3.12.15  Return of Partnership Income

Manual Transmittal

November 07, 2013

Purpose

(1) This transmits revised IRM 3.12.15, Return Resolution - Return of Partnership Income.

Material Changes

(1) 3.11.15.1.1(2)(j) - Reworded verbiage regarding "providing badge ID identification" .

(2) 3.12.15.1.2.1(2) - Updated the TAS Service Level Agreements (SLA) website information. (August 1, 2013)

(3) 3.12.15.1.11.1(3) - Added "Note" to first "Then" in Chart - Note: If the return comes back from AM with the information still incomplete, send the return to AM again to secure all the missing information. Serp feedback September 30, 2013

(4) 3.12.15.1.11.3(3) - Removed the first sentence. Removed the word "new" . (March 20, 2013)

(5) 3.12.15.1.11.3(3) - Replaced numbered step list with a bullet list to be consistent with other IRM's. Per IRM Review feedback August 30, 2013

(6) 3.12.15.1.13.3(3) - Added Note: Starting July 1, 2013 we will accept the Revenue Officers (RO) electronic signature or typed signature as a valid signature on the return.

(7) 3.12.15.1.14(3) - Criminal Investigation (CI) "Funny Box" - Table - Removed the following statement per HQ CI: "Returns with excessive "Other deductions" (50 % or more of the total deductions) which substantially reduce or zero tax liability." (03-20-2013)

(8) 3.12.15.3.3(2) - Delet the sentence "A Check Digit is present only on a pre-addressed return when the EIN has been validated" .

(9) 3.12.15.3.4(1) - Deleted reference of "or on the preprinted label" .

(10) 3.12.15.3.6(4) 1) - Changed the references of "2012" to "2013" and "2013" to "2014" .

(11) 3.12.15.3.8(1) - Changed the references of "2012" to "2013" and "2013" to "2014" . In paragraph (3) changed the references of "201112" to "201212" , "2012" to "2013" , and "201312" to "201412" .

(12) 3.12.15.3.9(4) - Removed Preprinted label, 1st line, right side.

(13) 3.12.15.3.9(4) - Removed (e), See Exhibit 3.12.15.4 NAICS chart.

(14) 3.12.15.3.9(4) - Deleted reference to preprinted labels. In the first If. Box deleted reference to preprinted label and changed the corrective action to read "Enter the NAICS Code if present" .

(15) 3.12.15.3.10(1) - Changed the reference of "2012" to "2013" .

(16) 3.12.15.3.13(4) - 1st If Box - Added "and boxes (3), (4), or (5) are not checked" .

(17) 3.12.15.3.30(4) - Audit Code 1 - Added in second bullet "or IRC 707 (Disguised Sale)" .

(18) 3.12.15.3.30(4) - Deleted to Audit Code 4 - Form 1065, Page 3, Schedule B, Question 5 is answered "YES" . Per IRM Review SE:S:CCS:CRC:EPFS, (September 6, 2013)

(19) 3.12.15.3.30(4) - Added to Audit Code 4 - Form 1065, Schedule B, Question 2 (Dual Partner Code) is present and the YES box is checked. Per IRM Review SE:S:CCS:CRC:EPFS, (September 6, 2013)

(20) 3.12.15.3.32(4)(3) - Added If more than one CRD is present, use the CRD that made the return complete and processable. Per Chief Counsel September 16, 2013.

(21) 3.12.15.7.1(2) - Deleted reference to pre-addressed label.

(22) 3.12.15.7.5 - Field 05FAD - Removed "(OSPC Only)" . (April 4, 2013)

(23) 3.12.15.7.5(4)2 - Field 05FAD - Removed Note. (March 20, 2013)

(24) 3.12.15.7.5(4)2 - If/Then Table - First "Then" box - GTSEC 05CTY. (March 25, 2013)

(25) 3.12.15.7.5(4)(2) - Added Note explaining that BMF can have two addresses, a mailing address and a location address. (05-21-2013)

(26) 3.12.15.7.5(4)(2) - If/Then Table - Added "And" Column and added instruction for a Location address change on the Form 8822 or Form 8822-B. (05-21-2013)

(27) 3.12.15.7.5.(4)( 2) - If/And/Then Table - Updated Form 8822-B title to read "Change of Address or Responsible Party - Business" per Form 8822-B Work Request Notification (WRN) dated May 22, 2013. (05-30-2013)

(28) 3.12.15.7.5(4)( 2) - Field 05FAD - Note - Added the word "Form" . (03-20-2013)

(29) 3.12.15.8.1(2) - Deleted reference for pre-addressed label.

(30) 3.12.15.9.2 - Added new transcription fields to Section 10 (Schedule D) error record format.

(31) 3.12.15.11.2(3) - Added Exception - "Field 2101B will display as invalid when the field contains an entry of "000000000" " .

(32) 3.12.15.11.2(5) - Added - "Delete the entry of "000000000" if present in Field 2101B" .

(33) 3.12.15.13.1(1) - Error Code 001 - Removed "- Error Code 001 will display as follows:"

(34) 3.12.15.13.1(3)2 - Error Code 001 - First bullet - Removed "Section" after "IRC" per feedback from W&I IMD Coordinator. (08-01-2013)

(35) 3.12.15.13.2.13(1) - Error Code 002 - Removed "- Error Code 002 will display as follows:" .

(36) 3.12.15.13.2(3)7 - Error Code 002 - Added "Command Code" to define CC. (03-20-2013)

(37) 3.12.15.13.2(4) 2 - Error Code 002 - If/Then Table - Second If box - Added "and IRS Received Date" (04-04-2013)

(38) 3.12.15.13.3(1) - Error Code 003 - Removed Error Code 003 to be consistent with the Code and Edit Consistency template. MER0341 Report showed no Error Code 003 data for the year to date query. (06-07-2013)

(39) 3.12.15.13.4(1) - Error Code 004 - Removed "- Error Code 004 will display as follows:" .

(40) 3.12.15.13.4(4)1- Error Code 004 - If/Then Table - First If box - Added "IRS" before Received Date.

(41) 3.12.15.13.4(4)1- Error Code 004 - If/Then Table - Second If box - Added "IRS" before Received Date.

(42) 3.12.15.13.5(1) - Error Code 005 - Removed "- Error Code 005 will display as follows:" .

(43) 3.12.15.13.5(3) 5 - Error Code 005 - Removed "IRS" before Received Date.

(44) 3.12.15.13.5(3)(5) - Removed "Note" regarding "For certified mail only."

(45) 3.12.15.13.6 - Error Code 006 - Removed "- Error Code 006 will display as follows:" .

(46) 3.12.15.13.7(1) - Error Code 007 - Removed "- Error Code 007 will display as follows:" .

(47) 3.12.15.13.7(1) - Error Code 007 - Table - Field 01CCC - Bold text for Field 01CCC. (04-04-2013)

(48) 3.12.15.13.7(2) - Error Code 007 - Replaced the word "last" with "first" .

(49) 3.12.15.13.7(2) - Error Code 007 - Added "by two months or more" . (04-04-2013)

(50) 3.12.15.13.7(3) - Changed the references of "20130115" to "20140115" , and "20140115" to "20150115" .

(51) 3.12.15.13.8 - Error Code 008 - Removed "- Error Code 008 will display as follows:" .

(52) 3.12.15.13.9(1) - Error Code 010 - Removed "- Error Code 010 will display as follows:" .

(53) 3.12.15.13.9(1) - Changed name of Field 01PSN from "Preparer SSN/PTIN" to "Preparer PTIN" . August 23, 2013

(54) 3.12.15.13.10 - Error Code 012 - Removed "- Error Code 012 will display as follows:"

(55) 3.12.15.13.11 - Error Code 014 - Error Code 014 Screen Display Table - Corrected Field Designator title. (March 20, 2013)

(56) 3.12.15.13.11(1) - Error Code 014 - Removed "- Error Code 014 will display as follows:" .

(57) 3.12.15.13.12 - Error Code 015 - Error Code 015 Screen Display Table - Corrected Field Designator title. (March 20, 2013)

(58) 3.12.15.13.12(1) - Error Code 015 - Removed "- Error Code 015 will display as follows:" .

(59) 3.12.15.13.13 - Error Code 016 - Error Code 016 Screen Display Table - Corrected Field Designator title. (March 20, 2013)

(60) 3.12.15.13.13(1) - Error Code 016 - Removed "- Error Code 016 will display as follows:" .

(61) 3.12.15.13.13(3) 3 - Error Code 016 - Added "Command Codes" . (March 20, 2013)

(62) 3.12.15.13.14 - Error Code 026 - Removed "- Error Code 26 will display as follows:" .

(63) 3.12.15.13.14(3) - Changed reference of "2013" to "2014" , "201204" to "201404" , and "201304" to "201404" .

(64) 3.12.15.13.14.1(2) - Changed reference of "201309" to "201409" , "201209" to "201309" , "201311" to "201411" , and "201211" to "201311" .

(65) 3.12.15.13.15 - Error Code 028 - Removed "- Error Code 028 will display as follows:" .

(66) 3.12.15.13.16 - Error Code 034 - Removed "- Error Code 034 will display as follows:" .

(67) 3.12.15.13.16(3)(3) - Added Note: "If more than one CRD is present, use the CRD that made the return complete and processable" . Per Chief Counsel September 16, 2013.

(68) 3.12.15.13.16(3)(3) - Added in 2nd "Then" - "If more than one CRD is present, use the CRD that made the return complete and processable" . Per Chief Counsel September 16, 2013.

(69) 3.12.15.13.17 - Error Code 073 - Removed "- Error Code 073 will display as follows:" .

(70) 3.12.15.13.18 - Error Code 702 - Removed "- Error Code 702 will display as follows:" .

(71) 3.12.15.13.18(4) - Added If more than one CRD is present, use the CRD that made the return complete and processable. Per Chief Counsel September 16, 2013.

(72) 3.12.15.13.19 - Error Code 725 - Removed "- Error Code 725 will display as follows:" .

(73) 3.12.15.13.20 - Error Code 726 - Removed "- Error Code 726 will display as follows:" .

(74) 3.12.15.13.21 - Error Code 727 - Removed "- Error Code 727 will display as follows:" .

(75) 3.12.15.13.22 - Error Code 728 - Removed "- Error Code 728 will display as follows:" .

