3.12.249  Processing Form 8752

Manual Transmittal

November 14, 2013

Purpose

(1) This transmits revised IRM 3.12.249, Error Resolution, Processing Form 8752.

Material Changes

(1) Minor editorial changes have been made throughout this IRM (e.g., line number updates). Other significant changes to this IRM are shown below.

(2) IRM 3.12.249.1.16(1) - Changed "illegally" to "improperly" per feedback from Chief Counsel.

(3) IRM 3.12.249.1.5(3) - Fourth bullet - Removed IRM 3.0.273, Administrative Reference Guide, because the IRM is obsolete and not replaced.

(4) IRM 3.12.249.1.15(3) - If/And/Then table - First Then box - 2. Added Caution that reads: "If the return comes back from AM with the information still incomplete, send the return to AM again to secure all the missing information." This change is per SERP Feedback 201304627 for IRM 3.11.13 (September 25, 2013).

(5) IRM 3.12.249.1.18(2) - Table - Removed information ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ " per request from Criminal Investigation (CI) (IPU 13U0236 issued 01302013).

(6) IRM 3.12.249.2.1(4) - Note - Changed "1991" to "1990" and "Abstract" to "Number" per feedback from Chief Counsel.

(7) IRM 3.12.249.2.1(5) - Fourth sentence reworded to read: "Generally, for an S Corporation, the tax year resulting from a Section 444 election ends in September, October, or November" per feedback from Chief Counsel.

(8) IRM 3.12.249.2.1(6) - Removed "For applicable election year 1990" . Added "of the year following the calendar year in which the applicable election year begins" per feedback from Chief Counsel.

(9) IRM 3.12.249.2.2.5(1) - Updated tax year information.

(10) IRM 3.12.249.2.2.5(3) - Updated tax year information.

(11) IRM 3.12.249.2.2.5(3) - Added "For example, if an election year ends September 30, 2013, the tax period is 201312, not 201309" per feedback from Chief Counsel.

(12) IRM 3.12.249.2.2.5(4) a. - Removed "as a calendar year period" per feedback from Chief Counsel.

(13) IRM 3.12.249.2.2.5(4) c. - Updated tax year information.

(14) IRM 3.12.249.2.2.5(5) - Reworded to state: As a result of the Internal Revenue Code (IRC) 7519(b), the rate was adjusted per Section 101(b) of American Taxpayer Relief Act (ATRA) of 2012. Under IRC 7519(b), the percentage rate is one percent higher than the highest tax rate stated in IRC 1 as in effect at the end of the base year. Under ATRA, the highest tax rate changed from 35% (percent) to 39.6%. Thus the percentage on Form 8752, Line 9a is changed from 36% to 40.6%.

(15) IRM 3.12.249.2.2.5(5) - Tax Year/Tax Rate Table - Added the tax year 2013 and tax rate (40.6%) as a result of the IRC 7519(b), the rate was adjusted per Section 101(b) of American Taxpayer Relief Act (ATRA) of 2012. Tax Year/Tax Rate Table - Tax Year Column - Second row - Corrected "2003 and subsequent" to "2003 through 2012" .

(16) IRM 3.12.249.2.2.6(3) - Note - Corrected IRM reference for determining reasonable cause.

(17) IRM 3.12.249.2.2.6.7(7) b. - Updated tax year information.

(18) IRM 3.12.249.2.2.8(2) a. - Updated tax year information.

(19) IRM 3.12.249.2.2.11(4) - Clarify Field 01-J, First Tax Year Box. Added language to research Integrated Data Retrieval System (IDRS), and added suggested language for open paragraph for Letter 118C (or other appropriate letter) per feedback from Ogden and Cincinnati (IPU 13U1308 issued 08012013).

(20) IRM 3.12.249.2.3.5(1) - Reworded - Changed "net income amount" to "applicable payment made during the base year" per feedback from Chief Counsel.

(21) IRM 3.12.249.2.3.9(2) - Tax Year/Tax Rate Table - Added the tax year 2013 and tax rate (40.6%) as a result of the IRC 7519(b), the rate was adjusted per Section 101(b) of American Taxpayer Relief Act (ATRA) of 2012. Tax Year/Tax Rate Table - Tax Year Column - Second row - Corrected "2003 and subsequent" to "2003 through 2012" .

(22) IRM 3.12.249.2.3.12(4) - If/And/Then Table - Removed Fourth If/And/Then boxes that contained duplicate information that read: "If Field 02-L (Payment Due or Refund Amount) is underprinting and Field 02-I (Net Base Year Income Amount) and Field 02-J (Required Payment Amount) have entries" per feedback from Cincinnati.

(23) IRM 3.12.249.2.3.13(1) - Updated to read: "Small Business and Work Opportunity Tax Act of 2007" per feedback from Chief Counsel.

(24) IRM 3.12.249.2.3.14(1) - Updated to read: "Small Business and Work Opportunity Tax Act of 2007" per feedback from Chief Counsel.

(25) IRM 3.12.249.2.3.15(1) - Updated to read: "Small Business and Work Opportunity Tax Act of 2007" per feedback from Chief Counsel.

(26) IRM 3.12.249.2.4.2(6) - Updated Form 8822-B title to read "Change of Address or Responsible Party - Business" per Form 8822-B Work Request Notification (WRN) dated May 22, 2013.

(27) IRM 3.12.249.2.4.2(6) - Added Note explaining that BMF can have two addresses, a mailing address and a location address.

(28) IRM 3.12.249.2.4.2(6). - If/Then Table - Added "And" Column and added instruction for a Location address change on the Form 8822 or Form 8822-B.

