Accessibility Skip to Top Navigation Skip to Main Content Home  |  Change Text Size  |  Contact IRS  |  About IRS  |  Site Map  |  Español  |  Help  

Part 3. Submission Processing

Chapter 11. Returns and Documents Analysis

Section 249. Processing Form 8752 (Cont. 1)

3.11.249  Processing Form 8752 (Cont. 1)

3.11.249.9  (01-01-2010)
General Entity Perfection

  1. This section includes information describing perfection of the entity and address areas of the Form 8752. The type of entity present on the return determines the name control procedure.

3.11.249.9.1  (01-01-2010)
Entity Perfection (General)

  1. The entity area of Form 8752 identifies the taxpayer on the Business Master File. The main features are as follows:

    1. Employer Identification Number (EIN)

    2. Tax Period

    3. Name and Address

    4. Check Digits

  2. There are two types of entity captions:

    1. Preaddressed (IRS label)

    2. Non-preaddressed (non-IRS label)

  3. Whenever the caption does not show a check digit or the caption is for a non-preaddressed return, the name control must be determined.

  4. The name control consists of four alpha and/or numeric characters which are generally derived from the first name line.

    1. Blanks may be present only in the last two positions of the name control.

    2. Ampersands (&) and hyphens (-), are the only valid special characters in a name control.

    3. Delete prefixes from the name line.

      Example:

      Mr., Rev., Dr., Capt., and Sgt. Delete "Mrs." only if given name is present.

    4. Delete suffixes from the first name line such as owner, agent, attorney, proprietor, etc. Edit the suffix "Partner" to "Ptr" .

    5. Delete "THE" if followed by more than one word.

  5. You must determine the type of entity present on the return because the type of entity determines the name control procedures you must use.

    1. Individuals

    2. Corporations

    3. Partnerships

    4. Trusts and Estates

    5. Other organizations

  6. The methods for determining name controls are explained in Document 7071, Name Control Job Aid for Individual Master File (IMF) Taxpayers, and Document 7071-A, BMF Name Control Job Aid - For use outside the Entity Area.

3.11.249.9.2  (01-01-2010)
Entity Perfection of Preaddressed Returns

  1. WITHOUT A CHANGE BY THE TAXPAYER - No action is required. A preaddressed return will have a label printed by IRS. These labels have check digits to the left of the EIN. See Figure 3.11.249-2.

    Figure 3.11.249-2

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

    Illustration of a Check Digit Return

  2. WITHOUT A CHECK DIGIT - Underline the name control.

    1. Some returns which are privately printed, appear to have IRS pre-printed labels. To determine if they are IRS labels or non-IRS labels, look for the check digits. If the check digits are missing, treat the return as a non-preaddressed return.

    2. If the check digits are missing on a pre-printed label you will underline the name control. See Figure 3.11.249-3.

    Figure 3.11.249-3

    Form 8752 Requiring Name Control Editing
    Please click here for the text description of the image.

    Form 8752 Requiring Name Control Editing

  3. WITH A NAME CHANGE BY THE TAXPAYER -

    1. If there is any change to the primary name line, (other than a minor spelling change), and the EIN is not changed, the return is unprocessable. Prepare Form 4227 and route to Entity Control for assignment of a new EIN. See Figure 3.11.249-4. Send any questionable entity changes to Entity Control (e.g., names, no EIN’s, etc.). Ensure that the reason for sending to Entity is specified (minor spelling changes can be input with a Transaction Code (TC) 013.)

      Figure 3.11.249-4

      Form 4227, Intra-SC Routing and Reject Slip
      Please click here for the text description of the image.

      Form 4227, Intra-SC Routing and Reject Slip

    2. Listed in the following chart are the conditions which indicate an entity change and require a new EIN. See Figure 3.11.249-5a and Figure 3.11.249-5b.

      Figure 3.11.249-5a

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

      Examples of Entity Changes Requiring a New EIN

      Figure 3.11.249-5b

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

      Examples of Entity Changes Requiring a New EIN

    3. A change to any other name line (continuation, sort, or "in care of" (c/o) names), or any name change with a foreign address present (OSPC only) requires a change to the entity on the BMF. With this type of change, input a Transaction Code (TC) 016 with the name change. See Figure 3.11.249-6.

      Figure 3.11.249-6

      Form 8752 Requiring TC 016 Input
      Please click here for the text description of the image.

      Form 8752 Requiring TC 016 Input

  4. WITH AN EIN CHANGE BY THE TAXPAYER - Send for IDRS research.

    1. If unable to locate EIN, attach a Form 4227 to an unnumbered return and route to Entity Control.

    2. On numbered returns, edit CCC "U" and route to Entity Control using Form 4227; allow it to remain in the block.

  5. If there is an EIN change and the return already bears the notation "TC 011" or "IDRS EIN" , underline the new Name Control and circle the Check Digits and old EIN. Entity Control has already taken the necessary action. See Figure 3.11.249-7.

    Figure 3.11.249-7

    Example of a TC 011 Return
    Please click here for the text description of the image.

    Example of a TC 011 Return

  6. PRIMARY NAME LINE CHANGE

    1. When a primary name line change clearly relates to the same taxpayer, notate TC 013 in the left margin and input TC 013. A new EIN is not needed. See Figure 3.11.249-8.

