If Accounting Operation is unable to locate a valid EIN while processing an EFTPS payment, they will fax a Form 4442 to the Entity clerical team.

The Form 4442 will indicate "5 Day Expedite Process." However, Entity will process the request for EIN assignment or re-establishment immediately upon receipt as Accounting is waiting to deposit the tax payment(s).

CCs NAMEE and NAMEB must be utilized prior to re-establishing an EIN. If unable to identify the questionable EIN as belonging to the taxpayer, ESIGN a new EIN. Suppress CP 57X by inserting Notice Indicator "D" in the proper field of CC ESIGN.

Without delay, a response will be faxed back to the number indicated on the cover sheet from EFTPS.

Form 8842 must be filed by the 15th day of the fourth month of the tax year for which the election is to apply.≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

See the chart below for assistance in determining the timeliness of Form 8842:

If Form 8842 is not timely, return it to the corporation using Form 6800, Request for Missing Information or Papers To Complete Your Tax Return or Form 8038-CP. Items 17 through 20 of Form 6800 are specifically for Form 8842.

Form 8842 must contain:

If any items are missing, research IDRS for completion. If unable to complete Form 8842 with research, return the form to the taxpayer using Form 6800. Enter the words Please return Form 8842 and this letter within 10 days electronically in Item 26 of Form 6800 before printing. The envelope may be hand written or routed to the Correspondence team (via the Entity Control Team) for typing.

If a previously incomplete Form 8842 is received, verify that it was received within ten days of the Form 6800 being sent. If it was not, return it to the corporation on Form 6800 marking Item 17.

If Form 6800 and Form 8842 are returned by the Postal Service as undeliverable, forward to Files to be filed alphabetically.

Underline the name control.

Edit the tax period above the OMB number

Edit MFT in the lower left margin:

Input TC 971 Action Code 047 with CC REQ77. CC REQ77 requires the use of the MFT and Tax Period rather than 00_000000. Indicate Option 1 or Option 2 in the remarks of the TC 971. The IRS received date should be used as the transaction date.

Annotate TC 971–047 and date of input in the lower left margin near the edited MFT

Prepare a routing slip to send Form 8842 to Files for filing in the Alpha File.

Review Form 2678 for completeness. If any of the following information is missing, take action as described in the table below in (2). Refer to Figures 3.13.2-33 and 3.13.2-34. The following items must be present on the Form 2678:

Both the employers/payer’s signature and the agents signature are required for appointment of an agent; however, only one signature (either the employer/payer or the agent) is required for revocation. If the employer/payer is unable to sign their own name, an "X" or other designation of their signature will be accepted.

Research IDRS for any information missing from Form 2678. If unable to locate the missing information, take the following actions:

If Form SS-4 is attached to the Form 2678, take the following actions:

Ensure the agent has the filing requirement(s) indicated in Part 2, Item 5.

If an employer designates an agent for all employees for Form 944, contact Accounts Management by phone to remove the Form 944 FRC from the employers account but do not establish a Form 944 FRC on the agents account. Ensure the agent has a Form 941 FRC.

Do not delete Form 940 FRC if present. Agents can now file Form 940 on behalf of their clients. Most agents will file an aggregate Form 940 with an attached Schedule R.

Disregard any differences in the address on Form 2678 and the address on Master File.

TC 971 AC 381 cannot be input on agent's EIN due to computer space requirements.

After determining the completeness of Form 2678, remove the FRCs indicated in Part 2, Item 5 of Form 2678 from the employer/payer's EIN. If the boxes in Part 2, Item 5 are marked for some employees, do not delete the FRCs.

Disregard any differences in the address on Form 2678 and the address on Master File.

When processing Form 2678, research CCs ENMOD and BMFOL'E' for a previously posted TC 971.

Action Code 382 will only be utilized when the box below Item 9 on page 2 is checked. Disregard the word "household" if in the employer/payer's signature.

Overlay CC ENMOD with CC REQ77 to generate CC FRM77.

