3.12.8  Information Returns Processing

Manual Transmittal

October 23, 2014

Purpose

(1) This transmits revised IRM 3.12.8, Error Resolution, Information Returns Processing.

Material Changes

(1) Editorial changes and subsection date changes made throughout.

(2) IRM 3.12.8.1(1) Obsolete Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments, removed from the valid form listing.

(3) IRM 3.12.8.4.1(3) Form 1099-K, Payment Card and Third Party Network Transactions, old box 1, "Gross payment card/third party network transactions" , correction instruction changed to box 1a throughout the IRM to reflect new form revision.

(4) IRM 3.12.8.4.1(4) New box 1b, "Card Not Present transactions (optional)" , on Form 1099-K, Payment Card and Third Party Network Transactions, instruction added. All subsequent field instruction updated to reflect the new form revision and field shifts.

(5) IRM 3.12.8.4.9(6)(d) Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments, removed from the Form 1096 TIN type listing.

(6) IRM 3.12.8.4.9(7) Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments, removed from the payment code instructions.

(7) IRM 3.12.8.4.9(7)(d) The payment code table outlining the valid entries for section 06, field G, document code 69 for TIN types 195 and 295, were updated for boxes 13, 14, 15a and 15b money amount entries. A note was added to perform work around procedure until a programming fix is deployed. IPU 14U0324 issued 02-13-2014.

(8) IRM 3.12.8.4.9(7)(d) Documentation for work around for a payment code error reflected on the note added on 02-13-2014 on IPU 14U0324 was removed. IPU 14U1241 issued 8-11-2014

(9) IRM 3.12.8.4.9(7)

  • (d) Payment code for Form 1099-MISC, Miscellaneous Income, Foreign tax paid, removed to reflect form change.

  • (f) Payment code "D" removed to reflect new Form 1098, Mortgage Interest Statement, revision.

  • (j) Payment codes updated to reflect Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, redesign.

  • (l) Payment codes J and K were added as valid for Form 1099-INT, Interest Income.

  • (n) Payment code F was added as valid code for Form 1099-OID, Original Issue Discount.

  • (m) Payment codes for Form 1099-K, Payment Card and Third Party Network Transactions, updated to reflect new box 1b inputs and shifting of subsequent assigned payment codes.

(10) IRM 3.12.8.4.9(8)(b) Valid delinquent date range table updated to reflect current processing year.

(11) IRM 3.12.8.4.10 Section 06 instruction for Form 1099-H, Health Coverage Tax Credit (HCTC) Advance Payments, removed and all subsequent sections renumbered.

(12) IRM 3.12.8.4.13(2), (3) and (4) Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, boxes 2a, 2b and 2c renumbered to 2b, 2c and 2d to reflect new form revision.

(13) IRM 3.12.8.4.13(8) Instruction added to mirror field A to field G when field G is blank and a positive value is in field H. IPU 14U0324 issued 02-13-2014

(14) IRM 3.12.8.4.14 All paragraphs for each field instructing correction for Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, section 06 was reworked due to form redesign.

(15) IRM 3.12.8.4.16(4) Money amount 4 for Form 1098, Mortgage Interest Statement, removed to reflect new form revision and subsequent paragraph renumbered and edited to reflect the same change.

(16) IRM 3.12.8.4.16(4)(d) The note instruction on box 4, Form 1098, Mortgage Interest Statement, selection of money amount when a description is entered and multiple money amounts are present was removed. Divergent form types not seen in tax year 2013 filings. IPU 14U1241 issued 8-11-2014

(17) IRM 3.12.8.4.22(10, (11), (12) Form 1099-INT, Interest Income, box 10 and 11 section 06 instructions were added and all subsequent instruction in the paragraph was renumbered. Must be blank fields were adjusted.

(18) IRM 3.12.8.4.25(11) Form 1099-MISC, Miscellaneous Income, box 11, Foreign tax paid, removed to reflect form revision and all subsequent paragraphs renumbered.

(19) IRM 3.12.8.4.26(5) Form 1099-OID, Original Issue Discount, section 06 instruction box title change from Foreign tax paid to Market discount.

(20) IRM 3.12.8.4.26(6) Form 1099-OID, Original Issue Discount, section 6 instruction added for new box 6, Acquisition premium, and all subsequent paragraphs adjusted to reflect the addition.

(21) IRM 3.12.8.4.28(7)(c) New distribution code "K" added to the valid code table for Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc..

(22) Exhibit 3.12.8-1, Information Return Processing Format Codes and Required Section 06 Fields for Returns, required fields table adjusted for the following form types:

  • Form 1098, Mortgage Interest Statement, box 4 removed

  • Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, all boxes reworked due to form redesign

  • Form 1099-INT, Interest Income, two new boxes added

  • Form 1099-K, Payment Card and Third Party Network Transactions, box 1b disposition added

  • Form 1099-MISC, Miscellaneous Income, box 11 removed

  • Form 1099-OID, Original Issue Discount, one new field added

(23) Exhibit 3.12.8-2, Information Return Processing Return Fields Transcribed or Scanned, return fields transcribed table updated to reflect new form revisions for the following forms.

  • Symbols were added to replace checkbox indicators represent checkbox entries in place of cxbx to conserve table space.

  • Form 1098, Mortgage Interest Statement, box 4 removed

  • Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes, boxes renumbered

  • Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, all boxes numbered due to form redesign

  • Form 1099-INT, Interest Income, boxes 10 and 11 added

  • Form 1099-K, Payment Card and Third Party Network Transactions, box 1b added and subsequent boxes renumbered

  • Form 1099-OID, Original Issue Discount, box 6 added

Effect on Other Documents

This supersedes IRM 3.12.8 dated November 14, 2013 (effective January 01, 2014). This IRM incorporates interim procedural updates 14U0324 issued 02-13-2014 and IPU 14U1241 issued 8-11-2014.