(76) 3.12.15.13.23 - Error Code 734 - Removed "- Error Code 734 will display as follows:" .

(77) 3.12.15.13.24 - Error Code 736 - Removed "- Error Code 736 will display as follows:" .

(78) 3.12.15.13.25 - Error Code 737 - Removed "- Error Code 737 will display as follows:" .

(79) 3.12.15.13.26 - Error Code 738 - Removed "- Error Code 738 will display as follows:" .

(80) 3.12.15.13.27 - Error Code 739 - Removed "- Error Code 739 will display as follows:" .

(81) 3.12.15.13.28 - Error Code 999 - Removed "- Error Code 999 will display as follows:" .

(82) 3.12.15.13.29 - Error Code 074 - Added TETR information back in due to SERP Feedback 201301817. (03-29-2013)

(83) Exhibit 3.12.15 Exhibit -1 - Action Codes - Updated table, removed headers and kept in numerical order. (05-20-2013)

(84) Exhibit 3.12.15 Exhibit -1 - Action Codes - Removed Action Code 347 information since only applicable to Form 1120S (September 6, 2013)

(85) Exhibit 3.12.15 Exhibit - 4 - Removed - Exhibit 4, NAICS Code Chart.

(86) Exhibit 3.12.15 Exhibit - 9 - C-Filings - Description column - Removed the word "crazy" . Added the word "confusing" before "arguments" . This is based on IRM review from C. Teddy Li from Chief Counsel during IRM Review and Clearance process. (August 26, 2013)

(87) Exhibit 3.12.15 Exhibit - 9 - Form 1099-OID - Description column - Added the word "business" . Removed the words "all of them" . Changed "claim" to "claims" . This is based on IRM review from C. Teddy Li from Chief Counsel during IRM Review and Clearance process. (August 26, 2013)

(88) Exhibit 3.12.15 Exhibit - 9 - Not a Person - Description Column - Removed "Section" after "IRC" per feedback from W&I IMD Coordinator. (08-01-2013)

(89) Exhibit 3.12.15 Exhibit - 9 - Zero Returns - Description Column - Removed "§" after "IRC" per feedback from W&I IMD Coordinator. (08-01-2013)

(90) Exhibit 3.12.15 Exhibit - 9 - Zero Returns - Description Column - Restricted the Note.

(91) Exhibit 3.12.15 Exhibit - 9 - Corrected The Truth About Frivolous Tax Arguments website information. This is based on IRM review from C. Teddy Li from Chief Counsel during IRM Review and Clearance process. (August 26, 2013)

(92) Exhibit 3.12.15 Exhibit - 9 - Other - Description Column - Changed Notice 2008-14 to Notice 2010-33 per Chief Counsel feedback. Added web link for "The Truth About Frivolous Tax Arguments" per feedback from Chief Counsel. This was added mostly for external IRM users. (03-20-2013)

(93) Exhibit 3.12.15 Exhibit - 12 - Removed - Exhibit 12, Conversion of PBA to NAICS Code.

(94) Changed Section name from BMF Returns to BMF just to shorten the section titles on the template. (August 26, 2013)

(95) Various editorial changes were made throughout this text.

(96) Updated all Figures and Exhibits containing graphics to current 2013 form or schedules.

(97) IRM updated with Citation tags (2013).

(98) IRM updated with See Also tags (2013).

Effect on Other Documents

IRM 3.12.15, dated October 16, 2012 (effective January 1, 2013) is superseded. This IRM also incorporates the following IRM Procedural Updates (IPUs) - 13U0130, 13U0226, 13U0252, 13U0573, and 13U0741.

Audience

Wage and Investment (W&I), Campus Input Correction Operation

Effective Date

(01-01-2014)


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

3.12.15.1  (01-01-2014)
Overview

  1. The information captured on Form 1065 and Form 1065-B is used by several functions within the Internal Revenue Service such as Exam Classification and Statistics of Income (SOI). SOI tabulates the data and shares it with agencies outside of the Internal Revenue Service such as the Office of Tax Analysis (OTA), Bureau of Economics (BEA) and the Joint Commerce.

  2. Form 1065, U.S. Return of Partnership Income is an information return used to report the income, deductions, gains, losses, etc., from the operation of a partnership. A partnership does not pay tax on its income but "passes through" any profits or losses to its partners. Partners must include partnership items on their tax returns.

    Exception:

    Partnership returns identified as a "Publicly Traded Partnership" (PTP) will pay a tax on income derived from the active conduct of all trades and businesses of the partnership. These returns will have the annotation "3.5% GROSS INCOME TAX" on Line 22 of the Form 1065 (above or below the Ordinary Business Income (Loss) amount) and the amount of tax owed. These returns are processed in the Ogden Submission Processing Campus (OSPC). See IRM 3.12.15.1.13.4.

  3. Certain partnerships who received a Qualifying Therapeutic Discovery Project grant under Section 9023 of the Affordable Care Act (ACA), and need to recapture part of the grant, will use Form 4255 to report the increase in tax along with filing Form 1065. The Form 1065 should have a notation "QTDP" and money amount in the margin near Line 22. If Form 4255 is attached process as follows:

    1. Verify the Employer Identification Number (EIN) and name on return with Form 4255.

    2. Detach Form 4255.

    3. Edit CCC "X" and action trail on Form 1065.

    4. Photocopy front page of Form 1065.

    5. Route photocopy of return an Form 4255 to Accounts Management.

    6. Continue processing Form 1065.

  4. Form 1065-B, U.S. Return of Income for Electing Large Partnerships, was created as a result of the Tax Reform Act (TRA) of 1997 to reduce the burden for the partners and increase the IRS' ability to match income and deduction amounts reported to individual partners on their individual income tax returns. These returns are processed in the Ogden Submission Processing Campus.

    1. A partnership may elect to file Form 1065-B if the partnership had 100 or more partners during the preceding tax year.

    2. A partnership cannot make the election to file Form 1065-B for its first tax year.

  5. This IRM cannot address every possibility that may arise while correcting returns or documents. Taxpayer intent must be taken into consideration. In some cases it may be necessary to refer the issue to your Subject Matter Expert (SME), lead and/or manager to determine the proper corrective action.

3.12.15.1.1  (01-01-2014)
♦IRS Employee Contacts - RRA98, Section 3705(a)♦

  1. The Restructuring and Reform Act of 1998 (RRA 98) Section 3705(a), provides identification requirements for all IRS employees working tax related matters. IRS employees are required to give their name and unique identification number during taxpayer telephone, face to face, and written contact. In addition, a telephone number is required on all taxpayer correspondence. This will provide taxpayers with enough information to identify an IRS employee who has previously assisted with tax related matters.

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

    1. Telephone Contact -Their title (e.g., Mr., Mrs., Ms., Miss), last name and badge identification (ID Card) number.

    2. Face to Face Contact -Their title (e.g., Mr., Mrs., Ms., Miss), provided as appropriate during the conversation, their last name and badge identification (ID Card) number.

    3. Correspondence- All correspondence must include a telephone number where the taxpayer's question can be answered. In addition, manually generated and handwritten correspondence must have their title (e.g., Mr., Mrs., Ms., Miss), last name, and IDRS (Integrated Data Retrieval System), letter system, or their badge identification (ID Card) number.

    4. The IDRS number and numbers for some other letter systems are automatically generated. If it is not generated, or a handwritten note is prepared, the badge identification (ID Card) number must be used. Toll-free employees may also provide their location for identification purposes. Faxes to taxpayers on tax related matters are considered manually-generated correspondence and must include the required information.

    5. Correspondence, whether sent directly to the taxpayer or to the taxpayer's personal representative, must contain the required information.

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

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

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

    9. Secretaries, receptionists or other people who answer the telephone in functional offices need to identify themselves and should provide their badge identification (ID Card) number only if they are answering telephones that are routinely used to provide tax or account information.

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

3.12.15.1.2  (01-01-2014)
♦Taxpayer Advocate Service (TAS)♦

  1. Refer taxpayers to the Taxpayer Advocate Service (TAS) (See IRM Part 13, Taxpayer Advocate Service) when the contact meets TAS criteria (See IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria) and you can’t resolve the taxpayer’s issue the same day. The definition of "same day" is within 24 hours. "Same day" cases include cases you can completely resolve in 24 hours, as well as cases in which you have taken steps within 24 hours to begin resolving the taxpayer’s issue. Do not refer these cases to TAS unless they meet TAS criteria and the taxpayer asks to be transferred to TAS. Refer to IRM 13.1.7.4, Same-Day Resolution by Operations. When referring cases to TAS, use Form 911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance Order), and forward to TAS in accordance with your local procedures.

3.12.15.1.2.1  (01-01-2014)
♦Taxpayer Advocate Service - Service Level Agreement (SLA)♦

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

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

3.12.15.1.3  (01-01-2014)
♦Frivolous Returns and Claims♦

  1. A frivolous argument is used for the purpose of expressing dissatisfaction with the substance, form or administration of the tax laws by attempting to illegally avoid or reduce tax liabilities. Recognized frivolous arguments made by businesses include, but are not limited to, the examples in IRM 4.10.12, Frivolous Return Program (FRP), shown in Exhibit 3.12.15-9 , Potential Frivolous Arguments for Examination Review.

  2. Review the return to determine whether it appears to be a frivolous return.

    If... Then...
    The return meets any of the conditions identified as a frivolous return, (See Exhibit 3.12.15-9 )

    Exception:

    If the return shows Action Code 331 and has a Form 4227 attached with the remarks, "Refer to Exam FRP for audit after process" , continue to next procedure.

    Remove return from the batch and place the return in the locally designated basket for Examination, Frivolous Return Processing (FRP) for review.
    Examination has selected the return as frivolous, e.g., indicated by Action Code 331 and a Form 4227 with the remarks, "Refer to Exam FRP for audit after processing" but sends the return for processing, Continue processing the return using the procedures in IRM 3.12.15. However, do not circle or void the Action Code indicating a frivolous return.

    Note:

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

3.12.15.1.4  (01-01-2014)
Error Correction Process

  1. All Form 1065 Error Screen displays will appear as follows:

    • Tax Class - 2

    • Document Code 65 - Form 1065

    • Document Code 67 - Form 1065 (Publicly Traded Partnerships or "PTP" )

    • Document Code 68 - Form 1065-B

3.12.15.1.5  (01-01-2014)
♦BMF Consistency♦

  1. The purpose of this initiative is to achieve consistency in the Business Master File (BMF) Error Resolution System (ERS) processing IRMs.

