3.11.26  Miscellaneous Tax Exempt Governmental Entities (TE/GE) Tax Returns

Manual Transmittal

December 04, 2015

Purpose

(1) This transmits revised IRM 3.11.26, SC Returns and Document Analysis, Miscellaneous Tax Exempt Governmental Entities (TE/GE) Tax Returns.

Material Changes

(1) Made various editorial changes throughout the IRM, including for plain language.

(2) Changed all dates to reflect processing year 01/01/2016.

(3) Official Use Only (OUO) removed from the entire IRM.

(4) Added to the IRM the following IPUs submitted in PY 2015:

  • IPU 15U1075 issued 06-24-2015 IRM 3.11.26.2.8.4 - Address for routing late filed Form 8038 series returns updated in paragraph (2).

  • IPU 15U1075 issued 06-24-2015 IRM 3.11.26.3.18 - Address for routing late filed Form 8038 series returns updated in the" If and Then" table located in paragraphs (6) and (12).

  • IPU 15U1075 issued 06-24-2015 IRM 3.11.26.3.19 - Address for routing late filed Form 8038 series returns updated in the "If and Then" table located in paragraph (10).

  • IPU 15U0799 issued 05-01-2015 IRM 3.11.26.3.22 - Form 8038-TC, line 4 editing procedures revised in paragraph (10), step a.

  • IPU 15U0666 issued 04-09-2015 IRM 3.11.26.3.15 - Removed editing requirement of Preparation Code in paragraph (36). Revised Preparer's SSN, PTIN, EIN and Phone Number procedures in paragraphs (37), (38), and (39) and removed If & Then table in paragraph (39).

  • IPU 15U0666 issued 04-09-2015 IRM 3.11.26.3.16 - Removed editing requirement of Preparation Code in paragraph (21). Revised Preparer's SSN, PTIN, EIN and Phone Number procedures in paragraphs (22), (23), and (24) and removed If & Then table in paragraph (24).

  • IPU 15U0666 issued 04-09-2015 IRM 3.11.26.3.17 - Removed editing requirement of Preparation Code in paragraph (14). Revised Preparer's SSN, PTIN, EIN and Phone Number procedures in paragraphs (15), (16), and (17) and removed If & Then table in paragraph (17).

  • IPU 15U0666 issued 04-09-2015 IRM 3.11.26.3.18 - Removed editing requirement of Preparation Code in paragraph (25). Revised Preparer's SSN, PTIN, EIN and Phone Number procedures in paragraphs (26), (27), and (28) and removed If & Then table in paragraph (28).

  • IPU 15U0666 issued 04-09-2015 IRM 3.11.26.3.21 - Removed editing requirement of Preparation Code in paragraph (32). Revised Preparer's SSN, PTIN, EIN and Phone Number procedures in paragraphs (33), (34), and (35) and removed If & Then table in paragraph (35).

  • IPU 15U0666 issued 04-09-2015 IRM 3.11.26.3.22 - Removed editing requirement of Preparation Code in paragraph (39). Revised Preparer's SSN, PTIN, EIN and Phone Number procedures in paragraphs (40), (41), and (42) and removed If & Then table in paragraph (42).

  • IPU 15U0666 issued 04-09-2015 IRM 3.11.26.3.23 - Removed editing requirement of Preparation Code in paragraph (18). Revised Preparer's SSN, PTIN, EIN and Phone Number procedures in paragraphs (19), (20), and (21) and removed If & Then table in paragraph (21).

Effect on Other Documents

This supersedes IRM 3.11.26 dated January 1, 2015.
This IRM also incorporates the following IRM Procedural Updates (IPU): 15U0799; 15U0666.

Audience

Code and Edit Clerks
Wage and Investment (W&I) Operating Division.

Effective Date

(01-01-2016)

Sean O’Reilly,
Acting Director, Business System Planning
Government Entities/Shared Services
Tax Exempt and Government Entities

3.11.26.1  (01-01-2016)
Miscellaneous Tax Exempt Governmental Entities Overview

  1. This IRM provides instructions for processing Miscellaneous Tax Exempt Governmental Entities (TE/GE) tax returns in the Internal Revenue Service (IRS) Center, Code & Edit, Entity and Accounting functions.

  2. The Ogden IRS Campus is the central processing center for all TE/GE returns, except for returns processed to Non-Master File (NMF). Route unprocessed miscellaneous TE/GE returns received in other IRS campus' or field offices to the appropriate IRS campus per IRM 3.10.72, Extracting, Sorting and Numbering..

  3. Numerical listings (e.g., (1), (2)) indicate a list of directions to follow in the order specified.

  4. Alpha listings (e.g., a., b., c.) indicate important instructions or information. The order of completion or consideration is unimportant.

  5. Any instructions written at the campus (i.e., desk procedures, job aides, etc.) to clarify this IRM or paragraphs created at the campus when the IRM doesn’t request use, may be used upon approval d by the overseeing TE/GE Submission Processing Program Staff Analyst.

3.11.26.1.1  (01-01-2016)
National Service Level Agreements

  1. The operating divisions established National Service Level Agreements (SLAs). This document contains specific information regarding SLAs that pertain to activities performed by use of the IRM.

3.11.26.1.1.1  (01-01-2016)
Taxpayer Advocate Service (TAS) SLA

  1. The TAS SLA contains basic requirements for handling TAS-referred cases, and includes specific actions to be taken on TAS referrals and specific time frames for completing those actions.

  2. You can find the SLAs at http://www.irs.gov/pub/tas/sla_tas_tege_2009-05-29.pdf and find procedures in IRM 13, Taxpayer Advocate Service.

3.11.26.1.1.2  (01-01-2016)
TAS Operations Assistance Requests (OARs)

  1. TAS uses the Operation Assistance Request (OAR) process to refer cases when TAS lacks either the statutory or delegated authority to resolve a taxpayer's problem. The TAS utilizesForm 12412, Operations Assistance Request, to initiate the OAR process.

  2. In cases requiring an OAR, TAS completes the form and forwards the case to the Operating Division Liaison via Form 3210. The Operating Division Liaison reviews the case, assigns it to the appropriate area, and monitors the case through its conclusion.