Audience

Small Business/Self Employed, Wage and Investment, Error Resolution Tax Examiners

Effective Date

(01-01-2015)


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

3.12.8.1  (01-01-2015)
Purpose

  1. These instructions cover the correction of error registers for the following information returns processed via Integrated Submission and Remit Processing (ISRP) and Service Center Recognition Processing System (SCRIPS):

    • Form 1096, Annual Summary and Transmittal of U.S. Information Returns, both current and delinquent processed to the Payer Master File (PMF);

    • Form 1097-BTC, Bond Tax Credit

    • Form 1098, Mortgage Interest Statement

    • Form 1098-C, Contributions of Motor Vehicles, Boats, and Airplanes

    • Form 1098-E, Student Loan Interest Statement

    • Form 1098-T, Tuition Statement

    • Form 1099-A, Acquisition or Abandonment of Secured Property

    • Form 1099-B, Proceeds From Broker and Barter Exchange Transactions

    • Form 1099-C, Cancellation of Debt

    • Form 1099-CAP, Changes in Corporate Control and Capital Structure

    • Form 1099-DIV, Dividends and Distributions

    • Form 1099-G, Certain Government Payments

    • Form 1099-INT, Interest Income

    • Form 1099-K, Payment Card and Third Party Network Transactions

    • Form 1099-LTC, Long-Term Care and Accelerated Death Benefits

    • Form 1099-MISC, Miscellaneous Income

    • Form 1099-OID, Original Issue Discount

    • Form 1099-PATR, Taxable Distributions Received From Cooperatives

    • Form 1099-Q, Payments From Qualified Education Programs (Under Sections 529 and 530)

    • Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.

    • Form 1099-S, Proceeds From Real Estate Transactions

    • Form 1099-SA, Distributions From an HSA, Archer MSA, or Medicare Advantage MSA

    • Form 3921, Exercise of a Qualified Incentive Stock Option Under Section 442(b)

    • Form 3922, Transfer of Stock Acquired Through an Employee Stock Purchase Plan Under Section 423(c)

    • Form 5498, IRA Contribution Information

    • Form 5498-ESA, Coverdell ESA Contribution Information

    • Form 5498-SA, HSA, Archer MSA, or Medicare Advantage MSA Information

    • Form W-2G, Certain Gambling Winnings

  2. These instructions also cover the correction of Form 1096, Annual Summary and Transmittal of U. S. Information Returns, (including delinquent tax years) processed to the Payer Master File (PMF).

  3. General instructions found in IRM 3.12.37, General Instructions, will be used as a basis when using this IRM.

3.12.8.1.1  (01-01-2015)
Scope

  1. These instructions apply to all campuses.

3.12.8.1.2  (01-01-2015)
Returns Files

  1. Return storage and retrieval for correcting the Information Return Program (IRP) error register will be performed in the same manner as for other error registers as prescribed in IRM 3.12.37, IMF General Instructions.

3.12.8.1.3  (01-01-2015)
Domestic and Foreign Returns

  1. For Code and Edit instructions for domestic and foreign information returns, see IRM 3.11.8, Information Return Processing.

3.12.8.1.4  (01-01-2015)
Error Register Format

  1. Exhibit 3.12.8-3, Information Returns Program Error Register - Field Definitions, provides the corresponding field definitions of the IRP Service Center Replacement System (SCRS) Error Register.

3.12.8.1.5  (01-01-2015)
Program Codes

  1. Listed below are the program codes as they will appear on the error register:

    Programs on Error Register
    Return Types Program Code
    ISRP ENTERED FORM LIST (DOMESTIC)
    • Form 1097-BTC

    • Form 1099-A

    • Form 1099-B

    • Form 1099-C

    • Form 1099-CAP

    • Form 1099-DIV

    • Form 1099-G

    • Form 1099-INT

    • Form 1099-LTC

    • Form 1099-MISC

    • Form 1099-OID

    • Form 1099-PATR

    • Form 1099-Q

    • Form 1099-R

    • Form 1099-S

    • Form 1099-SA

    • Form 1098

    • Form 1098-E

    • Form 1098-T

    • Form 3921

    • Form 3922

    • Form 5498

    • Form 5498-ESA

    • Form 5498-SA

    • Form W-2G

    4430X
    ISRP ENTERED FORM (DOMESTIC)
    • Form 1096

    • Form 1098-C

    44310
    ISRP ENTERED FOREIGN INFORMATION RETURNS 44320
    SCRIPS ENTERED FORM LIST
    • Form 1096

    • Form 1097 (series)

    • Form 1098 (series)

    • Form 1099 (series)

    • Form 5498

    44340

3.12.8.1.6  (01-01-2015)
Information Return Processing Error Reasons Codes

  1. If an error reason code appears, it will be printed in the return header line.

  2. These codes are used as a guide for correcting the error record; however, there may be errors other than the one(s) identified by the error reason code.

  3. Valid Error Reason Codes on IRP error register are:

    • 11

    • 14

    • 15

    • 16

    • 17

    • 18

    • 19

    • AA

  4. Error Reason Code 11 indicates one of the following error conditions:

    1. The ZIP code is inconsistent with the state.

    2. The ZIP code is present for a document which contains a period (.) in the state code field. The period (.) will only appear for foreign addresses.

    3. If a document has a state with a major city code, it will appear with error reason code 11; clear this by deleting the state.

  5. Error Reason Code 14 indicates one of the following error conditions:

    1. The return has an account type code "T" or "J" (foreign information returns) and does not have a foreign country code.

    2. The return has an account type code other than "T" or "J" and a foreign country code is present.

  6. Error Reason Code 15 indicates the tax class, document code, and file location code of the payer document locator number (DLN) is not valid for the document being processed.

  7. Error Reason Code 16 indicates inconsistencies involving money fields on the following returns:

    • Form 1099-DIV, Dividends and Distributions

    • Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc.

  8. Error Reason Code 17 indicates an error detected by ISRP. When this happens, an error indicator code should be present next to one or more of the section numbers. The entire document must be reviewed for errors.

  9. Error Reason Code AA indicates an invalid correction attempt was made. See IRM 3.12.8.1.8, Error Indicators, for invalid correction attempts.

