3.12.154  Unemployment Tax Returns

Manual Transmittal

November 07, 2013

Purpose

(1) This transmits revision for IRM 3.12.154, Error Resolution Systems- Federal Unemployment Tax, for Year 2014.

Material Changes

(1) Various editorial changes were made throughout the IRM.

(2) IRM 3.12.154.1 Paragrapher 6 changed reference 2012 to 2013. In paragraph (4) removed "st" from "31" and added "Business Master File" .

(3) IRM 3.12.154.1.2 Updated TAS website link. (IPU 13U0033 issued 01-03-2013) and corrected the software tag for TAS website link. (IPU 13U0275 issued 02-04-2013)

(4) IRM 3.12.154.1.5 Added the titles after the referenced forms, and IRM section names to the text. (IPU 13U0033 issued 01-03-2013

(5) IRM 3.12.154.1.7 Made the following changes:

  • Paragraph 1 changed reference of 2012 to 2013 and 2011 to 2013. In paragraph 4 changed reference of 2012 to 2013.

  • Expanded explanation only for Form 940 ERS in the use of a slash (/) on a document or return. (IPU 13U0275 issued 02-04-2013)

(6) IRM 3.12.154.1.8 Paragraph (1) changed Exhibit 3.12.154-6 to 3.12.154-5 and Exhibit 3.12.154-7 reference to 3.12.154-6.

(7) IRM 3.12.154.1.10.5 Paragraph (3) a) changed Exhibit 3.12.154-9 reference to 3.12.154-8.

(8) IRM 3.12.154.1.11 Paragraph (1) 1st definition box changed Exhibit 3.12.154-13 reference to 3.12.154-12.

(9) IRM 3.12.154.1.14 Made the following changed:

  • Paragraph (1) and (11 a)) changed Exhibit 3.12.154-13 reference to 3.12.154-12.

  • Added Exception information regarding the sequence of Action Codes 211, 215,225, 226 and 341. (IPU 13U0033 issued 01-03-2013)

(10) IRM 3.12.154.1.16 Paragraph (1) and (13) changed Exhibit 3.12.154-17 reference to 3.12.154-16.

(11) IRM 3.12.154.1.18 Paragraph 5 added tax year 2014 statute bared dates to table.

(12) IRM 3.12.154.1.21 Made the following changes:

  • In the text for (1) raised the manual refund amount from one million to ten million. (IPU 13U0033 issued 01-03-2013)

  • Revised the procedures in the IF/Then table. (IPU 13U0033 issued 01-03-2013)

(13) IRM 3.12.154.1.22 Paragraph (1) and (2) of the 1st If procedure box changed Exhibit 3.12.154-14 reference to 3.12.154-13.

(14) IRM 3.12.154.2 added "Form" in front of "940-EZ" in the title and in paragraph (1) in front of "940PR" .

(15) IRM 3.12.154.2.1 Paragraph 2 (a) changed reference 2012 to 2013 in the header column of the table.

(16) IRM 3.12.154.4.2 Paragraph (4) changed Exhibit 3.12.154-13 reference to 3.12.154-12.

(17) IRM 3.12.154.4.3 Paragraph (3) and paragraph (6) 1st Then procedure box changed Exhibit 3.12.154-7 reference to 3.12.154-6.

(18) IRM 3.12.154.7.4.2 Paragraph (1) 5th Then procedure box changed Exhibit 3.12.154-7 reference to 3.12.154-6.

(19) IRM 3.12.154.7.6 Paragraph (3) removed “Section” or the section symbol after “IRC” according to consistency standards in IRM 1.11.8-7, Citation Standards.

(20) IRM 3.12.154.7.7.2 Changed reference of 20120115 to 20130115 and 20130115 to 20140115.

(21) IRM 3.12.154.7.9 Paragraph (3) changed Exhibit 3.12.154-9 reference to 3.12.154-8.

(22) IRM 3.12.154.7.9.1 Paragraph (1) 2nd Title of Field box and paragraph (4) changed Exhibit 3.12.154-8 reference to 3.12.154-7.

(23) IRM 3.12.154.8.1 Paragraph 3 changed reference of 2012 to 2013.

(24) IRM 3.12.154.8.2 Paragraph 2 changed reference of 2012 to 2013.

(25) IRM 3.12.154.8.5 Paragraph 1 added 2013 reference.

(26) IRM 3.12.154.9 Added new paragraph (7) for 6020B returns when Schedule A is missing and line 1a of Form 940 has a state code.

(27) IRM 3.12.154.10.1 For field 06CON, added percent sign (%) as acceptable character in (3). (IPU 13U0735 issued 04-15-2013)

(28) IRM 3.12.154.10.2 For field 06FAD noted that field was "For OSC Only". Also deleted procedure in (4) that if foreign address is on return to SSPND/RJECT 650. (IPU 13U0735 issued 04-15-2013)

(29) IRM 3.12.154.10.2.2 Made the following changes:

  • Paragraph (1) 1st Then procedure box changed Exhibit 3.12.154-12 reference to 3.12.154-11.

  • For 06FAD Correction Procedures, added Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries, reference. (IPU 13U0735 issued 04-15-2013)

  • Revised paragraph (2) Revised procedures for processing Form 8822, Change of Address, and Form 8822-B, Change of Address-Business. (IPU 13U1013 issued 05-31-2013)

(30) IRM 3.12.154.10.3.2 Paragraph (1) 4th Then procedure box changed Exhibit 3.12.154-9 reference to 3.12.154-8.

(31) IRM 3.12.154.10.5.1 Paragraph (1) changed Exhibit 3.12.154-9 reference to 3.12.154-8.

(32) IRM 3.12.154.10.6.2 Paragraph (1) 5th and 6th Then procedure box changed Exhibit 3.12.154-9 reference to 3.12.154-8 and in the 6th If procedure box changed Exhibit 3.12.154-8 reference to 3.12.154-7.

(33) IRM 3.12.154.11.1.2 Made the following changes:

  • Paragraph 2 a) removed “Section” or the section symbol after “IRC” according to consistency standards in IRM 1.11.8-7, Citation Standards.

  • For Error Code 001, Correction Procedures, amended THEN procedures in table. Added IRM reference to Received Date instructions. (IPU 13U0735 issued 04-14-2013)

(34) IRM 3.12.154.11.2 Deleted Note below Error Code 002 table of displayed fields advising that the literal "SECTION 02 NOT PRESENT" will display if no entries are in Section 02. (IPU 13U0735 issued 04-15-2013)

(35) IRM 3.12.154.11.2.3 For Error Code 002, Suspense tridoc added IRS before the words "received date" in IF/THEN table. (IPU 13U0735 issued 04-15-2013)

(36) IRM 3.12.154.11.3.1 For Error Code 003, Invalid Conditions, revised statement (1)(b). (IPU) 13U0735 issued 04-15-2013)

(37) IRM 3.12.154.11.5.2 For Error Code 005, in (4) revised Exception statement. In (5) added IRM reference to Received Date instructions. (IPU 13U0735 issued 04-15-2013)

(38) IRM 3.12.154.11.7.1 Amend Invalid Condition for Error Code 007. (IPU 13U0735 issued 04-15-2013)

(39) IRM 3.12.154.11.7.2 Changed reference of 20120115 to 20130115 and 20130115 to 20140115.

(40) IRM 3.12.154.11.8 For Error Code 010 display, corrected Sections 02 through 06. (IPU 13U0735 issued 04-15-2013)

(41) IRM 3.12.154.11.8.2 For Error Code 010, in (3) deleted the additional procedures for determining if the CCC G was input correctly. (IPU 13U0735 issued 04-15-2013)

(42) IRM 3.12.154.9 Added new paragraph (7) for 6020B returns when Schedule A is missing and line 1a of Form 940 has a state code. (IPU 13U1356 issued 08-16-2013)

(43) IRM 3.12.154.11.10.2 Paragraph (3) 3rd bullet and 5th Then procedure box changed Exhibit 3.12.154-9 to 3.12.154-8. In paragraph (3) 3rd bullet and 3rd Then procedure box changed Exhibit 3.12.154-11 reference to 3.12.154-10.

(44) IRM 3.12.154.11.11.2 Paragraph (2) the 3rd Then procedure box changed Exhibit 3.12.154-12 reference to 3.12.154-11.

(45) IRM 3.12.154.11.12.2 Paragraph (3) 3rd bullet changed Exhibit 3.12.154-9 reference to 3.12.154-8.

(46) IRM 3.12.154.11.17.2 Paragraph (1) 2nd Then procedure box changed Exhibit 3.12.154-7 reference to 3.12.154-6.

(47) IRM 3.12.154.11.19.1 Changed reference of 2012 to 2013. In paragraph (1) changed Exhibit 3.12.154-15 reference to 3.12.154-14.

(48) IRM 3.12.154.11.20.2 Paragraph (1) changed Exhibit 3.12.154-15 reference to 3.12.154-14.

(49) IRM 3.12.154.11.21.1 Changed the invalid condition to read "Error Code 203 will generate when the State Code is present (Field 01SC1) and Credit Reduction Box is present (Field 01CRB, and Section 04, or 05 (Schedule A) is present." This now agrees with programing specifications as to why the Error Code 203 generates.

(50) IRM 3.12.154.11.21.2 Added 03 right after the reference to Section(s). In paragraph (1) changed Exhibit 3.12.154-15 reference to 3.12.154-14. Changed the 2nd then procedures 2.b. to read "If the entity state in field 01SC1 is a Credit Reduction state for the return tax year filed, enter 1 in Field 01CRB if not present. Review Exhibit 3.12.154-14 for the Credit Reduction states, and tax years to determine the validity prior to entering 1 in Field 01CRB."

(51) IRM 3.12.154.11.24.2 Paragraph 1 changed reference of 2012 to 2013 and in the 1st Then procedure box changed Exhibit 3.12.154-8 reference to 3.12.154-7.

