3.0.101 Schedule K-1 Processing

Manual Transmittal

November 19, 2021

Purpose

(1) This transmits revised IRM 3.0.101, General, Schedule K-1 Processing.

Material Changes

(1) IRM 3.0.101.1 (1) Removed reference to Integrated Submission and Remittance Processing (ISRP) because Schedules K-1 are no longer processed through ISRP. All references to ISRP have been removed throughout the IRM.

(2) IRM 3.0.101.1 (5) Removed Small Business/Self Employed (SB/SE) and replaced with Large Business and International (LB&I). Added Statistics of Income (SOI).

(3) IRM 3.0.101.1.6 (1) Added DV and it’s definition.

(4) IRM 3.0.101.2 Changed Purpose to IRM Deviations and removed Scope.

(5) IRM 3.0.101.7 Updated Form 1065 table to include new lines 4a and 4b.

(6) IRM 3.0.101.12 (1)c) Note, added instructions to place a SCRIPS breaker sheet after every 80 documents.

(7) IRM 3.0.101.13 (2) (a) and (e) Updated dates. j) Added instructions to include breaker sheets.

(8) IRM 3.0.101.14.5.2 Updated tax years in charts.

(9) IRM 3.0.101.14.9 Updated tax years in charts.

(10) IRM 3.0.101.14.11 (13) b) Added symbols @, AT and $, DOLLAR.

(11) IRM 3.0.101.14.11.1 Updated the following:

  • (1) (d) Removed Zone Improvement Plan

  • (1) (e) Added an example

(12) IRM 3.0.101.14.12 Removed sentence as it pertained to money amounts.

(13) IRM 3.0.101.14.13 (6) Removed redundant information already stated in (2). Moved Note to (2).

(14) IRM 3.0.101.14.13 (8) Added F to Form 1065 Schedule K-1 Line 11 and added V to Form 1065 Schedule K-1 Line 13 Alpha Designators Codes in chart.

(15) IRM 3.0.101.14.15 (1) a) Updated instruction.

(16) IRM 3.0.101.14.17.1 Updated tax years in chart.

(17) IRM 3.0.101.14.17.2 Updated tax years in chart.

(18) IRM 3.0.101.14.17.3 Updated tax years in chart and changed prompts for Shareholder TIN, Name 1, Name 2, Address, City, and State.

(19) IRM 3.0.101.14.17.4 Updated screen prompts and added (*) to instructions for Line 14.

(20) IRM 3.0.101.14.17.5 Added the following to the chart:

  • Disregarded Entity - Line H2 CKBOX

  • Disregarded Entity Name- Line H2

  • Disregarded Entity TIN - Line H2

  • Partnership Decrease- Line J CKBOX

  • Liabilities from Lower-Tier Partnership(s) - Line K CKBOX

  • Beginning Capital Account Line L

  • Ending Capital Account Line L

  • Beginning of Year Sec 704(c) Gain or Loss Line N

  • End of Year Sec 704(c) Gain or Loss Line N

  • Guaranteed Payments for Service Line 4a

  • Guaranteed Payments for Capital Line 4b

  • Added a Note to Total Guaranteed Payments Line 4c instructions

  • Updated Line 11 instruction to include F

  • Updated Line 13 instruction to include V

  • Schedule K-3 Attached Line 16 CKBOX

  • At-Risk Line 22 CKBOX

  • Passive Activity Line 23 CKBOX

  • Updated additional screen prompts

(21) IRM 3.0.101.14.17.6 Added the following to the chart:

  • Section 179 Deductions - Line 11

  • Sch K-3 Attached Checkbox Line 14

  • Updated screen prompts

(22) IRM 3.0.101.17.4 (1) Added and ampersand as a valid character.

(23) IRM 3.0.101.19.1 Updated the following:

  • (5) Updated example’s dates

  • (8) Changed Ending to Beginning for field 06BTP

  • (8) Added Disregarded Entity Checkbox for field 06H2I

  • (8) Added Disregarded Entity Name for field 06H2N

  • (8) Added Disregarded Entity TIN for field 06H2T

  • (8) Added Capital Beginning % for field 06JPS

  • (8) Added Capital Ending % for field 06JPE

  • (8) Added Line J Checkbox for field 06JCI

  • (8) Added Line K Checkbox for field 06KCI

  • (8) Added Beginning Capital Account for field 06LCB

  • (8) Added Ending Capital Account for field 06LCE

  • (8) Added Beginning unrecognized Sec 704(C) for field 06NUB

  • (8) Added Ending unrecognized Sec 704(C) for field 06NUE

  • (8) Added Guaranteed Payment for Service for field 0604a

  • (8) Added Guaranteed Payment for Capital for field 0604b

  • (8) Added "F" for field 0611C and 0611A.

  • (8) Added "V" for field 0613C and 0611C

  • (8) Added Sch K-3 Attached Checkbox for field 0616

  • (8) Added At-Risk Checkbox for field 0622

  • (8) Added Passive Activity Checkbox for field 0623

  • (9) Added Schedule K-3 Checkbox for field 0614

.

(24) IRM 3.0.101.20.2 (3) Changed Payee to Payer in chart.

(25) IRM 3.0.101.21.3 Updated the following:

  • Added Ordinary Business Income 0606 to 1041 chart.

  • Added Guaranteed Payment for Service Line 0604a to 1065 chart

  • Added Guaranteed Payment for Capital -Line 0604b to 1065 chart.

(26) Exhibit 3.0.101-2 Updated exhibit to show current year form.

(27) Exhibit 3.0.101-3 Updated exhibit to show current year form.

(28) Exhibit 3.0.101-6 Alphabetized table first by state than by city and added additional cities to each state.

(29) Exhibit 3.0.101-8 Added additional column for 2021 and later for Form 1065.

(30) Exhibit 3.0.101-10 Added and updated the following:

  • Added Page Up with instructions and definition

  • Updated Page Down instructions

  • Updated instructions for AUTO On/OFF (DV)

(31) All dates were changed to reflect processing year 2022.

(32) Editorial corrections and consistency changes were made throughout the instructions.

Effect on Other Documents

IRM 3.0.101 dated November 17, 2020 (effective January 01, 2021) is superseded.

Audience

The primary users of this IRM are Submission Processing Data Conversion Operation, Receipt and Control Operation, Input Correction Operation (Error Resolution) and their support staff which includes peripheral scanner operators, clerks, tax examiners, leads, technical advisors, and supervisors.

Effective Date

(01-01-2022)

James L. Fish
Director, Submission Processing
Wage and Investment Division

Program Scope and Objectives

  1. Purpose: IRM 3.0.101 provides written instructions regarding the processing of Schedules K-1 through the Service Center Recognition/Image Processing System (SCRIPS).

  2. Audience: The users of this IRM are Submission Processing Data Conversion Operation, Receipt and Control Operation, Input Correction Operation (Error Resolution) and their support staff which includes but is not limited to the following: extracting and sorting employees, peripheral scanner operators, clerks, tax examiners, leads, and supervisors. These instructions apply to all campuses.

  3. Policy Owner: The Director of Submission Processing.

  4. Program Owner: Paper Processing Branch, Mail Management/Data Conversion (an Organization within Submission Processing).

  5. Primary Stakeholders: Primary stakeholders for this IRM include:

    • Service and Enforcement,

    • ACA Implementation,

    • Compliance Strategy and Policy,

    • Large Business and International (LB&I),

    • Operations Business Support,

    • Office of Servicewide Penalties,

    • Statistics of Income (SOI).

  6. Program Goals: The goal of this program is to convert processable Schedules K-1 filed on paper media to electronic data records.

Background

  1. Paper returns and schedules are sent to the IRS by filers to fulfill their requirement to file a paper return and provide their taxpayer identification number (TIN). IRS must convert these returns to an electronic data record for use. Validation of the paper return information and conversion to electronic data is required.

Authority

  1. The following provides authority for the procedures in this IRM to be performed in support of completing compliance functions to make credits or refunds of any internal revenue tax, processing of non-revenue forms, and administrative support forms.

    1. Title 26 of the United States Code (USC) or more commonly known as the Internal Revenue Code (IRC).

    2. All policy statements for Submission Processing are in IRM 1.2.1.4, Servicewide Policies and Authorities, Policy Statements for Submission Processing Activities:

    • Code sections which provide the IRS with the authority to issue levies.

    • Congressional Acts which outline additional authorities and responsibilities like the Travel and Transportation Reform Act of 1998 or the Tax Reform Act of 1986.

    • Policy Statements that provide authority for the work being done.

    Note:

    The above list may not be all inclusive of the various updates to the IRC.

Roles and Responsibilities

  1. The Operation manager secures, assigns, and provides training for the staff needed to perform the duties presented in this IRM.

  2. The Planning and Analysis Staff provides feedback and support to local management to monitor and achieve scheduled goals.

  3. The team manager assigns, monitors, and controls the workflow to accomplish timely completion of the duties presented in this IRM.

  4. The employee applies the instruction for the duties presented in this IRM on the SCRIPS system to accurately convert paper data to an electronic data record for proper posting for use by the IRS.

Program Management and Review

  1. Program Reports: The reports listed below show receipts, production, and inventory for conversion of paper returns to electronic data. Management uses these reports to monitor the daily and weekly status of the program through completion.

    • IPS0083, Workstation Operator Statistics Program and Function Summary Report

    • IPS10610, Run Balancing Report

    • IPS06440, Throughput Statistics Report

    • PCC 2240, Daily Production Report - Program Sequence

    • PCC 6040, SC WP&C Performance and Cost Report

    • PCC 6240, SC WP&C Program Analysis Report

    • PCB 0440, Daily Workload and Staff Hours Schedule

    • PCB 0540, Weekly Workload and Staffing Schedule

  2. Program Effectiveness: Management measures weekly goals using the above reports for each function compared to the established completion schedule. Each function is expected to complete the inventory on or before the program completion date, and to retain or exceed schedule prior to the program completion date as stated in IRM 3.30.123, Work Planning and Control Processing Timeliness: Cycles, Criteria, and Critical Dates.

  3. Annual Review: Management reviews the processes in this manual annually to ensure accuracy and promote consistent tax administration.

Program Controls

  1. Local reports may be used to establish additional information for maintaining daily program control. Local reports do not replace the established official reports and required production reporting.

Acronyms/Terms/Definitions

  1. The following list of acronyms are used in this IRM. Definition of data entry prompts are in the charts.

    Acronyms Definition
    ABC Alphanumeric Block Control
    BMF Business Master File
    CC Command Code
    CCC Computer Condition Code
    DLN Document Locator Number
    DV Data Validation
    EIN Employer Identification Number
    EOP Entry Operator
    ERS Error Resolution System
    FUTA Federal Unemployment Tax Act
    IMF Individual Master File
    IRM Internal Revenue Manual
    KV Key Verification
    MCC Major City Code
    OE Original Entry
    PCD Program Completion Date
    SSN Social Security Number
    T Lines Transcription Lines
    TIN Taxpayer Identification Number

  2. Listed below are terms and their definitions related to SCRIPS processing.

    Term Definition
    Alpha Character A character (letter) of the alphabet.
    Alphanumeric Field A field that accepts both alpha and numeric characters.
    Application Refers to the form type being processed (e.g., Schedule K-1 or IRP).
    Block A group of Schedule K-1 documents identified with consecutive DLNs. The output program creates a block by combining documents from various units-of-work that share a block DLN.
    Block DLN An 11-digit DLN that consists of a two-digit File Location Code, tax class (always 5 for Schedules K-1), a two-digit document type, a three-digit Julian date and a three-digit block number.
    Block Number Also called "blocking series." The 9th, 10th, and 11th digits in a DLN. Up to 100 sequence numbers may be associated with one block number 00 through 99.
    Capture The process of obtaining images of a document for character recognition and operator use.
    Character Any symbol or alpha (special or numeric), that represents information.
    Character Recognition The process of converting information from paper to digital form.
    Cursor A vertical line showing the position where the next entry is keyed.
    Data Fields Those fields that do not include entity fields (e.g., money amounts, dates, etc.).
    DLN A 14-digit Document Locator Number that consists of a two-digit File Location Code, tax class a two-digit document type, a three-digit Julian date and a three-digit block number, two-digit sequence number and a year digit.
    EIN An Employer Identification Number (a nine-digit number) typically identifies an entity such as a corporation, or trust. Usually in nn-nnnnnnn format.
    Entity/Entity Fields The portion of the document that deals with TIN, name, and address information.
    Field Specific area provided for data entry.
    Flag A question mark used to "mark" an unrecognizable character, or an error within a field.
    Function Keys The upper row of keys on the keyboard. The function keys are <F1> through <F12>.
    Highlighting A three-dimensional shadowing of a template field used to direct attention to the field. Used in OE to show the current cursor position. Used in DV to show the current field containing an error.
    Image Strip A section of the true and complete image. Each strip corresponds to a particular field.
    Key Combination Keystroke commands that require two or more simultaneous keystrokes. For example, press <Ctrl>-<P> for (post-to-close) means to press and hold the <Ctrl> key and then press the <P> key before releasing the <Ctrl> key.
    Menu A list of operations/options from which the workstation operator makes a selection.
    Message Window A window that appears within the main window. It usually appears in the center of the screen. The system uses these windows to relay messages to the operator.
    NABR Name and Address Block Reader. NABR compares the address captured from the scanner and the United States Postal Service database of addresses.
    Non-Conforming Form A form the scanner cannot recognize.
    Numeric Character A number ranging from 0 to 9.
    Payee A recipient of money amounts issued by the payer. A filer may identify a payee on the form as one of the following: Beneficiary, Partner, or Shareholder.
    Payer An issuer of money amounts to a payee. A form may identify the payer as one of the following: Parent, Fiduciary, Estate, Partnership, or Corporation.
    Prompt A message or statement displayed that requires an operator response.
    Reverse Video A reversed display of the black and white on an image (i.e., black becomes white and white becomes black).
    Sequence Number/Serial Number A two-digit number within the DLN that uniquely identifies the document.
    Sight-Verify Examine a highlighted field in DV. If correct, release the field. If incorrect, correct the field. Also called "verify."
    Special Characters (symbols) *, &, /, %, #, ?, etc.
    SSN Social Security Number, a nine-digit number issued to an individual by the Social Security Administration. Usually in nnn-nn-nnnn format.
    Status Line A strip of information found along the bottom right side of the main working window below the prompt area.
    Template A window that contains fields for data entry. The template mirrors the actual form layout, to the extent possible. The system always displays it in the right side of the monitor screen.
    TIN Taxpayer Identification Number. Either an EIN or an SSN.
    Transmittal A Form 1332-SC Block and Selection Record/Breaker Sheet.
    True and Complete Image The black and white image that the system displays for data entry or validation purposes. If available, the system always displays it on the left half of the monitor screen. It is like a photocopy.
    Unit-of-Work (UW) A group of Schedule K-1 documents containing one transmittal and Schedules K-1.

Related Resources

  1. The following table lists the IRM primary sources of guidance for processing paper filed Schedules K-1.

    IRM Title Guidance on
    IRM 3.10.5 Campus Mail and Work Control - Batch/Block Tracking System (BBTS) utilizing BBTS to drop unit production cards for daily incoming receipts and production
    IRM 3.10.72 Campus Mail and Work Control - Receiving, Extracting, and Sorting receiving, extracting, sorting, and routing mail within the Submission Processing campuses
    IRM 3.10.73 Campus Mail and Work Control - Batching and Numbering batching and numbering with a Document Locator Number (DLN) of documents
    IRM 3.11.14 Returns and Documents Analysis, Income Tax Returns for Estates and Trusts, (Forms 1041, 1041-QFT, and 1041-N) document perfection to code and edit (perfect) returns and other documents for input to the Master File (MF) through the Service Center Recognition/Image Processing System (SCRIPS)
    IRM 3.11.15 Returns and Documents Analysis - Return of Partnership Income document perfection to code and edit (perfect) returns and other documents for input to the MF through SCRIPS
    IRM 3.11.217 Returns and Documents Analysis, Form 1120-S Corporation Income Tax Returns document perfection to code and edit (perfect) returns and other documents for input to the MF through SCRIPS
    IRM 3.41.274 Optical Character Recognition Scanning Operations, General Instructions for Processing via Service Center Recognition/Image Processing System workstation functions, workstation keyboard, windows environment and general instruction for entering data for tax returns and related data through SCRIPS
    IRM 3.41.275 Optical Character Recognition Scanning Operations, Scanner Operations on Service Center Recognition/Image Processing System scanning returns on SCRIPS

  2. The IRS adopted the Taxpayer Bill of Rights in June 2014. Employees are responsible for being familiar with and acting in accord with taxpayer rights. See IRC 7803(a)(3), and the following site for additional information about the Taxpayer Bill of Rights.

IRM Deviations

  1. These instructions supersede all instructions in other IRMs regarding the processing of Schedule K-1 documents.

  2. IRM Deviations - Must be submitted in writing following the instructions from IRM 1.11.2.2, Internal Management Documents System - Internal Revenue Manual (IRM) Process Standards and elevated through proper channels for executive approval.

Program Codes

  1. Use the program codes listed below when processing Schedules K-1 through SCRIPS, unless otherwise instructed:

    Return Type Program Code Tax Class/Doc Code Parent
    Tax Class/Doc Code
    1041 Schedule K-1 44386 566 244
    1065 Schedule K-1 44387 565 265
    1120-S Schedule K-1 44388 567 316

  2. Use the program codes listed below when processing Schedules K-1 through E-File, unless otherwise instructed:

    Return Type Program Code Tax Class/Doc Code Parent
    Tax Class/Doc Code
    1041 Schedule K-1 44390 566 236
    1065 Schedule K-1 44360 565 265
    1120-S Schedule K-1 44370 567 316
    1. Code and Edit: should use the parent return program codes for coding both the parent returns and the Schedules K-1. Do not use a 4438X - program code when coding the Schedules K-1.

    2. Batching/Numbering: should use the Schedule K-1 program codes for time spent batching and numbering Schedules K-1.

    3. Data Conversion: should use the parent return program code when transcribing the parent returns and the Schedule K-1 program code when transcribing Schedules K-1. (Use the program codes listed above.)

    4. Bob Register Transcription: should use program code 44930.

    5. Error Resolution (ERS): should use function/program code 340–44380.

    6. BOB Register: should use function/program code 620–44380.

Extracting and Sorting

  1. Schedules K-1 attached to the parent returns are not sorted during the sorting function. However, because of Schedules K-1 processing, parent returns do require additional sorts.

  2. Sort the parent returns into the following categories:

    1. Remittance versus Non-remittance

    2. Refund versus Non-refund

    3. Tax period

      • Current timely filed calendar year (current processing year minus 1)

      • One-Year Prior (current processing year minus 2)

      • Two-Years Prior (current processing year minus 3)

      • Prior Year (current processing year minus 4 or more)

      • Current fiscal and delinquent current year (current processing year minus 1)

      • Future Years (current processing year)

    4. Current forms and future Form 1041 with Schedules K-1 attached versus without Schedules K-1 attached.

    5. Code and Edit detaches current year, one-year prior to current year and two-years prior to current year Schedules K-1. Always detach future year Schedules K-1. DO NOT detach Schedules K-1 that are three or more years prior to current year.

      Note:

      When a future return with an attached Schedule K-1 is found in a current year batch, pull the return and re-batch.

Code and Edit

  1. This section contains instructions for processing parent returns with Schedules K-1 through Code and Edit.

  2. Schedule K-1 parent returns are processed in Kansas City Submission Processing Center (KCSPC) and Ogden Submission Processing Center (OSPC). Edit Schedules K-1 in red ink.

  3. If the return is for three or more years prior to current year, do not research or correspond for missing or incomplete Schedules K-1.

  4. The beginning and the ending tax year on all Schedules K-1 must list the same tax year. If not, they fall out to ERS if not edited correctly.

  5. Verify that the pre-printed year on the Schedules K-1 matches the beginning tax year on the parent return. If not, edit the YY digits on all Schedule K-1 forms to the beginning tax period of the parent return.

  6. The beginning and ending tax periods must be in the same year, if not the Schedules K-1 fallout to ERS if not edited correctly.

