4.19.4  CAWR Reconciliation Balancing

Manual Transmittal

April 10, 2014

Purpose

(1) This transmits the revised IRM 4.19.4, Liability Determination, CAWR Reconciliation Balancing .

Background

IRM 4.19.4 is issued to employees in the Small Business/Self Employed (SB/SE) Business Operating Division to use as a guide for the reconciliation of IRS-CAWR and SSA-CAWR tax cases.

Material Changes

(1) Updated year specific items to current processing years.

(2) Format, references and editorial and clarification changes throughout the IRM.

(3) IRM 4.19.4.1 CAWR Overview: Updated overview and removed references to AEIC matching.

(4) IRM 4.19.4.1(5) CAWR Overview: added mass generated cases to bullet list and removed AEIC references.

(5) IRM 4.19.4.2.2 Online Retrieval System (ORS) Data Screening: Updated wording and added reference to IDRS Command Code IRPTRI.

(6) IRM 4.19.4.3.1.1(2) The Intentional Disregard Failure to File Penalty (PRN 549): Updated penalty dollar amounts for different tax years.

(7) IRM 4.19.4.3.10(4) Replies Including Schedule H, Household Employment Tax Issues: Removed reference to using source code 2 Form 1041 accounts.

(8) IRM 4.19.4.3.19(1) Family Employment Related Case Replies: Updated verbiage in exception.

(9) IRM 4.19.4.3.50(3) Hiring Incentives to Restore Employment (HIRE) Act: Updated third if and then.

(10) IRM 4.19.4.3.51 BMF ID Theft in CAWR: Added new subsection.

(11) IRM 4.19.4.4(1) No Replies: Revised verbiage and deleted see also reference.

(12) IRM 4.19.4.4.3 (1) No Replies referring to Incentives to Restore Employment (HIRE) Act: Updated 2nd if/then.

(13) IRM 4.19.4.5.4 Undeliverables referring to Hiring Incentives to Restore Employment (HIRE) Act: Updated 2nd if/then.

(14) IRM 4.16.4.6.1(9) Late Replies Addressing SSA-CAWR Penalties: updated verbiage.

(15) 4.19.4.6.1(7) Late Replies Addressing SSA-CAWR Penalties: Added penalty reason code IRM reference.

(16) 4.19.4.11.1 (3) CSR Researching IRS-CAWR/SSA-CAWR Issues: Undated if and then box to remove Form 4506 reference.

Effect on Other Documents

This supersedes IRM 4.19.4 dated April 4, 2013. The following IRM Procedural Updates (IPUs) have been incorporated into this IRM: 13U0896 (issued 05/08/2013) and 13U1298 (issued 07/30/2013).

Audience

Compliance Employees, SB/SE

Effective Date

(04-10-2014)


/s/ Scott B Prentky
Director
Campus Reporting Compliance SE:S:CCS:CRC
Small Business/Self-Employed

4.19.4.1  (04-10-2014)
CAWR Overview

  1. This IRM is to be used by employees in the SBSE Document Matching Combined Annual Wage Reporting (CAWR) operations. This IRM is to be used in conjunction with IRM 4.19.8 CAWR (Combined Annual Wage Reporting) CAP (CAWR Automated Program) Technical System Procedure, IRM 1.4.22 Manager Coordinator Guide, IRM 4.19.22 CAWR Control, and IRM 21.1.3 Accounts Management and Compliance Services Operation Taxpayer Contact by Telephone, Correspondence or in Person . Important explanations, information, and instructions are included in these materials. Additional resources can be found on the CAWR/FUTA web site at http://wc.web.irs.gov/and the CAWR FUTA Research Portal found at http://serp.enterprise.irs.gov/databases/portals.dr/compliance.dr/crc.dr/cawr_futa/cawr_futa_default.htm/ When referring to IRS CAWR cases, the reference will be IRS-CAWR. When referring to SSA CAWR cases, the reference will be SSA-CAWR. When an instruction indicates CAWR, it is referring to all case types and SSA IND types. IRS-CAWR and SSA-CAWR instructions are consolidated so that the SSA-CAWR instructions are included with the screening, replies, undeliverables, no replies and case closing procedures.

  2. The purpose of the IRS CAWR program is to ensure that employers paid and reported the proper amount of taxes and federal withholding. This is done by comparing the Forms W-3/W-2/W-3C/W-2C totals and the Form 1099-R and W-2G withholding amounts to the amounts reported on the Forms 94X (Forms 941, 943, 944, 945, Schedule H (Forms 1040/1041)) employment tax returns.

  3. IRS matches four fields — Social Security wages, Social Security tips, Medicare wages and tips, and federal tax withheld (FIT).

  4. IRS CAWR case types are 01, 02, 04A, 04B, 04C, 04D, 06A, 06B, 06C, 06D, 09, 10A, 10B, 10C, 10D, 11, 13 and . SSA case types are 03, 05, 07, 08, and 12. The following are the Case Types and ranges, with definitions:

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  5. Case types are to be worked in the following priority order:

    • Mass generated available inventory

    • 04A, 06A, and 10A

    • 04B, 06B, 10B

    • 04C, 06C, 10C

    • 04D, 06D, 10D

    • All other case types are to be worked at HQ direction only.

  6. The purpose of the Social Security Administration-CAWR (SSA-CAWR) program is to:

    • Obtain Forms W-2 from the employer

    • Forward Forms W-3/W-2 to SSA to ensure employees receive proper credit for their earnings

    • Assess employers applicable penalties for not following the established rules of filing Forms W-3/W-2

    • Provide results, by case, to SSA (See note below)

    Note:

    The SSA information on the CAP Detail Screen is completed for each and every open SSA Indicator 2 or 1 SSA-CAWR case. This information provides SSA the information the IRS is required to provide under the IRS/SSA Memorandum of Understanding. This portion of the CAP Detail screen will only appear for cases with SSA Indicator 2 or 1 present.

  7. SSA-CAWR Cases (case types 03, 05, 07, 08 & 12) are SSA case types referred by SSA to IRS after several attempts by SSA were made to obtain the Forms W-3/W-2 from the employer. The majority of the SSA-CAWR cases are non-tax cases (i.e., the Forms 94X have been filed and taxes paid) and are SSA case types. It is mandated to work the entire SSA-CAWR download.

  8. SSA has performed their own "up front" matching of the Forms 94X data to the Forms W-2 data. When there has been no response to SSA's letters attempting to secure the Forms W-2, the cases are forwarded to IRS. SSA only matches three fields during their reconciliation — Social Security wages, Social Security tips and Medicare wages and tips.

    Note:

    Some of the cases referred to IRS have previously been identified as other IRS case types and updated to "SSA Indicator 2 or 1" .

  9. The annual due date for filing Forms W-2 is the last day of February following the reporting year or the following Monday if the last day in February falls on Saturday or Sunday.

    Exception:

    If Forms W-2 are filed electronically, the due date for filing is March 31st.

4.19.4.1.1  (04-01-2009)
CAP- CAWR Automated Program

  1. Cases that are determined to have discrepancies or that are referred by SSA, are loaded onto the CAP (CAWR Automated Program) Tier II SUN domain at Enterprise Computing Center-Memphis (ECC-MEM). For more information on the CAP system see IRM 4.19.8 CAP (CAWR Automated Program) Technical System Procedures.

  2. CAP is a computer (inventory, correspondence, reporting, document preparation, and updates to Master File) application that houses the CAWR programs.

  3. All Master File actions that affect the taxpayers account for the year(s) being worked will result in an update to the CAP system. This includes Entity changes, IDRS adjustments, and additional Forms W-3, Transmittal of Wage and Tax Statement, and Forms W–2, Wage and Tax Statement, processing by SSA.

4.19.4.1.2  (04-01-2009)
Taxpayer Advocate Service (TAS)

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

  2. Refer taxpayers to the Local Taxpayer Advocate (see IRM part 13, Taxpayer Advocate Service) when the contact meets TAS criteria see IRM 13.1.7, Taxpayer Advocate Service Case Criteria and you can't resolve the taxpayer's issue the same day. The definition of "same day" is within 24 hours. "Same day" cases include cases you can completely resolve in 24 hours, as well as cases in which you have taken steps within 24 hours to begin resolving the taxpayer's issues. Do not refer these cases to TAS unless they meet the TAS criteria and the taxpayer asks to be transferred to TAS. Refer to IRM 13.1.7.4Same-Day Resolution by Operations . When referring cases to TAS, use Form 911, Request for Taxpayer Advocate Service Assistance and forward to TAS in accordance with your local procedures. Also see IRM 21.1.3.18Taxpayer Advocate Service (TAS) Guidelines, for more information.

  3. If you want to report a systemic problem to TAS, you can do so by using SAMS, the Systemic Advocacy Management System, a web based method of identifying, prioritizing, and working issues that affect multiple taxpayers. The SAMS application is available on the Systemic Advocacy pages at http://tas.web.irs.gov/ or you may call 1–877–777–4778 or TTY/TDD 1–800–829–4059. When submitting issues through SAMS, do not include taxpayer information.

  4. Taxpayers can use the internet version of SAMS on the Systemic Advocacy pages of http://www.irs.gov/advocate/. Those without internet access can obtain the Systemic Advocacy Issue Submission Form; Form 14411, by calling 1–800–TAX-FORM (1-800-829-3676). If you suggest the taxpayers report a systemic problem by using SAMS, remind taxpayers to not include taxpayer information in their submissions and to be sure to include a phone number where a TAS employee can reach the tax payer if TAS has any questions about the submission.

  5. The National Taxpayer Advocate Service Level Agreement (SLA) with SB/SE outlines procedures and responsibilities for the processing of TAS casework when required case actions exceeds either the statutory or delegated authority granted to TAS. When TAS does not have delegated authority on issues handled by the CAWR unit, the TAS employee will refer the case to the CAWR Liaison via Form 12412, Operations Assistance Request (OAR).