(52) IRM 3.12.154.11.26.1 For Error Code 210, revise the Invalid Conditions which generate the error code. (IPU 13U0275 issued 02-04-2013)

(53) IRM 3.12.154.11.26.2 For Error Code 210, revise the IF/AND/THEN table procedures. (IPU 13U0275 issued 02-04-2013)

(54) IRM 3.12.154.11.27.1 Made the following changes:

  • Delete duplicate Invalid Condition for Error Code 211. (IPU 13U0033 issued 01-03-2013)

  • Under Invalid condition, add Note that error code 0211 will not generate if state is present in field 01SC. (IPU 13U0033 issued 01-03-2013)

(55) IRM 3.12.154.11.27.2 Paragraph 1 changed reference of 2012 to 2013.

(56) IRM 3.12.154.11.29.2 Made the following changes:

  • Paragraph (1) of the 5th then procedure box changed Exhibit 3.12.154-15 reference to 3.12.154-14.

  • Amend No Reply or insufficient reply procedures. (IPU 13U0350 issued 02-14-2013)

  • Revised THEN procedures in table Field 01SC1 is blank and/or Section(s) 03, 04, and/or 05 are blank, and Field 01CRB (Box 2) has an entry. (IPU 13U0350 issued 02-14-2013)

  • Revised THEN procedures in table when Field 01SC1 (Box 1a) has an entry, and the return tax year is a Credit Reduction year. (IPU 13U0350 issued 02-14-2013)

  • Revised THEN procedures in table when field 02TCR contains greater than zero amount and field 01CRB is blank. (IPU 13U0350 issued 02-14-2013)

  • Revised Error Code 214 procedures issued in IPU 13U0755 (04-17-2013) for "Multiple State" filers with entries in Section 03, 04, and/or 05, and field 02TCR (Line 11, Total Credit Reduction Amount) is blank or zero. (IPU 13U1028 issued 06-03-2013)

  • For Error Code 214, added to IF/AND/THEN table when Section 03, 04, and/or 05 is blank or zero, and field 02TCR is blank or zero, and Field 01CRB contains a numerical entry. Provided Resolution actions for the condition. (IPU 13U1171 issued 06-28-2013)

(57) IRM 3.12.154.11.30.1 Changed reference of 2012 to 2013.

(58) IRM 3.12.154.11.31.1 Changed reference of 2012 to 2013. In paragraph (2) changed Exhibit 3.12.154-15 reference to 3.12.154-14.

(59) IRM 3.12.154.11.32.1 Added 2013 reference.

(60) IRM 3.12.154.11.32.2 Added reference of 2013.

(61) IRM 3.12.154.11.34.2 Made the following changes:

  • Paragraph (1) added new procedures to Form 6020B returns. These returns will now be rejected with Action 640 and return to originator due to missing amounts on line 7a, 7b, and 7c needed to compute the tax correctly through ERS. (IPU 13U1356 issued 08-16-2013)

  • Deleted correspondence procedure to use TPNC 90 suggested text. Letter 142, Rev April 2013 (paragraph K) has applicable paragraph. (IPU 13U0275 issued 02-04-2013)

  • Inserted procedure when the total of field 02W08 and field 02W06 is greater than field 02TTW, (Line 7a, Taxable FUTA Wages), but field 02TTW>> is less than line 3 or line 6. (IPU 13U0275 issued 02-04-2013)

(62) IRM 3.12.154.11.38.2 Added reference of 2013 to the table title.

(63) IRM 3.12.3.154.11.42.1 Added 2013 reference to the table title.

(64) IRM 3.12.154.11.42.2 Made the following changes:

  • Revised procedures when field 02ADJ (Line 9) and field 02TCR (Line 11) contain entries. (IPU 13U0033 issued 010-03-2013)

  • Revised resolution procedures for Error Code 234 e.g. examiners will Clear error code condition, for all returns. (IPU 13U0275 issued 02-04-2013)

(65) IRM 3.12.154.11.43.2 Made the following changes:

  • Paragraph (1) changed Exhibit 3.12.154-15 reference to 3.12.154-14.

  • In response to SERP Feedback 201300689, clarify procedures for verifying the calculations on Schedule A. (IPU 13U0350 issued 02-14-2013)

(66) IRM 3.12.3.154.11.44.2 Made the following changes:

  • Change table title to read "For tax Periods 2013, 2012, or 2010 and prior" .

  • Revised "Correction Procedures" when Credit Reduction Wages entry are greater than Total Taxable Wages. (IPU 13U0275 issued 02-04-2013)

(67) 3.12.154.11.45.1 Paragraph (6) removed “Section” or the section symbol after “IRC” according to consistency standards in IRM 1.11.8-7, Citation Standards.

(68) IRM 3.12.3.154.11.45.2 Made the following changes:

  • Paragraph (5) added 2013 reference to the table title.

  • Paragraph (6) added 2013 reference to the table title, changed reference of 2012 to 2013 in the instructions.

  • The 5th then procedure box for TY2013, 2012, 2010 and prior and TY2011 instructions changed Exhibit 3.12.154-15 reference to 3.12.154-14.

  • Paragraph (6) in the 8th and 18th "Then" procedure boxes changed the "and" references to "minus" . In paragraph (7) note changed Exhibit 3.12.154–17 reference to 3.12.154–16.

  • Correction Procedures for Error Code 242, revised return condition(s) for year 2010 and 2012 IF/AND/THEN table, and in year 2011 IF/AND/THEN table, e.g. when return line(s) 8 and 12 show the same amount. Also, in response to SERP Feedback 20131405, correct TPNC when prior table procedures have not resolved EC242. In year 2010 and 2012 IF/AND/THEN table change to TPNC 15, and in year 2011 IF/AND/THEN table to change to TPNC 02. Moved the year 2005 and prior resolution to the Note beneath the (6) tables. (IPU 13U0735 issued 04-15-2013)

(69) IRM 3.12.154.11.48.2 Paragraph (2) 2nd If procedure box added 2013 reference and in the 2nd and 3rd Then procedure box changed Exhibit 3.12.154-7 reference to 3.12.154-6.

(70) IRM 3.12.154.11.50.2 Paragraph (3) removed “Section” or the section symbol after “IRC” according to consistency standards in IRM 1.11.8-7, Citation Standards. In paragraph (4) note changed Exhibit 3.12.154–17 reference to 3.12.154–16.

(71) IRM 3.12.154.11.52.2 Added 2013 reference.

(72) Exhibit 3.12.154-1 Updated to Tax Year 2013 Form 940 and Schedule A.

(73) Exhibit 3.12.154-2 Updated to Tax Year 2013 Form 940-PR, Anexo A, and Schedule A.

(74) Exhibit 3.12.154-5 Deleted the extra space in the title. Form 940 (Revision 2005 and Prior) has been deleted.

(75) Exhibit 3.12.154-8 Added 2013 reference.

(76) Exhibit 3.12.154-9 Changed reference of 2012 to 2013 and added 2013 reference to the instructions in the table.

(77) Exhibit 3.12.154-15 Made the following changes:

  • Updated with Year 2012 Credit Reduction States and state tax rates. (IPU 13U0033 issued 010-03-2013)

  • Corrected Credit Reduction State code for Missouri (MO) and Vermont (VT) for Tax Year 2012. (IPU 13U0350 issued 02-14-2013)

(78) Exhibit 3.12.154-16 Removed “Section” or the section symbol after “IRC” according to consistency standards in IRM 1.11.8-7, Citation Standards.

Effect on Other Documents

This material supersedes IRM 3.12.154 dated October 15, 2012 (effective January 1, 2013). This IRM includes current procedures from IRM Procedural Updates (IPUs): 13U0033 (01-03-2013), 13U0275 (02-04-2013), 13U0350, (02-14-2013), 13U0735 (04-15-2013), 13U0755 (04-17-2013), 13U1013 (05-31-2013), 13U1028 (06-03-2013), 13U1171 (06-28-2013), and 13U1356 (08-16-2013).

Audience

Wage and Investment, Submission Processing

Effective Date

(01-01-2014)

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

3.12.154.1  (01-01-2014)
General Guidelines

  1. The instructions contained in this text are used for correcting errors made by taxpayers and those made by submission processing campuses. These instructions pertain to the Error Resolution System (ERS).

  2. The returns covered in this IRM are:

    1. Form 940 - Employer's Annual Federal Unemployment (FUTA) Tax Return. The Form 940 was redesigned beginning with Tax Year 2006. The redesigned form includes "Schedule A-Multi-State Employer and Credit Reduction Information" . These returns are processed at both the Cincinnati Submission Processing Campus (CSPC) and the Ogden Submission Processing Campus (OSPC).

    2. Form 940PR - Beginning with Tax Year 2006, the Spanish version of the Form 940 will include Anexo A (Schedule A), which will be used for Multi-State Employer and Credit Reduction Information. These returns are processed as foreign tax returns at the Ogden Submission Processing Campus (OSPC) only.

    3. Form 940-EZ (Revision 2005 and Prior)- Employer's Annual Federal Unemployment (FUTA) Tax Return was the simplified version of Form 940. Form 940-EZ was made obsolete. Thus, all Form 940-EZ forms must be converted to the current year revision of Form 940. These returns are processed at both the Cincinnati Submission Processing Campus (CSPC) and the Ogden Submission Processing Campus (OSPC) using current year Form 940 fields and lines, and IRM 3.12.154 correction procedures for Form 940.

  3. The tax class, document codes, and Master File tax (MFT) codes for Unemployment Tax Returns are as follows:

    Form 940 and 940PR 940 Electronic Filing
    Tax Class 8 8
    Document Code 40 39
    MFT 10 10

  4. The due date for Form 940 and Form 940PR is January 31 of the following Tax Year. Since this is an annual return (covering a 12 month period) there are no short/fiscal period returns as compared to other Business Master File (BMF) returns. The taxpayer may notate short period on the return, but if no reason is given, such as final, quarterly payment, seasonal, etc., we correspond to find out why the return was filed early. The due date is extended by 10 days, if timely Federal Tax Deposits have been made in full by the due date.

  5. There is no extension form for these returns.

  6. Form 940 Tax Years 2006 through 2013 are processed through SCRIPS (Service Center Recognition Image Processing System).

  7. Form 940PR returns are transcribed and processed through ISRP (Integrated Submission and Remittance Processing).

  8. Returns that fail our consistency and validation process fall out to the Error Resolution System (ERS) for correction in a variety of Field and Error Codes.

