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Part 3. Submission Processing

Chapter 12. Error Resolution

Section 217. Error Resolution Instructions for Form 1120S

3.12.217  Error Resolution Instructions for Form 1120S

Manual Transmittal

September 23, 2011

Purpose

(1) This transmits revised IRM 3.12.217, Error Resolution, Error Resolution Instructions for Form 1120S.

Material Changes

(1) Made editorial changes to IRS Employee Contacts Section 3705(a) at 3.12.217.1.4.

(2) Made editorial changes to Use of Fax for Taxpayer Submissions at 3.12.217.1.6.

(3) Updated information related to Frivolous Returns and Claims at 3.12.217.1.7.

(4) Updated Criminal Investigation Funny Box information at 3.12.217.1.8.

(5) Added Examination Funny Box information at 3.12.217.1.9.

(6) Updated Taxpayer Advocate Service information at 3.12.217.1.11.

(7) Made editorial changes to Business Master File/BMF Consistency information at 3.12.217.1.13.

(8) Updated procedures related to Correspondence Imaging System (CIS) Returns at 3.12.217.1.25.1.

(9) Updated Consistency information and Correction Procedures for Field 02CON- In Care Of at 3.12.217.3.1.

(10) Updated Consistency information and Correction Procedures for Field 02FAD - Foreign Address at 3.12.217.3.2.

(11) Changed all references throughout to Schedule A to reflect change to new Form 1125-A.

(12) Updated Field Designators, Line Titles and Line Locations throughout.

(13) Updated Invalid Condition and Correction Procedures for Error Code 001 at 3.12.217.12.

(14) Updated Suspense Correction Procedures for Error Code 004 at 3.12.217.12.3.

(15) Updated Invalid Conditions for Error Code 005 at 3.12.217.12.4.

(16) Updated Correction Procedures for Error Code 007 at 3.12.217.12.7.

(17) Updated Field Designators and Correction Procedures for Error Code 010 at 3.12.217.12.9.

(18) Updated Field Designators, Invalid Condition and Correction Procedures for Error Code 014 at 3.12.217.12.10.

(19) Updated Correction Procedures for Error Code 015 at 3.12.217.12.11.

(20) Updated Invalid Conditions and Correction Procedures for Error Code 016 at 3.12.217.12.12.

(21) Updated Correction Procedures for Error Code 074 at 3.12.217.12.18.

(22) Updated Province, State and Territory Abbreviations at Exhibit 3.12.217-14.

(23) Added a new Exhibit numbered as 3.12.217-15 for U.S. Possessions ZIP Codes.

(24) Updated Exhibit 3.12.217-16 titled as Potential Frivolous Arguments for Examination Review.

(25) Added new Exhibit 3.12.217-20 titled as Province/County Code-Canada Only.

(26) Added new Exhibit 3.12.217-21 titled as Action Codes.

Effect on Other Documents

IRM 3.12.217 dated January 1, 2010 is superseded. This IRM also incorporates the following IRM Procedural Updates (IPUs): 110376,110259.

Audience

Wage and Investment employees working BMF Error Correction are the intended audience for this Internal Revenue Manual.

Effective Date

(01-01-2012)

Jerald H. Heschel
Director, Submission Processing
Wage and Investment Division

3.12.217.1  (01-01-2012)
Purpose and Scope

  1. Error Resolution System for Form 1120S U.S. Income Tax Return for an S Corporation corrects errors made by taxpayers as well as those made by Submission Processing Center operations.

    1. These instructions pertain to the Error Resolution System (ERS). In regards to the ERS system, the process of correcting errors is done on a terminal display screen in a real-time environment.

3.12.217.1.1  (01-01-2012)
IRS Mission Statement

  1. "Provide America's taxpayers top- quality service by helping them understand and meet their tax responsibilities and enforce the law with integrity and fairness to all."

    Note:

    Source: IRM 3.0.273.2, "IRS Mission Statement" .

3.12.217.1.2  (01-01-2012)
Wage & Investment (W&I) Mission and Goals Statement

  1. The mission of the W and I Division is to provide W&I customers top-quality service by helping them understand and comply with applicable tax laws and to protect the public interest by applying the tax law with integrity and fairness to all.

3.12.217.1.3  (01-01-2012)
Background

  1. The manual is your main source of information in correcting the record on the screen and the related return.

  2. Records will be placed into the Error Inventory of the Workload Suspense Inventory for correction.

  3. Once the Error Resolution Tax Examiner accesses the record and it is displayed on the screen it must either be fully corrected, placed in suspense for additional information, or rejected from pipeline processing. Corrections will include correcting errors in editing or transcribing and correcting math errors.

  4. You will also find procedures in IRM 3.12.38," BMF General Instructions" and IRM 3.0.273, "General - Administrative Reference Guide" , which contains general instructions for correcting records on the screen, document control, electronic payments inventories and management reports.