    Example:

    If 2020 is the pre-printed year on the Schedules K-1 and the beginning tax period on the parent return is 2021, then line through the 20(YY) and edit 21(YY) on all Schedules K-1. Also, if the pre-printed year on the Schedules K-1 is 2020 and the beginning tax period on the parent return is 2019, then line through the 20(YY) and edit 2019 (YY) on all Schedules K-1.

  7. If the ending tax period is not in the same year as the beginning tax period on the Schedules K-1, edit the ending tax period on the Schedules K-1 using the final quarter of the tax year, to ensure the beginning and ending tax periods are in the same year.

    Example:

    Beginning tax period is February 2021 and the ending tax period is January 2022 the ending tax period is 122021.

    Note:

    Watch that batches of work do not contain mixed tax periods since SCRIPS systemically deletes any batches with mixed tax periods causing rework and reprocessing.

    1. When making this correction be sure to edit to the right of the printed tax year in the Document Locator Number (DLN) area.

    2. When finding future returns with attached Schedules K-1 in a current year batch, pull the return(s) and re-batch.

  8. If an exact duplicate of a Schedule K-1 has been filed with the parent return, process one Schedule K-1 and cross out the duplicate Schedule K-1 with an "X" and leave the duplicate attached to the parent return.

  9. Do not bracket negative amounts. (See IRM 3.0.101.7 for Money Amount Fields instructions).

  10. If two-dollar amounts are listed on the same line, manually add together and enter total amount on the first line only.

  11. If the Individual Master File (IMF) payee social security number (SSN) or Business Master File (BMF) payee employer identification number (EIN) is not located in the correct box but it is in the name and address box, re-write the SSN/EIN in the SSN/EIN box.

  12. A payer TIN must be present on at least the first Schedule K-1. If not present, enter the TIN from the parent return in the SSN/EIN box. If the TIN on the parent return has changed, enter the new parent TIN on the payer TIN line.

  13. Edit a check mark or "X" in the box if the words "amended" or "corrected" are present on the parent return of the Schedules K-1 and the amended box is not checked. Detach from parent and continue processing.

  14. When Schedules K-1 are received in continuous formats (e.g., computer listings, and typed listings) correspond requesting separate Schedules K-1. Do not dispose of the listing as it is an attachment to a tax return.
    When correspondence is required for the paragraph above, any one of the following letters should be used:

    • Letter 177-C for Form 1041 Schedule K-1.

    • Letter 1355-C for Form 1065 Schedule K-1.

    • Letter 118-C for Form 1120-S Schedule K-1.

  15. Do not correspond for the missing, incomplete, or incorrect Schedules K-1 for Form 1065 on the following types of returns:

    • Sec. 6020(b) returns

    • Sec. 501(d) returns, Religious and Apostolic Organizations

    • Returns filed under a Common Trust

    • Sec. 761(a) returns

    • Nominee returns

    • Inactive returns

    • 26 CFR 1.736-1 (Payments to a retiring partner)

    • Final returns

    • If foreign box is checked, then it is accepted as a foreign return

    • Amended ("G" coded) returns

    • Payer is a foreign entity

    • Return is being reprocessed as an original return and has a Form 13596 attached

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

    • Returns filed for three or more years prior to current year.

      Note:

      Correspond for missing, incomplete, incorrect Schedules K-1 or number of partners (Line I) on current year, one-year prior to current year and two-years prior to current year returns.

  16. When reviewing Form 1065 Schedules K-1 and the partnership has indicated the number of Schedules K-1 is "1" and/or the Schedules K-1 attached to the return has 100% interest in the partnership then follow the instructions in IRM 3.11.15.16(6), Line I - Number of Schedules K-1 (or Number of Partners).

  17. When the Form 1065 Schedules K-1 shows two names listed in the partner’s name and address section:

    • Correspond to request separate Schedules K-1 using Letter 1355-C or approved local correspondence procedures.

    • Notate the letter sent in the lower right margin of Form 1065.

    • Continue editing the return.

  18. Do not correspond for missing, incomplete, or incorrect Schedules K-1 for Form 1120-S on the following types of returns:

    • Sec. 6020(b) returns

    • Examination Secured Substitute for Return (SFR) returns

    • Re-entry returns

    • Amended ("G" coded) returns

    • Payer is a foreign entity

    • Return is being reprocessed as an original return and has a Form 13596 attached

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

    • Returns filed for three or more years prior to current year.

      Note:

      Correspond for missing, incomplete or incorrect Schedules K-1 on current year, one-year prior to current year and two-years prior to current year returns.

  19. Do not correspond for missing Schedules K-1 for Form 1041 on the following types of returns:

    • Sec. 6020(b) returns

    • Examination Secured Substitute for Return (SFR) returns

    • Re-entry returns

    • Amended ("G" coded) returns

    • Electing Small Business Trust (ESBT), Grantor Type Trust, or Bankruptcy Estate

    • Payer is a foreign entity

    • Return is being reprocessed as an original return and has a Form 13596 attached

    • Section 642(i) Trust (Maintenance of Cemetery Property or Number of Gravesites)

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

    • Returns filed for three or more years prior to current year

      Note:

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

  20. Form 1041, non-taxable grantor trust filers are not required to file Schedules K-1. Do not process or detach any Schedules K-1 attached to a Non-taxable Grantor Trust. These trusts are edited with a Fiduciary Code of 4 and a Trust Code of 3. See IRM 3.11.14.13.4.1, Grantor Trusts, for updated instructions concerning Grantor Trust returns.

Unprocessable Schedules K-1

  1. The criteria for unprocessable Schedules K-1 are as follows:

    • The tax period is more than two-years prior to current year.

    • The payer information indicates a different entity than the parent entity.

    • The form is a 1065-B Schedule K-1 or Schedule K-1 is attached to a Form 1065-B.

    • Schedule K-1 attached to Form 1041 for Non-Taxable and Taxable Grantor Trust.

  2. Discontinue processing any Schedules K-1 if income reported is for a different tax year than the form.

Standard Schedules K-1

  1. To be processable, the Schedules K-1 must meet all the following requirements:

    • Must be for the parent return it is attached to, e.g., if attached to Form 1065 the Schedule K-1 must be a Form 1065 Schedule K-1.

    • Schedules K-1 must contain the payer and payee’s name, address, and SSN/EIN.

    • Each taxpayer’s information must be on a separate Schedule K-1 form.

      Exception:

      Do not correspond if a husband and wife (same last name) are filing a Schedule K-1 as "one Beneficiary, Partner, or Shareholder" in a "Trust, Partnership, or Corporation."

    • The amount of each partner, shareholder or beneficiary share cannot be combined as one total.

  2. If the Schedules K-1 do not meet the requirements listed above, research the return and attachments, if information is not found, research Integrated Data Retrieval System (IDRS). If unable to locate the missing information, and the payee is not a foreign entity correspond requesting a valid Schedule K-1, using Form 3696, Correspondence Action Sheet. As of October 29, 2008, returns are no longer sent back to the taxpayer for missing information/signature per Chief Counsel opinion issued in September 2008.

    Exception:

    There must be an SSN/EIN in the payee entity area to research IDRS. If the SSN/EIN is not present, and only a name OR only an address is present, DO NOT research IDRS. There is not enough information to find the correct payee. Either process the Schedules K-1 as it is or correspond for the missing information if the K-1s are required.

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

  4. See Exhibit 3.0.101-1, Form 1041 Schedule K-1, Exhibit 3.0.101-2, Form 1065 Schedule K-1, and/or Exhibit 3.0.101-3, Form 1120-S Schedule K-1, for examples of standard Schedules K-1.

Substitute Schedules K-1

  1. Schedules K-1 can be submitted in substitute format (e.g., 2D Bar Code).

  2. Edit Section 16 to tell clerks where to put payer information.

  3. To be processable, substitute Schedules K-1 must meet all the following requirements:

    • Schedules K-1 must contain the payer and payee’s name, address, and SSN/EIN.

    • Each taxpayer's information must be on a separate Schedule K-1 form.

      Exception:

      Do not correspond if a husband and wife (same last name) are filing a Schedule K-1 as "one Beneficiary, Partner or Shareholder" in a "a Trust, Partnership, or Corporation."

    • The amount of each partner, shareholder or beneficiary share cannot be combined as one total.

  4. If the substitute Schedules K-1 do not meet the requirements listed above, research the return and attachments, if information is not found research IDRS. If unable to locate the missing information, and the payee is not a foreign entity correspond requesting a valid Schedule K-1, using Form 3696, Correspondence Action Sheet. As of October 29, 2008, returns are no longer sent back to the taxpayer for missing information/signature per Chief Counsel opinion issued in September 2008.

    Exception:

    Do not correspond if a Schedule K-1 is not required per IRM 3.0.101.5, Code and Edit.

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

Non- Standard Schedules K-1

  1. Schedules K-1 can be submitted in non-standard format. A non-standard Schedule K-1 has missing lines.

  2. Edit Section 16 to tell clerks where to put payer information.

  3. For all processable non-standard Schedules K-1, DO NOT black out the Forms Identification Number found in the upper right corner of the Schedule K-1.

  4. To be processable, non-standard Schedules K-1 must meet all the following requirements:

    • Schedules K-1 must contain the payer and payee’s name, address, and SSN/EIN.

    • Line items may be missing, however, line items that are present must be in the same order as those on the official form.

    • Each taxpayer's information must be on a separate Schedule K-1 form.

      Exception:

      Do not correspond if a husband and wife (same last name) are filing a Schedule K-1 as "one Beneficiary, Partner or Shareholder" in a "Trust, Partnership, or Corporation."

    • The amount of each partner, shareholders or beneficiary share cannot be combined as one total.

  5. If the non-standard Schedules K-1 do not meet the requirements listed above, research the return and attachments, if information is not found research IDRS. If unable to locate the missing information, and the payee is not a foreign entity, correspond requesting a valid Schedule K-1, using Form 3696, Correspondence Action Sheet. As of October 29, 2008, returns are no longer sent back to the taxpayer for missing information/signature per Chief Counsel opinion issued in September 2008.

    Exception:

    Do not correspond if a Schedule K-1 is not required per IRM 3.0.101.5, Code and Edit.

  6. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

Loose Schedules K-1

  1. If loose Schedules K-1 are received in Code and Edit, research for the parent return DLN and proceed as follows:

    If parent return DLN and Schedule K-1 Then
    Is found and is for either current year, one-year prior to current year, two-years prior to current year or future year
    1. Write the parent DLN in the upper left of the Schedule K-1.

    2. If the DLN is for an electronic filed return File Location Code (FLC) of DLN (first two-digits) are 14, 16, 22, 35, 38, 41, 43, 52, 64, 65, 72, 75, 76, 92, 93, or 95, destroy the Schedules K-1 using Service Center Procedures.

    3. Place the Schedules K-1 in a gusset folder and label the folder "Loose Schedules K-1."

    4. Forward the folder, with the Schedules K-1 to Batching/Numbering to continue processing.

    Is found and is for three or more years prior to current year
    1. Prepare an "attachment slip" requesting the Schedules K-1 be attached to the parent return if the parent return is not an electronic filed DLN.

    2. If parent return is an electronic filed DLN, destroy the Schedules K-1 as classified waste.

    Is not found and is for either current, one-year prior to current year, two-years prior to current year or future year
    1. Hold in suspense and monitor weekly for parent return DLN.

      • Current Year: Hold until six weeks after parent return Processing Completion Date (PCD).

      • One-Year Prior to Current Year: Hold until six weeks after parent return PCD.

      • Two-Years Prior to Current Year: Hold until six weeks after parent return PCD.

      • Future Year: Hold for six weeks (research ERS suspense and Master File, weekly, for parent DLN).

    2. If parent DLN is found, follow procedures above.

    3. If parent DLN is not found, route to Accounts Management as a loose schedule.

      Note:

      All Schedules K-1 need to be suspended for research of parent DLN for a minimum of six weeks.

    Is not found and is for three or more years prior to current year Destroy the Schedules K-1 as classified waste.

Loose Schedules K-1 for Electronic File Returns

  1. When a loose Schedule K-1 is received from Code and Edit, research to determine if the Schedule K-1 is filed electronically with the parent return.

    IF AND THEN
    All Schedules K-1 are filed with the parent return. Schedules K-1 are for current, one-year prior to current year, two-years prior to current year future or prior year. Destroy the Schedules K-1 as classified waste.
       
    1. Destroy any Schedules K-1, as classified waste, if it is a duplicate of an electronic filed Schedule K-1.

    2. Place all other Schedules K-1 in a gusset folder and label the folder Loose Schedule K-1. Make sure the parent DLN is clearly written/stamped in the upper left margin of the first Schedule K-1 for that parent DLN.

    3. Forward the gusset folder, with the Schedules K-1 to Batching/Numbering to continue processing.

      Schedules K-1 are for three or more years prior to current year Destroy Schedules K-1 as classified waste.

Schedules K-1 Received in Suspense/Rejects

  1. Schedules K-1 are form specific and should not be converted to match the parent return (i.e., Form 1065 must have a Form 1065 Schedule K-1, Form 1041 must have a Form 1041 Schedule K-1, or Form 1120-S must have an Form 1120-S Schedule K-1). If the Schedule does not match the parent form, do not send the Schedules K-1 for processing. Take the necessary steps to have them attached to the parent return.

  2. For all others do the following when correspondence is received in Error Resolution.

    1. Separate the Schedules K-1 from the rest of the correspondence.

    2. Write or verify the parent return DLN is stamped in the upper left corner of the first Schedule K-1.

    3. Place the Schedules K-1 in a gusset folder and label the folder "Loose Schedule K-1."

    4. Forward the folder, with the Schedules K-1, to Numbering/Batching to continue processing.

    5. If there are attachments (other than the actual Schedules K-1), attach them to the parent return.

    6. If there are attachments (other than the actual Schedules K-1) and you do not have the parent return, prepare an "attachment slip" requesting the documents be stapled to the parent return.

    7. If the Schedules are for other than the above returns (i.e., Form 1065-B, Form 8865), leave attached to the parent return.

    8. If the Schedules are for other than the above returns (i.e., Form 1065-B, Form 8865) and you do not have the parent return, prepare an "attachment slip" requesting the document be attached to the parent return.

Money Amounts Fields

  1. Do not bracket negative amounts.

  2. If taxpayer enters a negative amount in a positive only field, "X" the negative amount. See table below for positive only fields for each Schedule K-1.

    Note:

    Lines with multiple entries, edit the first line only

    .

    Form 1065

    Line Number and Title
    Line 4a - Guaranteed Payments for Services
    Line 4b -Guaranteed Payments for Capital
    Line 4c Total Guaranteed Payments
    Line 12 - Section 179 deduction
     

    Form 1120-S

    Line Number and Title
    Line 11 - Section 179 deduction
    Line 13 - Credits
     

    Form 1041

    Line Number and Title
    Line 3 - Net Short-Term Capital Gain
    Line 4a - Net Long-Term Capital Gain
    Line 8 - Other Rental Income
  3. Amounts are transcribed in dollars only. If taxpayer enters a positive or negative $.49 or less, "X" the amount. If taxpayer enters a positive or negative $.50 to $.99, edit a $1 or -$1, respectively.

  4. Schedules K-1 with zeros, blanks or dashes in the entire money amount T-Lines are considered a "Zero Balance Schedule K-1" and are valid, continue processing.

  5. Ogden Campus Only

    • Foreign documents – if a circled "U" is edited to the right of the name on name line 1, enter "U" in the 2nd TIN Notification field in Section 02. The "U" code is valid with File Location Code 60 (Ogden) only.

    • When transcribing money amounts, the equivalent U.S. cents amount should not be transcribed. Many Europeans currencies use commas for decimals and decimals for commas. Do not transcribe punctuation. Do not transcribe the last two numeric digits of a foreign money amount if the amount is preceded by either a decimal or a comma (e.g., Deutsche Marks may be written as "DM 2.941,18" only 2941 should be transcribed).

Converting Schedule K-1 Forms

  1. Schedules K-1 are form specific and should not be converted to match the parent return, (i.e., Form 1065 must have a Form 1065 Schedule K-1, Form 1041 must have a Form 1041 Schedule K-1, and Form 1120-S must have an Form 1120-S Schedule K-1.

Prior Year Format for Schedules K-1

  1. All current year, one-year prior to current year and two-years prior to current year Schedules K-1 on a prior year form must be reformatted to current year format. See Exhibit 3.0.101-8, Conversion Chart.

  2. If there is a bar code present on the prior year revision (2012 and prior for Form 1120-S Schedule K-1, Form 1065 Schedule K-1 and Form 1041 Schedule K-1), using a marker, black out the straight lines on both sides of the bar code. See Figure 3.0.101-1, Black Out Bar Code on Prior Year Documents.

    Figure 3.0.101-1

    This is an Image: 33347033.gif

    Please click here for the text description of the image.

Moving Processable Schedules K-1

  1. Separate processable Schedules K-1 from the parent return.

  2. Staple the parent return, attachments, unprocessable Schedules K-1 and envelope together.

  3. Move the processable Schedules K-1, un-stapled, to the back of the parent return.

Numbering Parent Returns

  1. When numbering the parent return, the Numbering function:

    1. Separates Schedules K-1 from the parent return and makes sure "all" Schedules K-1 beginning tax year match the calendar/tax year of the parent return if other than calendar year.

    2. Assigns and stamps a DLN on the parent return on the upper right side of document. Stamp this same DLN in the upper left corner (at least 2 inches from the edge) on all Schedules K-1 for that parent. If there is no room in the upper margin, stamp DLN in the right-side margin. Do Not use the Entity area. See Figure 3.0.101-2, DLN Stamp Location.

      Note:

      It is very important that the parent DLN is clearly stamped on all Schedules K-1 as it is used during SCRIPS processing of the Schedules K-1.

    3. Stamps or writes the parent block DLN on the gusset folder, places the parent returns in the folders and puts the folders on the batch cart, in DLN order and forwards to Data Conversion.

    4. Places the Schedules K-1 into a box in parent DLN numbered order.

    5. Places parent transmittal in the same slot holding folder 1 and transfers the numbered parent documents and numbered Schedules K-1 to the final tech's work area.

      Note:

      Although the parent documents are in folders and Schedules K-1 are in a box, they both need to remain with the transmittal.

      Note:

      When your work is left in the final tech area, it is picked up by Quality Review (QR), when they complete their review, they transfer it to the final tech area. Then the work is checked, recorded, and moved to Data Conversion.

      Figure 3.0.101-2

      This is an Image: 33347020.gif

      Please click here for the text description of the image.

Batching

  1. Line up Schedules K-1 boxes according to program (Form 1041 Schedules K-1 with Form 1041 Schedules K-1 etc.) making sure to keep multiple boxes (1 of 2 and 2 of 2) together.

  2. It is very important to keep current and future year Schedules K-1 in different batches. The year is input once for each batch and it is repeated for each return in the batch.

    • Current = Current processing year minus 1

    • One-Year Prior = Current processing year minus 2

    • Two-Years Prior = Current processing year minus 3

    • Future = Current processing year (fiscal years)

  3. Input information in Batch Block Tracking System (BBTS) to create the new batch, and then record new batch number "1."

  4. On the Schedules K-1 box line through the old parent program and batch and write the new Schedules K-1 program and batch as well as the cycle number of boxes (i.e., 1 of 1, 1 of 2, and 2 of 2).

  5. Document count are 80 documents for each block. You can allow BBTS to default to the number of blocks or change the count to "1."

  6. Box is ready for Pre-Doc Prep Unit.

Loose Schedules K-1

  1. Batching keeps loose Schedules K-1 in a colored folder, and notates "Re-file" on the outside, routes to the Pre-Doc Prep Unit.

Preparing Schedules K-1 for Processing

  1. Prepare the Schedule K-1 folders or SCRIPS breaker sheets the same time the parent returns are numbered.

    1. Assign and stamp a DLN on the parent return.

    2. Stamp this same DLN in the upper left corner of all Schedules K-1 from that parent return as a cross-reference.

    3. Stamp the parent return gusset folder and the Schedules K-1 gusset/blue folder or SCRIPS breaker sheet with the (FLC), tax class and document code then write the block number on both folders.

      Note:

      If Service Center is not using gusset/blue folders for the Schedules K-1, place a SCRIPS breaker sheet after every 80 documents in the "stat" box.

    4. Place Schedules K-1 (in folders or with SCRIPS breaker sheet after every 80 documents) on batch cart or in stat boxes.