  6. The CAWR Liaison is responsible for accepting OARs from TAS, acknowledging receipt of the case, reviewing the case for appropriate assignment, assigning the case to the appropriate employee within the function, and monitoring the case through its conclusion.

  7. The CAWR liaison will provide the TAS employee with the name and telephone number of the group manager or employee assigned to work the case.

  8. The assigned TAS employee will negotiate resolution with the assigned CAWR employee. If the actions requested by TAS are denied, make every effort to communicate with the TAS representative to resolve the case prior to rejecting the OAR.

  9. If resolution cannot be reached between the assigned employees, each will elevate disagreement to their respective manager in accordance with the SB/SE SLA.

4.19.4.2  (05-13-2011)
IRS-CAWR and SSA-CAWR Case Screening Process

  1. When extensive research is performed during the Screening phase, it proves to be most beneficial for the tax examiner and the taxpayer. All available research tools should be used to balance the case before any taxpayer contact is made. The following procedures are used when working CAWR case types, SSA Indicator 2 cases, IMF W-2C cases, replies, no replies, late replies, and undeliverable mail.

    Caution:

    When using IDRS, only access those tax modules required to accomplish official duties. All IDRS accesses are recorded for immediate review and to determine the accuracy of an adjustment. Any unauthorized accesses or browsing of tax modules, by employees to satisfy personal curiosity or for fraudulent reasons, are prohibited by the IRS, AND PROHIBITED BY LAW and will result in disciplinary actions and/or removal from the Service.

    Note:

    This IRM cannot be all inclusive for resources to be researched during screening.

  2. There are times when the Campuses are directed by the Headquarters analysts to close certain CAWR cases. Campuses will receive specific directives outlining the actions to be taken. These directives can be delivered the following ways:

    • Question and Answer Updates from HQ Staff

    • Servicewide Electronic Research Program (SERP) updates/alerts

    • Information Technology and Asset Management System (ITAMS)

    Note:

    All prior tax year ITAMS, SERP alerts, and Headquarter reminders, are invalid upon the start of a new program year.

  3. Schedule D "Report of Discrepancies Caused by Acquisitions, Statutory Mergers, or Consolidations" information is now stored in the CAP system. Electronically filed Schedule D information is downloaded automatically into CAP. Loose paper Forms 941 Schedule D are routed to PSC CAWR. PSC will sort and input the Forms into the Schedule D table on CAP following the procedures below:

    1. Click "edit."

    2. Choose "CAWR SCHD."

    3. Click on "new."

    4. Form 941 EIN (Required field)

    5. Schedule D Tax year (Required field).

    6. Transaction date: This is the effective date of the acquisition/merger or consolidation located in Part 1 question number 2 of paper Schedule D (Required field).

    7. Other Party EIN (Required field).

    8. Click "apply."

    9. Destroy the paper Schedule D using local classified waste procedures.

  4. The initial research begins with the CAWR information on the CAP system. The following screens must be researched:

    1. Detail Screen — Review all indicators and freeze codes to determine the proper actions necessary while working the case. Indicators and freeze codes may change weekly, after each Master File update is loaded to CAP.

    2. PAL (Payer Agent List) Screen - Contains information that identifies a taxpayer on the AUR Bad Payer Agent Listing. This screen will only be displayed when applicable.

    3. Money Amount Screen — lists, by field, the total amounts of Forms 94X, Forms W-2 (as processed by SSA), Form W-3/W-3C (as reported by the employer), Forms 1099R, the difference between the Form W-2/W-2C amounts and the Form 94X amounts.

    4. Correspondence Screen - is accessed to request correspondence and will reflect any correspondence issued, replies and undeliverables received, no reply dates, and suspense dates.

    5. ENTITY Screen — Verify that the information shown on the entity screen of the CAWR case on CAP is the same as that shown on IDRS. This screen may help in identifying legitimate addresses, TRENDS ( See IRM 4.19.4.3.43.), and/or Disaster Areas (based on zip code) not yet identified on CAP but a FEMA alert has been issued. The IDRS address will update at least one week before the CAP ENTITY address. If the address is different, update CAP.

    6. W-3 WIRS Screen - This screen displays the Forms W-3, Forms W-2, Forms 1099-R, and Forms W-2G information. If more than one Form W-3/1096 (transmittal documents for Forms W-2, 1099-R, and W-2G) was submitted, there will be separate Microfilm Sequence Numbers (RLNs)/ Document Locator Numbers (DLNs) to identify each submission.

    7. MFT & ADJ Screen — displays the Master File Tax (MFT), DLN, line item adjustments (if any), and the Secondary Social Security Number (SSN) (for Schedule H). This information will help determine if there is a missing tax return, or an adjustment to a tax return which may help in resolving the CAWR discrepancy.

    8. Form 6209 Screen — This screen is used to make any Form W-2 adjustment using the automated Form 6209.

      Note:

      Form W-3 amounts can only be adjusted if you are transferring a complete RLN.

    9. History Screen — reflects actions taken by anyone on the CAWR CAP system.

    10. Original Money Amounts — This pop up screen will provide the original money amounts downloaded when the case was loaded onto CAP and can be used to determine the original amounts and out of balance condition. This screen cannot be updated by anyone or any program.

  5. During CAWR case screening on CAP, you need to determine if accessing ERQY (Employer Report Query) or researching ORS (On-Line Retrieval System) will help resolve the discrepancy. If not, move on to IDRS for further research.

  6. If a yellow disaster bar is present on CAP and you determine correspondence needs to be issued

    1. Research the Disaster web site at http://www.tris.irs.gov/fema/ for an "end date"

    2. Update CAP with the "end date"

    3. Update status code to "10"

    4. If necessary, see your Campus Disaster Coordinator for further instructions.

4.19.4.2.1  (09-29-2011)
IDRS Screening

  1. The following IDRS Command Codes (CC) are to be utilized during the screening process: (This list is not all inclusive)

    Note:

    The utilization of Integrated Automation Technologies (IAT) is mandated when applicable ensuring consistency and accuracy for the program.

    • TXMOD/SUMRY — for updated case actions or taxpayer correspondence .Pay particular attention to credit transfer transaction codes (TC 612, 652, 672) or transaction code 971 with an action code of 01, 02, or 03

    • INOLE/NAMEE/NAMES/ENMOD — for any indication of a cross-reference.

    • BMFOL/BRTVU/PMFOL/IRPTR/IMFOL/RTVUE/TRDBV — for any indication of additional case action (i.e. SUPOL is the national database of potential TDI cases)

    • ESTAB — to request an adjustment or original document to verify the taxpayer's intent or accuracy of account information

    • TRPRT - to view a graphical (form image) print of an electronically filed tax return stored on the tax return data base (TRDB). This may be used to identify various conditions that may have caused the out of balance condition (i.e., Third Party Sick Pay).

  2. If Large Corporation Indicator (LCI) is present on the module, see IRM 4.19.4.2.1.1. The LCI with a campus code on each taxpayer's case can be found on the following IDRS screens:

    1. Directly under CC:ENMOD

    2. On the third line of CC:SUMRY

    3. On the second line of CC:TXMODA, and/or

    4. On the fourth line of CC:BMFOLI

4.19.4.2.1.1  (04-04-2013)
Large Corporation/Large Dollar Screening

  1. When a CAWR case contains either a Large Corporation Indicator (LCI) or a proposed tax and/or penalty assessment of $1 million dollars or more that cannot be resolved through normal screening procedures, you must coordinate with your local Large Corporation Coordinator before contacting the taxpayer. All research must be completed to ensure the case cannot be resolved prior to referring to Large Corp.

  2. Provide the local Large Corporation Coordinator with a print of the CAP MONEY AMOUNT screen.

  3. Document the action in the CAP REMARKS field (ex: refer to LC Coordinator).

  4. Monitor the case for 10 business days, pending further direction from the local Large Corporation Coordinator. Alert your manager when 10 business days have elapsed without any further direction from the local Large Corporation Coordinator. Your manager will provide you with further instructions and/or actions needed.

  5. Follow the direction provided by the local Large Corporation Coordinator to complete the case processing.

4.19.4.2.2  (04-10-2014)
Online Retrieval System (ORS) Data Screening

  1. ORS data will be accessed during all phases of the CAWR program. ORS data is obtained through accessing the SSA database. Instructions for accessing ORS and updating your password can be located on the CAWR FUTA Home page.

    1. If you only need the data, not the actual copies of the original forms, you may order Forms W-2/W-2C information using IDRS CC IRPTRR using doc code WW or view IDRS CC IRPTRI. IRPTRI will allow you to view the of the IRs online.

    2. To order the Forms 1099-R and W-2G use IDRS CC IRPTRR Doc Code 98. Use care with CC IRPTRR when requesting large volumes.

  2. ORS data should be reviewed prior to any taxpayer contact. Some common reasons to access ORS/ERQY are:

    • dollar amounts reported on Form W-3 do not match what was processed on Forms W-2.

    • there is a "C" in the Corr. Ind. Column on the WIRS screen.

    • your only discrepancy is Social Security wages.

    • there are multiple sets of Forms W-2 and one of them matches the discrepancy.

  3. Review the copies for obvious errors, some of which are listed below:

    • different EIN or

    • voided Form W-2, Wage and Tax Statement, marked any place other than the official void box

    • boxes with incorrect entries — (i.e., box 6 with the same tax amount in box 4)

    • duplicate Forms W-2 need additional research performed to determine if the name and addresses are different. This can be done using cc NAMEE.

  4. The following chart shows common resolution procedures for cases in the initial screening phase after all research (ORS) has been completed and received.