  3. The Operating Divisions and Functions acknowledges receipt and provide the name and phone number of the assigned IRS employee. within one (1) workday of receipt of the OAR involving a case, Criteria 1 - 4. The Operating Divisions and Functions provides a relief/no relief decision within three (3) workdays of acknowledging receipt of an OAR. The decision is sent in writing, via fax, or hand delivered to the TAS case advocate.

  4. The Operating Divisions and Functions acknowledge receipt and provide the name and phone number of the assigned IRS employee within three (3) workdays of receipt of the OAR involving a systemic or procedural Criteria 5 - 7. The TAS employee negotiates a reasonable time frame with the IRS employee to resolve the case.

  5. Make every effort to expedite completion of OAR cases. Form 12412 indicates the time frames for the assigned area to complete the case.

    1. Assigned employee: If unable to resolve the taxpayer's case by the requested time frame or by a negotiated extension date, immediately notify your manager.

    2. Assigned employee/manager: Work with the Taxpayer Advocate contact listed on Form 12412 to arrive at agreed upon time frames for follow-up based on the facts and circumstances of the particular case.

    3. Assigned employee/manager: Discuss your findings and recommendations on the final disposition of the case with the appropriate TAS contact. The TAS contact communicates the final decision on the case to the taxpayer. This doesn’t prohibit you from also telling the taxpayer.

    4. Assigned employee/manager: If the TAS contact and you can’t agree how to resolve the taxpayer's problem, the TAS employee elevates this disagreement to his or her manager who will discuss it with the appropriate Operating Division manager. l You also need to elevate any disagreement to your manager.

  6. For more detailed information, please refer to: IRM 13 and http://www.irs.gov/pub/tas/sla_tas_tege_2009-05-29.pdf

  7. Assigned employee: Upon case resolution, complete section VI of Form 12412, Operations Assistance Request, and return it to the TAS Case Advocate assigned the case. Return The Form 12412 within three (3) workdays of the date when you complete all actions and the transactions post.

  8. Upon case resolution, complete section VI of Form 12412, Operations Assistance Request, and return it to the TAS Case Advocate assigned the case. Return the Form 12412 within three (3) workdays of the date when you complete all actions and the transactions post.

3.11.26.1.2  (01-01-2016)
BMF Consistency

  1. Our goal is to achieve consistency in the Business Master File (BMF) Code & Edit processing IRMs.

  2. Cincinnati, Ogden, and Paper Processing Branch BMF Code & Edit and ERS section coordinate the effort to identify topics for BMF Consistency.

  3. This IRM identifies BMF Consistency subsections are identified by a "◆" (diamond) before and after the subsection title.

  4. Text in normal print is the common process for BMF returns. The text in bold print is form-specific and applies to this IRM only.

3.11.26.2  (01-01-2016)
General Perfecting of TEB Returns

  1. Use the following general information when editing Tax Exempt Bond returns. If the general instructions and the form specific instructions conflict, follow the form specific instructions.

  2. Perfect for legibility. If perfecting a dollar or "total" line and an amount isn’t present, bring the amount to the line from attachment(s) or from the lines feeding into the "total" line.

    1. "X" the T-line if the taxpayer crossed out the wording and replaced it with wording with a different meaning from the wording on the return.

    2. "X" the line and edit or add the entry on the correct T-line if the wording has been crossed out and replaced with wording that is on a T-line.

    3. Recompute a "total" T-line if all of the lines above it are also T-lines, and one or more dollar entries edited or deleted ("X" ed).

  3. A dollar entry is a positive or negative dollar amount.

    1. Document Perfection n o longer needs to edit dollars and cents.

    2. Don’t edit brackets or parentheses around amounts clearly indicated to be negative with a bracket or a minus (-) sign. A true negative entry means that, through computation or perfection, the result or entry is actually negative.

      Reminder:

      Bracket negative amounts when editing negative entries on transcription lines (i.e., computing and entering a missing line entry, etc.).

  4. IRM 3.11.26.4 provides instruction for processing TEB returns received in Entity Perfection.

  5. IRM 3.11.26.5 provides general information about TEB returns received in Accounting.

  6. Any instruction for completing a correspondence action sheet and annotating the missing items can be done by checking the box next to the reason if present on the action sheet, or by writing out the reason in an open paragraph if the IRM states to use the open paragraph.

3.11.26.2.1  (01-01-2016)
Purpose and Background

  1. The Tax Reform Act of 1986 requires issuers of Tax Exempt Bonds to file information returns with the Internal Revenue Service. It also requires that municipal bonds meet certain rules for the interest received by the bondholders to be exempt from federal income tax.

  2. The table below provides the specific form type, MFT, Doc Code, and valid Report Number range as it applies to each TEB return. The Tax Class for all TEB returns is 3. The Document Code (Doc. Code) in the Document Locator Number (DLN) defines which form it specifically relates to.

    Form MFT Doc. Code Report Number
    8038 46 61 100 - 199
    8038-G 46 62 300 - 399
    8038-GC 46 72 500 - 599
    8038-T 46 74 700 - 799
    8328 46 75 900 - 999
    8038-CP 46 88 800 – 899,
    200 – 299,
    or 400 – 499
    8038-B 85 85 100 - 499
    8038-TC 86 86 100 - 499
    8703 84 05 100 - 999

3.11.26.2.2  (01-01-2016)
Purpose of Form

  1. Form 8038, Information Return for Tax Exempt Private Activity Bond Issues, is for issuers of tax exempt qualified private activity bonds to provide the IRS with the information required by IRC 149(e) and to monitor the requirements of IRC 141 through IRC 150.

  2. Form 8038-G, Information Return for Tax Exempt Governmental Obligations, is for issuers of tax exempt governmental bonds of $100,000 or more, to provide the IRS with information required by IRC 149(e).

  3. Form 8038-GC, Information Return for Small Tax Exempt Governmental Bond Issues, Leases, and Installment Sales, is for issuers of tax exempt governmental bonds of less than $100,000, to provide the IRS with information required by IRC 149(e).

  4. Form 8038-R, Request for Recovery of Overpayments Under Arbitrage Rebate Provisions, is for issuers of state and local bonds to request a refund of amounts previously paid with Form 8038-T. Form 8038-R replaces the letter procedure of Rev. Proc. 92.83, 1992-2 C.B. 487.

