3.22.111  Chapter Three Withholding (CTW) Database

Manual Transmittal

October 29, 2014

Purpose

(1) This transmits revised IRM Section 3.22.111, International Error Resolution - Chapter Three Withholding (CTW) Database.

Scope

This updates IRM 3.22.111, providing procedures for correcting Form 1042-T and Form 1042-S, using the Chapter Three Withholding (CTW) database. This updated version addresses procedures utilized by Input Correction (ERS) for the Tier II CTW database.

Material Changes

(1) Made various editorial changes throughout. Updated dates and figures. Updated box numbers for 2004 Changes to both Forms 1042-T and 1042-S.

(2) IRM 3.22.111.1(1) - For 2014, the Form 1042-S has been modified to accommodate reporting of payments and amounts withheld under the provisions of the Foreign Account Tax Compliance Act (FATCA) or Chapter 4, Regulations section 1.1474-1(d).

(3) IRM 3.22.111.1(2) - Under FATCA, to avoid being withheld upon, Foreign Financial Institutions (FFIs) may register with the IRS and agree to report to the IRS certain information about their U.S. accounts, including accounts of certain foreign entities with substantial U.S. owners. FFIs that enter into an agreement with the IRS to report on their account holders may be required to withhold 30% on certain payments to foreign payees if such payees do not comply with FATCA.

(4) IRM 3.22.111.1(3) - Unless otherwise exempt, FFIs that do not both register and agree to report face a 30% withholding tax on certain U.S. source payments made to them.

(5) IRM 3.22.111.9.1 – Added Chapter 4 fields

(6) IRM 3.22.111.9.4.1 – Added Chapter 3 or 4 Indicator

(7) IRM 3.22.111.9.4.4 – Added Chapter 3 and Chapter 4 Status Codes

(8) IRM 3.22.111.9.4.6(1) - The Withholding Agent Indicator is no longer on the paper Form 1042-S Electronic filers still use the Indicator. Deleted note.

(9) IRM 3.22.111.10(2) - Added Foreign Financial Institutions are required to file Chapter 4 Form 1042-S using FIRE.

(10) IRM 3.22.111.10.1 - Deleted subsection for Form 1042-S, General Correction Procedures.

(11) IRM 3.21.111.10.2 - Deleted CTW Database Correction Process - Form 1042-S.

(12) IRM 3.22.111.10.2.4 –Deleted old instructions for the RTI and added instructions for the Amended Checkbox.

(13) IRM 3.22.111.10.2.5 – Added Pro-Rata Checkbox instructions.

(14) IRM 3.22.111.10.2.6 – Added Updated the Income codes.

(15) IRM 3.22.111.10.2.8 – Added Chapter 3 or Chapter 4 Check Box, Boxes 3 and 4

(16) IRM 3.22.111.10.2.9 – Added Chapter 3 Exemption Code, Box 3a

(17) IRM 3.22.111.10.2.10 – Added Chapter 4 Exemption Code, Box 4a

(18) IRM 3.22.111.10.2.11 – Added Tax Rate, Box 3b and 4b

(19) IRM 3.22.111. 10.2.13 - Updated with this is a 12 position field that should only be used with Income Code 15, 16, 17, 18, 19 or 42 and Enter amount in whole dollars only, rounding to the nearest dollar (do not enter cents).

(20) IRM 3.22.111.10.2.14 - Added If the 1042-S is Chapter 4, and the tax not deposited under escrow procedure is checked, Box 7 will be blank or zero.

(21) IRM 3.22.111.10.2.15 – Added Tax Not Deposited Under Escrow Procedure Checkbox

(22) IRM 3.22.111.10.2.17 – Added Tax Assumed by Withholding Agent, Box 9

(23) IRM 3.22.111.10.2.20 – Added Chapter 4 fields.

(24) IRM 3.22.111.10.2.21 – Renumbered Recipient's U.S. TIN, Box 13g.

(25) IRM 3.22.111.10.2.21.1 – Renumbered Recipient's U.S. TIN Indicator checkbox, Box 14.

(26) IRM 3.22.111.10.2.22 – Added Recipient Chapter 3 or 4 Status Code, Box 13h and 13i instructions.

(27) IRM 3.22.111.10.2.24 – Renumbered Recipient's Country Code, Box 14b.

(28) IRM 3.22.111.10.2.25 (2) a – Added to the exception: If Recipient First Name Line equals "Unknown," then Recipient Code must be 24 for Chapter 3, 24 for Chapter 4, and 20 for years prior to 2014.

(29) IRM 3.22.111.10.2.26 – Added Primary Withholding Agent's Information, Boxes 14e and 14f

(30) IRM 3.22.111.10.2.27 – Added Intermediary or Flow-Through Entity's Name, Address and TIN, Boxes 15a- 15c, 16a-16.

(31) IRM 3.22.111.10.2.28 – Added Recipient's GIIN, Box 17

(32) IRM 3.22.111.10.2.29 – Renumbered Recipient's Foreign Tax Identifying Number, Box 18.

(33) IRM 3.22.111.10.2.30 – Renumbered Recipient's Account Number, Box 19

(34) IRM 3.22.111.10.2.31 – Added Recipient's Date of Birth.

(35) IRM 3.22.111.10.2.32 – Added Payer's GIIN - 19 position field.

(36) Exhibit 3.22.111-1 – Added Chapter 3 Status Codes

(37) Exhibit3.22.111-2 – Added Chapter 4 Status Codes

(38) Exhibit3.22.111-3 – Added Recipient Codes for Tax Year 2013 and Prior

Effect on Other Documents

IRM 3.22.111, dated November 14, 2013 (effective 01-01-2014), is superseded.

Audience

Wage and Investment - Ogden Submission Processing Campus (OSPC) - Submission Processing Tax Examiners

Effective Date

(01-01-2015)

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

3.22.111.1  (01-01-2015)
Background

  1. For 2014, the Form 1042-S has been modified to accommodate reporting of payments and amounts withheld under the provisions of the Foreign Account Tax Compliance Act (FATCA) or Chapter 4, Regulations section 1.1474-1(d).

  2. Under FATCA, to avoid being withheld upon, Foreign Financial Institutions (FFIs) may register with the IRS and agree to report to the IRS certain information about their U.S. accounts, including accounts of certain foreign entities with substantial U.S. owners. FFIs that enter into an agreement with the IRS to report on their account holders may be required to withhold 30% on certain payments to foreign payees if such payees do not comply with FATCA.

  3. Unless otherwise exempt, FFIs that do not both register and agree to report face a 30% withholding tax on certain U.S. source payments made to them.