  2. Topics for the BMF Consistency have been identified and developed as a coordinated effort between Cincinnati, Ogden, and Paper Processing Branch BMF Code and Edit/ERS section.

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

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

3.12.15.1.6  (01-01-2014)
Inventory/Reports

  1. Records will be placed into the Error Inventory or the Workable Suspense Inventory for correction. Once the Error Resolution Tax Examiner accesses the record and it is displayed on the screen, it must be:

    1. Corrected in full by correcting errors in editing or transcription and/or correcting math errors.

    2. Placed in suspense for additional information.

    3. Rejected from pipeline processing.

  2. Each day the Error Inventory Report will be furnished showing:

    1. Blocks, by the block control number, and block Document Locator Number (DLN) in DLN order.

    2. Each batch will be on a separate page.

    3. Blocks received from Block Out of Balance (BOB) Correction will be listed separately.

    4. A copy of the report must be on the carts of documents and used as a charge-out to determine when a cart is completed.

    5. The first line of the Error Inventory Report will show the number of working days the records on that page have been in the Error Inventory. This will enable work left from a previous day to have priority.

3.12.15.1.7  (01-01-2014)
Workable Suspense Inventory Report

  1. Each day the Workable Suspense Inventory Report will be furnished showing the records by Program in DLN order for various status situations. Separate pages for each program, with totals, will be provided.

  2. The first line of the report will show the number of working days that the records have been in the Workable Suspense Inventory. This will allow priority to be given to the older work.

3.12.15.1.8  (01-01-2014)
Error Displays and Corrections

  1. All Form 1065 and Form 1065-B Error Screen Displays will display as follows:

    • Each field is identified by an Alpha/Numeric field Designator (AFD) displayed before the field.

    • Fields are displayed with no breaker.

    • Negative values are indicated by a minus (-) sign following the amount.

    • Decimal points are displayed beginning in the left position.

    • Leading zeroes in amount fields are suppressed and the significant digits are displayed beginning in the left position.

    • If more than one amount field of a record is to be shown, the units positions are aligned beneath one another.

    • Sufficient leading blanks are displayed preceding the shorter amounts so that the unit position of these amounts are directly in line with the unit position of the longest amount.

    • The cents digits are not displayed for "Dollars Only" fields. So that the unit position will remain in line with the other fields of the section, two asterisks (**) are displayed in the cents position of the dollars only field.

  2. Corrections are entered starting with the left-most position of the field. Blank-out unused positions.

    • If fewer than the maximum number of positions is required, the program will automatically move to the right of the digits.

    • It is not necessary to enter the decimal point. If the decimal point is entered, it will be ignored.

    • A minus sign (-) must be entered as the last numeric if the amount is negative.

  3. Be careful not to enter more than the number of positions allowed for a particular field. If more data is entered, the overflow characters will display on the screen but are dropped when the field is added to the record. This is especially important for the Taxpayer Identification Number (TIN), name and address.

  4. Corrections can be made to a displayed field by overlaying only the digits in error and not re-entering the entire field. It is not necessary to eliminate the decimal point when correcting in this manner.

  5. If it is necessary to add a missing section:

    1. Transmit with Command Code GTSEC, followed by the desired section Number.

    2. When the empty section format is displayed, enter the missing data in the proper fields and transmit with Command Code CRECT.

  6. If it is necessary to see a field or section of the record other than that shown in the display:

    1. Enter Command Code GTSEC, followed by the desired section Number.

    2. If a correction is not made to the section, drop to the bottom of the screen, and transmit.

    3. Any error display not showing all fields necessary for resolution should be reported to Headquarters.

      Reminder:

      When transmitting corrections to a screen display, move the cursor below the last field containing data before transmitting.

  7. If it is necessary to delete a section of the record, enter Command Code DLSEC, followed by the desired section Number.

  8. If it is determined during the course of correcting a Priority II, III or IV Error, that additional information or research is necessary to resolve the error (or if the error is rejected), enter the appropriate Action Code with either Command Code SSPND or RJECT.

3.12.15.1.9  (01-01-2014)
Command Codes

  1. The Command Codes needed for correcting the Error Inventory and the Workable Suspense Inventory are briefly described below. Any Command Code in the Employees Security Profile will be available:

    Command Code Description
    ACTVT Used to transfer unworkable suspense records to workable suspense inventory.
    CRECT
    • Used to enter a correction.

    • Valid only after an error has been displayed in response to the GTREC command.

    DLSEC Used to delete a section within the record in progress.
    ENMOD Used to research a name control.
    ERINV Used to research a DLN or TIN on the ERS Control File.
    ERVOL
    • Used with a Status Code to display the number of ERS records in the current Workable Inventory.

    • Used to obtain the actual count of records to be worked.

    • Printed reports for ERS are updated nightly.

    FRM49 Used to input a fact of filing when an unnumbered return is withdrawn from normal processing, i.e., correspondence.
    GTREC
    • Used to access the first error record in an ERS error block.

    • Used to access a specific record in the Workable Suspense Inventory.

    GTRECQ Used to access a worked record that has been held for Quality Review.
    GTRECW
    • Used to recover an ERS data record that has already been worked.

    • Can be used at any time on the same processing day.

      Note:

      Errors discovered on subsequent days must be corrected by using Notice Review and Adjustment procedures.

    GTSEC
    • Used to obtain the display of any data section within the record in progress.

    • Response is the display of all correctable fields of the requested section, including blank fields.

    • Computer generated fields and error indicators will not be shown.

    • If no data is present in the specified section, the empty format of the requested section is displayed.

    INOLE Used to access the National Account Profile (NAP) which contains selected entity information for all Master File accounts.
    MFTRA Used to request a hard copy transcript for a specific TIN.
    NAMEE
    • Used to research a missing or incomplete Employer Identification Number (EIN)/TIN.

    • Name and address data is input to search the Key Index File.

    NWDLN Used to assign a renumbered DLN on an ERS record.
    RJECT Used to delete a record from ERS.
    SINOF
    • Used to Sign Off the computer.

    • SINOF is used by all terminal users, including ERS, Generalized Unpostable Framework (GUF) and IDRS.

    • SINOF is displayed, but must be keyed onto the screen when signing off.

    • Response is "Request Completed"

    SINON
    • Used to Sign On to the computer.

    • SINON is displayed but must be keyed onto the screen when signing on.

    • Password is entered but does not appear on the screen.

    SSPND
    • Used with an ERS Action Code to place a record into Suspense status.

    • SSPND is valid for Error Correction and Suspense Correction.

    TRDBV Tax Return Data Base
    • Used to access 100% of return data as well as all subsequent corrections entered via ERS and GUF.

    • Used to verify specific line items (including any correction activity), resolve taxpayer inquiries, identify refund issues, and verify filing and return status.

3.12.15.1.10  (01-01-2014)
Action Codes

  1. The ERS Action Code indicates that specific information is missing or that the record is to be rejected from processing. The code will have sufficient detail to indicate if correspondence is to be sent to the taxpayer or specific in-house research or action(s) required.

  2. For a listing of valid ERS Action Codes, See Exhibit 3.12.15-1 , Action Codes.

  3. Document Perfection Tax Examiners will assign a three digit code to numbered returns when they determine that the document is unprocessable in its present form either by needing additional information or some manual intervention is required. This code will be entered in the bottom left margin of the return.

  4. A Correspondence Action Sheet is used for initiating correspondence. This form is attached by Document Perfection. When routing within the campus (in-house research), an explanation concerning the missing information will need to be attached to the return.

  5. The Action Code assigned by Document Perfection will be transcribed into the record of the Form 1065 or Form 1065-B.

  6. The presence of a valid Action Code other than 001 will place the record in the Suspense Inventory, either Workable or Unworkable.

  7. If the Action Code assigned by Document Perfection is invalid or incomplete, the record will be assigned to the Error Inventory for correction or deletion of the code.

  8. Only one Action Code may be assigned at one time to a record. The priority of the Action Codes will be 320, 4XX, 6XX, 3XX, 2XX.

  9. An ERS Tax Examiner may:

    1. Enter an Action Code on a record.

    2. Delete or correct an invalid code.

    3. Overlay the present Action Code with another to either resuspend or reject from ERS. This is done by entering a valid Action Code with a Command Code SSPND, RJECT or NWDLN. See IRM 3.12.38, Error Resolution System (ERS), BMF General Instructions for additional information.

    4. Enter a valid Action Code with the SSPND Command Code to clear the record from the screen and place the record in either Workable Suspense or Unworkable Suspense.

    5. Enter a valid Action Code with the RJECT Command Code to reject the record from ERS. Generally the Service Center Control File (SCCF) will be automatically updated for the rejected records.

3.12.15.1.11  (01-01-2014)
Correspondence

  1. DO NOT correspond with the partnership when there is an indication on the return that no transactions transpired during the tax year.

    Reminder:

    A partnership is not considered to engage in a trade or business and is therefore not required to file for any tax year in which it neither receives income nor incurs any expenditures treated as deductions or credits for federal income tax purposes.

  2. Correspondence records with Action Code 21X will be automatically suspended for a predetermined number of days or until the taxpayer replies, whichever is earlier.

    Note:

    Do not correspond for information on any return "SECURED BY EXAMINATION OR COLLECTIONS" or reprocessable/reinput returns identified as "CIS" returns.

    See IRM 3.12.15.1.11.1 for correction procedures for "CIS" returns.

  3. As an ERS tax examiner issuing correspondence you may either:

    1. Use the IDRS Correspondence feature Command Code LETER, or

    2. Initiate correspondence by using a Correspondence Action Sheet. An IDRS operator or typist will use the form in issuing the actual correspondence.

  4. No reply to correspondence requires a Computer Condition Code (CCC) "3" in Field 01CCC. See specific IRM procedures and No Reply Procedures in Exhibit 3.12.15-11 .

  5. Most correspondence is either computer generated notice, computer generated letter or preprinted letter. All correspondence now reflects a response period within 30 days and the consequence for not replying.

