3.11.25 Miscellaneous Tax Returns

Manual Transmittal

November 9, 2018

Note:DO NOT REMOVE AND INSERT PAGES OR DISPOSE OF OBSOLETE TRANSMITTALS PRIOR TO JANUARY 01, 2019.

Purpose

(1) This transmits revised IRM 3.11.25, Returns and Documents Analysis, Miscellaneous Tax Returns.

Material Changes

(1) IRM 3.11.25.1(1) Kansas City Processing Campus added.

(2) IRM 3.11.25.1.1(3) Kansas City Processing Campus added.

(3) IRM 3.11.25.1.3(1) Kansas City Processing Campus added.

(4) IRM 3.11.25.1.9(2)d)- Update the IRM 11.3.1.14 Facsimile Transmission reference.

(5) IRM 3.11.25.1.12.2- Update Figure 3.11.25-1 Information.

(6) IRM 3.11.25.2.4(1)- Update Tier I and Tier II compensation.

(7) IRM 3.11.25.2.5- Update Figure 3.11.25-2 Information.

(8) IRM 3.11.25.3.3(2)- Update Line tax percentage.

(9) IR 3.11.25.4(1) Kansas City Processing Campus added.

(10) IRM 3.11.25.4.5- Update Figure 3.11.25-3.

(11) Update Exhibit 3.11.25-1.

(12) Update Exhibit 3.11.25-2.

(13) Exhibit 3.11.25-3- Update Acronyms and Abbreviations table.

(14) Update Exhibit 3.11.25-4.

Effect on Other Documents

IRM 3.11.25 dated November 03, 2017 (effective January 01, 2018) is superseded.

Audience

Wage and Investment (W&I), Submission Processing

Effective Date

(01-01-2019)

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

Program Scope and Objectives

  1. This section provides general background information about the types of returns processed and the nature of the work that Document Perfection personnel are expected to perform on these returns and documents. These instructions apply to Cincinnati and Kansas City Submission Processing Campuses.

  2. Purpose: The purpose of Document Perfection is to Code and Perfect (Edit) documents.

  3. Audience: The primary users of the IRM are Submission Processing Code & Edit Supervisory Tax Technician, Lead Tax Technician and Tax Examining Technicians.

  4. Policy Owner: The Director of Submission Processing.

  5. Program Owner: Paper Processing Branch, Business Master File (BMF) Section

  6. Primary Stakeholders: Other areas that may be affected by these procedures include (but not limited to):

    • Accounts Management (AM)

    • Chief Counsel (CC)

    • Compliance

    • Information Technology (IT) Programmers

    • Large Business and International (LB&I)

    • Small Business Self-Employed (SBSE)

    • Statistics of Income (SOI)

    • Submission Processing (SP)

    • Taxpayer Advocate Service (TAS)

    • Tax Exempt and Government Entities (TEGE)

Background

  1. This IRM provides general background information about the types of returns processed and the nature of the work that Document Perfection personnel are expected to perform on these returns and documents.

  2. The instructions in this section pertain to the processing of Non-Master File (NMF) Returns. These returns are not processed into a Master File (Individual Master File (IMF) or Business Master File (BMF). The accounting for these returns is handled entirely by the NMF procedures in the Accounting function.

  3. These instructions apply to Cincinnati and Kansas City Submission Processing Campus.

Authority

  1. Authority for these procedures is found in Internal Revenue Code Section 7519 and corresponding Treasury Regulations.

Responsibilities

  1. The Director of Cincinnati and Kansas City Submission Processing sites are responsible for monitoring operational performance for the BMF Submission Processing campuses.

  2. The Operations Manager is responsible for monitoring operational performance for their operation.

  3. The Team Manager/Lead is responsible for performance monitoring and ensuring employees have the tools to perform their duties.

  4. The Team Employees are responsible to follow the instructions contained in this IRM and maintain updated IRM procedures.