  4. IRC Sections 1441 through IRC Section 1464, Chapter Three Withholding, states that a person that makes a payment of U.S. source interest, dividends, royalties, and certain other types of income, to a foreign person must generally deduct and withhold 30% from the gross payment. A lower rate of withholding may apply under the code, or an income tax treaty, if certain requirements are met. Generally, a withholding agent is the person responsible for withholding on payments made to a foreign person. A withholding agent is a U.S. or foreign person that has control, receipt, custody, disposal, or payment of any item of income of a foreign person that is subject to withholding. A withholding agent may be an individual, corporation, partnership, trust, association, nominee (under section 1446 of the Code), or any other entity, including any foreign intermediary, foreign partnership, or U.S. branch of certain foreign banks and insurance companies.

  5. Revised regulations under Chapter 3 (IRC Section 1441 through IRC Section 1464) and Chapter 61 (IRC Section 6041 through IRC Section 6050N) of the Internal Revenue Code became effective January 1, 2001. These regulations required a much more rigorous application by withholding agents of the requirements contained in the statutes. These regulations, together with Revenue Procedure 2000-12, Qualified Intermediary (QI) Revenue procedures and Revenue Procedure 2004-59, Section 1441, Voluntary Compliance Procedures (VCP), represented the culmination of a major effort begun in 1992 to revamp the withholding and reporting on payments of U.S. source income paid to foreign persons.

  6. The regulations and the revenue procedure represented a significant change in the way withholding taxes were collected and information reported.

  7. The regulations required both U.S. and foreign financial institutions to change their tax withholding and information reporting systems.

  8. Withholding and information reporting are fundamental to the U.S. tax compliance system. Accurate processing of the Form 1042-T and Form 1042-S contributes to ensuring U.S. source income, paid to other than U.S. persons, has withholding tax deducted at the correct tax rate and is reported and paid to the IRS.

3.22.111.2  (01-01-2015)
Purpose and Scope

  1. The purpose of this IRM is to provide processing instructions to correct Forms 1042-T, Annual Summary and Transmittal of Forms 1042-S, and Forms 1042-S,Foreign Person's U.S. Source Income Subject to Withholding, that have failed validity, consistency checks, or math error computations through the Chapter Three Withholding database.

  2. These instructions pertain to the Chapter Three Withholding (CTW) Database only. The Chapter Three Withholding Database is an on-line correction process in a real-time environment.

  3. The Chapter Three Withholding (CTW) Database will display both paper and electronically filed returns that have not passed validity, consistency checks, or math error computations. Input Correction will correct errors via the CTW database.

  4. Tax examiners using this IRM must be familiar with the editing procedures in IRM 3.21.111, Form 1042-T and Form 1042-S Chapter Three Withholding - Code and Edit. The CTW tax examiner is not expected to review or redo the work of the Code and Edit tax examiner. However, if an error or omission is made by the Code and Edit tax examiner or the Data Transcriber, working the CTW paper return, edit the correct information on the return and you must make the necessary correction on the CTW database screen. Use the information on the associated paper record to make corrections to fields with transcription or coding errors.

    Note:

    These fields may or may not be highlighted in red.

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

    • IRM 3.0.273, Administrative Reference Guide

    • IRM 3.10.72, Receiving, Extracting and Sorting

    • IRM 3.21.111, International Returns and Documents Analysis - Chapter Three Withholding Returns

    • IRM 3.30.123, Processing Timeliness: Cycles, Criteria, Critical Dates

    • IRM 3.37.110, Chapter 3 Withholding Returns

  6. Throughout this manual there are instructions to correct inaccurate and missing information, by researching the Integrated Data Retrieval System (IDRS). When researching IDRS, if you have made the determination the information on Command Codes NAMES, NAMEI, NAMEE, or NAMEB is consistent with the CTW screen, then use the information to correct the screen. Judgment must be used to determine consistency. The information does not need to be an exact match (Examples: John Smith on the CTW screen and John T. Smith on NAMES; Apt. 31 Elm St. on CTW screen and Apt. 321 Elm St. on NAMES).

    Note:

    When entering a TIN, do not enter dashes. It is a 9 position field and numeric only. Do not enter an invalid TIN, which is denoted with an asterisk (nnn-nn-nnnn*).

  7. The instructions contained in this text are used for correcting errors made by withholding agents, as well as those made by campus processing operations, on the following forms:

    • Form 1042-T Annual Summary and Transmittal of Forms 1042-S

    • Form 1042-S Foreign Person's U.S. Source Income Subject to Withholding

  8. The IRM cannot address all issues that may arise as a result of correcting the records on the CTW database. In some cases, it may be necessary to refer the record(s) to your Subject Matter Expert (SME), lead, and/or manager to make a determination for the corrective action to be taken.

  9. The Form 1042-T is processed under:

    • Program Code: 71700

    • File Source: Payor Master File (PMF)

    • Tax Class: 5

    • Master File Transaction (MFT): 88

    • Document Code: 01

    • 60501ddd000-999 (OSPC paper only)

    • 29501ddd000–999 (OSPC - filed electronically)

    • Return Due Date: March 17, 2014

    • Extended Return Due Date: May 15, 2014

  10. The Form 1042-S is processed under the following at OSPC:

    • Program Code: 71720

    • File Source Code: Information Returns Master File (IRMF)

    • Tax Class: 5

    • MFT:12

    • Document Code: 02

    • Document Locator Number (DLN) 60502ddd000–999 — OSPC — Paper ONLY

    • DLN: 29502ddd000-999 (first 100,000 filed *) OSPC

    • DLN: 81502ddd000-999 (second 100,000 filed *) OSPC

    • DLN: 82502ddd000-999 (third 100,000 filed *) OSPC

    • DLN: 83502ddd000-999 (fourth 100,000 filed*) OSPC

    • DLN: 84502ddd000-999 (fifth 100,000 filed *) OSPC

    • DLN: 85502ddd000-999 (sixth 100,000 filed *) OSPC

    • DLN: 86502ddd000-999 (seventh 100,000 filed*) OSPC

    • DLN: 87502ddd000-999 (eight 100,000 filed *) OSPC

    • DLN: 88502ddd000-999 (ninth 100,000 filed *) OSPC

    Note:

    * Indicates files received through Enterprise Computing Center - Martinsburg (ECC-MTB) in one processing day. The DLN will loop if the File Location Code is not changed after each 100,000 records identified. The DLNs range are the File Location Codes limited to work to be processed by the Ogden Submission Processing Campus (OSPC) only. Specific DLNs will be utilized which are unique to Ogden (See list above).

    • Return Due Date: March 17, 2014

    • Extended Return Due Date: May 15, 2014

    Note:

    Meeting the Program Completion Date (PCD) guideline dates in IRM 3.30.123, Processing Timeliness: Cycles, Criteria, Critical Dates, will ensure that the Form 1042-T and Form 1042-S processing meets the Taxpayer Identification Number (TIN) perfection routines in the Information Returns Processing (IRP) datastreams.

  11. The CTW program will move all records that have been corrected by the CTW user to the appropriate Master File. All Forms 1042-T corrected during the week will move each Tuesday to the Payor Master File (PMF). All Forms 1042-S corrected during the week will move each Friday to the Information Returns Master File (IRMF). All corrected records posted to the designated Master File will be researchable using the appropriate Information Returns Program (IRP) Command Codes.