Schedules K-1 Pre-Document Preparation (Pre-Doc Prep)

  1. When preparing Schedules K-1 for the scanner, the most critical area for repair is the right side of the Schedules K-1.

  2. The Pre-Doc Prep function is responsible for the following:

    1. Do not mix tax years. All tax years must be sorted separately. If mixed, pull out the tax year(s) with the least amount of returns in the box. For example: If the majority in the box is 2021, pull any Schedules K-1 that are "not" 2021.

    2. Locate the parent DLN and write or verify the DLN is stamped on the Schedules K-1 that are pulled out of batches/boxes due to mixed tax years.

    3. Remove staples from the Schedules K-1, if present.

    4. Ensure all pages are oriented in the correct direction to be scanned.

    5. Remove all Schedules K-1, with tax periods 2018 or prior, write the parent DLN on the upper left corner (if not already present), and return to the Code and Edit function.

    6. Remove all attachments, write the parent DLN on the upper left corner (if not already present), and give to lead or manager.

    7. ALL damage on the right side must be repaired prior to sending to the scanner function.

    8. Repair any rips, tears or holes prior to sending to the scanner function and make sure document is laid out flat for scanning.

    9. If Code and Edit has put a slash (/) or "X" through the entire form, pull the form, write the parent DLN on the upper left corner (if not already present), and return to the Code and Edit function.

    10. Ensure that a SCRIPS breaker sheet is after every 80 documents.

Loose Schedules K-1

  1. Loose Schedules K-1 are received from Batching in a colored folder.

  2. Sort by document type, then sort each document type by future year, current year, one-year prior to current year and two-years prior to current year.

    • Batch

    • Follow all Pre-Doc Prep Procedures in IRM 3.0.101.13

    • Place in blue gusset folder and label the box as "RE-FILE"

  3. After preparing Schedules K-1, route to SCRIPS.

Duplex Schedules K-1

  1. Duplex (Carbon Copy) Schedules K-1, cannot be processed through the SCRIPS System. When received take the following actions:

    1. Photocopy the duplex Schedules K-1.

    2. Staple the duplex Schedules K-1 together by parent EIN.

    3. Place stapled duplex Schedules K-1 in a folder and place in front of the block.

    4. Place photocopied Schedules K-1 in the block to be processed through SCRIPS.

Schedules K-1 Processing Through SCRIPS

  1. This section provides instructions for entering data using the SCRIPS System.

Forms/Program Numbers/Tax Classes/Doc. Codes

  1. Use the program codes listed below when entering Schedules K-1 through SCRIPS.

    Return Type Program Number Tax Class/Doc Code Parent
    Tax Class/Doc Code
    1041 Schedule K-1 44386 566 236, 244 and 254
    1065 Schedule K-1 44387 565 265 and 254
    1120-S Schedule K-1 44388 567 316 and 354

    Note:

    SCRIPS allow management to override the established Unit Task Priority.

Work Prioritization
  1. The system automatically sets the Unit Task Prioritization using the following criteria:

    Program Number Return Type Description based on cycle
    44388 1120-S Schedule K-1 Prior (by cycle, then batch #), then Current Cycle (by batch #)
    44386 1041 Schedule K-1 Prior (by cycle, then batch #), then Current Cycle (by batch #)
    44387 1065 Schedule K-1 Prior (by cycle, then batch #), then Current Cycle (by batch #)
    44388 1120-S Schedule K-1 Future Cycle (by cycle then batch #)
    44386 1041 Schedule K-1 Future Cycle (by cycle then batch #)
    44387 1065 Schedule K-1 Future Cycle (by cycle then batch #)

  2. The system automatically re-prioritizes the work every time the cycle on the system changes.

  3. Form 1120-S Schedules K-1 must be batched and processed on cycle. They cannot be shelved.

  4. Form 1065 Schedules K-1 and Form 1041 Schedules K-1 can be shelved. However, they must be processed by Program Completion Date (PCD).

Scanner Reject

  1. The scanner prints a one-character reject code to the left of the DLN area on any form that is routed to the Reject Bin. The rejected form then is sent back to Batching.

    Note:

    Prior to sending to Batching, write the parent DLN in the upper left corner of the Schedules K-1 (if not already present).

    Form Reject Code Description
    44386 (1041 Schedule K-1)
    44387 (1065 Schedule K-1)
    44388 (1120-S Schedule K-1)
    M Mixed document type within a unit-of-work. (e.g., Form 1041 Schedule K-1 within a Form 1065 Schedule K-1 unit-of-work)

Loose Schedules K-1

  1. Loose Schedules K-1 are received in a colored folder.

  2. After scanning, the SCRIPS operators place the loose Schedules K-1 back in blue gusset folders labeled "RE-FILE" and sends to Post-Doc Prep.

Workstation Operations

  1. Refer to IRM 3.41.274, General Instructions for Processing via Service Center Recognition/Image Processing System, for a description of these and other items:

    • Keyboard Layout

    • Login/Logoff

    • Operator Statistics

    • Post-to-Close

    • Interrupt/Resume

    • Suspend/Resume

    • Status Line

  2. Whenever IRM 3.41.274, General Instructions for Processing via Service Center Recognition/Image Processing System, and this IRM conflict, this IRM takes precedence.

Form Identification (FI) Function

  1. The scanner does not recognize all documents. These documents are called non-conforming forms. They range from photocopies of official documents, that might be official forms but for some reason do not meet the official specification for measurement, homemade documents of varying formats, to non-Schedule K-1 forms. The Form Identification (FI) function allows the workstation operator to identify the form to avoid rework at the scanner. The FI screen has an image on the left and an entry template on the right. The entry template permits the operator to select what form type the image is, or to delete a single image or an entire submission from further processing. The menus shown on the screen vary depending on how your supervisor profiled you. For instance, if you are not profiled for the FI function, this option is not present on the OE Function Menu.

Form Identification (FI) QUICK START
  1. From the Workstation Main Menu, select the numeric code for Original Entry (OE).

  2. From the Original Entry (OE) Image Selection Menu, select the numeric code for Forms Identification (FI) Selection Menu. See Figure 3.0.101-3.

    Figure 3.0.101-3

    This is an Image: 33347040.gif

    Please click here for the text description of the image.

  3. From the Forms Identification (FI) Selection Menu, Select 1041 K-1 Forms Identification, 1065 K-1 Forms Identification or 1120-S K-1 Forms Identification.

  4. The first group of images from a unit-of-work (UW) requiring identification opens.

  5. If an incorrect option is selected from the Forms Identification (FI) Selection Menu, press the <Ctrl>-P key combination to set (post-to-close) and press <F9> to suspend, before entering any data, to return to the Forms Identification (FI) Selection Menu.

  6. If you need to stop FI:

    • Press the <Ctrl>-P key combination (post-to-close) to end FI after completing the current UW.

    • Press the <Ctrl>-P key combination (post-to-close) followed by <F9> to suspend the block immediately.

    Note:

    For a complete list of key functions, see Exhibit 3.0.101-10, Key Function Table.

  7. The system returns you to the Schedule K-1 Forms Identification (FI) Selection Menu when you complete the last image in the UW.

Forms Identification (FI) Processing
  1. The system assigns a six-digit sequence number instead of a DLN to Schedule K-1 documents it cannot identify. This number assists in locating the UW when researching documents. Once the form type has been identified, the system assigns a DLN to the submission.

  2. If you can identify the image, chose the proper letter or number selection from the form template. Depending on the form type selected (1041, 1065, or 1120-S), one of the following menus appears:

    1041 K-1 Form Type
    1 - Current Year (TY21) 1041 K-1 (661117)
    2 - 1 Prior Year (TY20) 1041 K-1 (661117)
    3 - 2 Years Prior Year (TY19) 1041 K-1 (661117)
    B - Breaker Sheet (F1332)
    X - Remove
    1065 K-1 Form Type
    1 - Current Year (TY21) 1065 K-1 (651121)
    2 - 1 Year Prior Year (TY20)1065 K-1 (651119)
    3 - 2 Years Prior Year (TY19)1065 K-1 (651119)
    B - Breaker Sheet (F1332)
    X - Remove
    1120-S K-1 Form Type
    1 - Current Year (TY21) 1120S K-1 (671121)
    2 -1 Year Prior Year (TY20) 1120S K-1 (671120)
    3 - 2 Years Prior Year (TY19) 1120S K-1 (671119)
    B - Breaker Sheet (F1332)
    X - Remove

    Note:

    If you receive an unrecognized Breaker Sheet (Form 1332, Block and Selection Record), press <X> to remove the document from further processing.

    The <Enter> key must be pressed to complete a selection.

  3. If you cannot identify the image, press <F9> to suspend the document for research. Some documents are scanned backwards. These requires research to determine exactly which document type they are. If the image is unprocessable, press <X> to remove the document from further processing.

  4. To end a session, press the <Ctrl>-P key combination to set (post-to-close). The system returns you to the Original Entry (OE) Selection Menu when you complete the last image in the UW.

Original Entry (OE) Function

  1. The OE function is used to manually enter data from both scanned images and from paper documents. The menus shown on the screen vary depending on your operator profile. For instance, if you are not profiled for the OE function, this option is not listed, or is grayed on the Workstation Main Menu.

OE Image QUICK START
  1. From the Workstation Main Menu, select the numeric code for Original Entry (OE).

  2. From the Original Entry (OE) Selection Menu, select the numeric code for OE Image Selection Menu.

  3. From the OE Image Selection Menu, select the numeric code for one of the following:

    • All K-1s OE Image

    • 1041 K-1 OE Image

    • 1065 K-1 OE Image

    • 1120-S K-1 OE Image

  4. The first whole unit-of-work (UW), or first individual document (because an entire UW may not require OE from image) requiring OE opens. Refer to IRM 3.0.101.14.17, SCRIPS Transcription Sheets and other exhibits in this IRM as needed when entering data.

  5. If an incorrect option is selected from the OE Image Selection Menu, press the <Ctrl>-<P> key combination and then <F9> to suspend the UW and return to the OE Image Selection Menu.

  6. Press the <Ctrl>-P key combination (post-to-close) to end OE Image when the current UW is finished.

  7. The system returns you to the Original Entry (OE) Selection Menu when you complete the last document in the current UW.

OE Image Processing
  1. The Status Line at the bottom of the screen displays the following information:

    1. The Program field shows one of the following: "44386," "44387," or "44388" for Schedule K-1 documents.

    2. The DLN field shows the DLN of the document being displayed.

    3. The Document field shows the relative count of the document. For example, if it is the first document in a UW that contains 80 documents, the Document field shows a count of "1 of 80."

    4. The Num field shows either "NU" or blank, indicates a numeric field, or if the shift key is pressed in an alpha/numeric field. See Figure 3.0.101-4, Num Field Location.

    Figure 3.0.101-4

    This is an Image: 33347041.gif

    Please click here for the text description of the image.

  2. In OE Image, you manually enter information into the template using a scanned image of the return as the source.

OE Paper QUICK START
  1. From the Workstation Main Menu, select Original Entry (OE).

  2. From the Original Entry (OE) Selection Menu, select OE Paper Selection Menu.

  3. From the OE Paper Selection Menu, select one of the following:

    • 1041 K-1 OE Paper

    • 1065 K-1 OE Paper

    • 1120-S K-1 OE Paper

      Note:

      The program printed in the middle of the BBTS Batch Transmittal indicates which form you are inputting (44386=1041 K-1, 44387=1065 K-1, or 44388 =1120-S K-1).

  4. Once the workstation operator has successfully completed steps 1 through 3 above, a window labeled "Schedule K-1 Block Input" opens. Input the following information:

    • BBTS Batch ID = is the four-digit Batch Number located in the upper right corner of the BBTS Transmittal.

    • Tax Year = are two-digits and are taken from the first document in the block and are either the year in the Tax Period Beginning area of the document or the form year if the tax period beginning is missing.

    • DLN = is taken from the first document in the block and MUST contain 14-digits for example (00566102790000).

  5. If the wrong program is selected press <Esc>, to returned to the OE Paper Selection Menu.

OE Paper Processing
  1. In OE Paper, the workstation operators manually enter the information into the system and eliminates all transport processing. The operators need the paper Schedules K-1 UW to perform OE Paper. These documents should be batched separately and the BBTS Transmittal clearly marked as "OE Paper."

  2. After selecting the form type from the OE Paper Selection Menu, you are first prompted for the form year, followed by the system reminder window "Enter amounts as DOLLARS ONLY."

  3. The appropriate prompt for the first required field is displayed for the first document in the block. Input the information from the document and when finished press <F6> to get the next document.

  4. A sequence number (located in the 12th and 13th position of the DLN) is required for each additional document input (01, 02, 03, etc.). A sequence number cannot be skipped or repeated.

  5. The Status Line at the bottom of the monitor screen contains the following information:

    • The Program field shows 44386, 44387 or 44388 for Schedule K-1 documents.

    • The DLN field shows the DLN of the current document.

    • The Document field shows the relative count of the document. The field shows "1 of 1" if this is the first document in the block. As each subsequent paper document is processed it increases to "2 of 2," "3 of 3," etc.

    • The Num Field either shows "NU" or is blank, depending on whether you have activated the embedded numeric keypad or not.

  6. Once all the documents have been input press the <Esc> and <F8> keys to end OE Paper or press <Ctrl>-P (post-to-close) while entering, but before releasing the last document in the UW.

    Note:

    The system returns you to the Original Entry (OE) Selection Menu if you used <Ctrl>-P (post-to-close) on the last document in the UW.

Image and Paper Processing Releasing a Unit-of-Work in Original Entry (OE)
  1. For OE Image, when you release the last document in a UW, the UW is released.

    1. If <Ctrl>-P has been pressed before releasing the UW, the OE Selection Menu opens.

    2. If <Ctrl>-P has not been pressed, another UW opens.

  2. For OE Paper, press the <Esc> then <F8> key to release (close) the UW.

    1. If you answer "NO" to the question window that opens, a template appears for additional Schedules K-1 entry.

    2. If you answer "YES" to the question window, and have not issued a post-to-close (<Ctrl>-P), a Schedule K-1 template appears to begin a new UW.

    3. If you answer "YES" to the question window, and have issued a post-to-close (<Ctrl>-P), the OE Selection Menu opens.

Selecting a Specific Unit-of-Work in Original Entry (OE)
  1. A specific Schedule K-1 UW may be selected for OE by following these steps:

    1. From the Workstation Main Menu, select the numeric code for OE. The Workstation Main Menu closes, and the OE Selection Menu opens. Menu options vary depending on operator profiles set by your supervisor. For instance, if you are not profiled for the OE function, this option is not listed or is grayed on the Workstation Main menu.

    2. From the OE Selection Menu, enter the numeric code for OE Select Block. The OE Selection Menu closes, and the Open Block/Unit-of-Work window opens.

    3. From the Open Block/Unit-of-Work window, enter the first 11-digits of the DLN from the Schedule K-1 in the UW.

    4. Press the <Enter> key. The Open Block/Unit-of-Work window closes and the selected UW opens.

    5. The designated Schedules K-1 opens. Enter data using instructions found in IRM 3.0.101.14.8, General Correction Procedures, IRM 3.0.101.14.17, SCRIPS Transcription Sheets, and other instructions in this IRM as needed.

    6. If the block is not available, an error message is displayed indicating the block is not available.

      Example:

      A message is displayed if you previously worked on this block, or if another operator is currently working on the Block/UW.

    7. If an incorrect UW is selected from the Open Block/Unit-of-Work menu, press the <Ctrl>-P (post-to-close) and then <F9> to suspend the UW.

Data Validation (DV) Function

  1. The DV function is used to manually correct data from scanned images. Menu options vary depending on your profile set by your supervisor. For instance, if you are not profiled for the DV function, this option is not listed or is grayed on the Workstation Main Menu.

  2. The Status Line at the bottom of the screen displays the following information:

    1. The DLN field shows the DLN of the document being displayed.

    2. The SUB field shows the relative count of the document.

      Example:

      If it is the first document in a UW containing 80 documents, the SUB field shows a count of "1 of 80."

    3. The Pg field shows the relative count of the page of the document.

    4. The Status Line shows "AU" when the automatic mode is on, "IN" when the insert mode is on, and "NU" when the numeric mode is on.

      Note:

      AUTO Indicator is a toggle which turns the AUTO Mode on and off. When AUTO is on, the cursor automatically moves from the current field to the next field requiring perfection. When AUTO is off, the cursor manually moves through every field using the cursor movement keys. A Select Block or Suspended Block in DV requires the operator to restore the AUTO on mode using <Ctrl>-<Shift>-<A>.

Data Validation (DV) Image QUICK START
  1. From the Workstation Main Menu, select the numeric code for Data Validation (DV).

  2. From the Data Validation (DV) Selection Menu, select the numeric code for DV Selection Menu.

  3. From the DV Selection Menu, select one of the following:

    • All K-1s DV

    • 1041 K-1 DV

    • 1065 K-1 DV

    • 1120-S K-1 DV

  4. The first UW opens and the cursor stops at the first highlighted field. Make the necessary corrections following instructions found in IRM 3.0.101.14.8, General Correction Procedures.

  5. If an incorrect option is selected from the DV Selection Menu before entering any data, press <Ctrl>-P (post-to-close), press <F9> to suspend and return to the DV Selection Menu.

  6. After entering the last field on the document, if AUTO is off, press the <F6> key to release the document and display the next template.

  7. Press the <Ctrl>-P (post-to-close) to not receive additional blocks once the current UW is completed.

  8. The system returns you to the Data Validation (DV) Selection Menu when you release the last document.

Data Validation (DV) Paper QUICK START
  1. From the Workstation Main Menu, select Data Validation (DV).

  2. From the Data Validation (DV) Selection Menu, select DV Select Block.

  3. From the Open Block/Unit-of-Work window, enter the first 11-digits of the DLN stamped on the Schedule K-1 in the UW.

  4. The selected UW opens and the cursor stops at the first highlighted field. Make the necessary corrections following instructions found in IRM 3.0.101.14.8, General Correction Procedures.

  5. The Open Block/Unit-of-Work window is displayed when you release the UW. If you want to continue Data Validation (DV) from paper, go back to step 3. Otherwise press the <Esc> key to return to the DV Selection Menu.

Selecting a Specific Unit-of-Work in Data Validation (DV)
  1. To begin DV on a specific UW of Schedule K-1 documents follow these steps:

    1. From the Workstation Main Menu, select the numeric code for Data Validation (DV). The Workstation Main Menu closes, and the Data Validation (DV) Selection Menu opens. Menu options vary depending on your profile set by your supervisor. For instance, if you are not profiled for the DV function, this option is not listed or is grayed on the menu.

    2. From the Data Validation (DV) Selection Menu window, enter the numeric code for DV Select Block. The Data Validation (DV) Selection Menu window closes and the Open Block/Unit-of-Work window opens.

    3. From the Open Block/Unit-of-Work window enter the first 11-digits of the DLN from the Schedule K-1 in the UW.

    4. Press the <Enter> key. The Open Block/Unit-of-Work window closes and the selected UW opens.

    5. The designated Schedule K-1 opens. Enter data using instructions found in IRM 3.0.101.14.8, General Correction Procedures, and IRM 3.0.101.14.17, SCRIPS Transcription Sheets and other instructions, as needed, in this IRM.

    6. If the block is not available, an error message is displayed indicating the block is not available.

      Example:

      A message is displayed if you previously worked on this block, or if another operator is currently working on the Block/UW.

    7. A suspended UW in DV requires the operator to restore the AUTO on mode.

    8. If an incorrect UW is selected from the Open Block/Unit-of-Work menu, press the <Ctrl>-P key combination and then <F9> to suspend the UW.

General Correction Procedures

  1. Use these procedures as a guide during the Original Entry (OE) and Data Validation (DV) functions. Not all the items are always applied to specific situations in either function. If the scanned information is correct, no action is necessary. If the scanner reads the information and it is incorrect, or if scanned information is put into the wrong field, remove from incorrect field and input the information in the correct field.

  2. If you reach the maximum field length while entering data, the cursor, in most cases, automatically moves to the next field. Therefore, incorrect characters can be inadvertently entered into the next field. Remove or correct these characters. Use standard abbreviations as shown in Exhibit 3.0.101-4, Standard Abbreviations, and Exhibit 3.0.101-5, Street Address Abbreviations, to avoid this situation.