Program Management and Review

  1. Program Goals: Ensure documents are code and edit ready for transcription.

  2. Program Effectiveness are measured using the following:

    • Embedded Quality Submission Processing (EQSP)

    • Balanced Measures

    • Managerial Reviews

Program Controls

  1. Quality Review conducts a statistical valid sample size review of completed work to ensure IRM guidelines are followed

Terms/Definitions/Acronyms

  1. For Terms, Definitions and Acronyms, see Exhibit 3.11.25-3.

Related Resources

  1. The following resources may assist in performing the work as outlined in this IRM.

    • Servicewide Electronic Research Program (SERP)

    • Integrated Data Retrieval System (IDRS)

♦IRM Deviation Procedures♦

  1. IRM deviations must be submitted in writing following instructions from IRM 1.11.2.2.4, Internal Management Documents System - Internal Revenue Manual (IRM) Process, IRM Standards, and elevated through appropriate channels for executive approval.

Internal Revenue Service (IRS) Employee Contacts - RRA98, Section 3705(a)

  1. The Restructuring and Reform Act of 1998 (RRA98), Section 3705(a), provides identification requirements for all IRS employees working tax-related matters. IRS employees are required to give their name and unique identification number during taxpayer telephone, face to face and written contact. In addition, a telephone number is required on all taxpayer correspondence. This will provide taxpayers with enough information to identify an IRS employee who has previously assisted with tax related matters.

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

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

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

    3. Correspondence - All correspondence must include a telephone number that the taxpayer can call for answer to any questions they may have. In addition, manually generated and handwritten correspondence must have their title (e.g., Mr., Mrs., Ms., Miss), last name, and IDRS (Integrated Data Retrieval System) number, letter system number, or their badge identification (ID Card) number.

    4. The IDRS number and numbers for some other letter systems are automatically generated. If it is not generated, or a handwritten note is prepared, the badge identification (ID Card) number must be used. Toll-free employees may also provide their location for identification purposes. Faxes to taxpayers on tax-related matters are considered manually-generated correspondence and must include the required information. See IRM 11.3.1.14, Facsimile Transmission of Tax Information.

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

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

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

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

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

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

    Note:

    The Taxpayer Bill of Rights (TBOR), was adopted by IRS in June 2014 and provides that taxpayers have the right to receive prompt, courteous and professional assistance in their dealings with the IRS. They are to be spoken to in a way that is easily understood and any correspondence from the IRS must be clear and understandable. They have the right to speak to a supervisor whenever quality service is not received.

Taxpayer Advocate Service (TAS)

  1. Per the Taxpayer Bill of Rights (TBOR), taxpayers have the right to expect a fair and just tax system which provides taxpayers with the opportunity to have their facts and circumstances considered when it might affect their underlying liabilities, ability to pay, or ability to provide information timely.

  2. Taxpayers have the right to receive assistance from the Taxpayer Advocate Service (TAS) if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through normal channels. For additional information on the Taxpayer Bill of Rights, visit http://taxpayeradvocate.irs.gov/About-TAS/Taxpayer-Rights

  3. Refer taxpayers to the Taxpayer Advocate Service (TAS) (see IRM Part 13, Taxpayer Advocate Service) when the contact meets TAS criteria (see IRM 13.1.7, Taxpayer Advocate Service (TAS) Case Criteria) or when Form 911, Request for Taxpayer Advocate Service Assistance (and Application for Taxpayer Assistance Order), is attached and steps cannot be taken to resolve the taxpayer’s issue the same day.

  4. Same day includes cases that can be resolved in 24 hours, as well as cases where steps can be taken within 24 hours to begin resolving the issue. (See also IRM 13.1.7.4, Same Day Resolution by Operations.)

  5. When making a TAS referral, use Form 911, and forward to TAS in accordance with your local procedures.

TAS Service Level Agreements (SLAs)
  1. The National Taxpayer Advocate has reached agreements with the Commissioners of the Wage and Investment (W&I) Division, Small Business and Self-Employed (SB/SE) Division, Tax Exempt & Government Entities (TE/GE), Criminal Investigation (CI), Appeals and Large Business and International (LB&I), that outline the procedures and responsibilities for the processing of TAS casework when either the statutory or delegated authority to complete case transactions rests outside of TAS. These agreements are known as Service Level Agreements (SLAs).

