3.12.16  Corporate Income Tax Returns (Cont. 1)

3.12.16.4 
Section 02, Data - Form 1120-FSC, Form 1120-ND and Form 1120-SF

3.12.16.4.4 
Field 02-D, City

3.12.16.4.4.1  (01-01-2014)
City - Special to Foreign Address

  1. If the Foreign Address is present, the City Error Indicator will error for the following reasons:

    1. The Foreign Country Code is blank.

    2. The Foreign Country Code is invalid.

    3. The Foreign Country Code is present, but the remaining positions in Field 02-D (City) are not blank.

    4. The City field is blank.

3.12.16.4.5  (01-01-2014)
Field 02-E, State

  1. If present, this field must contain a State Code of two alpha characters (two positions).

  2. This field will asterisk for the following conditions:

    1. The State is not valid. Enter the correct State Code in Field 02-E.

      Note:

      See Exhibit 3.12.16-10, State Codes and ZIP Codes, or refer to Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries.

    2. The State is present and a Major City Code is present in Field 02-D. If the Major City Code is correct, then delete Field 02-E (State).

    3. If the Major City Code is not correct or determinable, then enter the complete city name in Field 02-D.

  3. The State Code does not agree with the first three digits of the ZIP Code. Field 02-F (ZIP Code) will also asterisk:

    1. If the State Code is not correct, then correct Field 02-E.

    2. If the State Code is correct, check the return and/or attachments for the ZIP Code. If no data found, see Exhibit 3.12.16-10, State Codes and ZIP Codes, or refer to Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries.

  4. OSPC will delete Section 02 if a Non-U.S. Possession Foreign Address.

  5. IMPORTANT: Field 02-E must contain a period/space (. ) if the address is foreign.

3.12.16.4.6  (01-01-2014)
Field 02-F, ZIP Code

  1. Field 02-F is the entity ZIP information (12 positions).

  2. Correction Procedures:

    • Correct all misplaced entries, coding errors and transcription errors.

  3. If a valid ZIP Code is not available from the return or attachments to the return, see Exhibit 3.12.16-9, Major City and ZIP Codes, Exhibit 3.12.16-10, State Codes and ZIP Codes, or Exhibit 3.12.16-11, U.S. Possessions/Territories and ZIP Codes, for a valid ZIP Code. Refer to Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries.

  4. All ZIP Codes are standardized at Martinsburg Computing Center (MCC) before the return posts to the Master File. A program called "Finalist" matches the taxpayers Street Address and City Address to the ZIP Code on the return with the latest ZIP Code updates received from the U.S. Postal Service (USPS).

    1. If the ZIP Code is correct, the program standardizes the ZIP Code to a 12-digit ZIP Code and passes the record (return) on to Master File for posting to the taxpayer's account.

    2. If the ZIP Code is incorrect, but there is a match to the taxpayer's Street and City address, the program corrects and standardizes the ZIP Code, and passes the record (return) on to Master File for posting to the taxpayer's account.

  5. If you have an incomplete ZIP Code (partial) on the return, but it contains a Street and City address, no research is necessary, take the following action:

    1. Enter the Major State Code that includes the last two digits of "01" . See Exhibit 3.12.16-9, Major City and ZIP Codes.

    2. If there is a match by the program, the ZIP Code is standardized at MCC for posting to Master File.

    3. If there is no match by the program, MCC passes the return on to Master File for posting, but an Error Listing is generated and sent to the Campus for correction.

  6. If you have an incomplete ZIP Code on the return and the Street or City address is incomplete and/or missing, then research is needed for the complete address.

    • Follow local campus procedures for research.

  7. If only the first three digits of the ZIP Code can be determined, enter "01" for the fourth and fifth digits.

  8. If the first three digits of the ZIP Code cannot be determined, see Exhibit 3.12.16-10, State Codes and ZIP Codes, to determine the appropriate ZIP Code.

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

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

  10. IMPORTANT: Field 02-F must be blank if the address is foreign.

3.12.16.5  (01-01-2014)
Section 03, Data - Form 1120-FSC, Form 1120-ND and Form 1120-SF

  1. Section 03 must be present for Form 1120-FSC, except for a valid "G" coded return.

  2. The only error indicator that applies to Section 03 is the asterisk which will appear to the left of the invalid field or section error indicators.

  3. If a field is asterisked, check to determine if that field is valid for that return and/or document code.

  4. All Section 03 fields are variable in length.

  5. Corrections are made using Action Code 6. Section 03 can be added or deleted using Action Code 5 or Action Code 4.

    Note:

    Action Code 4 is used only when CCC "G" is present.

3.12.16.5.1  (01-01-2014)
Section 03, Error Register Format

  1. The chart below shows Section 03: Alpha Field Designator (AFD), Title, Field Length and Location on the Return.

    Note:

    The Form 1120-L and Form 1120-PC moved to the Error Resolution System (ERS). In order to keep the error register in the same format and prevent additional programming, various fields are "Reserved" .

    Section 03
    AFD Title Field Length Location
    A ABLM Code 3 Reserved
    B North American Industry Classification System (NAICS) Code 6 Form 1120-FSC, Page 1, above Box A;
    Computer generated for Form 1120-ND (525920) and Form 1120-SF (999000)
    C Missing Schedule Code 2 Form 1120-FSC, left margin near Line 2;
    Form 1120-ND, left margin near Line 5
    D Penalty and Interest Code 1 Form 1120-FSC, left margin near Line 2;
    Form 1120-ND, left margin near Line 5;
    Form 1120-SF, left margin near Line 9
    E Reserve Code 1 Form 1120-FSC, left margin near Line 2;
    Form 1120-ND, left margin near Line 5;
    Form 1120-SF, left margin near Line 9
    F Tax Preference Code 1 Form 1120-FSC, Page 1, bottom center margin
    H Audit Codes 9 Form 1120-FSC, left margin near Line 2;
    Form 1120-ND, left margin near Line 5;
    Form 1120-SF, left margin near Line 9
    I Installment Sale Indicator 1 Form 1120-FSC, left margin near Line 2
    K Principal Shareholder Name 4 Form 1120-FSC, Page 1, Line 1a
    L Principal Shareholder EIN 9 Form 1120-FSC, Page 1, Line 1b
    M Subsidiary Filer Code 1 Form 1120-FSC, Page 1, Line 2 box checked
    N Parent Name 4 Form 1120-FSC, Page 1, Line 2a
    O Parent EIN 9 Form 1120-FSC, Page 1, Line 2b
    P Type of Election Code 1 Form 1120-FSC, Page 1, Box B
    Q Kind of Business Code 1 Reserved
    V Foreign Country Code 2 Form 1120-FSC, Page 1, left of Line 1a
    W Parent Total Assets 13 Form 1120-FSC, Page 1, Line 2, Box D
    X Types of Liabilities 5 Form 1120-SF, Page 2, Line 5a
    Y Empowerment Zone Indicator 1 Reserved

3.12.16.5.2  (01-01-2014)
Field 03-A, ABLM Code

  1. This field is Reserved.

3.12.16.5.3  (01-01-2014)
Field 03-B, North American Industry Classification System (NAICS) Code

  1. The six-digit North American Industry Classification System (NAICS) Code (which is based on the Principal Business Activity (PBA) is computer generated for Form 1120-ND (525920) and Form 1120-SF (999000).