  10. Error Reason Code 18 indicates a possible fraudulent Form 1099-MISC, Miscellaneous Income, or Form 1096, Annual Summary and Transmittal of U.S. Information Returns. Follow local procedures for coordination with the Criminal Investigation Branch (CIB). Follow this procedure before resolving any other error condition(s). CIB will indicate, after review, whether to continue or discontinue processing. Use action code 7 to continue processing, or action code 2 with Service Center Control File (SCCF) adjustment indicator D to discontinue processing.

  11. Error Reason Code 19 indicates a possible fraudulent Form 1099-MISC, Miscellaneous Income. Follow local procedures for coordination with the Criminal Investigation Branch (CIB). Follow this procedure before resolving any other error condition(s). CIB will indicate, after review, whether to continue or discontinue processing.

    1. Use action code 7 to continue processing, or

    2. Use action code 2 with SCCF adjustment indicator D to discontinue processing.

3.12.8.1.7  (01-01-2015)
Information Return Processing (IRP) Action Codes (AC)

  1. At least one action code must be entered on the error register to correct an error item.

  2. Valid action codes for IRP error registers are:

    • AC 2

    • AC 6

    • AC 7

  3. Action Code 2

    1. Enter this code to the left of section 01 to delete an entire return.

    2. See IRM 3.12.8.1.10, Deleting Error Records, for details on deleting returns from the error register.

    3. Do not use AC 2 with any other action code.

    4. AC 2 must always be followed by a SCCF adjustment indicator of D, N or R.

  4. Action Code 6

    1. Use to change data field(s) in a section. Enter to the left of the appropriate section(s).

    2. This code is valid for all sections.

    3. The code is required for each section where fields are being corrected.

    4. When this code is used, at least one field within the section must be changed by lining through the incorrect field(s) and entering the correct data above the lined-out field(s).

    5. If a consecutive correction is made in section 16 on multiple documents, notate on the register the span of documents that need the correction entered.

      Caution:

      Not notating the consecutive changes needed may result in improper data entry.

  5. Action Code 7

    1. Enter this code to the left of section 01 to indicate data on the error register is correct.

    2. This code is also used to bypass certain validity and consistency checks.

    3. Do not use AC 7 with any other action code.

    4. "Do not use AC 7 " when "%%" appears in the document identification line. If used, all remaining documents in that block will continue to loop on the register until each document is corrected individually.

3.12.8.1.8  (01-01-2015)
Error Indicators

  1. Each invalid section on the error register may be preceded by one of the following error indicators:

    Invalid Correction Attempt Error Indicators
    Error Indicator Condition
    #1 - ISRP Error
    #2 - Section Length Error
    1. Section's required fields are not all present; or

    2. Section's has more than the allowable field(s) for that section.

    #4 - Field Length Error
    1. The field is variable and too many characters are present.

    2. The field is fixed and too few characters are present.

    3. A non-numeric character is in the unit position of a right justified field.

    4. Non-numeric data in a money field.

    5. Frequently, error indicator #4 will be assigned to more than one section even though not all sections contain an error. When this occurs, all sections in error should be corrected with AC 6. The error indicator #4 for any section, which is correct as is, cannot be removed on the first correction attempt. Therefore, the document will loop on the error register. When it loops, clear the document from the error register with AC 7, unless there is some other error that was not corrected previously. It is not necessary to reverify that the remaining section with error indicator #4 is correct, because this was done on the first correction attempt.

    #G - Required Section Not Input Data transcription has deleted a required section.
    #5 - Duplicate sections entered or entered out of order Data transcription has added sections in addition to screen prompt given.
  2. As an alternative to allowing the register to loop, a dummy correction may be used.

    Example:

    If error indicator #4 appears before both sections 01 and 02, but only section 01 contains an error, use AC 6 to correct section 01.

    Caution:

    Do not do this on parent document, Form 1096. Annual Summary and Transmittal of U.S. Information Returns.

  3. Enter a hyphen (-) in section 02, field A (Payer Account Number for payee) if the field is blank or re-enter the original entry if one is present and using an AC 6. This will force a dummy correction to section 02.

    Caution:

    Do not do this on parent document. Form 1096, Annual Summary and Transmittal of U.S. Information Returns.

3.12.8.1.9  (01-01-2015)
Account Type Code

  1. Information returns are input to ISRP for various purposes. In order to allow for the special validity checks necessary to distinguish between these purposes, an "Account Type Code" (ATC) is present in the block header record.

  2. The Account Type Code (ATC) will appear on the error register in the block identification line. It is transcribed from the Transaction Code box on Form 1332, Block and Selection Record, (or on Form 3893, Re-Entry Document Control).

  3. The Account Type Codes (ATC)s are defined as follows:

    Account Type Codes
    ATC Definition
    B The Form 1096 was prepared and submitted by the payer.
    C The Form 1096, is a "Dummy" prepared by IRS because the payer did not submit a Form 1096.
    J Electronically filed returns from a Foreign Treaty Country.
    P The block of returns is from a domestic payer(s), and was processed by the Integrated Submission and Remittance Processing System (ISRP).
    T Paper filed returns from a Foreign Treaty Country payer(s), for Individual Master File (IMF) type payees, and processed by Integrated Submission and Remittance Processing System (ISRP).
    M Indicates the return was processed through SCRIPS and reinput through Integrated Submission and Remittance Processing System (ISRP).
    S A return processed through SCRIPS.
    Z This code is reserved.

3.12.8.1.10  (01-01-2015)
Deleting Error Records

  1. In general a return will only be deleted from the error tape for one of the following reasons:

    Reasons to Delete Data Record
    Error Record Deleted Condition
    Duplicate document locator numbers (DLN)s were assigned
    1. If duplicate DLNs were assigned, delete one of the documents and return it to Receipt and Control to be renumbered and reinput.

    2. Use AC 2, Error/Reject Disposition Code D to delete the return from the error tape.

    Return was misblocked (e.g., a Form 1099-INT was blocked with Form 1099-DIV
    1. If a return was misblocked it should be "reinput" . Prepare Form 4227, Intra-SC Reject or Routing Slip, according to normal procedures. Indicate on the Form 4227, Intra-SC Reject or Routing Slip, "Reinput" and attach to the return.

