3.21.3  Individual Income Tax Returns

Manual Transmittal

November 08, 2013

Note:DO NOT REMOVE AND INSERT PAGES OR DISPOSE OF OBSOLETE TRANSMITTALS PRIOR TO 01/01/2012.

Purpose

(1) This transmits revised Internal revenue Manual (IRM) 3.21.3, International Returns and Documents Analysis - Individual Income Tax Returns.

Material Changes

(1) Made various editorial changes throughout IRM, including updating of tax years.

(2) Revised figures and exhibits throughout the IRM.

(3) Updated IRM references throughout the IRM.

(4) Updated money amount, tax periods, received dates (Julian dates and calendar dates), transcription lines (to reflect current year forms and schedules) and tax years throughout IRM.

(5) Changed reference from Possession to Territory throughout the IRM per Counsel.

(6) IRM 3.21.3.7 -- Updated Received date information.

(7) IRM 3.21.3.38.1 -- Updated maximum exclusion amount for Form 2555 and Form 2555-EZ from $95,100 to $97,600.

(8) IRM 3.21.3.1 (2) – Removed reference to IRM 3.0.273 (Administrative Reference Guide).

(9) IRM 3.21.3.3 (2) – Added the Streamline Programs (1040/A/EZ) to the Program table worked by Code & Edit.

(10) IRM 3.21.3.3.2 (2 f) – Update the line numbers for identification of an Uncomputed return for Form 1040-PR and 1040-SS.

(11) IRM 3.21.3.5.1 (1) – Revised the procedures for a legal valid signature.

(12) IRM 3.21.3.6.2 (1) – Added Form 8959 and Form 8960 to the table containing transcribed forms and schedules.

(13) IRM 3.21.3.6.3 – Added an "E" to Form 3471 to correct the title of the form.

(14) IRM 3.21.3.6.7 (4) – Added Form 8891 to lists for Audit Code "H" criteria.

(15) IRM 3.21.3.8 (5) – Deleted the Note for specific addresses under Refund Schemes.

(16) IRM 3.21.3.8.1 – Added a new Subsection for Streamline Returns.

(17) IRM 3.21.3.8.1.1 – Added a new Subsection for Streamlined Project Editing Instructions.

(18) IRM 3.21.3.8.1. 2 – Added a new Subsection for Corresponding for Streamlined Returns.

(19) IRM 3.21.3.8.1.3 – Added a new Subsection for Types of Correspondence on Streamlined Returns.

(20) IRM 3.21.3.8.1.4 – Added a new Subsection for Amended/Duplicate Returns Submitted for Streamline Processing.

(21) IRM 3.21.3.8.4 – Changed AMTAP to IVO (Integrity and Verification Operation) – RICS.

(22) IRM 3.21.3.11.3.3 – Removed some unnecessary procedures from Additional Information Line (Puerto Rico).

(23) IRM 3.21.3.14.1.5 – Added Poland to list of countries that are exempt from SE tax and RPC "S" is edited.

(24) IRM 3.21.3.14.1.13 – Added India and Japan to the list of Social Security Benefits that are not taxable.

(25) IRM 3.21.3.14.2.4 – Added a new (2) with a reference to Unallowable 95.

(26) IRM 3.21.3.14.6.1 (10 b) – Added a fill-in for corresponding on an early-filed Form 8288-A attached to a Form 1040NR.

(27) IRM 3.21.3.16 – Added a new (3) for when a taxpayer may take a deduction for taxes paid or accrued during the year to on Schedule A.

(28) IRM 3.21.3.37 – Changed the title of Form 8615 from Tax for Children Who Have Investment Income of More than $1900 to Tax for Children Who Have Unearned Income.

(29) IRM 3.21.3.55 -- Changed the title of Form 5405 from First-Time Homebuyer Credit and Repayment of the Credit to Repayment of the First-Time Homebuyer Credit.

(30) IRM 3.21.3.55 – Changed the title of Form 8958 from (Allocation of Tax Amounts Between Married Filing Separate Spouses, Same-Sex Spouses, or Registered Domestic Partners With Community Property Rights) With Community Property Rights).

(31) IRM 3.21.3.57 – Changed the title of Form 8834 from Qualified Plug-in Electric and Electric Vehicle Credit to Qualified Electric Vehicle Credit.

(32) IRM 3.21.3.61 -- Added new Subsection for Form 8959 - Additional Medicare Tax.

(33) IRM 3.21.3.62 – Added a new Subsection for Form 8960 - Net Investment Income Tax - Individuals, Estates and Trusts

(34) IRM 3.21.3.68 ( b) – Added the Spanish translation for a taxpayer when they are a bona fide resident of PR and it appears the taxpayer is filing only to claim the Additional Child Tax Credit.

(35) IRM 3.21.3.69 (4) – Added a fill-in for correspondence when a taxpayer files a Form 1040-PR or a Form 1040-SS, along with a U.S. W-2.

(36) IRM 3.21.69.1 – Revised the T-lines for 1040-PR and 1040-SS with the addition of a new line 5.

(37) IRM 3.21.3.69.3.2.1 – Updated Child’s Social Security Number to Child’s Identifying Number.

(38) IRM . 3.21.3.69.5 – Added a new Subsection for Line 5 -- Additional Medicare Tax (Form 8959) for Form 1040-PR and Form 1040-SS.

(39) IRM 3.21.3.71 (1) – Added a fill-in for correspondence of a U.S. filer’s status.

(40) IRM 3.21.3.71.7.1 (2) – Added a reference that if the taxpayer includes a copy of a letter from the U.S. Competent Authority or from the Foreign Competent Authority to allow the exclusion.

(41) IRM 3.21.3.71.12 (2) – Update the table with countries that are not subject to U.S. tax under current treaties.

(42) IRM 3.21.3.71.13. (2) – Added a reference to Tiebreaker for when the taxpayer includes non-U.S. source income.

(43) IRM 3.21.3.71.16 – Added a new Subsection for a Norway Treaty claiming Article 4A.

(44) IRM 3.21.3.72.8.8 (2) – Added instructions to dummy a Schedule C when required.

(45) IRM 3.21.3.72.8.9 (5) – Added a fill-in for corresponding for a Schedule D with form 8288-A.

(46) IRM 3.21.3.72.9.1 – Changed Line 24 (Form 1040NR) from reserved to Educator Expense.

(47) IRM 3.21.3.72.10.1 (2) – Updated amounts for the India/Standard Deduction for Page 3, Form 1040NR (Schedule A).

(48) IRM 3.21.3.72.12.8 – Added a new (1) for an amount claimed on line 59 (Other Taxes) of Form 1040NR.

(49) IRM 3.21.3.72.9.3 – Added a new (2) with a reference to Unallowable 95.

(50) IRM 3..21.3.72.13.3 – Added a fill-in for corresponding with the taxpayer when the send in Form 8288-A that was issued after the current year.

(51) IRM 3.21.3.72.13.10 – Changed title of Line 67 (Form 1040NR) from Credits from Form: (Form 2439, Form 8839, Form 8801 and/or Form 8885) to Other Payments.

(52) IRM 3.21.3.72.18 (11) – Added instructions on how to transfer 1040NR Schedule A T-lines to 1040 Schedule A T-lines.

(53) IRM 3.21.3.72.18.6.1 (1) Note – Added that the moving expenses for Unallowable 95 may be claimed on page 1 of Form 1040NR or Form 1040 using Form 3903.

(54) IRM 3.21.3.72.18.6.1 (3) – Updated addresses for Unallowable 95 criteria.

(55) IRM 3.21.3.72.18.9 – Added a list of Miscellaneous Deductions to Line 14 (From 1040NR, Schedule A).

(56) IRM 3.21.3.75.3.2 (10) – Added Waiver countries for 2012 (Central African Republic, Sudan and Tunisia).

(57) Exhibit 3.21.3-1 (Attachment Guide)
Added CP-01A, We've Assigned You An Identity Protective Personal Identification Number (IP-PIN)
Form 982 -- Added the location for Form 1040NR-EZ.
Form 2848 -- Updated the Philadelphia Mailing Address.
Form 8891 -- Action was changed from "Take No Action" to "edit Audit Code H and continue processing" .
Form 14039, Identity Theft Affidavit -- Added more detailed "Action" instructions.

(58) Exhibit 3.21.3-2 (1042-S Income Codes)
Income Code 16 -- Added an Exception.
Added Income Code 42 -- Added A Note -- For Prior Year only, the income code is "20" .
Added Income Code 43 -- Added A Note -- For Prior Year only, the income code is "20" .

(59) Exhibit 3.21.3-3 (Return Processing Codes)
Added RPC "W" for Schedule .
Revised the definition of RPC "X" .

(60) Exhibit 3.21.3-7 (Country Codes)
Curacao -- "NT" was changed to "UC"
Czech Republic -- "EZ" was changed to "CZ"
Korea -- "KS" was added
Montenegro -- "MJ" was changed to "XX"
Northern Ireland -- "XN" was changed to "UK"
St. Maarten -- "NN" was added
St. Martin -- "RN" was added

(61) Exhibit 3.21.3-8 (Housing Limitation for Form 2555) -- updated city and limitation on housing expenses (daily and yearly).

Effect on Other Documents

IRM 3.21.3 dated October 14, 2012 (effective January 1, 2013) is superseded. . The following Interim Procedural Updates (IPUs) issued from January 31, 2012 through September 11, 2012 have been incorporated into this IRM:, 13U0127,13U0183, 13U0277, 13U0295, 13U0342,13U0376,13U0456, 13U0658, 13U0669, 13U0704, 13U0738, 13U0811, 13U0871, 13U 0921, 13U0953, 13U1035, 13U1076. 13U1083, 13U1142,13U1189,13U1232, 13U1270, 13U1393, 13U1469 and 13U1477

Audience

Wage and Investment (W&I) Code and Edit Tax Examiners

Effective Date

(01-01-2014)

Paul Mamo
Director, Submission Processing
Wage and Investment Division

3.21.3.1  (01-01-2014)
Overview

  1. This section of the (IRM) provides instructions for coding and editing Individual International Tax Returns for computer processing. Special codes are entered into the computer to perform specific functions. Editing is necessary because many returns are incomplete, contain invalid or misplaced entries, or are computed incorrectly.

  2. IRM 3.11.3 must be used for ALL International returns, including Form 1040, Form 1040A, Form 1040EZ, Form 1040NR, Form 1040NR-EZ, Form 1040-PR and Form 1040-SS, including transcribed forms and schedules when specific processing instructions are not outlined in this IRM 3.21.3. International returns will be processed with procedures in this IRM and IRM 3.11.3, jointly.

  3. If this IRM lacks sufficient detail or is inconsistent with other directives, go to the Submission Processing Home Page and access Servicewide Electronic Research Program (SERP) Feedback.

  4. An International Job Aid (2513-701) was developed as a reference guide for this IRM. This IRM refers the tax examiner to clarifying information or exhibits in the Job Aid, where appropriate. When conflicts between any reference material and the IRM instructions occur, the IRM instructions take precedence.

3.21.3.2  (01-01-2014)
International Returns

  1. International tax returns are identified by the presence of one of the following:

    • An address outside the 50 United States and Washington D.C. (This does not include APO/DPO/FPO addresses).

