3.0.230 Lockbox Processing Procedures

Manual Transmittal

November 13, 2018

Purpose

(1) This transmits revised IRM 3.0.230, General - Lockbox Processing Procedures.

Material Changes

(1) IRM 3.0.230.2.1 - Added IRC Section 965 payments to list of processable Lockbox payments.

(2) Exhibit 3.0.230-2 updated with new BMF State Alignment

(3) Exhibit 3.0.230-3 updated with new/reassigned File Location Codes (FLC)

(4) Editorial and Formatting changes have been made throughout this IRM.

Effect on Other Documents

IRM 3.0.230 dated January 1, 2018 is superseded.

Audience

All Submission Processing Campuses (SPC), Lockbox Policy and Oversight Analysts, Fiscal Service IRS Lockbox Branch, Government Accountability Office (GAO), and Treasury Inspector General for Tax Administration (TIGTA).

Effective Date

(01-01-2019)

Linda J. Brown
Director, Submission Processing
Wage and Investment Division

Program Scope and Objectives

  1. The primary goal of the Lockbox Network is to effectively collect and process paper remittances on a 24-hour deposit standard to accelerate funds into the United States Treasury while maintaining the security and confidentiality of taxpayer information.

  2. Achievement of a 24-hour deposit standard incorporates the dual responsibilities of meeting productivity requirements while ensuring processing quality standards are simultaneously met. Both elements are of critical importance in ensuring internal controls exist to attain efficient, timely and accurate program achievement.

  3. The intended audience and primary stakeholders are; LPO analysts and employees at the Submission Processing Campuses (SPC) in the following Operations:

    • Planning and Analysis (P&A); Quality Improvement Team (QIT)

    • Accounting Control/Services (ACO)

    • Receipt and Control (RCO)

    • Input Corrections (ICO)

  4. The Director of Wage and Investment (W&I), Submission Processing (SP) is the policy owner and Accounting and Tax Payment Branch (ATP), Lockbox Policy and Oversight (LPO) Section, an organization within SP, is the program owner.

Background

  1. The IRS Lockbox Network consists of Financial Agent(s) (FA) designated by the Bureau of the Fiscal Service (BFS), IRS Lockbox Branch, to process payments at Lockbox sites in support of IRS Submission Processing Centers (SPCs) located throughout the country.

Authority

  1. The Fiscal Service IRS Lockbox Branch is delegated by the United States Treasury to enter into Financial Agent Agreement(s) (FAA) with FA to process payments on behalf of government agencies. The FA, designated by Fiscal Service IRS Lockbox Branch act as a fiduciary of IRS to process federal tax remittances and collections.

  2. The FA officers, employees and contractors must comply with and assume responsibility for compliance by its employees and contractors of the provisions of Section 6103 of the Internal Revenue Code.

  3. The following provide authority for the instructions in this IRM to be performed in support of Lockbox activities:

    1. Internal Revenue Code (IRC) Title 26 U.S.C. or the Privacy Act (5 U.S.C. Section 552).

    2. All Policy Statements for Submission Processing are contained in IRM 1.2.12, Servicewide Policies and Authorities, Policy Statements for Submission Processing Activities.

  4. The quality standards are provided in this IRM and the Lockbox Processing Guidelines (LPG). The intended audience and primary stakeholders will use this IRM to review/process tax payments/returns received from the aligned Lockbox Site. The Lockbox sites will utilize the LPG for payment processing requirements and the Lockbox Security Guidelines (LSG) for security requirements.

  5. The following Guidelines and IRMs are resources for the intended audience and primary stakeholders:

    1. Lockbox Processing Guidelines (LPG)

    2. Lockbox Security Guidelines (LSG)

    3. IRM 10.2.11 - Basic Security Concepts

    4. IRM 3.24.133 - Residual Remittance Processing System

    5. IRM 3.0.167 - Losses and Shortages

    6. IRM 3.8.44 - Campus Deposit Activity

    7. IRM 3.8.45 - Manual Deposit Process

    8. IRM 3.10.72 - Receiving, Extracting and Sorting

    9. IRM 3.10.73 - Batching and Numbering

    10. IRM 25.8.1 - OFP Codes Overview

    11. IRM 21.5 - Account Resolution

Responsibilities

  1. Fiscal Service, IRS Lockbox Branch and IRS LPO Section work closely together and share responsibility for the administration and program oversight of the IRS Lockbox Program. Each agency is primarily responsible for distinct duties.

Fiscal Service IRS Lockbox Branch & IRS LPO
  1. Fiscal Service and IRS are collectively responsible for the following administrative and oversight responsibilities:

    1. Establish IRS Lockbox Program goals and objectives.

    2. Conduct strategic program planning and risk management activities.

    3. Determine the Minimum Daily Processing Capacity (MDPC) and Program Completion Date (PCD) for each Lockbox site and workload requirements to ensure timely issuance of MDPC and PCD letters.

    4. Conduct analysis and assessment of each Lockbox site’s peak workload performance.

    5. Conduct pre-peak and post-peak analysis of each Lockbox site’s operations and performance.

    6. Make recommendations for process improvements and report and resolve significant issues of concern.

    7. Review, evaluate and respond to recommendations for process and system improvements.

    8. Plan, manage and coordinate activities to implement Lockbox program, process and system changes.

    9. Support and assist in resolving issues regarding IRS Lockbox deposits by the Lockbox sites.

    10. Conduct monthly meetings with the Lockbox sites to review performance and discuss processing issues.

    11. Provide oversight and guidance regarding Post Office (PO) Box addresses provided by the FA. Additionally, work in concert to instruct the FA on when to open and close PO Box addresses.

    12. Conduct training sessions to provide guidance and ensure consistency in oversight of peak coverage.

    13. Collaborate to review LPG and LSG annually to ensure updates, comments and recommendations have been incorporated.

    14. Ensure Lockbox sites receive updated LPG, LSG and Functional Specification Package (FSP) for peak processing periods.

    15. Review and approve procedural/security waivers as documented.

    16. Respond to inquiries from internal and external stakeholders pertaining to the IRS Lockbox program.

Fiscal Service IRS Lockbox Branch
  1. Fiscal Service, IRS Lockbox Branch primary responsibilities include but are not limited to the following elements:

    a) Perform Financial Agent (FA) Oversight:

    1. Implement a Financial Agent Selection Process (FASP) when designating FA.

    2. Negotiate and execute Financial Agent Agreement (FAA) when designating FA.

    3. Implement changes to the Treasury Financial Manual (TFM) as necessary.

    4. Compensate each FA for IRS Lockbox operation expenses subject to reimbursement by the IRS.

    5. Act as a liaison between the IRS and the Lockbox sites to ensure compliance with the requirements established by the IRS are incorporated into the FAA.

    6. Assume a leadership role in annual Lockbox Forum with IRS and Lockbox sites as well as the designation of scheduling and organizing post-peak reviews.

    7. Plan, manage and coordinate activities to support IRS Lockbox Network structural and/or organizational changes (e.g., Lockbox site openings and closures).

    8. Collaborate with Fiscal Service Asset Protection Division and IRS to conduct Physical Security reviews and approve IRS Lockbox site certification(s).

    b) Collaborate with LPO to ensure effective Internal Controls exist in the Lockbox Network:

    1. Participate with IRS to develop specific quality improvement and internal control programs.

    2. Provide on-site support during April Peak processing period.

    3. Assist IRS Lockbox analysts on an as-needed basis with on-site performance review during April Peak.

    4. Evaluate the Lockbox sites including reviewing and analyzing production, daily status and incident reports.

    5. Collaborate with IRS to conduct an analysis of April peak performance to include the following: dollars deposited, items processed, incident reports, staffing trends, operating status (e.g., Operating as Expected (OAE)), MDPC and PCD.

    6. Collaborate with IRS to conduct post-peak lessons learned sessions with each Lockbox site to review performance.

    7. Support the Statistics of Income (SOI) analyst(s) with reviewing production reports for inconsistencies.

    8. Ensure the Fiscal Service Branch Manager is available 24-hours a day to receive Situation Awareness Management Center (SAMC) calls, provide guidance and a headquarters reporting mechanism to the analyst on site.

    9. Collaborate with IRS to distribute and complete analysis of quarterly report cards for each Lockbox site.

    10. Collaborate with the IRS to develop and timely implement corrective action plans that respond to all audits and ensure implemented actions are appropriately validated.

    c) Provide Lockbox Sites Continuity of Operations (COOP) Services:

    1. Coordinate with the IRS to ensure the Lockbox sites have the appropriate COOP plans.

    2. Review each Lockbox site’s contingency and Occupational Emergency Plan (OEP) to ensure the safeguarding and proper transitioning of work in the event of an emergency as well as in support of daily operations.

    d) Provide integration between the Lockbox sites and Electronic Check Processing (ECP):

    1. Ensure ECP has the appropriate updates and documentation to support ECP failover to Image Cash Letter (ICL).

    2. Ensure the Lockbox sites perform annual contingency failover testing.

      Note:

      Fiscal Service IRS Lockbox Branch develops and prepares all correspondence and documentation and ensures all information is distributed to the Lockbox sites as required.

Accounting and Tax Payment (ATP) Branch, LPO Section
  1. The LPO Section of the ATP Branch has primary responsibility for management and oversight of the Lockbox Network. LPO is responsible for the development of system, security, internal control, processing and reporting requirements in accordance with tax legislation and IRS policy. In addition, the LPO team has primary responsibility for ensuring the accurate processing of remittances to taxpayers’ accounts. To effectively administrate the IRS Lockbox Program; the IRS LPO Section maintains the necessary liaisons with IRS support organizations and Subject Matter Expert(s) (SME).

  2. The LPO team performs the following activities to achieve this mission:

    1. Develop and maintain IRS Lockbox Network requirements in accordance with tax legislation and IRS Policy. Provide a process to collect feedback on requirement documents and conduct discussion sessions with Fiscal Service and IRS SME as needed or requested.

    2. LPO maintains the following governing documents:

    1) LPG processing and administrative requirements.

    2) LSG physical, personnel, courier, remittance and Information Technology (IT) security requirements:

    1. Develop and revise the Lockbox sites processing procedures and security procedures with appropriate SME.

    2. Coordinate revisions with all stakeholders.

    3. Organize a forum for IRS Lockbox analysts, Fiscal Service and Lockbox sites to participate in annual review of the LPG. Document review and comments.

    4. Organize a forum for IRS Lockbox analysts to participate in an annual review of the LSG with Fiscal Service IRS Lockbox Branch, Fiscal Service’s Asset Protection Division, Fiscal Service Information and Security Services (ISS), IRS Financial Management Shared Services (FMSS), Human Capitol Office (HCO) and IT. Document review and comments.

    5. Track and address issues, suggestions and comments reported during previous filing seasons.

    6. Track, coordinate and ensure accurate and timely responses to waiver and change requests associated with the LPG and LSG.

    7. Issue Alert(s) and Lockbox Electronic Bulletin(s) (LEB) to provide updates as necessary throughout the year.

    8. Provide annual revision drafts of the LPG and the LSG with Nature of Changes (NOC).

    9. Provide final documents via LEB to all stakeholders.

    3) IRM 3.0.230, Lockbox Processing Procedures:

    1. Provide an annual update with necessary changes to ensure procedures are consistent with LPG and LSG guidance.

    2. Issue IRM Procedural Update (IPU) as necessary.

    4) Manage the Lockbox Sites Functional Specification Package (FSP) and Lockbox Electronic Network (LEN) file transmission requirements:

    1. Coordinate with IRS IT to develop the Lockbox FSP software requirements and ensure consistency between Lockbox and IRS internal software specifications.

    2. In collaboration with Fiscal Service, coordinate with each Lockbox site to ensure adequate understanding of the software requirements. Ensure the FSP and new programs are implemented within the required timeframes.

    3. Coordinate with IRS Enterprise Systems Testing (EST) Division to ensure the Lockbox sites software is tested and acceptable for production prior to issuing the annual software certification.

    4. Coordinate with IRS IT and the Lockbox sites to resolve software production problems.

    5. Monitor and coordinate the LEN transmissions of Remittance Processing System (RPS), Remittance Transaction Research (RTR) and Redesign Revenue Accounting Control System (RRACS) taxpayer data files from the Lockbox sites to the EFTU drop box for accuracy and timeliness.

    6. Coordinate re-transmission of files with IT EOPS (Enterprise Operations), Enterprise Computing Center (ECC) and the Lockbox site(s) upon non-receipt or corrupt RPS, RTR or RRACS files.