3.22.111.3  (01-01-2015)
IRS Employee Contacts Section 3705(a)

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

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

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

    2. Face-to-Face: Their title (e.g., Mr., Mrs., Ms., Miss), provided as appropriate during the conversation, their last name and their badge identification (ID card) number.

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

    4. The IDRS number and numbers for certain letter systems are automatically generated. If it is not generated, or a handwritten note is prepared, the badge identification (ID card) number must be used. Toll-free employees may also provide their location for identification purposes. E-mail and faxes to taxpayers on tax related matters, are considered manually-generated correspondence and must include the required information. See IRM 11.3.1.11, Facsimile Transmission of Tax Information, for faxing guidance.

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

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

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

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

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

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

3.22.111.3.1  (01-01-2015)
♦Taxpayer Advocate Service (TAS)♦

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

3.22.111.4  (01-01-2015)
Correspondence Imaging Systems (CIS) Returns

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

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

  3. Accounts Management is required to ensure CIS returns are complete for processing. If the CIS return is incomplete, void the DLN and return to AM to secure any missing information.

    Note:

    Do not correspond for missing information on CIS returns.

3.22.111.5  (01-01-2015)
Securing Access to the CTW Database

  1. Access to the CTW database requires approval by management or a locally determined approving official. Management will also determine the level of access required to perform the employee's assigned duties (IRM 3.22.111.6, General Information and Procedures for CTW Leads and Managers, below).

  2. Designated UAP Administrators will grant approved level access to users using the User Administration Package (UAP) application, CTW Manager Role, and the SA Role in the OL5081 system. UAP Admins can grant access to the following roles:

    • CTW-Prod-11g-TCC-User

    • CTW-Prod-11g-TCC-Manager

    • CTW-Prod-11g-TCC-Reports

    • CTW-Prod-11g-TCC-Research-Reports

    • CTW-Prod-11g-TCC-SOI

    • User Admin Package (UAP) Prod

    Note:

    Access to roles other than User or Manager should be coordinated through the HQ Analyst.

  3. A User-ID and password will be required to access the UNIX system and CTW Oracle database. Take the following steps to obtain the necessary IDs and passwords:

    • Invoke the OL5081 system to

    • Request a password for the CTW database by initiating a Personal 5081.

    • Use the "Request access to an application" option.

    • In the "Look for" box, type CTW and then click "Find Now."

    • In the "Matching Applications" window, highlight "CTW-PROD-11G-TCC-USER (CTW)" and click "Save." The correct application should now appear in the "Saved Application List" window.

    • Click on the "continue" button.

    • Type the following information into the Special Instructions box: I will be a CTW user. I will need access to the CTW application.

      Note:

      Managers will request "CTW-PROD-11G-TCC-MANAGER(CTW)" access to CTW through the OL5081 process.

  4. A generic password will be issued. You will need to immediately change the generic password to a secure password by following the steps below:

    • Click the Internet Explorer Icon on your desktop.

    • Enter the URL http://ctw.enterprise.irs.gov:7778/forms/frmservlet?config=ctw in the address bar. Hit enter.

    • Click on the button "Press to Continue" on the CTW application screen.

    • Enter your SEID as your Username.

    • Enter the generic password given to you on the 5081 System. Follow screen prompts to change generic password to your permanent CTW password.

    Caution:

    If a user does not log in for a period of 45 days, security requires their account be locked. If the user does not log in for 90 consecutive days, security requires the account be deleted. In both cases, the user will need to access OL5081 to gain access to the CTW system.

    Note:

    CTW users will not be able to toggle between IDRS and the CTW database to perform research. To perform research on IDRS, the CTW user can minimize the CTW program and then perform the appropriate research. You may also "Restore Down" your IDRS screen, instead of minimizing, and "size" it to fit above a field on the database when you bring IDRS up for research. Another option is to use Task Manager to move between the CTW database and IDRS. To employ this option, hold down the Alt key and tap the Tab key to move through the open applications. Release the Alt and Tab keys, simultaneously, to bring up the desired application. All CTW users MUST exhaust all possible research to find a valid TIN, when instructed to do so.

3.22.111.6  (01-01-2015)
General Information and Procedures for CTW Leads and Managers

  1. All CTW users will be assigned different levels of access to the CTW database. CTW leads and managers will have access to various levels of the CTW database and will enter the database through a Manager Main Menu. CTW users (Tax Examiners) will enter the database through a Main Menu, limiting their access to correction screens only.

  2. Certain circumstances will require that a lead or manager perform an override on a erred Form 1042-S record that the tax examiner has corrected to the best of their ability and meets acceptable valid criteria. All override conditions must be reviewed for accuracy and completeness before the override password is entered, accepting the record to be moved to the Information Returns Master File (IRMF).

  3. Notify the Headquarters analyst if any Form 1042-T records are left on the database because they cannot be corrected. Scan and E-mail a copy of the Form 1042-T to the analyst.

  4. Ensure that the Non-Correctable (NC) records are reworked before the Cycle 32 PCD and again before the Cycle 51 PCD. The goal for the CTW program is for all records to move successfully to the IRMF.

3.22.111.6.1  (01-01-2015)
Printing Listings for Tax Examiners

  1. Errors to be worked by ERS Tax Examiners need to be printed off the CTW Application. All files are displayed in the order they need to be printed.

    Caution:

    In some circumstances, the listing will consist of thousands of DLN records. Please make sure that the printer is filled with paper and the toner is full.

  2. To print Form 1042-T error listings take the following steps:

    1. Login to CTW database.

    2. Select Form 1042-T Processing.

    3. Choose either paper or electronic 1042-T errors. Select the day.

    4. Select Print Listing of Form 1042-T errors.

    5. Once the reports have printed, the last page will provide a summary with a total count of Forms 1042-T in error for that date.

    6. Exit Form 1042-T Processing menu.

      Note:

      You can print all available files, however, they must be entered as an individual request for print.

  3. To print Form 1042-S error listings take the following steps:

    1. Login to CTW database.

    2. Select Form 1042-S Processing.

    3. Choose either paper or electronic 1042-S errors. Select the day.

    4. Select Print Listing of Form 1042-S errors.

    5. Once the reports have printed, the last page will provide a summary with a total count of Forms 1042-S in error for that date.

    6. Exit Form 1042-S Processing menu.

      Note:

      You can print all available files, however, they must be entered as an individual request for print.

3.22.111.6.2  (01-01-2015)
Inventory Screen

  1. The CTW inventory screen will display the following fields:

    Note:

    DO NOT have more than one user executing the Inventory Screen at the same time.