      Reminder:

      A return coded for reinput because it was misblocked must be re-numbered and re-blocked prior to reinput.

    2. Use AC 2, Error/Reject Disposition Code N to delete the return from the error tape.

    The return should never have been selected for this tax year's information returns program. Although there are no validity checks to ensure that a return meets the selection criteria, Error Resolution can delete a return if they determine it does not meet the selection criteria as specified in IRM 3.10.8, Information Return Processing.
    1. If a return does not meet the selection criteria, it should be deleted. Prepare Form 4227 according to normal procedures. Indicate "Delete" on the Form 4227 and attach to the return being deleted.

    2. Use AC 2, error/reject disposition code D to delete the return from the error tape.

  2. When Form 1096, Annual Summary and Transmittal of U.S. Information Returns, Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., and Form W-2G, Certain Gambling Winnings, are deleted, they must be re-input (with Form 3893, Re-Entry Document Control) using the same DLN originally assigned, unless the return was originally assigned an incorrect DLN. Use AC 2, Error/Reject Disposition Code R to delete a item above and reinput it using the same DLN.

  3. In certain cases it may be advantageous to delete returns and re-input them, even though they are not misblocked and they meet the selection criteria. To do this, use AC 2, Error/Reject Disposition Code R. In these cases the returns may be re-input without being re-numbered and re-blocked. Prepare Form 3893, Re-Entry Document Control, and attach to the return(s). In addition, place the Account Type Code, Amended Doc Code (F or G), and payer count in "Trans Code" box. For every return attached to the Form 3893, Re-Entry Document Control, in which the payer data changes, edit the 14 digit payer DLN (except foreign returns), payer name and Taxpayer Identification Number (TIN) (also, foreign country code for foreign returns), according to instructions in IRM 3.12.8.5, Section 16 Error Register. Edit the payer's address according to instructions in IRM 3.12.8.5, Section 16 Error Register. Do not edit the payer's address if it is foreign. Account Type Code S will be notated as M on Form 3893, Re-Entry Document Control, for reinput through ISRP.

  4. When deleting returns, an Error/Reject Disposition Code must also be present. This code will automatically adjust the Service Center Control File (SCCF). Use one of the following codes (as appropriate):

    Disposition Code Uses
    Error/Reject Disposition Code Action Use When:
    D Delete Document will not be re-input or when the DLN is unknown.

    Note:

    Cannot be used for Form 1096, Form 1099-R, or Form W-2G.

    R Reinput Document is being deleted and will be re-input using the same DLN
    N Renumber Document is being deleted and will be re-input using a different DLN then do the following:
    1. Return must be renumbered and the new DLN must also be coded on the error register.

    2. Place the new DLN above the original DLN in the document ID line and cross out the original DLN.

    3. If the document is being renumbered outside of ISRP, also enter one of the following master file codes:

      • IMF - Individual Master File

      • BMF - Business Master File

      • EPMF - Employee Plans Master File

      • IRAF - Individual Retirement Account File

      • NMF - Non master file

  5. Do not code a new DLN when using Error/Reject Disposition Codes D or R. Enter the Master File Tax Code (MFT Code) and Error/Reject Disposition Code R on Form 3893, Re-Entry Document Control, when reinputting a return with the same DLN. If the MFT needs to be changed, it is probably necessary to renumber the document, in which case Error/Reject Disposition Code N must be used. If the Account Type Code needs to be changed use Error/Reject Disposition Code R.

  6. The Error/Reject Disposition Code must appear immediately to the right of AC 2.

  7. Make sure to notate the Error/Reject Disposition Code in the Remarks section on Form 4227, Intra-SC Reject or Routing Slip and Form 1332, Block and Selection Record or Form 3893, Re-Entry Document Control.

  8. When deleting a return for reinput, make sure the 14 digit payer DLN (except foreign returns), payer name, payer address (except for foreign returns), and TIN (also foreign country code for foreign returns) are edited.

  9. When corrections are run against the error file, an error deletion list (SCR 11-45) is produced to show all documents which were deleted by using AC 2.

  10. Do not release any deleted document to Receipt and Control for DLN renumbering and reinput until it appears on the error deletion list, SCR 11-45.

  11. After verifying that a deleted document is on the error deletion list, release the document as follows:

    1. For documents deleted with Error/Reject Disposition Code D, dispose of the documents according to Document 12990, Records and Information Management Records Control Schedules, unless such documents need to be reinput and the D was used because a new DLN is not known.

    2. For documents deleted with Error/Reject Disposition Code R have the documents reinput using Form 3893, Re-Entry Document Control.

  12. If any discrepancies are identified through the error deletion list (e.g., return renumbered incorrectly, return coded with Error/Reject Disposition code D is reinput, etc.) contact the balancing function to resolve the discrepancy.

  13. The error deletion list should be filed in the error resolution function.

3.12.8.1.11  (01-01-2015)
Error Register Field Breakers

  1. IRP error registers will display plus (+) and minus (-) field breakers.

  2. Field breakers will be coded only in section 06 and only then if they need changing.

    1. Use a comma (,) for plus.

    2. Use a pound sign (#) for minus.

3.12.8.1.12  (01-01-2015)
Invalid Correction Attempts

  1. Each correction made on the error register is subject to computer validity checks. If the correction does not pass these validity checks, it will reappear on the error register with error reason code AA.

  2. Action codes other than 2, 6 or 7 are invalid correction attempts for IRP.

3.12.8.1.13  (01-01-2015)
Action Code 2

  1. Is an invalid correction attempt when, used with any other action code.

  2. Is an invalid correction attempt when, not immediately followed by Error/Reject Disposition Code R, N or D.

  3. Is an invalid correction attempt when, the correction record contains any section other than section 01.

  4. Is an invalid correction attempt when, it is immediately followed by Error/Reject Disposition Code R or D and there is non-blank data in the correction record.

  5. Is an invalid correction attempt when, it is immediately followed by Error/Reject Disposition Code N and

    1. A valid new DLN is not present for the correction record;

    2. A new valid block header MFT is not present for Form 1096, Annual Summary and Transmittal of U.S. Information Returns, and blank (i.e., shown as a circled 2) for all other information returns.