  5. Form 8038-T, Arbitrage Rebate, Yield Reduction and Penalty in Lieu of Arbitrage Rebate , is for issuers of tax exempt bonds when paying arbitrage rebate (or penalty in lieu of rebate) to the United States as required under IRC 148(f), or the corresponding provisions of the 1954 Code; or to make a yield reduction payment in accordance with IRC 1.148-5(c). Payments may be made by a person acting on behalf of the issuer for bonds subject to IRC 103(c)(6)(D) of the 1954 Code. Under IRC 148(f), interest on a state or local bond isn’t tax exempt unless the issuer of the bond rebates to the United States on Form 8038-T, arbitrage profits earned from investing proceeds of the bond in higher yield nonpurpose investments.

  6. Form 8328, Carryforward Election of Unused Private Activity Bond Volume Cap, is for the issuing authority of private activity bonds to elect to carry forward its unused volume cap for one or more carryforward purposes (see IRC 146(f)). A state may also use Form 8328 to carryforward the unused volume cap under IRC 142(k). Once Form 8328 is filed, the issuer may not revoke the carry forward election or amend the carry forward amounts on the form.

  7. Form 8038-CP, Return for Credit Payments to Issuers of Qualified Bonds, is for issuers of governmental bonds who elect to receive a direct payment from the federal government equal to the subsidy that would have otherwise been delivered through the federal tax credit for bonds.

  8. Form 8038-B, Information Return for Build America Bonds and Recovery Zone Economic Development Bonds, is for reporting Build America Bonds and Recovery Zone Economic Development Bonds to provide the IRS with information required by IRC 149(e).

  9. Form 8038-TC, Information Return for Tax Credit and Specified Tax Credit Bonds as the result of the new Hire bill, is for issuers of qualified tax credit bonds to provide the IRS with the information required by IRC 149(e).

  10. Form 8703, Annual Certification of a Residential Rental Project, is for an operator of a residential rental project to provide annual information the IRS will use to determine whether a project continues to be a qualified residential rental project under IRC 142(d). If so, and certain other requirements are met, bonds issued in connection with the project are considered "exempt facility bonds" and the interest paid on them isn’t taxable to the recipient.

3.11.26.2.3  (01-01-2016)
Description of Bonds

  1. Municipal bonds may be classified as tax exempt (government or qualified private activity bonds) or taxable ( government or qualified private activity bonds).

  2. Municipal bonds may be issued as governmental bonds or non-governmental bonds. Some non-governmental bonds are also called "qualified private activity bonds" . The following identifies a few bond categories:

    1. Governmental Bonds: issued to finance governmental activities of a state or local government. That is, the government entity uses the bond proceeds for its own purposes. Certain lease arrangements may be treated as tax exempt bonds when the lease transaction is treated as a conditional sales contract.

      Example:

      Funds used to build and maintain highways, schools, government buildings (e.g., courthouses), or sewer and water facilities.

    2. Qualified Private Activity Bonds: issued by state and local governments. The facilities financed with the bond proceeds can be owned and operated by non-governmental entities for limited purposes specified in IRC 142(a), 143, 144, and 145.

      Code Section Examples
      IRC 142 exempt facility bonds Airports
      Docks and wharves
      Mass commuting facilities
      Facilities for the furnishings of water
      Sewage facilities
      Solid waste disposal facilities
      Qualified residential rental projects
      Facilities for the local furnishing of electric energy or gas
      Local heating or cooling facilities
      Qualified hazardous waste facilities
      High-speed intercity rail facilities
      Environmental enhancements of hydroelectric generating facilities (142(a))
      Qualified public educational facilities
      Qualified green building and sustainable design projects
      Qualified highway or surface freight transfer facilities.
      IRC 143 bonds Qualified Mortgage Bonds
      Qualified Veteran's Mortgage Bonds
      IRC 144 bonds Qualified Small Issue Bonds
      Qualified Student Loan Bonds
      qualified Redevelopment Bonds
      IRC 145 bonds Qualified IRC 501(c)(3) bonds

      Example:

      A county needs a nursing home in its community. It loans bond proceeds to an IRC 501(c)(3) corporation who will construct and operate the facility.

    3. Pooled Financing may involve proceeds of governmental bonds or certain types of private activity bonds. In a pooled financing, the proceeds of the issuer loans the bonds to more than one borrower. The borrower of the proceeds may be tax exempt organizations or other state or local governments.

      Example:

      A school district issues a bond for multiple schools within its district. One school uses the proceeds to buy computer equipment. Another school uses the proceeds to construct administrative offices.

    4. Registered Warrants are a short term obligation (30 - 60 day bond) of a municipality.

    5. Commercial Paper Bonds are a short term bond having a maturity date of 270 days or less. These bonds are issued pursuant to a commercial paper program that is treated as part of a single issue.

    6. Commercial Paper Program is a program to issue commercial paper to finance or refinance the same governmental purpose pursuant to a master legal document.

    7. The Liberty Bond is due to the September 11, 2001 terrorist attack. The IRS provided guidance (Notice 2002-42 2002–27 IRB 36) on the effects of various tax benefits that were enacted for areas of New York City. IRC 1400L(a) provides for a new targeted group for the Work Opportunity Tax Credit (WOTC): New York Liberty Zone business employees. The new targeted group includes individuals who perform substantially all of their services in the New York Liberty Zone (NYLZ), and may include individuals who perform substantially all of their services elsewhere in New York City for a business that relocated from the NYLZ due to the physical destruction or damage of its workplace within the NYLZ by the September 11, 2001 terrorist attack.

    8. Lease Installment Sales: unconditional sales agreements under which a municipal government leases equipment that it acquires at the end of the lease period.

    9. Promissory Notes: interest bearing certificates of governments that come due in a shorter time than bonds. Municipal notes have maturities up to approximately one year.

    10. Lines of Credit: pre-approved loans where the municipality draws down money as it is needed. The loans have specified dollar limits, terms and interest rates.

      Note:

      This is similar to a home equity loan of a homeowner.

    11. Green bonds: issued to finance projects designated by the Secretary after consultation with the Environmental Protection Agency Administrator. Green building and sustainable design projects must meet certain eligibility requirements.