    7. Issue information Alerts to ECC scheduling, Chief Financial Office (CFO) and SPC Accounting when the Lockbox sites are working and transmitting RPS files on non-business days (weekends or holidays).

    8. Coordinate with EOPS File Transfer Section to request new Axway accounts or close accounts that are no longer required for secure data file transfers.

    9. Coordinate with IT on end-of-year (EOY) procedures and issue a LEB with detailed instructions for each day, including the date the new code will be implemented.

    5) Annual Lockbox Filing Season Readiness (FSR) Plan Activities:

    1. Provide voucher specifications to software developers, preparers, software vendors and internal IRS and ensure adequate testing of vouchers.

    2. Collaborate with Fiscal Service and the Lockbox sites to ensure the PO Box addresses by form type are correct.

    3. Manager and update Lockbox PO Box addresses to ensure IRS.gov website is accurate.

    4. Coordinate address changes with IRS IT and Media and Publications to ensure correct Lockbox addresses are incorporated in the mail-out tax packages and documents.

    5. Based on IRS research projections calculate the PCD for each Lockbox site, based on expected volume of work.

    6. Provide Fiscal Service each Lockbox sites April peak workload requirements and associated PCD for formal issuance to each FA in the PCD letter.

    7. Update Data Collection Instrument (DCI) to accurately reflect new requirements and/or changes in the LPG and LSG.

    8. Develop, coordinate and submit a Unified Work Request (UWR) with annual FSP updates and requirement changes.

    9. Coordinate with the Primary Local Security Administrators (PLSA) and each Lockbox site to ensure access to OTCnet.

    6) Ensure each Lockbox site’s readiness for filing season by preparation and coordination of the following:

    1. Conduct FSR meetings with the Lockbox sites and SPCs.

    2. Revise the Lockbox sites FSR review plan requirements to reflect needed changes on an annual basis.

    3. Distribute the FSR review plan requirements via official LEB to each Lockbox site with established timeframes for completion.

    4. Conduct an analysis of the FSR plans to ensure all processing requirements are addressed.

    5. Coordinate with each Lockbox site any required changes, concerns, or issues for resolution prior to the start of the new calendar year.

    6. Conduct pre-peak and post-peak meetings with each Lockbox site and the respective SPC.

    7) Provide Lockbox SME support to respond to inquiries and facilitate the resolution of all Lockbox site issues:

    1. Provide dedicated SME support to each SPC and each Lockbox site to ensure timely and appropriate resolution of all production, processing and internal control issues.

    2. Communicate information regarding Lockbox deliverables and services to appropriate SPC personnel.

    3. Provide SPC review feedback to Lockbox site management.

    4. As needed, coordinate resolution of identified issues with Fiscal Service, IRS internal functions and each Lockbox site.

    5. Respond to Congressional, General Accounting Office (GAO) and TIGTA memorandums and reports.

    6. Respond to IRS inquiries from internal and external stakeholders as needed.

Program Management and Review
  1. The LPO Section conducts continuous monitoring and review of Lockbox Network reports and devliverables to ensure accurate reporting, compliance and identify/address emerging risk and needed improvements.

    a) Develop and maintain management reporting tools:

    1. Revise the Daily Deposit Production Report (DDPR) to incorporate new work in the Lockbox Program.

    2. Prepare a weekly production report.

    3. Prepare the monthly Financial Facts (Fin-Facts) report.

    4. Prepare various workload management reports during the IMF and BMF peak processing periods.

    b) Monitor daily productivity and inventories using the DDPR submitted by each Lockbox site and Lockbox Daily Deposit Cycle Report.

    c) Monitor daily LEN transmissions of files from the Lockbox sites to the EFTU drop box to ensure accuracy and timeliness.

    d) Monitor daily all critical and non-cirtical incident reports.

    e) Monitor and manage all security issues to ensure adequate and timely Lockbox site resolution.

    f) Monitor and manage all security POAM (Plan of Action and Milestones) issues/findings to ensure adequate and timely Lockbox site response and necessary corrective action(s).

    g) Monitor and manage all Internal Control Opportunities for Improvement (OFIs) to ensure adequate and timely Lockbox site response and necessary corrective action(s).

    h) Monitor and manage all GAO Matter for Further Considerations (MFCs) and recommendations to ensure adequate and timely Lockbox site response and necessary corrective action(s).

    i) Collaborate with TIGTA, Office of Investigation, the SPC Remittance Security Coordinator (RSC) and Fiscal Service to monitor receipt losses and ensure taxpayer’s accounts receive timely reimbursement due to theft or loss.

Program Controls

  1. The LPO Section effectively administrates the Lockbox Performance Measure program, to assist in meeting the program objectives, LPO Section maintains the necessary liaisons with IRS support organizations and Subject Matter Expert(s) (SME) to manage and maintain each Lockbox sites performance.

    a) Collaborate with IRS Research Division SOI, Fiscal Service and IRS Cybersecurity, Fiscal Service ISS and IRS FMSS Physical Security staff to develop and perform Performance Measure reviews for Cybersecurity, Courier, Personnel and Physical Security.

    b) With the assistance of applicable SME, develop new DCI for on-site reviews and SPC reviews as new work is issued into the Lockbox Program.

    c) Provide timely review feedback to Lockbox site management and monitor needed corrective actions as applicable.

    d) Ensure timely receipt and analyze SPC DCI data and supporting documentation to ensure accuracy of review results before submission to SOI. Identify revisions for SPC review improvement and as needed provide SPC feedback and training.

    e) Compile and analyze data from Performance Measure on-site DCI reviews and SPC DCI reviews to monitor and assess the quality of Lockbox processing.

    f) Prepare and submit the Lockbox SPC DCI to SOI by the 15th of every month

    g) Prepare and submit the Processing Internal Control (PIC) and Procedural DCI to SOI by the 15th of the month following all peak and non-peak on-site reviews.

    h) Provide SPC Performance Measure review oversight, guidance and training, as necessary, to ensure quality of SPC reviews.

  2. Conduct reviews of each Lockbox site to ensure quality of services, compliance with Lockbox requirements, internal control effectiveness and to identify and address areas of emerging risks:

    a) Submission Processing Campus (SPC) Performance Measure Reviews: Review and analyze results collected from daily SPC reviews of Lockbox work. Ensure review results are accurate for use in the calculation of each Lockbox sites quarterly Performance Measure Scorecard.

    b) Lockbox Performance Measure On-Site Reviews: During major IMF and BMF peaks, conduct on-site Internal Control, Processing, Procedural, Administrative and Processing Internal Control (PIC) performance measure reviews of each Lockbox site. The review encompasses all operating shifts. Ensure review results are accurate for use in the calculation of each Lockbox sites quarterly Performance Measure Scorecard.

    Note:

    During BMF peak, the Internal Control Review is not performed due to time constraints, however, if an internal control deficiency is identified, the Lockbox site is issued an OFI.

    c) Physical/Courier and Personnel Security On-Site Reviews: Conduced with IRS, FMSS and Fiscal Service, Asset Protection Division. Physical Security Specialists conduct annual on-site physical, personnel and courier security reviews of each Lockbox site to ensure compliance with requirements and identify/report areas of potential risk. Assist with physical and courier review if needed, primarily responsible for personnel security review. Prepare and provide written review results to Fiscal Service review lead for incorporation into each Lockbox sites security review report.

    d) Cybersecurity On-Site Reviews: Conducted with IRS Cybersecurity Specialists. Conduct annual on-site review of each Lockbox site to ensure site compliance to LSG Cybersecurity requirements and identify and report areas of potential risk. Prepare and provide written review results to Cyber-security specialists for incorporation into Lockbox Site’s Plan of Action Milestone (POAM) document and security review report. Submit finalized review report to Fiscal Service IRS Branch for issuance to the FA.

    e) Unannounced Internal Control On-Site Reviews: Conduct annual and during April Peak on-site internal control reviews to evaluate the efficiency and effectiveness of each Lockbox site’s internal control structure, compliance to procedures and assess internal control over financial reporting. Prepare Opportunity for Improvement (OFI) reports of non-compliance, areas of needed improvement and risk. Provide report to Fiscal Service IRS Branch for issuance to the FA.

  3. Support Lockbox Continuity of Operations:

    a) Collaborate with Fiscal Service to develop and implement a Continuity of Operation Plan (COOP).

    b) Collaborate with Fiscal Service, Lockbox sites and SPC to coordinate testing of COOP.

    c) Provide 24/7 primary contacts to the Computer Security Incident Response Center/Situation Awareness and Management Center (CSIRC/SAMC) process. Update CSIRC/SAMC when contacts change.

    d) Provide field support to the contingency sites when a COOP is implemented.

  4. Support Fiscal Service in the FA selection process:

    a) Support Fiscal Service by providing IRS policy and workload requirements.

    b) Participate in planning sessions with Fiscal Service.

    c) Assist in preparing a timeline of activities that will meet the schedule of all parties involved.

    d) Provide concurrence with all documents prior to issuance.

    e) Provide concurrence on applicable changes to the FAA prior to issuance.

Mandatory Lockbox Review Travel
  1. The LPO Section conducts on-site reviews of each Lockbox site to ensure quality of services, compliance with Lockbox requirements, internal control effectiveness and to identify and address areas of emerging risks.

  2. The following is a chart that outlines Mandatory Review travel by Lockbox Analyst:

    MANDATORY TRAVEL - IMF COORDINATORS
    April Peak April 15 - 1040, 1040ES, 4868 processing
    Internal Control Review Review - dates to be determined by LFC and LPO.
    MANDATORY TRAVEL - BMF COORDINATORS
    January Peak January 31 - 94X processing
    Internal Control Review Review - dates to be determined by LFC and LPO.

General Overview

  1. The primary goal of the Lockbox Network is to effectively collect and process paper remittances on a 24-hour deposit standard to accelerate funds into the United States Treasury while maintaining the security and confidentiality of taxpayer information. the Lockbox Network achieves this goal by:

    1. Processing the vouchers and payments and crediting the amount to the United States Treasury's Deposit Demand Account (DDA).

    2. Electronically providing data associated with these payments to the IRS for posting to the taxpayers' accounts.

    3. Forwarding unprocessable items and returns in the daily mail out package to the IRS SPC aligned to the Lockbox site, via the Lockbox Document Transmittal (LDT). The LDT must list the contents of each deposit date work is being shipped to the aligned SPC..

  2. Taxpayers are instructed to send their IMF or BMF tax payments for various forms to Post Office Box addresses assigned to a Lockbox Site.

  3. States are realigned based on the SPC Consolidation plans. The approved realignment for the 2019 filing season is provided in Exhibit 3.0.230–1.

  4. Changes and recommendations to be incorporated into the January revision of this IRM must be received at Headquarters no later than the preceding June 30th for consideration.

  5. IRM deviations must be submitted in writing following instructions from IRM 1.11.2.2., Internal Management Document System - Internal Revenue Manual (IRM) Process, IRM Standards, and elevated through appropriate channels for executive approval.