  6. If special notes or letters are developed, conform to the language and response periods that are used in (4) above. Use the following guidelines:

    1. All correspondence to the partnership requesting information should indicate that a response is required. Specify the length of time the partnership has to respond (generally 30 days) and include a statement on the action IRS will take if the response is not received timely. Be sure to include the following statement:
      "WHEN YOU REPLY, PLEASE INCLUDE YOUR TELEPHONE NUMBER AND THE MOST CONVENIENT TIME FOR US TO CALL SO WE MAY CONTACT YOU IF WE NEED ADDITIONAL INFORMATION" .

    2. Provide for a purge date at least 10 days after the date provided in the letter.

    3. Whenever possible, form letter should be used to correspond with the partnership. If a C-NOTE or QUICKNOTE is used, be sure that it clearly communicates the message in simple language and contains the required information.

    4. When partnerships make errors that cause delays, advise the partnership that they made the error and explain what the error was that caused the delay.

    5. Specific turnaround times for working correspondence as outlined in IRM 3.30.123.5, Taxpayer Correspondence, Central Authorization File (CAF), Statutes, Taxpayer Advocate, RAIVS Photocopies, and Files, must be followed and monitoring reports must be instituted to ensure that these guidelines are met.

3.12.15.1.11.1  (01-01-2014)
♦Correspondence Imaging System (CIS) Returns♦

  1. Correspondence Imaging System (CIS) is an inventory system for scanning all Accounts Management (AM) receipts (including Form 1065 and Form 1065-B) into digital images and working the cases from those images.

  2. "CIS" returns are identified with "CIS Image - Do not correspond for Signature" stamped below the signature line or "CIS" annotated on the front of the return.

  3. Follow the correspondence instructions below for "CIS" returns:

    If... And... Then...
    The "CIS" return has a Form 13596 attached,

    Note:

    If there is an indication on the return that correspondence has been sent (e.g., CCC "3" is edited on the return), do not route return to Accounts Management (AM). Continue processing return,

    The return is not complete (e.g., missing signature, schedules, or forms),
    1. Remove the return from the batch.

      Note:

      If the return comes back from AM with the information still incomplete, send the return to AM again to secure all the missing information.

    2. Void the DLN.

    3. Attach Form 4227 to the return and route to Accounts Management to secure missing information.

    Note:

    Do not correspond for missing information on "CIS" reprocessable/reinput return.

    The "CIS" return does not have a Form 13596 attached, The return is not complete (e.g., missing signature, schedules or forms), Research for prior posting (TC 150 posted)
    1. If TC 150 present and the information is the same, cancel the DLN and treat as classified waste.

    2. If TC 150 is not present, follow normal correspondence procedures.

    Note:

    If there is an indication on the return that correspondence has been sent (e.g., CCC "3" is edited on the return), do not route return to AM. Continue processing return.

3.12.15.1.11.2  (01-01-2014)
♦Use of Fax for Taxpayer Submissions♦

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

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

  3. ERS examiners will indicate the fax paragraph on the approved Correspondence Action Sheet to advise taxpayers of the option to fax their response.

    Caution:

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

3.12.15.1.11.3  (01-01-2014)
♦CADE 2♦

  1. The Customer Account Data Engine (CADE) 2 Program Office in Headquarters, is charged with the primary goal to implement a single, modernized programming solution which provides daily processing of taxpayer accounts.

  2. The CADE 2 solution is comprised of several components, to modernize the IRS to a daily processing environment with several Transition States.

  3. The BMF campus cycles are:

    • Campus Cycle: Thursday - Wednesday

    • Master File Processing: Friday - Thursday

    • Notice Review Saturday: Monday (8+ days)

    • Unpostables: New available Tuesday; Closing Tuesday

  4. BMF transaction posting time frames are outlined as follows:

    1. Transactions will be viewable using CFOL Command Codes on Saturday following the weekly Master Files processing run on Thursday.

    2. Transactions will be viewable as posted transactions using IDRS Command Codes on Monday, following the weekly Master File processing run on Thursday.

      Note:

      With the acceleration of the IDRS weekly analysis being performed the weekend directly after the Master File processing on Thursday, transactions will be posted instead of in pending status on Monday.

  5. Transaction posting dates will reflect a format of YYYYCCDD. YYYY will indicate the year. CC will indicate the posting cycle.

    Note:

    BMF cycle posting dates on BMFOL will continue to reflect YYYYCC. YYYY will indicate the year. CC will indicate the posting cycle. BMF posting cycles in TXMOD will reflect a format of YYYYCCDD. The DD value will be 08

    .

3.12.15.1.12  (01-01-2014)
Perfection of Attachments

  1. Review all attachments to determine proper disposition:

    If... Then...
    Unrelated, unanswered partnership correspondence is attached and no action has been taken, Detach and route to the appropriate area using Form 4227.
    Unanswered partnership correspondence relating to the Form 1065 or Form 1065-B is attached,
    1. Make a photocopy of the attachment, and

    2. Forward to the appropriate area using Form 4227.

  2. Any attachment or photocopy of an attachment that is routed elsewhere must contain name, address, EIN and received date.

3.12.15.1.13  (01-01-2014)
Special Conditions

  1. The following instructions are provided for these special condition returns:

    • Short Length Records

    • Non-ADP (Automatic Data Processing) Return

    • Section 6020(b) Returns

    • Publicly Traded Partnerships (PTP) (Ogden Submission Processing Campus)

    • Amended Returns

3.12.15.1.13.1  (01-01-2014)
Short Length Records

  1. The following types of return are processed as Short Length Records:

    • Common Trusts.

    • Nominee returns ( IRM 3.12.15.1.13.1.1 ).

    • IRC §761(a) Elections ( IRM 3.12.15.1.13.1.2 )

    • Inactive returns (returns with no income or deductions on page 1 and no dollar entries on pages 4 and 5 of Form 1065, Form 1125-A, Line 18a, Form 8825 (Rental Real Estate Income and Expenses of a Partnership or an S Corporation) and Line 9 on Schedule F (Profit or Loss From Farming).

      Note:

      An inactive return with an Audit Code, correspondence received date or nonrecourse loan present is processed as a long record.

  2. Only the following fields may be present on short length records:

    Fields Title
    01NC Name Control
    01EIN Employer Identification Number
    01TXP Tax Period
    01RCD Received Date
    01CCC Computer Condition Code
    01NOP Number of Partners (except Amended Returns)
    Section 05 Address (only if address has changed) on Form 1065
    Section 06 Address (only if address has changed) on Form 1065-B

    Note:

    On short length records, do not correspond for missing information or attachments and do not apply missing schedule codes.

  3. Code and Edit (C&E) must edit "SR" in the top margin between the form number and form title for all Short Record returns except amended returns.

3.12.15.1.13.1.1  (01-01-2014)
Nominee Return

  1. Partnerships that are formed solely for the purpose of acting as a "Nominee" or "Agent" are not required to file a partnership return. They are required to file Form 1099 showing the actual owner of the income.

  2. Although they are not required to do so, some of these partnerships may file Form 1065 solely for the purpose of telling IRS that they are not required to file.

  3. These returns will usually contain only partnership entity information and a statement that the partnership is a nominee and is not required to file.

  4. Process nominee returns as "Final" , Short Record returns.

  5. CCC "F" is required.

3.12.15.1.13.1.2  (01-01-2014)
IRC §761(a) Return/Election

  1. The term "partnership" includes a syndicate, group, pool, joint venture or other unincorporated organization through or by means of which any business, financial operation or venture is carried on, and which is not a corporation, trust or estate.

  2. Under IRC §761(a), certain arrangements treated as partnerships (investing partnerships and operating agreements) may elect to be excluded from the partnership rules. Form 1065 need only be filed for the year of the election and a statement of the election should be attached to the return. If the return shows any tax data relating to an entity level computation of income, it cannot be treated as a Section 761(a) election.

  3. Returns can be identified as potential Section 761(a) elections if the return contains all of the following:

    • Name, address, and EIN but no tax data entries

    • An attachment listing the names and addresses of all the members of the organization

    • A statement to elect not to be treated as a partnership

    • CCC "8" is present

  4. Or, the partnership has referenced one of the following on the return or attachments:

    • Section 761(a) or Treas. Reg. 1.761-2 annotated;

    • Rev. Proc. 2002-68 (for tax years beginning before 01/01/2004);

    • Rev. Proc. 2003-84 (for tax years beginning after 01/01/2004);

    • Publication 541 (Partnerships) or Publication 550 (Investment Income and expenses)

    • Lottery Club

    • Exclusion filed under Subchapter K

  5. C & E is instructed to refer the return to Examination. Examination will determine if the election is accepted, rejected, or selected for Examination. After Examination has made their determination, process each return as directed.

    If... Then...
    The election is "Accepted" by Examination,
    1. Complete the processing of the return as a "Short Record" .

    2. Edit CCC "F" and CCC "8" .

    3. Edit the number of partners to "2" on the return and enter in Field 01NOP.

    Examination determines that the response is less than satisfactory, but does not request additional information to be obtained from the partnership,
    1. Consider the election "Rejected" .

    2. Process as a Form 1065 long record.

    Examination determines the return is "Selected for Examination" , Document Perfection will complete the processing of the return by deleting any money amount in Sections 02, 03, 04 and 05 and editing Audit Code "1" .
    Examination determines correspondence is require, Issue Letter 1355C.

3.12.15.1.13.2  (01-01-2014)
Non-ADP Return

  1. When a Form 1065 is for a Non-ADP period, reject the record from ERS, and process as Non-Master File.

    1. Use RJECT Command Code and reject the record with Action Code 620.

    2. If RJECT Command Code is not in your profile, use SSPND Command Code and suspend the record with Action Code 620.

  2. For NMF items with payment:

    1. Follow instructions in Error Resolution System (ERS), BMF General Instruction, IRM 3.12.38.

    2. Use Action Code 343 and suspend to Accounting for research.

    3. Reject from ERS.

    4. Transfer to Non-Master File (NMF) or Unidentified, dependent upon instruction from Accounting.

  3. For International Returns - with and without remittance - follow instructions in IRM 3.12.38, Error Resolution System (ERS), BMF General Instructions.

3.12.15.1.13.3  (01-01-2014)
IRC §6020(b) Returns

  1. When the partnership fails to file a return, IRC §6020(b) of the Internal Revenue Code is the authority for the IRS to prepare a return.

