3.12.16  Corporate Income Tax Returns

Manual Transmittal

October 20, 2014

Purpose

(1) This transmits revised IRM 3.12.16, Error Resolution, Corporate Income Tax Returns.

Material Changes

(1) Minor editorial changes have been made throughout this Internal Revenue Manual (IRM) (e.g., line number updates, spelling, punctuation, links, etc.). Other significant changes to this IRM are shown below.

(2) IRM 3.12.16.1.4 - New - Added information pertaining to BMF Identification (ID) Theft.

(3) IRM 3.12.16.1.11(6) c. Note - Added more information to explain a loop register.

(4) IRM 3.12.16.2.4.1(2) - Added "See IRM 3.12.16.3.17, Field 01-M, Taxpayer Notice Code (TPNC), for additional information." (IPU 14U0075 issued 01-08-2014)

(5) IRM 3.12.16.2.4.1(2) - Taxpayer Notice Code (TPNC) Table - TPNC 90 - Explanation Column - Added TPNC 90 Math Error Code Job Aid information and link (per Unified Work Request 83070 programmed TPNC 90 literals into OnLine Notice Review Retype Application). (IPU 14U0075 issued 01-08-2014)

(6) IRM 3.12.16.3.7(7) - Bullet List - Added "Returns secured by Examination/Collections" to the list of exceptions for routing to the Statute Control Unit. Removed the bullet that mentions Exam and processing as original. (IPU 14U0948 issued 06-02-2014)

(7) IRM 3.12.16.3.17(1) - Added "See IRM 3.12.16.2.4.1, Taxpayer Notice Codes (TPNCs), for the TPNC and the explanation." Added Note with TPNC 90 Math Error Code Job Aid information and link. (IPU 14U0075 issued 01-08-2014)

(8) IRM 3.12.16.3.17(3) - Added Caution with TPNC 90 Math Error Code Job Aid information and link. (IPU 14U0075 issued 01-08-2014)

(9) IRM 3.12.16.7(9) - Note - Added TPNC 90 Math Error Code Job Aid information and link. (IPU 14U0075 issued 01-08-2014)

(10) IRM 3.12.16.7.2(4) - If/Then Table - First Then box - Added TPNC 90 Math Error Code Job Aid information and link. (IPU 14U0075 issued 01-08-2014)

(11) IRM 3.12.16.7.2(6) - Added Note with TPNC 90 Math Error Code Job Aid information and link. (IPU 14U0075 issued 01-08-2014)

(12) IRM 3.12.16.7.8(4) - If/Then Table - Fourth Then box - Added a Note with a cross reference to IRM 3.12.16.3.17, Field 01-M, Taxpayer Notice Code (TPNC) and TPNC 90 Math Error Code Job Aid information and link. (IPU 14U0075 issued 01-08-2014)

(13) IRM 3.12.16.7.8(4) - If/Then Table - Seventh Then box - Added a Note with a cross reference to IRM 3.12.16.3.17, Field 01-M, Taxpayer Notice Code (TPNC) and TPNC 90 Math Error Code Job Aid information and link. (IPU 14U0075 issued 01-08-2014)

(14) IRM 3.12.16.7.14(3) - Added Note that reads: "Announcement 2012-16 provides that the Service will not process requests for refund of the wrongfully collected telephone excise taxes submitted after July 27, 2012."

(15) IRM 3.12.16.7.19(4) - Added a Note with a cross reference to IRM 3.12.16.3.17, Field 01-M, Taxpayer Notice Code (TPNC) and TPNC 90 Math Error Code Job Aid information and link. (IPU 14U0075 issued 01-08-2014)

(16) IRM 3.12.16.8.5(1) - Moved the additional credit to IRM 3.12.16.8.5.1, Non-Qualifying Vehicles. Reworded to read: "Additional credits that may be attached or indicated on a return are shown below."

(17) IRM 3.12.16.8.5(1) - Moved the additional credit to IRM 3.12.16.8.5.2, Qualified Cellulosic Biofuel known as "Black Liquor" . Reworded to read: "Additional credits that may be attached or indicated on a return are shown below."

(18) IRM 3.12.16.8.5.1 - New - Separated the "Additional Credits" to identify them easier.

(19) IRM 3.12.16.8.5.1(1) - Removed the Valid Vehicle Year column and updated the Valid In Service Date column per request from Chief Counsel.

(20) IRM 3.12.16.8.5.1(2) - Added a Note with a cross reference to IRM 3.12.16.3.17, Field 01-M, Taxpayer Notice Code (TPNC) and TPNC 90 Math Error Code Job Aid information and link. (IPU 14U0075 issued 01-08-2014)

(21) IRM 3.12.16.8.5.2 - New - Separated the "Additional Credits" to identify them easier.

(22) IRM 3.12.16.9.1(6) - Added a Note with a cross reference to IRM 3.12.16.3.17, Field 01-M, Taxpayer Notice Code (TPNC) and TPNC 90 Math Error Code Job Aid information and link. (IPU 14U0075 issued 01-08-2014)

(23) IRM 3.12.16.9.2(5) - Added a Note with a cross reference to IRM 3.12.16.3.17, Field 01-M, Taxpayer Notice Code (TPNC) and TPNC 90 Math Error Code Job Aid information and link. (IPU 14U0075 issued 01-08-2014)

(24) IRM 3.12.16.11.1(4) b. - Added a Note with a cross reference to IRM 3.12.16.3.17, Field 01-M, Taxpayer Notice Code (TPNC) and TPNC 90 Math Error Code Job Aid information and link. (IPU 14U0075 issued 01-08-2014)

(25) IRM 3.12.16.11.2(3) - Added a Note with a cross reference to IRM 3.12.16.3.17, Field 01-M, Taxpayer Notice Code (TPNC) and TPNC 90 Math Error Code Job Aid information and link. (IPU 14U0075 issued 01-08-2014)

(26) IRM 3.12.16.12.1(4) b. - Added a Note with a cross reference to IRM 3.12.16.3.17, Field 01-M, Taxpayer Notice Code (TPNC) and TPNC 90 Math Error Code Job Aid information and link. (IPU 14U0075 issued 01-08-2014)

(27) IRM 3.12.16.13.1(4) b. - Added a Note with a cross reference to IRM 3.12.16.3.17, Field 01-M, Taxpayer Notice Code (TPNC) and TPNC 90 Math Error Code Job Aid information and link. (IPU 14U0075 issued 01-08-2014)

(28) IRM 3.12.16.14.1(4) b. - Added a Note with a cross reference to IRM 3.12.16.3.17, Field 01-M, Taxpayer Notice Code (TPNC) and TPNC 90 Math Error Code Job Aid information and link. (IPU 14U0075 issued 01-08-2014)

(29) IRM 3.12.16.16.6 - No Reply Cases Table - Controlled Group - Required Action Column - Added a cross reference to IRM 3.12.16.3.17, Field 01-M, Taxpayer Notice Code (TPNC) and TPNC 90 Math Error Code Job Aid information and link. (IPU 14U0075 issued 01-08-2014)

(30) IRM 3.12.16.18.2(4) - Reworded the second sentence to read: "This applies to the short period when a taxpayer is changing to/from a 52-53 week tax year, but not if such change results in a short period of more than 359 days, but less than 7 days" per feedback from Chief Counsel.

(31) Exhibit 3.12.16-5, Potential Frivolous Arguments Criteria - IRC 861 Business Employment Tax - Descriptive box - Added "Code of Federal Regulations" to define CFR.

(32) Exhibit 3.12.16-14, Form 4136 - Invalid Credit Reference Number (CRN) and TPNC 90 Literal - Credit Reference Numbers (CRNs): 307, 388, 390, 426, 427, 428, 430, 431, 432, 436, and 437 updated per Public Law (P.L.) 112-240, Section 405 and Section 412; IRC 6426(d)(5); IRC 6426(c)(6); and IRC 6427(e)(6) indicated in Work Request Notifications (WRNs) dated July 16, 2014 and March 24, 2014.

(33) Exhibit 3.12.16-14, Form 4136 - Invalid Credit Reference Number (CRN) and TPNC 90 Literal - Credit Reference Numbers (CRNs): 422 and 429 updated per Public Law (P.L.) 109-59, Section 11113(b) indicated in Work Request Notification (WRN) dated March 24, 2014.

(34) Exhibit 3.12.16-16, Form 4136 - Valid Tax Period Chart - Credit Reference Numbers (CRNs): 307, 388, 390, 426, 427, 428, 430, 431, 432, 436, and 437 updated per Public Law (P.L.) 112-240, Section 405 and Section 412; IRC 6426(d)(5); IRC 6426(c)(6); and IRC 6427(e)(6) indicated in Work Request Notifications (WRNs) dated July 16, 2014 and March 24, 2014.

(35) Exhibit 3.12.16-16, Form 4136 - Valid Tax Period Chart - Credit Reference Numbers (CRNs): 422 and 429 updated per Public Law (P.L.) 109-59, Section 11113(b) indicated in Work Request Notification (WRN) dated March 24, 2014.

(36) IRM references updated throughout the IRM.

(37) Figures revised throughout the IRM.

(38) Exhibits revised throughout the IRM.

Effect on Other Documents

IRM 3.12.16, Error Resolution, Corporate Income Tax Returns, dated November 12, 2013 (effective January 01, 2014), is superseded. The following IRM Procedural Updates (IPUs), issued from January 02, 2014, through June 30, 2014, have been incorporated into this IRM: 14U0075 and 14U0948.

Audience

Wage and Investment (W&I) Submission Processing Error Resolution personnel are the intended audience for this IRM.

Effective Date

(01-01-2015)

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

3.12.16.1  (01-01-2015)
Introduction to the Error Correction Program -
Service Center Replacement System (SCRS)

  1. As an Error Correction tax examiner, you develop your expertise working all types of Business Master File (BMF) programs. As your expertise increases, you are also developing your judgement decisions to a comfort level needed to resolve your cases. In this Internal Revenue Manual (IRM) we have provided instructions, procedures, and guidelines for you in order to attain that comfort level needed for correcting cases in the Error Correction Program.

  2. This section provides instructions for resolving errors made by corporate taxpayers and errors made during campus processing. These instructions apply to the Service Center Replacement System (SCRS). 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 action.

  3. The Service Center Replacement System (SCRS) is a term used to refer to the processing of paper register documents. While ERS (Error Resolution System) is worked on the computer with IDRS (Integrated Data Retrieval System), SCRS documents are corrected on a paper print, by hand, with a pen. The errors appear on computer printed error registers. SCRS programs are few in number as programs continue to be moved to ERS each year; the few that remain are generally received in such small numbers that it is considered too expensive to move them to ERS. Despite the low amounts of receipts, these forms are just as important to process correctly as those on ERS.

  4. Instructions in specific sections take precedence over general section instructions in case of a conflict.

  5. The instructions in this text apply to the following Corporate Income Tax forms:

    Form Title Document (Doc) Code Processing Service Campus
    1120-FSC U.S. Income Tax Return of a Foreign Sales Corporation

    Note:

    Form 1120-FSC is used to report the income, gains, losses, deductions, credits, and to figure the income tax liability of a FSC.

    07 Ogden Submission Processing Campus (OSPC) Only
    1120-ND Return for Nuclear Decommissioning Funds and Certain Persons

    Note:

    Form 1120-ND is used to report contributions received, income earned, the administrative expenses of operating the fund, and the tax on modified gross income.

    08  
    1120-SF U.S. Income Tax Return for Settlement Funds (Under Section 468B)

    Note:

    Form 1120-SF is used to report transfers received, income earned, deductions claimed, distributions made, and to figure the income tax liability of a designated or qualified settlement fund.

    06  
  6. Internal Revenue Manual (IRM) 3.12.16 is exempt from the BMF Consistency Guidelines (e.g., indicating diamonds) as shown in other sections of IRM 3.12, Error Resolution.

3.12.16.1.1  (01-01-2015)
Organization of Text

  1. The text is organized to help find corrective procedures quickly and to provide, to the extent possible, all necessary procedures in one place. The text is organized as follows:

    • General information on the overall concepts and procedures of the error resolution process;

    • Math error and manual computation criteria and procedural instructions for correcting each section and each field on Form 1120-FSC, Form 1120-ND, and Form 1120-SF error register.

    • Exhibits are displayed on the last pages of the Internal Revenue Manual (IRM) with transcription lines and other frequently used codes with explanations.

  2. This text provides sufficient information to correct most error conditions. It may be necessary to refer at times to the instructions in IRM 3.11.16, Corporate Income Tax Returns. If there is a discrepancy between the instructions contained in IRM 3.11.16 and those in IRM 3.12.16, contact your Headquarters Analyst and continue to follow the instructions in IRM 3.12.16. If there is a conflict between IRM 3.12.16 and another IRM or Job Aid, IRM 3.12.16 takes precedence until the conflict is resolved.

3.12.16.1.2  (01-01-2015)
IRS Employee Contacts - RRA98, Section 3705(a)

  1. The Restructuring and Reform Act of 1998 (RRA98), 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, in the field, Headquarters and area offices, who communicate, by telephone, correspondence or face to face, with taxpayers or their personal authorized representatives, on tax-related matters, are required to provide (at a minimum) the following information:

    • Their title (e.g., Mr., Mrs., Ms., Miss) and/or first name,

    • Their last name, and

    • Their Identification (ID) card (badge) 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 include the following information:

    • Their title (e.g., Mr., Mrs., Ms., Miss),

    • Their last name, and

    • Their Integrated Data Retrieval System (IDRS) number or ID card (badge) 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 ID card (badge) number must be used. Toll-free employees may also provide their location for identification purposes. Facsimiles (faxes) to taxpayers on tax-related matters, are considered manually-generated correspondence and must include the required information.