    Field Definition
    Inventory Date The data of the last download or correction process that took place.
    Beginning Inventory The record count of the previous inventory date.
    Received The count of all records received from download and correction screens processed.
    Records Processed The count of records that were worked on correction screens.
    Adjustment (RESTRICTED-CTW Programmers Only) Used to input a manual adjustment to the inventory counts. If the adjustments were made to the process count, the number will be a negative. If the adjustments were made to the received count, the number will be a positive.
    End Inventory The sum of Beginning Inventory plus Received plus the Adjustments minus Records Processed.
    Year to Date Total Records Processed A cumulative count of records processed for each category.
    Year to Date Total Records Received A cumulative count of records received for each category.
  2. To print the CTW Inventory Screen take the following steps:

    1. On keyboard invoke shift key and print screen key.

    2. Open Microsoft Word to a new document (blank document).

    3. Under the Edit menu click on paste (or use paste shortcut).

    4. The CTW Inventory screen will appear on the word document.

    5. Adjust the view percentage to 100 - 125%.

    6. Follow normal procedures to print the page.

      Note:

      This process can be used to print any screen throughout the CTW program.

3.22.111.7  (01-01-2015)
Daily CTW Work Assignment

  1. CTW users will log out their own work. Do not sign out more than four (4) pages of listings assigned at one time. Whenever printed listings are used, place your stamp number and date on each page and make sure the right corrective action is notated. The correct notation must be edited next to each DLN (e.g., NC, OR, No T, or a ✓ for Saved).

  2. All CTW users will complete assigned page(s) before signing out additional error listings. If you do not complete your assigned page(s), log your page(s) back in and leave the page(s) on top of work in first slot. If you have partially completed a page, place a line across where you left off. The next CTW user to work this page must put their stamp number and date below this line.

  3. Listings are to be placed in the appropriate designated area. There will be a specific tray for listings which have been completed and have case dispositions of "OR" or "No T."

3.22.111.8  (01-01-2015)
CTW Database Error Correction Process

  1. Each user will be given a listing, which will provide the DLN of the record, and a brief description of what field on the record is in error. Users will work the listing from top to bottom (First-In / First-Out). Take the following action when working the listing:

    • Place a check mark (✓) next to those records that were corrected and saved.

    • Place Non-Correctable or "NC" next to those records that could not be corrected.

  2. The message field provides additional information to the tax examiner on what the error is on the record. Clicking on a red highlighted field will put a white border around the field and display the error description in the Message Field.

  3. The point of contact field provides the name and number of contact personnel within the Withholding Agent's organization that can answer questions pertaining to the record.

  4. The remarks field captures additional information pertaining to the corrective action or the record. You must enter remarks with any record identified as being "OR" or, "NC." Records that have been corrected and saved do not require remarks, unless indicated in specific guidance within this IRM.

    Caution:

    You must make sure the remarks box closes before hitting the clear screen action or inputting the next DLN on the listing.

  5. The override field is used when all corrective actions have been exhausted and the record is being accepted as presented. The override field can only be input by a manager, lead, or SME and is password sensitive.

  6. After correcting or inputting data, you must click onto another entry field (Exception: the Message Box), to have the CTW database save the data you just input or corrected. Do this before saving the record. DO NOT hit the Enter key. If you hit the enter key, the CTW database may kick you off the system and you would need to log in to the CTW database again. If you inadvertently hit the Enter key, and the system does not kick you off, DO NOT continue to use the Enter key. The CTW database is a TIER II system and does not function in the same manner as the Error Resolution System (ERS) system.

  7. When working paper records, you must look at ALL fields, and make any necessary corrections. Use the information on the associated paper record to make corrections to fields with transcription or coding errors.

  8. Fields that have failed consistency, validity, or math error checks, will be highlighted in red on the CTW database screens. Tax examiners should research to correct fields, whenever possible. Use the information on the associated paper record to make corrections to all fields with transcription or coding errors. If through careful research on an electronic record you are able to obtain correct information, you must correct those fields. If you are correcting misplaced entries by moving information into correct fields, ensure you have deleted the information from the previous field. After ensuring all fields are accurate, save the record.

  9. Some records may show multiple fields in error, but a correction may not be necessary in each field. To save the record, make the necessary corrections. If any additional fields remain red, remove and re-enter the original information. This should allow the field(s) to turn white and allow you to save the record.

  10. It is possible to have a record that has no red fields. You may correct fields if it can be determined the information has been misplaced or has "slipped" to the wrong field (e.g. part of a name appears in the address line, all address information combined in one field).

  11. When inputting or correcting any field you must make sure that there is no space preceding the entry (Exception: Postal Code Field). The CTW database will look for the first character in the field to determine the validity of the field. If the field is a required field, and the first space is blank, the CTW database will see the field as being blank, regardless of what you have entered after the space. Ensure that all entries begin all the way to the left of the field.

  12. When moving information to correct fields, you may find it necessary to abbreviate due to space restrictions in certain fields. Use commonly acceptable abbreviations and maintain the integrity of information.

  13. Delete all titles from name lines, such as those listed in the table below:

    Title Abbreviation
    Mister, Misses, Miss Mr., Mrs., Ms.
    Reverend Rev.
    Captain, Sergeant, General. etc. Cpt., Sgt., Gen., etc.
    Doctor Dr.
    Honorable Hon.
    Governor Gov.
  14. All research should be exhausted before marking a record as non-correctable. CTW records that must be marked non-correctable or "NC" will have a note left in the remarks box specifically identifying the error (i.e. NC W/H Calc Wrong ). If there are multiple errors on the record, this may be indicated in the remarks box (i.e. "NC mult ers" ). Notate the listing with "NC" Clear the screen. Any record that is determined to be non-correctable (NC) will remain on the error table and will not post to the PMF 1042-T) or the IRMF (1042-S).

  15. Ensure that all actions are taken prior to SAVING or marking a record for override (OR). Records that are saved or marked for override will be posted to PMF or the IRMF. It is necessary to look at all correction screens and correct all fields that can be corrected. After all actions have been completed, notate the listing with the resolution of the record. If you are marking a record for override (OR) and the information in a field(s) is CORRECT , it is not necessary to re-perfect the field(s) to remove the red highlighting.

  16. If after thorough research, it has been determined that a field on an electronic record cannot be corrected, it is not necessary to continue correcting the record. It may be noted as non-correctable (NC).

  17. If your record is in error, and you have no IRM instructions, mark the record as non-correctable (NC).

3.22.111.9  (01-01-2015)
Form 1042-T - General Information

  1. Form 1042-T is used by Withholding Agents to transmit Copy A of paper Forms 1042-S reporting U.S. source income paid to a foreign person.

  2. Withholding Agent - A withholding agent is any person, U.S. or foreign, that has control, receipt, or custody of an amount subject to withholding or who can disburse or make payments of an amount subject to withholding. The withholding agent may be an individual, corporation, partnership, trust, association, or any other entity. The term withholding agent also includes, but is not limited to, a qualified intermediary (QI), a non-qualified intermediary (NQI), a withholding foreign partnership (WP), a withholding foreign trust (WT), a flow-through entity, a U.S. branch of a foreign insurance company or foreign bank that is treated as a U.S. person, a nominee under section 1446, and an authorized foreign agent. A person may be a withholding agent even if there is no requirement to withhold from a payment or even if another person has already withheld the required amount from a payment.