    3. The new account type code (if present) is not alphabetic.

3.12.8.1.14  (01-01-2015)
Action Code 6

  1. Is an invalid correction attempt when, used with any other action code except another 6.

  2. Is an invalid correction attempt when, the section number of the correction section is other than 01, 02, 06 or 16 for all IRP documents except for Form 1096, Annual Summary and Transmittal of U.S. Information Returns.

  3. Is an invalid correction attempt when, the section number of the section being corrected is other than 01, 02 or 06 for Form 1096, Annual Summary and Transmittal of U.S. Information Returns.

  4. Is an invalid correction attempt when, used to correct more than one section and the section numbers are not in ascending order.

  5. Is an invalid correction attempt when, it is not immediately followed by an alpha field designator valid for the section being corrected.

  6. Is an invalid correction attempt when, the alpha field designators within the correction section are not in alphabetic sequence.

  7. Is an invalid correction attempt when, used to change a field that is not on the error tape.

  8. Is an invalid correction attempt when, the correction section contains invalid field breakers or fields that are too large.

  9. Is an invalid correction attempt when, the correction section does not contain at least one field breaker.

  10. Is an invalid correction attempt when, two identical sections numbers are present within a correction record and both sections do not contain AC 6.

3.12.8.1.15  (01-01-2015)
Action Code 7

  1. Is an invalid correction attempt when, used with any other action code.

  2. Is an invalid correction attempt when, the correction record contains anything other than the error sequence number, section number 01 and AC 7.

3.12.8.1.16  (01-01-2015)
Delinquent Transmittals

  1. All Form 1096, Annual Summary and Transmittal of U.S. Information Returns, must be processed to the Payer Master File (PMF) regardless of when received. Late transmittals for the current year being processed (yyty) will be processed. Delinquent transmittals up to three years back from current year being processed (i.e., if yyty equals current year being processed then yyty minus one, yyty minus 2 and yyty minus 3) will be processed. Such returns should be in separate blocks and the tax year in the block header should match the tax year on the transmittals.

3.12.8.2  (01-01-2015)
Section 01 Error Register

  1. Section 01 of the error register contains payee entity data and Form 1096, Annual Summary and Transmittal of U.S. Information Returns.

  2. Listed below are the fields contained in Section 01:

    1. Field A, TIN length 9

    2. Field B, TIN Validity Bypass Indicator, length 1

    3. Field C, Name Control, length 4

    4. Field D, Name-Line1, length 40

    5. Field E, Name-Line 2, length 40

    6. Field F, Street Address, length 35

    7. Field G, City, length 22

    8. Field H, State, length 2

    9. Field I, ZIP Code, length 9

  3. To blank a field in Section 01, line through the incorrect data.

3.12.8.2.1  (01-01-2015)
Section 01, Field A, Taxpayer Identification Number (TIN)

  1. There is no validity check of this field except for Form 1096, Annual Summary and Transmittal of U.S. Information Returns. However, if you notice the field was transcribed in error, correct it on the error register by lining through the incorrect TIN and entering the correct TIN above it. Payer documents must have a TIN.

  2. A no-TIN return is one for which the TIN contains other than nine numerics.

  3. Form 1096, Annual Summary and Transmittal of U.S. Information Returns, follow the rules for section 16, payer TIN (See IRM 3.12.8.5, Section 16 Error Register). Make necessary corrections to section 01, field A, Form 1096, Annual Summary and Transmittal of U.S. Information Returns, using the section 16 rules found in IRM 3.12.8.5.7, section 16, field G, Payer TIN.

3.12.8.2.2  (01-01-2015)
Section 01, Field B, Taxpayer Identification Number (TIN) Validity Bypass Code

  1. This field is always blank.

3.12.8.2.3  (01-01-2015)
Section 01, Field C, Name Control (4 Positions)

  1. The Name Control is generated from the first four significant characters in Name Line1. The requirements of a Name Control are:

    1. It must contain either an alpha or numeric in the first position,

    2. The hyphen and ampersand (&) are the only special characters and may only appear in the second, third, or fourth position,

    3. It may be a single alpha or numeric,

    4. It may be blank in the fourth position,

    5. If blank in the third position, the fourth position must be blank. If blank in the second position, the third and fourth positions must both be blank.

  2. If a name control is invalid or has been generated improperly, make any corrections necessary to the Name-Line 1 in order to have the correct name control generated by the computer. Never make a change to field "C" itself.

3.12.8.2.4  (01-01-2015)
Section 01, Field D, Name Line 1

  1. The Name Line 1, payee (payer for Form 1096, Annual Summary and Transmittal of U.S. Information Returns) may not be all blank. The valid characters are alpha, hyphen, blank, numeric and ampersand.

  2. If the first name line is invalid, line through the invalid name and enter the correct name above.

  3. If two or more payee names appear on an information return, the names as they appear can be entered into the Name-Line 1. Other names can be identified for entry into the Name Line 2.

  4. If the Name Control (field C) is blank, but the Name Line 1 is not, then a correction to the Name Line 1 is probably necessary. After re-input of the Name Line 1, the Name Control will be re-generated. If no name can be found after research using the SSN, delete the document (see exception below) according to instructions in IRM 3.12.8.1.10, Deleting Error Records. For these types only edit "Unknown" to Name Line 1.

    Exception:

    Form W-2G, Certain Gambling Winnings, and Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., are not covered by this rule.

  5. Do not enter a caret for any documents.

  6. Instructions for editing the first Name Line will be found in IRM 3.11.8, Information Return Processing.

3.12.8.2.5  (01-01-2015)
Section 01, Field E, Name Line 2 (Foreign Street Address)

  1. There is no validity check of this field unless the field contains a foreign street address. However, this field will be corrected if it is noticed that it was originally transcribed in error.

  2. If the Name Line 2 was originally transcribed in error, line through the erroneous name and enter the correct name above it.