  2. CCC "4" is required.

  3. The return must be signed by a Revenue Officer or Revenue Agent.

    Note:

    Starting July 1, 2013 we will accept the Revenue Officer's (RO) electronic signature or typed signature as a valid signature on the return.

  4. If the return is not signed by a Revenue Officer or Revenue Agent, return the document to Collections using Form 4227.

3.12.15.1.13.4  (01-01-2014)
Publicly Traded Partnerships (PTP)

  1. All coding and correction of Form 1065 with Doc. Code 67 (Publicly Traded Partnerships) is worked in Ogden Submission Processing Campus (OSPC).

  2. Publicly traded partnerships (Document (Doc.) Code 67) are corrected using the same correction procedures as Form 1065 and Form 1065-B.

  3. See IRM 3.12.15.13.25 for correction procedures for Error Code 737 that, if generated, applies only to these PTP returns.

3.12.15.1.14  (01-01-2014)
♦Criminal Investigation (CI) "Funny Box" ♦

  1. Criminal Investigation (CI) investigates potential criminal violations of the Internal Revenue Code (IRC) and related financial crimes. Criminal violations of the IRC are willful and deliberate attempts to evade or defeat the income tax. Flagrant criminal activity includes but is not limited to the failure to pay taxes due and/or taxes collected or withheld and claims of false refunds based on bogus return information.

  2. Pull any return identified as having any CI criteria found in paragraph (3) below and place in "CI Funny Box"

  3. CI "Funny Box" Criteria:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡

  4. If CI has stamped the return, no further CI action is required, but if the return fits other criteria (e.g., Frivolous Argument) take appropriate action.

3.12.15.1.15  (01-01-2014)
♦Examination (Exam) "Funny Box" Criteria♦

  1. The primary objective in identifying tax returns for examination is to promote the highest degree of voluntary compliance. Examination will provide support and assist Submission Processing (SP) with any questionable return identified during processing. Exam has a vast multitude of programs and tolerance criteria already identified in various IRM sections. Exam does not restrict SP with the flexibility to refer questionable returns other than what is currently identified in various IRMs.

3.12.15.2  (01-01-2014)
Types of Errors

  1. This section provides a description of the types of errors generated during Form 1065 and Form 1065-B processing.

  2. The Error Resolution System (ERS) will identify errors according to type and priority. This will show in the record heading:

    • Action Code Error (Priority I)

    • Section Error (Priority II) - Includes terminus error and ISRP (Integrated Submission and Remittance Processing) problem code.

    • Validity Error (Priority III)

    • Math/Consistency Error (Error Codes) (Priority IV)

  3. There may be records where the tax examiner finds that programming has not supplied a section or a field that is needed to solve an error. In this event, the tax examiner can use command code GTSEC. (See IRM 3.12.15.1.9 ). This should be reported to Headquarters for correction of the display.

3.12.15.2.1  (01-01-2014)
Priority I Errors - Action Code/Unpostable Code Errors

  1. Description:

    • All records with an invalid Action Code assigned by Document Perfection will be placed in the Error Inventory and will be displayed as a Priority I Error.

    • All records with a valid Action Code will be assigned to a Suspense Inventory and will be displayed as a Priority I Error.

  2. Display - The Action Code for the record with the literal description of the action or unpostable condition will be shown.

  3. Correction Procedures - Process Priority I errors as follows:

    If... Then...
    Suspense action is required, Enter CC SSPND with the correct Action Code.
    Suspense action is not required, Enter "000" in the Clear Field (CL) Field.

    Note:

    Except for priority statute and manual refund cases, do not remove the document from the block.

  4. See IRM 3.12.38, BMF General Instructions, procedures for correcting Priority I Action Code errors in Suspense and Unpostable Code Correction.

3.12.15.2.2  (01-01-2014)
Priority II Errors - Section Errors

  1. Most edit, missing section, and terminus errors should be eliminated by the ISRP system. However, edit errors and/or terminus errors may be present if normal ISRP validity checks have been bypassed.

  2. Edit Error - A section with an error detected by ISRP. Edit errors will be coded as follows:

    • Code 1 - Split screen transmission, key verifier attempted to change Check Digit, key verifier changed 4 or more digits of TIN, or the original entry operator indicated that a required section is missing.

    • Code 2 - CATCH-ALL ISRP ERROR: Any error attributed to ISRP that is not described below, such as invalid characters in a field, or a combination of errors listed below.

    • Code 3 - Invalid section ending point.

    • Code 4 - Invalid field length.

    • Code 5 - Questionable section - the ISRP operator input the same section more than once. The computer program will drop all duplicate sections and display on the error screen the first one encountered.

      Note:

      When displayed, this type of error will display all input fields, except for the Remittance in Section 01 of the section in error. Transcribed data will be present. Computer generated data will not be present.

  3. Correction Procedures:

    • Check all fields of the section when this condition exists verifying that fields are entered as coded.

    • If no correction is needed, or once the section is correct, transmit from the bottom of the screen.

    • If the section needs to be deleted, enter Command Code DLSEC with the section number.

  4. Terminus Error - This error is caused by a section with variable length input fields containing an erroneous size field.

    • When displayed, this type of error will show all input fields of the terminus section. Transcribed data will be present. Computer generated fields or Remittance field for Section 01 will not be present.

    • All fields present for the section must be examined and the necessary correction(s) made to all the fields.

  5. Correction Procedures:

    • Command Code CRECT will be displayed. If the section needs to be deleted, use Command Code DLSEC to delete the section.

    • If no corrections are needed, transmit from the bottom of the screen.

3.12.15.2.3  (01-01-2014)
Priority III - Field Errors

  1. Definition - Any field that does not meet the requirement(s) for that field will be shown as a Priority III error. Consistency and or relationships with other fields will not be a factor.

  2. Some reasons for this type of error are:

    • Non-numeric character in a numeric field.

    • Non-alphabetical character in an alpha field.

    • Blank space in a numeric field.

    • Blank in the first position of an alpha field if followed by significant data.

  3. Display - Every field displayed is in error.

    • All fields with a Priority III error will be displayed in columnar format in the order encountered in the record.

    • An overflow field is identified by all question marks for a money field or a single pound sign in the last position of a Name Line.

  4. Correction Procedures:

    1. Correct every error field displayed using the specific instructions within each section for the field in error.

    2. Check the information on the source document to determine if each displayed field has been correctly coded and transcribed.

    3. Enter the correct data for each field displayed.

    4. If no data is to be in a displayed field, blank the field.

    5. Transmit.

3.12.15.2.4  (01-01-2014)
Priority IV Errors - Consistency/Math Errors

  1. Definition - Any valid field used in any computation in which the result is inconsistent with (or contrary to) any other valid field will have Error Code 001-999 assigned and will be shown as a Priority IV Error.

  2. Display - These errors will be displayed with the Error Code assigned to them for the specific error in ascending numerical order. The screen display will show the error code assigned and the fields needed to make the necessary correction.

    1. The blank field "CL" will be displayed for the entry of a Clear Code on records where the possibility exists that a change or correction may not be needed.

    2. All errors must be resolved by either eliminating the error or entering a Clear Code.

  3. Correction Procedures:

    • Correct all coding and transcription errors.

    • If the data in the field is correct, enter a "C" in the Clear Code field.

3.12.15.3  (01-01-2014)
Section 01 Errors

  1. This section provides instructions for correcting Section 01 error conditions.

3.12.15.3.1  (01-01-2014)
General Information

  1. Section 01 contains entity data and codes for returns and is required for every record.

3.12.15.3.1.1  (01-01-2014)
Remittance (RMIT)

  1. This entry represents prepayment of a penalty.

  2. It must be blank or numeric.

  3. If a numeric amount is present, it must be dollars and cents.

  4. The Remittance field cannot be changed by ERS.

3.12.15.3.2  (01-01-2014)
Error Record Format

  1. Listed below are the fields contained in Section 01 of Form 1065 and Form 1065-B. See Exhibit 3.12.15-2 , Form 1065, U.S. Return of Partnership Income and Exhibit 3.12.15-3 , Form 1065-B, U.S. Return of Income for Electing Large Partnerships.

  2. The Field Designator, Field Length (maximum length for variable fields), Title, and Location where the data is obtained on the return is shown below:

    Field Field Length Title Location on Form 1065 or 1065-B
    01NC 4 Name Control/Check Digit First Name line Form 1065 or Form 1065-B, page 1
    01EIN 9 Employer Identification Number Form 1065 or Form 1065-B, page 1, Box "D"
    01TXP 6 Tax Period Form 1065 or Form 1065-B, page 1, between Form Title and OMB Number
    01RCD 8 Received Date Form 1065 or Form 1065-B, page 1, Deduction Area
    01CCC 10 Computer Condition Code Form 1065, page 1, dotted portion of Line 1a or Form 1065-B, page 1, dotted portion of Line 3
    01TXB 8 Tax Period Beginning Form 1065, page 1, Left of field 01TXP
    01NAI 6 North American Industry Classification Code System (NAICS) Form 1065 or Form 1065-B, page 1, Box "C"
    01DOB 6 Date Business Started Form 1065 or Form 1065-B, page 1, Box "E"
    01NOP 6 Number of Partners Form 1065 or Form 1065-B, page 1, Line I
    01IRC 1 Initial Return Code Form 1065, page 1, to the left of Box "G"
    01TT 1 Technical Termination Form 1065, page 1, Box "G(6)"
    01AMC 1 Accounting Method Code Form 1065 or Form 1065-B, page 1, Box "H"
    01M3 1 Schedule M-3 Form 1065 or Form 1065-B, page 1, Box "J"
    01LPC 1 Limited Partnership Code Form 1065 or Form 1065-B, page 2, Schedule B, Line 1
    01DPC 1 Dual Partner Code Form 1065 or Form 1065-B, page 2, Schedule B, Line 2
    01MPC 1 Multi Partner Code Form 1065-B, page 2, Schedule B, Line 3
    01FDC 1 Foreign/Domestic Corporation Code Form 1065, page 2, Schedule B, Line 3a
    01INE 1 Individual/Estate Ownership Code Form 1065, page 2, Schedule B, Line 3b
    01PCS 1 Ownership of Foreign or Domestic Corporation Code Form 1065, page 2, Schedule B, Line 4a
    01DPT 1 Ownership of Foreign Partnership or Trust Code Form 1065, page 2, Schedule B, Line 4b
    01PTT 1 Partnership Level Tax Treatment Election Code Form 1065, page 3, Schedule B, Line 5
    01DPA 1 Distribution of Property Code Form 1065, page 3, Schedule B, Line 12a
    01DRE 6 Number of Form 8858 attached Form 1065, page 3, Schedule B, Line 15
    01FPI 6 Number of Form 8805 attached Form 1065, page 3, Schedule B, Line 16
    01FPC 1 Foreign Partner Code Form 1065, page 3, Schedule B, Line 16 (Form 1065-B, page 2, Schedule B, Line 4)
    01IR1 6 Number of Form 8865 attached Form 1065, page 3, Schedule B, Line 17 (Line 9 on Form 1065-B)
    01NFC 3 Number of Form 5471 attached Form 1065, page 3, Schedule B, Line 19
    01ADC 9 Audit Code Form 1065, page 1, left margin next to Line 9. Form 1065-B, page 1, left margin next to Line 12.
    01SIC 1 Special Income Code Form 1065, page 1, left margin next to Line 9. Form 1065-B, page 1, left margin next to Line 12.
    01CRD 8 Correspondence Received Date N/A, no longer edited by C & E
    01ISI 1 Installment Sales Indicator Form 1065, page 1, left margin next to Line 9. Form 1065-B, page 1, left margin next to Line 12
    01NRL 1 Nonrecourse Loan Code Form 1065, page 1, left margin next to Line 9. Form 1065-B, page 1, left margin next to Line 12
    01MSC 2 Missing Schedule Code Form 1065, page 1, left margin next to Line 9. Form 1065-B, page 1, left margin next to Line 12
    01HSC 1 Historic Structure Code Form 1065, page 1, left margin next to Line 9. Form 1065-B, page 1, left margin next to Line 12.
    01SWC 1 Salary and Wage Code Form 1065, page 1, right margin next to Line 9. Form 1065-B, page 1, right margin next to Line 12
    01EP 1 EPMF (Employee Plans Master File) Code Form 1065, page 1, right margin next to Line 19. Form 1065-B, page 1, right margin next to Line 22
    01PSN 9 PTIN (Preparer Tax Identification Number)