3.12.217.1.4  (01-01-2012)
IRS Employee Contacts Section 3705(a)

  1. The Restructuring and Reform Act of 1998, RRA98 Section 3705(a), provides identification requirements for all IRS employees working tax-related matters. IRS employees are required to give their name and unique identification number during taxpayer telephone, face to face and written contact. In addition, a telephone number is required on all taxpayer correspondence. This will provide taxpayers with enough information to identify an IRS employee who has previously assisted with tax related matters.

  2. All IRS employees 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:

  3. Key Points — All IRS employees, in the field, national and regional office, who communicate, by telephone, correspondence or face to face, with taxpayers or their personal representatives on tax-related matters are required to provide (at a minimum) the following information:

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

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

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

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

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

    6. When a taxpayer requests to speak 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 must refer the inquiry using established procedures to his or her manager.

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

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

    9. Secretaries, receptionists or other people who answer the telephone in functional offices need to identify themselves 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.

    10. It is not necessary to repeat the badge identification (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 telephone or in person) his or her badge identification (ID Card) number on the first contact.

3.12.217.1.5  (01-01-2012)
Local Desk Procedures

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

    1. to supplement existing Headquarters procedures;

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

    3. for local routing procedures; and

    4. are not limited to the examples listed above

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

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

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

3.12.217.1.6  (01-01-2012)
♦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.

    Note:

    The CADE Master File, as it existed from 2004 - 2011, will transition from Production and be retired at the end of 201152

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

  3. With CADE 2 there will be changes to campus cycles which will begin with cycle 201201. The new BMF campus cycles are:

    1. Campus Cycle: Thursday - Wednesday

    2. Master File Processing: Friday - Thursday

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

    4. Unpostables: New available Tuesday; Closing Tuesday

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

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

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

      Note:

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

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

    • 01 = Friday

    • 02 = Monday

    • 03 = Tuesday

    • 04 = Wednesday

    • 05 = Thursday

3.12.217.1.7  (01-01-2012)
Use of Fax for Taxpayer Submissions

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

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

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

    Note:

    Caution: Before disclosing any tax information, you must be sure you are speaking with the taxpayer or authorized representative. See the Taxpayer Authentication guidelines in IRM 21.1.3.2.3, Required Taxpayer Authentication and IRM 21.1.3.2.4, Additional Taxpayer Authentication. Also, before leaving any messages on a taxpayer's answering machine, review IRM 11.3.2.6.1, Leaving Information on Answering Machines/Voicemail. Fax procedures contained in IRM 11.3.1.10, Facsimile Transmission of Tax Information, must be reviewed prior to faxing confidential information to the taxpayer.


3.12.217.1.8  (01-01-2012)
♦Frivolous Returns and Claims♦

  1. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

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

    IF THEN
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Exception:

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

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

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

    Note:

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

3.12.217.1.9  (01-01-2012)
Criminal investigation (CI) "Funny Box" Criteria

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

  2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ " ,

3.12.217.1.10  (01-01-2012)
♦Examination (Exam) "Funny Box" ♦

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

3.12.217.1.11  (01-01-2012)
Refund Returns 45 Day Jeopardy and Million Dollar Refunds

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

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

    If Then
    The processing date is more than 20 days after received date or, the return due date (whichever is later) and the 45 day interest free period is in jeopardy and the refund amount is $5,000 or more.

    1. SSPND Action Code "341"

    2. Attach Form 4227 and give the return to the lead examiner or manager.
    The refund is $1,000,000 or more.

    1. SSPND Action Code "341" for numbered and unnumbered returns.

    2. Attach Form 12230 , Expedite Processing of Million Dollar Refunds

  3. Taxpayer Advocate Service (TAS) Manual Refunds- any return hand walked by a W&I Submission Processing (SP) liaison for Taxpayer Advocate Service must be processed by a Lead Tax Examiner or designated tax examiner using the following procedures in the order listed:

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

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

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

  4. Correspondence: If required for missing or incomplete information, follow procedures below:

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

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

    3. Suspend (SSPND) with appropriate suspense code and give return back to the W&I SP liaison.

      Note:

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

  5. Additional Suspense action needed: If the return requires other suspense action, then follow procedures below:

    1. Initiate suspense (SSPND) action according to IRM procedures.

    2. Inform the W&I liaison the reason for the action taken.

    3. Give the return back to the liaison.

      Note:

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

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

    1. Assign the TPNC according to IRM procedures.

    2. After all TPNCs have been assigned, inform your liaison of TPNCs issued.

    3. Suspend (SSPND) with appropriate code (suspense must be done at the generated point of error and give the return to the liaison).

      Note:

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

  7. When Balance Due/ Overpayment Math Error Code (EC) Generates do the following:

    1. Make screen print of the Error Code 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 in to Field 07B/R.

    3. If Balance Due/Overpayment Math Error Code regenerates because the taxpayer made a math error when computing their refund, then make a screen print of the Error Code Screen Display and highlight the computer generated refund amount. Attach the print to the front of the return keeping the entity area visible and assign the appropriate TPNC.