      Figure 3.11.249-8

      Example of Form 8752 Clearly Relating to the Same Taxpayer
      Please click here for the text description of the image.

      Example of Form 8752 Clearly Relating to the Same Taxpayer

    2. A change to any other name line (continuation, sort, or c/o names), or any name change with a foreign address present (OSPC only) requires a change to the entity on the BMF. With this type of change input a TC 016 with the name change. See Figure 3.11.249-9.

      Figure 3.11.249-9

      Form 8752 with Foreign Entity Name Change
      Please click here for the text description of the image.

      Form 8752 with Foreign Entity Name Change

3.11.249.9.3  (01-01-2010)
Entity Perfection of Non-preaddressed Returns

  1. WITH AN EIN PRESENT - Underline the name control.

  2. MISSING EIN, MULTIPLE EINS, PARTIAL EIN, AN SSN PRESENT -

    1. If unnumbered return and the EIN is missing, applied for, pending, etc. and cannot be located on attachments, send for IDRS research (using Command Code (CC) NAMES or CC EINAD). If unable to locate EIN, route to Entity Control using Form 4227 for research. See Figure 3.11.249-10.

      Figure 3.11.249-10

      Form 8752 With Partial EIN
      Please click here for the text description of the image.

      Form 8752 With Partial EIN

    2. On numbered returns, enter CCC "U " and route to Entity Control using Form 4227; allow it to remain in the block.

  3. NEW EIN ASSIGNED - If the return has been given a new EIN by Entity Control, underline the name control. No further editing of the entity data is necessary. See Figure 3.11.249-11.

    Figure 3.11.249-11

    Form 8752 Illustrating EIN Assigned by Entity Control
    Please click here for the text description of the image.

    Form 8752 Illustrating EIN Assigned by Entity Control

  4. Returns with attachments or statements for the following conditions should be routed to Entity Control, using Form 4227.

    Note:

    If the return is numbered, edit Computer Condition Code (CCC) "U" and leave the return in the block.

    1. Name change requiring a new EIN

    2. Return is filed under another EIN

    3. Filing requirement was incorrectly established

    4. Taxpayer files bankruptcy

3.11.249.9.4  (01-01-2010)
Entity Perfection of Addresses

  1. Perfection of the address is necessary when the mailing address (Street or Post Office (PO) Box) is not easily identified.

  2. Do not perfect the address on amended returns (CCC "G" ).

  3. Perfect the address in the following instances. ISRP (Integrated Submission and Remittance Processing System) can only input the street address (mailing address). A Transaction Code (TC) 016 must be input to retain the location address.

    1. If a street address has been crossed out by the taxpayer and a PO Box has been added, notate TC 016 in the left margin and input TC 016 to retain the prior street address as the location address. See Figure 3.11.249-12.

      Figure 3.11.249-12

      Form 8752 Showing a PO Box Added in Place of a Street Address
      Please click here for the text description of the image.

      Form 8752 Showing a PO Box Added in Place of a Street Address

    2. If both a PO Box and a street address are shown, underline PO Box, notate TC 016 in the left margin and input TC 016 in order to retain the street address as the location address. See Figure 3.11.249-13.

      Figure 3.11.249-13

      Form 8752 with Both PO Box and Street Address
      Please click here for the text description of the image.

      Form 8752 with Both PO Box and Street Address

    3. If two street addresses are shown, underline the second street address, notate TC 016 in the left margin and input TC 016 to retain the first street address as the location address. See Figure 3.11.249-14.

      Figure 3.11.249-14

      Form 8752 With Two Street Addresses
      Please click here for the text description of the image.

      Form 8752 With Two Street Addresses

  4. Circle out an "in care of" symbol (%) if it is shown before the street address.

    Note:

    The "in care of" symbol is valid for the second name line, but not on the street address line.

  5. If more than one return for the same taxpayer is in the same batch or block, edit the mailing address on the oldest period return if two addresses are shown. The one return will establish the entity.

  6. If the city and/or state is missing, perfect from information on the document(s) or attachment(s). If not located, research using IDRS (Command Code (CC) INOLE) or local procedures.

    Note:

    Refer to Document 7475,State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries.

  7. If a taxpayer shows a nine or twelve-digit ZIP Code, take no action.

  8. Foreign address changes can be made from the return.

  9. Returns with foreign address changes and the following American possession address changes can be input via Integrated Submission and Remittance Processing (ISRP) with the return, the same as domestic address changes.

    U.S. Possessions/Territory Abbreviation
    American Samoa AS
    Federated States of Micronesia FM
    Guam GU
    Northern Mariana Islands MH
    Marshall Islands MP
    Palau PW
    Puerto Rico PR
    Virgin Islands VI

    Note:

    Route any returns with foreign or American Possession addresses to the Ogden Submission Processing Campus (OSPC) for processing. Prepare Letter 86C to inform the taxpayer that the return has been sent to OSPC.

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

    Address State Code Abbreviation Zip Code
    APO/DPO/FPO AA 340XX
    APO/DPO/FPO AE 090XX - 098XX
    APO/DPO/FPO AP 962XX - 966XX

  11. If Form 8822, Change of Address, is attached to the return, compare the Name Control, EIN, Address, City, State and Zip Code information on Form 8822 to the return.