Lockbox Site Processable IRS Forms

  1. All Lockbox Sites will process payments received with designated IRS forms. Specific procedures and policies are provided to the Lockbox Sites via the Lockbox Processing Guidelines (LPG). Lockbox Sites must provide the necessary services (personnel, facilities, equipment, and materials) to process the payments received with these forms and follow the instructions for returns to be forwarded to the SPC they service. The processable IRS forms are as follows:

    • Form 433–D, Installment Agreement

    • Form 940, Employer's Annual Federal Unemployment (FUTA)Tax Return / Payment Voucher

    • Form 940PR, Employer’s Annual Federal Unemployment Tax Return, Puerto Rico*

    • Form 940X, Amended Employer’s Annual Federal Unemployment Tax Return

    • Form 941, Employer's Quarterly Federal Tax Return / Payment Voucher

    • Form 941PR, Employer's Quarterly Federal Tax Return, Puerto Rico*

    • Form 941SS, Employer's Quarterly Federal Tax Return, American Samoa, Guam, the Commonwealth of the Northern Marianas Islands, and the U.S. Virgin Islands*

    • Form 941X, Adjusted Employer's Quarterly Federal Tax Return or Claim for Refund

    • Form 943, Employer's Annual Tax Return for Agricultural Employees / Payment Voucher

    • Form 943PR, Employer's Annual Tax Return for Agricultural Employees, Puerto Rico*

    • Form 943X, Adjusted Employer's Annual Tax Return for Agricultural Employees or claim for refund

    • Form 944, Employer's Annual Tax Return / Payment Voucher

    • Form 944SP, Employer’s Annual Tax Return / Payment Voucher (Spanish)

    • Form 944X, Adjusted Employer's Annual Tax Return or claim for refund

    • Form 944XSP, Adjusted Employer's Annual Tax Return or claim for refund (Spanish)

    • Form 945, Annual Return of Withheld Federal Income Tax / Payment Voucher

    • Form 945X, Adjusted Annual Return of Withheld Federal Income Tax or claim for refund

    • Form 1040, Form 1040A, and Form 1040EZ, U.S. Individual Income Tax Return / Payment Voucher

    • Form 1040ES, Estimated Tax Payment Voucher

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

    • Form 1040PR, U.S. Self-employment Tax Return for Puerto Rico**

    • Form 1040SS, U.S. Self-employment Tax Return for the Virgin Islands / American Samoa, Puerto Rico / Guam / Commonwealth of the Northern Marianas Islands**

    • Form 1040X, Amended U.S. Individual Income Tax Return

    • Form 1041ES, Estimated Tax Payment Voucher***

    • Form 2159 Payroll Deduction Installment Agreement

    • Form 2290, Heavy Highway Vehicle Use Tax Return / Payment Voucher***

    • Form 2290SP, Heavy Highway Vehicle Use Tax Return / Payment Voucher (Spanish)

    • Form 4868, Application for Automatic Extension of Time to file U.S. Individual Income Tax Return / Payment Voucher

    • Form 8453, U.S. Individual Income Tax Declaration for Electronic Filing

    • Form 8879, IRS e-file Signature Authorization

    • Form 8892, Payment of Gift / GST Tax and / or Application for Extension of Time to File Form 709

    • Form 9465, Installment Agreement Request

    • Form 14039 Identity Theft Affidavit

    • All Notices CP 521 and CP 523, Installment Agreement/Payment Notices

    • All Notices CP 621 and CP 623, Installment Agreement/Payment Notices, Spanish Version

    • Letter 2850, Installment Agreement Confirmation Letter (ICS)

    • Letter 3856 and Letter 3856A, Manually Monitored Installment Agreement (MMIA) Letter / Payment Voucher**

    • CP 14H, CP 501H, CP 503H, and CP 523H, Affordable Care Act (ACA) Notices

    • CP 14, CP 501, CP 503, and CP 504, Balance Due Notices CP 521, CP 621, CP 523, and CP 623, Installment Agreement Notices

    • CP 2000, Notice of Underreported income

    • Residual Payments (Refer to LPG 4.4 for specific instructions)

    • Internal Revenue Code (IRC) Section 965 payments (Refer to LPG 4.7 for specific instructions)


    *Ogden SPC only
    **Austin SPC only
    ***Cincinnati SPC only

Security Standards for Data Protection (Physical / Unauthorized Disclosure)

  1. The Lockbox Site will provide adequate security, equipment, and facilities to safeguard all remittances received, processed, stored, transmitted, and shipped to the SPC as follows:

    1. All Lockbox security requirements related to the physical premises, personnel, courier, vendor, and information technology will be followed as specified in the LSG.

    2. An IRS Official Disclosure Statement and a Fiscal Service Non-Disclosure Agreement Sensitive but Unclassified (SBU) information form must be signed for all Lockbox positions, to ensure protection of sensitive tax data (SBU) and to prevent disclosure of taxpayer personally identifiable Information (PII) to unauthorized individuals or entities, even if such disclosure is unintentional. Courier employees must sign an Official Courier's Additional Non-Disclosure Statement (IRS).

    3. All new Lockbox employees must complete a Security Awareness training and all returning or permanent Lockbox employees must attend annual Privacy Awareness refresher training. Documentation of the completion and attendance of the Security Awareness initial and refresher training will be maintained in the Lockbox employee personnel file.

    4. The Lockbox Site is liable for any Financial Agent (FA) settled loss or shortage of funds received and not properly credited to the IRS.

    5. All Lockbox Sites are subject to reviews, including unannounced, to ensure all procedures outlined in the LPG and LSG are followed.

  2. Prompt reporting of incidents involving unauthorized disclosure of SBU or PII data, whether willful/intentional or inadvertent/unintentional, and missing taxpayer remittance or sensitive data is critical. The Lockbox sites will follow all Incident Reporting procedures and provide full cooperation with TIGTA, IRS, and Fiscal Service in the investigation and resolution of all incidents. The LFC will ensure the Lockbox Site has followed all reporting procedures.

    1. Inadvertent (unintentional) unauthorized disclosures: report within one hour of discovery to Computer Security Incident Response Center (CSIRC) / Situation Awareness Management Center (SAMC), Fiscal Service IRS Lockbox Branch, Lockbox Program Office, Director and Deputy Director of Submission Processing, and LFC.

    2. Willful (intentional) unauthorized disclosures and Unauthorized Access (UNAX) : upon discovery, report immediately to TIGTA, Lockbox Program Office, Fiscal Service IRS Lockbox Branch, Director and Deputy Director of Submission Processing and LFC.

    3. Missing remittances: upon discovery, report immediately to TIGTA, Lockbox Program Office, Fiscal Service Program Office, Director and Deputy Director of Submission Processing and LFC. The LFC will notify the campus Remittance Security Coordinator (RSC).

Declaring IMF Program Completion Date (PCD), BMF Peak Completion (PC) and Peak Sweep

  1. IMF Lockbox Sites receive a PCD from IRS in which to complete receipts received during IMF April peak.

  2. BMF Lockbox Sites are required to be on a 24-hour deposit schedule (January peak only) before Peak Completion (PC) is declared.

  3. IRS in conjunction with Fiscal Service (if available) must complete a sweep of the facility before PCD / PC is declared. Refer to LPG for specifics.

  4. The LFC will declare when PCD/PC has been met utilizing LPG requirements. If LFC is not present, an on-site IRS representative will declare PCD / PC.

Bogus or Questionable Remittances

  1. Lockbox Sites may receive bogus remittances that resemble checks and money orders. Lockbox sites must follow the procedures outlined in the LPG.

  2. Lockbox Sites will place the bogus remittance in envelope and annotate "Potential Bogus Remittance" and place envelope in the Unprocessable with Remittance package to be sent to the SPC.

Areas of Impact

  1. Submission Processing functional areas impacted by Lockbox Sites are Receipt and Control, Error Resolution, Unpostables, Accounting, Submission Processing Improvement Team and Notice Review; Information Technology (IT), Accounts Management, and Field Compliance may also be impacted by Lockbox processing.

Accounts Management Operations
  1. Customer service representatives must alert management of unusual taxpayer complaints regarding Lockbox processing.

  2. Report any potential theft/embezzlement to the TIGTA Office of Investigations and the Remittance Security Coordinator (RSC) on the Submission Processing website under Campus Security.

  3. Follow all procedures outlined in IRM 21.3.4.7.16.1, Altered and/or Stolen Taxpayer Payments.

Encoding Errors
  1. Accounting Operations corrects Lockbox encoding errors and reports the errors monthly to the LFC. Refer to IRM 3.17.10, Dishonored Check File (DCF) and Unidentified Remittance File (URF).

  2. The LFC provides Statistics of Income (SOI) a consolidated monthly report of Lockbox encoding errors and Lockbox reviews performed by the SPC.

Payment Tracers
  1. A payment tracer case is generated when a taxpayer inquires are received about a payment which has not been credited to his account. The taxpayer usually has received an erroneous notice.

  2. Accounts Management and Field Compliance are responsible for the preliminary processing of payment tracer requests. Instructions for processing these requests are contained in IRM 21.5.7, Payment Tracers.

  3. If preliminary research does not result in locating the payment, the case will be forwarded to the Hard-core Payment Tracer Unit.

Balancing and Control Function
  1. The Balancing Unit will receive a copy of the journal package prepared by the Revenue Accounting Control System (RACS) Unit.

  2. The deposit amount from the Lockbox Deposit Ticket is added to the deposit amount from the regular RPS Deposit Recap RPS 03-42.

    • This amount should agree with the totals on Service Center Control File (SCCF) 11-43, RPS IMF Control Date Recap / Master Control Records

  3. Contact the LFC if there is a discrepancy between the totals attributable to Lockbox.

Correspondence (General)
  1. Written correspondence received at a Lockbox site from taxpayers or representatives is forwarded daily to Receipt and Control. Receipt and Control follows IRM 3.10.72, Receiving, Extracting, and Sorting, to deliver this work to be processed through the normal pipeline. Refer to IRM 21.3.3, Incoming and Outgoing Correspondence/Letters, for additional information.

Remittance Transaction Research (RTR) System
  1. The RTR system is a researchable database containing remittance processing data and images from Lockbox sites, Integrated Submission Remittance Processing (ISRP), and Remittance Strategy for Paper Check Conversion (RS-PCC). All Operations in Submission Processing and Accounts Management should refer to IRM 3.5.10, Remittance Transaction Research (RTR) System, for specific instructions on using this system.

Error Resolution System (ERS)
  1. Images of processed documents will be available for research on the RTR system. Documents are identifiable as scannable and non-scannable by the File Location Code (FLC).

  2. Transactions that fail the generalized mainframe (GMF) math error, consistency and validity checks are generated for correction to ERS.

  3. Instructions for resolving these errors are contained in IRM 3.12.10, Revenue Receipts.

  4. Notify the LFC if there is a significant increase in ERS volume relating to Lockbox processing.

  5. Remittances that are received at the Lockbox site and do not contain all processing information (Taxpayer Identification Number (TIN), Name Control, Tax Year or Tax Type (MFT) are forced to Error Resolution for correction and research. Instructions for handling and processing are contained in Error Resolution IRM 3.12.10, Revenue Receipts.

Unpostables
  1. Lockbox transactions are processed and matched against IMF and BMF data on the Master File.

  2. Transactions that fail to match master file validity and consistency checks will generate a list to the Unpostable Unit for corrective action.

  3. Instructions to correct unpostable conditions are in IRM 3.12.179, IMF Unpostable Resolution, IRM 3.12.279, BMF/CAWR/PMF Unpostable Resolution, IRM 3.13.122, Individual Master File (IMF) Entity Control Unpostables, and IRM 3.13.222, BMF Entity Control Unpostable Correction Procedures.

  4. Unusually large volumes of errors in certain unpostable category codes may indicate a need for additional training and / or revisions to LPG and / or IRMs. The Unpostable Unit must notify the LFC when volumes are above average.

Notice Review
  1. The Notice Review process ensures the information received from taxpayers is complete and correct, and taxpayers do not receive an erroneous refund.

  2. The Notice Review function will receive IMF, BMF, and Integrated Data Retrieval System (IDRS) Computer Paragraph (CP) Notices. These notices may be selected for review by Notice Review Processing System or IDRS Review Notice Register.

  3. Notices are generated to taxpayers when adjustments have been made to their account(s).

  4. Instructions for researching Lockbox payments are included in IRM 3.14.1, IMF Notice Review and IRM 3.14.2, Business Master File (BMF) Notice Review.

  5. Unusually large volumes of errors resulting in notices may indicate a need for additional training and / or revisions to LPG. Notify the LFC when the volumes are above average.

  6. The FLC in the DLN of the audit trail will be the indicator of Lockbox processing. Refer to Exhibit 3.0.230-3.

Information Technology (IT)
  1. This section contains instruction for Lockbox Electronic Network (LEN) RPS File Transmission.

Lockbox Electronic Network (LEN) RPS File Transmission
  1. Lockbox RPS0103, RPS0505, RPS0523, and RPS9701 files will be transmitted daily via the LEN.

  2. These files will be received at a EFTU drop box where they will be picked up at the top of every hour and sent to either ECC-MTB (Austin and Ogden) or ECC-MEM (Cincinnati, Fresno, Kansas City).

  3. Each SPC may establish print requirements for any of the RPS files.

  4. In the event the LEN will be unavailable for an extended period and the Lockbox site cannot transmit its RPS files electronically, the LEN coordinator will open a KISAM ticket and coordinate re-transmissions.

Quality Review / Improvement Team
  1. The Improvement Team assists the LFC in ensuring the quality standards listed in the LPG are maintained. This is accomplished by providing completed monthly DCI. When errors are identified the Quality/Improvement analyst will take the necessary corrective actions to the taxpayer’s accounts.

  2. Instructions on the use of DCI and the review process are included in IRM 3.0.230.13 Submission Processing Campus Quality Review of Lockbox. Contact the assigned LFC with questions regarding the reviews and use of DCI.