    • Qualified Intermediary- A qualified intermediary (QI) is any foreign intermediary (or foreign branch of a U.S. intermediary) that has entered into a qualified intermediary withholding agreement with the IRS. A QI may also be treated as a payee to the extent the QI assumes primary withholding responsibility or primary Form 1099 reporting and backup withholding responsibility for a payment. In this situation, the QI is required to withhold the tax. A QI is assigned a unique Employer Identification Number (EIN) for easy reference.

    • Non-Qualified Intermediary - Generally, the U.S. person who pays an amount subject to Non-Resident Alien (NRA) withholding is the person responsible for the withholding. However, other persons may be required to withhold. For example, a payment made by a flow-through entity or non-qualified intermediary that knows, or has reason to know, that the full amount of NRA withholding was not done by the person from which it receives a payment, is required to do the appropriate withholding since it also falls within the definition of a withholding agent.

  3. If a Withholding Agent is reporting 250 or more Forms 1042-S they are required to file their records electronically, through the FIRE (Filing Information Returns Electronically) system at ECC-MTB. The corresponding electronic record is the "W" record as described in Publication 1187, Specifications for Filing Forms 1042-S, Foreign Person's U.S. Source Income Subject to Withholding Electronically.

  4. For those Withholding Agents that have less than 250 Forms 1042-S to report, they can choose to file paper returns directly to the Ogden Submissions Processing Campus. The paper returns will follow normal submissions processing routines.

  5. Those Form 1042-T records that are in error, and are corrected, will be moved from the CTW database to the Payor Master File (PMF) for posting.

3.22.111.9.1  (01-01-2015)
Form 1042-T, Annual Summary and Transmittal of Forms 1042-S - General Correction Procedures

  1. Form 1042-T must be corrected before any associated Forms 1042-S can be corrected.

  2. The Form 1042-T Error Correction screen is used to correct records that have failed certain validity, consistency, and math error checks.

  3. Form 1042-T provides the following information:

    • Tax Year

    • Received Date

    • Chapter Indicator

    • Name of Withholding Agent.

    • Chapter 4 Status Code

    • Chapter 3 Status Code

    • Withholding Agent Employer Identification Number (EIN).

    • Withholding Agent Address.

    • Withholding Agent EIN Indicator.

    • Line 1a -Type of paper Forms 1042-S attached.

    • Line 1a - Pro-Rata indicator.

    • Line 1b - Number of paper Forms 1042-S attached.

    • Line 2 - Total gross income on all paper Forms 1042-S (box 2) attached.

    • Line 3a - Total federal tax withheld under chapter 4

    • Line 3b - Total federal tax withheld under chapter 3

    • Final return indicator.

    • Signature.

  4. There are different types of Forms 1042-S filed (Chapter 3, Chapter 4, original, amended, pro-rata, and amended pro-rata). One Form 1042-T must be submitted for each type of paper Form 1042-S attached.

3.22.111.9.2  (01-01-2015)
CTW Database Correction Process - Form 1042-T

  1. The Form 1042-T screen provides pop-up window information for the following fields:

    • TIN Type Indicator

    • State Code and state name

    • Province Code and province name

    • Country Code and country name

    Note:

    Users can choose a valid value from the pop-up list. DO NOT change information submitted by the Withholding Agent.

3.22.111.9.3  (01-01-2015)
Retrieving a 1042-T Record to be Worked

  1. Take the following steps to retrieve a Form 1042-T record:

    • From the Chapter Three Withholding (CTW) Menu, select option for Form 1042-T Processing Menu, then

    • From the Form 1042-T Processing Menu, select option to Correct Form 1042-T errors, then

    • Click on Show Listing button to choose the DLN of the first record on your listing and take the appropriate correction action.

      Note:

      Form 1042-T can be worked using the Show Listing button or from the printed listing. When using the Show Listing option, the first DLN is typically highlighted. Click on the OK button for the record to come up. The DLN you selected will appear in the Withholding Agent DLN field. Any record that is corrected and saved will be removed from the list and will not appear when you access the Show Listing option again. If the record is non-correctable (NC) and you have cleared the screen (which will leave the record on the Error Table), the DLN will remain in the Show Listing window. Just click on the next DLN to continue.

  2. The Form 1042-T correction screen consists of two pages:

    • Page one - captures the Withholding Agent's Entity information;

    • Page two - captures information relevant to the income and counts.

3.22.111.9.4  (01-01-2015)
Form 1042-T Field Designators and Correction Procedures

  1. Fields that are highlighted in red on the CTW error screens will require an action to be taken. There may be additional errors on the screen, which are not highlighted. The following sections will define the various field designators and will provide correction procedures.

    Note:

    You must adhere to all error correction procedures.

3.22.111.9.4.1  (01-01-2015)
Chapter 3 or 4 Indicator

  1. Identifies the if the 1042-T and corresponding Form 1042-S are reporting Chapter 3 or Chapter 4 withholding.

  2. This is a 1 position field that must be a 3 or 4.

3.22.111.9.4.2  (01-01-2015)
Tax Year

  1. Tax Year - Identifies the tax period for which the withholding agent is submitting the Forms 1042-T.

    • This is a 4 position field that must be present.

    • Only numeric characters are valid.

    • May be current or prior year.

    • The Tax Examiner MUST check the Tax Year field on all paper records for transcription and editing errors. Ensure that the correct tax year appears on the screen.

    • Code and Edit will edit future tax years to the current tax year.

      Note:

      This field may or may not appear in red.

3.22.111.9.4.3  (01-01-2015)
Received Date

  1. Received Date - Identifies the received date of the Form 1042-T.

    1. This is an 8 position field that must be present.

    2. Only numeric characters (0-9) are valid.

    3. The date must be in MMDDYYYY format.

    4. This field can only be corrected on paper records.

    5. Refer the record to your SME/lead/manager, if you detect an error in the Received Date field on an electronic record. If an attempt is made to correct this field on an electronic record, you will receive an error message.

    6. The date should be stamped/edited below the signature area on paper Form(s) 1042-T. If no date is present, use the instructions below to determine the correct date to enter in the Received Date field.

    If Then
    Missing, incomplete, or illegible, Research document or attachments for the Received Date and enter accordingly.
  2. If the received date is not stamped or edited on the Form 1042-T and can't be located through the research discussed above, determine the date in the following order of priority:

    1. The earliest legible postmark date on the envelope.

    2. The Revenue Officer's date of signature.

    3. The taxpayer's date of signature

    4. The DLN Julian Date minus 10 days.

    5. The current date minus 10 days.

      Note:

      If mailed USPS "Certified", give to a designated person with internet access to find the "Acceptance" date on https://wwww.usps.com/ If a designated Private Delivery Service, see IRM 3.10.72.6.2.4(3), Receiving, Extracting, and Sorting .

