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Part 3. Submission Processing

Chapter 12. Error Resolution

Section 3. Individual Income Tax Returns (Cont. 1)

3.12.3  Individual Income Tax Returns (Cont. 1)

3.12.3.4 
Section 01 Data—Entity And Miscellaneous Information

3.12.3.4.3 
Correction Procedures

3.12.3.4.3.1 
Field 01PNC Check Digits/Name Control

3.12.3.4.3.1.1  (01-01-2010)
Check Digits

  1. Description — A Check Digit is a unique two digit field that identifies the taxpayer from previous filings that is entered on initial input from the IRS label. The ERS screen will show the check digits as a four position field, the first two positions being blank and the second two filled with digits input from the IRS label. The Check Digit Field is located in the Entity portion of the return.

  2. Invalid Conditions — This field will be invalid if any of the following exist:

    1. First two positions are not blank.

    2. Third and fourth positions are not alpha characters.

    3. Additional validity checks by the computer.

  3. Correction Procedures — Enter the Name Control in Field 01PNC when the check digits are invalid. Refer to Document 7071, Name Control Job Aid, or 2515–015, IMF Job Aid.

    Caution:

    NEVER ENTER OR CORRECT CHECK DIGITS.

3.12.3.4.3.1.2  (01-01-2010)
Name Control

  1. Description — Name Control is a four position field located in the Entity portion of the return and consists of the first four letters of the primary taxpayer's last name.

  2. Invalid Conditions — This field will be invalid if any of the following exist:

    1. First position is not an alpha.

    2. The second, third, or fourth positions are not alphas, hyphens, or blank.

    3. Blanks are between characters.

  3. Correction Procedures — Compare the field with the return and overlay correct Name Control. Blank the remaining positions when the primary taxpayer's last name is less than four characters. Refer to Document 7071, Name Control Job Aid, or 2515–015, IMF Job Aid.

3.12.3.4.3.2  (01-01-2010)
Field 01PS Primary Social Security Number

  1. Description — A valid Primary Social Security Number (P–SSN) consisting of nine numbers must be present on every return.

    Note:

    Any reference to an SSN will also include the ITIN. An ITIN is a number assigned by the IRS to those taxpayers who are not eligible to obtain an SSN. It is used for tax purposes only. An ITIN will be in the following format: 9XX-70-XXXX through 9XX-88-XXXX (i.e., begins with 9 and the fourth and fifth digits are 70–88).

  2. Invalid Conditions — This field will be invalid if any of the following exist:

    1. Fewers than nine numeric characters are present.

    2. The digits are all blank, all zeros, or all nines.

  3. Correction Procedures — Search the return, attachments, and Form(s) W–2 for a P–SSN when the P-SSN is invalid as outlined in preceding (2). If not found on return or attachments, research CC NAMEI, NAMES, and INOLE for P-SSN. Take the following action to correct the field:

    If the P-SSN is... Then...
    A] Found (valid), Enter in Field 01PS.
    B] Not Found, SSPND 211 to correspond (see exception).

    Note:

    Check for the presence of Form W-7. If present, see exhibit 3.12.3-10.

    Exception:

    Conditions such as taxpayer having "Amish" , "Mennonite" , "none" , "SSN Applied For" , "NRA" , "SSA 205(c)" , or all nines or zeroes entered indicates that the person may be eligible to obtain an ITIN. SSPND 320 to have an IRSN assigned by Entity.

    Note:

    When returns come back from Entity with an IRSN, enter "O" in Field 01RPC and "0" (zero) in the first position of Field 01EXV if applicable. If the taxpayer indicates that he or she is Amish or Mennonite, don't enter RPC "O" or "0" (zero) in the first position of field 01EXV. Do enter RPC B though.

  4. TY06 only — Any form in the 1040 family that the taxpayer is only claiming TETR :

    1. If Field 01PS is blank and an SSN is not present on the return or attachments, look for the presence of two types of documentation to verify the filer's identity. These two types of documentation must be either originals or notarized or certified copies. If found, SSPND 320 to Entity for the assignment of a Temp. SSN. If not found, SSPND 640 for Rejects to reject the return and route it to Code & Edit for correspondence.

    2. If it appears the taxpayer has used an EIN when filing his claim for TETR, SSPND 640 to Rejects. Attach a Form 4227 to route the return to Code & Edit and note "EIN/TETR" .

  5. SSPND 351 when IDRS is unavailable.

  6. FOR AUSPC ONLY-If the return has an ITIN (9XX-70-XXXX through 9XX-88–XXXX) written in red ink and "W-7" is stamped in the bottom left hand corner of the return, follow the instruction in the following table:

    If... Then...
    A] The ITIN Operation stamped or wrote "rejected" for the primary taxpayer SSPND 320 to Entity Control for a temporary number. (If a red temporary number is already written (9XX-18-XXXX) on the return with that number in TIN Field, See Note Below)
    B] No primary ITIN is written, but RTS research shows Form W-7 in status S or U (Suspended or Unworked). Print the RTS screen and attach the print to the front of the return. SSPND 640 to ITIN. Indicate the status on Form 4227.
    C] Original W-7 attached to return. SSPND 640 to ITIN. Write "W-7 attached" on form 4227

    Note:

    When returns come back from Entity with temporary numbers, enter "O" in Field 01RPC and "0" (zero) in the first position of Field 01EXV if applicable.

3.12.3.4.3.3  (01-01-2010)
Field 01SNC Secondary Name Control

  1. Description — Secondary Name Control consist of the first four letters of the secondary taxpayer's last name.

  2. Invalid Conditions — This field will be invalid if any of the following exist:

    1. First position is not an alpha.

    2. The second, third, or fourth positions are not alphas, hyphen, or blank.

    3. Blanks are between characters.

  3. Correction Procedures — Compare the field with the return and overlay correct Name Control. Blank the remaining positions when the secondary taxpayer's last name is fewer than four characters.

3.12.3.4.3.4  (01-01-2010)
Field 01SS Secondary Social Security Number

  1. Description — Secondary Social Security Number (S-SSN), consisting of nine numbers, must be present on every joint return. Correspond for the Secondary SSN when any of the following exist:

    1. Estimated Tax Payment is claimed but was paid under a different name.

    2. SE Tax (Self Employment) is being paid for the secondary taxpayer.

    3. IRA (Individual Retirement Arrangement) Form 5329, is reported for the Secondary taxpayer.

    4. Primary taxpayer is deceased and it is a joint return.

    5. Form 4137 tax is being paid for the secondary taxpayer.

    6. Schedule H is filed for the secondary taxpayer.

    7. Form 8606 is filed for the secondary taxpayer.

    8. Form 8919 tax is being paid for the secondary taxpayer.

      Note:

      Any reference to an SSN will also include the ITIN.

  2. Invalid Conditions — This field will be invalid if fewer than 9 numeric characters are present.

  3. Correction Procedures — Search the return, attachments, and Form W-2(s) for an S–SSN when the S-SSN is invalid. If not found on return or attachments, research CC ENMOD and/or INOLE with the Primary SSN. Take the following action to correct the field:

    If an S-SSN is... And... Then...
    A] Found,   Enter in Field 01SS.
    B] Not Found, Not required (see the preceding (1)), Delete any invalid data in Field 01SS.
    Note: Request the S-SSN if other correspondence is needed.
    Is required, SSPND 211 to correspond (see note).

    Note:

    Check for the presence of Form W-7. If present, see exhibit 3.12.3-10.

    Note:

    SSPND 320 to have a temporary SSN assigned by Entity when return is a No Reply to an IRS request for a valid SSN or non-compliance because of religious beliefs and the S-SSN is required.

  4. SSPND 351 when IDRS is not available.

3.12.3.4.3.5  (01-01-2010)
Field 01NL1 First Name Line

  1. Description — The First Name Line contains 35 characters. If the Name Line exceeds 35 characters (including spaces), the last position will display with a # sign.

  2. Invalid Conditions — This field will be invalid if any of the following exist:

    1. Characters are not alpha, ampersand, hyphen, less-than sign (<), or blank.

    2. Less-than sign is not present.

    3. More than two less-than signs are present.

    4. The first character is a less-than sign, blank, or ampersand.

    5. The last character is a less-than sign.

    6. The character immediately following the first less-than sign is not an alpha.

    7. There is a blank immediately preceding a less-than sign.

    8. Two or more consecutive embedded blanks are present.

    9. An ampersand is present following the first less-than sign, but preceding the second less-than sign.

    10. More than one ampersand is present.

    11. An ampersand is present in the First Name Line and the Document Code is 26, 27, 72, or 73.

  3. Correction Procedures — Compare the fields displayed with data on the return. Correct any editing and transcription errors.

    Note:

    Do not enter information beyond column 41 of the ERS screen display.

  4. Delete all titles such as Mr., Dr., Reverend, etc.

    Exception:

    Do not delete Mrs. when a woman is using her husband's name; e.g., Mrs. John Smith.

  5. Use the following chart as a guide to correct various error conditions in the First Name Line:

    Error Condition Correction
    Joint Return, different last names. Less than sign before and after Primary Taxpayer's last name.
    Example: 01NL1 JOHN A<DOE<& JANE B SMITH
    Joint return, one person deceased, same names. Enter DECD after the first name and/or initial of the deceased taxpayer.
    Example: 01NL1 JOHN A & JANE B DECD<DOE
    Joint return, one person deceased, different name. Enter DECD after the last name of the deceased taxpayer.
    Example: 01NL1 JOHN A<DOE< & JANE B SMITH DECD
    Example: 01NL1 JOHN A<DOE<DECD & JANE B SMITH
    Joint return and JR or SR to be carried after DEC'D Enter JR or SR before <DECD or at the end of the name line.

    Example:

    01NL1 JOHN A JR DECD & JANE M <DOE

    Example:

    01NL1 JOHN A DECD & JANE<DOE<SR
    Other than joint return and deceased. Enter DECD after the last name of the deceased taxpayer.
    Example: 01NL1 JOHN A<DOE<DECD
    No first name (only last name). Enter a hyphen preceding the less-than (<) sign.
    Example: 01NL1 —<DOE
    When in-care-of (%). Transcribe in Second Name Line using c/o
    Example: 01NL2 C/O DON B SMITH
    For Minor/Child Name Line, See IRM 3.11.3.7.1.3.2 (Refer to manager or Lead Tax Examiner)

    Note:

    Research IDRS when the First Name Line is not present or incomplete. Enter as Short Entity if not found. See IMF Job Aid 2515–015 for additional information.