  2. The SLAs are located at http://tas.web.irs.gov/policy/sla/default.aspx.

Control of Returns

  1. There are certain restrictions imposed in the processing of NMF returns which are listed below.

  2. Do not withdraw any remittance return from the originally numbered block.

  3. Indicate misblocked returns by a notation on the Form 813, Document Register.

  4. Keep blocks intact for the Accounting operation, after which any needed correspondence or adjustment action will be taken. Move full paid returns with Correspondence Action Sheet (CAS) or adjustment requests to top of the block of returns.

  5. Overpayments on returns will be processed from accounting records.

Document Perfection

  1. This section includes general instructions to be used by examiners for processing all types of Form.

Penalty and Interest Computation
  1. Instructions in this IRM usually require examiners to math verify and/or check for completeness when processing NMF returns. Document Perfection examiners are not required to compute penalties and/or interest. If, during examination, it is determined penalty and/or interest assessments are needed, see IRM 3.11.25.1.12.2, Form 3465, Adjustment Request, and route as directed for the appropriate action.

Form 3465, Adjustment Request
  1. The form is prepared if adjustment action will be required on a return.

    1. Attach Form 3465 to the return and leave in the block for later adjustment action if the return involved was blocked and numbered.

    2. Use Form 3465 for routing to Accounts Management (AM) for necessary action if the return is not numbered (non-remittance).

  2. Complete the form as follows:

    1. Enter the taxpayer's name.

    2. Enter the Document Locator Number (DLN).

    3. Check Routing box for "Adjustments" .

    4. Enter the Employer Identification Number (EIN) or Social Security Number (SSN), if present.

    5. Enter the period ending, year and month.

    6. Enter the tax form number.

    7. In the "Remarks" area, enter a brief reason for routing to AM (e.g., "Amended return attached" ).

    8. Complete the blocks for Signature, Unit, Phone and Date.

    See Figure 3.11.25-1.

    Figure 3.11.25-1

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Amended Returns

  1. A claim for credit or refund must be filed within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever is later, or if no return was filed, within 2 years from the time the tax was paid.

    Exception:

    If the claim was filed by the taxpayer within 3 years of the time the return was filed, the amount of the credit or refund is limited to the portion of the tax paid within the period, immediately preceding the filing of the claim, equal to 3 years plus the period of any extension of time for filing the return. Any prior year return (amended or delinquent original) received more than 2 years 9 months from the due date should be forwarded to the Statute Unit for clearance. Also, refer to IRM 25.6.1, Statute of Limitations Processes and Procedures, for more information on the statute of limitations for assessing, refunding, and collecting of tax.

  2. Amended returns (including "Revised" , "Supplemental" , "Correcting" , "Duplicate" , etc.) must be associated with the original returns for reconciliation and adjustments. This reconciliation is the responsibility of AM. For remittance returns, no attempt to associate will be made prior to document analysis.

    1. Do not math verify amended returns.

    2. Re-enter the remittance amount and circle the edited amount.

    3. Prepare Form 3465, Adjustment Request, and attach it to the face of the return.

    4. Prepare Form 2275, Records Request, Charge and Recharge, and leave it with the return, in DLN sequence, within the block.

  3. Forward any unnumbered, no-remittance, amended returns to AM unless a specific part of this section prescribes different routing instructions.

  4. Forward any amended returns with remittance to NMF Accounting. NMF Accounting will forward them to AM after they complete their processing.

Attachments to Returns

  1. Examine all attachments to returns being processed and take any action required by the attachments.

  2. Requests for Form - If the taxpayer states on the return or an attachment to the return that tax Form and/or schedules are requested, prepare Form 4190, Order Form for Tax Forms and Publications, for current year tax form and Form 6112, Prior Year Tax Products Order Form, for prior year tax form. Forward to the Form Distribution Center for processing.

    Note:

    Form 4190, Order Form for Tax Form and Publications, and Form 6112, Prior Year Tax Products Order Form, are generally used in the Code and Edit function for IMF requests. Therefore, all BMF requests for form and/or schedules should be entered in the write-ins portion of the form.