Input the following fields into CC FRM77 using the employer/payer’s EIN:

See the chart below to determine the appropriate Action Code to be utilized with the TC 971 input. If multiple TCs 971 are to be input, the AC for employment returns will be input last. A TC 972 must be input between the TCs 971.

After completion of the above actions use Letter 1997C to notify the agent that the appointment has been approved. If the agent has been approved for multiple employers/payers, only one 1997C will be sent. The name and EIN of each employer/payer should be included in the letter.

Send a 1997C to the employer/payer confirming their authorization of the agent. Do not send 1997C to employer/payer if address is the same as the agent's address. Do not send 1997C to employer/payer if they are an HHCSR.

Taxpayers file a revocation of their appointment by checking the box in Part I of the 2007 revision of Form 2678 labeled" You want to revoke an existing appointment" . Revocations are acceptable on prior revisions of Form 2678 or by correspondence.

Revocations require only one signature. The signature may be that of the agent or employer/payer. If the signature is missing, return Form 2678 to the sender with a 4228C.

Research the employer/payer's account for the presence of a TC 971 Action Codes 382, 383, 384, or 385 with the same X-Ref-TIN as the revoking agent.

Send a 4228C to inform the filer the revocation has been approved. In the letter, use the revocation date provided by the taxpayer. If not provided, use earliest IRS received date as the effective date.

Do NOT send completed Forms 2678 to Files.

The Entity clerical team will forward the completed forms to:
Internal Revenue Service
SB/SE Employment Tax Policy
c/o Elizabeth Goodwin, Team 201
201 W. Rivercenter Blvd Stop 5701G
Covington, KY 41011

This section contains all information needed for processing of Forms 2032 and amendments to Form 2032.

Expedite processing will apply. See IRM 3.30.123.

Examine all three copies for completeness.

Secure the Director's signature and the date on all three copies of the Form 2032. The Forms 2032 will be routed to the Director's office through the Planning and Analysis staff. The Entity Department Management Assistant will assist the TE with this process.

Examine the effective date on the Form 2032. The effective date of the election is determined by the signature date of the Director's approval. The effective date of an original election is the first day of the quarter in which the election is filed (and approved) or the first day of the next calendar quarter if requested by the taxpayer. If a previous revision to Form 2032 is filed, annotate the effective date in the area pertaining to the agreement effective date.

Assign only one EIN in the name of the Domestic Corporation, including the words "Foreign Affiliates" in the primary name line, Employment Code "S" and Form 941 FRC. Do not use a NIC when assigning this EIN.

Entity's management assistant or designated employee will prepare a letter (in triplicate) explaining that an EIN has been assigned for exclusive use by the corporation in reporting wages paid to employees of its foreign subsidiaries.

Distribute the letters as follows:

Enter a history item on CC ENMOD as follows: APPD_F2032

Amendment to Form 2032, previously filed under Section 3121(1) of the IRC, to broaden the coverage as provided by Section 3121(a) will be received in Entity. A statement indicating the intention of the amendment must be included with the election. Generally the effective date of the amendment is the first day of the quarter following the quarter in which it is filed. However, an amendment filed in the same quarter as the original election is filed or in the first month following the quarter in which the original election is filed is retroactive to the effective date of the original election. Annotate the amended Form 2032 as such to reflect the effective date of the coverage.

Entity's management assistant or designated employee will prepare a letter (in triplicate) explaining that the EIN that was previously assigned is still valid for exclusive use by the corporation in reporting wages paid to employees of its foreign subsidiaries.

Distribute the letters as follows:

Once an agreement is made it cannot be revoked, either in its entirety or with respect to any foreign affiliate. However, the agreement will terminate for a foreign entity at the end of any quarter in which the foreign entity, at any time in that quarter, ceased to be a foreign affiliate.

Upon receipt of notification that a terminating event has taken place, verify the EIN supplied by the taxpayer. If supplied EIN is incorrect, research IDRS for valid EIN. If unable to locate, attempt telephone contact with taxpayer. If unsuccessful, return Form 2032 to taxpayer with 6800sce requesting missing information. Using CC ACTON, place history item on CC ENMOD: "F2032" "TOTP" .