    Scenario Form 6209 Form 6494 Correction Code Close CAP CC 36=IRS 99=SSA Notes
    Voided Form W-2 erroneously processed Yes Yes (see note for exception) 4 Yes If the voided Forms W-2 are exact duplicates of Forms W-2 on file, a Form 6494 is not needed.
    Corrected Form W-2 processed as original Yes Yes 5 Yes Calculate the difference and secure original Forms W-2
    Forms W-2 or W-3 processed under the wrong EIN (IRS-CAWR only) OR X-Reference EIN Found Yes Yes 3 Yes Form 6209 prepared to transfer Forms W-2/W-3 to the correct EIN
    Form W-2 processed with wages over Max Yes No Y Yes Form 6209 to decrease FICA Wages
    Balancing Error (W-3 reported W-2 processed amounts do not match) Yes Yes 6 Yes Form 6209 to adjust money field(s)
    Non-taxable wages on Form W-2 Yes Yes 4 Yes Form 6209 to decrease FICA Wages
    W-2C/W-3C brings account into balance Yes     Yes Form 6209 to adjust money field(s). Send W-2C/W-2C to SSA if found in loose W-2 file.
    Duplicate Forms W-2/W-3 same RLN Yes Yes (see note for exception)   Yes Form 6494 only if amounts are different.
    Duplicate Forms W-2/W-3 different RLN Yes No     Form 6209 to cancel one set of Forms W-2
    Loose Forms W-2/W-2C are found that resolve discrepancy Yes     Yes SSA Case- prepare Form 9338 to transmit to SSA.
    IRS-CAWR Case- forward the W-2/W-2C to SSA as "RECON"

  5. If the actions taken do not balance the case, issue the appropriate correspondence.

4.19.4.2.3  (02-01-2008)
Identification of Doc Type 98 or 32 During Screening

  1. When the only (or only remaining) discrepancy is for FIT and the exact amount is reported as Backup Withholding ( BUWH) on the Form(s) 945 and no other BUWH is required to be reported:

    Note:

    The only information returns filed with IRS that may include FIT are the Forms 1099-G, W-2G, and 1099R. The amount in the Form 1099-G FIT box may reflect either backup withholding or FIT. Form 1099-G FIT amounts are not included in the reconciliation balancing phase of CAWR. Therefore, it is recommended to research PMFOL for the amount of the discrepancy if there is an out of balance condition on FIT.

    1. Issue correspondence to inform the taxpayer that Forms 1099R are not subject to BUWH and we have adjusted their Form 945 account accordingly.

    2. Close the case on CAP with CC 36 for IRS-CAWR and CC 99 for SSA-CAWR, enter "1099R - 945 backup withholding" in the CAP remarks field.

    3. Input adjustment on MFT 16 using Blocking Series 55. Input a TC 290 .00 with Reference Code 003/184, as appropriate (positive amount) and Reference Code 008 (negative amount) to correct the out of balance condition. See Course Materials for the appropriate reference codes and their proper usage.

      Caution:

      Under no circumstances prepare a Form 6209 to transfer Doc Types 98 or 32 (Forms 1099-R and/or W-2G).

    4. Print the IDRS BMFOLR first page, CAP money screen and CAP WIRS screen to use as the source document for the IDRS adjustment.

  2. When the BUWH is more than the discrepant amount, and PMFOL shows the remaining BUWH amount on another information return, follow (1) above.

  3. When the BUWH is less than the discrepant amount, or there are other fields that remain discrepant, issue correspondence.

  4. If the entity is Virgin Island, Puerto Rico, Guam, or American Samoa and if FIT is the only discrepancy, do not send a letter. Close the case using the appropriate closing codes.

4.19.4.2.4  (02-01-2008)
Screening Identified Compliance Cases

  1. Follow Campus procedures for routing Compliance cases. The priority for Compliance cases is:

    1. Criminal Investigation

    2. Examination

    3. Collection

4.19.4.2.4.1  (04-01-2010)
Criminal Investigation (CI) Indicator

  1. Research the Master File to verify that a -Z or Z- freeze code is present on the MFT and tax year of the CAWR case.

    If ... Then ...
    One of these freeze codes is present,
    1. Route the CAWR Discrepancy Case (CDC) to Criminal Investigation.

    2. Follow the instructions in (2) below.

    3. For those cases retained by the addressee, close on CAP with CC 33.

    None of these freeze codes are present,
    1. Notate in the remarks field of the CDC to ignore the Criminal Investigation Indicator.

    2. See IRM 4.19.4.2 and follow those instructions.

    After researching CI, a notation states "NO CONTACT"
    1. Close Case using closing code 33.

  2. Local procedures may vary by Campus when routing cases to these compliance areas:

    • To transfer each case to Criminal Investigation - Prepare Form 3210 in triplicate listing one case per form.

    • Input status code 27 to CAP for cases routed to CI.

    • Attach the printout of the CAWR case from CAP to the transmittal. Notate "CAWR Case" on the transmittal.

    • On a weekly basis hand carry the Form 3210 with attachment(s) to the addressee.

    • After the case has been sent to the appropriate function, suspend the copy of the transmittal for five (5) workdays

    • If the addressee has not responded within five (5) workdays, photocopy the Form 3210 suspense copy, and mark the photocopy "Follow-up—Please Expedite" and forward to the addressee.

    • The addressee will either keep or return the case(s) submitted.

      Note:

      Those cases retained will be identified by an appropriate notation on the Form 3210 sent back or an IDRS history item "NO CONTACT" . Those cases not kept will be returned as attachments to the transmittal.

    • For those cases returned, notate in the remarks field of the CAWR case to ignore the Compliance Indicator. See IRM 4.19.4.2.4 through see IRM 4.19.4.2.6 and follow those instructions. Input status code 88 to CAP to bring the cases back into the inventory. Be sure to read any comments made on the case from the compliance area.

4.19.4.2.4.2  (09-29-2011)
Examination Indicator

  1. Research (using CC AMDIS) for the Area Office Status Code for the MFT and tax year of the case.

    IF THEN
    The Area Office Status Code is 12 or higher,
    1. Input status code 25 for cases routed to EXAM. To transfer each case to Examination (Indicator or -L freeze is present on cases) access the Audit Information Management System, AIMS web site at http://mysbse.web.irs.gov/exam/mis/default.aspx

    2. Look up the Primary Business Code (PBC) and the Employee Business Code (EGC) and contact the designated person.

    3. For those cases retained by the addressee, close on CAP with CC 31. For those cases rejected input SC 88 to bring case back into inventory.

    The Area Office Status Code is not 12 or higher,
    1. Notate in the remarks field of the CDC to ignore Examination Indicator or enter "not SC 12" .

    2. See IRM 4.19.4.2 and follow those instructions.

    there is a TC 300/308 on the module and there is no open —L freeze or there is now a TC 421 on the module
    1. These cases have already been worked by Exam.

    2. Notate in the remarks field that there is a TC 300 or TC 308 on the module.

    3. Close CAP with CC 31.

  2. If Exam has not responded within five (5) workdays follow normal processing procedures.

4.19.4.2.4.3  (04-01-2010)
Collection Indicator

  1. Check the Case Type on the CAP Entity to determine if it is 01, 04A, 04B, 06A, 06B, 06C, 09, 10A, 10B, 10C, or 13. (if any other case type or if the IND is "2" the case can be screened using procedures in 4.19.4.2.12).

    IF THEN
    One of these Case Types is present,
    1. Determine whether there are return(s) missing (by the presence or absence of DLNs in the MFT & ADJ Screen).

    Return(s) are missing,
    1. Research CC TXMOD definer A for an open TDI (T-sign) for the MFT and tax year of the case and if it is assigned.

      Note:

      A TDI (T-sign) is an eight-digit code which identifies the area (positions 1 and 2), office (position 3 and 4), branch/group (position 5 and 6), and employee or special action code (position 7 or 8) to which an account is assigned

    2. Use the web site at: http://serp.enterprise.irs.gov/cgi-bin/ROZIP_Search.cgi to locate the address and/or phone number of the RO assigned to the CDC

    3. Call the RO assigned to the CDC for case handling instructions.

    4. Close the cases retained by an RO with a Closing Code 32.

    All of the returns are present,
    1. Enter SC 29, post edit, and then enter SC 88 and post edit.

    2. See IRM 4.19.4.2. and follow those instructions.

    No T-sign is present, or it is 0200 or 7000,
    1. Enter SC 29, post edit, and then enter SC 88 and post edit.

    2. See IRM 4.19.4.2. and follow those instructions.

    Any other T-sign is present,
    1. Use the web site at: http://serp.enterprise.irs.gov/cgi-bin/ROZIP_Search.cgi to locate the address and/or phone number of the RO assigned to the CDC

    2. Call the RO assigned to the CDC for case handling instructions.

    3. Close the cases retained by an RO with a Closing Code 32.

    Reminder:

    If the RO has not responded within five (5) workdays follow normal processing procedures.

  2. Check the CAP CAWR case and IDRS for any other Compliance Indicators.

    IF THEN
    More than one Compliance Indicator is present,
    • Use the priority listed in IRM 4.19.4.2.4.

    No other Compliance Indicators are present,
    • Check the CDC for a TC 520 Indicator. See IRM 4.19.4.2.6.

  3. If, at any phase of processing a case, an update is received showing a Criminal Investigation, Examination Indicator, or Collections follow the appropriate procedures above. See IRM 4.19.4.2.4.

  4. If a -Y is present, it indicates that there is an "Offer In Compromise" on this module. See IRM 4.19.4.2.13.

4.19.4.2.5  (04-01-2010)
Identified Defunct Corporation (TC 530) Cases During Screening

  1. When there is an indication that a taxpayer is no longer in business, research IDRS CC ENMOD to check for the Currently Not Collectable "CNC" Indicator and check CC BMFOL definer I for Status 22 and a T- Freeze. Check that Module, using BMFOL definer "T" for TC 530:

    IF THEN
    TC 530 cc 07 or 10 is present on any prior or subsequent module
    1. For IRS CAWR Close the case on CAP with Status Code 98.

    2. For SSA-CAWR, send a Letter 98C to explain the need for the taxpayer's cooperation in obtaining the Forms W-3/W-2. Do not close the case, leave it in status code 28.

    Note:

    We do not assess a civil penalty in these instances (SSA-CAWR cases), however, we do attempt to obtain the Forms W-3/W-2.