(29) IRM 3.12.249.2.4.2(6). - If/And/Then Table - Reworded to read "Form 8822, Change of Address, or Form 8822-B, Change of Address or Responsible Party - Business, is attached" per Form 8822-B Work Request Notification (WRN) dated May 22, 2013.

(30) IRM 3.12.249.2.4.3(6) - Updated Form 8822-B title to read "Change of Address or Responsible Party - Business" per Form 8822-B Work Request Notification (WRN) dated May 22, 2013.

(31) IRM 3.12.249.2.4.3(6) - Added Note explaining that BMF can have two addresses, a mailing address and a location address.

(32) IRM 3.12.249.2.4.3(6). - If/Then Table - Added "And" Column and added instruction for a Location address change on the Form 8822 or Form 8822-B.

(33) IRM 3.12.249.2.4.3(6). - If/And/Then Table - Reworded to read "Form 8822, Change of Address, or Form 8822-B, Change of Address or Responsible Party - Business, is attached" per Form 8822-B Work Request Notification (WRN) dated May 22, 2013.

(34) Exhibit 3.12.249-3, Potential Frivolous Arguments Criteria - C-Filings - Description column - Removed the word "crazy" . Added the word "confusing" before "arguments" per feedback from Chief Counsel.

(35) Exhibit 3.12.249-3, Potential Frivolous Arguments Criteria - Form 1099-OID - Description column - Added "or business" . Removed the words "all of them" . Changed "claim" to "claims" per feedback from Chief Counsel.

(36) Exhibit 3.12.249-3, Potential Frivolous Arguments Criteria - Other - Corrected The Truth About Frivolous Tax Arguments website information.

(37) IRM references updated throughout the IRM.

(38) Exhibits revised throughout the IRM.

Effect on Other Documents

IRM 3.12.249, Error Resolution, Processing Form 8752, dated October 17, 2012 (effective January 01, 2013), is superseded. The following IRM Procedural Updates (IPUs), issued from January 02, 2013, through October 11, 2013, have been incorporated into this IRM: 13U0236 and 13U1308.

Audience

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

Effective Date

(01-01-2014)

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

3.12.249.1  (01-01-2014)
General

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

  2. This section contains information regarding the purpose, scope, concepts, and instructions for Service Center Replacement System (SCRS) processing of Form 8752, Required Payment or Refund Under Section 7519. This IRM cannot address every possibility that may arise while correcting returns or documents. Taxpayer intent must be taken into consideration. In some cases, it may be necessary to refer the issue to your Subject Matter Expert (SME), lead and/or manager to determine the proper action.

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

  4. IRM 3.12.249 is exempt from the BMF Consistency Guidelines (e.g., indicating diamonds) as shown in other sections of IRM 3.12, Error Resolution.

3.12.249.1.1  (01-01-2014)
Purpose

  1. This section provides instructions for resolving errors made by Form 8752 taxpayers, and errors made during campus processing. These instructions apply to SCRS.

3.12.249.1.2  (01-01-2014)
Scope

  1. This section provides procedures for correcting records that are printed on the error registers. Instructions in specific sections take precedence over general section instructions in case of a conflict.

3.12.249.1.3  (01-01-2014)
IRS Employee Contacts - RRA98, Section 3705(a)

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

  2. All IRS employees, in the field, Headquarters and area offices, who communicate, by telephone, correspondence or face to face, with taxpayers or their personal authorized representatives, on tax-related matters, are required to provide (at a minimum) the following information:

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

    • Their last name, and

    • Their Identification (ID) card (badge) number.

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

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

    • Their last name, and

    • Their Integrated Data Retrieval System (IDRS) number or ID card (badge) number.

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

    Caution:

    Email cannot be used to transmit taxpayer account information.

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

  6. When a taxpayer requests to speak with a specific employee who previously handled his or her inquiry or request, or complains about the level of service previously provided, every attempt should be made to resolve the taxpayer's inquiry. If the issue cannot be resolved, the employee should refer the inquiry using established procedures to his or her manager.

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

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

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

  10. It is not necessary to repeat the ID card (badge) number on a subsequent contact, when the nature of an employee's work involves multiple contacts with the same taxpayer, and the employee has given the taxpayer (either by telephone or in-person) his or her ID card (badge) number on the first contact.

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

  12. Prior to faxing confidential information to the taxpayer, review fax procedures contained in IRM 11.3.1.11, Facsimile Transmission of Tax Information

  13. During taxpayer contact, if the taxpayer asks to be referred to the Taxpayer Advocate Service (TAS) or you believe a referral to TAS may be appropriate, see IRM 3.12.249.1.4, Taxpayer Advocate Service (TAS).

  14. In compliance with a Chief Counsel opinion issued September 2, 2008, tax examiners will no longer send returns back to the taxpayer when corresponding for missing signature, missing information and supporting schedules and documentation on refund or zero balance returns. These changes were effective October 5, 2009.

3.12.249.1.4  (01-01-2014)
Taxpayer Advocate Service (TAS)

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

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

3.12.249.1.4.1  (01-01-2014)
TAS Service Level Agreements (SLAs)

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

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

3.12.249.1.5  (01-01-2014)
Concepts

  1. The tax examiners applying these instructions must be familiar with the editing procedures in IRM 3.11.249, Processing Form 8752, and the general procedures in IRM 3.12.38, BMF General Instructions. The telephone may be used to resolve questions pertaining to returns that are on the error register in lieu of rejecting those returns for subsequent correspondence action.

    Note:

    Any items that denote a protest should be referred immediately to the Criminal Investigation Branch.

  2. You are not expected to review or redo the work of the Code and Edit tax examiner. However, if an error or omission made by the tax examiner is noticed while working the error register, enter the correct information on the return and the error register. A complete review of the return is not required. If this section instructs you to do something without telling you how, refer to IRM 3.11.249.