  3. The Improvement Team analyst ensures the work being processed by the Lockbox sites is within IRS standards. The reviewers will examine critical processing elements which could cause a work stoppage, and make recommendations for improvement if processing guidelines are not accurate. Refer to IRM 3.0.230.13 Lockbox Processing Procedures, Quality Review of Lockbox and IRM 3.0.275, Business Results Measures for Submission Processing Functions.

Reporting Requirements

  1. Lockbox Sites are required to report total dollars and items deposited via the Daily Deposit Production Report (DDPR)/OFAS Report to Headquarters.

    Note:

    The word daily means any day the Lockbox site is working including Saturday, Sunday and holidays.

  2. Deposits made on Monday, Tuesday, Wednesday and Thursday must be reported to Headquarters by the following day.

    Example:

    Tuesday's deposit will be reported Wednesday morning; Wednesday's deposit reported Thursday morning, etc.

    Note:

    Remittances for Friday, Saturday, Sunday and holidays must be deposited the next business day.

Embezzlement / Theft

  1. The Submission Processing Directors will not be held accountable for any theft / loss that occurs at the Lockbox Site. (Credit cannot be issued from Accounts 7610, 7620, or 7650.) The LPG states the Lockbox is liable for funds received and not properly credited to the IRS.

  2. When an IRS employee or manager identifies or suspects a revenue receipt shortage, they should immediately contact TIGTA and follow the instructions in IRM 3.0.167, Losses and Shortages.

  3. The Lockbox Site is required to ensure adequate controls exist to minimize or prevent instances of theft or loss due to embezzlement or employee negligence.

  4. The Lockbox Site will immediately notify, TIGTA, Fiscal Service IRS Lockbox Branch, IRS Lockbox Program Office, CSIRC, the Director and Deputy Director, Submission Processing, LFC, and the local RSC within one hour of the discovery of a missing remittance or taxpayer PII.

  5. Lockbox Site management will obtain a statement from the employee who discovers the theft / loss. The report will contain the following:

    1. Date the loss / shortage occurred or discovered.

    2. The amount of the loss / shortage.

    3. The type of tax or fund in which loss / shortage occurred.

    4. The circumstances involved with the loss / shortage.

    5. The employee's signature, position, title, and the date the statement is prepared.

Remittance Security Coordinator (RSC)
  1. Each SPC has selected a member of the Planning and Analysis (P&A) Operation as the RSC.

  2. If the LFC is notified a Lockbox theft has occurred, the LFC must notify the RSC. The RSC is the individual responsible for centralized control, coordination and protection of taxpayers for potential embezzlement / theft cases. Refer to IRM 3.0.167, Losses and Shortages.

  3. The RSC will coordinate the theft / shortages with TIGTA, Submission Processing Director, Headquarters Losses and Shortages Analyst, Receipt Loss Coordinator, LFC, and Hard-core Payment Tracer Unit.

    Note:

    Report any potential embezzlement/theft(s) to the TIGTA Office of Investigations at 1-800-366-4484 (TIGTA Hotline Information) and the local RSC listed on the Submission Processing Website under Campus Security. http://win.web.irs.gov/SP/Security_Info_&_Internal_Control/Remittance_Security_Coordinators.htm.

  4. SPC and Field Offices are to report any potential embezzlements / thefts immediately to the RSC to ensure taxpayers are protected from adverse action while the case is investigated.

  5. Advise the respective SPC LFC when the potential loss may involve a Lockbox Site.

Lockbox Tax Remittance Losses
  1. Any remittance stolen, altered or embezzled during the Lockbox payment processing may occur under the following conditions:

    • Endorsed and made payable to someone other than the IRS

    • Embezzlement, misappropriation or other criminal acts

    • Lockbox employee negligence

    • Deposit discrepancies (encoding errors)

    • Deposit loss in transit

    • Theft (remittance stolen to obtain taxpayer identity and / or cash)

  2. The assigned LFC will receive available information and documentation regarding the theft / shortage of tax collection from TIGTA and / or the RSC.

  3. The LFC will report the theft / shortages of any tax collection received at the Lockbox site for IRS if reimbursement from the Lockbox site is being requested. Use the Lockbox Remittance Theft Report. See Exhibit 3.0.230-4.

  4. Fax a copy of the report and required documentation (e.g., copy of altered remittance) and information verifying perpetrator was connected to the Lockbox Site, if known to the LPO Analyst.

  5. Coordinate resolution of the Lockbox cases with the LPO analyst on a case-by-case basis.

  6. When notified, the LPO analyst is required to:

    1. Notify Fiscal Service IRS Lockbox Branch.

    2. Verify TIGTA has been informed.

    3. Prepare a request-for-reimbursement letter to include taxpayer's name, TIN, dollar amount, taxpayer's SPC location, telephone number, a copy of the front and back of the remittance and a copy of the TIGTA preliminary report to Fiscal Service IRS Lockbox Branch within 30 days.

    4. Set up a control file and prepare a quarterly theft report for submission to Fiscal Service IRS Lockbox Branch.

  7. If, after one year no evidence is discovered which implicates an employee of the Lockbox site in the theft, embezzlement, or subsequent negotiation, the LFC will:

    1. Request a manual refund for the Lockbox site on Form 3753, Manual Refund Posting Voucher.

    2. Send Form 3753 to Accounting Operations for approval and processing. Refer to IRM 21.4.4, Manual Refunds (this is the primary IRM for manual refunds initiators) and IRM 3.17.79, Accounting Refund Transactions (this is the primary IRM for Submission Processing), for additional information on the issuance of the manual refund.

  8. If the Lockbox site has been reimbursed as described above, and it is subsequently determined that the Lockbox site was responsible for the misappropriation:

    1. LPO will notify Fiscal Service IRS Lockbox Branch to request repayment from the Lockbox site.

    2. Repayment will be made to the General Fund, General Miscellaneous Receipts, Account 2320 with a SF–215 (Deposit Credit Voucher) annotated "For Deposit To General Miscellaneous Receipts, Account 20-3220 Lockbox Reimbursement" in the Agency Use comment section.

Lockbox Reimbursement Policy
  1. IRS will initiate a reimbursement process when there is a significant impact to taxpayers or the government resulting from:

    • Internal control deficiency

    • Processing error(s)

  2. The SPC will notify the LFC of the incident.

  3. The LFC will notify the LPO Section Chief and provide information of its potential impact.

  4. The LPO Section Chief will approve recovery / rework program code 85380 for SPC use.

  5. The LFC will monitor the use of program code 85380.

  6. The LFC will advise the Lockbox Site of the situation and request an Incident Report be prepared to document the situation. In addition, the Lockbox Site will research the cause of the problem and develop a method to avoid the situation in the future.

  7. The LFC will notify the LPO Section Chief in a report outlining program code 85380 volume and hours, on an ad hoc basis.

  8. LPO and Fiscal Service IRS Lockbox Branch will determine disposition of reimbursement. If the recommendation is reimbursement, Fiscal Service IRS Lockbox Branch will initiate recovery of funds from the Lockbox site.

Lockbox Daily Mail-Out Package

  1. The Lockbox Site will forward daily, via courier or Private Delivery Service (PDS), all work processed for the previous day’s activities. The LDT will list the contents of the mail-out package, and will be addressed to specific functional areas. The contents will include:

    1. All unprocessed with remittance and non-remittance work. (remittances must be packaged separately, in a tamper proof bag).

    2. Returns separated and sorted.

    3. LFC Package (if shown on LDT.

    4. Change of address forms (e.g. Forms 8822) and/or any taxpayer notes indicating an address change (e.g., photocopies of CP 521 and CP 523 vouchers with address changes).

    5. Incompletes Envelope (route to Error Resolution) following local procedures at SPC.

    6. Form 14039, Identity Theft Affidavit (if shown on LDT).

    7. Deposit Error Rate (DER) package (if shown on LDT).

    8. Acknowledgements and Correspondence.

    9. Form 4868 Sampling Review Package (if shown on LDT).

  2. After one year, destroy Lockbox Document Transmittal (LDT)

Receipt and Control Operations (RCO)
  1. RCO is the central point for receipt of the mail-out package from the Lockbox. An employee from RCO or other designated personnel is responsible for ensuring the mail is received and all Lockbox work is distributed to the SPC functional areas.

  2. Mail received will be opened daily. A review of the mail-out package is performed daily, upon receipt, by an employee in Shipping and Receiving or RCO.

  3. The mail-out package must be received no later than 12:00 p.m. daily in shipping containers. Contact the LFC if any items are missing from the containers, a mismatch of volumes given, or if the shipment is received after 12:00 p.m.

  4. The LPG specifies packaging / distribution / reporting instructions. Contact the LFC for specific instructions if necessary.

  5. Maintain the daily LDT in a file, refer to IRM 3.8.44.4.3.

Unidentified Large Remittances
  1. The aligned Submission Processing Campus (SPC) will provide additional research on unprocessable remittances of $5,000 or greater for the Lockbox Sites.

    Note:

    At the written request of the SPC, FAX tolerance may be lowered by the LFC.

  2. Lockbox Sites will fax their requests for research to the contacts agreed upon by the SPC and LFC.

  3. Within four hours of receipt of the request, the SPC will research IDRS for the missing information and provide a response to the Lockbox Site.

  4. If the missing information cannot be supplied to the Site, the Lockbox Site will forward the remittance to the SPC along with the fax as instructed in the LPG.

Lockbox Field Coordinator's Package
  1. The LFC package shall contain the following:

    • Daily Deposit Production / OFAS report

    • Monthly review reports

    • Lockbox Daily Deposit Cycle Report

  2. The Lockbox Daily Deposit Cycle Report is available on the Control D Website after the reports have been run daily by the computing centers.

Submission Processing Campus Quality Review of Lockbox

  1. Reviews were established to ensure Lockbox Site’s work meets the standards in the LPG. Each review examines a critical element that could cause a work stoppage if processing is not accurate. It is imperative the reviews are completed daily. They will be used to assess the overall performance of each Lockbox Site.

    Note:

    SPCs with multiple Lockbox sites are required to perform daily reviews of work received from each Lockbox site.

  2. Each review is associated with a Data Collection Instrument (DCI). Collective data from all reviews will be combined with the Processing Internal Control (PIC) and procedural DCI to produce a monthly report. General and specific guidelines for the review process and use of DCI is provided in the sections below.

General Guidelines
  1. The DCIs reflect the work to be sampled, sample size, error descriptions, and other review information. Read both the instruction and the DCI carefully before beginning.

  2. Document all pertinent comments relating to charged errors in the "Other" columns. Write them in the comments area on the DCI or on the main comment sheet.

    Note:

    Ensure corrective action is taken on the taxpayer's account when an error is identified during the Service Center Review.

  3. Forward completed DCI to the LFC no later than the fifth working day of the following month. The LFC will maintain these reports for the length of the contract. The contract period is for three years with up to two one-year extensions.

Mail-Out Package Review
  1. A review of the mail-out package must be performed daily upon receipt of the package by an employee in Shipping and Receiving or RCO. The mail-out package must contain the following items:

    • All unprocessed work is sorted into two categories: Unprocessables with remittances and Unprocessables with no remittances

    • DER Package

    • All returns sorted and the number of volume processed by sort type

    • LFC package (if shown on LDT)

    • Form 4868 Review Package (if shown on LDT)

    • Form 14039, Identity Theft Affidavit (if shown on LDT)

    • Change of Address Forms (Form 8822) and/or any taxpayer notes indicating an address change

    • Incomplete Envelope

    • On the monthly Service Center DCI, in the column labeled "Package Contents" answer "Complete" if all required items were included in the package. Answer "Incomplete" if any of the required items were missing

    • On the monthly Service Center DCI, in the column labeled "LDT Acknowledgement Page Correct? (items other than with remit)" , answer "Yes" if the LDT was correct and answer "No" if it was not.

    • On the monthly Service Center DCI, in the column labeled "With-Remit - Tamper Proof Bag serial numbers reconciled?" , answer "Yes" if the Tamper Proof Bag serial numbers were reconciled correctly and answer "No" if they were not.

  2. Managerial review, in accordance with IRM 3.8.44.3.3, must be performed monthly to ensure appropriate procedures are followed for the daily Lockbox mail-out package.

  3. Forward the DCI to the LFC no later than fifth working day of the following month.

SPC Receipt and Control / Cashiers Receiving Area LDT Instructions
  1. Verify LDT Date. The LDT should list the contents of the Lockbox mail out package(s). Instructions for acknowledgement of the LDT are contained in the IRM 3.10.72.2.4.7, Lockbox Mail and IRM 3.10.73.3.1, Lockbox Receipts.