    Caution:

    Email cannot be used to transmit taxpayer account information.

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

  6. When a taxpayer requests to speak with a specific employee who previously handled his or her 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 letters 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. They should provide their ID card (badge) number only if they are answering telephones which are routinely used to provide tax account information.

  10. It is not necessary to repeat the ID card (badge) number on a subsequent 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 ID card (badge) number on the first contact.

  11. When contacting taxpayers by telephone, you must be sure you are speaking with the taxpayer or authorized representative before disclosing tax information. See IRM 21.1.3.2.3, Required Taxpayer Authentication, and IRM 21.1.3.2.4, Additional Taxpayer Authentication. Also, before leaving a message on a taxpayer's answering machine, see IRM 11.3.2.6.1, Leaving Information on Answering Machines/Voice Mail. See IRM 3.12.16.1.7, Use of Fax for Taxpayer Submissions, for additional information.

  12. Prior to faxing confidential information to the taxpayer, review fax procedures contained in IRM 11.3.1.11, Facsimile Transmission of Tax Information. See IRM 3.12.16.1.7, Use of Fax for Taxpayer Submissions, for additional information.

  13. During taxpayer contact, if the taxpayer asks to be referred to the Taxpayer Advocate Service (TAS) or you believe a referral to TAS may be appropriate, see IRM 3.12.16.1.3, Taxpayer Advocate Service (TAS).

3.12.16.1.3  (01-01-2015)
Taxpayer Advocate Service (TAS)

  1. The Taxpayer Advocate Service (TAS) is an independent organization within the IRS whose employees assist taxpayers who are experiencing economic harm, who are seeking help in resolving tax problems that have not been resolved through normal channels, or who believe that an IRS system or procedure is not working as it should.

  2. Refer taxpayers to TAS (see IRM 13, Taxpayer Advocate Service) when the contact meets TAS criteria (see IRM 13.1.7, TAS Case Criteria) or has Form 911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance Order), attached 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 and forward it to TAS in accordance with your local procedures.

3.12.16.1.3.1  (01-01-2015)
TAS Service Level Agreements (SLAs)

  1. The National Taxpayer Advocate has reached agreements with the Commissioners of the Wage and Investment (W&I) Division, Small Business Self-Employed (SBSE) Division, Tax Exempt and Government Entities (TEGE) Division, Criminal Investigation (CI), Appeals, and Large Business and International (LB&I) Division, 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

3.12.16.1.4  (01-01-2015)
BMF Identification (ID) Theft

  1. BMF Identification Theft is increasing. If a tax examiner in Submission Processing (SP) Error resolution System (ERS) finds a case with attachments or correspondence indicating the taxpayer is a victim of ID Theft, provide the whole case to your senior/lead. Your senior/lead will expedite the case to the Planning and Analysis (P&A) staff for referral to one of the SP BMF ID Theft liaisons. The taxpayer must clearly state that they are a victim of "ID Theft" ; do not send cases that are subject to "Funny Box" or "Fraud" review.

3.12.16.1.5  (01-01-2015)
Frivolous Arguments

  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, Examination of Returns - Frivolous Return Program (FRP). Also, see Exhibit 3.12.16-5, Potential Frivolous Arguments Criteria.

  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.

    Caution:

    If the return shows CCC "U" (or Action Code 331) and has a Form 4227 attached with the remarks, "Refer to Exam FRP for audit after processing", 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 CCC "U" or an 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 procedures in IRM 3.12.16. However, do not circle or void the CCC "U" (or the Action Code) indicating a frivolous return.

    Note:

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3.12.16.1.6  (01-01-2015)
Correspondence Imaging System (CIS) Returns

  1. Correspondence Imaging System (CIS) is an inventory system for scanning all Accounts Management (AM) receipts 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 instructions below for processing CIS returns.

    If And Then
    The CIS return has a Form 13596, Reprocessing Returns, attached,

    Note:

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

    The return is not complete (e.g., missing signature, schedules or forms), 1. Enter Action Code 3 and reject the record.
    2. Attach Form 4227 (or other appropriate routing slip) to the return and route to AM to secure missing information.

    Caution:

    If the return comes back from AM with the information still incomplete, send the return to AM again to secure all the missing information. Indicate "Additional information needed to process incomplete CIS return," or similar language on Form 4227 (or other appropriate routing slip).

    Note:

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

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

3.12.16.1.7  (01-01-2015)
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 tax examiners will indicate the fax paragraph on the Form 3696, Correspondence Action Sheet, (or other 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 a message on a taxpayer's answering machine, review IRM 11.3.2.6.1, Leaving Information on Answering Machines/Voicemail. 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.

3.12.16.1.8  (01-01-2015)
Local Desk Procedures

  1. Some Submission Processing Campuses have developed local use Desk Procedures. Such procedures are only to be used:

    1. To supplement existing Headquarters procedures

    2. To expand Submission Processing Campus Error Resolution procedures by incorporating material from other IRMs, Automated Data Processing (ADP) handbooks, etc

    3. For local routing procedures; and

    4. Not limited to the examples listed above

  2. Team managers must have a signed approval on file from the responsible Operation Manager on all Submission Processing Campus Desk Procedures.

  3. All existing local information and procedural issuances should be reviewed periodically by the Operation Manager level (at least 2 times a year or with each IRM revision) to ensure conformance with Headquarters procedures (make necessary changes, secure necessary approvals, etc.).

  4. Emergency problems should be telephoned to the Headquarters Analyst if the problem cannot be resolved and is identified as a work stoppage.

3.12.16.1.9  (01-01-2015)
Procedures for "In-Care-Of" Instructions

  1. An "in-care-of" name can be identified by the words "in-care-of" or the symbols "c/o" or "%" (percent). Correct "in-care-of" names by researching IDRS using Command Code (CC) INOLES.

  2. Ensure that the "in-care-of" name is located above the street address.

    If And Then
    The "in-care-of" name on the return Name control on CC INOLES matches, 1. Delete % (percent) from the name control field.
    2. Enter the correct name control in Field 01-B (Name Control).
    The "in-care-of" name on the return Name control on CC INOLES does not match, Overlay CC INOLES with CC ENMOD and transmit.
    There is a pending (PN) transaction changing the c/o name,   1. Delete % from the name control field.
    2. Enter the name control in Field 01-B (Name Control).
    There is no PN transaction,   Input a change to the "in-care-of" name as shown below.
    1. Overlay CC ENMOD with CC ENREQ and transmit (Page Up key).

      Note:

      CC BNCHG will display.

    2. Caution: If CC ENMOD is not present, displays "THE MODULE YOU HAVE REQUESTED IS FOUND AT THE FOLLOWING CAMPUS(S); XXX@ xx," or the ENMOD name control does not match the name control on the return, see the CC MFREQ instructions below.

    3. Position the cursor at "<CARE-OF-NAME" by tabbing over.

    4. Enter the "c/o" name from the return making sure the % sign is in the first position followed by a space.

    5. TAB to "REMARKS" and enter "PER DOC" and transmit (Page Up key). "REQUEST COMPLETED" will display.

    6. Delete % from Field 01-B (Name Control) and enter the correct name control in Field 01-B (Name Control).

  3. CC MFREQ Instructions
    Enter: MFREQC00-1234567
    00 000000 XXXX

    1. Enter the name control on CC INOLES in place of the 4 Xs.

    2. After "REQUEST COMPLETED" displays, overlay CC MFREQ with CC ENMOD and transmit (Page Up key) to return to the "c/o" name change function.

      Note:

      Addresses on extensions should NEVER be changed.

3.12.16.1.10  (01-01-2015)
Refund Returns 45-Day Jeopardy and $10 Million or More Refunds

  1. Document Perfection is responsible for identifying refunds and for initiating requests for manual refunds.

  2. Expeditious processing of refund returns is critical if the 45-day period is about to expire.

    If Then
    The processing date is more than 20 days after received date or the return due date (whichever is later) and the 45-day interest free period is in jeopardy and the refund amount is $25,000 or more,

    Note:

    Refund in this instruction means only the amount requested to be refunded to the taxpayer, not overpayments transferred to other periods.

    1. Enter Action Code 3 and reject the record.
    2. Attach Form 4227 (or other appropriate routing slip) and give the return to the manager.
    The refund is $10,000,000 or more,

    Note:

    Refund in this instruction means only the amount requested to be refunded to the taxpayer, not overpayments transferred to other periods.

    1. Do not leave the return in the block.
    2. Enter Action Code 3 and reject the record.
    3. Attach Form 12230, Expedite Processing Million Dollar Manual Refund, and give the return to the manager.

    Note:

    See IRM 3.12.16.7.10.1, Refund Returns, for additional information.

3.12.16.1.11  (01-01-2015)
Taxpayer Advocate Service (TAS) Manual Refunds

  1. Taxpayer Advocate Service (TAS) Manual Refunds - Any return hand walked by a W&I Submission Processing (SP) liaison for Taxpayer Advocate Service (TAS) as a manual refund should be processed by a lead tax examiner or designated tax examiner using the following procedures:

    1. CCC "O" should be edited on the return and entered in Field 01-F (CCC) after the manual refund has been issued.

    2. Enter Reserve Code "1" (if applicable) in Field 03-E when a refund of $1 million or more has been issued. The Reserve Code "1" is valid on correction only.

    3. Delete CCC "Y" . Continue processing the return.

  2. Correspondence - If the return requires correspondence for missing or incomplete information, then do the following:

    1. Enter Action Code 3 and reject the record.

    2. Prepare Form 3696, Correspondence Action Sheet, (or other approved Correspondence Action Sheet) and request all information that is missing or incomplete.

    3. Inform the W&I SP liaison of all information that is being requested.

    4. Give the return back to the W&I SP liaison.

    5. The W&I SP liaison will contact the Taxpayer Advocate to obtain the required information needed to complete the processing of the return.

  3. Other Suspense Action - If the return requires other suspense action, then do the following:

    1. Initiate the suspense action according to procedures.

    2. Inform the W&I SP liaison the reason of the action taken.

    3. Give the return back to the W&I SP liaison.

    4. The W&I SP liaison will contact the Taxpayer Advocate, who in turn will take the necessary action to complete the processing of the return.

  4. Assigning Taxpayer Notice Codes (TPNCs)/Math Error - When a math error is identified, do the following:

    1. Assign the applicable TPNC according to procedures.

    2. After all TPNCs have been assigned, inform the W&I SP liaison of the TPNCs issued.

    3. Suspend according to procedures and then give the return to the W&I SP liaison.

    4. The W&I SP liaison will contact the Taxpayer Advocate, who in turn will take the necessary action to complete the processing of the return.

  5. When Balance Due/Overpayment Math Error generates do the following:

    1. Make a copy of the error register and highlight the Computer Generated Refund Amount (underprint).

    2. Attach the copy to the front of the return with the entity portion of the return visible.

    3. Enter the amount the taxpayer claimed as the amount they requested to be refunded back into Field 07-I.

  6. If Balance Due/Overpayment Math Error loops because the taxpayer made a math error when computing their refund, then do the following:

    1. Make a copy of the error register and highlight the Computer Generated Refund Amount (underprint).

    2. Attach the copy to the front of the return with the entity portion of the return visible.

    3. Enter Action Code 1 and assign the appropriate TPNC.

    Note:

    The first time a document in error prints on a register it is called a "raw" register. Tax examiners will make various corrections to the paper register, trying to correct as many errors as possible. The document and register are then sent back through the Integrated Submission and Remittance Processing (ISRP) system to be transcribed. If the correction resolves the error, the information is transmitted to the Enterprise Computing Center-Martinsburg (ECC-MTB). If all the errors do not clear, the system will generate a subsequent register (known as a “loop” register) showing the errors that are remaining. The title line will tell you if the register is a raw register or a loop register and how many times (if any) the register has looped. The term "loop" means the register continues to reappear on the next correction cycle until every validity check has been satisfied.

  7. Once return processing is complete, give the return, copy of the error register and Form 12412, Operations Assistance Request (OAR), to the W&I SP liaison.

  8. Rejects Suspense - Manual refunds that are hand walked by a W&I SP liaison that have been suspended should be processed as follows:

    1. Follow the specific instruction given by the W&I SP liaison in regards to correspondence issues and the assignment of the TPNCs.

    2. Refer to applicable paragraphs above.

3.12.16.1.12  (01-01-2015)
Perfection of Attachments

  1. If the taxpayer writes a question or request for assistance on the return itself, make a photocopy of the question/request and the taxpayer’s Employer Identification Number (EIN), name and address. Route this information to the appropriate function.

    If Then
    Unrelated, unanswered taxpayer correspondence is attached and no action has been taken, Detach and route to the appropriate area using local procedures.
    Unanswered taxpayer correspondence relating to the Form 1120 SCRS Program is attached, Make a photocopy of the attachment and forward it to the appropriate area using local procedures.

    Note:

    If a return or attachment indicates "Pro Forma Form 1120 for New York State" or similar statement is notated on the return, then no action is required. Do not detach the attachment from the return.