3.12.154.1.1  (01-01-2014)
Introduction to the Error Resolution System (ERS)

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

  2. This Internal Revenue Manual is your main source of information for correcting the error record and the related return. Other related IRMs are:

    1. IRM 3.12.38, Error Resolution- BMF General Instructions, which contains procedures for correcting records on the screen. It also contains information regarding document controls, inventories, and management reports.

    2. IRM 3.11.154, Returns and Documents Analysis - Unemployment Tax Returns.,

  3. OSPC ONLY - Form 940PR, all Foreign Address, and U.S. Possessions Unemployment returns are processed only at OSPC.

3.12.154.1.2  (01-01-2014)
♦TAS Service Level Agreement♦

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

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

3.12.154.1.3  (01-01-2014)
♦RRA98- Section 3705(a) IRS Employee Contacts ♦

  1. The Restructuring and Reform Act of 1998 (RRA98), Section 3705 (a) provides identification requirements for all IRS employees working tax related matters.

  2. IRS employees are required to give their name and unique identification number during taxpayer telephone, face to face, and written contact. Other correspondence must include a telephone number that the taxpayer may contact.

  3. This will provide taxpayers with enough information to identify an IRS employee who has previously assisted with tax related matters.

3.12.154.1.4  (01-01-2014)
♦Employee Contact Procedures♦

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

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

    • Your last name, and

    • Your badge identification (ID Card) number.

  2. Correspondence - All correspondence must include a telephone number where the taxpayer's questions can be answered. In addition, manually generated and handwritten correspondence must include:

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

    • Your last name, and

    • Your IDRS, letter system or ID Card number.

  3. 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 number must be used.

  4. Toll-Free employees may also provide their location for identification purposes. E-mail and faxes to taxpayers on tax related matters are considered manually-generated correspondence and must include the required information.

  5. When a taxpayer insists on speaking with a specific employee who previously handled their 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.

  6. 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.

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

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

  9. It is not necessary to repeat the ID Card 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) their ID Card number on the first contact. However, the ID Card number must be included on all correspondence and provided to the taxpayer upon request.

3.12.154.1.4.1  (01-01-2014)
Form 911, Request for Taxpayer Advocate Service Assistance (And Application for Taxpayer Assistance Order)

  1. A referral to a Taxpayer Advocate Service (TAS) office should be made if the IRS employee receives a taxpayer contact that meets the TAS criteria listed below in IRM 3.12.154.1.4.1(5), and the employee cannot initiate action to resolve the taxpayer's inquiry or provide the relief requested by the taxpayer. A taxpayer should not have to specifically request TAS assistance to be referred to TAS. IRS employees will advise taxpayers of the option to seek TAS assistance when appropriate. TAS will generally accept the taxpayer's problem at face value, and will not require documentation from the taxpayer unless it is needed by the IRS to provide the requested relief, or required by the IRM for TAS to provide the relief.

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

  3. Refer also to IRM 21.1.3.18, Taxpayer Advocate Service (TAS) Guidelines, for more information. The National Taxpayer Advocate (NTA) toll-free number, 1-877-777-4778 or TTY/TDD 1-800-829-4059, should be provided to the taxpayer and the taxpayer should be advised that TAS is available if the taxpayer is not satisfied with the service he or she received.

  4. The following types of cases "should not" be referred to TAS:

    • The taxpayer's complaint or inquiry only questions the constitutionality of the tax system.

    • Cases where the focus of the taxpayer's inquiry is solely to employ frivolous tax strategies to avoid or delay filing or paying federal taxes.

  5. TAS Case Acceptance Criteria:

    • The taxpayer is experiencing economic harm or is about to suffer economic harm.

    • The taxpayer is facing an immediate threat of adverse action.

    • The taxpayer will incur significant costs if relief is not granted (including fees for professional representation).

    • The taxpayer will suffer irreparable injury or long -term adverse impact if relief is not granted.

    • The taxpayer has experienced a delay of more than 30 days to resolve a tax account problem.

    • The taxpayer has not received a response or resolution to their problem or inquiry by the date promised.

    • A system or procedure has either failed to operate as intended, or failed to resolve the taxpayer's problem or dispute within the IRS.

    • The manner in which the tax laws are being administered raise considerations of equity, or have impaired or will impair the taxpayer's rights.

    • The NTA determines compelling public policy warrants assistance to an individual or group of taxpayers.

    Note:

    Case criteria are not meant to be all-inclusive; each taxpayer situation should be evaluated based on the unique facts and circumstances of each case.

3.12.154.1.5  (01-01-2014)
♦Use of Fax for Taxpayer Submissions♦

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

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

    Note:

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

  3. Code and Edit examiners will indicate the fax paragraph on the Form 12522, Correspondence Action Sheet, to advise taxpayers of the option to fax their response.

3.12.154.1.6  (01-01-2014)
Local Desk Procedures

  1. Some Submission Processing Campuses have developed local use Desk Procedures.

  2. Unit managers must have a signed approval on file from the responsible Branch Chief on all Submission Processing Campus Desk Procedures.

  3. All existing local information and procedural issuances must be reviewed by the Operations Manager upon receipt of the new IRM revision to ensure conformance with Headquarters procedures.

  4. Local desk procedures are only to be used :

    • To supplement existing Headquarters procedures.

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

    • For local routing procedures.

3.12.154.1.7  (01-01-2014)
Coding and Editing Guidelines

  1. The applicable code is edited in the designated area on Form 940, or Form 940PR as follows:

    Fields Field Location
    Computer Condition Code Revisions 2006 through 2013: Immediately to the right of the line that states, "You MUST fill out both pages of this form and SIGN it" .

    Revision 2005 and prior: Bottom margin, in the center position.
    Received Date Body of the return.
    ERS Action Code Revisions 2006 through 2013: Edit to the right of the words: "You MUST fill out both pages of this form and sign it."
    P/I Code We no longer edit the Penalty and Interest Code.
    Tax Period Next to the form title.
    Failure to Deposit Penalty We no longer edit the Failure to Deposit Penalty.
    Third Party Designee (when the "Yes" box is checked) No editing is needed.

  2. All returns must be in an acceptable current year's revision.

  3. Code and Edit examiners use different characters to indicate corrections, changes, or deletion of entries when editing forms. This is due to the implementation of the Service Center Recognition/Image Processing System (SCRIPS), which scans the Form 940 return and capture the information from pre-designated locations. Error resolution examiners must be able to comprehend any edited changes shown on a return.

  4. Form 940 returns, Revisions 2006 and subsequent, filed for tax years 2006 and subsequent may be processed through SCRIPS, (at the campus' discretion.) ISRP processes the following returns:

    • Form 940 (Revision 2005 and prior)

    • Form 940PR (All Revisions)

    • All Form 940 Returns converting a filed Form 940-EZ Return.

    • Form 940(CG). This form can be identified by the presence of Form 940 (CG) in the upper left hand corner.

    • Year 2005 and prior tax information that has been submitted on a Revision 2006 through 2013 form.

    • Year 2005 and prior tax information that has been submitted on the appropriate revision of Form 940 and Form 940PR.

    • Revision 2005 or prior return that was filed for tax year 2006 and subsequent tax information. These returns will be edited by Code and Edit as necessary. All transcription entries will be edited to match the current revision.

  5. ISRP is used for forms that cannot be input via SCRIPS.

  6. For a description of specific edit marks used in SCRIPS and ISRP processing, see the table below:

    Edit Mark SCRIPS ISRP Description
    Asterisk "*" X X Used to prompt the SCRIPS or ISRP system operator to stop at a field so that the operator can make a change. The "*" is used to delete tax data or to indicate that an item is not to be transcribed.

    Note:

    The asterisk must be placed to the left of the entry as close as possible.


    Exception:

    An Asterisk (*) in the signature box indicates that the signature is on an attachment or is not needed.

    Circle X X Used to delete a Received Date. If the taxpayer circles an entry, edit the entry.
    Decimal point X X Indicates the separation of dollars and cents, if no distinction has been made by the taxpayer.
    Edit Marks Made by Other IRS Functions X X Edit marks entered by another area (such as Compliance or Accounts Management), are not to be re-edited except to place the marks in the correct area.
    Line through X X Entity Perfection Only - Used to delete data. Unless otherwise specified, a horizontal line through data will always indicate the data is being deleted from the return.

    Note:

    Always edit an Asterisk (*) as closely as possible to the left when lining through an entry.

    Percent Sign (%) X X Indicates the presence of a "Care of Name" or address.
    Underline X X Used to identify a Name Control that is to be transcribed.
    Zero, Dash, or None X X "Zero" , "dash" or "None" are considered valid entries except when specific instructions require editing of an entry.
    slash "/" X X A"/" through the entire page can be used when deleting a form or schedule that is not to be transcribed, or by ERS, to indicate that all the information from the document has been deleted from the return's record.
    "/" XX "/$"
    XX represents the two digit foreign country code
      X ISRP ONLY: Indicates a foreign address. The two digit alpha foreign country code will be preceded by / and followed with "/$" . This cannot be used for documents processed via SCRIPS.

    Note:

    The "X" and "arrow" will no longer be used in editing Form 940 Series returns.

  7. When a Code and Edit examiner initiates correspondence, they are required to show the applicable Action Code in the lower left hand corner of the return. If Letter 142C is used, they are also required to notate the paragraph, and if appropriate, the fill in number(s) followed by the inserted fill-in information.

  8. Form 940 returns (Revision 2006 and subsequent) processed through SCRIPS will be received in ERS not stapled and sorted into "Perfect" (e.g., document without attachments), and "Imperfect" (e.g., documents with attachments and/or envelopes) batches.

    1. When pulling documents from a "Perfect" truck or batch, ensure that all pages are pulled (page 1, 2 and/or Schedule A).

    2. When pulling documents from an "Imperfect" truck or batch, check the upper right corner for a seven digit sequence number. Then, go to the colored folder at the back of the gusset and pull the corresponding attachments. Staple any attachments to the return before routing

  9. Working trails/Audit trails/Action trails - the following actions will be edited on the Unemployment Returns in the ERS program:

    1. Changes to Tax Period (01TXP).

    2. When Tax Examiners send a letter, they must make a notation such as "3875C" .

    3. Changes to Employer Identification Numbers (EIN) - (Field 01EIN)

    4. Any Action Code (AC) will be notated on bottom left hand corner of the return and on Form 4227.

    5. If an IDRS transaction is input, a notation must be made on the document showing the TC (Transaction Code) and the date.