Research EIN to determine if "Final" Form 941 has posted. If not:

When "Final" Form 941 has posted, input TC 016 to delete Employment Code (EC) "S."

If "Final" return has posted but did not reflect the Computer Condition Code (CCC) "F" , input TC 591-20 on the next tax period of MFT 01. Input TC 016. EC "9" to remove Employment Code "S" . Management Assistant should prepare a letter (in triplicate) notifying taxpayer that we have terminated their agreement under Section 3121(1) of the Internal Revenue Code. See (5) below for additional letter distribution.

Additional distribution of letters:

Use the table below to establish a fact of filing:

If TC 098/099 is already on IDRS, check the date of the TC 098/099. If the date is after the date on Form 56, destroy the Form 56 because it is a photocopy of the original Form 56 processed. If the Form 56 was received after the date of the TC 098/099, input another transaction for Form 56 and the XREF EIN or SSN and send it to files.

If multiple TCs 098/099 are input on the same EIN on the same day, a copy of Form 56 must be made for the source document.

If correspondence is received in lieu of Form 56, correspond with taxpayer via 177C, requesting completion of Form 56.

If the fiduciary notifies the IRS (either through correspondence or Form 56 by checking the termination block in Part IV, Section A) the fiduciary relationship has terminated, or revoked their relationship, update the account as follows:

If present, remove fiduciary's name from account. Return the taxpayer's address to the Mailing Address field.

Send Form 56 to Files as a source document for TCs 098 and/or 099 using Doc Code 63.

"Remarks" must be entered. Enter SD in the Remarks field to alert Files.

The Forms 56 must be maintained in sequence number order.

If a TC 098/099 was not input, send the Form 56 to files on a routing slip indicating it will be filed in the ALPHA FILE. This includes IMF Forms 56 (only Form 1040 shown in Part III of Form 56). Include the words "Alpha File" in the audit trail in the lower left corner of the document.

The following information must be completed on Form 56-F:

If any of the information listed above is missing, return Form 56-F to the Fiduciary (line 9) to be completed.

Update the name, address and phone number information for the entity's EIN as shown on Line 2 of the form.

If line 15 is not checked, skip to (5).

If line 15 is checked, input a REQ77 over CC ENMOD to generate the FRM77 for the entity as shown on Line 2. On the FRM77 screen input a TC 971 with a AC 076 for each tax year(s) that the financial institution was a subsidiary of the consolidated group as shown on Line 21.
•Input a TC 971 AC 076 to all years listed on line 21 (exception, do not input TC 971 to any years prior to 2003).
Example: Line 21 shows "2005 to 2011", the TC 971 AC 076 will be posted to the most current tax year 2011 and back to 2005 (2010, 2009, 2008, 2007, 2006, 2005, 2004, 2003).
a. MFT>02
b. TX-PRD>(each tax year as determined above, if there is none input the current tax period)
c. TC>971
d. TRANS-DT>(current date, which is the effective date)
e. TC971-CD>076
f. MISC>Form 56-F

If line 15 is checked, input a TC 971 with AC 076 to the common parent's EIN, line 17. Repeat steps (3)a through (3)f for each tax year(s) as determined in (3).
Caution: If a prior tax period already has a TC 971 AC 076 on the module, do not input another TC 971 AC 076.

Forward Form 56-F to the Files function to be placed in the Alpha File. Include the words "Alpha File" in the audit trail in the lower left corner of the document.

NOMRG Transcripts—NOMRG transcripts for the same Area Office will all contain the same DLN. In order to associate the two TINs involved, verify the posted TC 011 on the transcript containing the temporary TIN. Use the cross reference TIN associated with the TC 011 to locate the transcript for the good BMF TIN.

BMF Invalid SSN Transcripts are generated when a change is made to the first name line of an SSN account on the 'V' tape and the new name control does not pass DM–1 validation. CCs INOLE'T', NAMEI, and NAMES will be utilized for all transcripts. Any reference to "SSN" means a BMF SSN. Process as follows:

When the taxpayer's response is received, proceed as follows

For additional information see IRM 3.13.5.19.4.