3.12.16.1.13  (01-01-2015)
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 include willful and deliberate attempts to evade or defeat the income tax. Criminal tax violations also include the willful failure to collect or pay over tax and claims of false refunds based on bogus return information.

  2. Pull any return identified as having any CI criteria found in the table below and place in "CI Funny Box" .

    ≡ "≡ ≡ ≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
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    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    • ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

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

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

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

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

3.12.16.1.14  (01-01-2015)
Examination (Exam) "Funny Box"

  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 allows SP to refer questionable returns unless restricted by another IRM section.

3.12.16.1.15  (01-01-2015)
IDRS Decision Assisting Program/Integrated Automation Technologies (IDAP/IAT)

  1. IDAP/IAT provides tools to IRS employees that simplify research, reduce keystrokes and increase the accuracy of regular work processes. When used with IRS systems, it eliminates repetitive typing and assists in making precise decisions. IDAP/IAT tools improve efficiency, productivity and quality by performing some functions automatically. Through more complex programming, they are designed to reduce fallout to other areas.

  2. Managers will ensure employees understand the use of IDAP/IAT and will verify that employees have access to all the tools needed for their duties. They will make sure that all employees receive training on the use of IDAP/IAT.

    Note:

    IDRS will be used when IDAP/IAT is unavailable.

  3. See the IDAP/IAT website at http://iat.web.irs.gov/jobaids/iat.asp for a complete list of available tools and User Guides. A few of the tools available are:

    • Address Change

    • Auto MFREQ

    • CC Prints

    • Credit Transfer

    • Manual Refund

    • Route It Out

3.12.16.1.16  (01-01-2015)
Customer Account Data Engine (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 Business Master File (BMF) campus cycles are:

    1. Campus Cycle: Thursday - Wednesday

    2. Master File Processing: Friday - Thursday

    3. Notice Review Saturday: Monday (8+ days)

    4. 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. Cycle posting dates will reflect a format of YYYYCCDD. YYYY will indicate the year. CC will indicate the posting cycle. For IMF transactions, the following values for DD are defined:

    • 01 = Friday

    • 02 = Monday

    • 03 = Tuesday

    • 04 = Wednesday

    • 05 = Thursday

    Note:

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

3.12.16.2  (01-01-2015)
General Paper/Error Register Information

  1. The paper register is the physical representation of the tax document and any errors that have been identified. It is essentially a printed form of the data input from the document, and appears in a standardized format which is used for nearly every type of SCRS program. Data fields are designated with letters of the alphabet. Each section is designated with the section number.

  2. The first time a document in error prints on a register it is called a "raw" register. Tax examiners will make various corrections to the paper register, trying to correct as many errors as possible. The document and register are then sent back through the Integrated Submission and Remittance Processing (ISRP) system to be transcribed. If the correction resolves the error, the information is transmitted to the Enterprise Computing Center-Martinsburg (ECC-MTB). If all the errors do not clear, the system will generate a subsequent register (known as a “loop” register) showing the errors that are remaining. The title line will tell you if the register is a raw register or a loop register and how many times (if any) the register has looped.

  3. Each error register will have one or more sections of data. The sections will always start with Section 01. Other sections may follow in ascending order but not necessarily in consecutive order, depending upon which sections have data. For example, a register may show Sections 01 through 03, 05 and 07 because Sections 04 and 06 did not contain any data.

  4. Each section will contain one or more fields. Each field is identified by a letter of the alphabet, starting at A. The fields print consecutively until the end of the section. For example, Section 02 has six fields, starting at Field 02-A (In-Care-Of Name) and going through Field 02-F (ZIP Code). Unlike the sections, the fields print on the error register whether they contain data or not.

  5. There are two types of fields. They are a variable field and a fixed field.

    1. One type of field is a variable field. For example, Field 02-A ("In-Care-Of" Name) is separated from Field 02-B (Foreign Address) by a plus sign (+). The plus sign identifies Field 02-A ("In-Care-Of" Name) as a variable field and is called a breaker; most of the time the breaker will be a plus sign or (less often) a minus sign. A variable field is a field that can contain a variable amount of data. For example, Field 02-A ("In-Care-Of" Name) can contain up to 35 letters or numbers. You may only need to enter 15 characters in Field 02-A ("In-Care-Of" Name), and that’s fine. As long as you enter less than 36 characters, the field can contain them. See IRM 3.12.16.4.1, Field 02-A, "In-Care-Of" Name.

    2. The other type of field is a fixed field. Unlike the variable field, the fixed field must contain a fixed number of spaces. A good example is an Employer Identification Number (EIN). An EIN always has nine digits, so Field 01-C (EIN) will always have nine spaces. Other examples of a fixed field are Field 01-E (Received Date), which will have eight spaces, or Field 01-B (Name Control), which will have four spaces (characters). The computer identifies a fixed field for you by leaving out the breaker.

    Note:

    You need to know the difference between a fixed field and a variable field because there are times you need to make a correction to a fixed field and the correct entry does not contain all the required spaces. For example, the name control of "COE" . The name control requires four characters. If you only enter three characters, the computer will not accept your entry and the record will loop. You must account for all the spaces in the fixed field. The way to avoid a loop is to enter the data that you have and then account for the blanks left by entering the number of blanks and circling them.

  6. A record of the taxpayer’s return will appear on the paper/error register when the computer has detected an error made by the taxpayer, by the Document Perfection tax examiner or by the Integrated Submission and Remittance Processing (ISRP) operator. Errors appear much differently on paper registers than they do in ERS (error codes). The computer indicates the errors in two ways: with asterisks and underprints.

    1. One way the computer indicates an error is with an asterisk (*). The computer will place asterisks in front of the field or fields that are in error. The computer is telling you that something is wrong with this field.

    2. Another way the computer indicates an error is with an underprint. Instead of an asterisk, the computer is underprinting with what it thinks the correct information (amount, name control, etc.) should be.

    3. The Error Correction tax examiner must locate the error and correct the error condition or, in the case of a taxpayer error, issue an explanatory notice to the taxpayer. The tax examiner will also be required to manually verify the taxpayer's tax computation in those special instances where the computer is unable to compute tax.

    Note:

    Errors appear much differently on paper registers than they do in ERS (error codes). Most errors can be located by an asterisk (*) appearing to the immediate left of the Field Designator. Some are special errors that require unique treatment. Errors can occur anywhere in every section except for the Header Section. Research with Command Codes can be used to correct some Entity errors.

3.12.16.2.1  (01-01-2015)
General Corrective Procedures

  1. There are four general types of errors which cause a record to print on the error register.

    • Field errors.

    • Section errors.

    • Math errors.

    • Consistency errors.

  2. Field errors are indicated on the error register by an asterisk printed to the left of the field in error. This occurs when a field does not contain required data or when the contents of the field does not meet the requirements for that field. See Figure 3.12.16-1, Field Error.

    Figure 3.12.16-1

    This image is too large to be displayed in the current screen. Please click the link to view the image.
  3. Missing section errors are identified by a (*) single asterisk printed to the left of the section number. A missing section error occurs when a section is missing that the computer identifies as necessary for the correct processing of the return. See Figure 3.12.16-2, Section Error.

    1. If the required data or section was not transcribed, enter the data with Action Code 6. If you cannot find the data by checking the return or researching, you will indicate the return is unprocessable by entering Action Code 3.

    2. Do not try to correct a missing section error by trying to delete the section with Action Code 4. There is no section present (it is missing) and the computer will cause the register to "loop."

    Figure 3.12.16-2

    This image is too large to be displayed in the current screen. Please click the link to view the image.
  4. Extraneous section errors are a type of section error identified by a single pound sign (#) printed to the left of the section number. An extraneous section is one the computer identifies as not necessary for the complete processing of the return. In order to correct an extraneous section error, do the following:

    1. Examine the return and attachments and determine if the section is needed.

    2. Delete any unnecessary sections using Action Code 4; or,

    3. Enter another section using Action Code 5; or,

    4. Correct the section using Action Code 6.

  5. Terminus section errors are a type of section error identified by two asterisks (**) printed to the left of the section number. A terminus section is a section that does not fit the prescribed requirements for the given section. See Figure 3.12.16-3, Terminus Error. Several things cause Terminus section errors:

    1. Erroneous size of a field or the entire section

    2. Non-numeric character in a numeric field

    3. Improper formatting of the section

    Figure 3.12.16-3

    This image is too large to be displayed in the current screen. Please click the link to view the image.
  6. In order to correct a terminus section error, do the following:

    1. Check that all necessary sections are present. If not, enter the missing sections with Action Code 5 or correct the terminus sections with Action Code 6.

    2. Re-enter any field in the terminus section with Action Code 6 if the data is correct as it appears in the section.

    3. Delete the section with Action Code 4, if the terminus section is blank and no data is required.

  7. Integrated Submission and Remittance Processing (ISRP) section errors are a type of section error identified by a pound sign (#) and an error number printed to the left of the section number. An ISRP section error occurs after ISRP enters the data on the return into the system, the computer performs an automatic check, called a System Edit Run. If an error is detected, the computer prints a pound sign (#) and an error number to the left of the section number, identifying the type of error detected. An explanation of each error number follows.

    1. #0 - Normal.

    2. #1 - Split screen transmission - The Key Verifier attempted to change the check digits, the Key Verifier changed four or more digits of the Taxpayer Identification Number (TIN), or the Original Entry operator (ISRP operator) entered a required section as "missing" .

    3. #2 - A mixed condition exists, caused by back to back returns with the same data.

    4. #3 - Invalid section ending point.

    5. #4 - Invalid field length.

    6. #5 - Out of sequence section or duplicate section.

    This error will be shown on the error register as follows. See Figure 3.12.16-4, ISRP Error.

    Figure 3.12.16-4

    This image is too large to be displayed in the current screen. Please click the link to view the image.
  8. All fields of an ISRP section error must be examined when this condition exists. For example, if Section 01 of a return is coded, then examine the tax data base section for error to ensure the return data is for the taxpayer whose name control is in Section 01.

  9. Even though one or more sections of a record are coded, the validity and consistency checks necessary for the record are made for all sections.

    1. If the record is correct as it appears on the Error Register, then use Action Code 7 to send the record to Good Tape.

  10. Corrective action for fields in error shall be taken as instructed in the applicable chapter of IRM 3.12.16.

  11. Math Errors are indicated by the presence of an underprint. A math error occurs when the taxpayer provides incorrect information or there is an editing or transcription causing a computed field to be out of balance. See Figure 3.12.16-5, Math Error.

    Figure 3.12.16-5

    This image is too large to be displayed in the current screen. Please click the link to view the image.
    1. In order to correct a math error, compare all entries leading to the underprinted field with the return and correct all transcription errors, editing errors, coding and/or transfer errors on both the return and the register.

    2. Total Tax Field is computer verified and underprinted only after Total Income and Total Deductions are within tolerance. Therefore, Total Tax may appear valid when either Total Income or Total Deductions are not within tolerance.

    3. After making all possible corrections to the error register and examining the return for manual computation requirements, assign the applicable Taxpayer Notice Code (TPNC).

      Note:

      The term "loop" means the register continues to reappear on the next correction cycle until every validity check has been satisfied.

    4. TPNCs can only be assigned after every validity check has been satisfied. See IRM 3.12.16.2.4.1, Taxpayer Notice Codes (TPNCs).

  12. Consistency errors is indicated by the computer when two or more fields have inconsistent information The error can happen if the input information does not match or is inconsistent with other fields on the error register. An asterisk prints before the fields involved.

    1. In order to correct a consistency error, check all fields marked with an asterisk for coding errors and transcription errors by comparing the data on the register with the related entry on the return.

    2. Enter Action Code 6 to the left of the corresponding section number, and correct the field on the register to agree with the return.

3.12.16.2.2  (01-01-2015)
Action Codes

  1. Action Codes are entered on the error register to alert the computer to the type of correction being attempted. The table below lists the Action Codes and describes when each Action Code can be used.

    Action Code Type of Correction
    0 1. Action Code 0 is used when data, as transcribed is correct. (Taxpayer's figures must be verified.)
    2. Computer Condition Code (CCC) "Y" may or may not be present. When the "Y" code is required, but has not been entered, enter CCC "Y" and use Action Code 0 on the next correction cycle.
    3. Enter Action Code 0 to the left of Section 01.
    4. No other corrective action can be used.
    1 1. Action Code 1 is used when the taxpayer has made a math error and a TPNC will be sent.
    2. No other corrective action can be used.
    3. Enter Action Code and taxpayer notice code(s) must be separated with a hyphen (e.g., "1-90" or "1-05-90" ).
    4. Enter Action Code 1 to the left of Section 01.
    2 1. Action Code 2 is valid for Information Return Processing (IRP) and Reject Register only to delete (D), re-enter (R), or renumber (N) records on the Service Center Control File (SCCF).
    2. Enter Action Code 2 to the left of Section 01.
    3. It is only valid when immediately followed by Error/Reject Disposition Codes D (delete), R (re-enter), or N (renumber).
    4. No other Action Code is valid with Action Code 2
    3 1. Action Code 3 is used to reject a record with an unprocessable condition.
    2. Enter Action Code 3 to the left of Section 01.
    3. Prepare and attach Form 3696 (or other approved Correspondence Action Sheet), Form 4227, or Form 6882 for campus routing, whichever is applicable.
    4. No other corrective action can be used with Action Code 3.
    4 1. Action Code 4 is used to delete a data section that should not be part of the record.
    2. This code can be used to delete Sections 02 through 12 of a return.
    3. Enter Action Code 4 to the left of the section number being deleted.
    4. Action Codes 4, 5, or 6 may be used on the same correction attempt.
    5 1. Action Code 5 is used to add a section to the error register.
    2. Enter Action Code 5 to the left, followed by the section number, the alpha field designators and the data for each field.
    3. It is only necessary to enter the fields with data present.
    4. This code can be used to enter Section 02 through Section 12 of a return.
    6 1. Action Code 6 is used to change data within fields (except remittance and computer generated fields) and to correct terminus errors.
    2. Enter Action Code 6 to the left of the section number.