  6. Change the information in the First Name Line using the following priority when information is over 35 characters:

    1. Use initials only for second names.

    2. Delete second initial of secondary taxpayer if necessary.

    3. Delete second initial of primary taxpayer if necessary.

    4. Use initials only for secondary taxpayer's first name.

    5. Use initials only for primary taxpayer's first name.

    Note:

    Use initials only for primary and secondary taxpayers' first name if the total characters will exceed the maximum 35.

3.12.3.4.3.6  (01-01-2010)
Field 01NL2 Second Name Line

  1. Description — The Second Name Line contains 35 characters. If the Name Line exceeds 35 characters (including spaces), the last position will display with a # sign.

  2. Returns with an in-care of sign (%) will be transcribed in the Second Name Line Field.

  3. When the entity is Long or Partial and a Second Name Line is present, the First Name Line must be present.

  4. When Field 01CCC contains an L or W, the Second Name Line must be present if partial or long entity.

  5. Invalid Conditions — This field will be invalid if any of the following exist:

    1. Characters are not alpha, numeric, ampersand, hyphen, percent, slash, or blanks.

    2. Pound (#) sign is last position (over 35 characters).

  6. Correction Procedures — Examine the return and determine the type of entity when Field 01NL2 requires correction. See Job Aid Book 2515-015 for a list of acceptable abbreviations.

    Note:

    Do not enter information beyond column 41 of the ERS screen display. If necessary to reduce the number of characters, improvise with abbreviations, substitutions, etc. Refer to IRM 3.12.3.4.3.5(6).

3.12.3.4.3.7  (01-01-2010)
Field 01ADD Street Address

  1. Description — Street address contains 35 characters. If more than 35 characters (including spaces), the last position will display with a # sign.

  2. Invalid Conditions — This field will be invalid if any of the following exist:

    1. Characters are not alpha, numeric, hyphen, slash, or blanks.

    2. Pound (#) sign in last position (over 35 characters).

    3. When Field 01ADD is present, the first position must be alpha or numeric, and there cannot be consecutive embedded blanks/spaces.

  3. Correction Procedures — Use the following rules when entering the street address in Field 01ADD from the return or attachments:

    If the address... Then...
    A] Has % or "in-care of" , Use C/O.
    B] Has One-half, Use 1/2.
    C] Has &, Use AND.
    D] Has a pound (#) sign, abbreviation "No." , or the word "number " as a prefix to a house, street, route, apt, or P.O. Box, Omit the pound (#) sign, abbreviation "No" , or word "number" .
    E] Has an apartment number, 1. Enter the abbreviation "APT" before the alpha or numeric.
    2. Enter both street address and apartment number.
    F] Includes both a street address and a P.O. Box number, 1. Enter the street address in Field 01NL2
    2. Enter the P.O. Box in Field 01ADD.
    G] More than 35 characters and all of the address is necessary, 1. Correct as long entity.
    2. Start address in Field 01NL2.
    3. Separate the address in a comprehensible manner.
    H] Has consecutive embedded spaces, Delete the consecutive embedded blanks/spaces.

    Note:

    Do not enter information beyond column 41 of the ERS screen display.

3.12.3.4.3.8  (01-01-2010)
Field 01C/S City/State

  1. Description — City/State Field is 25 characters. Data may be the City-State or a Major City Code (MCC).

  2. APO/FPO will be used as the city name for military addresses and should only be used with state codes AA, AE, or AP and will be in the following format:

    Field 01C/S Field 01ZIP
    APO/AE 090XX–098XX
    APO/AP 962XX–966XX
    APO/AA 340XX

    Note:

    FPO can be substituted for APO in the preceding chart. They use the same state and ZIP code ranges. APO/FPO filers are instructed to file at AUSPC; however, if received at a different campus, process as normal. If the ZIP code is missing, enter the first three digits that apply to the state code and enter "01" as the last two digits.

    Note:

    Convert DPO to APO whenever it occurs in an address. The zip codes assigned to the DPO and the APO are the same.

  3. Invalid Conditions — This field will be invalid when any of the following apply:

    1. Any character is other than alpha or blank (the slash is used only to separate the city and state for the computer).

    2. The slash is not preceded by at least three valid characters.

    3. The slash is followed by something other than two alpha characters.

    4. City/State or major city code is present and the first position is blank.

    5. The state is not contained in the following state-code table:

    AA—APO/FPO Atlantic MS—Mississippi
    AE—APO/FPO Europe MO—Missouri
    AL—Alabama MT—Montana
    AK—Alaska NE—Nebraska
    AP—APO/FPO Pacific NV—Nevada
    AZ—Arizona NH—New Hampshire
    AR—Arkansas NJ—New Jersey
    CA—California NM—New Mexico
    CO—Colorado NY—New York
    CT—Connecticut NC—North Carolina
    DE—Delaware ND—North Dakota
    DC—District of Columbia OH—Ohio
    FL—Florida OK—Oklahoma
    GA—Georgia OR—Oregon
    HI—Hawaii PA—Pennsylvania
    ID—Idaho RI—Rhode Island
    IL—Illinois SC—South Carolina
    IN—Indiana SD—South Dakota
    IA—Iowa TN—Tennessee
    KS—Kansas TX—Texas
    KY—Kentucky UT—Utah
    LA—Louisiana VT—Vermont
    ME—Maine VA—Virginia
    MD—Maryland WA—Washington
    MA—Massachusetts WV—West Virginia
    MI—Michigan WI—Wisconsin
    MN—Minnesota WY—Wyoming

  4. Correction Procedures — Compare the screen display with the entry on the return. Correct field display when it appears that a field was transcribed incorrectly. GTSEC 01 and correct all fields in the section when it appears to be a slipped field (when transcription inputs an entry on the wrong line resulting in all subsequent entries for the section being input on wrong lines).

  5. Refer to IRM 3.12.3.3.7 on International returns.

  6. Use the following table to correct field error:

    If the City/State... Then...
    A] Exceeds 25 characters, Consult the Lead Tax Examiner or manager.
    B] Is missing and is required, Enter data for short entity only.
    C] Has more than one address and one is a permanent address, Use the permanent address.
    D] Is a temporary Foreign Address, See your manager to determine if a manual refund should be issued.
    E] Contains numeric characters, Convert to alpha characters (i.e., 1000 Oaks to Thousand Oaks).
    F] Contains ampersand (&), Convert to "AND" .

3.12.3.4.3.9  (01-01-2010)
Field 01ZIP ZIP Code—5 Positions

  1. Description — ZIP Code Field is a five character field and is all numeric.

  2. Invalid Conditions — This field is invalid when any of the following exist:

    1. Other than numeric 0 (zero) through 9.

    2. Other than five digits.

    3. Contains more than five digits (with # sign in the field).

    4. Is blank.

    5. Fourth and fifth characters are 00.

  3. Correction Procedures — Search the return and attachments for the ZIP Code when incorrect or not present and use the following table to correct the field error:

    If a ZIP Code is... And... Then...
    A] Found, Address matches, Enter correct 5–digit number in Field 01ZIP.
    Address doesn't match, 1. Determine and enter the 3–digit number (refer to Exhibit 3.12.3–9) in Field 01ZIP.
    2. Enter 01 as the 4th and 5th-digits in Field 01ZIP.
    B] Not Found, Address is an APO/FPO, Enter ZIP Code as follows:
    —AE–09001
    —AP–96201
    —AA–34001
    Address is not an APO/FPO, 1. Determine and enter the 3–digit number (refer to Exhibit 3.12.3–9) in Field 01ZIP.
    2. Enter 01 as the 4th and 5th-digits in Field 01ZIP.

    Note:

    DO NOT USE a campus ZIP Code or an APO/FPO ZIP Code for a non-APO/FPO address. Use only the first five digits of the ZIP Code.

3.12.3.4.3.10  (01-01-2010)
Field 01TXP Tax Period

  1. Description — Tax Period Field consists of the tax year followed by the ending month of the period covered by the return. The tax period is in the format YYYYMM. The current period is never transcribed. Prior— and fiscal-year returns are transcribed in the format YYYYMM.

  2. Invalid Conditions — This field is invalid if the tax period is other than those shown on the following chart:

    VALID TAX PERIOD ENDINGS
    Form Current Year Prior Year
    A] 1040 (takes into account Fiscal Year Returns) Tax period not less than 200812 or more than current year and month. 196212 — 200811
    B] 1040A 200812 only Calendar Years 197212 — 200712
    C] 1040EZ 200812 only Calendar Years 198212 — 200712

    Note:

    A Fiscal Year period ending may be shown on a preprinted label in the upper right corner.

  3. Field 01TXP will also be invalid when any of the following exist:

    1. Return is for a non-ADP tax period (prior to 196212).

    2. Form 1040A is present for any fiscal- or short-year tax period.

    3. Return shows a future tax period later than the current processing year and month.

  4. Correction Procedures — Verify the tax period on the return or attachments and correct any coding or transcription errors. Use the following table to correct field error:

    The tax period is... The Form is... Then...
    A] 200812 (current), 1040/A/EZ, Blank Field 01TXP (computer will generate 200812).
    B] Prior to 196212, 1040/A/EZ, SSPND 620.
    C] Prior to 197212, 1040A, SSPND 610 to renumber to Form 1040.
    D] Prior to 198212, 1040EZ, SSPND 610 to renumber to Form 1040.
    E] Fiscal or Short Year, 1040A/EZ, SSPND 610 to renumber to Form 1040
    F] Future Period (later than current processing year/month), 1040/A/EZ, Refer to Lead Tax Examiner (see exception).

    Exception:

    Refer to EC 260 when return is an early filed decedents. (Also refer to EC–002, EC–042 and EC–046.)

3.12.3.4.3.11  (01-01-2010)
Field 01PEF Presidential Election Campaign Fund — 1 Position

  1. Description — Presidential Election Campaign Fund Field is a 1–position field.

  2. Invalid Conditions — This field is invalid when the code is other than blank, 0, 1, or 2.

    Note:

    Zero is set as the default.

  3. Correction Procedures — Correct Field 01PEF from the information on page 1 of the tax return when Field 01PEF is invalid as follows:

    If the taxpayer checked... Then...
    A] No boxes, Blank Field 01PEF
    B] One yes box,, Enter 1 in Field 01PEF.
    C] Two yes boxes, Enter 2 in Field 01PEF.