    12. The Gulf Opportunity Zone Bond is due to the Hurricane Katrina disaster area determined by the President to warrant individual or individual and public assistance from the federal government. The IRS provided guidance ( Notice 2006-41, 2006–18 IRB 857), which authorizes the states of Alabama, Louisiana, and Mississippi to issue certain exempt facility bonds and qualified mortgage bonds pursuant to IRC 1400N(a). Gulf Opportunity Zone Bonds must be issued before January 1, 2011. Notice 2006-41 also provides guidance on Gulf Opportunity Zone Advance Refunding Bonds that are permitted to be issued under IRC 1400N(b).

  3. Bonds are an "obligation" of any state or political subdivision thereof. Obligation means any valid evidence of indebtedness under general federal tax principles. Obligations are not limited to bonds or other securities but may also include written contracts such as installment sales contracts and loans to a municipality.

  4. To be an obligation, money must be borrowed by a governmental entity, used for governmental or qualified purposes, and there must be an obligation to repay.

  5. Income from certain obligations of states and their political subdivisions may likewise be excluded from gross income. Such obligations include:

    1. Installment sales contracts

    2. Equipment leases

    3. Bank loans

3.11.26.2.4  (01-01-2016)
Definitions

  1. The following definitions may be used throughout the text of this IRM:

    TERM DEFINITION
    ARBITRAGE The purchase and sale of the same or equivalent security in order to profit from price differences. The term arbitrage applies to all types of investments.
    CUSIP An acronym for Committee on Uniform Securities Identification Procedures. Issuers obtain CUSIP numbers for their Municipal Bonds.
    Date of Issue This is usually the date on which the issuer physically exchanges the bonds that are part of the issue for the underwriter's (or other purchaser's) funds. It might also be the date the interest starts to accrue, if this obligation is for a lease or installment sale.
    IRC An acronym for Internal Revenue Code.
    Issuer The name of the entity issuing or selling the bonds, not necessarily the name of the entity receiving the benefit of the financing.
    Maturity Date The date on which the entire outstanding principal of the bond must be paid to the bondholder.
    Report Number This is a unique three digit number the IRS assigns to the bond issue to differentiate individual bond returns and to comply with programming requirements.
    TAS An acronym for Taxpayer Advocate Service.
    TEB An acronym for Tax Exempt Bond.
    Willful Neglect Conscious, intentional failure to comply with the provisions of the IRC, or reckless indifference to such provisions.
    Debt Service Schedule The debt service schedule provides various information such as interest amounts, subsidy payments, and dates. It’s a required attachment to Form 8038-B, Form 8038-TC and Form 8038-CP (when required).

3.11.26.2.5  (01-01-2016)
Attachment to Returns

  1. Review all attachments to the return before you can consider the return processable.

  2. Detach attachments only when specifically instructed.

  3. Detach documents with an original signature. Don’t detach documents used to supplement or support the return (e.g., Debt Service Schedule is attached to a Form 8038-B).

  4. Refer to the Campus Mail Routing Guide (MRG) for proper disposition of attachments not found in this section.

  5. Edit action trail(s) (e.g., "F2848 DETACHED" ) in the lower left corner going vertically up the side of the return.

    ATTACHMENT ROUTING GUIDE
    Form/Document Applicable Forms Detach Action
    Acknowledgement Requests All No 1) Don’t reply to request. Annotate on the return "copy" , line through the photocopy in red ink, leave attached to the original return and continue processing.
    2) If an original return isn’t present, and the form is marked with wording similar to "acknowledgement copy"
    or "Please stamp and return" , route to EO Accounts (MS: 6552).
    CP 142, Late Filed TEB Notice Form 8038, Form 8038-G, Form 8038–GC, Form 8038-T, Form 8038-B, Form 8038-TC No EO Accounts M/S 6552
    Debt Service Schedule Form 8038–B or Form 8038–TC No If attached to a return, leave attached.
    Form 8038-B Form 8038-G Yes Detach and process each return as an original.
    Form 8038-TC Form 8038
    Form 2848, Power of Attorney and Declaration of Representatives All Yes 1) Edit the issuer's name, EIN and assigned Rpt number on the Form 2848.
    2) Edit the received date on Form 2848.
    3) Route Form 2848 to the CAF unit.
    4) Edit the action trail on the left of the tax return (e.g., "Form 2848 detached" ).
    Form 8328 Form 8038 Yes If Form 8328 isn’t marked "copy" , check for an original signature and current signature date. If original signature and current signature date are present, detach and process each form as an original.
    No 1) If Form 8328 is marked "copy" , leave attached to Form 8038 and continue processing the return.
    2) If an original signature and current signature date are not present, leave attached to the Form 8038 and continue processing.
    Form 12412, Operations Assistance Request All Yes Don”t correspond or contact the taxpayer. Notify your manager.
    Refund Claim or Form 8038-R Form 8038-T, which may also have a bond computation summary sheet and/or any other miscellaneous correspondence or forms. No Route to EO Accounts M/S 6552
    Missing or Invalid EIN, All No Route to Entity.
    Mortgage Credit Certificate (MCC), All No Route to Entity.
    Notice of Defeasance, All No Route to Entity.
    Amended Return (except Form 8038-CP), All No Route to EO Accounts M/S 6552.
    All other miscellaneous TEB written correspondence, All No Route to EO Accounts M/S 6552.
    Form 8822, Change of Address

    Note:

    Compare the name control, EIN, city, state, and zip code on Form 8822 to the return.

    All No If the information is the same, take no action and continue processing.
    Yes If the information is different, detach and route to Entity.

3.11.26.2.6  (01-01-2016)
Correspondence and Taxpayer Contact Requirements

  1. Section 3705(a) of the Restructuring and Reform Act of 1998 requires all IRS employees who communicate with taxpayers by phone, in writing, or face to face, to give their name, unique identification number and telephone number when communicating with taxpayers.

  2. When writing a letter, you should include the following:

    1. Your title (Mr., Mrs., Ms., or Miss),

    2. Your last name,

    3. Your badge identification number or IDRS number, and

    4. A telephone number where the taxpayer's questions can be answered.

  3. If you’re not in the best position to respond to questions the taxpayer may have, include a telephone number the taxpayer may contact. In this instance, use a standard signature.