  2. Non-Remit Packages – Verify receipt of the following:

    1. Lockbox Field Coordinator (LFC) package, if listed verify the package or number of packages listed is received.

    2. Form 14039, Identity Theft Affidavit, if listed verify that the Form 14039 package is received.

    3. DER Review package, if listed verify that the DER package is received.

    4. Form 4868 Review Package, if listed verify that the Form 4868 Review package is received.

    5. Incompletes Envelope, if listed verify that the incomplete envelope is received and route to Error Resolution following local procedures.

  3. With Remit Unprocessable - These items will be boxed separately and received in tamper proof bags. Verify receipt of the following in the secure/restricted area. Ensure that all items are performed:

    1. Bag is sealed and not opened, sliced, torn or any other manipulation that would question the integrity of the bag(s).

    2. Alpha/numeric digits printed on the bag(s) matches the alpha/numeric digits annotated in" Remarks" box of the LDT. Caution: The alpha/numeric must match and cannot be transposed.

    3. Initial in the "Received Column" on Page 1 of the LDT beside the category of "Tamper Proof Bag".

      Note:

      It is not necessary to manually count the enclosed remittances contained in each labeled bundle. However, contact the assigned LFC immediately if the bag is not sealed, alpha/numeric entries don’t match, or there appears to be an obvious error in the volume of remittances (e.g., header/cover sheets states the volume to be 20 remittances and there are 5).

  4. Verify the number of boxes received agrees with the “Total Box Count” on Page 1, initial if correct or notate discrepancy and contact the assigned LFC immediately.

  5. Initial the Acknowledgement page in the appropriate fields, whether all is correct, or you had to notify the LFC of any discrepancy.

  6. Sign and Date at the bottom of the page. If multiple areas are responsible for verifying the package contents, both signatures must be at the bottom of the LDT.

  7. Fax/Email/E-Fax a copy of the signed Acknowledgement (Page 1) back to the Lockbox site daily, no later than (NTL) 2:00 p.m. local campus time. Refer to IRM 11.3.1.11, Facsimile Transmission of Tax Information, for additional information.

    Note:

    If multiple areas receive and verify the work (e.g., Extraction, Batching, and Cashiers), establish a system to ensure all acknowledgement pages are faxed to the Lockbox site daily.

  8. If any discrepancies are discovered on the LDT notify your LFC immediately via telephone and e-mail.

  9. SPC receiving area(s) is to maintain copies of all LDTs for a 1-year period. These documents are to be maintained in chronological order and available for review upon request. Refer to IRM 3.8.44.3.3, Lockbox Mail.

Monthly Reports Review
  1. Each month the Lockbox Site is required to send the monthly reports to the LFC by the 5th business day of the following month. The reports are as follows:

    • Cash Log

    • Candling Log

    • Shred Log

    • Managerial Reviews: Candling, and Shreds

    Note:

    Some Lockbox Sites combine the reports listed above, (e.g., the Candling and Candling Review Log may be combined on one report).

  2. The LFC will record the receipt of these reports, as well as the timeliness of each. The LFC will review the logs for completeness, (e.g., do the log entries indicate all reviews were performed and recorded per the LPG requirements? Yes or No) If "No" is answered, please provide specific details in the "comments" section outlining any errors.

    Note:

    In peak months, LFC should review these items using the PIC as instructed. The Service Center review will be altered to only review what was not reviewed on the PIC review. This alternative way to review will ensure the items are not double reviewed and errors will not be counted twice. For IMF sites, if the LFC reviewed all the April logs, leave this DCI blank.

Daily Deposit Reports Review
  1. Lockbox Sites are required to validate and reconcile reports which show the volume of items processed and dollars deposited daily to IRS, Fiscal Service, and OFAS.

  2. The reports are as follows:

    • RTR Report(s)

    • OCR Lockbox Daily Deposit Cycle Report

    • Daily Deposit Production / OFAS Report

  3. A 100 percent review of the RTR report data, OCR Lockbox Daily Deposit Cycle Report, Daily Deposit Production / OFAS report to ensure all reports balance to each other, reporting the same volume and amount deposited. Additionally, RTR and the OCR Lockbox Daily Deposit Cycle Report volumes and amounts should balance for each received date reflected on the report. This review will be performed by the LFC.

  4. Each column requires a "Yes" or "No" and will be recorded in the appropriate column when a report does not balance with the other reports. There should be an entry for each day files are made and reports prepared. In the event more than one report does not balance, research will need to be performed to determine which report(s) are correct.

  5. The Daily Deposit Production / OFAS Report will be received daily via e-mail from the Lockbox site. RTR data can be accessed in the RTR system reports function. The OCR Daily Cycle Reports are located on the RPS9720 run and can be accessed on Control-D.

Processed Twice and Adjustments Review
  1. This review is a 100 percent review of all processed twice remittance debit adjustments received from the Federal Reserve Bank-Cleveland (FRB-C).

  2. In the appropriate columns, record the voucher number, voucher date, amount and voucher type of each voucher received. Only one error can be assessed per voucher.

  3. Forward the DCI to the LFC no later than the fifth working day of the following month.

  4. An e-mail from FRB-C stating the duplicate or unprocessable item was removed from the deposit, these items will not have an adjustment voucher, but will be recorded on the DCI review.

Encoding Errors Report
  1. An encoding error report will be compiled each month in the Accounting Operation in order to keep a record of all errors and their associated causes. For each encoding error, several items will be recorded each month, including the following:

    • Date the error was discovered

    • Date the error occurred

    • Whether the error was a debit or a credit

    • Dollar amounts associated with each error

    Note:

    Differing Amounts - No error will be charged if the Lockbox Sites process the payment per the LPG requirements listed below:

    • If the numeric amount on remittance differs from the amount on the source document, use the handwritten legal line amount

    • If either the numeric amount on the remittance or the amount on the source document is illegible, use the handwritten legal line amount

    • If the handwritten legal line amount and numeric amounts are illegible, send to the SPC as an unprocessable

    • If no amount is written on the remittance, send to the SPC as an unprocessable

      Note:

      Encoding errors over a year old should not be captured on the DCI.

  2. Forward the DCI to the LFC no later than the fifth working day of the following month.

Electronic Files Transmission
  1. A 100 percent review of the files electronically transmitted and received by the computing centers daily will be performed by the LEN coordinator.

  2. Record the number of transmission requirement errors on the DCI. Keep track of the specific errors. Record the number of files missing and the number deemed unusable for any other reasons by the Enterprise Computing Center. Use the comments column to explain any errors.

    Note:

    The Lockbox sites are required to send 7 files each day. The RPS files are RPS0103, RPS0505, RPS0523, and RPS9701. The RTR files are LB0516 (data file) and LB0515 (image files) and LBX0501 (RRACS) file.

  3. Normally seven files will be received. If six files are received, the "expected number of files" is seven and the "number of files in error" is one. The following day, the "expected number of files" will be eight (the seven-expected daily plus the one missing from the day before).

Unprocessable Items Review - With and Without Remittance
  1. A daily sample review will be performed in the RCO by an analyst from the Improvement Team on unprocessable work (with remittance and non-remittance) sent to the SPC.

  2. To sample, randomly select 15 with remittance documents and 15 non-remittance documents to review.

  3. Record the number of processable items discovered. In addition to recording the number of processable items discovered, it is also necessary to keep track of the common processing requirements not met among the unprocessable items (note these are not errors). A list of the codes and corresponding processing requirements is provided on the DCI.

  4. If the "Other" category is selected, explain the error in the comments column.

  5. Forward the DCI to the LFC no later than the fifth working day of the following month.

Return Sort Review - IMF / BMF
  1. IMF and BMF returns will be reviewed year around at both IMF and BMF Lockbox Sites.

  2. A daily sample review will be performed by an analyst from the Improvement Team.

  3. To sample, randomly select six batches from each category. Randomly select three returns from each sampled batch. If six batches are not available, randomly select three returns from each available batch. If sampled batches have less than three returns available, review all returns available. Do not sample another batch.

  4. Record the number of returns discovered in error on the DCI. Use the error codes on the DCI to identify the types of errors discovered among the sampled returns. If the "Other" category is selected, explain the error using the comments column.

  5. Review the cover sheets associated with each sampled batch. Record the number of cover sheets reviewed and the number of cover sheets in error. Each cover sheet can only be charged one error, even if it contains multiple errors. Use the additional columns to identify number of each error type discovered. Results will filter to the cover sheets summary tab in the workbook.

  6. Forward the DCI to the LFC no later than the fifth working day of the following month.

Return Sort Review - Form 1040X
  1. A daily sample will be performed in March and April only by an analyst from the Improvement Team.

  2. To sample, randomly select six batches of Form 1040X work. Randomly select three returns from each sampled batch. If six batches are not available, randomly select three returns from each available batch. If sampled batches have less than three returns available, review all returns available. Do not sample another batch. Returns will only be pulled for review in March and April.

  3. Record the number of returns discovered in error on the DCI. Use the error codes on the DCI to identify the types of errors discovered among the sampled returns. If the “Other” category is selected, explain the error using the comments column.

    Note:

    The number of errors cannot exceed the number of sampled returns. One return can have multiple errors but only count one error. Detail the multiple errors in the "Types of errors" section.

  4. Review the cover sheets associated with each sampled batch. Record the number of cover sheets reviewed and the number of cover sheets in error. Each cover sheet can only be charged one error, even it if contains multiple errors. Use the additional columns to identify number of each error type . Results will filter to the cover sheet summary tab in the workbook.

  5. Forward the DCI to the LFC no later than the fifth working day of the following month.

Return Sort Reviews - Prior Year and Delinquent
  1. A daily sample will be performed by an analyst from the Improvement Team.

  2. To sample, randomly select a total of six batches of prior year returns and a total of six batches of delinquent returns. The sample should randomly include a mixture of both non-remit and part-paid batches. Randomly select three returns from each sampled batch. If six batches are not available in each category, randomly select three returns from each available batch. If sampled batches have less than three returns available, review all returns available. Do not sample another batch.

  3. Record the number of returns discovered in error on the DCI. Use the error codes on the DCI to identify the types of errors discovered among the sampled returns. If the "Other" category is selected, explain the error using the comments column.

  4. Review the cover sheets associated with each sampled batch. Record the number of cover sheets reviewed and the number of cover sheets in error. Each cover sheet can only be charged one error, even if it contains multiple errors. Use the additional columns to identify number of each error type discovered. Results will filter to the cover sheet summary tab in the workbook.

  5. Forward the DCI to the LFC no later than the fifth working day of the following month.

Deposit Error Review (DER)
  1. Each Lockbox Site will pull a random sample of twelve envelopes for each day mail is received, utilizing a schedule provided by LPO.

  2. All copies will be placed in a larger envelope labeled "Deposit Error Copy or Deposit Accuracy Copy, Improvement Team" , along with the appropriate Mail Stop number. This package will be put in Box #1 along with the reports.

  3. An analyst from the Improvement Team will review the selected samples provided by the Lockbox Site. The sample could include either IMF or BMF items.

    Note:

    This review must be performed throughout the year for each day the Lockbox Site receives mail.

  4. If necessary, adapt the procedures below to fit the needs of a reviewer or SPC. The LFC must approve the methodology of review. The following procedures provide basic instructions for performing the SPC DCI Lockbox DER utilizing the RTR system:

    1. Access RTR.

    2. Click on "Research" in tool bar at top of screen.

    3. Screen will come up: Enter criteria.

    4. Query by entering a deposit date range which is the received date plus five calendar days.

    5. Enter the TIN, name control and payment amount.

    6. Click on "Lockbox Only" at the bottom of the screen.

    7. Click on "Submit."

    8. Screen will display "Filter results: 1 Transaction found."

    9. Click on the date in the Deposit Date cell.

    10. The screen will display "ISR1340 Document Remittance Register Details" .

    11. Print screen display (landscape).

    12. Using the information in the print, verify the payment was processed accurately (correct MFT, TIN, name control, money amount, transaction date, tax period and transaction code).

      Note:

      If a payment was not processed correctly, notate the correct information on the RTR ISR1340 screen print below the data in error. Attach the screen print to each case file.

      Special Instructions for split payments or multiple payments:

      • Verify all data available

      • Charge only one error per case

  5. Place the number of items in error in the appropriate worksheet cell of the DCI. Provide copies of the RTR ISR1340 and copies of the sampled case to the LFC.

