Part 3. Submission Processing

Chapter 12. Error Resolution

Section 217. Error Resolution Instructions for Form 1120S (Cont. 1)

3.12.217  Error Resolution Instructions for Form 1120S (Cont. 1)

3.12.217.2 
Section 01 - Entity Data and Codes for Returns

3.12.217.2.9  (01-01-2012)
Received Date 01RCD

  1. The Received Date is entered in YYYYMMDD format and must contain eight numerics. The fifth and sixth digits (month) must be 01–12 and the seventh and eighth digits (days) must be 01–31. This field will show on the return in MMDDYY format. On the ERS Screen it will display as YYYYMMDD.

  2. Check for coding and transcription errors.

  3. The received date is required on all Forms 1120S. If the received date was not stamped/edited, determine the received date using the criteria listed below.

  4. The received date should be determined in the following priority:

    • IRS date stamp

      Note:

      If more than one IRS stamped received date is present, use the earliest date.

    • Legible U.S. Post Office or Foreign Post Office postmark date or a postmark established by an acceptable designated private delivery service. See IRM 3.10.72, "Receiving, Extracting, and Sorting" , for further details.

      Note:

      If both U.S. Postal Service and private meter marks are present, honor the U.S. Postal Service Postmarks. See IRM 3.0.273.31, "Administrative Reference Guide" , for more information.

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

    • Signature date (Use a signature date only for the current year return; if it is a prior year return use the DLN Control date).

    • DLN Julian date minus 10 days, unless MeF return. Use the original Julian DLN date when assigning a received date for MeF returns.

  5. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Note:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  6. If the received date stamp is invalid (i.e., 2010115 in lieu of 20110115) then change the received date year to the current year.

  7. The received date must be either equal to the current processing date or prior to the current processing date.

  8. Tax returns received after the Return Due Date (RDD) require a Received Date.

3.12.217.2.10  (01-01-2013)
Computer Condition Code 01CCC

  1. Computer Condition Codes are used to identify a specific condition for the computer.

  2. This field can contain up to 10 positions.

  3. The valid characters are B, D, F, G, I, L, O, Q, R, S, T, W, X, Y, 1, 2, 3, 7, 8, and 9.

  4. Computer condition codes are edited to the center dotted portion of the Income Area, on page 1 (lines 1–6) of the return.

  5. If an overflow condition occurs in Field 01CCC (more than 10 codes) retain the codes in the following priority–F, D, O, Y, W and others.

  6. Examine the return for transcription errors. Correct any errors found on the return and the screen as appropriate. Refer to the chart of Computer Condition Codes.

  7. If CCC "G" is present with another CCC except "S" , "T" , "W" and/or "3" , it will cause a field error.

  8. If CCC "G" is correct, delete all other CCC except "S" , "T" , "W" and/or "3" . Otherwise, delete CCC "G" and enter all tax information as reported on the return.

3.12.217.2.11  (01-01-2013)
Computer Condition Code (CCC) Chart

  1. Use this chart to identify Computer Condition Codes:

    Code Definition Error Check
    B Enter when a taxpayer has made an Entry in the margin of either Schedule D or Form 4797, Sale of Business Property, electing not to report sales on the installment basis.  
    D Reasonable cause for failure to pay taxes timely Received date must be present.
    F Final Return  
    G Amended Return No other CCC except "W" , "T" , "S" and/or "3" . All entries must be blank except RMIT, 01NC, 01EIN, 01TXP, 01RCD, 01CCC, and 01CRD.
    I Gains and losses from Section 1256 Contracts and Straddles
    Form 6781 is attached Regulated Futures Contracts and Tax Straddles     		Received date must be present.
    Tax period must be 198106 and subsequent.
    L Taxpayer writes Section 6114 "Election" on the return or attached Form 8833, Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b) to the return.  
    O Quick refund of overpayment  
    Q Telephone Excise Tax Refund (TETR) Claim Edited if taxpayer (TP) only filed Form 1120S to claim TETR refund.
    R Reasonable cause for delinquency Received date must be present.
    S Form 8883, Asset Allocation statement under section 338, is attached to the return.  
    T Form 8886, Reportable Transaction Disclosure Statement, is attached to the return.  
    W Used to bypass Statute check Entered when a return has been cleared by Statute Control Group
    X Indicated settlement of the return is to be frozen.  
    Y Updates Fiscal Year Month (FYM) on Master File. Entered only on a short period return due to change of accounting period. Return must be manually verified.
    1 Current Year Related Party Like-Kind Exchange Indicator, Form 8824 attached.
    		 1 is generated in Field 01CCC.
    2 Form 8938, Statement of Foreign Financial Assets, is attached to the return  
    3 Entered if no reply to correspondence Enter to suppress credit interest from being generated.
    7 Reasonable cause for delinquency examined and denied Received date must be present. CCC 7 cannot be used with CCC R and D together.
    8 Waiver of Estimated Tax Penalty
    		 When tax on annualized income is computed by the taxpayer, (taxpayer has attached a worksheet) or if the taxpayer has written Waiver in the bottom margin of page 1, or on Form 2220, enter CCC "8" on the return. The tax period cannot be prior to 198912.
    9 Low-Income Housing Credit Indicator
    		 If not present enter "9" when Form 8611, Form 8693, Form 8609, Form 1125-A, or Form 8586 is attached and has entries on any of lines 1 through 4. The tax period can not be prior to 198701.