    TC 530 with other than cc 07 or 10 for any other entity,
    1. Issue correspondence

    Reminder:

    Please ensure you use the IAT tool.

4.19.4.2.6  (04-10-2014)
Bankruptcy Cases (TC 520/521) Identified During Screening

  1. Bankruptcy cases (Chapter 7 and Chapter 13) are assigned to the Centralized Insolvency Operation (CIO) at the Philadelphia Campus. All mail and phone communications relating to these cases must be directed to the Philadelphia Campus. Chapter 7 Asset, Chapter 9, 11 and 12 cases and Chapter 13 pre-confirmation cases remain assigned to local Insolvency IRS employees. In most instances, your interaction with local Insolvency field employees on these chapters remains unchanged.

    • The CIO toll free number for Insolvency casework is 1-800-973-0424.

    • The CIO fax number is 855-235-6787.

    • The campus staff hours of operation are from 7:00 AM – 10:00 PM EST. This enables customers to speak with a bankruptcy representative during working hours in all time zones.


    Two national IRS mailing addresses have been established for bankruptcy correspondence.

    • Payments for Chapter 7 and Chapter 13 cases must be sent to P.O. Box 7317, Philadelphia, PA 19101-7317.

    • All other correspondence pertaining to Insolvency cases, including Section 341 notices for all Chapters must be sent to P.O. Box 7346, Philadelphia, PA 19101-7346.

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

  3. Bankruptcy Cases (TC 520/521) — An employer has filed for bankruptcy if TC 520 with closing code(s) (cc) 60–67, 83, 85–89 (-V freeze), 81, or 84 (-W freeze) is present in the module without a TC 521. Research CC MFTRA/CFOL for TC 520/521. Refer to IRM 21.5.5.4.43.1 Chapter 13 Bankruptcy Cases, IRM 21.5.6.4.44 -V Freeze, and IRM 21.5.6.4.46 -W Freeze when assessing a liability.

  4. Contact the CIO Unit via the SERP link for appropriate actions.

    If the transaction date of the TC 520 is AND THEN
    Prior to 10/22/94 and the closing code is other than cc 83, 84, 85, or 88 TC 521 is not posted in the module,
    1. Contact the Insolvency Function (CIO-Philadelphia), verify that the liability can be assessed.
      Insolvency http://serp.enterprise.irs.gov/databases/who-where.dr/inslvncy-bnkrptcy/national_insolvency_field.htm

    2. Close the case on CAP with CAWR closing status code "98 " .

    Prior to 10/22/94 and the closing code is cc 83, 84, 85, or 88 TC 521 is not posted in the module,
    1. Close the case on CAP using CAWR closing code 98.

      Note:

      If the cc is 83, 85, or 88, the Master File will unpost the assessment if the TC 520 date is prior to 10/22/94.

    10/22/94 or after the closing code is 72 or 74
    1. For IRS-CAWR The case is in Tax Court. Close CAP CC 98.

    2. For SSA-CAWR see (5) below.

    10/22/94 or after the closing code is any other than 72 or 74
    1. For IRS-CAWR issue Correspondence.

    2. For SSA-CAWR see (5) below.

    Reminder:

    Please ensure you use the IAT tool.

    Note:

    The CIO/Bankruptcy Unit inputs a TC 521 with matching bankruptcy cc or 999 to all applicable modules to reverse the TC 520 bankruptcy closing codes which removes the -V or -W freeze.

  5. We will not assess a civil penalty in these instances (SSA-CAWR cases), but try to obtain the Forms W-3/W-2. Follow the same procedures as shown in IRM 4.19.4.2.15., Federal Agency Screening. Send a Letter 98C and explain the need for the taxpayer's cooperation in obtaining the Forms W-2.

4.19.4.2.7  (04-01-2009)
Screening Schedule H/Form 1040/1041

  1. When the taxpayer files Schedule H with his/her Form 1040 there will be a number shown on the MFT & ADJ Screen on CAP, in the Secondary SSN field. Use this SSN to research CC IMFOLR, page 2. This should be where the Schedule H information is shown. The Forms W-2 may be reported under this SSN and processed by SSA as an EIN. Additional research must be done in both BMF and IMF to compare and resolve any SS wage tax and/or Medicare tax out of balances. Check the first prior and first subsequent tax year on CC IMFOLR, page 2 to determine if an incorrect TIN was used on the Schedule H.

  2. When a Taxpayer Identification Number (TIN) is found to resolve the case, input this TIN in the X-REF field on the CAP Detail Screen. If the TIN found belongs to a taxpayer unrelated to the account it must be corrected on IDRS. See IRM 21.6.4.4.8.2 for instruction on how to correct an EIN on a Sch H case.

  3. CC BMFOL definer U research must be done and compared with IMF records. The first column will show Posted 94X dollar amounts for:

    • TXBL SOC. SEC. WAGES

    • TXBL MED. WAGES

    • FEDERAL INCOME TAX

    • EMP SOC. SEC. TAX

    • EMP MEDICARE TAX

    • REPORTED (W-3)

    • PROCESSED (W-2)

  4. CC IMFOL definer R must be researched for Schedule H information. Page 2 provides the (rounded) dollar amounts that were on the Schedule H:

    • SSA WAGE

    • MEDICARE WAGE

    • TOTAL SSA MEDICARE TAX

    • MEDICARE TAX (COMPUTER)

    • TOTAL SSA MEDICARE TAX (COMPUTER)

    • FEDERAL INCOME TAX

  5. Compare the CC IMFOLR money fields to the CC BMFOLU POSTED 94X for dollar amounts.

    Reminder:

    The BMF 94X Soc. Sec. Medicare tax amount will include both the employee and employer's share.

  6. Compare the entries in the W-3 and W-2 BMFOLU columns to CC IMFOLR fields. If they do not match:

    1. Review the BMFOLU for the page with the TC 980. The DLN shown (which starts with 06) is the RLN where the W-3/W-2 copies should be. Access ORS or CC IRPTRR with Doc Code WW, and when received, review them.

    2. If it appears that there are missing Forms W-2, contact the taxpayer. Explain that this is a Schedule H problem and IRS must have a copy of the Form(s) W-2 to balance our case. Also explain that IRS will forward that copy to SSA for posting to the household worker's record.

  7. If more information is needed for these cases, see IRM 21.6.4.4.8, Schedule H, Household Employment Taxes and 21.7.4.4.1.11.3, BMF Schedules H Processed in 1998 and Subsequent

  8. An EIN must be present on Schedule H. If found through research, input the correction of the EIN on Schedule H. When adjusting a previously filed Schedule H, input of the EIN is not required. If Schedule H was not filed with the original return, the EIN must be input on the adjustment:

    1. Use Reference code — 993 for .00 — Primary Taxpayer's EIN, or

    2. Use Reference code — 994 for .00 — Secondary Taxpayer's EIN.

    3. IMF systemically forwards a record to the BMF containing the Schedule H Social Security and Medicare tax information. All EIN changes on Schedule H reporting Social Security and/or Medicare tax, must be processed manually to prevent erroneous CAWR records.

      Note:

      The reference number 993 for .00/994 for .00 is input in the item reference code field on the CC ADJ54. The EIN and reference numbers are visible as AP or PN transactions. The TIF does not show the EIN. However, Master File records the EIN

  9. If an out of balance condition still exists, issue correspondence.

4.19.4.2.8  (04-04-2013)
Third Party Sick Pay Identified During Screening

  1. A third party will often pay disability insurance benefits to employees as the employer's agent or as the insurance provider. Portions of these benefits can be subject to Social Security and Medicare taxes if the employer pays a portion of the premium. Under agreements made between the employer and the third party agent or the disability insurance provider, they may report the following to the IRS under different EINS:

    1. Employee's wages,

    2. Federal Income Tax Withheld (FIT),

    3. Employer's share of Social Security tax and Medicare tax,

    4. Employee's share of Social Security tax and Medicare tax.

  2. You may be able to resolve a case during screening if you check the tax return data base (TRDB) for electronically filed employment tax returns and BMFOLU, page 1 for Third Party Sick pay. You may need to check subsequent quarters' returns to make this determination.

  3. Discrepancy cases generate when the sick pay Forms W-2 are filed under the employer's EIN but a portion of the Social Security and Medicare taxes and any FIT is reported on the third party's return.

    If ... And ... Then ...
    the employer is an insurance company involved in paying disability benefits
    OR an amount in Box 14 of Form W-3 equal to the FIT discrepancy on ORS or BMFOLU
    the discrepancy can be attributed to the Federal Income Tax Withheld sick pay issue
    1. close the case on CAP using the appropriate status codes

    The discrepancy is an incorrect line adjustment the correct tax has been paid
    1. close the case on CAP using the appropriate status codes.

    the correct tax has not been paid third-party sick pay wages are not reported on line 5a and 5c of the Form 941, but the credit was taken on line 7b of Form 941,
    1. correspond with the taxpayer requesting the name and the EIN of the Third Party payer.

    an out of balance condition still exists  
    1. issue correspondence.

  4. See IRM 21.7.2.4.2 for instructions on adjusting accounts with 3rd party sick pay discrepancies.

4.19.4.2.9  (02-01-2008)
Social Security Tips Identified During Screening

  1. Many times employers will include Social Security tips in the Social Security wage field of the Forms W-2. SSA always combines tips into Medicare wages even if the Forms W-2 show the correct amounts.

  2. When the total of Form 94X Social Security tips and Social Security wages equal the total Social Security wages, reported by SSA, close the case with the appropriate closing code. Prepare a Form 6209 to adjust the Social Security wages for the Forms W-3/W-2 and the Medicare wages and tips if applicable.

  3. If an out of balance condition still exists, issue correspondence.

4.19.4.2.10  (02-01-2008)
Allocated Tips Identified During Screening

  1. Large food and beverage establishments are required to report allocated tips under certain circumstances.

  2. A large food or beverage establishment is one that provides food or beverages for consumption on the premises, where tipping is customary and where the employer normally employed more than 10 employees on a typical business day during the preceding calendar year.