    Note:

    For Tax Year 2009 and prior, field may indicate Preparer SSN (Social Security Number)

    Form 1065 and Form 1065-B, page 1, Preparer PTIN area
    01PEN 9 FIRM's Employer Identification Number Form 1065 and Form 1065-B, page 1, Preparer EIN area
    01CBI 1 Paid Preparer Checkbox Indicator Form 1065 and Form 1065-B, bottom page 1 to the right of signature date
    01PTN 10 Paid Preparer Phone Number Form 1065 and Form 1065-B, bottom page 1 below preparer EIN

3.12.15.3.3  (01-01-2014)
Field 01NC - Name Control/Check Digit

  1. Description - Field 01NC is located in the Entity Section of Form 1065 and Form 1065-B.

  2. Valid Condition - Field 01NC has four positions and the valid characters are alpha, numeric, hyphen, ampersand and blank.

    • If a check digit is present, the computer makes an additional mathematical test of the EIN.

    • A check digit must have blanks in the first 2 positions and a letter other than "E" , "G" or "M" in the last 2 positions.

  3. Invalid Condition - Field 01NC is invalid if any of the following conditions are present:

    • The first position is blank.

    • The second, third or fourth position is not an alpha, numeric, hyphen, ampersand or blank.

    • There are any intervening blanks between significant characters.

  4. Correction Procedures:

    1. Correct coding and transcription errors.

    2. Correct using the Check Digit, if present. Delete the entry in Field 01NC and enter the correct Check Digit.

    3. If the correct Check Digit cannot be determined, enter the Name Control.

    4. If the Name Control cannot be determined, research following instructions in Document 7071-A, Name Control Job Aid - For Use Outside of the Entity Area.

3.12.15.3.4  (01-01-2014)
Field 01EIN - Employer Identification Number

  1. Description - Field 01EIN is located in the Entity Section of Form 1065 and Form 1065-B, Box "D" .

  2. Valid Condition - Field 01EIN must contain nine numeric digits.

  3. Invalid Condition - Field 01EIN is invalid if any of the following conditions are present:

    • The EIN is not numeric.

    • The EIN is less than nine characters.

    • The first two digits of the EIN are: 00, 07, 08, 09, 17, 18, 19, 28, 29, 49, 78, 79, or 89.

    • The EIN is all zeroes or nines.

  4. Correction Procedures:

    1. Correct coding and transcription errors.

      If... Then...
      The EIN was transcribed correctly, Research for another EIN on the return or attachments and enter in Field 01EIN.
      The EIN cannot be determined,
      1. Research IDRS for the correct EIN using Command Code NAMEE/NAMEB.

      2. If located, enter the correct EIN. (See Figure 3.12.15-1 )

      No EIN can be found,
      1. SSPND record with Action Code "320" .

      2. Route to Entity Control using Form 4227.

      3. Notate Form 4227 "ASSIGN EIN" . (See Figure 3.12.15-1 )

      Caution:

      Always ensure that the Name Control matches the Master File record whenever you change an EIN.

    2. If the EIN is changed from the one the taxpayer used, issue Letter 3875C as a non-suspense letter to the address on the return. Continue processing the return.

      Note:

      Do not send Letter 3875C when: three or less digits of the EIN are transposed, different, or missing; or INOLES indicates the account has been "Merged To" or "Merged From" ; or the EIN on the return is the taxpayer’s SSN and research shows there is no valid entity on Master File for that EIN.

3.12.15.3.4.1  (01-01-2014)
Field 01EIN - Suspense Correction

  1. Determine if Entity Control has found the correct EIN.

    If... Then...
    Entity located the correct EIN, Enter in Field 01EIN
    Entity assigned an EIN,
    1. Enter in Field 01EIN.

    2. GTSEC 01 and enter the Entity Assignment Date (from the lower left corner of the return) in Field 01CRD if it is after the Return Due Date.

  2. If the EIN is changed from the one the taxpayer used, issue Letter 3875C as a non-suspense letter to the address on the return. Continue processing the return.

    Note:

    Do not send Letter 3875C when: three or less digits of the EIN are transposed, different, or missing; or INOLES indicates the account has been "Merged To" or "Merged From" ; or the EIN on the return is the taxpayer’s SSN and research shows there is no valid entity on Master File for that EIN.

    Figure 3.12.15-1
    This image is too large to be displayed in the current screen. Please click the link to view the image.

    Employer Identification Number (01EIN)

3.12.15.3.5  (01-01-2014)
Field 01TXP - Tax Period

  1. Description - Field 01TXP is located in the upper right corner of Page 1 of Form 1065 and Form 1065-B. Tax Period ending is printed in year (YYYY), month (MM) format e.g., Dec. 31, 2013 is printed 201312.

  2. Valid Condition - The Tax Period must be present and contain six numeric digits.

  3. Invalid Condition - Field 01TXP is invalid if any of the following conditions are present:

    • The Tax Period is not all numeric.

    • The last two digits (month) are not 01-12.

    • The Tax Year (first four digits) is after the current year.

    • The Tax Year is equal to the current year (i.e., 2013), but the month is after the current processing month.

  4. Correction Procedures:

    1. Correct coding and transcription errors.

    2. Determine the correct Tax Period from Form 1065 and attachments.

    If... Then...
    The Tax Period cannot be located, Enter the current year.
    A non-final return and the tax period ending is equal to or later than the current year-month by not more than four months,
    1. SSPND 480.

    2. Attach Form 4227 and notate "EARLY FILED" .

    A non-final return and the Tax Period ending is later than the current year-month by four months or more,
    1. SSPND 211.

    2. Attach Form 3696 or other approved Correspondence Action Sheet and request confirmation of the Tax Period ending.

      Note:

      When confirmed, the return will be processed after the end of that Tax Period.

    A "Final" return and the Tax Period ending is the same as or later than the Received Date, Change the Tax Period to the month preceding the Received Date.

3.12.15.3.6  (01-01-2014)
Field 01RCD - Received Date

  1. Description - Field 01RCD is a numeric field that is either the date stamped by Receipt and Control or edited by C & E.

    • The legal due date is the 15th day of the fourth month after the Tax Period ending.

    • Partnerships whose partners are all Nonresident Aliens must file their return by the 15th day of the sixth month following the close of the year.

    • If the 15th is a Saturday, Sunday or holiday, the due date is the first workday thereafter.

    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    • When the due date falls on a weekend or legal holiday, the return is timely if postmarked by the first business day following the due date.

    • Consider the return timely if:

      a. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
      b. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ the postmark is on or before the legal due date.
      c. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  2. Valid Condition - Field 01RCD must be present and entered in "YYYYMMDD" format.

  3. Invalid Condition - Field 01RCD is invalid if any of the following conditions are present:

    • The Received Date is not present.

    • The Received Date is not in "YYYYMMDD" format.

    • The Received Date is later than the current processing date.

    • The Received Date is not all numeric.

    • The Received Date is not within the valid month, day range detailed below:

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

  4. Correction Procedures:

    1. Correct coding and transcription errors.

      If... Then...
      The Received Date is invalid and it appears that the incorrect year was used (i.e., 20130115 instead of 20140115), and other information (Julian date, postmark date, and/or signature date) indicates that the Received Date should be a current year, Change the Received Date year to the current year.
      Multiple Received Dates are present,
      1. Use the earliest IRS stamped Received Date.

      2. Circle out all other dates.

      The return was addressed to the IRS and delivered to a State agency, Use the postmark date as the Received Date
      The return was addressed to a State agency, Use the IRS date stamp as the Received Date. (See Figure 3.12.15-2 )
      The Received Date cannot be determined, Determine the entry to Field 01RCD using the following priority order:
      1. Earliest legible postmark (e.g., U.S. Post Office, foreign postmark, or Private Delivery Service).

        Note:

        For certified mail only - If a postmark is not present, look for a "USPS.com Track & Confirm" record that has been attached to the return (should be before the envelope). Use the Acceptance date on the record to determine timeliness, follow normal editing procedures. If the "USPS.com Track & Confirm" record is not attached, no action is required.

        Note:

        If an envelope is not attached, use the postmark date stamped on the face of the return.