    Note:

    Sometimes you will need to use Action Code 6 to change a positive field to a negative one or a negative field to a positive one. For example, ISRP may enter the remittance as a positive amount when it should be a negative amount. Use special symbols to change the sign. A positive amount is written with a comma (,) and a negative amount is written with a pound sign (#).

    7 1. Action Code 7 is used to indicate that the data on the error record is correct. It is used to clear certain validity checks. It is not to be used when underprinted fields are present.
    2. Each correction attempt is subject to tests which ensure proper correction procedures are followed. If a correction attempt fails, the record will reappear or loop, with an Invalid Correction Attempt "AA" printed on the error register. When Error Reason Code "AA" is present, correct the error register as if no other correction attempt has been made. If no correction is necessary after reviewing return with Error Reason Code "AA" , use Action Code 7 to clear the register.
    3. Enter Action Code 7 to the left of Section 01.
    4. No other corrective action can be used with Action Code 7.
    9 1. Action Code 9 is used for Reject loop only. Do not use for raw input or error registers.

    Note:

    The first time a document in error prints on a register it is called a "raw" register. Tax examiners will make various corrections to the paper register, trying to correct as many errors as possible. The document and register are then sent back through the Integrated Submission and Remittance Processing (ISRP) system to be transcribed. If the correction resolves the error, the information is transmitted to the Enterprise Computing Center-Martinsburg (ECC-MTB). If all the errors do not clear, the system will generate a subsequent register (known as a “loop” register) showing the errors that are remaining. The title line will tell you if the register is a raw register or a loop register and how many times (if any) the register has looped.


    2. Use Action Code 9 to re-reject a loop register for correspondence or other suspense action.
    3. No other Action Code is valid with Action Code 9.

3.12.16.2.3  (01-01-2015)
Computer Condition Codes

  1. When a Computer Condition Code (CCC) is not present, and is required, it must be entered in the dotted portion of the income section, Page 1 (Lines 1-11).

  2. A maximum of ten codes can be entered, as required.

3.12.16.2.3.1  (01-01-2015)
Computer Condition Code Chart

  1. 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.

    CCC Definition Validity Check or Action
    A No Estimated Tax Penalty
    Used to suppress the Estimated Tax Penalty when the taxpayer computes zero for the penalty. Enter when the filer attaches Form 2220 showing no liability for the Estimated Tax Penalty.
    No validity check.
    B Electing out of Installment Sales No validity check.
    C Invalid Code - Fall to ERS
    Code and Edit will edit CCC "C" and force the return to fall to ERS.
    See IRM 3.12.16.8.5, Additional Credits, for more information.
    Delete CCC "C" and continue normal procedures.
    D Reasonable Cause for Failure to Pay Taxes Timely
    • CCC "D" is no longer edited by Code and Edit (see exception below) when a reason is given for the delay in paying taxes timely (or if the taxpayer requests abatement). Issue Letter 1382C (if Code and Edit has not done so) and continue processing the return.
      Exception: Secured returns, Prepared returns, Disaster returns and Reprocessing returns.

    • For Secured returns (e.g., returns with an attached Form 13133, Expedite Processing Cycle) or Prepared returns (e.g., returns notated "6020(b)" or "SFR" (Substitute for Return)), enter the applicable CCC as indicated on the return and/or attached form.

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

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

    • A foreign corporation attaches a statement indicating the corporation qualifies for an automatic 3-month extension under Regulations Section 1.6081-5 and the return is filed on or before the 15th day of the 6th month after the tax period ending date.

    • A "Final" return is received after the short period due date but received timely ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ before the regular full tax period due date.

    Do not use CCC "D" if a prepaid penalty is included.
    F Final Return
    Enter when the "Final Return" box on Page 1 of the return is checked.

    Enter when there is an indication that the corporation is not liable for filing future returns. Notations may include (but are not limited to):
    • "Final" ,

    • Deceased,

    • Out of Business,

    • Liquidation,

    • Exempt under IRC 501(c)(3), or

    • Dissolved.

    A "final" return may not have CCC "Y" or a Credit Elect amount in Field 07-J (Credit to Next Years Estimated Tax).
    G Amended Return
    Enter when a taxpayer notes amended, superseding, duplicate, substitute, corrected, etc., on the return.
    Note: If there is an incomplete return (e.g., return is missing multiple items of information, only Page 1 is present, etc.), then do the following:
    1. Research IDRS using appropriate Command Code (CC) (e.g., BRTVU, BMFOL, SUMRY and/or TXMOD) for the status of the return.
    2. Check to see if there is a posting (TC 150) of the return for the tax period.
    3. If there is a posting, enter "G" in Field 01-F (CCC) and delete subsequent significant entries and/or sections.
    • Delete all fields in Section 01 past Field 01-F (CCC).

    • Delete all CCCs except “G” in Field 01-F (CCC).

    • If Field 01-E (Received Date) is blank, enter the correct received date. See IRM 3.12.16.3.9, Field 01-E, Received Date.

    • Enter Action Code 6 to the left of Section 01.


    4. If there is not a posting, correspond for all missing information with Action Code (AC) 3.
    5. If unable to correspond, destroy the return in accordance with classified waste procedures.
    No other code is allowed, except CCCs "U," "W," and/or "3" (see instructions for Computer Condition Codes for additional criteria).
    L Treaty-Based Return Position Disclosure
    Enter when the taxpayer indicates IRC 6114 Election or Form 8833 is attached to the return.
    CCC "L" is not valid on Form 1120-ND or Form 1120-SF.
    N Joint Committee Case
    Used when an unusual credit is claimed on the Form 1120-FSC and Form 1120-SF. See IRM 3.12.16.5.8, Audit Codes, for additional information.
    CCC "N" is not valid on Form 1120-ND.
    O Manual Refund
    Used when the taxpayer applies for a quick refund of overpayment, or a manual refund is sent. Enter when Form 4466 or Form 3753 is attached to the return.
    No validity check.
    Q Return Filed Claiming Telephone Excise Tax Refund (TETR) Only (Form 8913, Credit for Federal Telephone Excise Tax Paid)
    CCC "Q" is no longer edited by Code and Edit. If CCC "Q" is edited in error by Code and Edit, remove CCC "Q" .

    See IRM 3.12.16.7.14, Field 07-R, Credit for Federal Telephone Excise Tax Paid and IRM 3.12.16.15, Section 20, Data - Form 8913, Credit for Federal Telephone Excise Tax Paid, for additional information.
    R Reasonable Cause for Failure to File Return Timely
    • CCC "R" is no longer edited by Code and Edit (see exception below) when a reason is given for the delay in filing a return timely (or if the taxpayer requests abatement). Issue Letter 1382C (if Code and Edit has not done so) and continue processing the return.
      Exception: Secured returns, Prepared returns, Disaster returns and Reprocessing returns.

    • For Secured returns (e.g., returns with an attached Form 13133) or Prepared returns (e.g., returns notated "6020(b)" or "SFR" (Substitute for Return)), enter the applicable CCC as indicated on the return and/or attached form.

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

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

    • A foreign corporation attaches a statement indicating the corporation qualifies for an automatic 3-month extension under Regulations Section 1.6081-5 and the return is filed on or before the 15th day of the 6th month after the tax period ending date.

    • A "Final" return is received after the short period due date but received timely ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ before the regular tax period due date.

    No validity check.
    S Form 8883, Asset Allocation statement under section 338 Enter CCC "S" when Form 8883 is attached.
    Not valid on Form 1120-ND and Form 1120-SF.
    T Form 8886, Reportable Transaction Disclosure Statement Enter CCC "T" when Form 8886 is attached.
    U Unprocessable Return Use Action Code 3.
    W Return Cleared by Statute
    Used to bypass the statute check. Enter when the return is stamped Cleared by Statute.
    The Computer Condition Code field will asterisk if a statute return has no CCC "W," or if CCC "W" is present on a non-statute return.
    X Credit Freeze
    Enter when the taxpayer indicates that excess remittance or overpayment is to be applied to another account. Also, use to freeze a refund.
    If there's "No Reply" on a refund return that is missing a signature, enter CCC "3" and CCC "X" .
    Y Short Period Return Due to Change of Accounting Period
    Enter only on a short period return that is due to a "change of accounting period" . The return is accepted as submitted, and the Master File is updated.
    Do not use CCC "Y" on an "initial" or "final" return. The return must be manually verified. Clear the Error Register with Action Code 0.
    1 Form 8824, Like-Kind Exchanges
    Enter when Form 8824 is attached.
    No validity check.
    2 Form 8938, Statement of Foreign Financial Assets
    Form 8938 is to be filed by U.S. taxpayers with foreign financial assets of more than $50,000.
    If attached to the return, no action is required.
    3 No Reply
    Used for No Reply, Reply with Some Information, and Reply with No Information. Enter to show incomplete or no reply to correspondence. Credit interest is suppressed.
    See the Note at the end of this chart.
    7 Reasonable Cause Denied
    CCC "7" is no longer edited by Code and Edit tax examiners. See CCC "D" , Reasonable Cause for Failure to Pay Taxes Timely, and CCC "R" , Reasonable Cause for Failure to File Return Timely.
    No validity check.
    8 Waiver of Estimated Tax Penalty or Estimated Tax Penalty Annualization Exception
    Enter when the taxpayer completes Form 2220 or worksheet that shows an exception from the estimated tax penalty due to annualization.
    No validity check.

    Note:

    If there is an overpayment on no reply correspondence, input CCC "3" and CCC "X" . The CCC "X" will freeze the refund.

3.12.16.2.4  (01-01-2015)

Math Error Preliminary Review

  1. A math error will occur when the taxpayer provides incorrect information (or there is a coding error or transcription error) in any of the following fields:

    • Tax Period (Field 01-D).

    • Penalty and Interest Code (Field 03-D).

  2. Take the following action during the preliminary review process:

    If Then
    The data is inconsistent or undeterminable, Correspond with the taxpayer for clarification.
    The Taxable Income Brackets are questionable, Consult with your lead tax examiner.
  3. Prepare Letter 3833C (or other appropriate letter) to notify the taxpayer of errors or adjustments to the return when a TPNC will not be sent.

  4. Prepare Letter 3833C (or other appropriate letter) when:

    1. An adjustment is made to income and/or deductions which affects the total taxable income ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ when the total taxable income is a loss;

    2. An adjustment to the Net Operating Loss Deduction (NOLD) changed ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ in Foreign Tax Investment Credit, Work Opportunity Credit, Employer Stock Ownership Credit, Research Credit, Possessions Tax Credit, Credit for Alcohol Used as Fuel, Production Tax Credit, General Business Credit or Prior Year Minimum Tax Credit.

3.12.16.2.4.1  (01-01-2015)
Taxpayer Notice Codes (TPNCs)

  1. Valid TPNCs for Form 1120-FSC, Form 1120-ND, and Form 1120-SF: 05, 10, 41, 88, 89, and 90.

  2. The following Taxpayer Notice Code (TPNC) table identifies the TPNC, its explanation and valid forms. See IRM 3.12.16.3.17, Field 01-M, Taxpayer Notice Code (TPNC), for additional information.

    TPNC Explanation Valid Form(s)
    05 We found an error in the computation of your total income tax. ALL
    10 We found an error in the computation of the tax due or overpayment amount. ALL
    41 We computed your tax for you. ALL
    88 We changed your telephone excise tax refund amount based on the information you provided. ALL
    89 We changed your tax and/or credits because we did not receive the additional information we requested. The change includes the disallowance of all or part of your telephone excise tax refund you requested on your tax return. We previously sent you a separate letter explaining the disallowance. ALL
    90 Fill-in narrative. This math error contains fill-in free form text with maximum of 10 lines, 70 characters per line.

    Note:

    In January 2014, the Taxpayer Notice Code (TPNC) 90 Math Error (ME) Code literals were programmed into the OnLine Notice Review (OLNR) Retype Application for Notice Review (NR). This addition will eliminate the need for the NR tax examiner to manually type the notice literal and reduce potential copying/typing incorrect paragraphs/messages in the notices. For a full listing of the programmed TPNC 90 Math Error Codes, see TPNC 90 Math Error Code Job Aid on Servicewide Electronic Research Program (SERP) at http://serp.enterprise.irs.gov/databases/portals.dr/sp-portal/bmf.dr/bmf_ers/job_aid.dr/TPNC-90-Math-Error-Code-Job-Aid.doc

    ALL

3.12.16.2.5  (01-01-2015)
Unprocessable Conditions

  1. Reject an error record with Action Code 3 when:

    1. It is a tax period prior to 198412 for Form 1120-ND.

    2. It is a tax period prior to 198501 for Form 1120-FSC.

    3. It is a tax period prior to 199301 for Form 1120-SF.

      Note:

      Prior to 1993, Form 1120-SF was Form 1120-DF, U.S. Income Tax Return for Designated Settlement Funds (Under Section 468B). Form 1120-DF is now obsolete. If Code and Edit receives a Form 1120-DF, they are required to convert it to a Form 1120-SF.