  2. The NAICS Code is entered on Form 1120-FSC, Page 1, above Box A.

  3. Field 03-B (NAICS) will asterisk if blank, all zeroes or if Field 03-B does not contain six numeric digits on Form 1120-FSC only, on other than "G" coded returns. See Figure 3.12.16-9, Blank Field 03-B.

    Figure 3.12.16-9

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

    Blank Field 03-B

  4. When the six-digit PBA Code (also known as NAICS Code) is missing, take the following action:

    If Then
    The NAICS Code is missing, 1. Check Form 1120-FSC, Page 2, Additional Information, Line 1a;
    2. Enter the six-digit code. See Exhibit 3.12.16-13, North American Industry Classification System (NAICS) Code.
    You cannot make the determination, Use Code 999000.

  5. Field 03-B (NAICS) must always be present on Form 1120-FSC.

    1. A Missing Section will generate if this field and Section 03 are not present.

    2. Enter the appropriate code using Action Code 6, if missing.

3.12.16.5.4  (01-01-2014)
Field 03-C, Missing Schedule Codes

  1. The Missing Schedule Code (MSC) is edited in the left margin near Line 5 (Form 1120-ND). Code and Edit will edit "3 -" followed by the appropriate Missing Schedule Code(s).

    Exception:

    For Form 1120-FSC, the MSC is edited in the left margin near Line 2.

    Below is a list of Missing Schedule Codes (MSCs), an Explanation of the Code and the Valid Form(s).

    Code Explanation Valid Form(s)
    29 Foreign Tax Credit - Corporations is present and Form 1118 is not attached. 1120-FSC
    30 Personal Holding Co. Tax is present and Schedule PH (Form 1120) is not attached. 1120-FSC (2004 and prior tax returns)
    32 Schedule D is not attached. 1120-ND
    34 Form 1120-FSC, Schedule J, Line 3* has an entry, but the Form 4626, Alternative Minimum Tax, is not attached.
    *(Line 4 for 2005-2000.)
    1120-FSC

    Note:

    Missing Schedule Codes are not valid on Form 1120-SF.

  2. Check for coding errors and transcription errors if Field 03-C is asterisked.

    1. Reject the record with Action Code 3 if two or more Missing Schedule Codes are present.

    2. Input TC 599 with Closing Code (cc) 017.

    3. Prepare Form 3696 (or other approved Correspondence Action Sheet).

    4. Otherwise correct Field 03-C (MSC), as appropriate.

  3. Do not enter the Missing Schedule Code if the entry ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3.12.16.5.5  (01-01-2014)
Field 03-D, Penalty and Interest Code

  1. Penalty and Interest Code is edited in the left margin near "Deductions" (Form 1120-ND, near Line 5; Form 1120-SF, near Line 9) when the return indicates an amount for Penalty and Interest, and the return is received ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ of the original due date. Code and Edit will edit "4 - 1" .

    Exception:

    For Form 1120-FSC, it is edited in the left margin near Line 2.

  2. CCC "R" must be present in Field 01-F, if interest only is indicated.

  3. Field 03-D must be blank or "1" .

    • If "1" is present, Field 01-E (Received Date), must be ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ . Otherwise, both fields will asterisk.

  4. Check the return for all coding errors and transcription errors.

    • Correct Field 01-E (Received Date), Field 01-F (Computer Condition Code) and Field 03-D (Penalty and Interest Code) and return as appropriate.

3.12.16.5.6  (01-01-2014)
Field 03-E, Reserve Code

  1. Reserve Code is edited in the left margin near "Deductions" (Form 1120-ND, near Line 5; Form 1120-SF, near Line 9). Code and Edit will edit "5 -" followed by the appropriate Reserve Code.

    Exception:

    For Form 1120-FSC, it is edited in the left margin near Line 2.

  2. Code and Edit may enter a "9" to force the record to the error register and will attach an explanation to the return.

    1. Since the "9" is invalid, it must be deleted from Field 03-E (Reserve Code) when the problem is resolved.

  3. If Field 03-E is asterisked, correct the field as appropriate.

  4. Enter Reserve Code "1" when a $1 million or more refund has been issued. The "1" is valid on correction only.

  5. Enter Reserve Code "4" if Form 2220, Underpayment of Estimated Tax by Corporations, is attached and the taxpayer has checked the box on Part II, Line 8, "Large Corporations."

  6. Priority of Reserve Codes are as follows:

    1. "1"

    2. "4"

    3. "9" - will be deleted by Error Correction after proper action is taken.

3.12.16.5.7  (01-01-2014)
Field 03-F, Tax Preference Code

  1. Field 03-F (Tax Preference Code) applies only to Form 1120-FSC.

  2. The Tax Preference Code is edited to the bottom center margin of Page 1.

  3. Tax Preference Code "1" is required when Form 4626 or substitute is attached or, when an amount is present for Alternative Minimum Tax computation on Form 1120-FSC, Schedule J, Line 3 (Line 4 for 2005 - 2000, Line 7 for 1999 - 1996).

  4. Field 03-F (Tax Preference Code) must be blank or "1" . Check for coding errors and transcription errors and correct accordingly.

3.12.16.5.8  (01-01-2014)
Field 03-H, Audit Code

  1. Field 03-H (Audit Code) is edited in the left margin near "Deductions" (Form 1120-ND, near Line 5; Form 1120-SF, near Line 9). Code and Edit will edit "2 -" followed by the appropriate Audit Code(s).

    Exception:

    For Form 1120-FSC, it is edited in the left margin near Line 2.

  2. This field may be blank or contain digits 1 through 6. Only three codes can be entered. The following table lists the valid Audit Codes:

    Form Valid Audit Code
    1120-FSC All codes are valid.
    1120-ND Audit Code "3" is the only valid code and must be present.
    1120-SF Audit Codes "1" and "3"

  3. The Audit Codes and conditions are listed in the following table:

    Audit Code Condition
    Audit Code "1" - Disclosure Statement or Inconsistent Filer
    Form 1120-FSC
    Form 1120-SF
    1. Form 8082, Notice of Inconsistent Treatment or Administrative Adjustment Request (AAR), is attached; or
    2. The return contains an attachment with the statement, "Notice of Inconsistent Treatment under IRC 6222(b);" or
    3. Form 8275, Disclosure Statement, or Form 8275-R, Regulation Disclosure Statement, is attached, or a statement referring specifically to IRC 6662 (Disclosure).
    4. Form 8886, Reportable Transaction Disclosure Statement, is attached.
    Audit Code "2" - International Income or Credit
    Form 1120-FSC Form 5472 is attached to the return.
    Audit Code "3" - Examination Classification Criteria

    Note:

    Attach Form 4227, Intra-SC Reject or Routing Slip, (or other appropriate routing slip) with an explanation as to why the Audit Code was used.