3.12.3.4.3.12  (01-01-2010)
Field 01FSC Filing Status Code—1 Position

  1. Description — Filing Status Code (FSC) for Form 1040 and 1040A is determined by the Filing Status Box checked by the taxpayer (FSC 1 through 5; or FSC 6 or 7 coded by Code and Edit). The FSC for Form 1040EZ (TY93 and later) is determined by the number of names in the caption (FSC 1 = one name and FSC 2 = two names).

  2. The meaning of the FSCs are as follows:

    • Code 1—Single taxpayer

    • Code 2—Married taxpayer filing a joint return

    • Code 3—Married taxpayer filing a separate return and spouse is also filing a separate return

    • Code 4—Head of Household (an exemption claimed in position 3, 5, 6, or 7 of Field 01EXC)

    • Code 5—Widow(er) with dependent child

    • Code 6—Married taxpayer filing a separate return, but claims an exemption for a spouse who has no income and who is not filing a return

    • Code 7—Head of Household with either a child's name on line 4 of Form 1040 or 1040A, Form 2441 or Form 8814, attached with a valid NAME/TIN, or Schedule EIC is attached showing a qualifying child.

  3. Invalid Conditions — This field is invalid if other than 1 through 7 for Form 1040 or 1040A or other than 1 or 2 for Form 1040EZ.

  4. Correction Procedures — Use the following table to code Field 01FSC:

    If... And... Then...
    A] The taxpayer checked no boxes, There is one name in caption, Enter 1 in Field 01FSC.
    There are two names in caption, Enter 2 in Field 01FSC.
    B] Multiple boxes are checked or the FSC is inconsistent with information on return,   Use FSC that corresponds with taxpayer's taxable income and tax computation (see note).
    C] FSC 2 is on a Form 1040EZ The tax period is TY82 — TY92, 1. Process as normal prior year return using correct standard or itemized deduction for filing status (computer will apply FSC 2 rates).
    2. Assign appropriate TPNC if necessary.

    Note:

    Before determining the FSC, verify that taxpayer meets the qualifying criteria by the filing status chart. The filing status chart appears on page xx of the 2010 ERS Job Aid (Training Publication 2515–015).

  5. Research IDRS using CC INOLE/RTVUE to determine filing status in prior year(s), if necessary.

  6. SSPND 211 when the correct FSC cannot be determined.

3.12.3.4.3.13  (01-01-2010)
Field 01CCC Computer Condition Codes (CCC)

  1. Description — Computer Condition Code (CCC) Field is an alpha and/or numeric character edited by Code and Edit to alert the computer and Master File to a special condition. Some CCCs are also generated by the computer. A CCC will post to the Master File. The number of CCCs may not exceed ten. CCCs are edited as follows:

    1. Form 1040/A is edited in the center of the return, to the right of the "Single" box.

    2. Form 1040EZ is edited to the left of the Wages Line.

  2. Invalid Conditions — This field will be invalid if other than the following:

    1. Form 1040 (Doc Code 11, 12, 21 or 22) — is other than 1, 2, 3, 4, 5, 6, 7, 8, 9, A, B, D, E, F, G, J, K, L, M, N, O, P, R, U, V, W, X, Y, or Z.

    2. Form 1040A (Doc Code 09 or 10) — is other than 1, 2, 3, 4, 7, 8, 9, A, B, D, E, F, G, J, K, L, M, N, O, P, R, U, V, W, X, Y, or Z.

    3. Form 1040EZ (Doc Code 07, 08 or 28) — is other than 1, 3, 4, 7, 8, 9, A, B, D, E, F, G, J, K, L, M, N, O, P, R, U, W, X, Y, or Z.

  3. Correction Procedures — Determine and enter the correct code when necessary. Refer to Exhibit 3.12.3–4.

    Note:

    When multiple CCCs are entered, CCC 3 must be in the first position.

  4. SSPND 610 for renumbering when a Form 1040X has a CCC 5 or 6 preceded by a CCC G and is not in blocking series 990–999 or vice versa.

    Note:

    CCC 5 or 6 must always be preceded by a CCC G.

3.12.3.4.3.14  (01-01-2010)
Field 01EXC Exemption Codes — 8 Positions

  1. Description — Exemption Code(s) support the exemption(s) claimed by the taxpayer. The exemption code chart appears on page xx of the 2010 ERS Job Aid (Training Publication 2515–015).

  2. Exemption descriptions are as follows:

    1. Placement of the code within the field identifies the exemption(s).

    2. The exemption code is computer generated for positions 1 (primary taxpayer) and 2 (secondary taxpayer).

    3. Code and Edit determines exemption positions 3 through 8.

    4. Exemption positions 5 through 8 are edited in the right margin by the printed description of dependency.

      Note:

      Correction to Field 01EXC should be made for editing and transcription errors only.

  3. The following are the descriptions of Exemption Positions used by Code and Edit:

    • Position 3 — Children, grandchildren, adopted children, step-children living at home.

    • Position 4 — Children who did not live with the taxpayer because of divorce or separation.

    • Position 5 — Parents, grandparents, step-parents, mother/father-in-law.

    • Position 6 — Qualifying children (i.e., eligible foster child, nieces/nephews, brothers/sisters, wards)

    • Position 7 — Cousins, son/daughter-in-law, NRA spouse and FSC 4 with other exemptions, "NRA" /"SSA 205c" , "Canada" , "Mexico" , "CN" , or "MX" dependents or no relationship indicated

    • Position 8—Excess dependents (overflow)

  4. Any time that the taxpayer claims a dependent in position 4, children who did not live with the taxpayer, Form 8332 (Release of Claim to Exemption for a Child of Divorced or Separated Parents), Form 2120 (Multiple Support Declaration), or a copy of a divorce decree releasing the claim of exemption for that child must be attached to the tax return. If it is not attached, SSPND 211.

  5. Invalid Conditions — This field will be invalid when any of the following exist:

    1. The field is all blank.

    2. The field contains other than numerics.

    3. Position one is other than 1.

    4. The correction input does not have every position entered.

    5. Position two is other than 0 (zero) or 1.

  6. This field will also be invalid when the Doc Code is 07 or 08 and either of the following exist:

    1. When Field 01FSC is 1, and position two through four of Field 01EXC is other than 0 (zero).

    2. When Field 01FSC is 2, and position two is other than 1 or positions three and four, of Field 01EXC, are other than 0 (zero).

  7. Correction Procedures — Take the following actions to correct the field error:

    1. Correct transcription and/or coding errors.

    2. Determine the correct exemption coding from the information on the return.

    3. Enter an entry in each position of the field.

  8. Only allow the exemptions that are supported by name (if used in the tax computation) when the taxpayer fails to total the exemptions.

3.12.3.4.3.15  (01-01-2010)
Field 01EXV Exemption Verified — 8 Positions

  1. Description — Exemption Verified Field is for ERS input only and is used by ERS Tax Examiners to make changes to exemptions claimed by the taxpayer. Field 01EXV will appear as blank. When entering data in Field 01EXV, all 8 positions must be entered.

  2. Invalid Condition — This field will be invalid when Positions 1 and 2 are other than 1 or 0 (zero).

3.12.3.4.3.16  (01-01-2010)
Field 01DSI Dependency Status Indicator — 1 Position

  1. Description — Dependency Status Indicator (DSI) is used to inform the computer that the primary taxpayer can be claimed as a dependent on someone else's return.

  2. Code and Edit will code a 1 directly above line 6c, column (4) on Form 1040/A (ISRP transcribes from the "You" or "Spouse" box on line 5, Form 1040EZ) when the taxpayer did not make an entry in the box on line 6a and did not enter an exemption for themselves on the line to the right of lines 6a and 6b in the right hand margin of Form 1040/A. (Refer to EC 252.)

  3. When a 1 is present in Field 01DSI all of the following will apply:

    1. The computer will limit the exemption amount for the primary taxpayer to zero.

    2. Standard Deduction Computer will be the greater of earned income plus $300 or $950 (earned income plus $300 or $900 for TY08, earned income plus $300 or $850 for TY07 & TY06, earned income plus $250 or $800 for TY05 and TY04, earned income plus $250 or $750 for TY03, TY02, and TY01, earned income plus $250 or $700 for TY00, TY99, and TY98), not to exceed the basic standard deduction for the filing status claimed.

    3. The computer will not allow any dependent exemptions.

    Note:

    On any return when DSI 1 is valid and Field 01EXV is being used, enter a 0 in positions 1 and 3 through 8 of Field 01EXV.

  4. Invalid Conditions — This field will be invalid if other than blank or 1.

3.12.3.4.3.17  (01-01-2010)
Field 01DN1/2/3/4 Dependent Name Control

  1. Description — Dependent Name Control is composed of the first four charachters of the dependent's last name and is located in the exemption area of the return. Code and Edit will edit the name control from Schedule EIC, attachments, or the primary taxpayer's name control. They will also "X" dependents without SSNs.

    Note:

    Field 01DN1/2/3/4 is entered on 199612 and later returns.

  2. Invalid Conditions — This field will be invalid when either of the following exist:

    1. The first position is not an alpha.

    2. The second, third, or fourth positions are not alpha, hyphen, or blank.

  3. Correction Procedures — Compare the field with the return and correct accordingly. Blank the field when the dependent's SSN is not present.

3.12.3.4.3.18  (01-01-2010)
Field 01DS1/2/3/4 Dependent SSN

  1. Description — Dependent SSN Field is located in the exemption area of the return. Code and Edit will edit the missing SSN from the return and attachments when not present, if possible.

    Note:

    Field 01DS1/2/3/4 is entered on 199612 and later returns.

  2. Invalid Conditions — This field will be invalid when fewer than nine numeric characters are present.

  3. Correction Procedures — When a correction is required to a TY96 or later return, search the return and attachments for the Dependent SSN and take the following action:

    If Dependent SSN is... Then...
    A] Found, Enter in the appropriate field.
    B] Not Found, Blank the field.

    Exception:

    See paragraph (4) and (5)

  4. Enter a value of 1 to 4 (number of allowable dependents) in Field 01DTR when a dependent is listed as Amish, Mennonite, or if Form 4029 is indicated.

  5. Search the return and attachments for an official document such as a birth certificate when there is any indication that the dependent "Died" , or was born and died in the tax year. If there is an indication of "Died" on the return:

    Note:

    There must be an indication that the child was born alive; you cannot claim an exemption for a stillborn child.