  3. This manual is your main source of information. You may also need to research procedures in the following IRMs:

    • IRM 1.15.29, Records Control Schedule for Submission Processing Campus Records.

    • IRM 2.3, Terminal Responses.

    • IRM 2.4, Terminal Input.

    • IRM 3.10.72, Extracting, Sorting and Numbering.

3.12.249.1.6  (01-01-2014)
Invalid Correction Attempt - Error Reason Code "AA"

  1. If an invalid correction is made to an error register, the error will return to be corrected again. When this happens, it is called a "loop" error register. Error Reason Code "AA" will print on the loop error register. The "AA" is simply for information.

  2. Correct the error register as if no prior attempt at correction has been made.

3.12.249.1.7  (01-01-2014)
Pre-Computed Penalty

  1. Only a ten percent (10%) underpayment penalty can be charged on a Form 8752 account.

    Note:

    Transaction Code (TC) 240 (Miscellaneous) or TC 246 (Form 8752 or Form 1065) penalty may be charged.

    If a penalty is shown on the return, and the notation, "3465 Prepared," does not appear on the return, prepare a Form 3465, Adjustment Request, to request an assessment of the penalty.

  2. On the Form 3465, indicate the portion of the remittance which is available for application to the penalty assessment if the return remittance includes an amount applicable to all or part of the penalty. Enter Computer Condition Code (CCC) "X" on the return and on the error register to freeze the module from refunding or offsetting, notate on the return, "3465 Prepared" , and route the Form 3465 to Accounts Management (AM).

  3. For additional information, refer to IRM 20.1.10, Excise Tax Penalties and Miscellaneous Penalties.

3.12.249.1.8  (01-01-2014)
Statute Control Documents

  1. Statute of Limitations processing does not apply to Form 8752 because the form is considered a required deposit by the taxpayer and not a payment of tax due.

3.12.249.1.9  (01-01-2014)
Tax Codes

  1. The following is a chart of Tax Class, Document Code, and MFT for Form 8752.

    Form 8752
    Tax Class 2
    Document Code 23
    MFT Code 15

3.12.249.1.10  (01-01-2014)
Action Codes (ACs)

  1. Action Codes (ACs) are used to correct errors on the paper register. Every correction made on an error register or reject register must have an Action Code (AC). The Action Code signifies to the computer what action should be taken. Using Action Codes is similar to correcting an error screen on the computer, though the process is not as instantaneous.

  2. Each AC has a different purpose. Only one AC may be entered at any time. If two different Action Codes are used, the record will loop with no corrections made. If incorrect data is present in addition to non-correctable data, the incorrect data should be corrected first. The error register will then loop, and further actions can be taken at that time. No other AC can be used with Action Codes 0, 1, 2, 3, or 7. If incorrect data is present, it must be corrected with Action Codes 4, 5, or 6, before AC 1 is used. Individual descriptions of the valid Action Codes for most error registers are provided below.

  3. Action Code 0 is used to indicate that the data in the record is correct and that the computer's computations should be disregarded. The taxpayer's figures must be verified before using this Action Code. This code should never be used unless the correct tax and data are printed in the error register. Action Code 0 will accept a record as transcribed and send the record to Martinsburg Computing Center (MCC). Action Code 0 is written to the left of Section 01.

  4. Action Code 1 is used in conjunction with Taxpayer Notice Codes (TPNCs), to issue math error notices. When the data in the record is correct, but the taxpayer's computations are incorrect ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ a TPNC will be sent to inform the taxpayer of their error. This code may not be used if an amount field has a transcription error or if a field validity error is present in any field of a section. No other AC may be used in the same correction attempt. All validity errors must be corrected before Action Code 1 can be used; otherwise, the record will loop. Action Code 1 and the correct TPNC are written to the left of Section 01, and a working trail is left in the upper left-hand corner of the return.

  5. Action Code 2 is used to delete a rejected record from processing. It cannot be used on a raw register. Only Rejects will use AC 2. AC 2 is written to the left of Section 01.

    Note:

    This action code is NOT used in Form 8752 processing.

  6. Action Code 3 is used to reject a record when it is unprocessable. Use of AC 3 will force the record to the reject register. It must never be used on a record already in reject status. When using AC 3, attach Form 4227, Intra-SC Reject or Routing Slip, (or other appropriate routing slip) stating why the return is being rejected. Any of the following types of returns can be unprocessable.

    1. A return or other document with illegible or missing necessary data.

    2. A return or other document with required correspondence items with uncorrectable asterisks. All errors indicated by asterisks that can be corrected must be corrected before sending a return or document to Rejects for required correspondence.

    3. A return or other document that cannot be processed by the program under which it was blocked and which must be processed with a DLN for a different program.

    4. An amended or substitute return where the original return is not available.

    Note:

    Never use Action Code 3 on a reject register. See Action Code 9.

  7. Action Code 4 is used to delete a section from a record. This AC is used when information has been erroneously or unnecessarily entered into a section, and the entire section is not needed for processing. Each section is indicated on the error register and will appear as the first two digits on the first line of print for each section. All sections cannot be deleted; therefore, a record with only one section cannot have an AC 4 correction. It cannot be used on certain sections, such as Section 01, which are required for processing. AC 4 is written to the left of the section to be deleted.

  8. Action Code 5 is used to add a section to a record when the section was not transcribed. The AC is written in the space below the last printed section of the error record. Enter Action Code 5 to the left of the added section. The section number, alpha field designator(s), the data for the added field, and the applicable field breaker (use a comma (,) for a positive amount and a pound sign (#) for a negative amount) follow Action Code 5 in the order that they normally appear in the section. Enter only those fields with data present.