    • Form 390 (American Samoa), American Samoa Individual Income Tax Return

    • Form 482.0 (Puerto Rico), Planilla de Contribucion Sobre Ingresos de Individuous

    • Form 1040CM (CNMI),CNMI Territorial Individual Income tax

    • Form 1040 GUAM, Guam Individual Income tax Return

    • Form W-2 from American Samoa (W-2AS, usually blue)

    • Form W-2 from CNMI (W-2 CM)

    • Form W-2 from Guam (W-2GU)

    • Form W-2 from Virgin Islands (W-2VI, usually pink)

    • Form 499R-2/W2-PR (Puerto Rican Withholding)

    • Form 1040NR, U.S. Nonresident Alien Income Tax Return

    • Form 1040NR-EZ, U.S. Income Tax Returns for Certain Nonresident Aliens With No Dependents

    • Form 1040-PR, Planilla para la Declaración de la Contribución Federal sobre el Trabajo por Cuenta Propia (Incluyendo el Crédito Tributario Adicional por Hijos para Residentes Bona Fide de Puerto Rico)

    • Form 1040-SS, U.S. Self-Employment Tax Return

    • Form 1042-S, Form SSA 1042-S, or Form RRB 1042-S

    • Form 2555, Foreign Earned Income (if Form 2555 is valid, should be blocked under FLC 20)

    • Form 2555-EZ, Foreign Earned Income Exclusion (if Form 2555-EZ is valid, should be blocked under FLC 20)

    • Form 4563, Exclusion of Income for Bona Fide Residents of American Samoa

    • Form 5074, Allocation of Individual Income Tax to Guam or the Commonwealth of the Northern Mariana Islands (CNMI)

    • Form 8288-A, Statement of withholding under Section 1445

    • Form 8689, Allocation of Individual Income Tax to the U.S. Virgin Islands

    • Form 8804, Annual Return for Partnership Withholding Tax Under Section 1446

    • Form 8805, Statement of Withholding under Section 1446

    • Form 8813, Partnership Withholding Tax Payment

    • Form 8833, Treaty-Based Return Position Disclosure

    • Form 8854, Initial and Annual Expatriation Information Statement

    • Form 8891, U.S. Information Return for Beneficiaries of Certain Canadian Registered Retirement Plans

    • Form 8898, Statement for Individuals Who Begin or End Bona Fide Residence in a U.S. Possession

    • Dual Status -- Form 1040 and Form 1040NR filed together for the same tax year, "Dual Status" or "D/S" indicated on the return (taxpayer claims part year residence and part year non - residence). Always leave Form 1040 and Form 1040NR/EZ for the same taxpayer together.

    • Nonresident Alien (NRA) -- Primary or both taxpayers are nonresident Alien

      Exception:

      Primary taxpayer is an NRA with no Social Security Number (SSN); however, secondary taxpayer has an SSN and W-2 income.

    • International Tax Treaty -- taxpayer indicating exemption or exclusion of tax and/or income due to an International Tax Treaty.

      Note:

      An American Indian treaty return is not considered an international return. If it should be transshipped and no international condition exists, consider it a domestic return.

    • Treaty Trader

    • Fulbright Grantee

    • IRC § 871, § 893, § 911,§ 913, § 931, § 932, § 933, § 934 or § 935 of the Internal Revenue Code (IRC) is notated anywhere on the return.

      Caution:

      If no International conditions exist in any of the above, consider it a domestic return and process it accordingly.

  2. International returns are assigned File Location Code (FLC) 20 or 21. A return assigned FLC 20 or 21 that does not meet the definition of an international return must be assigned a new Document Locator Number (DLN). Edit Action Code 610 or 611 as appropriate.

    Note:

    Returns on which taxpayers convert income paid in foreign currency to U.S. currency are not considered International (e.g. Canadian dollars converted to U.S. dollars).

3.21.3.2.1  (01-01-2014)
Form 1042 and Form 1042-S

  1. Form 1042 and Form 1042-S are used by withholding agents to report tax withheld at source on certain income paid to foreign persons (nonresident alien individuals, foreign partnerships, Foreign corporations or foreign trusts and estates) not engaged in a trade or business in the United States. Form 1042-S is a withholding document that identifies, by type, income that is subject to U.S. tax withholding and that is paid to nonresident aliens by U.S. payers.

  2. See Exhibit 3.21.3-2 which identifies the different types of income by Income Code and where the income is to be reported on Page 1 or 4, Form 1040NR or Page 1, Form 1040 NR-EZ.

  3. If Form 1042-S is attached to Form 1040, Form 1040A or Form 1040EZ take the following actions:

    If Then
    Refund and the only income is from the Form 1042-S Correspond for the filer's U.S. status using Form 9143.
    "Worldwide Income" is reported or the return is a balance due Delete Form 1042-S withholding from line 62 and edit to the dotted portion of line 72 page 2, Form 1040.

    Note:

    If the taxpayer files Form 1040A or Form 1040EZ the return must be converted.

3.21.3.2.2  (01-01-2014)
International Returns Are Returns Filed By:

  1. Individual U.S. citizens living or traveling outside the United States are generally required to file U.S. income tax returns on which they must report their worldwide income.

  2. A taxpayer is considered a Resident Alien for U.S. tax purposes and must file Form 1040 if it meets either the "green card test" or the "substantial presence test" for the calendar year. If a foreign taxpayer does not meet either of these tests, the taxpayer must file either Form 1040NR or Form 1040NR-EZ.

    1. The Green Card Test is met when a taxpayer is a lawful permanent resident of the U.S. at any time during the calendar year (i.e., the taxpayer has been issued an alien registration card also known as a "green card.)"

    2. To meet the Substantial Presence Test, the taxpayer must be physically present in the United States for both:
      • 31 days (or more) during the current tax year
      •183 days (or more) during the 3 year period that includes the current tax year and 2 years immediately before that, counting (1) all the days of physical presence in the tax year, (2) 1/3 of days of physical presence in the first year prior to the current tax year and (3) 1/6 of the number of days of physical presence in the second year prior to the current tax year.

  3. Individuals from a U.S. Territory

    1. American Samoa, see IRM 3.21.3.63 .

    2. Commonwealth of Northern Mariana Islands, see IRM 3.21.3.66 .

    3. Puerto Rico, see IRM 3.21.3.68 .

    4. Guam, see IRM 3.21.3.65 .

    5. U.S. Virgin Islands see IRM 3.21.3.67 .

  4. Nonresident Aliens, who are taxed:

    1. On their U.S. source income; and

    2. On certain foreign source income that is effectively connected with a U.S. trade or business.

  5. The U.S. has income tax treaties (conventions) with a number of foreign countries. Under these treaties, residents of foreign countries are taxed at a reduced rate, or are exempt from U.S. income taxes on certain types of income they receive from sources within the U.S. These reduced rates and exemptions vary among countries and with specific items of income.

  6. See IRM 3.21.3.71.7 for tax treaties that permit foreign individuals who are residents of the treaty country to visit the U.S., practice their profession and earn income (sometimes in limited amounts) for a limited period of time without having to pay U.S. tax.

  7. Dual Status Taxpayers -- A taxpayer who is a resident and nonresident alien in the United States within the same tax year. This condition usually occurs in the year of arrival in the U.S. or departure from the U.S. The taxpayer will file Form 1040 and Form 1040NR/NR-EZ for the tax year, based on the taxpayer's residence on the last day of the year.

    1. The taxpayer will file Form 1040 if he/she is a resident of the U.S. on the last day of the tax year.

    2. The taxpayer will file Form 1040NR or Form 1040NR-EZ if he/she is NOT a resident of the U.S. on the last day of the tax year.

  8. U.S. Citizens and U.S. Residents Living Abroad Who Qualify Under Sec. 911 of the IRC -- A taxpayer who meets the specific requirements of section § 911 of the Internal Revenue Code may claim an exclusion of foreign earned income up to $97,600 and an exclusion of housing expenses. The taxpayer may claim the foreign earned income exclusion and either the housing exclusion or deduction if the taxpayer has a tax home in a foreign country or countries and the taxpayer is

    1. A U.S. citizen who has been a bona fide resident of a foreign country or countries for an uninterrupted period (regardless of physical presence) that includes an entire taxable year, or

    2. A U.S. resident alien who is a citizen or national of a country with which the United States has an income tax treaty with an applicable nondiscrimination clause, and who is a bona fide resident of a foreign country for an uninterrupted period that includes an entire year, or

    3. A U.S. resident alien who has been physically present in a foreign country or countries for 330 days during a period of 12 consecutive months.

3.21.3.2.3  (01-01-2014)
Visas

  1. A visa is assigned to an individual by the United States Immigration and Naturalization Service based on the individual's immigrant or non-immigrant status. These visas are assigned to non-immigrants admitted temporarily to the U.S. for specific purposes and periods of time. See Exhibit 3.21.3-9. .

  2. The method of taxation of a visa-holder depends primarily upon whether the individual is classed as a resident or a nonresident. If the visa-holder is determined to be a nonresident alien, he or she is taxed on all United States source income and on all income that is effectively connected with the conduct of a trade or business in the United States. Non-effectively connected foreign source income is not taxed. Resident aliens are taxed the same way as are U.S. citizens.

3.21.3.2.4  (01-01-2014)
U.S. Income Reporting Requirements

  1. U.S. Citizens and U.S. Resident Aliens are required to file Form 1040, Form 1040A, or Form 1040EZ and must report 100% of their Worldwide Income. Worldwide Income is income from ALL sources and includes Foreign and U.S. Income reported on the following lines:

    1. For Form 1040, lines 7 through 22.

    2. For Form 1040A, lines 7 through 15.

    3. For Form 1040EZ, lines 1 through 4.

    Note:

    U.S. Resident Aliens are individuals who meet either the green card test or the substantial presence test for the calendar year.

  2. Nonresident Aliens are generally required to report ONLY U.S. source income and income that is effectively connected to a U.S. trade or business on Forms 1040NR/NR-EZ. A nonresident alien is not required to report U.S. source income that has been withheld properly at the source or any foreign source income received unless the nonresident alien is entitled to a claim for a refund for overpaid taxes. Income received from U.S. payers will in most cases constitute U.S. source income. In addition, income received from foreign payers may also constitute U.S. source income in certain circumstances such as income received for services performed in the U.S. and income received for the use of intangibles in the U.S.

    Exception:

    U.S. tax laws exempt nonresident aliens from U.S. taxation on interest from U.S. bank accounts.

    Note:

    U.S. source income is reported on Form 1042-S, Form W-2, Form 1099 series, Form 8805, Form 8288-A or statement of income.

    Note:

    All U.S. source income (which is not effectively connected to a U.S. trade or business) is taxed at 30% unless a tax treaty exists between the U.S. and the taxpayer's foreign country of residence that reduces the rate or exempts the income.

  3. When Scholarship/Fellowship income is paid to a resident of a non tax treaty country:

    • It is NOT exempted under a tax treaty.

    • It must be reported on line 12, Form 1040NR or line 5, Form 1040NR-EZ.

    • If the taxpayer is a "Degree Candidate," amounts paid to a qualified educational institute for education related expenses (such as fees, books, supplies, and equipment) may be deducted on line 31, Form 1040NR, or line 8, Form 1040NR-EZ.

  4. When Scholarship/Fellowship income is paid to a resident of a tax treaty country:

    • It may be excluded under a tax treaty.

    • It must be reported on the appropriate line on Page 1.

    • Question "L," Form 1040NR, Page 5 or Question "J," Page 2, Form 1040NR-EZ, must be answered.

    • The validity of the tax treaty benefit claimed must be verified.