  3. Enter on the attachment(s) the taxpayer's name, address, identifying number, and any other pertinent information. (If the document is numbered, enter the DLN on the attachment(s)). In addition, take the following actions as appropriate:

    If... Then...
    A remittance is discovered, Follow the procedures in IRM 3.8.46, Deposit Activity- Discovered Remittance.
    The attachment should be returned to the taxpayer, requires correspondence, or involves an adjustment, Detach it from the return and route it accordingly.
    The attachment contains information needed to process the return from which it was detached, Attach a copy of the information to the return and route the original to the appropriate function.
    The attachment does not require routing, Leave it attached to the return.

Form CT-2, Employee Representative's Quarterly Railroad Tax Return

  1. This subsection provides instructions for document perfection of Form CT-2, Employee Representative's Quarterly Railroad Tax Return.

  2. Form CT-2 are filed at Cincinnati and Kansas City Submission Processing Campus. Form CT-2 are processed to NMF with Master File Tax (MFT) 72, Tax Class 6, and Document (Doc) Code 02.

  3. See Exhibit 3.11.25-1 for an example of Form CT-2.

Form CT-2 Due Dates

  1. Form CT-2 is a quarterly return which generally covers taxable compensation paid during a single quarter.

  2. Form CT-2 are due on or before the end of the second month following the calendar quarter for which compensation is reported. The following table provides additional due date information for the quarters covered.

    Quarter Covered Due on or Before
    January, February, March May 31
    April, May, June August 31
    July, August, September November 30
    October, November, December Last Day of February

Blocking of Form CT-2

  1. Returns are sorted and blocked according to IRM 3.8.45, Deposit Activity- Manual Deposit Process.

  2. Returns blocked Full Paid by processing campus in series 600-619 are as follows:

    1. Tax due shown on returns of ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ (including precomputed penalty and interest).

    2. ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ but penalty and interest precomputed and paid on return.

    3. Marked "Amended" , "Supplemental" , etc. (regardless of the amount of payment or date filed).

  3. Returns blocked Part Paid by processing campus in series 900-919 are as follows:

    1. Either overpaid or underpaid ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ (except returns marked "amended" , "supplemental" , etc.).

    2. Delinquent without penalty and interest precomputed and paid on return.

Duplicate Copies of Form CT-2

  1. Ensure that all duplicate copies of Form CT-2 have the entity and tax data entered.

  2. Label copy of the Form CT-2 as "Duplicate copy of Form CT-2" and make copies of attachments of the correspondence for transmittal to the Railroad Retirement Board at the following address:

    1. U.S. Railroad Retirement Board
      Chief Financial Officer, 5th Floor
      844 N. Rush St.
      Chicago, IL 60611

  3. Follow local procedures for disposal of all other copies of Form CT-2.

Form CT-2 Tax Rates

  1. The Tier I tax rate is 12.4 percent The Tier I compensation base has increased to $128,700. The Tier I Medicare tax rate is 2.9 percent unchanged from 2012. There is no compensation base limit for Tier I Medicare tax. The Tier II tax rate on employee representatives is 13.1 percent. The Tier II compensation base has increased to $95,400. In addition to the Tier I Medicare tax of 2.9 percent, employee representatives are subject to 0.9 percent Additional Medicare Tax beginning in the pay period in which the compensation for the calendar year exceeds $200,000.

Math Verification of Form CT-2 (Rev 2013 and Subsequent) and (Rev 2012 and Prior)

  1. Effective January 1, 2002, legislation repealed the Supplemental Annuity Work-hour Tax. Form CT-2 was updated to delete the tax on Line 1 "Total work hours for which compensation was paid during this quarter" . The current Form CT-2 has Tier I tax, Tier I Medicare tax, and Tier II tax.

  2. Compute Line 6 (Rev 2013 and subsequent) or Line 5 (Rev 2012 and prior), if blank. Compute Lines 1, 2, 3, and 4 if necessary to compute Line 6 (Rev 2013 and subsequent) or compute Lines 1, 2, and 3 if necessary to compute Line 5 (Rev 2012 and prior). See Figure 3.11.25-2.