    Form 1120-FSC 1. "Unusual Refundable Credits" are claimed.
    2. Taxpayer quotes "Change of Accounting Period" under Headquarters Grant Letter, Revenue Procedure (Rev. Proc.) 2006-46, Rev. Proc. 2006-45, Rev. Proc. 82-25 or Treasury Regulations 1.442-1(c) or (d).
    Form 1120-ND Edit on all Forms 1120-ND.
    Form 1120-SF 1. An "Unusual Credit" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is claimed on Lines 16a through 16e. Enter CCC "N" (Joint Committee Case).
    Note: "Unusual Credits" are defined as:
    • A credit claimed under IRC 1341 or a "Claim of Right" for refund of excessive prior year taxes.

    • Credits claimed by minority shareholder corporations under IRC 337(d).

    • Credits claimed under IRC 1383 in a subsequent year for a refund of excessive prior year taxes.

    • Randomly entered credits notated as "Claim of Right" , "Reg. 1.1341" , or "Reg. 1.337" .


    2. Taxpayer quotes "Change of Accounting Period" under Headquarters Grant Letter, Revenue Procedure (Rev. Proc.) 2006-46, Rev. Proc. 2006-45, Rev. Proc. 82-25 or Treasury Regulations 1.442-1c) or (d).
    Audit Code "4" - Joint Committee Case
    Form 1120-FSC An "Unusual Credit" ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ is claimed on Lines 2a through 2g. Enter CCC "N" (Joint Committee Case).
    Note: "Unusual Credits" are defined as:
    • A credit claimed under IRC 1341 or a "Claim of Right" for refund of excessive prior year taxes.

    • Credits claimed by minority shareholder corporations under IRC 337(d).

    • Credits claimed under IRC 1383 in a subsequent year for a refund of excessive prior year taxes.

    • Randomly entered credits notated as "Claim of Right" , "Reg. 1.1341" , or "Reg. 1.337" .

    Audit Code "5" is Reserved.
    Audit Code "6" is Reserved.

  4. If Field 03-H (Audit Code) is asterisked, check for coding errors and transcription errors. Correct Field 03-H as appropriate.

3.12.16.5.9  (01-01-2014)
Field 03-I, Installment Sale Indicator

  1. Field 03-I (Installment Sale Indicator) is edited in the left margin near Line 2 (Form 1120-FSC). Code and Edit will edit "6 -" followed by the appropriate Installment Sale Indicator.

  2. This field must be 1, 2, 3 or blank. The codes are based on the response to Question "3" on Form 6252, Installment Sale Income.

  3. Valid codes for Installment Sale Indicator are:

    Code One Form 6252 Multiple Forms 6252
    1 "YES" response to Question 3 At least one form has a "YES" response.
    2 "NO" response to Question 3 All "NO" responses, or a combination of "NO" and/or blank responses.
    3 "YES" and "NO" are checked or Question 3 is blank Question 3 is blank on all forms.

  4. The following table provides instructions for resolving Field 03-I (Installment Sale Indicator).

    If Then
    Field 03-I asterisks, check for coding errors and transcription errors, Correct Field 03-I as appropriate.
    The return is a Form 1120-FSC, but the Document Code is not 07, Reject with Action Code 3 and indicate on Form 4227 (or other appropriate routing slip) incorrectly numbered, renumber as a Form 1120-FSC.

3.12.16.5.10  (01-01-2014)
Field 03-K, Principal Shareholder Name
(Form 1120-FSC)

  1. Field 03-K (Principal Shareholder Name) is transcribed from Form 1120-FSC, Page 1, Line 1a. The field must contain one to four characters. The valid characters are:

    1. Numeric,

    2. Alpha,

    3. Ampersand,

    4. Hyphen.

      Note:

      Change a slash (/) or period (.) in the name control to a dash (-)

  2. The name field must contain one to four characters and may contain from one to three blanks.

    1. The name must have an alpha or numeric in the first position.

    2. The remaining positions must be alpha, numeric, hyphen, ampersand, or blank.

    3. No character may follow a blank.

  3. Take the following action:

    If Then
    The name is invalid or blank, Check for coding errors and transcription errors. Enter the correct data in Field 03-K.
    The correct name cannot be found, Research using IDRS
    A correct name cannot be determined, Delete Field 03-K.

3.12.16.5.11  (01-01-2014)
Field 03-L, Principal Shareholder EIN
(Form 1120-FSC)

  1. Field 03-L (Principal Shareholder EIN) is transcribed from Form 1120-FSC, Page 1, Line 1b.

  2. Field 03-L must contain an EIN.

  3. If Field 03-L is an EIN, it cannot begin with 00, 07, 08, 09, 17, 18, 19, 28, 29, 49, 78, 79, or 89.

  4. Take the following action to correct the field:

    If Then
    The EIN is invalid or blank, Check for coding errors and transcription errors. Enter the correct EIN in Field 03-L.
    The correct EIN cannot be found, Research using IDRS.

    Reminder:

    EIN cannot begin with 00, 07, 08, 09, 17, 18, 19, 28, 29, 49, 78, 79, or 89.

    The correct EIN cannot be determined, Delete Field 03-L.

3.12.16.5.12  (01-01-2014)
Field 03-M, Subsidiary Filer Code

  1. Field 03-M (Subsidiary Filer Code) is edited from Form 1120-FSC, Page 1, Line 2 box checked.

  2. Field 03-M is a transcribed field which must contain a blank or 1 through 3.

    1. Code "1" - "Yes" box checked.

    2. Code "2" - "No" box checked.

    3. Code "3" - Both box 1 and 2 are checked.

  3. If this field asterisks, check for coding errors and transcription errors.

  4. Field 03-M (Subsidiary Filer Code) will asterisk if the Parent Name Control or Parent EIN is not present on the return, when code "1" or "3" is entered in this field. A correct entry in Field 03-N (Parent Name Control) and Field 03-O (Parent EIN) will eliminate the asterisk.

3.12.16.5.13  (01-01-2014)
Field 03-N, Parent Name Control

  1. Field 03-N (Parent Name Control) is transcribed from Form 1120-FSC, Page 1, Line 2a.

  2. Field 03-N (Parent Name Control) must contain one to four characters. The valid characters are:

    1. Numeric,

    2. Alpha,

    3. Ampersand,

    4. Hyphen,

      Note:

      Change a slash (/) or period (.) in the name control to a dash (-)

  3. The name field must contain one to four characters and may contain from one to three blanks.

    1. The name must have an alpha or numeric in the first position.

    2. The remaining positions must be alpha, numeric, hyphen, ampersand, or blank.

    3. No character may follow a blank.

  4. If name control is invalid or blank, check for coding errors and transcription errors and correct accordingly.

  5. Field 03-N (Parent Name Control) will asterisk if Field 03-M (Subsidiary Filer Code) is coded "1" or "3" and Field 03-N (Parent Name Control) is blank. Take the following action:

    If Then
    This field is invalid, Examine the return and attachments for valid name control.
    No Parent Name is found, Enter "XXXX" in Field 03-N (Parent Name Control) if Field 03-M (Subsidiary Filer Code) is coded "1" or "3" .

3.12.16.5.14  (01-01-2014)
Field 03-O, Parent EIN

  1. The table below contains transcription information for Field 03-O (Parent EIN):

    Form Page Line
    1120-FSC 1 2b

  2. Take the following action for Form 1120-FSC only:

    If Then
    Field 03-O (Parent EIN) was edited and transcribed, The EIN must be present in this field.
    The Field 03-O (Parent EIN) is not present, Then it will be substituted with Field 03-L (Principal Shareholder EIN), if present, unless Field 03-L is a SSN.