  3. Error Messages - Error messages with information are often helpful to correct the error and may be found in the Status Line. Most error messages are two lines with the first line being the error message and the second line containing information that may help resolve the error condition.

  4. While working in OE Image or DV Image, if you cannot determine the data for any field (except the street address or city fields) from the image because it is illegible or the image is incomplete, suspend the UW and pull the paper document for verification.

  5. In certain situations, the scanner may read a name or address or even a city without spaces. If the name and/or address can be determined, leave as is.

  6. When validating an address change, ensure the system read the correct ZIP Code. If the address, city, and state on the template does not match the information on the image and a correct ZIP Code is not present on the template, correct the information to match what is on the image.

  7. If a document is received and appears totally blank (no payer/payee entity or tax data), suspend UW and pull the paper document for verification.

  8. While working in OE Image or DV Image, do not enter data marked out or crossed through by the filer.

  9. The <Ctrl>-<F7> combination key function provides the operator the ability to access the last edited field or the last flagged field of the previous document.

  10. After DV is complete the system runs a verification of parent DLNs. If the parent DLN is missing from any of the documents within the UW the error message, "Blank Parent DLN still exists after DV. Press <Enter> to review possible parent matched." Another window appears stating "Possible Parent Match 1 of (however many) is this the same payer?" If the operator selects "YES," SCRIPS populates the payer information. If the operator selects "NO," the system continues to ask until it has gone through all payers in the UW.

    Note:

    System compares the parent EIN/TIN to the previous document. If the parent EIN/TIN matches, the system duplicates all the parent information, including the parent DLN from the previous document.

    • The valid parent return File Location Codes (FLC) for Ogden are 29, 60, 78, 81, 82, 83, 85, 87, or 88.

    • The valid parent return File Location Codes (FLC) for Kansas City are 09, 36, 39, 41, or 43.

  11. For additional information on Function Keys refer to the table in Exhibit 3.0.101-13, Key Function Table or IRM 3.41.274, Optical Character Recognition Scanning Operations, General Instructions for Processing via Service Center Recognition/Image Processing System, Exhibit 3.41.274-1, Function Key Use and Description by Form Type, and Exhibit 3.41.274-2, Summary of Function Keys by Form Type.

Poor Quality Image
  1. Occasionally the "Image" of the return presented to the OE or DV Operator is unreadable. Some of reasons for this are:

    • Writing on image is too light,

    • Image is too dark to read writing,

    • Image is illegible, or

    • Image is incomplete, etc.

  2. When working in OE or DV, if you cannot determine the data for ANY field (except the name, street address, city, state, or ZIP Code) from the Image, suspend the UW as "Poor Quality Image" (<F9>; press "S" ; select "Poor Quality Image" ).

    Note:

    Payer Name 1 must be suspended for "Poor Quality Image."

  3. The Lead Clerk/designated employee reviews the Work Status Report for suspended "Poor Quality Image" and pulls the document from the block and gives it to the employee who suspended the UW.

  4. The employee resumes the suspended block, corrects the data using the paper document or releases the document leaving the field blank, if unable to determine the data.

  5. The employee then gives the document back to the Lead Clerk/designated employee.

  6. The Lead Clerk/designated employee re-files the document in its original block.

Schedules K-1 Name and Address Information
  1. Form 1041 Schedule K-1

    • Payee Information - Transcribe name(s) and address information from Part II; the box labeled "Beneficiary’s name, address, city, state and ZIP Code."

    • Payer Information - Transcribe payer Name Line 1 from Part I, the box labeled "Estate’s or trust’s name." Transcribe payer Name Line 2 and address information from the box labeled "Fiduciary’s name, address, city, state and ZIP Code."

  2. Form 1065 Schedule K-1

    • Payee Information- Transcribe name(s) and address information from Part II; the box labeled "Partner's name, address, city, state and ZIP Code."

    • Payer Information - Transcribe payer name(s) from Part I, the box labeled "Partnership’s name, address, city, state and ZIP Code."

  3. Form 1120-S Schedule K-1

    • Payee Information - Transcribe name(s) and address information from Part II the box labeled; "Shareholder’s name, address, city, state and ZIP Code."

    • Payer Information - Transcribe name(s) and address information from Part I the box labeled, "Corporation’s name, address, city, state and ZIP Code."

  4. In certain situations, the scanner may read a name, address or city without spaces. If the name and/or address can be determined, leave as is.

Edit Marks
  1. Edit marks and their descriptions are below:

    EDIT MARK DESCRIPTION
    "X"
    • The "X" is used to delete tax data or to indicate an item is not to be transcribed.

    • For money amounts, enter the amount written to the left of the "X," when applicable.

    "/" (Slash) or "X" through the entire page.
    • A "/" (slash) or "X" through the entire page indicates the page is to be deleted.

    • If the form contains a "/" (slash) or "X" through the entire page, delete the page as "Unprocessable Attachment."

Tax Year and Tax Period Entries

  1. Tax Year and Tax Period dates must meet the following criteria:

    • Current timely filed calendar year

    • One-Year Prior to current calendar year

    • Two-Years Prior to current calendar year

    • The beginning and ending tax year on all Schedules K-1 must list the same tax year. If not, they fall out to ERS if not edited correctly.

    Note:

    Tax Period must be transcribed in MMYY format and Tax Year must be transcribed in YY format.

    OE/DV Screen Prompts Description Instructions
    Tax Year Tax Year
    1. Enter the pre-printed or edited Tax Year from the top of the form in YY format.

    2. If the Tax Year is different than the Beginning Tax Period Year, then enter the Beginning Tax Period Year as the Tax Year.

    Note:

    The tax year must be 2019, 2020 or 2021.

    Beginning Tax Period Date from the Tax Year Beginning date box at the top of form.
    1. Enter the Beginning Tax Period date in MMYY format.

    2. If blank press <Enter>, the output program updates the Tax Period based on the Tax Year.

    Note:

    If the document is batched based on the ‘unchanged’ Tax Year, this causes the document to be deleted from SCRIPS for “Mixed Tax Year” since Tax Years cannot be mixed within a batch.
    The deleted documents must be pulled and reprocessed following all the current procedures.

    Ending Tax Period Date from the Tax Year Ending date box at the top of form.
    1. Enter the Ending Tax Period date in MMYY format or the edited Ending Tax Year from the top of the form in YY format.

    2. If blank press <Enter>, the output program updates the Tax Period based on the Tax Year.

Name and Address Block Reader (NABR)

  1. Name and Address Block Reader is referred to as NABR. NABR is used to improve the accuracy of addresses captured by the scanner from Schedule K-1 documents. The NABR accomplishes this improvement by comparing the address captured by the scanner with a database of addresses used by the United States Postal Service. SCRIPS processes the NABR through a Postal Database.

  2. When validating a NABR change, ensure the system read the correct ZIP Code. If address, city, and state changes are made and a correct ZIP Code is not present in the data field, correct the information to match what is on the image.

  3. The system prompts an operator to "Please verify" the following conditions:

    • State is determined by the system from the city present

    • State is determined from the ZIP Code present

    • City is updated by the system to a phonetic match

    • City is determined from the ZIP Code

    • Acceptable city name used

    Return Postal Data Base Update Comments
    2121 SE TUNA
    NEW YORK, NY 10001
    2121 TUNA BLVD
    NEW YORK, NY 10001
    System removed SE and put BLVD
    112 POODLE A TURTLE CT
    RABBIT CITY BCH, FL 32413
    112 POODLE A TURTLE CT
    RC BEACH, FL 32413
    System Abbreviated Rabbit City and spelled out Beach
    14658 ANACONDA RD NE
    WASHINGTON DC 20013
    14658 NE ANACONDA RD
    WASHINGTON DC 20013
    System moved NE from the end of the line to after the numbers
    1705 SW PIGEON CIRCLE
    NEW YORK, NY 10001
    1705 SW PIGEON CIR
    NEW YORK, NY 10001
    System abbreviated Circle

Name Entries

  1. Enter the information as shown on the document with as many characters as permitted in the provided name line, except as instructed below. Refer to Exhibit 3.0.101-4, Standard Abbreviations and Exhibit 3.0.101-5, Street Address Abbreviations for a list of valid abbreviations. If the scanned information is correct, no action is necessary.

    Example:

    Except as noted below, enter the information exactly as shown or edited on the document, including all Trust numbers, Account numbers and dates if part of name line.

    Example of Taxpayer Entry Enter as:
    Iris Gopher Acct #14542 IRIS GOPHER ACCT 14542
    Estate of Gopher Family ESTATE OF GOPHER FAMILY

    1. If a Partner Number or SSN number is shown in the name line, do not enter.

    2. If an account number is shown above or to the right of the first name line, enter it on the first name line. (See example above.)

    3. Do not enter periods and do not space for them. Only enter a space in an internet name, such as "Flower.com" should be entered as "FLOWER COM."

    4. If the name appears with the last name first and the first name last, and the system has read it correctly, leave as is.

      Note:

      If during sight verification a correction needs to be made, or if in OE Image/OE Paper, enter the first name first and last name last.

    5. Enter Name Line 2 as shown. If a foreign address is present in entity information, use Name Line 2 for foreign information only. For further guidance on entering foreign addresses please refer to IRM 3.0.101.14.11.1.1, Foreign Address.

    6. If Name 1 or Name 2 entry is too long for the field, shorten it using the abbreviations listed in Exhibit 3.0.101-4, Standard Abbreviations.

      Note:

      If either Name 1 or Name 2 is too long after applying abbreviations mentioned above, then enter as many characters as possible. Do not continue the entry on Name 2. Do not abbreviate entries used for the Name Control.

    7. Omit a slash (/), if shown, between two names (e.g., John Pine/Mary Birch). Leave a space.

      Exception:

      If a date is present in the name lines replace the slash (/) with a hyphen (-). Convert dates to MM-DD-YY format. Do not enter date/dated/dtd or the alpha month.

  2. Enter a space before and after an ampersand (&). In the payer’s name line enter "and" or "&" as shown.

    Example: Enter as:
    (1) Linda Snake and Joe Guppy, Ptrs LINDA SNAKE AND JOE GUPPY PTRS
    (2) J. Gecko & R. Frog, Inc J GECKO & R FROG INC

  3. Omit punctuation, except for hyphens (-). Do not enter a space before or after hyphens. The hyphen is keyed using the MINUS (-).

    Example: Enter as:
    (1) O'Graphite OGRAPHITE
    (2) Maple-Pecan MAPLE-PECAN

  4. Space within a true last name if shown.

    Example: Enter as:
    De Pine DE PINE
    Van Yew VAN YEW

  5. In the second name line change "and" to "&."

    1. If ″In Care Of″ or "%" is found in the middle of Name 1, move the information to the Name 2 field.

      Example:

      Roger Banana c/o Anaconda Trucking and Moving Corporation

      Enter name In Prompt
      ROGER BANANA Name 1
      % ANACONDA TRUCKING & MOVING CORP Name 2

    2. If an "In-Care-Of" name is present, enter "%," space, and the name. If information is already present on Name Line 2, include as much as possible after the "In-Care-Of" information is input.

      Note:

      If two or more "In-Care-Of" name lines are present, enter the first "In-Care-Of" name.

  6. If there are two or more names in Name 2, separate them with the word "OR" , unless "and" (&) or "C/O" (%) are present. Enter "&C" when edited as the last two characters of Name 2 data (no space between the two characters) when the taxpayer entry is too long for the field.

    Example:

    Wood N Willow, Tulip R. Spaniel or Rose E. Locust, Edmund Beech, Evergreen R. Henry &C

    • Enter name In Prompt
      WOOD N WILLOW Name 1
      TULIP R SPANIEL OR ROSE E LOCUST &C Name 2

      Example:

      Robert Woodpecker OR Eleanor Woodpecker or Gloria Robin

      Enter name In Prompt
      ROBERT WOODPECKER Name 1
      ELEANOR WOODPECKER OR GLORIA ROBIN Name 2

      Example:

      Albert Palm, Jr. OR Rose Holly or Robert Coffee

      Enter name In Prompt
      ALBERT PALM JR Name 1
      ROSE HOLLY OR ROBERT COFFEE Name 2

      Example:

      Arthur AND Roberta Poplar or Stephen Poplar

      Enter name In Prompt
      ARTHUR POPLAR Name 1
      ROBERTA POPLAR OR STEPHEN POPLAR Name 2

  7. Second Name Line data, such as DBA, C/O, or % should be entered on the second line if placed on the address line, and clerk intervention is required.

  8. If the payer’s name line is illegible, suspend for "Poor Quality Image."

  9. If payer name is missing, leave blank.

  10. If payer or payee Name Line 2 is illegible or not present, leave blank.

  11. If payee name is missing or illegible, enter a "Z" in the payee’s name line field.

  12. IMF Only - Do not enter titles such as Mr., Mrs., Capt., Dr., Rev., etc., in any individual's name (except for Form 1096, Annual Summary and Transmittal of U.S. Information Returns).

    Exception:

    Enter "MRS" or "MS" if it precedes a masculine name, initials or a first name which could be masculine or feminine.

    • Example:

      Mr. OR Mrs. Joe Walnut - and/or ampersand included.

      Enter name In Prompt
      JOE WALNUT Name 1
      MRS JOE WALNUT Name 2

  13. BMF Only

    1. Abbreviate corporate name information only when it is abbreviated on the document or the name line exceeds the allowable space. Never abbreviate the first four characters containing the Name Control.

      Exception:

      The following always are abbreviated for corporate entries:
      ASSN for Association
      CO for Company
      CORP for Corporation
      FDN for Foundation
      INC for Incorporated
      LLC for Limited Liability Company
      PA for Professional Association
      PC for Professional Corporation
      PS for Professional Service
      SC for Small Corporation

    2. For the "#" symbol, enter NO, "¢" symbol, enter CENT, "+" symbol, enter PLUS, "@" symbol, enter AT, "$" symbol, enter DOLLAR.

    3. Special characters not outlined above and/or symbols are omitted and a blank space entered in its position in the name line.

      Note:

      The ampersand "&" is not considered a symbol for name line.

    4. Omit the designation only such as TA, DBA, AKA, Owner, Proprietor when entering data.

      Note:

      Do not enter DBA or TA. If scanner reads DBA or TA correctly and no other corrections are needed, leave as is.
      Do not enter the designations or data for FKA, formerly DBA or any data that follows these designations.

    5. If a city or state is shown as part of the first name line, enter the complete name of the city or state. NO abbreviations.

    6. If the name begins with the word "The" and has more than one word following "The" DO NOT enter "The."

    7. If the name begins with the word "The" and has only one word following "The" enter "The" as the first word on the name line.

    8. If there are initials in a person's name or a company name with abbreviations such as LLC, MD, PC, etc., do not space for periods. If scanner picks up spaces, leave as is.

    9. If there is business name in the name line such as ″Rug Doctor″ or ″Mister Clean″ and the system drops the Doctor or Mister, re-enter the name as submitted.

    10. If a foreign address is present, do not use the Name 2 field to enter names. Further instruction for entering foreign addresses can be found in IRM 3.0.101.14.11.1.1, Foreign Address.

    BMF NAME LINE ENTRY EXAMPLES

    Example of Paragraph (13) alpha above Taxpayer entry Enter (First Name Line) as
    a, f The Spaniel Corporation Apple Spaniel, Pres. SPANIEL CORP
    APPLE SPANIEL PRES (Second Name Line)
    b Banana Dental Office #5 Ltd. BANANA DENTAL OFFICE NO 5 LTD
    a Fig Spaniel Corporation FIG SPANIEL CORP
    I Dr. Fig Spaniel Inc. DR FIG SPANIEL INC
    c 5 & 10 & 25¢. Store 5 & 10 & 25 CENT STORE
    d, h, f Service Cleaners L.L.C. DBA The Clean Machine SERVICE CLEANERS LLC
    CLEAN MACHINE (Second Name Line)
    e First Bank of FL FIRST BANK OF FLORIDA
    f The First Bear Bank FIRST BEAR BANK
    g The Labrador THE LABRADOR
     

Address Elements
  1. If the scanned information is correct, no action is necessary.

  2. If the scanned information is NOT correct, enter the information exactly as shown on the document except as instructed below or when the NABR has perfected the address. See IRM 3.0.101.14.10.

    1. Do not enter periods in the address field, however, punctuation such as slash (/) and hyphen (-) are acceptable. If a period is present between two numbers, enter a space for the period.

    2. If an ampersand (&) is present in the street address, enter as "AND."

    3. If an apostrophe (‘) is present, omit the apostrophe and do not leave a space for the apostrophe.

    4. If perfecting only part of the address, such as the state or ZIP Code, do not go back to the street address to abbreviate or correct characters if the scanner picked up the street address as present on the document.

    5. If a document has a PO Box, Post Office Box, POB, PO, or PO Drawer, enter the Post Office Box or an asterisk (*) followed by a space and the number. EXAMPLE: PO Box #24; ENTER as *(space) 24.

    6. If a document has a street address and a PO Box, the PO Box takes precedence.

    7. If two street addresses are present with the same city and ZIP Code, enter the first street address. If two addresses are present, with different cities and ZIP Codes, enter the first in the address, city, state, and ZIP Code fields. Also, use abbreviations as necessary to limit this entry to 35 positions. Enter as much of the street address with abbreviations as possible. (See Exhibit 3.0.101-5 for Street Address Abbreviations).

      Exception:

      If the name of the street is a direction, the direction must be spelled out. Do not abbreviate street names.

      Example:

      123 North Street should be entered as 123 NORTH ST.

    8. Omit "No, No., Num, #" symbol and "Number" if it appears as a prefix to a house, apartment, Route, or PO Box number.

    9. If North, South, East or West is shown as part of the city name, use the standard abbreviation (such as N=North, S=South, etc.). NEVER use a Major City Code and the standard abbreviation together.

      Example:

      West Miami enter as W MIAMI, not W MF.

    10. If the city contains numerics, enter as alphas.

      Example:

      29 Palms enter as TWENTY NINE PALMS.

    11. If multiple street designations are present, only abbreviate the last designation present.

      Example:

      1234 Circle Road Drive should be entered as: 1234 CIRCLE ROAD DR

    12. If the street address cannot be determined or is blank, enter "Z" in the address field. If the city cannot be determined or is blank, enter "ZZZ" in the city field and leave the state and ZIP Code fields blank.

    13. Enter standard abbreviations for states and territories as shown in Exhibit 3.0.101-6, State/Major City/ZIP Code/Major City Code, and Exhibit 3.0.101-7, Foreign ZIP Code, City and State Exceptions.

    14. If there is no state, but a ZIP Code is present, enter the ZIP Code as shown and press <Enter>. This generates the state code for this ZIP Code in the prompt area. Follow the screen prompt to accept this code or to enter a different code.

    15. If there is no ZIP Code (or the ZIP Code is less than or more than five-digits) but a state is present, press the <Enter> key in the ZIP Code field. The system generates the default ZIP Code for this state.

      Note:

      DO NOT generate the default ZIP Code without first entering the ZIP Code "if" present on the form.

    16. If the system prompts that the ZIP Code entered and present on the form does not match the state, delete the ZIP Code entered from the form and generate the default ZIP Code for the state.

      Note:

      DO NOT generate the default ZIP Code without first entering the ZIP Code present on the form.

    17. If both the state and ZIP Code are blank, leave both blank.

    18. Foreign street addresses are entered in the street address field, foreign city in the city field, foreign province in the province field, and country and foreign postal code in the foreign postal code field. Use abbreviations as necessary to limit this entry to 35 positions.

    19. Army Post Office (APO), Diplomatic Post Office (DPO) and Fleet Post Office (FPO) addresses must be transcribed with the proper two-character state code followed by the corresponding unique five-digit ZIP Code.

    20. When an APO, DPO or FPO is used, do not enter any other data in the city field.

    21. If the ZIP Code is out of range on APO, DPO or FPO addresses, enter 34001 for Miami, 09001 for New York and 96201 for San Francisco or Seattle.

    22. When APO, DPO or FPO is to be transcribed in the city field, the state code field must correspond with the tables below.

    State Code ZIP Code Range Geographic Location
    AA 340 Americas
    AE 090-098 Europe
    AP 962-966 Pacific
    EXAMPLE: ENTER AS:
    APO New York, NY 091XX APO AE 091XX
    FPO San Francisco, CA 962XX FPO AP 962XX

Foreign Address
  1. Operators are responsible to perfect all entity information on all foreign Schedules K-1.