    If... Then...
    A] The information clearly shows that the child was born in the tax period of the tax return and died in the same or consecutive tax period.
    NOTE: The word "Died" in column 2 of line 6c of the tax return satisfies this requirement.     		1. Enter RPC I.
    2. Enter the number of allowable dependents in Field 01DTR. (If 4 or more, enter 4 in Field 01DTR.)
    NOTE: If EIC is being claimed and EC 010 redisplays after an entry is made in 01DTR, enter C in the Clear Field.
    B] Data indicates child was not born and died within the tax period of the return, 1. Treat as missing.
    2. Do not enter a value in Field 01DTR.
    C] Date of birth is not found, SSPND 211 to correspond for a copy of the child's birth certificate.

  6. Do not enter a value in the Field 01DTR when either of the following are noted (these are not valid reasons for a missing Dependent SSN):

    • "U.S. Adoption Pending"

    • "12/08"

  7. If a dependent SSN is missing and taxpayer notes "Pending Adoption" , and /or Form W-7A, Application for IRS Adoption TIN is attached or"Detached Form W-7" is edited in the margin then do the following:

    1. Research ATINQ to determine if an ATIN has been assigned (Command Code ATINQ with definer S followed by SSN of the applicant and transmit).

    2. If Field STAT-CD> is "A" , then enter the ATIN present in Field ATIN> into the ERS SSN Field for the dependent the ATIN was issued for.

    3. If Field STAT-CD> is"S" or"R" , SSPND 640 to Rejects and note on Form 4227 ATINQ STAT CD "S" or "R" .

    4. If Field STAT-CD> is "E" , "U" ,or "H" , disallow the exemption for the dependent using Field 01EXC.

    5. If there is no response to ATINQ research see Exhibit 3.12.3-10.

3.12.3.4.3.19  (01-01-2010)
Field 01DTR Dependent TIN Requirement

  1. Description-Dependent TIN Requirement is an ERS Input Only field to override the computer's need for a dependent TIN.

  2. Invalid Conditions-This field is invalid when other than 0 (zero), 1, 2, 3 or 4.

  3. Enter RPC I if the child was born in the tax period of the tax return and died in the same or consecutive tax period.

    Note:

    Enter 4 in Field 01DTR when there are four or more qualifying dependents.

3.12.3.4.3.20  (01-01-2010)
Field 01CT1/2/3/4 Child Tax Credit Indicator — 1 Position

  1. Description — Child Tax Credit Indicator Field is used for TY98 and later and is indicated with an "X" or a "check" in column 6c(4) indicating that a dependent is an eligible child for Child Tax Credit purposes. An entry by the taxpayer will be transcribed in the field as a "1" . The default value for the field is "0" (zero).

  2. Invalid Conditions — These fields will be invalid if they contain values other than 0 (zero) or 1.

  3. Correction Procedures — Verify that Fields 01CT1/2/3/4 are transcribed correctly.

3.12.3.4.3.21  (01-01-2010)
Field 01CEV — Total Children Eligible for Child Tax Credit Verified

  1. Description — Child Tax Credit Verified is a two-digit field for ERS input only and is used only when the computer cannot accurately compute the total number of children eligible for Child Tax Credit (i.e., there are more than 4 children eligible or eligible children beyond the 4th dependent exemption).

  2. Invalid Conditions — This field will be invalid if the figure is non-numeric and not blank.

  3. Correction Procedures — Use the following table to correct the field error:

    If the Computer... Then...
    A]Correctly figured the number of eligible children for Child Tax Credit in Field 01TCE>, Blank Field 01CEV.
    B]Did not correctly figure the number of eligible children for Child Tax Credit, 1. Determine the correct total number of children eligible for the Child Tax Credit.
    2. Enter the amount in Field 01CEV.

3.12.3.4.3.22  (01-01-2010)
Field 01RCD Received Date

  1. The received date is the date that a return was received by the IRS.

  2. Description — The Received Date Field is edited or stamped near the center of Form 1040/A and to the left of line 6 on Form 1040EZ by a Campus, Area, or Territory Office.. When needed, this field must be entered in YYYYMMDD (YYYY—Year Ending, MM—Calendar Month, DD—Day of the Month) format.

    Note:

    The received date will not always appear in the location mentioned above. Accept the earliest received date as long as it is determined to be an IRS received date.

  3. Invalid Conditions — This field will be invalid when any of the following exist:

    • Not numeric or blank

    • Not in YYYYMMDD format

    • Prior to 19630101

    • Later than the current processing date

  4. Field 01RCD will also be invalid if the date is not within the following valid month and day ranges:

    Month Day
    01 01–31
    02 01–28 (29 in leap year)
    03 01–31
    04 01–30
    05 01–31
    06 01–30
    07 01–31
    08 01–31
    09 01–30
    10 01–31
    11 01–30
    12 01–31

  5. The Received date cannot be any of the following:

    1. Later than the Error Record date shown in the title line.

    2. Earlier than the tax period ending month and year in Field 01TXP.

  6. Field 01RCD must contain a Received Date when the return filed is any of the following:

    • Amended

    • Delinquent ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • Fiscal Year, Prior Year, or Short Year

    • Early Filed Decedent

    • Processed after June 3, or the Julian date in the DLN is 155 or later

    • Superseded

  7. Correction Procedures — Delete data in Field 01RCD when received date is not required.

  8. Consider the return as timely filed and enter the return due date in Field 01RCD when all of the following exist:

    1. The return was originally received timely.

    2. Return was suspended in Code and Edit for correspondence with the taxpayer.

    3. There is no Received Date stamped or edited on the return.

  9. Determine the received date using the following priorities when one is needed but is not stamped on the return or a valid handwritten received date is not present:

    1. Latest postmark on the envelope (post office mark) or the latest date from a designated private delivery service (PDS) mark. See IRM 3.12.3.4.3.22.1 for determining a valid post office mark or IRM 3.12.3.4.3.22.2 for determining a valid PDS mark.

      Note:

      When the envelope or label is not attached, use the postmark date stamped or handwritten on the return to determine the received date.

    2. Latest date by the taxpayer's signature(s).

      Note:

      For prior year returns, use the signature date only if it is within the current year.

      Note:

      Do not use the tax preparer's signature date.

    3. Julian date minus 10 days in the DLN

      Note:

      Do not accept dates generated by FAX machines on returns or correspondence.

  10. Use the following table for processing exceptions to correcting the received date:

    The return... Then...
    A] Is timely filed, Delete the data in Field 01RCD.
    B] Has multiple received dates, Enter the earliest date in Field 01RCD (see exceptions).
    C] Is a renumbered non-remittance, Enter the calendar date of the Julian date in the original DLN minus 10 days.
    D] Is a renumbered remittance, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    E] Is a rejected, timely filed electronic return (noted by the taxpayer) received by April 22, 2009, Enter 20090415 in Field 01RCD.

    Exception:

    Use the latest date when the earliest date is prior to the end of the tax period.

    Exception:

    If there is an indication the return was sent back to the taxpayer, enter the latest received date in Field 01RCD. Indications the taxpayer sent the return back are, a copy of the correspondence or a correspondence action sheet ( Form 3531, Notice 649, Notice 779, etc.) attached to the back of the return.

  11. If a return was mailed to a state taxing agency on ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ the Received Date in Field 01RCD.

  12. When a received date is not required, delete data in Field 01RCD.

3.12.3.4.3.22.1  (01-01-2010)
Post Office Marks

  1. Valid United States Postal Service (USPS), foreign country postmarks, USPS private meter marks, or private meter marks are:

    • Postage Validation Imprinter (PVI) labels displaying the USPS eagle

    • Killer bar strips or other cancellation marks with a date, city, and state

    • USPS Metered postmarks

    • Private Metered Marks (identified by the absence of "USPS " in the postmark).

3.12.3.4.3.22.2  (01-01-2010)
Private Delivery Service (PDS) Marks

  1. Designated Private Delivery Services (PDS) are in the following list:

    1. DHL Express (DHL)
      • DHL Same Day Service
      • DHL Next Day 10:30 am
      • DHL Next Day 12:00 pm
      • DHL Next Day 3:00 pm
      • DHL 2nd Day Service

    2. United Parcel Service (UPS)
      • UPS Next Day Air
      • UPS Next Day Air Saver
      • UPS Second Day Air
      • UPS Second Day Air A.M.
      • UPS Worldwide Express
      • UPS Worldwide Express Plus

    3. Federal Express (FedEx)
      • Fed Ex Priority Overnight
      • Fed Ex Standard Overnight
      • Fed Ex Two Day
      • Fed Ex International Priority
      • Fed Ex International First

      Note:

      Do not use "FedEx Powership 3" labels for determining the mail date.

  2. Do not use marks from a non-designated PDS to determine whether a return is timely filed. The "timely mailing as timely filing" rule applies only to the USPS and to designated PDSs.

3.12.3.4.3.22.3  (01-01-2010)
≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  1. By law, a timely-mailed return is a timely-filed return. This applies to both USPS and designated PDS mail.

  2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡

  3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  4. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3.12.3.4.3.23  (01-01-2010)
Field 01CAF CAF Indicator

  1. Description — The CAF Indicator Field indicates the presence of a Power of Attorney (POA). Taxpayers may request assistance from accountants, attorneys, enrolled agents or other representatives. To authorize a third party reply to tax inquiries, the taxpayer may submit a Form 2848, Power of Attorney and Declaration of Representative or Form 8821, Tax Information Authorization (TIA) (TIA only authorizes a third party to receive information: the holder may not represent the taxpayer before the Service).

    Note:

    Original documents, photocopies, or documents submitted by facsimile transmission (FAX) are acceptable for processing.

  2. Correction Procedures — Do not detach POAs/TIAs from the related document when filed for specific issues. Forward a copy of the POA/TIA to the CAF Function when the document authorizes recognition for a return in addition to the specific issue. Examples of specific issues include but are not limited to the following:

    • Form 843, Claim for Refund and Request for Abatement

    • Form 966, Corporate Dissolution or Liquidation (Form 964 is obsolete)

    • Form W–4, Employee's Withholding Allowance Certificate

    • Form 4361, Application for Exemption from Self-Employment Tax for Use by Ministers, Members of Religious Orders and Christian Science Practitioners

    • Form 1128, Application to Adopt, Change or Retain a Tax Year

    • Form SS–4, Application for Employer Identification Number

    • "General Power of Attorney" or "Durable Power of Attorney" , These powers of attorney do not contain sufficient information to process on CAF and should be retained in the case file or left attached to the related return; however, if a general or durable power of attorney is submitted, attached to a completed Form 2848 (a transmittal power of attorney), send both forms to the CAF function for processing.