  9. Action Code 6 is used to change information in a field or fields of a section within the record. The computer identifies each field of a section with an AFD and prints the AFD before the field on the error register. The AC is written to the left of the section in which there is a field that requires correction. To correct an invalid field:

    1. Draw a line through the incorrect field data.

    2. Write the correct information directly above the lined out field. Use all capital letters and write as clearly and legibly as possible.

      Note:

      Use special symbols to change the sign. A positive amount is written with a comma (,) and a negative amount is written with a pound sign (#).

    Any number of fields may be changed in the section at the same time. AC 6 can also be used more than once; if invalid fields appear in multiple sections, the AC should appear to the left of each section in which there is a field that requires correction. If the name control (a fixed-length field) contains fewer than four characters, every position must be accounted for by editing the number of blanks and encircling it in front of the remaining name control characters.

  10. Action Code 7 is used to indicate that the data on the error register is correct and that no action is necessary. AC 7 may not be used with any other Action Code. All corrections requiring Action Codes 4, 5, and 6 must be done before Action Code 7 may be used. This AC may be used to clear a record which has been sent to the error register for one-time review. If information for a particular section was not input, the section may be generated for review with an asterisk before the section number. Use AC 7 to clear this item if no error exists.

    Note:

    Be cautious when determining whether to use AC 7. If there is another error in the error register, and AC 7 is mistakenly used, the register will loop and return to ERS with the original error still requiring correction. AC 7 will not make any error condition "go away" and therefore should be used sparingly.

  11. Action Code 9 is used to re-reject a reject loop register for correspondence or other suspense action. Action Code 9 is written to the left of Section 01.

    1. This code is used to prevent a reject loop record from reprint each time the loop is run, if it is clear that the record is not ready for correction.

    2. Action Code 9 is valid for reject loop only. It is not valid for raw rejects or for error registers.

      Note:

      For Form 8752 processing, this action code and Action Code 3 are used similarly, except Action Code 9 is used with reject registers.

  12. Enter Action Codes 0, 1, 2, 3, and 7 on the error register to the left of Section 01.

  13. Enter Action Codes 4, 5, and 6 on the error register to the left of the appropriate section number.

3.12.249.1.11  (01-01-2014)
Integrated Submission and Remittance Processing (ISRP) Error

  1. ISRP Error is an error that has been identified by the Integrated Submission and Remittance Processing (ISRP) edit run.

  2. The ISRP Error Indicator is printed to the left of the section number. This error will appear on the error register as shown in the following table:

    ISRP Error Indicator Type of Error Error Explanation
    #1 Split screen transmission Key Verifier attempted to change Check Digit, Key Verifier changed four or more digits of Taxpayer Identification Number (TIN), or the Original Entry (OE) Operator (data transcriber) entered a required section as "missing" .
    #2 Invalid section ending point  
    #3 Invalid field length  
    #4 Questionable section The ISRP operator input the same section more than once. The computer program will drop all duplicate sections and display the first one encountered on the error register.

  3. All fields of a section must be examined when this condition exists. If Section 01 of a return is error coded, also examine the tax base data section for errors to insure the return data is for the taxpayer whose name is in Section 01.

  4. Even though one or more sections of a record are error coded, the validity and consistency checks necessary for the record are made for all sections. Line out each incorrect field, and enter the correct data. Use Action Code 6. If the record is correct as it appears on the error register, enter Action Code 7.

3.12.249.1.12  (01-01-2014)
Terminus Error

  1. A Terminus Error results when:

    1. A non-numeric character appears in a numeric field, or

    2. The format of the section is incorrect.

  2. When this error is present, two asterisks will appear to the immediate left of the section number.

  3. Correct a Terminus Error as follows:

    1. Compare the return with the error register.

    2. Assure that any fields already containing data are correct. Correct or reject as applicable.

    3. Enter data in any blank fields that should contain data.

  4. If data is correct on register, re-enter a field, using Action Code 6 to send the record to good tape.

3.12.249.1.13  (01-01-2014)
Field Validity Error

  1. Field Validity Errors are the most common type of errors.

  2. A Field Validity Error appears with an asterisk (*) to the immediate left of the field that is in error. All fields will be printed on the error register. Some fields must contain data, and if they are blank, they are invalid. The field will be in error if:

    1. An invalid character is present in a field;

    2. The field is otherwise incomplete or invalid; or

    3. A math error is present.

  3. Correct a Field Validity Error as follows:

    1. Compare the return with the error register;

    2. Line out the incorrect field, and enter the correct data immediately above the lined-out data; and

    3. Enter Action Code 6.

    4. In some cases, a Taxpayer Notice Code (TPNC) must be sent, or another action must be taken.

    Note:

    Use special symbols to change the sign. A positive amount is written with a comma (,) and a negative amount is written with a pound sign (#).

  4. There are some fields which are asterisked (on the raw only) for a cursory review. These may be cleared with Action Code 7 if there are no other errors present.

3.12.249.1.14  (01-01-2014)
Blank Returns, Not Required to File

  1. Taxpayers may send a blank return stating that they are not required to file or don't understand why they are receiving the Form 8752.

  2. Research to ensure that the filer is still on a fiscal year basis. If a fiscal year filer, Form 8752 must be filed, unless:

    1. The entity has a service approved tax year either by automatic consent or letter ruling from National Office (NO) and taxpayer can demonstrate that it continues to qualify.

  3. If a fiscal year filer and 2(a) above does not apply, initiate correspondence. Inform the taxpayer that a partnership or S Corporation must file Form 8752 if it made a Section 444 election to file their tax return on a fiscal year basis instead of the required year basis.