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

  8. Rejects Suspense Procedures:

    1. Follow specific instruction given by W&I SP liaison. Correspond and assign appropriate TPNCs as directed.

    2. Refer to paragraphs (6) and (7) above.

3.12.217.1.12  (01-01-2012)
♦Taxpayer Advocate Service (TAS)♦

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

3.12.217.1.13  (01-01-2012)
♦TAS- Service Level Agreements (SLA)♦

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

  2. The SLAs are located at http//tas.web.irs.gov under the heading "Policy/Procedures Guidance" .

3.12.217.1.14  (01-01-2012)
♦Business Master File/BMF Consistency♦

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

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

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

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

3.12.217.1.15  (01-01-2012)
Related Forms

  1. When the following forms are referred to in this section, the chart below shows their form number, form title and use.

    If this form is used Then
    Form 3465, Adjustment Request Request Transfer of credits
    Form 4227, Intra-SC Reject or Routing Slip Identify the reason for using the Action Code
    Form 8161, ERS Return Charge-Out Generated by the computer to charge out returns on the new Suspense Records List and Duplicate Document Rejected. Document Locator Number (DLN) Register used as a routing slip and history item

3.12.217.1.16  (01-01-2012)
System Errors

  1. The Error Resolution System will identify errors according to type and priority.

    If this error is present Then it is a
    Action Code Error Priority I
    Section Error Priority II ( Integrated Submission and Remittance Processing (ISRP) problem code)
    Validity Error Priority III
    Math/Consistency Error Priority IV (Error Codes)
    The record heading will show the type of error.

3.12.217.1.17  (01-01-2012)
Field Errors

  1. Any field that does not meet the requirement(s) for that field will be displayed as a Field Error in the order encountered in the record.

    1. Non-alphabetical character in an alpha field.

    2. Blank space in numeric field.

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

3.12.217.1.18  (01-01-2012)
Terminus Error

  1. This error is caused by a section with variable length input fields containing an erroneous size field. This type of error will show all input fields of the terminus section. Transcribed data will be present. Computer generated fields or Remittance Field for Section 01 will not be present.

    If ... Then ...
    Displayed in error Check all fields in the section for necessary corrections
    No correction is needed Transmit from the bottom of the screen display
    Section needs to be deleted Use Command Code (CC) DLSEC to delete the section number

3.12.217.1.19  (01-01-2012)
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 specific inventory.

  2. Below is a list of the status codes and a brief explanation:

    1. Status 100, error awaiting correction. Records are in the Error Inventory.

    2. Status 2XX, record awaiting information. Records are in the Unworkable Suspense Inventory.

    3. Status 3XX, suspense period expired no response. Records are in the Workable Suspense Inventory.

    4. Status 4XX, record with information, awaiting correction. Records are in the Workable Suspense Inventory.

    5. 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. For Example —321— Suspense period expired, no response to taxpayer correspondence. If a record has been selected to be held for Quality Review, the second and third position will be "QA" For Example "1QA" , "3QA" or "4QA" .

  4. Records for which the Suspense Period has expired before being activated are automatically moved from Status 2XX to Status 3XX.

3.12.217.1.20  (01-01-2012)
Action Codes

  1. Action Codes (AC) are input when information is missing or the record must be suspended from processing.

    1. The code will have sufficient detail to indicate if correspondence is to be sent to the taxpayer or the specific in-house research or action required.

    2. Document Perfection Tax Examiners will assign a three-digit Code to numbered returns when they determine that the document is unprocessable in its present form either by needing additional information or some manual intervention is required.

    3. This code will be entered on the bottom left hand corner of the return.

3.12.217.1.21  (01-01-2012)
Action Code Suspense

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

    1. If the Action Code assigned by Document Perfection is invalid or incomplete or AC 001 the record will be assigned to the Error Inventory for correction or deletion of the code.

    2. Only one Action Code may be assigned at a time to a record.

    3. For routing within the Submission Processing Campus (In-House Research), the Action Code with a sufficient explanation concerning the missing information will need to be entered on the return.

    4. The ERS Tax Examiner may enter an Action Code on a record, delete or correct an invalid code or may overlay the present Action Code with another to either re-suspend or reject from ERS. This is done by entering a valid Action Code with a CC SSPND, NWDLN, or RJECT. IRM 3.12.38,, "BMF General Instructions" , also explains these codes.

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

    6. A Reject Tax Examiner entering a valid Action Code with the RJECT CC will be rejecting the record from ERS. Generally Service Center Control File (SCCF) will be automatically updated for the rejected records. In cases where the Action Code cannot describe the required action, attach a note of explanation to the return (Form 4227).

    Note:

    The Action Code assigned by Document Perfection will be transcribed into the record of the Form 1120S.

3.12.217.1.22  (01-01-2012)
Correspondence Action Sheets

  1. If the tax examiner will not be issuing a letter through IDRS, it will be necessary to attach a Correspondence Action Sheet (3696) or other acceptable form to issue the correspondence.