Deposit Error Review DCI Instructions
  1. Record the number of cases received on the DCI, using the received date from the sample.

    Note:

    You do not have to enter zeros for days when the review is not performed.

  2. Record the number of cases discovered in error on the DCI. Use the "Lockbox Error" column to document these errors. An error will result when a case was not processed accurately.

  3. Use the error codes on the DCI to identify the types of errors discovered among the selected items.

  4. If the "Other" category is used, record an error and use the “Comment” column to explain the error.

    Note:

    A case may have more than one error code identified, but only one error per case may be charged.

  5. Provide a copy of the case in error and the associated RTR data screen print to the LFC.

  6. Forward the DCI to the LFC no later than the fifth working day of the following month.

  7. Retain all DER sample cases for a consecutive six-month period.

DCI Column Explanations
  1. Taxpayer Error - Used when an error occurred due to information provided by the taxpayer. This may include illegible or unclear information. For taxpayer errors, no errors will be notated in the categories under "Types of Errors" .

  2. Unprocessable - Used when a case is a true with / remittance unprocessable and was processed correctly by the Lockbox site. If the Lockbox site incorrectly sent the case to the center as an unprocessable, the case should not be entered in this column. It should instead be marked as a "Lockbox Error" .

  3. Residual - Used when the sample case does not involve a remittance. No errors will be notated on residual cases.

  4. Taxpayer Impact - Used when a Lockbox error case results in a notice, letter, penalty, and/or interest charge to the taxpayer. The number of cases in error that result in one of these should be entered under this column. If there is a case that causes taxpayer impact, the type of impact must be described in the comments column.

Automatic Extension of Time to File Review - Form 4868 (April 10 - April 30 IMF Only)
  1. Each IMF Lockbox Site will pull a daily random sample of twelve envelopes from the Form 4868 PO Box if available.

  2. The Lockbox site will place all photocopied items in a larger envelope labeled with: Improvement Team, appropriate Mail Stop, and "Lockbox Form 4868 Review" . This package will be in the daily Mail-out package.

  3. An analyst from the "Improvement Team" will review the selected samples provided by the Lockbox Site.

    Note:

    Sampling will only be completed at the IMF Lockbox sites.

Form 4868 Review DCI instructions
  1. Errors will be charged when an extension has been processed incorrectly as approved or incorrectly as unapproved or if an extension has been processed as approved with a RTR transaction date later than 4/22/2012 (or 4/15 for items received 4/23 through 5/7 subject to the postmark review) or processed with an incorrect transaction date.

  2. All other errors identified (SSN, name control, etc.) may be recorded in the comments column, but will not be recorded in the "Lockbox Error" column.

  3. Daily, whenever an error is identified or suspected notify the LFC immediately via their cell phone. It will be necessary to contact your LFC on their cell phone as they will be at the Lockbox site during the review period.

DCI Explanations
  1. Sample Date - The "Sample Date" is the received date of the sample case received.

  2. Lockbox DLN - For each case, enter the Lockbox DLN (xxxxx-xxx-xxxxx). The Lockbox DLN can be determined via RTR research and will have a valid Lockbox File Location Code (FLC), refer to Exhibit 3.0.230–3. If the case is a 'residual' enter the taxpayer's name control in place of the DLN.

    Note:

    Consider the following as residual: a non-remit Form 4868 or any form other than a Form 4868. However, if a form other than a Form 4868 was processed as a Form 4868, this is not a residual and the information should be captured on the DCI (e.g., a Form 1040ES that was processed as a Form 4868). A "check only" annotated by the taxpayer anywhere on the remittance as payment for an extension should be processed as unapproved.

  3. Lockbox Error - Place an "X" in the "Lockbox Error" column for the following error conditions:

    • Processed incorrectly as approved

    • Processed incorrectly as unapproved

    • Processed as approved with a transaction date of 4/23 or later (For samples with received dates 4/20 through 4/22)

    • Processed as approved with a transaction date later than 4/15 (This is for samples with received dates 4/23 through 5/7 that have a timely postmark of 4/15 or earlier)

    • Processed with an incorrect transaction date

  4. Postmark Date - Enter the earliest date (if "missing" or "illegible" ) from the envelope.

  5. RTR Transaction Date - Input the transaction date from RTR. Use the RTR instructions below to locate the transaction on RTR.

    1. Access RTR

    2. Click on 'Research' in tool bar at top of screen.

    3. RTR Research: enter criteria, screen will come up. Query by entering a Deposit Date ‘range’ (note: the range should be the 'received date' plus 5 calendar days), enter the TIN, name control, and payment amount. Near the bottom of the screen click 'Lockbox Only'. After entering this information press enter or click 'Submit'.

    4. When the payment is discovered the following screen will come up: "Filter results: 1 Transaction found."

    5. Click on the date in the "Deposit Date" cell (e.g., 04/15/2013). The following screen will come up: ISR1340 Document Remittance Register Details - print this screen (landscape). Using the information on the print, verify that the payment was processed accurately with the correct MFT, TIN, name control, money amount, transaction date, (should be the date notated by the Lockbox site on the case file) tax period and transaction code(s).

      Note:

      If a payment was not processed accurately notate the correct information on the RTR ISR1340 screen print below the incorrect data. Attach the screen print to each case file.


      Special instructions for split payments or multiple payments

    • Verify all data available

  6. Transaction Date Correct - Select "yes" or "no" from the drop-down menu. Items received April 23 through May 7 are subject to a postmark review and should have a 4/15 transaction date if the earliest postmark is timely. Items with missing, illegible, and untimely postmarks should carry the transaction date annotated on the sample.

  7. IDRS Date - Enter the IDRS date of the Lockbox transaction. Use the IDRS instructions below to determine how the extension was processed.

    1. Access IDRS.

    2. Research payment via Command Code IMFOLT (other command codes may be used if necessary). Use the SSN from the RTR report to research the payment. Be sure the payment you review is the posted Lockbox Payment which will have a Lockbox FLC.

  8. Processed as approval/not approved - Place an "X" in the appropriate column indicating how the extension was processed. If the payment was processed as approved, there will be a transaction code 460 and transaction code 670 with the Lockbox DLN present on the module.

  9. Comments - Any pertinent comments, including transactions processed with an incorrect TIN, name control, etc.

    a) Special Instructions

    1. If processing errors are identified or suspected contact your LFC immediately. It will be necessary to contact your LFC on their cell phone as they will be at the Lockbox site during the review period.

    2. Please take appropriate steps to ensure that any errors identified are corrected. If Service Center errors are identified during the review, the Planning and Analysis Staff should be notified.

    3. At the end of the review period, provide all copies to your LFC, this includes: all photocopied envelope and contents, IDRS prints, and RTR prints. Each sample case should be stapled together including backup research data (RTR and IDRS prints).

After Completing the Review
  1. Daily, whenever an error is identified or suspected notify the LFC immediately via their cell phone/e-mail. At the end of the review period, provide all copies to your LFC, this includes: all photocopied envelopes and contents, IDRS prints, and RTR prints even if no error was charged. Each sample case should be stapled together including backup research data (RTR and IDRS prints).

Lockbox Field Coordinator On-site Reviews
  1. The LFC will perform on-site reviews during mandatory trips as outlined in IRM 3.0.230.1.4.1. Using the most current PIC and Procedural DCIs and instructions.

  2. The reviews ensure the Lockbox Sites' work meet the standards in the LPG. Each review examines the critical elements of the Lockbox Sites processing procedures that could cause a work stoppage if not executed accurately.

  3. Any errors discovered during on-site reviews should be photocopied as documentation to the DCI report.

  4. Maintain these reports for the length of the contract. The contract period is for five years with up to two one-year extensions.

Performance Standards
  1. Results from certain procedural reviews (high priority reviews) will be factored into the Lockbox performance standards, which assess the overall performance of each Lockbox site.

  2. The high priority reviews must be performed daily during each visit the LFC is on-site and the review instructions, including sample sizes must be followed. The following have been designated as priority reviews. Each DCI has been marked as high priority:

    • Return Sort Review (IMF, BMF)

    • Form 1040X Sort Review (April Only)

    • Prior Year Return Review

    • Delinquent Return Review

    • Candling

    • Unprocessables Items (with remittances and non-remittance)

    • ECP Check Review

    • Candling Bags

    • Form 4868 Review in Extraction (April only)

Procedural Review General Guidelines
  1. LFC will conduct all high priority reviews daily during all site visits. The other reviews should be reviewed as time permits.

  2. Enter the following information on each DCI review sheet:

    • Month

    • Lockbox Site

    • Date

    • Actual number sampled

    • Number of errors discovered

    • Comments (document all pertinent comments regarding 'Other' errors not identified on the appropriate DCI or on the comments sheet provided)

  3. The DCI indicates the type of work to be sampled, sample size, error descriptions, and other information needed to complete the review. Read both the instructions and the DCI carefully before beginning each review.

  4. The LFC must take the following items into consideration when performing the review:

    1. Take sample from the correct universe (i.e., blocks, transactions, returns, vouchers, checks, etc.).

    2. Sampled items are counted differently for some reviews.

    3. Errors are tracked differently depending on work being reviewed.

    4. "Randomly Select" means to select cases without conforming to a specific pattern.

Return Sort Review IMF - High Priority
  1. After all Lockbox Site quality reviews are completed, review sorted returns in the batching / return preparation area.

    Note:

    Perform this review during January and April visits at IMF Lockbox Sites only.

  2. Randomly select six batches of returns for each category. Randomly select three returns from each sampled batch. If less than six batches in a category, randomly select three returns from each available batch.

  3. Record the number of returns discovered in error on the DCI. Use the error codes on the DCI to identify the types of errors discovered among the sampled returns. If the "other" category is selected, explain the error using the comments column.

    Note:

    The number of errors cannot exceed the number of sampled returns. One return can have multiple errors but only count one error. Detail the multiple errors in the "types of errors" section.

  4. Review the cover sheet associated with each sampled batch. On the DCI, record the number of cover sheets reviewed and the number of cover sheets in error. Each cover sheet can only be charged one error, even if it contains multiple errors. Use the additional columns to show the number of each error type discovered. Results will filter to the cover sheets summary tab in the workbook.

Return Sort Review Form 1040X - High Priority (January through April Only)
  1. After all Lockbox Site quality reviews are completed, review sorted returns in the batching / return preparation area.

    Note:

    Perform this review during the April visit at the IMF Lockbox Sites only.

  2. Randomly select six batches of Form 1040X returns. Randomly select three returns from each sampled batch. If six batches are not available within a category, randomly select three returns from each available batch.

  3. Record the number of returns discovered in error on the DCI. Use the error codes on the DCI to identify the types of errors discovered among the sampled returns. If the "other" category is selected, explain the error using the comments column.

    Note:

    The number of errors cannot exceed the number of sampled returns. One return can have multiple errors but only count one error. Detail the multiple errors in the "types of errors" section.

  4. Review the cover sheet associated with each sampled batch. On the DCI record the number of cover sheets reviewed and the number of cover sheets in error. Each cover sheet can only be charged one error, even if it contains multiple errors. Use the additional columns to show the number of each error type discovered. Results will filter to the cover sheets summary tab in the workbook.

Return Sort Review BMF - High Priority
  1. After all Lockbox Site quality reviews are completed, review sorted returns in the batching / return preparation area.

    Note:

    Perform this review at BMF Lockbox sites year-round.

  2. Randomly select six different batches of returns for each category. Randomly select three returns from each sampled batch. If six batches are not available within a category, randomly select three returns from each available batch.

  3. Record the number of returns discovered in error on the DCI. Use the error codes on the DCI to identify the types of errors discovered among the sampled returns. If the "Other" category is selected, explain the error using the comments column.

    Note:

    The number of errors cannot exceed the number of sampled returns. One return can have multiple errors but only count one error. Detail the multiple errors in the "Types of errors" section.

  4. Review the cover sheet associated with each sampled batch. On the DCI record the number of cover sheets reviewed and the number of cover sheets in error. Each cover sheet can only be charged one error, even if it contains multiple errors. Use the additional columns to show the number of each error type discovered. Results will filter to the cover sheets summary tab in the workbook.

Return Sort Review Prior Year - High Priority
  1. After all Lockbox Site quality reviews are completed, review sorted returns in the batching / return preparation area.

  2. Randomly select six batches of returns from different form types for each category. Randomly select three returns from each sample batch. If six batches are not available within a category, randomly select three returns from each available batch.