    1. If the information is the same, take no action and continue processing.

    2. If the information is different, detach Form 8822 and route to Entity Control on Form 4227.

    3. Batch every Form 8822 daily and hand carry to Entity Control for expedited processing or follow local procedures.

  12. Tax examiners are not required to edit abbreviations.

3.11.249.9.5  (01-01-2010)
Tax Period

  1. All returns must have a tax period. Edit the Tax Period under the title of the form in YYMM format. Determine the Tax Period by the year (printed) on the face of the tax form (e.g., for the 2009 tax form, the tax period should be "0912" . Taxpayers are advised to edit changes on the form to the tax year for prior tax periods.

  2. Do not edit the tax period if the current year form is used unless the taxpayer indicates on the top of the return that this is not a current year return (e.g., shows a prior year). Programming automatically inserts the current year when there is no ISRP (Integrated Submission and Remittance Processing System) entry (and verifies the correct tax rate was used on Line 9a). All Form 8752 filers must be for a calendar year.

  3. The tax period for all prior year returns must be edited . Edit the tax period under the title of the form in YYMM format.

    Example:

    If the election year ends May 1, 2009, the tax period is "0912" , not "0905" .

  4. If a prior-year form is submitted and the taxpayer does not indicate the tax period, edit "0912" under the title of the form, except when you receive multiple Forms 8752 from the same entity See Figure 3.11.249-15.

    Figure 3.11.249-15

    Editing of a Prior Year Form 8752
    Please click here for the text description of the image.

    Editing of a Prior Year Form 8752

  5. If multiple Forms 8752 from the same entity using the current year form are received, try to find out the correct tax period to edit. Look at the "applicable election year beginning and ending." Make the latest "ending period" the current calendar year and edit prior year tax periods in descending order as can be best determined. See Figure 3.11.249-16.

  6. If a Form 8752 is received for a future tax period (e.g., if the tax period ending is after the current processing date), do as follows:

    1. Edit CCC "U" on the return.

    2. Attach Form 4227 and note "Early Filed" .

    3. Route to Rejects for Research to determine the correct tax period.

      Note:

      If a remittance is attached, prepare Form 3244, Payment Posting Voucher, and route to Deposit Activity for processing and posting to the taxpayer's account.

    Figure 3.11.249-16

    Multiple Forms 8752 from Same Entity With Current Year Form
    Please click here for the text description of the image.

    Multiple Forms 8752 from Same Entity With Current Year Form

3.11.249.9.6  (01-01-2010)
Centralized Authorization File (CAF) Indicator

  1. Editing of the Centralized Authorization File (CAF) code is no longer required.

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

    If Then
    Form 2848 or Form 8821 is attached, 1. Detach Form 2848 or Form 8821 from the return.
    2. Edit taxpayer name and EIN on Form 2848 or Form 8821 if missing.
    3. Edit received date on Form 2848 or Form 8821.
    4. Route Form 2848 or Form 8821 to the Centralized Authorization File (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 or Form 8821. 1. Take no action.
    2. Leave the Power of Attorney or Tax Information Authorization attached to the return.
    3. Do not route to the CAF function.

3.11.249.10  (01-01-2010)
Received Date

  1. A received date is required on every Form 8752, Required Payment or Refund Under Section 7519. The due date for Form 8752 is May 15.

    Note:

    Caution must be taken to determine when a return was filed or became processible.

  2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the due date falls on a weekend or legal holiday, the return is timely if postmarked by the first business day following the weekend or legal holiday. All Forms 8752 with a timely postmark date are considered timely filed, no matter when they are received.

  3. The returns that do not meet the requirements in (2) above, are considered delinquent. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

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

  5. If the date stamp is not present, or the date is illegible or invalid, edit the Received Date, in YYYYMMDD format, in the middle of the first page of the return (in the area between Lines 1 and 6). Edit the Received Date according to the following priority:

    1. The earliest legible postmark date (U.S. Postal Service (USPS), foreign or Private Delivery Service (e.g., Federal Express)) on the envelope. Rules for using the USPS postmark or foreign postmark date are as follows:

      If Then
      An envelope is not attached, Use the postmark date stamped on the face of the return.
      An envelope has both a USPS and private metered postmark, Always use the USPS postmark.
      An envelope has a foreign and private metered postmark, Use the foreign postmark.
      An envelope has two private metered postmarks, Always use the latest private postmark.
      An envelope has only one private metered postmark. Use the private metered postmark.