  3. Detach Form 2848 or Form 8821 when none of the preceding apply and expeditiously route to the CAF unit.

3.12.3.4.3.24  (01-01-2010)
Field 01RPC Return Processing Code — 10 Positions

  1. Description—A Return Processing Code (RPC) is an alpha or numeric character entered by a Code and Edit examiner to alert the computer to a special condition or computation. The number of RPCs may not exceed ten. These codes are used for Campus Processing and do not post to the Master File.

  2. RPCs are edited as follows:

    1. Form 1040 — near the right of line 22.

    2. Form 1040A — near the right of line 15.

    3. Form 1040EZ — near the right of line 10.

  3. Invalid Conditions — This field will be invalid as follows:

    1. Form 1040EZ (Doc Code 07, 08, or 28) and RPC is other than A, B, E, G, J, K, L, O, Q, R, V, or 7.

    2. Form 1040A (Doc Code 09 or 10) and RPC is other than A, B, C, D, E, G, I, J, K, L, N, O, Q, R, V, Z, 4, or 7.

    3. Form 1040 (Doc Code 05, 06, 11, 12, 21, or 22) and RPC is X or a numeric other than 3, 4, 5, 6, or 7.

  4. Correction Procedures — Take the following actions to correct Field 01RPC:

    1. Check for coding and transcription errors and correct, if needed.

    2. Determine and enter correct RPC (if necessary). See Exhibit 3.12.3 - 5 for a list of explanations.

    3. Blank the field when the RPC is illegible and/or you cannot determine the correct RPC from the explanations in Exhibit 3.12.3–5.

  5. If the tax period is more than 33 months before the current processing month and year, then do the following:

    1. If the return has a Statute Control stamp, enter RPC "K" in Field 01RPC if not present and continue processing the return.

    2. If the return does not have a Statute Control stamp, SSPND 310 to Statute Control for clearance.

      Note:

      Do not send returns to Statute Control for clearance if there is no money amounts present with an indication ofSFR/6020(b), Secured by Exam/Collections, " Dummy Return" noted, or a "TC59X " is present on the return.

  6. SSPND 610 when a Form 1040A/EZ is coded with RPC S and there is an indication that the return should be converted to Form 1040. RPC S is used for Form 1040 only. Otherwise, delete the code.

  7. For TY98 and later, RPC V is edited by Code & Edit on current year Forms 1040/A and not coded but entered in ISRP on Forms 1040EZ, determined to be computer generated. A computer generated return is one that is entirely designed and printed by the use of a computer printer, such as a laser printer, dot-matrix printer, etc.. The bottom portion, (usually the center margin) of page 1 of the computer generated return contains a three character alpha code assigned by the IRS indicating approval of the form. RPC V is valid for all returns, but should only be present on Forms 1040/A/EZ.

3.12.3.4.3.25  (01-01-2010)
Field 01ACD Audit Codes

  1. Description — Audit Codes are used to alert Examination to a particular condition(s) on the return. Audit Codes are edited by Code and Edit in the bottom right margin of page 1.

  2. Invalid Conditions — This field is invalid if other than the following:

    1. Form 1040 (Doc Code 11, 12, 21 or 22) are B, C, D, H, J, K, L, P, Q, S, T, U, and V.

    2. Form 1040EZ (Doc Code 07 or 08) are C, D, K , L or U.

    3. Form 1040A (Doc Code 09 or 10) are B, C, D, K, L, P, U, or V.

  3. Correction Procedures — Compare the field on the screen with the entry in the lower right margin of page 1 of the return. Correct the screen display and the code entered when edited or transcribed incorrectly.

  4. Use the Audit Code Exhibit 3.12.3–6 to determine the correct Audit Code when the code is illegible.

  5. Delete the code from the screen when the correct Audit Code cannot be determined.

3.12.3.4.3.26  (01-01-2010)
Field 01PT Preparer's TIN

  1. Description — Preparer's TIN (P-TIN) Field is located in the preparer's portion at the bottom of page 2, Form 1040/A (page 1, Form 1040EZ). The PTIN is a nine character alpha/numeric with the first character being "P" , or "S" followed by eight numbers. For ERS processing, the "P" or "S" in the "TIN" should appear as a "9" on the ERS screen.

  2. Invalid Conditions — This field will be invalid if the Preparer's TIN is present and any of the following:

    • All zeros (000000000)

    • All nines (999999999)

    • Fewer than nine digits

  3. Correction Procedures — Compare the field on the screen with the entry on the return. If edited or transcribed incorrectly, correct the screen display. Take the following action to correct the field error:

    If the preparer... Then...
    A] PTIN/SSN is not available, incomplete and or illegible, Delete the field.
    B] Is using a PTIN (P or S is in the first position of Field 01PT), Change the P or S to a 9.

3.12.3.4.3.27  (01-01-2010)
Field 01PE Preparer's EIN

  1. Description — Preparer's EIN Field is located in the preparer portion at the bottom of page 2, Form 1040/A (or bottom of page 1, Form 1040EZ).

  2. Invalid Conditions — This field will appear invalid if the Preparer's EIN is present and any of the following exist:

    • Not numeric

    • All zeros (000000000)

    • All nines (999999999)

    • Fewer than nine digits

  3. Correction Procedures — Compare the field on the screen with the entry on the return and correct the screen display, if necessary. Delete the field when a valid Preparer's EIN is not available.

    Note:

    "≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ " .

3.12.3.5  (01-01-2010)
Section 02 – 3471 (Edit Sheet)

  1. Section 02 contains edited information from Form 3471 for certain Unallowable (UA) conditions.

3.12.3.5.1  (01-01-2010)
Fields and Money Amounts

  1. All fields are positive. Money amounts are entered in dollars only.

3.12.3.5.2  (01-01-2010)
Error Record Format Section 02

  1. Section 02 contains the following fields:

    Field Designator: Field Title Field Location (Form 3471)
    1040 1040A 1040EZ    
    02CD1 02CD1 02CD1 Unallowable Code-1 Line 1
    02AM1 02AM1 02AM1 Unallowable Amount-1 Line 1
    02CD2 02CD2   Unallowable Code-2 Line 2
    02AM2 02AM2   Unallowable Amount-2 Line 2
    02CD3 02CD3   Unallowable Code-3 Line 3
    02AM3 02AM3   Unallowable Amount-3 Line 3
    02AGI 02AGI 02AGI Unallowable AGI Near bottom of form, box labeled "AGI"
    02ITM     Unallowable Itemized Near bottom of form, box labeled "Itemized"
    02NI 02NI 02NI Unallowable Net Income Near bottom of form, box labeled "Net Income"
    02TXA 02TXA 02TXA Unallowable Tax Adjustment Near bottom of form, box labeled "TAX"
    02TXV 02TXV 02TXV Unallowable Tax-Verified Near bottom of form, box labeled "Tax Verified"
    02RPD 02RPD 02RPD Returns Processed Date Line 4
    0206 0206 0206 Late Filing Code Line 6
    02PDP 02PDP 02PDP Pre-Determined Deliquency Penalty Line 7
    0208     Form 4563 Indicator (International) Line 8 (For AUSPC Only)
    0209 0209   NRA Spouse Indicator (International) Line 9 (Form AUSPC Only)
    0211 0211 0211 ID Number Penalty Line 11
    02PAV 02PAV 02PAV Primary Age Verified ERS Input Only
    02SAV 02SAV 02SAV Secondary Age Verified ERS Input Only
    02RI 02RI 02RI Revalidation Indicator ERS Input Only
    02SPC 02SPC 02SPC Special Processing Code ERS Input Only

  2. Form 3471, the Edit Sheet, appears on page xx of the 2010 ERS Job Aid (Training Publication 2515–015).

3.12.3.5.3  (01-01-2010)
Unallowables

  1. Description — There are certain conditions on a tax return that are unallowable by law and not merely questionable. These are identified by Unallowable Codes and edited by Code and Edit or Examination on Form 3471, Edit Sheet. Refer to Figure 3.12.3–7. An Unallowable Code allows the return to be processed as submitted. Section 02 for Forms 1040/A/EZ input money fields will appear as dollars only. SSPND 370 to Exam when unallowable conditions are present that do not have a specified unallowable code.

    Note:

    Unallowable items should only be coded ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  2. The following fields will be edited for transcription:

    • Fields 02CD1/02AM1

    • Fields 02CD2/02AM2

    • Fields 02CD3/02AM3

  3. The following fields are ERS input only fields:

    • Field 02AGI

    • Field 02ITM

    • Field 02NI

    • Field 02TXA

    • Field 02TXV

    • Field 02PAV

    • Field 02SAV

  4. The following is a list of Unallowable Codes and their explanations:

    Code Explanation
    16 LUMP SUM DISTRIBUTION —Determined by Exam when certain Unallowable conditions are present on Form 4972.
    17 LUMP SUM DISTRIBUTION—Determined by Exam when certain Unallowable conditions are present on Form 4972.
    18 LUMP SUM DISTRIBUTION—Determined by Exam when certain Unallowable conditions are present on Form 4972.
    19 LUMP SUM DISTRIBUTION—Determined by Exam when certain Unallowable conditions are present on Form 4972.
    20 LUMP SUM DISTRIBUTION—Determined by Exam when certain Unallowable conditions are present on Form 4972.
    33 MEDICAL EXPENSES ON SCHEDULE A HAVE BEEN ADJUSTED BECAUSE ITEMS SUCH AS HEALTH CLUB DUES, DIET FOODS, FUNERAL EXPENSES, MATERNITY CLOTHES, AND MEALS OR LODGINGS (UNLESS PROVIDED BY A HOSPITAL OR SIMILAR INSTITUTION FOR MEDICAL CARE) CANNOT BE DEDUCTED. (SEE PUBLICATION 502.). (Use U/A 33 for Personal or Living Expenses, (except transportation to obtain medical care) incidental to medical treatment.)
    34 THE FEDERAL TAXES ON SCHEDULE A CANNOT BE ALLOWED. TAXES THAT CANNOT BE DEDUCTED INCLUDE FEDERAL INCOME TAX, SOCIAL SECURITY AND RAILROAD RETIREMENT TAXES, THE SOCIAL SECURITY TAX YOU PAID FOR A PERSONAL OR DOMESTIC EMPLOYEE, FEDERAL ESTATE AND GIFT TAXES, CUSTOMS DUTIES AND FEDERAL EXCISE TAXES ON AUTOMOBILES, TIRES, TELEPHONE SERVICE, AND AIR TRANSPORTATION.