  3. Generally if tipped employees do not report tips totaling 8% or more of gross receipts (less carry out sales and sales with 10% or more service charge added), the employer must allocate to the employees an amount equal to the difference between the above 8% and the total tips reported by the employees.

  4. Allocated tips are not subject to withholding and should not be reported on Forms 941, Employer's Quarterly Federal Tax Return, or Form W-2 as Social Security wages, Social Security tips, or Medicare wages and tips. CAWR discrepancies occur when an employer includes them incorrectly.

  5. Send appropriate correspondence to the taxpayer.

  6. The taxpayer must file Form 941-X and/or Forms W-2C if allocated tips were reported incorrectly.

  7. If the taxpayer does not respond with this information:

    1. Do not allow credits based on these figures.

    2. Assess the account if there is a balance due based on uncorrected allocated tips information.

4.19.4.2.11  (04-04-2013)
Line Adjustments Identified During Screening

  1. Line adjustments occur when employers attempt to correct Social Security, Medicare, Federal Income Tax Withheld, or Advanced Earned Income Credit. Line adjustments are also used to report Third Party Sick pay and various other types of adjustments.

  2. If there is a posted line adjustment to a Form 94X account for the tax year being worked, it will show on the CAP MFT & ADJ Screen.

  3. Line adjustments are indicated on IDRS on the second page of BMFOLR or the first page on BRTVU as ATFI or ATWH or BMFOLU.

  4. CC BMFOLA can be used to research on-line adjustments that have been made.

  5. Verify the line adjustment made by ordering the adjustment or original document using CC ESTAB or by researching the Tax Return Data Base (TRDB) for electronically filed employment tax returns.

  6. If the line adjustments are accurate, adjust the reference fields accordingly.

  7. If an out of balance condition still exists, issue correspondence.

4.19.4.2.12  (04-03-2012)
Common Resolution Procedures During Screening

  1. The CAWR unit receives all copies of Forms W-3/W-2/W-2C/W-3C received in the Submission Processing Campuses without correspondence attached.

  2. If Loose Forms W-2, W-3, W-3C, and W-2C are received, process them as follows based on the tax year involved.

    1. Tax Years 1987-2003 — Research ERQY to ensure SSA has the information. If the forms carry entries in FICA (Social Security) wages or FICA (Social Security) tips, use a Form 3210 to forward them to SSA. Otherwise, destroy them. Do not send forms to SSA that do not contain FICA (Social Security) wages and/or tips.

      Caution:

      DO NOT SEND Forms W-2C to SSA if the ONLY Correction is to the PENSION INDICATOR BOX. See IRM 4.19.4.3.4.(4) for the correct SSA mailing address.

    2. Tax Years 2004 through 2009 — Research to determine whether the submission is a late reply to an assessment. If research shows a TC 29X in Blocking Series 55, secure the assessment document and process the case. Also research to determine whether the submission is a late reply to a Civil Penalty 549 on MFT 13. If no TC 29X is found handle these cases as provided in (a) above.

    3. Tax Years 2010/2011 — These forms are related to cases currently being worked (2012 operations). Check to determine whether they are related to a discrepancy case. Associate the Forms W-3/W-2 with the case and handle accordingly (treat them as original forms received from the taxpayer as a result of correspondence).

    4. Tax Year 2012 — After September 14, 2013 use Form 3210 to route these forms to SSA after photocopying and inputting them into the CAP system for the CAWR loose W-2 file

  3. All loose Forms W-2 must be entered into the CAP system for the tax years being worked before screening can begin. If the Loose Forms W-2 indicator is present on CAP that means loose Forms W-2 have already been input and must be retrieved and reviewed to determine if they balance the case prior to taxpayer contact. All loose Forms W-2 belonging to another site must be forwarded to that site once the information is entered into CAP.

    Note:

    Loose Forms W-2 can be entered into the CAP system for tax years that are not yet worked. For example, after September 14, 2011, you can input loose Forms W-2 for tax years through 2011 before the 2011 CAWR cases are being worked.

  4. If you have the Loose Forms W-2 indicator on your CAWR cases and your campus does not have them in the file, check on Windows drop-down menu Edit and click on Loose W-2. Do a search on the Loose W-2 number. It will tell you which campus has the actual documents. Call the campus at the number listed on the CAWR/FUTA home page http://wc.web.irs.gov/CAWR-SSA/Address%20and%20mail%20stop.htm and request that they mail or fax them to you.

  5. While screening, if there is a yellow bar across the top of CAP with an EIN, this indicates a Schedule D is on file. If there is a number in parenthesis next to the EIN this indicates the count of Schedules D on file and you must access the Schedule D table using the procedures below:

    1. Click "edit."

    2. Choose "CAWR SCHD."

    3. Click on "Search."

    4. Enter the EIN of your case.

    5. Click "find."

  6. Once all EINs are retrieved from the Schedule D table, research IDRS Command Code BMFOLU for each of the cross reference EINs to determine if the missing information to balance your case is filed there. If so, close the case CC 36 for IRS CAWR or CC 99 for SSA CAWR. If not, issue the appropriate correspondence.

  7. Duplicate Return — The following chart shows resolution procedures for cases in the initial screening phase for entities with a TC 976 present.

    IF AND THEN
    TC 976 is present TC 290 adjustment is present
    1. Order the adjustment document if necessary to consider the additional information when working the case.

    TC 976 is present TC 290 adjustment is not present
    1. Contact IRS area with an open case control and work together to resolve the discrepancy.

    TC 976 is present TC 290 adjustment is not present and no other area has an open case
    1. Request (ESTAB) the TC 976 document and work accordingly.

    2. if the document is not posted to the correct TIN/ tax period

    3. Input TC 971 using FRM77.

    4. Follow the instructions in IRM 21.7.9 BMF Duplicate Filing Conditions and Document 6209.

4.19.4.2.13  (04-01-2010)
Offer in Compromise Identified During Screening

  1. Offer in Compromise (OIC) cases are cases where the taxpayer and the Service have agreed that the taxpayer will pay a lesser amount than the original amount due.

  2. A TC 480 indicates that an Offer in Compromise is being considered. Continue normal processing.

  3. A TC 780/788 (unreversed by TC 781) indicates that an Offer in Compromise has been accepted. If a TC 780/788 (unreversed by a TC 781) is present on any module of the tax year you are working:

    1. Close all SSA-CAWR cases with closing code 98.

    2. Continue processing all IRS-CAWR cases.

  4. If a TC 781 is present on your tax year, or a TC 780/788 is found on other tax years, continue normal processing.

  5. If an unreversed TC780/788 is present during reply, undeliverable, no reply phases see IRM 4.19.4.3(5).

4.19.4.2.14  (04-04-2013)
Screening SSA Indicator 2 Cases (All Case Types)

  1. Only SSA-CAWR case Type 08 without compliance indicators , have automatic Letter 98C generated.

  2. SSA-CAWR case type 08 will have automatic letters generated at a determined volume per week, the CAWR Coordinator determines the number of cases to be systemically generated each week up to and including cycle 33.

  3. All other case SSA-CAWR case types , must be screened using all available research tools. If research balances the case, close the case with closing code 99.

  4. When the case has a compliance indicator, use the procedures for Screening Identified Compliance Cases. See IRM 4.19.4.2.4.

  5. If the case is not closed through research, correspond using a Letter 98C for SSA case types (03, 05, 07, 12) and a manual Letter 98C for IRS case types (02, 04, 06, 10, 11,13).

    Note:

    If correspondence is issued and a reply or undeliverable date is not input before the suspense period expires, an automatic penalty is assessed unless the penalty assessment is $1 million or more or if under tolerance.

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    Note:

    Send the appropriate correspondence if other tax fields are over tolerance.

4.19.4.2.14.1  (04-01-2009)
SSA Indicator 2 Research (All Case Types With Tax Due) Screening

  1. If a SSA Indicator 2 case has been received with tax due implications in addition to the missing Forms W-2, AND no action has been taken, research for a cross reference EIN.

    If Another Case is Found Then
    And the other case balances the discrepant case
    1. Prepare Form 6209 and Form 6494 to transfer the W-2 information to the correct EIN.

    2. Close the cases on CAP using the appropriate closing codes.

    And the cross reference does not resolve the case AND Forms 94X amounts EXCEED the Forms W-2 amounts
    1. Issue the Letter 98C with the appropriate paragraphs to explain the penalty.

    2. List both the original and cross reference EIN's.

    3. Combine wage and tax amounts from both EINs in the Letter 98C.

    And the cross reference does not resolve the case AND tax Forms 94X amounts are LESS than the Forms W-2 amounts
    1. Send a Letter 98C explaining the wage and tax amounts used are from the original and cross reference EINs and that there may be a tax increase.

    If a cross reference is NOT found
    1. Issue a Letter 98C with appropriate paragraphs.

      Reminder:

      Be sure to use the SSA paragraph to explain the penalty

    Reminder:

    SSA Indicator 2 cases must be worked as both SSA and CAWR cases. Any Forms W-3/W-2 received from taxpayers or from the Loose W-2 files must be sent to SSA attached behind a completed Form 9338.

4.19.4.2.15  (04-10-2014)
Federal Agency Screening

  1. Employers that are Federal Agencies can be identified by name and will always have a BOD Code TEGE and an Employment Code F.

  2. Although the law allows us to assess tax, we can not assess any type of penalty on Federal Agencies. Our goal is to balance the discrepancy, and/or to file the necessary Forms W-3/W-2/W-3C/W-2C in order for their employees to get proper credit.

  3. Contact the Federal Agency Delinquency (FAD) unit located in BSC by either contacting the employee with an open control or by using SERP. http://serp.enterprise.irs.gov/databases/who-where.dr/fad_contacts.html prior to issuing correspondence.

  4. Request from the assigned FAD unit employee if they want to resolve the CAWR issue or if they want CAWR to continue normal processing. Close the case or issue correspondence as appropriate.

