Pre-Computed Penalties - Failure to Deposit Penalty

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

3.11.154.2.12  (01-01-2015)
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  (01-01-2015)
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.

    Exception:

    Do not asterisk on Form 940PR returns.

    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  (01-01-2015)
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  (01-01-2015)
Unprocessable Returns with Replies

  1. This function will take place in Rejects.

3.11.154.2.13.3  (01-01-2015)
No Replies on Unprocessable Returns

  1. This function will take place in Rejects.

3.11.154.2.14  (01-01-2015)
♦ 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 3.11.154-5.

3.11.154.2.15  (01-01-2015)
♦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  (01-01-2015)
♦ 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  (01-01-2015)
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  (01-01-2015)
Third Party Designee Phone Number

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

  2. No action is required.

3.11.154.2.16.3  (01-01-2015)
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  (01-01-2015)
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  (01-01-2015)
♦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  (01-01-2015)
♦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  (01-01-2015)
♦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  (01-01-2015)
♦ 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. See IRM 3.11.154.3.14.

    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 IRM 3.11.154.3.14 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. See IRM 3.11.154.3.14.

  8. If the Taxpayer or duly authorized representative's signature and/or jurat is not present or as required or has been altered or If the jurat was altered or stricken (crossed out) 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  (01-01-2015)
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  (01-01-2015)
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 "2014" 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  (01-01-2015)
Special Conditions

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

3.11.154.3.1  (01-01-2015)
♦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.

More Internal Revenue Manual