  3. Record the number of returns discovered in error on the DCI. Use the error codes on the DCI to identify the types of errors discovered among the sampled returns. If the "Other" category is selected, explain the error using the comments column.

    Note:

    The number of errors cannot exceed the number of sampled returns. One return can have multiple errors but only count one error. Detail the multiple errors in the "types of errors" section.

  4. Review the cover sheet associated with each sampled batch. On the DCI record the number of cover sheets reviewed and the number of cover sheets in error. Each cover sheet can only be charged one error, even if it contains multiple errors. Use the additional columns to show the number of each error type discovered. Results will filter to the cover sheets summary tab in the workbook.

Return Sort Review Delinquent - High Priority
  1. After all Lockbox Site quality reviews are completed, review sorted returns in the batching / return preparation area.

  2. Randomly select six batches of returns from different form types for each category. Randomly select three returns from each sample batch. If six batches are not available within a category, randomly select three returns from each available batch.

  3. Record the number of returns discovered in error on the DCI. Use the error codes on the DCI to identify the types of errors discovered among the sampled returns. If the "other" category is selected, explain the error using the comments column.

    Note:

    The number of errors cannot exceed the number of sampled returns. One return can have multiple errors but only count one error. Detail the multiple errors in the "types of errors" section.

  4. Review the cover sheet associated with each sampled batch. On the DCI record the number of cover sheets reviewed and the number of cover sheets in error. Each cover sheet can only be charged one error, even if it contains multiple errors. Use the additional columns to show the number of each error type discovered. Results will filter to the cover sheets summary tab in the workbook.

Candling Review - High Priority
  1. Review a sample of candled envelopes to ensure no checks or pertinent taxpayer information are destroyed. Randomly select a sample of 200 items following the final pass of the envelopes through candling. The sample should be from various bins and / or shifts.

  2. An error will result if anything other than an empty envelope is discovered.

Unprocessable Items Review - High Priority
  1. Review a sample of unprocessable items to ensure processable items are not mixed in with unprocessable work. Select the sample after the Lockbox Site completes its review.

  2. Randomly select 25 "with remit" and 25 "non-remit" items in the exceptions / unprocessable / manual area. Do not select every item from the same bundle / box of work. Collect items from separate locations to obtain a more extensive sample.

  3. Record the number of processable items discovered. In addition, using the "Processing Requirements" codes provided on the DCI, review the sample of unprocessable items to determine whether the site is processing the work accurately before deeming it unprocessable.

  4. If the error code "other" is selected, use the comments column to explain the error. The number of errors discovered cannot exceed the number of items sampled.

Candling Bags Review - High Priority
  1. A sample review of candling bags received in first candling will be performed to ensure they are tagged properly identifying the extractor or equipment (OPEX) and the received date.

  2. Randomly select 10 bags of envelopes from the candling area.

  3. An error will result if the tag on the candling bag is missing or incomplete. Use the error codes provided on the DCI.

  4. If the error code "other" is selected, use the comments column to explain the error. The number of errors discovered cannot exceed the number of items sampled.

Form 4868 Review - High Priority (April Only)
  1. Sample review Forms 4868 in extraction area AFTER Lockbox Site's quality review.

    Note:

    Perform this review during the IMF April peak at the IMF Lockbox Sites only.

  2. Randomly select five blocks and select five items from each block.

  3. Record the number of Forms 4868 reviewed and the number in error on the DCI.

  4. If the error code "other" is selected, use the comments column to explain the error. The number of errors discovered cannot exceed the number of items sampled.

ECP Check Review
  1. Sample electronically processed remittances AFTER site’s quality review

  2. Randomly select thirty (30) trays and select one bundle from each tray. Randomly select 20 items per bundle

  3. Review the remittance for errors using the error codes provide on the DCI. If the error code “other” is selected, use the comments column to explain the error. The number of errors cannot exceed the number of sampled checks, and error will result when. Back of remittance is blank; audit trail has been covered with white out; remittance not retained for five days; other (e.g. remittance not stored in secured area).

  4. LFC must validate that the remittances are stored in a secured storage area.

Mail Review
  1. A review of the mail will be performed after it is prepared for the processing floor to determine whether the Lockbox Site correctly labeled the mail trays / tubs.

  2. Randomly select 25 mail trays / tubs for review. Select trays / tubs from various mail drops to comprehensively cover the mail coming into the Lockbox Site.

  3. An error will result when:

    • tray / tub tag is missing or incorrect

    • tray / tub contains mixed tax types

    • tray / tub is out of date / or time order

Voucher and Check Review in Extraction
  1. Review a sample of vouchers and remittances in Extraction after the Lockbox Site's quality review, to determine whether the Lockbox is correctly processing / batching vouchers and remittances.

  2. Randomly select five scannable and five non-scannable batches for review from various extractors. Then randomly select five vouchers and remittances combinations from each sampled batch.

  3. Review each batch header ticket and record the number of errors.

  4. An error will result when:

    • High dollar remittances were not expedited

    • Voucher and remittances mis-sorted

    • Remittances not overstamped

  5. If the error code "Other" is selected, use the comments column to explain the error. The number of errors discovered cannot exceed the number of items sampled.

    Note:

    Count a voucher and remittance combination as one item.

Items to be Shred Review
  1. Review a sample of items that are designated to be shred, to ensure no pertinent taxpayer information or requests are destroyed. Randomly select 200 after the Lockbox sites quality review by a manager or management official has been complete.

  2. An error will result when information is discovered which should be sent to the SPC or a payment that should be processed.

Multiple Payments Review
  1. Review a sample of multiple payments and corresponding voucher to ensure they are processed correctly. The LFC will contact Lockbox Site personnel to locate processed multiple payments.

  2. After the Lockbox sites quality review randomly select 25 multiple payments vouchers for review. If 25 multiple payments are not available, review all available multiple payments.

  3. An error will result when a payment is not processed correctly.

  4. Ensure multiple payments are correctly annotated with "M-2" , "M-3" , etc.

Split Payments Review
  1. Review a sample of split payments and corresponding voucher to ensure they were processed correctly. The LFC should contact Lockbox site personnel to locate processed split payments.

  2. After the Lockbox sites quality review randomly select 25 split payments for review. If 25 split payments are not available, review all available split payments.

  3. An error will result when a payment is not processed correctly.

  4. Ensure split payments are correctly annotated with "S-2 " , "S-3" , etc.

Certified / Registered Mail Review
  1. Review a sample of certified / registered mail cards to ensure they are properly stamped using an IRS Certified Date Stamp.

  2. Randomly select five bundles of stamped cards and select five cards from each sampled bundle. If there are not five bundles available, randomly select five cards from each available bundle.

  3. An error will result if the IRS Certified Date Stamp is missing, illegible or the date is incorrect. Report using the error codes provided on the DCI.

  4. If the error code "Other" is selected, use the comments column to explain the error.

Processing Internal Control (PIC) Review
  1. Results from this review will be used to assess the overall performance of each Lockbox Site. Reviewing as described on the DCI and below is very important.

    Note:

    Detail all "Partially Met" and "Not Met" observations on the comments sheet.

Checkpoint Frequencies
  1. Checkpoint 1 should be reviewed three times (IMF Peak only).

  2. Checkpoints 2 should be reviewed three times during the January (BMF) / April (IMF) peak visit and only once for all other on-site visits.

  3. Checkpoints 3-4 should be reviewed only once per Lockbox peak visit

  4. Checkpoints 5-8 should be reviewed three times during the January (BMF)/ April (IMF) peak visit and only once for all the other on-site visits

Checkpoint Instructions
  1. Each checkpoint has a list of requirements which need to be reviewed. LPG references is stated on the DCI. All listed requirements must be reviewed. Checkpoints will be assessed as follows:

    • Fully Met (FM) - All requirements must be met for the checkpoint to receive a FM

    • Partially Met (PM) - At least half of the requirements must be met for the checkpoint to receive a PM. Guidelines for this are included on the DCI.

    • Not Met (NM) - If less than half of the requirements listed are met, the checkpoint will receive NM

Repeat Finding
  1. Each checkpoint has a "Repeat Finding" entry. LFC will complete this on the DCI after returning from the on-site visit.

  2. The LFC must review the previous PIC review. For the checkpoints that received a PM or NM for the current review, check the prior review for the same checkpoints on the previous DCI.

  3. If the Lockbox Site received the same rating, the DCI should be marked "Yes" as a "Repeat Finding" . Otherwise it should be marked "No" .

Checkpoint 1 - Form 4868 Sampling Review
  1. Checkpoint 1: Form 4868 sampling review.

  2. Review to ensure the following:

    • Is the Lockbox site selecting 12 samples daily?

    • Does the sampling method vary in mail delivery times?

    • Are envelopes and their contents returned to the precise location from where they are pulled?

    • Is the site maintaining a Sample Tracking Sheet?

Checkpoint 2 - Lockbox Document Transmittal Review (LDT)
  1. Checkpoint 2: LDT requirements

  2. Review to ensure the following:

    • Is the Lockbox site completing the LDT acknowledgement page correctly?

    • Is there an internal control in place to ensure a signed and dated acknowledgement is received back from the service center daily?

    • Is the Lockbox site retaining the original LDTs and acknowledgements in chronological order?

    • Are the documents (LDTs and Acknowledgements) being retained for 1 year?

    • Is the site maintaining documentation to substantiate late shipments?

Checkpoint 3 – Deposit Error Rate Sampling (DER)
  1. Checkpoint 3: DER requirements.

  2. Review to ensure the following:

    • Does the Lockbox site maintain a Sampling Tracking Sheet?

    • Are envelopes and their contents returned to the precise location from where they are pulled?

    • Does the sampling method incorporate multiple P.O. Boxes?

    • Does the sampling method vary from day to day?

Checkpoint 4 – Managerial Quality Reviews
  1. Checkpoint 4: Lockbox Managerial quality reviews.

  2. Review to ensure the following:

    • Is the site management performing quality reviews on candling?

    • Is the site management performing quality reviews on shreds?

    • Does site management maintain logs of the desk and work area reviews? Review the previous months log.

Checkpoint 5 – IRS Date Stamps
  1. Checkpoint 5: IRS date stamp safeguard against unauthorized usage requirements.

  2. Review to ensure the following:

    • Do the date stamps have a date stamp number and / or unique serial number?

    • Is there is a record of the date stamp number and / or unique serial number?

    • Are the date stamps issued to a specific individual and signed out legibly?

    • Are the date stamps stored in a locked container when not in use?

Checkpoints 6a thru 6d – Log Reviews
  1. Checkpoints 6a thru 6d: Log reviews (Date Stamp, Candling, Cash and Mail).

  2. Review to ensure the following:

    • 6a - Does the stamp log includes current date, stamp number and / or unique serial numbers, name of employee, shift, time issued and return time?

    • 6b - Is all available information entered on the log including N/A for missing information?

    • 6b - Does the candling log include discovering employee initials?

    • 6b - Has site management or designee initialed to validate complete?

    • 6c - Does the receiving manager initial beside the discoverers name?

    • 6c - Are remittances secured in a locked container?

    • 6c - Is the Cash Log reconciled everyday by site management?

    • 6c - Are there two separate cash logs for cash dollar or more and items of cash value?

    • 6d - Is the site maintaining a mail log?

    • 6d - Is the mail log being completed after each mail drop?

    • 6d - Does the mail log list P.O. Box, form type/tax type?

    • 6d - Does the mail log reconcile with the Daily Deposit Production Report (DDPR) within 10 percent?

    Note:

    Review the daily logs beginning with the first day of the month. For example, if you are performing the review on April 17, review the daily log sheets from April 1 to the day prior to your review. For January (BMF) and April (IMF) peaks, perform these reviews three times. If your second review is on April 22, review daily logs from April 17-21.

Checkpoint 7 – Candling Envelopes
  1. Checkpoint 7: Envelopes candled requirements.

  2. Review to ensure the following:

    • Are envelopes opened (either manually or by OPEX) on three or more sides and must be candled once on the candling tables?

    • Are all other envelopes candled twice on the candling tables?

Checkpoint 8 – High Dollars
  1. Checkpoint 8: High Dollar requirements:

    • $25,000 or more will be in effect throughout the year except for the IMF April peak processing period when the $50,000 or more tolerance will apply.

  2. Review to ensure the following:

    • Is there an internal control in place to expedite these remittances?

    • Does site management ensure these remittances are collected from all areas at the end of each shift and prior to break / lunch periods, then batched and sent for processing?