3.12.217.1.23  (01-01-2012)
Action Code Chart

  1. The Action Code indicates that specific information is missing or that the record is to be rejected from processing. The code will indicate if correspondence is to be sent to the taxpayer or the specific in-house research or action required. This chart describes each Action Code, their functional use (EC = Error Correction, DP = Document Perfection, S= Suspense Correction and GEN = generated) and the suspended period.


    Action Code
    and Description    		 Workday
    Suspense
    Period
    Function
    Used
    001  Input Document 0 EC
    210  Employee Plans Master File (EPMF) Correspondence 60 EC, S
    211  First Correspondence 40 DP, EC, S
    212  Second Correspondence 25 DP, EC, S
    213  Correspondence to other 40 DP, EC, S
    215  International Correspondence 45 DP, EC, S
    225 Signature Only 10 DP, EC, S
    300   Examination (Fuel Tax Credit) 10 CE, EC, S
    310  Statute Control 10 DP, EC, S
    320  Entity Control 10 DP, EC, S
    321 Form 851 Employer Identification Number (EIN) Mismatch Modernized e File (MeF) Form 1120 only 10 EC
    331  Dispute Review 3 DP, EC
    332  Questionable Refund Detection Team (QRDT) Review 3 DP, EC
    333  Prompt Audit 10 DP, EC, S
    334  Joint Committee 10 DP, EC, S
    335  Dispute Case 10 DP, EC, S
    336  QRDT 10 DP, EC, S
    337 Other Criminal Investigation (CID) 10 DP, EC, S
    341 Manual Refund 10 DP, EC, S
    342  Credit Verification 10 DP, EC, S
    343  Other Accounting 10 DP, EC, S
    344  Manual Refund by Error Resolutions (ERS) 0 EC
    347 Form 2553 attached to Filed 1120– S- Control case to Entity for approval 20 EC, DP, S
    351  Taxpayer Identification Number (TIN) Research 0 EC, S
    352  Name Research 3 DP, EC, S
    353  Address Research 3 DP, EC, S
    354  Filing Requirement Research 3 DP, EC, S
    355  Other MFTRA Research 3 DP, EC, S
    360  Other In-House Research 10 DP, EC, S
    370  Examination 10 DP, EC, S
    383  1040EZ Audit Code 0 DP
    410  Technical Assistance 0 EC
    420  Management Suspense–A 5 DP, EC, S
    430 Management Suspense–B 10 DP, EC, S
    440  Management Suspense–C 15 DP, EC, S
    450  Management Suspense–D 20 DP, EC, S
    460  Management Suspense–E 25 DP, EC, S
    470  Complex Error Code 00 EC
    480 Early Filed Suspense 150 DP, EC, S
    490 System Problem 5 DP, EC, S
    510  Missing Document 0 DP
    511  Missing Document 1st Suspense 25 EC, S
    512  Missing Document 2nd Suspense 20 S
    513  Missing Document 3rd Suspense 20 S
    515  Missing Document sort Term 5 EC, S
    550  Mag Tape Attachments 3 TA
    551  Mag Tape Inconsistent Data 3 DP
    610  Renumber 0 DP, EC
    611  Remittance Renumber 0 S
    620 Non Master File (NMF)/Non-ADP 0 DP, EC, S
    630  Reinput 0 EC
    640  Void 0 DP, EC
    650  International 0 DP, EC
    660  Data Control Delete Tape Edit Processor (TEP) Delete 0 DP, EC, GEN
    670  Deleted Missing Document 0 GEN
    700  Duplicate (Dup) Block DLN 00 GEN
    711  Dup. DLN
       From Code & Edit (C&E)     		NA GEN
    712  Dup. DLN From Error Correction NA GEN
    713  Dup. DLN From Unp NA GEN
    714  Dup. DLN From
       Unworkable. Suspense     		NA GEN
    715  Dup. DLN From Workable. NA GEN
    800  National Account Profile (NAP) Linkage Problem 2 EC, S
    900  Unpostable Record 0 GEN

  2. Beginning with tax returns for periods ending 12–31-2007 and later, Form 2553 may be filed as an attachment to Form 1120S requesting to be considered a S Corporation. Code & Edit area will detach all Forms 2553 received with a Form 1120S and send on to Entity for prompt consideration. For MeF filed Forms 1120S, this will be attached to the return as a Portable Document File (PDF) file and will generate an Action Code 347. Error corrections must then assign the case to Entity Control for prompt consideration.

3.12.217.1.24  (01-01-2012)
Clear Code "C" and "000"

  1. The letter "C" is used as a "Clear Code" for the Error Codes where the error condition is such that the resolution does not require a change or correction to the record as displayed. The display will include a Clear Field labeled "CL" to indicate the possible need of a Clear Code. CC CRECT is used to enter the "C" .

  2. Code "C" is also used for clearing the Action Code from the screen after corrections for the Action Code have been completed, or as with Action Code 410, the Action Code must be cleared initially, so other errors in the record can be resolved. 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.