3.12.217.2.12  (01-01-2012)
Beginning Tax Period 01TXB

  1. The Beginning Tax Period displays in YYYYMMDD format and must contain eight numerics.

  2. Is coded on page 1 in the middle of the top margin.

  3. Check for coding and transcription errors.

3.12.217.2.13  (01-01-2012)
Correspondence Received Date 01CRD

  1. The Correspondence Received Date (CRD) displays in YYYYMMDD format and must contain eight numerics.

  2. Check for coding and transcription errors.

  3. If more than one CRD is present, use the earliest CRD.

  4. If the reply was not date stamped, use the postmark date on the envelope attached to the reply.

  5. If no reply or the correspondence was undeliverable enter a 3 in Field 01CCC.

  6. If there is an indication that Entity Control has assigned an EIN to the return, enter the entity assignment date found in the lower left-hand corner of the return if it is later than the Received Date and the Return Due Date. If there are both a CRD and an Entity Assignment date, enter the later of the two.

  7. Do not enter Field 01CRD if any of the following conditions are present:

    1. The correspondence reply was received prior to the due date of the return.

    2. The correspondence was required because of an IRS processing error.

    3. We failed to ask for all the required information.

3.12.217.2.14  (01-01-2012)
Preparer Check Box Indicator Field 01CBI

  1. The Paid Preparer Check Box is located next to the taxpayer signature area. This box is used to indicate whether or not the TP has elected to allow the Paid Preparer to answer questions about the TP's return as it is being processed.

  2. This field is transcribed from the bottom of page 1, Form 1120S. Code & Edit will enter a "1" in the margin to the right of the checkbox if the "Yes" box is checked.

  3. Correction Procedures - Correct all coding and transcription errors.

    If... Then...
    The "Yes" box is checked Enter a "1" in Field 01CBI
    The "No" box is checked or neither box is checked or both boxes are checked Delete Field 01CBI and continue processing.

3.12.217.2.15  (01-01-2013)
Preparer SSN Field 01PSN

  1. Description - The Preparer's SSN is transcribed from the bottom of Page 1, Form 1120S. Data may or may not be present in Field 01PSN.

  2. Valid Condition - This field can be blank or numeric.

    Exception:

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

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

    1. Field 01PSN is other than nine numeric digits or a "P" followed by 8 digits

    2. Field 01PSN is other than nine numeric digits.

    3. Field are invalid if they are all zeros, or

    4. If they are all nines, or

    5. If they are less than nine positions.

  4. Correction Procedures -

    1. Correct coding and transcription errors.

    2. If unable to determine a valid entry, delete Field 01PSN.

3.12.217.2.16  (01-01-2012)
Preparer Employer Identification Number Field 01PEN

  1. Description - The Preparer's EIN is transcribed from the bottom of Page 1, Form 1120S.

  2. Valid Condition - This field can be blank or it can be numeric, if numeric it cannot be all zeros and it cannot be all nines.

  3. Invalid Condition - This field is invalid if it is all zeros, all nines or less than nine positions.

  4. Correction Procedures -

    1. Correct coding and transcription errors.

    2. If unable to determine a valid entry, delete Field 01PEN.

3.12.217.2.17  (01-01-2013)
Preparer Telephone Number Field 01PTN

  1. The Paid Preparer Phone Number is transcribed from the bottom of page 1, Form 1120S below the Paid Preparer EIN.

    Note:

    If the taxpayer checked the paid preparer check box "Yes" , a telephone number for the paid preparer must be entered to allow contact.

  2. Invalid Condition:

    • Field 01PTN is invalid if other than alpha or numeric.

  3. Correction Procedures - Correct all coding and transcription errors. If invalid, delete the field.

3.12.217.2.18  (01-01-2012)
Field 01MSC Missing Schedule Code

  1. Beginning with tax period 200812, Form 1120S will be charged penalties for not providing a complete return. Code & Edit (C&E) will be responsible for initiating correspondence when needed, requesting the missing information, and ERS will be responsible for coding the Field 01MSC appropriately if the missing information is not received.

  2. Enter Field 01MSC whenever the taxpayer does not respond to our request for missing information. See the chart below for the correct code.

    Missing Schedule(s) Code
    Schedule(s) K-1 33
    Schedule L (Balance Sheet) 34
    Schedule(s) K-1 and L 36
    Schedule K 45
    Schedule K and K-1 46
    Schedules K and L 47
    Schedules K, K-1 and L 49

  3. Invalid Condition:

    • Field 01MSC is invalid if it is not numeric and not one of the numbers shown above.

      Note:

      There is always a possibility that a Missing Schedule Code is edited by C&E. However, employees working the suspense files in ERS must be entering the appropriate code based on the response received from the taxpayer.

  4. Correction Procedures:

    1. Correct any coding and transcription errors.

    2. If taxpayer does not respond with the missing information, input the appropriate Missing Schedule Code as shown in (2) above.