  2. Foreign addresses on Schedules K-1 documents are entered as follows:

    1. Enter the foreign street address in the Name Line 2. Omit any existing Name Line 2 information.

    2. Enter the foreign city, state, province or territory, and mailing code, if present, in the street address field. Spell out the city, state, province or territory, if abbreviated (See Exhibit 3.0.101-11 through Exhibit 3.0.101-15). Separate the postal code from the foreign city or province with a space. Example: London 02.

      Note:

      Accept what the taxpayer has put on the line unless the line is too long, then, use the province or territory abbreviation. This allows the postal code to fit in the field.

    3. Enter the foreign country in the city field. Spell out the country if abbreviated by the taxpayer. If the country is missing or illegible, use Exhibit 3.0.101-11 through Exhibit 3.0.101-15 to determine the country. If you are unable to determine the country, enter "ZZZ."

      Example:

      CA is Canada. See Exhibit 3.0.101-11 through Exhibit 3.0.101-15 for complete list of Foreign Country codes.

      Note:

      If the foreign country exceeds 22 characters, input only the first 22 characters.

    4. Enter a period (.) in the first position of the state field to identify the address as foreign.

    5. Leave the ZIP Code blank.

Percentage Field Instructions

  1. Should be input and validated as a seven-position field and must be in the format XXX.XXX.

  2. Must be positive only.

  3. Must be between 000 - 100.

  4. Percentage fields can be blank.

  5. If there are more than three numeric to the left of the decimal point enter 100. If there are more than three numeric to the right of the decimal point, enter the first three numeric closest to the decimal point. (See examples 6 and 7 below).

  6. If decimal point is not present, enter the decimal point after the numeric presented (with decimal point no further then fourth position). For validation purposes, the decimal point must be entered so the system can zero fill the percentage correctly. (See examples 1 and 3 below).

  7. If the percentage has a fraction, ignore the fraction, and enter the number only. (See example 8 and 9 below).

    No Percentage Recognized as Invalid = send for verification/correction Valid = not sent to Operator Operator to enter/verify
    1 10 missing decimal point   10.
    2 95.1   Valid  
    3 100 missing decimal point   100.
    4 101.123 percentage is > 100   100.
    5 15.123   Valid  
    6 15.0876 too many numbers to the right of decimal   15.087
    7 1201 percentage is >100.00 and to many numbers to the left of the decimal

    Note:

    If percentage is more than 100, input 100.

      100.
    8 33 1/2 Ignore the fraction; enter the whole number only   33.
    9 14 7/8 Ignore the fraction; enter the whole number only   14.

Money Amount Fields

  1. Enter all money amounts as DOLLARS ONLY. DO NOT enter money amounts from any form that is "X'd out." Do not enter any information from a document that is "X'd out."

  2. Enter negative amounts, where allowed, by leading the amount with a hyphen (-).

    Note:

    Negative money amounts require a double <Enter>.

  3. If a negative money amount appears in a positive only field, press <F3>, to clear the field and press <Enter>. Negative amounts can be identified by a minus sign or being enclosed in parentheses or brackets.

  4. If the taxpayer enters a positive or negative $.49 or less, <F3>,to clear the field, then press <Enter>. If the taxpayer enters a positive or negative $.50 to $.99, enter $1 or -$1 respectively.

  5. If the taxpayer files a State Schedule K-1, and it has a column with the federal information, transcribe the information from the federal lines.

  6. The following lines are presented for verification:

    • Form 1041 Schedule K-1 = Lines 1 and 2a

    • Form 1065 Schedule K-1 = Lines 5, 6a, 6c and 7

    • Form 1120-S Schedule K-1 = Lines 4, 5a and 6

    Note:

    Status Line displays "Is this amount correct?"

  7. If two-dollar amounts are present on the same line, manually add together and enter total amount.

  8. Alpha Codes are used in Part III to identify certain types of income, deductions, or credits. Valid Alpha Code characters consist of A-Z, asterisk (*) and blank. Enter the amount that corresponds with the valid Alpha Code. Alpha Codes can be found on the following lines of Schedules K-1:

    Schedule K-1 Lines Alpha Designators Codes
    Form 1041 Schedule K-1 Line 14 (Other information) A,B,C,D,E,F,G,H,I,Z,(*)
    Form 1065 Schedule K-1 Line 11 (Other income (loss) F, G
    Form 1065 Schedule K-1 Line 13 (Other deductions) V, X
    Form 1120-S Schedule K-1 Line 10 (Other income (loss) F
    Form 1120-S Schedule K-1 Line 12 (Other deductions) K
    Form 1120-S Schedule K-1 Line 13 (Credits) A,B,C,D,E,F,G,H,I,J,K,L,M,N,(*)

Deleting a Block

  1. Always delete a block if the tax year cannot be determined.

Prior Year Form Revision Processing

  1. If a prior year Schedule K-1 is processed by the scanner, SCRIPS operators:

    1. Input the preprinted or edited year on the Schedules K-1.

    2. Convert transcription lines using Exhibit 3.0.101-8, Conversion Chart.

    3. Continue processing.

Payer General Instructions

  1. If the payer EIN is the same as the previous document, the system copies the payer information into the document and then the next Schedule K-1 is presented.

  2. If the payer EIN is different, the payer Entity fields appear, and the operator is to enter payer entity information.

SCRIPS Transcription Sheets

  1. The following tables represent specific SCRIPS entry procedures.

Payee Information - Form 1041 Schedule K-1
  1. Enter from Part II, Information About the Beneficiary on Form 1041 Schedule K-1.

    OE/DV Screen Prompts Description Instructions
    Tax Year Tax Year.
    1. Enter the Tax Year from the top center of the form in YY format.

    2. If the Tax Year is different than the Beginning Tax Period Year, then enter the Beginning Tax Period Year as the Tax Year.

    Note:

    The tax year must be 2019, 2020 or 2021.

    Beginning Tax Period Date from the Tax Year Beginning date box at the top of form.
    1. Enter the Beginning Tax Period date in MMYY format.

    2. If blank, press <Enter>. The output program updates the Tax Period based on the Tax Year.

    Note:

    However, if it is batched based on the ‘unchanged’ Tax Year, this causes the document to be deleted on SCRIPS for “Mixed Tax Year” since Tax Years cannot be mixed within a block.

    Ending Tax Period Date from the Tax Year Ending date box at the top of form.
    1. Enter the Ending Tax Period date in MMYY format.

    2. If blank, press <Enter> the output program updates the Tax Period based on the Tax Year.

    [F] Beneficiary ID Beneficiary ID from Part II box F.
    1. Input or correct the nine-digit TIN.

    2. If "APPLD FOR" is listed, <F3> to clear the field, then press <Enter>.

    3. If two or more TINs are shown, the TIN is missing, or the TIN contains more or less than nine-digits, <F3> to clear the field, then press <Enter>.

    4. If illegible leave blank and press <Enter>.

    [G] Name 1 (Beneficiary) Name from box G.
    1. Enter or correct Beneficiary Name Line 1 from box G.

    2. If missing, or illegible, enter "Z" and press <Enter> per IRM 3.0.101.14.11 (11).

    [G] Name 2 (Beneficiary) Name from box G.
    1. If an "In-Care-Of" name is present, enter "%," space and then the name.

    2. If information is present on Name Line 2, include as much as possible after the "%" information.

    3. If a foreign address is present, see IRM 3.0.101.14.11.1.1.

    [G] Address (Beneficiary) Address from box G.
    1. Enter the street address.

    2. If PO Box is present, enter an asterisk (*) and a space in the first two positions of the field, followed by the PO Box number.

    3. If the street address is missing or illegible, enter "Z" then press <Enter>.

    4. If a foreign address is present, see IRM 3.0.101.14.11.1.1.

    [G] City (Beneficiary) City from box G.
    1. Enter the city.

    2. If a Major City Code (MCC) applies, enter the MCC for the listed city (optional).

    3. If the city is missing or illegible, enter "ZZZ" then press <Enter>.

    4. If a foreign address is present, see IRM 3.0.101.14.11.1.1.

    [G] State (Beneficiary) State from box G.
    1. Enter the state code.

    2. If a MCC is entered, the state field is bypassed.

    3. If a foreign address is present, see IRM 3.0.101.14.11.1.1.

    [G] Zip Code (Beneficiary) ZIP Code from box G.
    1. Enter the ZIP Code.

    2. If missing, press <Enter> to generate the default ZIP Code.

    3. If a foreign address is present, see IRM 3.0.101.14.11.1.1.

    K-1 Amended Amended K-1 box located above Part III.
    1. Enter an "X" if the box is marked.

    2. If box has been mis-read, <F3> to clear the box and press <Enter>.

Payee Information -Form 1065 Schedule K-1
  1. Enter from Part II, Information About the Partner, on 1065 Schedule K-1.

    OE/DV Screen Prompts Description Instructions
    Tax Year Tax Year.
    1. Enter the Tax Year from the top center of the form in YY format.

    2. If the Tax Year is different than the Beginning Tax Period Year, then enter the Beginning Tax Period Year as the Tax Year.

    Note:

    The tax year must be 2019, 2020 or 2021.

    Beginning Tax Period Date from the Tax Year Beginning date box at the top of form.
    1. Enter the Beginning Tax Period date in MMYY format.

    2. If blank, press <Enter> the output program updates the Tax Period based on the Tax Year.

    Note:

    However, if it is batched based on the ‘unchanged’ Tax Year, this causes the document to be deleted on SCRIPS for "Mixed Tax Year" since Tax Years cannot be mixed within a block.

    Ending Tax Period Date from the Tax Year Ending date box at the top of form.
    1. Enter the Ending Tax Period date in MMYY format.

    2. If blank, press <Enter> the output program updates the Tax Period based on the Tax Year.

    [E] Partner TIN TIN from Part II box E.
    1. Input or correct the nine-digit TIN.

    2. If "APPLD FOR" is listed, <F3> to clear the field, then press <Enter>.

    3. If two or more TINs are shown, the TIN is missing, or the TIN contains more or less than nine-digits, <F3> to clear the field then press <Enter>.

    4. If illegible, leave blank and press <Enter>.

    [F] Name 1 (Partner) Name from box F.
    1. Enter or correct Partner Name Line 1 from box F.

    2. If missing or illegible, enter a "Z" and press <Enter> per IRM 3.0.101.14.11 (11).

    [F] Name 2 (Partner) Name from box F.
    1. If an "In-Care-Of" name is present, enter "%," space and then the name.

    2. If information is present on Name Line 2, include as much as possible after the "%" information.

    3. If a foreign address is present, see IRM 3.0.101.14.11.1.1.

    [F] Address (Partner) Address from box F.
    1. Enter the street address.

    2. If PO Box is present, enter an asterisk (*) and a space in the first two positions of the field, followed by the PO Box number.

    3. If the street address is missing or illegible, enter "Z" then press <Enter>.

    4. If a foreign address is present, see IRM 3.0.101.14.11.1.1.

    [F] City (Partner) City from box F.
    1. Enter the city.

    2. If a Major City Code (MCC) applies, enter the MCC for the listed city (optional).

    3. If the city is missing or illegible, enter "ZZZ" then press <Enter>.

    4. If a foreign address is present, see IRM 3.0.101.14.11.1.1.

    [F] State (Partner) State from box F.
    1. Enter the state code.

    2. If a MCC is entered, the state field is bypassed.

    3. If a foreign address is present, see IRM 3.0.101.14.11.1.1.

    [F] Zip Code (Partner) ZIP Code from box F.
    1. Enter the Zip Code.

    2. If missing, press <Enter> to generate the default ZIP Code.

    3. If a foreign address is present, see IRM 3.0.101.14.11.1.1.

    K-1 Amended Amended K-1 box located above Part III.
    1. Enter an "X" if the box is marked.

    2. If box has been mis-read, <F3> to clear the box and press <Enter>.

Payee Information - Form 1120-S Schedule K-1
  1. Enter from Part II, Information About the Shareholder, on 1120-S Schedule K-1.

    OE/DV Screen Prompts Description Instructions
    Tax Year Tax Year.
    1. Enter the Tax Year from the top center of the form in YY format.

    2. If the Tax Year is different than the Beginning Tax Period Year, then enter the Beginning Tax Period Year as the Tax Year.

    Note:

    The tax year must be 2019, 2020 or 2021.

    Beginning Tax Period Date from the Tax Year Beginning date box at the top of form.
    1. Enter the Beginning Tax Period date in MMYY format.

    2. If blank, press <Enter> the output program updates the Tax Period based on the Tax Year.

    Note:

    However, if it is batched based on the ‘unchanged’ Tax Year, this causes the document to be deleted on SCRIPS for "Mixed Tax Year" since Tax Years cannot be mixed within a block.

    Ending Tax Period Date from the Tax Year Ending date box at the top of form.
    1. Enter the Ending Tax Period date in MMYY format.

    2. If blank, press <Enter> the output program updates the Tax Period based on the Tax Year.

    [E] Shareholder TIN TIN from Part II box E.
    1. Input or correct the nine-digit TIN.

    2. If "APPLD FOR" is listed, <F3> to clear the field, then press <Enter>.

    3. If two or more TINs are shown, the TIN is missing, or the TIN contains more or less than nine-digits, <F3>to clear the field then press <Enter>.

    4. If illegible, leave blank and press <Enter>.

    [F] Name 1 (Shareholder) Name from box F.
    1. Enter or correct Shareholder Name Line 1 from box F.

    2. If missing or illegible, enter a "Z" and press <Enter> per IRM 3.0.101.14.11 (11).

    [F] Name 2 (Shareholder) Name from box F.
    1. If an "In-Care-Of" name is present, enter "%," space and then the name.

    2. If information is present on Name Line 2, include as much as possible after the "%" information.

    3. If a foreign address is present, see IRM 3.0.101.14.11.1.1.

    [F] Address (Shareholder) Address from box F.
    1. Enter the street address.

    2. If PO Box is present, enter an asterisk (*) and a space in the first two positions of the field, followed by the PO Box number.

    3. If the street address is missing or illegible, enter "Z" then press <Enter>.

    4. If a foreign address is present, see IRM 3.0.101.14.11.1.1.

    [F] City (Shareholder) City from box F.
    1. Enter the city.

    2. If a Major City Code (MCC) applies, enter the MCC for the listed city (optional).

    3. If the city is missing or illegible, enter "ZZZ" then press <Enter>.

    4. If a foreign address is present, see IRM 3.0.101.14.11.1.1.

    [F] State (Shareholder) State from box F.
    1. Enter the state code.

    2. If a MCC is entered, the state field is bypassed.

    3. If a foreign address is present, see IRM 3.0.101.14.11.1.1.

    [F] Zip Code(Shareholder) ZIP Code from box F.
    1. Enter the ZIP Code.

    2. If missing, press <Enter> to generate the default ZIP Code.

    3. If a foreign address is present, see IRM 3.0.101.14.11.1.1.

    K-1 Amended Amended K-1 box located above Part III.
    1. Enter an "X" if the box is marked.

    2. If box has been mis-read, <F3> to clear the box and press <Enter>.

Money Amounts - Form 1041 Schedule K-1 (Program 44386)
  1. 1041 Schedule K-1 Transcription Sheet:

    OE/DV Screen Prompt Description Instructions
    [1] Interest Income Line 1 (+/-) Enter the amount from Line 1.
    [2a] Ordinary Dividends Line 2a (+/-) Enter the amount from Line 2a.
    [3] Net Short-Term Capital Gain Line 3 (+) Enter the amount from Line 3.
    [4a] Net Long-Term Capital Gain Line 4a (+) Enter the amount from Line 4a.
    [5] Other Portfolio Income Line 5 (+/-) Enter the amount from Line 5.
    [6] Ordinary Business Income Line 6 (+/-) Enter the amount from Line 6.
    [7] Net Rental Real Estate Income Line 7 (+/-) Enter the amount from Line 7.
    [8] Other Rental Income Line 8 (+) Enter the amount from Line 8.
    [14] Alpha Designator Line 14 Alpha Designator Code Enter the valid code to the left of Line 14. The valid codes are (A,B,C,D,E,F,G,H,I,Z,(*)), if blank press <Enter>.
    [14] Other Information Line 14 (+/-) Enter the amount from Line 14 that corresponds with the valid code (A,B,C,D,E,F,G,H,I,Z(*)), if blank press <Enter>.

Money Amounts - Form 1065 Schedule K-1 (Program 44387)
  1. Form 1065 Schedule K-1 Transcription Sheet:

    OE/DV Screen Prompt Description Instructions
    Disregarded Entity H2 CKBOX If the box is checked, enter an "X," otherwise leave blank.
    Disregarded Entity TIN H2 DISTIN
    1. Input or correct the nine-digit TIN.

    2. If "APPLD FOR" is listed, <F3> to clear the field, then press <Enter>.

    3. If two or more TINs are shown, the TIN is missing, or the TIN contains more or less than nine-digits, <F3> to clear the field, then press <Enter>.

    4. If illegible, leave blank and press <Enter>.

    Disregarded Entity Name H2 DISNAME
    1. Enter or correct Disregarded Entity Name Line H2.

    2. If missing, or illegible, enter "Z" and press <Enter> per IRM 3.0.101.14.11 (11).

    Is this partner a retirement plan I2 CKBOX If the box is checked, enter an "X," otherwise leave blank.
    Partners Beginning Capital Beginning J Capital beginning Enter % from Capital beginning Line J. See instructions in IRM 3.0.101.14.12, Percentage Field Instructions.
    Partners Beginning Capital Ending J Capital ending Enter % from Capital ending Line J. See instructions in IRM 3.0.101.14.12, Percentage Field Instructions.
    Partnership Decrease J CKBOX If the box is checked, enter an "X," otherwise leave blank.
    Nonrecourse Beginning K Nonrecourse beginning (+/-) Enter the amount from Nonrecourse Beginning, Line K.
    Qualified Nonrecourse Beginning K Qualified Nonrecourse Financing beginning (+/-) Enter the amount from Qualified Nonrecourse Financing Beginning, Line K.
    Qualified Nonrecourse Ending K Qualified Nonrecourse Financing ending (+/-) Enter the amount from Qualified Nonrecourse Financing Ending, Line K.
    Recourse Beginning K Recourse beginning (+/-) Enter the amount from Recourse Beginning, Line K.
    Liabilities from Lower Tier Partnership K CKBOX If the box is checked, enter an "X," otherwise leave blank.
    Beginning Capital Account L Capital beginning (+/-) Enter the amount from Beginning Capital Account Line L.
    Ending Capital Account L Capital ending (+/-) Enter the amount from Ending Capital Account Line L.
    Beginning of Year Sec 704(c) Gain or Loss N Beginning (+/-) Enter the amount from the Beginning Line N.
    End of Year Sec 704(c) Gain or Loss N Ending (+/-) Enter the amount from the Ending Line N.
    [1] Ordinary Business Income (Loss) Line 1 (+/-) Enter the amount from Line 1.
    [2] Net Rental Real Estate Income (Loss) Line 2 (+/-) Enter the amount from Line 2.
    [3] Other Net Rental Income (Loss) Line 3 (+/-) Enter the amount from Line 3.
    [4a] Guaranteed Payments for Service Line 4a (+) Enter the amount from Line 4a.

    Note:

    Enter for TY 2021 and future.

    [4b] Guaranteed Payments for Capital Line 4b (+) Enter the amount from Line 4b.

    Note:

    Enter for TY 2021 and future.

    [4c] Total Guaranteed Payments Line 4c (+) Enter the amount from Line 4c.

    Note:

    Enter for TY 2019 and TY 2020 only.