  3. The "000" is also used as a Clear Code when deleting Action Codes. It will only be used for erroneous Action Codes and you have determined there is no reason to suspend the record. The "000" cannot be used in suspense correction.

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

  5. Programming erases all "C" Clear Codes for Error Codes and Action Codes for the new day’s Error Inventory and Workable Suspense Inventory. Unfinished records from the previous day will contain none of the "C" Clear Codes that were assigned to a record that was not completely worked.

  6. Error codes (including the ones which may require a "C" Clear Code) are numbered consecutively in order for correcting. There may be instances when you as an ERS tax examiner, correcting errors at the terminal, will create an Error Code with a higher priority than the one(s) you have cleared with a Taxpayer Notice Code or "C" Clear Code. Should this occur, programming will erase all "C" Clear Codes and Taxpayer Notice Codes for Error Codes with a lower priority than the one created.

  7. Beginning with the highest priority Error Code created, programming will continue displaying Error codes for the record. Displays using the corrected data are apt to be different from those previously displayed.

  8. There may be instances when you will make a correction erasing an Error Code which you previously cleared with a "C" and now the error condition no longer exists. Should this occur, the "C" Clear Code for this error and all "C" and TPNC for all subsequent errors in the record will be deleted.

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

  10. The "C" Clear Code will prevent any other corrections to the record to accompany the "C" Clear Code. If a correction must be entered but you have already entered the "C" Clear Code, and the error is no longer displayed, create a higher priority error. If the record has cleared, then use CC GTRECW to make any corrections.

3.12.217.1.25  (01-01-2012)
Unprocessable ADP Return

  1. When perfection of a return is not possible and it is necessary to correspond, perform in-house research, or refer the document to another area of the Submission Processing Campus, the record will be suspended and the required action taken.

  2. Suspend the unprocessable record by entering the CC SSPND followed by the appropriate Action Code.

    1. In cases where the Action Code cannot describe the required action, attach Form 4227 to the return with an explanation.

    2. If the tax examiner will not be issuing a letter through IDRS, it will be necessary to attach a Correspondence Action Sheet (Form 3696) to issue the correspondence.

    3. A Charge-Out (Form 8161 or Form 4251) will be computer generated for all new suspense items.

    4. The Charge-Out will be used for pulling documents as well as routing and controlling documents while the record is being held in suspense and for use in associating the document with the Workable Suspense Inventory when the record becomes workable.

3.12.217.1.26  (01-01-2012)
Correspondence

  1. Replies—When the taxpayer replies to correspondence, continue to process the return with the instructions provided in IRM 3.0.273, "Administrative Reference Guide" .

  2. No Replies—When the taxpayer does not respond to correspondence, input CCC "3" (on refund returns only) and use the following procedures as applicable.

    "No Reply Cases"
    If tax period is Then
    a. More than 12 months Research for the correct period ending and change the tax period to conform with the previous filing.
    b. Unexplained short year Enter Computer Condition Code "Y" in Field 01CCC. When the screen returns, enter a "C" in the Clear field. Attach Form 4227 to the return with an explanation for the Audit code.
    c. Unauthorized change in Accounting in Period Enter Computer Condition Code "Y" in Field 01CCC . When the screen returns, enter a "C" in the Clear field. Attach Form 4227 to the return with an explanation for the Audit code.
    d. Multiple tax periods Use earliest tax period. If a remittance return, SSPND return to have remittance posted to the correct period.

    If Then
    Signature is required Enter CCC X and CCC 3 (on refund returns only)
    Schedule D Continue normal processing
    Line 22a Support Schedule Continue normal processing
    Form 8609, Form 8825, Balance Sheet and K-1 Continue normal processing
    Form 8824- Like-Kind Exchanges Continue processing
    If Unsubstantiated Credits Then
    a. Form 6478 — Credit for Alcohol Used as Fuel Delete credit from the return and the screen.
    b. Form 4136 — Credit for Federal Tax Paid on Fuels Delete credit from the return and the screen.
    c. Form 6249 — Computation of Overpaid Windfall Profit Tax Delete credit from the return and the screen.
    d. Form 8586 — Low-Income Housing Credit Delete the credit from the return and the screen.
    e. Form 8611 — Recapture of Low-Income Housing Credit Delete the credit from the return and the screen.

  3. For missing schedules use the chart below to determine the Missing Schedule Code, Field 01MSC:

    Missing Schedule Input 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

3.12.217.1.26.1  (01-01-2012)
♦Correspondence Imaging System (CIS) Returns♦

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

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

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

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

    Note:

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

    		The return is not complete (e.g., 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" reprocessed/reinput returns.

    The CIS return does not have a Form 13596 attached The return is not complete (e.g., missing signature, schedules or forms), Research for prior posting (TC 150 posted)

    1. If TC 150 present and the information is the same, cancel the DLN and treat as classified waste.

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

    Note:

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

3.12.217.1.27  (01-01-2012)
♦Business Master File (BMF) Consistency♦

  1. The purpose of the BMF Consistency initiative is to achieve consistency in the BMF Error Resolution System processing IRMs.