  5. Suspense Procedures:

    If... Then...
    Taxpayer responds with missing information, Enter Correspondence Received Date in Field 01CRD and continue processing.
    Taxpayer does not respond, Enter appropriate Missing Schedule Code in Field 01MSC.
    Taxpayer does not provide missing TINs on Schedule K-1, Enter Missing Schedule Code 33 in Field 01MSC and continue processing.
    Taxpayer provides missing K-1s and/or missing TINs, Write the DLN of the return on the first Schedule K-1, in the upper left hand corner, then detach and send for processing. Enter Correspondence Received Date in Field 01CRD.

    Caution:

    Enter missing TINS on each Schedule K-1 before detaching for processing.

3.12.217.3  (01-01-2013)
Section 02 - Address Information

  1. Section 02 contains address (entity) information. It will be present when a change of address has been entered.

  2. All fields are of variable length and it is not necessary to account for every position allotted.

  3. This section is not present on a "G" Coded Return.

    Field
    Designator    		 Max
    Length    		 Title
     
    Location
    02FAD 35 Foreign Address Page 1, number and street line, or corrected entry in pre-addressed label.
    02CON 35 In-Care-of-Name Page 1, corrected entry in pre-addressed label
    02ADD 35 Street Address Page 1, number and street line, or corrected entry in pre-addressed label.
    02CTY 22 City Page 1, city, state, zip line or corrected entry on pre-addressed label.
    02ST 2 State Page 1, city, state, zip line or corrected entry on pre-addressed label.
    02ZIP 5/9/12 ZIP Code Page 1, city, state, zip line or corrected entry on pre-addressed label.

3.12.217.3.1  (01-01-2012)
♦Field 02CON - "In-Care-of" Name♦

  1. Description - Field 02CON is located in the Entity Section of the return.

  2. Valid Conditions - Field 02CON has 35 positions and the valid characters are alpha, numeric, ampersand, dash or slash or percent sign (%).

    Note:

    The first character of the "in-care-of" name must be alpha or numeric.

  3. Invalid Condition - Field 02CON is invalid if any of the following conditions are present:

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

    • The first position is blank, or

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

    • There are two consecutive blanks between significant characters.

  4. Correction Procedures - Correct all coding and transcription errors.

    If... Then...
    A % (percent) is in the first position,

    1. Verify there is a blank in the second position.

    2. If not blank, enter a blank space followed by the "in-care-of" name beginning with an alpha or numeric in Field 02CON.

    A blank is in the first position,

    1. Delete blank.

    2. Enter the "in-care-of" name beginning with an alpha or numeric in Field 02CON.

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

    1. Verify "in-care-of" name on the return

    2. Enter the "in-care-of" name beginning with an alpha or numeric in Field 02CON.

    Two consecutive blanks are present between significant characters Delete any unnecessary blanks in Field 02CON.

3.12.217.3.2  (01-01-2013)
♦Field 02FAD - Foreign Address (OSPC Only)♦

  1. Description - Field 02FAD is located in the Entity Section of the return.

    • This field will contain an entry when there is a foreign address present on the return.

    • Field 02FAD should not be present on "G" coded short length records.

  2. Valid Characters - Valid characters are alpha, numeric, and special characters.

  3. Invalid Condition: Field 02FAD will generate as an error when any of the following conditions are present:

    • The first position is blank

    • Any character follows two consecutive blanks

    • There are more than 35 characters present in the field

      Note:

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

  4. Correction Procedures:

    1. Correct all coding and transcription errors.

      Note:

      For processing year 2012 a new Form 8822-B, Change of Address - Business, will become available

      .

      If... Then...
      Field 02FAD is present,

      1. GTSEC 02.

      2. Ensure Field 02CTY contains a foreign country code and Field 02ST (State) contains a "." (period/space).

      See Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries.

      Exception:

      Use the country code based on the province in Field 02CTY if the foreign address is from Canada and the address contains a province name or abbreviation. See Exhibit 3.12.217-20.

      A province abbreviation is not present for Australia, Brazil, Canada, Cuba, Italy, Mexico or The Netherlands but a province name is present, Enter the province abbreviation in the appropriate position in 02CTY. See Exhibit 3.12.217-14.
      A foreign address is not present on the return,

      1. SSPND 610.

      2. Renumber return with domestic DLN.

    2. If Form 8822, Change of Address or Form 8822-B, Change of Address - Business is attached to the return, compare the name and address information on the Form 8822 or Form 8822-B to the return.

      If... Then...
      The information is the same, Take no action and continue processing.
      The information is different,

      1. Enter address shown on Form 8822/Form 8822-B in Field 02FAD.

      2. Notate "Form 8822 or 8822-B detached" on tax return.

      3. Detach Form 8822/Form 8822-B and route to Entity Control using Form 4227 or follow local procedures.

      4. Notate on Form 4227, "CHANGE OF ADDRESS PER FORM 8822 or Form 8822-B" .

    Note:

    The lead tax examiner is required to batch all Forms 8822 / 8822-B daily and hand carry them to Entity Control for expedite processing.

3.12.217.3.3  (01-01-2012)
Field 02ADD Street Address

  1. This field is transcribed from the Street Address line of the entity portion of the return.

  2. Invalid Condition - Field 02ADD is invalid if:

    1. Street Address is present and the first position is blank,

    2. A character other than alpha, numeric, blank, dash or slash is present,

    3. Any character follows two consecutive blanks, or

    4. There are more than 35 characters in this field.

      Note:

      ISRP will input a pound (#) sign as the 35th character to indicate an overflow condition.