  3. The table below lists pertinent information for Field 03-O (Parent EIN).

    Form Field 03-O Cannot Begin With The Following Numerics
    1120-FSC 00, 07, 08, 09, 17, 18, 19, 28, 29, 49, 78, 79, or 89.

  4. Field 03-O (Parent EIN) will asterisk if the EIN is the same as the EIN for the return. They cannot be the same.

  5. Examine the return and attachments for a valid EIN, if this field is invalid. Take the following action:

    If Then
    A valid EIN is found, Enter the correct EIN in Field 03-O (Parent EIN).
    A valid EIN is not found, Enter "129999999" in Field 03-O (Parent EIN), if Field 03-M (Subsidiary Filer Code) is coded "1" or "3" .

3.12.16.5.15  (01-01-2014)
Field 03-P, Type of Election Code
(Form 1120-FSC)

  1. Field 03-P (Type of Election Code) is transcribed and edited from Form 1120-FSC, Page 1, Box B.

  2. Valid codes are 1, 2, or blank.

    1. Code "1" must be present if the FSC box is checked.

    2. Code "2" must be present if the Small FSC box is checked.

    3. If neither box is checked (Box B is blank), then no code is applicable.

    4. Correct accordingly.

  3. Field 03-P (Type of Election Code) will asterisk if present on any return other than 1120-FSC. Delete this field if present on any other form.

3.12.16.5.16  (01-01-2014)
Field 03-Q, Kind of Business Code

  1. This field is Reserved.

  2. This will prevent the error register from being renumbered/reformatted and will eliminate new programming.

3.12.16.5.17  (01-01-2014)
Field 03-V, Foreign Country Code
(Form 1120-FSC)

  1. The Foreign Country Code is a code transcribed from Form 1120-FSC, Page 1, left of Line 1a.

  2. This field must be blank or a two character alpha. See Exhibit 3.12.16-6, Foreign Country Codes, for a list of valid foreign county codes.

3.12.16.5.18  (01-01-2014)
Field 03-W, Parent Total Assets
(Form 1120-FSC)

  1. Field 03-W (Parent Total Assets) must be present if Field 03-N (Parent Name Control) was edited and transcribed.

    1. It is transcribed in dollars only.

    2. Delete Field 03-W (Parent Total Assets) if it is negative.

    3. The field must be blank or all numeric.

  2. Delete this field when an asterisk is present on Form 1120-SF.

  3. Enter the amount from Box 1d into Field 03-W (Parent Total Assets), when the amount in Box 1d is greater than the amount present in Box 2d, Page 1.

  4. Copy any significant amount on Line 1d to Line 2d, when the amount on Line 2d is blank and the Common Parent’s Name and EIN are blank.

3.12.16.5.19  (01-01-2014)
Field 03-X, Type of Liabilities
(Form 1120-SF)

  1. Field 03-X (Type of Liabilities) is a five-digit field transcribed from Page 2, Additional Information, Line 5a on Form 1120-SF only.

  2. The field must be 1 through 5 or blank. All five codes do not have to be present.

  3. A blank cannot be in the first position, if a valid code is present.

  4. The valid codes for Field 03-X (Type of Liabilities) are:

    Code Description
    1 Tort
    2 Breach of Contract
    3 Violation of Law
    4 CERCLA (Comprehensive Environmental Response, Compensation and Liability Act)
    5 Other

3.12.16.5.20  (01-01-2014)
Field 03-Y, Empowerment Zone Indicator

  1. This field is Reserved.

  2. This will prevent the error register from being renumbered/reformatted and will eliminate new programming.

3.12.16.6  (01-01-2014)
Section 04, Data - Form 1120-FSC, Form 1120-ND and Form 1120-SF

  1. Section 04 contains the information fields for Form 1120-FSC, Form 1120-ND and Form 1120-SF.

  2. If a field is asterisked, check to determine if that field is valid for that return and/or document code.

  3. The fields are variable in length and are money amounts.

  4. Fields 04-A, 04-B, 04-C, 04-D, 04-E and 04-F are transcribed in dollars only.

  5. Fields 04-A, 04-C and 04-F may be positive or negative.

  6. The remaining fields must be positive only.

3.12.16.6.1  (01-01-2014)
Section 04, Error Register Format

  1. The chart below shows Section 04: Alpha Field Designator (AFD), Title, Field Length, Dollars and Cents ($ / ¢), and the Location on the Return.

    Section 04
    AFD Title Field Length $ / ¢ Location on the Return
    A Total Assets-End 15 $ Form 1120-FSC, Box E
    B Total Assets-
    Begin
    15 $ Form 1120-SF, Schedule L, Line 6, Beginning Column
    C Modified Gross Income 11 $ Form 1120-SF, Page 1, Line 14
    D Total Liabilities-End 13 $ Form 1120-SF, Schedule L, Line 9, End Column
    E Total Liabilities-Begin 13 $ Form 1120-SF, Schedule L, Line 9, Beginning Column
    F Taxable Income 15 $
    Form 1120-FSC, Page 3, Line 18;
    Form 1120-ND, Page 1, Line 12;
    H Depreciation (Administrative Pricing Rules) 11 $ / ¢ Form 1120-FSC, Schedule G, Line 4, Column (a)
    I Depreciation (Non-Administrative Pricing Rules) 11 $ / ¢ Form 1120-FSC, Schedule G, Line 4, Column (b)

3.12.16.6.2  (01-01-2014)
Field 04-A, Total Assets - End

  1. Field 04-A (Total Assets - End) is transcribed from Form 1120-FSC, Box E.

  2. Code and Edit will edit the amount in dollars.

  3. The field must be all numeric or blank.

  4. Field 04-A (Total Assets - End) will asterisk when Fields 04-F through 04-J are present on Form 1120-SF.

  5. Delete the invalid fields for Form 1120-ND or Form 1120-SF.

  6. Check for misblocking, if the return is not a Form 1120-ND or Form 1120-SF.

    1. Reject using Action Code 3.

    2. Prepare Form 4227 (or other appropriate routing slip) indicating reason for reject (e.g., return is misblocked, renumber as Form 1120-FSC, etc.).

3.12.16.6.3  (01-01-2014)
Fields 04-B through 04-E
(Form 1120-SF)

  1. Fields 04-B through 04-E are valid on Form 1120-SF.

  2. The table below shows Field, Name and Location on the Form 1120-SF.

    Field Name Location on the Return
    04-B Total Assets -
    Beginning of Year
    Schedule L, Line 6, Beginning Column
    04-C Modified Gross Income Page 1, Line 14
    04-D Total Liabilities -
    End of Year
    Schedule L, Line 9, End Column
    04-E Total Liabilities -
    Beginning of Year
    Schedule L, Line 9, Beginning Column

  3. These fields must be all numeric or blank.

  4. Field 04-C may be positive or negative.

3.12.16.6.4  (01-01-2014)
Field 04-F, Taxable Income

  1. The table below shows Form and Location on the Return for Field 04-F (Taxable Income).

    Form Location on the Return
    1120-FSC Page 3, Line 18
    1120-ND Page 1, Line 12

  2. This field must be all numeric or blank.

  3. Field 04-F (Taxable Income) may be positive or negative.

3.12.16.6.5  (01-01-2014)
Fields 04-H and 04-I, Depreciation

  1. The table below shows Field, Name and Location on the Form 1120-FSC.

    Field Name Location on the Return
    04-H Depreciation (Administrative Pricing Rules) Schedule G, Line 4, Column (a)
    04-I Depreciation (Non-Administrative Pricing Rules) Schedule G, Line 4, Column (b)

  2. Fields 04-H (Depreciation (Administrative Pricing Rules)) and 04-I (Depreciation (Non-Administrative Pricing Rules)) must be edited in dollars and cents.