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

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

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

3.12.217.1.28  (01-01-2012)
Perfection of Attachments

  1. Sometimes a return is received with written information on the attachments.

    IF THEN
    a. The taxpayer writes a question or request for assistance on the return itself. Make a photocopy of the question/request and the taxpayer's EIN, name and address. Route this information to the appropriate function.
    b. Unrelated, unanswered taxpayer correspondence is attached and no action has been taken. Detach and route to the appropriate area using local Submission Processing Campus procedures.
    c. Unanswered taxpayer correspondence relating to the Form 1120S is attached. Make a photocopy of the attachment and forward it to the appropriate area using local Submission Processing Campus procedures.

  2. All attachments or photocopies of attachments that are routed to another area must contain the taxpayer's:

    1. Name,

    2. Address,

    3. EIN, and

    4. Received Date.

3.12.217.1.29  (01-01-2012)
NAMEE Search

  1. The CC NAMEE will be using a system called Name Research Facility (NSF), which is a Taxpayer Identification Number searching tool.

  2. NSF provides a national centralized name search capability which replaces the Key Index File (KIF) located at each Submission Processing Campus. Authorized users will have access to NSF via CC NAMEE for EIN searches.

  3. NSF will provide an input screen to enter data about the taxpayer (name, address, etc.). It will match the data entered, to data we have in our files and will return to the users the Social Security Number (SSN) or EIN of any possible matches. The more information entered, the narrower the search and the better the possibility for a match. The CC NAMEE requires a name be entered for searching the NSF use CC NAMEE to verify that the EIN the taxpayer has furnished is on the Master File. See http://serp.enterprise.irs.gov/databases/irm-sup.dr/job_aid.dr/command-code.dr/idrs_command_codes_job_aid.htm for all CC job aids.

3.12.217.1.30  (01-01-2012)
On-Line Entity (OLE)

  1. OLE is a Taxpayer Identification Number (TIN) system designed to allow for validation of the EIN and EIN/name control on line with Integrated Data Retrieval System (IDRS) input CCs. It is also designed to allow for entity research on a national basis.

  2. Use CC INOLE to research the entity module. This information includes name lines, name control, address, employment codes and filing requirements. See http://serp.enterprise.irs.gov/databases/irm-sup.dr/job_aid.dr/command-code.dr/idrs_command_codes_job_aid.htm for all CC job aids.

  3. The display for a BMF EIN account or INOLE will show the:

    1. Primary name and all the name lines on the BMF

    2. Mailing address

    3. Primary name control

    4. Prior name control

    5. Sole proprietor SSN

    6. Fiscal month

    7. Prior fiscal month

    8. Establishment date

    9. Employment code

    10. Exempt Organization (EO) data, if present, and

    11. Filing requirements.

  4. Validation of IDRS CCs—IDRS CCs that create a transaction for posting to the Master File will have the EIN and EIN/name control validated using the Taxpayer Information File (TIF), and the National Accounts Profile (NAP).

  5. The CCs will not return the "Request Completed" response until the EIN and EIN/name control have been validated by the NAP as being on the Master File that the transaction will attempt to post.

  6. The following IDRS CCs are affected by OLE validation:

    • FRM49—Taxpayer Delinquent Return Notices and Investigations

    • ENREQ—Entity Changes

  7. If the EIN matches the EIN and name control, normal processing will continue.

  8. If the EIN or name control mismatches, See http://serp.enterprise.irs.gov/databases/irm-sup.dr/job_aid.dr/command-code.dr/idrs_command_codes_job_aid.htm for all CC job aids.

3.12.217.1.31  (01-01-2012)
BRTVU

  1. CC BRTVU is used to research edited, transcribed and computer-generated line items for BMF returns and related forms and schedules. This information will be accessed using CC BRTVU with a Taxpayer TIN, a two digit Master File Transaction (MFT) Code, Tax Period and Definer Code.

  2. The Returns Transaction File does not contain all the information available on the IDRS system, for example, IDRS notice status, case control information. BRTVU can be accessed even when TXMOD and SUMRY are not available.

  3. CC BRTVU, with definer SM, requests the summary screen for a specific EIN, MFT and tax period. This screen provides information about income, deductions, tax, remittance, number of pages, and schedules or forms attached to the return.

  4. Definers will only be displayed for the forms that are present with the return. A form is present if any field on the related screen (other than name control) contains significant data.

  5. If the definer is blank or invalid, or a definer is requested for a screen not available for the record requested, the computer will display the summary screen, showing available screen and definers.