    [5] Interest Income Line 5 (+/-) Enter the amount from Line 5.
    [6a] Ordinary Dividend Line 6a (+/-) Enter the amount from Line 6a.
    [6c] Dividend Equivalents Amount Line 6c (+/-) Enter the amount from Line 6c.
    [7] Royalties Line 7 (+/-) Enter the amount from Line 7.
    [8] Net Short-Term Capital Gain (Loss) Line 8 (+/-) Enter the amount from Line 8.
    [9a] Net Long-Term Capital Gain (Loss) Line 9a (+/-) Enter the amount from Line 9a.
    [11] Other Income Code Line 11
    Alpha Designator Code
    Enter the valid code "F" or “G” when displayed in Line 11.
    [11] Other Income Amount Line 11 (+/-) Enter the amount from Line 11 that corresponds with the valid code "F" or "G," if blank, press <Enter>.
    [12] Section 179 Deduction Line 12 (+) Enter the amount from Line 12.
    [13] Other Deductions Code Line 13
    Alpha Designator Code
    Enter the valid code "V" or “X” when displayed in Line 13.
    [13] Other Deductions Amount Line 13 (+/-) Enter the amount from Line 13 that corresponds with the valid code "V" or ”X,” if blank, press <Enter>.
    [16] Sch K-3 Attached Line 16 CKBOX If the box is checked, enter an "X," otherwise leave blank.
    [22] At Risk Line 22 CKBOX If the box is checked, enter an "X," otherwise leave blank.
    [23] Passive Activity Line 23 CKBOX If the box is checked, enter an "X," otherwise leave blank.

Money Amounts - Form 1120-S Schedule K-1 (Program 44388)
  1. Form 1120-S Schedule K-1 Transcription Sheet:

    OE/DV Screen Prompt Description Instructions
    G Current Year allocation percentage

    Note:

    For TY 2019 and 2020 it will be box F

    G Shareholder % of Stock Ownership (+) Enter % from box G. See instructions in IRM 3.0.101.14.12, Percentage Field Instructions.
    [1] Ordinary Business Income (Loss) Line 1(+/-) Enter the amount from Line 1.
    [2] Net Rental Real Estate Income (Loss) Line 2 (+/-) Enter the amount from Line 2.
    [3] Other Net Rental Income (Loss) Line 3 (+/-) Enter the amount from Line 3.
    [4] Interest Income Line 4 (+/-) Enter the amount from Line 4.
    [5a] Ordinary Dividends Line 5a (+/-) Enter the amount from Line 5a.
    [6] Royalties Line 6 (+/-) Enter the amount from Line 6.
    [7] Net Short-Term Capital Gain (Loss) Line 7 (+/-) Enter the amount from Line 7.
    [8a] Net-Long-Term Capital Gain (Loss) Line 8a (+/-) Enter the amount from Line 8a.
    [10] Other Income Code Line 10
    Alpha Designator Code
    Enter the valid code “F” when displayed in Line 10.
    [10] Other Income Amount Line10 (+/-) Enter the amount from Line 10 that corresponds with the valid code ”F,” if blank, press <Enter>.
    [11] Section 179 Deductions Line 11 (+) Enter the amount from Line 11.
    [12] Other Deductions Code Line 12
    Alpha Designator Code
    Enter the valid code “K” when displayed in Line 12.
    [12] Other Deductions Amount Line 12 (+/-) Enter the amount from Line 12 that corresponds with the valid code “K,” if blank press <Enter>.
    [13] Alpha Designator Line 13 Alpha Designator Code Enter the valid codes to the left of Line 13. Valid codes are A,B,C,D,E,F,G,H,I,J,K,L,M,N,(*) if blank press <Enter>.
    [13] Credits Line 13 (+) Enter the amount from Line 13 that corresponds with the valid code (A,B,C,D,E,F,G,H,I,J,K,L,M,N,(*)), if blank, press <Enter>.
    [14] Sch K-3 Attached Line 14 CKBX If the box is checked, enter an "X," otherwise leave blank.

Payer Information - 1041 Schedule K-1
  1. Enter from Part I, Information About the Estate or Trust, on Form 1041 Schedule K-1.

    OE/DV Screen Prompts Description Instructions
    [A] Estate/Trust ID Parent Return ID.
    1. Correct or verify the nine-digit TIN.

    2. If two or more TINs are shown, the TIN is missing, or the TIN contains more or less than nine-digits, <F3> to clear the field then press <Enter>.

    3. If illegible, suspend UW for Poor Quality Image per IRM 3.0.101.14.8.1.

    Parent DLN The 14-digit Document Locator Number (DLN) is stamped in the upper left margin.
    1. Correct or verify the 14-digit DLN if missing or invalid. If unable to correct, <F3> to clear the field then press <Enter> twice.

    2. If illegible, suspend UW for Poor Quality Image. If still unable to read from paper copy leave blank per IRM 3.0.101.14.8.1.

    3. If File Location Code (FLC) is 78 or 60 (KCSPC only), clear the field and press <Enter> twice.

    [B] Name 1 (Estate/Trust) Name from box B.
    1. Enter or correct Payer Name Line 1 from box B.

    2. If missing, leave blank and press <Enter>.

    3. If illegible, suspend UW for Poor Quality Image.

      Note:

      Refer to IRM 3.0.101.14.8.1 for Poor Quality Image. After pulling document to read from paper, if still unable to determine information leave blank.

    [C] Name 2 (Fiduciary) Name from box C
    1. If an "In-Care-Of" name is present, enter "%," space and then the name.

    2. If information is present on Name Line, include as much as possible after the "%" information.

    3. If a foreign address is present, see IRM 3.0.101.14.11.1.1.

    [C] Address (Fiduciary) Address from box C.
    1. Enter the street address.

    2. If PO Box is present, enter an asterisk (*) and a space in the first two positions of the field, followed by the PO Box number.

    3. If the street address is missing or illegible, enter "Z" then press <Enter>.

    4. If a foreign address is present, see IRM 3.0.101.14.11.1.1.

    [C] City (Fiduciary) City from box C.
    1. Enter the city.

    2. If a Major City Code (MCC) applies, enter the MCC for the listed city (optional).

    3. If the city is missing or illegible, enter "ZZZ" then press <Enter>.

    4. If a foreign address is present, see IRM 3.0.101.14.11.1.1.

    [C] State (Fiduciary) State from box C.
    1. Enter the state code.

    2. If a MCC is entered, the state field is bypassed.

    3. If a foreign address is present, see IRM 3.0.101.14.11.1.1.

    [C] Zip Code (Fiduciary) ZIP Code from box C.
    1. Enter the ZIP Code.

    2. If missing, press <Enter> to generate the default ZIP Code.

    3. If a foreign address is present, see IRM 3.0.101.14.11.1.1.

Payer Information - Form 1065 Schedule K-1
  1. Enter from Part I, Information About the Partnership, on Form 1065 Schedule K-1.

    OE/DV Screen Prompts Description Instructions
    [A] Partnership EIN Parent Return ID.
    1. Correct or verify the nine-digit TIN.

    2. If two or more TINs are shown, the TIN is missing, or the TIN contains more or less than nine-digits, <F3> to clear the field then press <Enter>.

    3. If illegible, suspend UW for Poor Quality Image per IRM 3.0.101.14.8.1.

    Parent DLN The 14-digit Document Locator Number (DLN) is stamped in the upper left margin.
    1. Correct or verify the 14-digit DLN if missing or invalid. If unable to correct, <F3> to clear the field if necessary and press <Enter> twice.

    2. If illegible, suspend UW for Poor Quality Image. If still unable to read from paper copy, leave blank per IRM 3.0.101.14.8.1.

    3. If File Location Code (FLC) is 78 or 60 (KCSPC only) clear the field, and press <Enter> twice.

    [B] Name 1 (Partnership) Name from box B.
    1. Enter or correct Payer Name Line 1 from box B.

    2. If missing, leave blank and press <Enter>.

    3. If illegible, suspend UW for Poor Quality Image.

    Note:

    Refer to IRM 3.0.101.14.8.1 for Poor Quality Image. After pulling document to read from paper, if still unable to determine information, leave blank.

    [B] Name 2 (Partnership) Name from box B.
    1. If an "In-Care-Of" name is present, enter "%," space and then the name.

    2. If information is present on Name Line 2, include as much as possible after the "%" information.

    3. If a foreign address is present, see IRM 3.0.101.14.11.1.1.

    [B] Address (Partnership) Address from box B.
    1. Enter the street address.

    2. If PO Box is present, enter an asterisk (*) and a space in the first two positions of the field, followed by the PO Box number.

    3. If the street address is missing or illegible, enter "Z" then press <Enter>.

    4. If a foreign address is present, see IRM 3.0.101.14.11.1.1.

    [B] City (Partnership) City from box B.
    1. Enter the city.

    2. If a Major City Code (MCC) applies, enter the MCC for the listed city (optional).

    3. If the city is missing or illegible, enter "ZZZ" then press <Enter>.

    4. If a foreign address is present, see IRM 3.0.101.14.11.1.1.

    [B] State (Partnership) State from box B.
    1. Enter the state code.

    2. If a Major City Code is entered, the state field is bypassed.

    3. If a foreign address is present, see IRM 3.0.101.14.11.1.1.

    [B] Zip Code (Partnership) ZIP Code from box B.
    1. Enter the ZIP Code.

    2. If missing, press <Enter> to generate the default ZIP Code.

    3. If a foreign address is present, see IRM 3.0.101.14.11.1.1.

Payer Information - Form 1120-S Schedule K-1
  1. Enter from Part I, Information About the Corporation, on Form 1120-S Schedule K-1.

    OE/DV Screen Prompts Description Instructions
    [A] Corporation EIN Parent Return EIN
    1. Correct or verify the nine-digit TIN.

    2. If two or more TINs are shown, the TIN is missing, or the TIN contains more or less than nine-digits <F3> to clear the field then press <Enter>.

    3. If illegible, suspend UW for Poor Quality Image per IRM 3.0.101.14.8.1.

    Parent DLN The 14-digit Document Locator Number (DLN) is stamped in the upper left margin.
    1. Correct or verify the 14-digit DLN if missing or invalid. If unable to correct, <F3> to clear the field if necessary and press <Enter> twice.

    2. If illegible, suspend UW for Poor Quality Image, if still unable to read from paper copy, leave blank per IRM 3.0.101.14.8.1.

    3. If File Location Code (FLC) is 78 or 60 (KCSPC only) clear the field, and press <Enter> twice.

    [B] Name 1 (Corporation) Name from box B.
    1. Enter or correct Payer Name Line 1 from box B.

    2. If missing, leave blank and press <Enter>.

    3. If illegible, suspend for Poor Quality Image.

    Note:

    Refer to IRM 3.0.101.14.8.1 for Poor Quality Image. After pulling document to read from paper, if still unable to determine information leave blank.

    [B] Name 2 (Corporation) Name from box B.
    1. If an "In-Care-Of" name is present, enter "%," space and then the name.

    2. If information is present on Name Line 2, include as much as possible after the "%" information.

    3. If a foreign address is present, see IRM 3.0.101.14.11.1.1.

    [B] Address (Corporation) Address from box B.
    1. Enter the street address.

    2. If PO Box is present, enter an asterisk (*) and a space in the first two positions of the field, followed by the PO Box number.

    3. If the street address is missing or illegible, enter "Z" then press <Enter>.

    4. If a foreign address is present, see IRM 3.0.101.14.11.1.1.

    [B] City (Corporation) City from box B.
    1. Enter the city.

    2. If a Major City Code (MCC) applies, enter the MCC for the listed city (optional).

    3. If the city is missing or illegible, enter "ZZZ" then press <Enter>.

    4. If a foreign address is present, see IRM 3.0.101.14.11.1.1.

    [B] State (Corporation) State from box B.
    1. Enter the state code.

    2. If a MCC is entered, the state field is bypassed.

    3. If a foreign address is present, see IRM 3.0.101.14.11.1.1.

    [B] Zip Code (Corporation) ZIP Code from box B.
    1. Enter the ZIP Code.

    2. If missing, press <Enter> to generate the default ZIP Code.

    3. If a foreign address is present, see IRM 3.0.101.14.11.1.1.

ERS

  1. This section contains instructions for resolving Schedules K-1 error conditions. All forms go to Error Resolution Systems (ERS) under program code 44380.

Types of Errors

  1. This section provides a description of the types of errors generated during Schedules K-1 processing.

  2. The Error Resolution System (ERS) identifies errors according to type and priority. This shows in the record heading.

    • Action Code Error (Priority I) - Not valid on Schedules K-1

    • Section Error (Priority II) - Includes terminus error

    • Validity Error (Priority III)

    • Math/Consistency Error (Error Codes) (Priority IV)

  3. There may be records where the tax examiner finds programming has not furnished a section or a field that is needed to resolve an error. In this event, the tax examiner can use Command Code (CC) GTSEC. This should be reported to Headquarters for correction of the display.

Priority II Errors - Section Errors

  1. The following conditions may be present if normal SCRIPS validity checks have been bypassed:

    • Terminus Errors

    • Edit Errors

    • Missing required sections

  2. Terminus Error - This error is caused by a section with variable length input fields containing an erroneous size field.

    1. When displayed, this type of error shows all input fields of the terminus section. Transcribed data is present. Computer generated fields are not present.

    2. All fields present for the section must be examined and the necessary correction(s) made to all the fields.

  3. Correction Procedures:

    1. CC CRECT is displayed. If the section needs to be deleted, use CC DLSEC to delete the section.

    2. If no corrections are needed, transmit from the bottom of the screen.

Priority III - Field Errors

  1. Definition - Any field that does not meet the requirement(s) for that field is shown as a Priority III error. Consistency and or relationships with other fields are not a factor.

  2. Some reasons for this type of error are:

    • Non-numeric character in a numeric field

    • Non-alphabetical character in an alpha field

    • Blank space in a numeric field

    • Blank in the first position of an alpha field if followed by significant data

  3. Display - Every field displayed is in error.

    1. All fields with a Priority III error are displayed in columnar format in the order encountered in the record.

    2. An overflow field is identified by all question marks for a money field.

  4. Correction Procedures:

    1. Correct every error field displayed using the specific instructions within each section for the field in error.

    2. MeF - Check the information on the source document to determine if each displayed field has been correctly edited and transcribed.

    3. Enter the correct data for each field displayed.

    4. If no data is to be in a displayed field, blank the field.

    5. Transmit.

Part IV Errors - Consistency/Math Errors

  1. Definition - Any valid field used in any computation in which the result is inconsistent with (or contrary to) any other valid field has Error Code 001–999 assigned and is shown as a Priority IV Error.

  2. Display - These errors are displayed with the Error Code assigned to them for the specific error in ascending numerical order. The screen display shows the Error Code assigned and the fields needed to make the necessary correction.

    1. The blank field "CL" is displayed for the entry of a Clear Code on records where the possibility exists that a change or correction may not be needed.

    2. All errors must be resolved by either eliminating the error or entering a Clear Code.

  3. Correction Procedures:

    1. MeF - Correct all coding and transcription errors.

    2. If the data in the field is correct, enter a "C" in the Clear Code field.

Section 01 Errors

  1. This section provides instructions for correcting Section 01 error conditions.

General Information

  1. Section 01 contains the payee entity data and is required for every record.

  2. Listed below are the fields contained in Section 01 that applies to Schedules K-1 processing:

    Field Field Length Title
    01TIN 09 Payee Identification Number
    01TVC 01 Primary TIN Validity Bypass Code
    01NM1 40 Payee Name Line 1
    01NM2 40 Payee Name Line 2
    01ADD 35 Payee Street Address
    01CTY 22 Payee City
    01ST 02 Payee State Code
    01ZIP 09 Payee ZIP Code

Section 01TIN - Payee Identification Number

  1. There is no validity check of this field.

Section 01TVC - Primary TIN Validity Bypass Code

  1. This field is always blank.

Section 01NM1 - Payee Name Line 1

  1. Valid characters are alpha, hyphen (-), blank, numeric, and ampersand (&).

  2. Invalid Conditions:

    1. Field is completely blank.

    2. Field contains characters other than alpha, hyphen (-), numeric, or ampersand (&).

    3. A character follows two consecutive blanks.

    4. The first position contains a blank.

    5. The number of character positions is more than 40.

  3. Correction Procedure:

    1. MeF - Correct all coding and transcription errors. If name is not present, research using the TIN if present.

      If Then
      There is a name entered in SEC01NM2 Move to SEC01NM1
      TIN research matches name in 01ADD
      There is an address match on CC INOLE
      Enter the name from CC INOLE as the Payee
      There is no information or no information on CC INOLE Enter "Z" and continue processing

Section 01NM2 - Payee Name Line 2

  1. Valid characters are alpha, hyphen (-), blank, numeric, percent (%), and ampersand (&).

  2. Invalid Conditions:

    1. Field contains characters other than alpha, hyphen (-), numeric, percent (%) and ampersand (&).

    2. The number of character positions is more than 40.

  3. Corrections Procedure:

    1. MeF - Correct all coding and transcription errors.

    2. For "In-Care-Of" names, enter the percent (%) sign, space, and then the name.

    3. For foreign address, enter the street address, omit the existing Name Line 2.

Section 01ADD - Street Address

  1. Description - Field 01ADD is in the Entity Section of the return.

    1. Valid Characters are alpha, numeric, blank, hyphen (-), or slash (/).

  2. Invalid Condition - Field 01ADD generates as a field error when any of the following conditions are present:

    1. Any character is present other than alpha, numeric, blank, hyphen (-), or slash (/).

    2. The first position is blank.

    3. Any character follows two consecutive blanks.

  3. Correction Procedures:

    1. MeF - Correct all coding and transcription errors.

    2. If address is not present, research using the TIN if present.

    3. If unable to perfect, after research enter "ZZZ" as the street address.

    4. Enter the foreign city, state, province if present.

    Note:

    MeF- Multiple Addresses If more than one address is present, research CC INOLE and determine the correct address as follows: Foreign Addresses see IRM 3.0.101.14.11.1.1.

  4. .

    If Then
    CC INOLE matches one of the addresses on the return Enter the address listed on CC INOLE in Field 01ADD.
    CC INOLE does not match any of the addresses on the return Enter the first address found on the return to field 01ADD.

Section 01CTY - City

  1. Description - Field 01CTY is in the Entity Section of the return.

    • Valid characters are alpha and blank.

  2. Invalid Conditions - Field 01CTY displays as a field error when any of the following conditions are present:

    1. The first position is blank.

    2. Any character is present and the second and third characters are blank.

    3. Any character follows two consecutive blanks.

    4. The Major City Code does not match any of the valid codes in the Major City Code table.

  3. Correction Procedures:

    1. MeF - Correct all coding and transcription errors.

      Note:

      For a listing of Major City Codes see Exhibit 3.0.101-6, State/Major City/ZIP Code/Major City Code.

Section 01ST - State

  1. Description - Field 01ST is in the Entity section of the return.

    1. Valid characters are alpha and blank.

  2. Invalid Condition - This field is invalid if it is not found in the State Code Table.

  3. Correction Procedures:

    1. MeF - Correct all coding and transcription errors.

    2. For a description of valid State Codes, see Document 7475, State Abbreviations, Major City Codes, and Address Abbreviations.

  4. Correction Procedures for APO/DPO/FPO

    1. The U.S. Postal Service established new requirements for APO/DPO/FPO addresses.

    2. If the old address appears (i.e., AP New York, NY 091XX), convert the address to the new state code abbreviation based on the ZIP Code.

    ADDRESS ABBREVIATION LOCATION ZIP CODE
    APO AA Americas 340
    DPO AA Americas 340
    FPO AA Americas 340
    APO AE Europe 090-098
    DPO AE Europe 090-098
    FPO AE Europe 090-098
    APO AP Pacific 962-987
    DPO AP Pacific 962-987
    FPO AP Pacific 962-987

Section 01ZIP - ZIP Code

  1. Description - Field 01ZIP is in the Entity Section of the return.

    1. Valid characters are numeric and blank.

  2. Invalid Condition - Field 01ZIP generates as a field error when any of the following conditions are present:

    1. Any character is other than numeric or blank.

    2. An entry is other than five or nine positions.

    3. The entry is not within the range of 00501 and 99999.

    4. The first five positions are blank, and an entry is present in the last four positions.

  3. Correction Procedures:

    • MeF - Correct all coding and transcription errors. Research any of the following for valid ZIP Code information: Document 7475, State Abbreviations, Major City Codes and Address Abbreviations, CC INOLE or NAME.

      If Then
      01ZIP is blank Search return and attachments for a valid ZIP Code, if found enter in 01ZIP.
      A Major City Code is entered in field 01CTY
      1. Determine the first three digits of the ZIP Code from Exhibit 3.0.101-6, State/Major City/ZIP Code/Major City Code.