      2. Service Center Automated Mail Processing System (SCAMPS) digital date.

      3. Revenue Officer's or other IRS official's signature date

      4. Signature date if within the current year (unless other information indicates signature date is invalid).

      5. DLN Julian date minus 10 days.

      6. Current date minus 10 days.

      Figure 3.12.15-2

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

      Received Date (01RCD)

    2. Determine the postmark date as listed below:

      Only legible official postmark date and/or label dates (Killer Bar Strips or Postage Validation Imprinted Labels) and/or the date of submission to a designated private delivery service are accepted as proof of filing timely.
      Valid official Killer Bar Strips are identified by a series of solid or broken lines containing a date, city and state that is used to cancel postage stamps. Accept the postmark date as the Received Date if it is on or before the due date.
      The official marking of arrows easily identifies metered Postmarks. These types of markings are not found on a privately metered postmark.
      For further information and procedures on Postmarks, See IRM 3.10.72, Receiving, Extracting and Sorting.

    3. A private delivery service (PDS) is a business that delivers packages. The "Timely Mailing as Timely Filing" rule now applies to some PDS. When the rule applies to a PDS, it is referred to as a "Designated" PDS.

      1) Do not use marks from a non-designated PDS to determine the IRS Received Date. The "Timely Mailing as Timely Filing" rule applies only to the USPS and to a PDS.
      2) Accept all designated PDS marks. The only designated delivery services are listed below:
      Private Delivery Service
        DHL Express:
      • DHL "Same Day" Service

      • DHL Next Day (10:30 am, 12:00 pm and 3:00 pm)

      • DHL 2nd Day (10:30 am, 12:00 pm and 3:00 pm)

        Federal Express (FedEx):
      • FedEx Priority Overnight

      • FedEx Standard Overnight

      • FedEx 2 Day

      • FedEx International Priority

      • FedEx International First

        United Parcel Services (UPS):
      • UPS Next Day Air

      • UPS Next Day Air Saver

      • UPS 2nd Day Air

      • UPS 2nd Day Air A.M.

      • UPS Worldwide Express

      • UPS Worldwide Express Plus

      Note:

      Private delivery services do not deliver to P.O. Boxes. Partnerships must use the U.S. Postal Service to mail items to an IRS P.O. Box address.

3.12.15.3.7  (01-01-2014)
Field 01CCC - Computer Condition Code

  1. Description - Field 01CCC is an alpha or numeric field edited on the dotted portion of Line 1a, Form 1065 and Form 1065-B.

  2. Valid Condition - Valid characters are "A" , "B" , "D" , "F" , "G" , "I" , "L" , "O" , "Q" , "R" , "S" , "T" , "W" , "X" , "Y" , "1" , "2" , "3" , "4" , "5" , "6" , "7" , "8" and "9" .

  3. Correction Procedures - Correct Field 01CCC using the following procedures:

    If... Then...
    Field 01CCC was transcribed incorrectly, Enter the correct Computer Condition Code from the dotted portion of Line 1a on Page 1.
    The Computer Condition Code was edited incorrectly,
    1. Examine the document to determine the correct CCC.

    2. Enter the correct code in Field 01CCC and on the return. (See Figure 3.12.15-3 )

    The Computer Condition Code(s) edited on Form 1065 or Form 1065-B is illegible or invalid,
    1. Examine the document to determine the correct CCC.

    2. Enter the correct code in Field 01CCC and on the return.

    No reply to correspondence or the correspondence was undeliverable, Enter "3" in Field 01CCC and on the return.
    CCC "G" is deleted from Field 01CCC,
    1. GTSEC to review all sections.

    2. Enter data where necessary.

    CCC "5" is present with a Computer Condition Code other than A, B, F, R, W, 4, 6 and/or 8, Delete the invalid Computer Condition Code(s).
    CCC "6" is present with a Computer Condition Code other than A, B, F, R, W, 4, 5, 8 and/or 9, Delete the invalid Computer Condition Code(s).
    CCC "8" is present with a Computer Condition Code other than A, B, F, R, W, 4, 6 and/or 9, Delete the invalid Computer Condition Code(s).

  4. Computer Condition Codes (CCCs) are assigned by tax examiners or are computer generated. Presence of one of the following Computer Condition Codes initiates action as explained below. Listed below are the valid Computer Condition Codes for Form 1065 and Form 1065-B.

    CCC Description
    A Date Business Started is blank.
    B Schedule M-3 is attached or Line J is checked "YES" .
    D Partnership provided Reasonable Cause for Failure to Pay Penalty

    Note:

    C & E has been instructed not to edit this Computer Condition Code unless instructed by Compliance on a Secured or Prepared return, or from Form 13133, Expedite Processing Cycle.

    F
    • Final return (Line J on Form 1065 or Form 1065-B is checked)

    • Nominee return

    • Accepted Section 761(a) election

    • Deceased

    • Dissolved

    • Liquidation

    • Out-of-Business

    • IRC §501(c)(3)

    • IRC §708(b)(1)(B)

    • Filed in accordance with Rev. Proc. 2003-84

    G Amended, corrected or superseding return.
    Note: CCC "G" is invalid if any other CCC is present except"S" "T" "W" and/or "3" and must have a Received Date.
    I Tax Period is 198106 or later andForm 6781, Gains and Losses from Section 1256 Contracts and Straddles, is attached.
    L Form 8833, Treaty-Based Return Position Disclosure Under IRC §6114 or IRC §7701(b), is attached.
    O Manual Refund/Settlement Freeze
    Q Return filed claiming Telephone Excise Tax (TETR) Only (Form 8913, Credit for Filing Telephone Excise Tax Paid)
    CCC "Q" is no longer edited by C & E. If CCC "Q" is edited in error by C & E, remove CCC "Q" .
    R
    • There is an indication such as "DO NOT ASSESS FAILURE TO FILE PENALTY " on a secured return annotated with "599"

    • "IRC §6032" or "Common Trust" is notated by the partnership

    • Partnership's electronic return was rejected and the postmark on the mailed is within 10 calendar days of rejection notification

    • The return is not received by the original return due date ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and there is no indication of any income, deductions or credits or partnership states it's inactive

    • Form 13133, Expedite Processing Cycle, is attached and Examination indicates application of the Condition Code

      Note:

      If Rev. Proc. 84-35 (10 or fewer partners) is notated on the return or on an attachment to the return, treat as a reason given by the partnership for delay in filing the return, 1382C should be issued.

    Reminder:

    All returns with an "R" Code must have an IRS Received Date. If not present, enter the IRS Received Date.

    .
    S Form 8883, Asset Allocation Statement Under Section 338, is attached.
    T Form 8886, Reportable Transaction Disclosure Statement, is attached.

    Note:

    Form 8886 replaces Form 8271, Investor Reporting of Tax Shelter Registration Number.

    W Record cleared by Statute Control Unit.
    X Prevents the refund of prepaid credits or credit offset on publicly traded partnerships.

    Prevents the refund of repayment of the Qualified Therapeutic Credit (QTDP). If Form 4255 is attached, See IRM 3.12.15.1
    Y Return was filed for a Short Period due to a change in accounting period.
    1 Form 8824, Like-Kind Exchanges, is attached.
    2 Form 8938, Statement of Foreign Financial Assets. No editing is required at this time.
    3 Correspondence Received Date - reply is missing, incomplete or notice was undeliverable.
    4 IRC §6020(b)
    5 Common Trusts, IRC §6032
    • Box A, Principal Business Activity is notated with COMMON TRUST FUND, COMMON TRUST or NAICS Code 525920

    • IRC §6032 Common Trust Fund or similar notations marked within margins of Form 1065.

    Note:

    CCC "5" is valid with CCC "A" , "B" , "F" , "R" , "W" , "4" , "6" and/or "9" only.

    6 Suppresses the Failure to File on Correct Media Penalty when a Short Record return is filed. (Form 1065 only)
    • Inactive return

    • IRC §501d religious organization

    • IRC §6020(b) return

    Note:

    CCC "6" is valid with CCC A, B, "F" , "R" , "W," "4" , "5" , "8" and/or "9" only.

    7 Reasonable Cause for failure to file a delinquent return was considered and denied.
    8 IRC §761(a)

    Note:

    CCC "8" is valid with CCC "A" , "B" , "F" , "R" , "W" , "4" , "6" and/or "9" only.

    9 Foreign Partnership (OSPC only)
    Note: Address on the return is foreign.

    Figure 3.12.15-3

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

    Computer Condition Codes (01CCC)

3.12.15.3.8  (01-01-2014)
Field 01TXB - Tax Period Beginning

  1. Description - Field 01TXB is located to the left of Field 01TXP in the upper middle of Page 1 of Form 1065. The Tax Period Beginning Date is printed in YYYYMMDD format, e.g., September 1, 2014 is printed 20140901.

  2. Valid Condition - The Tax Period Beginning Date must be present if the return is a "Final" or a "Short Period" . The Tax Period beginning date must be eight numeric digits.

  3. Invalid Condition - Field 01TXB is invalid if any of the following conditions are present:

    • The Tax Period beginning date is not all numeric.

    • The last two digits (month) are not 01-12.

    • The Tax Period beginning date is later than Tax Period end date (e.g., if tax period is 201212 and Tax Period beginning date is 1/1/2013 or later).

    • The Tax Period beginning date is earlier than 12 months before Tax Period end date (e.g., if tax period is 201412, and Tax Period beginning date is 11/01/2013 or earlier)

  4. Correction Procedures:

    1. Correct coding and transcription errors.

    2. Determine the correct Tax Period beginning from Form 1065. If its an "Initial return" , use the Date Business Started from the face of the Form 1065 entered in box E located to the right of the entity. For "Final" or "Short Period" returns, refer to the IF/THEN table in Error Code 008 for resolution.

3.12.15.3.9  (01-01-2014)
Field 01NAI - North American Industry Code System (NAICS)

  1. Description - Field 01NAI is a numeric field located on page 1, Box "C" of Form 1065 and Form 1065-B. The NAICS code identifies the partnership Principal Business Activity.

  2. Valid Condition:

    • Six numeric digits within a range of 000001-999000 on all full length records.

    • Blanks on all short length records. (See IRM 3.12.15.1.13.1 )

  3. Invalid Condition:

    • Not numeric

    • Entry not within range of 000001-999000 for full length records.

    • Entry present and Section 02 is not present.

    • Entry contains six of the same digit.