    Exception:

    2006 only Federal Telephone Excise Tax Refund.
    35 THE TAXES ON SCHEDULE A HAVE BEEN ADJUSTED. UTILITY TAXES FOR SEWERS, WATER, PHONES, AND GARBAGE COLLECTION CANNOT BE DEDUCTED.(This does not include certain sales taxes paid on certain utilities in Minnesota and Wisconsin.)
    36 THE TAXES ON SCHEDULE A HAVE BEEN ADJUSTED. STATE AND LOCAL TAXES, SUCH AS THOSE FOR HOTEL ROOMS, AIR FARES, INHERITANCE, STAMPS, AND MORTGAGE TRANSFERS CANNOT BE DEDUCTED.
    37 THE DEDUCTION FOR AUTOMOBILE LICENSE, REGISTRATION, TAG FEES, OR TAXES ON SCHEDULE A HAS BEEN DISALLOWED. THESE AMOUNTS MAY BE SHOWN AS PERSONAL PROPERTY TAXES ONLY IF A STATE CHARGED THEM ANNUALLY AND IN THE AMOUNT BASED ON THE VALUE OF YOUR AUTOMOBILE. SINCE THESE STATES DO NOT CHARGE THE FEES AND TAXES THIS WAY, THEY ARE NOT PERSONAL PROPERTY TAXES AND CANNOT BE ALLOWED.(Do not code U/A 37 for residents of Alabama, Arizona, Georgia, Minnesota, Nebraska, California, Colorado, Connecticut, Kentucky, Indiana, Iowa, Maine, Massachusetts, Michigan, Mississippi, Montana, Nevada, New Hampshire, Oklahoma, South Carolina, Virginia, Washington and Wyoming.)
    38 THE EXPENSES FOR SUPPORT OF CHILDREN OR DEPENDENTS ON SCHEDULE A CANNOT BE ALLOWED BECAUSE THESE EXPENSES ARE NOT DEDUCTIBLE.(Not to be confused with Child Care.)
    40 EDUCATIONAL EXPENSES—CANNOT DEDUCT EDUCATIONAL EXPENSES FOR SOMEONE OTHER THAN YOURSELF OR YOUR SPOUSE, ON SCHEDULE A. (SEE PUBLICATION 508). (This includes tuition, books, transportation, lodging, etc., for individuals—other than the taxpayer.)
    41 PERSONAL INTEREST—TAXPAYER CAN NO LONGER DEDUCT PERSONAL INTEREST. (TY91 and later)
    42 THE CHARITABLE CONTRIBUTIONS ON SCHEDULE A HAVE BEEN ADJUSTED BECAUSE PAYMENTS TO INDIVIDUALS, LOBBYING ORGANIZATIONS, FOREIGN CHARITIES (EXCEPT CANADIAN CHARITIES) AND OTHER NONQUALIFYING RECIPIENTS ARE NOT DEDUCTIBLE. (SEE PUBLICATION 526). (This also includes the monetary value of the taxpayer's time and labor.)
    43 CHANGED THE AMOUNT OF AUTOMOBILE EXPENSES. THE CORRECT MILEAGE RATE FOR BUSINESS MILES IS 40.5 CENTS A MILE (48.5 CENTS 09/01/2005 THROUGH 12/31/2005); RURAL MAIL CARRIERS IN EXCESS OF 47.25 CENTS PER MILE FOR ALL MILES.
    45 SALE OF PERSONAL RESIDENCE—THE EXPENSES INCURRED IN THE SALE OR PURCHASE OF RESIDENCE CANNOT BE DEDUCTED ON SCHEDULE A. CLOSING COSTS (FOR EXAMPLE, SETTLEMENT AND LEGAL FEES) OR REALTOR COMMISSIONS ARE NOT DEDUCTIBLE. (SEE PUBLICATION 523).(Do not use U/A 45 if these items are specifically claimed as part of Moving Expense.)
    46 PERSONAL INSURANCE—PREMIUMS PAID FOR INSURANCE (OTHER THAN MEDICAL INSURANCE) ARE NOT DEDUCTIBLE ON SCHEDULE A.(e.g., Life, auto, home liability, etc., not claimed as Employee Business Expense.)
    56 FRACTIONAL EXEMPTION—THE FRACTIONAL EXEMPTION SHOWN ON THE RETURN CANNOT BE ALLOWED. (Use U/A 56 if a taxpayer is claiming a fractional exemption for reasons other than birth or death.)
    60 MORTGAGE INTEREST CREDIT—WE ARE DISALLOWING THE MORTGAGE INTEREST CREDIT CLAIMED ON FORM 8396. YOU ONLY QUALIFY FOR THIS CREDIT IF YOU WERE ISSUED A MORTGAGE CREDIT CERTIFICATE (MCC) BY A QUALIFIED STATE OR LOCAL GOVERNMENT UNIT OR AGENCY. PLEASE PROVIDE A COPY OF YOUR MCC AND FORM(S) 1098 TO SHOW THAT YOU ARE ELIGIBLE FOR THIS CREDIT.
    61 DC FIRST TIME HOMEBUYER'S CREDIT—WE ARE DISALLOWING THE DISTRICT OF COLUMBIA FIRST TIME HOMEBUYER CREDIT CLAIMED ON FORM 8859. YOU CAN ONLY CLAIM THIS CREDIT IF YOU PURCHASED A MAIN HOME DURING THE TAX YEAR IN THE DISTRICT OF COLUMBIA, AND YOU DID NOT OWN ANY OTHER MAIN HOME IN THE DISTRICT OF COLUMBIA FOR AT LEAST ONE YEAR PRIOR TO THE DATE OF PURCHASE.
    70 SURVIVING SPOUSE—THE TAX ON THE RETURN HAS BEEN ADJUSTED BECAUSE THE FILING STATUS FOR A QUALIFYING WIDOW(ER) CAN BE USED ONLY FOR THE TWO YEARS AFTER THE YEAR OF THE DEATH OF THE SPOUSE AND, DURING THAT TIME, THE WIDOW(ER) MUST BE ENTITLED TO AN EXEMPTION FOR A SON, DAUGHTER, OR STEPCHILD WHO LIVED WITH HIM OR HER DURING THE ENTIRE TAX YEAR IN A HOUSEHOLD THE WIDOW(ER) MAINTAINED.(Use U/A 70 only if dependent child is claimed). (This code will be identified by the Unpostables Unit.)
    77 THE AMOUNT BEING CLAIMED ON YOUR TAX RETURN FOR DISABLED ACCESS CREDIT IS BEING DISALLOWED. THIS AMOUNT HAS BEEN FROZEN AND WILL NOT BE INCLUDED IN ANY ANTICIPATED REFUND AMOUNT. YOU WILL RECEIVE CORRESPONDENCE WHEN THE EXAMINATION IS COMPLETED AND/OR THE REMAINDER OF THE REFUND AMOUNT RELATING TO THIS ISSUE IS RELEASED.
    79 RELEASE CREDIT—Reinput documents only.
    81 THE AMOUNT OR A PORTION OF THE AMOUNT BEING CLAIMED ON YOUR TAX RETURN FOR RECOVERY REBATE CREDIT IS BEING EXAMINED. THEREFORE WE HAVE DISALLOWED THIS AMOUNT AND WILL NOT BE INCLUDED IN ANY ANTICIPATED REFUND AMOUNT. THE REASON FOR THE DISALLOWANCE IS BECAUSE THE PRIMARY OR SECONDARY TAXPAYER, AND/OR DEPENDENT(S) IDENTIFICATION NUMBER WAS NOT ISSUED BY THE SOCIAL SECURITY ADMINISTRATION. YOU WILL RECEIVE CORRESPONDENCE WHEN THE EXAMINATION IS COMPLETED AND/OR THE REMAINDER OF THE REFUND AMOUNT RELATING TO THIS ISSUE IS RELEASED.
    82 THE AMOUNT OR A PORTION OF THE AMOUNT BEING CLAIMED ON YOUR TAX RETURN FOR RECOVERY REBATE CREDIT IS BEING EXAMINED. THEREFORE WE HAVE DISALLOWED THIS AMOUNT AND WILL NOT BE INCLUDED IN ANY ANTICIPATED REFUND AMOUNT. THE REASON FOR THE DISALLOWANCE IS BECAUSE THE PRIMARY OR SECONDARY TAXPAYER AND/OR DEPENDENT(S) NAME AND SOCIAL SECURITY NUMBER(S) ON THE RETURN DOES NOT MATCH THE RECORDS PROVIDED BY THE SOCIAL SECURITY ADMINISTRATION. YOU WILL RECEIVE CORRESPONDENCE WHEN THE EXAMINATION IS COMPLETED AND/OR THE REMAINDER OF THE REFUND AMOUNT RELATING TO THIS ISSUE IS RELEASED.
    85 WE ARE PROPOSING TO DISALLOW THE FUEL TAX CREDIT ON YOUR TAX RETURN. IT APPEARS YOU DO NOT MEET THE REQUIREMENTS TO CLAIM THE CREDIT.
    89 THE AMOUNT BEING CLAIMED ON YOUR TAX RETURN FOR HEALTH COVERAGE TAX CREDIT IS BEING DISALLOWED. THIS AMOUNT HAS BEEN FROZEN AND WILL NOT BE INCLUDED IN ANY ANTICIPATED REFUND AMOUNT. YOU WILL RECEIVE CORRESPONDENCE WHEN THE EXAMINATION IS COMPLETED AND/OR THE REMAINDER OF THE REFUND AMOUNT RELATING TO THIS ISSUE IS RELEASED.
    91 THE TAX ON THE RETURN HAS BEEN CORRECTED BECAUSE A DEDUCTION, CREDIT, OMISSION OF INCOME, OR OTHER ADJUSTMENT AS AN INDICATION OF PROTEST CANNOT BE ALLOWED.(Note: Code for any amount).
    92 THE LOSS ON THE SALE OF A RESIDENCE OR OTHER PROPERTY USED FOR PERSONAL PURPOSES IS NOT DEDUCTIBLE.
    95 YOUR EXPENSES HAVE BEEN DISALLOWED BECAUSE YOU HAVE NOT MET THE TIME REQUIREMENTS FOR TAKING THESE DEDUCTIONS.
    98 MULTIPLE (MORE THAN THREE UNALLOWABLES)—If more than three unallowable codes are identified, enter Unallowable Code 98 without an amount in place of the third unallowable.
    99 UNSPECIFIED UNALLOWABLE - This Unallowable is to be used only when specifically instructed to in IRM 3.12.3..