  3. Correction Procedures:

    1. Correct any coding and transcription errors.

    2. If the 35th character is a pound sign (#), refer to Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries. Abbreviate the address to 35 or fewer characters.

    3. If unable to correct, DLSEC 02.

3.12.217.3.4  (01-01-2012)
Field 02CTY City

  1. This field is transcribed from the City, State, Zip line of the entity portion, on page 1 of the return.

    1. Certain cities are designated "Major Cities" and have been assigned a designator that consists of two alpha characters. This code represents both the city and state.

    2. Whenever the city is on the Major City list, ISRP will enter the Major City Code instead of entering the entire name of the city and the state.

    3. When a Major City Code is used, it will be the first two positions of Field 02CTY.

  2. Invalid Condition - Field 02CTY is invalid if:

    1. City is present and the first position is blank.

    2. Any character other than alpha or blank is present.

    3. Any character follows two consecutive blanks.

    4. A Major City Code is present and it is not a valid Major City Code.

  3. Correction Procedures:

    1. Correct any coding and transcription errors.

    2. Follow procedures below:

      If... Then...
      Valid city is not available from return or envelope

      • Research using CC INOLES or ENMOD or

      • Refer to Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries, or

      • Follow local Submission Processing (SP) procedures

      Major city code is found Enter in Field 02CTY and delete Field 02ST
      Unable to correct DLSEC 02

3.12.217.3.5  (01-01-2012)
Field 02ST State

  1. This field is transcribed from the City, State, Zip Code line of the entity portion of the return.

  2. If the address is a foreign address, defined as not within the 50 states or the District of Columbia, SSPND with Action Code "650" and attach a Form 4227 with a notation to forward to the Ogden Submission Processing Campus.

    Note:

    An Army Post Office (APO), Diplomatic Post Office (DPO) or Fleet Post Office (FPO) address is not considered a foreign address, but an address in an American possession.

  3. Invalid Condition - Field 02ST is invalid if the entry is not a state code that is listed in the State Code Table in Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries.

  4. Correction Procedures:

    1. Correct any coding and transcription errors.

    2. If a valid State Code is not available from the return or envelope, take any of the following steps:

      • Research using INOLES and/or ENMOD to determine state,

      • Refer to Document 7475, State and Address Abbreviations, Major City Codes (MCCs), ZIP Codes and Countries, and determine Major City Code, or

      • Follow local Submission Processing procedures.

        Note:

        If a major city code is found, GTSEC 02. Enter the code in Field 02CTY and delete Field 02ST.

    3. If unable to correct, DLSEC 02.

3.12.217.3.6  (01-01-2012)
Field 02ZIP ZIP Code

  1. This field is transcribed from the City, State, Zip line of the entity portion of the return.

  2. Invalid Condition - Field 02ZIP is invalid if:

    • Zip Code is present and the first 5 positions are not numeric,

    • The last 4 positions are not all numeric or all blank, or

    • Positions 4 and 5 are "00"

      Exception:

      Zip Code 20500

  3. Correction Procedures:

    1. Correct any coding and transcription errors.

    2. If a valid zip code is not available from the return or envelope, research using any of the following to determine the zip code.

    3. INOLES, ENMOD. and/or Document 7475, Major City, State and Address Abbreviations, ZIP Codes and Countries.

3.12.217.4  (01-01-2013)
Section 03 - General Information

  1. Section 03 is a General Information section.

  2. The list below gives the designation, length, title and the location on the return where the fields are displayed in Section 03 of Form 1120S.

    Field
    Designator     		Max
    Length     		Title Location
    03PRI 1 Precomputed Penalty/Interest (P/I)Code Entered as L2 followed by the P&I code next to line 9 (deductions section)
    03TPC 1 Tax Preference Code (TPC) Entered as L4 followed by TPC code next to line 9 (deductions section)
    03SWC 1 Salary and Wage Code Pg 1, line 8, right margin
    03ADC 9 Audit Code Entered as L1 followed by the appropriate Audit Code next to line 9 (deductions section)
    03ISI 1 Installment Sales
    Indicator     		Edited as L3 followed by the appropriate Installment Sales Indicator next to line 9 (deductions section)
    03IRC 1 Initial Return Code Box G, Page 1
    03GSH 4 Number of Shareholders Page 1, line I
    03AMC 1 Accounting Method Code Sch B, line 1
    03QG 1 Consolidated S Corp Indicator 199712 and prior only. ERS input only. If Box G on page 1 is checked, input a 1 in Field 03QG.
    03LIC 11 Low Income Housing
    Credit     		Edited as L5 followed by Form 8586 credit next to line 9 (deductions section)
    03RLI 11 Total Recapture Credit Edited as L6- followed by the Form 8611 credit

3.12.217.4.1  (01-01-2012)
Penalty/Interest Code 03PRI

  1. The precomputed Penalty and Interest Code "1" is entered when the precomputed penalty and interest ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ the original due date.

  2. Transcription is from the left hand margin next to line 9. If applicable "L2" followed by "1" has been edited.

  3. If interest only is indicated, CCC "R" must also be present in 01CCC.

  4. 03PRI must be blank or "1" .