  3. Check instructions for Name Line 2 in IRM 3.11.8, Information Return Processing, before any corrections are made.

  4. For Form 1096, Annual Summary and Transmittal of U.S. Information Returns, a second name line (payer) can be present. If present, do not delete the second name line. See IRM 3.11.8, Information Return Processing, for details.

  5. If the payee address is foreign, the street address (if present) will be coded in the Name Line 2 field. Foreign addresses can be identified by a period (.) in the first position of the state field.

3.12.8.2.6  (01-01-2015)
Section 01, Field F, Street Address (Foreign City Or Province)

  1. This field is validity/consistency checked for all documents. The valid characters for this field are alpha (A through Z), numeric (0 through 9), hyphen (-), blank ( ), and slash (/).

  2. If noticed the street is missing or incorrect, necessary corrections can be made for all documents.

  3. If the street address is not present on the document, enter the single character "Z" as the street address.

  4. Use standard abbreviations shown in IRM 3.11.8, Information Return Processing, and Exhibit 3.12.8-8, Abbreviations Used in Entity, whenever possible for the street address.

  5. If the payee address is foreign, the foreign city or province and the postal code will be entered in the Street-Address field. Abbreviations should be used to limit this entry to 25 positions.

3.12.8.2.7  (01-01-2015)
Section 01, Field G, City (Foreign Country)

  1. For all documents, if the city is present it must be alpha only. If the city for a domestic address contains numerics, it must be corrected to alphas. For example, "29 Palms" must be corrected to "Twenty nine Palms."

  2. Army Post Office (APO), Diplomatic Post Office (DPO) and Fleet Post Office (FPO) are edited to the first three positions of the city:

    1. If present, no other city information is allowed in this field.

    2. If present, the state code and ZIP code must match the military state and ZIP codes shown in Exhibit 3.12.8-9, Military City, State and ZIP Codes.

  3. Major city codes may be used:

    1. If the city is a valid Major City Code (MCC), enter the ZIP code from Exhibit 3.12.8-4, Major City Codes Sorted By Major City, or Exhibit 3.12.8-5, Major Cities Sorted By Major City Code.

    2. If the city is not a valid MCC enter the city and state.

  4. If the payee address is foreign:

    1. Edit the foreign country in the city-field.

    2. Follow instructions in IRM 3.24.37, General Instructions, for entry of foreign returns.

    3. Do not enter a foreign country code. Use abbreviations as necessary to limit this entry to no more than 15 positions.

  5. If city cannot be determined, enter three "Z" s (e.g., ZZZ).

3.12.8.2.8  (01-01-2015)
Section 01, Field H, State (Foreign Period)

  1. If the state is present and a ZIP code is also present, the ZIP code must be valid for the state. Both will appear as fields in error when the state code is a valid code but the ZIP code is not valid for the state.

  2. If the state is present, it must be in the valid range of the state codes. If the state is not valid, the ZIP code will not be identified as a field in error (unless it is not a valid ZIP code configuration). Always check the ZIP code field when the state field must be corrected. Do not assume the ZIP code is correct. Use Exhibit 3.12.8-7, ZIP Code Range Sorted By ZIP Code, to determine the correct first 3 digits.

  3. If a correct state cannot be determined. Field I must be blank. Make necessary corrections to the appropriate fields (H, and/or I).

  4. If the address is foreign (including American Samoa and Panama Canal Zone), edit a period (.) in the first position of the state field.

  5. Make necessary corrections to field H on the error register when the state is in error unless another correction action will correct the field H problem.

  6. If both a major city code and a state code are present, both fields will be error coded. Correct by deleting the state if a valid major city code is present.

  7. If the state code is "AA" , "AE" or "AP" , use the military city, state and ZIP codes shown in Exhibit 3.12.8-9, Military City, State and ZIP Codes, to determine a valid city and ZIP code.

3.12.8.2.9  (01-01-2015)
Section 01, Field 1, ZIP Code

  1. The ZIP code must:

    1. Be numeric,

    2. Be 5 or 9 numerics.

    3. Be valid for the state. The first three digits must be in the valid range of ZIP codes for the state followed by two numerics other than 00. If only three numerics are shown, add 01 to the field.

    4. Not contain embedded blanks.

    5. Be left justified.

  2. If the ZIP code is in error and can be determined from the state see Exhibit 3.12.8-7, ZIP Code Range Sorted By ZIP Code, correct field 1 by entering the first 3-digit ZIP code shown for the state followed by the numerics 01.

  3. If the ZIP code cannot be determined, proceed as follows: Blank out field I, ZIP code and field H, State.

  4. When a Major City Code (MCC) is present on payee documents, the ZIP code should not be blank. If blank, enter a 3-digit ZIP code shown for the MCC followed by the numerics 01.

  5. If the address is foreign, the ZIP code field should be blank.

  6. The ZIP code should always be verified for a state, even if only the state is identified as a field in error. Use Exhibit 3.12.8-7, ZIP Code Range Sorted By ZIP Code.

  7. If the first three digits of the ZIP code equals 340, 090 through 098 or 962 through 966, use the military city, state and ZIP codes shown in Exhibit 3.12.8-9, Military City, State and ZIP Codes, to determine a valid city and state.

3.12.8.3  (01-01-2015)
Section 02 Error Register

  1. Section 02 of the error register contains additional payee (payer for Form 1096, Annual Summary and Transmittal of U.S. Information Returns) entity data.

  2. Listed below are the fields contained in section 02:

    1. Field A, Payer Account Number for payee. This field will be blank for Form 1096, Annual Summary and Transmittal of U.S. Information Returns. The length of this field is 20 positions.

    2. Field B, 2nd TIN not indicator

    3. Field C, Corrected/Amended indicator

    4. Field D, check digit
      -An entry in this field is valid only for Form 1096, Annual Summary and Transmittal of U.S. Information Returns with an Account Type Code "S" .

    5. Field E, Tin Type per PMF source. An entry in this field is valid only for Form 1096, Annual Summary and Transmittal of U.S. Information Returns, with an Account Type Code "S" .