3.21.3.2.5  (01-01-2014)
Form 1040 with Form 2555 or Form 2555-EZ Attached -- Purpose of Form

  1. Form 2555 must be attached if any of the following indicators are on Form 1040, for complete instructions, see IRM 3.21.3.38

    • IRC § 911 exclusion

    • Notation of "Form 2555"

    • Overseas Housing Exclusion on line 21, Form 1040 (negative amount)

    • Overseas Earned Income Exclusion on line 21 of Form 1040 (negative amount)

    • Overseas Housing Deduction on, dotted portion of line 36, Form 1040

  2. A taxpayer with foreign earned income is entitled to claim the following exclusions and/or deductions on Form 2555:

    • Foreign Earned Income Exclusion (Part VII)

    • Housing Deduction, if housing is not provided by the employer (Parts VI and IX)

    • Housing Exclusion, if housing is provided by the employer (Parts VI)

  3. A U.S. citizen or U.S. resident alien living in a foreign country may use Form 2555 to:

    1. Exclude a limited amount ($97,600 - this amount is adjusted annually based on inflation) of their foreign earned income

    2. Claim housing exclusion or deduction

  4. A U.S. citizen or U.S. resident alien living in a foreign country may use Form 2555-EZ if:

    1. They have earned wages/salaries in a foreign country that totals $97,600 or less for the year.

    2. They did not have any income from self-employment.

    3. They did not have any business or moving expenses for the year.

    4. They are not claiming the housing exclusion or deduction.

    5. They are filing a calendar year return that covers a 12 month period.

  5. For purposes of earned income, foreign country is defined as any territory (including the air space, territorial waters, seabed and subsoil) under the sovereignty of a government other than the United States. It does not include U.S. territories.

  6. Unearned income may NOT be excluded on Form 2555/ Form 2555-EZ. To avoid double taxation, foreign taxes paid on the unearned foreign income can be:

    1. Claimed as a credit on Form 1116, or

    2. Claimed on line 8, Schedule A and is limited to $300 ($600 Married Filing Joint).

  7. Individual U.S. Citizens living or travelling outside the United States are generally required to file U.S. income tax returns on which they must report worldwide income.

  8. To qualify for foreign earned income exclusion, taxpayers must meet the requirements of the "tax home test" and must either:

    1. Have been a bona fide foreign resident for an uninterrupted period (regardless of physical presence) which includes an entire taxable year.

    2. Have been physically present in a foreign country for 330 days out of 12 consecutive months.

    3. Have a partial tax year that falls within the qualifying period (the exclusion must be prorated for the partial year).

    Note:

    A taxpayer working for the U.S. Government or who is a member of the armed forces does not qualify for the foreign earned income exclusion.

3.21.3.2.6  (01-01-2014)
U.S. Territories -- General Information

  1. The following are the five key U.S. Territories

    1. American Samoa (AS)

    2. Commonwealth of Northern Mariana Islands (CNMI)

    3. Guam (GU)

    4. Puerto Rico (PR)

    5. U.S. Virgin Islands (USVI)

  2. Special tax rules apply to bona fide residents of these five key territories. A bona fide resident of one of these territories is an individual taxpayer who; pursuant to § 937 and the § 937 Regulations:

    • Meets the presence test. To satisfy the presence test for the entire year, the taxpayer must meet ONE of the conditions in the table below.

    • Does not have a tax home outside the relevant territory.

    • Does not have a closer connection to the U.S. or to a foreign country.

    Bona Fide Residence Presence Test for U.S. Territories
    Present in the relevant territory for at least 183 days during the tax year.
    Present in the relevant territory for at least 549 days during the three-year period consisting of the taxable year and the preceding two tax years, provided he/she was also present in the territory for at least 60 days during each tax year of the period.
    Present in the U.S. for no more than 90 days during the tax year.
    Earned income (pay for personal services performed, such as wages, salaries or professional fees) from the U.S. of no more than $3000.00 and was present for more days in the territory than the U.S.
    No significant connection to the U.S. during the tax year, such as a permanent home, voter registration or spouse/minor child in the United States.

    Note:

    It is often difficult to determine bona fide residency based on the test above. therefore, for purpose of processing income tax returns the following additional guidance is being given. If the only address on the return or attachments (including W-2 type statements) is that of a territory, that is an indication that the taxpayer may be a bona fide resident of that territory

  3. U.S. Service Members: A service member's "state of legal residence" generally determines his or her residency for tax purposes. For non-tax purposes, U.S service members have two types of "residency" : "home of record" and "state of legal residence." A service member's "home of record" is the state where he or she joined the military and it is used to determine certain military benefits (for example, travel allowance back to the state when leaving the military). All service member's "state of legal residence" is his or her permanent home, the state where he or she intends to live after leaving the military. All service members declare their state of legal residence with the Department of Defense or equivalent. By operation of the Servicemembers Civil Relief Act of 2003 (SCRA), if a service member qualifies as a bona fide resident of a U.S. Territory in an earlier tax year, his or her absence from that territory during the current tax year in compliance with military orders will not affect his or her status as a bona fide resident. Similarly, being in a territory solely in compliance with military orders will not qualify a service member for bona residency status in that territory.

  4. Service Members Civilian Spouses In accordance with Military Spouses Relief Act of 2009 (MSRRA), civilian spouses of active duty U.S. Service Members can choose to keep their prior residence or domicile for tax purposes. By operation of MSRRA, if civilian spouses qualify as bona residents of a US. territory in an earlier tax year, their absence from that territory during the current year when accompanying the service member spouse who is relocating under military orders will not affect the civilian spouse's status as a bona fide resident. Similarly, being in a territory solely to accompany the service member in compliance with military orders will not qualify the civilian spouse for bona fide resident status in that territory. For additional guidance on when and how MSRRA applies to civilian spouses who are working in or claiming tax residency in a U.S. territory, see Notice 2010-30, Notice 2011-16 and Notice 2012-41.

  5. Taxpayers who reside in any U.S. territory are generally not entitled to claim Earned Income Credit (EIC). See IRM 3.21.3.14.6.3.

3.21.3.2.6.1  (01-01-2014)
The American Jobs Creation Act of 2004

  1. The American Jobs Creation Act of 2004 (AJCA) clarified and supplemented the U.S. tax rules dealing with U.S. territories for determining if a taxpayer is a bona fide resident of a territory and whether income is territory sourced or effectively connected with the conduct of a territory trade or business.

  2. Residence Rules -- In general IRC § 937(a) provides new rules for determining whether a taxpayer is a bona fide resident of a U.S. Territory. The new rules are referred to in IRM 3.21.3.2.6. (above) and discussed in greater detail in Publication 570. See also Treasury Regulations 1.937-1.

  3. Source Rules -- In general IRC § 937(b)(1) provides that the principles for determining whether income is U.S. source are applicable for determining whether income is territory source, and the principles for determining whether income is effectively connected with the conduct of a U.S. trade or business are applicable for purposes of determining whether income is effectively connected with the conduct of a trade or business in a U.S. territory. The IRC § 937(b)(2) sets forth the "U.S. income rule," which provides that:

    • Income from U.S. sources is not treated as income that is territory sourced or effectively connected with the conduct of a territory trade or business, and

    • Income that is effectively connected with the conduct of a U.S. trade or business is not treated as territory sourced or effectively connected with the conduct of a trade or business in a U.S. territory. See Treasury Regulations 1.937.2.

  4. The regulations provide the following exceptions to these rules:

    • The regulations preserve the existing treatment of income from sale of goods manufactured in a territory, which provide for the allocation of this income between U.S. and territory sources.

    • The regulations provide that gains from the disposition of certain property by a U.S. citizen or resident who owned the property on the date they became a bona fide resident of the U.S. territory may not be treated as from sources within a territory. This special gain rule applies to the disposition of certain property such as stocks, bonds, debt instruments, and other property that is held for investment and that is sold within 10 years after the date the individual became a bona fide resident. Such an individual can elect to treat as territory source income any gain attributable to appreciation that occurs while the individual is a bona fide resident of the territory.

    • The regulations also provide certain anti-abuse rules for determining the sources of dividends and interest from territory corporations.

    These regulations are generally effective for income earned after April 9, 2008. Taxpayers may choose to apply the U.S. income rule to income earned in open tax years ending after October 22, 2004. Taxpayers may also choose to apply the exception for gains on sales of appreciated property dispositions after April 11, 2005.

3.21.3.2.6.1.1  (01-01-2014)
Form 8898

  1. Form 8898, Statement for Individuals Who Begin or End Bona Fide Residence in a U.S. Possession, was created as a result of the American Jobs Creation Act of 2004.

  2. Form 8898 is used to notify the IRS that an individual became or ceased to become a bona fide resident of a U.S. Territory in accordance with IRC § 937(c).

  3. Form 8898, which must be filed for tax year 2001 and forward, is completed by individuals who have worldwide gross income of more than $75,000 in the tax year and that take any of the following positions for U.S. tax purposes:

    • They became bona fide residents of a U.S. possession. after a tax year for which they filed a U.S. tax return as citizens or residents of the U.S., but not as bona fide residents of the possession.

    • They are citizens or residents of the U.S. that ceased to be bona fide residents of a U.S. possession after a tax year for which they filed an income tax return as bona fide residents of a possession.

    • They became bona fide residents of Puerto Rico or American Samoa after a tax year for which they were required to file an income tax return as bona fide residents of the U.S. Virgin Islands, Guam or the CNMI.

  4. In general, Form 8898 must be filed by the due date (including extensions) for filing Form 1040 or Form 1040NR.

3.21.3.3  (01-01-2014)
Control of International Returns

  1. International Returns will be assigned the following FLCs:

    1. FLC 20 will be assigned to any Form 1040/A/EZ with any International criteria other than U.S. territories, including Form 2555 of Form 2555-EZ and Form 1040NR or Form 1040NR-EZ.

    2. FLC 21 will be assigned to any Form 1040/A/EZ with any U.S. territory criteria as follows:

    • Territory address in the entity area

    • IRC 931

    • IRC 932

    • IRC 933

    • IRC 934

    • IRC 935

    • Form W-2AS, Form W-2GU, Form W-2VI, Form W-2 CM, 499R-2/W-2PR

    • Form 4563

    • Form 5074

    • Form 8689

    • Form 8898

    • Form 1040-PR

    • Form 1040-SS

  2. The following table contains the programs worked in Code & Edit (C&E):

    Program Description
    46110 Form 1040 OTFP Current Year
    46112 Form 1040 OTFP Prior Year
    46114 Form 1040 Non Refund
    46115 Form 1040 OTFP
    46117 Form 1040 - Streamline
    46126 Form 1040NR-EZ
    46127 Form 1040-PR OTFP Current and Prior Year
    46128 Form 1040-SS OTFP Current and Prior Year
    46220 Form 1040 Full Paid Current Year
    46130 Form 1040A OTFP Current Year
    46132 Form 1040A OTFP Prior Year
    46230 Form 1040A Full Paid Current Year
    46137 Form 1040A -Streamline
    46150 Form 1040EZ OTFP Current Year
    46152 Form 1040EZ OTFP Prior Year
    46250 Form 1040EZ Full Paid Current Year
    46157 Form 1040-EZ - Streamline
    46120 Form 1040-NR OTFP (Effectively Connected) Current Year
    46124 Form 1040-NR OTFP (Effectively Connected) Prior Year
    46140 Form 1040-NR OTFP (Non-Effectively Connected) Current Year
    46142 Form 1040-NR OTFP (Non -Effectively Connected) Prior Year
    46227 Form 1040–PR Full Paid Current and Prior Year
    46228 Form 1040-SS Full Paid Current and Prior Year
    46170 Form 1040 OTFP ITIN Current Year
    46172 Form 1040 OTFP ITIN Prior Year
    46270 Form 1040 Full Paid ITIN

3.21.3.3.1  (01-01-2014)
Misblocked International Returns

  1. Returns that are blocked in FLC 20 that should be blocked in FLC 21 or vice versa, must be re-sorted.

    Note:

    All returns that have a valid Form 2555 or Form 2555-EZ must be blocked under FLC 20.