3.12.217.4.2  (01-01-2012)
Tax Preference Code 03TPC

  1. The Tax Preference Code 1 is used to identify an excess amount claimed by taxpayer.

  2. Transcription is from the left hand margin next to line 9. If applicable "L4" followed by "1" has been edited.

  3. The valid entries are blank and "1" .

  4. Schedule K–1, Items of Tax Preference, totals ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ period.

  5. Generally a Tax Preference Code of "1" is required when Form 4626, Alternative Minimum Tax - Corporations, or substitute is attached.

3.12.217.4.3  (01-01-2012)
Salary and Wage Indicator 03SWC

  1. The Salary and Wage Code "1" must be entered when Salary and Wages are present.

  2. Valid codes are blank or 1.

  3. A Code "1" must be present if:

    • line 8, page 1 of the 1120S has an amount for salaries/wages.

    • line 3, Form 1125-A, has an amount for salaries/wages.

    • If there are other attachments with salaries/wages indicated.

  4. Field 03SWC may be blank if there is no indication of salaries/wages.

3.12.217.4.4  (01-01-2012)
Audit Code 03ADC

  1. The Audit Codes are entered to monitor the taxpayers and their filing behavior.

  2. Field 03ADC will be transcribed from the left hand margin next to line 9. If applicable "L1" followed by the appropriate audit code (1-9) has been edited.

  3. The entry can be blank, or up to nine digits.

  4. The valid codes are 1-9.

  5. If Field 03ADC was transcribed incorrectly, enter the correct code from the left hand margin as indicated in (2) above.

3.12.217.4.5  (01-01-2012)
Audit Code

  1. Audit Code 1 (Disclosure)

    1. Form 8082, Notice of Inconsistent Treatment or Administrative Adjustment Request (AAR) is attached.

    2. Form 8275, Disclosure Statement is attached.

    3. Form 8275-R, Regulation Disclosure Statement, is attached.

    4. Form 8886, Reportable Transaction Disclosure Statement is attached.

  2. Audit Code 2 (International Issues)

    1. Form 1120S, Schedule K, line 14(l) Total Foreign Taxes,≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. Form 926, Return by a U.S. Transferrer of Property to a Foreign Corporation is attached.

    3. For periods beginning after 199912, if an affirmative answer is given to any question other than Question 6, on Schedule N.

    4. Form 5471, Information Return of U.S. Persons With Respect to Certain Foreign Corporations is attached.

    5. Form 5472, Information Return of a Foreign Owned Corporation is attached.

    6. Form 8621, Return By A Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund is attached and Part IV 10a - 11f has an ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    7. Form 5713, International Boycott Report, Tax Effect of the International Boycott Provisions is attached and both questions in 7(f) are answered "yes" .

    8. Form 8832, Entity Classification Election, is attached and either box 2(d), (e) or (f) is checked.

    9. Form 8833, Treaty Based Return Position Disclosure Under section 6114 or 7701(b), is attached.

    10. Form 8858, Information Return of U.S. Persons With Respect to Foreign Disregarded Entities, is attached.

    11. Form 8865, Return of U.S. Persons With Respect to Certain Foreign Partnerships, is attached.

  3. Audit Code 3

    1. Form 8283, Noncash Charitable Contributions, is attached ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. Form 8283 is attached ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    3. Form 8883, Asset Allocation statement under Section 338, is attached ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ .

    4. Form 8594, Asset Acquisition Statement, is attached, ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  4. Audit Code 4

    1. Form 1120 processed with a valid election on file (Form 2553) and converted to Form 1120S.

  5. Audit Code 5 - Large Loss

    1. Schedule K - line 10 reflects a loss ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  6. Audit Code 6- Form 3115

    1. Presence of Form 3115, Application for Change in Accounting Method, is attached.

  7. Audit Code 7

    1. Form 1120S, Schedule K, line 14(l) Total Foreign Taxes ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    2. Form 5713, International Boycott Report is attached ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ " .

    3. Form 8621, Return by a Shareholder of a Passive Foreign Investment Company, or Qualifying Electing Fund, is attached ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  8. Audit Code 8 - Form M-3

    1. Form M-3 attached.

  9. Audit Code 9 - First Year "S" Election

    1. The date in Box A falls during the tax year for which the S corporation is being filed.

3.12.217.4.6  (01-01-2012)
Installment Sales Indicator 03ISI

  1. The taxpayer has computed installment sales income.

    1. Transcription is from left hand margin next to line 9. If applicable "L3" followed by the appropriate Installment Sales Indicator (1-3) has been edited.

    2. The valid entries are 1, 2, 3, or blank.

    3. Enter the Installment Sales Indicator code indicated by the shareholder’s response to Question 3, Form 6252, Installment Sale Income.

    Question 3 Code
    Yes 1
    No 2
    Blank Blank
    Yes and No 3

  2. Correction Procedures:

    1. Examine the return and attachments to determine the correct code.

    2. Delete the incorrect entry and enter the correct code on the screen in Field 03ISI and on the left side margin next to line 9.

    3. If a code should not be present, blank the entry on the screen.

3.12.217.4.7  (01-01-2012)
Initial Return Code 03IRC

  1. This code is entered as an indication that this is a first time filer.

  2. This field is determined from the Initial Return Box, line G, page 1.

  3. The valid entries are 2 and blank.

  4. ISRP will transcribe this field from the code edited to the upper right margin of page 1, Box E.

  5. If there is an indication the return is an initial return, enter a "2" when:

    1. the initial return box, located below the entity area is checked.