    6. When instructed to prepare Form 3465 (Adjustment Request) while working Form 940 Series returns take the following actions:

      If Then
      Form 3465 prepared, 1. Make a copy of the Original Return and attachments to attach to Form 3465.

      2. Notate "COPY" on the copy and place in the "BMF Adjustment Out Box" .

      3. Notate "3465 PREP" in the bottom left margin of the original Form/Return.

3.12.154.1.8  (01-01-2014)
Correspondence

  1. Exhibit 3.12.154-5 Correspondence Action Chart and Exhibit 3.12.154-6 No Reply/Undeliverable Chart for correspondence issues.

3.12.154.1.9  (01-01-2014)
Indian Tribal Government - Background

  1. After December 20, 2000, services rendered to a federally recognized Indian Tribal Government ( or its instrumentalities) are exempt from Federal Unemployment Tax (FUTA), subject to the tribes compliance with applicable state law. For more information, see Announcement 2001-16 and Internal Revenue Code Section 3309(d).

  2. For submission processing purposes, Code and Edit and ERS employees will accept all FUTA tax returns notated or referenced with the following explanations for exemption to the FUTA tax. We will code and perfect these returns as "Non-Taxable and Final" .

    • Indian Tribal Government for Tax Years 200012 and subsequent;

    • Announcement 2001-16;

    • The Community Renewal Tax Relief Act of 2000;

    • H.R. 5662, incorporated in H.R. 4577, the Consolidated Appropriations Act, 2001;

    • Public Law No. 106–554, 114 Stat. 2763;

    • Internal Revenue Code Section 3309(d); and/or

    • Similar explanation as described above,

    Note:

    If the taxpayer is claiming a refund for Federal Tax Deposits, ensure that the return is perfected by editing/deleting all transcription lines so the overpayment is refunded to the taxpayer.

3.12.154.1.10  (01-01-2014)
General Information and Definitions of Taxpayer's Entity Addresses in the Unemployment Program

  1. The determination of a domestic or foreign address is based only on the address of the taxpayer.

3.12.154.1.10.1  (01-01-2014)
Domestic Addresses

  1. A Domestic Address is a U.S. address that contains:

    • Street Address

    • City

    • State

    • ZIP Code

  2. These Unemployment Tax Returns are processed at CSPC and OSPC.

3.12.154.1.10.2  (01-01-2014)
APO/DPO/FPO Addresses

  1. An APO/DPO/FPO Address is a U.S. address which may include:

    • APO (Army/Air Force Post Office)

    • DPO (Diplomatic Post Office

    • FPO (Fleet Post Office)

    • Postal Service Center

    • Mobile Unit Designation

    • Name of Ship

    • State Code

    • ZIP Code

  2. APO/DPO/FPO addresses are not foreign addresses.

  3. These Unemployment Tax Returns are processed at CSPC and OSPC.

  4. The Postal Service has established address requirements for APO/DPO/FPO addresses. If an address appears in the old APO/DPO/FPO format, such as "APO New York, NY 091XX" , convert to the new state code based on the ZIP Code as follows: "APO AE 091XX" .

    ZIP Code State Code
    340 AA
    090-098 AE
    962-966 AP

3.12.154.1.10.3  (01-01-2014)
U.S. Possession or Territory Address

  1. A U.S. Possession or Territory Address will include:

    • Street Address

    • City/U.S. Possession

    • ZIP Code

  2. A U.S. Possession or Territory is considered a foreign address return.

  3. These Unemployment Tax Returns are processed at the Ogden Submission Processing Campus only.

    1. SSPND 650.

    2. Attach Routing Slip with the notation "Forward to OSPC" .

    3. Prepare letter 86C to inform the taxpayer that the return has been sent to Ogden.

  4. OSPC ONLY -Returns with an address in a U.S. Possession or Territory are considered to be a foreign return for processing purposes and are entered in the same way as domestic addresses.

    1. A two character alpha code must be entered in Field 06ST for the possession or territory name.

      U.S. Possession Abbreviation
      American Samoa AS
      Federated States of Micronesia FM
      Guam GU
      Marshall Islands MH
      Northern Mariana Islands MP
      Republic of Palau PW
      Puerto Rico PR
      U.S. Virgin Islands VI

    2. A ZIP Code must be present.

3.12.154.1.10.4  (01-01-2014)
Foreign Addresses (OSPC ONLY)

  1. All returns with a foreign address must be shipped to OSPC.

    1. SSPND 650.

    2. Attach a routing slip with the notation "Forward to OSPC" .

    3. Prepare letter 86C to inform the taxpayer that the return has been sent to Ogden.

  2. A Foreign Address will contain:

    • Street Address or P.O. Box

    • City or town name

    • Other principal subdivision (i.e., province, state, country, etc.)

    • Postal code, if present

    • Foreign country

  3. A foreign (international) address is any address that is not in one of the 50 states or the District of Columbia.

  4. Returns with an address in a U.S. Possession or Territory are considered to be foreign returns for processing purposes.

3.12.154.1.10.5  (01-01-2014)
ZIP Codes – Explanation, Procedures, Corrections

  1. All ZIP CODES are standardized at Enterprise Computing Center at Martinsburg, WV (ECC-MTB) before the return posts to the Master File.

  2. This program called "FINALIST" matches the taxpayer's street address and city address to the ZIP CODE on the return with the latest ZIP Code updates received from the U.S. Postal Service.

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

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

  3. If you have an incomplete or no ZIP CODE on the return, but it contains a street and city address, no research is necessary, take the following action:

    1. Exhibit 3.12.154-8 or Document 7475 for the Major State ZIP Code that includes the last two digits of "01" .

    2. If there is a match by the program, the ZIP CODE is standardized at ECC-MTB for posting to the Master File.

    3. If there is a no match by the program, ECC-MTB passes the return on to the Master File for posting, but an Error Listing is generated and sent to the Service Center for correction.

  4. If you have an incomplete or no ZIP CODE, and the street or city address is incomplete or missing, then research is needed for the complete address. Follow local submission processing procedures for research.

3.12.154.1.11  (01-01-2014)
Glossary of ERS Terms

  1. The following words are used in the sections of this IRM:

    Words Definition
    Action Code (AC) ERS A three digit numeric code indicating the need for additional information not available in the record or on the source document. Only one Action Code can be assigned to a record at one time. Exhibit 3.12.154-12
    Amended Return A return the taxpayer files to change information on the original tax return.
    Annualized A method of computing tax on less than one full year (12 months) using the appropriate tax rates for that Year.

    Note:

    In the FUTA program, you may see this statement on a final return.

    Block A group of 100 or less documents identified with the same block DLN (Document Locator Number) in order to control the documents.
    Block-Out-Of-Balance (BOB) A condition where the total returns or money listed does not equal the sum total of returns or amounts.
    Check Digits Two computer-generated alpha characters used with the Social Security Number (SSN) or Employee Identification Number (EIN) to identify a taxpayer's account (E, G, and M are invalid).
    Computer Condition Code (CCC) A one digit number or letter assigned to a return to identify a specific condition or computation.
    Consistency Error A condition determined when the computer compares two or more Fields and these Fields do not meet the processing requirements.
    Entity Index File (EIF) A computer file that stores name data for each EIN on file. A check is made between the EIN and name entered.
    Error Code A three digit numeric code identifying specific math or consistency error in an Error Record.
    Error Records Data records failing any of the math or validity checks on Generalized Mainline Framework or containing an invalid or incomplete Action Code.
    Generalized Mainline Framework (GMF) The system used to process and control all documents through the service center pipeline.
    Name Search Facility (NSF) A National file of name and address data used to Locate a Taxpayer Identification Number (TIN). NSF uses off-the-shelf software and a relational database to search for taxpayer names that match or are similar to the name requested by CC NAMEE.

3.12.154.1.12  (01-01-2014)
Related Forms

  1. The following forms are referred to in this section. The table below shows their form number, form title and use:

    Form Title Use
    3244 Payment Posting Voucher Identifies account where payment is applied.
    3465 Adjustment Request To request transfer of credits.
    12522 Correspondence Action Sheet Initiates correspondence to the taxpayer through the Typing Unit or IDRS. (or follow local procedures)
    4227 Intra-SC Reject or Routing Slip Identifies the reason for using the Action Code.
    10886 Reject Routing Slip Identifies the reason for an action code.

3.12.154.1.13  (01-01-2014)
Command Codes (CC)

  1. The COMMAND CODES (CC) used for correcting the Error Inventory and the Workable Suspense Inventories are described below.

    1. CCs are used to tell the system what function to do,

    2. CCs must be entered in a valid format, otherwise an error message will display, and

    3. Correct the data entered with the CC and transmit.
      The following is a list of some CCs:

    Command Code Definition
    BMFOL Reviews transactions posted to the Master File.
    BRTVU Used to see the transcribed data from a return that has posted to the Master File.
    CRECT Will be displayed with all error displays.
    DLSEC Deletes a section of a record.
    ENMOD Requests a display of entity information for a specific module.
    ENREQ Requests the BNCHG format.
    ERINV Used to research a DLN or TIN on ERS to see if the document is in the ERS inventory.
    ERVOL Used with a STATUS CODE to display the number of ERS records in the current Workable Inventory and Unworkable Inventory.
    GTREC Accesses the first error in a block in the Error Inventory or a specific record in the Workable Suspense Inventory. It can also re-display any uncorrected error.
    GTRECQ Retrieves and corrects a record selected for quality review.
    GTRECW Retrieves and corrects an Error Record that has been erroneously worked. Can be used on the day that the record or block was worked.
    GTSEC Obtains the display of any section of a record in process.
    INOLE Research Entity Module.
    MFREQ Retrieves a tax module and its related entity date from Master File.
    NAMEE Used to provide nationally centralized entity research via Name Search Facility (NSF).
    NWDLN Changes (renumbers) the DLN and MFT of the record and/or reject the record.
    RJECT Rejects a record from ERS.
    SSPND Used to enter an Action Code and place a record in suspense inventory.
    TRDBV A summary selection screen display of the returns, schedules and forms submitted by the specific taxpayer.