4.19.4.2.16  (04-01-2009)
Using The Payer Agent List (PAL) During Screening

  1. The Case Header Screen contains the Automated Under Reporter (AUR) Payer Agent List (PAL) which alerts the user that there is information available concerning the CAWR discrepancy.

  2. The PAL information may be used to resolve the CAWR issue for Forms W-2 wages and withholding (1099-R and W-2G) information.

    1. If the discrepancy is resolved close the case during screening.

    2. If the discrepancy is not resolved issue appropriate correspondence.

4.19.4.2.17  (04-01-2011)
Screening Family Employment Related Cases

  1. Access ORS if there is an indication that the problem may be with wages for work performed by a family member i.e., Sole Proprietors.

  2. If ORS data indicate the discrepancy is due to a family employment situation, check the Form W-2 and check the Date of Birth (DOB) using CC INOLE.

  3. Determine if the employee is a child, parent, or spouse. Refer to Publication 15 (Circular E), Employer's Tax Guide, for more information. See table below:

          Subject to:  
    Family Member Performing the services in the course of parent/child/ spouse trade or business Age Social Security Taxes Medicare taxes Comments
    Child YES as a sole proprietorship under 18 NO NO  
    Child YES as a partnership under 18 NO NO if each partner is a parent
    Child YES 18/19/20 YES YES  
    Child NO under 21 NO NO casual labor
    Child NO under 21 NO NO domestic services performed in private home
    Parent YES   YES YES  
    Parent NO   NO NO casual labor
    Parent NO   NO NO domestic services performed in private home
    Spouse YES   YES YES  
    Spouse NO   NO NO domestic services in the private home or casual labor

    Exception:

    Social Security and Medicare taxes apply where the parent was employed to care for their son or daughter's child, and the son or daughter lived with the child who was either under age 18 or required the personal care and supervision of an adult for at least 4 continuous weeks in the calendar quarter in which the services were rendered due to a mental or physical condition, and the son or daughter was a widow, widower, divorced, or married to a person who, because of a mental or physical condition, could not care for the child during such period.

  4. If both spouses jointly own and operate a business they may be taxed as partners in a partnership. Beginning in 2007, if they are also married filing jointly they may make a joint election to be taxed as a "qualified joint venture" instead of a partnership if they are the only members and they both materially participate in the business. Payments for services performed for the partnership or qualified joint venture by the member spouses are NOT subject to Social Security or Medicare taxes under FICA, though they included in the amounts that are subject to self-employment tax.

  5. Covered service of a child, parent, or spouse:

    • Services performed by employees of corporations are subject to Social Security and Medicare taxes, even if the corporation is controlled by the individual's parent, child, or spouse.

    • Services performed by a child of any age for a partnership in which a parent is a partner are subject to Social Security and Medicare taxes unless each partner is a parent.

  6. Issue the appropriate correspondence if not closing the case in the screening phase.

  7. Resolution: If the only problem with the case involves family employment, prepare Forms 6209 and 6494 and close the case with the appropriate status code on CAP.

4.19.4.2.18  (04-04-2013)
Screening Foreign Students/Non-Resident Visitors

  1. Certain Foreign Students/Non-Resident Visitors are exempt from Social Security (FICA) and Medicare tax

    IF AND THEN
    Social security and Medicare tax is erroneously withheld by the employer The foreign student is unable to obtain reimbursement from the employer The student files Form 843 to receive a refund of the erroneously withheld taxes.

    Note:

    The original Form 843 claims for foreign taxpayers are no longer processed in Philadelphia. They are now processed in CSC or OSC. IRM 21.7.2.5.11Foreign Students – FICA Tax Erroneously Withheld and IRM 21.8.2.7 VISA Holders - General

  2. Check TXMODA for an adjustment (as shown below).

    291 10162010 1,721.24- 201040 98 (or 60, 78, or 66)154-123-45678-3
    004 22,499.77- 007 1,721.24-
    073 22,499.77-
    820 01312011 201040 98124-123-45678-3
    XREF-TIN> 123-45-6789 XREF-MFT> 30 XREF-TX-PRD> 201012

    • The Reference amounts (004, 005, 073) may match the Form 941/944/W-2 CAWR discrepancy

    • The tax amount is 1/2 of the Social Security and Medicare tax amount (wage amount X 7.65%)

    • A TC 820, Credit Transfer, has been input with X-Ref SSN (The Foreign Student's SSN) to X-Ref MFT 30.

    • The DLN begins with 98, 60, 78, or 66.

    • The original adjustment is done in Philadelphia, Cincinnati, or Ogden.

  3. Check CC IRPTRL on the student's SSN. There should be a Form W-2 for the adjusted reference amount from the EIN (employer) on the CAWR case.

    IF THEN
    the adjustment document is requested (using CC ESTAB) the DLN beginning with 98 shows:
    • A copy of the Form W-2,

    • A copy of the VISA,

    • A letter stating that the foreign student was unable to obtain reimbursement from their employer, and

    • A Form 843 (claim).

    1. Complete Form 6209 to decrease Social Security and Medicare wages. In the remarks, select "Other" and enter "Exempt Foreign Student."

    2. Complete Form 6494 to tell SSA to cancel the Form W-2 for the foreign student using CC 4.

    3. Attach a copy of the Form W-2 or give employee name, SSN, and wage amount to be canceled.

    4. Close the case on CAP with the appropriate closing code.

4.19.4.2.19  (04-01-2009)
Screening Cases For State and Local Governments

  1. These cases should be identified in CAP and IDRS by the following:

    1. Employment Code T;

    2. BOD Code on the CAP detail screen = TE

  2. State and local government employees are subject to both Social Security and Medicare taxes if:

    • The employees are covered by a section 218 agreement, or

    • The employees are not participants in a public retirement system (for services after July 1, 1991).

  3. Other state and local government employees are subject to Medicare tax, if they were hired after March 31, 1988. Refer to Publication 963, Federal-State Reference Guide, for more information.

  4. See IRM 21.7, Business Tax Return and Non-Master File Accounts, for exceptions.

  5. If there is a discrepancy solely in Social Security wages and medicare wages and tips and the employer is a local or state government where research indicates the employees are Social Security exempt:

    1. Prepare Forms 6209 and 6494 to cancel the Social Security wages.

    2. Close the case with appropriate status code on CAP (IRS-CAWR=36, SSA-CAWR=99).

4.19.4.2.20  (09-22-2009)
Screening Identification of Cross Reference (X-Ref) Cases/Filed With Another EIN

  1. When the Forms W-3/W-2 exceed Forms 94X:

    1. Research any cross-reference EIN under which the taxpayer may have filed additional Forms 94X.

    2. Check for the X-Ref EIN on CAP, if the X-Ref EIN is on CAP, work the cases together. Enter the X-ref EIN on each case on CAP.

  2. When the X-Ref EIN is not on CAP:

    1. Research IDRS command codes (i.e., CC BMFOL definer E and/or CC INOLE definer X) for any X-Ref number.

    2. If the X-ref is found, access ORS for the X-Ref number (if needed).

    3. Correspond with the taxpayer for missing Forms W-3/W-2 (if needed).

    4. Transfer the Forms W-3/W-2 to the appropriate EIN via Forms 6209 and notify SSA via Form 6494.

    5. When the information balances the account, close the case by entering the appropriate closing code. Input a TC 971 on IDRS using CC REQ77 with action code 017 to identify the cross reference EIN.

    6. When the information does not balance the account, issue appropriate correspondence.

    If Another Case is Found Then
    And the cross reference does not resolve the case AND tax Forms 94X amounts are LESS than the Forms W-2 amounts ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  3. If the case is a Large Corporation (LCI indicator present on TXMOD or ENMOD) or a subsidiary of one, the information may be filed by a parent corporation or another EIN (due to an entity change), follow the procedures in IRM 4.19.4.2.1.1. After coordinating with the Technical Large Corp contact and agreeing the taxpayer must be contacted, correspond for the EIN and validate information. If an employment code "S" is present for any SSA-CAWR/SSA Indicator 2 case, a penalty assessment cannot be made to that EIN/TIN on MFT 13. Do the following:

    1. Research for a parent TIN/EIN and/or a phone number for the entity. This may include contacting the Large Corporation unit for help locating the parent company.

    2. Contact the taxpayer in an effort to obtain the missing Forms W-2, so that a penalty assessment does not have to be made.

    3. Be sure to consider the amounts reported under the parent TIN/EIN while working the subsidiary case.

    4. Follow normal correspondence and reply procedures for the SSA-CAWR/SSA Indicator 2 case worked as a result of this situation.

      Note:

      CORRESPONDENCE MUST BE ISSUED TO THE PARENT TIN/EIN BEFORE A PENALTY ASSESSMENT CAN BE MADE AGAINST THE PARENT ENTITY.

4.19.4.2.21  (04-04-2013)
Screening Cases Identified as Exempt Church Organizations

  1. An election of exemption from Social Security and Medicare taxes may be filed via Form 8274, Certification by Churches and Qualified Church Controlled Organizations Electing Exemption from Employer Social Security and Medicare Taxes.

  2. The employee, unless otherwise exempt, must still pay self-employment tax on the income if the employee is paid $108.28 or more in a year from a Church or a qualified Church controlled organization. However, an employee who is a member of a qualified religious group can apply for an exemption from the self-employment tax by filing Form 4029, Application for Exemption From Social Security and Medicare Taxes and Waiver of Benefits.

    Note:

    Ordained, commissioned, or licensed ministers and members of religious orders are also generally treated as self-employed for Social Security and Medicare purposes.

  3. Churches established after October 1, 1984 must file no later than the day before the due date of their first quarterly employment tax return. Elections filed after these deadlines will be void. Additional information can be found in IRM 21.7, Business Tax Return and Non-Master File Accounts.