  3. These fields must be all numeric or blank.

  4. They must be a positive amount only.

3.12.16.6.6  (01-01-2014)
Tax Rates for Form 1120-SF

  1. The table below shows Tax Period and Tax Rate for the Form 1120-SF.

    Tax Period Tax Rate
    201312 and subsequent 39.6% (percent)
    200301 through 201311 35%
    200201 through 200212 38.6%
    200101 through 200112 39.1%
    200012 and prior 39.6%

3.12.16.7  (01-01-2014)
Section 07, Data - Form 1120-FSC, Form 1120-ND and Form 1120-SF

  1. Section 07 contains tax information, credits and other taxes.

  2. If a field is asterisked, check to determine if that field is valid for that return and/or document code.

  3. Action Codes 4, 5, and 6 are applicable.

  4. All fields are positive except the following fields, which may be positive or negative.

    1. Field 07-I (Balance Due/Overpayment)

    2. Field 07-T (Salaries and Wages)

  5. Take the following action if an error reduces the correctly transcribed Total Tax,≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ :

    1. Examine the return for a possible typing error.

    2. Check all the lines leading to the math computation.

    3. Search for omitted or incorrectly transferred amounts from attachments.

    4. If it appears that the error is not necessarily a true error condition, reject the record for correspondence with the taxpayer. Ask for clarification of the area in doubt.

  6. If there is an increase in Total Tax, then check if the taxpayer has any unused carryover credits. If so then apply them to the maximum amount available in the following order.

    If Then
    For Tax Periods beginning 199512 and subsequent: Apply as follows:
    1. Foreign Tax Credit
    2. Possessions Tax Credit
    3. Production Tax Credit
    4. General Business Credit
    5. Prior Year Minimum Tax Credit
    For Tax Periods 198801 through 199511: Apply as follows:
    1. Foreign Tax Credit
    2. Possessions Tax Credit
    3. Orphan Drug Credit
    4. Production Tax Credit
    5. General Business Credit
    6. Prior Year Minimum Tax
    Credit
    The taxpayer has not applied the credits in the proper order: Recompute in the order above. Refer to the supporting forms to determine the available amounts.

  7. Adjust the amount reported on the return to reflect the actual amount applied; and, change the appropriate fields on the error register.

  8. If an adjustment is made to any carryover credit ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and no math error notice is required to be sent,

    • Send Letter 3833C (or other appropriate letter) explaining the adjustment and stating the corrected carryover amount.

  9. The valid taxpayer notice codes for Form 1120-FSC, Form 1120-ND and Form 1120-SF are TPNCs 05, 10, 41, 88, 89 and 90.

    Note:

    See IRM 3.12.16.2.4.1, Taxpayer Notice Codes (TPNCs), for the TPNC and the explanation.

  10. Manually Corrected Tax is used when neither the transcribed amount nor the underprinted amount for total tax is correct. All fields leading up to Field 01-A (Total Tax) must be corrected when applicable. If manually corrected tax is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3.12.16.7.1  (01-01-2014)
Section 07, Error Register Format

  1. Section 07 contains information fields that are variable in length and are money amounts.

  2. If a field is asterisked, check to determine if that field is valid for that return and/or document code.

  3. The chart below shows Section 07: Alpha Field Designator (AFD), Title, Field Length, Dollars and Cents ($ / ¢), and the Location on the Return.

    Note:

    The Form 1120-L and Form 1120-PC moved to the Error Resolution System (ERS). In order to keep the error register in the same format and prevent additional programming, various fields are "Reserved" .

    Section 07
    AFD Title Field Length $ / ¢ Location on the Return
    A Total Tax 15 $ / ¢ Form 1120-FSC, Line 1;
    Form 1120-ND, Line 13;
    Form 1120-SF, Line 15
    A Total Income Tax (Generated Underprint)      
    B Estimated Tax Credit 15 $ / ¢ Form 1120-FSC, Line 2d;
    Form 1120-ND, Line 14d;
    Form 1120-SF, Line 16d
    C Form 7004 Credit 15 $ / ¢ Form 1120-FSC, Line 2e;
    Form 1120-ND, Line 14e;
    Form 1120-SF, Line 16e
    D Regulated Investment Credit /
    Reciprocal Credits
    11 $ / ¢ Reserved
    E Refundable Credits from Form 3800 and Form 8827 15 $ / ¢ Reserved
    F 1042-S Credit (Form 1120-FSC) 15 $ / ¢ Form 1120-FSC, Line 2g
    G Foreign Investment Real Property Tax Act (FIRPTA) Credit 11 $ / ¢ Form 1120-FSC, space to the right of Line 2g
    H Estimated Tax Penalty 15 $ / ¢ Form 1120-FSC, Line 3;
    Form 1120-ND, Line 15;
    Form 1120-SF, Line 17
    I Balance Due/
    Overpayment
    15 $ / ¢ Form 1120-FSC, Line 4/5;
    Form 1120-ND, Line 16/17;
    Form 1120-SF, Line 18/19
    I Balance Due/
    Overpayment (Generated Underprint)
         
    J Credit to Next Year’s Estimated Tax 15 $ / ¢ Form 1120-FSC, Line 6 (center);
    Form 1120-ND, Line 18 (center);
    Form 1120-SF, Line 20, (center)
    N Gross Income 15 $ Reserved
    O Special Deduction 15 $ Reserved
    R Credit for Federal Telephone Excise Tax Paid (For 2006 tax form revision.) 15 $ / ¢ Form 1120-FSC, edited amount in the dotted area left of Line 2h;
    Form 1120-ND, Line 14f, edited amount in dotted area;
    Form 1120-SF, Line 16f, edited amount in dotted area
    R Credit for Federal Telephone Excise Tax Paid (Generated Underprint) 15   Generated total of Form 8913, Line 15, Columns (d) and (e)
    S Credit for Federal Telephone Excise Tax Paid (verified amount) 15 $ / ¢ SCRS field only
    T Salaries and Wages 15 $ Reserved
    W Tax Exempt Interest 15 $ Form 1120-SF, Page 2, Additional Information Line 2
    X Interest Exempt Under Section 103 11 $ Reserved
    Y Refundable Credits (Computer Generated) 15 $ / ¢ Form 1120-FSC, Line 2h;
    Form 1120-ND, Line 14f;
    Form 1120-SF, Line 16f
    Z Manually Corrected Total Tax 13 $ / ¢ Form 1120-FSC, Line 1 left;

    Form 1120-ND, Line 13 left;
    Form 1120-SF, Line 15 left

3.12.16.7.2  (01-01-2014)
Field 07-A, Total Tax

  1. Field 07-A (Total Tax) has a ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  2. The form(s) and the appropriate transcription line(s) are identified in the table below:

    Form Transcription Line(s) Math Verify
    1120-FSC Page 1, Line 1 YES
    1120-ND Page 1, Line 13 YES
    1120-SF Page 1, Line 15 NO

    Note:

    See IRM 3.12.16.9, Manual Verifications, for additional information.