3.12.8.3.1  (01-01-2015)
Section 02, Field A, Payer Account Number for Payee

  1. There is no validity check of this field for any payee type documents.

  2. If you notice that the field is in error, correct it on the error register.

  3. If an entry is made in error on a payer form (Form 1096, Annual Summary and Transmittal of U.S. Information Returns) blank it out on the error register.

  4. Form 1096, Annual Summary and Transmittal of U.S. Information Returns, will be assigned an asterisk if this field is not blank.

3.12.8.3.2  (01-01-2015)
Section 02, Field B, 2ND TIN NOT Indicator

  1. This is a one position field/code.

  2. Valid characters are 1 (one) or blank for form types 1099 series = "B" , "DIV" , "INT" , "K" , "MISC" , "OID" and "PATR" only. It must be blank for all other documents.

  3. This field should be coded 1 (one) if the "2nd TIN Not." checkbox is checked or blank if it is not checked.

3.12.8.3.3  (01-01-2015)
Section 02, Field C, Corrected/Amended Indicator for Information Return Processing documents

  1. This is a one position field/code.

  2. Valid characters are:

    1. "F" —original document (Form 1096, Annual Summary and Transmittal of U.S. Information Returns is always original. Do not use G.)

    2. "G" —"corrected" /"amended" document

  3. If this field is correctly coded a "G" , a document is valid with no money amounts.

  4. If this field is correctly coded an "F" , at least one money amount must be present except for Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit-Sharing Plans, IRAs, Insurance Contracts, etc., or Form 1099-MISC, Miscellaneous Income, with a "Direct Sales" indicator of 1.

  5. If the indicator is an "F" and accurate and no money amounts are present, except for the information returns outlined in paragraph (4) above, delete the document using AC "2" and Error/Reject Disposition Code "D" to re-input.

3.12.8.3.4  (01-01-2015)
Section 02, Field D, Check Digit for Form 1096, Annual Summary and Transmittal of U.S. Information Returns

  1. This field should be blank for all account code types ("B" , "C" , "M" and "S" ).

  2. Input AC "6" to correct the check digit null and/or TIN.

3.12.8.3.5  (01-01-2015)
Section 02, Field E, Taxpayer Identification Number (TIN) Type for Payer Master File (PMF)

  1. This is a one position field.

  2. This field will only cause an error condition for SCRIPS processed labeled Form 1096, Annual Summary and Transmittal of U.S. Information Returns, Account Type Code "S" .

  3. Payee documents and ISRP processed Form 1096, Annual Summary and Transmittal of U.S. Information Returns, (Account Type Code "B" , "C" or "M" ) should have blanks in this field.

  4. Valid characters in this field are:

    1. 1 for BMF

    2. 2 for IMF

    3. 3 for EPMF

    4. 4 for NMF

  5. Input AC "7" to clear if the TIN type is correct.

  6. Input AC "6" to correct an error.

  7. An incorrect TIN type will cause an error condition in the TIN type field and check digit field.

3.12.8.4  (01-01-2015)
Section 06 Error Register

  1. Section 06 of the error register contains money amounts indicators and descriptions.

  2. Do not code a breaker for a money amount field unless it needs to be changed from negative to positive or from positive to negative.

  3. Money amounts have a maximum length of twelve positions.

  4. Money amount fields are always dollars only. Alpha characters are valid in indicator and description fields only.

  5. Money amount fields must be all numeric (including zero).

  6. All returns transcribed with a money amount(s) of one million dollars or greater, or losses greater than (10,000) are output to the error register for "physical" review. Review of such returns is necessary to make sure that each money amount was transcribed correctly. If the entry is a money amount was transcribed correctly and the documents do not meet fraudulent criteria, use AC "7" . If the documents appear to be fraudulent follow local procedures for coordination with Criminal Investigation.

    Note:

    Returns with Account Type Code "S" must be obtained from the SCRIPS.

  7. If any of fields A through S are in error, make necessary corrections to the field(s) on the error register. This includes changing a blank required money amount field to zero if a zero should have been transcribed. Before changing a blank to zero, verify that no significant money amount is present on the document. To zero a field, line through the incorrect data and edit one zero above the incorrect data.

  8. Returns should contain a significant amount in at least one of the required money fields if the return was selected for processing with the exception of items listed in paragraph b) below.

    1. If not, and the return was not transcribed in error, delete the record with AC 2 and Error/Reject Disposition Code "D" .

    2. Zero amounts in all money fields are acceptable for the following conditions: If corrected/amended returns (section 02 field C = "G" ) and original returns (section 02 field C = "F" ) for Form 1099-MISC, Miscellaneous Income, with direct sales box checked.

    3. If box 4, "Federal income tax withheld" , is the only money amount on the return, delete the return using AC "2" and Error/Reject Disposition Code "D" .

      Note:

      If the return is a Form W-2G, Certain Gambling Winnings, and box 2, "Federal income tax withheld" , is the only money amount on the return delete the return as outlined above.

    4. If all money amounts or illegible and cannot be determined, delete the record with AC "2" and Error/Reject Disposition Code "D" and rout to IRP sort unit to correspond as outlined in IRM 3.10.8.4.2, Review of Information Returns.

  9. The money amounts for each document are explained below.

  10. Exhibit 3.12.8-1, Information Return Processing Format Codes and Required Section 06 Fields for Returns, and Exhibit 3.12.8-2, Information Return Processing Return Fields Transcribed or Scanned, contain the required fields and box (line) numbers the fields represent for all of the returns.

  11. Correct erroneous negative amounts as follows:

    1. If the negative amount is present because of a transcription error, correct the field using AC "6" .

    2. If a negative amount was erroneously edited by Document Perfection, change the field to zero using AC "6" . However, if the correction results in all required money amounts being zero, delete the return according to procedures in IRM 3.12.8.1.10, Deleting Error Records.

  12. It is necessary to verify that prior year Form 1096, Annual Summary and Transmittal of U.S. Information Returns, were converted to the correct processing year format.

  13. Do a cursory review of the section 06 money amounts. If any amounts were input incorrectly, correct using AC "6" .

  14. If a filer enters more than one amount in a box, circle the amounts and enter the total of the two amounts above the circled amounts.