3.12.154.1.14  (01-01-2014)
Action Codes (AC)

  1. The ERS Action Code indicates that specific information is missing or that the record is to be rejected from processing. The Action Code will have sufficient detail to indicate if correspondence is to be sent to the taxpayer or the specific inhouse research or action required. Exhibit 3.12.154-12

  2. ACTION CODE 001 will be computer generated when the BOB Resolution Function (Block Out of Balance) has added a missing document by only inputting the TIN and the Name Control for the missing document. See IRM 3.12.154.4.2(2) for correction procedures on Priority I Errors.

  3. Document Perfection Tax Examiners (Code and Edit) will assign Action Codes to numbered returns when they determine that the document is unprocessable in its present form either by needing additional information or some manual intervention is required. The action code will be entered on the lower left margin of the return.

  4. Correspondence Action Sheets (Form 12522) may be attached by Code and Edit to initiate correspondence.

    1. Action Codes and literal for each Action Code will generally be sufficient with no further explanation, except other research.

    2. When a note of explanation concerning the missing information is attached to the return, an Action Code is assigned by Code and Edit.

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

  6. If the Action Code assigned by Code and Edit is invalid, incomplete, or AC 001, the record will be assigned to the Error Inventory for correction or deletion of the Action Code.

  7. Only one Action Code may be assigned at one time to a record. The priority of the Action Codes will be:

    • 310

    • 320

    • 4XX

    • 6XX

    • 3XX

    • 2XX

    • 610

    • 611

    Exception:

    Use Action Code 211, 215, 225 or 226 before Action Code 341 to ensure return is complete before a manual refund is issued.

  8. An ERS Tax Examiner may enter an Action Code on a record, delete or correct an invalid Action Code.

  9. ERS Tax Examiner entering a valid Action Code with CC SSPND will be clearing the record from the screen and placing the record in either Workable Suspense or Unworkable Suspense.

  10. A Reject Tax Examiner entering a valid Action Code with CC RJECT will be rejecting the record from ERS. Generally, Service Center Control File (SCCF) will be automatically updated for the rejected record.

  11. A Reject Tax Examiner entering an Action Code with the CC NWDLN will be rejecting the record from ERS and establishing the new DLN under which the record is to be input.

    1. Exhibit 3.12.154-12 for a list of Action Codes showing the suspense period.

    2. The suspense period should be used for controlling suspense documents, NOT to determine which Action Code to use.

3.12.154.1.15  (01-01-2014)
Status Codes

  1. Records for the documents in the Error Resolution System (ERS) are controlled by Status Codes. The status is updated when the record is placed in a specific inventory.

  2. Below is a list of the Status Codes and a brief explanation:

    Status Code Explanation
    Status 100 Error awaiting correction. Records are in the Error Inventory.
    Status 2XX Records awaiting information to be received. Records are in the Unworkable Suspense Inventory.
    Status 3XX Suspense period expired - no response. Records are automatically transferred from Unworkable to Workable Suspense Inventory.
    Status 4XX Records awaiting correction - information received. Records are in the Workable Suspense Inventory.
    Status 900 Record is on the Unselected Inventory.

  3. The final two positions of the Status Code will consist of the first two positions of the Action Code. This will put similar work together on the Workable Suspense Inventory.

    Example:

    321 - Suspense period expired, no response to taxpayer correspondence.

3.12.154.1.16  (01-01-2014)
Taxpayer Notice Codes (TPNC)

  1. This code is used when a math error is present involving the tax liability or balance due/overpayment. It is entered on the terminal screen following the literal "NC." Exhibit 3.12.154-16.

  2. To eliminate a TPNC, do one of the following:

    1. Delete 02TTW and 02TFT and XMIT, GTSEC 02 and reenter. (Deleting only one field may not eliminate the TPNC), or

    2. Enter "G" in 01CCC and XMIT. When Error Code 010 falls out, delete CCC "G" .

  3. The TPNC is entered after determining that no other corrections to the record are needed.

  4. Each Math Error will have certain TPNCs that are valid to clear the Math Error.

    1. The TPNC assigned must be valid for that error or the same as one previously assigned,

    2. When a TPNC that is not valid is entered, the error will be re-displayed.

    3. A previously assigned TPNC can only be used if it has been validated for that Error Code.

  5. Each Math Error display will require a correction to a field or the entry of a TPNC. The transmission of a TPNC must not be accompanied by any other correction.

  6. A return can have a total of three TPNCs. If more than three TPNCs are to be assigned, use instead and list the errors for Notice Review to type and send to the taxpayer.

  7. is actually a fill-in notice and should be used when no other TPNC fully explains the correction(s) made to the taxpayer.

    1. The tax examiner will write a brief explanation of the error and attach it to the face of the return,

    2. When a brief explanation is written, there must be a mandatory review before the record (return) is closed off the ERS system. Follow local procedures for review.

    3. The return should be charged out and routed directly to Notice Review, and/or follow local procedures.

    4. Notice Review will type the Math Error explanation on the notice before mailing to the taxpayer.

    5. can be used with other TPNCs.

  8. Listed below are procedures you may take once a TPNC is transmitted to the ERS record:

    1. If errors remain after transmitting the TPNC, then create an error with a higher priority,

    2. This will cause all "C" Clear Codes and any TPNC already assigned with a lower priority error to be deleted from the record.

    3. TPNCs will be deleted from the header display,

    4. Beginning with the higher Priority IV error created, all subsequent error TPNCs will be displayed for resolution, although they may have been displayed previously, and

    5. A correction erases an Error Code which you previously cleared with a TPNC or "C" Clear Code. In this case, the "C" or TPNC on this error and all subsequent Error Codes will be displayed for resolution whether or not they were previously displayed.

    6. The TPNCs for this error and subsequent Error Codes will be deleted from the header display.

  9. Records which have been worked may be reworked using CC GTRECW. See IRM 3.12.38.3.2.(4)1., General Correction Procedures, for further details.

  10. All TPNCs are erased when a record is suspended with CC SSPND.

  11. Unfinished records from the previous day will contain none of the TPNCs assigned to the records that were not completely worked.

  12. OSPC Only - Form 940PR TPNCs are issued in the Spanish version.

  13. For a listing of the TPNCs valid for specific forms, Exhibit 3.12.154-16

3.12.154.1.17  (01-01-2014)
Clear Code "C"

  1. The letter "C" is used as a Clear Code for the Error Codes (consistency errors) where the error condition is such that the resolution does not require a change or correction to the record as displayed.

    1. The display will include a Clear Field labeled "CL" to indicate the possible need of a Clear Code.

    2. The Clear Code Field will always be located to the right of CC CRECT on the screen display.

    If Then
    Error Codes indicate the possible need for a Clear Code, These are cleared by either correcting the condition or entering a "C" to indicate no correction is needed.
    Corrections are required, 1. Corrections must be entered and transmitted before entry of the Clear Code "C."

    2. Assure that all corrective procedures have been input as shown under each individual Error Code before entering a "C" in the Clear Code Field.

    3. The "C" Clear Code will prevent any other corrections to the record.

    4. If a correction must be entered but you have already transmitted the "C" Clear Code, and the error is no longer displayed, then use CC GTRECW to make any corrections.
    Clearing the Action Code from the screen after corrections for the Action Code have been completed, or, as with Action Codes 410 and 700, the Action Code must be cleared initially, so other errors in the record can be resolved, 1. Clear Code "C" is used.

    2. The presence of the "C" with a Priority I Error indicates that you have made the corrections to the Action Code and now wish to have any other errors on the record displayed.
    Deleting an Action Code, 1. "000" is also used as a Clear Code.

    2. It will only be used for invalid or erroneous Action Codes when you have determined there is no reason to suspend the record.

    3. The "000" cannot be used in suspense correction.

  2. Programming erases all "C" Clear Codes for Error Codes when a record is suspended with the CC SSPND.

  3. It also erases Error Codes and Action Codes for the new day's Error Inventory and Workable Suspense Inventory.

    1. Unfinished records from the previous day will contain none of the "C" Clear Codes assigned to a record that was not completely worked.

    2. Error Codes (including the ones which may require a "C" Clear Code) are numbered in order of correction.

  4. Sometimes an ERS Tax Examiner, correcting errors at the terminal, will create an Error Code with a higher priority than the one(s) cleared with a TPNC or "C" Clear Code.

    1. Should this occur, programming will erase all "C" Clear Codes and TPNCs for Error Codes with a lower priority than the one created.

    2. Beginning with the higher priority Error Code created, programming will continue displaying Error Codes for the record.

    3. Displays using the corrected data are apt to be different from those previously displayed.

  5. Sometimes an ERS Tax Examiner will make a correction erasing an Error Code which you previously cleared with a "C" and now the error condition no longer exists.

    1. Should this occur, the "C" Clear Code for this error and all "C" and TPNCs for all subsequent errors in the record will be deleted.

    2. If after deleting the "C" and TPNCs there are errors remaining on the record, they will continue to be displayed for resolution whether or not they were previously displayed.

3.12.154.1.18  (01-01-2014)
Statute Control Cases

  1. Any Form 940 series return that has a current processing date equal to or more than two years and nine months or more after the original due date (without regard to any extension) or the received date, whichever is later, is a statute control document.

    1. It will appear on the screen as Error Code 001, unless CCC "W" is present.

    2. The "W" indicates the record has been cleared by the Statute Unit.

  2. All "G" Coded returns become statute returns if the processing date is equal to or more than two years and nine months after the due date.

  3. If the return has an attachment or stamp which indicates previous clearance by the Statute Control Group within the last 90 days, the error must be cleared by entering "W" in Field 01CCC.

  4. If the return does not have an attachment or stamp which shows that the Statute Control Group has cleared it within the last 90 days, take the following actions:

    1. Treat the record as unprocessable, suspend the record with AC 310 for statutory clearance,

    2. If working the Error Inventory, return the document to the block, and

    3. If working the Workable Suspense Inventory, notate 2nd and 3rd copies of charge-out, if available, with AC 310 and the current date.

    4. Handle the document as instructed for statutory clearance. See IRM 3.0.273.11, Administrative Reference Guide, for further information.

  5. The statute date for timely filed Form 940 series returns requesting an overpayment/refund due is shown in the table below.