    If after correspondence Then
    The taxpayer replies and indicates that he/she is not required to file because he/she meets the conditions in 2(a) above, 1. Prepare Form 4227, Intra-SC Reject or Routing Slip, (or other appropriate routing slip). Attach a photocopy of the taxpayer's response.
    2. Route to Entity Control following local procedures to correct the taxpayer's filing requirement.
    3. Void the blank return.
    The taxpayer replies and indicates that he/she is not required to file and does not offer an explanation, 1. Void the blank return.
    2. Prepare Form 4227 (or other appropriate routing slip) notating on it that the taxpayer provided no explanation why he/she is not required to file a Form 8752.
    3. Attach a photocopy of the reply to the Form 4227 and route to Entity Control following local procedures.
    The taxpayer does not reply, 1. Void the blank return.
    2. Prepare Form 4227 (or other appropriate routing slip) notating on it that the taxpayer did not reply to (Form 8752) correspondence.
    3. Route to Entity Control following local procedures.

  4. If the taxpayer is no longer a fiscal year filer, do not process the Form 8752. Void the blank return.

3.12.249.1.15  (01-01-2014)
Correspondence Imaging System (CIS) Returns

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

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

  3. Follow the instructions below for processing CIS returns.

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

    Note:

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

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

    Caution:

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

    Note:

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

    The CIS return does not have a Form 13596 attached The return is not complete (e.g., missing signature, schedules or forms), Research for a prior posting (TC 150 posted).
    1. If TC 150 is 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, do not route return to Accounts Management (AM). Continue processing the return.

3.12.249.1.16  (01-01-2014)
Frivolous Arguments

  1. A frivolous argument is used for the purpose of expressing dissatisfaction with the substance, form, or administration of the tax laws by attempting to improperly avoid or reduce tax liabilities. Recognized frivolous arguments made by businesses include, but are not limited to, the examples in IRM 4.10.12, Examination of Returns - Frivolous Return Program (FRP). Also, see Exhibit 3.12.249-3, Potential Frivolous Arguments Criteria.

  2. Review the return to determine whether it appears to be a frivolous return.

    If Then
    The return meets any of the conditions identified as a frivolous return.

    Exception:

    If the return shows CCC "U" (or Action Code 331) and has a Form 4227 attached with the remarks, "Refer to Exam FRP for audit after processing," continue to next procedure.

    Remove return from the batch and place the return in the locally designated basket for Examination, Frivolous Return Processing (FRP) for review.
    Examination has selected the return as frivolous (e.g., indicated by CCC "U" or an Action Code 331) and a Form 4227 with the remarks, "Refer to Exam FRP for audit after processing," but sends the return for processing, Continue processing the return using procedures in IRM 3.12.249. However, do not circle or void the CCC "U" (or an Action Code) indicating a frivolous return.

    Note:

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

3.12.249.1.17  (01-01-2014)
Use of Fax for Taxpayer Submissions

  1. Tax return information can be received via fax as part of return perfection even if a taxpayer signature is required. In circumstances where contact with the taxpayer has been made and documented, fax signatures are acceptable. The IRS.gov link http://www.irs.gov/ contains helpful information about fax signature documents in response to IRS notices requesting tax return information or tax return filing.

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

  3. ERS tax examiners will indicate the fax paragraph on the Form 3696, Correspondence Action Sheet, (or other approved Correspondence Action Sheet) to advise taxpayers of the option to fax their response.

    Caution:

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

3.12.249.1.18  (01-01-2014)
Criminal Investigation (CI) "Funny Box"

  1. Criminal Investigation (CI) investigates potential criminal violations of the Internal Revenue Code (IRC) and related financial crimes. Criminal violations of the IRC include willful and deliberate attempts to evade or defeat the income tax. Criminal tax violations also include the willful failure to collect or pay over tax and claims of false refunds based on bogus return information.

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

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

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

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

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

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

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

3.12.249.1.19  (01-01-2014)
Examination (Exam) "Funny Box"

  1. The primary objective in identifying tax returns for examination is to promote the highest degree of voluntary compliance. Examination will provide support and assist Submission Processing (SP) with any questionable return identified during processing. Exam has a vast multitude of programs and tolerance criteria already identified in various IRM sections. Exam allows SP to refer questionable returns unless restricted by another IRM section.

3.12.249.1.20  (01-01-2014)
Customer Account Data Engine (CADE) 2

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

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

  3. The BMF campus cycles are:

    1. Campus Cycle: Thursday - Wednesday

    2. Master File Processing: Friday - Thursday

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

    4. Unpostables: New available Tuesday; Closing Tuesday

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

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

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

      Note:

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

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

    • 01 = Friday

    • 02 = Monday

    • 03 = Tuesday

    • 04 = Wednesday

    • 05 = Thursday

    Note:

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

3.12.249.2  (01-01-2014)
Processing Form 8752, Required Payment or Refund Under Section 7519

  1. This section provides background information, descriptions of three sections of the error register, the individual fields and their designations, and procedures for correcting Form 8752, Required Payment or Refund Under Section 7519.

3.12.249.2.1  (01-01-2014)
General Information and Error Register Information

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

  2. The Error Register contains three sections (Section 01, Section 02, and Section 03 (Address Data)). The money fields (Field 01-A (Remittance), and all fields in Section 02, except Field 02-C (Deferred Ratio)), will be entered as dollars and cents.

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

  4. Form 8752 is filed by partnerships (Form 1065, U.S. Partnership Return of Income) and S Corporations (Form 1120S, U.S. Income Tax Return for an S Corporation) who made the Section 444 election to file their income tax return on a year other than the required year. Partnerships and S Corporations use Form 8752 to figure and report the payment required under IRC 7519 or to obtain a refund of net prior year payment(s). A partnership or S Corporation must file Form 8752 if it made a Section 444 election by filing Form 8716, Election To Have A Tax Year Other Than a Required Tax Year, and its election is still in effect for the tax year. Any tax year that a Section 444 election is in effect, including the first tax year the Section 444 is made, is an "applicable election year" .