  3. Take the following action:

    If Then
    The return is a Form 1120-ND and any of the following fields are present:
    Field 07-D (Regulated Investment Credit),
    07-F (1042-S Credit/Other Credit),
    07-G Foreign Investment Real Property Tax Act (FIRPTA) Credit),
    Delete the fields.
    The return is a Form 1120-SF and any of the following fields are present:
    Field 07-D (Regulated Investment Credit),
    07-F (1042-S Credit/Other Credit),
    07-G (FIRPTA Credit),
    Delete the fields.

  4. The return is a Form 1120-SF and the total tax does not equal 39.6% (percent) of the Modified Gross Income (Field 04-C), Field 07-A (Total Tax) will underprint. Take the following action:

    If Then
    Field 07-A (Total Tax) is underprinting and the underprint is correct, On raw, enter amount in Field 07-Z (Manually Corrected Total Tax). On loop, send TPNC 90.

    Note:

    The first time a document in error displays on an error register, it is called a raw register.

    Field 07-A (Total Tax) is underprinting and the underprint is incorrect, and the taxpayer’s figure has been verified as correct, Enter Action Code 0 to clear the register.
    Neither the taxpayer’s figure nor the underprint are correct, Enter the corrected figure in Field 07-Z (Manually Corrected Total Tax).

  5. Take the following action for Form 1120-SF:

    If Then
    The tax period straddles the 1992 and 1993 tax year, Manually compute the income tax using the two rates. See IRM 3.12.16.18, Annualization Computations.
    No other errors are present, and there is no underprint in Field 07-A (Total Tax), Enter Action Code 0 to clear the register.

    Note:

    Field 07-A (Total Tax) can never be blank if Field 01-A (Remittance) has an entry. Enter .01 (1 cent) in Field 07-A (Total Tax) if the remittance amount in Field 01-A (Remittance) is the estimated penalty in Fields 07-H (Estimated Tax Penalty) plus 07-I (Balance Due/Overpayment).

  6. Taxpayers who file an approved Form 1128, Application to Adopt, Change, or Retain a Tax Year, are required to annualize. If the taxpayer does not annualize, enter the correct annualized tax in Field 07-Z (Manually Corrected Total Tax). On loop, send TPNC 90 to inform the taxpayer of the error.

  7. Taxpayers annualizing their tax due to a short period "initial" or "final" return is not permitted. Assess tax at the regular rate based on their taxable income.

3.12.16.7.3  (01-01-2014)
Field 07-B, Estimated Tax Credit

  1. The form(s) and the appropriate transcription line(s) are identified in the table below:

    Form Transcription Line(s)
    1120-FSC Page 1, Line 2d
    1120-ND Page 1, Line 14d
    1120-SF Page 1, Line 16d

  2. Field 07-B (Estimated Tax Credit) is the total of:

    • Form 1120-FSC, Line 2d equals = Line 2a plus 2b minus 2c.

    • Form 1120-ND, Line 14d equals = Line 14a plus 14b minus 14c.

    • Form 1120-SF, Line 16d equals = Line 16a plus 16b minus 16c.

  3. Reject to Accounting: If prepaid credits are claimed on Form 1120-FSC (Lines 2a, 2b, 2e), Form 1120-ND (Lines 14a, 14b, 14e), or Form 1120-SF (Lines 16a, 16b, 16e) and the return is one of the following conditions:

    1. A short period return,

    2. A "Final" , or

    3. A "Change of Accounting Period" .

  4. Prepare Form 4227 (or other appropriate routing slip) with a notation "Short Period with ES Credits" .

  5. Input TC 599 with Closing Code (cc) 017 as defined below.

    1. Input for the short period if a copy of attached Form 7004 shows short period.

    2. Input for a full period (ending 12 months after beginning of the short period) if no Form 7004 is attached or use the underprinted FYM in Field 01-D (Tax Period).

3.12.16.7.4  (01-01-2014)
Field 07-C, Form 7004 Credit

  1. The form(s) and the appropriate transcription line(s) are identified in the table below:

    Form Transcription Line(s)
    1120-FSC Page 1, Line 2e
    1120-ND Page 1, Line 14e
    1120-SF Page 1, Line 16e

  2. On prior year returns (1982 and prior), if an amount is entered for Form 7005 credits, add to Form 7004 credits.

3.12.16.7.5  (01-01-2014)
Field 07-D, Regulated Investment Credit

  1. This field is Reserved.

  2. This will prevent the error register from being renumbered/reformatted and will eliminate new programming.

3.12.16.7.6  (01-01-2014)
Field 07-E, Refundable Credits from Form 3800 and Form 8827

  1. This field is Reserved.

  2. This will prevent the error register from being renumbered/reformatted and will eliminate new programming.

3.12.16.7.7  (01-01-2014)
Field 07-F, U.S. Income Tax Paid or Withheld at Source
(Form 1042-S Credit)

  1. The form and the appropriate transcription line are identified in the table below:

    Form Transcription Line(s)
    1120-FSC Page 1, Line 2g, U.S. Income Tax Paid or Withheld at Source

  2. Correct all misplaced entries, coding errors and transcription errors.

  3. OSPC must take the following action to correct Field 07-F:

    Note:

    If the taxpayer's name is not listed as the recipient in Box 13 of Form 1042-S (Box 13 cannot be a Withholding Rate Pool), then reduce Field 07-F by this amount.

    If Then
    Field 07-F (U.S. Income Tax Paid or Withheld at Source) and Field 07-G (Foreign Investment Real Property Tax Act (FIRPTA) Credit) are present at the same time, Edit the 1042-S Credit to Form 1120-FSC, to the left of Line 2g.

    Note:

    Form 1042-S, Box 13, cannot be a Withholding Rate Pool. If present, reduce Field 07-F by this amount and continue processing.

    The total credit on Form 1120-FSC, Field 07-F (U.S. Income Tax Paid or Withheld at Source) is supported by Form 1042-S, Accept the taxpayer’s figures.

    Exception:

    Form 1042-S, Box 13, cannot be a Withholding Rate Pool. If present, reduce Field 07-F by this amount and continue processing.

    There is an amount present in Field 07-F (U.S. Income Tax Paid or Withheld at Source) and no Form 1042-S or supporting statement is attached, Enter Action Code 3 and prepare Form 3696, Correspondence Action Sheet (or other approved Correspondence Action Sheet) for supporting documentation.
    No response to the request for verification of withholding is received from the taxpayer, Disallow the withholding credit.

    Note:

    See IRM 3.12.16.16, Reject Procedures General "No Reply" Procedures, for additional information.