    4. It is a tax period prior to 198701 for 1120-PC.

  2. Reject an error record with Action Code 3 when it is international related and one of the following conditions is present:

    • Contains a foreign address

    • Claims Possessions Tax Credit (197601 and subsequent)

    • Claims Credit for Income Tax Withheld (or paid) at source (Form 1042-S credit) (OSPC only)

    • Requests extension for Form 1120-FSC or

    • For Form 1120-FSC (OSPC only)

  3. Reject an error record with Action Code 3 when one of the following situations are present:

    • The return covers multiple tax periods or reports multiple types of tax.

    • The return is misblocked.

    • The return requires correspondence with the taxpayer for missing or clarifying information.

    • The return indicates Tax Exempt Status pending.

    • The return is a potential Statute case not cleared by Statute Control Group.

    • The return indicates "Pro Forma" or "Pro Forma 1120", "Pro Forma Form 1120 for New York State", or similar statement. The "Pro Forma" return should not be processed.

    1. If a "Pro Forma" return is attached to a Form 1120 series return, do not detach. Move the "Pro Forma" return to the back of the document.

    2. If a "Pro Forma" return is received and not attached to a Form 1120 series return, then delete the DLN and return the "Pro Forma" return to the taxpayer using Form 6800 (or other appropriate letter). Include the following (or similar language) in the open paragraph: "The attached form appears to have been sent to us in error. Please keep it for your tax records."

    Note:

    Pro Forma returns are an exception to the Chief Counsel opinion (effective October 5, 2009) that tax examiners will no longer send returns back to the taxpayer when corresponding for missing signature, missing information and supporting schedules and documentation on refund or zero balance returns.

  4. When a record is rejected, it will be necessary to prepare one or more of the following:

    1. Form 4227, Intra-SC Reject or Routing Slip (or other appropriate routing slip). Notate the reason for rejecting the document. See Figure 3.12.16-6, Form 4227, Intra-SC Reject or Routing Slip.

    2. Form 10886, Reject Routing Slip (or other appropriate routing slip). Check the reason (or notate the reason in the "Other" area) for rejecting the document.

    3. Form 3696, Correspondence Action Sheet, (or other approved Correspondence Action Sheet), used to correspond with the taxpayer.

    4. Form 6882, IDRS/Master File Information Request.

  5. Use Transaction Code (TC) 599 with Closing Code (cc) 017. Input TC 599 with cc 018 using Command Code FRM49 if the form is being processed after the program completion date and TC 599 with cc 17 has not already been input.

    1. If the EIN, Name Control, Master File Tax (MFT) or Tax Period is missing, do not input TC 599 with cc 017.

    2. Do not input TC 599 with cc 017 if the document was secured by Compliance.

    Figure 3.12.16-6
    This image is too large to be displayed in the current screen. Please click the link to view the image.

3.12.16.2.6  (01-01-2015)
Single and Double Alpha Field Designators (AFD)

  1. In a mixed section with both single and double alpha fields, the single alphas must have a space between the AFD and the money amount.

    Note:

    A space should be indicated by entering the number of spaces with a circle around it.

    • For single Alpha Field Designator (AFD) fields in an a single/double field section, the correction would be entered as : 608A (1 with a circle around it) 557600, where 6 is the Action Code, 08 is the section number, A is the AFD, 1 with a circle around it is the space, and 557600 is the money amount.

    • For double AFD fields in a single/double field section, the correction would be entered as: 608AB557600, where 6 is the Action Code, 08 is the section number, AB is the AFD, and 557600 is the money amount.

    • Any section with just single AFDs would be corrected as: 610B12345, which is the normal correction procedures.

3.12.16.2.7  (01-01-2015)
Corporation Edit Sheet (Form 3892)

  1. Due to the Form 1120, U.S. Corporation Income Tax Return, redesign, the Form 3892, Corporation Edit Sheet, will no longer be used in Code and Edit. The applicable fields will be edited in the margin to the left of "Deductions" section of the return.

    Exception:

    For Form 1120-FSC, the applicable fields will be edited in the left margin near Line 2.

3.12.16.3  (01-01-2015)
Introduction of Form 1120-FSC, Form 1120-ND and Form 1120-SF

  1. Form 1120-FSC - U.S. Income Tax Return of a Foreign Sales Corporation, Document (Doc). Code 07. See Exhibit 3.12.16-1, Form 1120-FSC, for the Sections and Fields.

  2. Form 1120-ND - Return for Nuclear Decommissioning Funds and Certain Related Persons, Doc. Code 08. See Exhibit 3.12.16-2, Form 1120-ND, for the Sections and Fields.

  3. Form 1120-SF - U.S. Income Tax Return for Settlement Funds (Under Section 468B), Doc. Code 06. See Exhibit 3.12.16-3Form 1120-SF, for the Sections and Fields.

3.12.16.3.1  (01-01-2015)
Section 01, Data - Form 1120-FSC, Form 1120-ND and Form 1120-SF

  1. Section 01 shall always be present.

  2. It cannot be deleted or added. Action Codes 4 and 5 will never be used.

  3. The error indicators that apply are the asterisk, underprint, ISRP Errors and Terminus.

  4. Fields 01-A, 01-B and 01-C are fixed fields and all positions shall be accounted for. The remaining fields are variable in length.

  5. The record can be accepted (Action Code 0), rejected (Action Code 3), or changed (Action Code 6).

  6. Form 1120-FSC is processed in OSPC only.

  7. Only Section 01 will print on a "G" coded return.

    1. Manual math verification is not required.

    2. All other records must be math verified and cleared with Action Code 0 or Action Code 1.

  8. Form 1120-FSC, Form 1120-ND and Form 1120-SF require manual computations except "G" coded returns. See IRM 3.12.16.17, Manual Computations, for procedures.

3.12.16.3.2  (01-01-2015)
Section 01, Error Register Format

  1. The chart below shows Section 01: Alpha Field Designator (AFD), Title, Field Length and Location on the Return.

    Section 01
    AFD Title Field Length Location on the Return
    A Remittance 11 Page 1, balance due area.
    B Name Control/Check Digit 4 Page 1, first name line.
    B Name Control/Check Digit (Generated Underprint) 4  
    C Employer Identification Number 9 Page 1, EIN line.
    D Tax Period Ending 6 Page 1, edited to the right/above the title of the form.
    D Tax Period Ending (Generated Underprint) 2  
    E Received Date 8 Form 1120-FSC - Page 1, IRS date stamp, or edited to the dotted portion of Line 1 under Tax and Payments;
    Form 1120-ND - Page 1, IRS date stamp, or edited to the dotted portion of Lines 7 through 14;
    Form 1120-SF - Page 1, IRS date stamp, or edited to the dotted portion of Lines 9 through 13.
    F Computer Condition Codes (CCC) 10 Form 1120-FSC - Page 1, dotted portion of Lines 3 or 4;
    Form 1120-ND - Page 1, dotted portion of Lines 1 thru 4;
    Form 1120-SF - Page 1, dotted portion of Lines 1 thru 6.
    G Correspondence Received Date 8 SCRS field only.
    H Preparer Checkbox Indicator 1 Page 1, lower right margin next to the Discuss with Preparer Checkbox.
    I Preparer Phone Number 10 Bottom of Page 1.
    J Preparer Tax Identification Number (PTIN) 9 Bottom of Page 1.
    K Firm's Employer Identification Number (EIN) 9 Bottom of Page 1.
    L Entity Underprint Code
    (Generated Underprint)
    1  
    M Taxpayer Notice Code 6 Edited in upper left corner of Page 1.

3.12.16.3.3  (01-01-2015)
Field 01-A, Remittance

  1. Field 01-A can never be changed with Action Code 6. If the remittance was transcribed incorrectly take the following action:

    1. Reject the record using Action Code 3.

    2. Prepare Form 4227 (or other appropriate routing slip) notating "Remittance in Error" or "Unidentified Remittance" and route to Rejects.

  2. This field will be blank for non-remittance returns, overpaid returns and remittance returns processed through the Integrated Submission and Remittance Processing (ISRP)/Residual Remittance Processing System (RRPS).

  3. Field 01-A will asterisk if present on a non-"G" coded return when Total Tax Computed is zero or blank, or if Total Tax Taxpayer is zero or blank. Take the following action:

    If Then
    There is a math error, Enter appropriate TPNC using Action Code 1.
    There is no math error, Reject the record with Action Code 3 for transfer of payment off the record.
  4. On the loop, Field 01-A will not asterisk on Form 1120-FSC, Form 1120-ND and Form 1120-SF.

    Note:

    Field 07-A can never be blank if Field 01-A has an entry. Enter .01 (1 cent) in Field 07-A if the remittance amount in Field 01-A is the estimated penalty in Fields 07-H plus 07-I.

3.12.16.3.4  (01-01-2015)
Field 01-B, Name Control

  1. This is a four position field and is used for either the check digits (two letter code preprinted on the label which is assigned to the taxpayer) or the name control (the first four significant characters of the corporation except when the first word is "the" and is followed by more than one word).

  2. This 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 (-).

  3. The name control field may contain one to three blanks.

    1. The name control 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 the correction contains less than 4 characters, enter the significant characters and circle the number of remaining positions.

    5. The check digit must have blanks in the first two positions and a letter other than "E," "G" or "M" in the last two positions.

    6. When the check digit is present, the computer verifies it with Field 01-C (EIN). Always enter the name control to correct invalid check digits.

  4. Take the following action:

    If Then
    There are no errors in the check digits, Enter the name control in Field 01-B (Name Control).
    The EIN is transcribed correctly, Enter the name control in Field 01-B (Name Control).
    The name control is invalid or blank, 1. Check for coding errors and transcription errors.
    2. Enter the correct data in Field 01-B (Name Control).
    The name control cannot be determined, Research using IDRS.
  5. All returns and documents input through ISRP shall have the name control and tax period validated on the EIF (Entity Index File).

  6. Field 01-B (Name Control) and/or Field 01-D (Tax Period) will underprint if the transcribed field and the EIF name control and/or tax period don’t match.

  7. Compare the entries in Field 01-B (Name Control) and 01-C (EIN) with the return, to determine the corrective action necessary.

    If Then
    The EIN on the return and the EIN in Field 01-C do not agree, Correct Field 01-C (EIN) to agree with the return.
    The name control on CC INOLES and Field 01-B agree and it is edited properly, Enter a "1" in Field 01-L (Entity Underprint Code).
    The name control on the return and Field 01-B do not agree or was transcribed incorrectly, Change Field 01-B (Name Control).
    The correction does not agree with the name control underprint, Enter a "1" in Field 01-L (Entity Underprint Code).
    The EIN on the return agrees with the EIN in Field 01-C, Determine why the name control is underprinted.
    The name control edited on the return agrees with the name control Field 01-B, 1. Compare the name control underprint with the Field 01-B (Name Control). If it is obvious that the underprint was caused by the name being illegible, or coded wrong, change Field 01-B to agree with the name control underprint.
    2. If it is not an obvious error, research IDRS using Command Code (CC) INOLES, then use the following Command Codes:
    1. NAMEB/NAMEE to research for the EIN on the return.

    2. ENMOD to research for the name on the return.

    3. BMFOL for the EIN on the return and/or EIN found on CC ENMOD.

    The taxpayer checks the name change box, Research IDRS using appropriate Command Codes.
    1. If the name change has been completed or is pending, enter appropriate code in Field 01-L (Entity Underprint Code).
    2. If research indicates no name change:
    1. Reject and route the return to Entity Control following local procedures.

    2. Attach Form 4227 (or other appropriate routing slip) notating why the return is being routed.

  8. From the research, determine the correct EIN and name control for the return on the error register. Take the following action:

    If Then
    Another EIN is found for the entity on the return, Change Field 01-C (EIN) to the correct EIN and follow procedures in the first table under (7) above.
    Multiple EINs are found, Forward the case to Entity Control following local procedures.
    The EIN on the return is correct and the taxpayer just rearranged the name on the return, Change Field 01-B (Name Control) to agree with the name control on the BMF.
    The EIN on the return is correct, but the name control on the BMF is not conforming to the acceptable rules for name controlling: 1. Correct Field 01-B (Name Control) to agree with the name control on the BMF.
    2. Copy Page 1 of the return, attach any research and forward the case to Entity Control following local procedures. Notate on Form 4227 (or other appropriate routing slip) what action needs to be taken.
    3. If the EIN on return and Field 01-C agree, but does not agree with the name on the BMF, forward the case (along with any research) to Entity Control following local procedures.
    See Figure 3.12.16-7, Entity Control Routing.

    Figure 3.12.16-7
    This image is too large to be displayed in the current screen. Please click the link to view the image.

3.12.16.3.5  (01-01-2015)
Field 01-C, Employer Identification Number (EIN)

  1. The EIN is located in the box indicated on the return or on the preprinted label.

  2. This field must:

    • Contain nine numerics.

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

    • Not be all zeroes or all nines.