  2. If the return is unnumbered, code and edit the return and slot it into the appropriate program.

  3. If the return is numbered, enter Action Code 610 (for non-remittance) or Action Code 611 (for remittance) for renumbering and attach Form 4227 with instructions "re-sort to appropriate program." Annotate "re-sort to FLC 20 or FLC 21," as appropriate.

    Note:

    If a return has been numbered as International and it is a Domestic return (or vice versa), it must be re-sorted.

3.21.3.3.2  (01-01-2014)
Uncomputed Returns

  1. An uncomputed return is one filed by a taxpayer who expects the IRS to compute his/her tax. Do not confuse an uncomputed return with a return where the taxpayer has computed no tax due.

  2. An uncomputed return can be identified as follows:

    1. Form 1040 has no entries on lines 44, 45, 46, 55, 61, 73, 74a, 75 and 76.

    2. Form 1040A has no entries on lines 28, 35, 42, 43a, 44, 45 and 46.

    3. Form 1040EZ has no entries on lines 10, 11a, and 12.

    4. Form 1040NR has no entries on lines 42, 43, 44, 52, 60, 70, 71a, 72 and 73.

    5. Form 1040NR-EZ has no entries on lines 15, 22, 23a, 24 and 25.

    6. Form 1040-PR and Form 1040-SS has no entries on lines 5, 12, 13a, 14 and 15.

3.21.3.4  (01-01-2014)
General Instructions for International Forms (1040/A/EZ/PR/SS/NR/NR-EZ)

  1. The general instructions for all International returns are provided here. The general instructions in this section include:

    • Stamping Tax Examiner (TE) Numbers

    • Action Trails

    • Attachments

    • Detached Documents

3.21.3.4.1  (01-01-2014)
Stamping Tax Examiner (TE) Numbers

  1. See IRM 3.11.3.3.2 for complete instructions.

3.21.3.4.2  (01-01-2014)
Action Trails

  1. For all International Returns (1040/A/EZ/PR/SS/NR/NR-EZ), see IRM 3.11.3.3.6 for complete instructions.

3.21.3.4.3  (01-01-2014)
Attachments to Returns

  1. Examine all the attachments to the return. Leave the attachments with the return unless specifically instructed otherwise. Refer to the Attachment Guide in Exhibit 3.21.3-1 for specific attachment-by-attachment instructions. Research either an attachment or a notation on the return, as appropriate.

    Note:

    If an attachment is not found in Exhibit 3.21.3-1, refer to Exhibit 3.11.3-1.

  2. See IRM 3.11.3.3.7 for additional instructions.

3.21.3.4.4  (01-01-2014)
Detached Documents

  1. Always leave an Action Trail on the return when an attachment is removed.

    Example:

    When a form or letter is detached from a return, notations such as "detached 1040X" or "detached TP correspondence" must be made.

  2. An Action Trail must also be written on the detached document, unless it is an original document. If present on the return, all of the following must be present or edited on all detached items:

    • Current date if before April 23, 2014, otherwise use the received date in "MMDDYY" format.

    • Tax Period in "YYMM" format.

    • Form from which detached.

    • Taxpayer Name(s).

    • Primary/Secondary taxpayer's identification number(s).

    • Taxpayer's address

      Note:

      When sending a return back to a taxpayer, do not detach documents. Examples include, but are not limited to Powers of Attorney (POA) and taxpayer inquiries (TPI).

      Exception:

      Detach and process any remittance. Do not mail back any remittance to the taxpayer.

3.21.3.5  (01-01-2014)
International Correspondence Procedures

  1. Correspondence is necessary when a return is incomplete or illegible and cannot be processed. To determine all correspondence issues, you must use both IRM 3.11.3 and IRM 3.21.3 and follow line-by-line instructions.

  2. All missing required information must be requested when corresponding. Do Not Correspond With A Taxpayer More Than One Time.

    Note:

    WHEN THE FIRST CORRESPONDENCE CONDITION IS IDENTIFIED, CORRESPOND FOR ALL MISSING REQUIRED FORMS AND/OR SCHEDULES REGARDLESS OF CORRESPONDENCE TOLERANCES IDENTIFIED IN THE LINE-BY-LINE IRM INSTRUCTIONS.

    Exception:

    Code & Edit will correspond a second time if the taxpayer sends back a return with a signature not located in the appropriate "Sign Here" area under the jurat.


    In order for a taxpayer's signature to be valid, it MUST APPEAR in the space provided under the jurat. THE ONLY EXCEPTION TO THIS RULE IS WHEN THE TAXPAYER HIM/HERSELF SIGNED IN THE WRONG AREA AND ARROWED THEIR SIGNATURE TO THE APPROPRIATE PLACE.

  3. See IRM 3.11.3.6.1 for additional instructions.

3.21.3.5.1  (01-01-2014)
Correspondence When Sending Returns Back to the Taxpayer

  1. A valid legal signature is an original signature that appears below a jurat statement. Returns missing a valid, legal signatures will be sent back via the following:

    1. Form 1040, Form 1040A, /Form 1040EZ or Form 1040NR, Form 1040NR-EZ, use Form 9143 and correspond for ALL missing required information.

    2. Form 1040-PR and Form 1040-SS, use Form 13557 and correspond for ALL missing required information.

  2. There are specific circumstances when Submission Processing would send a return back to the taxpayer.

    1. A misfiled return. A misfiled return is a return when the taxpayer is filing what appears to be a business filing requirement on individual tax forms.

    2. Early filed loose Schedule H for tax year 2014

    3. Loose current year Schedule H filed on or before 04/15/14

    4. Early filed Form 8288-A

    5. Missing or invalid signature.

      Exception:

      Do not send back a secured return with a missing or invalid signature back to the taxpayer. Route the entire return to Collections.

      Exception:

      Do not mail back numbered, secured returns or signed returns missing documentary evidence.

    6. Filer's U.S status (1042-S)

    7. Forms 1040-PR or Form 1040-SS filed with Form W-2 income

    8. Puerto Rico with no U.S filing requirement

    9. Bona Fide PR resident claiming ACTC (1040 or 1040A)

    Note:

    Stop editing after identifying a missing signature and identify all other correspondence conditions.

  3. When sending the return back to the taxpayer with correspondence:

    1. Line through your TE number, if present.

    2. Remove Form 3471, if attached.

    3. Date stamp the correspondence with the current date. Use any IRS date stamp other than a received date stamp.

      Note:

      Delete any IRS Received Date when mailing a return back to the taxpayer.

    4. Attach the correspondence sheet to the return immediately below the caption area.

    5. Edit an Action Trail to notate issued correspondence.

    6. Check the appropriate box(es).

    7. Remove the return from the batch and place it in the designated area.

    8. If address is missing or incomplete, perfect from an attached envelope. If unable to perfect from an attached envelope, research.

      Note:

      Do not detach attachments when sending the return back to the taxpayer.

  4. When using Form 9143 or Form 13557:

    1. Write legibly to ensure that the taxpayer understands what information is being requested.

    2. Check the appropriate box(es).

    3. Indicate whether the return was received with or without remittance by checking either the "R" or "N" boxes in the top margin of Form 9143 or Form 13557.

    4. Edit or stamp "Returned for Signature" and edit the date in the bottom margin of the tax return when sending the return back for missing signature.

      Note:

      Delete any IRS Received Date when mailing a return back to the taxpayer

3.21.3.5.2  (01-01-2014)
Correspondence When Not Sending Returns Back to the Taxpayer

  1. Complete all possible editing and identify all correspondence issues.

    Note:

    Do not complete coding if sending the return back to the taxpayer.

    Exception:

    If address is missing or incomplete, perfect from an attached envelope unable to perfect from an attached envelope, research.

  2. A correspondence action sheet (CAS) is a form used to generate a letter requesting information from a taxpayer. A CAS is used with a return that cannot be sent back to the taxpayer. The following CAS forms are used:

    1. Form 13900 is used to generate 4087C letters (International returns)

    2. Form 13975 is used to generate 2894C/SP letters (International returns)

    3. Form 6001-B is used to generate 12C letters (International returns)

    4. Form 3696-A is used to generate miscellaneous Correspondex (C) letters (e.g., Letter 369C used to deny reasonable cause.)

    5. Form 3696 is used to generate miscellaneous campus (SC) letters.

  3. Prepare the CAS and attach to Form 1040/A/EZ/NR/NR-EZ/PR/SS below the caption area.

  4. Edit Action Code "215" on the return and leave it in the block.

  5. If a received date is required and not present on the return, edit the received date before corresponding and see IRM 3.21.3.7 for received date editing instructions.

  6. Edit Action Code "480" for early-filed returns, such as gambling.

3.21.3.5.3  (01-01-2014)
General Response Procedures

  1. Move all correspondence sheets to the back of the return.

3.21.3.5.4  (01-01-2014)
Return Processing Date (RPD)

  1. A Return Processable Date (RPD) is required only when a reply to correspondence is received AFTER the due date of the return.

  2. Edit the RPD on Form 3471, Line 14 MMDDYY format.

    Reminder:

    The RPD and the Received Date should never be the same date.

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

    ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Note:

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

    ≡ ≡

  4. An RPD will not be edited on returns sent back to the taxpayer for missing signature(s).

3.21.3.5.5  (01-01-2014)
Replies to Correspondence

  1. Ensure that the return has been perfected. See the Correspondence Action Chart at IRM 3.21.3.5.6 for instructions to process "no reply," "undeliverable," and "incomplete reply" correspondence.

3.21.3.5.6  (01-01-2014)
No Reply/Incomplete Reply/Undeliverable Correspondence

  1. Use the Correspondence Action Chart and continue processing the return when any of the following conditions are present:

    • Taxpayer does not provide ALL required information

    • Correspondence is returned by the USPS as "undeliverable"

    • One or more correspondence conditions were not included when the first correspondence was sent.

    Note:

    Do not edit RPD when any of the above apply.

  2. Edit CCC "U" on all no reply returns, except when any of the following apply:

    1. The only correspondence item was for withholding support

    2. The correspondence was not required.

    3. One or more correspondence conditions were not included in the first correspondence was sent.

  3. For late "no reply" returns, honor the original received date.

    Note:

    Edit 041514 as the return received date if a timely-filed return is being processed after June 3, 2014 or if the Julian date in the DLN is 155 or later.

  4. The correspondence Action Chart follows:

    Correspondence Required When the Following Conditions Exist: Action Required for Incomplete Reply or No Reply to Correspondence
    Form 1040
    Article XXV and Form 1040NR not attached Convert
    Line 21 -- Incomplete Treaty information "X " line 21 and ensure amount is present on line 7
    Line 21 -- IRC § 893 and the number of the Executive Order and Written evidence not attached "X " line 21
    Line 62 -- ≡ ≡ ≡ ≡ ≡ ≡ and Form(s) W-2, 1042-S, 8805 and/or 8288-A are not attached "X " line 62
    Line 62 -- Filer’s U.S. Status and Form 1040NR not attached Move amount on line 62 to dotted portion of line 72
    Line 62 -- SSA or RRB 1042-S attached and no Green card and/or declaration statement attached "X " line 62
    Line 72 (dotted portion) -- ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and Form 8689 is not attached "X " line 72
    Loose Schedule H or H-PR -- Cannot determine if Schedule H or H-PR should be filed loose or attached to a Form 1040 Process Schedule H or H-PR with a dummied Form 1040. See IRM 3.21.3.44. If signature or documentary evidence missing, also edit CCC "3."
    Form 2555 and Form 2555-EZ
    not attached and one or more of these indications are present:
    • IRC § 911 or

    • Form 2555 or Form 2555-EZ

    • Foreign Earned Income Exclusion (line 21)

    • Foreign Housing Exclusion (line 21/36 (dotted portion))

    1. "X" line(s) 21/36 (dotted portion) Form 1040 and

    2. edit CCC "U"

    Note:

    If there is no other foreign aspect of the return, re-sort the return to the domestic program.

    incomplete:
    • page 1 missing or incomplete

    • page 2 missing or incomplete

    • page 3 missing or incomplete

    1. "X" line(s) 21/36 (dotted portion) Form 1040 and

    2. edit CCC "U"

    Note:

    If the deleted Form 2555 or Form 2555-EZ is the only foreign aspect of the return, re-sort the return to the domestic program.