    2. the date of incorporation, Box E, is within 12 months of the tax period ending.

    3. there is an indication of an initial filing written on the return such as "Initial Return" , "First Return" or "New Corporation" .

    4. the date of incorporation is within 24 months (or is not shown) and the beginning balance sheet is blank or zeros.

3.12.217.4.8  (01-01-2012)
Number of Shareholders 03GSH

  1. The valid entries are blank, 0001 thru 9999.

  2. ISRP will transcribe this field from Page 1, line I.

3.12.217.4.9  (01-01-2012)
Accounting Method Code 03AMC

  1. This code is input to identify taxpayer’s accounting method.

  2. Transcription is from line 1, Schedule B.

  3. Valid entries for this field are blank, 1, 2, or 3.

  4. Input the Accounting Method Code as follows:

    • Code 1 if box (a) is checked

    • Code 2 if box (b) is checked

    • Code 3 if box (c) is checked

  5. Leave blank if multiple or no boxes are checked.

3.12.217.4.10  (01-01-2012)
Low Income Housing Credit 03LIC

  1. The taxpayer is claiming a Low Income Housing Credit.

  2. Transcription is from the left hand side margin next to line 9 (deductions section). If applicable "L5" followed by the Form 8586 credit amount.

  3. The money amount is entered in dollars only and must be positive.

  4. If Forms 8586, 8609, or Form 1125-A are attached or Low Income Housing Credit is claimed (entries present on Schedule K, lines 13a or 13b), enter "9" in Field 01CCC.

  5. Valid tax periods are 198701 and subsequent. If Tax Period is 198612 or prior, delete the credit.

  6. If Low Income Housing Credit is claimed, Form 8586 must be attached. Form 8609 and Form 1125-A must also be attached if Form 8586 has any entries in lines 1 through 4. If missing, correspond.

  7. If no reply, enter CCC 3.

3.12.217.4.11  (01-01-2012)
Total Recapture Credit 03RLI

  1. The taxpayer is filing a Form 8611 to recapture the Low Income Housing Credit.

  2. Transcription is from the left hand side margin next to line 9 (deductions section). If applicable "L6" has been edited with the Form 8611 credit amount.

  3. The entry amount is notated next to "L6" it has been edited from Form 8611, line 14 (prior year line 12).

  4. The money amount is edited in dollars only and must be positive.

  5. If Form 8693, Low Income Housing Credit Disposition Bond, is attached, enter "9" in Field 01CCC (if not present).

  6. If this field has an entry, Form 8611 must be attached.

  7. If missing, correspond. If no reply, enter CCC 3.

  8. Valid Tax Periods are 198701 and subsequent.

3.12.217.5  (01-01-2013)
Section 04 - Income

  1. Section 04 is the income lines (1-6) on Form 1120S.

  2. Listed below are the fields displayed in Section 04 of Form 1120S.

  3. Verify the figures to ensure that the taxpayer used the appropriate line.

    Field Designator Max Length Title Dollars/Cents Positive/Negative
    Location
    0401A 15 Gross Receipts and Sales $ +/- Pg 1, Line 1a
    0401B 15 Returns and Allowances $ +/- Pg 1, Line 1b
    0401C> 15 Gross Receipts Less Returns $ +/− Pg 1, Line 1c
    0402 15 Cost of Goods Sold $ +/− Pg 1,Line 2
    0403> 15 Gross Profit Computer Amount $ +/- Pg 1, Line 3
    0404 15 Net Gain/Loss $ +/− Pg 1,Line 4
    0405 15 Other Income $ +/− Pg 1, Line 5
    0406 15 Total Income $ +/− Pg 1, Line 6
    04MCV 15 Merchant Card Payments Verified (prior year only) $ +/- 2011 only, Pg 1, Line 1a

3.12.217.6  (01-01-2013)
Section 05 - Deduction

  1. Section 05 is the deduction lines (7-21) on Form 1120S.

  2. Listed below are the fields displayed in Section 05 of Form 1120S.

  3. Verify the figure to ensure that the taxpayer used the appropriate line.

    Field Designator Max
    Length    		 Title Dollars/Cents Positive/Negative
    Location
    0507 11 Compensation of Officers $ +/− Pg 1, Line 7
    0508C 11 Salary and Wages Less Job Credit $ +/− Pg 1, line 8
    0509 11 Repairs and Maintenance $ +/− Pg 1, line 9
    0510 11 Bad Debts $ +/− Pg 1, line 10
    0511 11 Rents $ +/− Pg 1, line 11
    0512 11 Taxes and Licenses $ +/− Pg 1, line 12
    0513 11 Deductible Interest $ +/− Pg 1, line 13
    0514C 11 Depreciation not claimed on Form 1125-A or elsewhere (Form 4562) $ +/− Pg 1, line 14
    0515 11 Depletion $ +/− Pg 1, line 15
    0516 11 Advertising $ +/− Pg 1, line 16
    0517 11 Pension, Profit Sharing Plan $ +/− Pg 1, line 17
    0518 11 Employee Benefit Program $ +/− Pg 1, line 18
    0519 11 Other Deductions $ +/− Pg 1, line 19
    0520 15 Total Deductions $ +/− Pg 1, line 20
    0521 15 Ordinary Income Loss $ +/− Pg 1, line 21

3.12.217.7  (01-01-2013)
Section 06 - Tax and Payments

  1. Section 06 is the Tax and Payment lines on Form 1120S.

  2. Listed below are the fields displayed in Section 06 of Form 1120S.

  3. Field 0618A, Total Gross Rents cannot be a negative field. If the taxpayer enters a negative amount, make Field 0618A a positive field.