3.11.26.2.7  (01-01-2016)
♦Entity Perfection - General♦

  1. There are no package mail-outs for TEB forms, therefore, no pre-printed labels exist for these forms.

3.11.26.2.7.1  (01-01-2016)
♦Entity Perfection -
Employer Identification
Number (EIN)♦

  1. The EIN is a nine-digit number (XX-XXXXXXX) assigned to identify the taxpayer.

  2. The EIN is located in the upper right of the form (Employer Identification Number box) or the top left corner of the preprinted label.

  3. Determine the EIN as follows:

    If Then
    the EIN is missing, and you can determine the correct EIN from the attachments and/or schedules, edit the EIN to the proper location.
    there are multiple EINs present, route to Entity.
    the EIN is illegible, invalid or missing, and can be determined from attachments, edit the EIN box or the left of the EIN box.
    the EIN is illegible, invalid or missing, and cannot be determined from attachments, route to Entity.

    Note:

    Do not research IDRS for the EIN.

3.11.26.2.7.2  (01-01-2016)
♦Entity Perfection –
Name Control♦

  1. There are no package mail-outs for TEB forms, therefore, no pre-printed labels exist for these forms.

  2. Perfect the name control by editing or underlining the first four characters of the name.

  3. If you can’t perfect the name control route the return to Entity.

  4. The Name Control consists of four or less alpha and/or numeric characters derived from the first name line.

    1. Valid characters are alpha, numeric, ampersand (&), hyphen (-), and blank. However, blanks are only valid in the last three positions.

    2. Disregard the word "THE" in the Name Control only when followed by more than one word.

    3. Include the word "The" when followed by only one word.

  5. See Document 7071A, Name Control Job Aid – For Use Outside the Entity Area, to determine the Name Control.

3.11.26.2.7.3  (01-01-2016)
♦Entity Perfection -
"In-Care-Of" Name♦

  1. You can identify an "in-care-of" name by words "in-care-of" or symbols "c/o" or "%" (percent).

  2. Ensure the "in-care-of" name is located in the proper location.

    If Then
    the in-care-of name is located on the street address line preceding the street address, 1) No editing is required.
    the in-care-of name is located above the first name line or below the street address 1) Arrow the in-care-of name so it appears below the first name line and above the street address.
    2) Continue editing the return.
    the in-care-of name is shown on an attachment 1) Edit the in-care-of name above the street address beginning with the %or c/oin the first position.
    2) Continue editing the return.

    Note:

    Always circle the in-care-of symbol (% or c/o) if present with an address. Don’t use the ampersand (&) and the percent sign (%) when editing address information.

3.11.26.2.7.4  (01-01-2016)
♦Entity Perfection –
Domestic Addresses♦

  1. You need to perfect the address when you can’t easily identify the mailing address (Street or P.O. Box).

    If Then
    the address contains information other than a street address or a P.O. Box, no perfection is necessary. ISRP will enter the complete address.
    there is an indication on an attachment that the address has been changed, edit the new address in the Entity section of the return.
    Form 8822, Part II (Address Change Requested) is attached and the information is the same, take no action.
    Form 8822, Part II (Address Change Requested) is attached and the information is different, detach Form 8822 and route to Entity.
    the city and state are not shown on the return, but are shown on an attachment, edit the city and state in the Entity Section of the tax return.
    no address is shown on the return or attachment, 1) Attach a completed Form 4227.
    2) Route to Entity.
    the ZIP Code is missing or illegible and isn’t, available from the return or attachments, determine the ZIP Code using State and Address Abbreviations, Major City Codes, ZIP Codes, and Countries, Document 7475.
    only the first three digits of the ZIP Code can be determined, edit 01 for the fourth and fifth digits.
  2. Perfect the following locations as an U.S. address:

    • American Samoa (AS)

    • Mariana Islands (MP)

    • Puerto Rico (PR)

    • Virgin Islands (VI)

    • Guam (GU)

  3. The U.S. Postal Service established new address requirements for APO/FPO addresses. If the old address appears (i.e., APO New York, NY 091XX), convert to the new state abbreviation based on the zip code (i.e., in the previous example convert it to APO AE 091XX). Treat APO/FPO addresses as domestic addresses. Refer to the Conversion Chart below:

    ZIP Code Address Country APO/FPO
    34000 - 34049 APO Americas APO AA
    34050 - 34099 FPO Americas FPO AA
    090XX - 094XX
    096XX - 098XX
    APO Europe APO AE
    095X FPO Europe FPO AE
    962XX - 965XX
    98700 - 98759
    APO Pacific APO AP
    966XX and
    98760 - 98799
    FPO Pacific FPO AP

3.11.26.2.7.5  (01-01-2016)
♦Entity Perfection -
Foreign Address♦

  1. A foreign (international) address is any address not in the 50 states or the District of Columbia.

  2. Treat returns with APO or FPO addresses as domestic addresses (see IRM 3.11.26.2.7.4 above).

  3. Route returns with a foreign address to Ogden Submission Processing Center (OSPC) for processing. Prepare 86C to inform the taxpayer that we sent the return to Ogden.

    Note:

    Refer to IRM 3.11.26.3.13.1 for additional foreign address procedures.

  4. Treat returns with addresses in the following U.S. Possessions/Territories as foreign address for processing purposes. Edit these in the same way as domestic addresses.

    1. Edit a two-character alpha code for the possession name.

    U.S. Possession / Territory Abbreviation
    American Samoa AS
    Federated States of Micronesia FM
    Guam GU
    Marshall Islands MH
    Northern Mariana Islands MP
    Palau PW
    Puerto Rico PR
    Virgin Islands (U.S.) VI
  5. Process all Forms 8703 with a Puerto Rico address as normal.

3.11.26.2.8  (01-01-2016)
Special Returns

  1. This subsection provides procedures for processing special returns which includes amended, SFR, reprocessable and statute.

3.11.26.2.8.1  (01-01-2016)
Amended Returns

  1. An "amended" return may be annotated with wording similar to:

    1. Amended

    2. Superseding

    3. Revised

    4. Supplemental

    5. Amended return box is checked.

  2. Correspondence may also indicate a return being amended and there won’t be any annotation on the return itself.

  3. If we receive a TEB return and the filer marked the "Amended Return" check box or attached correspondence is attached indicating he/she amended the return, refer to the procedures outlined below.