    2. Revenue Officer’s Signature Date

    3. Signature Date (only if within current year)

    4. Julian Control Date minus 10 days

    5. Current Date minus 10 days

  6. Edit the Received Date as follows:

    If And Then
    A timely received date is the only received date stamped on the return   No editing is required.
    Two or more dates stamped on the return   1. Use the earliest IRS stamped received date.
    2. Circle out all other dates.
    A Federal return is addressed to the IRS Delivered to a State agency Use the postmark date as the received date.
    A Federal return is addressed to a State Agency   Use the IRS date stamp as the received date.
    Envelope is attached to the return The return is timely Discard the envelope.
    Envelope is attached to the return 1. The envelope is addressed to IRS
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡     		1. Look at the postmark/private delivery service date on the envelope.
    2. Change the Received Date to the date on the envelope.
    The postmark/private delivery service date is on or before the due date of the return ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ 1. Circle the Received Date on the return.
    2. Edit the postmark/private delivery service date in its place.
    Envelope is attached to the return 1. The postmark/private delivery service date is later than the due date of the return .
    2. There is no date stamp on the document (or cash register stamp date).     		Edit the postmark/private delivery service date on the return as the Received Date.
    Envelope is attached to the return 1. The return is not timely.
    2. The envelope is not addressed to IRS.     		Do not change the Received Date.
    No envelope is attached to the return No postmark/private delivery service date is indicated on a return with a delinquent received date Do not change the received date on the return.
    A received date has been entered by means other than a normal received date stamp (e.g., handwritten, typed, cash register stamp date, etc.)   Underline the received date in red, orange, or brown.
    The received date is entered in other than the center portion of the return   Edit it to the center portion of the return.
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡   ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  7. A received date that has been stamped or written by a District Office or a Revenue Officer will be considered a valid IRS received date.

  8. For the latest information regarding date stamping, the use of postmarks, private delivery service, and processing of private metered mail, refer to IRM 3.10.72.7.3, Attaching Envelopes to Returns and Documents.

3.11.249.11  (01-01-2010)
Computer Condition Codes

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

  2. Edit the Computer Condition Code(s) in the upper left margin of the Form 8752.

3.11.249.11.1  (01-01-2010)
Computer Condition Code "D" - Reasonable Cause for Failure to Pay Taxes Timely

  1. ≡ ≡ ≡ "≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the taxpayer requests an abatement for Failing to Pay Timely when the return is submitted, send Letter 1382C (Penalty Removal Request Incomplete) or other appropriate letter, which will inform the taxpayer of the proper procedure to follow to request abatement, if, and when a penalty is assessed.

  2. Issue Letter 1382C and continue processing the return (see exception below).

    • Exception: Secured returns, Disaster returns and Reprocessing returns.

    • For Secured returns (e.g., returns with an attached Form 13133, Expedite Processing Cycle), enter the applicable CCC as indicated on the return and/or attached form.

    • Disaster provisions may apply if the taxpayer has identified the return as being subject to reasonable cause because of a specific disaster declaration.

    • For Reprocessing returns (e.g., returns with an attached Form 13596), enter the applicable CCC as indicated on the return and/or attached form.

3.11.249.11.2  (01-01-2010)
Computer Condition Code "F" - Final Return

  1. Edit CCC "F" when the taxpayer gives a positive indication that they are not liable for filing future returns. Notations such as (but not limited to) the following:

    1. Final

    2. Deceased

    3. Out-of-Business

    4. Liquidation

    5. Exempt under IRC Section 501(c)(3)

    6. Dissolved

    7. IRC Section 444 was terminated.

      Note:

      In cases regarding Form 8752, any references to a "terminating event" may also apply in determining whether this is a final return.

3.11.249.11.3  (01-01-2010)
Computer Condition Code "G" - Amended Return

  1. An amended return may be identified by checking the " Amended" box and/or by such words as "Supplemental" , "Duplicate" , "Additional" , or any other positive indication that the taxpayer has filed previously. Filing a "Copy" of a return is not sufficient reason to label a return "Amended" unless accompanied by a positive statement from the taxpayer.

    Note:

    Form 8752 do not have an Amended box. Taxpayers are advised to file an amended Form 8752 and write "Amended Return" across the top to correct an error in a Form 8752 already filed.

  2. Examine the return for attachments. Do not separate any related attachments from the return that the taxpayer has submitted to explain the reason for the amended return. This information will be used by Accounts Management. Detach any unrelated documents and route them to the appropriate function, using Form 4227. Edit an Action Trail on the return.

  3. Always edit a CCC "G" on an amended return.

  4. There is an indication the return is amended and:

    If Then
    "TC 59X" or "ICS" was edited on the return by Compliance Services, Do not edit CCC "G" . Process the return as an original.
    The return is stamped "Delinquent Original Cleared for Processing" by Statutes, Do not edit CCC "G" . Process the return as an original.
    Form 3893 or Form 13596 is attached, Do not edit CCC "G" .
    None of the above are present, Edit CCC "G" . No other codes may be used with a CCC "G" , except "U" .

    Note:

    Computer Condition Code "3" (No Reply to Correspondence) or any of the Error Resolution System (ERS) Action Codes do not apply to Form 8752 processing.

  5. The following data must be edited on all amended returns:

    1. Name control (unless Check Digits are present),

    2. EIN,

    3. Tax period,

    4. CCC "G" ,

    5. Received Date, and

    6. Signature.

  6. Exclusive to Form 8752: Do not edit CCC "G" if the taxpayer clearly indicates that the return is used to submit a subsequent payment or did not include the payment with the original return filed.

    1. Edit CCC "U" on the return.

    2. Prepare and notate on Form 4227, "Research - Missed or Subsequent Payment" .

    3. Route to Rejects. They will research to determine if the original return was posted and if the payment was misapplied.