    Note:

    For Tax Year 2011 only - If the taxpayer used a Form CT-2 other than Form CT-2 (Rev. January 2011), recompute Line 1 using the rate of 10.4 percent (.104). Also, recompute Line 5.

    Figure 3.11.25-2

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  3. For 2001 and prior returns, if there is an entry for taxable compensation paid, an entry must also be shown for work hours of services performed for the same period. If the entry is missing, refer to the return or attachments to determine the appropriate entry. If the entry cannot be determined, prepare Form 3696, Correspondence Action Sheet, to secure the required missing information from the taxpayer.

Form CT-2 - Line 5 (Rev 2013 and Subsequent) and Line 4 (Rev 2012) Adjustment

  1. An adjustment on Line 5 (Rev 2013 and subsequent) and Line 4 (Rev 2012) must have a supporting document. An adjustment for any amount identified as "≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ " ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡ ≡

  2. Adjustments in wage information reported for prior quarters must be supported with a statement containing the following information:

    1. Explanation of the error which the entry intends to correct;

    2. The particular return period or periods to which the error relates; and

    3. The amount chargeable to each such period.

Barred Periods
  1. Determination of "Barred Periods" for credit or adjustment on Line 5 (Rev 2013 and subsequent) or Line 4 (Rev 2012 and prior). By reference to the attached explanation, a tax examiner will determine whether any portion of the adjustment entered on Line 5 (Rev 2013 and subsequent) or Line 4 (Rev 2012) of the Form CT-2 is barred by the statute of limitations.

  2. See IRM 25.6.1, Statute of Limitations Processes and Procedures, for more information on claims for refund on original delinquent filed returns and amended or supplemental returns.

Form 2438, Undistributed Capital Gains Tax Return Processing

  1. This subsection provides instructions for the examination of Form 2438, Undistributed Capital Gains Tax Return, at the Submission Processing Campus.

  2. Taxpayers are required to file the original form with the Internal Revenue Service Center (201 W. Rivercenter Blvd., Covington, KY 41011), and to attach a copy of Form 2438 to the Form 1120-RIC, U.S. Income Tax Return for Regulated Investment Company, or Form 1120-REIT, U.S. Income Tax Return for Real Estate Investment Trusts.

  3. The following instructions are for processing the original Form 2438 filed independently of the Form 1120-REIT or Form 1120-RIC.

Due Date

  1. Form 2438 must be filed on or before the 30th day after the close of the company's taxable year. Leave Form 7004, Application for Automatic Extension of Time to File Certain Business Income Tax, Information, and Other Returns, if attached to the Form 2438.

Examination

  1. Examine the Form 2438 for completeness, timeliness, the name, address and EIN. There is no need to check for signature, as a copy of the Form 2438 is attached to Form 1120-REIT or Form 1120-RIC and serves as Schedule D.

Mathematical Verification

  1. Compute the following lines, if blank:

    1. Line 4, Net Short-Term Capital Gain (or loss). (Combine the totals in Lines 1 through 3).

    2. Line 8, Net Long-Term Capital Gain. (Combine Lines 5 through 7).

    3. Line 10, Undistributed Capital Gains. (Subtract Line 9b from Line 9a).

  2. Verify Line 13, Capital Gains Tax, is 21 percent of Line 11, Amount of Undistributed Capital Gains on Line 10, Designated under IRC Section 852(b)(3)(D). If different, edit the correct amount to Line 13.

Federal Tax Deposits Credits

  1. Due to the limited number of Form 2438 filed, a distinctive MFT Code is not established for tax deposits of Form 2438. Master File Form 1120 modules for Form 2438 files must be identified and frozen from refund or offset by posting a Transaction Code (TC) 570 pending input of an Account Adjustment Voucher (Form 2424) to transfer any account applicable to Form 2438 to the NMF account. In order to assist Accounting in transferring the Federal Tax Deposit (FTD) credit to the accounts, flag all non-remittance Balance Due and Part-Paid returns, "Do not bill, check for FTD in BMF" .