    Bona Fide or Physical Dates are missing
    1. "X" line(s) 21/36 (dotted portion) Form 1040

    2. "X" Form 2555 or Form 2555-EZ, and

    3. edit CCC "U"

      Note:

      If the deleted Form 2555 or Form 2555-EZ is the only foreign aspect of the return, re-sort the return to the domestic program.

    Form 2555 or Form 2555-EZ is attached and is for more than one taxable year
    1. "X" line(s) 21/36 (dotted portion) Form 1040

    2. "X" Form 2555 or Form 2555-EZ, and

    3. edit CCC "U"

      Note:

      If the deleted Form 2555 or Form 2555-EZ is the only foreign aspect of the return, re-sort the return to the domestic program.

    On a joint return and there is an indication each spouse has his/her own income and only one Form 2555 or Form 2555-EZ has been submitted
    1. "X" line(s) 21/36 (dotted portion) Form 1040

    2. "X" Form 2555 or Form 2555-EZ, and

    3. edit CCC "U"

      Note:

      If the deleted Form 2555 or Form 2555-EZ is the only foreign aspect of the return, re-sort the return to the domestic program.

      Exception:

      If the joint filers are a missionary team, divide the income equally between the two filers on separate Form 2555 and/or Form 2555-EZ.

    Form 2555-EZ
    Is attached and any of the following is claimed:
    • foreign earned income of more than $97,600

    • self-employment income

    • business/moving expenses

    • foreign housing exclusion or deduction

    • other than a calendar year return that covers a 12 month period

    Note:

    If the taxpayer uses Form 2555-EZ for prior to 1992, convert to Form 2555, unless a condition exist for corresponding for Form 2555.

    1. "X" line(s) 21/36 (dotted portion) Form 1040

    2. "X" Form 2555-EZ, and

    3. edit CCC "U"

      Note:

      If the deleted Form 2555 and/or Form 2555-EZ is the only foreign aspect of the return, re-sort the return to the domestic program.

    Form 4563 or IRC § 931
    If Form 1040 indicates IRC § 931 or Income from American Samoa and Form 4563 is not attached
    1. "X" line(s) 21/36 (dotted portion), Form 1040 and

    2. edit CCC "U"

    Note:

    If the deleted Form 4563 is the only foreign aspect of the return, re-sort the return to the domestic program.

    Form 8689
    Line 72 -- (dotted portion), Form 1040 is ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ and Form 8689 is not attached. "X" line 72, Form 1040
    Form 1040-PR and Form 1040-SS
    Line 3 has an amount and Part V is missing Divide SE Tax amount by .153 to determine SE income subtotal amount, then divide the subtotal amount by .9235 to determine the SE income total amount. Prepare a dummy Part V for the primary taxpayer if the Social Security Wages are $113,700 or less. Edit the SE income total amount on Part V, line 3.
    Line 8 has an amount and supporting documentation (W-2, W-2AS, W-2CM, W-2GU, W-2VI or 499R-2/W-2PR) is missing "X" line 8 and page 2, Part II.
    One Part V is submitted for 2 taxpayers Divide SE Tax amount by .153 to determine SE income subtotal amount, then divide the subtotal amount by .9235 to determine the SE income total amount. Prepare a dummy Part V for the primary taxpayer if the Social Security Wages are $113,700 or less. Edit the SE income total amount on Part V, line 3.
    Form 1040NR, Page 1
    Filed for two taxpayers: Two names present, two incomes reported and two signatures
    1. Circle out secondary taxpayer

    2. Edit CCCs "3," "U" and "Y"

    3. Edit action trail: "no reply two taxpayers."

    Invalid treaty information provided or taxpayer does not reference a valid treaty benefit
    1. "X" the exclusion amount,

    2. ensure the amount is included in lines 8 - 21 and

    3. edit CCC "U"

    Line 31
    Missing a valid scholarship/fellowship grant statement and taxpayer claimed an amount.
    1. "X" line 31 and

    2. Edit CCC "U"

    Form 1040NR, Page 2
    Line 61a is ≡ ≡ ≡ ≡ ≡ ≡ ≡ and supporting W-2 series, 1099 series, 4852, or supporting documentation is not attached. "X" line 61a

    Note:

    DO NOT edit CCC" U."

    Line 61b Section 1446 credit is ≡ ≡ ≡ ≡ ≡ ≡ ≡ and Form 8805 or similar withholding document is not attached "X" line 61b

    Note:

    DO NOT edit CCC "U."

    Line 61c Entry is present and Form 8288-A is not attached "X" line 61c

    Note:

    DO NOT edit CCC "U."

    Line 61d is ≡ ≡ ≡ ≡ ≡ ≡ and Form 1042-S is not attached "X" line 61d

    Note:

    DO NOT edit CCC "U."

    Form 1040NR, Page 3 (Itemized Deductions)
    Line 6 Entry is present and Form 4684 is not attached
    1. "X" line 6 and

    2. edit CCC "U"

    Line 7 is ≡ ≡ ≡ ≡ ≡ ≡ ≡ and Form 2106 or similar statement is not attached
    1. "X" line 13 and

    2. edit CCC "U"

    Form 1040NR, Page 4 (Tax on Income Not Effectively Connected With a U.S. Trade or Business)
    Cannot determine correct country of permanent address
    1. Multiply the gross not effectively connected income by 30% and b. edit the result to line 53, page 2, Form 1040NR.

    Form 1040NR-EZ
    Line 11 – Form W-2 or Form 1042-S are not attached and no explanation "X" line 11
    Line 11 – Form W-2 or Form 1042-S are attached and Form 1040NR and Sch. A not attached. "X " line 11
    Line 18a is ≡ ≡ ≡ ≡ ≡ ≡ ≡ and supporting W-2 series or supporting documentation is not attached. "X" line 18a

    Note:

    DO NOT edit CCC "U."

    Line 18b is ≡ ≡ ≡ ≡ ≡ ≡ and supporting W-2 series or supporting documentation is not attached. "X" line 18b

    Note:

    DO NOT edit CCC "U."

    1. Tax Period is other than calendar year

    2. Taxable Income is more than $100,000.00

    3. Interest income is taxable

    4. Dividend income is taxable

    5. Entry without appropriate printed line

    6. Exemption(s) claimed in addition to self and spouse

    7. Indication taxpayer is claimed as a dependent on another person’s return

    8. Itemized deductions (other than state and local income taxes)

    9. Indication that line 3 amount includes $434.00 or more of Self-Employment income, Non-Employee Compensation, or Fishing Boat Proceeds

    10. Indication taxpayer is claiming any adjustments to income (other than scholarship/fellowship grants excluded)

    11. Indication taxpayer is claiming any tax credits

    12. Indication taxpayer is filing an “Expatriation Return”

    13. Indication taxpayer is claiming taxes owed (other than from tax rate table or social security/ medicare tax on tip income not reported to your employer)

    14. Non-effectively connected income

    15. Indication of gambling income

    16. Indication of Community Property

    17. Form 1042-S reporting pension

    18. Form W-2G

    19. Unemployment Compensation

    20. Social Security Benefits

    21. Railroad Retirement Benefits

    22. Form 1099-MISC with an amount of $434.00 or more in box 5 or Box 7

    23. Form 1099-R reporting IRA Distributions in Box 7, code 1

    24. Schedule H attached (As of 12-31-2000 Schedule H will not be allowed as an attached schedule to Form 1040NR-EZ). Current and prior years must be converted to Form 1040NR.)

    25. Transcribed Form 1040NR schedule(s) or form(s) attached

    Convert to Form 1040NR
    Dual Status Returns
    If a determination cannot be made about which return to process or the Dual Status Statement is missing Edit CCC "U" and do one of the following:
    1. When both Form 1040 and Form 1040NR or 1040NR-EZ are present, process Form 1040NR or 1040NR-EZ as the "Dual Status Return" and use the Form 1040 as the "Dual Status Statement"

    2. When only one form is present, always process as a Form 1040NR

      Note:

      Dummy Form 1040NR if missing.

    Filing Status Code (FSC) is 2, both taxpayers have income
    1. Circle out the name of the secondary taxpayer.

    2. edit CCCs "3," "U " and "Y"

    3. Edit action trail: "no reply with two incomes."

    T-line amount(s) that do not have corresponding entries on Form 1040NR-EZ Convert to Form 1040NR
    SSA/RRB 1042-S
    Withholding claimed and no U.S. documentation submitted
    1. "X " withholding amount and income where found,

    2. edit CCC "3," "U" and "Y" and

    3. edit an action trail, "SSA/RRB 1042-S"

  5. For additional instructions, see IRM 3.11.3.6.3.3 for additional NO Reply instructions.

3.21.3.6  (01-01-2013)
Editing for ALL international Returns (1040/A/EZ/SS/PR/NR/NR-EZ)

  1. Editing is done to prepare returns and attachments for transcription and computer processing.

  2. The editing instructions described in more detail in this subsection are about:

    • Transcription Lines (T-Lines) and Transcription Compute Lines (T-Compute Lines)

    • Sequence of Transcribed Schedules and Forms

    • Form 3471E

    • Dollars and Cents Editing

    • International Unallowable Codes

    • Action Codes

    • International Audit Codes

    • International Return Processing Codes (RPCs)

    • Special Processing Codes (SPCs)

    • International Computer Condition Codes (CCCs)

  3. In addition to the listed subsections, see IRM 3.11.3.4.1 -- 3.11.3.4.2.6.

3.21.3.6.1  (01-01-2014)
Transcription Lines (T-Lines) and Transcription Compute Lines (T-Compute Lines)

  1. For complete instructions, see IRM 3.11.3.3.3.

3.21.3.6.2  (01-01-2014)
Sequence of Transcribed Schedules and Forms

  1. Organize the tax return and its transcribed schedules and forms according to sequence code. The sequence code is made up of two digits, and is usually preprinted in the upper right margin of the schedule or form. The transcribed forms and schedules must be arranged in sequential order. See the table below for a list of the Sequence Codes of all transcribed schedules and forms. Any document not on the list is not a transcribed form or schedule and should be deleted or moved. Also delete any form that shares a sequence number with a transcribed form.

    Note:

    Examples include but are not limited to the following:

    Form 2106 (Sequence 54) (For TY 2007 and prior)
    Form 3468 (Sequence 52) (For TY 2009 and prior)
    Form 3903 (Sequence 62) (For TY 2010 and prior)
    Form 4562-FY (Sequence 67)
    Form 4563 (Sequence 68)
    Form 5884-B (Sequence 65)
    Form 8621 (Sequence 69)

    Note:

    "X" a transcribed schedule or form if it is blank or has no significant T-line entries, unless specifically instructed otherwise.