    Note:

    Do not correspond for any missing information.

3.11.249.11.4  (01-01-2010)
Computer Condition Code "O" - Manual Refund

  1. CCC "O" is entered when a Pre-Settlement Manual Refund was made and a Form 3753, Manual Refund Posting Voucher, Form 5792, Request for IDRS Generated Refund (IGR), or Form 12857, Refund Transfer Posting Voucher, is attached. Verify that the Name Control, EIN, and Tax Period on the return is the same as the data on the form.

    1. If a completed Form 3753, Manual Refund Posting Voucher, or Form 5792, Request for IDRS Generated Refund (IGR), or Form 12857, Refund Transfer Posting Voucher, is attached to the return, verify that the Name Control, EIN, and Tax Period on the return is the same as the data on the form. Edit CCC "O" if the data is the same.

    2. If the data is not the same, refer the return and the attachment to your supervisor. The supervisor will send the return and the attached Form 3573, Form 5792, or Form 12857 back to the originating function.

3.11.249.11.5  (01-01-2010)
Computer Condition Code "R" - Reasonable Cause for Failing to Timely File Return

  1. ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ If the taxpayer requests an abatement for Reasonable Cause for Failing to Timely File Return when the return is submitted, Code and Edit will send Letter 1382 (Penalty Removal Request Incomplete) to inform the taxpayer of the proper procedure to follow to request abatement, if and when, a penalty is assessed.

  2. Issue Letter 1382C and continue processing the return (see exception below).

    • Exception: Secured returns, Disaster returns and Reprocessing returns.

    • For Secured returns (e.g., returns with an attached Form 13133, Expedite Processing Cycle), enter the applicable CCC as indicated on the return and/or attached form.

    • Disaster provisions may apply if the taxpayer has identified the return as being subject to reasonable cause because of a specific disaster declaration.

    • For Reprocessing returns (e.g., returns with an attached Form 13596), enter the applicable CCC as indicated on the return and/or attached form.

3.11.249.11.6  (01-01-2010)
Computer Condition Code "U" - Unprocessable Return

  1. Unprocessable Return (numbered returns only). Edit this code when the return is too incomplete or illegible for processing. When CCC "U" is edited, continue perfecting the return to the extent possible. See IRM 3.11.249.6 for unprocessable conditions.

  2. Edit on misblocked and non-ADP returns.

3.11.249.11.7  (01-01-2010)
Computer Condition Code "W" - Return Cleared by Statute

  1. Code and Edit is no longer required to edit Computer Condition Code (CCC) "W" .

  2. Statute of Limitations processing does not apply to Form 8752 because the form is considered a required deposit by the taxpayer and not a payment of tax due.

3.11.249.11.8  (01-01-2010)
Computer Condition Code "X" - Refund Freeze Code

  1. On no reply cases for a signature, edit CCC "X" on refund returns. This freezes the release of an overpayment (e.g., freezes the module from refunding or offsetting credit out) at the Master File.

    Note:

    IMPORTANT : With other BMF returns, the "X" freeze may permit the Service to comply with the taxpayer's request to transfer a part of the refund applied to another account. This is NOT the case with Form 8752. By law, money held in the taxpayer's Form 8752 (escrow) account, or any money earmarked for that purpose, is not permitted to be transferred to another account. (It is, for this reason, that we are unable to comply with the official text recommendations made by the BMF Consistency Task Team.)

3.11.249.11.9  (01-01-2010)
Computer Condition Code "7" - Reasonable Cause Statement Denied

  1. CCC "7" is no longer edited by Code and Edit tax examiners. See IRM 3.11.249.11.1 regarding CCC "D" . See IRM 3.11.249.11.5 regarding CCC "R" .

3.11.249.12  (01-01-2010)
Taxpayer Pre-computed Penalty and Interest Code (P/I Code)

  1. The P/I Code is used when the taxpayer has paid an amount for penalty and/or interest even though the ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ The P/I Code will allow the computer to compute penalty and/or interest when it normally would not.

  2. Edit Code "1" to the right of the Office of Management and Budget (OMB) number (upper-right corner) on Form 8752 when precomputed delinquency penalty and/or interest is shown.

3.11.249.13  (01-01-2010)
Personal Service Corporations

  1. Personal Service Corporations (PSC’s) are NOT required to file Form 8752. In the case of a PSC, such corporations must complete Schedule H (Form 1120), Section 280H Limitations for a Personal Service Corporation, to figure the minimum distributions and the maximum deductible amount, if applicable.

    1. If the taxpayer clearly indicates on the return or attachment that they are a PSC, edit CCC "F" on the return and continue processing (unnumbered only).

    2. If a determination cannot be made, route the return for IDRS research (Command Code (CC) BMFOL or CC MFTRA).

    Note:

    Other indications that the taxpayer is a PSC are entity information. Some examples are business names which indicate professions in the area of health (e.g., "Dr." present in entity), law, engineering, architecture, accounting (e.g., " C.P.A." present in entity), actuarial science, performing arts, or consulting.