NOMRG CAF are generated when the "FROM" account has a significant CAF indicator. Action has been taken by the CAF to resolve the CAF NOMRG situation; the transcript is then forwarded to Entity Control for input of TC 011.

Entity Control will identify the "TO" account and the "FROM" account from the following criteria displayed in the transaction explanation field on the transcript:

Form 1128 is processed at the following locations:

To request Automatic Approval to change a tax year, Form 1128 must be filed by the due date of the return (including extensions) for the short tax period. If Form 1128 is filed early, do not return the Form 1128 back to the taxpayer to be filed later. The Form 1128 must be held until it can be processed timely.

Review the Received Date stamp to determine if the Form 1128 is timely

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Review Page 1, Part I General Information section, for the following information:

This section is completed by corporations other than S corporations or personal service corporations only.

Corporations use this section to indicate that they are requesting automatic approval of a change in tax year under Revenue Procedure 2006-45.

Review the automatic approval request as follows:

This section is completed by Partnerships, S corporations, Personal Service Corporations, and Trusts only.

Taxpayers use this section to indicate that they are requesting automatic approval to adopt, change or retain a tax year under Revenue Procedure 2006–46.

Review the automatic approval request as follows:

The following Transaction Codes are used for Form 1128:

Figure 3.13.2-31

Figure 3.13.2-32

Determine whether to use TC 053 or TC 054, per Transaction Code information above and taxpayer entry on Page 1, Line 2, Form 1128.

Using CC BRCHG, document code 63, to input all TCs 05X.

TC 053, see Figure 3.13.2–34.

TC 054, see Figure 3.13.2–33.

The FYM, effective Date (IRS received date)

Sequence number (Files will be associating the IDRS Transaction Record, Form 5147 , with Form 1128. Each Form 1128 will be annotated with the date of input, your IDRS number, and the sequence number input.

Prepare Form 3465 and route to Accounts Management, Adjustments Department for the transfer of any credits to the new tax period.

"Approved" Forms 1128 will be sent to Files in the TC 05X source document folder. The Remarks section must begin with the letters "SD" to alert Files the IDRS input record (Form 5147) must be associated with a source document.

Transaction Code 059 is used to record the denial of Form 1128.

If the Form 1128 is not complete, accurate, or timely based on the instructions provided within this IRM and

Using CC BRCHG, Doc Code 63, process the denied application

Approved Form 1128 from a Private Letter Ruling (PLR): Update the FYM via CC BRCHG. TC 053 or TC 054, as applicable.

Denied Form 1128

BACK-UP SECTION 444 ELECTION—If Chief Counsel denies the FYM requested under Rev. Proc. 2002-39 Section 6 (business purpose), process the back-up election made on Form 8716 per IRM 3.13.2.21.5.

If correspondence is received challenging the denial of Form 8716 or Form 1128, refer the taxpayer to Chief Counsel. See IRM 3.13.2.22.13.

Check the Form 8716 for the following three conditions:

Timeliness—The Form 8716 must be filed by the earlier of

See table below for example:

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Completeness-To be a complete document, Form 8716 must be submitted with the following information:

If the document is incomplete, correspond for the missing information, send the original Form 8716 back to the taxpayer. Do not correspond if missing information can be determined from research. Annotate action on Form 8716. If the document is complete, check the document for eligibility.

Eligibility-A Partnership, S corporation (or C corporation electing to be an S corporation), or Personal Service Corporation (PSC) are eligible to file Form 8716, unless they fall under the following circumstances:

If the Form 8716 is timely, complete and the taxpayer is eligible, process the form. Ensure there is an annual FRC (1120 or 1065) on the EIN prior to the input of TC 054/055.

Input one of the following transaction codes to process Form 8716:

Figure 3.13.2-34

Process Form 8716 as follows:

Form 8716 cannot be processed until Form 2553 is received and processed. If Form 8716 is filed for a Subchapter S corporation and a TC 090 is not posted, put a history item on CC ENMOD by using CC ACTON that states: HAVE8716. This will alert the TE that is processing Form 2553 to contact you. Be sure to coordinate the use of Posting Delay Codes (PDCs).