  5. Correction Procedures — Corrections are not necessary unless the record contains EC 370, 702, 704, 706, 708, 712, 714, or 718.

  6. Use the following important guidelines when entering or correcting Unallowable Codes:

    1. Enter Unallowable Code 91 first.

    2. Enter all other codes in sequence found.

    3. Enter Unallowable Code 98 (more than 3 unallowables are identified) for the third code (with no amount) and explain the additional codes and amounts in the memo portion of Form 3471.

  7. Before correcting an Unallowable Code, determine if the unallowable amount is more than the tolerance,≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Use the following table to correct the Unallowable Code:

    If the amount is... And the UA is... Then...
    A] More than the tolerance,   1. GTSEC 02.
    2. Enter the UA Codes (see Exhibit 3.12.3–7)
    3. Enter the UA amount.
    B] Less than the tolerance, In a field that is creating an ERS error condition, Move the amount to a catch-all field (e.g. on Schedule A, move to Field 0728). (See note)

    Note:

    The amount in question is NOT TO BE ADJUSTED on the return (i.e. DO NOT leave a working trail for the moved amount).

  8. Refer to EC 260 for conditions that should be Y coded.

3.12.3.5.3.1  (01-01-2010)
Field 02RPD Return Processed Date

  1. Description — Returns Processed Date (RPD) Field is located on line 4, Form 3471 or date stamped on the reply and is sometimes referred to as the Correspondence Received Date.

    Note:

    Do not accept dates generated by the sending FAX machine.

  2. Invalid Conditions — This field will be invalid when any of the following exist:

    1. Day of the month (DD) exceeds number of days for the transcribed calendar month (MM).

    2. First position is blank and the field contains other data.

    3. Fewer than eight (8) numerics.

    4. Later than the current date.

  3. Correction Procedures — Correct any coding and transcriptions errors. Verify that the entry does not fall under the criteria for Invalid Conditions in the previous (2).

  4. This field should be present when returns have been held in suspense (or mailed back to the Taxpayer) and a complete reply or the return is received after the due date of the return.

  5. The field format is YYYYMMDD.

  6. The Return Processed Date and CCC U (no reply) should not be present when any of the following exist:

    1. The correspondence was received prior to the due date of the return ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. The correspondence was issued in error.

    Note:

    CCC U and the RPD date cannot both be present on the same return

  7. Enter CCC U in Field 01CCC when the reply is incomplete, No Reply, or undeliverable.

    Exception:

    Do not enter an RPD when CCC U is present. Do not enter CCC U when the taxpayer's response is a No Reply because the IRS did not request all of the missing information. Process the missing information using No Reply procedures, but enter the reply date into Field 02RPD.

3.12.3.5.3.2  (01-01-2010)
Field 0206 Late Filing Code

  1. Description — ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ for receiving certain tax returns. Code and Edit will edit the Late Filing Code 1 when the received date on ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ the taxpayer has computed a delinquency penalty and/or interest. (Refer to EC 062.)

  2. Invalid Conditions — This field will be invalid when other than blank or a 1.

  3. Correction Procedures — Correct coding and transcription errors and use the following table to correct the field error:

    The return is... And... Then...
    A] Full Paid, Any of the following is present:
    a. Pre-computed delinquency,
    b. Failure to Pay Penalty,
    c. Interest is entered on the return,     		1. Enter 1 in Field 0206.
    2. Enter 20080415 in Field 01RCD.
    B] Partial Paid, An amount is indicated for delinquency (Failure to File) penalty, Enter 1 in Field 0206.

3.12.3.5.3.3  (01-01-2010)
Field 02PDP Pre-Determined Delinquency Penalty

  1. Description — Code and Edit will edit the amount on the Edit Sheet when there is a notation on the return that indicates this penalty. (Refer to EC 064.)

  2. Invalid Conditions — This field will be invalid if other than blank or all numerics.

  3. Correction Procedures — Correct any coding or transcription errors.

3.12.3.5.3.4  (01-01-2010)
Field 0208 Form 4563 Indicator (International)

  1. Description — This field is used by AUSPC only.

  2. Correction Procedure — Delete entry if present in this field.

3.12.3.5.3.5  (01-01-2010)
Field 0209 NRA Spouse Indicator (International)

  1. Description — This field is used by AUSPC only.

  2. Correction Procedures — Delete entry if present in this field.

3.12.3.5.3.6  (01-01-2010)
Field 0211 Identification Number Penalty

  1. Description — Identification Number Penalty Field has a maximum of 2 characters. When a notation is made on the return that indicates this penalty, Code and Edit will edit the designated amount using the following guidelines:

    1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  2. Invalid Conditions — This field will be invalid if other than blank or all numeric.

  3. Correction Procedures — Correct any editing or transcription errors. Enter the amount as two digits (i.e. $5.00 will be entered as 05) in Field 0211.

3.12.3.5.3.7  (01-01-2010)
Field 02PAV Primary Age Verified

  1. This field is for ERS input only when the Primary Taxpayer's Age in Field 01PYB> is blank or all zeros.

  2. Correction Procedure - Subtract the Primary Taxpayer's year of birth on INOLES from the tax year of the return and enter the result in Field 02PAV.

3.12.3.5.3.8  (01-01-2010)
Field 02SAV Secondary Age Verified

  1. This field is for ERS input only when the Secondary Taxpayer's Age in Field 01SYB> is blank or all zeros.

  2. Correction Procedure - Subtract the Secondary Taxpayer's year of birth on INOLES from the tax year of the return and enter the result in Field 02SAV.

3.12.3.5.3.9  (01-01-2010)
Field 02RI Revalidation Indicator

  1. This field is for ERS Input Only when it is necessary to generate Error Code 011 for SSN validation. Valid entries for this field are:

    1. Blank — Signifies that NAP validation is not requested.

    2. R — Signifies that NAP validation is requested.

3.12.3.5.3.10  (01-01-2010)
Field 02SPC Special Processing Code

  1. Description - A special processing code is an alpha or numeric character entered by a Code & Edit examiner, except for SPC T, to alert the computer to a special condition or computation. The number of SPC's may not exceed ten. These codes are used for Campus Processing and do not post to the Master File. This field was created as an over flow for Return Processing Codes and will only be used as such.

  2. For all tax years — the following Special Processing Code will be edited by Code and Edit:

    1. "A" —Taxpayer has attached Form 8332, Release of Claim to Exemption for Child of Divorced or Separated Parents, Form 2120, Multiple Support Declaration, or a copy of a Divorce Decree stating their entitlement to claim an exemption for the child that did not live with them because of divorce or separation.

  3. Code and Edit will edit the following Special Processing Codes for the tax years noted:

    1. "B" —Taxpayer noted that only Educator Expenses are present on line 23, Form 1040. TY06.

    2. "C" —Taxpayer noted that only Tuition and Fees are present on line 35, Form 1040. TY06.

    3. "D" —Taxpayer noted that State and Local Sales Tax is present on Schedule A, line 5. TY06.

    4. "E" —Taxpayer noted that both Educator Expenses and Archer MSA Deduction are present on line 23, Form 1040. TY06.

    5. "F" —Taxpayer noted that both Tuition and Fees and Domestic Production Activities are present on line 35, Form 1040. TY06.

    6. "H" —Taxpayer bought a house in 2009 and is eligible for up to $8,000 in the First-Time Homebuyer Credit, from Form 5405. TY08.

    7. "P" —Taxpayer is a non-requirement filer who is filing the return solely to claim the Economic Stimulus Payment (TY07) or the Recovery Rebate Credit (TY08).

    8. "R" —Taxpayers claim, by filing status, an additional $500 or $1,000 in standard deduction for real estate taxes or a disaster loss. TY08.

    9. "V" —Taxpayer computed the Economic Stimulus Payment or the Recovery Rebate Credit by using non-combat pay or veterans benefits of $3,000 or more. TY07 for the Economic Stimulus Payment, TY 08 for the Recovery Rebate Credit.

  4. The Special Processing Code below is entered by Error Resolution only.

    1. "T" —Taxpayer's claim for the Recovery Rebate Credit requires an entry in field 05RAV. TY08.

3.12.3.5.3.11  (01-01-2010)
Field 02NC> Non-Compute Code

  1. Description — The Non-Compute Code 2 is computer generated when the return is identified as a Non-Compute by the computer. Taxpayers who want the IRS to compute the tax will only complete the following lines:

    1. Form 1040 — Data through line 43, plus any applicable lines from line 47 through 55 and lines 62 through 71.

    2. Form 1040A — Data through line 27, plus any applicable lines 29 through 34 and lines 38 through 43.

  2. The taxpayers must not compute the Tax Liability, Balance Due/Refund, or have certain attached schedules for IRS to compute their tax.

    Exception:

    Section 01-05, 08, 16, 19, 21, 22, 23, 27, 29, 30, 36, 37, 43, 44, 45 and 50–62 may be present. Further rules for filing as a Non-Compute are explained in Publication 967.

  3. Field 02NC> will display with a 2 (identifying the return as a Non-Compute), for TY06 and later, when all of the following exist:

    1. Adjusted Gross Income is present and Total Tax Taxpayer, Amount Owed/Refund, Estimated Tax Payments, Estimated Tax Penalty and Remittance Amount are not present.

    2. Computer Condition Code B is not present.

    3. Taxpayer does not exceed tax table limitations for income.

    4. Only Sections 01–05, 08, 16, 19, 21, 22, 23, 27, 29, 30, 36, 37, 43, 44, 45 and 50–62 are present.

    5. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  4. A return processed as a Non-Compute return generates a CP 51 notice to the taxpayer. The CP 51 informs the taxpayer that the IRS figured their tax for them.

  5. Error Codes in the 500 and 600 series will also be generated on all Non-Compute returns.

  6. Correction Procedures — Determine from the return if the Tax and/or Balance Due/Refund has been computed to zero by the taxpayer, or if the taxpayer is asking IRS to figure the tax. A dash (-), a 0 (zero), or "none" written on any of the lines is an indication the taxpayer computed their own return.