      2. Enter "01" for the fourth and fifth digits.

      There is not a Major City Code listed in field 01CTY Enter the ZIP Code for the state from Exhibit 3.0.101-6 State/Major City/ZIP Code/Major City Code.

Section 02 Errors

  1. This section provides instructions for correcting Section 02 error conditions.

General Information

  1. Section 02 contains miscellaneous data fields.

  2. Listed below are the fields contained in Section 02 that applies to Schedules K-1 processing:

    Field Field Length Title
    06PRP 12 Partner Retirement Plan
    02PAN 20 Payer Account Number for Payer
    02TNI 01 2nd TIN NOT Indicator
    02AMD 01 Corrected/Amended Indicator
    02CD 02 Check Digits
    02NC 04 Name Control
    02TTS 01 TIN Type
    02SSA 40 SSA Specific Data

Section 02PAN - Payer Account Number for Payer
  1. There is no validity check for this field.

Section 02TNI - 2nd TIN NOT indicator
  1. This field must always be blank.

Section 02AMD - Corrected/Amended Indicator
  1. Valid characters are "G" and blank.

  2. MeF- For Schedules K-1 processed through SCRIPS, enter a "G" if the Amended Schedule K-1 Box is checked.

    Type of Schedule K-1 Location of Check Box
    Form 1041 Schedule K-1 Above Part III
    Form 1065 Schedule K-1 Above Part III
    Form 1120-S Schedule K-1 Above Part III

Section 06 Errors

  1. This section provides instructions for correcting Section 06 error conditions.

General Information

  1. Section 06 contains, date fields, money amounts, indicators, and descriptions.

  2. If invalid dates are listed in the 06BTP and 06ETP fields, these are typos from the taxpayer or the SCRIPS operators.

  3. ERS must use CC ENMOD and use the parent’s tax year, it is listed under "FYM."

  4. To correct errors in Fields 06BTP and 06ETP, enter a space after the P, enter seven zeros and then enter the four-digit year and the two-digit month.

  5. For Example: If the tax year is 2021 the beginning tax period is 0000000202101 and the ending tax period is 0000000202112.

  6. Below are the fields listed in Section 06 that apply to Schedules K-1 processing:

  7. Form 1041 Doc Code 66

    Field Field Length Title +/-
    06BTP 13 Beginning Tax Period N/A
    06ETP 13 Ending Tax Period N/A
    0601 12 Interest Amount +/-
    0602a 12 Dividends Amount +/-
    0603 12 Net Short-Term Capital Gains +
    0604a 12 Net Long-Term Capital Gains +
    0606 12 Ordinary Business Income +/-
    0607 12 Net Rental Real Estate Income +/-
    0608 12 Other Rental Income +
    0614 12 Other Information +

  8. Form 1065 Doc Code 65

    Field Field Length Title +/-
    06BTP 13 Beginning Tax Period N/A
    06ETP 13 Ending Tax Period N/A
    06H2I 1 Disregarded Entity Checkbox N/A
    06H2N 26 Disregarded Entity Name N/A
    06H2T 9 Disregarded Entity TIN N/A
    06JPS 6 Capital Beginning % N/A
    06JPE 6 Capital Ending % N/A
    06JCI 1 Partnership Interest Checkbox N/A
    06KNB 12 NonRecourse-BEG-AMT +/-
    06KQB 12 Qualified-BEG-AMT +/-
    06KQE 12 Qualified-END-AMT +/-
    06KRB 12 Recourse-BEG-AMT +/-
    06KCI 1 Liability Amount Checkbox N/A
    06LCB 12 Beginning Capital Account +/-
    06LCE 12 Ending Capital Account +/-
    06NUB 12 Beginning Unrecognized Sec 704(C) +/-
    06NUE 12 Ending Unrecognized Sec 704(C) +/-
    0601 12 Ordinary Income Amount +/-
    0602 12 Net Real Estate Rental Amount +/-
    0603 12 Other Net Rental Amount +/-
    0604a 12 Guaranteed Payments for Service +
    0604b 12 Guaranteed Payments for Capital +
    0604c 12 Total Guaranteed Payments Amount +
    0605 12 Interest Income +/-
    0606a 12 Ordinary Dividends Amount +/-
    0606c 12 Dividend Equivalents +/-
    0607 12 Royalties +
    0608 12 Net Short-Term Capital Gains +/-
    0609a 12 Net Long-Term Capital Gains +/-
    0611C 1 Other Income (Loss) Code Enter the valid code "F" or “G” when displayed on Line 0611C.
    0611A 12 Other Income (Loss) Amount +/-
    Delete the money amount in Field 0611A if the corresponding Alpha Designator Code "F" or “G” is not present in Field 0611C.
    0612 12 Section 179 Deduction +
    0613C 1 Other Deductions Code Enter the valid code "V" or “X” when displayed on Line 0613C.
    0613A 12 Other Deductions Amount +/-
    Delete the money amount in Field 0613A if the corresponding Alpha Designator Code "V" or “X” is not present in field 0613C.
    0616 1 Sch K-3 Attached Checkbox N/A
    0622 1 At-Risk Checkbox N/A
    0623 1 Passive Activity Checkbox N/A

  9. Form 1120-S Doc Code 67

    Field Field Length Title +/-
    06BTP 13 Beginning Tax Period N/A
    06ETP 13 Ending Tax Period N/A
    0601 12 Ordinary Income Amount +/-
    0602 12 Net Real Estate Rental Amount +/-
    0603 12 Other Net Rental Amount +/-
    0604 12 Interest Amount +/-
    0605a 12 Dividends Amount +/-
    0606 12 Royalties +/-
    0607 12 Net Short-Term Capital Gains +/-
    0608a 12 Net Long-Term Capital Gains +/-
    0610C 1 Other Income-Loss Code Enter the valid code “F” when displayed on line 0610C.
    0610A 12 Other Income-Loss-Amount +/-
    Delete the money amount in Field 0610A if the corresponding Alpha Designator Code “F” is not present in Field 0610C.
    0611 12 Section 179 Deduction +
    0612C 1 Other-Deductions Code Enter the valid code “K” when displayed on Line 0612C.
    0612A 12 Other Deductions Amount +/-
    Delete the money amount in Field 0612A if the corresponding Alpha Designator Code “K” is not present in Field 0612C.
    0613C 1 Credits and Credit Recapture Code Enter only one of the valid codes to the left of Line 0613C. The valid codes are: A, B, C, D, E, F, G, H, I, J, K, L, M, N, (*).
    0613A 12 Credits and Credit Recapture Amount +
    Delete the money amount in Field 0613A if the corresponding Alpha Designator Code is not present in Field 0613C.
    0614 1 Schedule K-3 Attached Checkbox N/A

Section 16 Errors

  1. This section provides instructions for correcting Section 16 error conditions.

General Information

  1. Section 16 contains the payer entity data and is required for every record.

  2. Listed below are the fields contained in Section 16 that applies to Schedules K-1 processing:

    Field Field Length Title
    16NM1 40 Payer Name Line 1
    16NM2 40 Payer Name Line 2
    16ADD 35 Payer Street Address
    16CTY 22 Payer City
    16ST 02 Payer State Code
    16ZIP 09 Payer ZIP Code
    16TIN 09 Payer TIN
    16TVC 01 TIN Validity Bypass Code
    16DLN 14 Payer DLN
    16FCC 02 Foreign Country Code

Section 16NM1 - Payer Name Line 1

  1. Valid characters are alpha, hyphen (-), blank, numeric and ampersand (&).

  2. Invalid Conditions:

    1. Field is completely blank.

    2. Field contains characters other than alpha, hyphen (-), blank, numeric, or ampersand (&).

    3. A character follows two consecutive blanks.

    4. The first position contains a blank.

    5. The number of character positions is more than 40.

  3. Correction Procedure:

    1. MeF - Correct all coding and transcription entry errors. If name is not present, research using the TIN if present.

      If Then
      There is a name entered in SEC16NM2 Move to SEC16NM1.
      TIN research matches name in 16ADD Enter name as payer and enter the street address (if City/ST match) from CC INOLE into SEC16ADD.
      There is an address match on CC INOLE Enter the name from CC INOLE as the payer.
      There is no name match or information on CC INOLE Enter "Z" and continue processing.

Section 16NM2 - Payer Name Line 2

  1. Valid characters are alpha, hyphen (-), blank, numeric and ampersand (&).

  2. Invalid Conditions:

    1. Field contains characters other than alpha, hyphen (-), blank, numeric, or ampersand (&).

    2. A character follows two consecutive blanks.

    3. The first position contains a blank.

    4. The number of character positions is more than 40.

  3. Correction Procedure:

    1. MeF - Correct all coding and transcription errors. If name is not present, research using the TIN if present.

      If Then
      There is an address match on CC INOLE Enter the name from CC INOLE as the payer.
      There is no information Enter "Z" and continue processing.

Section 16ADD - Street Address

  1. Description - Field 16ADD is in the Entity Section of the return.

    1. Valid Characters are alpha, numeric, blank, hyphen (-), or slash (/).

  2. Invalid Condition - Field 16ADD generates as a field error when any of the following conditions are present:

    1. Any character is present other than alpha, numeric, blank, hyphen (-), or slash (/).

    2. The first position is blank.

    3. Any character follows two consecutive blanks.

  3. Correction Procedures:

    1. MeF - Correct all coding and transcription errors.

    2. If address is not present, research using the TIN if present.

    3. If unable to perfect, after research enter "ZZZ" as the street address.

    Note:

    Multiple Addresses - If more than one address is present, research CC INOLE and determine the correct address as follows:

  4. If Then
    CC INOLE matches one of the addresses on the return Enter the address listed on CC INOLE in Field 16ADD.
    CC INOLE does not match any of the addresses on the return Enter the first address found on the return to Field 16ADD.

Section 16CTY - City

  1. Description - Field 16CTY is in the Entity Section of the return.

    1. Valid characters are alpha and blank.

  2. Invalid Conditions - Field 16CTY generates as a field error when any of the following conditions are present:

    1. The first position is blank.

    2. Any character is present and the second and third characters are blank.

    3. Any character follows two consecutive blanks.

    4. The Major City Code does not match any of the valid codes in the Major City Code Table.

  3. Correction Procedures:

    1. MeF - Correct all coding and transcription errors.

      Note:

      For a listing of Major City Codes, Exhibit 3.0.101-6, State/Major City/Zip Code/Major City Code.

Section 16ST - State

  1. Description - Field 16ST is in the Entity section of the return.

    1. Valid characters are alpha and blank.

  2. Invalid Condition - This field is invalid if it is not found in the State Code Table.

  3. Correction Procedures:

    1. MeF - Correct all coding and transcription errors.

    2. For a description of valid State Codes, see Document 7475, State Abbreviations, Major City Codes, and Address Abbreviations.

  4. Correction Procedures for APO/DPO/FPO Addresses -

    1. The U.S. Postal Service established new requirements for APO/DPO/FPO addresses.

    2. If the old address appears (i.e., AP New York, NY 091XX), convert the address to the new state code abbreviation based on the ZIP Code:

    ADDRESS ABBREVIATION LOCATION ZIP CODE
    APO AA Americas 340
    DPO AA Americas 340
    FPO AA Americas 340
    APO AE Europe 090-098
    DPO AE Europe 090-098
    DPO AE Europe 090-098
    FPO AE Europe 090-098
    APO AP Pacific 962-987
    DPO AP Pacific 962-987
    FPO AP Pacific 962-987

Section 16ZIP - ZIP Code

  1. Description - Field 16ZIP is in the Entity Section of the return.

    1. Valid characters are numeric and blank.

  2. Invalid Condition - Field 16ZIP generates as a field error when any of the following conditions are present:

    1. Any character is other than numeric or blank.

    2. An entry is other than five or nine positions.

    3. The entry is not within the range of 00501 and 99999.

    4. The first five positions are blank, and an entry is present in the last four positions.

  3. Correction Procedures:

    1. MeF - Correct all coding and transcription errors. Research any of the following for valid ZIP Code information: Document 7475, State Abbreviations, Major City Codes, and Address Abbreviations, CCs INOLE or NAME.

      If Then
      Field 16ZIP is transcribed incorrectly Enter the correct ZIP Code from the return. Only the first five digits are required.
      A valid ZIP Code is not available from the return or attachment
      1. Determine the first three-digits of a valid ZIP Code for the Major City from Exhibit 3.0.101-6, State/Major City/Zip Code/Major City Code.

      2. Enter "01" for the fourth and fifth digits.

      The Major City is not listed in Exhibit 3.0.101-6, State/Major City/Zip Code/Major City Code or the first three digits cannot be determined Enter the ZIP Code of the state shown in the address from Exhibit 3.0.101-6, State/Major City/Zip Code/Major City Code.

Section 16TIN - Payer TIN

  1. Description - Field 16TIN is in Part I of the return.

    1. Valid characters are numeric.

  2. Invalid Condition - Field 16TIN generates as a field error when any of the following conditions are present:

    1. It is not numeric.

    2. It is less than nine characters.

  3. Correction Procedures:

    1. MeF - Correct all coding and transcription errors. If TIN is not present, research using the name line.

    If Then
    There is a match Enter TIN from research.
    A correct number cannot be determined Enter the number nine, (9) times.

Priority IV Errors - Error Codes 001 through 999

  1. This section provides detailed error correction procedures for Error Codes 001 through 999. These errors are displayed with the Error Code assigned to them for the specific error in ascending numerical order. The screen display shows the Error Code assigned and the fields needed to make the necessary corrections.

♦Error Code 014 - Address♦

  1. Error Code 014 displays as follows:

    Field Designator Field Name Field Length
    01ADD Payee Street Address 35
    01CTY Payee City 22
    01ST Payee State Code 02
    01ZIP Payee ZIP Code 09

Invalid Condition - Error Code 014
  1. Error Code 014 generates when all fields are not present as follows:

    1. If the street address is present, Field 01CTY and 01ST must be present, unless a Major City Code (MCC) is used.

    2. If a MCC is used, Field 01ADD must be present.

    3. A city must be present. If the city is not in the Major City format, Field 01ST must be present. Field 01ADD can be blank.

    4. A MCC is used and Field 01ST is present.

Correction Procedures - Error Code 014
  1. MeF - Correct all coding and transcription errors.

  2. Compare the displayed fields with the return and attachments. If incorrect, overlay the screen with the correct information.

  3. Research any of the following for valid address information.

    • Document 7475, State Abbreviations Major City Codes, and Address Abbreviations

    • CCs INOLE, ENMOD, or NAME

    If And Then
    A MCC is present A street address is not available
    1. Enter the city name (Spelled out, not in Major City format) in Field 01CTY.

    2. Enter the State Code in Field 01ST.

    The MCC is correct The state is present Delete Field 01ST.
    The ZIP Code cannot be corrected from the information on the return, attachments, or research  
    1. Determine the first three-digits of the ZIP Code from Exhibit 3.0.101-6, State/Major City/ZIP Code/Major City Code.

    2. Enter "01" for the fourth and fifth digits in Field 01ZIP.

♦Error Code 016 - Zip/Major City Code Mismatch♦

  1. Error Code 016 displays as follows:

    Field Designator Field Name Field Length
    01CTY Payee City 22
    01ST Payee State 02
    01ZIP Payee ZIP Code 09
Invalid Condition - Error Code 016
  1. Error Code 016 generates when the ZIP Code is inconsistent with the Major City Code or State Code.

Correction Procedures - Error Code 016
  1. MeF - Correct all coding and transcription errors.

  2. Compare the displayed fields with the return and attachments. If incorrect, overlay the screen with the correct information.

  3. Research any of the following for valid ZIP Code information:

    • Document 7475, State Abbreviations, Major City Codes, and Address Abbreviations

    • CCs INOLE, ENMOD, or NAME

  4. If only the first three-digits of the ZIP Code can be determined, enter "01" in the fourth (4th) and fifth (5th) positions.

    If And Then
    Unable to determine a valid ZIP Code from the return or attachment   Enter the valid ZIP Code found through research in Field 01ZIP.
    The address is in a Major City A MCC can be determined,
    1. Enter the name of the city in Field 01CTY.

    2. Enter the State Code in Field 01ST.

    The address is not in a Major City  
    1. Enter the proper state abbreviation in Field 01ST.

    2. Enter the ZIP Code in Field 01ZIP.

  5. Correct Procedures for APO/DPO/FPO Address -

    1. The U.S. Postal Service established new requirements for APO/DPO/FPO addresses.

    2. If the old address appears (i.e., AP New York, NY 091XX), convert the address to the new state code abbreviations based on the ZIP Code:

    ADDRESS ABBREVIATION LOCATION ZIP CODE
    APO AA Americas 340
    DPO AA Americas 340
    FPO AA Americas 340
    APO AE Europe 090-098
    DPO AE Europe 090-098
    FPO AE Europe 090-098
    APO AP Pacific 090-098
    DPO AP Pacific 090-098
    FPO AP Pacific 090-098

Error Code 020

  1. Error Code 020 screen displays as follows:

    Note:

    These instructions apply to all documents that are not processed through SCRIPS.

    • Form 1041 Doc Code 66

      Field Designator Field Name
      06BTP Beginning
      06ETP Ending
      0601 Interest Income
      0602a Ordinary Dividends
      0603 Net Short-Term Capital gains
      0604a Net Long-Term Capital Gains
      0605 (SCRIPS only) Other Portfolio Income
      0606 Ordinary Business Income
      0607 Net Rental Real Estate Income
      0608 Other Rental Income
      0614 Other Information

    • Form 1065 Doc Code 65

      Field Designator Field Name
      06BTP Beginning
      06ETP Ending
      0601 Ordinary Income
      0602 Net Real Estate Rental Amount
      0603 Other Net Rental Amount
      0604a Guaranteed Payment for Service
      0604b Guaranteed Payment for Capital
      0604c Total Guaranteed Payments Amount
      0605 Interest Income
      0606a Ordinary Dividends Amount
      0607 Royalties
      0608 Net Short-Term Capital Gains
      0609a Net Long-Term Capital Gains
      0612 Section 179 Deduction

    • Form 1120-S Doc Code 67

      Field Designator Field Name
      06BTP Beginning
      06ETP Ending
      0601 Ordinary Income Amount
      0602 Net Real Estate Rental Amount
      0603 Other Net Rental Amount
      0604 Interest Amount
      0605a Dividends Amount
      0606 Royalties
      0607 Net Short-Term Capital Gains
      0608a Net Long-Term Capital Gains
      0611 Section 179 Deduction
      0613 Credits and Credit Recaptures

  2. Invalid Conditions by form type:

    Forms Transcribed Fields
    1041 0605a, 0607
    1065 0601, 0602, 0603, 0608, 0609a
    1120-S 0601, 0602, 0603, 0607, 0608a

  3. Transcribed Fields by form type:
    ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

    Forms Transcribed Fields
    1041 0601, 0602a, 0603, 0604a, 0614
    1065 0604, 0605, 0606a, 0607, 0612
    1120-S 0604, 0605a, 0606, 0611, 0613

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

  4. Correction Procedures:

    1. Check the entries to make sure the entries are valid or are not misplaced entries. If there are misplaced entries, move or delete the entries.

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

Error Code 024 - Address

  1. Error Code 024 displays as follows:

    Field Designator Field Name Field Length
    16ADD Payer Street Address 35
    16CTY Payer City 22
    16ST Payer State Code 02
    16ZIP Payer ZIP Code 09

Invalid Condition - Error Code 024
  1. Error Code 024 generates if all fields are not present as follows:

    1. If the street address is present, Field 16CTY and Field 16ST must be present unless a Major City Code (MCC) is used.

    2. If a MCC is used, Field 16ADD must be present.

    3. A city must be present. If the city is not in the Major City format, Field 16ST must be present. Field 16ADD can be blank.

    4. A MCC is used and Field 16ST is present.

Correction Procedures - Error Code 024
  1. MeF - Correct all coding and transcription errors.

  2. Compare the displayed fields with the return and attachments. If incorrect, overlay the screen with the correct information.

  3. Research any of the following for valid address information:

    • Document 7475, State Abbreviations, Major City Codes, and Address Abbreviations

    • CCs INOLE, ENMOD, or NAME

    If And Then
    A MCC is present A street address is not available
    1. Enter the city name (spelled out, not in Major City format) in Field 16CTY.