    1. All returns received after the postmarked date are disallowed by the Statute Unit (for overpayment or refund).

    2. Original balance due returns must be cleared by the Statute Unit. Follow procedures outlined in (4) above.

    Tax Return Tax Year Statute Barred Date 90 Days to Statute Bar Date
    940, 940PR 2007 01-31-2011 11-02-2010
    940, 940PR 2008 01-31-2012 11-02-2011
    940, 940PR 2009 01-31-2013 11-02-2012
    940, 940PR 2010 01-31-2014 11-02-2013
    940, 940PR 2011 01-31-2015 11-02-2014
    940, 940PR 2012 01-31-2016 11-02-2015
    940, 940PR 2013 01-31-2017 11-02-2016
    940, 940PR 2014 01-31-2018 11-02-2017

3.12.154.1.19  (01-01-2014)
Pre-Computed Penalty

  1. If a penalty other than a delinquency, late payment or Federal Tax Deposit (FTD) penalty is included on the return and the notation "3465 Prepared" does not appear on the return take the following actions:

    1. Prepare a Form 3465 to request an assessment of the penalty.

    2. If the return remittance includes an amount applicable to all or part of the penalty referred to above, indicate on the Form 3465 that this portion of the remittance is available for application to the assessment.

    3. Enter CCC "X" to freeze the refund until the assessment for penalty posts to BMF.

    4. Enter CCC "R" when an assessment of fraud penalty is shown. Notate the return "Form 3465 Prepared" and route the Form 3465 to Accounts Management.

3.12.154.1.20  (01-01-2014)
Electronic Filing

  1. The following instructions apply to Electronically Filed returns:

    1. Since all validity and consistency checks are performed up front during the transmission process, there should be minimal fall out to ERS;

    2. If an Electronic record appears in your error inventory, please take the following steps:

      IF THEN
      You are able to correct the error condition, Make the correction following the procedures within this IRM.
      You are unable to resolve the error condition for the Electronic record, 1. Take a screen print and give it to your manager.

      2. The manager will contact the Planning and Analysis Staff Analyst responsible for Error Resolution who will contact and forward the documentation to the Unemployment Return (Electronic) Program Analyst at Headquarters.

      Note:

      A Knowledge, Incident/Problem, Service and Asset Management (KISAM)Alert may be required to notify Headquarters management and/or to correct current programming. The Planning and Analysis Staff Analyst should contact the Unemployment Return (Electronic) Program Analyst at Headquarters first, prior to issuing any KISAM Alert, to attempt to resolve the problem in a timely manner. Follow local procedures for issuing the KISAM Alert to Headquarters.

  2. Form 940 originally input by electronic filing come out on ERS for correction.

  3. The corrections are identical to corrections made for paper input documents.

    1. Electronic Filed error corrections are made by referring to a computer printed facsimile document.

    2. These facsimile documents have the Electronic Filed Error Codes printed in the top left corner of the return.

  4. Electronic Filed DLNs contain Document CODE 39.

3.12.154.1.21  (01-01-2014)
♦Refund Returns - 45 Day Jeopardy and Ten Million Dollar Refunds♦

  1. This section explains the procedure for issuing refunds when the 45 Day interest free period is about to expire or when the amount of refund is over ten million dollars.

  2. Document Perfection and ERS are responsible for identifying refunds and for initiating requests for manual refunds.

    Note:

    Expeditious processing of refund returns is critical if the 45 Day period is about to expire.

  3. Action Code 341 should be input by Code and Edit to show that a manual refund is needed.

  4. If these are not identified in Code and Edit, ERS examiners need to be aware of the following criteria:

    IF THEN
    The processing date is more than 20 days after received date or return due date (whichever is later), and the 45 day interest free period is about to expire and the refund amount is≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Note:

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

    1. Input AC 341.

    2. Attach Form 4227 (or other appropriate routing slip) and give to the manager.
    The refund is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ , 1. Input AC 341.

    2. Attach Form 12230, Expedite Processing Million Dollar Manual Refund, and give to the manager.
  5. Taxpayer Advocate Service (TAS) Initiated Manual Refunds - Any request for a manual refund that is hand walked by a Wage and Income Submission Processing (SP) liaison for a Taxpayer Advocate Service (TAS) employee as a manual refund, should be processed by a Lead Tax Examiner or designated tax examiner using the following procedures in the order listed:

    1. CCC "O" should be edited on the return and entered in 01CCC.

    2. Delete the CCC "Y" from Field 01CCC.

    3. Continue to process the return according to Error Code processing.

  6. Correspondence If the manual refund requires correspondence for missing or incomplete information, then do the following:

    1. Complete the appropriate correspondence request form and request all information that is missing or incomplete.

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

    3. Suspense (SSPND) with appropriate suspense code and give the return back to the Wage and Income Submission Processing liaison.

    4. The Wage and Income Submission Processing liaison will contact the TAS employee to obtain the required information needed to complete the processing of the manual refund.

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

    1. Initiate suspense (SSPND) action according to the Error Code procedures.

    2. Inform the Wage and Income Submission Processing liaison the reason of the action taken.

    3. Give the return back to the Wage and Income Submission Processing liaison.

    4. The Wage and Income Submission Processing liaison will contact the TAS employee, who in turn, will take the necessary action to complete the processing of the manual refund.

  8. Assigning TPNCs/Math Error When a math error is identified, do the following:

    1. Assign the TPNC in accordance with the Error Code procedures.

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

    3. Suspend (SSPND) with appropriate code (suspense should be done at the generated error code) and give the return to the W&I SP liaison.

    4. The Wage and Income Submission Processing liaison will contact the TAS employee, who, in turn, will take the necessary action to complete the processing of the return.

  9. When Balance Due/Overpayment Math Error Code generates, do the following:

    1. Make a screen print of the Error Code Screen Display. Highlight the Computer Generated Refund Amount, and attach the print to the front of the return with the entity portion of the return visible.

    2. Enter the amount the taxpayer claimed as the amount they requested to be refunded back into Field 02B/R.

    3. Once return processing is complete, give the return, Form 12412, Operations Assistance Request and the ERS screen print to the W&I SP liaison.

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

    1. Make a screen print of the Error Code Screen Display and highlight the Computer Generated Refund Amount

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

    3. Assign the appropriate TPNC.

    4. Once return processing is complete, give the return, Form 12412, Operations Assistance Request and the ERS screen print to the W&I SP liaison.

  11. 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 regarding correspondence issues and the assignment of the TPNCs.

    2. Refer to Paragraphs 9 and 10 above.

3.12.154.1.22  (01-01-2014)
♦Frivolous Returns and Claims♦

  1. A frivolous argument is used for the purpose of expressing dissatisfaction with the substance, form, or administration of the tax laws by attempting to illegally avoid or reduce tax liabilities. Recognized frivolous arguments made by businesses include, but are not limited to, the examples in IRM 4.10.12, Frivolous Returns Program shown in Exhibit 3.12.154-13.

  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. Exhibit 3.12.154-13,
    Caution: If the return shows 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 an Action Code 331 "and a Form 4227 or other routing slip, with the remarks" , "Refer to Exam FRP for audit after processing" , but sends the return for processing, Continue to process the return using the procedures in IRM 3.12.154. However, do not circle or void the Action Code "indicating a frivolous return" .

    Note:

    Returns having only zeros, no entries, are blank or indicate "None" , "Not Liable" , etc. with no evidence of a frivolous argument are not to be considered as frivolous returns.

3.12.154.1.23  (01-01-2014)
♦Criminal Investigation (CI) “Funny Box”♦

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

  2. Pull any return identified as having any CI criteria's and place in the (CI) "Funny box" .

  3. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

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

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

    1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

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

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

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

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

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

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

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

3.12.154.1.24  (01-01-2014)
♦CADE 2♦

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

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

  3. The BMF campus cycles are:

    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 File processing run on Thursday.

    2. Transactions will be viewable as posted transactions using Integrated Data Retrieval System (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 rather than in a "pending" status on Monday.

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

    Note:

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

3.12.154.1.25  (01-01-2014)
♦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" is 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 attached,

    Note:

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

    The return is not complete ( for example, missing signature, schedules, or forms), 1. Remove the return from the batch.
    2. Void the DLN.
    3. Attach Form 4227 to the return and route to Accounts Management to secure missing information.

    Note:

    Do not correspond for missing information on "CIS" reprocessable returns.

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

    Note:

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

3.12.154.1.26  (01-01-2014)
♦BMF Consistency♦

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

  2. Topics for BMF Consistency have been identified and developed as a coordinated effort between CSPC, OSPC, and W& I Customer Account Services, Submission Processing (SP), Paper Processing Branch, Business Master File (BMF) Code and Edit/ Error Resolution.

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

  4. The text in normal print within a consistency subsection signifies the common processes to be used for all BMF returns. The text in bold print is form-specific and applies to this IRM only.

3.12.154.2  (01-01-2014)
Form 940, Form 940PR and Form 940-EZ, Conversions

  1. The Form 940 and Form 940PR were redesigned for Tax Years 2006 and subsequent.

  2. The Form 940-EZ became obsolete. Thus, all Form 940-EZ returns must be converted to a current year Form 940 return format.

3.12.154.2.1  (01-01-2014)
Form 940-EZ Conversion

  1. The Form 940-EZ is obsolete must be converted to a current year Form 940 return format. All converted forms are processed through ISRP.