  4. OSPC must refer any questionable verification of the withholding documents to Examination (Exam).

3.12.16.7.8  (01-01-2014)
Field 07-G, Foreign Investment Real Property Tax Act (FIRPTA)
(Form 8288-A)

  1. The FIRPTA credit is located on Form 1120-FSC, Page 1, to the right of Line 2g.

  2. Correct all misplaced entries, coding errors and transcription errors.

  3. If FIRPTA credit is claimed on Form 1120-FSC, OSPC must take the following action to correct Field 07-G (FIRPTA):

    1. Look for an approval from the OSPC Document Perfection, Foreign Team on the total amount of credit claimed on Form 13698, International Credit(s) Verification Slip.

    2. The credit must be claimed on Form 8288-A or a statement from the payor/withholding agent which identifies the amount of tax withheld, the withholding rate (including 0% (percent), if exempt), and the country involved.

    Note:

    Form 13698, International Credit(s) Verification Slip, must be present when a FIRPTA credit (e.g., Form 8288-A) is indicated. If Form 13698 is not attached, reject the record and route the return to the OSPC Document Perfection, Foreign Team for verification of these credits on the International National Standard Application (NSA) database.

  4. Follow the instructions in the table below for FIRPTA credit.

    If Then
    The total amount of FIRPTA credit claimed on Form 1120-FSC is verified by OSPC Document Perfection, Foreign Team, Accept the taxpayer’s figure.
    The total amount of FIRPTA credit claimed on the return is not approved by OSPC Document Perfection, Foreign Team, Check the attachments for a Form 1042-S withholding credit to make up the difference.

    Note:

    Form 1042-S, Box 13, cannot be a Withholding Rate Pool. If present, reduce Field 07-F by this amount and continue processing.

    Attachments are present, Accept taxpayer figures.

    Exception:

    Form 1042-S, Box 13, cannot be a Withholding Rate Pool. If present, reduce Field 07-F by this amount and continue processing.

    Attachments are not present, and there is an indication that Code and Edit corresponded, Send TPNC 90 to inform the taxpayer of the error.
    Attachments are not present, and there is no indication that Code and Edit corresponded, Enter Action Code 3 and prepare Form 3696, Correspondence Action Sheet (or other approved Correspondence Action Sheet) for supporting documentation.
    A reply is received, Route the return and attachments to the OSPC Document Perfection, Foreign Team for verification per local procedures.
    There is no reply, 1. Disallow the credit.
    2. Send TPNC 90 to inform the taxpayer why the credit was disallowed.

    Note:

    Input CCC "L" when taxpayer writes "Section 6114 Election" on the return or attached Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), to the return.

  5. OSPC must refer any questionable verification of the withholding documentation to Examination (Exam).

3.12.16.7.9  (01-01-2014)
Field 07-H, Estimated Tax Penalty

  1. The form(s) and the appropriate transcription line(s) are identified in the table below:

    Form Transcription Line(s)
    1120-FSC Page 1, Line 3 (current year through 2005)
    1120-ND Page 1, Line 15 (current year through 2005)
    1120-SF Page 1, Line 17 (current year through 2005)

  2. Field 07-H (Estimated Tax Penalty) is edited from Form 2220, Underpayment of Estimated Tax by Corporations, Line 38 (Line 34 for 2007 through 2005) and must always be included in the Balance Due/Overpayment total.

  3. Enter Reserve Code "4" when a large corporation is indicated on Form 2220, Part II, Line 8. See IRM 3.12.16.5.6, Field 03-E, Reserve Code.

    Note:

    Enter CCC "8" when a taxpayer writes "waiver of estimated tax penalties" under IRC 6655 for any period before January 1, 1998, with any payment the due date of which is before January 16, 1998.

3.12.16.7.10  (01-01-2014)
Field 07-I, Balance Due/Overpayment

  1. The form(s) and the appropriate transcription line(s) are identified in the table below:

    Form Transcription Line(s)
    1120-FSC Line 4, Tax Due;
    Line 5, Overpayment
    1120-ND Line 16, Tax Due;
    Line 17, Overpayment
    1120-SF Line 18, Tax Due;
    Line 19, Overpayment

  2. Field 07-I (Balance Due/Overpayment) will underprint if it is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  3. Correct all misplaced entries, coding errors and transcription errors.

  4. The table below identifies the form and provides the computation for Field 07-I (Balance Due/Overpayment).

    Form Balance Due Or Overpayment Is Equal To:
    1120-FSC 1. Field 07-A (Total Tax) minus Fields 07-B (Estimated Tax Credit), 07-C (Form 7004 Credit), 07-F (1042-S Credit), 07-G (FIRPTA) and 07-R (Credit for Telephone Excise Tax Paid), plus
    2. Field 07-H (Estimated Tax Penalty), minus
    3. Field 15-A (Total Gas Tax Credit) on the error register.

    Note:

    Delete Fields 07-D and 07-E, if present. They are invalid fields.

    1120-ND 1. Field 07-A (Total Tax) minus Fields 07-B (Estimated Tax Credit), 07-C (Form 7004 Credit) and 07-R (Credit for Telephone Excise Tax Paid), plus
    2. Field 07-H (Estimated Tax Penalty), minus
    3. Field 15-A (Total Gas Tax Credit) on the error register.

    Note:

    Delete Fields 07-D, 07-E, 07-F and 07-G, if present. They are invalid fields.

    1120-SF 1. Computer’s underprint amount minus Fields 07-B (Estimated Tax Credit), 07-C (Form 7004 Credit) and 07-R (Credit for Telephone Excise Tax Paid), plus
    2. Field 07-H (Estimated Tax Penalty), minus
    3. Field 15-A (Total Gas Tax Credit) on the error register.

    Note:

    Delete Fields 07-D, 07-E, 07-F and 07-G, if present. They are invalid fields.

    Note:

    A ripple type error will cause an underprint in Field 07-I (Balance Due/Overpayment) on Form 1120-SF.

    Note:

    The total of the applicable Fields 07-B (Estimated Tax Credit), 07-C (Form 7004 Credit), 07-F (1042-S Credit), 07-G (FIRPTA) and 07-R (Credit for Telephone Excise Tax Paid), plus Field 15-A (Total Gas Tax Credit) will be computer-generated into Field 07-Y (Refundable Credits).

  5. Field 07-I (Balance Due/Overpayment) will underprint when a refundable credit is present, but not claimed on a refundable credit line. Follow local campus procedures to allow the credit.

  6. Delete all penalties and interest that are included in Field 07-I (Balance Due/Overpayment), except for the amount from Field 07-H (Estimated Tax Penalty).

  7. Occasionally, the taxpayer will enter tax only on the total income tax line or only on the tax due line.

    1. If this happens, deduct any penalties and interest from the total income tax line ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. Enter the correct tax in Field 07-A (Total Income Tax) or Field 07-I (Balance Due/Overpayment), whichever is appropriate.

  8. Field 07-I (Balance Due/Overpayment) may underprint if Field 07-I is out of tolerance. If the out of tolerance was caused by an adjustment to the Credit for Federal Telephone Excise Tax Paid, Field 07-S (Credit for Federal Telephone Excise Tax Paid, Verified Amount) has a significant entry, then:

    1. Send TPNC 88 if the credit was partially denied (Field 07-S amount is less than Field 07-R, Letter 106C issued). See IRM 3.12.16.7.14, Field 07-R, Credit for Federal Telephone Excise Tax Paid.