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

    If Then
    Field 01-C is invalid, Examine the return and attachments.
    A correct EIN is found, Enter in Field 01-C.
    Correct EIN cannot be found, Research using IDRS.
    The invalid EIN has credits that apply to the return being processed, Move the credits to the correct EIN.

    Reminder:

    If you change the EIN and Field 01-B (Name Control) and/or Field 01-D (Tax Period) is underprinting, then check to see if you must enter Field 01-L (Entity Underprint Code).

  4. If the Employer Identification Number (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:
    1. Three or less digits of the EIN are transposed, different or missing, or
    2. Command Code (CC) INOLES indicates the account has been "merged to" or "merged from," or
    3. The EIN on the return is the taxpayer's Social Security Number (SSN) and research shows there is no valid entity on Master File for that EIN.

  5. Suspense Correction:

    1. If there is an indication that Entity Control has assigned an EIN to the return, enter the Entity Assignment Date (found in the lower left corner of Page 1 of the return) in Field 01-G (Correspondence Received Date), if it is later than the received date and return due date.

    2. If the EIN is changed from the taxpayer's entry and Entity has not already issued Letter 3875C, CP 576 (or other appropriate EIN letter or notice), issue Letter 3875C as a non-suspense letter to the address on the return.

      Note:

      Do not send Letter 3875C when:
      1. Three or less digits of the EIN are transposed, different or missing, or
      2. Command Code (CC) INOLES indicates the account has been "merged to" or "merged from," or
      3. The EIN on the return is the taxpayer's SSN and research shows there is no valid entity on Master File for that EIN.

3.12.16.3.6  (01-01-2015)
Field 01-D, Tax Period Ending

  1. Field 01-D contains the ending month and year of the tax period in YYYYMM format.

  2. The following procedures address invalid tax periods for EARLY FILERS.

    1. The tax period is computer generated as a current calendar year return when ISRP inputs a blank.

    2. It cannot be after the current year and month or prior to the following periods:

      FORM PERIOD
      1120-FSC 198501
      1120-ND 198412
      1120-SF 199301
    3. If the tax period is equal to the year and month of the process date, the tax period will asterisk.

    4. For tax periods that are later than or equal to the current month and year:

      If Then
      Later by a year or more, Change to a current fiscal or calendar year.
      Later by not more than one month, or the taxpayer indicates "no income," Reject the record and attach Form 4227 (or other appropriate routing slip) notating "Release end of appropriate month" .
      Later by more than one month with no explanation such as "Final" or "no income," Correspond for confirmation of tax period ending.
      Later by more than one month and taxpayer indicates "Final" on the return, Reduce the tax period to the month prior to the current processing month. See Figure 3.12.16-8, Tax Period Correction.

    Figure 3.12.16-8
    This image is too large to be displayed in the current screen. Please click the link to view the image.

3.12.16.3.7  (01-01-2015)
Field 01-D - Statute Control Documents

  1. Any return with a received date that is two years and nine months or more after the Return Due Date is a potential statute control return.

  2. A statute control document is a document that is filed for a barred period. A barred period is a taxable period on which statutory limitations are placed for allowing refunds, credits, or for assessing additional taxes.

  3. A claim for refund must be filed or additional tax assessments must be made not later than three years from the date the original return was filed or two years from the date the tax was paid.

  4. Process non-"G" coded returns as follows:

    1. Identify a return for statute control action if the current processing date is two years and nine months, or more, after the original due date or the received date, whichever is later, and has not cleared the Statute Control Group. Reject and route the return using Form 4227 (or other appropriate routing slip).

    2. Field 01-D will asterisk for Statute check if the processing date is two years and nine months, or more, after the original due date or the received date, whichever is later and CCC "W" is not present.

  5. Process "G" coded returns as follows:

    1. Identify a return for statute control action if the current processing date is two years and nine months, or more, after the original due date or the received date, whichever is later, and has not cleared the Statute Control Group. Reject and route the return using Form 4227 (or other appropriate routing slip).

    2. Field 01-D will asterisk if the processing date is two years and nine months, or more, after the original due date or the received date, whichever is later, and CCC "W" is not present.

  6. On both non-"G" and "G" coded returns both Fields 01-D and 01-F (Computer Condition Codes) will asterisk if the processing date is less than two years after the Return Due Date and a CCC "W" is present.

    1. Correct the Tax Period or Computer Condition Code, whichever is incorrect.

  7. Statute returns must be routed to the Statute Control Group daily, or more often, if needed.

    Exception:

    Do not route to the Statute Control Group for clearance, enter CCC "W" and continue processing if any of the following conditions are present:

    • Compliance (IRC 6020(b)) returns.

    • Returns secured by Examination/Collections.

    • Returns with Transaction Code (TC) 59X or Integrated Collection System (ICS) notated on the face of the return.

    • Returns that are substitute returns prepared by Examination (e.g., Substitute For Return (SFR)) in top margin of the return.

    • Returns with a stamp indicating a previous clearance by Statute Control within the last ninety days.

  8. If there is an indication that the return has already been cleared through the Statute Control Group within the last ninety days, then enter CCC "W" . Code and Edit will enter CCC "W" if the return has been cleared by Statute.

    Note:

    The May 16, 1986, Federal Register published Temporary Regulations concerning returns filed with Election under IRC 338(g). Receipt of such returns where the statutory period for assessment has expired should be expeditiously processed as if the statute had not expired. Enter CCC "D" and CCC "R" if the return contains a statement indicating that it qualifies for a waiver under Treasury Regulations (Treas. Reg.) 1.338-10(b). In addition, enter CCC "W" to bypass Statute checks, if the current processing date is two years and nine months, or more, after the original due date or the received date, whichever is later.

  9. If no indication, reject the record, attach Form 4227 (or other appropriate routing slip) to return and route to Statute Control Group.

  10. If it appears that a rejected document will not reach the Statute Control Group in time for clearance, then photocopy Page 1 of the return, stamp the photocopy "Photocopy-Do not process" and forward it to the Statute Control Group.

3.12.16.3.8  (01-01-2015)
Field 01-D - Tax Period Underprint

  1. Compare the EIN on the return with Field 01-C (EIN) and apply the following corrective procedures when the tax period underprints.

    If Then
    The EINs do not agree, 1. Change Field 01-C (EIN) to agree with the return.
    2. Enter the appropriate code in Field 01-L (Entity Underprint Code).
    The EINs agree, Compare the tax period on the return with Field 01-D (Tax Period).
    1. If the tax period on the return does not agree with Field 01-D, change Field 01-D to agree with the return.
    2. If the corrected tax period does not agree with the underprint, continue in (2) below.
    The EIN and tax period on the return agree with Field 01-C (EIN) and Field 01-D (Tax Period) and are transcribed correctly, but do not agree with the underprint, Continue in (2) below.

    Note:

    Tax periods reported under the 52-53 week rule may end not more than 6 days before, and not more than 3 days after, the end of a month. Be aware of special situations such as 52-53 week filers before changing the tax period.

  2. If the tax period on the return is for a short period, "Final," "Change in Accounting Period" or "Initial," proceed as follows:

    If Then
    A "Final" return, Enter CCC "F" in Field 01-F (CCC).
    A "Change of Accounting Period" and Field 01-F (CCC) contains a "Y" , Return must be manually verified.
    1. Clear the Error Register with Action Code 0.
    2. Enter the appropriate code in Field 01-L (Entity Underprint Code).
    It is not a "Final" return or a "Change of Accounting Period" , Review the return for a statement that the taxpayer is complying with:
    1. Treasury Regulation (Treas. Reg.) 1.442-1(c) or (d), Treas. Reg. 1.1502-76, Section 444, or
    2. Revenue Procedure (Rev. Proc.) 76-10, Rev. Proc. 82-25, Rev. Proc. 85-58, Rev. Proc. 87-32, Rev. Proc. 92-13, Rev. Proc. 2000-11, Rev. Proc. 2002-37 or Rev. Proc. 2006-45, 2006-46 or
    3. IRC 898(c)(1)(A), IRC 898(c)(2) or IRC 1398.
    A statement is attached stating that the taxpayer is complying with one of the Treasury Regulations or Rev. Proc. listed above, except Treasury Regulation 1.442-1(c) or (d) or Rev. Proc. 82-25, 1. Enter CCC "Y" in Field 01-F (CCC).
    2. Enter the appropriate code in Field 01-L (Entity Underprint Code).
    The taxpayer is complying with Treasury Regulation 1.442-1(c) or (d) or Rev. Proc. 82-25, 1. Enter CCC "Y" in Field 01-F (CCC).
    2. Enter the appropriate code in Field 01-L (Entity Underprint Code).
    3. Verify information and/or research IDRS.
    The above mentioned conditions do not apply, Research IDRS using Command Code (CC) ENMOD (or other applicable CC) for the following transaction codes:
    1. TC 052 - Reverses TC 053, TC 054 and TC 055.
    2. TC 053 - Form 1128, Application to Adopt Change, or Retain a Tax Year, filed and tax period approved for other than Rev. Proc. 87-32. This code applies to all Forms 1120.
    One of the above transactions is present, and the tax period matches the taxpayer’s tax period on the return, Enter a "2" in Field 01-L (Entity Underprint Code).
    One of the above transactions is present, and the tax period underprint does not match the taxpayer’s intended tax period on the return, 1. Route to Entity Control for validation of the transaction code.
    2. Attach Form 4227 (or other appropriate routing slip) with an explanation as to why the document is being sent to Entity Control.
    None of the transaction codes are present on the entity module, Correspond with the taxpayer for tax period approval.
    The taxpayer replies with an approved copy of Form 1128,Application To Adopt, Change, or Retain a Tax Year, or Form 8716,Election To Have a Tax Year Other Than a Required Tax Year, Forward to Entity Control so they may update the Fiscal Year Month (FYM) on the Master File.
    The taxpayer fails to reply, or does not provide tax period approval, 1. Enter CCC "Y" in Field 01-F (CCC).
    2. Enter a "2" in Field 01-L (Entity Underprint Code).
    The taxpayer states this is an "Initial" return; it may be for a full 12 months or a short period. Normally, an "initial" return will post without matching on FYM. However, if a tax module has been established for the Master File Tax (MFT) that is on the return, it will unpost. Research using IDRS.
    Research shows no tax modules for MFT 02; this is the first return for the taxpayer, Input TC 016 to change the FYM to agree with the taxpayer’s return.
    Research shows tax modules already established for MFT 02, but no returns posted prior to the tax period of the return, 1. Input TC 016 to change the FYM to agree with the taxpayer's return.
    2. Release the return from the register one (1) cycle after the TC 016 is input.
    3. Move the extension, payments and/or credits, etc., to the correct tax period, or prepare Form 3465, Adjustment Request, for routing to Accounts Management, to request that the extension, payments and/or credits, etc., be moved to the correct tax period. Enter a CCC "X" in Field 01-F (CCC) and write a note on the bottom of Form 3465 to remove "X" once credits have been moved.
    4. Input a TC 590 with Closing Code (cc) 020 to the module that was established erroneously.

    Note:

    Tax periods reported under the 52-53 week rule may end not more than 6 days before, and not more than 3 days after, the end of a month. Be aware of special situations such as 52-53 week filers before changing the tax period.

  3. If the return covers a full 12 months and the FYM in Field 01-D (Tax Period) does not agree with the underprint, research using IDRS.

    1. Research using Command Code (CC) BMFOL, CC INOLE or CC ENMOD for the entity and the MFT of the return.

    2. Review the transactions posted for the tax periods on the BMF.

    If Then
    Returns filed (TC 150), and the TC 150s are all for the same FYM as the return:

    Note:

    There is a tax module for the same FYM as the underprint with extension, payments, credits, etc., posted, that apply to the return being processed.

    1. Input TC 016 to change the FYM on the BMF to agree with the return.
    2. Release the return from the register one (1) cycle after the TC 016 is input.
    3. Enter a "2" in Field 01-L (Entity Underprint Code).
    4. Move the extension, payments, and/or credits, etc., to the correct tax period, or prepare Form 3465, Adjustment Request, for routing to Accounts Management, request that the extension, payments, and/or credits, etc., be moved to the correct tax period. Enter a CCC "X" in Field 01-F (CCC) and write a note on the bottom of Form 3465 to remove "X" once credits have been moved.
    5. Input a TC 590 with Closing Code 20 to the module that was established erroneously.

    Note:

    Tax periods reported under the 52-53 week rule may end not more than 6 days before, and not more than 3 days after, the end of a month. Be aware of special situations such as 52-53 week filers before changing the tax period.

  4. Initiate correspondence with the taxpayer, requesting a clarification of the accounting period, if the posted TC 150s are for various tax periods (no pattern), or posted TC 150s are all for the same FYM but disagree with the tax period of the return. Telephone contact may be used.