  2. If any of the above occupations are listed, route the return for IDRS research.

  3. If research verifies that the taxpayer is a PSC (Tax Class 6, MFT 02, and Document Code 11, Filing Requirement 19 and TC 054 is present), take the following action:

    1. If numbered, edit CCC "U" and route to the Rejects function using Form 4227. Notate on Form 4227 "PSC not required to file Form 8752 per Internal Revenue Code (IRC) Section 444(c)(2)."

    2. If unnumbered, edit CCC "F" and continue processing the return. Notify the taxpayer, only if they have not noted on the return or attachment that they are a Personal Service Corporation (PSC), they are not required to file Form 8752. However, they must complete Schedule H (Form 1120), Section 280H Limitations for a Personal Service Corporation, to figure the minimum distributions and the maximum deductible amount, if applicable.

    Note:

    A reply from the taxpayer is not necessary. Also, do not send the return back.

  4. If research verifies that the taxpayer is not a PSC, or has not changed the Form 1065, U.S. Return of Partnership Income, or 1120S, U.S. Income Tax Return for an S Corporation, to a calendar year (XXXX12), continue processing the return.

3.11.249.14  (01-01-2010)
Perfecting Data on Form 8752

  1. This section provides instructions for perfecting the money amounts, deferral ratios, and other numerical data to be transcribed from Form 8752. See Exhibit 3.11.249-1 for transcription lines.

3.11.249.14.1  (01-01-2010)
Line 1 - Net income for base year

  1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ number, in which case enter zero.

3.11.249.14.2  (01-01-2010)
Line 2 - Applicable payment made during base year

  1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ number, in which case enter zero.

3.11.249.14.3  (01-01-2010)
Line 3 - Base year deferral ratio

  1. Edit a three-digit code for the percentage on the dotted portion of Line 3 (to the left of the taxpayer’s entry). There are eleven codes you can enter. These codes represent deferrals of one to eleven months (e.g., with "083" representing a deferral of one month and "917" for a deferral of eleven months, respectively).

    Deferral Period
    (Number of Months)     		Deferral Ratio
    (Three-Digit Code)
    1 083
    2 167
    3 250
    4 333
    5 417
    6 500
    7 583
    8 667
    9 750
    10 833
    11 917

    Note:

    Do not put a decimal in front of the deferral ratio number.

  2. The "Deferral Ratio" is the three-digit code representing the allowable deferral percentage for the taxpayer’s deferral period. The term "Deferral Period" means the number of months that occur between the last day of the elected tax year and the last day of the required tax year. For example, if the taxpayer elected a tax year ending on September 30 and his/her required tax year is the calendar year, the deferral period would be 3 months (the number of months between September 30 and December 31). (If the deferral period is 3 months, edit "250" as the Deferral Ratio.) Using the same example (e.g., if the required tax year is the calendar year), the deferral period would be 2 months for an elected tax year ending in October, while the deferral period would be one month for an elected tax year ending in November. (Edit "167" for the Deferral Ratio for a deferral period of 2 months. For a deferral period of one month, edit "083" .)

    Note:

    By law (Tax Reform Act of 1986), the "required " tax year for corporate and partnership entities is a calendar year (ending in December). Statutes may dictate otherwise in circumstances permitting the taxpayer to file fiscal-year returns for a legally acceptable business purpose.

  3. Generally, the deferral percentage will not exceed 25%. However, entities with taxable years for 1986 and prior to make the IRC Section 444 elections can retain that taxable year even if the deferral period was more than 3 months. If the taxpayer claims an amount greater than 25%, but less than 91.7%, accept taxpayer’s amount. If the taxpayer claims more than 91.7%, allow only 91.7%.

    Note:

    Before you lower the rate, multiply Line 1 by the amount shown on Line 3 to make sure the taxpayer actually used that rate. For instance, if a taxpayer put $1,000 on Line 1 and 83 percent on Line 3, but came up with an amount of $83.00, he did not multiply by 83%, but rather, 8.3%. In this case, you would edit "083" .

  4. The taxpayer may either round the percentage (e.g., put down 8% or 17% or 67%, rather than 8.3% or 16.7% or 66.67%), or carry the percentage to multiple places (8.33% or 16.67% or 66.67%). In either case, you will enter "083" or "167" or "667" .

  5. If the taxpayer enters a percentage that does not approximate the allowable percentages, enter the acceptable code that is:

    1. Lower than the percentage claimed, and

    2. Closest to the percentage claimed (see example below).

      Example:

      If the taxpayer put down 12%, edit "083" . If the taxpayer put down 21%, edit "167" .

    3. If the taxpayer puts down an amount on Line 3 that is less than 8 percent, correspond using appropriate letter (e.g., 3463C) to ask what his/her deferral period is. Edit the appropriate code based on the taxpayer’s answer. If there is no response, enter "083" .

    Exception:

    Edit lowest percentage of "083" when taxpayer enters "0" (zero), dash (-), none, N/A, or leaves blank. See instructions in (6), below.

  6. If the taxpayer shows a deferral ratio in the form of a decimal rather than a percentage, convert to a percentage.

    1. Example 1: If the taxpayer enters .17 as the deferral ratio, edit code "167" .

    2. Example 2: If the taxpayer enters .08 as the deferral ratio, edit code "083" .

  7. IMPORTANT: If the taxpayer checked the box on Line B (which reads, If this is the entity’s first tax year, skip lines 1 through 10, enter -0- on line 11, and check this box), then no editing of an entry on Line 3 is necessary. (Line B is the second line item located immediately beneath the entity portion of Form 8752.)