    If Then
    unnumbered Form 8038, Form 8038-B, Form 8038-G, Form 8038-GC, Form 8038-T, Form 8703, or Form 8038-TC amended return, 1) Route to EO Accounts (M/S 6552).
    numbered Form 8038, Form 8038-B, Form 8038-G, Form 8038-GC, Form 8038-T, Form 8703 or Form 8038-TC amended return, 1) Edit ERS AC 640 (see IRM 3.11.26.3.2, ERS Action Codes.
    2) Attach Form 4227.
    3) Check the Reject box and annotate "Cancel to EO Accounts M/S 6552."
    unnumbered or numbered Form 8328, 1) Circle out the amended wording and process as an original.
    Don’t route to EO Accounts.
    correspondence is attached indicating the return was amended, 1) Route to EO Accounts (M/S 6552).

3.11.26.2.8.2  (01-01-2016)
♦Statute Returns♦

  1. The Form 8038-CP is the only TEB return that can possibly have a statute of limitation (SOL). GECU will determine whether the Form 8038-CP is outside the SOL.

  2. A claim for credit or refund of the refundable credit for qualified bonds must be filed within the statute of limitations which is three years from the date the Form 8038-CP was filed or two years from the date the issuer made the bond interest payment, whichever period expires later.

  3. A statute of limitation problem may exist when one of the following situations occur:

    1. The current processing date is 2 years and 9 months or more, after the later of the due date or the Received Date of any original Form 8038-CP being edited.

    2. The current processing date is 2 years and 9 months or more after the original due date on an amended return.

  4. If a return meets the above conditions and doesn’t have a "Statute Cleared" indication, attach Form 4227 and give to lead.

  5. Edit CCC "W" if the statute return is stamped "Cleared by Statute" . This code will prevent the validity check on returns which are filed two years and nine months after the due date.

    Note:

    Edit CCC "W" only when the return processing date is two years and nine months after the later of the return due date or received date, whichever is later.

  6. Statute expirations are as follows:

    1. ASED (Assessment Statute Expiration Date) 3 years from the later of the return due date or 3 years from the received date.

    2. RSED (Refund Statute Expiration Date) 3 years from the received date of the original return or 2 years from the tax penalty and/or interest payment date.

    3. CSED (Collection Statute Expiration Date) 10 years from the date of assessment.

3.11.26.2.8.3  (01-01-2016)
Substitute for Return (SFR)
Field Requests for Return Processing

  1. We may receive TEB returns from the Field requesting we process the returns to MF.

  2. You can identify these returns by wording similar to "Substitute for Return (SFR)" . Additionally, the wording similar to "DO NOT CORRESPOND - PROCESS TO THE MF" may be edited on the return. Don’t correspond on these returns.

  3. If the return is complete, continue processing.

  4. If return is incomplete, contact TEGE P&A analyst liaison.

3.11.26.2.8.4  (01-01-2016)
Delinquent Return or Payment

  1. Determine if the return is timely filed using the due date charts in IRM 3.11.26.3.6 and Exhibit 3.11.26-2.

    1. If timely filed, continue processing.

    2. If not timely filed by the due date or extended due date, review the return and attachment(s) and proceed as follows:

    1. If Filed Form And Attachment(s) Indicate Then And
      8038,
      8038-G,
      8038-GC,
      8038-B,
      8038-TC,
      within 6 months of the due date,
      taxpayer filed in accordance with Rev. Proc. 88-10or Rev. Proc. 2002-48, and
      provided a reason for the delay,
      Edit CCC "R" on the return, 1) Continue processing return.
      8038,
      8038-G,
      8038-GC,
      8038-B,
      8038-TC,
      6 months or more after the due date,
      taxpayer filed in accordance with Rev. Proc 88-10 or Rev. Proc 2002-48, and
      provides a reason for the delay,
      Edit CCC "7" on the return, 1) Photocopy the return, attachment(s), and envelope.
      2) Forward copy to the TEB CPM per (2) below.
      3) Annotate on return "Copy sent to TEB." in lower left hand margin of form.
      4) Continue processing return.
      8038,
      8038-G,
      8038-GC,
      8038-B,
      8038-TC,
      taxpayer received a 400C letter granting an extension of time to file, if return was filed by the extension date granted in the letter
      •Edit CCC "R" on the return,
      1) Continue processing return.
      if return was filed after the extension date granted in the 400C letter, and the taxpayer indicates they filed late in accordance with Rev. Proc. 88-10 or Rev. Proc 2002-48, and provided a reason for the delay
      •Edit CCC "7" on the return.
      1) Photocopy the return, attachment(s), and envelope.
      2) Forward copy to the TEB CPM (see (2) below).
      3) Annotate on return "Copy sent to TEB." in lower left hand margin of form.
      4) Continue processing return.
      if the return was filed after the extension date granted in the 400C letter, and no explanation for late filing is provided, 1) Continue processing return.
      8038,
      8038-G,
      8038-GC,
      8038-B,
      8038-TC,
      no attachments, or
      taxpayer did not indicate they were filing late in accordance with Rev. Proc. 88-10, or Rev. Proc. 2002-48, and
      did not provide a reason for the delay,
      if there are NO additional instructions edited on the return from the Field. 1) Continue processing return.
      if there are instructions from the Field similar to "Do Not correspond - process to the MF" , edited on the return
      •Edit CCC "R" on the return.
      1) Continue processing return.
      8038
      8038-G,
      8038-GC,
      8038-T,
      8038-B,
      8038-TC,
      the failure to timely file was due to willful neglect, Edit CCC "7" on the return, 1) Photocopy the return, attachment(s), and envelope.
      2) Forward copy to the TEB CPM (see (2) below).
      3) Annotate on return "Copy sent to TEB." in lower left hand margin of form.
      4) Continue processing return.
      Exception: Secured Delinquent returns, Form 8038-T, should not be photocopied and sent to TEB CPM.
      8038-T, any reason,
      no reason provided,
      no attachments,
      no date entered on line 12 and Part II is completed, or
      no box checked on line 16 and Part III is completed,
      Edit CCC "7" on the return, Exception: Secured Delinquent returns Form 8038-T, should not be photocopied and sent to TEB CPM.
      1) Photocopy the return, attachment(s), and envelope.
      2) Forward copy to the TEB CPM per (2) below.
      3) Annotate on return "Copy sent to TEB." in lower left hand margin of form.
      4) Continue processing return.
      Exception: Secured Delinquent returns Form 8038-T, should not be photocopied and sent to TEB CPM.
      8038-T taxpayer filed in accordance with Rev. Proc. 95-47,  
      8328, any reason don’t edit a late filed CCC. 1) Continue processing return.
      8703 any reason for late filing, Edit CCC "R" on the return, 1) Continue processing return.