    2. Enter the State Code in Field 16ST.

    The MCC is correct The state is present Delete Field 16ST.
    The ZIP Code or address cannot be corrected from the information on the return, attachments, or from research  
    1. Determine the first three-digits of the ZIP Code from Exhibit 3.0.101-6, State/Major City/Zip Code/Major City Code.

    2. Enter "01" for the fourth and fifth digits in Field 16ZIP.

Error Code 026 - Zip/Major City Code Mismatch

  1. Error Code 026 displays as follows:

    Field Designator Field Name Field Length
    16CTY Payer City 22
    16ST Payer State 02
    16ZIP Payer ZIP Code 09
Invalid Condition - Error Code 026
  1. Error Code 026 generates when the ZIP Code is inconsistent with the Major City Code or State Code.

Correction Procedures - Error Code 026
  1. MeF - Correct all coding and transcription errors.

  2. Compare the displayed fields with the return and attachments. If incorrect, overlay the screen with the correct information.

  3. Research any of the following for valid ZIP Code information:

    • Document 7475, State Abbreviations, Major City Codes, and Address Abbreviations

    • CCs INOLE, ENMOD, or NAME

  4. If only the first three-digits of the ZIP Code can be determined, enter "01" in the fourth (4th) and fifth (5th) positions.

    If And Then
    Unable to determine a valid ZIP Code from the return or attachment   Enter the valid ZIP Code found through research in Field 16ZIP.
    The address is in a Major City A MCC can be determined
    1. Enter the MCC in Field 16CTY.

    2. Delete the State Code in Field 16ST.

    The address is not in a Major City  
    1. Enter the proper state abbreviation in Field 16ST.

    2. Enter the ZIP Code in Field 16ZIP.

  5. Correction Procedure for APO/DPO/FPO Address

    1. The U.S. Postal Service established new requirements for APO/DPO/FPO addresses.

    2. If the old address appears (i.e., (AP New York, NY 091XX), convert the address to the new state code abbreviations based on the ZIP Code:

    ADDRESS ABBREVIATION LOCATION ZIP CODE
    APO AA Americas 340
    DPO AA Americas 340
    FPO AA Americas 340
    APO AE Europe 090-098
    DPO AE Europe 090-098
    FPO AE Europe 090-098
    APO AP Pacific 962-987
    DPO AP Pacific 962-987
    FPO AP Pacific 962-987

ERS – When Correspondence is Required

  1. Correspondence may be required if any of the following is present:

    1. If the Schedules K-1 are received in continuous format (e.g., computer listings or typed listings), correspond requesting separate Schedules K-1.

    2. If substitute Schedules K-1 are received and do not meet the requirements listed in IRM 3.0.101.5.3, Substitute Schedules K-1, correspond requesting a valid substitute form, or the official IRS form.

Post Document Preparation

  1. Pick up work according to the number of carts or boxes included (i.e., box 1 of 2, box 2 of 2).

  2. Leaf through Schedules K-1 to determine which Schedules K-1 belong to a single parent (parent DLN is stamped in the upper left of the first Schedule K-1). The Schedules K-1 for each parent should be in separate gusset/blue folder or separated by a pink piece of paper.

    1. You may find many documents with attachments. In this case, all the following pages should match the front page in some way (EIN, Name).

    2. If there is a stray Schedule K-1 without a DLN that does not match any other documents, pull the document, and send to Code and Edit as a "Loose Schedule K-1."

  3. Return block of documents to "stat" box or cart.

Output Report

  1. Instructions for working the "Actual Output Report."

  2. The "Actual Output Report" lists all DLNs that is either output or deleted.

    1. Verify every DLN on the "Actual Output Report."

  3. If the batch contains a DLN not on the report:

    1. Pull entire block and make sure the parent DLN is written or stamped on the first document.

    2. Give the entire block of documents to the Lead or designated employee for research.

    3. If block is deleted, the Lead or designated employee routes it for processing.

    4. If block is not deleted and is still on the SCRIPS system, the Lead or designated employee takes the necessary action to have the block worked and output.

  4. If a single document is deleted from a block:

    1. Pull the document from the block.

    2. Make sure the parent DLN is written in the upper left corner of each Schedule K-1 pulled.

    3. Route deleted, pulled documents to Batching for further processing.

Post Document Preparation for Files

  1. The documents are received on batch carts in gusset/blue folders or in "stat" boxes after raw input has been completed.

  2. After receipt, prepare documents for filing as follows:

    1. Check parent DLN on folder or on "stat" box against the first Schedule K-1 parent DLN in each folder or "stat" box to ensure they match.

    2. If parent DLN is for an electronically filed return (FLC of DLN (first two-digits) are 14, 16, 22, 35, 38, 41, 43, 52, 64, 65, 72, 75, 76, 92, 93, or 95), destroy as classified waste.

    3. If folder is labeled "Loose Schedules K-1," prepare an "attachment document," staple to the Schedule and route to Files to be attached to the parent return.

    4. For all others, make sure parent DLN is stamped/written on gusset/blue folders or "stat" boxes.

    5. If gusset/blue folder is not provided for a parent DLN, create one by stamping/writing the parent DLN on the top tab and placing the Schedules K-1 inside the folder.

    6. Place folders in the box or batch cart with the parent DLN sticking out, in ascending order, from right to left, facing the front of the box/batch cart.

    7. If DLN is out of order (e.g., LC244–091–49700–2, LC244–091–49800–2, LC244–091–51000–2, LC244-091–49900–2), associate in the correct DLN order.

    8. "Re-file" documents should be stapled together for each parent DLN, place the documents in a "stat" box labeled "Re-file" and route to Files.

    9. Prepare additional gusset/blue folders or "stat" boxes, when necessary, to eliminate over stuffing. If over-stuffing is an ongoing problem, coordinate with the Pre-Doc Prep Function.

    Note:

    There should be a gusset/blue folder for each parent DLN, and the gusset/blue folders should be in parent DLN order within each "stat" box or batch cart.

Duplex Schedules K-1

  1. Duplex (Carbon Copy) Schedules K-1 cannot process through SCRIPS and are photocopied in Pre-Doc Prep and placed in a folder. When received take the following actions:

    1. Remove the duplex Schedules K-1 from the folder.

    2. Re-associate to the photocopied Schedules K-1 before routing to Files.

Set-Up for Document File Retention

  1. Documents are placed in "stat" boxes.

  2. Arrange documents in proper filing sequence. Maintain all documents in parent DLN order.

  3. After the weekly cycle has been accumulated (daily where space limitations or other local requirements dictate) inter-file the cycle on permanent shelving for retention.

Files

  1. When requests for the parent return (Form 1041, Form 1065 and Form 1120-S) and Schedules K-1 are received by Files:

    1. If the requests are received via Form 5546 (Exam request) pull and charge out both the parent return and the Schedules K-1 and forward to requester.

    2. If a request is received from Statistic of Income (SOI), for both the Form 1120-S and the related Schedules K-1, pull and charge out both and forward to SOI. Do not pull the Schedules K-1 for Form 1041 and Form 1065.

    3. If a request is received from Return and Income Verification Services (RAIVS) for Form 1120-S, Form 1041, or Form 1065 and the related Schedules K-1, pull and charge out both and forward to RAIVS.

    4. If requests are received from other areas for Form 1041, Form 1065 and Form 1120-S and the related Schedules K-1 via CC ESTAB/DOALL, they must enter "Pull Schedule K-1" in the remarks field. If "Pull Schedule K-1" is not present in the remarks field, pull and charge out only the parent return and forward to the requester.

    5. If the request is received via Form 2275, Records Request, Charge and Recharge for the parent return and the related Schedules K-1, they must write "Pull Schedule K-1" in the Remarks block. If "Pull Schedule K-1" is not present in the remarks block, pull and charge out only the parent return and forward to the requester.

Servicing Requests for Returns, Copies, and Information

  1. When a request for a document arrives in Files, and the document is already charged-out or is missing, note the complete charge-out data on the requisition.

  2. If the document/block is not in Files, ensure necessary action is taken to guarantee that the document/block is not misfiled or possibly shelved incorrectly (i.e., notify supervisor for special search).

  3. If an "A" is marked on the Block Control Sheet, there is a duplicate DLN. Check the following block, marked "B" on the block control sheet, to ensure pulling of the correct document.

  4. Prepare copies where requested. Re-file the original.

  5. Sort filled requests into location of requestor and route to requestor. The Unit Address List (UAL) is available on the Submission Processing website and has addresses corresponding with the IDRS group numbers of the requestor. Perform special search on unfilled requests only if the special search criteria are met. See IRM 3.5.61.11, Requests for Association of Attachments.

  6. Form 8161, Error Resolution Charge-outs, are received in two ways:

    1. Part 1 only - Error Resolution already has the return. File part 1 in its proper place in the block.

    2. All three parts - Attach parts 2 and 3 to return and route to Error Resolution. File part 1 in its proper place in the block.

Re-Filing

  1. When previously charged-out parent and Schedules K-1 are received back in Files to be re-filed, file both parent and Schedules K-1 associated by parent DLN. Never attach, associate, or re-file into Schedules K-1 folders.

  2. When processed "Loose Schedules K-1" are received in Files, if necessary, research IDRS for matching parent DLN, then re-file behind parent return.

  3. When attachments other than Schedules K-1 are received, file with the parent return using Form 10023B, Attachment (To Be Associated With Return). The parent DLN is written on the upper left of the Schedules K-1. These attachments are pulled in the Pre-Doc Prep area but cannot be processed through the SCRIPS scanners and need to be re-associated with the parent return.

Retiring Documents to Federal Records Center

  1. Files function retires Schedules K-1 at the same time as the matching parent blocks, in accordance with Document 12990, Records and Information Management Records Control Schedules. To locate this information, open the attached link and refer to the information in the table below.

    IRS Records Control Schedules (RCS) Schedule Page Item Item
    Tax Administration – Wage and Investment (W&I) Records 29 420 56 58

Form 1041 Schedule K-1

This is an Image: 33347101.gif

Please click here for the text description of the image.

Form 1065 Schedule K-1

This is an Image: 33347002.gif

Please click here for the text description of the image.

Form 1120-S Schedule K-1

This is an Image: 33347003.gif

Please click here for the text description of the image.

Standard Abbreviations

When it is necessary to shorten entries, the abbreviations listed below must be used to shorten entries, EXCEPT when used to determine name control.

NAME/OR PHRASE ABBREVIATION
Accounting ACCTG
Account ACCT
Accounts ACCTS
Administration ADMIN
Administrator/Administrators ADM/ADMS
America(n) AMER
Associates ASSOC
Association ASSN
Blue Cross/Blue Shield BC BS
Brook(s) BRK(S)
Brotherhood BRTHHD
Brothers BROS
Burg(s) BG(S)
Care of/in care of % (Name Line 2 only)
Casualty CASLTY
Commission COMM
Company/Companies CO/COS
Comptroller COMPT
Computer COMP
Consolidated CONS
Construction CONST
Cooperative COOP
Corporation/Corporations CORP/CORPS
Co-Trustee CO-TTEE
Co-Trustees CO-TTEES
Credit Union CU
Data Processing DP
Dated Jan. 16, 1987 Convert dates to MM-DD-YY format with hyphens. (DO NOT ENTER DATE/DATED/DTD OR THE ALPHA MONTH.)
Deceased DECD
Department DEPT
Doing business as, D/B/A, D.B.A DBA
District DIST
Division DIV
Electrical ELEC
Employees EMP
Enterprises ENT
Executor/Executrix EX
Executors/Executives EXS
Family FAM
Family Trust FAM TR
Federal FED
Federal Credit Union FCU
Fiduciary FID
Finance FIN
First National Bank FNB
For the Benefit of, F/B/O, F.B.O FBO
Funeral Trust FNER TR
Group GRP
Headquarters HDQTRS
Hourly HRLY
Human Resources HM RES
Human Development HUM DEVLP
Incorporated INC
Industry(ies) INDUST
Institute, Institution INST
Insurance INS
International INT
Investment, Investors INVEST
Irrevocable IRRV
Irrevocable Trust IRRV TR
Limited LTD
Management MGMT
Manufacturing MFG
Marital Trust MRTL TR
Mental Health MEN HLTH
Municipal MUN
Mutual MUTL
National NAT
National Guard NAT GD
Non-exempt Charitable Trust NECT
Pension PENS
Partner PTR
Partner Number PTR NO
Partnership PTRSP
Personal Representative PER REP
Professional Association PA
Professional Corporation PC
Professional Service PS
Products PROD
Railroad RR
Realty RLTY
Retirement RET
Revocable RVOC
Revocable Trust RVOC TR
Salary(ies) SAL
Savings SAV
Savings and Loan SL
Service(S) SERV(S)
Small Corporation SC
Stevedoring STVDG
Transportation TRANS
Telegraph TEL
Telephone TEL
Testamentary TEST
Trust/Trusts TR/TRS
Trustee/Trustees TTEE/TTEES
Under the will of, U/W, under will UW
Under agreement, U/A, Under agreement with UA
Under Trust Agreement UTA
United States US
University UNIV
US Air Force USAF
US Army USA
US Coast Guard USCG
US Marine Corp USMC
US Navy USN
Voluntary Employee Benefit Association VEBA

Street Address Abbreviations

When necessary to shorten entries, street address abbreviations that must be used. For SCRIPS processing it is not necessary to abbreviate any word if it is correctly recognized by the scanner. This requirement applies only if the word is manually entered.

Note:

Abbreviate East, North, South and West only when it is used as a direction.

Word Abbr. Word Abbr. Word Abbr.
Alley ALY Ford FRD Pines PNES
Annex ANX Forest FRST Plain PLN
Arcade ARC Forge FRG Plains PLNS
Bayou BYU Fork FRK Plaza PLZ
Beach BCH Forks FRKS Point PT
Bend BND Fort FT Port PRT
Bluff BLF Freeway FWY Prairie PR
Bottom BTM Gardens GDNS Radical RADL
Branch BR Gateway GTWY Ranch RNCH
Bridge BRG Glen GLN Rapids RPDS
Brook BRK Green GRN Rest RST
Burg BG Grove GRV Ridge RDG
Bypass BYP Harbor HBR River RIV
Camp CP Haven HVN Second 2nd
Canyon CYN Heights HTS Shoal SHL
Cape CPE Hill HL Shoals SHLS
Causeway CSWY Hills HLS Shore SHR
Center CTR Hollow HOLW Shores SHRS
Cliffs CLFS Inlet INLT Spring SPG
Club CLB Island IS Springs SPGS
Corner COR Islands ISS Square SQ
Corners CORS Isle ISLE Station STA
Course CRSE Junction JCT Stream STRM
Cove CV Knolls KNLS Summit SMT
Creek CRK Lake LK Third 3rd
Crescent CRES Lakes LKS Trace TRCE
Crossing XING Landing LNDG Track TRAK
Dale DL Light LGT Trail TRL
Dam DM Loaf LF Trailer TRLR
Divide DV Locks LCKS Tunnel TUNL
Estates EST Lodge LDG Turnpike TPKE
Expressway EXPY Manor MNR Union UN
Extension EXT Meadows MDWS Valley VLY
Falls FLS Mill ML Viaduct VIA
Ferry FRY Mills MLS View VW
Field FLD Mission MSN Village VLG
Fields FLDS Mount MT Ville VL
First 1st Mountain MTN Vista VIS
Flats FLT Orchard ORCH Wells WLS

Street address abbreviations that must be used. For SCRIPS processing it is not necessary to abbreviate any word if it is correctly recognized by the scanner. This requirement applies only if the word is manually entered.

Note:

Abbreviate East, North, South and West only when it is used as a direction.

Word Abbr. Word Abbr.
Air Force Base AFB One-half (all fractions space before and after the number) 1/1
Apartment APT Parkway PKWY
Avenue AVE Place PL
Boulevard BLVD Post Office Box * or PO BOX
Building BLDG Route RTE
Circle CIR Road RD
Court CT Room RM
Department DEPT R.D., RFD, R.F.D., R. Rural Delivery, Rural Route RR
Drive DR South S
East E Southeast, S.E. SE
Floor FL Southwest, S.W. SW
General Delivery GEN DEL Street ST
Highway HWY Suite STE
Highway Contract HC Terrace TER
Lane LN West W
North N    
Northeast, N.E. NE    
Northwest, N.W. NW    

State/Major City/ZIP Code/Major City Code

If the ZIP Code is missing or invalid, add "01" to the three digits shown below.

State Major City Zip Major City Code
AK Anchorage 995 AN
AK Fairbanks 997 FK
AL Auburn 368 AF
AL Birmingham 352 BI
AL Florence 356 FC
AL Huntsville 358 HU
AL Mobile 366 MO
AL Montgomery 361 MG
AL Tuscaloosa 354 TB
AR Fayetteville 727 FB
AR Fort Smith 729 FS
AR Jonesboro 724 JB
AR Little Rock 722 LR
AR North Little Rock 721 NL
AR Pine Bluff 716 PB
AZ Chandler 852 YZ
AZ Glendale 853 GE
AZ Mesa 852 MZ
AZ Peoria 853 PY
AZ Phoenix 850 PX
AZ Scottsdale 852 YS
AZ Tempe 852 TE
AZ Tucson 857 TU
CA Alhambra 918 YA
CA Anaheim 928 AH
CA Bakersfield 933 BD
CA Berkeley 947 BE
CA Chula Vista 919 DV
CA Englewood 903 ID
CA Fresno 937 FO
CA Glendale 912 GL
CA Huntington Beach 926 HB
CA Inglewood 903 ID
CA Irvine 926-927 IV
CA Long Beach 907-908 LB
CA Los Angeles 900 LA
CA Modesto 953 MC
CA North Hollywood 916 NW
CA Oakland 946 OA
CA Oceanside 920 OE
CA Oxnard 930 OX
CA Palo Alta 943 PQ
CA Pasadena 910-911 PD
CA Riverside 925 RS
CA Sacramento 942, 958 SC
CA Salinas 939 YL
CA San Bernardino 924 SR
CA San Diego 921 SD
CA San Francisco 941 SF
CA San Jose 951 SJ
CA Santa Ana 927 SA
CA Santa Barbara 931 SC
CA Stockton 952 SN
CA Torrance 905 TN
CA Van Nuys 913-914 VN
CO Arvada 800, 804 AV
CO Aurora 800 AZ
CO Boulder 803 BV
CO Colorado Springs 809 CS
CO Denver 800-802 DN
CO Greeley 806 GC
CO Lakewood 801-802, 804 LW
CO Pueblo 810 PU
CO Westminster 800, 802 WD
CT Bridgeport 066 BP
CT Hartford 061 HD
CT New Haven 065 NH
CT Stamford 069 ST
CT Waterbury 067 WT
DC Washington 200-205, 569 DC
DE Wilmington 198 WI
FL Boca Raton 334 BZ
FL Bradenton 342 BG
FL Cape Coral 339 CF
FL Clearwater 337 CQ
FL Daytona Beach 320-321 DF
FL Fort Lauderdale 333 FL
FL Fort Pierce 349 FP
FL Gainesville 326 GF
FL Hialeah 330 HI
FL Hollywood 330 HW
FL Jacksonville 322 JV
FL Lakeland 338 LK
FL Melbourne 329 ML
FL Miami 330-332 MF
FL Orlando 328 OR
FL Pensacola 325 PE
FL St. Petersburg 337 SP
FL Tallahassee 323 TL
FL Tampa 336 TA
FL West Palm Beach 334 WP
GA Albany 317 AY
GA Athens 306 AE
GA Atlanta 303,311,399 AT
GA Augusta 309 AG
GA Columbus 318-319 CM
GA Macon 312 MA
GA Marietta 300 MT
GA Savannah 314 GS
HI Honolulu 968 HL
IA Cedar Rapids 524 CR
IA Davenport 528 DP
IA Des Moines 503 DM
IA Dubuque 520 DQ
IA Sioux City 511 SX
IA Waterloo 507 WL
ID Boise 837 BS
ID Pocatello 832 PC
IL Aurora 605 AO
IL Champaign 618 CX
IL Chicago 606-608 CH
IL Decatur 625 DT
IL East St. Louis 622 ES
IL Evanston 602 EN
IL Joliet 604 JT
IL Naperville 605 NP
IL Oak Park 603 OP
IL Peoria 616 PL
IL Rockford 611 RF
IL Springfield 627 XL
IN Bloomington 474 BQ
IN Evansville 477 EV