  4. If any of the conditions below resolve the CAWR discrepancy close the case.

    1. Research prior years on CAP to determine if a 6209 was input for minister wages.

    2. Research on ORS for any corrected W2-C

    3. Research the exempt employee's SSN on IRPTRO

  5. If the discrepancy has been resolved follow the steps below:

    1. Prepare Form 6209 to reduce the wages.

    2. Prepare Form 6494 to notify SSA to cancel Social Security wages.

    3. Close the case using appropriate status code on CAP.

  6. If the discrepancy is not resolved by the above research, issue the appropriate correspondence.

4.19.4.2.22  (02-01-2008)
Delete Cases During Screening

  1. When the status of the case changes to status code 11 or a 98 with a Gen code D located on the detail screen, it means that the CAWR module is now in balance at master file.

  2. If no taxpayer contact has occurred on this case, remove the case from your batch.

4.19.4.2.23  (02-01-2008)
Screening SSA Indicator Other Than "Blank" Cases

  1. As you work an IRS-CAWR batch, you may find the SSA IND has updated from blank to "1" or "2" .

    1. If the SSA IND is "1" work the case. SSA is also contacting the taxpayer.

      Note:

      You will be required to enter the SSA screen data on these cases, even though they have not updated to SSA IND = 2.

    2. If the SSA IND is "2" work according to SSA-CAWR procedures.

4.19.4.2.24  (04-03-2012)
Hiring Incentives to Restore Employment (HIRE) Act

  1. Under the Hiring Incentives to Restore Employment (HIRE) Act, enacted March 18, 2010, employers are provided a payroll tax exemption from the employer’s 6.2 percent share of social security tax on wages paid to qualifying employees. This is effective for wages paid from March 19, 2010 through December 31, 2010.

  2. CAWR is now matching the wages reported as subject to the exemption on the employer's Form 941 line 6c and 12d, Form 943 line 7b and 13d, Form 944 line 5b and 11d against what is reported on the Forms W-2 on line 12b using code "CC." IRM 21.7.2.5.20.

  3. When the wages claimed as exemptions do not match a CAWR case will be created.

    If ... Then ...
    The Forms W-2 show more exempt wages than on his Forms 941, 943, 944 and no other out of balance condition exists Close the case with no action.
    The forms W-2 show less exempt wages than on his Forms 941, 943, 944.
    1. Check line 12d on Form 941, line 13d of Form 943, or line 11d on Form 944. If an amount is present that equals the discrepancy, close the case.

    2. If not, Issue a Letter 98C.

4.19.4.3  (04-10-2014)
Replies

  1. There are so many variables in the CAWR program, the replies are broken into many different categories. The following subsections deal with individual type replies.

    Reminder:

    When working replies follow instructions for inputting Correspondence Date (Corr Date in IRM 21.3.3.4.2.3 Correspondence Date (Corr Date)

  2. When working replies received from the taxpayer (in response to IRS correspondence you issued) remember that care must be taken to attempt to conform to the Policy Statement P-21-3 and if you cannot initiate a final response within 30 days from the earliest received date, you must issue an interim response.

  3. There may be times during the response phase when calling the taxpayer will expedite the resolution of a case. For example; when taxpayers respond to a notice, they may inadvertently omit required information or signatures delaying the action on the case. If additional information is required to resolve a case, attempt to contact them by phone prior to making the assessment on the account. See the CAWR/FUTA web page at http://wc.web.irs.gov/Default.htm and http://serp.enterprise.irs.gov/databases/portals.dr/compliance.dr/crc.dr/cawr_futa/cawr_futa_default.htm and see IRM 21.1.3.2.3. Required Taxpayer Authentication.

  4. When assessing a FTD penalty, use PCC 018 (Penalty Computation Code). See IRM 4.19.4.7.3 Failure To Deposit Penalty (TC 180) and 20.1.4.21.6.1 Computation of the FTD Penalty (CAWR and FUTA Notices).

  5. If a TC 780/788 (unreversed by a TC 781) is present on any module of the tax year that you are working during the reply, undeliverable or no-reply phase, no tax or penalty can be assessed. Take the following actions:

    1. Provide prints of the Money Amount and the Detail screens from CAP to the appropriate MOIC unit.

    2. File the correspondence using the applicable Case Processing Procedure. See IRM 4.19.4.7.

    3. Close the case with closing code 98.

  6. When an account has a TC 300 or TC 308 on any module of the tax year you're working, do not assess; close the case with No Assessment Needed Processing Procedures found in 4.19.4.7.

  7. Replies may also be Forms 4442 that are referrals of CAWR cases from CSRs. Provide the taxpayers with interim responses (by telephone or in writing) if Tax Law Referrals of cases cannot be resolved within seven (7) calendar days or Account Referrals of cases cannot be resolved within fifteen (15) calendar days.

  8. When working responses, close the case with the appropriate closing code instead of preparing the Form 6209 if:

    • No money fields are being changed

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

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

  9. If contact is needed with a CAWR unit at another SBSE site, the phone numbers and fax numbers are located on the CAWR/FUTA home page.

  10. When the taxpayer submits a payment for the proposed discrepancy, and no correspondence is attached, take the following actions:

    1. Accept the payment,

    2. Assess the intentional disregard penalty IRM 4.19.4.3.1.1 The Intentional Disregard Failure to File Penalty (PRN 549)

    3. Assess tax and any related penalties,

    4. input the amount of the penalty in the amount field, and

    5. Close the case with the appropriate closing code.

  11. Third Party Contacts, Section 7602 (c), does not apply to any contact with any office of any local, state, federal, or foreign government entity. Third Party Contacts do apply if the business entity is directly conducting business with or employed by the government office contacted.

  12. When the taxpayer response indicates that the tax discrepancy and/or penalty discrepancy has been paid by a third party, research/correspondence (by letter or telephone) must be done to validate the taxpayer's claim of payment. Do not just accept the taxpayer's statement that the payments were paid by a third party. Use the following steps as a guide for proof of payment(s):

    • Third party name and EIN must be provided in order to check for posted payments.

    • Copy of the cancelled check (front and back) payable to the US Treasury for the discrepant tax and/or penalty amount(s) may be provided to prove payment and ownership of payment.

    • Verify whether the third party pays Sick Pay for employer (see IRM 4.19.4.3.16 Responses Identifying Third Party Sick Pay) or is plan administrator for the employer (see IRM 4.19.4.3.34 Replies relating to Forms 945/1099R).


    IF THEN
    Third party name and EIN (check for posted payments) is found and the issue is not related to Third Party Sick Pay or third party plan administrator.
    1. Transfer the payments to the correct taxpayer's account using the credit transfer IAT.

    2. Enter the appropriate tax assessment or civil penalty amount you will be assessing and the number of quarters adjusted on the CAP detail screen and close the case using the appropriate closing code.

    3. Follow the appropriate CAWR assessment case processing procedures. See IRM 4.19.4.7.

    Third party name and EIN (check for posted payments) is not found
    1. Correspond with the taxpayer and explain that they are responsible for the discrepant amount(s) regardless of the third payer.

  13. Whenever a taxpayer makes a reference to any of his forms being fraudulently filed by another party or claims there is a fraud or identity theft issue, refer the case to HQ. See IRM 10.5.3.3 BMF Identity Theft Procedures for more information.

  14. When a reply is received that is identified on IDRS as a Federal Agency (BOD code TEGE with Employment Code F) refer the case to the FAD unit prior to assessing the case. See 4.19.4.2.15 Federal Agency Screening for more information.

4.19.4.3.1  (04-03-2012)
SSA-CAWR Civil Penalties

  1. The Service assesses penalties for cases referred by the Social Security Administration (SSA) when there is a discrepancy between wages reported on Forms W-2 and what is reported to the Service on Forms 94X. SSA will make two attempts to contact the employer to resolve the discrepancy.

    Reminder:

    Chief Counsel has determined the First Time Abate Penalty relief option does NOT apply to the Intentional Disregard Penalty (PRN 549) under IRC Section 6721(e) or the Late Filing Penalty (PRN 550) under section 6721(a). Therefore, please ensure that PRN 549 and 550 penalties are not abated using First Time Abate Penalty relief option.

    1. If SSA is unable to resolve the discrepancy, the cases are sent to the Service. A SSA discrepancy is identified when the employer reports more Social Security wages to the Service than to SSA. An SSA discrepancy is resolved when the employer provided missing Forms W-2, amends their Form 94X or submits other information to resolve the discrepancy.

    2. An agreement between the Service and SSA requires the Service to correspond with the employer in an effort to secure missing Forms W-2 from the employer. SSA does not have the authority to assess penalties or enforce collection of the Forms W-2. SSA refers these cases to the Service which is compared to the Business Master File (BMF). If a match is made, a Letter 98C is issued to the employer requesting the information necessary to resolve the discrepancy.

  2. If the discrepancy is not resolved by either the filing of the missing Forms W-2, an amended Form 94X, or by providing an explanation of the discrepancy, the Service is directed to assess a penalty.

  3. The taxpayer is given 45 days to answer the Letter 98C. If the taxpayer does not respond to the letter by the end of the suspense period (11 cycles from letter date) the case becomes a No Reply. Status code 91 automatically posts to CAP and is updated to BMF. The Intentional Disregard Penalty automatically assesses when the BMF posts status code 91 based on the following criteria:

    1. Penalties of less than $25,000.00 automatically assess on IDRS.

    2. Penalties of between $25,000.00 and $999,999.99 are held in a re-sequencing file until after PCD. These assessments will post to BMFOLT and then 1 week later to TXMOD at the end of the dead cycle.

    3. Penalties of $1 Million dollars or more do not automatically assess. Cases meeting this criteria must be reviewed by CAWR and the Technical Large Corp Unit. See IRM 4.19.4.3.36.

    4. Once the over $25,000 automatic penalties post (it may be in December or January), review the "TY YYYY $25,000 to $1 Million Resolved Resolution Penalty Report (181-02-28)" . This reflects those cases that SSA informed us were resolved if they met the criteria for being on the report. If the EIN appears on the Resolved report, the automatic penalty did not assess. There is no need to input an abatement.