    Note:

    Prior to 1990, the Section 444 payment made by these taxpayers was reported on Form 720, Quarterly Federal Excise Tax Return, under Number 11.

  5. Taxpayers electing a Section 444 election must file Form 8752 even if the required payment is zero (0). Taxpayers must make a required payment for the applicable election year if more than $500 or the required payment for any prior tax year was more than $500. The required payment represents the value of the tax deferral of owners or those entities for a taxable year other than the required tax year. Generally, for an S Corporation, the tax year resulting from a Section 444 election ends in September, October, or November. A partnership's tax year may differ and depends on the tax year of the partners. The required payment is considered a deposit.

  6. Due Date: Form 8752 must be filed and required payment made on or before May 15 of the year following the calendar year in which the applicable election year begins. See IRM 3.12.249.2.2.8, Field 01-G, Penalty and Interest (P/I) Code, for additional information.

3.12.249.2.2  (01-01-2014)
Section 01 Fields and Correction Procedures

  1. This section provides field criteria, descriptions, and specifications for correcting Form 8752.

  2. Section 01 fields on the Error Register are shown below: Alpha Field Designator (AFD), Title, Field Length, and Location on the Return. See Exhibit 3.12.249-1, Form 8752, Required Payment or Refund Under Section 7519, for additional information. See Exhibit 3.12.249-2, Error Register for Form 8752, for additional information.

    Section 01
    AFD Title Field Length Location on the Return
    A Remittance (non-correctable) 11 Green writing
    B Name Control/Check Digit 4 Box entitled Name of Partnership or S Corporation
    C Employer Identification Number 9 Box entitled Employer Identification Number
    D Tax Period 6 Center of return above Name line or edited tax period to the left of the OMB Number (No.)
    E Computer Condition Code 10 Upper left margin of return
    F Received Date 8 Middle of return
    G Penalty and Interest Code 1 Right of OMB Number (No.)
    H Partnership/S Corporation Indicator 1 Right of Page 1, Form 8752, "Check Applicable Box to Show Type of Taxpayer"
    I Centralized Authorization File (CAF) Indicator 1 Right lower corner
    J First Tax Year Box 1 Box B
    K Terminating Event Box 1 Box C
    L Short Base Year Box 1 Box D
    M Entity Underprint Code 1  
    N Taxpayer Notice Code 6 Left margin of return near Name area

3.12.249.2.2.1  (01-01-2014)
Field 01-A, Remittance

  1. Field 01-A (Remittance) cannot be changed in Error Resolution. If the amount is incorrect, treat the return and related error register as unprocessable. Reject with Action Code 3, and prepare Form 4227, Intra-SC Reject or Routing Slip, (or other appropriate routing slip) to explain the error or follow local procedures. Rejects will prepare Form 3893, Re-Entry Document Control, after corrective action has been taken.

  2. If a remittance amount is present, the received date must be present. See IRM 3.12.249.2.2.7, Field 01-F, Received Date.

3.12.249.2.2.2  (01-01-2014)
Excess Remittance Returns

  1. Rejects will determine the proper application of an excess remittance through research, correspondence, or other existing procedures.

  2. When the Reject tax examiner determines that the excess remittance should be applied to a different tax class or module, enter Computer Condition Code (CCC) "X" on the return and the error register. This code will freeze the tax module from refunding or offsetting by generating a Transaction Code (TC) 570.

  3. The tax examiner will prepare Form 3465, Adjustment Request, to indicate the amount and module in which the credit should be applied.

  4. See IRM 3.12.38, BMF General Instructions, if additional information is required.

3.12.249.2.2.3  (01-01-2014)
Field 01-B, Name Control/Check Digit

  1. Field 01-B (Name Control/Check Digit) must have 1 to 4 characters. If the name control contains fewer than four characters, every position must be accounted for by editing the number of blanks and encircling it in front of the remaining name control characters. The name control and check digit each have their own tests for validity.

    Note:

    A check digit may be seen on a 2010 form revision and prior year form revision.

  2. A check digit will always be your first correction choice. It is invalid if:

    1. The 1st and 2nd positions are not blank.

    2. The 3rd and 4th positions are not letters.

    3. The letters E, G, or M are present.

  3. The check digit is derived by a mathematical computation performed by the computer on the Employer Identification Number (EIN). It is present on mail labels provided by the IRS and is only used when that mail label is present. To correct, refer to the check digit on the label.

    1. Correct any transcription errors by lining through the entry in Field 01-B (Name Control/Check Digit) and editing an encircled "2," followed by the two-letter check digit from the mail label.

    2. If the check digit is correct but is asterisked, check for transcription errors in the EIN. Correct the EIN in Field 01-C (EIN). The computer will recompute and validate the check digit.

  4. A name control will be entered if the check digit is not available. It is invalid if:

    1. The 1st position is other than a letter or number.

    2. The 2nd, 3rd and 4th positions contain characters other than letters, numbers, ampersands (), hyphens (-), or blanks.

    3. Any character follows a blank.

  5. To correct, line through the entry in Field 01-B (Name Control/Check Digit) and enter the correct name control above it. If the name control contains fewer than four characters, every position must be accounted for by editing the number of blanks and encircling it in front of the remaining name control characters.

  6. To determine the correct name control, follow the guidelines in Document 7071, Name Control Job Aid.

  7. If the transcribed name control does not match the name control for the transcribed EIN on the Entity Index File (EIF), there will be an underprint to Field 01-B (Name Control/Check Digit).