  15. Review all errors for input errors. Make necessary corrections using AC "6" . If there are no input errors, release using AC "7" .

  16. If a taxpayer enters a negative amount for a positive only field, enter zero.

  17. Unused alpha field designators will no longer print in this section.

3.12.8.4.1  (01-01-2015)
Section 06 Document Code 10 Format Code 037, Form 1099-K, Payment Card and Third Party Network Transactions

  1. Field A, Check box located under the filers entity data on the left

    1. Valid character for "PSE" box marked is "1" .

    2. Valid character for "EPF/TPP" box marked is "2" .

    3. Blank is valid if a determination of the filer cannot be made.

  2. Field B, Checkbox located under the filers data on the left next to field A

    1. Valid character for "Payment card" box marked is "1" .

    2. Valid character for "Third party network" box marked is "2" .

    3. Blank is valid if a determination of the filer cannot be made.

  3. Field C, Money amount 1

    1. This money amount field should be box 1a, "Gross amount of payment card/third party network transactions" .

    2. Only positive (including zero for corrected documents) amounts are acceptable.

    3. Total money entered in box 1a plus one box 1b should equal the sum of the entries for box 5a through 5l.

      Note:

      If box 1a is the only error do the following:
      check transcription for box 1a and boxes 5a through 5l,
      replace negative money amount in 5a through 5l with zero,
      add box 5a through 5l,
      adjust box 5a (or the first amount present) to correct tolerance error.

    4. Enter the total amount in box 1a in box 5a if box 1a has a positive entry and box 5a through 5l are blank.

  4. Field D, Money amount 2

    1. This money amount field should be box 1b, "Card Not Present transactions (optional)" .

    2. Only positive (including zero for corrected documents) amounts are acceptable.

    3. Total money entered in box 1b plus box 1a should equal the sum of the entries for box 5a through 5l.

      Note:

      If box 1b is the only error do the following:
      check transcription for box 1b and boxes 5a through 5l,
      replace negative money amount in 5a through 5l with zero,
      add box 5a through 5l,
      adjust box 5a (or the first amount present) to correct tolerance error.

    4. Enter the total amount in box 1b in box 5a if box 1b has a positive entry and box 5a through 5l are blank.

  5. Field E, Box 2

    1. This is box 2, "Merchant category code" .

    2. This field is a four position numeric field.

    3. Blank is acceptable.

  6. Field F, Box 3

    1. This is box 3, "Number of purchase transactions" .

    2. This field is a numeric field.

    3. Blank is acceptable.

  7. Field G, Money amount 3

    1. This money amount field should be box 4, "Federal income tax withheld" .

    2. Only positive amounts (including zero) are accepted.

    3. This field must be less field C.

  8. Field H, Money amount 4

    1. This money amount field should be box 5a, "January" .

    2. Only positive (including zero) amounts are acceptable.

  9. Field I, Money amount 5

    1. This money amount field should be box 5b, "February"

    2. Only positive (including zero) amounts are acceptable.

  10. Field J, Money amount 6

    1. This money amount field should be box 5c, "March" .

    2. Only positive (including zero) amounts are acceptable.

  11. Field K, Money amount 7

    1. This money amount field should be box 5d, "April" .

    2. Only positive (including zero) amounts are acceptable.

  12. Field L, Money amount 8

    1. This money amount field should be box 5e, "May" .

    2. Only positive (including zero) amounts are acceptable.

  13. Field M, Money amount 9

    1. This money amount field should be box 5f, "June" .

    2. Only positive (including zero) amounts are acceptable.

  14. Field N, Money amount 10

    1. This money amount field should be box 5g, "July" .

    2. Only positive (including zero) amounts are acceptable.

  15. Field O, Money amount 11

    1. This money amount field should be box 5h, "August" .

    2. Only positive (including zero) amounts are acceptable.

  16. Field P, Money amount 12

    1. This money amount field should be box 5i, "September" .

    2. Only positive (including zero) amounts are acceptable.

  17. Field Q, Money amount 13

    1. This money amount field should be box 5j, "October" .

    2. Only positive (including zero) amounts are acceptable.

  18. Field R, Money amount 14

    1. This money amount field should be box 5k, "November" .

    2. Only positive (including zero) amounts are acceptable.

  19. Field S, Money amount 15

    1. This money amount field should be box 5l, "December" .

    2. Only positive (including zero) amounts are acceptable.

3.12.8.4.2  (01-01-2015)
Section 06 Document Code 25 Format Code 048, Form 3921, Exercise of a Qualified Incentive Stock Option Under Section 442(b)

  1. Field A, Box 1

    1. This is a date that should be present in box 1, "Date Option Granted" .

    2. This field must be in YYYYMMDD format.

    3. If the field states "various" mirror box 2.

  2. Field B, Box 2

    1. This is a date that should be present in box 2, "Date Option Exercised" .

    2. This field must be in YYYYMMDD format.

  3. Field C, Money amount 1

    1. This money amount field should be box 3, "Exercised Price Per Share" .

    2. Only positive (including zero) amounts are acceptable. See also IRM 3.12.8.4, Section 06 Error Register, if no significant money amounts are present on the submission.

  4. Field D, Money amount 2

    1. This money amount field should be box 4, "FMV/Share on Exercise Date" .

    2. Only positive (including zero) amounts are acceptable.

    3. Field C or field D must contain a significant amount in at least one of the required money fields if the return is not an amended return. Delete the return if no significant money amount is present on a non amended return. Refer to IRM 3.12.8.4 (8), Section 06 Error Register, for instruction.

  5. Field E, Box 5

    1. This is a number that should be present in box 5, "Number of Shares Transferred" .

    2. Only positive (including zero) numbers are acceptable.

  6. Field F, Box 6

    1. This is a description field located in box 6, "If other than Transferor, Name/Address/EIN" .

    2. This field can have up to 39 alpha and/or numeric characters.

    3. For entries longer than 39 characters, abbreviate where possible; otherwise, delete the address but ensure the Name and TIN remain intact.

  7. Field G through S must be blank.


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