A TC 097 on module indicates the Form 2553 has been forwarded to Chief Counsel for a ruling, associate Form 8716 with Form 2553 in local file.

If the election does not meet the requirements of timeliness, eligibility, or completeness, deny it.

Using CC BRCHG, Doc. Code 63, process the denied election as follows:

Input the appropriate PSC "A" through "D" or suppress the CP Notice with the input of PSC, "Z" and send a letter of explanation. The PSCs for CP 287 are listed below.

A deferral period is the number of months between the required tax year and the requested tax year. An example is shown in the table.

*Because the C corporation already has a zero deferral period the taxpayer cannot make a Section 444 to increase the deferral period.

Back-Up elections are made to secure the use of a fiscal tax year that is being requested on Form 2553 and Form 8716 are used to make back-up fiscal elections.

To identify a back-up election the taxpayer will indicate a "Back-Up Section 444 Election" on the Form 1128, and "Back-Up Section 444 Election For Form 1128" , on the Form 8716.

Taxpayers requesting a FYM under Rev. Proc. 2002-39, (business purpose), may file a "Back-Up Section 444 Election." Process as follows:

A Section 444 election is terminated by a partnership, S corporation, or personal service corporation changing to the required tax year.

Timeliness is not an issue for the termination of a Section 444 election.

The effective date of the termination is—

If a personal service corporation that has a Section 444 election in effect elects to be an S corporation, the S corporation may continue the Section 444 election of the personal service corporation. Likewise, if an S corporation that has a Section 444 election in effect terminates its S election and immediately becomes a personal service corporation, the personal service corporation may continue the Section 444 election of the S corporation.

If correspondence is received requesting a termination of the Section 444 election, correspond with the taxpayer informing them to file a short period return, at the top write "Terminating Section 444" . This will automatically terminate their election. Do not input a TC 052.

TC 057-This transaction is computer generated and it represent a termination of the Section 444 election. It is computer generated from the reversal of TC 054 or TC 055. The TC 057 DLN is the same as the document or transaction that caused the termination.

TC 052-TC 052 correct or reverse TC 054/055. If TC 055 is reversed, the FYM will revert to the prior FYM. FRC 1120–19 will update to FRC 1120–01, and Form 8752 FRC from 1 to zero. If TC 054 is reversed by TC 052, the FYM must be changed with TC 016. See figure 3.13.2–38.

Form 1120/1120S or 1065 return posted with condition code "Y" and a tax period month of 12 is present and the entity contains an unreversed TC 054 or TC 055 is going to cause an UPC 307. Bypass on corrected Unpostable 307 RC 6.

Figure 3.13.2-35

Once an election is terminated, another election cannot be made under Section 444.

Part I of Form 2553 contains elements required for completion of the election. Part II of Form 2553 is required when the entity is requesting a tax year other than a required tax year. Part III is required when a Qualified Subchapter S Trust (QSST) is electing to be a shareholder of the S corporation. See Figures 3.13.2-39, 3.13.2-40, and 3.13.2-41 for the three page Form 2553.

Name and Address The name and address of the entity electing to be treated as a Subchapter S corporation will be entered in these spaces.

When processing Forms 2553, compare the address on Form 2553 with the address currently on Master File. Follow the procedures below:

Compare the name on Form 2553 with the name presently on Master File. If the name is different, follow the procedures below:

Employer Identification Number The EIN of the entity making the Subchapter S election will be in this area. Research IDRS carefully to verify the accuracy of the EIN. See chart:

Date Incorporated and State of Incorporation will be entered in these boxes. Do not return Form 2553 if this is the only information missing.

Name and Address Change Boxes The taxpayer will mark one or both of these boxes if requesting a name and/or address change on Form 2553. Entity will update these fields as requested by the taxpayer unless the Form 2553 is an 'old' form. If the signature date on the Form 2553 is prior to the current processing year, do not update name and/or address based on the check boxes alone. Perform additional research to ensure the name and address are correct and current.

Effective Date This field will contain the date the taxpayer wants their Subchapter S election to become effective.

The chart below may help in determining a valid Effective Date. Chart is based on Dec. 2007 revision of Form 2553.