    Forms/Schedules Sequence Code 1040 1040NR 1040NR-EZ 1040-PR/1040-SS
    Schedule A
    (Form 1040)
    Page 3 Form 1040NR
    07 Yes Yes No No
    Schedule B 08 Yes No No No
    Schedule C or C-EZ 09,10,11 Yes Yes No Yes
    Schedule D 12 Yes Yes No No
    Schedule E 13 Yes Yes No Yes
    Schedule F 14,15 Yes Yes No Yes
    Schedule R 16 Yes No No No
    Schedule SE 17,18 Yes
    (17 and 18)
    Yes (only Sequence Code 17) No Yes
    (17 and 18)
    Form 1116 19 Yes Yes No No
    Schedule J 20 Yes Yes No No
    Form 2441 21 Yes Yes No No
    Form 3800 22 Yes Yes No No
    Form 4136 23 Yes Yes No No
    Form 4137 24, 25 Yes Yes (only sequence code 24) Yes (only sequence code 24) No
    Form 4684 26 Yes Yes No No
    Form 4797 27 Yes Yes No No
    Form 4972 28 Yes Yes No No
    Form 5329 29, 30 Yes Yes (only sequence code 29) No No
    Form 6198 31 Yes Yes No No
    Form 6251 32 Yes Yes No No
    Form 8615 33 Yes Yes No No
    Form 2555 and Form 2555-EZ 34, 35 Yes No No No
    Form 4835 37 Yes Yes No No
    Form 8839 38 Yes Yes No No
    Form 8853 39 Yes Yes No No
    Form 8814 40, 41, 42 Yes Yes No No
    Schedule EIC 43 Yes No No No
    Schedule H and Schedule H-PR 44, 45 Yes Yes (only Sequence Code 44) No Yes
    Schedule 8812 47 Yes Yes No No
    Form 8806 48, 49 Yes Yes No No
    Form 8863 50 Yes No No No
    Form 4952 51 Yes Yes No No
    Form 8889 52, 53 Yes Yes (only sequence code 52) No No
    Form 8880 54 Yes Yes No No
    Form 8888 56 Yes Yes Yes Yes
    Form 5405 58, 59 Yes No No No
    Form 8917 60 Yes No No No
    Form 8919 61, 62 Yes Yes (only sequence code 61) Yes Yes
    Form 8958 63 Yes Yes No No
    Form 8941 65, 66 Yes Yes No No
    Form 8834 67 Yes Yes No No
    Form 8910 68 Yes Yes No No
    Form 8936 69 Yes Yes No No
    Form 8867 70 Yes No No No
    Form 8959 71 Yes Yes No Yes
    Form 8960 72 Yes No No No

  2. If a schedule or form is not mentioned above, place it behind the last page to be transcribed without regard to sequence number.

  3. If a schedule or form mentioned above is blank or has no significant T-line entry, "X" it unless specifically instructed otherwise.

  4. If any schedule or form is attached with "Alt-Min Tax," "AMTCR," "AMT" or "Alternative Minimum Tax" notated across the top, "X" the form or schedule.

  5. If possible, Form W-2, Form 1099, or other U.S. withholding documents may be left wherever found as long as they do not obstruct transcription lines or the entity portion of the return.

3.21.3.6.3  (01-01-2014)
Form 3471E

  1. Edit money amounts on Form 3471E in dollars only for all form types (1040/A/EZ/SS/PR/NR/NR-EZ).

  2. Position the Form 3471E on the back of the last page of the return even though it has a Sequence Code of "02." Staple Form 3471E to the last page of the tax return so that the Form is facing out.

3.21.3.6.4  (01-01-2014)
Dollars and Cents Editing

  1. Allow for the taxpayers to round amounts. Use only dollar amounts when computing amounts on forms or schedules.

    Exception:

    Use dollars and cents when computing withholding and excess social security tax.

  2. Draw a vertical line between the dollars and cents figures when dollars or cents are in the wrong column:

    1. on each line that is to be transcribed, or

    2. down the entire front of the form or schedule

  3. Dollars and cents editing is required on certain T-lines if any of the following conditions exist:

    1. A substitute form is used with dollars and cents not clearly separated by a decimal point or slash.

      Exception:

      Do not draw a vertical line to separate dollars and cents when only dollar amounts are present on a dollars and cents T-line.

    2. An entry is illegible.

    3. Other editing requires a change to the taxpayer's entries.

  4. The following line numbers require dollars and cents editing when adjusting or editing:

    1. Form 1040 -- lines 61 through 77

    2. Form 1040A -- lines 35 through 46

    3. Form 1040EZ -- All lines

    4. Form 1040-PR -- Part I, lines 5 through 15

    5. Form 1040-SS -- Part I, line 5 through 15

    6. Form 1040NR -- lines 60 through 74

    7. Form 1040NR-EZ -- lines 17 through 26

3.21.3.6.5  (01-01-2014)
International Unallowable Codes

  1. For a complete list of all unallowable codes, see IRM 3.11.3. The following is a list of the most commonly used international unallowable codes:

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

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

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

    4. "≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

      Caution:

      See IRM 3.21.3.72.18.6.1 for additional criteria for the determination of Unallowable 95.

      Reminder:

      UA 95 applies to Form 1040 as well as Form 1040NR.

    5. "≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Reminder:

    Do not code unallowable items of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ unless specified in the line-by-line instructions.

  2. For complete instructions, see IRM 3.11.3.3.9.

3.21.3.6.6  (01-01-2014)
Action Codes

  1. An Action Code is used to reject a document and identify the reason for rejection.

  2. This code is edited to the center of the bottom margin of Page 1.

  3. Assign only one Action Code to a document. Edit Action Codes in the following priority:

    1. "310"

    2. "4XX"

    3. "6XX"

    4. "2XX"

    5. "3XX"

  4. Listed below are action codes for international process only:

    1. 215 -- International Correspondence

    2. 420 -- Verification of Form 8288-A withholding for numbered returns

    3. 651 -- Transship International returns to AUSPC

      Note:

      Delete the Action Code of 651 when processing returns that were transshipped and continue processing.

  5. See Exhibit 3.11.3-4 for a complete list of Action Codes

3.21.3.6.7  (01-01-2014)
International Audit Codes

  1. Audit Codes identify questionable conditions for Examination.

  2. For a list of all audit codes see Exhibit 3.11.3-5 in IRM 3.11.3.

  3. Audit Codes are edited horizontally to the right bottom margin of page 1 of the tax return.

  4. The following is a list of the most commonly used International Audit Codes:

    Code Explanation
    H Form 926, Form 3520, Form 3520A, Form 5471, Form 5472 or Form 8891 is attached to the return
    K Expatriation Return
    L
    1. § 6501(d) of IR Code, request for prompt audit or assessment

    2. Form 5074, Allocation of Individual Income Tax to Guam or the Commonwealth of the Northern Mariana Islands is attached to Form 1040

3.21.3.6.8  (01-01-2014)
International Return Processing Codes (RPCs)

  1. Return Processing Codes are entered in the margin to the right of:

    1. Line 22 for Form 1040

    2. Line 23 for Form 1040NR

    3. Line 22 for Form 1040NR-EZ

    4. Line 5 for Form 1040-PR

    5. Line 5 for Form 1040-SS

    6. Line 15 for Form 1040A

    7. Line 10 for Form 1040EZ

  2. See Exhibit 3.21.3-3 and the Exhibit 3.11.3-3 for a complete list of RPC's.

3.21.3.6.9  (01-01-2014)
Special Processing Codes (SPC)

  1. Special Processing codes are edited in the following locations:

    • Form 1040 series -- are edited vertically in the right margin between the Secondary TIN and the Presidential Election Campaign Fund (PECF) check boxes.

    • Form 1040NR and Form 1040NR-EZ -- the right margin between the Identifying Number and the Individual/Estate or Trust check boxes.

    • Form 1040-PR and Form 1040-SS -- the right margin of the Spouse's Social Security Number.

  2. A complete list of SPC's can be found at Exhibit 3.11.3-7.

3.21.3.6.10  (01-01-2014)
International Computer Condition Codes (CCC)

  1. Edit Computer Condition Codes:

    1. Form 1040 and Form 1040A -- in the upper portion of the filing status area

    2. Form 1040EZ -- middle of line 1 instructions

    3. Form 1040-PR and Form 1040-SS -- to the right of Part I

    4. Form 1040NR -- in the upper portion of the filing status area

    5. Form 1040NR-EZ -- to the right of the filing status, under the "Foreign Province/State/County"

  2. Computer condition code "C" is unique to International processing only for Form 1040NR and Form 1040NR-EZ. This code is used when Form 8833 (treaty based return position disclosure under § 6114 or 301.7701) is attached.

    Note:

    For a complete list of Computer Condition Codes see Exhibit 3.11.3-2 in IRM 3.11.3.

  3. When CCC "3" is edited, it must appear first.

  4. Always edit an Action Trail when CCC " Y" is edited.

3.21.3.7  (01-01-2014)
Received Dates for ALL international Returns (1040/A/EZ/PR/SS/NR/NR-EZ)

  1. The received date is the date a return was received by the IRS.

  2. When a received date is required edit it in " MMDDYY" (Month/Month, Day/Day, Year/Year) format using the instructions below:

    1. Form 1040 -- edit to the right of line 6d.

    2. Form 1040A -- edit to the right of line 6d.

    3. Form 1040EZ -- edit in the center to the left of line 6.

    4. Form 1040-PR -- edit to the left dotted portion of line 5.

    5. Form 1040-SS -- edit to the left dotted portion of line 5.

    6. Form 1040NR -- edit to the left of line 7d.

    7. Form 1040NR-EZ -- edit to the dotted portion of line 7.

  3. A received date is always required when the return is:

    1. Amended

    2. Delinquent (received after the grace period without an approved extension)

    3. For a fiscal year, prior year, or short year

    4. Early-filed for a decedent (filed before the close of the current year)

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

  4. If a received date is required and the return was transshipped from any other Submission Processing Campus, follow the instructions below:

    Note:

    DO NOT refer to any other instructions in this IRM or in IRM 3.11.3 to determine the received date for any return that can be identified as being transshipped from another Submission Processing Campus.

    IF THEN
    The return has been stamped with an AUSPC received date and another Submission Processing Campus stamped received date. Circle out the other Submission Processing Campus received date, (including those that have ramped down) leaving only the AUSPC date.
    One received date stamped from another Submission Processing Campus
    1. Circle that received date.

    2. Edit a received date (current date minus 10 days).

      Exception:

      Honor the other campus date if today's date minus 10 days makes the received date earlier than the other campus date.

    The return has only an AUSPC received date Take no action
    The return has no received date Edit a received date (current date minus 10 days)

    Exception:

    If the return was transshipped and a determination was made that the return was not foreign or the foreign aspect was deleted, process the return as a domestic return and honor the original received date.

  5. Circle a received date when it is present on a return and it is not required.

  6. Circle all but the earliest received date when a return has multiple received dates and one is required.

    Exception:

    For transshipped returns see (4) above.

    Note:

    Circle all but the earliest valid received dates (including Statute or other valid IRS organization's received dates) when there are multiple received dates present and a received date is required. See IRM 3.21.3.7.1.1. Taxpayer Advocate Service (TAS) received dates are not valid received dates. If multiple received dates are identical, circle all but one received date. Also, if a received date is "X" -ed, circle that received date stamp.

    Exception:

    When the return has been mailed back for missing signature(s), and multiple received dates are present, see IRM 3.21.3.7.1

  7. Perfect the received date when it is required and it is not legible and/or not in complete "MMDDYY" format, unless stamped with an IRS Campus Date Stamp.

3.21.3.7.1  (01-01-2014)
Determining Received Date

  1. Determine the received date in the following priority when it is required, but missing:

    1. Latest postmark on the envelope or latest date from a designated private delivery service or private metered postmark.

      Note:

      When the envelope or air-bill is not attached, use the postmark date stamped or handwritten on the return to determine the received date.