    Note:

    Send copies of all late filed 8038-T's and/or Form 8038-Ts filed in accordance with Rev. Proc. 95-47 must be sent to TEB CPM for late filing consideration.

  2. Forward copies of items identified above within 21 days to the address shown below. Complete a Form 3210 and include the EIN, tax period, and report number. Annotate briefly the reason for sending a the copies (i.e., Late filed, No R/C explanation, etc.).

    Internal Revenue Service
    SE:T:GE:TEB:CPM
    1111 Constitution Ave., NW
    SE:T:GE:TEB:CPM NCA-533-08
    Washington, D.C., 20224

3.11.26.2.8.5  (01-01-2016)
Re-Entry Document Procedures

  1. A return posted to the wrong account or module or attempting to post must be reprocessed to post to the proper account or module.

  2. Each re-entry return must have a Form 3893, Re-Entry Document Control or Form 13596, Reprocessing Returns attached. We use Form 3893 to re-input documents that haven’t posted to an account or module. We use Form 13596 to reprocess documents to the correct account ro module that posted to the wrong account or module.

  3. Always leave a Form 3893 or Form 13596 on the front of the return. It remains as a permanent part of the document.

  4. Examine the Form 3893 and/or Form 13596 to determine the action to take to make the return processable.

  5. For late filed re-entry documents refer to IRM 3.11.26.2.8.5. If CCC "7" is on the return, but lacks any indication the required documentation was sent to TEB CPM (i.e., "Copy sent to TEB" isn’t annotated on return in lower left hand margin of form) prepare the required documents as outlined in 3.11.26.2.8.5 above and forward to TEB CPM.

3.11.26.3  (01-01-2016)
Code and Edit - Instructions for Editing Tax Exempt Bonds

  1. This subsection provides editing instructions for tax exempt bonds and their related documents.

  2. Enter all edit marks on the return being processed.

  3. Consider the following criteria when editing a return:

    1. Zero, N/A, dash, or none are acceptable entries unless otherwise stated.

    2. Edit any misplaced or illegible entry to the proper transcription line.

3.11.26.3.1  (01-01-2016)
♦Edit Marks♦

  1. We edit marks on the return for transcription to the Automated Data Processing (ADP) System through ISRP. Code and Edit must edit in red pencil/pen. Other areas can edit in brown, orange, purple or green pencil/ pen.

  2. The only items edited on the return are those to be transcribed except where specific instructions require editing of a non-transcribed item. Leave lines blank if the entry would be a zero amount unless otherwise instructed.

  3. Never obliterate, alter, or erase the original entry on a return when deleting or correcting an entry. Always exercise care to ensure that the original entry remains legible. Perfected entries provide a legible "edit trail" for anyone who may work with the return later.

  4. For a description of specific edit marks, see the table below:

    Edit Mark Description
    X or / Use the "X" to delete tax data or to indicate that an item isn’t transcribed. Use an "/" when deleting a form or schedule not being transcribed.
    / /$ Use "/ /$" in the entity area to identify the beginning and ending of a Foreign Country Code.

    Example:

    Edit "/EI/$" for "Ireland" or edit "/GM/$" for "Germany"

    c/o or % Indicates an "in-care-of" name for transcription.
    Circle Indicates that an entry isn’t transcribed. Also used to delete Entity data or a Received Date.

    Note:

    If the taxpayer circles an entry, edit the entry.

    Underline Indicates that an entry is to be transcribed (e.g., Name Control, Tax Period, etc.).
    Arrow Indicates the correct placement of a misplaced entry. Use an arrow if the misplaced item is close to the correct line and there is no question where the entry belongs.

    Note:

    Use a double arrow (<------->) if the same figure is to be transcribed in two different places.

    Check Mark Indicates t a manually math verified and correct entry.
    Bracket/Parenthesis Indicates a negative numerical amount.

    Note:

    C&E is no longer needs to bracket negative amounts when brackets are preprinted on the form or schedule, or when the taxpayer clearly indicates a negative amount with "( )" brackets or "-" minus sign. Bracket negative amounts when editing negative entries on transcription lines (i.e., computing and entering a line entry, entering a missing entry, etc.).

    Vertical Line or Decimal Point Indicates the separation of dollars and cents.
    0 (zero), - (dash), None, or N/A ZERO, DASH, NONE, or N/A are valid entries except when specific instructions require editing of an entry.
    Edit marks made by other IRS functions Don’t re-edit edit marks entered by other areas, such as GECU, TEB CPM, Entity or Accounts Management except to place the marks in the correct area. Don’t edit (or write) edit marks made by another area.
    Rocker Indicates the amount paid when drawn under a remittance amount.

3.11.26.3.2  (01-01-2016)
♦Action Codes♦

  1. Use Action Codes (AC) to indicate whether correspondence, research, or some other action is needed. The AC sets the suspense period to be assigned to the return and place the return in the workable or unworkable suspense inventory.

  2. When needed, assign a three-digit AC. Action codes are valid on Form 8038, Form 8038-G, Form 8038-GC, Form 8328, Form 8038-T, Form 8038-B, Form 8038-TC, and Form 8703. Process any other returns through a manual correction system.

  3. Edit the AC in the bottom left margin of the tax return.

  4. Assign action codes in the following priority:

    1. AC 310 (Statute Control)

    2. AC 320 (Entity Control)

    3. AC 4XX

    4. AC 6XX

    5. AC 3XX

    6. AC 2XX (correspondence)

    Exception:

    Use AC 2XX before AC 480 to ensure correspondence for completeness before suspending the return as early filed.