3.22.111.9.4.4  (01-01-2015)
Chapter 3 and Chapter 4 Status Codes

  1. Identifies the Chapter 3 or 4 withholding status of the withholding agent.

  2. This is a 2 position, numeric field. See Exhibit 3.22.111-1 for Chapter 3 Status Codes and Exhibit 3.22.111-2 for Chapter 4 Status Codes.

3.22.111.9.4.5  (01-01-2015)
Employer Identification Number (EIN)

  1. Employer Identification Number (EIN) - Identifies the Employer Identification Number (EIN) of the Withholding Agent, Qualified Intermediary or Non-Qualified Intermediary.

    • This is a 9 position field that must be present.

    • Only numeric characters are valid. However, all zeros (0's) or all nines (9's) are invalid characters.

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

    Note:

    DO NOT accept a Social Security Number (SSN) or an IRS Individual Taxpayer Identification Number (ITIN) in place of an EIN.

    If Then
    Missing, incomplete, or illegible, Research document or initiate research via IDRS using the name and address as it appears on the record.
    If found, enter EIN in field and continue processing.
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
    SSN or ITIN is present Initiate research via IDRS using name and address as it appears on the record.
    If found, enter EIN in field and continue processing.
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Note:

    Whenever you perform IDRS research, ensure you have accessed the appropriate account. If the IDRS research shows information which is not consistent with the CTW correction screen, do not correct the fields. Mark the listing as NC and clear the screen.

  2. Any Form 1042-T record, marked as NC, MUST be referred to your SME, lead, and/or manager. The non-correctable Form 1042-T record MUST be elevated to the HQ Analyst. Mark the corresponding Form 1042-S records as non-correctable if they fall out for error. The Form 1042-T and the corresponding Form 1042-S documents will be held in ERS until the Analyst can provide the correct information.

3.22.111.9.4.6  (01-01-2015)
Withholding Agent EIN Indicator

  1. Withholding Agent EIN Indicator - Identifies the type of tax identification number for the Withholding Agent.

    • This is a 1 position field that may be present on electronic files.

    • The valid entries for this field are:

      Value Definition
      0 (blank) EIN Indicator
      1 QI EIN Indicator
      2 NQI EIN Indicator
  2. Take the following actions:

    If Then
    Missing, incomplete, or illegible, Research the EIN to determine the correct indicator.
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ Change the indicator to "QI EIN."
    EIN indicator is in error and the Withholding Agent address is foreign and the EIN is within the QI EIN range, Change the indicator to "QI EIN."
    Indicator is QI EIN and the EIN is NOT within the QI EIN range and/or the address is domestic, Change the indicator to "EIN."

3.22.111.9.4.7  (01-01-2015)
Withholding Agent Name Line

  1. Withholding Agent Name Line - Identifies the Withholding Agent's name as established when filing for the EIN or QI-EIN. This field consists of three line entries.

    • These fields are 40 position fields.

    • Name Line 1 - Required.

    • Name Line 2/3 - Used to identify additional/supplemental name line data. (e.g., In Care of, In Trust for (ITF), Division, Department, Office, etc.)

  2. Valid characters for all name and address fields are:

    • Alpha (A-Z)

    • Numeric (0-9)

    • Blank

    • Ampersand (&)

    • Hyphen (-)

    • Slash (/)

    • Period (.)

    • Comma (,)

    • Apostrophe (')

    • Pound (#)

    • Percent (%)

      Note:

      The percent (%) is used to indicate "in care of" and is valid in the first position only.

    If Then
    Name Line 1 is missing, incomplete, or illegible, Research document or initiate research via IDRS using the Withholding Agent's EIN.
    If found, enter name line data in field(s) and continue processing.

    Note:

    Whenever you perform IDRS research, ensure you have accessed the appropriate account. If the IDRS research shows information which is not consistent with the CTW correction screen, do not correct the fields. Mark the listing as NC and clear the screen.

    If not found, mark listing as non-correctable (NC) and clear the screen.

3.22.111.9.4.8  (01-01-2015)
Withholding Agent Address Line

  1. Withholding Agent Address Line - Identifies the Withholding Agent address of record. This field consists of entries which identify street, city, state, province code (if applicable), country code (if applicable), and zip or foreign postal code. See IRM 3.22.111.9.4.5(2) for a list of valid characters. The following defines the various address entries:

    • Street Line 1 - is a required field and identifies the street address of record for the Withholding Agent. This field consists of 40 positions. The address must consist of number, street and apartment or suite number ( P. O. Box if mail is not delivered to street address). Abbreviate as needed, See Exhibit 3.21.111–5, Job Aid 2543–702 and Document 7475 for address abbreviations.

      If Then
      Missing, incomplete, or illegible, Research document or initiate research via IDRS using the Withholding Agent's EIN.
      If found, enter the corrected street information and continue processing.

      Note:

      Whenever you perform IDRS research, ensure you have accessed the appropriate account. If the IDRS research shows information which is not consistent with the CTW correction screen, do not correct the fields. Mark the listing as NC and clear the screen.

      If not found, mark listing as non-correctable (NC) and clear the screen.
    • Street Line 2 - is used to provide additional/supplemental information pertaining to the Withholding Agent's street address.

  2. When identifying City, State, Province Code, Country Code, and Zip/Foreign postal codes you must take the following into consideration before performing any correction procedures:

    If Then
    City, State, and Domestic Zip Code are present, Country Code should be blank. If a Country Code, or U.S., is present, delete. Enter "OC" in the blank Country Code.
    If State field is missing, Research document or initiate research via IDRS using the Withholding Agent's EIN.
    If found, enter the correct information and continue processing.

    Note:

    Whenever you perform IDRS research, ensure you have accessed the appropriate account. If the IDRS research shows information which is not consistent with the CTW correction screen, do not correct the fields. Mark the listing as NC and clear the screen.

    If not found, determine if the entity is foreign, in which case, state code does not apply. If unable to determine, mark listing as non-correctable (NC) and clear the screen.
    It appears the city, state, zip, province, country code, or foreign postal code has been misplaced, Determine the correct entries and enter in appropriate fields.
    If Country Code is CA, Province Code must be entered. See Exhibit 3.21.111-9 and Job Aid 2543–702, for Canadian Province codes. The Job Aid includes Canada Postal Code definers.
    • City - is a required field and identifies the city of record for the Withholding Agent. This is a 40 position field. Enter city or town (or other locality name).

      Note:

      If an APO (Army Post Office)/FPO (Fleet Post Office)/DPO (Diplomatic Post Office) address is present, you must ensure APO/FPO/DPO, the applicable state abbreviation, and zip code are in the City/State/ZIP field. An example of the format for APO/FPO/DPO addresses can be found in paragraph (3), IRM 3.22.111.10.3.25 . (See Exhibit 3.21.111–6, State Abbreviations and Zip Code Ranges including APO/FPO/DPO Zones, Job Aid 2543–702 and Document 7475).