  2. Conversion of Form 940-EZ to Form 940.

    1. The following table enumerates the Form 940-EZ line conversion to Form 940.

      Line Item Description Line Number on Form 940-EZ Line Number on Form 940, Rev 2013 Transcription Line Title of Field Field Designator
      Amount of Contributions paid to state Unemployment Fund A N/A No N/A N/A
      Name of state where contributions are paid B 1a Yes State Code 01SC1
      Total payments to employees 1 3 No N/A N/A
      Exempt payments 2 4 No N/A N/A
      Payments of more than $7,000 3 5 No N/A N/A
      Add lines 2 and 3 4 6 No N/A N/A
      Total taxable wages 5 7 Yes Total Taxable Wages 02TTW
      FUTA Tax 6 12 Yes Total Tax Taxpayer 02TFT
      Total FUTA Tax Deposited 7 13 Yes FTD Credit Claimed Amount 02FCC
      Balance due 8 14 Yes Balance Due/Overpayment Taxpayer 02B/R
      Overpayment 9 15 Yes Balance Due/Overpayment Taxpayer 02B/R
      First Quarter Liability First Box in Part II 16a Yes Total Tax Liability Amount 02Q1
      Second Quarter Liability Second Box in Part II 16b Yes Total Tax Liability Amount 02Q2
      Third Quarter Liability Third Box in Part II 16c Yes Total Tax Liability Amount 02Q3
      Fourth Quarter Liability Fourth Box in Part II 16d Yes Total Tax Liability Amount 02Q4

    2. Form 940-EZ - All valid Codes should be transferred to Form 940 including 01SIC and 01RCD.

    3. Form 940-EZ - Circle out any ACTION CODES.

    4. Form 940-EZ - Staple the replacement Form 940 to the front of the original return.

    5. Form 940-EZ -Follow local submission processing campus procedures for renumbering.

  3. Using CC SSPND 61X, suspend to Rejects.

3.12.154.2.2  (01-01-2014)
Form 940 (Revision 2005 and prior) Conversion to Current Year

  1. Forms that have been converted will be processed via ISRP.

  2. Conversions of prior year returns to Form 940 will be performed by Code and Edit.

  3. In addition, some converting will be necessary as indicated below when a credit reduction state is involved.

    IF THEN
    The taxpayer completed Part I, Line 6, signifying a Credit Reduction State, Part I, Line 6 should be edited to Schedule A.
    Part I, Line 7 should be entered on Form 940, Line 11 (current year revision).
    There is not sufficient information to convert the return, SSPND 211 using Letter 142C (or local letter as permitted by the campus) correspond for a completed Form 940 (current year revision) and Schedule A.

3.12.154.3  (01-01-2014)
ERS Error Codes

  1. This section provides general information regarding ERS Error Codes.

3.12.154.3.1  (01-01-2014)
Error Codes

  1. An error code is computer generated to a record and assigned in numerical order.

  2. Error codes are displayed on ERS by priority. The lower number error codes appear first.

  3. Error codes require one of the following actions to be taken by the tax examiner:

    1. Correct the invalid field/math condition,

    2. Assign a TPNC in the appropriate field,

    3. Suspend the document with the appropriate Action Code, or

    4. Verify and clear the error with a "C" Code in the appropriate Clear Field.

3.12.154.3.2  (01-01-2014)
Explanation of Priority Types

  1. ERS will identify errors according to type and priority. The record heading will show the type of error.

  2. Priority I are Action Code Errors. When an Action Code is assigned to a return, it displays as a Priority I error.

  3. Priority II are Section Errors (ISRP and Terminus).

    1. ISRP (transcription - error) - An error detected by ISRP displays as an ISRP Section Error,

    2. Terminus - An alpha transcribed in a numeric field or vice versa and a section with variable length fields containing an erroneous size field displays as a terminus section error,

  4. Priority III are Field Validity Errors. Any field failing to meet the requirements for that field displays as a Priority III error.

  5. Priority IV are Math and Consistency Errors. When a record is assigned an Error Code because of a math error or an inconsistency between fields, it displays as a Priority IV error.

  6. There may be records where the tax examiner finds that programming has not furnished a section that is needed to solve an error. If this happens, the tax examiner will enter the section using CC GTSEC and enter the missing data. It should be reported to Headquarters for correction of the display.

3.12.154.4  (01-01-2014)
Priority I Action Code Errors

  1. This section contains Priority I Action Code Error information for Form 940 and Form 940PR.

3.12.154.4.1  (01-01-2014)
Priority I Guidelines

  1. All records that are assigned an Action Code by Code and Edit will be displayed as a Priority I Error.

  2. If the Action Code is valid and other than 001, it will be placed in the Suspense Inventory.

    Note:

    If the Action Code is invalid or 001, it will be placed in the Error Inventory.

3.12.154.4.2  (01-01-2014)
Priority I Error Inventory Correction Procedures

  1. The Error Screen Display will show the following:

    Note:

    The items listed will display in the header portion of each Error Record. Previously assigned TPNCs will also be displayed in the header information.

    • Document Locator Number (DLN),

    • Taxpayer Identification Number and Name Control,

    • Processing Date,

    • ISRP/RRPS (literal printed if a document was processed through the Residual Remittance Processing System),

    • ERS Status Code,

    • Command Code.

  2. Before making corrections do the following:

    1. Make sure the DLN on the screen display matches the DLN of the document,

    2. Make sure the taxpayer's entries are on the correct lines of the tax return,

    3. Check and correct all coding and transcription errors in each section, and

    4. Make certain all sections and fields are transcribed.

    If Then
    Suspense action is required, 1. Use CC SSPND and the correct Action Code.

    2. If no suspense action is needed, enter "000" in the Clear Code Field and transmit.
    The BOB Resolution function has added a document to a block by entering only the name control and TIN, Action Code 001 will be computer - generated, 1. Error Resolution must enter the remainder of the record.

    2. Enter CC GTSEC for each record section that should contain data.

    3. Add the required data. When all of the sections have been entered, clear the Action Code by entering "C" in the Clear Code Field.
  3. Money Amounts - When you correct a screen display, be sure money amounts have been transcribed correctly in dollars and cents.

  4. Check the displayed Action Code for validity. Exhibit 3.12.154-12 for valid Action Codes.

    1. Also check the return to verify that the Action Code assigned is appropriate and whether it has been transcribed properly.

    2. Remember to use CC GTSEC before clearing the data from the terminal on "AC 001" .

3.12.154.4.3  (01-01-2014)
Priority I Suspense Inventory Correction Procedures

  1. Determine if the record can now be resolved with the information available. If so, make the corrections to the record using CC DLSEC or CC GTSEC.

  2. After all corrections are made and transmitted, enter a "C" in the Clear Code Field and transmit.

    1. If there are other errors in the record, they will be displayed.

    2. If the error is resolved, release the document to files.

  3. The No Reply instructions are furnished on the No Reply Chart. Exhibit 3.12.154-6

  4. If the error cannot be resolved without additional information or clearance, resuspend with the appropriate Action Code using CC SSPND.

    1. Enter the new Action Code and date on both copies of the charge-out (Form 4251) (a new charge-out is not issued for the re-suspended record, if available.)

    2. Give the return with attached charge-outs to the Suspended Documents File Unit.

  5. A record may also require rejecting from ERS, either for re-input or voiding.

    1. A record being re-input may be re-input with the same DLN or a new DLN. Notate on charge-out,

    2. A new charge-out will be issued for the Rejected Document,

    3. Give the return to the Suspended Document Unit, and

    4. On the screen, use the appropriate CC RJECT or CC NWDLN and enter the appropriate Reject Action Code.

  6. The following table contains Priority I error instructions:

    If And Then
    Priority I Error, Action Code 21X, Correspondence Status 321 For correspondence with No Reply, follow the No Reply instructions before clearing the Priority I Error. Exhibit 3.12.154-6
    Status 421 Input the information received in the reply before clearing the Priority I Error.
    Priority I Error, Action Code 310, Statute Control Status 331 or 431 1. Document will be furnished to the tax examiner with instructions from Statute Control.

    2. If the Statute Control Group indicates clearance, use CC GTSEC for Section 01, verifying 01TXP (Tax Year) and entering "W" in 01CCC for Form 940 returns.

    3. If document is to be voided:

    a. Use CC RJECT 640 for non-remittance documents.

    b. Use CC NWDLN 640 for remittance documents.

    c. See IRM 3.12.38 for the DLN of the payment posting voucher (Form 3244) to post the remittance to the year and MFT of the voided Statute document.

    4. Transmit and then clear the Priority I Error.
    Priority I Error, Action Code 320, Entity Control. Status 432 1. Document will be furnished to the tax examiner with instructions from Entity Control.

    2. Follow instructions from Entity Control before clearing the Priority I Errors.

    3. Enter the correct fields using CC GTSEC for Section 01 if the return was referred to Entity for the Name Control or EIN.

    4. When Entity assigns an EIN, enter the assigned date in the Correspondence Received Date (CRD) field, (01CRD).
    Priority I Error, Action Code 33X, Review/Routing to CI Status 433 1. Document will be referred to CI before giving to tax examiners.

    2. If instructed to void the record and refer the Form 940 or Form 940PR to CI, use CC RJECT or CC NWDLN, AC 640, following CI instructions.

    3. CC NWDLN 640 is for the voided Form 940 or Form 940PR with a remittance.

    4. The new DLN is the DLN of the payment posting voucher that posts the remittance to the year and MFT of the voided document sent to CI or "URF" if CI instructs that the money is to be applied to the Unidentified Remittance File.

    5. If you continue processing Form 940 or Form 940PR, follow CI instructions before clearing Priority I Error.
    Priority I Error, Action Code 35X, IDRS Research Status 435 1. AC 351 indicates IDRS was not available when the record was on the Error inventory.

    2. If after researching with CC NAMEB or CC NAMEE and the EIN is located - enter in 01EIN after using CC GTSEC for Section 01.

    3. If after researching with CC NAMEB or CC NAMEE and the EIN is NOT located, resuspend using CC SSPND with AC 320 for referral of a document to Entity for EIN.

    4. Action Codes "352" , "354" or "355" , - if after researching you are unable to resolve, resuspend to Entity with AC 320.

    5. AC 353 will not be used on Form 940 or Form 940PR, unless correspondence is necessary and there is no address.
    Priority I Error, Action Codes 420 through 460, Management Suspense Status 442 1. Management may direct either that you work or resuspend the record.

    2. If resuspending, use CC SSPND and the Action Code as directed.

    3. When instructed to work the record, clear the Priority I Error with the "C" Clear Code, so if other errors exist in the record, they can be displayed.
    Priority I Error, Action Code 480, Early Filed Final Suspense Status 448 IRM 3.12.154.7.4.2 and IRM 3.12.154.11.7.2
    Priority I Error, Action Code 490, System Problem Status 349 Instructions are needed from the Computer Branch through your supervisor for working. If instructions are not furnished for Status 349, you may be advised to resuspend, using CC SSPND 490.
    Status 449 Once you clear AC 490, if no other error exists in the record, the record will go to good tape. It is imperative to await instructions from the Computer Branch.
    Priority I Error, Action Code 51X, Missing Document Status 451 or 351 1. The charge-out issued for a missing document may be used for the initial search.