  7. Enter B in Field 01CCC when you can determine that the taxpayer has computed their return. A CCC B will prevent the return from being identified as a Non-Compute. This practice is recommended because of the current amount of unnecessary CP 51 notices that are generated.

    Note:

    If the taxpayer has computed the tax to zero, has entered withholding and has no subsequent entries (i.e., taxpayer is not asking IRS to figure EIC) and does not have an entry on line 72, enter the withholding amount in 05BDR (Do not enter CCC B).

  8. Correct all field errors when the return is identified as a true Non-Compute and the taxpayer has done all the following:

    1. Completed all applicable lines through Taxable Income.

    2. Entered any withholding.

    3. Entered any applicable lines thereafter (except the total lines).

    4. Wrote "CFE" , if applicable, on the dotted line next to the line for Credit for the Elderly or the Disabled and attached the schedule with the appropriate lines completed.

    5. Wrote "EIC" if applicable to the left of the Earned Income Credit line and attached the schedule (if necessary) with the appropriate lines completed.

      Note:

      Assign TPNC 218 when a return appears to be a Non-Compute, but does not meet the criteria (e.g. "prior year return" , Schedule A present, Schedule C present, etc.). Field 02NC> will be blank.

  9. Verify the coding and transcription on all the fields in the following table. Take the appropriate action listed in the table, when necessary, before transmitting the record:

    Verify Field(s).... And... Then...
    01FSC The taxpayer failed to check or checked multiple boxes for the FS, SSPND 211
    01EXC You are unable to arrive at the taxpayer's total for exemptions, SSPND 211
    04ABI You are unable to arrive at the taxpayer's total for Age/Blind deduction(s), Refer to EC 252.
    01DSI You are unable to determine if the taxpayer is limiting the Standard Deduction or Exemption amount, Refer to EC 252.
    Section 03 Verification of wages, from Form(s) W-2s, shows the amount of wages is greater than the amount reported on the return by $10 or more, Increase the wages amount. (Do nothing if amount is less than what is reported on the return.)
    Section 03 The taxpayer used SSA/Medicare Wages instead of Withholding Wages, Change the amount to reflect the Withholding Wages.
    Section 03 a. EIC is claimed based solely on wages that are not supported by a W-2 (or similar Form W-2 document), or
    b. HSH is not noted on the wage line,     		SSPND 211 for documentation.
    Section 03 Gross Social Security is being claimed, Verify and correct the amount, if applicable.
    Field 0561 (1040), or
    Field 0538 (1040A), or
    Field 0507 (1040EZ),     		1. Withholding is claimed,
    2. Supported by only a substitute, typed or handwritten Form W-2
    3. The computer computes a refund,     		Enter 8 in Field 01CCC (see note).
    Field 04AEI (1040/A) W-2 reflects AEIC in box 9, Enter the box 9 amount in Field 04AEI.

    Note:

    Always verify the Withholding amount from the Forms W-2 and ensure that the amount was transcribed correctly before transmitting error record.

  10. Refer to EC 260 for information on joint Non-Compute returns. A CCC "Y" will be assigned when both of the following are present:

    1. The separate taxable incomes of the husband and wife are shown above the words "Adjusted Gross Income" , on Form 1040 (to the left of line 27 on Form 1040A or to the left of line 6 on Form 1040EZ).

    2. There are no exemptions in positions 3 through 8, or the taxpayer has indicated the allocation of the exemptions to the husband and/or wife.

3.12.3.6  (01-01-2010)
Section 03 Data—Income And Adjustments

  1. Section 03 includes the following information:

    • Income

    • Adjustment items

  2. Entries are used to calculate the Adjusted Gross Income for Forms 1040, 1040A and 1040EZ.

3.12.3.6.1  (01-01-2010)
Fields and Money Amounts

  1. All fields are positive, with the exception of the following list, that can be positive or negative:

    • Taxable Interest

    • Schedule C, D, E, F

    • Form 4797

    • Other Income

    • Adjusted Gross Income

3.12.3.6.2  (01-01-2010)
Error Record Format Section 03

  1. Section 03 consists of the following fields:

    Field Designators    
    1040 1040A 1040EZ Field Title Field Location
    0307 0307 0301 Wages Line 7 (1040)
    Line 7 (1040A)
    Line 1 (1040EZ)
    0308A 0308A 0302 Taxable Interest Line 8a (1040)
    Line 8a (1040A)
    Line 2 (1040EZ)
    0308B 0308B 03TEI Tax-Exempt Interest Line 8b (1040)
    Line 8b (1040A)
    Line 2 (dotted portion to the left 1040EZ, ERS Input Only)
    0309A 0309A   Ordinary Dividends Line 9a (1040)
    Line 9a (1040A)
    0309B 0309B   Qualified Dividends Line 9b (1040)
    Line 9b (1040A)
    0310     State Income Tax Refund Line 10 (1040)
    0311     Alimony Received Line 11 (1040)
    0312     Combined Schedule C Profit/Loss Line 12 (1040)
      0310   Total Capital Gain Distribution Line 10 (1040A)
    0313     Schedule D Profit/Loss Line 13 (1040)
    0314     Other Gains/Losses Line 14 (1040)
    0315A 0311A   Total IRA Distribution Line 15a (1040)
    Line 11a (1040A)
    0315B 0311B   Taxable IRA Distribution Line 15b (1040)
    Line 11b (1040A)
    0316A 0312A 03GPA Total Pensions and Annuities Line 16a (1040)
    Line 12a (1040A)
    ERS Input Only (1040EZ)
    0316B 0312B 03TPA Taxable Pensions and Annuities Line 16b (1040)
    Line 12b (1040A)
    ERS Input Only (1040EZ)
    0317     Schedule E Profit/loss Line 17 (1040)
    0318     Combined Schedule F Profit/Loss Line 18 (1040)
    0319 0313 0303 Taxable Unemployment Compensation Line 19 (1040)
    Line 13 (1040A)
    Line 3 (1040EZ)
    0320A 0314A   Gross Social Security Line 20a (1040)
    Line 14a (1040A)
    0320B 0314B   Taxable Social Security Line 20b (1040)
    Line 14b (1040A)
    0320V 03TSV   Taxable Social Security Verified ERS Input Only
    0321 03OTI   Other Income Line 21 (1040)
    ERS Input Only (1040A)
    0322 0315 03TOT Total Income Line 22 (1040)
    Line 15 (1040A)
    Line 4 (1040EZ)
    0323 0316   Educator Expenses Line 23 (1040)
    Line 16 (1040A)
    0324     Reservist/Other Business Expenses Line 24 (1040)
    0325     Health Saving Account Deduction Line 25 (1040)
    0326     Moving Expenses Line 26 (1040)
    0327     Deduction for Self-Employment Tax Line 27 (1040)
    0328     SE Retirement Plans Deduction Line 28(1040)
    0329     Self Employed Health Insurance Line 29 (1040)
    0330     Penalty on Saving Withdrawal Line 30 (1040)
    03SSN     Alimony SSN Line 31b (1040)
    0331A     Alimony Paid Line 31a (1040)
    0332 0317   IRA Deduction Line 32 (1040)
    Line 17 (1040A)
    0333 0318   Student Loan Interest Deduction Line 33 (1040)
    Line 18 (1040A)
    0334 0319   Tuitions and Fees Deduction Line 34 (1040)
    Line 19 (1040A)
    0335     Domestic Production Activities Deduction Line 35 (1040)
    03MSA     Archer MSA Deduction Line 36 (dotted portion 1040)
    03ADJ     Other Adjustments Line 36 (dotted portion 1040)
    0336 0320   Total Adjustments Line 36 (1040)
    Line 20 (1040A)
    0337 0321 0304 Adjusted Gross Income Line 37 (1040)
    Line 21 (1040A)
    Line 4 (1040EZ)

3.12.3.6.3  (01-01-2010)
Invalid Conditions

  1. Fields are invalid if not all numeric.

    Exception:

    See Alimony SSN Field for specific invalid conditions for that field only.

3.12.3.6.4  (01-01-2010)
Correction Procedures

  1. Correction procedures for Section 03 fields follow.

3.12.3.6.4.1  (01-01-2010)
Field 0307/0301 Wages

  1. Correction Procedures — SSPND 211 for W–2 documentation when EIC is claimed based solely on wages that are not supported by at least one Form W–2 (or similar "W–2 type" statement). (Refer to EC 218)

    Note:

    Household Employees may not have W–2s to support an entry on the Wages Line. They are instructed to write "HSH" and the amount of earnings to the left of the Wages Line. Consider this a "W–2 type" statement.

3.12.3.6.4.2  (01-01-2010)
Field 0308A/0302 Taxable Interest

  1. Correction Procedures — SSPND 610/611 to convert to Form 1040 when a negative amount is claimed as taxable interest on Form 1040EZ. Beginning in TY97, negative taxable interest amounts stemming from inflation-indexed bonds may be claimed on line 8a, Form 1040/A. (Refer to EC 218.)

3.12.3.6.4.3  (01-01-2010)
Field 0308B/03TEI Tax Exempt Interest

  1. Accept the taxpayer's entry. (Refer to Error Code 218.)

3.12.3.6.4.4  (01-01-2010)
Field 0309A Ordinary Dividends

  1. Description — Dividends and distributions are reported to the taxpayer on Form 1099–DIV. The taxpayer should enter the total of ordinary dividends from Box 1a of Form 1099–DIV on line 9a of Form 1040/A. Taxpayers are not required to attach Form 1099–DIV to their return. (Refer to EC 218.)

3.12.3.6.4.5  (01-01-2010)
Field 0309B Qualified Dividends

  1. Description — Dividends and distributions are reported to the taxpayer on Form 1099–DIV. The taxpayer should enter the total of qualified dividends from box 1b of Form 1099–DIV on line 9b of Form 1040/A. Taxpayers are not required to attach Form 1099–DIV to their return. (Refer to EC 218.)

3.12.3.6.4.6  (01-01-2010)
Field 0310 State Income Tax Refund (Form 1040)

  1. Refer to EC 218.

3.12.3.6.4.7  (01-01-2010)
Field 0311 Alimony Received (Form 1040)

  1. Correction Procedure — ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ (Refer to EC 218.)

3.12.3.6.4.8  (01-01-2010)
Field 0312 Combined Schedule C Profit/Loss (Form 1040)

  1. Refer to EC 202.


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