  6. Screens may be accessed using the appropriate two positions definer code. The valid definers for Form 1120S are:

    Definer Meaning
    SM Summary screen
    R1 Screen 1
    R2 Screen 2
    R3 Screen 3
    SK Schedule K
    N1 Form 4136
    V2 Form 8586 (PY 91)
    V1 Form 8586 (PY 91)
    W1 Form 8611 (PY 91)
    Y1 Form 8693 (PY 91)

  7. Amended and duplicate returns can be accessed via CC BRTVU by inputting a sequence number immediately after the definer code. These returns will display the format of the year processed, therefore, the line numbers may be inconsistent with current year returns.

3.12.217.1.32  (01-01-2012)
BMFOL

  1. CC BMFOL provides on-line research capability of nationwide entity and tax data information posted to the Master File.

  2. CC BMFOL displays information very similar to CC MFTRA. In fact CC BMFOL, is a suggested alternative to CC MFTRA.

  3. CC BMFOL, with definer I, displays a summary screen for a specific account. The summary screen will show what other display screens are accessible and a minimum of information on each available module.

  4. For further explanation of the screen displays and applicable definer codes, see http://serp.enterprise.irs.gov/databases/irm-sup.dr/job_aid.dr/command-code.dr/idrs_command_codes_job_aid.htm for all CC job aids..

3.12.217.1.33  (01-01-2012)
Form 1120 Converted to Form 1120S

  1. Form 1120 must be converted to Form 1120S when the taxpayer has filed Form 1120 and the Entity Control Unpostable Unit has determined the taxpayer has a valid Form 2553, Election by a Small Business Corporation, on file.

  2. When the Form 1120 has been converted to a Form 1120S Entity must ensure that only the received date, Field 01NAI and Audit Code 4 is edited to the new renumbered form. If a field other than those mentioned above has been entered, delete it.

  3. For MeF Forms 1120 being reprocessed as Form 1120S, ensure the correct received date is edited on the document. The received date is the Julian DLN date of the original DLN. Do not subtract ten days in the case from the Julian Date.

  4. Do not enter any tax data on the "blank" Form 1120S.

3.12.217.1.34  (01-01-2012)
Installment Agreement

  1. If a request for an installment agreement (an inquiry by the taxpayer that he be allowed to make payments on a debt) is attached to any return, detach it and send it to the Collection Branch. This request may come on Form 9465, Installment Agreement Request. When forwarding the installment request make sure the following information is included as a working trail: EIN, Name, Type of Return, Tax Period, Amount Due and Amount Paid.

3.12.217.2  (01-01-2012)
Section 01

  1. Section 01 contains the entity data and codes for returns. The line designation, maximum length for each field, title and location where the field can be found is listed below:

    Field
    Designator    		 Max
    Length    		 Title Location
    RMIT> 11 Remittance Entry on Page (Pg.)1 Balance Due Line
    01NC 4 Name Control Pg. 1, First Name Line
    01EIN 9 EIN Pg. 1 label or EIN block
    01NAI 6 North American Industry Code Pg. 1, Box B, Header
    01TXP 6 Tax Period Pg. 1 upper right margin
    01RCD 8 Received Date Pg. 1, stamped date
    01CCC 10 Computer
    Condition Code     		Dotted portion of Line 2
    01TXB   Tax Period Beginning Pg. 1 top center margin
    01CRD 8 Correspondence Received Date ERS input only
    01MSC 2 Missing Schedule Code Edited as 7–33,34 , 36, 45, 46, 47, or 49 to the left of line 9. Input by ERS only
    01CBI 1 Check Box Indicator Page 1 Paid Preparer area
    01PSN 9 Tax Preparer SSN Bottom of Page 1
    01PEN 9 Tax Preparer EIN Bottom of Page 1
    01PTN 10 Tax Preparer Phone Number Bottom Page 1

3.12.217.2.1  (01-01-2012)
Remittance

  1. Remittance (RMIT>) is an entry that identifies payment made with return.

  2. This entry must be blank or numeric.

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

  4. It must be blank for non-remittance returns, overpaid returns and remittance returns processed through the Residual Remittance Processing System (RRPS) / Integrated Submission and Remittance Processing (ISRP) systems.

  5. This is a non-correctable entry.

3.12.217.2.2  (01-01-2012)
Name Control/Check Digit 01NC

  1. The name control consists of the first four significant characters of the corporation’s name.

  2. The valid characters are alpha, numeric, ampersand (&), hyphen (-), and blank.

  3. The Name Control is invalid if the first position is blank or there are any intervening blanks between significant characters.

  4. Check Digit is present only on a preaddressed return when the EIN has been validated or is generated from ISRP using information contained on the Entity Index File.

    1. If a valid check digit is present, the computer makes an additional mathematical test of the EIN. A check digit must have:

    2. Blanks in the first 2 positions and

    3. A letter other than E, G, or M in the last 2 positions

3.12.217.2.3  (01-01-2012)
Correction 01NC

  1. Check for coding and transcription errors.

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

  3. If the Name Control cannot be determined, research using local Submission Processing procedures.

3.12.217.2.4  (01-01-2012)
Employer Identification Number 01EIN

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

  2. Check for coding and transcription errors

  3. This field is invalid if:

    1. It begins with 00, 07, 08, 09, 17, 18, 19, 28, 29, 49, 78, 79, or 89.

    2. It is not numeric.

    3. It is less than 9 characters.

    4. It is all zeroes or all nines.

  4. If transcribed correctly, search the return for another EIN and/or use local Submission Processing Campus research procedures to obtain the EIN. If found, enter in Field 01EIN and send a Letter 3875C . Notate that the letter 3875C should not be sent if it is obvious that EIN numbers have been transposed or has three or fewer digits different.