  8. The name control underprint will be removed when the following occurs:

    1. The name control underprint and the entry in Field 01-B (Name Control/Check Digit) agree.

    2. Field 01-M (Entity Underprint Code) contains a "1" .

  9. When the name control on the return does not match the name control on the EIF, one of the following has occurred:

    1. The EIN was entered wrong, either by the taxpayer or the IRS.

    2. The name control was edited or transcribed incorrectly.

    3. The name control on the EIF is incorrect.

    4. The taxpayer altered the order of the name on the return in such a way that the name control no longer agrees with the way it appears on the Business Master File (BMF).

    5. The taxpayer’s name changed.

    6. The taxpayer’s identity has changed (e.g., the taxpayer has changed from a partnership to a corporation).

  10. To correct, compare the entries in Field 01-B (Name Control/Check Digit) and Field 01-C (EIN) to the name control and EIN on the return.

  11. If the EIN on the return and the EIN in Field 01-C do not agree, correct Field 01-C to agree with the return.

    1. If the correct name control is in Field 01-B (Name Control/Check Digit), enter a "1" in Field 01-M (Entity Underprint Code).

    2. If the name control in Field 01-B (Name Control/Check Digit) is not correct according to the information on the return, change Field 01-B.

    3. If the correction does not agree with the name control underprint, enter a "1" in Field 01-M (Entity Underprint Code).

    4. If the return is an ISRP Remittance Processing return, reject with Action Code 3 and attach Form 4227, Intra-SC Reject and Routing Slip, (or other appropriate routing slip) notating, "Move ISRP Remittance Processing money" . Rejects will research IDRS using appropriate command codes (e.g., Command Code (CC) BMFOL or CC MFTRA) to determine if the payment has posted incorrectly. See IRM 3.12.38, BMF General Instructions, for detailed instructions. If the money is posted incorrectly, prepare a Form 3465, Adjustment Request, or follow local procedures to transfer the money to the correct module. Notate "3465 Prepared" on the return and enter CCC "X" on the return and in Field 01-E (CCC).

  12. If the EIN on the return agrees with the EIN in Field 01-C, determine why the name control underprint is present. If the name control edited on the return agrees with the name control in Field 01-B (Name Control/Check Digit) then:

    1. Compare the name control underprint with Field 01-B (Name Control/Check Digit) and the name on the return. If it is obvious that the underprint is the correct name control and it was edited wrong on the return, change Field 01-B (Name Control/Check Digit) to agree with the underprint.

    2. If it is not an obvious error, request research per local procedures. (See IRM 2.3, Terminal Response, and IRM 2.4, Terminal Input.) Research, using IDRS command codes.

  13. Determine the correct EIN and name control from the research.

    1. If another EIN is found for the entity on the return, change Field 01-C to the correct EIN and follow the procedures in (10) above.

    2. If the EIN on the return is correct and the taxpayer just rearranged the name on the return, change Field 01-B (Name Control/Check Digit) to agree with the name control on the Entity Index File (EIF).

    3. If the EIN is changed from the one the taxpayer used, issue Letter 3875C as a non-suspense letter to the address on the return.

      Note:

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

  14. If the EIN on the return is correct but the name control on the EIF is not conforming to the acceptable rules for name controlling:

    1. Correct Field 01-B (Name Control/Check Digit) to agree with the name control on the BMF.

    2. Copy Page 1 of the return and notate "Copy - Do Not Process" . Attach any research and route the case to Entity Control following local procedures (e.g., Attach Form 4227 (or other appropriate routing slip). Entity Control will fix the name control, which should stop future unpostables and underprints.

    3. If the EIN on the return agrees with the EIN in Field 01-C, but the name control does not agree with the name on the EIF, attach any research and route the case to Entity Control following local procedures (e.g., Attach Form 4227 (or other appropriate routing slip).

3.12.249.2.2.4  (01-01-2014)
Field 01-C, Employer Identification Number (EIN)

  1. This field has nine positions.

  2. It is invalid if any of the following conditions are present:

    1. It is not nine numeric characters.

    2. It is all nines or all zeros.

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

  3. If the EIN is invalid, take the following action:

    1. Compare with the EIN on the return, and correct the error register with Action Code 6, if the number has been incorrectly transcribed.

    2. Search the return and any attachments for a valid EIN if transcribed correctly. If one is found, enter the number on the return, and correct the error register with Action Code 6. If no valid EIN is found, research IDRS using the appropriate Command Code (CC) (e.g., CC EINAD, CC NAMEE, CC INOLE, CC ENMOD, etc.) or follow local procedures.

    3. If it is transcribed correctly, and a valid EIN is not found during the search prescribed above, reject the record to Entity Control following local procedures (e.g., Attach Form 4227 (or other appropriate routing slip) and notate reason for sending to Entity Control).

  4. Reject Correction:

    1. If Entity Control has found the correct EIN, enter it in Field 01-C (EIN).

    2. If Entity Control has assigned an EIN, enter it in Field 01-C (EIN).

3.12.249.2.2.5  (01-01-2014)
Field 01-D, Tax Period

  1. This field contains the ending month and year of the tax period covering the return. The tax period ending is printed, in year-month (YYYYMM) format (e.g., December 31, 2013, is printed 201312).

  2. The field is invalid if:

    1. It is not numeric.

    2. The tax year ending is later than the current date.

    3. The year is before 199012.

    4. The month is not 12.

    5. It is in a format other than YYYYMM.

  3. Determine the tax period by the year (printed) on the face of the tax form (e.g., for the 2013 tax form, the tax period should be "201312" ). For example, if an election year ends September 30, 2013, the tax period is 201312, not 201309. Taxpayers are advised to edit changes on the form to the tax year for prior tax periods.