  2. Route Form 2438 to NMF Accounting for subsequent processing.

  3. See Exhibit 3.11.25-2 for an example of Form 2438, Undistributed Capital Gains Tax Return.

Form 8831, Excise Taxes on Excess Inclusions of Real Estate Mortgage Investment Conduit (REMIC) Residual Interests

  1. This subsection provides background information and instructions for the handling, editing, and disposition of Form 8831, Excise Taxes on Excess Inclusions of Real Estate Mortgage Investment Conduit (REMIC) Residual Interests. Form 8831 related to Business Income Tax returns are processed at the Cincinnati and Kansas City Submission Processing Campus. They are processed to NMF with MFT 89, Tax Class 6, and Doc Code 21.

  2. A tax is imposed on any transfer of a residual interest in a REMIC to a disqualified organization (IRC Section 860E(e)(1)) or on any transfers to a residual interest in a pass-through entity (IRC Section 860E(e)(6)). Taxpayers who are liable for the excise tax(es) due under this section are required to file Form 8831, Excise Taxes on Excess Inclusions of REMIC Residual Interests. The tax applies to those transfers made after March 31, 1988 (unless the transfer was made under a binding contract in effect on that date).

  3. Form 8831 are used to report and pay the following:

    1. The excise tax due under IRC 860E(e)(1) on any transfer of a residual interest in a REMIC to a disqualified organization.

    2. The amount due under 26 Code of Federal Regulations (CFR) 1.860E-2(a)(7)(ii) if the tax under IRC 860E(e)(1) is to be waived; or,

    3. The excise tax due under IRC 860E(e)(6) on pass-through entities with interests held by disqualified organizations.

  4. Disqualified organizations are defined as follows:

    1. The United States, any state or subdivision thereof, any foreign government, any international organization, or any of their agencies (except for certain taxable instrumentalities described in IRC 168(h)(2)(D) and the Federal Home Loan Mortgage Corporation),

    2. Any tax-exempt organization (other than a farmers' cooperative described in IRC 521), unless that organization is subject to the unrelated business income tax; and,

    3. Any cooperative described in IRC 1381(a)(2)(C).

  5. A "pass-through entity" is a regulated investment company, real estate investment trust, common trust fund, partnership, trust, estate, or a cooperative described in IRC Section 1381. A person holding an interest in a pass-through entity as a nominee for another person is also treated as a pass-through entity.

  6. See Exhibit 3.11.25-4 for an example of Form 8831.

Due Date of Form 8831

  1. Taxpayers are required to file Form 8831 and pay the tax by April 15 of the year following the calendar year in which the residual interest is transferred to a disqualified organization. If the regular due date falls on a weekend or legal holiday, the due date is the next business day.

  2. A pass-through entity must file Form 8831 and pay the tax due under IRC Section 860E(e)(6) by the 15th day of the 4th month following the close of its tax year in which the disqualified person is a record holder.

  3. Taxpayers may file Form 7004, Application for Automatic Extension of Time To File Certain Business Income Tax, Information, and Other Returns, to request an extension of time to file Form 8831.

    Note:

    IMPORTANT -Form 7004 does not extend the time for payment of tax. All payment(s) of tax must be received by the original due date of the Form(s) 8831.

Form 8831 General Procedures

  1. Document Perfection will process all full-paid Form 8831. All refund claim Form 8831 will be processed in AM. If refund claim Form 8831 are received, DO NOT PROCESS. Forward to AM using Form 4227.

  2. All edited full paid Form 8831 will be forwarded to NMF Accounting via Form 2345, Batch Transmittal.

  3. If amounts are illegible or over 10 digits, examine the form for attachments and edit the correct amount above the taxpayer's figure. If an amount should be brought forward from an attachment, but it is illegible or cannot be determined, prepare Form 3696, Correspondence Action Sheet, indicating the information needed from the taxpayer. Attach it to the front of Form 8831 and forward to the Suspense Unit.

  4. An amended return will have "AMENDED" marked in the margin at the top of the form. If the return is identified as amended, DO NOT PROCESS. Use Form 4227, Intra-SC Reject or Routing Slip, to forward all amended Form 8831 to AM.

  5. Form 8831 received with remittance will be forwarded to Deposit Activity using Form 4227. If the Form 8831 received with remittance is a copy of a previously filed return, DO NOT PROCESS. Forward to NMF Accounting using Form 4227.