    2. It may also be used for subsequent searches by marking Second Request, Third Request, etc. on the charge-out returned from Files.

    3. A special search is continued as indicated in IRM 3.12.38 until a document is located or record is rejected from ERS with AC 670.

    4. If the missing document is a non-remittance document, use CC RJECT 670.

    5. If the missing document is a remittance document, use CC NWDLN 670 and the DLN of Form 3244 for the payment or if unable to designate where remittance should be applied, use CC NWDLN 670 URF.
    l. Priority I Error, Action Code 6XX, Rejects   1. Review the document to see if you agree with recommended reject action.

    2. If so, delete with CC RJECT or CC NWDLN and the appropriate Action Code.

    3. If you determine not to delete the record, clear the Priority I Error with the "C" Clear Code deleting the Action Code so that other errors that might exist can display.
    Priority I Error, Action Code 700, Duplicate Block DLN   Clear the Priority I Error with the "C" Clear Code so that other errors in the record might display.
    Priority I Error, Action Code 900, Unpostable Records   1. The literal for the AC 900 will include the Unpostable Code and the Unpostable Reason Code.

    2. For AC 900 returns, determine if the record can be resolved. If so, use CC GTSEC for the desired section(s) and make the correction(s).

    3. After all corrections are made and transmitted, enter a "C" in the Clear Field. Once the AC 900 is cleared, all other errors on the record will be displayed for correction.

    4. If no other errors exist, the record will clear the screen. The record has never posted to Master File.

    5. Fields displayed will be as processed before being an Unpostable. The record may contain editing and transcription errors.

    6. All Clear Codes and TPNCs assigned when previously processed will be deleted from the record and will need to be assigned again, if still applicable.

3.12.154.5  (01-01-2014)
Priority II Section Errors

  1. Errors which are identified as Priority II Errors are: ISRP, SCRIPS, and Terminus Errors.

  2. These errors and the correction procedures are explained in this section.

3.12.154.5.1  (01-01-2014)
Priority II - ISRP or SCRIPS Errors

  1. An edit error is a section with an error detected by ISRP or SCRIPS.

  2. Edit errors are coded as follows:

    Code Error
    "1" 1. Split screen transmission.

    2. Key Verifier attempted to change Check Digit.

    3. Key Verifier changed 4 or more digits of TIN.

    4. The Original Entry operator entered required section as missing.
    "2" Not used at this time.
    "3" Invalid section ending point.
    "4" Invalid field length.

  3. Questionable Section - the same section was input more than once or a section was entered out of sequence. The computer program will drop all duplicate sections and display the first one encountered.

  4. Mainline Problem - two sections were input (04 and 05 input) to generate Section 02.

    1. The computer cannot determine which input section to use.

    2. When displayed, this type of error will display all input fields, except the Remittance in Section 01 of the section in error,

    3. Transcribed data will be present, and

    4. Computer-generated data will not be present.

3.12.154.5.1.1  (01-01-2014)
ISRP or SCRIPS Errors - Correction Procedures

  1. Check the fields with the return and do the following:

    If Then
    Check all fields of the section when this condition exists, Verify that fields are entered as coded.
    No correction is needed, or once the section is correct, Go to the bottom of the screen and transmit.
    The section needs to be deleted, Enter CC DLSEC with the section number.

3.12.154.5.2  (01-01-2014)
Priority II Terminus Error

  1. This error is caused by a section with variable length input fields containing an erroneous size field.

  2. When displayed, this type of error will show all input fields of the terminus section.

    1. Transcribed data will be present, and

    2. Computer-generated fields or Remittance Field for Section 01 will not be present.

3.12.154.5.2.1  (01-01-2014)
Terminus Error - Correction Procedures

  1. Check all fields and make the necessary corrections.

    If Then
    No correction is needed, or once the section is correct, Go to the bottom of the screen and transmit.
    The section needs to be deleted, Enter CC DLSEC with the section number.

3.12.154.6  (01-01-2014)
Priority III Field Errors

  1. Any field that does not meet the requirement(s) for that field will be shown as a Priority III Error.

3.12.154.6.1  (01-01-2014)
Types of Field Errors

  1. Some reasons for this type of error are as follows:

    1. Non-alpha character in an alpha field,

    2. Blank space in a numeric field,

    3. Blank in the first position of an alpha field,

    4. Non-numeric character in a numeric field,

    5. A required field is blank,

    6. On re-input–the field length exceeds the maximum allowable characters,

    7. Form 940 and Form 940PRSection 02, 03, 04, and 05 money fields, with the exception of the balance due field, have negative amounts, and

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

  3. The Action Code and TPNC will never be displayed as a Priority III error.

  4. Follow the correction procedures below for an Overflow condition:

    If Then
    The money amount on a return exceeds the maximum field length allowable.
    * "Overflow Field,"
    1. Enter the maximum amount allowable on the original return.

    2. Recompute the tax data and enter the corrected amount(s) on the screen display and the return.

    3. DO NOT SEND A TPNC.

    4. Annotate on the original return, "Dummy Return prepared due to an overflow document."

    5. Prepare a "Dummy Return" by computing and entering the remaining overflow money amount(s) for all applicable T-lines. Enter the following information on the "Dummy Return" :
    1. Entity data from the original return,

    2. CCC "G."

    3. In the signature area write "Signature on Original return. "

    4. The DLN from the original return.

    5. On the top of the return write "Prepared from Overflow Document. "



    6. Route completed "Dummy Return" to Receipt and Control on a routing slip to be numbered and processed.

3.12.154.7  (01-01-2014)
Section 01 Fields

  1. The following sections identify the Section 01 field designators for Form 940 and Form 940PR.

3.12.154.7.1  (01-01-2014)
Form 940 and Form 940PR Section 01

  1. Section 01 information is as follows:

    • Form 940 (Revision 2006 and subsequent), Exhibit 3.12.154-1.

    • Form 940PR (Revision 2006 and subsequent), Exhibit 3.12.154-2.

    • Form 940 ( Revision 2005 and prior).

    Field Designator Field Length Title of Field LOCATION on Revision 2006 and subsequent
    01NC 4 Name Control/Check Digit Entity Portion
    01EIN 9 Employer Identification Number Entity Portion
    01TXP 4 Tax Year Entity Portion
    01CCC 10 Computer Condition Codes
    Form 940: Immediately to the right of the line that states "You MUST fill out both pages of this form and SIGN it."
    Form 940PR : Immediately to the right of the line that states: "Usted DEBE llenar ambas paginas de esta planilla y luego FIRMARLA"
    01RCD 8 Received Date Center Portion of Return
    01PIC 1 Penalty and/or Interest Code No longer edited by Code and Edit
    01SC1 2 State Code Part 1, Line 1a
    01ABC 1 ABC Indicator Not Applicable.
    01CAF 1 Centralized Authorization File Not Applicable
    01SIC 1 Schedule Indicator Code (SIC) In the right margin, next to the line that separates the entity information from Part 1
    01MSB 1 Multi-State Filer Check Box Indicator Part 1, Line 1b
    01CRB 1 Credit Reduction Check Box Indicator Part 1, Line 2
    01SRI 1 Form 940, Schedule R Indicator An indicator "R" on the right margin next to Line 6, "Subtotal" .
    01CRD 8 Correspondence Received Date (CRD) Far left of the address
    01ARN 1 Applied Refund Indicator Part 4, After Line 15
    01CBI 1 Third Party Designee Indicator Part 6
    01CBP 5 Third Party Designee Personal Identification Number (PIN) Part 6
    01PSN 9 Paid Preparer's SSN or PTIN Part 7, below the taxpayer signature line
    01PEN 9 Firm's EIN Part 7, below the taxpayer signature line
    01PTN 10 Paid Preparer's Phone Number Part 7, below the taxpayer signature line

3.12.154.7.2  (01-01-2014)
Field 01NC Name Control/Check Digits - 4 Positions

  1. Name Control:

    1. This field is located in the Entity Section of the return and is underlined by Code and Edit.

    2. Each of the four positions must have an alpha, numeric, hyphen, ampersand or a blank, and

    3. The first position cannot be blank.

  2. Check Digits

    1. This field is located above the Entity Section of the return,

    2. This is also a four-position field, and

    3. There must be blanks in the first two positions and a letter of the alphabet in the third and fourth positions.

3.12.154.7.2.1  (01-01-2014)
Field 01NC Invalid Conditions

  1. The Name Control field is invalid if any of the following occurs:

    1. The first position is not an alpha or numeric,

    2. The "2nd" , "3rd" or "4th" position is not an alpha, numeric, hyphen, ampersand or blank,

    3. There are any intervening blanks between characters, and

    4. Letters "E" , "G" or "M" are present in the check digits.

3.12.154.7.2.2  (01-01-2014)
Field 01NC Correction Procedures

  1. Check the field with the return and do the following:

    If Then
    Data was transcribed incorrectly, Enter the correct data. Check digits have priority over the Name Control.
    Name control is not available, Use CC ENMOD, CC NAMEB, CC NAMEE and/or CC INOLE to secure the name control.
    IDRS is not available and you are unable to determine the name control from the return, CC SSPND with AC 355.
    Unable to secure name control, Refer the document to Entity Control and suspend the record with "AC 320" . See Name Control Job Aid (Doc. 7071A) for methods of determining name controls if the Name Control is obviously wrong. Otherwise, follow instructions above.

    Note:

    See IRM 3.12.154.12.1.2 for "In Care of" Name correction procedures.

3.12.154.7.3  (01-01-2014)
Field 01EIN Employer Identification Number - 9 Positions

  1. Description - The EIN is a number assigned by IRS for identification of a business tax account.

  2. This field is located in the Entity Section of the return.

3.12.154.7.3.1  (01-01-2014)
Field 01EIN Invalid Condition

  1. The EIN is invalid if one of the following conditions is present:

    1. It is not numeric,

    2. It is less than nine characters,

    3. The first two digits are: "00" , "07" , "08" , "09" , "17" , "18" , "19" , "28" , "29" , "49" , "78" , "79" , "89" , or

    4. It is all "zeros" or all "nines" .


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