  4. The tax period may be a calendar year (e.g., 20XX12). Editing is required only if the "applicable election year ending" is other than blank. Circle the taxpayer’s entry and enter the correct tax period.

    1. If the tax period has been changed to an earlier year and the ending period is not December 31, circle the date and edit the tax period, using the procedures described above.

    2. If there are multiple returns from the same entity in a batch and you cannot determine the correct tax period, edit all of them to the current tax period (20XX12). Accounts Management will work the "dup" returns and correct the tax periods.

    3. Editing of the tax period is not required if the current year form is used (e.g., 2013 form).

      Exception:

      The taxpayer makes an indication on the form that the tax period is for a prior year.

    4. If any version of Form 8752 other than the current year form is submitted, edit the current year in the "20XX12" format under the title of the form (unless the taxpayer has indicated the tax period is for a prior year).

    5. If the tax period is in error due to a Statute issue, correct with Action Code 0.

  5. As a result of the Internal Revenue Code (IRC) 7519(b), the rate was adjusted per Section 101(b) of American Taxpayer Relief Act (ATRA) of 2012. Under IRC 7519 (b), the percentage rate is one percent higher than the highest tax rate stated in IRC 1 as in effect at the end of the base year. Under ATRA, the highest tax rate changed from 35% (percent) to 39.6%. Thus the percentage on Form 8752, Line 9a is changed from 36% to 40.6%. The tax rates are as follows:

    Tax Year Tax Rate
    2013 40.6%
    2003 through 2012 36%
    2002 39.6%
    2001 40.1%
    1993 through 2000 40.6%
    1991 and 1992 32%
    1990 29%

    Note:

    Make sure the taxpayer used the correct tax rate for the appropriate year on Line 9a.

  6. If a Form 8752 is received for a future tax period (e.g., if the tax period ending is after the current processing date), enter Action Code 3 and prepare a Form 4227, Intra-SC Reject or Routing Slip, (or other appropriate routing slip) to request Rejects to research for postings.

    If Then
    Current year has posted, Hold in suspense until January of year due.
    Current year has not posted, Process as current year return.

    Note:

    If payments posted to the wrong tax period, follow instructions in IRM 3.12.38, BMF General Instructions.

3.12.249.2.2.6  (01-01-2014)
Field 01-E, Computer Condition Code (CCC)

  1. Computer Condition Codes (CCCs) are used to identify a special condition or computation to post to the Master File and are entered in the upper left margin of the Form 8752. CCCs F, G, O, U (on ISRP (Submission Processing) input only), and X are valid for Form 8752 processing.

  2. The field is invalid if CCCs other than those listed above are used. See IRM 3.12.249.2.2.6.1 through IRM 3.12.249.2.2.6.6 for descriptions of the CCCs.

  3. See IRM 3.12.249.2.2.6.7, Field 01-E (CCC) Correction Procedures.

    Note:

    Legislation (2001) extended reasonable cause criteria to Form 8752 filers. You may refer to IRM 20.1, Penalty Handbook, for determining reasonable cause criteria.

3.12.249.2.2.6.1  (01-01-2014)
CCC "F" - Final Return

  1. Enter CCC "F" when the taxpayer gives a positive indication that they are not liable for filing future returns. Notations such as (but not limited to) the following:

    1. Final

    2. Deceased

    3. Out-of-Business

    4. Liquidation

    5. Exempt under IRC 501(c)(3)

    6. Dissolved

    7. IRC 444 was terminated.

      Note:

      In cases regarding Form 8752, any references to a "terminating event" may also apply in determining whether this is a final return.

3.12.249.2.2.6.2  (01-01-2014)
CCC "G" - Amended Return

  1. Enter CCC "G" on return marked "Amended," "Supplemental," "Duplicate," "Corrected," "Additional," or any other positive indication that the taxpayer has filed previously.

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

  3. Research IDRS (e.g., Command Code (CC) BRTVU, BMFOL, SUMRY, TXMOD, etc.) to make sure it is an amended return. Sometimes the original return may be held up in another area and not posted yet.

  4. If the return is amended:

    1. Delete all fields in Section 01 past Field 01-F (Received Date).

    2. Delete all CCCs except “G” in Field 01-E (CCC).

    3. If Field 01-F (Received Date) is blank, enter the correct received date. See IRM 3.12.249.2.2.7, Field 01-F, Received Date.

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

    5. Delete Section 02 (except Field 02-C (Deferral Ratio)) using Action Code 6.

  5. If the return is not amended:

    1. Ensure that the Section 01 fields are correct.

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

    3. Line through the "G" code in Field 01-E (CCC).

    4. Verify the remaining fields for correct data, enter any missing data and correct any erroneous data.

3.12.249.2.2.6.3  (01-01-2014)
CCC "O" - Manual Refund

  1. Enter CCC "O" if a completed Form 3753, Manual Refund Posting Voucher, or Form 5792, Request for IDRS Generated Refund, is attached to the return. These indicate that a pre-settlement manual refund was made.

3.12.249.2.2.6.4  (01-01-2014)
CCC "U" - Unprocessable Return

  1. Enter CCC "U" on all conditions which cause the return to be unprocessable. Unprocessable conditions are described as follows:

    1. Name illegible, incomplete, or contradictory and is not acceptable for computer processing.

    2. Information is not available on the return or attachments that is necessary for processing the return.

    3. EIN is other than nine numeric digits.

    4. Issuer indicates on return or attachment that the return represents more than one tax period.

    5. Blank returns where the filer states "not required to file," or he/she does not know why they received the Form 8752 (or a similar statement).


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