    1. The table below establishes procedures for processing correspondence.

      If Then
      The taxpayer replies and identifies the correct tax period and it agrees with the return tax period, 1. Input TC 016 to change the FYM on the BMF to agree with the return.
      2. Release the return from the register one (1) cycle after the TC 016 is input.
      3. Enter a "2" in Field 01-L (Entity Underprint Code).
      4. Move the extension, payments and/or credits, etc., to the correct tax period, or prepare Form 3465, Adjustment Request, for routing to Accounts Management, to request that the extension, payments and/or credits, etc., be moved to the correct tax period. Enter a CCC "X" in Field 01-F (CCC) and write a note on the bottom of Form 3465 to remove "X" once credits have been moved.
      5. Input a TC 590 with Closing Code 20 to the module that was established erroneously.
      The taxpayer replies and identifies that the tax period on the return is not correct and gives the correct period that does not agree with the underprint, Change Field 01-D (Tax Period) and follow procedures directly above.
      No reply and the last tax period with a TC 150 is 12 months or more prior to the return tax period, 1. Input TC 016 on CC ENMOD using CC BNCHG.
      2. Input TC 474 on CC REQ77 (using one (1) cycle delay) for the year and month prior to the beginning month of the tax period on the return being processed.
      3. Hold for one week.
      4. Correct the return and the register one (1) cycle after the input of TC 474.
      5. When PN 016 generates on CC ENMOD, enter a "2" in Field 01-L (Entity Underprint Code) for "initial" returns.
      No reply to correspondence and the last tax period with a TC 150 is less than 12 months previous to the return tax period, 1. Enter CCC "Y" in Field 01-F (CCC).
      2. Enter a "2" in Field 01-L (Entity Underprint Code).

3.12.16.3.9  (01-01-2015)
Field 01-E, Received Date

  1. The received date cannot be earlier than:

    1. 19850201 for Form 1120-FSC.

    2. 19850101 for Form 1120-ND.

    3. 19931001 for Form 1120-SF.

  2. The received date must be printed in YYYYMMDD format, and it must be all numeric. If no received date is stamped on the return, Code and Edit may edit it in the dotted portion of the Deduction Section.

  3. Input the correct received date if Field 01-E (Received Date) asterisks.

  4. It must be equal to or earlier than the processing date. The year-month combination must be equal to or later than the tax period year-month. Otherwise, Field 01-E (Received Date) will asterisk.

  5. If the received date is earlier than the tax period:

    1. If Field 01-D (Tax Period) and Field 01-E (Received Date) are transcribed correctly and the tax period is not after the error register date, enter the received date as the first day after the tax period.

    2. If tax period is after the error register date, see IRM 3.12.16.3.6, Field 01-D, Tax Period Ending.

  6. Correct all misplaced entries, coding errors and transcription errors. Compare the date with the date stamped or edited on the face of the return and take the following action:

    If Then
    The month of the received date is prior to the tax period ending, Enter the month of the tax period.
    There are multiple received dates on the return, Use the earliest received date in Field 01-E (Received Date).
    The received date is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ of the return due date and Penalty and Interest Code is correctly entered in Field 03-D, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ month the return is due (e.g., due date is 3/15/2014, use ≡ ≡ ≡ ≡ ≡
  7. Determine the received date using the following priority when one is needed but is not stamped on the return or a valid handwritten received date is not present.

    1. Earliest legible postmark date (U.S. Postal Service, foreign or Private Delivery Service) on the envelope. Rules for using the U.S. Postal Service (USPS) postmark, foreign postmark or Private Delivery Service postmark date are as follows:

      If Then
      An envelope is not attached, Use the postmark date stamped on the face of the return.

      Note:

      When there are multiple returns in one envelope, the envelope is attached to one return and the postmark date is stamped on the other returns.

      The postmark is missing and the envelope is certified, Look for an "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 and follow normal procedures.
      See Exhibit 3.12.16-19, USPS.com Track & Confirm.
      If the "USPS.com Track & Confirm" record is not attached, no action is required.
      An envelope has both a USPS and private metered postmark, Use the USPS postmark.
      An envelope has a foreign and private metered postmark, Use the foreign postmark.
      An envelope has two private metered postmarks, Use the latest private postmark.
      An envelope has only one private metered postmark, Use the private metered postmark.
    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. Document Locator Number (DLN) Julian date minus 10 days.

    6. Current Date minus 10 days.

3.12.16.3.10  (01-01-2015)
Field 01-F, Computer Condition Codes

  1. See IRM 3.12.16.2.3, Computer Condition Codes, for a list of valid Computer Condition Codes (CCCs) and their descriptions.

  2. Field 01-F (CCC) can contain up to 10 positions.

  3. The table below identifies the forms and valid codes on the raw register.

    Note:

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

    Form Valid Computer Condition Codes
    1120-FSC "A" , "B" , "D" , "F" , "G" , "L" , "N" , "O" , "Q" , "R" , "S" , "T" , "U" , "W" , "X" , "Y" , "1" , "3" , "7" , and "8" .
    1120-ND "A" , "B" , "D" , "F" , "G" , "O" , "Q" , "R" , "T" , "U" , "W" , "X" , "Y" , "1" , "2" , "3" , "7" , and "8" .
    1120-SF "A" , "B" , "D" , "F" , "G" , "N" , "O" , "Q" , "R" , "T" , "U" , "W" , "X" , "Y" , "1" , "2" , "3" , "7" , and "8" .
  4. CCC "L" is valid on Form 1120-FSC. It must be entered when a taxpayer writes "Section 6114 Election" or "IRC 6114 Election" on the return or attaches Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b), to the return.

  5. Enter CCC "8" to suppress penalties of estimated tax for Form 1120-FSC, Form 1120-ND and Form 1120-SF.

    Note:

    Suppress penalties 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, enter CCC "8" .

  6. Take the following action to correct Field 01-F (CCC):

    If Then
    An overflow condition occurs in Field 01-F (more than 10 codes), Retain codes in the following priority: "F," "D," "R," "O," "Y," "3," and others.
    Both CCCs "D" and "R" are present, CCC "7" may not be present.
    Field 01-F (CCC) is asterisked, examine the return for the correct entries. Correct any error found on the return and correct Field 01-F (CCC) as appropriate. See IRM 3.12.16.2.3, Computer Condition Codes, for additional information.
    CCC "F" is present and there is an entry in Field 07-J (Credit to Next Years Estimated Tax), Field 01-F (CCC) and Field 07-J (Credit to Next Years Estimated Tax) will asterisk.
    1. Check to see if CCC "F" has been correctly edited.
    2. Delete CCC "F" if it has not been correctly edited.
    CCC "F" was correctly edited, Delete Field 07-J (Credit to Next Years Estimated Tax) amount from the register and on the return to allow the amount to be refunded.
    CCC "G" is present with another CCC (except CCCs "S" , "T" , "U" , "W" , and/or "3" ) or is not the last entry for the return except for the Correspondence Received Date and Entity Underprint Code, Field 01-F (CCC) will asterisk.
    The CCC "G" is correct, Delete other Computer Condition Code(s) (except CCCs "S" , "T" , "U" , "W" , and/or "3" ) and any subsequent significant entries or sections*. Otherwise, delete CCC "G" from Field 01-F (CCC) and the return.

    Note:

    *Delete all fields in Section 01 past Field 01-F (CCC). Delete all CCCs except "G" (and the CCC exceptions indicated above, if present) in Field 01-F (CCC).

  7. CCC "O" is entered if a quick refund has been issued or if a manual refund has been issued. Also a Reserve Code "1" must be entered when a manual refund of $1 million or more has been issued.

    Note:

    See IRM 3.12.16.1.10, Refund Returns 45-Day Jeopardy and $10 Million or More Refunds, to ensure the refund is issued timely. See IRM 3.12.16.1.11, Taxpayer Advocate Service (TAS) Manual Refunds, for TAS Manual Refunds.

  8. Field 01-F will asterisk if CCC "W" is present and the processing date is less than two years after the return due date. Field 01-D (Tax Period) will also asterisk. See IRM 3.12.16.3.6, Field 01-D, Tax Period Ending, for corrective procedures.

  9. CCC "Y" is used to update the tax period at Master File.

  10. If CCC "Y" is present without Action Code 0 or Action Code 1, Field 01-F will continue to asterisk. See IRM 3.12.16.17, Manual Computations, for corrective action.

  11. CCC "3" will be entered for no reply cases and used as an indicator for Master File to suppress credit interest.

3.12.16.3.11  (01-01-2015)
Field 01-G, Correspondence Received Date

  1. This field must be blank if prior to the return due date and in YYYYMMDD format if significant and after the return due date. It cannot be later or the same as the current processing date. It cannot be earlier than the received date.

  2. If there is an indication that Entity Control has assigned an EIN to the return, enter the Entity Assignment Date in Field 01-G (Correspondence Received Date), if it is later than the received date and return due date. Field 01-G will be invalid if Entity assigned the EIN and the Entity Assignment Date is before the due date of the return. Blank Field 01-G (Correspondence Received Date).

    Note:

    The Entity Assignment Date can be found in the lower left corner of Page 1 of the return.

  3. If no reply to correspondence, enter CCC "3" in Field 01-F (CCC). If an overpayment is indicated, enter CCC "X" to freeze the refund.

3.12.16.3.12  (01-01-2015)
Field 01-H, Preparer Checkbox Indicator

  1. The Preparer Checkbox is located next to the taxpayer signature area. The Preparer Checkbox is used to indicate whether or not the taxpayer has elected to allow the Preparer to answer questions about the taxpayer's return as it is processed.

  2. The Preparer Indicator is located on Page 1, lower right margin, next to the Discuss with Preparer Checkbox, Form 1120-FSC, Form 1120-ND and Form 1120-SF.

  3. ISRP transcribers will enter a "1" if the Preparer Checkbox, Yes box is checked.

  4. Correction Procedures:

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

      If Then
      The Yes box is checked Enter "1" in Field 01-H (Preparer Checkbox Indicator).
      The No box is checked;
      Neither box is checked; or
      Both boxes are checked
      Delete Field 01-H (Preparer Checkbox Indicator) and Field 01-I (Preparer Phone Number) and continue processing.

3.12.16.3.13  (01-01-2015)
Field 01-I, Preparer Phone Number

  1. The Preparer Phone Number is located at the bottom of Page 1 below the Firm's EIN (EIN for 2009 and prior and Form 1120-ND and Form 1120-SF) at the bottom right hand corner.

    Note:

    If the taxpayer has checked "Yes" in the Preparer Checkbox, a telephone number for the Preparer should be entered to allow contact. However, this field is not required and may be left blank.

  2. Valid Condition - Field 01-I must be alpha or numeric or a combination of alpha, numeric and/or blank characters, not to exceed 10 characters.

  3. Invalid Condition - This field is invalid if other than alpha, numeric and/or blank.

  4. Correction Procedures:

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

    2. If invalid, delete Field 01-I (Preparer Phone Number) and continue processing.

3.12.16.3.14  (01-01-2015)
Field 01-J, Preparer Tax Identification Number (PTIN)

  1. The Preparer Tax Identification Number (PTIN) is located at the bottom of Page 1 (Preparer's SSN or PTIN box for 2009 and prior). Data may or may not be present in Field 01-J (PTIN).

    Note:

    If the Preparer information is present, either Field 01-J (PTIN) or Field 01-K (EIN) should have an entry. Only one of these fields is required.

  2. Valid Condition - Field 01-J can be blank or numeric. If numeric, it cannot be all zeros and it cannot be all nines.

    Note:

    The first position can be a "P," followed by eight numbers. These numbers cannot be all zeros or all nines.

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

    • All zeros, or

    • All nines, or

    • Less than nine positions.

  4. Correction Procedures:

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

    2. If unable to determine a valid entry, delete Field 01-J (PTIN).

3.12.16.3.15  (01-01-2015)
Field 01-K, Firm's Employer Identification Number (EIN)

  1. The Firm's EIN (EIN for 2009 and prior and Form 1120-ND and Form 1120-SF) is located at the bottom of Page 1 below the PTIN box (Preparer's SSN or PTIN box for 2009 and prior).

    Note:

    If the Preparer information is present, either Field 01-J (PTIN) or 01-K (EIN) should have an entry. Only one of these fields is required.

  2. Valid Condition - Field 01-K can be blank or numeric. If numeric, it cannot be all zeros or all nines.

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

    • All zeros, or

    • All nines, or

    • Less than nine characters.

  4. Correction Procedures:

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

    2. If unable to determine a valid entry, delete Field 01-K (EIN).

3.12.16.3.16  (01-01-2015)
Field 01-L, Entity Underprint Code

  1. The Entity Underprint Code will force the computer to bypass the underprint and accept the transcribed entry for Field 01-B (Name Control) and/or Field 01-D (Tax Period).

  2. The underprint in Field 01-B (Name Control), and/or Field 01-D (Tax Period), will not clear until either an Entity Underprint Code is entered in Field 01-L or the field is corrected to agree with the underprint.

  3. When CCC "F" is entered to correct a tax period underprint, the Entity Underprint Code is not necessary to clear the tax period underprint.

  4. The computer will not recheck the Entity Index File after initial input. Enter code as follows:

    1. Code "1" - Name Control underprinting only and transcribed name control is correct; or name control and tax period both are underprinting but only transcribed name control is correct.

    2. Code "2" - Tax period underprinting only and transcribed tax period is correct; or name control and tax period both are underprinting but only transcribed tax period is correct.

    3. Code "3" - Tax period and name control underprinting and transcribed tax period and name control are both correct.

3.12.16.3.17  (01-01-2015)
Field 01-M, Taxpayer Notice Code (TPNC)

  1. The valid Taxpayer Notice Codes for Form 1120-FSC, Form 1120-ND and Form 1120-SF are 05, 10, 41, 88, 89 and 90. See IRM 3.12.16.2.4.1, Taxpayer Notice Codes (TPNCs), for the TPNC and the explanation.