3.11.249.14.4  (01-01-2010)
Line 4 - Line 1 deferred amount

  1. This line is the result of multiplying Lines 1 and 3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ number, in which case enter zero.

3.11.249.14.5  (01-01-2010)
Line 5 - Line 2 deferred amount

  1. This line is the result of multiplying Lines 2 and 3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ number, in which case enter zero.

3.11.249.14.6  (01-01-2010)
Line 6 - Applicable payments made during the deferral period of the base year

  1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ number, in which case enter zero.

3.11.249.14.7  (01-01-2010)
Line 7 - If the entity had a 12-month base year …

  1. This line can be the result of:

    1. Subtracting Line 6 from Line 5, or

    2. In the case of a short base year, the taxpayer enters an amount based on the applicable payments made during the deferral period of the applicable election year.

  2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ number, in which case enter zero.

3.11.249.14.8  (01-01-2010)
Line 8 - Net base year income

  1. This line can be the result of:

    1. Adding lines 4 and 7, or

    2. In the case of a short base year, subtracting Line 7 from Line 4.

  2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ number, in which case enter zero.

3.11.249.14.9  (01-01-2010)
Line 9a - Calculation of required payment

  1. This line is the result of multiplying Line 8 by the applicable tax rate. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ number, in which case enter zero.

3.11.249.14.10  (01-01-2010)
Line 9b - Required payment

  1. This line will be either the amount shown on Line 9a or $0, which is the result of multiplying Line 8 by the applicable tax rate.

  2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ number, in which case enter zero.

3.11.249.14.11  (01-01-2010)
Line 10 - Net required payment balance

  1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ number, in which case enter zero.

3.11.249.14.12  (01-01-2010)
Line 11 - Required payment due

  1. There will be an amount on this line when Line 9b is greater than Line 10.

  2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ put the refund/balance due amount on the wrong line or on both. In that case, "X" out the amount placed on the wrong line and/or place the amount on the correct line.

3.11.249.14.13  (01-01-2010)
Line 12 - Refund payments

  1. There will be an amount on this line when Line 10 is greater than Line 9b.

  2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ put the refund/balance due amount on the wrong line or on both. In that case, "X" out the amount placed on the wrong line and/or place the amount on the correct line.

  3. Refunds of 1 million dollars or more:

    1. If line 12 is 1 million dollars or more, use Computer Condition Code "U" and route to Rejects with Form 4227.

    2. Note "Manual Refund" on Form 4227 (or other appropriate routing slip).

  4. If Line 12 is $1 million or more and Form 8302, Electronic Deposit of Tax Refund of $1 Million or More, is attached, follow the instructions in a. above. Do not detach Form 8302.

3.11.249.14.14  (01-01-2010)
Transfer of Credits

  1. SPECIAL TO PRIOR YEAR RETURNS - If the taxpayer files prior year returns and the payment(s) posts to one Form 8752 tax period module, initiate Accounts Management action to move the money to the correct tax period(s)

    Note:

    We realize these procedures can be followed by Document Perfection only if the taxpayer makes a notation on the form regarding these circumstances.

    1. Prepare Form 3465, Adjustments Request.

    2. Notate on the Form 3465 (under "Other" ) that the taxpayer filed a prior year return(s) and the payment(s) for the return(s) must be credited to the correct tax period(s).

    3. Attach a photocopy of the return(s) to the Form 3465 and route to Accounts Management for the appropriate action.

  2. Do not move money to another type of tax module (e.g., Form 1120S).

3.11.249.15  (01-01-2010)
Special Returns

  1. This section contains information in regards to statute returns, amended returns, non-taxable returns with no line entries, foreign returns, and secured returns.

3.11.249.15.1  (01-01-2010)
Statute Returns

  1. Statute of Limitations processing does not apply to Form 8752 because the form is considered a required deposit by the taxpayer and not a payment of tax due.

3.11.249.15.2  (01-01-2010)
Amended Returns

  1. See IRM 3.11.249.11.3, Computer Condition Code "G" , Amended Returns, for instructions for processing amended Form 8752.

3.11.249.15.3  (01-01-2010)
Non-Taxable Returns Reflecting No Line Entries

  1. Non-taxable returns reflecting no-line entries usually involve the following returns:

    1. First tax year Form 8752, where form instructions advise the taxpayer to check the box on Line B, skip Lines 1 through 10, and enter "0" (zero) on Line 11.

    2. Final tax year Form 8752, where the taxpayer files to claim a full refund of the net required payment balance because of a terminating event (e.g., election filed under IRC Section 444 was terminated). Form instructions advise the taxpayer to check the box on Line C, skip Lines 1 through 9a, enter "0" (zero) on Line 9b, and complete the rest of the form.

3.11.249.15.4  (01-01-2010)
Foreign Returns

  1. If the return has an address outside of the 50 states and the District of Columbia (APO or FPO address is not considered foreign), follow the procedures below.

    Note:

    The following three paragraphs apply to Cincinnati Submission Processing Campus (CSPC) only.