4.19.4.3.1.1  (04-10-2014)
Intentional Disregard Failure to File Penalty (PRN 549)

  1. A penalty for intentional disregard (PRN 549) of the filing requirements under IRC Section 6721(e) is imposed on employers who do not comply with our requests to file correct Forms W-2. A CP 215 generates advising the taxpayer of the actual penalty assessment.

  2. The penalty is the greater of $250.00 ($100.00 for SSA CAWR tax years 2009 and prior) per missing Form W-2 or 10% of the aggregate amount of the items required to be reported correctly. For the purpose of this program, use only the 10% of the aggregate amount method due to a problem with the data appearing in the number of employees field on the Form 94X returns and CAP. See Exhibit 4.19.4-4. There is no maximum to the Intentional Disregard penalty. The following procedures are only for manually assessed penalties:

    • Review the Form 94X for Social Security wages, Social Security tips, and Medicare wages. Add Social Security tips and Social Security wage amounts together.

    • Compare the aggregate Social Security wages and Social Security tips amount and the Medicare wages amount (from Form 94X ) to its corresponding Form W-2 field. Determine which of the two amounts is the greater dollar discrepancy.

    • Assess the 10% Penalty on the larger discrepancy. See IRM 4.19.4.3.1.3.

  3. DO NOT ASSESS A CIVIL PENALTY (PRN 549) ON ENTITIES THAT ARE:

    • Federal Agencies

    • Defunct (cc 07 or 10) or Bankrupt Corporations

    • Cases with Forms 94X filed under 6020(b) procedures on any quarter that have not been amended

    • The only wage field out of balance is Total Compensation

    • The Employment Code is "S" . See IRM 4.19.4.4.

    • See Exhibit 4.19.4-4.

    • When the employer establishes reasonable cause IRM 20.1.7.8.1 and IRM 20.1.1.3.2

4.19.4.3.1.2  (04-10-2014)
Late Filed Forms W-2 Penalty (PRN 550)

  1. The Late Filing Penalty Assessment (PRN 550) is assessed by CAWR in the reply phase, when original Forms W-2 filed in response to SSA-CAWR correspondence are received. These forms are always subject to the maximum penalty of $100.00 ($50.00 for SSA CAWR tax years 2009 and prior) for each Form W-2 unless the Form W-2 shows no FIT, Social Security tax, Medicare tax, and only reports Total Compensation. Up to $500,000 for small businesses with gross receipts of $5 million or less and $1.500,000 for large businesses with gross receipts over $5 million per year may be assessed. Consider submitted Forms W-2 as original filings when:

    1. the taxpayer does not state the Forms W-2 were previously submitted OR

    2. the taxpayer states the Forms W-2 were previously submitted and further BMFOLU and SSA (ORS or ERQY) research does not support the claim.

  2. When the employer submits Forms W-2 always research BMFOLU prior to assessing the Late Filing Penalty:

    1. If all of the submitted Forms W-2 have already posted to BMFOLU, do not assess the Late Filing Penalty.

    2. If research shows that some of the missing Forms W-2 were previously filed, then assess the late filing penalty only on the remaining out-of-balance Forms W-2. Further SSA (ORS or ERQY) research may be needed to research for the Forms W-2 if the taxpayer stated that the Forms W-2 were previously submitted. See (1) above.

  3. DO NOT ASSESS A CIVIL PENALTY (PRN 550) ON ENTITIES THAT ARE:

    1. Forms W-2C submitted in response to CAWR correspondence

    2. Federal Agencies

    3. Defunct (cc 07 or 10) or Bankrupt Corporations

    4. Forms that BMFOLU or SSA research confirm were filed timely with SSA.

    5. The Employment Code is "S" . See IRM 4.19.4.4.

    6. See Exhibit 4.19.4-4.

    7. When the employer establishes reasonable cause IRM 20.1.7.8.1 and IRM 20.1.1.3.2

4.19.4.3.1.3  (04-10-2014)
SSA-CAWR Reply Procedures

  1. SSA-CAWR replies occur when taxpayers submit W-2 data prior to the expiration of the CAP correspondence suspense period.

  2. If the taxpayer provides W-2 information in other than the official format (i.e., a computer listing providing the employee name, SSN, wages, tips, federal income tax withheld) accept the information as if it was the actual Form W-2 and notate or identify each field on the first Form(s) W-2 data so SSA will know which fields are present on the listing(s).

  3. Follow the procedures below when working SSA-CAWR indicator 2 reply cases.

    IF THEN
    The Form(s) W-2 balances the SSA-CAWR case
    1. Prepare Form 9338 and attach Forms W-2 for submission to SSA

    2. Assess Late Filing Penalty if you have three or more Forms W-2. If you do not, file correspondence. See IRM 4.19.4.7.2.

    Note:

    DO NOT prepare a Form 6209. When SSA processes the forms, the master file will be updated at that time.

    The Form(s) W-2C balances the SSA-CAWR case
    1. Prepare Form 6209 and Form 9338 and attach Forms W-2C for submission to SSA.

    2. Associate with case folder to allow for review.

    3. File the correspondence using the SSA-CAWR No Penalty Needed Processing Procedures. See IRM 4.19.4.7.2.

    The SSA-CAWR reply does not balance the case :

    Example:

    The reply includes a partial number of Forms W-2.

    1. Make a copy of any Forms W-2/W-2C to attach to the case file.

    2. Prepare Form 9338 and attach Forms W-2/W-2C for submission to SSA.

    3. Assess Late Filing Penalty if you have three or more Forms W-2 and the Intentional Disregard (PRN 549) Penalty for any remaining discrepancy. See IRM 4.19.4.7.2.

      Exception:

      When there are more that 100 Forms W-2/W–2C are submitted, only photocopy the Form W-3/W-3C for inclusion in case file.

    The SSA-CAWR reply includes Forms W-2 increasing the Social Security wages, Social Security tips, medicare wages, FIT, and/or AEIC to more than the 94X amounts
    1. Make a copy of any Forms W-2/W-2C to attach to the case file.

    2. Prepare Form 9338 and attach Forms W-2 for submission to SSA.

    3. Assess Late Filing Penalty if you have three or more Forms W-2 (PRN 550) submitted. See IRM 4.19.4.7.2.

    4. Assess the additional tax using a posting delay code 3 to ensure the letter is received before the adjustment notice. See IRM 4.19.4.7.1.

      Exception:

      When there are more that 100 Forms W-2/W–2C are submitted, only photocopy the Form W-3/W-3C for inclusion in case file.

    Reminder:

    The 98C Letter informed the taxpayer that additional tax, and/or a penalty may be charged if the amounts on the Forms 94X and the Forms W-2 differ.

    The SSA-CAWR reply has Information on magnetic media (tape or disc),
    1. Send a 2057C explaining that SSA no longer accepts Mag Media and request a listing or copies of Forms W-2 and Form W-3.

    2. Assess the Intentional Disregard Penalty. See IRM 4.19.4.7.2.

4.19.4.3.2  (04-03-2012)
Agreed Assessments

  1. If the taxpayer agrees with our proposed increase (whether or not a Form 941-X has been filed or a payment was made), the adjustment is interest free, if the discrepancy is in federal income tax withholding, Social Security tax, or Medicare tax. Input the adjustment using the earliest IRS received date as the interest computation date. IRM 20.2.12.3 CAWR Assessments.

  2. If the taxpayer does not pay the entire balance by this due date, interest will accrue from this date onward. Whenever tax adjustments are made, penalties and interest must also be considered. Input the assessment to the last available quarter.

    IF THEN
    The taxpayer agrees to the proposed tax increase before we input the assessment to IDRS
    1. Input the appropriate adjustment amount you will be assessing on the CAP Detail Screen and close CAP using CC 48.

    2. Input TC 298 with BS 55 for the amount of the assessment using the correct interest computation date and the appropriate item adjustment codes.

    3. If full payment for the TC 298 tax amount is not received by the interest computation date of the TC 298 adjustment, assess a 10 percent FTD penalty (TC 180) on the amount not remitted timely.
      a) Input the secondary TC 180 and penalty amount on the same adjustment as the primary TC 298.
      b) Use PCC 018 with the TC 180 penalty assessment. See IRM 4.19.4.7.3. and IRM 20.1.4.21.6.1 (3) Computation of the FTD Penalty (CAWR and FUTA notices).

    4. If appropriate, monitor the case for the additional TC 180 - 5% Tier (PNTIER) with CC ACTON. See IRM 4.19.4.7.3.

    The taxpayer agrees to the proposed tax increase and the payment is found on another module.
    1. Use the Credit Transfer IAT to transfer the payment to the correct quarter.

    2. Input the appropriate adjustment amount you will be assessing on the CAP Detail Screen and close CAP using CC 48.

    3. Input TC 298 using BS 55 for the amount of the assessment using the correct interest computation date and appropriate adjustment codes.

    4. If full payment for the TC 298 tax amount is not received by the interest computation date of the TC 298 adjustment, assess a 10 percent FTD penalty (TC 180) on the amount not remitted timely.
      a) Input the secondary TC 180 and penalty amount on the same adjustment as the primary TC 298.
      b) Use PCC 018 with the TC 180 penalty assessment. See IRM 4.19.4.7.3.

    5. If appropriate, monitor the case for the additional TC 180 - 5% Tier (PNTIER) with CC ACTON. See IRM 4.19.4.7.3 and IRM 20.1.4.21.6.1 (8).

4.19.4.3.3  (02-01-2008)
Replies Received For Out of Locality Cases

  1. Do not work another campuses' CAWR reply. Send the reply, after entering the received date through the EDIT screen on CAP, to the campus identified when the reply date is input.

  2. When a late reply has been received for another campus, the case must be sent to the appropriate campus.

  3. For Late Replies you must follow the procedures in IRM 4.19.4.6.

  4. See CAWR/FUTA home page http://wc.web.irs.gov/ for a listing of the SB/SE Campus telephone and FAX numbers.


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