  3. For remittances of $25,000 or more ($50,000 or more IMF April peak processing), ensure the following:

    • High dollar remittances discovered in any type of work, are expedited and deposited in the first available deposit with the earliest processing date. High dollar remittances not able to be processed are in the next available shipment scheduled for SPC.

  4. $100 million or more is discovered, it must be immediately hand-carried to the manager with the return / document. The Lockbox site will stamp the check as non-negotiable.

  5. Place the remittance and posting document in its own envelope labeled “Attention to Receipt and Control”, the assigned LFC will provide a name and stop number. These items will be placed in a separate envelope with the other unprocessable with remittance items, into a tamper proof bag.

  6. Notate in the “Remarks” column of the LDT the package contains the $100 million or more remittance envelope.

  7. The remittance must be expedited. If a shipment is sealed and awaiting pick up the Lockbox site must reopen the shipment and include the envelope containing the remittance and posting document in the with remit unprocessables.

    Note:

    In the event there is more than one shipment awaiting pickup, the envelope containing the remittance and posting document must be included with the earliest shipment of the group.

Checkpoint Descriptions and LPG References
  1. Following is a listing of the PIC Reviews and their respective LPG references.

    1. Checkpoint 1 - Form 4868 Sampling Review (LPG 9.4).

    2. Checkpoint 2 - Lockbox Document Transmittal (LDT) LPG 7.5.5.

    3. Checkpoint 3 - Deposit Error Rate Sampling (DER) - LPG 9.3.

    4. Checkpoint 4 - Managerial Quality Reviews - LPG 9.1.

    5. Checkpoint 5 - IRS Date Stamping Safeguards - LPG 3.5.2.

    6. Checkpoints 6a - 6d Log Review (Date Stamp, Candling, Cash, Mail) - LPG 3.5.2, 3.9 and 3.10.3.

    7. Checkpoint 7 - Candling Requirements - LPG 3.10.

    8. Checkpoint 8 - High Dollar Requirements - LPG 3.4.3(1).

BMF/IMF Peak Readiness Review
  1. The purpose of the BMF / IMF Readiness Review is to determine if the Lockbox Site is prepared for peak processing. Before the start of the peak processing season, each Lockbox Site prepares a readiness package.

  2. The Readiness package addresses:

    • Annual Changes

    • Site Overview

    • Pre-peak Planning

    • Workload Management

    • Data Management

    • Staffing

    • Training

    • Security

    • Vendor Support

    • Communication

    • Internal Controls/Quality

    • Site-Specific/GAO issues

  3. The LFC will review the individual readiness packages with the Lockbox, either on-site or by conference call prior to January.

Definitions of Terminology
  1. The following terminology has been used in the text of this document.

    TERM DEFINITION
    Acceptable payments Payments made in cash, check, or money order that can be processed by the Lockbox Network.
    April Peak (IMF) April 15 through a pre-determined PCD.
    Audit trail Contains both taxpayer and deposit information that is on the back of all processed remittances.
    Block A group of documents sequentially numbered from 00 and up.
    Business Master File (BMF) Income tax forms related to business filers.
    Candling The process of using an illuminated table to scan envelopes prior to destroying them to ensure all of the contents have been removed.
    Check Lister A document which identifies all items within a block.
    Correspondence Communications received from taxpayers on separate letters or notes, or written on vouchers / documents (excluding name / address or tax period ending changes).
    Data Collection Instrument (DCI) A form used for collecting data for reporting quality review results.
    Depositary The Lockbox Site contracted by Fiscal Service to process IRS deposits and establish credit for the Treasury's general account.
    Deposit Ticket (SF–215A) The standard government accounting document used to constitute a deposit to the IRS' Lockbox account.
    Deposit Ticket (SF–215) (Credit Voucher) The standard government accounting document used to increase the amount of the deposit previously made to the IRS Lockbox account.
    Document Locator Number (DLN) A 14-digit control number assigned to every document and remittance input through the remittance processing system for identification purposes.
    Due Date The date a tax payment or tax return is legally due and payable. It is formally defined by a combination of Internal Revenue Code (IRC) Sec. 6654 and IRC Sec. 7503.
    Electronic Check Processing Federal Reserve Bank-Cleveland (FRB-C) will be bank of first deposit.
    Employer Identification Number (EIN) A nine-digit number used to identify a taxpayer's business account.
    Encoding Errors An error that occurs when the dollar amount on the remittance is keyed incorrectly from the actual amount written on the remittance.
    Entity The area on a document where the name, address, SSN / EIN, and tax period appear.
    File Location Code (FLC) First two digits of the DLN assigned to indicate the Submission Processing Campus and to designate whether the voucher was scannable or non-scannable.
    Fiscal Service / Bureau of the Fiscal Service Agency of the Department of the Treasury responsible for outside contracting and cash management.
    Holdover Remittances that have not been deposited within the timeframes specified in LPG 3.2.4.
    Individual Master File (IMF) Income tax forms related to individual filers.
    Installment Agreement An arrangement between IRS and taxpayers to make partial payments until the balance of a tax debt is paid in full.
    Integrated Data Retrieval System (IDRS) A computerized system used by IRS for adjusting, researching, and monitoring tax accounts.
    January Peak (BMF) January 31st until site is back on a 24-hour deposit schedule.
    Lockbox Commercial Financial Agent designated by Fiscal Service to process federal tax payments.
    Lockbox Electronic Network (LEN) The system used to electronically transmit all RPS and RTR files directly from the Lockbox Sites to a Computing Center drop box (ECC-MTB / ECC-MEM).
    Lockbox Field Coordinator(s) (LFC) Designated Headquarters representatives responsible for ensuring the processing and deposit requirements stated in the LPG are followed by performing on-site reviews.
    Lockbox Policy and Oversight (LPO) Analyst Designated Headquarters representatives responsible for the development of system, security and processing requirements for the Lockbox program.
    Lockbox Processing Guidelines (LPG) Manual providing instructions detailing remittance processing requirements for the commercial Lockbox Depositaries.
    Multiple Checks Two (2) or more remittances submitted with one document.
    Multiple documents Two (2) or more vouchers or documents submitted with one remittance.
    OTCnet Over the Counter Network is Treasury's system of inputting and confirming deposits.
    Prior Year A tax year with a due date prior to the current processing year.
    Quality Review The appraisal of processed remittances to ensure the quality standards stated in the LPG are maintained.
    Remittances Any cash, check, draft or money order drawn on and payable through financial institutions in the US.
    Residual Payments Certain forms, letters, and notices that are not directly related to the Lockbox site, are received with a remittance.
    Unpostables Transactions that fail the consistency and validity checks at master file.
    Unprocessables Any document, item, or correspondence that cannot be processed by the Lockbox and must be sent to the SPC.
    Voucher The document the taxpayer submits with his or her remittance for a federal tax obligation.

IMF Submission Processing Campus / Lockbox State Realignment

Description: The table below shows IMF SPCs with a corresponding Lockbox Sites and the applicable payment processing states.

2019 IMF SPC and Lockbox State Realignment
Kansas City and JP Morgan Chase - Louisville Fresno and Bank of America - Union City
Alabama N. Carolina Alaska New Mexico
Georgia S. Carolina Arizona Nevada
Kentucky Tennessee California Oregon
New Jersey Virginia Colorado Utah
    Hawaii Washington
    Idaho Wyoming
Kansas City and Bank of America - Windsor Austin - JP Morgan Chase- Charlotte
Connecticut New Hampshire Florida Texas
Delaware New York Louisiana International
Maine Pennsylvania Mississippi  
Maryland Rhode Island    
Massachusetts Vermont    
Missouri West Virginia    
Fresno and US Bank - Cincinnati  
Arkansas Montana    
Illinois Nebraska    
Indiana N. Dakota    
Iowa Ohio    
Kansas Oklahoma    
Michigan S. Dakota    
Minnesota Wisconsin    

BMF Submission Processing Campus / Lockbox State Realignment

Description: The table below shows the BMF table SPCs with corresponding Lockbox Sites and the applicable payment processing states.

2018 BMF SPC and Lockbox State Realignment
Cincinnati and US Bank - Cincinnati Ogden and Bank of America - Windsor
Connecticut New Jersey Alabama Missouri
Delaware New York Alaska Montana
District of Columbia N. Carolina Arkansas Nebraska
Florida Ohio Arizona Nevada
Georgia Pennsylvania California New Mexico
Illinois Rhode Island Colorado N. Dakota
Indiana S. Carolina Hawaii Oklahoma
Kentucky Tennessee Idaho Oregon
Maine Vermont Iowa S. Dakota
Maryland Virginia Kansas Texas
Massachusetts West Virginia Louisiana Utah
Michigan Wisconsin Minnesota Washington
New Hampshire   Mississippi Wyoming
      International

File Location Code Table

Description: A table used to specify the Submission Processing Campus or Lockbox Site that processes the documents. File Location Code is a unique two position numeric code found in the first two positions of the DLN.

LOCATION CAMPUS CODE Lockbox Site CODE
Austin SPC - JP Morgan Chase - Charlotte 18
MMIA
73 = Scan; 75 = Non Scan; "Overflow" 50 = Scan; 53 = Non Scan
Cincinnati SPC - US Bank - Cincinnati 17 35 = Scan; 31 = Non Scan
Fresno SPC - Bank of America - Union City 89 68 = Scan; 94 = Non Scan; "Overflow" 15 = Scan; 24 = Non Scan
Fresno SPC - US Bank - Cincinnati 89 33 = Scan; 77 = Non Scan; "Overflow" 80 = Scan; 90 = Non Scan
Kansas City SPC - JP Morgan Chase-Louisville 09 36 = Scan; 39 = Non Scan;
Kansas City SPC - Bank of America - Windsor 09 47 = Scan; 48 = Non Scan; "Overflow" 37 = Scan; 44 = Non Scan
Kansas City SPC - US Bank - Cincinnati 09 40 = Scan; 42 = Non Scan
Ogden SPC -JP Morgan Chase-Louisville 29 91 = Scan; 92 = Non Scan
Ogden SPC - US Bank - Cincinnati 29 85 = Scan; 86 = Non Scan

Lockbox Remittance Theft Report

Description: This form is used by the LFC to report a theft of a payment that went through the Lockbox Site processing. It includes the injured taxpayer's name, the taxpayer's EIN, money amount lost, date of remittance, and name of Lockbox Site. It also lists the name of the Remittance Security Coordinator and the name of the TIGTA agent as well as actions taken to recover the funds from the perpetrator and Lockbox Site.

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Glossary of Acronyms and Descriptions

Acronyms Descriptions
ACA Affordable Care Act
BMF Business Master File
COOP Continuity of Operation Plan
CSIRC Computer Security Incident Response Center
DER Deposit Error Rate
DCF Dishonored Check File
DCI Data Collection Instrument
DCVR Debit / Credit Voucher Review
DDCR Daily Deposit Cycle Report
ECC-MEM Enterprise Computing Center - Memphis
ECC-MTB Enterprise Computing Center - Martinsburg
ECP Electronic Check Presentment
EOY End of Year
FAA Financial Agent Agreement
EFTU Electronic File Transfer Utility
ERS Error Resolution System
Fin-Facts Financial Facts
FLC File Location Code
FSP (Lockbox) Functional Specification Packages
FRB-C Federal Reserve Bank-Cleveland
FSR Filing Season Readiness
GMF Generalized Mainframe
IMF Individual Master File
ISRP Integrated Submission Remittance Processing
ITAMS Information Technology Asset Management System
LEBS Lockbox Electronic Bulletins
LEN Lockbox Electronic Network
LDT Lockbox Document Transmittal
LFC Lockbox Field Coordinator
LPG Lockbox Processing Guideline
LPO Lockbox Policy and Oversight Section
LSG Lockbox Security Guidelines
MDPC Minimum Daily Processing Capacity
IT Information Technology
MOU Memorandum of Understanding
OFAS Office of the Assistant Secretary
OTCnet Over the Counter Network
PC Peak Completion (BMF)
PCD Program Completion Date (IMF)
PIC Processing Internal Control
POAM Plan of Action and Milestones
RACS Revenue Accounting Control System
RPS Remittance Processing System
RSC Remittance Security Coordinator
RS-PCC Remittance Strategy for Paper Check Conversion
RTR Remittance Transaction Research
SAMC Situation Awareness Management Center
SAT Systems Acceptability Testing
SCCF Service Center Control File
SERP Servicewide Electronic Research Portal
SOI Statistics of Income
SPC Submission Processing Campuses
TIGTA Treasury Inspector General For Tax Administration
URF Unidentified Remittance File