      If Then
      Missing, incomplete, or illegible, Research document or initiate research via IDRS using the Withholding Agent's EIN.
      If found, then enter the correct city information and continue processing.

      Note:

      Whenever you perform IDRS research, ensure you have accessed the appropriate account. If the IDRS research shows information which is not consistent with the CTW correction screen, do not correct the fields. Mark the listing as NC and clear the screen.

      If not found, mark listing as non-correctable (NC) and clear the screen.
    • State - is a required field if the Withholding Agent is a U.S. Withholding Agent, and is located within the United States, one of its territories, or an APO/FPO/DPO address. This is a 2 position field. See Exhibit 3.21.111–6, State Abbreviations and Zip Code Ranges including APO/FPO/DPO Zones, Job Aid 2543–702 and Document 7475, for the appropriate state abbreviation.

      Note:

      If the Withholding Agent is not located in a U.S. state, territory, or APO/FPO/DPO, then this field must be blank. DO NOT enter foreign country code in this field.

      If Then
      Missing, incomplete, or illegible, Research document or initiate research via IDRS using the Withholding Agent's EIN.
      If found, enter the correct state information and continue processing.

      Note:

      Whenever you perform IDRS research, ensure you have accessed the appropriate account. If the IDRS research shows information which is not consistent with the CTW correction screen, do not correct the fields. Mark the listing as NC and clear the screen.

      If not found, mark listing as non-correctable (NC) and clear the screen.
    • Province Code - is a required field if the Withholding Agent Country Code is CA (Canada). This is a 2 position field. The Province Code field is only present when the foreign Country Code for the withholding agent is CA (Canada). See Exhibit 3.21.111-9 and Job Aid 2543-702, for Canadian Province Codes. The Job Aid includes Canada Postal Code definers.

      If Then
      Missing, incomplete, or illegible, Research document or initiate research via IDRS using the Withholding Agent's EIN.
      If found, enter the correct province information and continue processing.

      Note:

      Whenever you perform IDRS research, ensure you have accessed the appropriate account. If the IDRS research shows information which is not consistent with the CTW correction screen, do not correct the fields. Mark the listing as NC and clear the screen.

      If not found, then mark listing as non-correctable (NC) and clear the screen.
      The city is blank and the country is CA (Canada), Enter full province name in the city field and appropriate Province Code in the Province Code field.
      A province, or Province Code is entered in the city line, for a country other than Canada, Leave the entry in the city line and do not enter a Province Code in the Province Code field.
    • Country Code - is a required field when the Withholding Agent is a foreign Withholding Agent. This field is a 2- position field. See Exhibit 3.22.111-1, Country Code Table and Document 7475 for correcting entity/address information.

      If Then
      Missing, incomplete, or illegible, Research document or initiate research via IDRS using the Withholding Agent's EIN.
      If found, enter the correct country information and continue processing.

      Note:

      Whenever you perform IDRS research, ensure you have accessed the appropriate account. If the IDRS research shows information which is not consistent with the CTW correction screen, do not correct the fields. Mark the listing as NC and clear the screen.

      If not found, mark listing as non-correctable and clear the screen.
      Country name is one of the following:
      Hong Kong (HK)
      Monaco (MN)
      Abu Dhabi (AE)
      Malta (MT)
      Mexico (MX)
      Singapore (SN)
      Luxembourg (LU)
      San Marino (SM)
      Vatican City (VT)
      Enter full country name in city field and appropriate Country Code in Country Code field.
      Country Code is one of the following:
      • TC

      • VP

      • WE

      • XE

      Change the expired code to match the current code:
      • TC to AE

      • VP to FR

      • WE to IS

      • XE to UK

    • Postal/Zip Code - This field identifies the foreign postal or domestic Zip Code for the Withholding Agent. This field varies between 5-9 positions. See Job Aid 2543–702 and Document 7475 for additional information on Zip Code ranges. Valid characters for this field can be Alpha (A-Z), or Numeric (0-9), and may include a hyphen (-).

      Note:

      If Withholding Agent address is U.S., then Zip Code must be present and must be numeric. If address is foreign, then foreign postal code may or may not be present and can be alpha and/or numeric. If foreign postal code is not present, and the country is other than Australia, it is not necessary to research for a Postal Code. If present, do not delete. Correct any obviously misplaced entries.

    • A foreign postal code must be present for all Australian addresses. If the Postal Code field is blank, then edit using the list below:

      Australian State/Territory Postal Code
      New South Wales and Australian Capital Territory (A.C.T.) 2000 - 2999
      Victoria 3000 - 3999
      Queensland 4000 - 4999
      South Australia 5000 - 5799
      Western Australia 6000 - 6799
      Tasmania 7000 - 7499
      Northern Territory 0800 - 0899
    • European postal systems frequently do not spell out the name of the country, instead, they will use a prefix to the postal code. At times the Withholding Agent will enter their foreign postal code and city only in the city field and leave the Country Code and foreign postal code fields blank. To assist you in determining missing Country and/or foreign postal code use the table below to determine Country and foreign postal codes.

    Country Name Prefix Length
    Austria (AU) A 4
    Belgium (BE) B 4
    Denmark (DA) DK 4
    Finland (FI) SK 5
    France (FR) F 5
    Germany (GM) D 4 or 5
    Hungary (HU) H 4
    Italy (IT) I 5
    Liechtenstein (LS) FL 4
    Norway (NO) N 4
    Sweden (SW) S 5
    Switzerland (SZ) CH 4

3.22.111.9.4.9  (01-01-2015)
Return Type Indicator, Line 1a

  1. Return Type Indicator (RTI)- identifies the type of Form 1042-S attached/submitted with Form 1042-T. On the Form 1042-T record, this information is separated into two fields (boxes) for Line 1a. The type of returns that are indicated in the first box are either an Original or Amended record.

    • No action is required for electronic records.

    • The first box on the CTW screen is located to the right of "Return Type Indicator."

    • Paper Form 1042-T are transcribed in ISRP and the ERS tax examiner must correct any transcription errors. Research the associated paper form to ensure entries on the screen are correct.

    • The Data transcriber should press the "Enter" key, which will generate a "0" in the RTI, if the filer has placed a check mark ✓ in the box on the form for Original (or if neither the Original or Amended boxes have been checked). The ERS tax examiner must ensure "Original" appears in the first box.

    • Data should enter a "1," if the filer has placed a check mark in the box for "Amended." The ERS TE must ensure "AMENDED" appears in the first box.

  2. Correct the screen using the table in IRM 3.22.111.9.4.10(2) below.

3.22.111.9.4.10  (01-01-2015)
Pro-Rata Basis Reporting, Line 1a

  1. Pro-Rata Basis Reporting - identifies whether the Withholding Agent is reporting Pro-Rata withholding on attached Form 1042-S. If the agent is reporting Pro-Rata withholding, the second box under Line 1a will be checked.