  4. Verify the figures to ensure that the taxpayer used the appropriate line.

    Field Designator Max Length Title Dollars / Cents Positive / Negative Location
    0618A 11 Total Gross Rents $ + Form 8825 line 18a
    0622C 15 Total Tax Taxpayer $/C + Page 1, line 22c
    06OTH 13 Travel and Entertainment $ +/- Pg 5, Sch M-1, line 3b
    0623A 15 Estimated Tax Payment $/C + Page 1, line 23a
    0623B 15 Form 7004 Payment $/C + Page 1, line 23b
    0623D 15 Telephone Excise Tax Paid $/C + Page 1 line 23d (200612-200711)
    06TRV 15 Telephone Excise Tax Paid - Verify Field $/C + Corrected TETR amount based on correspondence reply
    0623E 15 Total lines 23a-23c $/C   Page 1, line 23d
    0624 15 Estimated Tax Penalty $/C + Page 1, line 24
    0625 15 Balance Due Over-Payment Taxpayer $/C +/− Page 1, line 25, 26
    0627 15 Credit Elect Amount $/C + Page 1, line 27, Center
    06A01 11 Beginning Inventory $ + Form 1125-A, line 1
    06A07 11 Ending Inventory $ + Form 1125-A, line 7
    0613F 11 Credit for Alcohol used as Fuel $ + Page 3, line 13f, Schedule K
    0616D 13 Total Property Distribution $ +/- Schedule K, line 16d
    0618 13 Income (Loss) $ +/- Schedule K, line 18
    06BXF 15 Total Assets End $ + Page 1, Form 1120S, Box F
    06MCT 12 Manually Corrected $ + Page 1, line 22c, Left
    06K4 11 Portfolio Interest $ +/− Pg 2, line 4, Schedule K
    06LTS 13 Loans to Shareholders (end of year) $ +/- Schedule L, line 7d
    06TAB 13 Total Assets Beginning $ +/- Schedule L, line 15b
    06LFS 13 Loans from Shareholders $ +/- Schedule L, line 19d
    06CSE 13 Capitol Stock (EOY) $ +/- Schedule L, line 22d
    06ACE 13 Additional Paid in Capital $ +/- Schedule L, line 23d
    06REE 13 Retained Earnings (EOY) $ +/- Schedule L, line 24d
    06AAA 13 Sch. M-2 Balance (BOY) $ +/- Schedule M-2, line 1A

3.12.217.8  (01-01-2013)
Section 10 - Capital Gains and Losses and Built-In Gains

  1. Section 10 contains information reported on Schedule D, Capital Gains and Losses and Built-In Gains.

  2. This section is not required.

  3. All fields in Section 10 are numeric only and transcribed in dollars only.

  4. All fields in Section 10 must be positive.

  5. Listed below are all valid fields:

    Field Designator Maximum Length Title Location on Schedule D
    1001D 15 Line 1, Sales price Line 1, Column (d)
    1001E 15 Line 1, Cost or other basis Line 1, Column (e)
    1002D 15 Line 2, Sales price Line 2, Column (d)
    1002E 15 Line 2, Cost or other basis Line 2, Column (e)
    1003F 15 Line 3, Sales price Line 3, Column (d)
    1003E 15 Line 3, Cost or other basis Line 3, Column (e)
    1008D 15 Line 8, Sales price Line 8, Column (d)
    1008E 15 Line 8, Cost or other basis Line 8, Column (e)
    1009D 15 Line 9, Sales price Line 9, Column (d)
    1009E 15 Line 9, Cost or other basis Line 9, Column (e)
    1010D 15 Line 10, Sales price Line 10, Column (d)
    1010E 15 Line 10, Cost or other basis Line 10, Column (e)
    10013 15 Capital gain distributions Line 13

  6. Field Errors will display for this section whenever non-numeric characters are entered into any field. Check for transcription errors and make necessary corrections. If correct information is not available, delete the entry.

3.12.217.9  (01-01-2013)
Section 12 - Direct Deposit refunds

  1. Section 12 contains data for Direct Deposit refunds for businesses.

  2. If direct deposit is requested, filers of Form 1120S must use Form 8050, Direct Deposit of Corporate Tax Refund, to request that the IRS deposit a corporate income tax refund (including a refund of $1 million or more) directly into an account at any U.S. bank or other financial Institution (such as a mutual fund or brokerage firm) that accepts direct deposits.