  4. Correction Procedures - Determine the correct NAICS Code in the following order:

    1. Form 1065 or Form 1065-B, Box "C" , Business Code Number.

    2. Form 1065 or Form 1065-B, Box "A" , Principal Business Activity.

    3. Form 1065 or Form 1065-B, Box "B" , Principal Product or Service.

    If... Then...
    The box "C" is complete, Enter the NAICS Code if present.
    The correct code cannot be determined on a full length record,
    • If you cannot make the determination enter "999000" in Field 01NAI. ( Figure 3.12.15-4 )

    Field 01NAI is present on Short Record returns, Delete the entry.
    Return is a Prior Year return with a Principal Industry Activity (PIA) Code or a PIA code with leading zeroes,
    1. If the NAICS Code cannot be determined, edit NAICS Code "999000" in Field 01NAI.

    Field 01NAI is present and Section 02 was not entered when required, Enter Section 02.

    Figure 3.12.15-4
    This image is too large to be displayed in the current screen. Please click the link to view the image.

    NAICS Code (01NAI)

3.12.15.3.10  (01-01-2014)
Field 01DOB - Date Business Started

  1. Description - Field 01DOB is a numeric field located on page 1, Box "E" of Form 1065 and Form 1065-B.

    • Date Business Started is entered in year (YYYY), month (MM) format e.g., Dec. 31, 2013 is printed 201312.

  2. Valid Condition:

    • Valid characters are numeric only.

    • Field 01DOB may be blank.

  3. Invalid Condition:

    • The Date Business Started is not all numeric or blank.

    • The last two digits (month) are not 01-12.

  4. Correction Procedures:

    If... Then...
    Field 01DOB was transcribed or coded incorrectly, Enter the correct date from page 1, Box "E" . ( Figure 3.12.15-5 )
    A month is present but a year is not present, Enter "1950" for the year.
    A year is present but a month is not present, Enter "01" for the month.
    A year and month is not present in Box "E" or cannot be determined, DO NOT enter any data in Field 01DOB. Enter Computer Condition Code "A" in Field 01CCC.
    The partnership enters a future date as Date Business Started, DO NOT enter any data in Field 01DOB. Enter Computer Condition Code "A" in Field 01CCC.

    Figure 3.12.15-5
    This image is too large to be displayed in the current screen. Please click the link to view the image.

    Date Business Started (01DOB)

3.12.15.3.11  (01-01-2014)
Field 01NOP - Number of Partners

  1. Description - Field 01NOP is located on page 1, Line I on Form 1065 and Form 1065-B.

    • This entry consists of the number of Schedules K-1 attached to the return.

    • It can be used to determine the number of partners in the partnership.

  2. Valid Condition:

    • Must be numeric, 2 through 999,999. See Figure 3.12.15-6 .

  3. Invalid Condition:

    • Not numeric.

  4. Correction Procedures:

    1. Correct coding and transcription errors.

    2. If Form 1065, Line I (i) is zero or blank, check the return and attachments for any indication of the number of partners and enter in Field 01NOP.

    3. If the number of partners is not found, follow the procedures below:

      If... And... Then...
      Amended return ("G" Coded),   GTSEC 01 and enter "G" in Field 01CCC.
      "Final" return,  
      1. GTSEC 01 and enter "F" in Field 01CCC.

      2. Enter "2" in Field 01NOP.

      IRC §736 or Treas. Reg. 1.736-1 (Payment to a retiring partner),   Enter "2" Field 01NOP.
      Reinput/Re-entry document,   Enter "2" in Field 01NOP.
      Returns filed for Tax Periods prior to 200812,   Enter "2" in Field 01NOP.
      IRC §501(d) return (Religious and Apostolic Organizations),   Enter "2" in Field 01 NOP.
      IRC §6020(b),  
      1. GTSEC 01 and enter "4" in Field 01CCC.

      2. Enter "6" in Field 01NOP.

      Short Record return,   Enter "2" in Field 01NOP.
      Form 1065, Line 22 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Form 8825 is not attached, Enter "2" in Field 01NOP.
      ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ (1) If Schedule K-1s are attached, enter the number of Schedule K-1s to Field 01NOP and continue processing.
      (2) If Schedule K-1s are not attached, and there is no indication C & E issued Letter 1355C for the missing Schedule K-1s, enter "2" in Field 01NOP.
      (3) GTSEC01 and enter "33" in Field 01MSC.
      Form 1065, Line 22 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Form 8825 is not attached,
      1. Review the return and attachments for Schedule K-1s or an indication C & E issued Letter 1355C for missing Schedule K-1s. and/or missing Form 8825, if needed, etc.

        Note:

        C & E is instructed to notate in the lower right hand corner of Form 1065 or Form 1065-B if they issue Letter 1355C

      2. If Schedule K-1s are attached, enter the number of Schedule K-1s to Field 01NOP and continue processing.

      3. If there is no indication Letter 1355C was sent, enter "2" in Field 01NOP.

      4. GTSEC01 and enter "33" in Field 01MSC.

      Form 1065, Line 22 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , Form 8825 is attached and Form 8825, Line 21 ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ,
      1. Review the return and attachments for Schedule K-1s or, an indication C & E issued Letter 1355C, e.g. for missing Schedule K-1s. and any other condition, such as missing schedule, missing signature, etc.

        Note:

        C & E is instructed to notate in the lower right hand corner of Form 1065 or Form 1065-B if they issue Letter 1355C

      2. If there is no Schedule K-1s and no indication Letter 1355C was sent, enter "2" in Field 01NOP.

      3. GTSEC01 and enter "33" in Field 01MSC.

    4. If the partnership indicates that the number of Schedules K-1 is "1" or the attached Schedule K-1 shows 100% interest in the partnership, follow the procedures below:

      If... Then...
      Schedule K-1 shows two names in the partners' Name and Address Section, Correspond requesting Schedule K-1s for each partner using Letter 1355C.
      Partnership entity section indicates:
      • "Limited Partnership" (LP)

      • "Limited Liability Partnership" (LLP)

      • "Limited Liability Company" (LLC)

      • "Limited Liability Land Trust" (LLLT)

      • "Unincorporated Business Organization" (UBO) or

      • "2" , "3" or "4" is present in Field 01LPC,

      1. GTSEC 01 and enter CCC "F" in Field 01CCC.

      2. Enter "2" in Field 01NOP.

      3. Advise the taxpayer that we are deleting the partnership filing requirement with a non-suspense Letter 3733C.

      Partnership indicates payment to a retired or deceased partner or cites IRC §736 or Treasury Regulations 1.736–1, Enter "2" in Field 01NOP.
      The partnership indicates this is a "Final" Return,
      1. GTSEC 01 and enter CCC "F" in Field 01CCC, if necessary.

      2. Enter 2 in Field 01NOP.

      The partnership does not indicate this is a final return or does not notate:
      • IRC §736 or Treas. Reg. 1.736-1

      • "Limited Liability Partnership" (LLP)

      • "Limited Liability Company" (LLC)

      • "Limited Liability Land Trust" (LLLT)

      • "Unincorporated Business Organization" (UBO),

      Correspond informing the partnership that the partnership cannot have one partner and ask for an explanation using Letter 1355C.
      The partnership submits a response to our request for Schedule K-1s,
      1. Change the number of Schedules K-1 to the number provided by the partnership.

      2. Write the DLN of the parent return in the upper left corner of the first Schedule K-1.

      3. Place Schedules K-1 in a gusset folder.

      4. Forward the folder with the K-1s to Batching & Numbering to process the Schedule K-1s.

    Figure 3.12.15-6
    This image is too large to be displayed in the current screen. Please click the link to view the image.

    Number of Partners (01NOP)

3.12.15.3.12  (01-01-2014)
Field 01IRC - Initial Return Code

  1. Description - Field 01IRC is edited to the left of Line G, page 1 of Form 1065. (See Figure 3.12.15-7 )

  2. Valid Condition - Blank or "2" .

  3. Invalid Condition - Entries other than "2" or blank.

  4. Correction Procedures -

    1. Correct coding and transcription errors. C & E will edit to the left of Line G. (See Figure 3.12.15-7 )

    2. Field 01IRC must contain a "2" if any of the following conditions is present:
      • Page 1, Box E has a Date Business Started that is within 12 months from the Tax Period ending date.
      • The "Initial Return" box on Line G is checked.
      • There is a taxpayer notation of "Initial Filing" , such as, "FIRST RETURN" , "NEW PARTNERSHIP" , etc.

    Figure 3.12.15-7
    This image is too large to be displayed in the current screen. Please click the link to view the image.

    Initial Return Code (01IRC)

3.12.15.3.13  (01-01-2014)
Field 01TT - Technical Termination

  1. Description - Field 01TT is located on Line G, Box (6) Technical termination - also check (1) or (2), page 1 of Form 1065.

  2. Valid Condition - Blank or "1" .

  3. Invalid Condition - Entries other than "1" or blank.

  4. Correction Procedures:

    If... Then...
    Box (6) on Line G is checked and boxes (3), (4), or (5) are not checked, Enter "1" in Field 01TT.
    Box (6) on Line G is not checked Leave Field 01TT blank.

3.12.15.3.14  (01-01-2014)
Field 01AMC - Accounting Method Code

  1. Description -Field 01AMC is located on Line H, page 1 of Form 1065 and Form 1065-B.

  2. Valid Condition - Entry must be numeric or blank.

  3. Invalid Condition - Field 01AMC will generate as an error if the Accounting Method Code is other than "1" , "2" , "3" or blank.

  4. Correction Procedures:

    1. Correct coding and transcription errors.

    2. Code Field 01AMC as follows:

      If... Then...
      "Cash" box is checked, Enter "1" in Field 01AMC.
      "Accrual" box is checked, Enter "2" in Field 01AMC.
      "Other" box is checked, Enter "3" in Field 01AMC.
      No box is checked, Leave Field 01AMC blank.

3.12.15.3.15  (01-01-2014)
Field 01M3 - Schedule M-3

  1. Description - Field 01M3 is located on Line J, page 1 of Form 1065 and Form 1065-B.

  2. Valid Condition - "1" or blank.

  3. Invalid Condition - Entries other than "1" or blank.

  4. Correction Procedures:

    If... Then...
    Box (J) is checked Enter "1" in Field 01M3.
    Box (J) is not checked Leave Field 01M3 blank.


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