    • No action is required on electronic records.

    • The second box on the screen is located to the right of "if pro-rata."

    • Use the paper form as a source document and ensure entries on the screen are correct.

    • If no check mark is entered in the box for Pro-Rata, on the paper Form 1042-T, Data will hit the "Enter" key, which will generate a "0" in the field. The ERS TE should ensure that the second box under Line 1a indicates "Not Pro-Rata."

    • If there is a check mark in the box for Pro-Rata on the form, Data should enter a "1." ERS must ensure "Pro-Rata" appears in the second box, under Line 1a, on the screen.

  2. Use the table below to correct the screen for paper records only.

    If Then
    Amended box is checked, or there is an indication the form is amended, Click the "Original" button to change the record to Amended.
    Pro-rata box is checked, or there is an indication that the form is a pro-rata, Click the "Not Pro-Rata" button to change the record to Pro-Rata.
    Amended and pro-rata boxes are checked, or there is an indication the form is amended pro-rata, Click on both the "Original" and "Not Pro-Rata" buttons to change the record to Amended Pro-Rata.
    No boxes are checked and there is no indication the form is an amended pro-rata. Ensure the boxes on the screen indicate Original and Not Pro-Rata.

    Note:

    An indication would include a "✓" , or an "X" in the appropriate box(es), or a notation on the form or attachment.

3.22.111.9.4.11  (01-01-2015)
Number of 1042-S Attached, Line 1b

  1. Number of 1042-S Attached - identifies the number of paper Form 1042-S submitted with Form 1042-T or the electronically filed Form 1042-S submitted by a transmitting agent at ECC-MTB.

    • This is a required field and may contain up to 5 positions.

      If Then
      Missing or zero,
      • For paper records, count the number of associated Form(s) 1042-S and enter the correct number in the field. If there are no associated Form 1042-S, place a "1" in the field and refer the case to the SME, lead, or manager (feedback should be provided to Code and Edit).

      • For electronic records, enter a "1" in the field.

      Number of paper Form 1042-S is over 250 Verify the number is correct on the document. If the number does not match what is on the screen, override the field and insert the correct number.

3.22.111.9.4.12  (01-01-2015)
Total Gross Income Paid, Line 2

  1. Gross Income Paid - identifies the total of gross income from all associated Form 1042-S.

    • This is a required entry and may contain up to 15 numerics.

    • All entries must be positive and will be in whole dollars only.

      If And Then
      ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡
      ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

3.22.111.9.4.13  (01-01-2015)
Total Federal Tax Withheld, Lines 3a or 3b

  1. Total U.S. Federal Tax Withheld - identities the U.S. Federal Tax withheld from all associated Form 1042-S (Total amount withheld includes all amounts from Form(s) 1042-S, Line 9).

    • This is a required entry and may contain up to 15 numerics.

    • Entries should be in whole dollars only.

    • Only zero (0), or positive entries are valid.

3.22.111.9.4.14  (01-01-2015)
Final Return Indicator

  1. Final Return Indicator - identities if the return is a final return and is located at the bottom of page 2 of the Form 1042-T screen.

    • This is a 1 position field.

    • The valid entries for this field are "0" or "1."

      If Then
      Final return - filer has placed a ✓ or X in the box "1" will be present in checkbox.
      Not a final return - the box has been left blank "0" will be in the checkbox.

3.22.111.10  (01-01-2015)
Form 1042-S - General Information

  1. Form 1042-S is used by Withholding Agents to report U.S. source income paid to a foreign person and to report amounts withheld under the Chapter 3 and Chapter 4 Internal Revenue Code (IRC).

  2. Withholding Agents that have 250 or more Form 1042-S to submit must file electronically, using the FIRE system, at the ECC-MTB. Foreign Financial Institutions are required to file Chapter 4 Form 1042-S using FIRE. The corresponding electronic record is the "Q" record as described in Publication 1187, Specifications for Filing Form 1042-S, Foreign Person's U.S. Source Income Subject to Withholding Electronically.

  3. For those Withholding Agents that have less than 250 Form 1042-S to report, they can choose to file paper returns directly to the Ogden Submissions Processing Campus. The paper returns will follow normal submissions processing routines.

  4. Those Form 1042-S records that are in error, and are corrected, will be moved from the CTW database to the Information Returns Master File (IRMF) for posting.

3.22.111.10.1  (01-01-2015)
CTW Database Correction Process - Form 1042-S

  1. The Form 1042-S screens provide pop-up window information for the following fields:

    • Income Code

    • Tax Rate

    • Exemption Code

    • Recipient Code

    • State Code

    • Province Code

    • Country Code

    Note:

    Users can choose a valid value from the pop-up list. DO NOT change information submitted by the Withholding Agent.

3.22.111.10.2  (01-01-2015)
Retrieving a Form 1042-S Record to be Worked

  1. Take the following steps to retrieve a Form 1042-S record:

    • From the Chapter Three Withholding (CTW) Menu, select option Form 1042-S Processing Menu, then;

    • From the Form 1042-S Processing Menu, select option for Correct Form 1042-S errors, then;

    • Input DLN of first record on listing in the Recipient DLN field and hit enter, then;

    • Once record retrieves, follow your IRM procedures and take corrective action.

      Caution:

      DO NOT click on the Show Listing button. This will bring up the list of all Form 1042-S records that are in error and cause a delayed response time, as the database retrieves hundreds of thousands of records at any given time. If you inadvertently select Show Listing, a pop-up window will appear and ask if you still want to Show Listing, indicating performance may be affected. You must select —"NO." If you inadvertently select "Yes," you will need to wait for the database to retrieve all the error Form 1042-S DLN records. After the listing appears, hit the cancel button and proceed with the instructions above by placing the DLN in the Recipient DLN field, then hit enter.

  2. The Form 1042-S correction process involves four error correction screens:

    • Screen one - captures the Withholding Agent's Entity information and captures data pertaining to the income.

    • Screen two - captures Recipient's information.

    • Screen three - captures NQI/Flow-Through Entity's information, if any.

    • Screen four - captures Payer's Information, if any.

  3. Junk 1042-S records will be corrected and will then fall out to error where they will have final correction. The DLN will not copy to the Error screen. Junk Error records that are considered non-Correctable should be taken to the SME, Lead or manager to verify that the record is non-Correctable before the screen is cleared. Records that cannot be corrected stay on the Junk Error Table.

  4. The purpose of the CTW Amend S Records Delete Screen is to match amended records with original input records. The screen first queries records from the CTW Amend S table and then matches them against records from the Junk S table and Error S table. Matching records will display in the Matching Records Found area at the bottom of the screen. Click on the yellow button next to the field(s) to update one record at a time. After all the matching records are deleted, click on the SAVE button in the top right corner of the screen. If there are no matching records found, click on the SAVE button.

    Note:

    You must have Manager rights to work Amended records.


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