  3. Direct Deposit refunds are not valid for prior year returns.

3.12.217.9.1  (01-01-2012)
Error Record Format Section 12

  1. The Error Record Format for Section 12 is:

    Field Designator Field Length Title Location
    12RTN 9 Routing Transit Number (RTN) Form 8050
    12DAN 17 Depositors Account Number (DAN) Form 8050
    12DDC 2 Direct Deposit Code Form 8050
    12TDA 1 Type Depositor Account (TDA) Form 8050

3.12.217.9.2  (01-01-2012)
Routing Transit Number (RTN) Field 12RTN

  1. Field 12RTN is transcribed from line 1, Form 8050.

  2. Field 12RTN is a 9 digit numeric field.

  3. The first two digits of Field 12RTN must be numeric and as follows:

    1. Between 01 through 12; or

    2. Between 21 through 32.

  4. Correction Procedure - Check for transcription and/or coding errors and correct accordingly.

  5. If Field 12RTN is not valid, blank the field.

3.12.217.9.3  (01-01-2012)
Depositors Account Number (DAN) Field 12DAN

  1. Field 12DAN is transcribed from line 2, Form 8050.

  2. Field 12RTN is valid up to 17 characters. The valid characters for Field 12RTN are as follows:

    1. Numeric

    2. Alpha

    3. Hyphens

    4. Spaces

  3. The first two digits of Field 12RTN must be numeric and as follows:

    1. Between 01 through 12; or

    2. Between 21 through 32.

  4. Correction Procedure - Check for transcription and/or coding errors and correct accordingly.

  5. If Field 12DAN is not valid, blank the field.

3.12.217.9.4  (01-01-2012)
Direct Deposit Code Field 12DDC

  1. Field 12DDC is a computer generated field and is not correctable. The Direct Deposit Code is included in the Section 12 screen display for information only.

  2. Field 12DDC may be blank or it may contain a two digit number that is used by Master File to generate a notice to the taxpayer.

3.12.217.9.5  (01-01-2012)
Type Depositor Account Field (TDA) 12TDA

  1. Field 12TDA is transcribed from line 3, Form 8050.

  2. Field 12TDA is a 1 digit alpha field. It must be either a "C" for Checking or a "S" for Saving.

  3. Correction Procedure - Check for transcription and/or coding errors and correct accordingly.

  4. If both or neither box is checked, enter C in Field 12TDA

3.12.217.10  (01-01-2013)
Section 14 - Schedule N

  1. Section 14 contains data from Form 1120S, Schedule N, Foreign Operations of U.S. Corporations. See Exhibit 3.12.217-3 for a copy of Schedule N.

  2. Section 14 data is valid for tax periods beginning after 199912. Schedule N was not available for tax periods 199912 and prior.

3.12.217.10.1  (01-01-2012)
Error Record Format Section 14

  1. The Error Record Format for Section 14 is:

    Field Designator Field Length Title Location
    14Q01 1 Disregarded Entity Form 1120S, Schedule N, line 1a
    14Q02 3 Number of Forms 8865 Form 1120S, Schedule N, line 2
    14Q03 1 Direct/Indirect Interest Form 1120S, Schedule N, line 3
    14Q4A 1 Controlled Foreign Corporation Form 1120S, Schedule N, line 4a
    14Q4B 3 Number of Forms 5471 Form 1120S, Schedule N, line 4b
    14Q05 1 Foreign Trust Distribution Form 1120S, Schedule N, line 5
    14Q6A 1 Foreign Country Financial Account Form 1120S, Schedule N, line 6a
    14Q6B 2 Foreign Country Code Form 1120S, Schedule N, line 6b
    14Q7A 1 Extraterritorial Income (EI) Exclusion Form 1120S, Schedule N, line 7a
    14Q7B 3 Number of Forms 8873 Form 1120S, Schedule N, line 7b
    14Q7C 15 Total EI Exclusion Form 1120S, Schedule N, line 7c

3.12.217.10.2  (01-01-2012)
Disregarded Entity Field 14Q01

  1. Field 14Q01 is transcribed from line 1a, Schedule N, Form 1120S.

  2. The valid codes are as follows:

    1. Yes box checked = 1

    2. No box checked = 2

    3. Both boxes are checked = 3

    4. Neither box is checked = blank

  3. Correction Procedure - Check for coding and transcription errors and correct accordingly.

3.12.217.10.3  (01-01-2012)
Number of Forms 8865 Field 14Q02

  1. Field 14Q02 is transcribed from the dotted line portion of line 2, Schedule N, Form 1120S.

  2. This Field is invalid if it is not all numeric or blank.

  3. The valid numeric range is from 0 to 999.

  4. Correction Procedure:

    1. Check for coding and transcription errors and correct accordingly.

    2. If Schedule N, line 2 is blank and Forms 8865 are attached, overlay with the correct number.

3.12.217.10.4  (01-01-2012)
Direct/Indirect Interest Field 14Q03

  1. Field 14Q03 is transcribed from the line 3, Schedule N, Form 1120S.

  2. The valid codes are as follows:

    1. Yes box checked = 1

    2. No box checked = 2

    3. Both boxes are checked = 3

    4. Neither box is checked = blank

  3. Correction Procedure - Check for coding and transcription errors and correct accordingly.

3.12.217.10.5  (01-01-2012)
Controlled Foreign Corporation Field 14Q4A

  1. Field 14Q4A is transcribed from line 4a, Schedule N, Form 1120S.

  2. The valid codes are as follows:

    1. Yes box checked = 1

    2. No box checked = 2

    3. Both boxes are checked = 3

    4. Neither box is checked = blank

  3. Correction Procedure - Check for coding and transcription errors and correct accordingly.


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