  5. If another EIN is not found during the search above, or if there is no record of an EIN, or multiple EINs are found, suspend the record with Action Code 320 and route to Entity Control for an EIN to be assigned.

  6. On an RPS return, with an EIN change SSPND with Action Code "351" to route to rejects.

3.12.217.2.5  (01-01-2012)
01EIN Correction

  1. Entity Control has found the correct EIN, enter it in 01EIN.

  2. If Entity Control has assigned an EIN, enter it in 01EIN. Enter the entity assignment date, found in the lower left hand corner of the return, in 01CRD if it is after the return due date.

  3. Rejects will research any RPS return with a change to the EIN to determine if a payment has posted correctly.

3.12.217.2.6  (01-01-2012)
North American Industry Classification System (NAICS) 01NAI

  1. Field 01NAI is the North American Industry Classification System (NAICS). The NAICS codes have replaced the Principal Industrial Code (PIA). The NAICS Code is a 6 digit code. It is transcribed from Box B, Page 1, Form 1120S. It may be found on the preprinted label to the right of the Area Office Code.

  2. Invalid Condition—This field is invalid if it is not present (except G Coded returns), or it is other than 000001 through 999000.

  3. Correction Procedures

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

    2. If Field 01NAI is blank, enter the entry from Box B, Page 1, Form 1120S, or the preprinted label.

    3. If no code is found, use the information on Form 1120S, Schedule B, Line 2a or 2b to determine the appropriate code to use. See Exhibit 3.12.217-1.

    4. If the taxpayer uses the four digit Principal Business Activity Code (PBA Code), use the information on the return and the NAICS Chart to determine the NAICS Code.

    5. If the taxpayer is using the four digit PBA Code and you are unable to determine the NAICS Code, enter the four digit code preceded by 2 zeros.

    6. Enter 899000 if there is an indication that services are provided, or 999000 if no determination can be made.

3.12.217.2.7  (01-01-2012)
Tax Period 01TXP

  1. 01TXP is the Tax Period field which is located on the pre-addressed label or at the of top of page 1 of the return.

  2. Tax period ending is printed in Year (YYYY), month (MM) format e.g., Dec. 31, 2006 is printed 200612.

  3. The tax period is located above the first name line, to the right on the return.

  4. The tax period must be present and contain six numeric digits.

  5. The last two digits must be 01–12 and the year (first four digits) must not be greater than the current year. In addition, if the year is equal to the current year, the month must be equal to or earlier than the current month.

3.12.217.2.8  (01-01-2012)
Tax Period Correction

  1. Determine from preaddressed label or tax year at the top of page 1 of the return the correct Tax Period ending date.

  2. Correct Field 01TXP when a transcription or edit error is discovered.

    IF THEN
    a. The end of the tax period is later than the current year-month combination by a year or more Reduce it by the lowest number of full years that will make it valid
    b. The tax period ending is equal to or later than the current year-month by not more than three months SSPND the return with Action Code 480 and attach Form 4227 noting that the return should be held and processed after the end of the tax period
    c. The tax period ending is later than the current year-month by four months or more (but less than 12 months)

    • We don't receive a reply

    		 Check attachments for correct tax period ending. If none found, correspond requesting confirmation of the tax period ending.

    • SSPND 480 and attach Form 4227 noting that the return should be held and processed after the end of the tax period.
    d. The taxpayer has indicated this is a final return and the close of business precedes the edited tax period Change the tax period to agree with the close of business date
    e. No close of business date is available Change the tax period to the month preceding the received date EXCEPT if prepaid credits are claimed on lines 23(a) through 23(c), then Suspend 342 to have the credits moved to the correct tax period.
    f. The tax period cannot be determined from the return, attachments or research Default to the calendar year printed on the return.
    g. The correct tax period ending is determined Enter the tax period found.

  3. A taxpayer can file a return for:

    • A Calendar Year-Ends December 31.

    • A Fiscal Year-Ends last day of the month except December.

    • A 52 and 53 Week Year-Ends 6 days before to 3 days after the end of the month (April 26, 2010 and May 2, 2010 both are 201004).

      Example:

      52-53 tax year that ends on the last Friday of the month can end as much as 6 days before the last day of the month. If the tax year ended on April 24, 2010, then the valid period would be 201004.

      Example:

      52-53 year that ends on the Friday that is nearest to the last day of the month can end as much as 3 days before, or 3 days after the last day of the month. If the tax period ends September 2, 2008, then the valid period would be 200808.


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