    2. Service Center Automated Mail Processing System (SCAMPS) digital dates stamped on the envelope.

    3. Latest date by the taxpayer's signature.

      Exception:

      Use the signature date on prior year returns only when it is within the current year. Also, do not use the signature date to determine the received date for replies to correspondence.

    4. Today's date minus 10 days

  2. If the stamped received date on a current year return is three months or more prior to the current date, search the return for an indication the received date is incorrect (e.g., a postmark or signature date after the received date). If the received date is determined to be incorrect, delete it and edit a new received date following instructions at IRM 3.21.3.7.

  3. ALWAYS review each return for the words, "Returned for Signature" or similar statement and a date present in the lower left corner of the return. These are returns that were originally received missing a signature and were mailed back to the taxpayer. If a date and the notation "Returned for Signature" or similar statement is present, refer to the following instructions for editing the received date:

    1. If the return is Balance Due and a received date is present showing a date within 30 days after the date present in the lower left corner, use the date sent back for signature as the received date. Delete any later received date(s) that may be present.

    2. If the return is Balance Due and a received date is present showing a date MORE than 30 days after the date present in the lower left corner, honor the latest received date. Use the most recent mail-back date when multiple dates are present. Delete any earlier received date(s) that may be present.

    3. If the return is a Refund, Credit Elect or Zero balance return, honor the latest received date. Delete any earlier received date(s) that may be present.

    Reminder:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Caution:

    Any Form 1040 with International information, Form 1040 with Form 2555 or Form 2555-EZ, Form 1040NRor Form 1040NR-EZ and Form 1040-PR orForm 1040-SS transhipped from another Campus, Territory Office or Foreign Post, take the following action:

    IF THEN
    there is no Austin Submission Processing Center (AUSPC) received date enter the received date using today's date minus 10 days

3.21.3.7.1.1  (01-01-2014)
Types of Received Dates

  1. Accept these four types of received dates:

    1. AUSPC date stamp

    2. IRS area/territory (e.g. Puerto Rico) office date stamp

    3. Valid handwritten received date

      Reminder:

      A valid handwritten received date by an IRS employee includes those edited by Submission Processing employees.

    4. IRS Offices in London, Paris, Beijing or Frankfurt only.

  2. To be a valid handwritten received date it must include both of the following:

    1. The word "received" or any abbreviation of the word received and a date.

    2. A signature on the front page of the return with an abbreviated title such as "RO," "RA," "RR," "OCR," "TSR" or "TSSP."

    Exception:

    A handwritten received date edited by an IRS employee in Submission Processing or Return Integrity and Correspondence Services (RICS) is valid. A clear indication that a handwritten received date has been edited by RICS will be the presence of SPC "B" and/or "RICS" noted or stamped in the upper left margin. Generally, the RICS edited received date will be earlier than the original, stamped received date.

3.21.3.7.1.2  (01-01-2014)
Post Office Marks

  1. See IRM 3.11.3.5.2.2 for instructions.

3.21.3.7.1.3  (01-01-2014)
Private Delivery Service (PDS) Marks

  1. See IRM 3.11.3.5.2.3 for instructions.

3.21.3.7.2  (01-01-2014)
Timely-Filed Returns

  1. For 2014 a current year return is a return filed for tax year 2013. A current calendar year return (1312) is considered to be timely filed when it is received on or before the due date:

    1. April 15 2014 for Form 1040, Form 1040A, Form 1040EZ, Form 1040-PR, Form 1040-SS

      Note:

      June 16, 2014 is the due date for taxpayers residing outside the United States and Puerto Rico since they are entitled to a two-month extension to file.

    2. April 15, 2014 for Form 1040NR or Form 1040NR-EZ (doc code 73)

    3. June 16, 2014 for Form 1040NR (doc code 72)

    Note:

    TAS received dates are not acceptable

    .

  2. Generally, a current calendar-year return (1312) received on or before April 22, 2014 does not require a received date.

  3. For current calendar-year (1312) other than full paid returns, received on or before April 15, 2014:

    The document is Then
    processed before June 4, 2014 Circle the received date when present.

    Exception:

    NEVER circle a received date that has been edited in green ink.

    Numbered with a Julian date of 154 or earlier in the DLN, Circle the received date when present.

    Exception:

    NEVER circle a received date that has been edited in green ink.

    Unnumbered and being processed on June 4, 2014 or later Edit 041514 as the received date, if one is not present if timely filed.
    Numbered with a Julian date of 155 or later in the DLN, Edit "041514" as the received date if one is not present.

3.21.3.7.3  ≡ ≡ ≡ ≡ ≡ ≡
≡ ≡ ≡ ≡ ≡ ≡ ≡

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

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

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

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

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

    ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Exception:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Exception:

    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

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

  6. ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  7. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3.21.3.7.4  (01-01-2014)
Late-Filed Return/Reasonable Cause

  1. A return is delinquent when it is filed after the due date without an approved extension.

    Note:

    Taxpayers residing outside the United States and Puerto Rico are entitled to a two-month extension to file.

  2. Edit "042314" as the received date when the return has no received date and an envelope is attached with both of the following:

    1. A postmark date or designated PDS mark date of April 16, 2014, or later,

    2. The envelope is addressed to a state taxing agency.

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

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

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

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

  5. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ "≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    1. The taxpayer lived outside the United States and Puerto Rico on the due date of the return.

      Note:

      Do not use page 5, line G, Form 1040NR (page 2, line G, Form 1040NR-EZ) to determine this.

      Caution:

      This applies to returns that are due the 15th day of April only

    2. The taxpayer is in the military or naval service on duty outside the United States and Puerto Rico.

    3. The taxpayer has a APO/DPO/FPO address.

    4. The taxpayer qualifies for an automatic two month extension.

    5. Form 2555 or Form 2555-EZ dates indicate still there or continuing.

    6. Form 2555 or Form 2555-EZ has an ending date later than the tax year (e.g., 2014, 2015, etc.).

    7. Taxpayer is abroad/overseas.

    8. Return indicates Treasury Regulation 1.6081-5(a).

    Note:

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

  6. When the taxpayer's reasonable cause statement is not acceptable:

    1. Edit CCC "7"

    2. Correspond using Letter 854C (Penalty Waiver or Abatement Disallowed Appeals Procedure Explained), Paragraph D.

  7. On a late-filed return when reasonable cause is established, take the following action:

    IF THEN
    Late filing, Edit CCC "R " unless CCC "N" has been edited.
    Late payment or a "Section 6020(b)" notation is present, Edit CCC "M. "

  8. Edit CCC "R" and delete CCC "N" when the taxpayer has a Form 4868 or Form 6401 attached to the return and an ITIN or IRSN is present in the primary SSN field. Both ITINs and IRSNs begin with a 9.

  9. When the tax return is due on October 15, 2014 because of an extension, examine the envelope postmark date. If the received date is "102314" or later, and the postmark date or designated PDS mark date is on or before October 15, 2014, edit the postmark date as the received date.

    Note:

    Extension forms are not required to be attached to the return when filed

    .

  10. When the tax return is due on December 15, 2014 because of an extension, examine the envelope postmark date. If the received date is "122314" or later, and the postmark date or designated PDS mark date is on or before December 15, 2014, edit the postmark date as the received date.

    Note:

    Extension forms are not required to be attached to the return when filed

    .

3.21.3.8  (01-01-2014)
General Instructions for ALL International Forms 1040/A/EZ/PR/SS/NR/NR-EZ

  1. Edit RPC "L" if there are no significant T-line entries present or edited from attachments on lines:

    • 7 through 77, Form 1040

    • 7 through 46, Form 1040A

    • 1 through 12, Form 1040EZ

    • 3 through 15, Form 1040-PR and Form 1040-SS

    • 8 through 74, Form 1040NR

    • 3 through 26, Form 1040NR-EZ

    Reminder:

    When applicable, the Dependency Status Indicator (DSI) is required even if RPC "L" is edited.

  2. Edit RPC "V" when the tax form is computer generated. Computer-generated forms are identified by a three alpha character software code in the bottom margin of page 1 or 2.

    Exception:

    Do not edit RPC "V" on Form 1040-PR, Form 1040-SS, Form 1040NR or Form 1040NR-EZ.

    Note:

    Do not edit RPC "V" on computer-generated returns when there is an indication the return was prepared by Volunteer Income Tax Assistance (VITA) or Tax Counseling for the Elderly (TCE) (e.g. the presence of an "S" within the P-TIN field).

  3. All amounts are to be reported in U.S. currency only. Convert any amounts reported in foreign currency to U.S. dollars using the exchange rate chart appropriate for the tax period of the filer's return.

  4. Edit Action Code "480" for early-filed returns, such as gambling.

  5. Some special conditions will require special editing procedures. Taxpayers are instructed to note certain conditions on the return, some type of returns require special editing which you must identify. Edit these returns using instructions in IRM 3.11.3 subsection titled "Special Situations and Returns" unless otherwise instructed in line-by-line instructions in IRM 3.21.3:

    Special Situations IRM Reference
    Combat Zone and other Military Operations IRM 3.11.3.7.1.1
    Examination Cases IRM 3.11.3.7.1.2
    Fiduciary Relationship (Minor Child, POA) IRM 3.11.3.7.1.3
    Frivolous Filer/Non-Filer Returns

    Note:

    Any return with a 1099-OID should be treated as frivolous.

    Note:

    There are also FRIV 1040NR Sole Proprietor -- UK returns

    IRM 3.11.3.7.1.4
    Hardship

    Caution:

    When W&I Submission processing Liaison for Taxpayer Advocate Service (TAS) issues walks a return through Code & Edit on the basis of hardship, in addition to normal editing, perform all actions below:
    • Edit CCC "O" to freeze the refund
    • Edit CCC "Y" to send the return to Error Resolution System (ERS)
    • "X" the refund line on the return.

    Reminder:

    If correspondence conditions are identified during editing, give the return back to TAS and do not correspond.

    IRM 3.11.3.7.1.5
    Killed in Terrorist Action (KITA) IRM 3.11.3.7.1.6
    National Disaster/Emergency Relief Program IRM 3.11.3.7.1.7
    Refund Schemes

    Note:

    Domestic/Stateside addresses may be "in care of" (c/o) another person
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    IRM 3.11.3.7.1.8

    Special Returns IRM Reference
    Amended IRM 3.11.3.7.2.1
    Blank Returns IRM 3.11.3.7.2.2
    Blocked or Deferred Income IRM 3.11.3.7.2.4
    Correspondence Imaging System (CIS) Returns IRM 3.11.3.7.2.5
    Combined Tax Liabilities IRM 3.11.3.7.2.6
    Community Property/Registered Domestic Partnership Returns IRM 3.11.3.7.2.7 and IRM 3.21.3.8.6
    Incomplete Returns IRM 3.11.3.7.2.3
    Injured Spouse Returns IRM 3.11.3.7.2.8
    Innocent Spouse Relief Request IRM 3.11.3.7.2.9
    Joint Committee Returns IRM 3.11.3.7.2.11
    Misblocked Returns IRM 3.11.3.7.2.12 and IRM 3.21.3.3.1
    Misfiled Returns IRM 3.11.3.7.2.13
    Reinput Returns IRM 3.11.3.7.2.14
    Returns Secured by Collection IRM 3.11.3.7.2.15
    Short-Period Returns IRM 3.11.3.7.2.16
    Substitute for Return (SFR) IRM 3.11.3.7.2.17
    52-53 Week Return IRM 3.11.3.7.2.18
    Blind Trust Returns IRM 3.11.3.7.2.19

3.21.3.8.1  (01-01-2014)
Streamlined Project

  1. Effective September 1, 2012, the IRS announced a new program for US citizens living abroad to file delinquent tax returns without being charged failure to file (FTF) or failure to pay (FTP) penalties.