Form 8831 Entity Perfection

  1. Tax Year - ensure the tax year is in YYMM format and edited under the Office of Management and Budget (OMB) number of the form.

  2. If the name, address, or Taxpayer Identification Number (TIN) is incomplete or missing, review any attachments to obtain necessary information, and edit on the return. If attachments are not available and there is no other method of obtaining the necessary data, proceed as follows:

    1. Prepare a Form 3696, Correspondence Action Sheet, indicating the information needed from the taxpayer (i.e., missing information, signature).

    2. Attach it to the front of the Form 8831 and forward to the Suspense Unit.

    Note:

    If only the ZIP Code is missing, research the ZIP Code Directory and edit the appropriate code information.

Correspondence on Form 8831

  1. Always check return attachments before corresponding for missing information.

  2. When corresponding for information, inform the taxpayer that penalties may be assessed (unless reasonable cause is shown) if the requested information is not provided.

  3. Correspondence is required if any of the following conditions apply:

    If... And... Then...
    Section A, Line 1 is blank,   Correspond.
    Section A, Line 2 "Yes" or "No" box is not checked,   Correspond.

    Note:

    Do not correspond if the taxpayer has completed either Section B or Section C.

    Section A, Line 2 "No" box is checked, Section B is not completed, Correspond.
    Section A, Line 2 "Yes" box is checked, Section C is not completed, Correspond.
    Part III (Tax and payments) information is missing,   Correspond.
  4. Attempt to obtain all missing information through one contact with the taxpayer, if possible. Allow 45 days suspense on all correspondence. After 45 days, proceed as follows:

    1. If the taxpayer responds and gives reasonable cause that meets the criteria in IRM 20.1.1, Penalty Handbook, attach the response to the back of the return and continue processing.

    2. If the taxpayer responds but does not meet criteria in IRM 20.1.1, Penalty Handbook, issue correspondence Letter 53C, Penalty and Interest Due: Taxpayer Needs Information (During Initial Processing), to inform the taxpayer their reply did not meet reasonable cause criteria. Also, advise taxpayer a penalty will be assessed if they do not provide the requested missing information. Allow 30 days suspense. If the taxpayer provides the requested information, continue processing the return.

    3. If the taxpayer does not reply or response is incomplete, follow procedures as directed under "d" through "f" , below.

    4. Photocopy the Form 8831, Excise Taxes on Excess Inclusions of REMIC Residual Interests.

    5. Prepare Form 3465 (Adjustment Request) and attach the Form 8831 photocopy. Notate on the Form 3465that a penalty is to be assessed because the taxpayer did not provide the requested missing information.

    6. Route Form 3465 and attached photocopy to AM.

Form 8831 - Part III - Tax and Payments

  1. If present, perfect as described in (2) through (4), below.

  2. If Line 11 is blank and there is an entry on any of Lines 5, 7, or 10, bring the amount forward to Line 11. See Figure 3.11.25-3.

    Figure 3.11.25-3

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  3. If Line 11 is greater than Line 12, verify Line 13 by subtracting Line 12 from Line 11. If the amount on Line 13 is different, edit the difference between Lines 11 and 12 to Line 13.

  4. If Line 11 is less than Line 12, delete Line 13, if an entry is present. Edit the difference between Lines 11 and 12 to Line 13 and route to AM.

Form 8831 - Disposition of Documents

  1. All edited full paid Form 8831 will be forwarded to NMF Accounting via Form 2345, Batch Transmittal.

Form CT-2, Employee Representative's Quarterly Railroad Tax Return

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Form 2438, Undistributed Capital Gains Tax Return

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Terms/Definitions/Acronyms

For Terms, Definitions and acronyms see the following tables:

Interpretation Words

Word Definition Example
Fair Accurate and professional service to all persons without regard to personal bias. Taxpayers have the right to expect a fair and just tax system
Significant Characters Any character other than zero or blank. For example: There are any intervening blanks between significant characters.
Usually The exceptions when something is not required or what would create the unusual circumstance. Nominee returns usually contain only partnership entity information with a statement notating the partnership is a nominee and is not required to file.
Timely The time frame to consider what is or is not timely. Taxpayers have the right to receive assistance from the Taxpayer Advocate Service (TAS) if they are experiencing financial difficulty or if the IRS has not resolved their tax issues properly and timely through normal channels.
 