    1. If numbered, edit CCC "U" on the return.

    2. Prepare Form 4227, Intra-SC Reject or Routing Slip, (or other appropriate routing slip) and indicate that a Letter 86C should be prepared and the return sent to the Ogden Submission Processing Campus (OSPC).

    3. If unnumbered, route the return to the Correspondence function for transmittal to OSPC.

    4. If the return is not date stamped, see IRM 3.11.249.10.

3.11.249.15.5  (01-01-2010)
Secured Returns

  1. Returns processed through the Collection function will show a Transaction Code (TC) 59X or Integrated Collection System (ICS) notated on the face of the return.

  2. Compliance (IRC Section 6020(b)) returns.do not apply to Form 8752. Collection will not prepare (nor perform follow-up action regarding) any of these returns.

  3. Returns that are substitute returns prepared by Examination (SFR) in top margin of the Form 8752 do not apply to Form 8752. Examination will not prepare (nor perform follow-up action regarding) these returns

Exhibit 3.11.249-1  (01-01-2010)
Transcription Lines for Form 8752, Required Payment or Refund under Section 7519

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

Exhibit 3.11.249-2  (01-01-2010)
Potential Frivolous Arguments for Examination Review

Returns or submissions that contain positions/arguments not listed below, which on their face have no basis for validity in existing law, or which have been deemed frivolous in a published opinion of the United States Tax Court or other court of competent jurisdiction, may be determined to reflect a desire to delay or impede the administration of Federal tax laws and thereby subject to penalty.

Note:

A complete list of frivolous positions/arguments can be found in Notice 2008-14.

Potential Frivolous Argument Description
Alleged Churches/First Amendment Income from non-religious sources and may claim a vow of poverty.
Altered Form Altering any or all line items with the intent of facilitating non-compliance with the tax laws.
Altered Jurat/UCC 1-207 Return contains income and deductions but the jurat has been altered or stricken. May include reference to UCC 1-207 or a statement that the return was not signed under penalties of perjury.
Amended Returns/Form 843 Claim Amended return or a Form 843 filed to obtain a total refund of all taxes paid in prior years, based on a tax avoidance argument.
Challenges to Authority/Due Process Questions various administrative authorities such as delegation orders, summons authority, privacy act, etc. Argues that they must be afforded a hearing or a trial before taxes can be assessed or before property can be seized.
Challenges to Authority/Title 26 or "law" in Other Documents Argues that Title 26 of the United States Code is not law because it was never enacted as named.
Disclaimer Submits a disclaimer stating, " disclaims the liability for the tax due" , making the liability on the return zero.
Fifth Amendment Assertion of the Fifth Amendment right against self-incrimination as a basis for not providing any financial information.
Foreign Income Argues that United States citizens and residents are not subject to tax on their wages or other income derived from sources within the United States, as only foreign-based income or income received by nonresident aliens and foreign corporations from sources within the United States is taxable.
IRS is a Private Organization/Collects Tribute, Not Taxes Argues that the IRS is an entity named the Internal Revenue and Tax Service, Inc., which was incorporated in Delaware in 1933, it is a collection agency for the Federal Reserve Bank, or is part of the United Nations and is clandestinely leading the tax-paying public into a "new world order."
Not a Person Argues that a taxpayer is not a "person" within the meaning of IRC Section 7701(a)(14).
Obscene, Vulgar, Harassing Submits documents or other materials indicating that non-filing is due to dissatisfaction with tax policies or taxation in general. Often, this argument is expressed with obscene, vulgar, or crude language and characters in an extremely demeaning manner.
Protest Against Government Action/Inaction Argues that refusal to file or pay is justified because they disagree with government policies or spending plans.
Sixteenth Amendment Argues the Sixteenth Amendment was not properly ratified and therefore the federal government does not have the legal authority to collect an income tax without apportionment.
Straw Men Argues the government has created an entity separate and distinct from the taxpayer - a "straw man" and any tax obligations are exclusively those of the "straw man" .
Taxes are Voluntary/Law Does Not Require Submits a return, amended return or correspondence that argues income taxes are voluntary.
U.S. v. Long Submits a return with zero money amounts much the same as the Zero Return category and U.S. V. Long is referenced. See NOTE in Zero returns below.
Unsigned Returns The individual completes a return but fails to sign, A statement indicating disagreement with the tax system is attached or added to the return.
Valuation Income is not taxable because of the declining fair market value of the dollar, because the dollar is not backed by gold/silver, because the value of services is offset by the value of the labor (barter income), etc.
Zero Returns Submits a return with zero money amounts. A statement is attached claiming there is no section of the Internal Revenue Code (IRC) that established an income tax liability. The statement may also contain arguments regarding the definition of income.
Note: Returns having only zeros, no entries, are blank, or indicate "None" ,"Not Liable" , etc. with no evidence of frivolous arguments are not to be considered as frivolous returns.
Other All others. This category includes non-filer accounts resulting from initial compliance check such as cross-reference TINs.
Note:Frivolous arguments citing "Collection Due Process" (CDP) should be reviewed by Collections for possible referral to Appeals. Refer to IRM 5.19.8, Collection Appeal Rights, for additional information.

Prev

More Internal Revenue Manual