  2. Qualified taxpayers are required to follow procedures listed on irs.gov using the following link: http://www.irs.gov/uac/Instructions-for-New- Streamlined- Filing-Compliance-Procedures-for-Non-Resident-Non-Filer- US-Taxpayers.

3.21.3.8.1.1  (01-01-2014)
Streamlined Project Editing Instructions

  1. Streamline returns will have a specific program (46117 for 1040, 46137 for 1040A and 46157 for 1040EZ) and a blocking series from 850 -- 899.

  2. If one return needs to be cleared by Statute, send all returns, do not separate. A Form 3210 will be used initially to control which returns are being sent to Statute.

  3. When a completed Streamlined filing is received, edit the following Computer Condition Codes (CCC):

    • M

    • R

    • 3 (if the return is a refund only)

  4. It is important to ensure that all returns submitted by each taxpayer are kept together.

  5. Follow normal coding instructions as outlined in IRM 3.21.3 and IRM 3.11.3.

  6. Follow normal Attachment Guide procedures, except for FBAR – Report of Foreign Bank & Financial Accounts (TDF 90-22.1).

    Caution:

    If the first page of each FBAR does not have a received date, edit in MMDDYYY format. Do NOT detach FBARs (Form TDF 90-22.1) from the tax return.

3.21.3.8.1.2  (01-01-2014)
Corresponding on Streamlined Returns

  1. If correspondence is necessary for any return submitted as part of the "Streamlined" process, it is important to ensure that all returns submitted by each taxpayer be kept together. This means that if one return needs to be corresponded on that all returns in the submission must be kept with the suspended return(s) and held together in the Suspense area.

  2. Use Action Code "215" to correspond on any issue relating to streamlined returns.

  3. Do NOT send returns back to the Taxpayer if there is a signature issue. Use Form 6001-B or Form 13900 to correspond for signature related correspondence.

  4. If correspondence is needed for Streamlined issues (see IRM 3.21.3.8.1.3), use Letter 4087 and correspond for ALL issues:

    • Check all appropriate boxes

    • Attach letter 4087 below the caption area

    • Edit AC 215.

  5. If other than Streamlined correspondence issues are identified, use Form 6001-B or Form 13900 to correspond.

    Note:

    It is not necessary to complete the heading of the letter. This will be completed by ERS.

3.21.3.8.1.3  (01-01-2014)
Types of Correspondence on Streamlined Returns

  1. If the items below are not submitted with a Streamlined package, correspond using Letter 4087 (see IRM 3.21.3.8.1.2)

    • The TP is required to submit delinquent tax returns for the last three years for which a U.S. tax return is due. However, it is acceptable for TPs to submit more than 3 years returns.

      Note:

      It the taxpayer submits less than 3 years returns but attaches copies of returns or a statement indicating that the other years were already filed, DO NOT correspond for the missing years.

    • Completed questionnaire signed under penalty of perjury.

    • Signed and dated delinquent Form TDF 90-22.1, FBAR - Report of Foreign Bank & Financial Accounts, for the past 6 years. This only applies to FBARS submitted with returns dated after July 1, 2013. As of that date the taxpayers are required to electronically file their FBARs. Therefore, Do Not correspond for FBARs if the return was submitted after July 1, 2013.

      Note:

      If the taxpayer indicates that they were not required to file FBARs because their aggregate value of the foreign financial accounts did not exceed $10,000 OR the taxpayer states they already mailed their FBARs to Detroit, DO NOT CORRESPOND.

    • If a Form 8891. U.S. Information Return for Beneficiaries of Certain Canadian Registered Retirement Plans, is included with the submission, the following should be included with the submission, the following should be included with that form:

    • A statement requesting an extension of time to make the election

    • A dated statement signed under penalty of perjury describing the events that led to the failure to file Form 8891, how they discovered that failure and if they relied on a tax professional.

3.21.3.8.1.4  (01-01-2014)
Amended/Duplicate Returns Submitted for Streamline Processing

  1. Any Streamlined Package that contains a Form 1040X or any return marked amended/duplicate/copy submitted under this program should be routed to LB&I at MS 4300 AUSC for review or route using local procedures.

  2. LB&I will review the returns and determine the actions that need to taken by SP. Follow the directives provided by LB&I when the return is received back from LB&I review.

3.21.3.8.2  (01-01-2014)
Frivolous Filer/Non-Filer

  1. The Frivolous Filer Program (FRP), through administration of the internal Revenue Code section 6702, addresses non-compliance based on unfounded legal or constitutional arguments. The law provided penalties intended to address those situations where a taxpayer is furthering a frivolous argument or demonstrates a prima facie intent to delay or impede the administration of the tax law.

  2. Pull any return identified as Frivolous Review Box Criteria and place in the designated "Friv Filer Box" using the following criteria:

    • Frivolous Filer/Non Filer Returns

    • Forms 2439 for an indication of "Reparation for African Americans," Black investment Taxes or similar statement

    • Altered or deleted jurat statement

    See IRM 3.11.3 and Exhibit 3.11.3-11.

3.21.3.8.3  (01-01-2014)
Criminal Investigation

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

  2. Pull any return identified as Criminal Investigation (CI) Review Box Criteria and place in the designated "Funny Box."

  3. Returns that do not meet the Review Box criteria of other functions, but would be of interest to CI include multiple returns with matching refunds while claiming:

    • Household help income and no other income document present.

    • Schedule C profit with little or no expenses and no income document

    • Refundable credits claimed, no Form W-2 income, to include:
      ♦ Adoption Credit
      ♦ First Time Homebuyer Credit
      ♦ Large estimated tax payments (compared to income reported)
      ♦ Large dollar amount paid with extension (compared to income reported)
      ♦ Excess SS/Tier1 RRTA Withholding (credits from Forms 2439, 4136, 8801 and/or 8885)

    • Pre-tax Credits claimed (No Form W-2 income)
      ♦ Form 1116
      ♦ Form 8863
      ♦ Form 8880
      ♦ Form 8396
      ♦ Form 8839
      ♦ Form 5695
      ♦ Form 8859
      ♦ Form 8936
      ♦ Form 8834
      ♦ Form 8910
      ♦ Form 8911
      ♦ Form 3800
      ♦ Form 8801
      ♦ Form 8912

    • Refundable credits/payments on Form 1040NR returns (including items above) reported with Form 8805, Form 8288-A, on Income not effectively connected with a trade/business, credit for amount paid with Form 1040C.

    • Unsubstantiated withholding – no wages reported and no supporting documents attached.

    • Matching characteristics of multiple returns that may include:
      ♦ Duplicate filing addresses
      ♦ Same writing instruments (matching ink, pencil color)
      ♦ Same/similar handwriting
      ♦ Matching attached envelopes
      ♦ Same paper stock
      ♦ Same amounts entered on similar Form 1040 line entries (including attached Schedules/Forms)
      ♦ Multiple entries ending in zeroes
      ♦ Same occupations
      ♦ Large number of “cookie cutter” returns submitted in a single envelope/box.
      ♦ Duplicate instances of identical direct deposit information

3.21.3.8.4  (01-01-2014)
IVO (Integrity and Verification Operation) -- RICS

  1. IVO (RICS) performs a revenue protection program. IVO (RICS) utilizes the Electronic Fraud Detection System (EFDS) to screen and verify the accuracy of wages and withholding reported on paper and electronically filed tax returns.

  2. Pull any return identified as IVO (RICS) Criteria and place in the designated "IVO (RICS) Funny Box" using the following criteria:

    • Refund Schemes

    • Form 4852 and Form W-2

    • Form W-2 is altered, handwritten or a substitute/similar statement

    • Form(s) 4852 attached and no other withholding documentation is present

    • Refund scheme review when there are similarities between returns on Form(s) W-2 such as:
      ♦ Typing or printing
      ♦ Wage amounts
      ♦ Wihholding amounts
      ♦ Employer

    • Earned Income Credit (EIC) is being claimed and only the attached Form W-2 is altered, handwritten or a substitute/similar statement

    • Operation Mass Mailout (OMM) – refund scheme involving bulk filings. Returns are often identical or vary only slightly. See IRM 3.11.3 and Exhibit 3.11.3-13 for a clear breakdown of OMM and non-OMM RICS criteria.

    Note:

    Do Not Send to IVO (RICS):
    ♦ Returns that already have been stamped by IVO (RICS/AMTAP/QRDT).
    ♦ Returns that have a balance due

3.21.3.8.5  (01-01-2014)
Examination Review

  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.

  2. Pull any return identified as Examination Review Box Criteria and place in the designated "Exam Funny Box" using the following criteria:

    • Taxpayer initiated correspondence on Earned Income Credit (EIC) Fraud

    • Examination Cases

    • Frivolous Filer/Non-Filer Returns

    • Refund Schemes

    • Amended Joint MFA or MFS Return

    • Form 8857, Innocent Spouse Relief Request

    • Joint Committee

    • Decedent Returns, General Procedures

    • Signature

    • Form 1040EZ-T, Claim for Refund of Federal Telephone Excise Tax

3.21.3.8.6  (01-01-2014)
Community Property -- General Information

  1. If taxpayers are married and are subject to the community property laws of a foreign country, a U.S. state, or a U.S. Territory, they generally must follow those laws to determine their income for U.S. tax purposes unless:

    1. Both are nonresident aliens

    2. One spouse is a nonresident alien and the other is a U.S. citizen or resident and they do not both choose to be treated as U.S. residents.

  2. If one taxpayer is a nonresident alien, the following rules apply to community income.

    1. Earned Income of a spouse, other than trade or business income and a partners distributive share of partnership income, is treated as the income of the spouse whose services produced the income. That spouse must report all of it on his or her separate return.

    2. Trade or business income, other than a partner distributive share of partnership income, is treated as the income of the person who exercises substantially all of the management and control over the trade or business. That spouse must report all of it on his or her separate return.

    3. Partnership income (or loss). A partner distributive share of partnership income is treated as the income (or loss) of the partner. The partner must report all of it on his or her separate return.

  3. Income derived from the separate property of one spouse (and which is not earned income, trade or business income, or partnership distributive share income) is treated as the income of that spouse. That spouse must report all of it on his or her separate return. Use the appropriate community property law to determine what is separate property.

    Note:

    Income can no longer be split under Community Property provisions.

  4. All other community income is treated as provided by the applicable community property laws.

3.21.3.9  (01-01-2014)
Decedent Return

  1. For ALL International returns (1040/A/EZ/SS/PR/NR/NR-EZ), see IRM 3.11.3.10 - 3.11.3.10.6.

    Reminder:

    A refund ≡ ≡ ≡ ≡ ≡ ≡ on a 1040NR or Form NR-EZ requires documentary evidence when a surviving spouse is signing.

  2. In addition to the instructions above, special editing is required when an Additional Information Line (AIL) is required for a foreign address. If a foreign address AIL is present, and a decedent AIL is present or has been edited as a second AIL, take the following actions for a refund return:

    1. DO NOT edit CCC "L" or "W"

    2. Edit CCC "Y" and an action trail of "Manual Refund"

      Exception:

      Do not edit CCC "Y," if CCC "3" has been edited. If the taxpayer has elected to use Direct Deposit or has been issued an IRSN, do not edit CCC "Y" (An IRSN begins with a 9 and the middle 2 digits are other than 70-88, 90-92 and 94-98. The middle 2 digits identify the Campus location where it was issued from.)

3.21.3.10  (01-01-2014)
Tax Period for International Returns

  1. For complete instructions refer to IRM 3.11.3.8.

    Caution:

    See IRM 3.21.3.72.1 for additional Form 1040NR or Form NR-EZ instructions.


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