Selected Tax Year The Tax Reform Act of 1986 required all S corporations to change to the tax year of their owner. This rule applies to new S corporations also. If an FYM is requested under the automatic approval provisions of Rev. Proc. 2006–46, one of the following must be indicated and/or attached:

See Figure 36 below for FYM elections available on Form 2553, Part II (page 3).

Figure 3.13.2-36

Who May Elect box. This box will be checked when family members are being considered as one shareholder.

Contact's name and phone number Name and number for a person that IRS can contact when processing Form 2553.

Statement of Reasonable Cause Form 2553 now contains an area where the taxpayer can write or type in his reason for failure to timely file Form 2553.

Name and Address of each shareholder The legal name and address of each shareholder will be in this area. The corporation must not have over 100 shareholders. A husband and wife (or their estates) are treated as one shareholder (in all situations) for purpose of determining the number of shareholders. If the shareholder resides in a community property state or stock is owned through a community interest, the signatures of both husband and wife are necessary.

Shareholders' Consent Statement Each shareholder will sign in this area of Form 2553. The original signature of the shareholders is required. The signature of both husband and wife are required if the ownership of stock is joint for the election to be valid. Community property rules apply to shareholders and their spouses residing in Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin (See Publication 555 ). If the shareholder is a minor, the signature must be that of the minor, his legal guardian or his natural guardian. If the shareholder is an estate, the signature must be that of the administrator or executor.

Extension of Time for Shareholders' Consent - In the event, the corporation cannot obtain a shareholder's consent, provisions have been made to enable the corporation to apply for an extension of time to obtain the required signature(s) per Section 1.1362-6(b)(3)(iii).

Take the following action:

Stock Owned or Percentage of Ownership This area will contain either a number of shares or percentage owned and the date purchased. If "various" is indicated and the election is for a new corporation or a reelection (due to a previous termination or revocation), correspond for a specific date shares were first acquired. Otherwise, accept any format (YYYYMMDD or YYYY).

TIN of Shareholder The SSN/EIN of the shareholder will be in this area.

Shareholders' FYM The tax year ending of said shareholder will be entered in this area.

Selection of Fiscal Tax Year This area will be completed when the taxpayer has selected the use of a tax year other than the required year which is usually December 31. Form 8716 or a statement of gross receipts may be attached to Form 2553.

Part III of Form 2553 may be used to make the QSST election if the stock of the corporation has been transferred to the trust on or before the date the corporation makes its election to be an S corporation. The Form 2553 and QSST elections have the same effective date. If all of the required information is present, input TC 100 to establish the taxpayer as a QSST. The input of TC 100 establishes the taxpayer as a QSST and generates an acknowledgement notice, CP 288.

In addition to submitting Forms 2553 to make an election to be treated as a small business corporation, a taxpayer may submit the election in the form of a statement without an actual Form 2553. If the statement contains all of the pieces of information usually contained on Form 2553

If there are items missing on Form 2553, see chart below. Chart is based on Dec. 2007 revision of Form 2553.

If unable to complete the election, return it to the taxpayer for completion. Do not suspend. You may use the 312C or the 6800sce. . If the 6800sce is used, use CC ACTON to input a history item on CC ENMOD that says:
6800SCE
W2553
Ensure there is a TC 093 and a TC 092 on the Entity module. If you are inputting both transactions at the same sitting, use a Posting Delay Code (PDC) of at least 1 on the TC 092. The TC 092 is currently generating an 1120–01 filing requirement code. If you are dealing with an LLC, be sure to input a TC 016, PDC2 or more to remove the 1120 FRC, unless there is a TC 076 posted..

If the response is received before the end of the requested tax period, approve Form 2553 for the requested effective date. If the response is received after the requested tax period, approve Form 2553 for the next qualifying tax year. A TC 093 input during the year of an Unpostable return cannot be used to consider timeliness as the Form 2553 was incomplete. If an unpostable Form 1120S is open/suspended, the TC 093 may be considered for timeliness if the Form 2553 is now complete and all necessary documentation per a Rev. Proc. is attached.