    Note:

    In January 2014, the Taxpayer Notice Code (TPNC) 90 Math Error (ME) Code literals were programmed into the OnLine Notice Review (OLNR) Retype Application for Notice Review (NR). This addition will eliminate the need for the NR tax examiner to manually type the notice literal and reduce potential copying/typing incorrect paragraphs/messages in the notices. For a full listing of the programmed TPNC 90 Math Error Codes, see TPNC 90 Math Error Code Job Aid on Servicewide Electronic Research Program (SERP) at http://serp.enterprise.irs.gov/databases/portals.dr/sp-portal/bmf.dr/bmf_ers/job_aid.dr/TPNC-90-Math-Error-Code-Job-Aid.doc .

  2. Enter the TPNC in the upper left entity portion of the return.

  3. Attach a TPNC 90 card/paper to the return with the exact statement to be printed on the notice.

    Caution:

    For a full listing of the programmed TPNC 90 Math Error Codes, see TPNC 90 Math Error Code Job Aid at http://serp.enterprise.irs.gov/databases/portals.dr/sp-portal/bmf.dr/bmf_ers/job_aid.dr/TPNC-90-Math-Error-Code-Job-Aid.doc .

  4. Re-enter TPNC 90 with Action Code 1, if it was transcribed incorrectly.

  5. TPNC 90 is an error explanation that shall be used if the standard TPNCs do not adequately describe an error condition. Ten blank lines (70 characters per line) are available to provide pertinent information to the taxpayer.

  6. If Field 01-M (TPNC) is invalid (*), do not change Field 01-M. This will happen if Field 07-Z (Manually Corrected Total Tax) was not entered previously. Never change Field 01-M.

  7. When necessary to send a TPNC, you must enter the correct tax in Field 07-Z (Manually Corrected Total Tax) first, then allow it to loop to send the TPNC. On loop, the amount in Field 07-Z (Manually Corrected Total Tax) will underprint Field 07-A (Total Tax) for the notice.

3.12.16.4  (01-01-2015)
Section 02, Data - Form 1120-FSC, Form 1120-ND and Form 1120-SF

  1. Section 02 contains address information from Form 1120-FSC, Form 1120-ND and Form 1120-SF. It will be present when a change of address has been entered.

  2. The chart below shows Section 02: Alpha Field Designator (AFD), Title, Field Sign, and Field Length. All fields are variable length.

    Section 02
    AFD Title Field Sign Field Length
    A "In-Care-Of" Name + 35
    B Foreign Address + 35
    C Street Address + 35
    D City + 22
    E State + 2
    F ZIP Code + 12
  3. This section will not be present on "G" coded returns.

  4. Action Codes 4, 5 and 6 are valid.

3.12.16.4.1  (01-01-2015)
Field 02-A, "In-Care-Of" Name

  1. Field 02-A ("In-Care-Of" Name) is located in the Entity Section of the return.

  2. Valid Condition - Field 02-A ("In-Care-Of" Name) has 35 positions and the valid characters are alpha, numeric, ampersand (&), dash (-), slash (/), or percent (%).

  3. Invalid Condition - Field 02-A ("In-Care-Of" Name) is invalid if any of the following conditions are present:

    • The first position is % (percent) and the second position is not blank, or

    • The first position is blank, or

    • The first character of the "in-care-of" name is not alpha or numeric, or

    • There are two consecutive blanks between significant characters.

  4. Correction Procedures:

    1. Correct coding errors and transcription errors.

    If Then
    A % (percent) is in the first position, 1. Line through Field 02-A ("In-Care-Of" Name).
    2. Enter the "in-care-of" name beginning with an alpha or numeric in Field 02-A ("In-Care-Of" Name).
    A blank is in the first position, 1. Line through Field 02-A ("In-Care-Of" Name).
    2. Enter the "in-care-of" name beginning with an alpha or numeric in Field 02-A ("In-Care-Of" Name).
    The first character of the "in-care-of" name is not alpha or numeric, 1. Verify "in-care-of" name on return.
    2. Line through Field 02-A ("In-Care-Of" Name).
    3. Enter the "in-care-of" name beginning with an alpha or numeric in Field 02-A ("In-Care-Of" Name).
    Two consecutive blanks present between significant characters, 1. Line through Field 02-A ("In-Care-Of" Name).
    2. Enter the "in-care-of" name beginning with an alpha or numeric in Field 02-A ("In-Care-Of" Name).

3.12.16.4.2  (01-01-2015)
Field 02-B, Foreign Address

  1. Field 02-B (Foreign Address) is located in the Entity Address Section of the return.

    1. The computer will check for a presence in this field if Field 02-E (State Code) contains a period/space (. ).

    2. Field 02-B should not be present on "G" coded short period returns.

  2. Valid Condition - Field 02-B (Foreign Address) has 35 characters and the valid characters are alpha, numeric and special characters.

  3. Invalid Condition - Field 02-B will generate as an error when the Field 02-E (State Code) contains a period/space (. ) and any of the following conditions are present:

    • The first position is blank.

    • There are two consecutive blanks followed by valid characters.

    • There are more than 35 characters present in the field.

      Note:

      ISRP transcribers are instructed to input a pound sign (#) as the 35th character if there are more than 35 characters present for this field on the return.

  4. Correction Procedures:

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

      If Then
      A foreign address is present in Field 02-B (Foreign Address), Check the register against the return to verify the address is truly a foreign address.
      It is confirmed the address on the return is a foreign address, 1. A valid Foreign Country Code must be present in Field 02-D (City). If missing, correct Field 02-D with an Action Code 6.

      Exception:

      Use the country code based on the province in Field 02-D (City) if the foreign address is from Canada and the address contains a province name or abbreviation. See Exhibit 3.12.16-7, Province and Country Code - Canada.


      2. Delete Field 02-F (ZIP Code), if present, using Action Code 6.
      A province abbreviation is not present for Australia, Brazil, Canada, Cuba, Italy, Mexico or The Netherlands but a province name is present, Enter the province abbreviation in Field 02-B (Foreign Address). See Exhibit 3.12.16-8, Province, State and Territory Abbreviations.
      It is confirmed the address on the return is a domestic address, 1. Reject with Action Code 3.
      2. Attach Form 4227 (or other appropriate routing slip) indicating to renumber the return with a domestic DLN.

      Reminder:

      *The period/space (. ) in Field 02-E (State) must be deleted if this is NOT a foreign address.

      A foreign address is NOT present in Field 02-B (Foreign Address), Check the register against the return to verify whether the address was a domestic address.

      Caution:

      Do not use Field 02-B for domestic street addresses. The period/space (. ) in Field 02-E (State) will alert the computer to search for a foreign address in Field 02-B and the Foreign Country Code in Field 02-D (City).

      The address on the return is a domestic address, 1. Draw a line through the period/space (. ) entry in Field 02-E (State) and enter the correct State Code, using Action Code 6.
      2. Enter the appropriate information in Fields 02-C (Street), 02-D (City), and 02-F (ZIP Code), using Action Code 6.
      The address on the return is truly a foreign address, 1. Enter the foreign street address in Field 02-B, using Action Code 6.

      Reminder:

      ISRP transcribers are instructed to use the Street Address line (Field 02-C) as a second address line, if needed.


      2. Also enter the valid Foreign Country Code in Field 02-D (City), using Action Code 6.
      The Foreign Country Code is missing or incorrect, 1. Compare the information on the register to the information on the return.
      2. Enter the Foreign Country Code in Field 02-D (City), if missing, using Action Code 6.
      3. To correct, draw a line through the entry in Field 02-D and write the correct information above the lined-out entry, using Action Code 6.
      A foreign address is present in Field 02-B and a ZIP code is present in Field 02-F, 1. Verify the information on the register against the return.
      2. If the return truly contains a foreign address, line through the entry in Field 02-F (ZIP Code) on the register.
      3. Enter the Foreign Country Code in Field 02-D (City), using Action Code 6.

      Note:

      See Exhibit 3.12.16-6, Foreign Country Codes, for a list of the valid Foreign Country Codes.

  5. This field will asterisk (*) if other than specified above.

  6. If Form 8822, Change of Address, or Form 8822-B, Change of Address or Responsible Party - Business, is attached to the return, compare the name and address information on the Form 8822 (or Form 8822-B) to the return.

    Note:

    A business may have two addresses. One is the mailing address and the other is the location address or physical location of the business.

    Caution:

    These instructions will apply to Error Resolution only if Document Perfection has not detached and sent the Form 8822 (or Form 8822-B) to Entity Control.

    If And Then
    Form 8822, Change of Address, or Form 8822-B, Change of Address or Responsible Party - Business, is attached, Mailing address information is the same and no location address is listed on Form 8822/Form 8822-B, Line 7 Take no action and continue processing.
    Form 8822, Change of Address, or Form 8822-B, Change of Address or Responsible Party - Business, is attached, Mailing address information is different and/or a location address is listed on Form 8822/Form 8822-B, Line 7 1. Enter address shown on Form 8822 (or Form 8822-B) in Field 03-C (Street Address).
    2. Notate "Form 8822 (or Form 8822-B) detached" on tax return.
    3. Detach Form 8822 (or Form 8822-B) and route to Entity Control using Form 4227 (or appropriate routing slip).
    4. Notate on Form 4227, "Change of Address per Form 8822 (or Form 8822-B)."

    Note:

    The lead tax examiner is required to batch all Forms 8822 (or Form 8822-B) daily and hand carry to Entity Control for expedite processing.

3.12.16.4.3  (01-01-2015)
Field 02-C,
Street Address

  1. Field 02-C (Street Address) is located in the Entity Section of the return.

  2. Valid Condition - Field 02-C (Street Address) has 35 characters and the valid characters are alpha, numeric, blank, hyphen (-), and slash (/).

  3. Invalid Condition - Field 02-C (Street Address) will error when any of these conditions are present:

    • The first position is blank.

    • Any characters are not alpha, numeric, blank, hyphen (-) or slash (/).

    • There are two consecutive blanks followed by valid characters.

  4. Correct all coding errors and transcription errors.

  5. If Field 02-D (City) contains a Major City Code (MCC), a street address must be present.

  6. If a Major City Code (MCC) is used and no address is present, enter the city in "city format," not in MCC format.

  7. Check returns and attachments if the address is not present.

    If Then
    Address is not found, Research IDRS using Command Code (CC) INOLE or CC ENMOD.
    If an address is still not found, 1. Reject using Action Code 3 and attach research.
    2. Attach Form 4227 (or other appropriate routing slip) and notate "No Address" and route to Entity Control.

    Note:

    See Exhibit 3.12.16-9, Major City and ZIP Codes, or refer to Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries.

  8. This field will asterisk if other than specified above. Correct this field accordingly.

    Reminder:

    If inputting a foreign address, this field may be used as a second address line for entering the foreign city, province, and postal code.

  9. If Form 8822, Change of Address, or Form 8822-B, Change of Address or Responsible Party - Business, is attached to the return, compare the name and address information on the Form 8822 (or Form 8822-B) to the return.

    Note:

    A business may have two addresses. One is the mailing address and the other is the location address or physical location of the business.

    Caution:

    These instructions will apply to Error Resolution only if Document Perfection has not detached and sent the Form 8822 (or Form 8822-B) to Entity Control.

    If And Then
    Form 8822, Change of Address, or Form 8822-B, Change of Address or Responsible Party - Business, is attached, Mailing address information is the same and no location address is listed on Form 8822/Form 8822-B, Line 7 Take no action and continue processing.
    Form 8822, Change of Address, or Form 8822-B, Change of Address or Responsible Party - Business, is attached, Mailing address information is different and/or a location address is listed on Form 8822/Form 8822-B, Line 7 1. Enter address shown on Form 8822 (or Form 8822-B) in Field 03-C (Street Address).
    2. Notate "Form 8822 (or Form 8822-B) detached" on tax return.
    3. Detach Form 8822 (or Form 8822-B) and route to Entity Control using Form 4227 (or appropriate routing slip).
    4. Notate on Form 4227, "Change of Address per Form 8822 (or Form 8822-B)."

    Note:

    The lead tax examiner is required to batch all Forms 8822 (or Form 8822-B) daily and hand carry to Entity Control for expedited processing.

3.12.16.4.4  (01-01-2015)
Field 02-D, City

  1. Valid characters are alpha and blank (22 positions).

  2. First position cannot be blank.

  3. Second and third positions cannot both be blank.

  4. There cannot be two consecutive blanks within significant data.

  5. When a Major City Code (MCC) has been used:

    1. Field 02-E (State Code) must not be present.

    2. Field 02-C (Street Address) must be present.

    3. Field 02-F (ZIP Code) must be compatible with Major City Code.

  6. If a valid MCC cannot be used, then the entire City must be input with Action Code 6. When the entire city name is used, Field 02-E (State) must be present.

  7. This field will asterisk if the MCC does not agree with the first three digits of the ZIP Code. Field 02-F (ZIP Code) will also asterisk.

  8. The ZIP Code will require ZIP Code look-up if the Major City has multiple ZIP Codes. Correct Field 02-F (ZIP Code).

  9. See Exhibit 3.12.16-9, Major City and ZIP Codes, or refer to Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries. See Exhibit 3.12.16-11, U.S. Possessions/Territories and ZIP Codes, for use with address corrections.

  10. IMPORTANT: If there is a foreign address, the country must be present in this field. Do not abbreviate the name of the country. See Exhibit 3.12.16-6, Foreign Country Codes, for a list of the valid foreign country codes.


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