  5. Attach Form 4277 when more than one AC is needed. Edit the second AC on Form 4227.

  6. If needing more than one AC of the same priority (e.g., 420 and 480), edit the AC with the shortest suspense period and attach Form 4227 to indicate the second unprocessable condition, see IRM Exhibit 3.11.12-1

  7. Edit the following ACs when unable to perfect a return from the information present:

    Action Code Description
    211 (First Correspondence) or
    215 (International Correspondence)
    • Return is so illegible, incomplete, or contradictory that it’s unacceptable for computer processing.

    • The taxpayer annotates on the return or attachment that they are reporting tax for more than one tax period or for more than one type of tax.

    225 (Missing Signature Correspondence)
    • Unsigned returns (only issue for correspondence).

    226 (Missing Signature, International Correspondence)
    310 (Statute)
    • Route return to have Statute cleared.

    320 (Entity)
    • Route return to have Entity issue worked.

    480 (Early Filed - Suspense)
    • The return is an early-filed return.

    640 (Void)
    • To delete the assigned DLN on the return (e.g., Re-entry Returns).

    650 (International)
    • The return is an International return and must be forwarded to OSPC.

  8. Continue perfecting the return after editing the action code(s).

3.11.26.3.3  (01-01-2016)
CP 152 TEB Acknowledgement Notice and
CP 152A, Form 8038-CP Acknowledgment and Sequestration Notice

  1. Submission Processing no longer sends TEB acknowledgements. The TEB acknowledgment process was automated to allow issuance of either a CP 152, TEB Acknowledgement Notice or CP 152A, Form 8038-CP Acknowledgment and Sequestration Notice upon posting of a TC 150 to Master File. Both notices are issued for each tax exempt bond filed. The CP 152 /152A also generates to the POA if one is active for the specific tax period and form type.

  2. Effective March 2013 the CP 152A generates on all Forms 80238-CP and serves as both an acknowledgement notice and a notice of sequestration.

  3. When we receive an acknowledgment request from an issuer or preparer asking IRS to return the attached letter and/or copy of their TEB return, don’t reply. Annotate on the return "copy" and line through the photocopy in red ink, leave attached to the original return and continue processing.

  4. If an original return isn’t present, and the form is marked with wording similar to "acknowledgement copy" or "Please stamp and return" , route to EO Accounts (MS: 6552).

3.11.26.3.4  (01-01-2016)
Form Revisions

  1. If we receive a form with a revision date before the date shown below, renumber the return using the Return Conversion Chart. See Exhibit 3.11.26-4 and Exhibit 3.11.26-3, "Prior Year Conversion Chart" .

    Form Latest Revision Date
    8038 04-2011
    8038-G 09-2011
    8038-GC 01-2012
    8038-T 04-2011
    8328 09-2011
    8038-B 01-2010
    8038-TC 11-2012
    8703 09-2013
    8038-CP 01-2012

3.11.26.3.5  (01-01-2016)
Computer Condition Codes (CCC)

  1. Edit the Computer Condition Code (CCC) as follows:

    • Form 8038: Part II, line 11a on the dotted portion ( rev. before 1999, Part II, line 9a).

    • Form 8038-G: Part II, line 11 on the dotted portion (rev. before 1999, line 9).

    • Form 8038-GC: Part II, line 8a on the dotted portion (rev. before 1999, line 5).

    • Form 8038-T: Part II, line 12 on the dotted portion (rev. before 1999, line 10).

    • Form 8328: Part II, line 1 on the dotted portion.

    • Form 8038-B: Part II, line 1a on the dotted portion.

    • Form 8038-TC: Part III, line 1 on the dotted portion.

    • Form 8703: Part II, line 5 on the dotted portion.

    • Form 8038-CP: Part III, line 19a on the dotted portion.

  2. Edit one or more "CCC" when instructed to do so.

  3. Valid "CCC" for Forms 8038, 8038-G, 8038-GC, 8038-T, 8038-CP, 8038-B, 8038-TC, 8328 and 8703 are D, F, G, R, 3 and 7. Condition Code H is only valid on Form 8038-G.

    Note:

    CCC "G" is valid, but currently not used.

    Note:

    CCC "R" is valid, but currently not used on Form 8038-T.

    Note:

    CCC "R" and "D" is valid but currently not used on Form 8328.

  4. Refer to the following table for use of Computer Condition Codes:

    COMPUTER CONDITION CODES
    CCC DEFINITION USE IF FOR FORM(S)
    D Reasonable cause for failure to pay timely Untimely paid return and Reasonable Cause is established in accordance with Rev. Proc. 90-11 or Rev. Proc. 2005-40. See IRM 3.11.26.3.9,Reasonable Cause.

    Note:

    If prepaid penalty is included, DON’T use CCC "D" .

    8038-T
    F Final return Return indicates it’s a "Final." 8038-T
    G Amended return See IRM 3.11.26.2.8.1,Amended Returns 8038
    8038-G
    8038-GC
    8038-T
    8328
    8038-B
    8038-TC
    8703
    R Reasonable cause for failure to file return timely Untimely filed return and Reasonable Cause is established in accordance with Rev. Proc. 88-10, Rev. Proc. 2002-48, Rev. Proc. 90-11, or Rev. Proc. 2005-40. IRM 3.11.26.3.9, Reasonable Cause 8038
    8038-G
    8038-GC
    8038-T
    8038-B
    8038-TC
    8703
    3 No reply Input when issuer doesn’t reply to IRS correspondence. 8038
    8038-G
    8038-GC
    8038-T
    8328

    8038-TC
    8038-B
    8703
    7 Reasonable Cause was considered and denied Reasonable Cause was not granted. See IRM 3.11.26.3.9, Reasonable Cause 8038
    8038-G
    8038-GC
    8038-T

    8038-TC
    8038-B
    8703
    1- Return was referred to TEB CPM.
    OR
    2- Form 8038-T was secured by TEB CPM and a late filing CP 142 notice should not be generated.
    1- Return referred to TEB CPM for late filing consideration. See IRM 3.11.26.2.8.5, Delinquent Return or Payment
    OR
    2- Form 8038-T CP 142 late filing correspondence should not be issued because TEB CPM secured the return.
    N Form 8038, line 11q - other described as Recover Zone Facility Bond The description on line 11q (other) on Form 8038 reads "Recovery Zone Facility Bond" 8038
    H Form 8038-G, line 18- other described as "Tribal Economic Development Bond" The description on Form 8038-G, line 18 other reads "Tribal Economic Development Bond" 8038-G

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