    2. Send TPNC 89 if the credit was fully denied (Field 07-S entry is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Letter 105C issued). See IRM 3.12.16.7.14, Field 07-R, Credit for Federal Telephone Excise Tax Paid.

  9. When no other errors are discovered, take the following action:

    1. Change Field 07-I (Balance Due/Overpayment) to the underprinted amount.

    2. Enter the revised figure on the return.

3.12.16.7.10.1  (01-01-2014)
Refund Returns

  1. Field 07-I (Balance Due/Overpayment) will asterisk as a precautionary flag whenever there is a refund for review and manual verification.

    1. Returns will not be forced to the error register solely because of the presence of a refund amount in Field 07-I.

    2. Field 07-I will asterisk on initial input and on all subsequent loops. Once all true error conditions are corrected, Field 07-I will automatically clear.

  2. Field 07-I will also asterisk, until Reserve Code "1" is entered if the overpayment amount minus credit elect per computer (not taxpayer’s amount) is $1 million or more.

    1. Check for coding errors and transcription errors.

    2. If the refund is $1 million or more, but less than $10 million, and the return has been in processing for less than 20 days from the received date or return due date (whichever is later), verify that the transcribed refund amount is the same as the return refund line. If the amounts are the same, then input "1" in Field 03-E (Reserve Code) to allow the systemic refund to be generated.

      Caution:

      If the return has been in processing for 20 days or more from the received date or return due date (whichever is later), reject and flag the return for issuance of a manual refund, if the refund has not been issued. Once the manual refund has been issued, enter a "1" in Field 03-E (Reserve Code).

    3. If the refund is $25,000 or more and the return has been in processing for 20 days or more from the received or return due date (whichever is later), reject and flag the return for issuance of a manual refund, if the refund has not been issued. Once the manual refund has been issued, enter a "1" in Field 03-E (Reserve Code).

      Caution:

      Because of the tendency for SCRS returns to loop over and over, it is up to the campus to determine if they want to continue to process SCRS refund returns over $25,000 or more automatically as manual refunds as they are potentially in interest jeopardy.

    4. Reject and flag the return for issuance of a manual refund, if the refund is truly $10 million or more and the refund has not been manually refunded. Once the manual refund has been issued, enter a "1" in Field 03-E (Reserve Code).

  3. Refund returns have a 45-day interest free period (180 days for any overpayment resulting from tax deducted and withheld under Chapter 3 or Chapter 4). The interest free period is the 45 calendar day span of time between the return due date, received date or processible date (whichever is later) and the actual date of the refund check.

    1. The return is in jeopardy when 20 or more days have elapsed since the received date or the return due date.

    2. The due date of the return is two months and fifteen days after the end of the tax year.

      Example:

      The due date for a 2013 calendar year return is March 15, 2014.

    3. If it is apparent that the 45-day interest free period is in jeopardy or that the interest free period has actually expired on a return with a refund of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ then bring the matter to the immediate attention of your supervisor and follow local campus procedures.

    4. Interest is never payable on "No Replies."

    5. If a date is correctly present in Field 01-G (Correspondence Received Date), interest is payable 45 days from the Correspondence Received Date.

    6. If a manual refund must be issued, reject the record from the register and flag the return for expedite issuance of the manual refund.

  4. Input TC 599 with cc 017 to prevent delinquency notice from generating, when a refund return is pulled for manual refund.

  5. Handle the return on an EXPEDITE basis, when a manual refund is necessary.

  6. Enter CCC "0" in Field 01-F (CCC), when a manual refund has been issued.

    Note:

    See IRM 3.12.16.1.9, Refund Returns 45-Day Jeopardy and $10 Million or More Refunds, to ensure the refund is issued timely. See IRM 3.12.16.1.10, Taxpayer Advocate Service (TAS) Manual Refunds, for TAS Manual Refunds.

3.12.16.7.11  (01-01-2014)
Field 07-J, Credit to Next Years Estimated Tax

  1. The form(s) and the appropriate transcription line(s) are identified in the table below:

    Form Transcription Line(s)
    1120-FSC Page 1, Line 6, center
    1120-ND Page 1, Line 18, center
    1120-SF Page 1, Line 20, center

  2. CCC "F" is incompatible with an amount in Field 07-J (Credit to Next Years Estimated Tax) and both will asterisk.

    1. Determine which is correct.

    2. Delete the other.

3.12.16.7.12  (01-01-2014)
Field 07-N, Gross Income

  1. This field is Reserved.

  2. This will prevent the error register from being renumbered/reformatted and will eliminate new programming.

3.12.16.7.13  (01-01-2014)
Field 07-O, Special Deduction

  1. This field is Reserved.

  2. This will prevent the error register from being renumbered/reformatted and will eliminate new programming.

3.12.16.7.14  (01-01-2014)
Field 07-R, Credit for Federal Telephone Excise Tax Paid
Field 07-S, Credit for Federal Telephone Excise Tax Paid Verified Amount

  1. For tax returns filed with tax period ending 200612 through 200711, a refund for the federal telephone excise tax paid on long-distance service may be claimed.

  2. The credit claimed is for the tax paid on service that was billed after February 28, 2003, and before August 1, 2006.

  3. Corporations claiming this credit must complete and submit Form 8913, Credit for Federal Telephone Excise Tax Paid, with the tax return.

  4. An Invalid Condition will asterisk when any of the following conditions are present:

    • Tax Period is prior to 200612, or after 200711.

    • There are entries in Fields 20-A (Tax Refund) and 20-B (Interest on Tax Refund) and there is no entry in Field 07-R.

    • Field 20-B is greater than Field 07-R and the total claimed ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    • The transcribed amount for telephone excise tax refund amount (return amount) differs from the computer amount ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  5. Correction Procedures:

    1. Code and Edit will no longer edit the Telephone Excise Tax Refund (TETR) amount. This will allow all TETR claims filed on original returns to fall out to ERS.

    2. Change all TETR fields to zero (0) and remove the Computer Condition Code "U", if applicable.

    3. Detach Form 8913 and make a copy of the signature page from the return. Staple the copy of the signature page to the back of the original Form 8913 and route to Accounts Management.

    4. Send TPNC 90 to the taxpayer with the following literal:
      Due to processing constraints, your Credit for Federal Telephone Excise Tax Paid could not be processed with your tax return. Your claim for this credit has been forwarded to another area to be processed.

3.12.16.7.15  (01-01-2014)
Field 07-T, Salaries and Wages

  1. This field is Reserved.

  2. This will prevent the error register from being renumbered/reformatted and will eliminate new programming.

3.12.16.7.16  (01-01-2014)
Field 07-W, Tax Exempt Interest

  1. The form and the appropriate transcription line are identified in the table below:

    Form Transcription Line(s)
    1120-SF Page 2, Additional Information, Line 2

  2. Correct all misplaced entries, coding errors and transcription errors.

3.12.16.7.17  (01-01-2014)
Field 07-X, Interest Exempt Under Section 103

  1. This field is Reserved.

  2. This will prevent the error register from being renumbered/reformatted and will eliminate new programming.


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