Acronyms and Abbreviations

Acronyms and Abbreviations Definition
ACA Affordable Care Act
ADP Automated Data Processing
AFD Alpha/Numeric Field Designator
AM Accounts Management
APO Army Post office
AUR Automated Underreporter
BEA Bureau of Economics
BMF Business Master File
BOB Block Out of Balance
C&E Code and Edit
CCC Computer Condition Code
CDP Collection Due Process
CFR Code of Federal Regulations
CI Criminal Investigation
CIS Correspondence Imaging System
CL Clear Field
C/O Care of
CP Computer Paragraph
CSPC Cincinnati Submission Processing Center
DBA Doing Business As
DLN Document Locator Number
DPO Diplomatic Post Office
DPO Document Perfection Operation
EIF Entity Index File
EEFax Enterprise Electronic Fax
E-File Electronically File
e.g. For Example
EIN Employee Identification Number
EOCU EO Compliance Unit
EPMF Employee Plan Master File
ERS Error Resolution System
etc. Et Cetera
Exam Examination
FAX Facsimile
FPO Fleet Post Office
FRP Frivolous Return Program
FTF Failure To File
FYM Fiscal Year Month
GDP Gross Domestic Process
HIRE Hiring Incentives to Restore Employment Act
ICS Integrated Collection System
ID Identification or Identity
IDRS Integrated Document Retrieval System
ISRP Integrated and Remittance Processing System
ITIN IRS Individual Identification Number
IMF Individual Master File
IRC Internal Revenue Code
KCSPC Kansas City Submission Processing Center
LB&I Large Business and International
LIHC Low Income Housing Credit
LLC Limited Liability Company
LLLT Limited Liability Land Trust
LLP Limited Liability Partner
LP Limited Partnership
MCC Martinsburg Computing Center
MeF Modernized Electronic Filing
MFT Master File Tax
MMDDYY Month Month Day Day Year Year
MODI-EIN Modernized Internet EIN
MT Merge To
NAP National Account profile
NAICS North America Industry Classification System
NDC National Distribution Center
NMF Non-Master File
N/A Not Applicable
NDC National Distribution Center
OC Other Country
OID Original Issue Discount
OLE On-Line Entity
OSPC Ogden Submission Processing Center
PBA Principal Business Activity
PDS Private Delivery Service
POA Power of Attorney
PTIN Paid Preparer Tax Identification Number
P.O. Post Office
PRP Program Requirements Package
PTP Publicly Traded Partnership
QSSS Qualified Subchapter S Subsidiary
QTDP Qualifying Therapeutic Discovery Project
R&C Receipt and Control
RDD Return Due Date
Rec’d Received
Rev. Proc. Revenue Procedure
RMIT Remittance
RO Revenue Officer
RRA98 Restructuring and Reform Act of 1998
SB/SE Small Business & Self-Employed
SCAMPS Service Center Automated Mail Processing System
SERP Servicewide Electronic Research Program (SERP)
SFR Substitute for Return
SLA Service Level Agreement
SOI Statistics of Income
SP Submission Processing
SR Short Record
SSN Social Security Number
TAS Taxpayer Advocate Service
TBOR Taxpayer Bill of Rights
TC Transaction Code
TCC Tennessee Computing Center
TE Tax Examiner
TEFRA Tax Equity and Fiscal Responsibility Act
TE/GE Tax Exempt & Government Entities
TETR Telephone Excise Tax Refund
TIA Tax Information Authorization
TPE Tax Period Ending
TPNC Tax Payer Notice Code
TRA Tax Reform Act
TY Tax Year
UBO Unincorporated Business Organization
UCC Uniform Commercial Code
U.S. United States
USPS United States Postal Service
W&I Wage and Investment
ZIP Zone Improvement Plan

Form 8831, Excise Taxes on Excess Inclusions of REMIC Residual Interests

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